485BPOS 1 l87593ae485bpos.txt NATIONWIDE VLI SEPARATE ACCOUNT -4 FORM 485BPOS 1 Registration No. 333-52617 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 6 TO FORM S-6 FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 NATIONWIDE VLI SEPARATE ACCOUNT-4 (EXACT NAME OF TRUST) NATIONWIDE LIFE INSURANCE COMPANY ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215 (EXACT NAME AND ADDRESS OF DEPOSITOR AND REGISTRANT) PATRICIA R. HATLER SECRETARY ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215 (NAME AND ADDRESS OF AGENT FOR SERVICE) --------- This Post-Effective Amendment amends the Registration Statement with respect to the Prospectus, Financial Statements, and Part II. It is proposed that this filing will become effective (check appropriate box): [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 [X] on May 1, 2001 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on (date) pursuant to paragraph (a)(1) of Rule 485 If appropriate check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment Title of Securities being registered: Last Survivor Flexible Premium Variable Universal Life Insurance Policies Approximate date of proposed offering: Continuously on and after May 1, 2001 [ ] Check box if it is proposed that this filing will become effective on (date) at (time) pursuant to Rule 487. ================================================================================ 2 CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2
N-8B-2 ITEM CAPTION IN PROSPECTUS 1..........................Nationwide Life Insurance ..........................Company ..........................The Variable Account 2..........................Nationwide Life Insurance ..........................Company 3..........................Custodian of Assets 4..........................Distribution of The Policies 5..........................The Variable Account 6..........................Not Applicable 7..........................Not Applicable 8..........................Not Applicable 9..........................Legal Proceedings 10..........................Information About The Policies; ..........................How The Cash Value Varies; Right ..........................to Exchange for a Fixed Benefit ..........................Policy; Reinstatement; Other Policy ..........................Provisions 11..........................Investments of The Variable ..........................Account 12..........................The Variable Account 13..........................Policy Charges ..........................Reinstatement 14..........................Underwriting and Issuance - ..........................Premium Payments ..........................Minimum Requirements for ..........................Issuance of a Policy 15..........................Investments of the Variable ..........................Account; Premium Payments 16..........................Underwriting and Issuance - ..........................Allocation of Cash Value 17..........................Surrendering The Policy for Cash 18..........................Reinvestment 19..........................Not Applicable 20..........................Not Applicable 21..........................Policy Loans 22..........................Not Applicable 23..........................Not Applicable 24..........................Not Applicable 25..........................Nationwide Life Insurance ..........................Company 26..........................Not Applicable 27..........................Nationwide Life Insurance ..........................Company
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N-8B-2 ITEM CAPTION IN PROSPECTUS 28...........................Company Management 29...........................Company Management 30...........................Not Applicable 31...........................Not Applicable 32...........................Not Applicable 33...........................Not Applicable 34...........................Not Applicable 35...........................Nationwide Life Insurance ...........................Company 36...........................Not Applicable 37...........................Not Applicable 38...........................Distribution of The Policies 39...........................Distribution of The Policies 40...........................Not Applicable 41(a)........................Distribution of The Policies 42...........................Not Applicable 43...........................Not Applicable 44...........................How The Cash Value Varies 45...........................Not Applicable 46...........................How The Cash Value Varies 47...........................Not Applicable 48...........................Custodian of Assets 49...........................Not Applicable 50...........................Not Applicable 51...........................Summary of The Policies; ...........................Information About The Policies 52...........................Substitution of Securities 53...........................Taxation of The Company 54...........................Not Applicable 55...........................Not Applicable 56...........................Not Applicable 57...........................Not Applicable 58...........................Not Applicable 59...........................Financial Statements
4 NATIONWIDE LIFE INSURANCE COMPANY Last Survivor Flexible Premium Variable Universal Life Insurance Policies Issued by Nationwide Life Insurance Company through its Nationwide VLI Separate Account-4 The date of this prospectus is May 1, 2001. -------------------------------------------------------------------------------- This prospectus contains basic information you should know about the policies before investing. Please read it and keep it for future reference. The following underlying mutual funds are available under the policies (not all underlying mutual funds are available in every state): AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM) FAMILY OF INVESTMENTS o American Century VP Income & Growth o American Century VP International o American Century VP Value DREYFUS o Dreyfus Investment Portfolios - European Equity Portfolio - Initial Shares o The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares o Dreyfus Stock Index Fund, Inc. - Initial Shares o Dreyfus Variable Investment Fund -Appreciation Portfolio - Initial Shares (formerly, Capital Appreciation Portfolio) FEDERATED INSURANCE SERIES o Federated Quality Bond Fund II FIDELITY VARIABLE INSURANCE PRODUCTS FUND o VIP Equity - Income Portfolio: Service Class o VIP Growth Portfolio: Service Class o VIP High Income Portfolio: Service Class* o VIP Overseas Portfolio: Service Class FIDELITY VARIABLE INSURANCE PRODUCTS FUND II o VIP II Contrafund(R) Portfolio: Service Class FIDELITY VARIABLE INSURANCE PRODUCT FUND III o VIP III Growth Opportunities Portfolio: Service Class JANUS ASPEN SERIES o Capital Appreciation Portfolio: Service Shares o Global Technology Portfolio: Service Shares o International Growth Portfolio: Service Shares MORGAN STANLEY THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.) o Emerging Markets Debt Portfolio o Mid Cap Growth Portfolio o U.S. Real Estate Portfolio NATIONWIDE SEPARATE ACCOUNT TRUST o Capital Appreciation Fund o Dreyfus NSAT Mid Cap Index Fund (formerly, Nationwide(R)Mid Cap Index Fund) (formerly, Nationwide(R)Select Advisers Mid Cap Fund) o Federated NSAT Equity Income Fund (formerly, Nationwide(R)Equity Income Fund) o Federated NSAT High Income Bond Fund* (formerly, Nationwide(R)High Income Bond Fund) o Gartmore NSAT Emerging Markets Fund o Gartmore NSAT Global Technology and Communications Fund o Gartmore NSAT International Growth Fund o Government Bond Fund o J.P. Morgan NSAT Balanced Fund (formerly, Nationwide(R)Balanced Fund) o MAS NSAT Multi Sector Bond Fund* (formerly, Nationwide(R)Multi Sector Bond Fund) o Money Market Fund o Nationwide(R)Global 50 Fund (formerly, Nationwide(R)Global Equity Fund) (subadviser: J.P. Morgan Investment Management Inc.) o Nationwide(R)Small Cap Growth Fund (formerly, Nationwide(R)Select Advisers Small Cap Growth Fund) (subadvisers: Miller, Anderson & Sherrerd, LLP, Neuberger Berman LLC and Waddell & Reed Investment Management Company) o Nationwide(R)Small Cap Value Fund (subadviser: The Dreyfus Corporation) o Nationwide(R)Small Company Fund (subadvisers: The Dreyfus Corporation, Neuberger Berman LLC, Lazard Asset Management, Strong Capital Management, Inc. and Waddell & Reed Investment Management Company) o Strong NSAT Mid Cap Growth Fund (formerly, Nationwide(R)Strategic Growth Fund) o Total Return Fund o Turner NSAT Growth Focus Fund 1 5 NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST o AMT Guardian Portfolio o AMT Mid-Cap Growth Portfolio o AMT Partners Portfolio OPPENHEIMER VARIABLE ACCOUNT FUNDS o Oppenheimer Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) o Oppenheimer Capital Appreciation Fund/VA (formerly, Oppenheimer Growth Fund) o Oppenheimer Global Securities Fund/VA o Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer Growth & Income Fund) STRONG OPPORTUNITY FUND II, INC. VAN ECK WORLDWIDE INSURANCE TRUST o Worldwide Emerging Markets Fund o Worldwide Hard Assets Fund *These underlying mutual funds invest in lower quality debt securities commonly referred to as junk bonds. THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE IN CONNECTION WITH CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER SEPTEMBER 27, 1999: CREDIT SUISSE WARBURG PINCUS TRUST (FORMERLY, WARBURG PINCUS TRUST) o Global Post-Venture Capital Portfolio (formerly, Post-Venture Capital Portfolio) o International Equity Portfolio 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: CREDIT SUISSE WARBURG PINCUS TRUST (FORMERLY, WARBURG PINCUS TRUST) o Value Portfolio (formerly, Growth & Income Portfolio) NATIONWIDE SEPARATE ACCOUNT TRUST o Nationwide(R)Strategic Value Fund (subadviser: Strong Capital Management, Inc.) In the future, additional underlying mutual funds managed by certain financial institutions or brokerage firms may be added to the variable account. These additional underlying mutual funds may be offered exclusively to purchasing customers of the particular financial institution or brokerage firm. For general information or to obtain FREE copies of the: o prospectus, annual report or semi-annual report for any underlying mutual fund; and o any required Nationwide forms, call: 1-800-547-7548 TDD 1-800-238-3035 or write: NATIONWIDE LIFE INSURANCE COMPANY P.O. BOX 182150 COLUMBUS, OHIO 43218-2150 Material incorporated by reference in this prospectus can be found on the SEC website at: www.sec.gov Information about this and other Best of America Products can be found on the world-wide web at: www.bestofamerica.com THIS POLICY: o IS NOT A BANK DEPOSIT o IS NOT FDIC INSURED o IS NOT INSURED OR ENDORSED BY A BANK OR ANY FEDERAL GOVERNMENT AGENCY o IS NOT AVAILABLE IN EVERY STATE o MAY GO DOWN IN VALUE The life insurance policies offered by this prospectus are flexible premium variable universal life insurance policies. They provide flexibility to vary the amount and frequency of premium payments. A cash surrender value may be offered if the policy is terminated during the lifetime of the insured. The purpose of this policy is to provide life insurance protection for the beneficiary named in the policy. No claim is made that the policy is in any way similar or comparable to a systematic investment plan of a mutual fund. The death benefit and cash value of this policy may vary to reflect the experience of the Nationwide VLI Separate Account-4 (the "variable account") or the fixed account, depending on how premium payments are invested. Investors assume certain risks when investing in the policies, including the risk of losing money. Nationwide guarantees the death benefit for as long as the policy is in force. The cash surrender value is not guaranteed. The policy will lapse if the cash surrender value is insufficient to cover policy charges. 2 6 Benefits described in this prospectus may not be available in every jurisdiction - refer to your policy for specific benefit information. THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY NOT LAWFULLY BE MADE. 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 7 GLOSSARY OF SPECIAL TERMS ATTAINED AGE- The insured's age on the policy date, plus the number of full years since the policy date. ACCUMULATION UNIT- An accounting unit of measure used to calculate the cash value of the variable account. AVERAGE ISSUE AGE- The arithmetic average of the ages of the two insureds at policy issuance. BASIC COVERAGE- One of the two types of coverage that comprise the specified amount. The other type is supplemental coverage. FIXED ACCOUNT- An investment option which is funded by the general account of Nationwide. GENERAL ACCOUNT- All assets of Nationwide other than those of the variable account or in other separate accounts that have been or may be established by Nationwide. IRS GUIDELINE LEVEL PREMIUM- The amount of level annual premium, calculated in accordance with the provisions of the Internal Revenue Code, guaranteed mortality and expense charges, and an interest rate of 4%. MATURITY DATE- The policy anniversary on or next following the insured's 100th birthday. NATIONWIDE- Nationwide Life Insurance Company. NET AMOUNT AT RISK- Net amount at risk is the death benefit minus the cash value calculated at the beginning of each policy month. NET PREMIUMS- Net premiums are equal to the actual premiums minus the percent of premium charges. The percent of premium charges are shown on the policy data page. SEC GUIDELINE LEVEL PREMIUM- The level annual premiums required to mature the policy under reasonable mortality and expense charges with an annual effective interest rate of 5%. It is calculated pursuant to Rule 6e-3(T) of the Investment Company Act of 1940. SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund shares are allocated and for which accumulation units are separately maintained. SUPPLEMENTAL COVERAGE- One of the two types of coverage that comprise the specified amount. Supplemental coverage can never exceed 90% of the specified amount. Supplemental coverage is not available in New York or New Jersey. VALUATION PERIOD- Each day the New York Stock Exchange is open. VARIABLE ACCOUNT- Nationwide VLI Separate Account-4, a separate account of Nationwide Life Insurance Company that contains variable account allocations. The variable account is divided into sub-accounts, each of which invests in shares of a separate underlying mutual fund. 4 8 TABLE OF CONTENTS GLOSSARY OF SPECIAL TERMS..................................... 4 SUMMARY OF POLICY EXPENSES.................................... 7 UNDERLYING MUTUAL FUND ANNUAL EXPENSES........................ 8 SYNOPSIS OF THE POLICIES...................................... 11 NATIONWIDE LIFE INSURANCE COMPANY............................. 11 NATIONWIDE INVESTMENT SERVICES CORPORATION.............................................. 11 INVESTING IN THE POLICY....................................... 11 The Variable Account and Underlying Mutual Funds The Fixed Account INFORMATION ABOUT THE POLICIES................................ 13 Minimum Requirements for Policy Issuance Premium Payments Death Benefit Guarantees Pricing POLICY CHARGES................................................ 14 Sales Load Tax Expense Charges Surrender Charges Monthly Cost of Insurance Monthly Administrative Charge Mortality and Expense Risk Charge Federal Income Tax Reduction of Charges SURRENDERING THE POLICY FOR CASH.............................. 17 Surrender (Redemption) Cash Surrender Value Partial Surrenders Income Tax Withholding VARIATION IN CASH VALUE....................................... 18 POLICY PROVISIONS............................................. 18 Policy Owner Beneficiary Changes in Existing Insurance Coverage OPERATION OF THE POLICY....................................... 19 Allocation of Net Premium and Cash Value How the Investment Experience is Determined Net Investment Factor Determining the Cash Value Transfers RIGHT TO REVOKE............................................... 20 POLICY LOANS.................................................. 21 Taking a Policy Loan Effect on Investment Performance Loan Interest Effect on Death Benefit and Cash Value Repayment ASSIGNMENT.................................................... 22 POLICY OWNER SERVICES......................................... 22 Dollar Cost Averaging DEATH BENEFIT INFORMATION..................................... 22 Calculation of the Death Benefit Changes in the Death Benefit Option Proceeds Payable on Death Incontestability Error in Age or Sex Suicide Maturity Proceeds RIGHT OF CONVERSION........................................... 25 GRACE PERIOD.................................................. 25 Grace Period without Death Benefit Guarantees Lifetime Death Benefit Guarantee Limited Death Benefit Guarantee Reinstatement TAX MATTERS................................................... 26 Policy Proceeds Withholding Federal Estate and Generation-Skipping Transfers Taxes Non-Resident Aliens Taxation of Policy Split Option Rider Description of Cash Value Accumulation Test and Guideline Premium/Cash Value Corridor Test Taxation of Nationwide Tax Changes LEGAL CONSIDERATIONS.......................................... 30 STATE REGULATION.............................................. 30 REPORTS TO POLICY OWNERS...................................... 30 ADVERTISING................................................... 31 LEGAL PROCEEDINGS............................................. 31 EXPERTS....................................................... 31 REGISTRATION STATEMENT........................................ 31 DISTRIBUTION OF THE POLICIES.................................. 31 ADDITIONAL INFORMATION ABOUT NATIONWIDE............................................... 33
5 9 APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS............ APPENDIX B: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES, AND DEATH BENEFITS................................. APPENDIX C: PERFORMANCE SUMMARY INFORMATION...................
6 10 SUMMARY OF POLICY EXPENSES Nationwide deducts certain charges from the policy. Charges are made for administrative and sales expenses, tax expenses, providing life insurance protection and assuming the mortality and expense risks (see "Policy Charges"). Nationwide deducts a sales load and a premium expense charge from all premium payments. The sales load is guaranteed never to exceed 5.0% (6.0% in New York) during the first 10 policy years, and 1.5% (2.5% in New York and 5.0% in New Jersey) thereafter. The premium expense charge is approximately 3.5% of premiums for all states (see "Sales Load" and "Premium Expense Charge"). Nationwide deducts the following charges monthly from the cash value of the policy (see "Policy Charges"): o cost of insurance; o cost of any additional benefits provided by riders to the policy; o administrative expense charge; and o mortality and expense risk charge. The amount of the administrative expense charge is the sum of the per policy charge and the per $1,000 basic coverage charge (see "Monthly Administrative Charge"). The mortality and expense risk charge is a equal to an annual effective rate of 0.55% for policy years 1-10 and varies beginning with policy year 11 (see "Mortality and Expenses Risk Charge"). For policies which are surrendered during the first 9 policy years, Nationwide deducts a surrender charge (during the first 14 policy years in Pennsylvania and during the first 10 policy years in Florida) (see "Surrender Charges"). For more information about any policy charge, see "Policy Charges" in this prospectus. 7 11 UNDERLYING MUTUAL FUND ANNUAL EXPENSES (as a percentage of underlying mutual fund net assets, after expense reimbursement)
Total Underlying Management Other 12b-1 Mutual Fund Fees Expenses Fees Expenses ---------- -------- ----- ---------------- American Century Variable Portfolios, Inc. - American Century VP 0.70% 0.00% 0.00% 0.70% Income & Growth American Century Variable Portfolios, Inc. - American Century VP 1.23% 0.00% 0.00% 1.23% International American Century Variable Portfolios, Inc. - American Century VP 1.00% 0.00% 0.00% 1.00% Value Credit Suisse Warburg Pincus Trust - Global Post-Venture Capital 1.14% 0.26% 0.00% 1.40% Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) Credit Suisse Warburg Pincus Trust - International Equity Portfolio 1.00% 0.30% 0.00% 1.30% (formerly, Warburg Pincus Trust - International Equity Portfolio) Credit Suisse Warburg Pincus Trust - Value Portfolio (formerly, 0.48% 0.52% 0.00% 1.00% Warburg Pincus Trust - Value Portfolio) (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Dreyfus Investment Portfolios - European Equity Portfolio - Initial 1.00% 0.25% 0.00% 1.25% Shares The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares 0.75% 0.03% 0.00% 0.78% Dreyfus Stock Index Fund, Inc. - Initial Shares 0.25% 0.01% 0.00% 0.26% Dreyfus Variable Investment Fund - Appreciation Portfolio - Initial 0.75% 0.03% 0.00% 0.78% Shares (formerly, Capital Appreciation Portfolio) Federated Insurance Series - Federated Quality Bond Fund II 0.28% 0.42% 0.00% 0.70% Fidelity VIP Equity-Income Portfolio: Service Class* 0.48% 0.08% 0.10% 0.66% Fidelity VIP Growth Portfolio: Service Class* 0.57% 0.09% 0.10% 0.76% Fidelity VIP High Income Portfolio: Service Class 0.58% 0.10% 0.10% 0.78% Fidelity VIP Overseas Portfolio: Service Class* 0.72% 0.17% 0.10% 0.99% Fidelity VIP II Contrafund(R)Portfolio: Service Class* 0.57% 0.09% 0.10% 0.76% Fidelity VIP III Growth Opportunities Portfolio: Service Class* 0.58% 0.11% 0.10% 0.79% Janus Aspen Series - Capital Appreciation Portfolio: Service Shares 0.65% 0.02% 0.25% 0.92% Janus Aspen Series - Global Technology Portfolio: Service Shares 0.65% 0.04% 0.25% 0.94% Janus Aspen Series - International Growth Portfolio: Service Shares 0.65% 0.06% 0.25% 0.96% NSAT Capital Appreciation Fund 0.60% 0.20% 0.00% 0.80% NSAT Dreyfus NSAT Mid Cap Index Fund (formerly, Nationwide Mid Cap 0.50% 0.15% 0.00% 0.65% Index Fund) (formerly, Nationwide Select Advisers Mid Cap Fund) NSAT Federated NSAT Equity Income Fund (formerly, Nationwide Equity 0.80% 0.15% 0.00% 0.95% Income Fund) NSAT Federated NSAT High Income Bond Fund (formerly, Nationwide 0.80% 0.15% 0.00% 0.95% High Income Bond Fund) NSAT Gartmore NSAT Emerging Markets Fund 1.15% 0.60% 0.00% 1.75% NSAT Gartmore NSAT Global Technology and Communications Fund 0.98% 0.37% 0.00% 1.35% NSAT Gartmore NSAT International Growth Fund 1.00% 0.60% 0.00% 1.60% NSAT Government Bond Fund 0.50% 0.16% 0.00% 0.66% NSAT J.P. Morgan NSAT Balanced Fund (formerly, Nationwide Balanced 0.75% 0.15% 0.00% 0.90% Fund) NSAT MAS NSAT Multi Sector Bond Fund (formerly, Nationwide Multi 0.75% 0.15% 0.00% 0.90% Sector Bond Fund)
8 12 UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
Total Underlying Management Other 12b-1 Mutual Fund Fees Expenses Fees Expenses ---------- -------- ----- ---------------- NSAT Money Market Fund 0.39% 0.16% 0.00% 0.55% NSAT Nationwide Global 50 Fund (formerly, Nationwide Global Equity 1.00% 0.20% 0.00% 1.20% Fund) NSAT Nationwide Small Cap Growth Fund (formerly, Nationwide Select 1.10% 0.20% 0.00% 1.30% Advisers Small Cap Growth Fund) NSAT Nationwide Small Cap Value Fund 0.90% 0.15% 0.00% 1.05% NSAT Nationwide Small Company Fund 0.93% 0.28% 0.00% 1.21% NSAT Nationwide Strategic Value Fund 0.90% 0.10% 0.00% 1.00% NSAT Strong NSAT Mid Cap Growth Fund (formerly, Nationwide 0.90% 0.10% 0.00% 1.00% Strategic Growth Fund) NSAT Total Return Fund 0.58% 0.20% 0.00% 0.78% NSAT Turner NSAT Growth Focus Fund 0.90% 0.45% 0.00% 1.35% Neuberger Berman AMT Guardian Portfolio 0.85% 0.15% 0.00% 1.00% Neuberger Berman AMT Mid-Cap Growth Portfolio 0.84% 0.14% 0.00% 0.98% Neuberger Berman AMT Partners Portfolio 0.82% 0.10% 0.00% 0.92% Oppenheimer Variable Account Funds - Oppenheimer Aggressive Growth 0.62% 0.02% 0.00% 0.64% Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) Oppenheimer Variable Account Funds - Oppenheimer Capital 0.64% 0.03% 0.00% 0.67% Appreciation Fund/VA (formerly, Oppenheimer Growth Fund) Oppenheimer Variable Account Funds - Oppenheimer Global Securities 0.64% 0.04% 0.00% 0.68% Fund/VA Oppenheimer Variable Account Funds - Oppenheimer Main Street Growth 0.70% 0.03% 0.00% 0.73% & Income Fund/VA (formerly, Oppenheimer Growth & Income Fund) Strong Opportunity Fund II, Inc. 1.00% 0.11% 0.00% 1.11% The Universal Institutional Funds, Inc. - Emerging Markets Debt 0.59% 0.81% 0.00% 1.40% Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio) The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio 0.00% 1.05% 0.00% 1.05% The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio 0.74% 0.36% 0.00% 1.10% Van Eck Worldwide Insurance Trust - Worldwide Emerging Markets Fund 1.00% 0.26% 0.00% 1.26% Van Eck Worldwide Insurance Trust - Worldwide Hard Assets Fund 1.00% 0.14% 0.00% 1.14%
* Actual Annual Class operating expenses were lower because a portion of the brokerage commissions that the Fund paid was used to reduce the Fund's expenses, and/or because through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's custodian expenses. 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. 9 13 UNDERLYING MUTUAL FUND ANNUAL EXPENSES (as a percentage of underlying mutual fund net assets, before expense reimbursement)
Total Underlying Management Other 12b-1 Mutual Fund Fees Expenses Fees Expenses ---------- -------- ----- ---------------- Credit Suisse Warburg Pincus Trust - Global Post-Venture Capital 1.25% 0.28% 0.00% 1.53% Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) Credit Suisse Warburg Pincus Trust - International Equity Portfolio 1.00% 0.32% 0.00% 1.32% (formerly, Warburg Pincus Trust - International Equity Portfolio) Credit Suisse Warburg Pincus Trust - Value Portfolio (formerly, 0.75% 0.54% 0.00% 1.29% Warburg Pincus Trust - Value Portfolio) (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Dreyfus Investment Portfolios - European Equity Portfolio - Initial 1.00% 0.60% 0.00% 1.60% Shares Federated Insurance Series - Federated Quality Bond Fund II 0.60% 0.67% 0.25% 1.52% NSAT Capital Appreciation Fund 0.60% 0.23% 0.00% 0.83% NSAT Dreyfus NSAT Mid Cap Index Fund (formerly, Nationwide Mid Cap 0.50% 0.40% 0.00% 0.90% Index Fund) (formerly, Nationwide Select Advisers Mid Cap Fund) NSAT Federated NSAT Equity Income Fund (formerly, Nationwide Equity 0.80% 0.31% 0.00% 1.11% Income Fund) NSAT Federated NSAT High Income Bond Fund (formerly, Nationwide High 0.80% 0.32% 0.00% 1.12% Income Bond Fund) NSAT Gartmore NSAT Emerging Markets Fund 1.15% 2.94% 0.00% 4.09% NSAT Gartmore NSAT Global Technology and Communications Fund 0.98% 1.59% 0.00% 2.57% NSAT Gartmore NSAT International Growth Fund 1.00% 1.88% 0.00% 2.88% NSAT Government Bond Fund 0.50% 0.23% 0.00% 0.73% NSAT J.P. Morgan NSAT Balanced Fund (formerly, Nationwide Balanced 0.75% 0.32% 0.00% 1.07% Fund) NSAT MAS NSAT Multi Sector Bond Fund (formerly, Nationwide Multi 0.75% 0.34% 0.00% 1.09% Sector Bond Fund) NSAT Money Market Fund 0.39% 0.22% 0.00% 0.61% NSAT Nationwide Global 50 Fund (formerly, Nationwide Global Equity 1.00% 0.42% 0.00% 1.42% Fund) NSAT Nationwide Small Cap Growth Fund (formerly, Nationwide Select 1.10% 0.50% 0.00% 1.60% Advisers Small Cap Growth Fund) NSAT Nationwide Small Cap Value Fund 0.90% 0.30% 0.00% 1.20% NSAT Nationwide Strategic Value Fund 0.90% 0.36% 0.00% 1.26% NSAT Strong NSAT Mid Cap Growth Fund (formerly, Nationwide Strategic 0.90% 0.27% 0.00% 1.17% Value Fund) NSAT Total Return Fund 0.58% 0.23% 0.00% 0.81% NSAT Turner NSAT Growth Focus Fund 0.90% 4.13% 0.00% 5.03% Strong Opportunity Fund II, Inc. 1.00% 0.18% 0.00% 1.18% The Universal Institutional Funds, Inc. - Emerging Markets Debt 0.80% 0.81% 0.00% 1.61% Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio) The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio 0.75% 1.54% 0.00% 2.29% The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio 0.80% 0.36% 0.00% 1.16% Van Eck Worldwide Insurance Trust - Worldwide Emerging Markets Fund 1.00% 0.33% 0.00% 1.33% Van Eck Worldwide Insurance Trust - Worldwide Hard Assets Fund 1.00% 0.16% 0.00% 1.16%
10 14 SYNOPSIS OF THE POLICIES The policy offered by this prospectus provides for life insurance coverage on two insureds. Nationwide pays the death proceeds on the death of the last surviving insured. The death benefit and cash value of the policy may increase or decrease to reflect the performance of the investment options chosen by the policy owner (see "Death Benefit Information"). CASH SURRENDER VALUE If the policy is terminated during the insureds' lifetime, a cash surrender value may be payable under the policy. However, there is no guaranteed cash surrender value (see "Variation in Cash Value "). The policy will lapse without value if the cash surrender value falls below what is needed to cover policy charges and neither death benefit guarantee is in effect (see "Grace Period"). PREMIUMS The initial premium is shown on the policy data page. Additional premium payments may be made at any time while the policy is in force. Each premium payment must be at least $50. TAXATION The policies described in this prospectus meet the definition of "life insurance" under Section 7702 of the Internal Revenue Code. Nationwide will monitor compliance with the tests provided by Section 7702 to insure the policies continue to receive this favored tax treatment (see "Tax Matters"). NONPARTICIPATING POLICIES The policies are nonparticipating policies on which no dividends are payable. The policies do not share in the profits or surplus earnings of Nationwide. RIDERS A rider may be added to the policy (availability varies by state). Riders currently include: o Policy Split Option; o Estate Protection; o Maturity Extension Endorsement (not available in New York); and o Maturity Extension for Specified Amount. These riders are not available in the State of New Jersey. POLICY CANCELLATION Policy owners may return the policy for any reason within certain time periods and Nationwide will refund the policy value or the amount required by law (see "Right to Revoke"). NATIONWIDE LIFE INSURANCE COMPANY Nationwide is a stock life insurance company organized under the laws of the State of Ohio 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. CUSTODIAN OF ASSETS Nationwide serves as the custodian of the assets of the variable account. OTHER CONTRACTS ISSUED BY NATIONWIDE Nationwide offers variable contracts and policies with benefits which vary in accordance with the investment experience of a separate account of Nationwide. NATIONWIDE INVESTMENT SERVICES CORPORATION The policies are distributed by Nationwide Investment Services Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio 43215. (For policies issued in the State of Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation.) NISC is a wholly owned subsidiary of Nationwide. INVESTING IN THE POLICY THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS Nationwide VLI Separate Account-4 is a separate account that invests in the underlying mutual fund options listed in Appendix A. Nationwide established the separate account on December 3, 1987, pursuant to Ohio law. Although the separate account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise the management of Nationwide or the variable account. Income, gains, and losses credited to, or charged against the variable account reflect the variable account's own investment experience and not the investment experience of Nationwide's other assets. The variable account's assets are held separately from Nationwide's assets and in general are not chargeable with liabilities incurred in any other business of Nationwide. Nationwide is obligated to pay all amounts promised to policy owners under the policies. 11 15 The variable account is divided into sub-accounts. Policy owners elect to have net premiums allocated among the sub-accounts and the fixed account at the time of application. Nationwide uses the assets of each sub-account to buy shares of the underlying mutual funds based on policy owner instructions. A policy's investment performance depends upon the performance of the underlying mutual fund options chosen by the policy owner. Each underlying mutual fund's prospectus contains more detailed information about that fund. Prospectuses for the underlying mutual funds should be read in conjunction with this prospectus. Underlying mutual funds in the variable account are NOT publicly traded mutual funds. 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. Policy owners should not compare the performance of a publicly traded fund with the performance of underlying mutual funds participating in the variable account. The performance of the underlying mutual funds could differ substantially from that of any publicly traded funds. Changes of Investment Policy Nationwide may materially change the investment policy of the variable account. Nationwide must inform policy owners and obtain all necessary regulatory approvals. Any change must be submitted to the various state insurance departments which may disapprove it if deemed detrimental to the interests of the policy owners or if it renders Nationwide's operations hazardous to the public. If a policy owner objects, the policy owner may, upon written request, transfer all sub-account cash values to the fixed account. The policy owner has the later of 60 days (6 months in Pennsylvania) from the date of the investment policy change or 60 days (6 months in Pennsylvania) from being informed of the change to make the transfer. Nationwide will not assess a charge for this transfer. Voting Rights Policy owners who have allocated assets to the underlying mutual funds are entitled to certain voting rights. Nationwide will vote policy owner shares at special shareholder meetings based on policy owner instructions. However, if the law changes allowing Nationwide to vote in its own right, it may elect to do so. Policy owners with voting interests in an underlying mutual fund will be notified of issues requiring the shareholder's vote as soon as possible prior to the shareholder meeting. Notification will contain proxy materials, and a form to return to Nationwide with voting instructions. Nationwide will vote shares for which no instructions are received in the same proportion as those that are received. The number of shares which a policy owner may vote is determined by dividing the cash value of the amount they have allocated to an underlying mutual fund by the net asset value of that underlying mutual fund. Nationwide will designate a date for this determination not more than 90 days before the shareholder meeting. 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 and/or combine shares of another underlying mutual fund for shares already purchased or to be purchased in the future if either of the following occur: (1) shares of a current underlying mutual fund option are no longer available for investment; or (2) further investment in an underlying mutual fund option is inappropriate. No substitution, elimination, and/or combination of shares may take place without the prior approval of the SEC. 12 16 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 this and other Nationwide separate accounts. The general account is used to support Nationwide's annuity and insurance obligations and may contain compensation for mortality and expense risks. Purchase payments will be allocated to the fixed account by election of the contract owner. Under exemptive and exclusionary provisions, Nationwide's general account has not been registered under the Securities Act of 1933 and has not been registered as an investment company under the Investment Company Act of 1940. Accordingly, neither the general account nor any interest therein is subject to the provisions of these Acts. The general account is not subject to the same laws as the variable account and the SEC has not reviewed the disclosures 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 statements made in prospectuses. The investment income earned by the fixed account will be allocated to the contracts at varying rate(s) set by Nationwide. Current rates will be set at the beginning of each calendar quarter. The guaranteed rate for any purchase payment will be effective for not less than 3 months. Nationwide guarantees that the rate will not be less than 4.0% per year. Any interest in excess of 4.0% will be credited to fixed account allocations at Nationwide's sole discretion. The contract owner assumes the risk that interest credited to fixed account allocations may not exceed the minimum guarantee of 4.0% for any given year. New purchase payments deposited to the contract which are allocated to the fixed account may receive a different rate of interest than amounts transferred from the sub-accounts to the fixed account and amounts maturing in the fixed account. INFORMATION ABOUT THE POLICIES MINIMUM REQUIREMENTS FOR POLICY ISSUANCE This policy provides life insurance coverage with the flexibility to vary the amount and frequency of premium payments. At policy issuance, the policy owner selects the premium and specified amount, which consists of basic coverage and supplemental coverage, if any. The proportion of supplemental coverage is irrevocable. A policy owner can apply to increase or decrease the specified amount no more than once per policy year. The minimum specified amount is $100,000. Supplemental coverage cannot exceed 90% of the specified amount. Supplemental coverage differs from basic coverage in several respects: (1) supplemental coverage has lower cost of insurance rates, on a current basis; (2) supplemental coverage has no surrender charges; and (3) supplemental coverage has no monthly per unit charge, on a current basis. Supplemental coverage is not available for policies issued in the State of New York. Policies may be issued to insureds at ages consistent with Nationwide's underwriting guidelines. Before issuing any policy, Nationwide requires satisfactory evidence of insurability which may include medical examinations. PREMIUM PAYMENTS Each premium payment must be at least $50. The initial premium is payable in full at Nationwide's home office or to an authorized agent of Nationwide. Upon payment of the initial premium, temporary insurance may be provided. Issuance of the continuing insurance coverage is dependent upon completion of all underwriting requirements, payment of initial premium, and delivery of the policy while both insureds are still living. Additional premium payments may be made at any time while the policy is in force, subject to the following conditions: o Nationwide may require satisfactory evidence of insurability before accepting any additional premium payment which results in an increase in the net amount at risk; o premium payments in excess of the premium limit established by the IRS to qualify the policy as a contract for life insurance will be refunded; and o Nationwide may require policy indebtedness be repaid prior to accepting any additional premium payments. Additional premium payments or other changes to the policy may jeopardize the policy's non-modified endowment status. Nationwide will monitor premiums paid and other policy transactions and will notify the policy owner when non-modified endowment contract status is in jeopardy. 13 17 Nationwide will send scheduled premium payment reminder notices to policy owners according to the premium mode shown on the policy data page. DEATH BENEFIT GUARANTEES Lifetime Death Benefit Guarantee The policy will not lapse if cumulative premiums, less any indebtedness and partial withdrawals are greater than or equal to cumulative Lifetime Death Benefit Guarantee premiums (see "Grace Period"). Limited Death Benefit Guarantee The policy will not lapse during the Limited Death Benefit Guarantee period if cumulative premiums, less any indebtedness and partial withdrawals, are greater than or equal to cumulative Limited Death Benefit Guarantee premiums. The Limited Death Benefit Guarantee period runs from the policy date to the policy anniversary on or next following the younger insured's 75th birthday (see "Grace Period"). PRICING Premiums will not be priced when the New York Stock Exchange is closed or on the following nationally recognized holidays: o New Year's Day o Martin Luther King, Jr.Day o Presidents' Day o Good Friday o Memorial Day o Independence Day o Labor Day o Thanksgiving o Christmas 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, policy value may be affected since the policy owner would not have access to their account. POLICY CHARGES SALES LOAD Nationwide deducts a sales load from each premium payment received. The sales load is guaranteed never to exceed 5.0% (6.0% in New York) of each premium payment during the first 10 policy years and 1.5% (2.5% in New York and 5.0% in New Jersey) of each premium payment thereafter. Currently, the sales load is 5.0% (6.0 in New York) during the first 10 policy years and 0% (1.0% in New York) thereafter. The total sales load actually deducted from any policy will be equal to the sum of this front-end sales load plus any sales surrender charge. In addition, the portion of the increase charges attributable to an increase in specified amount that reimburse Nationwide for distribution expenses will be added to the total sales load deduction. TAX EXPENSE CHARGES A charge equal to 3.5% is deducted from all premium payments, when the premium payment is received, in order to compensate Nationwide for certain administrative expenses which are incurred by Nationwide for taxes, which include premium or other taxes, imposed by various state and local jurisdiction as well as federal taxes imposed under Section 848 of the Internal Revenue Code. These tax expenses to Nationwide consist of two components: (1) a tax rate of 2.25% for state and local premium or other taxes; and (2) a tax rate of 1.25% for federal taxes. The amount charged may be more or less than the amount actually assessed by the state in which a particular policy owner lives. Nationwide does not expect to make a profit from these charges. SURRENDER CHARGES Nationwide deducts a surrender charge from the cash value of any policy surrendered during the first 9 policy years. The surrender charge is deducted proportionally from the cash value in each sub-account and the fixed account. The maximum surrender charge varies by the issue ages, sexes, and underwriting classifications of the insureds and is calculated based on the initial basic coverage on the policy date. The following table illustrates the maximum surrender charge per $1,000 of initial basic coverage for policies which are issued on a male non-tobacco preferred and a female non-tobacco other than preferred basis (see "Appendix B: Illustrations of Cash Values, Cash Surrender Values, and Death Benefits" for specific examples) based on $1 million specified amount. 14 18
MAXIMUM SURRENDER CHARGES ---------------------------------------------- PER $1,000 OF INITIAL AVERAGE ISSUE AGE BASIC COVERAGE ----------------- --------------------- 35/35 $ 5.54 45/45 8.51 55/55 11.30 65/65 15.82 75/75 23.34
The surrender charge is comprised of two components: o an underwriting component; and o a sales component. The underwriting component varies by average issue age in the following manner:
UNDERWRITING COMPONENT -------------------------------------------------- PER $1,000 OF INITIAL BASIC AVERAGE ISSUE AGE COVERAGE ----------------- --------------------------- 0-39 $ 4.00 40-49 6.00 50-59 7.00 60-85 8.00
The underwriting component is designed to cover the administrative expenses associated with underwriting and issuing policies, including the costs of: o processing applications; o conducting medical exams; o determining insurability and the insureds' underwriting class; and o establishing policy records. The remainder of the surrender charge that is not attributable to the underwriting component represents the sales component. The purpose of the sales component is to reimburse Nationwide for some of the expenses incurred in the distribution of the policies. In no event will the sales component exceed 23.75% of the lesser of the SEC Guideline Level Premium required in the first year or the premiums actually paid in the first year. The following table illustrates the maximum sales surrender charge per $1,000 of initial basic coverage based on a policy issued on a male non-tobacco preferred and a female non-tobacco other than preferred basis.
