-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GVD+zb8AVd+ofE2OAHSjjfg/jKntnA+5NidzMuqNoYHqTkB5+O4BEh9QrtoIX3qV yUgF+NX3tzW9DXtmeBr/Tw== 0000950152-02-000240.txt : 20020413 0000950152-02-000240.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950152-02-000240 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20020115 EFFECTIVENESS DATE: 20020115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE VLI SEPARATE ACCOUNT 4 CENTRAL INDEX KEY: 0001041357 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 314156830 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-31725 FILM NUMBER: 2509940 BUSINESS ADDRESS: STREET 1: C/O NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43216 BUSINESS PHONE: 8008603946 MAIL ADDRESS: STREET 1: C/O NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43216 485BPOS 1 l92154ae485bpos.txt NATIONWIDE VLI SEPARATE ACCOUNT 4 485BPOS Registration No. 333-31725 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 11 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 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 January 25, 2002 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: Flexible Premium Variable Universal Life Insurance Policies Approximate date of proposed offering: Continuously on and after January 25, 2002. [ ] Check box if it is proposed that this filing will become effective on (date) at (time) pursuant to Rule 487. ================================================================================ 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 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 N-8B-2 ITEM CAPTION IN PROSPECTUS 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 SUPPLEMENT DATED JANUARY 25, 2002 TO PROSPECTUS DATED MAY 1, 2001 FOR FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES ISSUED BY NATIONWIDE LIFE INSURANCE COMPANY THROUGH ITS NATIONWIDE VLI SEPARATE ACCOUNT - 4 THIS SUPPLEMENT UPDATES CERTAIN INFORMATION CONTAINED IN YOUR PROSPECTUS. PLEASE READ IT AND KEEP IT WITH YOUR PROSPECTUS FOR FUTURE REFERENCE. 1. ALL REFERENCES IN THE PROSPECTUS TO "NATIONWIDE SEPARATE ACCOUNT TRUST" OR "NSAT" ARE CHANGED TO "GARTMORE VARIABLE INSURANCE TRUST" AND "GVIT," RESPECTIVELY. 2. EFFECTIVE DECEMBER 12, 2001, THE FOLLOWING UNDERLYING MUTUAL FUNDS CHANGED NAMES:
--------------------------------------------------------------- ------------------------------------------------------------- OLD UNDERLYING MUTUAL FUND NAME NEW UNDERLYING MUTUAL FUND NAME --------------------------------------------------------------- ------------------------------------------------------------- Credit Suisse Warburg Pincus Trust - Global Post-Venture Credit Suisse Trust - Global Post-Venture Capital Portfolio Capital Portfolio Credit Suisse Warburg Pincus Trust - International Equity Credit Suisse Trust - International Focus Portfolio Portfolio Credit Suisse Warburg Pincus Trust - Value Portfolio Credit Suisse Trust - Large Cap Value Portfolio --------------------------------------------------------------- ------------------------------------------------------------- 3. EFFECTIVE JANUARY 25, 2002, THE FOLLOWING UNDERLYING MUTUAL FUNDS CHANGED NAMES: --------------------------------------------------------------- ------------------------------------------------------------- OLD UNDERLYING MUTUAL FUND NAME NEW UNDERLYING MUTUAL FUND NAME --------------------------------------------------------------- ------------------------------------------------------------- Nationwide Separate Account Trust ("NSAT") - Capital Gartmore Variable Insurance Trust ("GVIT") - Gartmore GVIT Appreciation Fund Growth Fund: Class I NSAT - Dreyfus NSAT Mid Cap Index Fund GVIT - Dreyfus GVIT Mid Cap Index Fund: Class I NSAT - Federated NSAT Equity Income Fund GVIT - Federated GVIT Equity Income Fund: Class I NSAT - Federated NSAT High Income Bond Fund GVIT - Federated GVIT High Income Bond Fund: Class I NSAT - Gartmore NSAT Emerging Markets Fund GVIT - Gartmore GVIT Emerging Markets Fund: Class I NSAT - Gartmore NSAT Global Technology and Communications Fund GVIT - Gartmore GVIT Global Technology and Communications Fund: Class I NSAT - Gartmore NSAT International Growth Fund GVIT - Gartmore GVIT International Growth Fund: Class I NSAT - Government Bond Fund GVIT - Gartmore GVIT Government Bond Fund: Class I NSAT - J.P. Morgan NSAT Balanced Fund GVIT - J.P. Morgan GVIT Balanced Fund: Class I NSAT - MAS NSAT Multi Sector Bond Fund GVIT - MAS GVIT Multi Sector Bond Fund: Class I NSAT - Money Market Fund GVIT - Gartmore GVIT Money Market Fund: Class I NSAT - Nationwide Global 50 Fund GVIT - Gartmore GVIT Worldwide Leaders Fund: Class I NSAT - Nationwide Small Cap Growth Fund GVIT - GVIT Small Cap Growth Fund: Class I NSAT - Nationwide Small Cap Value Fund GVIT - GVIT Small Cap Value Fund: Class I NSAT - Nationwide Small Company Fund GVIT - GVIT Small Company Fund: Class I NSAT - Nationwide Strategic Value Fund GVIT - Nationwide GVIT Strategic Value Fund: Class I NSAT - Strong NSAT Mid Cap Growth Fund GVIT - Strong GVIT Mid Cap Growth Fund: Class I NSAT - Total Return Fund GVIT - Gartmore GVIT Total Return Fund: Class I NSAT - Turner NSAT Growth Focus Fund GVIT - Turner GVIT Growth Focus Fund: Class I --------------------------------------------------------------- -------------------------------------------------------------
4. THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOW AVAILABLE