MAXIMUM SALES COMPONENT ------------------------------------------------ AVERAGE ISSUE PER $1,000 OF INITIAL BASIC AGE COVERAGE ------------- --------------------------- 35/35 $1.54 45/45 2.51 55/55 4.30 65/65 7.82 75/75 15.34
Nationwide does not expect to profit from the surrender charge. The surrender charge may be insufficient to recover certain expenses related to the sale of the policies. Unrecovered expenses are born by Nationwide's general assets which may include profits, if any, from mortality and expense risk charges. Additional premiums and/or income earned on assets in the variable account have no effect on these charges. The surrender charge does not apply to increases or decreases in specified amount. Reductions to Surrender Charges Surrender charges are reduced in subsequent policy years as follows:
SURRENDER CHARGE AS A PERCENTAGE OF INITIAL POLICY YEAR SURRENDER CHARGE ----------- -------------------------- 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 45% 8 30% 9 15% 10 and after 0%
SURRENDER CHARGE FOR FLORIDA ONLY AS A PERCENTAGE OF INITIAL POLICY YEAR SURRENDER CHARGE ----------- -------------------------- 1 100% 2 90% 3 80% 4 70% 5 60% 6 50% 7 40% 8 30% 9 20% 10 10% 11 and after 0%
15 19
SURRENDER CHARGE FOR PENNSYLVANIA ONLY AS A PERCENTAGE OF INITIAL POLICY YEAR SURRENDER CHARGE ----------- -------------------------- 1 100% 2 100% 3 100% 4 95% 5 90% 6 85% 7 80% 8 75% 9 70% 10 65% 11 60% 12 45% 13 30% 14 15% 15 and after 0%
MONTHLY COST OF INSURANCE The monthly cost of insurance charge reflects the anticipated mortality of both insureds and the fact that the death benefit is not payable until the death of the last surviving insured. The monthly cost of insurance charge for each policy month is determined by multiplying the monthly cost of insurance rate by the net amount at risk. The net amount at risk is the difference between the death benefit and the policy's cash value, as calculated at the beginning of each policy month. This deduction is charged proportionately to the cash value in each sub-account and the fixed account. Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO). Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate multiples of the 1980 CSO. These mortality tables are sex distinct. In addition, separate mortality tables will be used for tobacco and non-tobacco. The rate class of an insured may affect the cost of insurance rate. Nationwide currently places insureds into both standard rate classes and substandard rate classes that involve a higher mortality risk. In an otherwise identical policy, an insured in the standard rate class will have a lower cost of insurance than an insured in a rate class with higher mortality risks. MONTHLY ADMINISTRATIVE CHARGE Nationwide deducts a monthly administrative expense charge proportionately from the cash value in each sub-account and the fixed account. This charge reimburses Nationwide for certain actual expenses related to maintenance of the policies including accounting and record keeping, and periodic reporting to policy owners. Nationwide does not expect to recover any amount in excess of aggregate maintenance expenses from this charge. Currently, this charge is the sum of the per policy charge and the per $1,000 basic coverage charge as set forth below:
POLICY PER POLICY PER $1,000 BASIC YEAR(S) CHARGE COVERAGE CHARGE ------- ---------- ---------------- 1-10 $10.00 $0.04 but not less than $20 or more than $80 per policy 11 and After $5.00 $0.02 but not less than $10 or more than $40 per policy
The charge for years 11 and after may be increased at Nationwide's sole discretion, but may not exceed the charge for years 1-10. After a change in specified amount, the per $1,000 basic coverage charge portion of the monthly administrative expense charge is based on the new basic coverage in effect. For policies issued in the State of New York, the per policy charge portion is equal to $7.50 per month in all years, both currently and guaranteed. The monthly per $1,000 basic coverage charge portion in New York is $0.04 per $1,000 in the first year only, subject to a minimum of $20 and a maximum of $80 per policy, currently and guaranteed, and $0 thereafter. MORTALITY AND EXPENSE RISK CHARGE Nationwide assumes certain risks for guaranteeing the mortality and expense charges. The mortality risk assumed under the policies is that both insureds may not live as long as expected. The expense risk assumed is that the actual expenses incurred in issuing and administering the policies may be greater than expected. In addition, Nationwide assumes risks associated with the non-recovery of policy issue, underwriting and other administrative expenses due to policies that lapse or are surrendered in the early policy years. Nationwide deducts the mortality and expense risk charge from the variable account on a monthly basis. 16 20 Mortality and expense risk deductions will be charged proportionally to the cash value in each sub-account. The mortality and expense risk charge is equivalent to an annual effective rate of 0.55% for policy years 1-10. This charge varies starting at the beginning of policy year 11, depending on the variable account value, as described in the table that follows:
VARIABLE ACCOUNT VALUE AT MORTALITY AND EXPENSE RISK THE BEGINNING CHARGE FOR YEARS OF POLICY YEAR 11 11 AND AFTER ------------------------- -------------------------- Less than $25,000 0.55% $25,000 to $99,999 0.35% $100,000 or More 0.20%
Policy owners receive quarterly and annual statements, advising policy owners of the cancellation of accumulation units for mortality and expense risk charges. These charges are all guaranteed. In the State of New York, the annual effective rate is 0.55% in years 1-10 and 0.35% beginning in year 11, regardless of variable account value. FEDERAL INCOME TAX No charge is assessed to policy owners for income taxes incurred by Nationwide as a result of the operations of the sub-accounts. However, Nationwide reserves the right to assess a charge for income taxes against the variable account if income taxes are incurred. REDUCTION OF CHARGES The policy is available for purchase by individuals, corporations and other groups. Nationwide may reduce or eliminate certain charges (sales load, surrender charge, monthly administrative charge, monthly cost of insurance charge, or other charges), where the size or nature of the group results in savings in sales, underwriting, administrative or other costs, to Nationwide. These charges may be reduced in certain group, sponsored arrangements made available by Nationwide, (including employees of Nationwide and their families). Eligibility for reduction in charges and the amount of any reduction is determined by a number of factors, including: o the number of insureds; o the total premium expected to be paid; o total assets under management for the policy owner; o the nature of the relationship among individual insureds; o the purpose for which the policies are being purchased; o the expected persistency of individual policies; and o any other circumstances which are rationally related to the expected reduction in expenses. The extent and nature of reductions may change from time to time. The charge structure may vary. Variations are determined in a manner not unfairly discriminatory to policy owners which reflects differences in costs of services. SURRENDERING THE POLICY FOR CASH SURRENDER (REDEMPTION) Policies may be surrendered for the cash surrender value any time while the insured is living. The cancellation will be effective as of the date Nationwide receives the policy accompanied by a signed, written request for cancellation. In some cases, Nationwide may require additional documentation of a customary nature. Nationwide is required by state law to reserve the right to postpone payment of assets in the fixed account for a period of up to six months from the date of surrender request. CASH SURRENDER VALUE The cash surrender value increases or decreases daily to reflect the investment experience of the variable account and the daily crediting of interest in the fixed account and the policy loan account. The cash surrender value equals the policy's cash value, next computed after the date Nationwide receives a proper written request for surrender and the policy, minus any charges, indebtedness or other deductions due on that date, which may also include a surrender charge. PARTIAL SURRENDERS After the policy has been in force for one year, the policy owner may request a partial surrender. Partial surrenders are permitted if they satisfy the following requirements: (1) the minimum partial surrender is $500; (2) partial surrenders may not reduce the specified amount below the minimum issue amount ($100,000); (3) the maximum amount of a partial surrender is the cash surrender value less the greater of $500 or three monthly deductions; and 17 21 (4) after the partial surrender, the policy continues to qualify as life insurance. Nationwide reserves the right to limit the number of partial surrenders in each policy year. When a partial surrender is made, the cash value is reduced by the amount of the partial surrender. Also, under death benefit Option 1, the specified amount is reduced by the amount of the partial surrender. The basic and supplemental specified amounts are reduced proportionally. Partial surrenders will be first deducted from the values in the sub-accounts. Partial surrenders will be deducted from the fixed account when the amount requested exceeds the value available in the sub-accounts. Nationwide reserves the right to deduct a fee for each partial surrender. The fee will not be more than the lesser of $25 or 2% of the amount of the partial surrender. On a current basis, Nationwide does not deduct this fee. Certain partial surrenders may result in currently taxable income and tax penalties. INCOME TAX WITHHOLDING Federal law requires Nationwide to withhold income tax from any portion of surrender proceeds subject to tax. Nationwide will withhold income tax unless the policy owner advises Nationwide, in writing, of his or her request not to withhold. If a policy owner requests that taxes not be withheld, or if the taxes withheld are insufficient, the policy owner may be liable for payment of an estimated tax. Policy owners should consult a tax adviser. VARIATION IN CASH VALUE On any date during the policy year, the cash value equals the cash value on the preceding valuation period plus any net premium applied since the previous valuation period, minus any partial surrenders plus or minus any investment results, and less any policy charges. There is no guaranteed cash value. The cash value will vary with the investment experience of the variable account and/or the daily crediting of interest in the fixed account and policy loan account depending on the allocation of cash value by the policy owner. POLICY PROVISIONS POLICY OWNER While either insured is living, all rights in this policy are vested in the policy owner named in the application or as subsequently changed, subject to assignment, if any. The policy owner may name a contingent policy owner or a new policy owner while either insured is living. Any change must be in a written form satisfactory to Nationwide and recorded at Nationwide's home office. Once recorded, the change will be effective when signed. The change will not affect any payment made or action taken by Nationwide before the change was recorded. Nationwide may require that the policy be submitted for endorsement before making a change. If the policy owner dies before both insureds, the policy owner's rights in this policy belong to the policy owner's estate. BENEFICIARY The beneficiary(ies) will be as named in the application or as subsequently changed, subject to assignment, if any. The policy owner may name a new beneficiary while either insured is living. Any change must be in a written form satisfactory to Nationwide and recorded at Nationwide's home office. Once recorded, the change will be effective when signed. The change will not affect any payment made or action taken by Nationwide before it was recorded. If any beneficiary predeceases an insured, that beneficiary's interest passes to any surviving beneficiary(ies), unless otherwise provided. Multiple beneficiaries will be paid in equal shares, unless otherwise provided. If no named beneficiary survives both insureds, the death proceeds will be paid to the policy owner or the policy owner's estate. CHANGES IN EXISTING INSURANCE COVERAGE The policy owner may request certain changes in the insurance coverage under the policy. Requests must be in writing and received by Nationwide. No change will take effect unless the cash surrender value after the change is sufficient to keep the policy in force for at least 3 months. Any approved change will have an effective date of the monthly anniversary day on or next following the date Nationwide approves the application for the change. Basic and supplemental coverage will change proportionally. Nationwide reserves the right to limit the number of specified amount changes to one each policy year. Specified Amount Increases After the first policy year, the policy owner may request an increase to the specified amount. Any increase will be subject to the following conditions: 18 22 (1) satisfactory evidence of insurability must be provided for both insureds; (2) the increase must be for a minimum of $10,000; and (3) age limits are the same as for a new issue. Specified Amount Decreases After the first policy year, the policy owner may also request a decrease to the specified amount. Any such decrease shall reduce insurance in the following order: (1) against insurance provided by the most recent increase; (2) against the next most recent increases successively; and (3) against insurance provided under the original application. Nationwide will refuse a request for a decrease which would: (1) reduce the specified amount to less than the minimum issue amount; (2) disqualify the policy as a contract for life insurance; or (3) result in both: (a) a negative guideline single premium; and (b) an aggregated guideline level premium that would be negative at any time prior to the maturity of the policy. OPERATION OF THE POLICY ALLOCATION OF NET PREMIUM AND CASH VALUE Nationwide allocates premium payments to sub-accounts or the fixed account, as instructed by policy owners. All percentage allocations must be in whole numbers, and must be at least 1%. The sum of allocations must equal 100%. Future premium allocations may be changed by giving written notice to Nationwide. Premiums allocated to a sub-account on the application are allocated to the NSAT Money Market Fund during the period a policy owner can cancel the policy, unless a specific state requires premiums to be allocated to the fixed account. At the expiration of this period, these premiums are used to purchase shares of the underlying mutual funds specified by the policy owner at net asset value for the respective sub-account(s). The policy owner may change the allocation of net premiums or may transfer cash value from one sub-account to another. Changes are subject to the terms and conditions imposed by each underlying mutual fund and those found in this prospectus. Net premiums allocated to the fixed account at the time of application may not be transferred from the fixed account prior to the first policy anniversary (see "Transfers"). HOW THE INVESTMENT EXPERIENCE IS DETERMINED The accumulation unit value for a valuation period is determined by multiplying the accumulation unit value for each sub-account for the immediately preceding valuation period by the net investment factor for the sub-account for the subsequent valuation period. NET INVESTMENT FACTOR The net investment factor for any valuation period is determined by dividing (a) by (b) where: (a) is the sum of: (1) the net asset value per share of the underlying mutual fund held in the sub-account as of the end of the current valuation period; and (2) the per share amount of any dividend or income distributions made by the underlying mutual fund (if the date of the dividend or income distribution occurs during the current valuation period); and (b) is the net asset value per share of the underlying mutual fund determined as of the end of the immediately preceding valuation period. Though the number of accumulation units will not change as a result of investment experience, the value of an accumulation unit may increase or decrease from valuation period to valuation period. The net investment factor may be greater or less than one; therefore, the value of an accumulation unit may increase or decrease. Nationwide does not currently assess any charge for income taxes incurred by Nationwide as a result of the operations of the sub-accounts. Nationwide reserves the right to assess a charge for such taxes if Nationwide determines that such taxes will be incurred. DETERMINING THE CASH VALUE The cash value is the sum of the value of all variable account accumulation units attributable to the policy plus amounts credited to the fixed account and the policy loan account. The number of accumulation units credited to each sub-account is determined by dividing the net amount allocated to the sub-account by the accumulation unit value for the sub-account for the valuation period during 19 23 which the premium is received by Nationwide. In the event part or all of the cash value is surrendered or charges or deductions are made against the cash value, an appropriate number of accumulation units from the variable account and an appropriate amount from the fixed account will be deducted in the same proportion that the policy owner's interest in the variable account and the fixed account bears to the total cash value. The cash value in the fixed account and the policy loan account is credited with interest daily at an effective annual rate which Nationwide periodically declares. The annual effective rate will never be less than 4% (for a description of the annual effective credited rates, see "The Fixed Account" and "Policy Loans"). Upon request, Nationwide will inform the policy owner of the then applicable rates for each account. TRANSFERS Policy owners can transfer allocations without penalty or adjustment subject to the following conditions: o transfers between the fixed account and the variable account may not be made in the first policy year; o transfers between the fixed account and the variable account may be made once per policy year; o transfers among sub-accounts may be made once per valuation period; o Nationwide reserves the right to restrict the amount transferred from the fixed account to 25% of the cash value in the fixed account. Policy owners who have entered into Dollar Cost Averaging agreements with Nationwide may transfer under the terms of that agreement; and o Nationwide reserves the right to restrict the amount transferred to the fixed account to 25% of the cash value. The policy owner's cash value in each sub-account will be determined as of the date Nationwide receives the transfer request in good order. Transfer Requests Nationwide will accept transfer requests in writing, over the telephone or via the internet. Nationwide will use reasonable procedures to confirm that instructions are genuine and will not be liable for following instructions it reasonably determined to be genuine. Nationwide may withdraw the telephone and/or internet exchange privilege upon 30 days written notice to policy owners. Market-Timing Firms Some policy owners may use market-timing firms or other third parties to make transfers on their behalf. Generally, in order to take advantage of perceived market trends, market-timing firms will submit transfer requests on behalf of multiple policy owners at the same time. Sometimes this can result in unusually large transfers of funds. These large transfers might interfere with the ability of Nationwide or the underlying mutual fund to process transactions. This can potentially disadvantage policy owners not using market-timing firms. To avoid this, Nationwide may modify the transfer rights of policy owners who use market-timing firms (or other third parties) to initiate transfers on their behalf. The transfer rights of individual policy owners will not be modified in any way when instructions are submitted directly by the policy owner, or by the policy owner's representative (as authorized by the execution of a valid Nationwide Limited Power of Attorney Form). To protect policy owners, Nationwide may refuse transfer requests: o submitted by any agent acting under a power of attorney on behalf of more than one policy owner; or o submitted on behalf of individual policy owners who have executed pre-authorized exchange forms which are submitted by market-timing firms (or other third parties) on behalf of more than one policy owner at the same time. Nationwide will not restrict transfer rights unless Nationwide believes it to be necessary for the protection of all policy owners. RIGHT TO REVOKE A policy owner may cancel the policy by returning it by the latest of: o 10 days after receiving the policy; o 45 days after signing the application; or o 10 days after Nationwide delivers a Notice of Right to Withdrawal. The policy can be mailed to the registered representative who sold it, or directly to Nationwide. Returned policies are deemed void from the beginning. Nationwide will refund the amount prescribed by the state in which the policy was issued within 7 days after it receives the policy. The refunded policy value will reflect the deduction of any policy charges, unless otherwise required by law. This right varies by state. 20 24 POLICY LOANS TAKING A POLICY LOAN The policy owner may take a policy loan at any time after the first policy anniversary using the policy as security. Maximum policy indebtedness is limited to 90% of the cash value, less any surrender charges. Maximum policy indebtedness in Texas is limited to 90% of the cash value in the sub-accounts and 100% of the cash value in the fixed account, less any surrender charges and less interest due on the next policy anniversary. The cash value less surrender charge is determined as of the loan date. Nationwide will not grant a loan for an amount less than $1,000. Policy indebtedness will be deducted from the death benefit, cash surrender value upon surrender, or the maturity proceeds. Any request for a policy loan must be in written form. The request must be signed and, where permitted, the signature guaranteed by a member firm of the New York, American, Boston, Midwest, Philadelphia or Pacific Stock Exchanges, or by a commercial bank or a savings and loan which is a member of the Federal Deposit Insurance Corporation. Certain policy loans may result in currently taxable income and tax penalties. A policy owner considering the use of policy loans in connection with his or her retirement income plan should consult his or her personal tax adviser regarding potential tax consequences that may arise if necessary payments are not made to keep the policy from lapsing. The amount of the payments necessary to prevent the policy from lapsing will increase with age. EFFECT ON INVESTMENT PERFORMANCE When a loan is made, an amount equal to the amount of the loan is transferred from the variable account to the policy loan account. If the assets relating to a policy are held in more than one sub-account, withdrawals from the sub-accounts will be made in proportion to the assets in each sub-account at the time of the loan. Policy loans will be transferred from the fixed account only when sufficient amounts are not available in the sub-accounts. The amount taken out of the variable account will not be affected by the variable account's investment experience while the loan is outstanding. LOAN INTEREST The annual effective loan interest rate charged on policy loans is 6.0%. On a current basis, cash value in the policy loan account is credited with an annual effective rate of 5.1% during policy years 2 through 10 and an annual effective rate of 6% during the 11th and subsequent policy years. Nationwide may change the current interest crediting rate on the policy loans at any time at its sole discretion. However, the rate is guaranteed never to be lower than 5.1%. Nationwide retains the right to increase the net cost (by decreasing the interest crediting rate) on all subsequent policy loans to an amount that would result in the transaction being treated as a loan under federal tax law if it is determined that such loans will be treated, as a result of the differential between the interest crediting rate and the loan interest rate, as taxable distributions under any applicable ruling, regulation, or court decision. If this amount is not prescribed by such ruling, regulation, or court decision, the amount will be that which Nationwide considers to be more likely to result in the transaction being treated as a loan under federal tax law. Amounts transferred to the policy loan account will earn interest daily from the date of transfer. The earned interest is transferred from the policy loan account to a variable account or the fixed account on each policy anniversary, at the time a new loan is requested, or at the time of loan repayment. Earned interest will be allocated according to the fund allocation factors in effect at the time of the transfer. Interest is charged daily and is payable at the end of each policy year or at the time of loan repayment. Unpaid interest will be added to the existing policy indebtedness as of the due date and will be charged interest at the same rate as the rest of the indebtedness. Whenever the total policy indebtedness exceeds the cash value less any surrender charges, Nationwide will send a notice to the policy owner and the assignee, if any. The policy will terminate without value 61 days after the mailing of the notice unless a sufficient repayment is made during that period. A repayment is sufficient if it is large enough to reduce the total policy indebtedness to an amount equal to the total cash value less any surrender charges plus an amount sufficient to continue the policy in force for 3 months. EFFECT ON DEATH BENEFIT AND CASH VALUE A policy loan, whether or not repaid, will have a permanent effect on the death benefit and cash value because the investment results of the variable account or the fixed account will apply only to the non-loaned portion of the cash value. The longer the loan is outstanding, the greater the effect is likely to be. Depending on the investment results of the variable account or the fixed account while the loan is 21 25 outstanding, the effect could be favorable or unfavorable. REPAYMENT All or part of the indebtedness may be repaid at any time while the policy is in force during the insured's lifetime. Any payment intended as a premium payment, rather than a loan repayment, must be identified as such. Loan repayments will be credited to the sub-accounts and the fixed account in proportion to the policy owner's underlying mutual fund allocation factors in effect at the time of the repayment. Each repayment may not be less than $50. Nationwide reserves the right to require that any loan repayments resulting from policy loans transferred from the fixed account must be first allocated to the fixed account. ASSIGNMENT While either insured is living, the policy owner may assign his or her rights in the policy. The assignment must be in writing, signed by the policy owner and recorded at Nationwide's home office. Prior to being recorded, assignments will not affect any payments made or actions taken by Nationwide. Nationwide is not responsible for any assignment not submitted for recording, nor is Nationwide responsible for the sufficiency or validity of any assignment. Assignments are subject to any indebtedness owed to Nationwide before being recorded. POLICY OWNER SERVICES DOLLAR COST AVERAGING Dollar Cost Averaging is a long-term transfer program that allows you to make regular, level investments over time. It involves the automatic transfer of a specified amount from the fixed account and/or certain sub-accounts into other sub-accounts. Nationwide does not guarantee that this program will result in profit or protect policy owners from loss. Policy owners direct Nationwide to automatically transfer specified amounts from the fixed account, Federated Quality Bond Fund II, Fidelity VIP High Income Portfolio, NSAT Government Bond Fund, Federated NSAT High Income Bond Fund, and the NSAT Money Market Fund. Transfers occur monthly or on another frequency if permitted by Nationwide. Nationwide will process transfers until either the value in the originating investment option is exhausted, or the policy owner instructs Nationwide in writing to stop the transfers. 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. Nationwide reserves the right to stop establishing new Dollar Cost Averaging programs. Nationwide reserves the right to assess a processing fee for this service. DEATH BENEFIT INFORMATION CALCULATION OF THE DEATH BENEFIT At issue, the policy owner selects premium and the specified amount, which consists of the basic coverage and the supplemental coverage, if any (see "Underwriting and Issuance"). While the policy is in force, the death benefit will never be less than the specified amount. The death benefit may vary with the cash value of the policy, which depends on investment performance. The policy owner chooses one of two death benefit options. OPTION 1. The death benefit will be the greater of the specified amount or the applicable percentage of cash value (see below). Under Option 1, the amount of the death benefit will ordinarily not change for several years to reflect the investment performance, and may not change at all. If investment performance is favorable, the amount of death benefit may increase. To see how and when investment performance will begin to affect death benefits, please see the illustrations in Appendix B. OPTION 2. The death benefit will be the greater of the specified amount plus the cash value, or the applicable percentage of cash value. Under Option 2, the amount of the death benefit will vary directly with the investment performance. The term "applicable percentage" means the percentage shown in the "Applicable Percentage of Cash Value Table." The applicable percentage depends on whether the policy owner elected the Guideline Premium/Cash Value Corridor Test or the Cash Value Accumulation Test. The following tables illustrate applicable percentages: 22 26 GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST TABLE OF APPLICABLE PERCENTAGES OF CASH VALUE
ATTAINED AGE OF PERCENTAGE OF ATTAINED AGE OF PERCENTAGE OF ATTAINED AGE OF PERCENTAGE OF YOUNGER INSURED CASH VALUE YOUNGER INSURED CASH VALUE YOUNGER INSURED CASH VALUE --------------- ------------- --------------- ------------- --------------- -------------- 0-40 250% 60 130% 80 105% 41 243% 61 128% 81 105% 42 236% 62 126% 82 105% 43 229% 63 124% 83 105% 44 222% 64 122% 84 105% 45 215% 65 120% 85 105% 46 209% 66 119% 86 105% 47 203% 67 118% 87 105% 48 197% 68 117% 88 105% 49 191% 69 116% 89 105% 50 185% 70 115% 90 105% 51 178% 71 113% 91 104% 52 171% 72 111% 92 103% 53 164% 73 109% 93 102% 54 157% 74 107% 94 101% 55 150% 75 105% 95 101% 56 146% 76 105% 96 101% 57 142% 77 105% 97 101% 58 138% 78 105% 98 101% 59 134% 79 105% 99 101% 100 100%
23 27 CASH VALUE ACCUMULATION TEST The Cash Value Accumulation Test also requires the death benefit to exceed an applicable percentage of the cash value. These applicable percentages are the net inverses of net single premiums based on an interest rate of 4% and 1980 CSO guaranteed mortality as prescribed in Internal Revenue Code Section 7702 for the Cash Value Accumulation Test. These premiums vary with the ages, sexes, and risk classifications of the insureds. The table below provides an example of applicable percentages for the Cash Value Accumulation Test. This example is for a male non-tobacco preferred issue age 55 and a female non-tobacco preferred issue age 55.
POLICY PERCENTAGE OF POLICY PERCENTAGE OF POLICY PERCENTAGE OF YEAR CASH VALUE YEAR CASH VALUE YEAR CASH VALUE ------ ------------- ------ ------------- ------ ------------- 1 302% 16 174% 31 121% 2 290% 17 169% 32 119% 3 279% 18 164% 33 118% 4 269% 19 159% 34 116% 5 259% 20 154% 35 115% 6 249% 21 150% 36 113% 7 240% 22 146% 37 112% 8 231% 23 142% 38 111% 9 223% 24 139% 39 110% 10 215% 25 136% 40 108% 11 207% 26 133% 41 107% 12 200% 27 130% 42 106% 13 193% 28 127% 43 104% 14 186% 29 125% 44 103% 15 180% 30 123% 45 102%
CHANGES IN THE DEATH BENEFIT OPTION After the first policy year, the policy owner may change the death benefit option. If the change is from Option 1 to Option 2, the specified amount will be decreased by the amount of the cash value. Basic coverage and supplemental coverage will be decreased proportionally. If the change is from Option 2 to Option 1, the specified amount will be increased by the amount of the cash value. Basic coverage and supplemental coverage will be increased proportionally. Evidence of insurability is not required for a change from Option 2 to Option 1. Nationwide reserves the right to require evidence of insurability for a change from Option 1 to Option 2. The effective date of the change will be the monthly anniversary date on or next following the date Nationwide approves the request for change. Only one change of option is permitted per policy year. A change in death benefit option will not be permitted if it results in the total premiums paid exceeding the then current maximum premium limitations prescribed by the IRS to qualify the policy as a life insurance contract. PROCEEDS PAYABLE ON DEATH The actual death proceeds payable on the death of the last surviving insured will be the death benefit as described above, less any policy indebtedness, and less any unpaid policy charges. Under certain circumstances, the death proceeds may be adjusted (see "Incontestability," "Error in Age or Sex," and "Suicide"). INCONTESTABILITY Nationwide will not contest payment of the death proceeds based on the initial specified amount after the policy has been in force during the lifetimes of both insureds for 2 years from the policy date. For any increase in specified amount requiring evidence of insurability, Nationwide will not contest payment of the death proceeds based on such an increase after it has been in force during the lifetimes of both insureds for 2 years from its effective date. ERROR IN AGE OR SEX If the age or sex of either insured has been misstated, the affected benefits will be adjusted by the ratio of the last monthly cost of insurance deducted to the monthly cost of insurance that would have been deducted based on the true age and sex of each insured. 24 28 SUICIDE If either insured dies by suicide, while sane or insane, within 2 years from the policy date, Nationwide will pay no more than the sum of the premiums paid, less any indebtedness, and less any partial surrenders. If either insured dies by suicide, while sane or insane, within 2 years from the date an application is accepted for an increase in the specified amount, Nationwide will pay no more than the amount paid for the additional benefit. MATURITY PROCEEDS The maturity date is the policy anniversary on or next following the insured's 100th birthday. If the policy is still in force, maturity proceeds are payable to the policy owner on the maturity date. Maturity proceeds are equal to the amount of the policy's cash value, less any indebtedness. RIGHT OF CONVERSION The policy owner may at any time upon written request to Nationwide within 24 months of the policy date, make an irrevocable, one time election to transfer all sub-account cash values to the fixed account. The right of conversion is subject to state availability. GRACE PERIOD GRACE PERIOD WITHOUT DEATH BENEFIT GUARANTEES If the surrender value on a monthly anniversary date is not sufficient to cover the current monthly deduction, and no death benefit guarantee is in effect, a grace period will be allowed for the payment of a premium of at least 4 times the current monthly deduction. Nationwide will send the policy owner a notice at the start of the grace period at the last known address stating the amount of premium required to keep the policy from lapsing. The grace period will end 61 days after the later of the day Nationwide mails the notice or the monthly anniversary date when the surrender value was insufficient. If the required amount is not paid by the end of the grace period, this policy will terminate without value. Nationwide will pay the death proceeds if the death proceeds become payable during the grace period. LIFETIME DEATH BENEFIT GUARANTEE The policy will not lapse if on each monthly anniversary date, (1) is greater than or equal to (2), where: (1) is the sum of all premiums paid to date less any indebtedness and less any previous partial surrenders; and (2) is the sum of the Lifetime Death Benefit Guarantee premiums due since the policy date including such premium for the current monthly anniversary date. The Lifetime Death Benefit Guarantee is not permanently lost when premium payments fall below those required to maintain this benefit. Payment of enough premium to make (1) greater than or equal to (2) restores the benefit. Any increase or decrease in specified amount would increase or decrease the minimum guaranteed amount, respectively. The Lifetime Death Benefit Guarantee premium is shown on the policy data page. The Lifetime Death Benefit Guarantee premium is the same as the IRS Guideline Level Premium. LIMITED DEATH BENEFIT GUARANTEE During the Limited Death Benefit Guarantee period, the policy will not lapse if on each monthly anniversary date (1) is greater than or equal to (2), where: (1) is the sum of all premiums paid to date less any indebtedness and less any previous partial surrenders; and (2) is the sum of the Limited Death Benefit Guarantee premiums due since the policy date including such premium for the current monthly anniversary date. The Limited Death Benefit Guarantee is not permanently lost when premium payments fall below those required to maintain this benefit. Payment of enough premium to make (1) greater than or equal to (2) restores the benefit. Any increase or decrease in specified amount would increase or decrease the minimum guaranteed amount, respectively. The Limited Death Benefit Guarantee period runs from the policy date to the policy anniversary on or next following the younger insured's 75th birthday. The Limited Death Benefit Guarantee premium is shown on the policy data page. For the first 3 policy years, the required premium is calculated from the minimum monthly premium associated with the actual issue age, sex and underwriting class. For policy years 4 and after, the required premium is the percentage of the IRS Guideline Level Premium shown below. 25 29 AVERAGE OF INSUREDS ISSUE AGES UNDER OPTION 1
POLICY SIZE 0-39 40-45 46 47 48 49 50-59 60 OR OLDER ----------- ---- ----- -- -- -- -- ----- ----------- $100,000 - 249,000 50 50 52 54 56 58 60 60 $250,000 - 499,000 50 50 52 54 56 58 60 60 $500,000 or more 50 50 52 54 56 58 60 60
AVERAGE OF INSUREDS ISSUE AGES UNDER OPTION 2*
POLICY SIZE 0-39 40-45 46 47 48 49 50-59 60 OR OLDER ----------- ---- ----- -- -- -- -- ----- ----------- $100,000 - 249,000 20 20 20 21 22 23 24 24 $250,000 - 499,000 20 20 20 21 22 23 24 24 $500,000 or more 20 20 20 21 22 23 24 24
*Shown as a percentage of the Option 2 IRS Guideline Level Premium. REINSTATEMENT If the grace period ends and the policy owner has neither paid the required premium nor surrendered the policy for its cash surrender value, the policy lapses. The policy owner may reinstate the policy provided both insureds are alive on the date of reinstatement by: (1) submitting a written request at any time within 3 years after the end of the grace period and prior to the maturity date; (2) providing evidence of insurability of both insureds satisfactory to Nationwide; (3) paying sufficient premium to cover all policy charges that were due and unpaid during the grace period if the policy terminated in the fourth or later policy year; (4) paying sufficient premium to keep the policy in force for 3 months from the date of reinstatement; and (5) paying or reinstating any indebtedness against the policy which existed at the end of the grace period. The effective date of a reinstated policy will be the monthly anniversary day on or next following the date the application for reinstatement is approved by Nationwide. If the policy is reinstated, the cash value on the date of reinstatement, but prior to applying any premiums or loan repayments received, will be set equal to the lesser of: (1) the cash value at the end of the grace period; or (2) the surrender charge for the policy year in which the policy was reinstated. Unless the policy owner has provided otherwise, all amounts will be allocated based on the underlying mutual fund allocation factors in effect at the start of the grace period. TAX MATTERS POLICY PROCEEDS Section 7702 of the Internal Revenue Code provides that if certain tests are met, a policy will be treated as a life insurance policy for federal tax purposes. Nationwide will monitor compliance with these tests. The policy 26 30 should thus receive the same federal income tax treatment as fixed benefit life insurance. As a result, the death proceeds payable under a policy generally are excludable from gross income of the beneficiary under Section 101 of the Internal Revenue Code. However, if the policy is transferred for valuable consideration, then a portion of the death proceeds may be includable in the beneficiary's gross income. Section 7702A of the Internal Revenue Code defines modified endowment contracts as those life insurance policies issued or materially changed on or after June 21, 1988 on which the total premiums paid during the first seven years exceed the amount that would have been paid if the policy provided for paid up benefits after seven level annual premiums (see "Information about the Policies"). As a general rule, distributions from a life insurance policy (other than a modified endowment contract) during the life of the insured are treated as the non-taxable return of premium, to the extent of premiums previously paid. For this purpose, dividends that are used to purchase riders are treated as distributions; dividends that are used to purchase paid-up additions or to reduce premiums are not treated as distributions. Aggregate amounts distributed in excess of aggregate premiums paid are generally treated as taxable ordinary income. A loan from a life insurance policy that is not a modified endowment contract generally is not treated as a taxable distribution. However, if the total loan is not repaid and is forgiven (such as if the life insurance policy lapses or is surrendered), then the amount of the outstanding loan balance is treated as a distribution to the policy owner and may be treated as ordinary income in whole or in part. The Internal Revenue Code provides special rules for the taxation of surrenders, partial surrenders, loans, collateral assignments and other pre-death distributions from modified endowment contracts (other than certain distributions to terminally ill individuals). Under these special rules, such transactions are taxable to the extent the cash value of the policy exceeds, at the time of distribution, the premiums paid into the policy. In addition, 10% tax penalty generally applies to the taxable portion of such distributions unless the policy owner is over age 59 1/2 or disabled or the distribution is part of a series of substantially equal periodic payments as defined in the Internal Revenue Code. Under certain circumstances, certain distributions made under a policy on the life of a "terminally ill individual", as that term is defined in the Internal Revenue Code, are treated as death proceeds and are subject to the death benefit rules of Section 101 of the Internal Revenue Code described above. The policies offered by this prospectus may or may not be issued as modified endowment contracts. If the policy is not issued as a modified endowment contract, Nationwide will monitor premiums paid and will notify the policy owner when the policy's non-modified endowment status is in jeopardy. If a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued which causes a reduction in death benefits may still become fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Internal Revenue Code. The policy owner should carefully consider this potential effect and seek further information before initiating any changes in the terms of the policy. Under certain conditions, a policy may become a modified endowment or may become subject to a new 7 year testing period, as a result of a material change or a reduction in benefits as defined by Section 7702A(c) of the Internal Revenue Code. In addition to meeting the tests required under Section 7702, Section 817(h) of the Internal Revenue Code requires that the investments of separate accounts, such as the variable account, be adequately diversified. Regulations under 817(h) provide that a variable life policy that fails to satisfy the diversification standards will not be treated as life insurance unless such failure was inadvertent, is corrected, and the policy owner or the issuer pays an amount to the IRS. The amount will be based on the tax that would have been paid by the policy owner if the income, for the period the policy was not diversified, had been received by the policy owner. If the failure to diversify is not corrected in this manner, the policy owner will be deemed to be the owner of the underlying securities and taxed on the earnings of his or her account. Representatives of the IRS have suggested, from time to time, that the number of underlying mutual funds available or the number of transfer opportunities available under a variable product may be relevant in determining whether the product qualifies for the desired tax treatment. No formal guidance has been issued in this area. Should the Secretary of the Treasury issue additional rules or regulations limiting the number of underlying mutual funds, transfers between underlying mutual funds, exchanges of underlying mutual funds or changes in investment objectives of underlying mutual funds such that the policy would no longer qualify as life insurance under Section 7702 of the Internal Revenue Code, Nationwide will take whatever steps are available to remain in compliance. 27 31 Nationwide will monitor compliance with these regulations and, to the extent necessary, will change the objectives or assets of the sub-account investments to remain in compliance. A total surrender or cancellation of the policy by lapse or the maturity of the policy on its maturity date may have adverse tax consequences. If the amount received by the policy owner plus total policy indebtedness exceeds the premiums paid into the policy, then the excess generally will be treated as taxable income, regardless of whether or not the policy is a modified endowment contract. WITHHOLDING Distributions of income from a modified endowment contract are subject to federal income tax withholding; however, the recipient may elect not to have the withholding taken from the distribution. A distribution of income from a modified endowment contract may be subject to mandatory back-up withholding (which cannot be waived). The mandatory back-up withholding rate is 31% of the income that is distributed and will arise of no taxpayer identification number is provided to Nationwide, or if the IRS notifies Nationwide that back-up withholding is required. FEDERAL ESTATE AND GENERATION-SKIPPING TRANSFER TAXES The federal estate tax is integrated with the federal gift tax under a unified tax rate schedule. In general, in 2000, an estate of less than $675,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability. In addition, an unlimited marital deduction may be available for federal estate tax purposes, for certain amounts that pass to the surviving spouse. When the last surviving insured dies, the death benefit will generally be included in such insured's federal gross estate if: (1) the proceeds were payable to or for the benefit of the insured's estate; or (2) the insured held any "incident of ownership" in the policy at death or at any time within three years of death. An incident of ownership is, in general, any right that may be exercised by the policy owner, such as the right to borrow on the policy, or the right to name a new beneficiary. If the policy owner (whether or not he or she is the insured) transfers ownership of the policy to another person, such transfer may be subject to a federal gift tax. In addition, if such policy owner transfers the policy to someone two or more generations younger than the policy owner, the transfer may be subject to the federal generation-skipping transfer tax ("GSTT"), the taxable amount being the value of the policy. Similarly, if the beneficiary is two or more generations younger than the insured, the payment of the death proceeds at the death of the insured may be subject to the GSTT. Pursuant to regulations recently promulgated by the U.S. Secretary of the Treasury, Nationwide may be required to withhold a portion of the death proceeds and pay them directly to the IRS as the GSTT liability. The GSTT provisions generally apply to the same transfers that are subject to estate or gift taxes. The tax rate is a flat rate equal to the maximum estate tax rate (currently 55%), and there is a provision for an aggregate $1 million exemption. Due to the complexity of these rules, the policy owner should consult with counsel and other competent advisors regarding these taxes. NON-RESIDENT ALIENS Pre-death distributions from modified endowment contracts to nonresident aliens ("NRAs") are generally subject to federal income tax and tax withholding, at a statutory rate of 30% of the amount of income that is distributed. Nationwide is required to withhold such amount from the distribution and remit it to the IRS. Distributions to certain NRAs may be subject to lower, or in certain instances zero, tax and withholding rates, if the United States has entered into an applicable treaty. However, in order to obtain the benefits of such treaty provisions, the NRA must give to Nationwide sufficient proof of his or her residency and citizenship in the form and manner prescribed by the IRS. In addition, the NRA must obtain an individual taxpayer identification number from the IRS, and furnish that number to Nationwide prior to the distribution. If Nationwide does not have the proper proof of citizenship or residency and a proper individual taxpayer identification number prior to any distribution, Nationwide will be required to withhold 30% of the income, regardless of any treaty provision. A pre-death distribution may not be subject to withholding where the recipient sufficiently establishes to Nationwide that such payment is effectively connected to the recipient's conduct of a trade or business in the United States and that such payment is includible in the recipient's gross income for United States federal income tax purposes. Any such distributions may be subject to back-up withholding at the statutory rate (currently 31%) if no taxpayer identification number, or an incorrect taxpayer identification number, is provided. 28 32 State and local estate, inheritance, income and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary. TAXATION OF POLICY SPLIT OPTION RIDER The Policy Split Option Rider permits a policy to be split into two other single life insurance contracts upon the occurrence of a divorce of the joint insureds or certain other changes in federal estate tax. A policy split could have adverse tax consequences. It is not clear whether a policy split will be treated as a nontaxable exchange under Section 1035 of the Internal Revenue Code. If a policy split is not treated as a nontaxable exchange, a split could result in the recognition of taxable income in an amount up to any gain in the policy at the time of the split. Additionally, it is not clear whether, in all circumstances, the resulting individual contracts would be treated as life insurance contracts for federal income tax purposes and, if so treated, whether the individual contracts would be classified as modified endowment contracts. Before the policy owner exercises rights provided by the Policy Split Option Rider, it is important that a tax adviser be consulted regarding the possible consequences of a policy split. DESCRIPTION OF CASH VALUE ACCUMULATION TEST AND GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST Section 7702(b)(1) of the Internal Revenue Code provides that if one of two alternate tests is met, a policy will be treated as life insurance for federal tax purposes. The two tests are referred to as the Cash Value Accumulation Test and the Guideline Premium/Cash Value Corridor Test. The Cash Value Accumulation Test generally requires that under the terms of a life insurance policy, the death benefit must be sufficient so that the cash surrender value, as defined in Section 7702(f)(2), does not at any time exceed the net single premium required to fund the future benefits under the policy. The net single premium under the policy will vary according to the age, sex and underwriting classification of the insureds. Under the Cash Value Accumulation Test, there is no limit to the amount that may be paid in premiums as long as there is sufficient death benefit in relation to the account value at all times. A table containing the applicable percentage of cash value can be found in the "How the Death Benefit Varies" section. The Guideline Premium/Cash Value Corridor Test requires that the sum of the premiums paid into the policy does not at any time exceed the guideline premium limitation. Additionally, a minimum corridor of death benefit in relation to account value must be maintained. Policy owners who elect this test are given the option of electing either an Option 1 or Option 2 death benefit. Please refer to "How the Death Benefit Varies" for a detailed explanation. The policy owners must make the election of death benefit qualification tests on the application. Once elected, the death benefit qualification test cannot be changed for the duration of the policy. If no option is designated, the Guideline Premium/Cash Value Corridor Test with an Option 1 death benefit will be assumed by Nationwide to have been selected. Regardless of which test is selected, Nationwide will monitor compliance to assure that the policy meets the statutory definition of life insurance for federal tax purposes. The policy should thus receive the same federal income tax treatment as fixed benefit life insurance. As a result, the death proceeds payable under a policy are excludable from gross income of the beneficiary under Section 101 of the Internal Revenue Code. The policy owner elects either the Cash Value Accumulation Test or the Guideline Premium/Cash Value Corridor Test in the application. This election is irrevocable. TAXATION OF NATIONWIDE Nationwide is taxed as a life insurance company under the Internal Revenue Code. Since the variable account is not a separate entity from Nationwide and its operations form a part of Nationwide, it will not be taxed separately as a "regulated investment company" under Sub-chapter M of the Internal Revenue Code. Investment income and realized capital gains on the assets of the variable account are reinvested and taken into account in determining the value of accumulation units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the policies. Nationwide does not initially expect to incur any federal income tax liability that would be chargeable to the variable account. Based upon these expectations, no charge is currently being made against the variable account for federal income taxes. If, however, Nationwide determines that on a separate company basis such taxes may be incurred, it reserves the right to assess a charge for such taxes against the variable account. Nationwide may also incur state and local taxes (in addition to premium taxes) in several states. At present, 29 33 these taxes are not significant. If they increase, however, charges for such taxes may be made. TAX CHANGES The foregoing discussion, which is based on Nationwide's understanding of federal tax laws as they are currently interpreted by the IRS, is general and is not intended as tax advice. The Internal Revenue Code has been subjected to numerous amendments and changes, and it is reasonable to believe that it will continue to be revised. The United States Congress has, in the past, considered numerous legislative proposals that, if enacted, could change the tax treatment of the policies. It is reasonable to believe that such proposals, and future proposals, may be enacted into law. The U.S. Treasury Department may amend existing regulations, issue new regulations, or adopt new interpretations of existing law that may be at variance with its current positions on these matters. In addition, current state law (which is not discussed herein), and future amendments to state law, may affect the tax consequences of the policy. If the policy owner, insured, or beneficiary or other person receiving any benefit or interest in or from the policy is not both a resident and citizen of the United States, there may be a tax imposed by a foreign country, in addition to any tax imposed by the United States. The foreign law (including regulations, rulings, and case law) may change and impose additional taxes on the policy, the death proceeds, or other distributions and/or ownership of the policy, or a treaty may be amended and all or part of the favorable treatment may be eliminated. Any or all of the foregoing may change from time to time without any notice, and the tax consequences arising out of a policy may be changed retroactively. There is no way of predicting if, when, or to what extent any such change may take place. No representation is made as to the likelihood of the continuation of these current laws, interpretations, and policies. The foregoing is a general explanation as to certain tax matters pertaining to insurance policies. It is not intended to be legal or tax advice, and you should consult your independent legal, tax and/or financial advisor. LEGAL CONSIDERATIONS On July 6, 1983, the U.S. Supreme Court held in Arizona Governing Committee v. Norris that certain annuity benefits provided by employers' retirement and fringe benefit programs may not vary between men and women on the basis of sex. This decision applies only to benefits derived from premiums made on or after August 1, 1983. The policies offered by this prospectus are based upon actuarial tables which distinguish between men and women. Thus the policies provide different benefits to men and women of the same age. Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of Norris on any employment related insurance or benefit program before purchasing this policy. STATE REGULATION Nationwide is subject to the laws of Ohio governing insurance companies and to regulation by the Ohio Insurance Department. An annual statement in a prescribed form is filed with the Insurance Department each year covering the operation of Nationwide for the preceding year and its financial condition as of the end of such year. Regulation by the Insurance Department includes periodic examination to determine Nationwide's contract liabilities and reserves so that the Insurance Department may certify the items are correct. Nationwide's books and accounts are subject to review by the Insurance Department at all times and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners. Such regulation does not, however, involve any supervision of management or investment practices or policies. In addition, Nationwide is subject to regulation under the insurance laws of other jurisdictions in which it may operate. REPORTS TO POLICY OWNERS Nationwide will mail to the policy owner at the last known address of record: o an annual statement containing: the amount of the current death benefit, cash value, cash surrender value, premiums paid, monthly charges deducted, amounts invested in the fixed account and the sub-accounts, and policy indebtedness; o annual and semi-annual reports containing all applicable information and financial statements or their equivalent, which must be sent to the underlying mutual fund beneficial shareholders as required by the rules under the Investment Company Act of 1940 for the variable account; and o statements of significant transactions, such as changes in specified amount, changes in death benefit options, changes in future premium allocations, transfers among sub-accounts, premium payments, loans, loan repayments, reinstatement and termination. 30 34 ADVERTISING Nationwide is ranked and rated by independent financial rating services, including Moody's, Standard & Poor's and A.M. Best Company. The purpose of these ratings is to reflect the financial strength or claims-paying ability of Nationwide. The ratings are not intended to reflect the investment experience or financial strength of the variable account. Nationwide may advertise these ratings from time to time. In addition, Nationwide may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend Nationwide or the policies. Furthermore, Nationwide may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions. LEGAL PROCEEDINGS Nationwide is a party to litigation and arbitration proceedings in the ordinary course of its business, none of which is expected to have a material adverse effect on Nationwide. In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits, relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements. On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court related to the sale of deferred annuity products for use as investments in tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company). On May 3, 1999, the complaint was amended to, among other things, add Marcus Shore as a second plaintiff. The amended complaint is brought as a class action on behalf of all persons who purchased individual deferred annuity contracts or participated in group annuity contracts sold by Nationwide and the other named Nationwide affiliates which were used to fund certain tax-deferred retirement plans. The amended complaint seeks unspecified compensatory and punitive damages. No class has been certified. On June 11, 1999, Nationwide and the other named defendants filed a motion to dismiss the amended complaint. On March 8, 2000, the court denied the motion to dismiss the amended complaint filed by Nationwide and other named defendants. Nationwide intends to defend this lawsuit vigorously. There can be no assurance that any litigation relating to pricing or sales practices will not have a material adverse effect on Nationwide in the future. The general distributor, NISC, is not engaged in any litigation of any material nature. EXPERTS The financial statements of Nationwide Life Insurance Company and Nationwide VLI Separate Account-4 have been included herein in reliance upon the reports of KPMG LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. REGISTRATION STATEMENT A registration statement has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to the policies offered hereby. This prospectus does not contain all the information set forth in the Registration Statement and amendments thereto and exhibits filed as a part thereof, to all of which reference is hereby made for further information concerning the variable account, Nationwide, and the policies offered hereby. Statements contained in this prospectus as to the content of policies and other legal instruments are summaries. For a complete statement of the terms thereof, reference is made to such instruments as filed. DISTRIBUTION OF THE POLICIES The policies will be sold by licensed insurance agents in those states where the policies may lawfully be sold. Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 who are member firms of the National Association of Securities Dealers, Inc. ("NASD"). The policies will be distributed by the general distributor, NISC. NISC was organized as an Oklahoma corporation on March 19, 1974. NISC is a wholly owned subsidiary of Nationwide and a member of the NASD. NISC acts as general distributor for the following separate accounts, all of which are separate investment accounts of Nationwide or its affiliates: o Nationwide VLI Separate Account-2; o Nationwide VLI Separate Account-3; o Nationwide VLI Separate Account-4; o Nationwide VLI Separate Account-5; o Nationwide Multi-Flex Variable Account; o Nationwide Variable Account; o Nationwide Variable Account-II; 31 35 o Nationwide Variable Account-5; o Nationwide Variable Account-6; o Nationwide Variable Account-8; o Nationwide Variable Account-9; o Nationwide Variable Account-10; o Nationwide VA Separate Account-A; o Nationwide VA Separate Account-B; o Nationwide VA Separate Account-C; o Nationwide VL Separate Account-A; o Nationwide VL Separate Account-B; o Nationwide VL Separate Account-C; and o Nationwide VL Separate Account-D. Gross first year commissions plus any expense allowance payments paid by Nationwide on the sale of these policies provided by NISC will not exceed 99% of the target premium plus 4% of any excess premium payments. Gross renewal commissions in years 2 through 10 paid by Nationwide will not exceed 4% of actual premium payment, and will not exceed 2% in policy years 11 and thereafter. No underwriting commissions have been paid by Nationwide to NISC. NATIONWIDE INVESTMENT SERVICES CORPORATION DIRECTORS AND OFFICERS
POSITIONS AND OFFICES NAME AND BUSINESS ADDRESS WITH UNDERWRITER ------------------------- --------------------- W.G. Jurgensen Chief Executive Officer and One Nationwide Plaza Director Columbus, OH 43215 Joseph J. Gasper Chairman of the Board and Director One Nationwide Plaza 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 - Chief Financial Officer One Nationwide Plaza Columbus, OH 43215 Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer One Nationwide Plaza Columbus, OH 43215 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
32 36
POSITIONS AND OFFICES NAME AND BUSINESS ADDRESS WITH UNDERWRITER ------------------------- --------------------- John F. Delaloye Assistant Secretary One Nationwide Plaza Columbus, OH 43215 Glenn W. Soden Associate Vice President and Secretary One Nationwide Plaza Columbus, OH 43215 E. Gary Berndt Assistant Treasurer One Nationwide Plaza Columbus, OH 43215 Carol L. Dove Associate Vice President -Treasury Services and Assistant Treasurer One Nationwide Plaza Columbus, OH 43215 Terry C. Smetzer Assistant Treasurer One Nationwide Plaza Columbus, OH 43215
ADDITIONAL INFORMATION ABOUT NATIONWIDE The life insurance business, including annuities, is the only business in which Nationwide is engaged. Nationwide markets its policies through independent insurance brokers, general agents, and registered representatives of registered NASD broker/dealer firms. Nationwide serves as depositor for the following separate investment accounts, each of which is a registered investment company: o Nationwide Variable Account; o Nationwide Variable Account-II; o Nationwide Variable Account-3; o Nationwide Variable Account-4; o Nationwide Variable Account-5; o Nationwide Variable Account-6; o Nationwide Fidelity Advisor Variable Account; o Nationwide Variable Account-8; o Nationwide Variable Account-9; o Nationwide Variable Account-10; o MFS Variable Account; o Nationwide Multi-Flex Variable Account; o Nationwide VLI Separate Account; o Nationwide VLI Separate Account-2; o Nationwide VLI Separate Account-3; o Nationwide VLI Separate Account-4; and o Nationwide VLI Separate Account-5. Nationwide, in common with other insurance companies, is subject to regulation and supervision by the regulatory authorities of the states in which it is licensed to do business. A license from the state insurance department is a prerequisite to the transaction of insurance business in that state. In general, all states have statutory administrative powers. Such regulation relates, among other things, to licensing of insurers and their agents, the approval of policy forms, the methods of computing reserves, the form and content of statutory financial statements, the amount of policyholders' and stockholders' dividends, and the type of distribution of investments permitted. Nationwide operates in the highly competitive field of life insurance. There are approximately 2,300 stock, mutual and other types of insurers in the life insurance business in the United States, and a large number of them compete with the registrant in the sale of insurance policies. As is customary in insurance company groups, employees are shared with the other insurance companies in the group. In addition to its direct salaried employees, Nationwide shares employees with Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company. Nationwide does not presently own or lease any materially important physical properties when its property holdings are viewed in relation to its total assets. Nationwide shares its home office, other facilities and equipment with Nationwide Mutual Insurance Company. Company Management Nationwide and Nationwide Life and Annuity Insurance Company, together with Nationwide Mutual Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide Property and Casualty Insurance Company and Nationwide General Insurance Company and their 33 37 affiliated companies comprise the Nationwide group of companies. The companies listed above have substantially common boards of directors and officers. Nationwide Financial Services, Inc. ("NFS") is the sole shareholder of Nationwide. NFS serves as a holding company for other financial institutions. Nationwide is the sole owner of Nationwide Life and Annuity Insurance Company. Each of the directors and officers listed below is a director or officer respectively of at least one or more of the other major insurance affiliates of the Nationwide group of companies. Messrs. Gasper and Woodward are also trustees of one or more of the registered investment companies distributed by Nationwide Investment Services Corporation, a registered broker-dealer affiliated with the Nationwide group of companies. DIRECTORS OF NATIONWIDE
DIRECTORS OF THE DEPOSITOR NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES ADDRESS WITH DEPOSITOR PRINCIPAL OCCUPATION --------------------------- --------------------- -------------------- Lewis J. Alphin Director Farm Owner and Operator, Bell Farms(1) 519 Bethel Church Road Mount Olive, NC 28365-6107 A. I. Bell Director Farm Owner and Operator(1) 4121 North River Road West Zanesville, OH 43701 Yvonne M. Curl Director Vice President, Chief Marketing Officer Avaya Inc. Avaya Inc.(2) Room 3C322 211 Mt. Airy Road Basing Ridge, NJ 07920 Kenneth D. Davis Director Farm Owner and Operator(1) 7229 Woodmansee Road Leesburg, OH 45135 Keith W. Eckel Director Partner, Fred W. Eckel Sons; President, Eckel 1647 Falls Road Farms, Inc.(1) Clarks Summit, PA 18411 Willard J. Engel Director Retired General Manager, Lyon County Co-operative 301 East Marshall Street Oil Company(1) Marshall, MN 56258 Fred C. Finney Director Owner and Operator, Moreland Fruit Farm; Operator, 1558 West Moreland Road Melrose Orchard(1) Wooster, OH 44691 Joseph J. Gasper President and Chief President and Chief Operating Officer, Nationwide One Nationwide Plaza Operating Officer and Life Insurance Company and Nationwide Life and Columbus, OH 43215 Director Annuity Insurance Company(1) W.G. Jurgensen Chief Executive Officer Chairman and Chief Executive Officer(3) One Nationwide Plaza and Director Columbus, OH 43215 David O. Miller Chairman of the Board and President, Owen Potato Farm, Inc.; Partner, M&M 115 Sprague Drive Director Enterprises(1) Hebron, OH 43025 Ralph M. Paige Director Executive Director Federation of Southern Federation of Southern Cooperatives/Land Assistance Fund(1) Cooperatives/Land Assistance Fund 2769 Church Street East Point, GA 30344 James F. Patterson Director Vice President, Pattersons, Inc.; President, 8765 Mulberry Road Patterson Farms, Inc.(1) Chesterland, OH 44026 Arden L. Shisler Director President and Chief Executive Officer, K&B 1356 North Wenger Road Transport, Inc.(1) Dalton, OH 44618
34 38
DIRECTORS OF THE DEPOSITOR NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES ADDRESS WITH DEPOSITOR PRINCIPAL OCCUPATION --------------------------- --------------------- -------------------- Robert L. Stewart Director Owner and Operator Sunnydale Farms and Mining(1) 88740 Fairview Road Jewett, OH 43986
(1) Principal occupation for last 5 years. (2) Prior to assuming this current position, Ms. Curl held other executive management positions with the Xerox Corporation. (3) Prior to assuming this current position, Mr. Jurgensen was Executive Vice President of Bank One Corporation. Prior to that, Mr. Jurgensen was Executive Vice President of First Chicago NBD. Each of the directors is a director of the other major insurance affiliates of the Nationwide group of companies except Mr. Gasper who is a director only of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. Mr. Gasper is a director of NISC, a registered broker-dealer. Messrs. Miller, Patterson, and Shisler are directors of Nationwide Financial Services, Inc. Messrs. Gasper and Woodward are trustees of Nationwide Separate Account Trust and Nationwide Asset Allocation Trust, registered investment companies. EXECUTIVE OFFICERS OF NATIONWIDE
OFFICERS OF THE DEPOSITOR NAME AND PRINCIPAL BUSINESS ADDRESS OFFICES OF THE DEPOSITOR ----------------------------------- ------------------------ Richard D. Headley Executive Vice President One Nationwide Plaza Columbus, OH 43215 Michael S. Helfer Executive Vice President -Corporate Strategy One Nationwide Plaza Columbus, OH 43215 Donna A. James Executive Vice President - Chief Administrative Officer One Nationwide Plaza Columbus, OH 43215 Robert A. Oakley Executive Vice President - Chief Financial Officer and Treasurer One Nationwide Plaza Columbus, OH 43215 Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer One Nationwide Plaza Columbus, OH 43215 John R. Cook, Jr. Senior Vice President - Chief Communications Officer One Nationwide Plaza Columbus, OH 43215 Thomas L. Crumrine Senior Vice President One Nationwide Plaza Columbus, OH 43215 David A. Diamond Senior Vice President - Corporate Strategy One Nationwide Plaza Columbus, OH 43215 Philip C. Gath Senior Vice President - Chief Actuary - Nationwide Financial One Nationwide Plaza Columbus, OH 43215 Patricia R. Hatler Senior Vice President, General Counsel and Secretary One Nationwide Plaza Columbus, OH 43215 David K. Hollingsworth Senior Vice President - Business Development and Sponsor One Nationwide Plaza Relations Columbus, OH 43215 David R. Jahn Senior Vice President - Product Management One Nationwide Plaza Columbus, OH 43215
35 39 EXECUTIVE OFFICERS OF NATIONWIDE (CONTINUED)
OFFICERS OF THE DEPOSITOR NAME AND PRINCIPAL BUSINESS ADDRESS OFFICES OF THE DEPOSITOR ----------------------------------- ------------------------ Richard A. Karas Senior Vice President - Sales - Financial Services One Nationwide Plaza Columbus, OH 43215 Gregory S. Lashutka Senior Vice President - Corporate Relations One Nationwide Plaza Columbus, OH 43215 Edwin P. McCausland, Jr. Senior Vice President - Fixed Income Securities One Nationwide Plaza Columbus, OH 43215 Mark D. Phelan Senior Vice President - Technology and Operations One Nationwide Plaza Columbus, OH 43215 Douglas C. Robinette Senior Vice President - Claims One Nationwide Plaza Columbus, OH 43215 Mark R. Thresher Senior Vice President - Finance - Nationwide Financial One Nationwide Plaza Columbus, OH 43215 Richard M. Waggoner Senior Vice President - Operations One Nationwide Plaza Columbus, OH 43215 Susan A. Wolken Senior Vice President - Product Management and Nationwide One Nationwide Plaza Financial Marketing Columbus, OH 43215
W.G. JURGENSEN has been a Director and Chief Executive Officer since 2000. Previously, he was Executive Vice President of Bank One Corporation from 1998 to May 2000. Prior to Bank One's merger with First Chicago NBD, Mr. Jurgensen served from 1990 to 1998 as Executive Vice President with First Chicago, leading various business units. For 17 years, Mr. Jurgensen was with Norwest Corporation, beginning as a corporate banking officer and serving in increasingly responsible roles including president and CEO of Norwest Investment Services and management of the treasury function. Mr. Jurgensen's final post was Executive Vice President - Corporate Banking. JOSEPH J. GASPER has been President and Chief Operating Officer and Director of Nationwide since April 1996. Previously, he was Executive Vice President - Property/Casualty Operations of Nationwide Mutual Insurance Company from April 1995 to April 1996. He was Senior Vice President - Property/Casualty Operations of Nationwide Mutual Insurance Company from September 1993 to April 1995. Prior to that time, Mr. Gasper held numerous positions within Nationwide. Mr. Gasper has been with Nationwide for 34 years. LEWIS J. ALPHIN has been a Director of Nationwide since 1993. Mr. Alphin owns and operates an 800-acre farm in Mt. Olive, NC. He taught agriculture business at James Sprunt Community College in Kenansville, NC for more than 22 years before retiring in 1994. He is the former board chairman of the Cape Fear Farm Credit Association, a member and former vice president, secretary/treasurer, and director of the Duplin County Agribusiness Council, and a former board member of the Southern States Cooperative (1986 to 1993). Mr. Alphin is a member of the Duplin County Farm Bureau, the North Carolina Farm Bureau, ad the Farm Credit Council. He is a member and former director of the Oak Wolfe Fire Department. A. I. BELL has been a Director of Nationwide since April, 1998. Mr. Bell has served as a state trustee of the Ohio Farm Bureau Federation from 1991 to 1998 and as president that last four years. He oversees the Bell family farm in Zanesville, Ohio. The farm is the hub of a multi-family swine network, in addition to grain and beef operations. Mr. Bell has represented the Ohio Farm Bureau at state and national level activities, and has traveled internationally representing Ohio agriculture. In 1995, he was introduced into The Ohio State University Department of Animal Sciences Hall of Fame. YVONNE M. CURL has been a Director of Nationwide since April 1998. Ms. Curl is Vice President - Chief Marketing Officer for Avaya Inc. located in Basking Ridge, NJ. Prior to joining Avaya Inc. in November 2000, she was employed by the Xerox Corporation. She 36 40 joined Xerox in 1976 as a sales representative and progressed through management positions, including vice president - field operations; executive assistant to the chairman and CEO; and as corporate vice president serving as senior vice president and general manager, public sector worldwide/global solutions group. JOHN R. COOK, JR. has been Senior Vice President - Chief Communications Officer since May 1997. Previously, Mr. Cook was Senior Vice President - Chief Communications Officer of USAA from July 1989 to May 1997. Mr. Cook has been with Nationwide for 3 years. THOMAS L. CRUMRINE has been Senior Vice President of Nationwide since September 1997. Previously he was Senior Vice President - Property/Casualty from March 1996 to September 1997. Prior to that time, he was Senior Vice President - Claims from April 1995 to March 1996, Vice President - Claims from 1993 to March 1996, Vice President - Agency Sales from 1991 to 1993 and Vice President - Agency Services from 1989 to 1991. Prior to 1991, Mr. Crumrine held several other positions within Nationwide. KENNETH D. DAVIS has been a Director of Nationwide since April 1999. Mr. Davis is the immediate past president of the Ohio Farm Bureau Federation. He served as a member of the Ohio Farm Bureau Federation's board of trustees from 1989 until 1999. He served as first vice president of the board from 1994 until 1998. Mr. Davis serves on the board of directors of his local rural electric cooperatives and is a member of many agriculture organizations including the Ohio Corn Growers, Ohio Cattlemen's and Ohio Soybean associations. DAVID A. DIAMOND has been Senior Vice President - Corporate Controller since December 11, 2000. Previously, Mr. Diamond was Senior Vice President - Corporate Controller from August 1999 to December 2000. He was Vice President - Controller from October 1993 to August 1999. Prior to that time, Mr. Diamond held several positions within Nationwide. Mr. Diamond has been with Nationwide for 12 years. KEITH W. ECKEL has been a Director of Nationwide since April 1996. Mr. Eckel is a partner of Fred W. Eckel Sons and president of Eckel Farms, Inc. in northeast Pennsylvania. He received the Master Farmer award from Penn State University in 1982. Mr. Eckel is a member of the Pennsylvania Agricultural Land Preservation Board. He is a former president of the Pennsylvania Farm Bureau, a position he held for 15 years, and the Lackawanna County Cooperative Extension Association. He has served as a board member and executive committee member of the American Farm Bureau Federation. He is a former vice president of the Pennsylvania Council of Cooperative Extension Associations and former board member of the Pennsylvania Vegetable Growers Association. WILLARD J. ENGEL has been a Director of Nationwide since 1994. Mr. Engel served as general manager of Lyon County Co-Operative Oil Co. in Marshall, MN from 1975 to 1997, and occasionally serves on a consulting basis. He previously was a division manager of the Truman Farmers Elevator. He is a former director of the Western Co-op Transport in Montevideo, MN, a former director and legislative committee chairman of the Northwest Petroleum Association in St. Paul, and a former director of Farmland Industries in Kansas City. FRED C. FINNEY has been a Director of Nationwide since 1992. Mr. Finney is the owner and operator of the Moreland Fruit Farm and operator of Melrose Orchard in Wooster, OH. He is past president of the Ohio Farm Bureau Federation, the Ohio Fruit Growers Society, Wayne County Farm Bureau, and the Westwood Ruritan Club. He is a member of the American Berry Cooperative. PHILIP C. GATH has been Senior Vice President - Chief Actuary - Nationwide Financial since May 1998. Previously, Mr. Gath was Vice President - Product Manager - Individual Variable Annuity from July 1997 to May 1998. Mr. Gath was Vice President - Individual Life Actuary from August 1989 to July 1997. Prior to that time, Mr. Gath held several positions within Nationwide. Mr. Gath has been with Nationwide for 32 years. PATRICIA R. HATLER has been Senior Vice President, General Counsel and Secretary since April 2000. Previously, she was Senior Vice President and General Counsel from July 1999 to April 2000. Prior to that time, she was General Counsel and Corporate Secretary of Independence Blue Cross from 1983 to July 1999. MICHAEL S. HELFER has been Executive Vice President - Corporate Strategy since August 2000. He is a former partner and head of the financial institutions group at Wilmer, Cutler and Pickering, a 350-lawyer international law firm headquartered in Washington, D.C. He served as that firm's Chairman and Chief Executive Officer from 1995 to 1998. DAVID K. HOLLINGSWORTH has been Senior Vice President - Business Development and Sponsor Relations since April 2000. Previously, he was Senior Vice President - Multi Channel and Sponsor relations from August 1999 until April 2000. Previously, he was Senior Vice President - Marketing from June 1999 to August 1999. Prior to that time, Mr. Hollingsworth held 37 41 numerous positions within Nationwide. Mr. Hollingsworth has been with Nationwide for 26 years. DAVID R. JAHN has been Senior Vice President - Product Management since November 2000. Previously, he was Senior Vice President - Commercial Insurance from March 1998 to November 2000. Previously, he was Vice President - Property/Casualty Operations and Vice President - Resource Management from March 1996 to January 1998. Prior to that time, Mr. Jahn has held numerous positions within Nationwide. Mr. Jahn has been with Nationwide for 29 years. DONNA A. JAMES has been Executive Vice President - Chief Administrative Officer since July 2000. Previously, she was Senior Vice President - Chief Human Resources Officer from May 1999 to July 2000. She was Senior Vice President - Human Resources from December 1997 to May 1999. Previously, she was Vice President - Human Resources from July 1996 to December 1997. Prior to that time, Ms. James was Vice President - Assistant to the CEO of Nationwide from March 1996 to July 1996. From May 1994 to March 1996, she was Associate Vice President - Assistant to the CEO of Nationwide. Previously, Ms. James held several positions within Nationwide. Ms. James has been with Nationwide for 19 years. RICHARD D. HEADLEY has been Executive Vice President for Nationwide since July 2000. Previously, he was Executive Vice President - Chief Information Technology Officer from May 1999 to July 2000. He was Senior Vice President - Chief Information Technology Officer from October 1997 to May 1999. Previously, Mr. Headley was Chairman and Chief Executive Officer of Banc One Services Corporation from 1992 to October 1997. From January 1975 until 1992, Mr. Headley held several positions with Banc One Corporation. Mr. Headley has been with Nationwide for 3 years. RICHARD A. KARAS has been Senior Vice President - Sales - Financial Services since March 1993. Previously, he was Vice President - Sales - Financial Services from February 1989 to March 1993. Prior to that time, Mr. Karas held several positions within Nationwide. Mr. Karas has been with Nationwide for 36 years. GREGORY S. LASHUTKA has been Senior Vice President - Corporate Relations since January 2000. Previously, he was the Mayor of the City of Columbus (Ohio) from January 1992 to December 1999. From January 1986 to December 1991, Mr. Lashutka was a Partner with Squire, Sanders & Dempsey. From January 1978 to December 1985, he was City Attorney for the City of Columbus (Ohio). EDWIN P. MCCAUSLAND, JR. has been Senior Vice President - Fixed Income Securities since 1999. Mr. McCausland has 29 years of experience in insurance investments beginning his career in 1970 with Connecticut Mutual Life Insurance Company. He joined Phoenix Mutual Life Insurance Company in 1981 as second Vice President of Bond Investments and rising to Vice President of Pension Operations. He was Vice President and Managing Director of Mass Mutual Life Insurance Company prior to joining Nationwide. DAVID O. MILLER has been a Director of Nationwide since November 1996. Mr. Miller has been Chairman of the Board since 1998. Mr. Miller is president of Owen Potato Farm, Inc. and a partner of M&M Enterprises in Licking County, OH. He is a director and board chairman of the National Cooperative Business Association, director of Cooperative Business International and the International Cooperative Alliance, and serves on the educational executive committee of the National Council of Farmer Cooperatives. He was president of the Ohio Farm Bureau Federation from 1981 to 1985 and was vice president for six years. Mr. Miller served a two year term on the board of the American Farm Bureau Association. He is past president of the Ohio Vegetable and Potato Growers Association, and was a director of Landmark, Inc., a farm supply cooperative which is now part of Indianapolis-based Countrymark. ROBERT A. OAKLEY has been Executive Vice President - Chief Financial Officer and Treasurer since December 2000. Previously, Mr. Oakley was Executive Vice President - Chief Financial Officer from April 1995 to December 2000. Prior to that, Mr. Oakley was Senior Vice President - Chief Financial Officer from October 1993 to April 1995. Prior to that time, Mr. Oakley held several positions within Nationwide. Mr. Oakley has been with Nationwide for 25 years. RALPH M. PAIGE has been a Director of Nationwide since April 1999. Mr. Paige has been the Executive Director of the Federation of Southern Cooperatives/Land Assistance Fund since 1969. Mr. Paige also served as the National Field Director/Georgia State Director from 1981 to 1984. JAMES F. PATTERSON has been a Director of Nationwide since April 1989. Mr. Patterson is president of Patterson Farms, Inc. and has operated Patterson Fruit Farm in Chesterland, OH since 1964. Mr. Patterson is on the boards of The Ohio State University Hospitals Health System in Cleveland, Geauga Hospital, Inc. and the National Cooperative Business Association. He is past 38 42 president of the Ohio Farm Bureau Federation and former member of Cleveland Foundation's Lake and Geauga Advisory Committees. MARK D. PHELAN has been Senior Vice President - Technology and Operations since December 2000. Previously, he was Senior Vice President - Technology Services from 1998 to December 2000. His previous management experience includes five years (1977 - 1982) with the data processing division's sales group at IBM Corporation. From 1982 through 1990, Mr. Phelan served as Director of AT&T's Consumer Communications Services Group and he was subsequently promoted to Sales Vice President for the Eastern Region of the Business Communications Services Division. In 1992, he became Executive Vice President - Sales and Marketing for the Electronic Commerce Division of Checkfree Corporation, a position he held for five years. From 1997 until 1998, he was in private consulting. DOUGLAS C. ROBINETTE has been Senior Vice President - Claims since November 2000. Previously he was Senior Vice President - Claims and Financial Services from 1999 to November 2000. Prior to that time, Mr. Robinette was Senior Vice President - Marketing and Product Management from May 1998 to 1999. Mr. Robinette was Executive Vice President, Customer Services of Employers Insurance of Wausau, and a member of the Nationwide group until 1998, from September 1996 to May 1998. Prior to that time, he was Executive Vice President, Finance and Insurance Services of Wausau from May 1995 to September 1996. From November 1994 to May 1995, Mr. Robinette was Senior Vice President, Finance and Insurance Services of Wausau. From May 1993 to November 1994, he was Senior Vice President, Finance of Wausau. Prior to that time, Mr. Robinette held several positions within the Nationwide group. Mr. Robinette has been with Nationwide for 14 years. ARDEN L. SHISLER has been a Director of Nationwide since 1984. Mr. Shisler is president and chief executive officer of K&B Transport, Inc., a trucking firm in Dalton, OH. He is a director of the National Cooperative Business Association in Washington, DC. He is a former board member and vice president of the Ohio Farm Bureau Federation and past president of the Ohio Agricultural Marketing Association, an Ohio Farm Bureau Federation subsidiary. He is a member of the Ohio Trucking Association, the Ohio Trucking Safety Council, the Wayne County Farm Bureau, Cornerstone Community Church, the Advisory Committee of The Ohio State University Agriculture Technical Institute and a board member of the Wilderness Center. ROBERT L. STEWART has been a Director of Nationwide since 1989. Mr. Stewart is the owner and operator of Sunnydale Farms and Mining in Jewett, OH. He served on the board of the Ohio Farm Bureau Federation and as president of the Ohio Holstein Association board. Mr. Stewart was a director of the Ohio Agricultural Stabilization and Conservation Service board and Landmark, Inc. a farm supply cooperative which is now part of Indianapolis-based Countrymark. MARK R. THRESHER has been Senior Vice President - Finance - Nationwide Financial since May 1999. He was Vice President - Controller from August 1996 to May 1999. He was Vice President and Treasurer from November 1996 to February 1997. Previously, he was Vice President and Treasurer from June 1996 to November 1996. Prior to joining Nationwide, Mr. Thresher served as a partner with KPMG LLP from July 1988 to June 1996. RICHARD M. WAGGONER has been Senior Vice President - Operations since May 1999. Previously, he was President of Nationwide Services from May 1997 to May 1999. Prior to that time, Mr. Waggoner has held numerous positions within the Nationwide group of companies. Mr. Waggoner has been with Nationwide for 24 years. SUSAN A. WOLKEN has been Senior Vice President - Product Management and Nationwide Financial Marketing since May 1999. Previously, Ms. Wolken was Senior Vice President - Life Company Operations from June 1997 to May 1999. She was Senior Vice President - Enterprise Administration from July 1996 to June 1997. Prior to that time, she was Senior Vice President - Human Resources from April 1995 to July 1996. From September 1993 to April 1995, Ms. Wolken was Vice President - Human Resources. From October 1989 to September 1993 she was Vice President - Individual Life and Health Operations. Ms. Wolken has been with Nationwide for 26 years. ROBERT J. WOODWARD, JR. has been Executive Vice President - Chief Investment Officer since August 1995. Previously, he was Senior Vice President - Fixed Income Investments from March 1991 to August 1995. Prior to that time, Mr. Woodward held several positions within Nationwide. Mr. Woodward has been with Nationwide for 36 years. 39 43 APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS The underlying mutual funds listed below are designed primarily as investments for variable annuity contracts and variable life insurance policies issued by insurance companies. There is no guarantee that the investment objectives will be met. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., 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: 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. AMERICAN CENTURY VP VALUE Investment Objective: 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. CREDIT SUISSE WARBURG PINCUS TRUST (FORMERLY, WARBURG PINCUS TRUST) The Credit Suisse 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"). GLOBAL POST-VENTURE CAPITAL PORTFOLIO (FORMERLY, POST-VENTURE CAPITAL PORTFOLIO) (NOT AVAILABLE IN CONNECTION WITH CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER SEPTEMBER 27, 1999) Investment Objective: Long-term growth of capital by investing primarily in equity securities of U.S. and foreign companies considered to be in their post-venture capital stage of development. Under normal market conditions, the Portfolio will invest at least 65% of its total assets in equity securities of "post-venture capital companies." A post-venture capital company is one that has received venture capital financing either: (a) during the early stages of the company's existence or the early stages of the development of a new product or service; or (b) as part of a restructuring or recapitalization of the company. The Portfolio will invest in at least three countries including the United States. 40 44 INTERNATIONAL EQUITY PORTFOLIO (NOT AVAILABLE IN CONNECTION WITH CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER SEPTEMBER 27, 1999) Investment Objective: Long-term capital appreciation by investing primarily in a broadly diversified portfolio of equity securities of companies, wherever organized, that in the judgment of Credit Suisse have their principal business activities and interests outside the United States. The Portfolio will ordinarily invest substantially all of its assets, but no less than 65% of its total assets, in common stocks, warrants and securities convertible into or exchangeable for common stocks. The Portfolio intends to invest principally in the securities of financially strong companies with opportunities for growth within growing international economies and markets through increased earning power and improved utilization or recognition of assets. VALUE PORTFOLIO (FORMERLY, GROWTH & INCOME PORTFOLIO) (NOT AVAILABLE IN CONNECTION WITH CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER MAY 1, 2000) Investment Objective: Total return by investing primarily in equity securities of value companies that may or may not pay dividends. DREYFUS INVESTMENT PORTFOLIOS Dreyfus Investment Portfolios (the "Fund") is an open-end, management investment company known as a mutual fund. Shares are offered only to variable annuity and variable life insurance separate accounts established by insurance companies to fund variable annuity contracts and variable life insurance policies and to qualified pension and retirement plans. Individuals may not purchase shares directly from the Fund. The Dreyfus Corporation serves as the Fund's investment adviser. EUROPEAN EQUITY PORTFOLIO: INITIAL SHARES Investment Objective: Long-term capital growth. To pursue this goal, the Portfolio generally invests at least 80% of its total assets in stocks included within the universe of the 300 largest European companies. The Portfolio may invest up to 10% of its total assets in the stocks of non-European companies. The Portfolio's stock investments may include common stocks, preferred stocks and convertible securities. THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.: INITIAL SHARES 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 Fund's investment adviser. NCM Capital Management Group, Inc. serves as the Fund's sub-investment adviser and provides day-to-day management of the Fund's portfolio. Investment Objective: Capital growth through equity investment in companies that, in the opinion of the Fund's advisers, not only meet traditional investment standards, but which also show evidence that they conduct their business in a manner that contributes to the enhancement of the quality of life in America. Current income is secondary to the primary goal. DREYFUS STOCK INDEX FUND, INC.: INITIAL SHARES The Dreyfus Stock Index Fund, Inc. is an open-end, non-diversified, management investment company incorporated under Maryland law on January 24, 1989 and commenced operations on September 29, 1989. The Fund offers its shares only as investment vehicles for variable annuity and variable life insurance products of insurance companies. The Dreyfus Corporation ("Dreyfus") serves as the Fund's manager, while Mellon Equity Associates, an affiliate of Dreyfus, serves as the Fund's index manager. Dreyfus is a wholly owned subsidiary of Mellon Bank, N.A., which is a wholly owned subsidiary of Mellon Bank Corporation. Investment Objective: To provide investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price Index. The Fund is neither sponsored by nor affiliated with Standard & Poor's Corporation. 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. The Dreyfus Corporation serves as the Fund's manager. 41 45 APPRECIATION PORTFOLIO: INITIAL SHARES (FORMERLY, CAPITAL APPRECIATION PORTFOLIO) Investment Objective: Primarily 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. Fayez Sarofim & Company serves as the sub-adviser and provides day-to-day management of the Portfolio. 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 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: o at least 65% in income-producing debt securities and preferred stocks, including convertible securities; and o 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. 42 46 VIP II CONTRAFUND(R) PORTFOLIO: SERVICE CLASS Investment Objective: 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 its 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. JANUS ASPEN SERIES The Janus Aspen Series is an open-end management investment company whose shares are offered in connection with investment in and payments under variable annuity contracts and variable life insurance policies, as well as certain qualified retirement plans. Janus Capital Corporation serves as investment adviser to each Portfolio. CAPITAL APPRECIATION PORTFOLIO: SERVICE SHARES Investment Objective: Long-term growth of capital by investing primarily in common stocks selected for their growth potential. The Portfolio may invest in companies of any size, from larger, well-established companies to smaller, emerging growth companies. GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES Investment Objective: Long-term growth of capital by investing primarily in equity securities of U.S. and foreign companies selected for their growth potential. Under normal circumstances, the Portfolio invests at least 65% of its total assets in securities of companies that the Portfolio manager believes will benefit significantly from advances or improvements in technology. INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES Investment Objective: Long-term growth of capital by investing at least 65% of its total assets in securities of issuers from at least five different countries, excluding the United States. Although the Portfolio intends to invest substantially all of its assets in issuers located outside the United States, it may invest in U.S. issuers and it may at times invest all of its assets in fewer than five countries, or even a single country. NATIONWIDE SEPARATE ACCOUNT TRUST Nationwide Separate Account Trust ("NSAT") is a diversified open-end management investment company created under the laws of Massachusetts. NSAT offers shares in the mutual funds listed below, each with its own investment objectives. Shares of NSAT will be sold primarily to separate accounts to fund the benefits under variable life insurance policies and variable annuity contracts issued by life insurance companies. Villanova Global Asset Management Trust, an indirect subsidiary of Nationwide Mutual Insurance Company, manages the assets of the Gartmore NSAT Emerging Markets Fund and Gartmore NSAT International Growth Fund. The remaining 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. DREYFUS NSAT MID CAP INDEX FUND (FORMERLY, NATIONWIDE MID CAP INDEX FUND) (FORMERLY, NATIONWIDE SELECT ADVISERS MID CAP 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. 43 47 FEDERATED NSAT EQUITY INCOME FUND (FORMERLY, NATIONWIDE EQUITY INCOME FUND) Subadviser: Federated Investment Counseling Investment Objective: Above average income and capital appreciation by investing primarily in income producing U.S. and foreign equity securities and securities that are convertible into common stock. FEDERATED NSAT HIGH INCOME BOND FUND (FORMERLY, NATIONWIDE HIGH INCOME BOND FUND) Subadviser: Federated Investment Counseling Investment Objective: High current income by investing at least 65% of the Fund's total assets in corporate bonds that are rated BBB or lower by a rating agency or that are unrated but of comparable quality. Such funds are commonly referred to as "junk bonds." GARTMORE NSAT EMERGING MARKETS FUND Subadviser: Gartmore Global Partners Investment Objective: Long-term capital growth by investing primarily in equity securities of companies located in emerging market countries. GARTMORE NSAT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND Investment Objective: Long-term capital appreciation by investing primarily and at least 65% of its total assets in equity securities issued by U.S. and foreign companies with business operations in technology and communications and/or technology and communication related industries. GARTMORE NSAT INTERNATIONAL GROWTH FUND Subadviser: Gartmore Global Partners Investment Objective: Long-term capital growth by investing primarily in equity securities of companies in Europe, Australia, the Far East and other regions, including developing countries. The Fund invests at least 65% of its assets in established companies located in at least three countries other than the U.S. GOVERNMENT BOND FUND Investment Objective: As high a level of income as is consistent with the preservation of capital by investing at least 65% of its total assets in U.S. government and agency bonds, bills and notes. J.P. MORGAN NSAT BALANCED FUND (FORMERLY, NATIONWIDE BALANCED FUND) Subadviser: J.P. Morgan Investment Management, Inc. Investment Objective: A high total return from a diversified portfolio of equity and fixed income securities. Under normal circumstances, the Fund invests approximately 60% of its assets in equity securities and 40% of its assets in fixed income securities. The equity securities held by the Fund generally are common stocks of large and medium sized companies included in the Standard & Poor's 500 Index. Generally, most of the Fund's fixed income securities will consist of "investment grade" securities, but the Fund may invest securities rated below investment grade or determined by the subadviser to be of comparable quality. These securities are commonly known as junk bonds. MAS NSAT MULTI SECTOR BOND FUND (FORMERLY, NATIONWIDE MULTI SECTOR BOND FUND) Subadviser: Miller, Anderson & Sherrerd, LLP Investment Objective: Primarily seeks above average total return over a market cycle of three to five years. The Fund invests in a diversified portfolio of U.S. and foreign fixed income securities, including high yield securities (commonly referred to as "junk bonds") and emerging markets securities. The subadviser will use futures, swaps and other derivatives in managing the Fund. MONEY MARKET FUND Investment Objective: As high a level of current income as is consistent with the preservation of capital and maintenance of liquidity. 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. The Fund seeks its investment objective through stock selection and management of currency exposure. The Fund invests in approximately fifty stocks of primarily large and midcap companies located throughout the world. 44 48 NATIONWIDE SMALL CAP GROWTH FUND (FORMERLY, NATIONWIDE SELECT ADVISERS SMALL CAP GROWTH FUND) Subadvisers: Miller Anderson & Sherrerd, LLP, Neuberger Berman, LLC and Waddell & Reed Investment Management Company Investment Objective: Capital growth by investing in a broadly diversified portfolio of equity securities issued by U.S. and foreign companies with market capitalizations in the range of companies represented by the Russell 2000, known has small cap companies. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of small cap companies. The balance of the Fund's assets may be invested in equity securities of larger cap companies. NATIONWIDE SMALL CAP VALUE FUND Subadviser: The Dreyfus Corporation Investment Objective: Capital appreciation through investment in a diversified portfolio of equity securities of companies with a medial market capitalization of approximately $1 billion. 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 Index. NATIONWIDE SMALL COMPANY FUND Subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC, Lazard Asset Management, Strong Capital Management, Inc. and Waddell & Reed Investment Management Company Investment Objective: Long-term growth of capital. 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 Index. 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. Investment Objective: Primarily long-term capital appreciation. The Fund invests primarily in common stocks of medium and large-size companies. The subadviser selects stocks of companies that have attractive growth prospects, but are believed to be underpriced. To a limited extent, the Fund may also invest in foreign securities. STRONG NSAT MID CAP GROWTH FUND (FORMERLY, NATIONWIDE STRATEGIC GROWTH FUND) Subadviser: Strong Capital Management Inc. Investment Objective: Capital growth by focusing on common stocks of U.S. and foreign companies that the subadviser believes are reasonably priced and have above-average growth potential. The Fund invests primarily in stocks of medium sized companies but its portfolio can include stocks of companies of any size. TOTAL RETURN FUND Investment Objective: To obtain a reasonable, long-term total return on invested capital. TURNER NSAT GROWTH FOCUS FUND Subadviser: Turner Investment Partners, Inc. Investment Objective: Long-term capital appreciation by investing primarily in U.S. common stocks, ADRs and foreign companies that demonstrate strong earnings growth potential. The Fund is non-diversified and typically focuses its investments in a core group of 20 to 30 common stocks. NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST ("AMT") Neuberger Berman AMT is an open-end, diversified management investment company that offers its portfolios in connection with variable annuity contracts and variable life insurance policies, and certain qualified plans. Prior to May 1, 2000, the portfolios invested through a two-tier master/feeder structure, whereby each portfolio invested its assets in another fund that served as a corresponding "master series;" the master series invested in securities. Effective May 1, 2000, the portfolios converted to a conventional one-tier structure, whereby each portfolio holds its securities directly. Neuberger Berman Management Inc. is the investment adviser. AMT GUARDIAN PORTFOLIO Investment Objective: Long-term capital growth, with current income as a secondary objective. The Portfolio pursues these goals by investing mainly in common stocks of large-capitalization companies. AMT MID-CAP GROWTH PORTFOLIO Investment Objective: Capital growth. The Portfolio pursues this goal by investing mainly in common stocks of mid-capitalization companies. The managers look for fast-growing companies that are in new or rapidly evolving industries and seek to reduce risk by diversifying among many companies, industries and sectors. 45 49 AMT PARTNERS PORTFOLIO Investment Objective: Capital growth. The Portfolio pursues its goal by investing mainly in common stocks of mid- to large-capitalization companies. 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 (FORMERLY, OPPENHEIMER CAPITAL APPRECIATION FUND) 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 (FORMERLY, OPPENHEIMER GROWTH FUND) Investment Objective: Capital appreciation by investing in securities of well-known established companies. Such securities generally have a history of earnings and dividends and are issued by seasoned companies (companies which have an operating history of at least five years including predecessors). Current income is a secondary consideration in the selection of the Fund's portfolio securities. OPPENHEIMER GLOBAL SECURITIES FUND/VA Investment Objective: Long-term capital appreciation by investing a substantial portion of assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special appreciation possibilities. These securities may be considered speculative. OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA (FORMERLY, OPPENHEIMER GROWTH & INCOME FUND) 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. STRONG OPPORTUNITY FUND II, INC. The Strong Opportunity Fund II, Inc. is a diversified, open-end management company commonly called a mutual fund. The Strong Opportunity Fund II, Inc. was incorporated in Wisconsin and may only be purchased by the separate accounts of insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Strong Capital Management, Inc. is the investment adviser for the Fund. Investment Objective: Capital appreciation through investments in a diversified portfolio of equity securities. 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. 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. Morgan Stanley Dean Witter Investment Management, Inc. is the portfolio's investment adviser. MID CAP GROWTH PORTFOLIO Investment Objective: Long-term capital growth by investing primarily in common stocks and other equity securities of issuers with equity capitalizations in the range of the companies represented in the Standard & Poor's Rating Group ("S&P") MidCap 400 Index. Such range is generally $500 million to $6 billion but the range 46 50 fluctuates over time with changes in the equity market. Miller, Anderson & Sherrerd, LLP is the Portfolio's investment adviser. U. S. REAL ESTATE PORTFOLIO Investment Objective: Long-term capital growth by investing principally in a diversified portfolio of securities of companies operating in the real estate industry ("Real Estate Securities"). Current income is a secondary consideration. Real Estate Securities include equity securities, including common stocks and convertible securities, as well as non-convertible preferred stocks and debt securities of real estate industry companies. A "real estate industry company" is a company that derives at least 50% of its assets (marked to market), gross income or net profits from the ownership, construction, management or sale of residential, commercial or industrial real estate. Under normal market conditions, at least 65% of the Fund's total assets will be invested in Real Estate Securities, primarily equity securities of real estate investment trusts. The Portfolio may invest up to 25% of its total assets in securities issued by foreign issuers, some or all of which may also be Real Estate Securities. Morgan Stanley Asset Management, Inc. serves as the Fund's investment adviser. 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: 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. 47 51 APPENDIX B: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES, AND DEATH BENEFITS The illustrations in this prospectus have been prepared to help show how values under the poli ces change with investment performance. The illustrations demonstrate how cash values, cash surrender values and death benefits under a policy would vary over time if the hypothetical gross investment rates of return were a uniform annual effective rate of either 0%, 6% or 12%. If the hypothetical gross investment rate of return averages 0%, 6% or 12% over a period of years, but fluctuates above or below those averages for individual years, the cash values, cash surrender values and death benefits may be different. For hypothetical returns of 0% and 6%, the illustrations also illustrate when the policies would go into default, at which time additional premium payments would be required to continue the policy in force. The illustrations also assume there is not policy indebtedness, no additional premium payments are made, no cash values are allocated to the fixed account, and there are no changes in the specified amount or death benefit option. The amounts shown for the cash value, cash surrender value and death benefit as of each policy anniversary reflect the fact that the net investment return on the assets held in the variable account sub-accounts is lower than the gross return. This is due to the deduction of underlying mutual fund investment advisory fees and other expenses which are equivalent to an annual effective rate of 0.97%. This effective rate is based on the average of the fund expenses, after expense reimbursement, for the preceding year for all mutual fund options available under the policy as of December 31, 2000. Some underlying mutual funds are subject to expense reimbursements and fee waivers. Absent expense reimbursements and fee waivers, the annual effective rate would have been 1.24%. Nationwide anticipates that the expense reimbursement and fee waiver arrangements will continue past the current year. Should there be an increase or decrease in the expense reimbursements and fee waivers of these underlying mutual funds, such change will be reflected in the net asset value of the corresponding underlying mutual fund. Taking into account the underlying mutual fund expenses, gross annual rates of return of 0%, 6% and 12% correspond to net investment experience at constant annual rates of -0.97%, 5.03% and 11.03%, respectively. The illustrations also reflect the fact that Nationwide makes monthly charges for providing insurance protection. Current values reflect current cost of insurance charges and guaranteed values reflect the maximum cost of insurance charges guaranteed in the policy. The values shown are for policies which are issued as standard. Policies issued on a substandard basis would result in lower cash values and death benefits than those illustrated. Death benefit Option 1 has been assumed in all the illustrations. The illustrations reflect that Nationwide deducts a sales load as well as charges for state premium and federal taxes, from each premium payment. The illustrations reflect the fact that no charges for federal or state income taxes are currently made against the variable account. If such a charge is made in the future, it will require a higher gross investment return than illustrated in order to produce the net after-tax returns shown in the illustrations. In addition, the illustrations reflect the fact that Nationwide deducts a monthly administrative charge at the beginning of each policy month. The illustrations also reflect that Nationwide deducts a monthly charge to assume mortality and expense risks. This mortality and expense risk charge is assessed at the beginning of each policy month and is calculated as a percentage of the assets of the variable account only. Policy charges on policies issued for delivery in the State of New York will vary (see "Deductions and Charges") and thereby affect the illustrations. The cash surrender values shown in the illustrations reflect that Nationwide will deduct a surrender charge from the policy's cash value for any policy surrendered in the first fourteen years. Upon request, Nationwide will furnish a comparable illustration based on the proposed insureds' age, sex, smoking classification, rating classification and premium payment requested. 48 52 $12,150 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 1 CURRENT VALUES
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN ---------------------------- ------------------------------ ------------------------------ PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT ------ --------- ----- ----- ------- ----- ----- ------- ----- ----- ------- 1 12,758 10,554 669 1,000,000 11,205 1,320 1,000,000 11,857 1,971 1,000,000 2 26,153 20,859 10,973 1,000,000 22,811 12,925 1,000,000 24,840 14,955 1,000,000 3 40,218 30,902 22,005 1,000,000 34,818 25,921 1,000,000 39,052 30,155 1,000,000 4 54,986 40,672 32,763 1,000,000 47,231 39,322 1,000,000 54,604 46,695 1,000,000 5 70,493 50,153 43,233 1,000,000 60,047 53,127 1,000,000 71,616 64,696 1,000,000 6 86,775 59,330 53,398 1,000,000 73,266 67,334 1,000,000 90,223 84,291 1,000,000 7 103,872 68,181 63,732 1,000,000 86,881 82,432 1,000,000 110,567 106,118 1,000,000 8 121,823 76,674 73,708 1,000,000 100,875 97,909 1,000,000 132,799 129,833 1,000,000 9 140,671 84,770 83,287 1,000,000 115,225 113,742 1,000,000 157,080 155,597 1,000,000 10 160,462 92,428 92,428 1,000,000 129,905 129,905 1,000,000 183,592 183,592 1,000,000 11 181,243 100,645 100,645 1,000,000 146,117 146,117 1,000,000 214,036 214,036 1,000,000 12 203,063 108,394 108,394 1,000,000 162,762 162,762 1,000,000 247,464 247,464 1,000,000 13 225,973 115,654 115,654 1,000,000 179,847 179,847 1,000,000 284,205 284,205 1,000,000 14 250,030 122,403 122,403 1,000,000 197,378 197,378 1,000,000 324,637 324,637 1,000,000 15 275,289 128,607 128,607 1,000,000 215,355 215,355 1,000,000 369,180 369,180 1,000,000 16 301,810 134,438 134,438 1,000,000 233,973 233,973 1,000,000 418,467 418,467 1,000,000 17 329,658 139,924 139,924 1,000,000 253,297 253,297 1,000,000 473,086 473,086 1,000,000 18 358,899 145,100 145,100 1,000,000 273,406 273,406 1,000,000 533,697 533,697 1,000,000 19 389,601 150,030 150,030 1,000,000 294,406 294,406 1,000,000 601,052 601,052 1,000,000 20 421,839 154,824 154,824 1,000,000 316,445 316,445 1,000,000 676,001 676,001 1,000,000 21 455,688 158,683 158,683 1,000,000 338,927 338,927 1,000,000 759,140 759,140 1,000,000 22 491,230 161,467 161,467 1,000,000 361,803 361,803 1,000,000 851,564 851,564 1,000,000 23 528,549 163,020 163,020 1,000,000 385,029 385,029 1,000,000 954,579 954,579 1,002,307 24 567,734 163,155 163,155 1,000,000 408,549 408,549 1,000,000 1,069,016 1,069,016 1,122,467 25 608,878 161,625 161,625 1,000,000 432,289 432,289 1,000,000 1,195,535 1,195,535 1,255,312 26 652,080 158,103 158,103 1,000,000 456,142 456,142 1,000,000 1,335,371 1,335,371 1,402,140 27 697,441 152,160 152,160 1,000,000 479,971 479,971 1,000,000 1,489,869 1,489,869 1,564,362 28 745,071 143,249 143,249 1,000,000 503,613 503,613 1,000,000 1,660,491 1,660,491 1,743,516 29 795,082 130,718 130,718 1,000,000 526,898 526,898 1,000,000 1,848,825 1,848,825 1,941,266 30 847,594 113,812 113,812 1,000,000 549,675 549,675 1,000,000 2,056,593 2,056,593 2,159,423
ASSUMPTIONS: (1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 49 53 $14,000 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 2 CURRENT VALUES
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN ---------------------------- ------------------------------ ------------------------------ PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT ------ --------- ----- ----- ------- ----- ----- ------- ----- ----- ------- 1 14,700 12,258 1,933 1,012,258 13,011 2,686 1,013,011 13,765 3,440 1,013,765 2 30,135 24,238 13,913 1,024,238 26,500 16,175 1,026,500 28,851 18,526 1,028,851 3 46,342 35,927 26,635 1,035,927 40,468 31,176 1,040,468 45,376 36,083 1,045,376 4 63,359 47,311 39,051 1,047,311 54,918 46,658 1,054,918 63,468 55,208 1,063,468 5 81,227 58,370 51,142 1,058,370 69,848 62,620 1,069,848 83,266 76,039 1,083,266 6 99,988 69,085 62,890 1,069,085 85,254 79,059 1,085,254 104,920 98,725 1,104,920 7 119,688 79,431 74,785 1,079,431 101,123 96,477 1,101,123 128,588 123,941 1,128,588 8 140,372 89,369 86,271 1,089,369 117,433 114,336 1,117,433 154,432 151,334 1,154,432 9 162,090 98,852 97,303 1,098,852 134,148 132,599 1,134,148 182,621 181,072 1,182,621 10 184,895 107,830 107,830 1,107,830 151,227 151,227 1,151,227 213,337 213,337 1,213,337 11 208,840 117,405 117,405 1,117,405 169,997 169,997 1,169,997 248,459 248,459 1,248,459 12 233,982 126,431 126,431 1,126,431 189,213 189,213 1,189,213 286,880 286,880 1,286,880 13 260,381 134,876 134,876 1,134,876 208,857 208,857 1,208,857 328,914 328,914 1,328,914 14 288,100 142,710 142,710 1,142,710 228,910 228,910 1,228,910 374,908 374,908 1,374,908 15 317,205 149,887 149,887 1,149,887 249,339 249,339 1,249,339 425,231 425,231 1,425,231 16 347,765 156,603 156,603 1,156,603 270,356 270,356 1,270,356 480,547 480,547 1,480,547 17 379,853 162,887 162,887 1,162,887 292,012 292,012 1,292,012 541,416 541,416 1,541,416 18 413,546 168,777 168,777 1,168,777 314,374 314,374 1,314,374 608,471 608,471 1,608,471 19 448,923 174,347 174,347 1,174,347 337,546 337,546 1,337,546 682,449 682,449 1,682,449 20 486,070 179,727 179,727 1,179,727 361,699 361,699 1,361,699 764,225 764,225 1,764,225 21 525,073 183,963 183,963 1,183,963 385,892 385,892 1,385,892 853,621 853,621 1,853,621 22 566,027 186,888 186,888 1,186,888 409,940 409,940 1,409,940 951,260 951,260 1,951,260 23 609,028 188,315 188,315 1,188,315 433,630 433,630 1,433,630 1,057,813 1,057,813 2,057,813 24 654,179 188,030 188,030 1,188,030 456,705 456,705 1,456,705 1,173,989 1,173,989 2,173,989 25 701,588 185,757 185,757 1,185,757 478,830 478,830 1,478,830 1,300,506 1,300,506 2,300,506 26 751,368 181,136 181,136 1,181,136 499,566 499,566 1,499,566 1,438,067 1,438,067 2,438,067 27 803,636 173,720 173,720 1,173,720 518,355 518,355 1,518,355 1,587,351 1,587,351 2,587,351 28 858,518 162,956 162,956 1,162,956 534,504 534,504 1,534,504 1,748,995 1,748,995 2,748,995 29 916,144 148,238 148,238 1,148,238 547,218 547,218 1,547,218 1,923,637 1,923,637 2,923,637 30 976,651 128,931 128,931 1,128,931 555,632 555,632 1,555,632 2,111,949 2,111,949 3,111,949
ASSUMPTIONS: (1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 50 54 $12,150 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 1 GUARANTEED VALUES
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN ------------------------------ ------------------------------ ------------------------------ PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT ------ --------- ----- ----- ------- ----- ----- ------- ----- ----- ------- 1 12,758 10,545 659 1,000,000 11,196 1,310 1,000,000 11,847 1,961 1,000,000 2 26,153 20,816 10,930 1,000,000 22,766 12,880 1,000,000 24,794 14,908 1,000,000 3 40,218 30,793 21,896 1,000,000 34,703 25,806 1,000,000 38,930 30,033 1,000,000 4 54,986 40,455 32,547 1,000,000 46,999 39,090 1,000,000 54,355 46,446 1,000,000 5 70,493 49,775 42,855 1,000,000 59,635 52,715 1,000,000 71,168 64,248 1,000,000 6 86,775 58,716 52,784 1,000,000 72,590 66,658 1,000,000 89,479 83,547 1,000,000 7 103,872 67,232 62,784 1,000,000 85,826 81,378 1,000,000 109,395 104,946 1,000,000 8 121,823 75,261 72,296 1,000,000 99,291 96,326 1,000,000 131,023 128,057 1,000,000 9 140,671 82,721 81,239 1,000,000 112,913 111,430 1,000,000 154,469 152,986 1,000,000 10 160,462 89,522 89,522 1,000,000 126,606 126,606 1,000,000 179,848 179,848 1,000,000 11 181,243 95,975 95,975 1,000,000 140,970 140,970 1,000,000 208,226 208,226 1,000,000 12 203,063 101,690 101,690 1,000,000 155,296 155,296 1,000,000 239,028 239,028 1,000,000 13 225,973 106,440 106,440 1,000,000 169,484 169,484 1,000,000 272,470 272,470 1,000,000 14 250,030 110,093 110,093 1,000,000 183,417 183,417 1,000,000 308,799 308,799 1,000,000 15 275,289 112,474 112,474 1,000,000 196,936 196,936 1,000,000 348,287 348,287 1,000,000 16 301,810 113,346 113,346 1,000,000 209,828 209,828 1,000,000 391,234 391,234 1,000,000 17 329,658 112,386 112,386 1,000,000 221,802 221,802 1,000,000 437,973 437,973 1,000,000 18 358,899 109,165 109,165 1,000,000 232,473 232,473 1,000,000 488,894 488,894 1,000,000 19 389,601 103,155 103,155 1,000,000 241,371 241,371 1,000,000 544,501 544,501 1,000,000 20 421,839 93,716 93,716 1,000,000 247,962 247,962 1,000,000 605,483 605,483 1,000,000 21 455,688 80,141 80,141 1,000,000 251,649 251,649 1,000,000 672,790 672,790 1,000,000 22 491,230 61,718 61,718 1,000,000 251,761 251,761 1,000,000 747,718 747,718 1,000,000 23 528,549 37,614 37,614 1,000,000 247,522 247,522 1,000,000 832,007 832,007 1,000,000 24 567,734 6,727 6,727 1,000,000 237,963 237,963 1,000,000 927,976 927,976 1,000,000 25 608,878 (*) (*) (*) 221,781 221,781 1,000,000 1,036,963 1,036,963 1,088,811 26 652,080 (*) (*) (*) 197,171 197,171 1,000,000 1,156,948 1,156,948 1,214,795 27 697,441 (*) (*) (*) 161,640 161,640 1,000,000 1,288,797 1,288,797 1,353,237 28 745,071 (*) (*) (*) 111,723 111,723 1,000,000 1,433,494 1,433,494 1,505,168 29 795,082 (*) (*) (*) 42,649 42,649 1,000,000 1,592,059 1,592,059 1,671,662 30 847,594 (*) (*) (*) (*) (*) (*) 1,765,559 1,765,559 1,853,837
ASSUMPTIONS: (1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. (*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 51 55 $14,000 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 2 GUARANTEED VALUES
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN --------------------------- ------------------------------- -------------------------------- PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT ------ --------- ----- ----- ------- ----- ----- ------- ----- ----- --------- 1 14,700 12,248 1,923 1,012,248 13,001 2,676 1,013,001 13,755 3,430 1,013,755 2 30,135 24,194 13,869 1,024,194 26,454 16,129 1,026,454 28,803 18,478 1,028,803 3 46,342 35,816 26,523 1,035,816 40,350 31,057 1,040,350 45,250 35,958 1,045,250 4 63,359 47,087 38,827 1,047,087 54,677 46,417 1,054,677 63,209 54,949 1,063,209 5 81,227 57,975 50,748 1,057,975 69,417 62,189 1,069,417 82,795 75,567 1,082,795 6 99,988 68,440 62,245 1,068,440 84,538 78,343 1,084,538 104,127 97,932 1,104,127 7 119,688 78,428 73,781 1,078,428 99,997 95,351 1,099,997 127,321 122,675 1,127,321 8 140,372 87,864 84,766 1,087,864 115,724 112,626 1,115,724 152,485 149,387 1,152,485 9 162,090 96,654 95,105 1,096,654 131,624 130,076 1,131,624 179,712 178,163 1,179,712 10 184,895 104,692 104,692 1,104,692 147,587 147,587 1,147,587 209,092 209,092 1,209,092 11 208,840 112,466 112,466 1,112,466 164,282 164,282 1,164,282 241,794 241,794 1,241,794 12 233,982 119,261 119,261 1,119,261 180,858 180,858 1,180,858 277,057 277,057 1,277,057 13 260,381 124,942 124,942 1,124,942 197,157 197,157 1,197,157 314,997 314,997 1,314,997 14 288,100 129,354 129,354 1,129,354 212,996 212,996 1,212,996 355,726 355,726 1,355,726 15 317,205 132,299 132,299 1,132,299 228,131 228,131 1,228,131 399,316 399,316 1,399,316 16 347,765 133,512 133,512 1,133,512 242,239 242,239 1,242,239 445,774 445,774 1,445,774 17 379,853 132,643 132,643 1,132,643 254,887 254,887 1,254,887 495,014 495,014 1,495,014 18 413,546 129,237 129,237 1,129,237 265,513 265,513 1,265,513 546,826 546,826 1,546,826 19 448,923 122,758 122,758 1,122,758 273,438 273,438 1,273,438 600,885 600,885 1,600,885 20 486,070 112,636 112,636 1,112,636 277,904 277,904 1,277,904 656,786 656,786 1,656,786 21 525,073 98,284 98,284 1,098,284 278,100 278,100 1,278,100 714,061 714,061 1,714,061 22 566,027 79,048 79,048 1,079,048 273,177 273,177 1,273,177 772,193 772,193 1,772,193 23 609,028 54,398 54,398 1,054,398 262,238 262,238 1,262,238 830,602 830,602 1,830,602 24 654,179 23,783 23,783 1,023,783 244,286 244,286 1,244,286 888,588 888,588 1,888,588 25 701,588 (*) (*) (*) 218,111 218,111 1,218,111 945,204 945,204 1,945,204 26 751,368 (*) (*) (*) 182,209 182,209 1,182,209 999,161 999,161 1,999,161 27 803,636 (*) (*) (*) 134,758 134,758 1,134,758 1,048,775 1,048,775 2,048,775 28 858,518 (*) (*) (*) 73,546 73,546 1,073,546 1,091,918 1,091,918 2,091,918 29 916,144 (*) (*) (*) (*) (*) (*) 1,126,170 1,126,170 2,126,170 30 976,651 (*) (*) (*) (*) (*) (*) 1,148,931 1,148,931 2,148,931
ASSUMPTIONS: (1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. (*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 52 56 APPENDIX C: PERFORMANCE SUMMARY INFORMATION The following performance tables display historical investment results of the underlying mutual fund sub-accounts. This information may be useful in helping potential investors in deciding which underlying mutual fund sub-accounts to choose and in assessing the competence of the underlying mutual funds' investment advisors. The performance figures shown should be considered in light of the investment objectives and policies, characteristics and quality of the underlying portfolios of the underlying mutual funds, and the market conditions during the periods of time quoted. The performance figures should not be considered as estimates or predictions of future performance. Investment return and the principal value of the underlying mutual fund sub-accounts are not guaranteed and will fluctuate so that a policy owner's units, when redeemed, may be worth more or less than their original cost. 53 57 PERFORMANCE TABLES - TOTAL RETURN
Annual Percentage Change Non Annualized Percentage Change ------------------------ ---------------------------------------------------- Fund Unit 1 mo 1 Yr. 2 Yrs. 3 Yrs. 5 yrs. UNDERLYING INVESTMENT Inception Values 1998 1999 2000 To to to to to OPTIONS Date** 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 --------------------- --------- -------- ---- ---- ---- -------- -------- -------- -------- -------- American Century Variable 10/30/97 13.38 26.86 18.02 (10.62) 1.28 (10.62) 5.49 33.83 NA Portfolios, Inc. - American Century VP Income & Growth American Century Variable 05/01/94 16.20 18.76 64.04 (16.83) 5.14 (16.83) 36.44 62.04 119.92 Portfolios, Inc. - American Century VP International American Century Variable 05/01/96 12.28 4.81 (0.85) 18.14 5.71 18.14 17.14 22.77 NA Portfolios, Inc. - American Century VP Value Credit Suisse Warburg 09/30/96 14.12 6.51 63.50 (18.94) 2.92 (18.94) 32.53 41.16 NA Pincus Trust - Global Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) Credit Suisse Warburg 06/30/95 11.98 5.35 53.43 (25.90) 2.70 (25.90) 13.70 19.78 28.77 Pincus Trust - International Equity Portfolio (formerly, Warburg Pincus Trust - International Equity Portfolio) Credit Suisse Warburg 10/31/97 12.97 12.13 6.24 8.91 6.93 8.91 15.71 29.74 NA Pincus Trust - Value Portfolio (formerly, Warburg Pincus Trust - Value Portfolio) (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Dreyfus Investment 04/30/99 12.67 NA NA (2.00) 6.60 (2.00) NA NA NA Portfolios - European Equity Portfolio - Initial Shares The Dreyfus Socially 10/06/93 14.97 29.38 30.08 (11.03) 0.13 (11.03) 15.73 49.73 133.13 Responsible Growth Fund Inc. - Initial Shares Dreyfus Stock Index Fund- 09/29/89 14.03 28.21 20.60 (9.28) 0.49 (9.28) 9.41 40.28 128.54 Initial Shares Dreyfus Variable 04/05/93 14.42 30.22 11.46 (0.65) (0.01) (0.65) 10.73 44.19 131.81 Investment Fund - Appreciation Portfolio- Initial Shares (formerly, Capital Appreciation Portfolio) Federated Insurance Series 04/22/99 10.90 NA NA 10.45 2.00 10.45 NA NA NA - Federated Quality Bond Fund II Fidelity VIP Equity-Income 10/09/86 12.84 11.54 6.25 8.30 4.26 8.30 15.08 28.36 87.85 Portfolio: Service Class* Fidelity VIP Growth 10/09/86 17.02 39.38 37.29 (11.07) 0.23 (11.07) 22.09 70.17 140.96 Portfolio: Service Class Fidelity VIP High Income 09/15/85 7.99 (4.42) 8.07 (22.61) 2.13 (22.61) (16.36) (20.06) 7.18 Portfolio Service Class* Fidelity VIP Overseas 01/28/87 12.97 12.64 42.46 (19.15) 0.25 (19.15) 15.18 29.74 63.85 Portfolio: Service Class* Fidelity VIP II 01/03/95 15.05 29.94 24.15 (6.71) 3.36 (6.71) 15.81 50.48 126.50 Contrafund(R) Portfolio: Service Class* Fidelity VIP III Growth 01/03/95 10.74 24.51 4.18 (17.18) 0.80 (17.18) (13.71) 7.43 65.12 Opportunity Port. Service Class* Janus Aspen Series Capital 05/01/97 8.24 58.11 66.95 (19.35) 2.73 (19.35) 34.64 112.88 NA Appreciation Portfolio: Service Shares Janus Aspen Series Global 01/18/00 6.58 NA NA NA (1.51) NA NA NA NA Portfolio: Service Shares Janus Aspen Series Intl. 05/02/94 8.27 17.24 82.31 (16.97) 0.89 (16.97) 51.38 77.48 183.19 Growth Portfolio: Service Shares NSAT Capital Appreciation 04/15/92 9.96 29.96 4.28 (26.53) (2.25) (26.53) (23.39) (0.43) 68.91 Fund NSAT Dreyfus NSAT Mid Cap 10/31/97 15.44 10.81 20.92 15.21 7.36 15.21 39.31 54.37 NA Index Fund (formerly, Nationwide Mid Cap Index Fund) (formerly, Nationwide Select Advisers Mid Cap Fund) NSAT Federated NSAT Equity 10/31/97 12.19 15.13 18.49 (10.62) 2.38 (10.62) 5.90 21.93 NA Income Fund (formerly, Nationwide Equity Income Fund) NSAT Federated NSAT High 10/31/97 10.01 5.80 3.19 (8.28) 3.01 (8.28) (5.35) 0.14 NA Income Bond Fund (formerly, Nationwide High Income Bond Fund) NSAT Gartmore NSAT 08/30/00 8.71 NA NA NA 3.30 NA NA NA NA Emerging Markets Fund NSAT Gartmore NSAT Global 06/30/00 6.02 NA NA NA (0.87) NA NA NA NA Technology & Communications Fund NSAT Gartmore NSAT 08/30/00 9.25 NA NA NA 4.10 NA NA NA NA International Growth Fund NSAT Government Bond Fund 11/08/82 11.97 8.91 (2.35) 12.54 1.89 12.54 9.90 19.69 35.83 NSAT JP Morgan NSAT 10/31/97 10.86 8.07 0.87 (0.35) 1.28 (0.35) 0.51 8.62 NA Balanced Fund (formerly, Nationwide Balanced Fund) NSAT MAS NSAT Multi Sector 10/31/97 11.01 2.60 1.56 5.65 3.41 5.65 7.30 10.09 NA Bond Fund (formerly, Nationwide Multi Sector Bond Fund) NSAT Money Market Fund 11/10/81 11.70 5.27 4.85 6.03 0.52 6.03 11.17 17.03 29.51 NSAT Nationwide Global 50 10/31/97 12.84 19.14 22.92 (12.32) 3.21 (12.32) 7.78 28.41 NA Fund (formerly, Nationwide Global 50 Equity Fund) Non Annualized Percentage Change Annualized Percentage Change ---------- ---------------------------- Inception 3 Yrs. 5 yrs. Inception UNDERLYING INVESTMENT to to to To OPTIONS 12/31/00 12/31/00 12/31/00 12/31/00 --------------------- ---------- -------- -------- --------- American Century Variable 44.27 10.20 NA 12.26 Portfolios, Inc. - American Century VP Income & Growth American Century Variable 134.44 17.45 17.07 13.64 Portfolios, Inc. - American Century VP International American Century Variable 73.81 7.08 NA 12.58 Portfolios, Inc. - American Century VP Value Credit Suisse Warburg 56.15 12.18 NA 11.05 Pincus Trust - Global Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) Credit Suisse Warburg 38.16 6.20 5.19 6.05 Pincus Trust - International Equity Portfolio (formerly, Warburg Pincus Trust - International Equity Portfolio) Credit Suisse Warburg 34.79 9.07 NA 9.89 Pincus Trust - Value Portfolio (formerly, Warburg Pincus Trust - Value Portfolio) (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Dreyfus Investment 26.62 NA NA 15.21 Portfolios - European Equity Portfolio - Initial Shares The Dreyfus Socially 241.79 14.40 18.45 18.52 Responsible Growth Fund Inc. - Initial Shares Dreyfus Stock Index Fund- 372.79 11.94 17.98 14.80 Initial Shares Dreyfus Variable 240.42 12.97 18.31 17.16 Investment Fund - Appreciation Portfolio- Initial Shares (formerly, Capital Appreciation Portfolio) Federated Insurance Series 8.24 NA NA 4.80 - Federated Quality Bond Fund II Fidelity VIP Equity-Income 496.75 8.68 13.44 13.38 Portfolio: Service Class* Fidelity VIP Growth 763.87 19.39 19.23 16.37 Portfolio: Service Class Fidelity VIP High Income 239.56 (7.19) 1.40 8.33 Portfolio Service Class* Fidelity VIP Overseas 207.59 9.07 10.38 8.40 Portfolio: Service Class* Fidelity VIP II 216.24 14.59 17.76 21.18 Contrafund(R)Portfolio: Service Class* Fidelity VIP III Growth 118.81 2.42 10.55 13.96 Opportunity Port. Service Class* Janus Aspen Series Capital 169.51 28.64 NA 31.07 Appreciation Portfolio: Service Shares Janus Aspen Series Global (34.11) NA NA NA Portfolio: Service Shares Janus Aspen Series Intl. 238.98 21.07 23.14 20.11 Growth Portfolio: Service Shares NSAT Capital Appreciation 151.05 (0.15) 11.05 11.15 Fund NSAT Dreyfus NSAT Mid Cap 53.81 15.57 NA 14.56 Index Fund (formerly, Nationwide Mid Cap Index Fund) (formerly, Nationwide Select Advisers Mid Cap Fund) NSAT Federated NSAT Equity 24.09 6.83 NA 7.05 Income Fund (formerly, Nationwide Equity Income Fund) NSAT Federated NSAT High 2.42 0.05 NA 0.76 Income Bond Fund (formerly, Nationwide High Income Bond Fund) NSAT Gartmore NSAT (24.83) NA NA NA Emerging Markets Fund NSAT Gartmore NSAT Global (24.96) NA NA NA Technology & Communications Fund NSAT Gartmore NSAT (13.70) NA NA NA International Growth Fund NSAT Government Bond Fund 365.31 6.17 6.32 8.84 NSAT JP Morgan NSAT 10.21 2.80 NA 3.12 Balanced Fund (formerly, Nationwide Balanced Fund) NSAT MAS NSAT Multi Sector 11.23 3.26 NA 3.42 Bond Fund (formerly, Nationwide Multi Sector Bond Fund) NSAT Money Market Fund 251.64 5.38 5.31 6.79 NSAT Nationwide Global 50 29.91 8.69 NA 8.62 Fund (formerly, Nationwide Global 50 Equity Fund)
54 58 PERFORMANCE TABLES - TOTAL RETURN
Fund Unit Annual Percentage Change Inception Values --------------------------- UNDERLYING INVESTMENT OPTIONS Date** 12/31/00 1998 1999 2000 ----------------------------- --------- -------- ------ ------ ------ NSAT Nationwide Small-Cap Growth 05/03/99 17.19 NA NA (16.17) Fund (formerly, Nationwide Select Advisers Small Cap Growth Fund) NSAT Nationwide Small Cap Value 10/31/97 13.78 (3.06) 27.84 11.20 NSAT Small Company Fund 10/23/95 15.84 1.01 44.02 8.90 NSAT Nationwide Strategic Value Fund 10/31/97 10.47 0.39 (3.07) 7.61 NSAT Strong NSAT Mid Cap Growth Fund 10/31/97 17.92 14.59 84.75 (15.38) (formerly, Nationwide Strategic Growth Fund) NSAT Total Return Fund 11/08/82 12.36 18.07 6.94 (2.12) NSAT Turner NSAT Return Fund 07/03/95 6.34 NA NA NA Neuberger & Berman AMT Guardian 11/03/97 15.30 31.67 14.93 1.13 Portfolio Neuberger & Berman AMT Mid Cap 11/03/97 19.84 39.28 53.89 (7.46) Growth Portfolios Neuberger & Berman AMT Partners Portfolio 03/22/94 11.27 4.21 7.37 0.70 Oppenheimer Variable Account Funds - 08/15/86 18.31 12.36 83.60 (11.24) Oppenheimer Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) Oppenheimer Variable Account Fund - 04/03/85 17.52 24.00 41.66 (0.23) Capital Appreciation Fund/VA (formerly, Oppenheimer Growth & Income Fund) Oppenheimer Variable Account Funds 06/30/95 9.60 14.10 58.48 5.09 - Oppenheimer Global Securities Fund /VA Oppenheimer Variable Account Funds 07/05/95 11.62 4.70 21.71 (8.78) - Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer Growth Fund) Strong Opportunity Fund II, Inc 06/30/95 9.85 13.54 34.91 6.35 The Universal Institutional Funds, 06/16/97 10.32 (28.38) 29.37 11.39 Inc. - Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio The Universal Institutional Funds, 11/08/82 8.69 NA NA (7.33) Inc. - Mid Cap Growth Portfolio The Universal Institutional Funds, 07/03/95 10.94 (11.62) (3.37) 28.06 Inc. - US Real Estate Portfolio Van Eck Worldwide Insurance Trust - 12/27/95 7.67 (34.13) 100.28 (41.87) Worldwide Emerging Markets Fund Van Eck Worldwide Insurance Trust - 09/01/89 9.31 (30.97) 21.00 11.40 Worldwide Hard Assets Fund Non Annualized Percentage Change Annualized Percentage Change ----------------------------------------------------------- ------------------------------ 1 mo 1 Yr 2 Yrs 3 Yrs. 5 yrs. Inception 3 Yrs. 5 yrs. Inception To to to to to to to to To UNDERLYING INVESTMENT OPTIONS 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 ----------------------------- -------- -------- -------- -------- -------- --------- -------- -------- -------- NSAT Nationwide Small-Cap Growth 7.27 (16.17) NA NA NA 71.86 NA NA 38.61 Fund (formerly, Nationwide Select Advisers Small Cap Growth Fund) NSAT Nationwide Small Cap Value 7.53 11.20 42.15 37.80 NA 35.58 11.28 NA 10.09 NSAT Small Company Fund 9.13 8.90 56.83 58.42 128.34 161.16 16.57 17.95 20.33 NSAT Nationwide Strategic Value Fund 6.25 7.61 4.31 4.71 NA 6.42 1.55 NA 1.98 NSAT Strong NSAT Mid Cap Growth Fund 13.44 (15.38) 56.34 79.16 NA 83.09 21.45 NA 21.04 (formerly, Nationwide Strategic Growth Fund) NSAT Total Return Fund 0.61 (2.12) 4.67 23.59 94.91 1106.41 7.32 14.28 14.71 NSAT Turner NSAT Return Fund (0.50) NA NA NA NA (40.30) NA NA NA Neuberger & Berman AMT Guardian 3.17 1.13 16.23 53.04 NA 61.00 15.24 NA 16.27 Portfolio Neuberger & Berman AMT Mid Cap 6.79 (7.46) 42.41 98.35 NA 132.47 25.65 NA 30.62 Growth Portfolios Neuberger & Berman AMT Partners 5.89 0.70 8.12 12.67 91.61 155.48 4.06 13.89 14.85 Portfolio Oppenheimer Variable Account Funds - 2.67 (11.24) 62.97 83.11 145.85 826.36 22.34 19.71 16.75 Oppenheimer Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) Oppenheimer Variable Account Fund - 3.26 (0.23) 41.33 75.25 177.99 992.62 20.56 22.69 16.40 Capital Appreciation Fund/VA (formerly, Oppenheimer Growth & Income Fund) Oppenheimer Variable Account Funds 5.53 5.09 66.55 90.04 174.06 333.84 23.86 22.34 15.58 - Oppenheimer Global Securities Fund /VA Oppenheimer Variable Account Funds 2.16 (8.78) 11.03 16.25 104.07 155.61 5.15 15.33 18.65 - Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer Growth Fund) Strong Opportunity Fund II, Inc 6.85 6.35 43.48 62.91 141.47 357.67 17.67 19.28 19.24 The Universal Institutional Funds, 3.31 11.39 44.11 3.21 NA 4.01 1.06 NA 1.12 Inc. - Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio The Universal Institutional Funds, 7.58 (7.33) NA NA NA 28.25 NA NA 23.01 Inc. - Mid Cap Growth Portfolio The Universal Institutional Funds, 6.00 28.06 23.74 9.36 86.69 102.27 3.03 13.30 13.69 Inc. - US Real Estate Portfolio Van Eck Worldwide Insurance Trust - (2.47) (41.87) 16.43 (23.31) (14.02) (14.88) (8.46) (2.98) (3.15) Worldwide Emerging Markets Fund Van Eck Worldwide Insurance Trust - 11.97 11.40 34.80 (6.95) 8.02 63.62 (2.37) 1.55 4.44 Worldwide Hard Assets Fund
The preceding table displays three types of total return. Simply stated, total return shows the percent change in unit values, with dividends and capital gains reinvested, after the deduction of a 0.55% asset charge (and the deduction of applicable investment advisory fees and other expenses of the underlying mutual funds). The total return figures shown in the Annual Percentage Change and Annualized Percentage Change columns represent annualized figures, i.e., they show the rate of growth that would have produced the corresponding cumulative return had performance been constant over the entire period quoted. The Non-Annualized Percentage Change total return figures are not annual return figures but instead represent the total percentage change in unit value over the stated periods without annualization. THE TOTAL RETURN FIGURES DO NOT TAKE INTO ACCOUNT THE SEVERAL OTHER POLICY CHARGES WHICH ARE DESCRIBED IN THE "POLICY CHARGES" SECTION. THESE OTHER CHARGES INCLUDE DEDUCTIONS FROM PREMIUMS, COST OF INSURANCE CHARGES, SURRENDER CHARGES AND A MONTHLY ADMINISTRATIVE CHARGE. **The underlying mutual fund Inception Date is the date the underlying mutual fund first became effective, which is not necessarily the same date the underlying mutual fund was first made available through the variable account. For those underlying mutual funds which have not been offered as sub-accounts through the variable account for one of the quoted periods, the total return figures will show the investment performance such underlying mutual funds would have achieved (reduced by the 0.55% asset charge and Fund investment advisory fees and expenses) had they been offered as sub-accounts through the variable account for the period quoted. Certain underlying mutual funds are not as old as some of the periods quoted, therefore, total return figures may not be available for all of the periods shown. 55 59
PERFORMANCE TABLE - CASH VALUES --------------------------------------------------------------------------------------- 1 YEAR TO 12/31/00 2 YEARS TO 12/31/00 3 YEARS TO 12/31/00 ---------- ----------------------- ----------------------- ----------------------- FUND CASH CASH CASH INCEPTION ACCUM SURR. ACCUM SURR. ACCUM SURR. UNDERLYING INVESTMENT OPTIONS DATE** VALUE VALUE VALUE VALUE VALUE VALUE ----------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- American Century Variable Portfolios, 10/30/97 $ 15,691 $ 4,854 $ 34,085 $ 23,248 $ 57,249 $ 46,413 Inc. - American Century VP Income & Growth American Century Variable Portfolios, 05/01/94 $ 14,585 $ 3,748 $ 38,426 $ 27,589 $ 66,518 $ 55,682 Inc. - American Century VP International American Century Variable Portfolios, 05/01/96 $ 20,766 $ 9,929 $ 41,160 $ 30,323 $ 62,305 $ 51,469 Inc. - American Century VP Value Credit Suisse Warburg Pincus Trust - 09/30/96 $ 14,266 $ 3,429 $ 37,425 $ 26,588 $ 61,789 $ 50,953 Global Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) Credit Suisse Warburg Pincus Trust - 06/30/95 $ 12,969 $ 2,133 $ 32,828 $ 21,992 $ 53,525 $ 42,689 International Equity Portfolio (formerly, Warburg Pincus Trust - International Equity Portfolio) Credit Suisse Warburg Pincus Trust - 10/31/97 $ 19,140 $ 8,303 $ 39,314 $ 28,478 $ 61,709 $ 50,872 Value Portfolio (formerly, Warburg Pincus Trust - Value Portfolio) (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Dreyfus Investment Portfolios - 04/30/99 $ 17,230 $ 6,394 NA NA NA NA European Equity Portfolio - Initial Shares The Dreyfus Socially Responsible 10/06/93 $ 15,637 $ 4,800 $ 35,848 $ 25,011 $ 61,782 $ 50,945 Growth Fund Inc. - Initial Shares Dreyfus Stock Index Fund Initial 09/29/89 $ 15,936 $ 5,100 $ 35,028 $ 24,191 $ 59,318 $ 48,481 Shares Dreyfus Variable Investment Fund - 04/05/93 $ 17,469 $ 6,632 $ 36,769 $ 25,933 $ 61,748 $ 50,912 Appreciation Fund - Initial Shares (formerly, Capital Appreciation Fund) Federated Insurance Series - 04/22/99 $ 19,438 $ 8,602 NA NA NA NA Federated Quality Bond Fund II Fidelity VIP Equity-Income Portfolio: 10/09/86 $ 19,035 $ 8,199 $ 39,094 $ 28,257 $ 61,241 $ 50,404 Service Class* Fidelity VIP Growth Portfolio: 10/09/86 $ 15,641 $ 4,804 $ 36,982 $ 26,145 $ 66,505 $ 55,668 Service Class Fidelity VIP High Income Portfolio 09/15/85 $ 13,566 $ 2,729 $ 28,140 $ 17,304 $ 41,884 $ 31,047 Service Class* Fidelity VIP Overseas Portfolio: 01/28/87 $ 14,172 $ 3,335 $ 34,287 $ 23,451 $ 56,724 $ 45,887 Service Class* Fidelity VIP II Contrafund(R) 01/03/95 $ 16,390 $ 5,553 $ 36,600 $ 25,764 $ 62,652 $ 51,816 Portfolio: Service Class* Fidelity VIP III Growth Opportunity 01/03/95 $ 14,528 $ 3,692 $ 29,542 $ 18,706 $ 48,104 $ 37,267 Port. Service Class* Janus Aspen Series Capital 05/01/97 $ 14,157 $ 3,320 $ 37,757 $ 26,920 $ 74,786 $ 63,949 Appreciation Portfolio: Service Janus Aspen Series Global Technology 01/18/00 NA NA NA NA NA NA Portfolio: Service Shares Janus Aspen Series International 05/02/94 $ 14,595 $ 3,758 $ 41,082 $ 30,245 $ 71,849 $ 61,012 Growth Portfolio: Service Shares NSAT Capital Appreciation Fund 04/15/92 $ 12,891 $ 2,054 $ 26,231 $ 15,395 $ 43,464 $ 32,627 NSAT Dreyfus NSAT Mid Cap Index Fund 10/31/97 $ 20,312 $ 9,476 $ 44,613 $ 33,777 $ 71,252 $ 60,415 (formerly, Nationwide Mid Cap Index Fund) (formerly, Nationwide Select Advisers Mid Cap Fund) NSAT Federated NSAT Equity Income 10/31/97 $ 15,716 $ 4,879 $ 34,188 $ 23,352 $ 55,243 $ 44,406 Fund (formerly, Nationwide Equity Income Fund) NSAT Federated NSAT High Income Bond 10/31/97 $ 16,108 $ 5,272 $ 32,586 $ 21,749 $ 49,842 $ 39,006 Fund (formerly, Nationwide High Income Bond Fund) NSAT Gartmore NSAT Emerging Markets 08/30/00 NA NA NA NA NA NA Fund --------------------------------------------------------------------------- 5 YEARS TO 12/31/00 10 YEARS TO 12/31/00 INCEPTION TO 12/31/00 ----------------------- ----------------------- ----------------------- CASH CASH CASH ACCUM SURR. ACCUM SURR. ACCUM SURR. UNDERLYING INVESTMENT OPTIONS VALUE VALUE VALUE VALUE VALUE VALUE ---------- ---------- ---------- ---------- ---------- ---------- American Century Variable Portfolios, NA NA NA NA $ 82,116 $ 71,821 Inc. - American Century VP Income & Growth American Century Variable Portfolios, $ 136,909 $ 127,156 NA NA $ 207,813 $ 199,143 Inc. - American Century VP International American Century Variable Portfolios, NA NA NA NA $ 115,206 $ 105,453 Inc. - American Century VP Value Credit Suisse Warburg Pincus Trust - NA NA NA NA $ 113,115 $ 103,362 Global Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) Credit Suisse Warburg Pincus Trust - $ 95,279 $ 85,526 NA NA $ 111,997 $ 102,786 International Equity Portfolio (formerly, Warburg Pincus Trust - International Equity Portfolio) Credit Suisse Warburg Pincus Trust - NA NA NA NA $ 82,736 $ 72,441 Value Portfolio (formerly, Warburg Pincus Trust - Value Portfolio) (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Dreyfus Investment Portfolios - NA NA NA NA $ 38,938 $ 28,102 European Equity Portfolio - Initial Shares The Dreyfus Socially Responsible $ 134,592 $ 124,840 NA NA $ 271,280 $ 263,153 Growth Fund Inc. - Initial Shares Dreyfus Stock Index Fund Initial $ 130,364 $ 120,611 $ 432,397 $ 425,353 $ 557,147 $ 552,270 Shares Dreyfus Variable Investment Fund - $ 133,017 $ 123,265 NA NA $ 287,126 $ 278,998 Appreciation Fund - Initial Shares (formerly, Capital Appreciation Fund) Federated Insurance Series - NA NA NA NA $ 38,151 $ 27,314 Federated Quality Bond Fund II Fidelity VIP Equity-Income Portfolio: $ 121,313 $ 111,560 $ 405,997 $ 398,953 $ 777,686 $ 777,686 Service Class* Fidelity VIP Growth Portfolio: $ 143,663 $ 133,910 $ 490,190 $ 483,146 $1,040,024 $1,040,024 Service Class Fidelity VIP High Income Portfolio $ 76,058 $ 66,305 $ 216,749 $ 209,705 $ 466,990 $ 466,990 Service Class* Fidelity VIP Overseas Portfolio: $ 109,299 $ 99,546 $ 286,516 $ 279,472 $ 480,060 $ 478,435 Service Class* Fidelity VIP II Contrafund(R) $ 133,271 $ 123,518 NA NA $ 186,972 $ 177,761 Portfolio: Service Class* Fidelity VIP III Growth Opportunity $ 100,124 $ 90,371 NA NA $ 137,154 $ 127,943 Port. Service Class* Janus Aspen Series Capital NA NA NA NA $ 109,962 $ 99,667 Appreciation Portfolio: Service Janus Aspen Series Global Technology NA NA NA NA $ 11,558 $ 0,721 Portfolio: Service Shares Janus Aspen Series International $ 156,410 $ 146,657 NA NA $ 258,205 $ 249,536 Growth Portfolio: Service Shares NSAT Capital Appreciation Fund $ 95,290 $ 85,537 NA NA $ 243,986 $ 236,401 NSAT Dreyfus NSAT Mid Cap Index Fund NA NA NA NA $ 94,466 $ 84,171 (formerly, Nationwide Mid Cap Index Fund) (formerly, Nationwide Select Advisers Mid Cap Fund) NSAT Federated NSAT Equity Income NA NA NA NA $ 74,864 $ 64,569 Fund (formerly, Nationwide Equity Income Fund) NSAT Federated NSAT High Income Bond NA NA NA NA $ 69,183 $ 58,889 Fund (formerly, Nationwide High Income Bond Fund) NSAT Gartmore NSAT Emerging Markets NA NA NA NA $ 13,547 $ 2,710 Fund
56 60
PERFORMANCE TABLE - CASH VALUES ------------------------------------------------------------------------------------------- 1 YEAR TO 12/31/00 2 YEARS TO 12/31/00 3 YEARS TO 12/31/00 ---------------------- ---------------------- -------------------- FUND CASH CASH CASH INCEPTION ACCUM SURR. ACCUM SURR. ACCUM SURR. UNDERLYING INVESTMENT OPTIONS DATE** VALUE VALUE VALUE VALUE VALUE VALUE ----------------------------------- --------- -------- -------- -------- -------- -------- -------- NSAT Gartmore NSAT Global 06/30/00 NA NA NA NA NA NA Technology & Communications Fund NSAT MAS NSAT Multi Sector 10/31/97 $ 18,584 $ 7,748 $ 37,250 $ 26,413 $ 56,202 $ 45,365 Bond Fund (formerly, Nationwide Multi Sector Bond Fund) NSAT Money Market Fund 11/10/81 $ 18,657 $ 7,820 $ 38,017 $ 27,181 $ 58,185 $ 47,348 NSAT Nationwide Global 50 10/31/97 $ 15,392 $ 4,555 $ 34,194 $ 23,358 $ 56,401 $ 45,565 Fund (formerly, Nationwide Global 50 Equity Fund) NSAT Nationwide Small-Cap 05/03/99 $ 14,739 $ 3,902 NA NA NA NA Growth Fund (formerly, Nationwide Select Advisers Small Cap Growth Fund) NSAT Nationwide Small Cap 10/31/97 $ 19,600 $ 8,763 $ 44,437 $ 33,600 $ 68,141 $ 57,305 Value NSAT Small Company Fund 10/23/95 $ 19,187 $ 8,350 $ 46,560 $ 35,724 $ 73,856 $ 63,020 NSAT Nationwide Strategic 10/31/97 $ 18,929 $ 8,093 $ 37,070 $ 26,233 $ 55,052 $ 44,216 Value Fund NSAT Strong NSAT Mid Cap 10/31/97 $ 14,891 $ 4,055 $ 42,315 $ 31,478 $ 73,290 $ 62,454 Growth Fund (formerly, Nationwide Strategic Growth Fund) NSAT Total Return Fund 11/08/82 $ 17,211 $ 6,374 $ 35,450 $ 24,614 $ 56,807 $ 45,971 NSAT Turner NSAT Return 07/03/95 NA NA NA NA NA NA Fund Neuberger & Berman AMT 11/03/97 $ 17,794 $ 6,958 $ 38,076 $ 27,240 $ 64,646 $ 53,810 Guardian Portfolio Neuberger & Berman AMT Mid 11/03/97 $ 16,313 $ 5,476 $ 41,165 $ 30,328 $ 75,581 $ 64,745 Cap Growth Portfolios Neuberger & Berman AMT 03/22/94 $ 17,697 $ 6,860 $ 36,538 $ 25,701 $ 55,944 $ 45,107 Partners Portfolio Oppenheimer Variable Account 08/15/86 $ 15,671 $ 4,834 $ 44,245 $ 33,408 $ 75,909 $ 65,072 Funds - Oppenheimer Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) Oppenheimer Variable Account 04/03/85 $ 17,576 $ 6,739 $ 42,282 $ 31,446 $ 72,624 $ 61,787 Fund - Capital Appreciation Fund/VA (formerly, Oppenheimer Growth & Income Fund) Oppenheimer Variable Account 06/30/95 $ 18,518 $ 7,682 $ 47,651 $ 36,814 $ 80,525 $ 69,688 Funds - Oppenheimer Global Securities Fund /VA Oppenheimer Variable Account 07/05/95 $ 16,031 $ 5,194 $ 35,415 $ 24,578 $ 55,461 $ 44,624 Funds - Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer Growth Fund) Strong Opportunity Fund II, Inc 06/30/95 $ 18,722 $ 7,885 $ 43,814 $ 32,977 $ 71,984 $ 61,148 The Universal Institutional 06/16/97 $ 19,621 $ 8,785 $ 44,798 $ 33,961 $ 62,419 $ 51,583 Funds, Inc. - Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio The Universal Institutional 11/08/82 $ 16,315 $ 5,479 NA NA NA NA Funds, Inc. - Mid Cap Growth Portfolio The Universal Institutional 07/03/95 $ 22,593 $ 11,756 $ 44,129 $ 33,292 $ 62,866 $ 52,029 Funds, Inc. - US Real Estate Portfolio Van Eck Worldwide Insurance 12/27/95 $ 10,154 $ 0,683 $ 30,584 $ 19,747 $ 43,627 $ 32,790 Trust - Worldwide Emerging Markets Fund Van Eck Worldwide Insurance 09/01/89 $ 19,598 $ 8,761 $ 43,144 $ 32,308 $ 58,991 $ 48,154 Trust - Worldwide Hard Assets Fund
PERFORMANCE TABLE - CASH VALUES ------------------------------------------------------------------------------ 5 YEARS TO 12/31/00 10 YEARS TO 12/31/00 INCEPTION TO 12/31/00 ---------------------- ---------------------- ---------------------- CASH CASH CASH ACCUM SURR. ACCUM SURR. ACCUM SURR. UNDERLYING INVESTMENT OPTIONS VALUE VALUE VALUE VALUE VALUE VALUE ----------------------------------- -------- -------- -------- -------- -------- -------- NSAT Gartmore NSAT Global NA NA NA NA $ 13,471 $ 2,635 Technology & Communications Fund NSAT MAS NSAT Multi Sector NA NA NA NA $ 75,737 $ 65,442 Bond Fund (formerly, Nationwide Multi Sector Bond Fund) NSAT Money Market Fund $101,006 $ 91,253 $220,118 $213,074 $603,590 $603,590 NSAT Nationwide Global 50 NA NA NA NA $ 77,822 $ 67,527 Fund (formerly, Nationwide Global 50 Equity Fund) NSAT Nationwide Small-Cap NA NA NA NA $ 45,311 $ 34,474 Growth Fund (formerly, Nationwide Select Advisers Small Cap Growth Fund) NSAT Nationwide Small Cap NA NA NA NA $ 91,386 $ 81,091 Value NSAT Small Company Fund $144,513 $134,760 NA NA $178,040 $168,829 NSAT Nationwide Strategic NA NA NA NA $ 76,172 $ 65,877 Value Fund NSAT Strong NSAT Mid Cap NA NA NA NA $ 99,523 $ 89,228 Growth Fund (formerly, Nationwide Strategic Growth Fund) NSAT Total Return Fund $117,442 $107,689 $368,306 $361,262 $1,346,568 $1,346,568 NSAT Turner NSAT Return NA NA NA NA $ 10,683 $ 0,154 Fund Neuberger & Berman AMT NA NA NA NA $ 86,322 $ 76,027 Guardian Portfolio Neuberger & Berman AMT Mid NA NA NA NA $109,967 $ 99,673 Cap Growth Portfolios Neuberger & Berman AMT $113,939 $104,187 NA NA $196,196 $187,526 Partners Portfolio Oppenheimer Variable Account $152,825 $143,072 $507,212 $500,168 $1,063,425 $1,063,425 Funds - Oppenheimer Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) Oppenheimer Variable Account $158,233 $148,480 $529,169 $522,125 $1,279,285 $1,279,285 Fund - Capital Appreciation Fund/VA (formerly, Oppenheimer Growth & Income Fund) Oppenheimer Variable Account $167,144 $157,391 $471,195 $464,151 $506,242 $499,740 Funds - Oppenheimer Global Securities Fund /VA Oppenheimer Variable Account $116,712 $106,959 NA NA $147,245 $138,034 Funds - Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer Growth Fund) Strong Opportunity Fund II, Inc $148,144 $138,391 NA NA $373,648 $366,063 The Universal Institutional NA NA NA NA $ 77,271 $ 66,976 Funds, Inc. - Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio The Universal Institutional NA NA NA NA $ 37,690 $ 26,854 Funds, Inc. - Mid Cap Growth Portfolio The Universal Institutional $117,229 $107,476 NA NA $144,825 $135,614 Funds, Inc. - US Real Estate Portfolio Van Eck Worldwide Insurance $ 69,625 $ 59,872 NA NA $ 90,202 $ 80,991 Trust - Worldwide Emerging Markets Fund Van Eck Worldwide Insurance $ 92,646 $ 82,893 $219,204 $212,161 $262,289 $257,413 Trust - Worldwide Hard Assets Fund
57 61 **The underlying mutual fund Inception Date is the date the underlying mutual fund first became effective, which is not necessarily the same date the underlying mutual fund was first made available through the variable account. For those underlying mutual funds which have not been offered as sub-accounts through the variable account for one of the quoted periods, the cash values will show the investment performance such underlying mutual funds would have achieved (reduced by any applicable variable account and policy charges, and underlying mutual fund investment advisory fees and expenses) had they been offered as sub-accounts through the variable account for the period quoted. Certain underlying mutual funds are not as old as some of the periods quoted, therefore, the cash values may not be available for all of the periods shown. The preceding cash value performance table shows the effect of the performance quoted on accumulated values and cash surrender values, based on a hypothetical annual premium of $20,000 for a 55 year-old male and a 55 year-old female, non-tobacco preferred, with a level death benefit and an initial specified amount of $958,894. The cash surrender value figures reflect the deduction of all applicable policy charges, including a 0.55% asset charge, applicable cost of insurance charges, surrender charges, and an annual administrative charge (and the deduction of applicable investment advisory fees and other expenses of the underlying mutual funds). See the "Policy Charges" section for more information about these charges. The cost of insurance charges may be higher or lower for purchasers who do not meet the profile of the hypothetical purchaser. Illustrations reflecting a potential purchaser's specific characteristics are available from Nationwide upon request. 58 62 1 -------------------------------------------------------------------------------- Independent Auditors' Report ---------------------------- The Board of Directors of Nationwide Life Insurance Company and Contract Owners of Nationwide VLI Separate Account-4: We have audited the accompanying statement of assets, liabilities and contract owners' equity of Nationwide VLI Separate Account-4 (comprised of the sub-accounts listed in note 1(b)) (collectively, "the Account") as of December 31, 2000, and the related statements of operations and changes in contract owners' equity for each of the years in the two year period then ended and for the period February 18, 1998 (commencement of operations) through December 31, 1998, and the financial highlights for each of the years in the two year period then ended and for the period February 18, 1998 (commencement of operations) through December 31, 1998. These financial statements and financial highlights are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights 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, 2000, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Account as of December 31, 2000, the results of its operations and its changes in contract owners' equity for each of the years in the two year period then ended and for the period February 18, 1998 (commencement of operations) through December 31, 1998, and the finan- cial highlights for each of the years in the two year period then ended and for the period February 18, 1998 (commencement of operations) through December 31, 1998, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Columbus, Ohio February 16, 2001 -------------------------------------------------------------------------------- 2 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY DECEMBER 31, 2000
ASSETS: Investments at fair value: American Century VP - American Century VP Income & Growth (ACVPIncGr) 3,520,844 shares (cost $26,492,915) ............................................... $ 25,033,199 American Century VP - American Century VP International (ACVPInt) 4,327,440 shares (cost $50,107,521) ............................................... 44,269,706 American Century VP - American Century VP Value (ACVPValue) 1,110,522 shares (cost $6,655,647) ................................................ 7,407,179 The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGr) 478,283 shares (cost $17,868,978) ................................................. 16,486,409 Dreyfus Stock Index Fund (DryStkIx) 6,822,189 shares (cost $247,280,744) .............................................. 231,954,425 Dreyfus IP - European Equity Portfolio (DryEuroEq) 97,382 shares (cost $1,422,509) ................................................... 1,458,779 Dreyfus VIF - Appreciation Portfolio (DryVApp) 829,567 shares (cost $32,580,787) ................................................. 32,278,459 Federated Insurance Series - Quality Bond Fund II (FedQualBd2) 4,888,937 shares (cost $49,393,596) ............................................... 52,409,408 Fidelity VIP - Equity-Income Portfolio - Service Class (FidVEqInS) 1,123,826 shares (cost $26,958,864) ............................................... 28,601,378 Fidelity VIP - Growth Portfolio - Service Class (FidVGrS) 2,288,448 shares (cost $112,282,101) .............................................. 99,547,490 Fidelity VIP - High Income Portfolio - Service Class (FidVHiInS) 1,742,262 shares (cost $17,700,937) ............................................... 14,199,438 Fidelity VIP - Overseas Portfolio - Service Class (FidVOvSeS) 1,219,554 shares (cost $26,879,872) ............................................... 24,317,914 Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVConS) 2,001,473 shares (cost $50,647,030) ............................................... 47,374,866 Fidelity VIP-III - Growth Opportunities Portfolio - Service Class (FidVGrOpS) 800,720 shares (cost $16,998,621) ................................................. 14,172,737 Gartmore NSAT - Emerging Markets Fund (NSATEmMGM) 2,782 shares (cost $20,588) ....................................................... 20,895 Gartmore NSAT - Global Technology & Communications Fund (NSATGTecGM) 75,628 shares (cost $751,824) ..................................................... 555,867 Gartmore NSAT - International Growth Fund (NSATIntGGM) 2,891 shares (cost $24,686) ....................................................... 24,946
3 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, CONTINUED Janus Aspen Series - Capital Appreciation Portfolio - Service Shares (JanACapApS) 835,840 shares (cost $25,584,669) ................................................. 22,183,187 Janus Aspen Series - Global Technology Portfolio - Service Shares (JanAGlTchS) 2,391,105 shares (cost $21,271,695) ............................................... 15,661,738 Janus Aspen Series - International Growth Portfolio - Service Shares (JanAIntGrS) 607,844 shares (cost $21,433,733) ................................................. 18,624,342 Nationwide SAT - Balanced Fund - J.P. Morgan (NSATBalJPM) 679,412 shares (cost $7,039,214) .................................................. 6,787,329 Nationwide SAT - Capital Appreciation Fund (NSATCapAp) 1,479,309 shares (cost $34,225,912) ............................................... 21,716,260 Nationwide SAT - Equity Income Fund - Federated (NSATEqIFED) 180,950 shares (cost $2,405,433) .................................................. 2,169,595 Nationwide SAT - Global 50 Fund (NSATGlob50) 2,316,205 shares (cost $30,284,783) ............................................... 26,983,784 Nationwide SAT - Government Bond Fund (NSATGvtBd) 4,350,728 shares (cost $48,110,219) ............................................... 49,772,326 Nationwide SAT - High Income Bond Fund - Federated (NSATHiIFED) 1,949,660 shares (cost $17,083,991) ............................................... 15,363,317 Nationwide SAT - Mid Cap Growth Fund - Strong (NSATMCpSTR) 1,663,974 shares (cost $34,257,943) ............................................... 27,671,892 Nationwide SAT - Mid Cap Index Fund - Dreyfus (NSATMCIxDR) 494,827 shares (cost $6,960,647) .................................................. 6,704,912 Nationwide SAT - Money Market Fund (NSATMMkt) 232,950,632 shares (cost $232,950,632) ............................................ 232,950,632 Nationwide SAT - Multi Sector Bond Fund - MAS (NSATMBdMAS) 2,835,859 shares (cost $26,553,198) ............................................... 26,316,776 Nationwide SAT - Small Cap Growth Fund (NSATSmCapG) 433,027 shares (cost $7,290,920) .................................................. 7,032,358 Nationwide SAT - Small Cap Value Fund (NSATSmCapV) 1,751,521 shares (cost $17,697,372) ............................................... 15,238,231 Nationwide SAT - Small Company Fund (NSATSmCo) 2,150,419 shares (cost $46,873,187) ............................................... 43,008,379 Nationwide SAT - Strategic Value Fund (NSATStrVal) 122,367 shares (cost $1,221,340) .................................................. 1,228,560 Nationwide SAT - Total Return Fund (NSATTotRtn) 2,841,975 shares (cost $46,180,109) ............................................... 33,080,588 Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard) 341,544 shares (cost $5,466,763) .................................................. 5,440,792 Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr) 1,637,648 shares (cost $43,888,979) ............................................... 36,814,318 Neuberger & Berman AMT - Partners Portfolio (NBAMTPart) 601,581 shares (cost $10,164,616) ................................................. 9,727,567
4 Oppenheimer Aggressive Growth Fund/VA (OppAggGrVA) 805,091 shares (cost $73,635,576) ................................................................ 56,976,278 Oppenheimer Capital Appreciation Fund/VA (OppCapApVA) 966,962 shares (cost $47,676,455) ................................................................ 45,089,423 Oppenheimer Global Securities Fund/VA (OppGlSecVA) 132,214 shares (cost $3,939,556) ................................................................. 4,010,040 Oppenheimer Main Street Growth & Income Fund/VA (OppMGrInVA) 981,886 shares (cost $22,848,695) ................................................................ 20,874,887 Strong Opportunity Fund II, Inc. (StOpp2) 211,464 shares (cost $5,540,840) ................................................................. 5,062,438 Turner NSAT - Growth Focus Fund (NSATGFocTU) 13,155 shares (cost $82,744) ..................................................................... 78,534 The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio ((MSUEmMkt) (formerly Morgan Stanley - Emerging Markets Debt Portfolio) 216,626 shares (cost $1,602,945) .................................................................. 1,496,887 The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio (MSUMCapGr) (formerly Morgan Stanley - Mid Cap Growth Portfolio) 68,097 shares (cost $939,349) ..................................................................... 840,998 The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio (MSUUSRealE) (formerly Van Kampen American Capital - Morgan Stanley U.S. Real Estate Portfolio) 437,348 shares (cost $4,980,785) .................................................................. 5,033,881 Van Eck WIT - Worldwide Emerging Markets Fund (VEWwEmgMkt) 435,385 shares (cost $4,582,831) ................................................................. 3,609,340 Van Eck WIT - Worldwide Hard Assets Fund (VEWwHrdAst) 109,063 shares (cost $1,275,365) ................................................................. 1,316,394 Warburg Pincus Trust - Global Post Venture Capital Portfolio (WPTGloPVC) 191,645 shares (cost $2,340,455) ................................................................. 2,431,981 Warburg Pincus Trust - International Equity Portfolio (WPTIntEq) 225,970 shares (cost $3,107,770) ................................................................. 2,424,657 Warburg Pincus Trust - Value Portfolio (WPTValue) 81,531 shares (cost $1,588,695) .................................................................. 1,110,451 ----------- Total investments.............................................................................. 1,414,946,167 Accounts receivable .................................................................................... - ----------- Total assets .................................................................................. 1,414,946,167 ACCOUNTS PAYABLE........................................................................................... 53,726 ----------- CONTRACT OWNERS' EQUITY (NOTE 7) .......................................................................... $ 1,414,892,441 ===========
See accompanying notes to financial statements. 5 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
Total ACVPincGr ------------------------------------------- ------------------------------- 2000 1999 1998 2000 1999 ------------- ------------- ------------- ------------- ------------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 21,039,631 6,784,764 795,996 89,434 345 Mortality and expense risk charges (note 3) ... (1,473,980) (382,102) (7,523) (33,218) (4,870) ------------- ------------- ------------- ------------- ------------- Net investment income ....................... 19,565,651 6,402,662 788,473 56,216 (4,525) ------------- ------------- ------------- ------------- ------------- Proceeds from mutual funds shares sold ...... 537,305,272 201,999,339 61,803,110 4,190,922 4,238,041 Cost of mutual fund shares sold ............. (520,733,854) (195,191,587) (62,074,770) (4,127,013) (3,971,748) ------------- ------------- ------------- ------------- ------------- Realized gain (loss) on investment .......... 16,571,418 6,807,752 (271,660) 63,909 266,293 Change in unrealized gain (loss) on investments .............................. (178,984,942) 42,568,531 6,208,890 (2,277,235) 692,513 ------------- ------------- ------------- ------------- ------------- Net gain (loss) on investments .............. (162,413,524) 49,376,283 5,937,230 (2,213,326) 958,806 ------------- ------------- ------------- ------------- ------------- Reinvested capital gains ...................... 50,385,356 6,941,880 597,466 -- -- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (92,462,517) 62,720,825 7,323,169 (2,157,110) 954,281 ============= ============= ============= ============= ============= ACVPincGr ACVPint --------------- --------------------------------------------- 1998 2000 1999 1998 ------------- ------------- ------------- ------------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 5,125 29,817 -- 355 Mortality and expense risk charges (note 3) ... (86) (43,822) (3,029) (173) ------------- ------------- ------------- ------------- Net investment income ....................... 5,039 (14,005) (3,029) 182 ------------- ------------- ------------- ------------- Proceeds from mutual funds shares sold ...... 60,422 11,287,808 2,517,615 613,620 Cost of mutual fund shares sold ............. (58,667) (8,439,891) (1,889,551) (614,510) ------------- ------------- ------------- ------------- Realized gain (loss) on investment .......... 1,755 2,847,917 628,064 (890) Change in unrealized gain (loss) on investments .............................. 125,007 (10,029,310) 4,031,727 159,768 ------------- ------------- ------------- ------------- Net gain (loss) on investments .............. 126,762 (7,181,393) 4,659,791 158,878 ------------- ------------- ------------- ------------- Reinvested capital gains ...................... -- 445,800 -- 3,644 ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 131,801 (6,749,598) 4,656,762 162,704 ============= ============= ============= =============
ACVPValue DrySRGr ---------------------------------------------- -------------------------------- 2000 1999 1998 2000 1999 ------------- ------------- ------------- ------------- ------------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 29,260 9,053 169 133,052 1,039 Mortality and expense risk charges (note 3) ... (2,491) (698) (44) (5,466) (849) ------------- ------------- ------------- ------------- ------------- Net investment income ....................... 26,769 8,355 125 127,586 190 ------------- ------------- ------------- ------------- ------------- Proceeds from mutual funds shares sold ........ 5,835,158 1,027,473 216,392 1,524,094 620,665 Cost of mutual fund shares sold ............... (5,829,916) (1,065,502) (220,562) (1,237,290) (483,300) ------------- ------------- ------------- ------------- ------------- Realized gain (loss) on investments ......... $ 5,242 (38,029) (4,170) 286,804 137,365 Change in unrealized gain (loss) on investments .............................. 865,295 (142,040) 28,277 (2,392,732) 901,808 ------------- ------------- ------------- ------------- ------------- Net gain (loss) on investments .............. 870,537 (180,069) 24,107 (2,105,928) 1,039,173 ------------- ------------- ------------- ------------- ------------- Reinvested capital gains ...................... 74,870 85,768 1,997 -- 279,678 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 972,176 (85,946) 26,229 (1,978,342) 1,319,041 ============= ============= ============= ============= ============= DrySRGr DryStkix ----------- ---------------------------------------------- 1998 2000 1999 1998 ------------ ------------- ------------- ------------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 2,114 1,776,028 694,199 64,671 Mortality and expense risk charges (note 3) ... (96) (301,447) (80,224) (1,001) ------------ ------------- ------------- ------------- Net investment income ....................... 2,018 1,474,581 613,975 63,670 ------------ ------------- ------------- ------------- Proceeds from mutual funds shares sold ........ 292,403 17,394,755 3,651,059 2,855,607 Cost of mutual fund shares sold ............... (279,293) (13,809,069) (3,038,322) (2,928,820) ------------ ------------- ------------- ------------- Realized gain (loss) on investments ......... 13,110 3,585,686 612,737 (73,213) Change in unrealized gain (loss) on investments .............................. 108,355 (27,898,576) 11,117,238 1,455,019 ------------ ------------- ------------- ------------- Net gain (loss) on investments .............. 121,465 (24,312,890) 11,729,975 1,381,806 ------------ ------------- ------------- ------------- Reinvested capital gains ...................... 47,900 3,654,055 672,634 12,311 ------------ ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 171,383 (19,184,254) 13,016,584 1,457,787 ============ ============= ============= =============
6 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
DryEuroEq DryVApp ---------------------------------------- ------------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 3,040 266 -- 209,082 102,225 Mortality and expense risk charges (note 3) ... (647) -- -- (61,134) (19,902) ----------- ----------- ----------- ----------- ----------- Net investment income ....................... 2,393 266 -- 147,948 82,323 ----------- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 4,915,237 9,724 -- 5,802,885 6,596,135 Cost of mutual fund shares sold ............... (4,976,743) (9,364) -- (5,449,137) (6,226,765) ----------- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (61,506) 360 -- 353,748 369,370 Change in unrealized gain (loss) on investments .............................. 26,273 9,997 -- (1,102,409) 649,339 ----------- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. (35,233) 10,357 -- (748,661) 1,018,709 ----------- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... 39,799 1,251 -- 355,671 68,742 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 6,959 11,874 -- (245,042) 1,169,774 =========== =========== =========== =========== =========== DryVApp FedQualBd2 ------------- ---------------------------------------- 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 7,616 284,124 -- -- Mortality and expense risk charges (note 3) ... (108) (36,034) (3,162) -- ----------- ----------- ----------- ----------- Net investment income ....................... 7,508 248,090 (3,162) -- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 191,690 5,070,565 193,269 -- Cost of mutual fund shares sold ............... (192,584) (4,943,810) (195,176) -- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (894) 126,755 (1,907) -- Change in unrealized gain (loss) on investments .............................. 150,742 2,975,611 40,201 -- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. 149,848 3,102,366 38,294 -- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- -- -- -- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 157,356 3,350,456 35,132 -- =========== =========== =========== ===========
FidVEqinS FidVGrS ---------------------------------------- ------------------------------ 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 275,597 97,065 -- 46,538 8,639 Mortality and expense risk charges (note 3) ... (12,713) (3,265) (402) (106,544) (12,917) ----------- ----------- ----------- ----------- ----------- Net investment income ....................... 262,884 93,800 (402) (60,006) (4,278) ----------- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 8,769,366 2,794,623 1,186,510 8,193,032 1,070,026 Cost of mutual fund shares sold ............... (9,316,337) (2,491,032) (1,221,597) (6,947,939) (923,816) ----------- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (546,971) 303,591 (35,087) 1,245,093 146,210 Change in unrealized gain (loss) on investments .............................. 1,470,791 (277,459) 449,182 (19,309,179) 6,093,883 ----------- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. 923,820 26,132 414,095 (18,064,086) 6,240,093 ----------- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... 1,063,019 214,564 -- 5,556,689 543,154 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 2,249,723 334,496 413,693 (12,567,403) 6,778,969 =========== =========== =========== =========== =========== FidVGrS FidVHiInS ------------- ---------------------------------------- 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- 711,532 364,862 -- Mortality and expense risk charges (note 3) ... (249) (21,719) (1,521) (245) ----------- ----------- ----------- ----------- Net investment income ....................... (249) 689,813 363,341 (245) ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 759,197 5,669,988 926,716 848,212 Cost of mutual fund shares sold ............... (750,697) (6,842,047) (1,041,180) (901,996) ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... 8,500 (1,172,059) (114,464) (53,784) Change in unrealized gain (loss) on investments .............................. 480,684 (3,641,858) 103,063 37,295 ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. 489,184 (4,813,917) (11,401) (16,489) ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- -- 13,640 -- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 488,935 (4,124,104) 365,580 (16,734) =========== =========== =========== ===========
(Continued) 7 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
FidVOvSeS FidVConS ------------------------------------------- -------------------------------- 2000 1999 1998 2000 1999 ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 217,766 21,110 -- 93,712 26,713 Mortality and expense risk charges (note 3) ... (49,878) (9,859) (75) (27,798) (4,360) ------------ ------------ ------------ ------------ ------------ Net investment income ....................... 167,888 11,251 (75) 65,914 22,353 ------------ ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 23,478,026 7,592,272 528,529 2,681,172 1,218,202 Cost of mutual fund shares sold ............... (25,243,216) (6,861,807) (553,402) (2,152,820) (1,003,352) ------------ ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... (1,765,190) 730,465 (24,873) 528,352 214,850 Change in unrealized gain (loss) on investments .............................. (4,479,931) 1,849,661 68,313 (6,926,956) 3,006,379 ------------ ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. $ (6,245,121) 2,580,126 43,440 (6,398,604) 3,221,229 ------------ ------------ ------------ ------------ ------------ Reinvested capital gains ...................... 1,409,432 34,048 -- 3,401,735 195,897 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ (4,667,801) 2,625,425 43,365 (2,930,955) 3,439,479 ============ ============ ============ ============ ============ FidVConS FidVGrOpS -------------- ----------------------------------------- 1998 2000 1999 1998 ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .................... $ -- 125,878 28,246 -- Mortality and expense risk charges (note 3) ....................... (330) (11,570) (3,130) (168) ------------ ------------ ------------ ------------ Net investment income ................. (330) 114,308 25,116 (168) ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold .. 974,276 2,790,417 613,535 309,151 Cost of mutual fund shares sold ......... (947,452) (2,995,674) (559,981) (296,203) ------------ ------------ ------------ ------------ Realized gain (loss) on investments ... 26,824 (205,257) 53,554 12,948 Change in unrealized gain (loss) on investments ........................ 648,413 (3,225,818) 137,134 262,800 ------------ ------------ ------------ ------------ Net gain (loss) on investments ........ 675,237 (3,431,075) 190,688 275,748 ------------ ------------ ------------ ------------ Reinvested capital gains ................ -- 662,022 55,207 -- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........................ $ 674,907 (2,654,745) 271,011 275,580 ============ ============ ============ ============
NSATEmMGM NSATGTecGM ------------------------------------------- -------------------------------- 2000 1999 1998 2000 1999 ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- -- -- -- Mortality and expense risk charges (note 3) ... -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Net investment income ....................... -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 641,425 -- -- 9,643 -- Cost of mutual fund shares sold ............... (644,443) -- -- (14,069) -- ------------ ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... (3,018) -- -- (4,426) -- Change in unrealized gain (loss) on investments .............................. 336 -- -- (195,957) -- ------------ ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. (2,682) -- -- (200,383) -- ------------ ------------ ------------ ------------ ------------ Reinvested capital gains ...................... -- -- -- 10,013 -- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ (2,682) -- -- (190,370) -- ============ ============ ============ ============ ============ NSATGTecGM NSATIntGGm ------------ --------------------------------------------- 1998 2000 1999 1998 ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- -- -- Mortality and expense risk charges (note 3) ... -- -- -- -- ------------ ------------ ------------ ------------ Net investment income ....................... -- -- -- -- ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ -- 355,202 -- -- Cost of mutual fund shares sold ............... -- (354,541) -- -- ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... -- 661 -- -- Change in unrealized gain (loss) on investments .............................. -- 260 -- -- ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. -- 921 -- -- ------------ ------------ ------------ ------------ Reinvested capital gains ...................... -- -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ -- 921 -- -- ============ ============ ============ ============
8 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
JanACapApS JanAGlTchS ---------------------------------------- ---------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 135,185 -- -- 94,337 -- Mortality and expense risk charges (note 3) ... (5,130) -- -- (5,864) -- ----------- ----------- ----------- ----------- ----------- Net investment income ....................... 130,055 -- -- 88,473 -- ----------- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 2,667,595 -- -- 6,627,712 -- Cost of mutual fund shares sold ............... (3,199,056) -- -- (8,282,161) -- ----------- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (531,461) -- -- (1,654,449) -- Change in unrealized gain (loss) on investments .............................. (3,401,482) -- -- (5,609,957) -- ----------- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. (3,932,943) -- -- (7,264,406) -- ----------- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $(3,802,888) -- -- (7,175,933) -- =========== =========== =========== =========== =========== JanAGlTchS JanAintGrS -------------- ---------------------------------------- 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- 482,954 -- -- Mortality and expense risk charges (note 3) ... -- (5,407) -- -- ----------- ----------- ----------- ----------- Net investment income ....................... -- 477,547 -- -- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ -- 8,802,259 -- -- Cost of mutual fund shares sold ............... -- (10,182,763) -- -- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... -- (1,380,504) -- -- Change in unrealized gain (loss) on investments .............................. -- (2,809,392) -- -- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. -- (4,189,896) -- -- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- -- -- -- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ -- (3,712,349) -- -- =========== =========== =========== ===========
NSATBalJPM NSATCapAp ---------------------------------------- ---------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 172,981 80,095 9,854 41,174 96,180 Mortality and expense risk charges (note 3) ... (5,434) (1,605) (51) (10,414) (2,498) ----------- ----------- ----------- ----------- ----------- Net investment income ....................... 167,547 78,490 9,803 30,760 93,682 ----------- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 5,501,271 2,788,299 316,297 6,534,873 4,176,681 Cost of mutual fund shares sold ............... (5,437,733) (2,830,503) (315,924) (7,187,743) (3,638,494) ----------- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... 63,538 (42,204) 373 (652,870) 538,187 Change in unrealized gain (loss) on investments .............................. (241,628) (33,063) 22,806 (11,341,220) (1,637,699) ----------- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. (178,090) (75,267) 23,179 (11,994,090) (1,099,512) ----------- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- 495 2,184 4,845,304 1,352,393 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (10,543) 3,718 35,166 (7,118,026) 346,563 =========== =========== =========== =========== =========== NSATCapAp NSATEqIFED ------------ ---------------------------------------- 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 14,834 15,802 1,722 896 Mortality and expense risk charges (note 3) ... (440) (1,543) (71) (17) ----------- ----------- ----------- ----------- Net investment income ....................... 14,394 14,259 1,651 879 ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 703,904 1,130,737 116,995 18,085 Cost of mutual fund shares sold ............... (686,965) (1,084,332) (100,117) (17,928) ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... 16,939 46,405 16,878 157 Change in unrealized gain (loss) on investments .............................. 469,266 (334,972) 84,114 15,021 ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. 486,205 (288,567) 100,992 15,178 ----------- ----------- ----------- ----------- Reinvested capital gains ...................... 174,093 -- 202 2,636 ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 674,692 (274,308) 102,845 18,693 =========== =========== =========== ===========
(Continued) 9 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATGlob50 NSATGvtBd ------------------------------------------- ------------------------------ 2000 1999 1998 2000 1999 ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 199,386 8,364 1,950 2,182,498 798,788 Mortality and expense risk charges (note 3) ... (37,311) (10,207) (34) (99,138) (37,827) ------------ ------------ ------------ ------------ ------------ Net investment income ....................... 162,075 (1,843) 1,916 2,083,360 760,961 ------------ ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 5,122,679 1,039,009 57,978 5,456,678 10,418,680 Cost of mutual fund shares sold ............... (5,037,852) (930,501) (57,852) (5,620,925) (11,072,171) ------------ ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... 84,827 108,508 126 (164,247) (653,491) Change in unrealized gain (loss) on investments .............................. (4,336,580) 997,392 38,188 2,189,054 (442,511) ------------ ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. (4,251,753) 1,105,900 38,314 2,024,807 (1,096,002) ------------ ------------ ------------ ------------ ------------ Reinvested capital gains ...................... 945,098 456,545 3,213 -- 35,939 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ (3,144,580) 1,560,602 43,443 4,108,167 (299,102) ============ ============ ============ ============ ============ NSATGvtBd NSATHiIFED ------------- -------------------------------------------- 1998 2000 1999 1998 ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 83,382 1,119,466 308,481 22,707 Mortality and expense risk charges (note 3) ... (327) (9,331) (3,120) (68) ------------ ------------ ------------ ------------ Net investment income ....................... 83,055 1,110,135 305,361 22,639 ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 1,043,507 3,240,993 689,933 206,929 Cost of mutual fund shares sold ............... (1,033,771) (3,550,410) (687,767) (213,860) ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... 9,736 (309,417) 2,166 (6,931) Change in unrealized gain (loss) on investments .............................. (84,436) (1,573,020) (155,595) 7,941 ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. (74,700) (1,882,437) (153,429) 1,010 ------------ ------------ ------------ ------------ Reinvested capital gains ...................... 22,403 -- 645 -- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ 30,758 (772,302) 152,577 23,649 ============ ============ ============ ============
NSATMCpSTR NSATMCIxDR ------------------------------------------- ------------------------------ 2000 1999 1998 2000 1999 ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- -- 24,820 1,219 Mortality and expense risk charges (note 3) ... (36,857) (2,128) (30) (1,304) (9) ------------ ------------ ------------ ------------ ------------ Net investment income ....................... (36,857) (2,128) (30) 23,516 1,210 ------------ ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 10,455,471 2,132,323 150,535 3,068,344 104,264 Cost of mutual fund shares sold ............... (9,038,986) (1,804,973) (150,564) (2,777,066) (89,446) ------------ ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... 1,416,485 327,350 (29) 291,278 14,818 Change in unrealized gain (loss) on investments .............................. (7,958,483) 1,323,586 48,847 (336,854) 51,305 ------------ ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. (6,541,998) 1,650,936 48,818 (45,576) 66,123 ------------ ------------ ------------ ------------ ------------ Reinvested capital gains ...................... 922,208 515,885 -- 238,697 47,431 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ (5,656,647) 2,164,693 48,788 216,637 114,764 ============ ============ ============ ============ ============ NSATMCIxDR NSATMMkt ------------ -------------------------------------------- 1998 2000 1999 1998 ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 782 10,355,160 3,376,535 506,347 Mortality and expense risk charges (note 3) ... (21) (307,209) (139,891) (1,751) ------------ ------------ ------------ ------------ Net investment income ....................... 761 10,047,951 3,236,644 504,596 ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 48,915 263,535,916 104,229,444 44,230,768 Cost of mutual fund shares sold ............... (51,817) (263,535,916) (104,229,444) (44,230,768) ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... (2,902) -- -- -- Change in unrealized gain (loss) on investments .............................. 29,815 -- -- -- ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. 26,913 -- -- -- ------------ ------------ ------------ ------------ Reinvested capital gains ...................... -- -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ 27,674 10,047,951 3,236,644 504,596 ============ ============ ============ ============
10 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATMBdMAS NSATSmCapG ---------------------------------------- ---------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 1,380,209 405,079 20,456 -- -- Mortality and expense risk charges (note 3) ... (35,618) (8,904) (64) (1,793) (31) ----------- ----------- ----------- ----------- ----------- Net investment income ....................... 1,344,591 396,175 20,392 (1,793) (31) ----------- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 1,457,359 824,473 678,560 4,671,162 11,249,953 Cost of mutual fund shares sold ............... (1,524,119) (850,875) (682,489) (4,701,490) (11,295,118) ----------- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (66,760) (26,402) (3,929) (30,328) (45,165) Change in unrealized gain (loss) on investments .............................. (112,147) (125,056) 781 (1,279,267) 1,020,705 ----------- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. (178,907) (151,458) (3,148) (1,309,595) 975,540 ----------- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- -- 691 72,445 101,886 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 1,165,684 244,717 17,935 (1,238,943) 1,077,395 =========== =========== =========== =========== =========== NSATSmCapG NSATSmCapV ------------- ------------------------------------------ 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- -- -- Mortality and expense risk charges (note 3) ... -- (6,507) (609) (72) ----------- ----------- ----------- ----------- Net investment income ....................... -- (6,507) (609) (72) ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ -- 5,713,553 1,400,366 119,432 Cost of mutual fund shares sold ............... -- (5,334,666) (1,184,849) (127,976) ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... -- 378,887 215,517 (8,544) Change in unrealized gain (loss) on investments .............................. -- (2,383,146) (194,598) 118,603 ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. -- (2,004,259) 20,919 110,059 ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- 2,830,882 651,318 -- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ -- 820,116 671,628 109,987 =========== =========== =========== ===========
NSATSmCo NSATStrVal ---------------------------------------- ---------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 6,404 -- -- 12,032 5,676 Mortality and expense risk charges (note 3) ... (24,879) (4,091) (112) (439) (137) ----------- ----------- ----------- ----------- ----------- Net investment income ....................... (18,475) (4,091) (112) 11,593 5,539 ----------- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 5,986,277 1,854,552 303,745 6,700,644 173,459 Cost of mutual fund shares sold ............... (4,024,143) (1,415,009) (310,124) (6,640,337) (155,571) ----------- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... 1,962,134 439,543 (6,379) 60,307 17,888 Change in unrealized gain (loss) on investments .............................. (6,709,330) 2,711,547 132,974 33,455 (70,115) ----------- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. (4,747,196) 3,151,090 126,595 93,762 (52,227) ----------- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... 6,779,344 500,536 -- -- 22,264 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 2,013,673 3,647,535 126,483 105,355 (24,424) =========== =========== =========== =========== =========== NSATStrVal NSATTotRtn ------------ ------------------------------------------ 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 1,052 193,418 96,396 27,487 Mortality and expense risk charges (note 3) ... (24) (5,805) (606) (578) ----------- ----------- ----------- ----------- Net investment income ....................... 1,028 187,613 95,790 26,909 ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 81,326 3,055,349 806,876 1,201,208 Cost of mutual fund shares sold ............... (89,165) (2,710,595) (784,668) (1,222,228) ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (7,839) 344,754 22,208 (21,020) Change in unrealized gain (loss) on investments .............................. 43,881 (13,348,541) (33,899) 283,836 ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. 36,042 (13,003,787) (11,691) 262,816 ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- 11,991,779 809,302 321,440 ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 37,070 (824,395) 893,401 611,165 =========== =========== =========== ===========
(Continued) 11 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NBAMTGuard NBAMTMCGr -------------------------------------------- ------------------------------ 2000 1999 1998 2000 1999 ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 16,882 3,977 -- -- -- Mortality and expense risk charges (note 3) ... (1,965) (679) (83) (41,606) (7,463) ------------ ------------ ------------ ------------ ------------ Net investment income ....................... 14,917 3,298 (83) (41,606) (7,463) ------------ ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 1,626,130 807,995 117,578 13,583,260 7,840,757 Cost of mutual fund shares sold ............... (1,517,104) (670,629) (123,077) (9,016,924) (6,652,007) ------------ ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... 109,026 137,366 (5,499) 4,566,336 1,188,750 Change in unrealized gain (loss) on investments .............................. (185,904) 77,047 82,886 (10,290,829) 3,039,884 ------------ ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. (76,878) 214,413 77,387 (5,724,493) 4,228,634 ------------ ------------ ------------ ------------ ------------ Reinvested capital gains ...................... -- -- -- 6,497 37,807 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ (61,961) 217,711 77,304 (5,759,602) 4,258,978 ============ ============ ============ ============ ============ BAMTMCGr NBAMTPart ------------ ---------------------------------------------- 1998 2000 1999 1998 ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... -- 55,679 56,853 114 Mortality and expense risk charges (note 3) ... $ (52) (5,009) (2,109) (290) ------------ ------------ ------------ ------------ Net investment income ....................... (52) 50,670 54,744 (176) ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 140,913 3,401,374 787,143 862,257 Cost of mutual fund shares sold ............... (137,009) (3,678,166) (785,895) (875,740) ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... 3,904 (276,792) 1,248 (13,483) Change in unrealized gain (loss) on investments .............................. 176,285 (888,222) 196,040 255,133 ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. 180,189 (1,165,014) 197,288 241,650 ------------ ------------ ------------ ------------ Reinvested capital gains ...................... -- 1,184,100 98,874 3,599 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ 180,137 69,756 350,906 245,073 ============ ============ ============ ============
OppAggGrVA OppCapApVA -------------------------------------------- ------------------------------ 2000 1999 1998 2000 1999 ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- 26 26,876 10,044 Mortality and expense risk charges (note 3) ... (52,493) (2,942) (80) (35,238) (4,168) ------------ ------------ ------------ ------------ ------------ Net investment income ....................... (52,493) (2,942) (54) (8,362) 5,876 ------------ ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 13,833,125 1,971,772 120,154 6,304,788 993,762 Cost of mutual fund shares sold ............... (9,344,555) (1,353,384) (118,908) (4,511,928) (802,267) ------------ ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... 4,488,570 618,388 1,246 1,792,860 191,495 Change in unrealized gain (loss) on investments .............................. (19,721,439) 2,906,737 155,404 (5,403,446) 2,561,317 ------------ ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. (15,232,869) 3,525,125 156,650 (3,610,586) 2,752,812 ------------ ------------ ------------ ------------ ------------ Reinvested capital gains ...................... 950,033 -- 270 1,434,225 110,334 ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $(14,335,329) 3,522,183 156,866 (2,184,723) 2,869,022 ============ ============ ============ ============ ============ OppCapApVA OppGlSecVA ------------ -------------------------------------------- 1998 2000 1999 1998 ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 8 -- -- -- Mortality and expense risk charges (note 3) ... (142) (1,051) -- -- ------------ ------------ ------------ ------------ Net investment income ....................... (134) (1,051) -- -- ------------ ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 412,555 3,569,728 -- -- Cost of mutual fund shares sold ............... (391,820) (3,708,378) -- -- ------------ ------------ ------------ ------------ Realized gain (loss) on investments ......... 20,735 (138,650) -- -- Change in unrealized gain (loss) on investments .............................. 255,097 70,484 -- -- ------------ ------------ ------------ ------------ Net gain (loss) on investments .............. 275,832 (68,166) -- -- ------------ ------------ ------------ ------------ Reinvested capital gains ...................... 101 -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ 275,799 (69,217) -- -- ============ ============ ============ ============
12 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
OppMGrInVA StOpp2 ---------------------------------------- ------------------------------------ 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ---------- -------- INVESTMENT ACTIVITY: Reinvested dividends ........................ $ 38,554 10,187 29 -- -- -- Mortality and expense risk charges (note 3) . (10,265) (2,014) (113) (1,449) -- -- ----------- ----------- ----------- ----------- ---------- -------- Net investment income ..................... 28,289 8,173 (84) (1,449) -- -- ----------- ----------- ----------- ----------- ---------- -------- Proceeds from mutual funds shares sold ...... 1,958,100 570,677 698,919 2,262,742 -- -- Cost of mutual fund shares sold ............. (1,608,534) (582,947) (718,580) (2,255,273) -- -- ----------- ----------- ----------- ----------- ---------- -------- Realized gain (loss) on investments ....... 349,566 (12,270) (19,661) 7,469 -- -- Change in unrealized gain (loss) on investments ............................ (2,767,885) 713,752 80,325 (478,402) -- -- ----------- ----------- ----------- ----------- ---------- -------- Net gain (loss) on investments ............ (2,418,319) 701,482 60,664 (470,933) -- -- ----------- ----------- ----------- ----------- ---------- -------- Reinvested capital gains .................... 509,013 17,163 645 501,505 -- -- ----------- ----------- ----------- ----------- ---------- -------- Net increase (decrease) in contract owners' equity resulting from operations ..... $(1,881,017) 726,818 61,225 29,123 -- -- =========== =========== =========== =========== ========== ========= NSATGFocTU ---------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- -- Mortality and expense risk charges (note 3) ... -- -- -- ----------- ----------- ----------- Net investment income ....................... -- -- -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 290,188 -- -- Cost of mutual fund shares sold ............... (317,405) -- -- ----------- ----------- ----------- Realized gain (loss) on investments ......... (27,217) -- -- Change in unrealized gain (loss) on investments .............................. (4,210) -- -- ----------- ----------- ----------- Net gain (loss) on investments .............. (31,427) -- -- ----------- ----------- ----------- Reinvested capital gains ...................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (31,427) -- -- =========== =========== ===========
MSUEmMkt MSUMCapGr ---------------------------------------- ------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ---------- --------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 151,314 85,097 18,594 -- -- -- Mortality and expense risk charges (note 3) ... (963) (166) (11) (162) -- -- ----------- ----------- ----------- ----------- ---------- ---------- Net investment income ....................... 150,351 84,931 18,583 (162) -- -- ----------- ----------- ----------- ----------- ---------- ---------- Proceeds from mutual funds shares sold ........ 1,344,335 218,023 268,442 769,277 -- -- Cost of mutual fund shares sold ............... (1,256,230) (200,881) (301,322) (782,583) -- -- ----------- ----------- ----------- ----------- ---------- ---------- Realized gain (loss) on investments ......... 88,105 17,142 (32,880) (13,306) -- -- Change in unrealized gain (loss) on investments .............................. (119,691) 20,955 (7,323) (98,350) -- -- ----------- ----------- ----------- ----------- ---------- ---------- Net gain (loss) on investments .............. (31,586) 38,097 (40,203) (111,656) -- -- ----------- ----------- ----------- ----------- ---------- ---------- Reinvested capital gains ...................... -- -- -- 800 -- -- ----------- ----------- ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 118,765 123,028 (21,620) (111,018) -- -- =========== =========== =========== =========== ========== ========== MSUUSRealE ---------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 265,214 54,408 34 Mortality and expense risk charges (note 3) ... (2,123) (1,163) (50) ----------- ----------- ----------- Net investment income ....................... 263,091 53,245 (16) ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 10,682,231 10,399,298 357,742 Cost of mutual fund shares sold ............... (10,383,636) (10,439,502) (388,797) ----------- ----------- ----------- Realized gain (loss) on investments ......... 298,595 (40,204) (31,055) Change in unrealized gain (loss) on investments .............................. 155,839 (130,048) 27,306 ----------- ----------- ----------- Net gain (loss) on investments .............. 454,434 (170,252) (3,749) ----------- ----------- ----------- Reinvested capital gains ...................... 25,130 -- 339 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 742,655 (117,007) (3,426) =========== =========== ===========
(Continued) 13 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
VEWwEmgMkt VEWwHrdAst ----------------------------------------- ---------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- -- 6,160 2,469 Mortality and expense risk charges (note 3) ... (1,640) (139) (20) (124) (295) ----------- ----------- ----------- ----------- ----------- Net investment income ....................... (1,640) (139) (20) 6,036 2,174 ----------- ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 8,541,759 1,092,848 70,482 6,042,759 718,765 Cost of mutual fund shares sold ............... (8,950,297) (857,511) (84,625) (6,013,577) (692,370) ----------- ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (408,538) 235,337 (14,143) 29,182 26,395 Change in unrealized gain (loss) on investments .............................. (1,655,251) 663,413 18,347 20,687 22,444 ----------- ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. (2,063,789) 898,750 4,204 49,869 48,839 ----------- ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $(2,065,429) 898,611 4,184 55,905 51,013 =========== =========== =========== =========== =========== VEWwHrdAst WPTGloPVC ------------ ---------------------------------------- 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- 25,366 10,150 4,521 Mortality and expense risk charges (note 3) ... (11) (2,889) (1,209) (50) ----------- ----------- ----------- ----------- Net investment income ....................... (11) 22,477 8,941 4,471 ----------- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 46,572 1,991,744 372,724 345,457 Cost of mutual fund shares sold ............... (49,623) (1,898,600) (375,164) (337,050) ----------- ----------- ----------- ----------- Realized gain (loss) on investments ......... (3,051) 93,144 (2,440) 8,407 Change in unrealized gain (loss) on investments .............................. (2,102) 87,894 (2,238) 5,870 ----------- ----------- ----------- ----------- Net gain (loss) on investments .............. (5,153) 181,038 (4,678) 14,277 ----------- ----------- ----------- ----------- Reinvested capital gains ...................... -- 23,283 18,278 -- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (5,164) 226,798 22,541 18,748 =========== =========== =========== ===========
WPTInteq ----------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ 12,900 19,282 2,873 Mortality and expense risk charges (note 3) ... (1,340) (81) (42) ----------- ----------- ----------- Net investment income ....................... 11,560 19,201 2,831 ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 992,359 785,974 277,515 Cost of mutual fund shares sold ............... (749,434) (670,363) (301,573) ----------- ----------- ----------- Realized gain (loss) on investments ......... 242,925 115,611 (24,058) Change in unrealized gain (loss) on investments .............................. (1,294,832) 581,395 30,323 ----------- ----------- ----------- Net gain (loss) on investments .............. (1,051,907) 697,006 6,265 ----------- ----------- ----------- Reinvested capital gains ...................... 310,165 -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (730,182) 716,207 9,096 =========== =========== =========== WPTValue ---------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends .......................... $ -- -- -- Mortality and expense risk charges (note 3) ... (1,199) (154) (13) ----------- ----------- ----------- Net investment income ....................... (1,199) (154) (13) ----------- ----------- ----------- Proceeds from mutual funds shares sold ........ 1,772,806 364,939 87,326 Cost of mutual fund shares sold ............... (1,546,982) (278,265) (89,432) ----------- ----------- ----------- Realized gain (loss) on investments ......... 225,824 86,674 (2,106) Change in unrealized gain (loss) on investments .............................. (716,480) 208,276 29,961 ----------- ----------- ----------- Net gain (loss) on investments .............. (490,656) 294,950 27,855 ----------- ----------- ----------- Reinvested capital gains ...................... 141,743 -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (350,112) 294,796 27,842 =========== =========== ===========
See accompanying notes to financial statements. 14 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
Total ACVPincGr ---------------------------------------------- ---------------------------------------------- 2000 1999 1998 2000 1999 1998 -------------- -------------- -------------- -------------- ------------- ------------- INVESTMENT ACTIVITY: Net investment income............... $ 19,565,651 6,402,662 788,473 56,216 (4,525) 5,039 Realized gain (loss) on investments 16,571,418 6,807,752 (271,660) 63,909 266,293 1,755 Change in unrealized gain (loss) on investments.................... (178,984,942) 42,568,531 6,208,888 (2,277,235) 692,513 125,007 Reinvested capital gains............ 50,385,356 6,941,880 597,466 - - - -------------- -------------- -------------- -------------- ------------- ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (92,462,517) 62,720,825 7,323,167 (2,157,110) 954,281 131,801 -------------- -------------- -------------- -------------- ------------- ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners................... 947,537,536 515,112,072 106,894,981 9,141,279 4,843,884 168,731 Transfers between funds............. - - - 7,485,967 5,659,068 959,762 Surrenders.......................... (10,694,705) (2,953,250) (205,540) (307,329) (25,955) (64) Death benefits...................... (65,736) (165,946) - (1,577) (1,531) - Policy loans (net of repayments) (note 5).......................... (9,821,909) (4,792,558) (1,093,563) (57,111) (99,683) - Deductions for surrender charges (note 2d)......................... (1,692,311) (378,228) (2,405) (48,631) (3,324) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)................. (63,687,230) (28,207,228) (4,765,148) (1,117,246) (410,626) (23,721) Asset charges (note 3): FPVUL & VEL contracts............. (1,989,545) (882,295) (148,735) (32,044) (13,701) (985) MSP contracts..................... (359,299) (49,709) (535) (6,176) (1,582) (4) SL contracts...................... (165,436) (99,794) (12,520) (4,637) (1,422) (83) -------------- -------------- -------------- -------------- ------------- ------------ Net equity transactions......... 859,061,365 477,583,064 100,666,535 15,052,495 9,945,128 1,103,635 -------------- -------------- -------------- -------------- ------------- ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY...................... 766,598,848 540,303,889 107,989,702 12,895,385 10,899,409 1,235,436 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........................... 648,293,593 107,989,704 - 12,134,845 1,235,436 - -------------- -------------- -------------- -------------- ------------- ------------ CONTRACT OWNERS' EQUITY END OF PERIOD........................... $1,414,892,441 648,293,593 107,989,702 25,030,230 12,134,845 1,235,436 ============== ============== ============== ============== ============= ============ CHANGES IN UNITS: Beginning units.............. 50,045,344 9,506,248 - 874,749 97,382 - ------------ -------------- -------------- -------------- ------------- -------------- Units purchased.............. 109,550,329 66,964,330 16,180,186 1,358,922 990,326 99,550 Units redeemed............... (43,498,824) (26,425,234) (6,673,938) (125,099) (212,959) (2,168 ------------ -------------- -------------- -------------- ------------- -------------- Ending units................. 116,096,849 50,045,344 9,506,248 2,108,572 874,749 97,382 ============ ============== ============== ============== ============= ============== ACVPint ----------------------------------------------- 2000 1999 1998 -------------- -------------- -------------- INVESTMENT ACTIVITY: Net investment income........ ........ $ (14,005) (3,029) 182 Realized gain (loss) on investments .. 2,847,917 628,064 (890) Change in unrealized gain (loss) on investments...................... (10,029,310) 4,031,727 159,768 Reinvested capital gains.............. 445,800 - 3,644 -------------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations ........ (6,749,598) 4,656,762 162,704 -------------- -------------- -------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners..................... 17,266,035 3,440,338 489,914 Transfers between funds............... 20,394,660 5,542,573 1,905,042 Surrenders............................ (174,891) (6,193) - Death benefits........................ (5,691) (3,352) - Policy loans (net of repayments) (note 5)............................ (199,083) (114,731) (2,833) Deductions for surrender charges (note 2d)........................... (27,674) (793) - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)................... (1,602,834) (514,310) (73,254) Asset charges (note 3): FPVUL & VEL contracts............... (60,820) (21,791) (2,574) MSP contracts....................... (7,381) (570) (9) SL contracts........................ (7,846) (1,478) (217) -------------- -------------- -------------- Net equity transactions........... 35,574,475 8,319,693 2,316,069 -------------- -------------- -------------- NET CHANGE IN CONTRACT OWNERS' EQUITY........................ 28,824,877 12,976,455 2,478,773 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD............................. 15,455,228 2,478,773 - -------------- -------------- -------------- CONTRACT OWNERS' EQUITY END OF PERIOD............................. $ 44,280,105 15,455,228 2,478,773 ============== ============== ============== CHANGES IN UNITS: Beginning units.............. 830,394 209,297 - -------------- -------------- -------------- Units purchased.............. 2,368,251 682,334 216,428 Units redeemed............... (135,307) (61,237) (7,131) -------------- -------------- -------------- Ending units................. 3,063,338 830,394 209,297 ============== ============== ==============
(Continued) 15 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
ACVPValue DrySRGr -------------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ---------- INVESTMENT ACTIVITY: Net investment income .............. $ 26,769 8,355 125 127,586 190 2,018 Realized gain (loss) on investments 5,242 (38,029) (4,170) 286,804 137,365 13,110 Change in unrealized gain (loss) on investments ................... 865,295 (142,040) 28,277 (2,392,732) 901,808 108,355 Reinvested capital gains ........... 74,870 85,768 1,997 -- 279,678 47,900 ------------ ------------ ------------ ------------ ------------ ---------- Net increase (decrease) in contract owners' equity resulting from operations ...... 972,176 (85,946) 26,229 (1,978,342) 1,319,041 171,383 ------------ ------------ ------------ ------------ ------------ ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 2,380,936 698,376 218,019 5,340,142 2,335,241 544,259 Transfers between funds ............ 2,477,656 905,970 409,201 6,492,229 4,065,765 721,262 Surrenders ......................... (104,084) (7,715) (20) (161,374) (13,484) (97) Death benefits ..................... -- -- -- 17,714 (18,063) -- Policy loans (net of repayments) (note 5) ......................... (8,731) (15,452) (1,893) (253,461) (33,299) (1,497) Deductions for surrender charges (note 2d) ........................ (16,470) (988) -- (25,536) (1,727) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (264,459) (132,120) (23,676) (1,388,349) (506,680) (61,633) Asset charges (note 3): FPVUL & VEL contracts ............ (10,699) (5,363) (827) (49,907) (17,385) (1,607) MSP contracts .................... (992) (203) (3) (4,193) (332) (6) SL contracts ..................... (751) (147) (70) (2,607) (913) (135) ------------ ------------ ------------ ------------ ------------ ---------- Net equity transactions ........ 4,452,406 1,442,358 600,731 9,964,658 5,809,123 1,200,545 ------------ ------------ ------------ ------------ ------------ ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 5,424,582 1,356,412 626,960 7,986,316 7,128,164 1,371,928 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 1,983,372 626,960 -- 8,500,092 1,371,928 -- ------------ ------------ ------------ ------------ ------------ ---------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 7,407,954 1,983,372 626,960 16,486,408 8,500,092 1,371,928 ============ ============ ============ ============ ============ ========== CHANGES IN UNITS: Beginning units .................... 193,386 59,864 -- 509,172 106,093 -- ------------ ------------ ------------ ------------ ------------ ---------- Units purchased .................... 464,887 171,328 62,522 741,714 445,091 111,810 Units redeemed ..................... (40,889) (37,806) (2,658) (118,327) (42,012) (5,717) ------------ ------------ ------------ ------------ ------------ ---------- Ending units ....................... 617,384 193,386 59,864 1,132,559 509,172 106,093 ============ ============ ============ ============ ============ ==========
DryStkIx ----------------------------------------- 2000 1999 1998 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. $ 1,474,581 613,975 63,670 Realized gain (loss) on investments 3,585,686 612,737 (73,213) Change in unrealized gain (loss) on investments ................... (27,898,576) 11,117,238 1,455,019 Reinvested capital gains ........... 3,654,055 672,634 12,311 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (19,184,254) 13,016,584 1,457,787 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 68,654,997 41,330,848 3,047,695 Transfers between funds ............ 72,727,790 57,817,925 10,358,645 Surrenders ......................... (1,341,027) (626,906) (430) Death benefits ..................... 2,224 (24,555) -- Policy loans (net of repayments) (note 5) ......................... (792,260) (192,790) (9,416) Deductions for surrender charges (note 2d) ........................ (212,202) (80,289) (5) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (8,955,356) (4,045,059) (463,310) Asset charges (note 3): FPVUL & VEL contracts ............ (279,995) (134,875) (15,073) MSP contracts .................... (49,600) (4,126) (54) SL contracts ..................... (28,362) (11,443) (1,269) ------------ ------------ ------------ Net equity transactions ........ 129,726,209 94,028,730 12,916,783 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 110,541,955 107,045,314 14,374,570 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 121,419,884 14,374,570 -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $231,961,839 121,419,884 14,374,570 ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 8,707,267 1,136,754 -- ------------ ------------ ------------ Units purchased .................... 11,088,744 7,959,543 1,180,333 Units redeemed ..................... (888,358) (389,030) (43,579) ------------ ------------ ------------ Ending units ....................... 18,907,653 8,707,267 1,136,754 ============ ============ ============
16 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
DryEuroEq DryVApp -------------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- -------------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .............. $ 2,393 266 -- 147,948 82,323 7,508 Realized gain (loss) on investments (61,506) 360 -- 353,748 369,370 (894) Change in unrealized gain (loss) on investments ................... 26,273 9,997 -- (1,102,409) 649,339 150,742 Reinvested capital gains ........... 39,799 1,251 -- 355,671 68,742 -- ----------- ----------- -------------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... 6,959 11,874 -- (245,042) 1,169,774 157,356 ----------- ----------- -------------- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 298,004 8,625 -- 13,754,528 12,955,621 381,182 Transfers between funds ............ 1,063,297 114,306 -- 1,480,475 4,076,889 1,070,054 Surrenders ......................... (23) -- -- (176,111) (56,786) (44) Death benefits ..................... -- -- -- -- (6,440) -- Policy loans (net of repayments) (note 5) ......................... (310) -- -- (114,896) (32,681) (289) Deductions for surrender charges (note 2d) ........................ (4) -- -- (27,867) (7,273) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (41,463) (92) -- (1,277,668) (701,318) (58,099) Asset charges (note 3): FPVUL & VEL contracts ............ (1,518) (32) -- (33,727) (17,976) (1,594) MSP contracts .................... (296) (8) -- (5,950) (683) (6) SL contracts ..................... (300) -- -- (1,121) (1,755) (134) ----------- ----------- -------------- ----------- ----------- ----------- Net equity transactions ........ 1,317,387 122,799 -- 13,597,663 16,207,598 1,391,069 ----------- ----------- -------------- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 1,324,346 134,673 -- 13,352,621 17,377,372 1,548,425 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 134,673 -- -- 18,925,797 1,548,425 -- ----------- ----------- -------------- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 1,459,019 134,673 -- 32,278,418 18,925,797 1,548,425 =========== =========== ============== =========== =========== =========== CHANGES IN UNITS: Beginning units .................... 10,415 -- -- 1,466,981 120,461 -- ----------- ----------- -------------- ----------- ----------- ----------- Units purchased .................. 110,285 10,455 -- 1,345,193 1,811,470 125,573 Units redeemed ................... (5,477) (40) -- (224,132) (464,950) (5,112) ----------- ----------- -------------- ----------- ----------- ----------- Ending units ....................... 115,223 10,415 -- 2,588,042 1,466,981 120,461 =========== =========== ============== =========== =========== ===========
FedQualBd2 --------------------------------------------- 2000 1999 1998 ----------- ----------- -------------- INVESTMENT ACTIVITY: Net investment income .............. 248,090 (3,162) -- Realized gain (loss) on investments 126,755 (1,907) -- Change in unrealized gain (loss) on investments ................... 2,975,611 40,201 -- Reinvested capital gains ........... -- -- -- ----------- ----------- -------------- Net increase (decrease) in contract owners' equity resulting from operations ...... 3,350,456 35,132 -- ----------- ----------- -------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 18,965,217 3,119,190 -- Transfers between funds ............ 19,532,260 8,049,110 -- Surrenders ......................... -- -- -- Death benefits ..................... (5,851) -- -- Policy loans (net of repayments) (note 5) ......................... (6,815) -- -- Deductions for surrender charges (note 2d) ........................ -- -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (606,106) (20,060) -- Asset charges (note 3): FPVUL & VEL contracts ............ (2,155) (31) -- MSP contracts .................... (611) (21) -- SL contracts ..................... (235) -- -- ----------- ----------- -------------- Net equity transactions ........ 37,875,704 11,148,188 -- ----------- ----------- -------------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 41,226,160 11,183,320 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 11,183,320 -- -- ----------- ----------- -------------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 52,409,480 11,183,320 -- =========== =========== ============== CHANGES IN UNITS: Beginning units .................... 1,133,916 -- -- Units purchased ...................... 3,748,621 1,141,400 -- Units redeemed ....................... (63,800) (7,484) -- ----------- ----------- -------------- Ending units ....................... 4,818,737 1,133,916 -- =========== =========== ==============
(Continued) 17 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
FIDVEQINS FIDVGRS -------------------------------------------- -------------------------------------------- 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. $ 262,884 93,800 (402) (60,006) (4,278) (249) Realized gain (loss) on investments (546,971) 303,591 (35,087) 1,245,093 146,210 8,500 Change in unrealized gain (loss) on investments ................... 1,470,791 (277,459) 449,182 (19,309,179) 6,093,883 480,684 Reinvested capital gains ........... 1,063,019 214,564 -- 5,556,689 543,154 -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... 2,249,723 334,496 413,693 (12,567,403) 6,778,969 488,935 ------------ ------------ ------------ ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 7,850,333 4,448,956 1,622,388 37,211,019 13,666,314 742,777 Transfers between funds ............ 4,967,158 6,896,656 3,964,871 39,402,444 20,406,545 2,489,085 Surrenders ......................... (341,944) (80,452) (401) (572,831) (63,057) (1,445) Death benefits ..................... (6,617) (1,391) -- (17,086) (10,491) -- Policy loans (net of repayments) (note 5) ......................... (315,976) (144,802) (6,242) (799,676) (177,397) (5,968) Deductions for surrender charges (note 2d) ........................ (54,109) (10,304) (5) (90,644) (8,076) (17) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (1,698,463) (1,124,439) (217,638) (5,241,119) (1,671,275) (140,842) Asset charges (note 3): FPVUL & VEL contracts ............ (68,189) (43,634) (6,715) (178,345) (55,807) (4,257) MSP contracts .................... (4,739) (1,965) (24) (24,381) (2,486) (15) SL contracts ..................... (5,991) (1,316) (565) (12,861) (3,848) (358) ------------ ------------ ------------ ------------ ------------ ------------ Net equity transactions ........ 10,321,463 9,937,309 5,355,669 69,676,520 32,080,422 3,078,960 ------------ ------------ ------------ ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 12,571,186 10,271,805 5,769,362 57,109,117 38,859,391 3,567,895 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 16,041,167 5,769,362 -- 42,427,286 3,567,895 -- ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 28,612,353 16,041,167 5,769,362 99,536,403 42,427,286 3,567,895 ============ ============ ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 1,374,484 517,910 -- 2,322,709 256,014 -- ------------ ------------ ------------ ------------ ------------ ------------ Units purchased .................... 1,252,718 975,907 540,577 4,664,500 2,192,613 268,539 Units redeemed ..................... (329,618) (119,333) (22,667) (425,983) (125,918) (12,525) ------------ ------------ ------------ ------------ ------------ ------------ Ending units ....................... 2,297,584 1,374,484 517,910 6,561,226 2,322,709 256,014 ============ ============ ============ ============ ============ ============
FIDVHIINS --------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. 689,813 363,341 (245) Realized gain (loss) on investments (1,172,059) (114,464) (53,784) Change in unrealized gain (loss) on investments ................... (3,641,858) 103,063 37,295 Reinvested capital gains ........... -- 13,640 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (4,124,104) 365,580 (16,734) ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 7,533,788 2,442,012 685,592 Transfers between funds ............ 3,220,351 3,417,897 2,964,332 Surrenders ......................... (716,896) (30,819) -- Death benefits ..................... -- (1,204) -- Policy loans (net of repayments) (note 5) ......................... (1,732) (134,160) (1,581) Deductions for surrender charges (note 2d) ........................ (113,440) (3,947) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (677,508) (455,068) (103,400) Asset charges (note 3): FPVUL & VEL contracts ............ (22,619) (18,072) (3,432) MSP contracts .................... (3,871) (1,135) (12) SL contracts ..................... (2,510) (1,596) (289) ------------ ------------ ------------ Net equity transactions ........ 9,215,563 5,213,908 3,541,210 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 5,091,459 5,579,488 3,524,476 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 9,103,964 3,524,476 -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 14,195,423 9,103,964 3,524,476 ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 895,631 368,766 -- ------------ ------------ ------------ Units purchased .................... 1,222,377 623,361 380,291 Units redeemed ..................... (310,119) (96,496) (11,525) ------------ ------------ ------------ Ending units ....................... 1,807,889 895,631 368,766 ============ ============ ============
18 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
FIDVOVSES FIDVCONS ------------------------------------------ -------------------------------------------- 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. $ 167,888 11,251 (75) 65,914 22,353 (330) Realized gain (loss) on investments (1,765,190) 730,465 (24,873) 528,352 214,850 26,824 Change in unrealized gain (loss) on investments ................... (4,479,931) 1,849,661 68,313 (6,926,956) 3,006,379 648,413 Reinvested capital gains ........... 1,409,432 34,048 -- 3,401,735 195,897 -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (4,667,801) 2,625,425 43,365 (2,930,955) 3,439,479 674,907 ------------ ------------ ------------ ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 8,505,042 1,371,398 233,314 13,331,258 6,884,353 1,117,315 Transfers between funds ............ 8,652,600 8,415,589 835,812 16,551,717 11,647,164 3,133,469 Surrenders ......................... (105,541) (26,372) (16) (475,190) (454,009) (165) Death benefits ..................... (10,322) (308) -- (21,261) (4,599) -- Policy loans (net of repayments) (note 5) ......................... (59,458) (21,644) (1,574) (383,633) (155,019) (2,052) Deductions for surrender charges (note 2d) ........................ (16,701) (3,377) -- (75,193) (58,146) (2) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (1,042,254) (318,257) (34,849) (3,087,387) (1,389,362) (173,162) Asset charges (note 3): FPVUL & VEL contracts ............ (27,681) (10,339) (1,230) (119,105) (50,526) (5,299) MSP contracts .................... (7,325) (724) (4) (13,801) (1,103) (19) SL contracts ..................... (2,147) (955) (103) (4,789) (2,492) (446) ------------ ------------ ------------ ------------ ------------ ------------ Net equity transactions ........ 15,886,213 9,405,011 1,031,350 25,702,616 16,416,261 4,069,639 ------------ ------------ ------------ ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 11,218,412 12,030,436 1,074,715 22,771,661 19,855,740 4,744,546 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 13,105,151 1,074,715 -- 24,600,286 4,744,546 -- ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 24,323,563 13,105,151 1,074,715 47,371,947 24,600,286 4,744,546 ============ ============ ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 897,019 95,893 -- 1,555,137 365,486 -- ------------ ------------ ------------ ------------ ------------ ------------ Units purchased .................... 1,314,737 863,392 99,416 2,019,106 1,338,819 381,598 Units redeemed ..................... (114,723) (62,266) (3,523) (278,479) (149,168) (16,112) ------------ ------------ ------------ ------------ ------------ ------------ Ending units ....................... 2,097,033 897,019 95,893 3,295,764 1,555,137 365,486 ============ ============ ============ ============ ============ ============
FIDVGROPS --------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. 114,308 25,116 (168) Realized gain (loss) on investments (205,257) 53,554 12,948 Change in unrealized gain (loss) on investments ................... (3,225,818) 137,134 262,800 Reinvested capital gains ........... 662,022 55,207 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (2,654,745) 271,011 275,580 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 4,026,349 3,045,388 584,874 Transfers between funds ............ 4,007,402 5,377,081 1,646,479 Surrenders ......................... (106,913) (191,409) (36) Death benefits ..................... (14,827) (1,216) -- Policy loans (net of repayments) (note 5) ......................... (182,797) (42,620) 29 Deductions for surrender charges (note 2d) ........................ (16,918) (24,514) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (1,045,761) (632,760) (84,140) Asset charges (note 3): FPVUL & VEL contracts ............ (39,737) (23,008) (2,917) MSP contracts .................... (3,764) (1,943) (10) SL contracts ..................... (3,068) (1,552) (245) ------------ ------------ ------------ Net equity transactions ........ 6,619,966 7,503,447 2,144,034 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 3,965,221 7,774,458 2,419,614 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 10,194,072 2,419,614 -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 14,159,293 10,194,072 2,419,614 ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 798,468 194,457 -- ------------ ------------ ------------ Units purchased .................... 797,422 679,802 202,309 Units redeemed ..................... (236,089) (75,791) (7,852) ------------ ------------ ------------ Ending units ....................... 1,359,801 798,468 194,457 ============ ============ ============
(Continued) 19 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATEMMGM NSATGTECGM ---------------------------------------------- ------------------------------------------ 2000 1999 1998 2000 1999 1998 -------------- -------------- ------------ -------------- --------- ------------- INVESTMENT ACTIVITY: Net investment income....... $ - - - - - - Realized gain (loss) on investments (3,018) - - (4,426) - - Change in unrealized gain (loss) on investments............. 336 - - (195,957) - - Reinvested capital gains..... - - - 10,013 - - -------------- -------------- ---------- -------------- ---------- ------------ Net increase (decrease) in contract owners' equity resulting from operations (2,682) - - (190,370) - - -------------- -------------- ---------- -------------- ---------- ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 430 - - 36,330 - - Transfers between funds...... 23,571 - - 719,894 - - Surrenders................... - - - - - - Death benefits............... - - - - - - Policy loans (net of repayments) (note 5)................... - - - (22) - - Deductions for surrender charges (note 2d).................. - - - - - - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......... (398) - - (14,760) - - Asset charges (note 3): FPVUL & VEL contracts...... (17) - - (358) - - MSP contracts.............. - - - (4) - - SL contracts............... (73) - - (108) - - -------------- -------------- ---------- -------------- ---------- ------------ Net equity transactions.. 23,513 - - 740,972 - - -------------- -------------- ---------- -------------- ---------- ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY............... 20,831 - - 550,602 - - CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD.................... - - - - - - -------------- -------------- ---------- -------------- ---------- ------------ CONTRACT OWNERS' EQUITY END OF PERIOD.................... $20,831 - - 550,602 - - ============== ============== ========== ============== ========== ============ CHANGES IN UNITS: Beginning units.............. - - - - - -------------- -------------- ---------- -------------- ---------- ------------ Units purchased.............. 2,438 - - 92,911 - - Units redeemed............... (47) - - (1,413) - - -------------- -------------- ---------- -------------- ---------- ----------- Ending units................. 2,391 - - 91,498 - - ============== ============== ========== ============== ========== ============
NSATINTGGM --------------------------------------------- 2000 1999 1998 ------------- -------------- -------------- INVESTMENT ACTIVITY: Net investment income....... - - - Realized gain (loss) on investments 661 - - Change in unrealized gain (loss) on investments............. 260 - - Reinvested capital gains..... - - - -------------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations 921 - - -------------- -------------- -------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 1,248 - - Transfers between funds...... 23,447 - - Surrenders................... - - - Death benefits............... - - - Policy loans (net of repayments) (note 5)................... - - - Deductions for surrender charges (note 2d).................. - - - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......... (576) - - Asset charges (note 3): FPVUL & VEL contracts...... (20) - - MSP contracts.............. - - - SL contracts............... (73) - - -------------- -------------- -------------- Net equity transactions.. 24,026 - - -------------- -------------- -------------- NET CHANGE IN CONTRACT OWNERS' EQUITY............... 24,947 - - CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD.................... - - - -------------- -------------- -------------- CONTRACT OWNERS' EQUITY END OF PERIOD.................... 24,947 - - ============== ============== ============== CHANGES IN UNITS: Beginning units.............. - - - -------------- -------------- -------------- Units purchased.............. 2,770 - - Units redeemed............... (73) - - -------------- -------------- -------------- Ending units................. 2,697 - - ============== ============== ==============
20 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
JANACAPAPS JANAGLTCHS --------------------------------------------- -------------------------------- 2000 1999 1998 2000 1999 -------------- -------------- -------------- -------------- ------------- INVESTMENT ACTIVITY: Net investment income........ $ 130,055 - - 88,473 - Realized gain (loss) on investments (531,461) - - (1,654,449) - Change in unrealized gain (loss) on investments............. (3,401,482) - - (5,609,957) - Reinvested capital gains..... - - - - - -------------- -------------- -------------- -------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations (3,802,888) - - (7,175,933) - -------------- -------------- -------------- -------------- ------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 4,655,897 - - 5,576,181 - Transfers between funds...... 22,374,018 - - 18,371,062 - Surrenders................... (74,366) - - (65,589) - Death benefits............... - - - (282) - Policy loans (net of repayments) (note 5)................... (27,728) - - (67,411) - Deductions for surrender charges (note 2d).................. (11,767) - - (10,379) - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......... (892,334) - - (930,882) - Asset charges (note 3): FPVUL & VEL contracts...... (33,096) - - (32,832) - MSP contracts.............. (4,072) - - (5,353) - SL contracts............... (1,406) - - (670) - -------------- -------------- -------------- -------------- ------------- Net equity transactions.. 25,985,146 - - 22,833,845 - -------------- -------------- -------------- -------------- ------------- NET CHANGE IN CONTRACT OWNERS' EQUITY............... 22,182,258 - - 15,657,912 - CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD.................... - - - - - -------------- -------------- -------------- -------------- ------------- CONTRACT OWNERS' EQUITY END OF PERIOD.................... $22,182,258 - - 15,657,912 - ============== ============== ============== ============== ============= CHANGES IN UNITS: Beginning units.............. - - - - - -------------- -------------- -------------- -------------- ------------- Units purchased.............. 2,815,308 - - 2,513,806 - Units redeemed............... (120,018) - - (133,644) - -------------- -------------- -------------- -------------- ------------- Ending units................. 2,695,290 - - 2,380,162 - ============== ============== ============== ============== =============
JANAGLTCHS JANAINTGRS --------------- ---------------------------------------------- 1998 2000 1999 1998 -------------- -------------- -------------- -------------- INVESTMENT ACTIVITY: Net investment income........ - 477,547 - - Realized gain (loss) on investments - (1,380,504) - - Change in unrealized gain (loss) on investments............. - (2,809,392) - - Reinvested capital gains..... - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations - (3,712,349) - - -------------- -------------- -------------- -------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ - 3,860,854 - - Transfers between funds...... - 19,317,238 - - Surrenders................... - (64,857) - - Death benefits............... - (1,321) - - Policy loans (net of repayments) (note 5)................... - (44,077) - - Deductions for surrender charges (note 2d).................. - (10,263) - - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......... - (688,560) - - Asset charges (note 3): FPVUL & VEL contracts...... - (25,778) - - MSP contracts.............. - (2,921) - - SL contracts............... - (733) - - -------------- -------------- -------------- -------------- Net equity transactions.. - 22,339,582 - - -------------- -------------- -------------- -------------- NET CHANGE IN CONTRACT OWNERS' EQUITY............... - 18,627,233 - - CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD.................... - - - - -------------- -------------- -------------- -------------- CONTRACT OWNERS' EQUITY END OF PERIOD.................... - 18,627,233 - - ============== ============== ============== ============== CHANGES IN UNITS: Beginning units.............. - - - - -------------- -------------- -------------- -------------- Units purchased.............. - 2,353,803 - - Units redeemed............... - (100,741) - - -------------- -------------- -------------- -------------- Ending units................. - 2,253,062 - - ============== ============== ============== ==============
(Continued) 21 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATBALJPM NSATCAPAP ----------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY Net investment income .............. $ 167,547 78,490 9,803 30,760 93,682 14,394 Realized gain (loss) on investments 63,538 (42,204) 373 (652,870) 538,187 16,939 Change in unrealized gain (loss) on investments ................... (241,628) (33,063) 22,806 (11,341,220) (1,637,699) 469,266 Reinvested capital gains ........... -- 495 2,184 4,845,304 1,352,393 174,093 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... (10,543) 3,718 35,166 (7,118,026) 346,563 674,692 ----------- ----------- ----------- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 1,988,633 1,611,897 87,905 8,485,213 9,062,429 1,531,297 Transfers between funds ............ 1,908,503 1,487,269 640,480 1,967,580 7,693,905 4,379,971 Surrenders ......................... (157,913) (107,959) -- (306,983) (206,070) (118) Death benefits ..................... (11,305) -- -- 10,787 (17,696) -- Policy loans (net of repayments) (note 5) ......................... (49,949) (10,080) (2,200) (245,557) (72,988) 731 Deductions for surrender charges (note 2d) ........................ (24,988) (13,826) -- (48,576) (26,392) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (312,300) (211,528) (28,998) (2,322,085) (1,637,150) (265,208) Asset charges (note 3): FPVUL & VEL contracts ............ (10,757) (6,440) (840) (83,996) (57,366) (7,161) MSP contracts .................... (2,649) (439) (3) (5,475) (1,785) (26) SL contracts ..................... (1,847) (638) (71) (4,898) (1,205) (603) ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions ........ 3,325,428 2,748,256 696,273 7,446,010 14,735,682 5,638,882 ----------- ----------- ----------- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 3,314,885 2,751,974 731,439 327,984 15,082,245 6,313,574 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 3,483,413 731,439 -- 21,395,819 6,313,574 -- ----------- ----------- ----------- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 6,798,298 3,483,413 731,439 21,723,803 21,395,819 6,313,574 =========== =========== =========== =========== =========== =========== CHANGES IN UNITS: Beginning units .................... 327,982 67,709 -- 1,644,036 485,911 -- ----------- ----------- ----------- ----------- ----------- ----------- Units purchased .................... 449,447 353,956 70,786 1,198,867 1,379,462 509,866 Units redeemed ..................... (129,366) (93,683) (3,077) (494,498) (221,337) (23,955) ----------- ----------- ----------- ----------- ----------- ----------- Ending units ....................... 648,063 327,982 67,709 2,348,405 1,644,036 485,911 =========== =========== =========== =========== =========== =========== NSATEQIFED ----------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY Net investment income .............. 14,259 1,651 879 Realized gain (loss) on investments 46,405 16,878 157 Change in unrealized gain (loss) on investments ................... (334,972) 84,114 15,021 Reinvested capital gains ........... -- 202 2,636 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... (274,308) 102,845 18,693 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 473,028 100,722 28,736 Transfers between funds ............ 1,253,216 527,196 202,838 Surrenders ......................... (6,869) (207) -- Death benefits ..................... -- -- -- Policy loans (net of repayments) (note 5) ......................... (32,403) (1,768) -- Deductions for surrender charges (note 2d) ........................ (1,087) (26) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (157,503) (48,952) (5,984) Asset charges (note 3): FPVUL & VEL contracts ............ (5,044) (1,993) (247) MSP contracts .................... (589) (80) (1) SL contracts ..................... (503) (77) (21) ----------- ----------- ----------- Net equity transactions ........ 1,522,246 574,815 225,321 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 1,247,938 677,660 244,014 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 921,674 244,014 -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 2,169,612 921,674 244,014 =========== =========== =========== CHANGES IN UNITS: Beginning units .................... 67,642 21,211 -- ----------- ----------- ----------- Units purchased .................... 135,367 51,440 21,799 Units redeemed ..................... (22,437) (5,009) (588) ----------- ----------- ----------- Ending units ....................... 180,572 67,642 21,211 =========== =========== ===========
22 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATGLOB50 NSATGVTBD -------------------------------------------- -------------------------------------------- 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. $ 162,075 (1,843) 1,916 2,083,360 760,961 83,055 Realized gain (loss) on investments 84,827 108,508 126 (164,247) (653,491) 9,736 Change in unrealized gain (loss) on investments ................... (4,336,580) 997,392 38,188 2,189,054 (442,511) (84,436) Reinvested capital gains ........... 945,098 456,545 3,213 -- 35,939 22,403 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (3,144,580) 1,560,602 43,443 4,108,167 (299,102) 30,758 ------------ ------------ ------------ ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 12,463,148 1,045,536 96,340 17,668,928 5,188,264 480,508 Transfers between funds ............ 2,956,853 12,602,010 374,760 9,887,594 10,824,196 4,241,272 Surrenders ......................... (17,060) (149,120) (20) (72,334) (7,882) (58) Death benefits ..................... -- (783) -- (652) (779) -- Policy loans (net of repayments) (note 5) ......................... (18,038) (3,556) (199) (103,358) (10,210) (822) Deductions for surrender charges (note 2d) ........................ (2,700) (19,098) -- (11,446) (1,010) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (486,956) (215,865) (19,705) (1,298,442) (747,310) (51,451) Asset charges (note 3): FPVUL & VEL contracts ............ (10,018) (4,771) (571) (21,054) (13,896) (2,112) MSP contracts .................... (54,582) (78) (2) (3,139) (3,046) (8) SL contracts ..................... (649) (8,899) (48) (7,679) (1,057) (178) ------------ ------------ ------------ ------------ ------------ ------------ Net equity transactions ........ 14,829,998 13,245,376 450,555 26,038,418 15,227,270 4,667,150 ------------ ------------ ------------ ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 11,685,418 14,805,978 493,998 30,146,585 14,928,168 4,697,908 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 15,299,976 493,998 -- 19,626,076 4,697,908 -- ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 26,985,394 15,299,976 493,998 49,772,661 19,626,076 4,697,908 ============ ============ ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 1,116,697 41,464 -- 1,882,004 436,992 -- ------------ ------------ ------------ ------------ ------------ ------------ Units purchased .................... 1,201,157 1,104,898 43,495 2,670,982 1,601,216 442,110 Units redeemed ..................... (61,297) (29,665) (2,031) (282,166) (156,204) (5,118) ------------ ------------ ------------ ------------ ------------ ------------ Ending units ....................... 2,256,557 1,116,697 41,464 4,270,820 1,882,004 436,992 ============ ============ ============ ============ ============ ============ NSATHIIFED --- ----------------------------------------- 2000 1999 1998 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. 1,110,135 305,361 22,639 Realized gain (loss) on investments (309,417) 2,166 (6,931) Change in unrealized gain (loss) on investments ................... (1,573,020) (155,595) 7,941 Reinvested capital gains ........... -- 645 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (772,302) 152,577 23,649 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 5,531,190 4,145,976 116,422 Transfers between funds ............ 2,945,536 3,041,733 850,224 Surrenders ......................... (202,047) (1,402) -- Death benefits ..................... (243) -- -- Policy loans (net of repayments) (note 5) ......................... 27,348 (1,976) -- Deductions for surrender charges (note 2d) ........................ (31,972) (180) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (295,849) (134,672) (18,455) Asset charges (note 3): FPVUL & VEL contracts ............ (5,820) (4,222) (756) MSP contracts .................... (873) (16) (3) SL contracts ..................... (176) (549) (64) ------------ ------------ ------------ Net equity transactions ........ 7,967,094 7,044,692 947,368 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 7,194,792 7,197,269 971,017 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 8,168,286 971,017 -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 15,363,078 8,168,286 971,017 ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 805,022 92,454 -- ------------ ------------ ------------ Units purchased .................... 918,997 756,587 94,321 Units redeemed ..................... (63,618) (44,019) (1,867) ------------ ------------ ------------ Ending units ....................... 1,660,401 805,022 92,454 ============ ============ ============
(Continued) 23 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATMCPSTR NSATMCIXDR -------------------------------------------- ------------------------------------------ 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. $ (36,857) (2,128) (30) 23,516 1,210 761 Realized gain (loss) on investments 1,416,485 327,350 (29) 291,278 14,818 (2,902) Change in unrealized gain (loss) on investments ................... (7,958,483) 1,323,586 48,847 (336,854) 51,305 29,815 Reinvested capital gains ........... 922,208 515,885 -- 238,697 47,431 -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (5,656,647) 2,164,693 48,788 216,637 114,764 27,674 ------------ ------------ ------------ ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 11,164,429 2,422,960 106,807 1,349,384 29,706 38,598 Transfers between funds ............ 12,673,990 6,109,550 294,315 4,514,754 418,208 239,349 Surrenders ......................... (176,519) (8,289) -- (1,416) (445) -- Death benefits ..................... (276) (1,613) -- -- -- -- Policy loans (net of repayments) (note 5) ......................... (111,058) (24,425) (514) (1,227) (3,245) -- Deductions for surrender charges (note 2d) ........................ (27,932) (1,062) -- (224) (57) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (1,032,843) (166,998) (20,594) (182,757) (35,179) (6,590) Asset charges (note 3): FPVUL & VEL contracts ............ (33,805) (5,799) (658) (7,127) (2,054) (289) MSP contracts .................... (2,152) (79) (2) (2,018) (35) (1) SL contracts ..................... (1,262) (147) (55) (272) (34) (24) ------------ ------------ ------------ ------------ ------------ ------------ Net equity transactions ........ 22,452,572 8,324,098 379,299 5,669,097 406,865 271,043 ------------ ------------ ------------ ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 16,795,925 10,488,791 428,087 5,885,734 521,629 298,717 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 10,916,878 428,087 -- 820,346 298,717 -- ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 27,712,803 10,916,878 428,087 6,706,080 820,346 298,717 ============ ============ ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 580,219 37,396 -- 61,224 26,958 -- ------------ ------------ ------------ ------------ ------------ ------------ Units purchased .................... 1,233,405 556,514 39,590 399,626 37,816 27,645 Units redeemed ..................... (97,413) (13,691) (2,194) (13,571) (3,550) (687) ------------ ------------ ------------ ------------ ------------ ------------ Ending units ....................... 1,716,211 580,219 37,396 447,279 61,224 26,958 ============ ============ ============ ============ ============ ============ NSATMMKT ----------------------------------------- 2000 1999 1998 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. 10,047,951 3,236,644 504,596 Realized gain (loss) on investments -- -- -- Change in unrealized gain (loss) on investments ................... -- -- -- Reinvested capital gains ........... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... 10,047,951 3,236,644 504,596 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 551,344,398 352,373,390 88,272,542 Transfers between funds ............ (450,193,315) (230,478,324) (60,507,727) Surrenders ......................... (1,793,468) (235,503) (201,196) Death benefits ..................... -- (27,182) -- Policy loans (net of repayments) (note 5) ......................... (3,989,346) (2,684,887) (1,000,116) Deductions for surrender charges (note 2d) ........................ (283,795) (30,161) (2,354) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (11,953,409) (7,099,744) (1,866,745) Asset charges (note 3): FPVUL & VEL contracts ............ (251,927) (155,882) (58,762) MSP contracts .................... (45,487) (18,983) (210) SL contracts ..................... (26,948) (43,454) (4,947) ------------ ------------ ------------ Net equity transactions ........ 82,806,703 111,599,270 24,630,485 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 92,854,654 114,835,914 25,135,081 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 139,970,995 25,135,081 -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 232,825,649 139,970,995 25,135,081 ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 13,058,280 2,395,406 -- ------------ ------------ ------------ Units purchased .................... 44,348,389 33,458,797 8,773,206 Units redeemed ..................... (36,845,146) (22,795,923) (6,377,800) ------------ ------------ ------------ Ending units ....................... 20,561,523 13,058,280 2,395,406 ============ ============ ============
24 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATMBDMAS NSATSMCAPG -------------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ---------- INVESTMENT ACTIVITY: Net investment income .............. $ 1,344,591 396,175 20,392 (1,793) (31) -- Realized gain (loss) on investments (66,760) (26,402) (3,929) (30,328) (45,165) -- Change in unrealized gain (loss) on investments ................... (112,147) (125,056) 781 (1,279,267) 1,020,705 -- Reinvested capital gains ........... -- -- 691 72,445 101,886 -- ------------ ------------ ------------ ------------ ------------ ---------- Net increase (decrease) in contract owners' equity resulting from operations ...... 1,165,684 244,717 17,935 (1,238,943) 1,077,395 -- ------------ ------------ ------------ ------------ ------------ ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 9,346,749 3,583,938 238,773 1,154,557 1,120,048 -- Transfers between funds ............ 3,298,958 8,648,087 687,922 4,644,251 516,673 -- Surrenders ......................... (62,839) (4,080) -- (1,187) -- -- Death benefits ..................... -- 21 -- -- -- -- Policy loans (net of repayments) (note 5) ......................... (10,119) (7,035) (427) (11,214) -- -- Deductions for surrender charges (note 2d) ........................ (9,943) (523) -- (188) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (538,746) (202,496) (20,588) (216,886) (3,049) -- Asset charges (note 3): FPVUL & VEL contracts ............ (8,327) (5,111) (994) (7,874) (190) -- MSP contracts .................... (37,227) (340) (4) (1,016) (16) -- SL contracts ..................... (891) (6,384) (84) (401) (68) -- ------------ ------------ ------------ ------------ ------------ ---------- Net equity transactions ........ 11,977,615 12,006,077 904,598 5,560,042 1,633,398 -- ------------ ------------ ------------ ------------ ------------ ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 13,143,299 12,250,794 922,533 4,321,099 2,710,793 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 13,173,327 922,533 -- 2,710,793 -- -- ------------ ------------ ------------ ------------ ------------ ---------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 26,316,626 13,173,327 922,533 7,031,892 2,710,793 -- ============ ============ ============ ============ ============ ========== CHANGES IN UNITS: Beginning units .................... 1,283,724 90,322 -- 132,226 -- -- ------------ ------------ ------------ ------------ ------------ ---------- Units purchased .................... 1,242,287 1,252,855 96,867 290,611 132,396 -- Units redeemed ..................... (92,882) (59,453) (6,545) (13,237) (170) -- ------------ ------------ ------------ ------------ ------------ ---------- Ending units ....................... 2,433,129 1,283,724 90,322 409,600 132,226 -- ============ ============ ============ ============ ============ ========== NSATSMCAPV --------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. (6,507) (609) (72) Realized gain (loss) on investments 378,887 215,517 (8,544) Change in unrealized gain (loss) on investments ................... (2,383,146) (194,598) 118,603 Reinvested capital gains ........... 2,830,882 651,318 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... 820,116 671,628 109,987 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 4,858,757 837,148 186,610 Transfers between funds ............ 6,033,116 2,112,202 774,453 Surrenders ......................... (80,683) (7,439) -- Death benefits ..................... -- 222 -- Policy loans (net of repayments) (note 5) ......................... (42,449) (13,801) (2,782) Deductions for surrender charges (note 2d) ........................ (12,767) (953) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (687,469) (244,824) (34,791) Asset charges (note 3): FPVUL & VEL contracts ............ (26,379) (10,039) (1,048) MSP contracts .................... (2,432) (356) (4) SL contracts ..................... (1,182) (386) (88) ------------ ------------ ------------ Net equity transactions ........ 10,038,512 2,671,774 922,350 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 10,858,628 3,343,402 1,032,337 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 4,375,739 1,032,337 -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 15,234,367 4,375,739 1,032,337 ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 354,123 106,497 -- ------------ ------------ ------------ Units purchased .................... 821,558 273,364 110,966 Units redeemed ..................... (69,600) (25,738) (4,469) ------------ ------------ ------------ Ending units ....................... 1,106,081 354,123 106,497 ============ ============ ============
(Continued) 25 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NSATSMCO NSATSTRVAL -------------------------------------------- ------------------------------------------ 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ---------- INVESTMENT ACTIVITY: Net investment income .............. $ (18,475) (4,091) (112) 11,593 5,539 1,028 Realized gain (loss) on investments 1,962,134 439,543 (6,379) 60,307 17,888 (7,839) Change in unrealized gain (loss) on investments ................... (6,709,330) 2,711,547 132,974 33,455 (70,115) 43,881 Reinvested capital gains ........... 6,779,344 500,536 -- -- 22,264 -- ------------ ------------ ------------ ------------ ------------ ---------- Net increase (decrease) in contract owners' equity resulting from operations ...... 2,013,673 3,647,535 126,483 105,355 (24,424) 37,070 ------------ ------------ ------------ ------------ ------------ ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 13,832,839 2,908,526 360,233 217,062 113,739 26,097 Transfers between funds ............ 15,651,034 5,337,212 1,192,844 36,281 555,257 290,790 Surrenders ......................... (181,834) (6,177) (43) (2,555) (534) -- Death benefits ..................... (2,655) (1,172) -- -- -- -- Policy loans (net of repayments) (note 5) ......................... (173,061) (23,244) (2,442) 5,717 (6,758) 368 Deductions for surrender charges (note 2d) ........................ (28,773) (791) (1) (404) (68) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (1,154,682) (349,442) (64,333) (70,189) (38,618) (7,966) Asset charges (note 3): FPVUL & VEL contracts ............ (39,974) (13,385) (2,107) (3,692) (2,342) (354) MSP contracts .................... (4,563) (382) (8) (245) (47) (1) SL contracts ..................... (2,226) (788) (177) (704) (54) (30) ------------ ------------ ------------ ------------ ------------ ---------- Net equity transactions ........ 27,896,105 7,850,357 1,483,966 181,271 620,575 308,904 ------------ ------------ ------------ ------------ ------------ ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 29,909,778 11,497,892 1,610,449 286,626 596,151 345,974 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 13,108,341 1,610,449 -- 942,125 345,974 -- ------------ ------------ ------------ ------------ ------------ ---------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 43,018,119 13,108,341 1,610,449 1,228,751 942,125 345,974 ============ ============ ============ ============ ============ ========== CHANGES IN UNITS: Beginning units .................... 900,802 159,462 -- 96,897 34,463 -- ------------ ------------ ------------ ------------ ------------ ---------- Units purchased .................... 1,953,863 777,178 167,063 45,789 67,374 35,384 Units redeemed ..................... (108,007) (35,838) (7,601) (25,096) (4,940) (921) ------------ ------------ ------------ ------------ ------------ ---------- Ending units ....................... 2,746,658 900,802 159,462 117,590 96,897 34,463 ============ ============ ============ ============ ============ ========== NSATTOTRTN ----------------------------------------- 2000 1999 1998 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. 187,613 95,790 26,909 Realized gain (loss) on investments 344,754 22,208 (21,020) Change in unrealized gain (loss) on investments ................... (13,348,541) (33,899) 283,836 Reinvested capital gains ........... 11,991,779 809,302 321,440 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (824,395) 893,401 611,165 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 10,272,164 7,871,786 2,620,309 Transfers between funds ............ 4,280,493 9,589,090 5,463,668 Surrenders ......................... (358,609) (153,144) (81) Death benefits ..................... 16,036 (25,003) -- Policy loans (net of repayments) (note 5) ......................... (580,464) (318,100) (4,594) Deductions for surrender charges (note 2d) ........................ (56,746) (19,613) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (3,360,137) (2,208,818) (385,652) Asset charges (note 3): FPVUL & VEL contracts ............ (122,772) (73,719) (10,105) MSP contracts .................... (6,483) (3,448) (36) SL contracts ..................... (10,831) (2,037) (851) ------------ ------------ ------------ Net equity transactions ........ 10,072,651 14,656,994 7,682,657 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 9,248,256 15,550,395 8,293,822 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 23,844,217 8,293,822 -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 33,092,473 23,844,217 8,293,822 ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 1,894,394 702,435 -- ------------ ------------ ------------ Units purchased .................... 1,307,532 1,426,646 740,122 Units redeemed ..................... (485,526) (234,687) (37,687) ------------ ------------ ------------ Ending units ....................... 2,716,400 1,894,394 702,435 ============ ============ ============
26 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
NBAMTGUARD NBAMTMCGR ----------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .............. $ 14,917 3,298 (83) (41,606) (7,463) (52) Realized gain (loss) on investments 109,026 137,366 (5,499) 4,566,336 1,188,750 3,904 Change in unrealized gain (loss) on investments ................... (185,904) 77,047 82,886 (10,290,829) 3,039,884 176,285 Reinvested capital gains ........... -- -- -- 6,497 37,807 -- ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... (61,961) 217,711 77,304 (5,759,602) 4,258,978 180,137 ----------- ----------- ----------- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 791,413 436,993 246,176 15,764,083 9,784,832 57,715 Transfers between funds ............ 2,086,291 1,360,544 891,240 16,272,282 (2,147,643) 560,630 Surrenders ......................... (37,547) (62,331) (2) (82,297) (16,427) (20) Death benefits ..................... -- -- -- (5,370) (4,321) -- Policy loans (net of repayments) (note 5) ......................... (16,305) (3,869) (318) (106,262) (67,280) (140) Deductions for surrender charges (note 2d) ........................ (5,941) (7,983) -- (13,023) (2,104) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (259,871) (169,963) (17,719) (1,383,172) (350,946) (55,646) Asset charges (note 3): FPVUL & VEL contracts ............ (12,978) (8,142) (742) (48,371) (11,378) (1,407) MSP contracts .................... (543) (127) (3) (5,311) (459) (5) SL contracts ..................... (579) (100) (62) (2,701) (716) (118) ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions ........ 2,543,940 1,545,022 1,118,570 30,389,858 7,183,558 561,009 ----------- ----------- ----------- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 2,481,979 1,762,733 1,195,874 24,630,256 11,442,536 741,146 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 2,958,607 1,195,874 -- 12,183,682 741,146 -- ----------- ----------- ----------- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... $ 5,440,586 2,958,607 1,195,874 36,813,938 12,183,682 741,146 =========== =========== =========== =========== =========== =========== CHANGES IN UNITS: Beginning units .................... 202,892 56,533 -- 640,951 85,872 -- ----------- ----------- ----------- ----------- ----------- ----------- Units purchased .................... 252,130 167,370 58,160 1,560,513 995,573 90,761 Units redeemed ..................... (58,231) (21,011) (1,627) (79,404) (440,494) (4,889) ----------- ----------- ----------- ----------- ----------- ----------- Ending units ....................... 396,791 202,892 56,533 2,122,060 640,951 85,872 =========== =========== =========== =========== =========== =========== NBAMTPART --------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .............. 50,670 54,744 (176) Realized gain (loss) on investments (276,792) 1,248 (13,483) Change in unrealized gain (loss) on investments ................... (888,222) 196,040 255,133 Reinvested capital gains ........... 1,184,100 98,874 3,599 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... 69,756 350,906 245,073 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 2,034,154 2,049,277 831,946 Transfers between funds ............ 1,022,755 1,699,822 3,231,525 Surrenders ......................... (165,342) (78,561) (16) Death benefits ..................... (502) (2,713) -- Policy loans (net of repayments) (note 5) ......................... (95,808) (216,206) (174) Deductions for surrender charges (note 2d) ........................ (26,163) (10,061) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (540,817) (464,515) (144,625) Asset charges (note 3): FPVUL & VEL contracts ............ (25,778) (22,616) (4,977) MSP contracts .................... (3,445) (622) (18) SL contracts ..................... (1,681) (1,766) (419) ----------- ----------- ----------- Net equity transactions ........ 2,197,373 2,952,039 3,913,242 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 2,267,129 3,302,945 4,158,315 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 7,461,260 4,158,315 -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD .......................... 9,728,389 7,461,260 4,158,315 =========== =========== =========== CHANGES IN UNITS: Beginning units .................... 676,989 401,819 -- ----------- ----------- ----------- Units purchased .................... 383,557 382,626 417,585 Units redeemed ..................... (170,279) (107,456) (15,766) ----------- ----------- ----------- Ending units ....................... 890,267 676,989 401,819 =========== =========== ===========
(Continued) 27 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
OPPAGGGRVA OPPCAPAPVA ------------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .............. $ (52,493) (2,942) (54) (8,362) 5,876 (134) Realized gain (loss) on investments 4,488,570 618,388 1,246 1,792,860 191,495 20,735 Change in unrealized gain (loss) on investments ................... (19,721,439) 2,906,737 155,404 (5,403,446) 2,561,317 255,097 Reinvested capital gains ........... 950,033 -- 270 1,434,225 110,334 101 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...... (14,335,329) 3,522,183 156,866 (2,184,723) 2,869,022 275,799 ------------ ------------ ------------ ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 24,690,515 2,894,019 298,181 12,133,627 2,754,479 522,163 Transfers between funds ............ 38,617,778 4,290,831 753,401 25,912,373 7,064,837 1,352,464 Surrenders ......................... (184,820) (25,306) (318) (1,774,425) (254,161) (369) Death benefits ..................... (6,793) 295 -- (7,097) (300) -- Policy loans (net of repayments) (note 5) ......................... (384,286) (37,694) (2,146) (290,219) (72,268) (10,091) Deductions for surrender charges (note 2d) ........................ (29,245) (3,241) (4) (280,781) (32,551) (4) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (2,643,790) (416,901) (60,958) (2,024,385) (655,772) (91,465) Asset charges (note 3): FPVUL & VEL contracts ............ (84,929) (13,629) (1,372) (73,662) (23,800) (2,763) MSP contracts .................... (14,660) (182) (5) (8,607) (983) (10) SL contracts ..................... (7,197) (488) (115) (4,224) (390) (233) ------------ ------------ ------------ ------------ ------------ ------------ Net equity transactions ........ 59,952,573 6,687,704 986,664 33,582,600 8,779,091 1,769,692 ------------ ------------ ------------ ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 45,617,244 10,209,887 1,143,530 31,397,877 11,648,113 2,045,491 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 11,353,417 1,143,530 -- 13,693,604 2,045,491 -- ------------ ------------ ------------ ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 56,970,661 11,353,417 1,143,530 45,091,481 13,693,604 2,045,491 ============ ============ ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .................... 570,019 101,944 -- 806,675 165,067 -- ------------ ------------ ------------ ------------ ------------ ------------ Units purchased .................... 3,007,222 544,229 108,530 2,290,226 715,374 174,797 Units redeemed ..................... (149,167) (76,154) (6,586) (257,837) (73,766) (9,730) ------------ ------------ ------------ ------------ ------------ ------------ Ending units ....................... 3,428,074 570,019 101,944 2,839,064 806,675 165,067 ============ ============ ============ ============ ============ ============ OPPGLSECVA ----------------------------------------- 2000 1999 1998 ------------ --------- --------- INVESTMENT ACTIVITY: Net investment income .............. (1,051) -- -- Realized gain (loss) on investments (138,650) -- -- Change in unrealized gain (loss) on investments ................... 70,484 -- -- Reinvested capital gains ........... -- -- -- ------------ --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ...... (69,217) -- -- ------------ --------- --------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 756,191 -- -- Transfers between funds ............ 3,400,619 -- -- Surrenders ......................... (1,589) -- -- Death benefits ..................... -- -- -- Policy loans (net of repayments) (note 5) ......................... (2,407) -- -- Deductions for surrender charges (note 2d) ........................ (252) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (70,452) -- -- Asset charges (note 3): FPVUL & VEL contracts ............ (1,673) -- -- MSP contracts .................... (1,076) -- -- SL contracts ..................... (94) -- -- ------------ --------- --------- Net equity transactions ........ 4,079,267 -- -- ------------ --------- --------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 4,010,050 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... -- -- -- ------------ --------- --------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 4,010,050 -- -- ============ ========= ========= CHANGES IN UNITS: Beginning units .................... -- -- -- ------------ --------- --------- Units purchased .................... 426,089 -- -- Units redeemed ..................... (8,082) -- -- ------------ --------- --------- Ending units ....................... 418,007 -- -- ============ ========= =========
28 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
OPPMGRINVA STOPP2 -------------------------------------------- --------------------------------------- 2000 1999 1998 2000 1999 1998 ------------ ------------ ------------ ------------ --------- --------- INVESTMENT ACTIVITY: Net investment income .............. $ 28,289 8,173 (84) (1,449) -- -- Realized gain (loss) on investments 349,566 (12,270) (19,661) 7,469 -- -- Change in unrealized gain (loss) on investments ................... (2,767,885) 713,752 80,325 (478,402) -- -- Reinvested capital gains ........... 509,013 17,163 645 501,505 -- -- ------------ ------------ ------------ ------------ --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ...... (1,881,017) 726,818 61,225 29,123 -- -- ------------ ------------ ------------ ------------ --------- --------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 6,051,658 1,687,758 284,513 1,381,833 -- -- Transfers between funds ............ 11,215,475 3,276,499 1,343,627 3,738,013 -- -- Surrenders ......................... (108,972) (24,107) (418) (11,246) -- -- Death benefits ..................... 7,734 (9,603) -- -- -- -- Policy loans (net of repayments) (note 5) ......................... (207,915) (23,549) (16,228) (10,320) -- -- Deductions for surrender charges (note 2d) ........................ (17,244) (3,088) (5) (1,779) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (1,065,069) (314,964) (43,383) (61,655) -- -- Asset charges (note 3): FPVUL & VEL contracts ............ (39,206) (12,409) (1,608) (1,167) -- -- MSP contracts .................... (6,649) (626) (6) (206) -- -- SL contracts ..................... (3,480) (620) (135) (147) -- -- ------------ ------------ ------------ ------------ --------- --------- Net equity transactions ........ 15,826,332 4,575,291 1,566,357 5,033,326 -- -- ------------ ------------ ------------ ------------ --------- --------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 13,945,315 5,302,109 1,627,582 5,062,449 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 6,929,691 1,627,582 -- -- -- -- ------------ ------------ ------------ ------------ --------- --------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 20,875,006 6,929,691 1,627,582 5,062,449 -- -- ============ ============ ============ ============ ========= ========= CHANGES IN UNITS: Beginning units .................... 558,424 158,153 -- -- -- -- ------------ ------------ ------------ ------------ --------- --------- Units purchased .................... 1,423,961 436,576 164,578 523,047 -- -- Units redeemed ..................... (119,721) (36,305) (6,425) (8,938) -- -- ------------ ------------ ------------ ------------ --------- --------- Ending units ....................... 1,862,664 558,424 158,153 514,109 -- -- ============ ============ ============ ============ ========= ========= NSATGFOCTU ----------------------------------------- 2000 1999 1998 ------------ --------- --------- INVESTMENT ACTIVITY: Net investment income .............. -- -- -- Realized gain (loss) on investments (27,217) -- -- Change in unrealized gain (loss) on investments ................... (4,210) -- -- Reinvested capital gains ........... -- -- -- ------------ --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ...... (31,427) -- -- ------------ --------- --------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 8,564 -- -- Transfers between funds ............ 102,537 -- -- Surrenders ......................... -- -- -- Death benefits ..................... -- -- -- Policy loans (net of repayments) (note 5) ......................... -- -- -- Deductions for surrender charges (note 2d) ........................ -- -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (1,091) -- -- Asset charges (note 3): FPVUL & VEL contracts ............ (35) -- -- MSP contracts .................... (4) -- -- SL contracts ..................... (8) -- -- ------------ --------- --------- Net equity transactions ........ 109,963 -- -- ------------ --------- --------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 78,536 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... -- -- -- ------------ --------- --------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 78,536 -- -- ============ ========= ========= CHANGES IN UNITS: Beginning units .................... -- -- -- ------------ --------- --------- Units purchased .................... 12,533 -- -- Units redeemed ..................... (154) -- -- ------------ --------- --------- Ending units ....................... 12,379 -- -- ============ ========= =========
(Continued) 29 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
MSUEMMKT MSUMCAPGR ----------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ------------- ----------- INVESTMENT ACTIVITY: Net investment income .............. $ 150,351 84,931 18,583 (162) -- -- Realized gain (loss) on investments 88,105 17,142 (32,880) (13,306) -- -- Change in unrealized gain (loss) on investments ................... (119,691) 20,955 (7,323) (98,350) -- -- Reinvested capital gains ........... -- -- -- 800 -- -- ----------- ----------- ----------- ----------- ------------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... 118,765 123,028 (21,620) (111,018) -- -- ----------- ----------- ----------- ----------- ------------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 423,869 176,047 41,423 88,544 -- -- Transfers between funds ............ 353,545 265,717 144,407 877,199 -- -- Surrenders ......................... (956) (137) -- (650) -- -- Death benefits ..................... -- -- -- -- -- -- Policy loans (net of repayments) (note 5) ......................... (6,273) (792) -- (83) -- -- Deductions for surrender charges (note 2d) ........................ (151) (17) -- (103) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (78,727) (30,191) (6,534) (12,506) -- -- Asset charges (note 3): FPVUL & VEL contracts ............ (3,151) (1,369) (152) (300) -- -- MSP contracts .................... (105) (2) (1) (74) -- -- SL contracts ..................... (173) (2) (13) (2) -- -- ----------- ----------- ----------- ----------- ------------- ----------- Net equity transactions ........ 687,878 409,254 179,130 952,025 -- -- ----------- ----------- ----------- ----------- ------------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 806,643 532,282 157,510 841,007 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 689,792 157,510 -- -- -- -- ----------- ----------- ----------- ----------- ------------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 1,496,435 689,792 157,510 841,007 -- -- =========== =========== =========== =========== ============= =========== CHANGES IN UNITS: .................... Beginning units .................... 75,186 21,992 -- -- -- -- -- -- -- -- -- -- Units purchased .................... 90,977 57,926 22,914 98,221 -- -- Units redeemed ..................... (19,742) (4,732) (922) (1,379) -- -- -- -- -- -- -- -- Ending units ....................... 146,421 75,186 21,992 96,842 -- -- =========== =========== =========== =========== ============= =========== MSUUSREALE ----------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .............. 263,091 53,245 (16) Realized gain (loss) on investments 298,595 (40,204) (31,055) Change in unrealized gain (loss) on investments ................... 155,839 (130,048) 27,306 Reinvested capital gains ........... 25,130 -- 339 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... 742,655 (117,007) (3,426) ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 1,587,036 754,790 233,023 Transfers between funds ............ 1,297,880 440,087 517,845 Surrenders ......................... (14,855) (8,017) -- Death benefits ..................... (503) (1,020) -- Policy loans (net of repayments) (note 5) ......................... 8,244 (8,547) (834) Deductions for surrender charges (note 2d) ........................ (2,351) (1,027) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (156,453) (188,335) (28,277) Asset charges (note 3): FPVUL & VEL contracts ............ (7,652) (4,322) (1,116) MSP contracts .................... (893) (107) (4) SL contracts ..................... (715) (227) (94) ----------- ----------- ----------- Net equity transactions ........ 2,709,738 983,275 720,543 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 3,452,393 866,268 717,117 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 1,583,385 717,117 -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 5,035,778 1,583,385 717,117 =========== =========== =========== CHANGES IN UNITS: .................... Beginning units .................... 185,170 81,141 -- -- -- -- Units purchased .................... 321,028 119,546 84,716 Units redeemed ..................... (50,354) (15,517) (3,575) -- -- -- Ending units ....................... 455,844 185,170 81,141 =========== =========== ===========
30 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
VEWWEMGMKT VEWWHRDAST ----------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .............. $ (1,640) (139) (20) 6,036 2,174 (11) Realized gain (loss) on investments (408,538) 235,337 (14,143) 29,182 26,395 (3,051) Change in unrealized gain (loss) on investments ................... (1,655,251) 663,413 18,347 20,687 22,444 (2,102) Reinvested capital gains ........... -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... (2,065,429) 898,611 4,184 55,905 51,013 (5,164) ----------- ----------- ----------- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 1,719,241 322,588 90,144 140,736 201,802 23,363 Transfers between funds ............ 1,679,789 1,279,757 207,921 728,352 69,474 144,721 Surrenders ......................... (45,027) (1,334) -- (5,248) (679) -- Death benefits ..................... -- (1,149) -- -- -- -- Policy loans (net of repayments) (note 5) ......................... (19,011) (5,485) 410 3,590 216 235 Deductions for surrender charges (note 2d) ........................ (7,125) (171) -- (831) (87) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (324,544) (90,731) (13,062) (48,413) (29,846) (8,707) Asset charges (note 3): FPVUL & VEL contracts ............ (13,663) (4,040) (370) (2,162) (1,079) (186) MSP contracts .................... (1,248) (151) (1) (343) (2) (1) SL contracts ..................... (1,292) (184) (31) (135) (159) (16) ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions ........ 2,987,120 1,499,100 285,011 815,546 239,640 159,409 ----------- ----------- ----------- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 921,691 2,397,711 289,195 871,451 290,653 154,245 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 2,686,906 289,195 -- 444,898 154,245 -- ----------- ----------- ----------- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 3,608,597 2,686,906 289,195 1,316,349 444,898 154,245 =========== =========== =========== =========== =========== =========== CHANGES IN UNITS: .................... 204,110 43,904 -- 53,265 22,344 -- Beginning units .................... -- -- -- -- -- -- 316,404 171,741 46,042 106,332 51,882 23,601 Units purchased .................... (53,994) (11,535) (2,138) (18,085) (20,961) (1,257) Units redeemed ..................... -- -- -- -- -- -- 466,520 204,110 43,904 141,512 53,265 22,344 Ending units ....................... ============== ============== ============== ============== ============= ============ WPTGLOPVC ----------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .............. 22,477 8,941 4,471 Realized gain (loss) on investments 93,144 (2,440) 8,407 Change in unrealized gain (loss) on investments ................... 87,894 (2,238) 5,870 Reinvested capital gains ........... 23,283 18,278 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... 226,798 22,541 18,748 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 576,937 486,214 76,711 Transfers between funds ............ 628,024 (106) 655,643 Surrenders ......................... (4,490) (2,612) -- Death benefits ..................... -- -- -- Policy loans (net of repayments) (note 5) ......................... (20,705) (3,476) (17,477 Deductions for surrender charges (note 2d) ........................ (710) (334) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (131,580) (53,820) (13,090 Asset charges (note 3): FPVUL & VEL contracts ............ (4,272) (2,591) (558 MSP contracts .................... (428) (46) (2 SL contracts ..................... (681) (57) (47 ----------- ----------- ----------- Net equity transactions ........ 1,042,095 423,172 701,180 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 1,268,893 445,713 719,928 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 1,165,641 719,928 -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 2,434,534 1,165,641 719,928 =========== =========== =========== CHANGES IN UNITS: .................... 102,845 66,036 -- Beginning units .................... -- -- -- 114,059 67,676 69,022 Units purchased .................... (16,387) (30,867) (2,986 Units redeemed ..................... -- -- -- 200,517 102,845 66,036 Ending units ....................... ============== ============== ==============
(Continued) 31 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000 AND 1999 AND FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1998
WPTINTEQ WPTVALUE ----------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .............. $ 11,560 19,201 2,831 (1,199) (154) (13) Realized gain (loss) on investments 242,925 115,611 (24,058) 225,824 86,674 (2,106) Change in unrealized gain (loss) on investments ................... (1,294,832) 581,395 30,323 (716,480) 208,276 29,961 Reinvested capital gains ........... 310,165 -- -- 141,743 -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ...... (730,182) 716,207 9,096 (350,112) 294,796 27,842 ----------- ----------- ----------- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................. 467,135 386,407 114,374 381,654 170,257 48,012 Transfers between funds ............ 625,009 716,698 495,343 297,999 306,681 118,060 Surrenders ......................... (33,371) (6,378) -- (12,588) (1,792) (163) Death benefits ..................... -- -- -- -- -- -- Policy loans (net of repayments) (note 5) ......................... (16,955) (4,356) (891) (6,839) (2,901) 404 Deductions for surrender charges (note 2d) ........................ (5,281) (817) -- (1,992) (229) (2) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ................ (157,048) (114,080) (19,101) (83,921) (61,093) (7,797) Asset charges (note 3): FPVUL & VEL contracts ............ (8,846) (5,328) (733) (4,492) (1,843) (237) MSP contracts .................... (866) (367) (3) (481) (24) (1) SL contracts ..................... (834) (328) (62) (736) (63) (20) ----------- ----------- ----------- ----------- ----------- ----------- Net equity transactions ........ 868,943 971,451 588,927 568,604 408,993 158,256 ----------- ----------- ----------- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 138,761 1,687,658 598,023 218,492 703,789 186,098 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......................... 2,285,681 598,023 -- 889,887 186,098 -- ----------- ----------- ----------- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD....................$ ..... 2,424,442 2,285,681 598,023 1,108,379 889,887 186,098 =========== =========== =========== =========== =========== =========== CHANGES IN UNITS: .................... 141,958 56,767 -- 51,860 17,619 -- ----------- ----------- ----------- ----------- ----------- ----------- Beginning units .................... -- -- -- -- -- -- 84,215 98,872 58,807 43,425 38,599 18,507 Units purchased .................... (15,819) (13,681) (2,040) (15,055) (4,358) (888) Units redeemed ..................... -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- 210,354 141,958 56,767 80,230 51,860 17,619 Ending units ....................... ============== ============== ============== ============== ============= ==============
See accompanying notes to financial statements. 32 -------------------------------------------------------------------------------- NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Organization and Nature of Operations The Nationwide VLI Separate Account-4 (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on December 3, 1997. The Account has been registered as a unit investment trust under the Investment Company Act of 1940. On May 3, 1999, the Company (Depositor) transferred to the Account 100,000 shares of the Nationwide SAT - Small Cap Growth Fund for which the Account was credited with 100,000 units of the Nationwide SAT - Small Cap Growth Fund. The value of the units purchased by the Company on May 3, 1999 was $1,000,000. The Company offers Flexible Premium, Modified Single Premium and Survivorship Life Variable Life Insurance Policies through the Account. (b) The Contracts Only contracts without a front-end sales charge, but with a contingent deferred sales charge and certain other fees are offered for purchase. See note 2 for a discussion of policy charges and note 3 for asset charges. Contract owners may invest in the following: Portfolios of the American Century Variable Portfolios, Inc. (American Century VP); American Century VP - American Century VP 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. (DrySRGr) Dreyfus Stock Index Fund (DryStkIx) Dreyfus IP - European Equity Portfolio (DryEuroEq) Portfolio of the Dreyfus Variable Investment Fund (Dreyfus VIF); Dreyfus VIF - Appreciation Portfolio (DryVApp) Federated Insurance Series - Quality Bond Fund II (FedQualBd2) Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity VIP); Fidelity VIP - Equity-Income Portfolio - Service Class (FidVEqInS) Fidelity VIP - Growth Portfolio - Service Class (FidVGrS) Fidelity VIP - High Income Portfolio - Service Class (FidVHiInS) Fidelity VIP - Overseas Portfolio - Service Class (FidVOvSeS) Portfolio of the Fidelity Variable Insurance Products Fund II (Fidelity VIP-II); Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVConS) Portfolio of the Fidelity Variable Insurance Products Fund III (Fidelity VIP-III); Fidelity VIP-III - Growth Opportunities Portfolio - Service Class (FidVGrOpS) Funds of the Gartmore NSAT; Gartmore NSAT - Emerging Markets Fund (NSATEmMGM) Gartmore NSAT - Global Technology & Communication Fund (NSATGTecGM) Gartmore NSAT - International Growth Fund (NSATIntGGM) (Continued) 33 Portfolios of Janus Aspen Series; Janus Aspen Series - Capital Appreciation Portfolio - Service Shares (JanACapApS) Janus Aspen Series - Global Technology Portfolio - Service Shares (JanAGlTchS) Janus Aspen Series - International Growth Portfolio - Service Shares (JanAIntGrS) Funds of the Nationwide Separate Account Trust (Nationwide SAT) (managed for a fee by an affiliated investment advisor); Nationwide SAT - Balanced Fund - J.P. Morgan (NSATBalJPM) Nationwide SAT - Capital Appreciation Fund (NSATCapAp) Nationwide SAT - Equity Income Fund - Federated (NSATEqIFED) Nationwide SAT - Global 50 Fund (NSATGlob50) Nationwide SAT - Government Bond Fund (NSATGvtBd) Nationwide SAT - High Income Bond Fund - Federated (NSATHiIFED) Nationwide SAT - Mid Cap Growth Fund - Strong (NSATMCpSTR) Nationwide SAT - Mid Cap Index Fund - Dreyfus (NSATMCIxDR) Nationwide SAT - Money Market Fund (NSATMMkt) Nationwide SAT - Multi Sector Bond Fund - MAS (NSATMBdMAS) Nationwide SAT - Small Cap Growth Fund (NSATSmCapG) Nationwide SAT - Small Cap Value Fund (NSATSmCapV) Nationwide SAT - Small Company Fund (NSATSmCo) Nationwide SAT - Strategic Value Fund (NSATStrVal) Nationwide SAT - Total Return Fund (NSATTotRtn) 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) Funds of the Oppenheimer Variable Account Funds; Oppenheimer Aggressive Growth Fund/VA (OppAggGrVA) Oppenheimer Capital Appreciation Fund/VA (OppCapApVA) Oppenheimer Global Securities Fund/VA (OppGlSecVA) Oppenheimer Growth & Income Fund/VA (OppMGrInVA) Strong Opportunity Fund II, Inc. (StOpp2) Turner NSAT - Growth Focus Fund (NSATGFocTU) Portfolios of The Universal Institutional Funds, Inc. The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio (MSUEmMkt) (formerly Morgan Stanley - Emerging Markets Debt Portfolio) The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio (MSUMCapGr) (formerly Morgan Stanley - Mid Cap Growth Portfolio) The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio (MSUUSRealE) (formerly Van Kampen Morgan Stanley - U.S. Real Estate Portfolio) Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT); Van Eck WIT - Worldwide Emerging Markets Fund (VEWwEmgMkt) Van Eck WIT - Worldwide Hard Assets Fund (VEWwHrdAst) Portfolios of the Warburg Pincus Trust; Warburg Pincus Trust - Global Post - Venture Capital Portfolio (WPTGloPVC) Warburg Pincus Trust - International Equity Portfolio (WPTIntEq) Warburg Pincus Trust - Value Portfolio (WPTValue) 34 At December 31, 2000, contract owners have invested in all of the above funds. The contract owners' equity is affected by the investment results of each fund, equity transactions by contract owners and certain contract expenses (see notes 2 and 3). The accompanying financial statements include only contract owners' purchase payments pertaining to the variable portions of their contracts and exclude any purchase payments for fixed dollar 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. (c) Security Valuation, Transactions and Related Investment Income The fair value of the underlying mutual funds is based on the closing net asset value per share at December 31, 2000. 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 accounting principles generally accepted in the United States may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) POLICY CHARGES (a) Deductions from Premium On flexible premium, modified single premium and survivorship life variable life insurance contracts, the Company deducts a charge for state premium taxes not to exceed 2.5% of all premiums received to cover the payment of these premium taxes. Additionally, the Company deducts a front-end sales load of up to 3.5% from each premium payment received. The Company may at its sole discretion reduce this sales loading. (b) Cost of Insurance A cost of insurance charge is assessed monthly against each contract. The amount of the charge is based upon age, sex, rate class and net amount at risk (death benefit less total contract value). (Continued) 35 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued (c) Administrative Charges For flexible premium, modified single premium and survivorship life variable life insurance contracts, the Company currently deducts a monthly administrative charge of $10 during the first policy year and $5 per month thereafter (may deduct up to $7.50, maximum) to recover policy maintenance, accounting, record keeping and other administrative expenses. The above charges are assessed against each contract by liquidating units. (d) Surrender Charges Policy surrenders result in a redemption of the contract value from the Account and payment of the surrender proceeds to the contract owner or designee. The surrender proceeds consist of the contract value, less any outstanding policy loans, and less a surrender charge, if applicable. The amount of the charge is based upon a specified percentage of the initial surrender charge which varies by issue age, sex and rate class. For flexible premium contracts, the charge is 100% of the initial surrender charge in the first year, declining to 30% of the initial surrender charge in the eighth year. No surrender charge is assessed on any contract surrendered after the eighth year. The Company may waive the surrender charge for certain contracts in which the sales expenses normally associated with the distribution of a contract are not incurred. No charges were deducted from the initial funding, or from earnings thereon. (3) ASSET CHARGES For flexible premium variable universal life (FPVUL) and variable executive life (VEL) contracts, the Company deducts a charge equal to an annual effective rate multiplied by the Cash Value attributable to the Variable Account. The annual effective rate is 0.60% for the first $25,000 of Cash Value attributable to the Variable Account, 0.30% for the next $225,000 of Cash Value attributable to the Variable Account and 0.10% for all Cash Value attributable to the Variable Account in excess of $250,000. This charge is assessed monthly against each contract by liquidating units. For modified single premium contracts (MSP), the Company deducts an annual rate of .70% charged against the cash value of the contracts. This charge is assessed monthly against each contract by liquidating units. For surivorship life contracts (SL), the Company deducts an annual rate of .55% in policy years one through ten. In policy years eleven and greater, the Company deducts an annual rate of .55% if the cash value of the contract is less than $25,000. If the cash value is greater than $25,000 but less than $100,000, the Company reduces the annual rate to .35%. If the cash value is greater than $100,000, the company reduces the annual rate to .20%. This charge is assessed monthly by liquidating units. For Corporate Variable Universal Life Series, the Company deducts on a daily basis from the assets of the Variable Account, a charge to provide for mortality and expense risks. This charge is guaranteed not to exceed an annual effective rate of 0.75% of the daily net assets of the Variable Account. Currently, this rate is 0.40% during the first through fourth Policy Years, 0.25% during the fifth through twentieth Policy Years, and 0.10% thereafter. This charge is assessed through the daily unit value calculation. Nationwide may reduce or eliminate certain charges where the size or nature of the group results in savings in sales, underwriting, administrative or other costs to Nationwide. These charges may be reduced in certain group sponsored arrangements or special exchange programs made available by Nationwide. 36 (4) DEATH BENEFITS Death benefit proceeds result in a redemption of the contract value from the Account and payment of those proceeds, less any outstanding policy loans (and policy charges), to the legal beneficiary. For last survivor flexible premium contracts, the proceeds are payable on the death of the last surviving insured. In the event that the guaranteed death benefit exceeds the contract value on the date of death, the excess is paid by the Company's general account. (5) POLICY LOANS (NET OF REPAYMENTS) Contract provisions allow contract owners to borrow 90% of a policy's cash surrender value. Interest is charged on the outstanding loan and is due and payable in advance on the policy anniversary. At the time the loan is granted, the amount of the loan is transferred from the Account to the Company's general account as collateral for the outstanding loan. Collateral amounts in the general account are credited with the stated rate of interest in effect at the time the loan is made, subject to a guaranteed minimum rate. Interest credited is paid by the Company's general account to the Account. Loan repayments result in a transfer of collateral including interest back to the Account. (6) RELATED PARTY TRANSACTIONS The Company performs various services on behalf of the Mutual Fund Companies in which the Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, preparation, postage, fund transfer agency and various other record keeping and customer service functions. These fees are paid to an affiliate of the Company. (Continued) 37 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued (7) FINANCIAL HIGHLIGHTS The following is a summary of units, unit fair values and contract owners' equity outstanding for variable life and annuity contracts as of the end of the period indicated, and the expense ratios and total return for each of the years in the period ended December 31, 2000, and the period February 18, 1998 (commencement of operations) through December 1998. The following is a summary for 2000:
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- The BEST of AMERICA(R) America's FUTURE Life Series(SM): American Century VP - American Century VP Income & Growth .............. 804,658 $13.383115 $10,768,831 0.00% (10.62)% American Century VP - American Century VP International ................ 1,252,780 16.203538 20,299,468 0.00% (16.83)% American Century VP - American Century VP Value ........................ 380,941 12.277397 4,676,964 0.00% 18.14% The Dreyfus Socially Responsible Growth Fund, Inc. ................................ 953,352 14.972899 14,274,443 0.00% (11.03)% Dreyfus Stock Index Fund .......................... 6,631,938 14.027609 93,030,233 0.00% (9.28)% Dreyfus IP - European Equity Portfolio ............ 70,183 12.672265 889,378 0.00% (0.65)% Dreyfus VIF - Appreciation Portfolio .............. 721,134 14.418721 10,397,830 0.00% (2.00)% Federated Insurance Series - Quality Bond Fund II ............................. 184,168 10.900349 2,007,495 0.00% 10.45% Fidelity VIP - Equity-Income Portfolio - Service Class .......... 1,731,014 12.835974 22,219,251 0.00% 8.30% Fidelity VIP - Growth Portfolio - Service Class ... 3,245,205 17.016859 55,223,196 0.00% (11.07)% Fidelity VIP - High Income Portfolio - Service Class ............ 775,357 7.993621 6,197,910 0.00% (22.61)% Fidelity VIP - Overseas Portfolio - Service Class ............... 709,131 12.973519 9,199,925 0.00% (19.15)% Fidelity VIP-II - Contrafund Portfolio - Service Class ............. 2,414,828 15.048072 36,338,506 0.00% (6.71)% Fidelity VIP-III - Growth Opportunities Portfolio - Service Class .................................... 959,519 10.743116 10,308,224 0.00% (17.18)% Gartmore NSAT Emerging Markets Fund ............... 2,391 8.712299 20,831 0.00% (51.70)%*** Gartmore NSAT Global Technology & Communications Fund .............................. 91,498 6.017639 550,602 0.00% (159.83)%*** Gartmore NSAT International Growth Fund ........... 2,697 9.249730 24,947 0.00% (30.10)%*** Janus Aspen Series - Capital Appreciation Portfolio - Service Shares ....................... 2,083,464 8.236248 17,159,926 0.00% (18.95)%***
38
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Janus Aspen Series - Global Technology Portfolio - Service Shares ....... 1,878,974 6.582411 12,368,179 0.00% (36.72)%*** Janus Aspen Series - International Growth Portfolio - Service Shares ......................... 1,639,208 8.273482 13,561,958 0.00% (18.55)%*** Nationwide SAT - Balanced Fund ...................... 382,020 10.862308 4,149,619 0.00% (0.35)% Nationwide SAT - Capital Appreciation Fund .......... 1,582,653 9.956531 15,757,734 0.00% (26.53)% Nationwide SAT - Equity Income Fund ................. 150,717 12.193117 1,837,710 0.00% (10.62)% Nationwide SAT - Global 50 Fund ..................... 1,172,113 12.840541 15,050,565 0.00% (12.32)% Nationwide SAT - Government Bond Fund ............... 796,198 11.968657 9,529,421 0.00% 12.54% Nationwide SAT - High Income Bond Fund .............. 167,390 10.013612 1,676,179 0.00% (8.28)% Nationwide SAT - Mid Cap Growth Portfolio (formerly Nationwide SAT - Strategic Growth Portfolio) ........................ 569,923 17.915535 10,210,475 0.00% (15.38)% Nationwide SAT - Mid Cap Index Fund ................. 312,214 15.436663 4,819,542 0.00% 15.21% Nationwide SAT - Money Market Fund .................. 6,735,623 11.702768 78,825,433 0.00% 6.03% Nationwide SAT - Multi Sector Bond Fund ............. 1,105,931 11.008804 12,174,978 0.00% 5.65% Nationwide SAT - Small Cap Growth Fund .............. 220,651 17.186287 3,792,171 0.00% (16.17)% Nationwide SAT - Small Cap Growth Fund Initial Funding by Depositor (note 1a) ............. 100,000 17.186295 1,718,630 0.00% (16.17)% Nationwide SAT - Small Cap Value Fund ............... 731,305 13.779795 10,077,233 0.00% 11.20% Nationwide SAT - Small Company Fund ................. 922,404 15.841678 14,612,427 0.00% 8.90% Nationwide SAT - Strategic Value Fund ............... 114,604 10.471261 1,200,048 0.00% 7.61% Nationwide SAT - Total Return Fund .................. 2,459,963 12.359389 30,403,640 0.00% (2.12)% Neuberger & Berman AMT - Guardian Portfolio ......... 253,627 15.303939 3,881,492 0.00% 1.13% Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................... 903,690 19.835316 17,924,977 0.00% (7.46)% Neuberger & Berman AMT - Partners Portfolio ......... 648,616 11.267369 7,308,196 0.00% 0.70% Oppenheimer Aggressive Growth Fund / VA ............. 1,531,755 18.311377 28,048,543 0.00% (11.24)% Oppenheimer Capital Appreciation Fund / VA .......... 1,394,931 17.524709 24,445,760 0.00% (0.23)% Oppenheimer Global Securities Fund / VA ............. 228,958 9.598100 2,197,562 0.00% (5.99)%*** Oppenheimer Main Street Growth & Income / VA ................... 1,325,991 11.624742 15,414,303 0.00% (8.78)% Strong Opportunity Fund II, Inc. .................... 156,475 9.854316 1,541,954 0.00% (1.83)%*** The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio (formerly Morgan Stanley - Emerging Markets Debt Portfolio) ................... 116,206 10.321107 1,199,375 0.00% 11.39% The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio (formerly Morgan Stanley - Mid Cap Growth Portfolio) ........................ 38,928 8.689212 338,254 0.00% (19.54)%***
(Continued) 39 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio (formerly Van Kampen American Capital - Morgan Stanley U.S. Real Estate Portfolio) ....... 320,762 10.935907 3,507,823 0.00% 15.43%*** Turner NSAT Growth Focus Fund ..................... 12,379 6.344311 78,536 0.00% (146.74)%*** Van Eck WIT - Worldwide Emerging Markets Fund .................. 408,641 7.669407 3,134,034 0.00% (41.87)% Van Eck WIT - Worldwide Hard Assets Fund .......... 138,471 9.305371 1,288,524 0.00% 11.40% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ............ 93,621 12.974256 1,214,663 0.00% (18.94)% Warburg Pincus Trust - International Equity Portfolio ................... 161,421 11.977804 1,933,469 0.00% (25.90)% Warburg Pincus Trust - Value Portfolio ............ 69,236 14.116099 977,342 0.00% 8.91% The BEST of AMERICA(R) Corporate Variable Universal Life SeriesSM: American Century VP - American Century VP Income & Growth .............. 763,555 11.398555 8,703,424 0.31% (10.97)% American Century VP - American Century VP International ................ 1,191,245 13.221985 15,750,624 0.30% (17.16)% American Century VP - American Century VP Value ........................ 111,911 10.893612 1,219,115 0.16% 17.67% The Dreyfus Socially Responsible Growth Fund, Inc. ................................ 136,511 12.795380 1,746,710 0.40% (11.39)% Dreyfus Stock Index Fund .......................... 7,299,831 11.972080 87,394,161 0.28% (9.64)% Dreyfus IP - European Equity Portfolio ............ 8,448 12.608842 106,519 0.23% (1.05)% Dreyfus VIF - Appreciation Portfolio .............. 1,368,457 12.111451 16,574,000 0.34% (2.39)% Federated Insurance Series - Quality Bond Fund II ............................. 607,272 10.828312 6,575,731 0.14% 10.01% Fidelity VIP - Equity-Income Portfolio - Service Class .......... 351,542 11.310203 3,976,011 0.30% 7.87% Fidelity VIP - Growth Portfolio - Service Class ... 2,131,137 14.593603 31,100,967 0.34% (11.42)% Fidelity VIP - High Income Portfolio - Service Class ............ 441,041 7.470194 3,294,662 0.32% (22.92)% Fidelity VIP - Overseas Portfolio - Service Class ............... 1,216,616 10.864367 13,217,763 0.44% (19.47)% Fidelity VIP-II - Contrafund Portfolio - Service Class ............. 671,658 13.026647 8,749,452 0.37% (7.09)% Fidelity VIP-III - Growth Opportunities Portfolio - Service Class .................................... 397,095 9.628054 3,823,252 0.43% (17.51)% Janus Aspen Series - Capital Appreciation Portfolio - Service Class ... 535,891 8.205940 4,397,489 0.22%*** (19.27)%***
40
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Janus Aspen Series - Global Technology Portfolio - Service Class ..... 343,351 6.558143 2,251,745 0.38%*** (36.98)%*** Janus Aspen Series - International Growth Portfolio - Service Class .. 383,403 8.243024 3,160,400 0.23%*** (18.87)%*** Nationwide SAT - Balanced Fund ................... 117,858 9.980967 1,176,337 0.30% (0.75)% Nationwide SAT - Capital Appreciation Fund ....... 178,360 8.505270 1,517,000 0.23% (26.82)% Nationwide SAT - Equity Income Fund .............. 29,855 11.117142 331,902 0.90% (10.98)% Nationwide SAT - Global 50 Fund .................. 942,496 11.093053 10,455,158 0.40% (12.67)% Nationwide SAT - Government Bond Fund ............ 3,170,399 11.626380 36,860,264 0.36% 12.09% Nationwide SAT - High Income Bond Fund ........... 224,564 9.436226 2,119,037 0.10% (8.64)% Nationwide SAT - Mid Cap Growth Fund ............. 647,094 16.319202 10,560,058 0.42% (15.72)% Nationwide SAT - Mid Cap Index Fund .............. 38,007 13.573326 515,881 0.14% 14.75% Nationwide SAT - Money Market Fund ............... 5,646,634 11.380873 64,263,624 0.24% 5.60% Nationwide SAT - Multi Sector Bond Fund .......... 1,055,243 10.635225 11,222,747 0.36% 5.23% Nationwide SAT - Small Cap Growth Fund ........... 59,757 17.072794 1,020,219 0.24% (16.50)% Nationwide SAT - Small Cap Value Fund ............ 152,675 12.101060 1,847,529 0.24% 10.76% Nationwide SAT - Small Company Fund .............. 493,035 14.091380 6,947,544 0.15% 8.47% Nationwide SAT - Strategic Value Fund ............ 2,481 9.402302 23,327 0.59% 7.18% Nationwide SAT - Total Return Fund ............... 212,989 10.534111 2,243,650 0.36% (2.51)% Neuberger & Berman AMT - Guardian Portfolio ...... 86,066 10.768698 926,819 0.20% 0.73% Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................ 827,220 15.959556 13,202,064 0.31% (7.83)% Neuberger & Berman AMT - Partners Portfolio ...... 241,651 10.015242 2,420,193 0.30% 0.03% Oppenheimer Aggressive Growth Fund / VA .......... 1,068,591 15.659821 16,733,944 0.32% (11.59)% Oppenheimer Capital Appreciation Fund / VA ....... 911,021 14.945030 13,615,236 0.28% (0.63)% Oppenheimer Global Securities Fund / VA .......... 43,440 9.572769 415,841 0.17%*** (6.37)%*** Oppenheimer Main Street Growth & Income / VA ................ 327,513 9.845729 3,224,604 0.28% (9.14)% Strong Opportunity Fund II, Inc. ................. 72,473 9.828296 712,286 0.28% (1.49)% The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio ................. 28,939 9.671636 279,887 0.47% 10.94% The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio ....................... 8,201 8.666239 71,072 0.54%*** (19.89)%*** The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio ...................... 111,390 10.960329 1,220,871 0.38%*** 15.00%*** Van Eck WIT - Worldwide Emerging Markets Fund .... 41,537 7.303734 303,375 0.49% (42.10)% Van Eck WIT - Worldwide Hard Assets Fund ......... 3,041 9.149843 27,825 0.83% 10.96%
(Continued) 41 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Warburg Pincus Trust - Global Post-Venture Capital Portfolio ........... 106,896 11.411760 1,219,871 0.59% (19.26)% Warburg Pincus Trust - International Equity Portfolio .................. 48,933 10.033586 490,973 0.50% (26.19)% Warburg Pincus Trust - Value Portfolio ........... 10,994 11.918959 131,037 0.35% 8.48% The BEST of AMERICA(R) Corporate Variable Universal Life SeriesSM: Reduced Fee Tier: American Century VP - American Century VP Income & Growth ............. 540,359 10.285709 5,557,975 0.42% (10.70)% American Century VP - American Century VP International ............... 619,313 13.288939 8,230,013 0.37% (16.91)% American Century VP - American Century VP Value ....................... 124,532 12.140456 1,511,875 0.18% 18.02% The Dreyfus Socially Responsible Growth Fund, Inc. ............................... 42,696 10.896922 465,255 0.49% (11.12)% Dreyfus Stock Index Fund ......................... 4,975,884 10.357445 51,537,445 0.34% (9.37)% Dreyfus IP - European Equity Portfolio ........... 36,592 12.656379 463,122 0.23% (0.75)% Dreyfus VIF - Appreciation Portfolio ............. 498,451 10.646157 5,306,588 0.45% (2.10)% Federated Insurance Series - Quality Bond Fund II ............................... 4,027,297 10.882300 43,826,254 0.11% 10.34% Fidelity VIP - Equity-Income Portfolio - Service Class ......... 215,028 11.240819 2,417,091 0.32% 8.20% Fidelity VIP - Growth Portfolio - Service Class .. 1,184,884 11.150661 13,212,240 0.48% (11.16)% Fidelity VIP - High Income Portfolio - Service Class ........... 591,491 7.950841 4,702,851 0.54% (22.69)% Fidelity VIP - Overseas Portfolio - Service Class .............. 171,286 11.126859 1,905,875 0.66% (19.23)% Fidelity VIP-II - Contrafund Portfolio - Service Class ............ 209,278 10.913660 2,283,989 0.50% (6.81)% Fidelity VIP-III - Growth Opportunities Portfolio - Service Class ................................... 3,187 8.728402 27,817 0.60% (17.26)% Janus Aspen Series - Capital Appreciation Portfolio - Service Class .. 75,935 8.228654 624,843 0.22%*** (19.03)%*** Janus Aspen Series - Global Technology Portfolio - Service Class ..... 157,837 6.576328 1,037,988 0.38%*** (36.78)%*** Janus Aspen Series - International Growth Portfolio - Service Class .. 230,451 8.265856 1,904,875 0.23%*** (18.63)%*** Nationwide SAT - Balanced Fund ................... 148,185 9.935839 1,472,342 0.29% (0.45)% Nationwide SAT - Capital Appreciation Fund ....... 587,392 7.574275 4,449,069 0.23% (26.61)% Nationwide SAT - Global 50 Fund .................. 141,948 10.424035 1,479,671 0.44% (12.41)%
42
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Nationwide SAT - Government Bond Fund ............ 304,223 11.120055 3,382,976 0.42% 12.43% Nationwide SAT - High Income Bond Fund ........... 1,268,447 9.119705 11,567,862 0.09% (8.37)% Nationwide SAT - Mid Cap Growth Fund ............. 499,194 13.906958 6,942,270 0.42% (15.46)% Nationwide SAT - Mid Cap Index Fund .............. 97,058 14.122042 1,370,657 0.14% 15.09% Nationwide SAT - Money Market Fund ............... 8,179,266 10.971228 89,736,592 0.26% 5.92% Nationwide SAT - Multi Sector Bond Fund .......... 271,955 10.733031 2,918,901 0.28% 5.55% Nationwide SAT - Small Cap Growth Fund ........... 29,192 17.157856 500,872 0.24% (16.25)% Nationwide SAT - Small Cap Value Fund ............ 222,101 14.901350 3,309,605 0.25% 11.09% Nationwide SAT - Small Company Fund .............. 1,331,219 16.119172 21,458,148 0.13% 8.79% Nationwide SAT - Strategic Value Fund ............ 505 10.645991 5,376 0.53% 7.50% Nationwide SAT - Total Return Fund ............... 43,448 10.246333 445,183 0.43% (2.22)% Neuberger & Berman AMT - Guardian Portfolio ...... 57,098 11.073505 632,275 0.25% 1.03% Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................ 391,150 14.538915 5,686,897 0.39% (7.55)% Oppenheimer Aggressive Growth Fund / VA .......... 827,728 14.724854 12,188,174 0.36% (11.33)% Oppenheimer Capital Appreciation Fund / VA ....... 533,112 13.187632 7,030,485 0.34% (0.33)% Oppenheimer Global Securities Fund / VA .......... 145,609 9.591764 1,396,647 0.17%*** (6.08)%*** Oppenheimer Main Street Growth & Income / VA ................ 209,160 10.690852 2,236,099 0.38% (8.87)% Strong Opportunity Fund II, Inc. ................. 285,161 9.847803 2,808,209 0.12%*** (1.94)%*** The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio ................. 1,276 13.458822 17,173 0.65% 11.28% The Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio ....................... 49,713 8.683462 431,681 0.46%*** (19.63)%*** The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio ...................... 23,692 12.961511 307,084 0.39%*** 15.33%*** Van Eck WIT - Worldwide Emerging Markets Fund ................. 16,342 10.475365 171,188 0.69% (41.92)% ======== ========== $1,414,892,441 ============== The following is a summary for 1999: The BEST of AMERICA(R) America's FUTURE Life Series(SM): American Century VP - American Century VP Income & Growth ............. 463,779 $14.972547 $ 6,943,953 0.00% 18.02% American Century VP - American Century VP International ............... 625,339 19.481449 12,182,510 0.00% 64.04% American Century VP - American Century VP Value ....................... 169,333 10.392110 1,759,727 0.00% (0.85)%
(Continued) 43 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- The Dreyfus Socially Responsible Growth Fund, Inc. ............................... 480,241 16.829763 8,082,342 0.00% 30.08% Dreyfus Stock Index Fund ......................... 3,757,311 15.462782 58,098,481 0.00% 20.60% Dreyfus IP - European Equity Portfolio ........... 10,415 12.930654 134,673 0.00% 11.46% Dreyfus VIF - Appreciation Portfolio ............. 505,299 14.513370 7,333,591 0.00% 111.52%*** Federated Insurance Series - Quality Bond Fund II ............................ 3,972 9.869090 39,200 0.00% (1.97)%*** Fidelity VIP - Equity-Income Portfolio - Service Class ......... 1,196,502 11.851816 14,180,722 0.00% 6.25% Fidelity VIP - Growth Portfolio - Service Class .. 1,564,447 19.134456 29,934,842 0.00% 37.29% Fidelity VIP - High Income Portfolio - Service Class ........... 664,736 10.329299 6,866,257 0.00% 8.07% Fidelity VIP - Overseas Portfolio - Service Class .............. 392,522 16.046561 6,298,628 0.00% 42.46% Fidelity VIP-II - Contrafund Portfolio - Service Class ............ 1,324,909 16.131283 21,372,482 0.00% 24.15% Fidelity VIP-III - Growth Opportunities Portfolio - Service Class ................................... 673,044 12.971233 8,730,211 0.00% 4.18% Morgan Stanley - Emerging Markets Debt Portfolio ................. 62,633 9.266040 580,360 0.00% 29.37% Nationwide SAT - Balanced Fund ................... 224,583 10.900657 2,448,102 0.00% 0.87% Nationwide SAT - Capital Appreciation Fund ....... 1,343,877 13.552350 18,212,691 0.00% 4.28% Nationwide SAT - Equity Income Fund .............. 66,677 13.642236 909,623 0.00% 18.49% Nationwide SAT - Global 50 Fund .................. 595,841 14.645021 8,726,104 0.00% 22.92% Nationwide SAT - Government Bond Fund ............ 509,816 10.635188 5,421,989 0.00% (2.35)% Nationwide SAT - High Income Bond Fund ........... 130,767 10.917180 1,427,607 0.00% 3.19% Nationwide SAT - Mid Cap Index Fund .............. 61,224 13.399089 820,346 0.00% 20.92% Nationwide SAT - Money Market Fund ............... 4,602,015 11.037591 50,795,159 0.00% 4.85% Nationwide SAT - Multi Sector Bond Fund .......... 590,762 10.419701 6,155,563 0.00% 1.56% Nationwide SAT - Small Cap Growth Fund ........... 32,108 20.501257 658,254 0.00% 157.84%*** Nationwide SAT - Small Cap Growth Fund Initial Funding by Depositor (note 1a) .......... 100,000 20.501257 2,050,126 0.00% 157.84%*** Nationwide SAT - Small Cap Value Fund ............ 345,575 12.391945 4,282,346 0.00% 27.84% Nationwide SAT - Small Company Fund .............. 393,286 14.547287 5,721,244 0.00% 44.02% Nationwide SAT - Strategic Growth Fund ........... 211,257 21.171385 4,472,603 0.00% 84.75% Nationwide SAT - Strategic Value Fund ............ 96,106 9.730781 935,186 0.00% (3.07)% Nationwide SAT - Total Return Fund ............... 1,852,310 12.627200 23,389,489 0.00% 6.94% Neuberger & Berman AMT - Guardian Portfolio ...... 177,738 15.132896 2,689,691 0.00% 14.93%
44
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................ 280,847 21.434231 6,019,739 0.00% 53.89% Neuberger & Berman AMT - Partners Portfolio ...... 582,704 11.188893 6,519,813 0.00% 7.37% Oppenheimer Aggressive Growth Fund / VA .......... 431,151 20.629873 8,894,590 0.00% 83.60% Oppenheimer Capital Appreciation Fund / VA ....... 618,285 17.565274 10,860,345 0.00% 41.66% Oppenheimer Main Street Growth & Income / VA ................ 460,733 12.743006 5,871,123 0.00% 21.71% Van Eck WIT - Worldwide Emerging Markets Fund ................. 194,066 13.192491 2,560,214 0.00% 100.28% Van Eck WIT - Worldwide Hard Assets Fund ......... 53,013 8.353043 442,820 0.00% 21.00% Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio ................... 146,473 8.539870 1,250,860 0.00% (3.37)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ........... 46,879 17.414110 816,356 0.00% 63.50% Warburg Pincus Trust - Growth & Income Portfolio ....................... 60,100 11.912913 715,966 0.00% 6.24% Warburg Pincus Trust - International Equity Portfolio .................. 138,513 16.163464 2,238,850 0.00% 53.43% The BEST of AMERICA(R) Corporate Variable Universal Life SeriesSM: American Century VP - American Century VP Income & Growth ............. 355,846 12.803106 4,555,934 0.19% 17.55% American Century VP - American Century VP International ............... 204,837 15.960157 3,269,231 0.18% 63.39% American Century VP - American Century VP Value ....................... 23,107 9.257533 213,914 0.61% (1.25)% The Dreyfus Socially Responsible Growth Fund, Inc. ............................... 28,931 14.439525 417,750 0.40% 29.56% Dreyfus Stock Index Fund ......................... 3,707,136 13.249543 49,117,858 0.25% 20.12% Dreyfus VIF - Appreciation Portfolio ............. 843,808 12.239522 10,327,807 0.34% 11.01% Federated Insurance Series - Quality Bond Fund II ............................ 18 9.842943 177 0.39%*** (2.36)%*** Fidelity VIP - Equity-Income Portfolio - Service Class ......... 118,952 10.484615 1,247,166 0.34% 5.83% Fidelity VIP - Growth Portfolio - Service Class .. 758,262 16.475102 12,492,444 0.21% 36.74% Fidelity VIP - High Income Portfolio - Service Class ........... 230,895 9.691447 2,237,707 0.14% 7.64% Fidelity VIP - Overseas Portfolio - Service Class .............. 504,007 13.491426 6,799,773 0.29% 41.89% Fidelity VIP-II - Contrafund Portfolio - Service Class ............ 230,228 14.020034 3,227,804 0.27% 23.65%
(Continued) 45 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Fidelity VIP-III - Growth Opportunities Portfolio - Service Class ................................... 125,424 11.671298 1,463,861 0.42% 3.77% Morgan Stanley - Emerging Markets Debt Portfolio ................. 12,553 8.717559 109,432 0.30% 28.86% Nationwide SAT - Balanced Fund ................... 43,881 10.056111 441,272 0.31% 0.47% Nationwide SAT - Capital Appreciation Fund ....... 65,598 11.623180 762,457 0.16% 3.86% Nationwide SAT - Equity Income Fund .............. 965 12.487973 12,051 0.99% 18.02% Nationwide SAT - Global 50 Fund .................. 468,148 12.702408 5,946,607 0.31% 22.43% Nationwide SAT - Government Bond Fund ............ 1,312,872 10.372218 13,617,395 0.44% (2.74)% Nationwide SAT - High Income Bond Fund ........... 80,137 10.328712 827,712 0.08% 2.78% Nationwide SAT - Money Market Fund ............... 3,786,796 10.776865 40,809,789 0.29% 4.43% Nationwide SAT - Multi Sector Bond Fund .......... 460,632 10.106222 4,655,249 0.25% 1.15% Nationwide SAT - Small Cap Growth Fund ........... 118 20.447188 2,413 0.64%*** 157.03%*** Nationwide SAT - Small Cap Value Fund ............ 8,548 10.925665 93,393 0.65% 27.33% Nationwide SAT - Small Company Fund .............. 72,698 12.991606 944,464 0.11% 43.45% Nationwide SAT - Strategic Growth Fund ........... 128,669 19.361969 2,491,285 0.37% 84.02% Nationwide SAT - Strategic Value Fund ............ 791 8.772237 6,939 0.37% (3.46)% Nationwide SAT - Total Return Fund ............... 42,084 10.805244 454,728 0.27% 6.52% Neuberger & Berman AMT - Guardian Portfolio ...... 25,154 10.690765 268,916 0.49% 14.47% Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................ 315,266 17.314889 5,458,796 0.24% 53.28% Neuberger & Berman AMT - Partners Portfolio ...... 94,285 9.985118 941,447 0.35% 6.94% Oppenheimer Aggressive Growth Fund / VA .......... 138,018 17.712996 2,444,712 0.24% 82.87% Oppenheimer Capital Appreciation Fund / VA ....... 188,390 15.039330 2,833,259 0.29% 41.09% Oppenheimer Main Street Growth & Income / VA ................ 97,691 10.835877 1,058,568 0.33% 21.22% Van Eck WIT - Worldwide Emerging Markets Fund ................. 10,044 12.613718 126,692 0.22% 99.48% Van Eck WIT - Worldwide Hard Assets Fund ......... 252 8.246159 2,078 0.70% 20.52% Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio ................ 38,697 8.593033 332,525 0.70% (3.76)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ........... 4,981 14.762349 73,531 0.37% 62.85% Warburg Pincus Trust - Growth & Income Portfolio ....................... 42,745 10.519954 449,675 0.40% 5.82% Warburg Pincus Trust - International Equity Portfolio .................. 3,445 13.593893 46,831 0.35% 52.82%
46
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- The BEST of AMERICA(R) Corporate Variable Universal Life SeriesSM: Reduced Fee Tier: American Century VP - American Century VP Income & Growth ............. 55,124 11.518727 634,958 0.25%*** 20.10%*** American Century VP - American Century VP International ............... 218 15.993145 3,487 0.25%*** 79.60%*** American Century VP - American Century VP Value ....................... 946 10.286399 9,731 0.83%*** 3.80%*** Dreyfus Stock Index Fund ......................... 1,242,820 11.428481 14,203,545 0.34%*** 18.97%*** Dreyfus VIF - Appreciation Portfolio ............. 117,874 10.726699 1,264,399 0.46%*** 9.66%*** Federated Insurance Series - Quality Bond Fund II ............................ 1,129,926 9.862542 11,143,943 0.08%*** (1.82)%*** Fidelity VIP - Equity-Income Portfolio - Service Class ......... 59,030 10.389282 613,279 0.47%*** 5.17%*** Fidelity VIP - Overseas Portfolio - Service Class .............. 490 13.776193 6,750 0.38%*** 50.15%*** Nationwide SAT - Balanced Fund ................... 59,518 9.980828 594,039 0.41%*** (0.25)%*** Nationwide SAT - Capital Appreciation Fund ....... 234,561 10.320007 2,420,671 0.21%*** 4.25%*** Nationwide SAT - Global 50 Fund .................. 52,708 11.900760 627,265 0.41%*** 25.25%*** Nationwide SAT - Government Bond Fund ............ 59,316 9.890955 586,692 0.71%*** (1.45)%*** Nationwide SAT - High Income Bond Fund ........... 594,118 9.952512 5,912,967 0.12%*** (0.62)%*** Nationwide SAT - Money Market Fund ............... 4,669,469 10.357933 48,366,047 0.41%*** 4.72%*** Nationwide SAT - Multi Sector Bond Fund .......... 232,330 10.168791 2,362,515 0.34%*** 2.24%*** Nationwide SAT - Small Company Fund .............. 434,818 14.816849 6,442,633 0.15%*** 63.98%*** Nationwide SAT - Strategic Growth Fund ........... 240,293 16.450708 3,952,990 0.09%*** 85.68%*** Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................ 44,838 15.726546 705,147 0.32%*** 76.06%*** Oppenheimer Aggressive Growth Fund / VA .......... 850 16.605768 14,115 0.32%*** 87.74%*** ======== ========== $648,293,593 ============ The following is a summary for 1998: The BEST of AMERICA(R) America's FUTURE Life Series(SM): American Century VP - American Century VP Income & Growth ............. 97,382 $12.686493 $ 1,235,436 0.00% 26.86% American Century VP - American Century VP International .................. 206,063 11.875895 2,447,183 0.00% 18.76% American Century VP - American Century VP Value ....................... 59,424 10.481205 622,835 0.00% 4.81%
(Continued) 47 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- The Dreyfus Socially Responsible Growth Fund, Inc. ............................... 105,696 12.938078 1,367,503 0.00% 29.38% Dreyfus Stock Index Fund ......................... 1,025,141 12.821142 13,143,478 0.00% 28.21% Dreyfus VIF - Appreciation Portfolio ............. 110,355 13.021619 1,437,001 0.00% 30.22% Fidelity VIP - Equity-Income Portfolio - Service Class ......... 511,915 11.154137 5,709,970 0.00% 11.54% Fidelity VIP - Growth Portfolio - Service Class .. 255,829 13.937692 3,565,666 0.00% 39.38% Fidelity VIP - High Income Portfolio - Service Class ........... 368,689 9.557602 3,523,783 0.00% (4.42)% Fidelity VIP - Overseas Portfolio - Service Class .............. 92,817 11.263759 1,045,468 0.00% 12.64% Fidelity VIP-II - Contrafund Portfolio - Service Class ............ 362,774 12.993755 4,713,796 0.00% 29.94% Fidelity VIP-III - Growth Opportunities Portfolio - Service Class ................................... 193,229 12.450522 2,405,802 0.00% 24.51% Morgan Stanley - Emerging Markets Debt Portfolio ................. 21,992 7.162164 157,510 0.00% (28.38)% Nationwide SAT - Balanced Fund ................... 67,360 10.806799 727,946 0.00% 8.07% Nationwide SAT - Capital Appreciation Fund ....... 485,064 12.996420 6,304,095 0.00% 29.96% Nationwide SAT - Equity Income Fund .............. 21,000 11.513398 241,781 0.00% 15.13% Nationwide SAT - Global 50 Fund .................. 41,464 11.913908 493,998 0.00% 19.14% Nationwide SAT - Government Bond Fund ............ 166,631 10.890820 1,814,748 0.00% 8.91% Nationwide SAT - High Income Bond Fund ........... 79,031 10.579676 836,122 0.00% 5.80% Nationwide SAT - Mid Cap Index Fund .............. 26,958 11.080816 298,717 0.00% 10.81% Nationwide SAT - Money Market Fund ............... 2,000,515 10.527225 21,059,872 0.00% 5.27% Nationwide SAT - Multi Sector Bond Fund .......... 74,773 10.260092 767,178 0.00% 2.60% Nationwide SAT - Small Cap Value Fund ............ 106,497 9.693575 1,032,337 0.00% (3.06)% Nationwide SAT - Small Company Fund .............. 159,205 10.100944 1,608,121 0.00% 1.01% Nationwide SAT - Strategic Growth Fund ........... 36,919 11.459357 423,068 0.00% 14.59% Nationwide SAT - Strategic Value Fund ............ 34,463 10.038994 345,974 0.00% 0.39% Nationwide SAT - Total Return Fund ............... 702,365 11.807411 8,293,112 0.00% 18.07% Neuberger & Berman AMT - Guardian Portfolio ...... 55,695 13.166703 733,320 0.00% 31.67% Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................ 85,802 13.928381 1,195,083 0.00% 39.28% Neuberger & Berman AMT - Partners Portfolio ...... 375,069 10.420882 3,908,550 0.00% 4.21% Oppenheimer Aggressive Growth Fund / VA .......... 100,709 11.236019 1,131,568 0.00% 12.36% Oppenheimer Capital Appreciation Fund / VA ....... 164,300 12.399968 2,037,315 0.00% 24.00%
48
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Oppenheimer Main Street Growth & Income / VA ................ 139,668 10.470163 1,462,347 0.00% 4.70% Van Eck WIT - Worldwide Emerging Markets Fund ................. 43,904 6.586990 289,195 0.00% (34.13)% Van Eck WIT - Worldwide Hard Assets Fund ......... 22,344 6.903203 154,245 0.00% (30.97)% Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio ................ 81,141 8.837916 717,117 0.00% (11.62)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ........... 16,634 10.651002 177,169 0.00% 6.51% Warburg Pincus Trust - Growth & Income Portfolio ....................... 49,891 11.212895 559,423 0.00% 12.13% Warburg Pincus Trust - International Equity Portfolio .................. 56,767 10.534701 598,023 0.00% 5.35% The BEST of AMERICA(R) Corporate Variable Universal Life SeriesSM: American Century VP - American Century VP International ............... 3,234 9.768200 31,590 0.16%*** (3.46)%*** American Century VP - American Century VP Value ....................... 440 9.374321 4,125 0.23%*** (9.33)%*** The Dreyfus Socially Responsible Growth Fund, Inc. ............................... 397 11.144998 4,425 0.18%*** 17.07%*** Dreyfus Stock Index Fund ......................... 111,613 11.030001 1,231,092 0.24%*** 15.36%*** Dreyfus VIF - Appreciation Portfolio ............. 10,106 11.025485 111,424 0.29%*** 15.28%*** Fidelity VIP - Equity-Income Portfolio - Service Class ......... 5,995 9.906965 59,392 0.20%*** (1.39)%*** Fidelity VIP - Growth Portfolio - Service Class .. 185 12.048634 2,229 0.26%*** 30.55%*** Fidelity VIP - High Income Portfolio - Service Class ........... 77 9.003329 693 0.21%*** (14.86)%*** Fidelity VIP - Overseas Portfolio - Service Class .............. 3,076 9.508092 29,247 0.16%*** (7.33)%*** Fidelity VIP-II - Contrafund Portfolio - Service Class ............ 2,712 11.338370 30,750 0.16%*** 19.95%*** Fidelity VIP-III - Growth Opportunities Portfolio - Service Class ................................... 1,228 11.247664 13,812 0.18%*** 18.61%*** Nationwide SAT - Balanced Fund ................... 349 10.009481 3,493 0.21%*** 0.13%*** Nationwide SAT - Capital Appreciation Fund ....... 847 11.191056 9,479 0.20%*** 17.76%*** Nationwide SAT - Equity Income Fund .............. 211 10.581467 2,233 0.22%*** 8.66%*** Nationwide SAT - Government Bond Fund ............ 270,361 10.664112 2,883,160 0.23%*** 9.90%*** Nationwide SAT - High Income Bond Fund ........... 13,423 10.049520 134,895 0.15%*** 0.75%*** Nationwide SAT - Money Market Fund ............... 394,891 10.319833 4,075,209 0.13%*** 4.75%*** Nationwide SAT - Multi Sector Bond Fund .......... 15,549 9.991296 155,355 0.12%*** (0.13)%***
(Continued) 49 NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
UNIT CONTRACT TOTAL UNITS FAIR VALUE OWNERS' EQUITY EXPENSES* RETURN** ----------- ----------- -------------- --------- --------- Nationwide SAT - Small Company Fund .............. 257 9.056852 2,328 0.20%*** (14.06)%*** Nationwide SAT - Strategic Growth Fund ........... 477 10.521882 5,019 0.17%*** 7.78%*** Nationwide SAT - Total Return Fund ............... 70 10.144232 710 0.14%*** 2.15%*** Neuberger & Berman AMT - Guardian Portfolio ...... 838 9.338993 7,826 0.15%*** (9.85)%*** Neuberger & Berman AMT - Mid Cap Growth Portfolio ........................ 70 11.296584 791 0.22%*** 19.34%*** Neuberger & Berman AMT - Partners Portfolio ...... 26,750 9.337008 249,765 0.35%*** (9.88)%*** Oppenheimer Aggressive Growth Fund / VA .......... 1,235 9.685930 11,962 0.19%*** (4.68)%*** Oppenheimer Capital Appreciation Fund / VA ....... 767 10.659314 8,176 0.25%*** 9.82%*** Oppenheimer Main Street Growth and Income / VA .............. 18,485 8.938847 165,235 0.16%*** (15.82)%*** Warburg Pincus Trust - Global Post-Venture Capital Portfolio ........... 985 9.065227 8,929 0.15%*** (13.94)%*** Warburg Pincus Trust - Growth & Income Portfolio ....................... 16,145 9.941469 160,505 0.18%*** (0.88)%*** ========= ========= $107,989,704 ============
* This represents expenses as a percentage of the average net assets of the variable account for the period indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the underlying fund portfolios and charges made directly to contract owner accounts through the redemption of units. ** This represents the annual total return for the period indicated and includes a deduction only for expenses assessed through the daily unit value calculation. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction of the total return presented. *** Annualized as this investment option was not utilized for the entire period indicated. -------------------------------------------------------------------------------- 63 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, 2000 and 1999, 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, 2000. 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 auditing standards generally accepted in the United States of America. 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, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP January 26, 2001 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)
December 31, ------------------------------------ 2000 1999 ============================================================================================================================ ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity securities $ 15,443.0 $ 15,294.0 Equity securities 109.0 92.9 Mortgage loans on real estate, net 6,168.3 5,786.3 Real estate, net 310.7 254.8 Policy loans 562.6 519.6 Other long-term investments 101.8 73.8 Short-term investments 442.6 416.0 ---------------------------------------------------------------------------------------------------------------------------- 23,138.0 22,437.4 ---------------------------------------------------------------------------------------------------------------------------- Cash 18.4 4.8 Accrued investment income 251.4 238.6 Deferred policy acquisition costs 2,865.6 2,554.1 Other assets 396.7 305.9 Assets held in separate accounts 65,897.2 67,135.1 ---------------------------------------------------------------------------------------------------------------------------- $ 92,567.3 $ 92,675.9 ============================================================================================================================ LIABILITIES AND SHAREHOLDER'S EQUITY Future policy benefits and claims $ 22,183.6 $ 21,861.6 Short-term borrowings 118.7 - Other liabilities 1,164.9 914.2 Liabilities related to separate accounts 65,897.2 67,135.1 ---------------------------------------------------------------------------------------------------------------------------- 89,364.4 89,910.9 ---------------------------------------------------------------------------------------------------------------------------- Commitments and contingencies (notes 9 and 14) 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 646.1 766.1 Retained earnings 2,436.3 2,011.0 Accumulated other comprehensive income (loss) 116.7 (15.9) ---------------------------------------------------------------------------------------------------------------------------- 3,202.9 2,765.0 ---------------------------------------------------------------------------------------------------------------------------- $ 92,567.3 $ 92,675.9 ============================================================================================================================
See accompanying notes to consolidated financial statements. 3 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Income (in millions)
Years ended December 31, --------------------------------------------- 2000 1999 1998 =========================================================================================================================== Revenues: Policy charges $ 1,091.4 $ 895.5 $ 698.9 Life insurance premiums 240.0 220.8 200.0 Net investment income 1,654.9 1,520.8 1,481.6 Realized (losses) gains on investments (19.4) (11.6) 28.4 Other 17.0 66.1 66.8 --------------------------------------------------------------------------------------------------------------------------- 2,983.9 2,691.6 2,475.7 --------------------------------------------------------------------------------------------------------------------------- Benefits and expenses: Interest credited to policyholder account balances 1,182.4 1,096.3 1,069.0 Other benefits and claims 241.6 210.4 175.8 Policyholder dividends on participating policies 44.5 42.4 39.6 Amortization of deferred policy acquisition costs 352.1 272.6 214.5 Interest expense on short-term borrowings 1.3 - - Other operating expenses 479.0 463.4 419.7 --------------------------------------------------------------------------------------------------------------------------- 2,300.9 2,085.1 1,918.6 --------------------------------------------------------------------------------------------------------------------------- Income before federal income tax expense 683.0 606.5 557.1 Federal income tax expense 207.7 201.4 190.4 --------------------------------------------------------------------------------------------------------------------------- Net income $ 475.3 $ 405.1 $ 366.7 ===========================================================================================================================
See accompanying notes to consolidated financial statements. 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, 2000, 1999 and 1998 (in millions)
Accumulated Additional other Total Common paid-in Retained comprehensive shareholder's stock capital earnings income (loss) equity ========================================================================================================================= 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 Return of capital to shareholder - (175.0) - - (175.0) Dividends to shareholder - - (61.0) - (61.0) ------------------------------------------------------------------------------------------------------------------------- December 31, 1999 3.8 766.1 2,011.0 (15.9) 2,765.0 ========================================================================================================================= Comprehensive income: Net income - - 475.3 - 475.3 Net unrealized gains on securities available-for-sale arising during the year - - - 132.6 132.6 --------------- Total comprehensive income 607.9 --------------- Return of capital to shareholder - (120.0) - - (120.0) Dividends to shareholder - - (50.0) - (50.0) ------------------------------------------------------------------------------------------------------------------------- December 31, 2000 $ 3.8 $ 646.1 $ 2,436.3 $ 116.7 $ 3,202.9 =========================================================================================================================
See accompanying notes to consolidated financial statements. 5 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Cash Flows (in millions)
Years ended December 31, ---------------------------------------------- 2000 1999 1998 ============================================================================================================================== Cash flows from operating activities: Net income $ 475.3 $ 405.1 $ 366.7 Adjustments to reconcile net income to net cash provided by operating activities: Interest credited to policyholder account balances 1,182.4 1,096.3 1,069.0 Capitalization of deferred policy acquisition costs (778.9) (637.0) (584.2) Amortization of deferred policy acquisition costs 352.1 272.6 214.5 Amortization and depreciation (12.7) 2.4 (8.5) Realized losses (gains) on invested assets, net 19.4 11.6 (28.4) Increase in accrued investment income (12.8) (7.9) (8.2) (Increase) decrease in other assets (92.0) 122.9 16.4 Decrease in policy liabilities (0.3) (20.9) (8.3) Increase (decrease) in other liabilities 229.3 149.7 (34.8) Other, net 22.3 (8.6) (11.3) ------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 1,384.1 1,386.2 982.9 ------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Proceeds from maturity of securities available-for-sale 2,988.7 2,307.9 1,557.0 Proceeds from sale of securities available-for-sale 602.0 513.1 610.5 Proceeds from repayments of mortgage loans on real estate 911.7 696.7 678.2 Proceeds from sale of real estate 18.7 5.7 103.8 Proceeds from repayments of policy loans and sale of other invested assets 79.3 40.9 23.6 Cost of securities available-for-sale acquired (3,475.5) (3,724.9) (3,182.8) Cost of mortgage loans on real estate acquired (1,318.0) (971.4) (829.1) Cost of real estate acquired (7.1) (14.2) (0.8) Short-term investments, net (26.6) (27.5) 69.3 Other, net (182.3) (110.9) (88.4) ------------------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (409.1) (1,284.6) (1,058.7) ------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Capital returned to shareholder (120.0) (175.0) - Net proceeds from issuance of short-term borrowings (commercial paper) 118.7 - - Cash dividends paid (100.0) (13.5) (100.0) Increase in investment product and universal life insurance product account balances 4,517.0 3,799.4 2,682.1 Decrease in investment product and universal life insurance product account balances (5,377.1) (3,711.1) (2,678.5) ------------------------------------------------------------------------------------------------------------------------------ Net cash used in financing activities (961.4) (100.2) (96.4) ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash 13.6 1.4 (172.2) Cash, beginning of year 4.8 3.4 175.6 ------------------------------------------------------------------------------------------------------------------------------ Cash, end of year $ 18.4 $ 4.8 $ 3.4 ==============================================================================================================================
See accompanying notes to consolidated financial statements. 6 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements December 31, 2000, 1999 and 1998 (1) ORGANIZATION AND DESCRIPTION OF BUSINESS Nationwide Life Insurance Company (NLIC, or collectively with its subsidiaries, the Company) 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 individual annuities, private and public sector pension plans and other investment products sold to institutions and life insurance. 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 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. (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 accounting principles generally accepted in the United States of America 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, the liability for future policy benefits and claims and federal income taxes. 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. 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. The Company classifies fixed maturity and equity securities as available-for-sale. Available-for-sale securities 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. 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. 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 $1.12 billion and $915.4 million of separate account assets at December 31, 2000 and 1999, respectively, 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. 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. (g) PARTICIPATING BUSINESS Participating business represents approximately 21% in 2000 (29% in 1999 and 40% in 1998) of the Company's life insurance in force, 66% in 2000 (69% in 1999 and 74% in 1998) of the number of life insurance policies in force, and 8% in 2000 (13% in 1999 and 14% in 1998) 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 NFS. 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. 9 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued 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 June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133, as amended by SFAS 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 and SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, is effective for the Company as of January 1, 2001. SFAS 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. As of January 1, 2001, the Company had $755.4 million notional amount of freestanding derivatives with a market value of ($7.0) million. All other derivatives qualified for hedge accounting under SFAS 133. Adoption of SFAS 133 will result in the Company recording a net transition adjustment loss of $4.8 million (net of related income tax of $2.6 million) in net income. In addition, a net transition adjustment loss of $3.6 million (net of related income tax of $2.0 million) will be recorded in accumulated other comprehensive income at January 1, 2001. The adoption of SFAS 133 will result in the Company derecognizing $17.0 million of deferred assets related to hedges, recognizing $10.9 million of additional derivative instrument liabilities and $1.3 million of additional firm commitment assets, while also decreasing hedged future policy benefits by $3.0 million and increasing the carrying amount of hedged investments by $10.6 million. Further, the adoption of SFAS 133 will result in the Company reporting total derivative instrument assets and liabilities of $44.8 million and $107.1 million, respectively. Also, the Company expects that the adoption of SFAS 133 will increase the volatility of reported earnings and other comprehensive income. The amount of volatility will vary with the level of derivative and hedging activities and fluctuations in market interest rates and foreign currency exchange rates during any period. (k) RECLASSIFICATION Certain items in the 1999 and 1998 consolidated financial statements have been reclassified to conform to the 2000 presentation. 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, 2000 and 1999 were:
Gross Gross Amortized unrealized unrealized Estimated (in millions) cost gains losses fair value ========================================================================================================================= December 31, 2000 Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 277.5 $ 33.4 $ 0.1 $ 310.8 Obligations of states and political subdivisions 8.6 0.2 - 8.8 Debt securities issued by foreign governments 94.1 1.5 0.1 95.5 Corporate securities 9,758.3 235.0 135.1 9,858.2 Mortgage-backed securities - U.S. Government backed 2,719.1 46.1 3.8 2,761.4 Asset-backed securities 2,388.2 36.3 16.2 2,408.3 ------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 15,245.8 352.5 155.3 15,443.0 Equity securities 103.5 9.5 4.0 109.0 ------------------------------------------------------------------------------------------------------------------------- $ 15,349.3 $ 362.0 $ 159.3 $ 15,552.0 ========================================================================================================================= 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 9,390.4 110.3 179.9 9,320.8 Mortgage-backed securities - U.S. Government backed 3,423.1 25.8 30.3 3,418.6 Asset-backed securities 2,024.0 8.6 38.6 1,994.0 ------------------------------------------------------------------------------------------------------------------------- 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 =========================================================================================================================
The amortized cost and estimated fair value of fixed maturity securities available-for-sale as of December 31, 2000, 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. 11 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued
Amortized Estimated (in millions) cost fair value =========================================================================================================== Fixed maturity securities available for sale: Due in one year or less $ 1,288.7 $ 1,287.0 Due after one year through five years 4,577.9 4,572.4 Due after five years through ten years 3,071.3 3,136.6 Due after ten years 1,200.6 1,277.3 ----------------------------------------------------------------------------------------------------------- 10,138.5 10,273.3 Mortgage-backed securities 2,719.1 2,761.4 Asset-backed securities 2,388.2 2,408.3 ----------------------------------------------------------------------------------------------------------- $ 15,245.8 $ 15,443.0 =========================================================================================================== The components of unrealized gains (losses) on securities available-for-sale, net, were as follows as of each December 31: (in millions) 2000 1999 =========================================================================================================== Gross unrealized gains (losses) $ 202.7 $ (75.3) Adjustment to deferred policy acquisition costs (23.2) 50.9 Deferred federal income tax (62.8) 8.5 ----------------------------------------------------------------------------------------------------------- $ 116.7 $ (15.9) =========================================================================================================== An analysis of the change in gross unrealized gains (losses) on securities available-for-sale for the years ended December 31: (in millions) 2000 1999 1998 =========================================================================================================== Securities available-for-sale: Fixed maturity securities $ 280.5 $ (607.1) $ 52.6 Equity securities (2.5) (8.8) 4.2 ----------------------------------------------------------------------------------------------------------- $ 278.0 $ (615.9) $ 56.8 ===========================================================================================================
Proceeds from the sale of securities available-for-sale during 2000, 1999 and 1998 were $602.0 million, $513.1 million and $610.5 million, respectively. During 2000, gross gains of $12.1 million ($10.4 million and $9.0 million in 1999 and 1998, respectively) and gross losses of $25.6 million ($28.0 million and $7.6 million in 1999 and 1998, respectively) were realized on those sales. The Company had $13.0 million and $15.6 million of real estate investments at December 31, 2000 and 1999, respectively, that were non-income producing the preceding twelve months. Real estate is presented at cost less accumulated depreciation of $25.7 million as of December 31, 2000 ($24.8 million as of December 31, 1999) and valuation allowances of $5.2 million as of December 31, 2000 ($5.5 million as of December 31, 1999). 12 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The recorded investment of mortgage loans on real estate considered to be impaired was $9.8 million as of December 31, 2000 ($3.7 million as of December 31, 1999), which includes $5.3 million (none as of December 31, 1999) of impaired mortgage loans on real estate for which the related valuation allowance was $1.6 million (none as of December 31, 1999) and $4.5 million ($3.7 million as of December 31, 1999) of impaired mortgage loans on real estate for which there was no valuation allowance. During 2000, the average recorded investment in impaired mortgage loans on real estate was $7.7 million ($3.7 million in 1999) and interest income recognized on those loans totaled $0.4 million in 2000 (none in 1999) which is equal to interest income recognized using a cash-basis method of income recognition. Activity in the valuation allowance account for mortgage loans on real estate is summarized for the years ended December 31:
(in millions) 2000 1999 1998 =========================================================================================================== Allowance, beginning of year $ 44.4 $ 42.4 $ 42.5 Additions (reductions) charged to operations 4.1 0.7 (0.1) Direct write-downs charged against the allowance (3.2) -- -- Allowance on acquired mortgage loans -- 1.3 -- ----------------------------------------------------------------------------------------------------------- Allowance, end of year $ 45.3 $ 44.4 $ 42.4 =========================================================================================================== An analysis of investment income by investment type follows for the years ended December 31: (in millions) 2000 1999 1998 =========================================================================================================== Gross investment income: Securities available-for-sale: Fixed maturity securities $ 1,095.5 $ 1,031.3 $ 982.5 Equity securities 2.6 2.5 0.8 Mortgage loans on real estate 494.5 460.4 458.9 Real estate 32.2 28.8 40.4 Short-term investments 27.0 18.6 17.8 Other 53.2 26.5 30.7 ----------------------------------------------------------------------------------------------------------- Total investment income 1,705.0 1,568.1 1,531.1 Less investment expenses 50.1 47.3 49.5 ----------------------------------------------------------------------------------------------------------- Net investment income $ 1,654.9 $ 1,520.8 $ 1,481.6 =========================================================================================================== An analysis of realized gains (losses) on investments, net of valuation allowances, by investment type follows for the years ended December 31: (in millions) 2000 1999 1998 =========================================================================================================== Securities available-for-sale: Fixed maturity securities $ (18.2) $ (25.0) $ (0.7) Equity securities 4.7 7.4 2.1 Mortgage loans on real estate (4.2) (0.6) 3.9 Real estate and other (1.7) 6.6 23.1 ----------------------------------------------------------------------------------------------------------- $ (19.4) $ (11.6) $ 28.4 ===========================================================================================================
Fixed maturity securities with an amortized cost of $12.8 million and $9.1 million were on deposit with various regulatory agencies as required by law as of December 31, 2000 and 1999, respectively. 13 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (4) SHORT-TERM BORROWINGS NLIC established a $300 million commercial paper program in October 2000. Borrowings under the commercial paper program are unsecured and are issued for terms of 364 days or less. As of December 31, 2000 the Company had $118.7 million of commercial paper outstanding at an average effective rate of 6.48%. See also note 13. (5) 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 and foreign currency 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. See note 2 (j) regarding accounting for derivatives under SFAS 133 effective January 1, 2001. 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. Currently, 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 and cross currency swaps hedging foreign denominated debt instruments, 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. 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. 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. 14 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The notional amount of derivative financial instruments outstanding as of December 31, 2000 and 1999 were as follows:
(in millions ) 2000 1999 =========================================================================================================== Interest rate swaps Pay fixed/receive variable rate swaps hedging investments $ 934.8 $ 362.7 Pay variable/receive fixed rate swaps hedging investments 98.8 28.5 Pay variable/receive variable rate swaps hedging investments 184.0 9.0 Other contracts hedging investments 20.4 10.1 Pay variable/receive fixed rate swaps hedging liabilities 965.3 577.2 Pay variable/receive variable rate swaps hedging liabilities 546.9 -- Foreign currency swaps Hedging foreign currency denominated investments $ 30.5 $ 14.8 Hedging foreign currency denominated liabilities 1,542.2 577.2 Interest rate futures contracts $ 5,659.8 $ 781.6 ----------------------------------------------------------------------------------------------------------- (6) 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, 2000 and 1999 were as follows: (in millions) 2000 1999 =========================================================================================================== Deferred tax assets: Fixed maturity securities $ -- $ 5.3 Future policy benefits 34.7 149.5 Liabilities in separate accounts 462.7 373.6 Mortgage loans on real estate and real estate 18.8 18.5 Other assets and other liabilities 40.3 51.1 ----------------------------------------------------------------------------------------------------------- Total gross deferred tax assets 556.5 598.0 Valuation allowance (7.0) (7.0) ----------------------------------------------------------------------------------------------------------- Net deferred tax assets 549.5 591.0 ----------------------------------------------------------------------------------------------------------- Deferred tax liabilities: Fixed maturity securities 98.8 -- Equity securities and other long-term investments 6.4 10.8 Deferred policy acquisition costs 783.7 724.4 Deferred tax on realized investment gains 29.0 34.7 Other 38.1 26.5 ----------------------------------------------------------------------------------------------------------- Total gross deferred tax liabilities 956.0 796.4 ----------------------------------------------------------------------------------------------------------- Net deferred tax liability $ 406.5 $ 205.4 ===========================================================================================================
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. Future taxable amounts or recovery of federal income tax paid within the statutory carryback period can offset nearly all future deductible amounts. The valuation allowance was unchanged for the years ended December 31, 2000, 1999 and 1998. 15 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The Company's current federal income tax liability was $108.9 million and $104.7 million as of December 31, 2000 and 1999, respectively. Federal income tax expense for the years ended December 31 was as follows:
(in millions) 2000 1999 1998 =========================================================================================================== Currently payable $ 78.0 $ 53.6 $ 186.1 Deferred tax expense 129.7 147.8 4.3 ----------------------------------------------------------------------------------------------------------- $ 207.7 $ 201.4 $ 190.4 ===========================================================================================================
Total federal income tax expense for the years ended December 31, 2000, 1999 and 1998 differs from the amount computed by applying the U.S. federal income tax rate to income before tax as follows:
2000 1999 1998 ---------------------- ---------------------- ---------------------- (in millions) Amount % Amount % Amount % ================================================================================================================== Computed (expected) tax expense $239.1 35.0 $212.3 35.0 $195.0 35.0 Tax exempt interest and dividends received deduction (24.7) (3.6) (7.3) (1.2) (4.9) (0.9) Income tax credits (8.0) (1.2) (4.3) (0.7) - - Other, net 1.3 0.2 0.7 0.1 0.3 0.1 ------------------------------------------------------------------------------------------------------------------ Total (effective rate of each year) $207.7 30.4 $201.4 33.2 $190.4 34.2 ==================================================================================================================
Total federal income tax paid was $74.6 million, $29.8 million and $173.4 million during the years ended December 31, 2000, 1999 and 1998, respectively. (7) 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 for the years ended December 31, 2000, 1999 and 1998 were as follows:
(in millions) 2000 1999 1998 =========================================================================================================== Unrealized gains (losses) on securities available-for-sale arising during the period: Gross $ 264.5 $ (665.3) $ 58.2 Adjustment to deferred policy acquisition costs (74.0) 167.5 (12.9) Related federal income tax (expense) benefit (66.7) 171.4 (15.9) ----------------------------------------------------------------------------------------------------------- Net 123.8 (326.4) 29.4 ----------------------------------------------------------------------------------------------------------- Reclassification adjustment for net (gains) losses on securities available-for-sale realized during the period: Gross 13.5 17.6 (1.4) Related federal income tax expense (benefit) (4.7) (6.2) 0.5 ----------------------------------------------------------------------------------------------------------- Net 8.8 11.4 (0.9) ----------------------------------------------------------------------------------------------------------- Total Other Comprehensive Income (Loss) $ 132.6 $ (315.0) $ 28.5 ===========================================================================================================
16 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (8) FAIR VALUE OF FINANCIAL INSTRUMENTS The following disclosures summarize the carrying amount and estimated fair value of the Company's financial instruments. Certain assets and liabilities are specifically excluded from the disclosure requirements of financial instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value of a financial instrument is defined as the amount at which the financial instrument could be exchanged in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is 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 Company in estimating its fair value disclosures used the following methods and assumptions: 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 impaired mortgage loans 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 based on one of 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. 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. SHORT-TERM BORROWINGS: The carrying amount reported in the consolidated balance sheets for these instruments approximates their 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 9. 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:
2000 1999 ------------------------------- ------------------------------- Carrying Estimated Carrying Estimated (in millions) amount fair value amount fair value ============================================================================================================== Assets: Investments: Securities available-for-sale: Fixed maturity securities $ 15,451.3 $ 15,451.3 $ 15,289.7 $ 15,289.7 Equity securities 109.0 109.0 92.9 92.9 Mortgage loans on real estate, net 6,168.3 6,327.8 5,786.3 5,745.5 Policy loans 562.6 562.6 519.6 519.6 Short-term investments 442.6 442.6 416.0 416.0 Cash 18.4 18.4 4.8 4.8 Assets held in separate accounts 65,897.2 65,897.2 67,135.1 67,135.1 Liabilities: Investment contracts (16,815.3) (15,979.8) (16,977.7) (16,428.6) Policy reserves on life insurance contracts (5,368.4) (5,128.5) (4,883.9) (4,607.9) Short-term borrowings (118.7) (118.7) -- -- Liabilities related to separate accounts (65,897.2) (64,237.6) (67,135.1) (66,318.7) Derivative financial instruments: Interest rate swaps hedging assets (8.3) (8.3) 4.3 4.3 Interest rate swaps hedging liabilities (26.2) (32.2) (11.5) (24.2) Foreign currency swaps (24.3) (30.9) (11.8) (11.8) Futures contracts (16.0) (16.0) 1.3 1.3 --------------------------------------------------------------------------------------------------------------
(9) RISK DISCLOSURES The following is a description of the most significant risks facing life insurers and how the Company mitigates those risks: 18 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued 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. 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 could potentially 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 $360.6 million extending into 2001 were outstanding as of December 31, 2000. The Company also had $55.6 million of commitments to purchase fixed maturity securities outstanding as of December 31, 2000. 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. As of December 31, 2000, NLIC's credit risk from these derivative financial instruments was $44.8 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 22% (23% in 1999) in any geographic area and no more than 1% (2% in 1999) with any one borrower as of December 31, 2000. As of December 31, 2000, 36% (39% in 1999) of the remaining principal balance of the Company's commercial mortgage loan portfolio financed retail properties. 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 reinsurance contracts to cede a portion of its individual annuity business to The Franklin Life Insurance Company (Franklin) and beginning in 2000 with Security Benefit Life Insurance Company (SBL). Total recoveries due from Franklin were $97.7 million and $143.6 million as of December 31, 2000 and 1999, respectively, while amounts due from SBL totaled $45.4 million at December 31, 2000. The contracts are 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 and SBL have each 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% and 100% of the reinsured reserves for Franklin and SBL, respectively. (10) 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 and who have met certain age requirements. Plan contributions are invested in a group annuity contract of NLIC. Benefits are based upon the highest average annual salary of a specified number of consecutive years of the last ten years 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. Pension cost (benefit) charged to operations by the Company during the years ended December 31, 2000, 1999 and 1998 were $1.9 million, $(8.3) million and $2.0 million, respectively. The Company has recorded a prepaid pension asset of $13.6 million and $13.3 million as of December 31, 2000 and 1999, 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, 2000 and 1999 was $51.0 million and $49.6 million, respectively and the net periodic postretirement benefit cost (NPPBC) for 2000, 1999 and 1998 was $3.8 million, $4.9 million and $4.1 million, respectively. 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, 2000 and 1999 follows:
Pension Benefits Postretirement Benefits ---------------------------- --------------------------- (in millions) 2000 1999 2000 1999 =================================================================================================================== Change in benefit obligation: Benefit obligation at beginning of year $ 1,811.4 $ 2,185.0 $ 239.8 $ 270.1 Service cost 81.4 80.0 12.2 14.2 Interest cost 125.3 109.9 18.7 17.6 Actuarial loss (gain) 34.8 (95.0) 16.1 (64.4) Plan settlement -- (396.1) -- -- Benefits paid (71.2) (72.4) (10.4) (11.0) Acquired companies -- -- -- 13.3 ------------------------------------------------------------------------------------------------------------------- Benefit obligation at end of year 1,981.7 1,811.4 276.4 239.8 ------------------------------------------------------------------------------------------------------------------- Change in plan assets: Fair value of plan assets at beginning of year 2,247.6 2,541.9 91.3 77.9 Actual return on plan assets 140.9 161.8 12.2 3.5 Employer contribution -- 12.4 26.3 20.9 Plan curtailment in 2000/settlement in 1999 19.8 (396.1) -- -- Benefits paid (71.2) (72.4) (10.4) (11.0) ------------------------------------------------------------------------------------------------------------------- Fair value of plan assets at end of year 2,337.1 2,247.6 119.4 91.3 ------------------------------------------------------------------------------------------------------------------- Funded status 355.4 436.2 (157.0) (148.5) Unrecognized prior service cost 25.0 28.2 -- -- Unrecognized net gains (311.7) (402.0) (34.1) (46.7) Unrecognized net (asset) obligation at transition (6.4) (7.7) 1.0 1.1 ------------------------------------------------------------------------------------------------------------------- Prepaid (accrued) benefit cost $ 62.3 $ 54.7 $ (190.1) $ (194.1) ===================================================================================================================
Assumptions used in calculating the funded status of the pension plan and postretirement life and health care benefit plan were as follows:
Pension Benefits Postretirement Benefits --------------------------- --------------------------- 2000 1999 2000 1999 =================================================================================================================== Weighted average discount rate 6.75% 7.00% 7.50% 7.80% Rate of increase in future compensation levels 5.00% 5.25% -- -- Assumed health care cost trend rate: Initial rate -- -- 15.00% 15.00% Ultimate rate -- -- 5.50% 5.50% Uniform declining period -- -- 5 Years 5 Years -------------------------------------------------------------------------------------------------------------------
21 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The components of net periodic pension cost for the pension plan as a whole for the years ended December 31, 2000, 1999 and 1998 were as follows:
(in millions) 2000 1999 1998 ========================================================================================================= Service cost (benefits earned during the period) $ 81.4 $ 80.0 $ 87.6 Interest cost on projected benefit obligation 125.3 109.9 123.4 Expected return on plan assets (184.5) (160.3) (159.0) Recognized gains (11.8) (9.1) (3.8) Amortization of prior service cost 3.2 3.2 3.2 Amortization of unrecognized transition obligation (asset) (1.3) (1.4) 4.2 --------------------------------------------------------------------------------------------------------- $ 12.3 $ 22.3 $ 55.6 =========================================================================================================
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its affiliation with Nationwide and employees of WSC ended participation in the plan resulting in a curtailment gain of $67.1 million. During 1999, the Plan transferred assets to settle its obligation related to WSC employees, resulting in a gain of $32.9 million. The spin-off of liabilities and assets was completed in the year 2000, resulting in an adjustment to the curtailment gain of $19.8 million. Assumptions used in calculating the net periodic pension cost for the pension plan were as follows:
2000 1999 1998 ================================================================================================================ Weighted average discount rate 7.00% 6.08% 6.00% Rate of increase in future compensation levels 5.25% 4.33% 4.25% Expected long-term rate of return on plan assets 8.25% 7.33% 7.25% ---------------------------------------------------------------------------------------------------------------- The components of NPPBC for the postretirement benefit plan as a whole for the years ended December 31, 2000, 1999 and 1998 were as follows: (in millions) 2000 1999 1998 ================================================================================================================ Service cost (benefits attributed to employee service during the year) $ 12.2 $ 14.2 $ 9.8 Interest cost on accumulated postretirement benefit obligation 18.7 17.6 15.4 Expected return on plan assets (7.9) (4.8) (4.4) Amortization of unrecognized transition obligation of affiliates 0.6 0.6 0.2 Net amortization and deferral (1.3) (0.5) 0.6 ---------------------------------------------------------------------------------------------------------------- $ 22.3 $ 27.1 $ 21.6 ================================================================================================================
Actuarial assumptions used for the measurement of the NPPBC for the postretirement benefit plan for 2000, 1999 and 1998 were as follows:
2000 1999 1998 ================================================================================================================ Discount rate 7.80% 6.65% 6.70% Long-term rate of return on plan assets, net of tax in 1999 and 1998 8.30% 7.15% 5.83% Assumed health care cost trend rate: Initial rate 15.00% 15.00% 12.00% Ultimate rate 5.50% 5.50% 6.00% Uniform declining period 5 Years 5 Years 12 Years ----------------------------------------------------------------------------------------------------------------
22 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Because current plan costs are very close to the employer dollar caps, the health care cost trend has an immaterial effect on plan obligations for the postretirement benefit plan as a whole. For this reason, the effect of a one percentage point increase or decrease in the assumed health care cost trend rate on the APBO as of December 31, 2000 and on the NPPBC for the year ended December 31, 2000 was not calculated. (11) 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, 2000, 1999 and 1998 was $1.28 billion, $1.35 billion and $1.32 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2000, 1999 and 1998 was $158.7 million, $276.2 million and $171.0 million, respectively. The NAIC completed a project to codify statutory accounting principles (Codification), which is effective January 1, 2001 for NLIC and its insurance company subsidiary. The resulting change to NLIC's January 1, 2001 surplus was an increase of approximately $80.0 million. The significant change for NLIC, as a result of Codification, was the recording of deferred taxes, which were not recorded prior to the adoption of Codification. The Company is limited in the amount of shareholder dividends it may pay without prior approval by the Department. As of December 31, 2000 no dividends could be paid by NLIC without prior approval. 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 shareholders. The Company currently does not expect such regulatory requirements to impair its ability to pay operating expenses and shareholder dividends in the future. (12) 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 net income in 1999. 23 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued 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, 2000, 1999 and 1998 were $170.1 million, $193.0 million, and $216.9 million, respectively, while benefits, claims and expenses ceded were $168.0 million, $197.3 million and $259.3 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, 2000, 1999 and 1998, the Company made payments to NMIC and Nationwide Services Company totaling $150.3 million, $124.1 million, and $95.0 million, respectively. 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, 2000, 1999 and 1998, the Company made lease payments to NMIC and its subsidiaries of $14.1 million, $9.9 million and $8.0 million, respectively. 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 after a stated period, the seller will repurchase the securities at the original sales price plus a price differential. Transactions under the agreements during 2000, 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 $321.1 million and $411.7 million as of December 31, 2000 and 1999, respectively, and are included in short-term investments on the accompanying consolidated balance sheets. Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the three years ended December 31, 2000 were $65.0 million, $79.7 million and $74.9 million, respectively. 24 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (13) BANK LINES OF CREDIT Also available as a source of funds to the Company is a $1 billion revolving credit facility entered into by NFS, NLIC and NMIC. The facility is comprised of a five year $700 million agreement and a 364 day $300 million agreement with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that NLIC maintain statutory surplus in excess of $935 million. The Company had no amounts outstanding under this agreement as of December 31, 2000. Of the total facility, $300 million is designated to back NLIC's $300 million commercial paper program. Therefore, borrowing capacity under this facility would be reduced by the amount of any commercial paper outstanding. (14) 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. (15) SEGMENT INFORMATION The Company has redefined its business segments in order to align this disclosure with the way management currently views its core operations. This updated view better reflects the different economics of the Company's various businesses and also aligns well with the current market focus. As a result, the Company now reports three product segments: Individual Annuity, Institutional Products and Life Insurance. In addition, the Company reports certain other revenues and expenses in a Corporate segment. All 1999 and 1998 amounts have been restated to reflect the new business segments. The Individual Annuity segment consists of both variable and fixed annuity contracts. Individual annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, variable annuity contracts provide the customer with access to a wide range of investment options and asset protection in the event of an untimely death, while fixed annuity contracts generate a return for the customer at a specified interest rate fixed for a prescribed period. The Company's individual annuity products consist of single premium deferred annuities, flexible premium deferred annuities and single premium immediate annuities. The Institutional Products segment is comprised of the Company's group pension and payroll deduction business, both public and private sectors, and medium-term note program. The public sector includes the 457 business in the form of fixed and variable annuities. The private sector includes the 401(k) business generated through fixed and variable annuities. The Life Insurance segment consists of insurance products, including universal life insurance, corporate-owned life insurance and bank-owned life insurance products, which provide a death benefit and also allow the customer to build cash value on a tax-advantaged basis. 25 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued In addition to the product segments, the Company reports a Corporate segment. The Corporate segment includes net investment income not allocated to the three product segments, certain revenues and expenses of the Company's investment advisory and broker/dealer subsidiary, unallocated expenses and interest expense on short-term borrowings. In addition to these operating revenues and expenses, the Company also reports net realized gains and losses on investments in the Corporate segment. The following table summarizes the financial results of the Company's business segments for the years ended December 31, 2000, 1999 and 1998.
Individual Institutional Life (in millions) Annuity Products Insurance Corporate Total =================================================================================================================== 2000: Net investment income $ 483.2 $ 827.4 $ 289.2 $ 55.1 $ 1,654.9 Other operating revenue 625.9 251.6 453.9 17.0 1,348.4 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 1,109.1 1,079.0 743.1 72.1 3,003.3 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 396.4 628.8 157.2 -- 1,182.4 Amortization of deferred policy acquisition costs 238.7 49.2 64.2 -- 352.1 Interest expense on short-term borrowings -- -- -- 1.3 1.3 Other benefits and expenses 192.3 170.3 368.8 33.7 765.1 ------------------------------------------------------------------------------------------------------------------- Total expenses 827.4 848.3 590.2 35.0 2,300.9 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax 281.7 230.7 152.9 37.1 702.4 Realized losses on investments -- -- -- (19.4) (19.4) ------------------------------------------------------------------------------------------------------------------- Income before federal income tax $ 281.7 $ 230.7 $ 152.9 $ 17.7 $ 683.0 =================================================================================================================== Assets as of year end $45,422.5 $37,217.3 $ 8,103.3 $ 1,824.2 $92,567.3 ------------------------------------------------------------------------------------------------------------------- 1999: Net investment income $ 458.9 $ 771.2 $ 253.1 $ 37.6 $ 1,520.8 Other operating revenue 511.4 211.9 393.0 66.1 1,182.4 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 970.3 983.1 646.1 103.7 2,703.2 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 384.9 580.9 130.5 -- 1,096.3 Amortization of deferred policy acquisition costs 170.9 41.6 60.1 -- 272.6 Other benefits and expenses 155.3 142.8 334.7 83.4 716.2 ------------------------------------------------------------------------------------------------------------------- Total expenses 711.1 765.3 525.3 83.4 2,085.1 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax 259.2 217.8 120.8 20.3 618.1 Realized losses on investments -- -- -- (11.6) (11.6) ------------------------------------------------------------------------------------------------------------------- Income before federal income tax $ 259.2 $ 217.8 $ 120.8 $ 8.7 $ 606.5 =================================================================================================================== Assets as of year end $45,667.8 $39,045.1 $ 6,616.7 $ 1,346.3 $92,675.9 -------------------------------------------------------------------------------------------------------------------
26 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued
Individual Institutional Life (in millions) Annuity Products Insurance Corporate Total =================================================================================================================== 1998: Net investment income $ 431.7 $ 784.7 $ 225.6 $ 39.6 $ 1,481.6 Other operating revenue 412.6 167.8 318.5 66.8 965.7 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 844.3 952.5 544.1 106.4 2,447.3 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 357.9 595.7 115.4 -- 1,069.0 Amortization of deferred policy acquisition costs 129.2 38.9 46.4 -- 214.5 Other benefits and expenses 125.7 137.5 293.5 78.4 635.1 ------------------------------------------------------------------------------------------------------------------- Total expenses 612.8 772.1 455.3 78.4 1,918.6 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax 231.5 180.4 88.8 28.0 528.7 Realized gains on investments -- -- -- 28.4 28.4 ------------------------------------------------------------------------------------------------------------------- Income before federal income tax $ 231.5 $ 180.4 $ 88.8 $ 56.4 $ 557.1 =================================================================================================================== Assets as of year end $36,641.8 $30,618.4 $ 5,187.6 $ 1,894.3 $74,342.1 -------------------------------------------------------------------------------------------------------------------
---------- 1 Excludes net 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. 64 PART II - OTHER INFORMATION CONTENTS OF REGISTRATION STATEMENT This Post-Effective Amendment No. 6 comprises the following papers and documents: The facing sheet. Cross-reference to items required by Form N-8B-2. The prospectus consisting of 133 pages. Representations and Undertakings. Independent Auditors' Consent. Signatures. The following exhibits required by Forms N-8B-2 and S-6: 1. Power of Attorney dated April 4, 2000 Attached hereto. 2. Resolution of the Depositor's Board of Directors Included with the Registration Statement on Form N-8B-2 for authorizing the establishment of the Registrant, the Nationwide VLI Separate Account-2 (File No. 811-5311), adopted and is hereby incorporated by reference. 3. Distribution Contracts Attached hereto. 4. Form of Security Included with the Registration Statement on Form S-6 for the Nationwide VLI Separate Account-2 ('33 Act File No. 33-63179, '40 Act File No. 811-5311). 5. Articles of Incorporation of Depositor Included with the Registration Statement on Form N-8B-2 for the Nationwide VLI Separate Account-2 (File No. 811-5311), and is hereby incorporated by reference. 6. Application Form of Security Filed with the Registration Statement on Form S-6 (File No. 333-52617, and is hereby incorporated by reference. 7. Opinion of Counsel Included with the Registration Statement on Form N-8B-2 for the Nationwide VLI Separate Account-4 ('33 Act File No. 333-52617, '40 Act File No. 811-8301).
65 REPRESENTATIONS AND UNDERTAKINGS The Registrant and Nationwide hereby make the following representations and undertakings: (a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment Company Act of 1940 (the "Act"). The Registrant and Nationwide elect to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with respect to the policies described in the prospectus. The policies have been designed in such a way as to qualify for the exemptive relief from various provisions of the Act afforded by Rule 6e-3(T). (b) Paragraph (b)(13)(iii)(F) of Rule 6e-3(T) is being relied on for the deduction of the mortality and expense risk charges ("risk charges") assumed by Nationwide under the policies. Nationwide represents that the risk charges are within the range of industry practice for comparable policies and reasonable in relation to all of the risks assumed by the issuer under the policies. Actuarial memoranda demonstrating the reasonableness of these charges are maintained by Nationwide, and will be made available to the Securities and Exchange Commission (the "Commission") on request. (c) Nationwide has concluded that there is a reasonable likelihood that the distribution financing arrangement of the separate account will benefit the separate account and the contractholders and will keep and make available to the Commission on request a memorandum setting forth the basis for this representation. (d) Nationwide represents that the separate account will invest only in management investment companies which have undertaken to have a board of directors, a majority of whom are not interested persons of Nationwide, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. (e) Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the Registrant hereby undertakes to file with the Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. (f) Nationwide represents that the fees and charges deducted under the policy in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Nationwide. 66 INDEPENDENT AUDITORS' CONSENT The Board of Directors of Nationwide Life Insurance Company and Policy Owners of Nationwide VLI Separate Account-4: We consent to the use of our reports included herein and to the reference to our firm under the heading "Experts" in the Prospectus. Columbus, Ohio April 26, 2001 KPMG LLP 67 SIGNATURES As required by the Securities Act of 1933, the Registrant, Nationwide VLI Separate Account - 4 certifies that it meets the requirements of the Securities Act Rule 485(b) for effectiveness of Post-Effective Amendment No. 6 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, 2001. NATIONWIDE VLI SEPARATE ACCOUNT-4 ------------------------------------------- (Registrant) (Seal) NATIONWIDE LIFE INSURANCE COMPANY ------------------------------------------- Attest: (Depositor) By: /s/ GLENN W. SODEN By: /s/ STEVEN SAVINI, ESQ. ---------------------- ------------------------------------------- Glenn W. Soden Steven Savini, Esq. Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 6 has been signed below by the following persons in the capacities indicated on the 26th day of April, 2001.
SIGNATURE TITLE LEWIS J. ALPHIN Director ---------------------------------------- Lewis J. Alphin A. I. BELL Director ---------------------------------------- A. I. Bell YVONNE M. CURL Director ---------------------------------------- Yvonne M. Curl 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 W.G. JURGENSEN Chief Executive Officer ---------------------------------------- W.G. Jurgensen And Director DAVID O. MILLER Chairman of the Board and ---------------------------------------- David O. Miller Director RALPH M. PAIGE Director ---------------------------------------- Ralph M. Paige JAMES F. PATTERSON Director ---------------------------------------- James F. Patterson ARDEN L. SHISLER Director By /s/ STEVEN SAVINI ---------------------------------------- ------------------------------------- Arden L. Shisler Steven Savini Attorney-in-Fact ROBERT L. STEWART Director ---------------------------------------- Robert L. Stewart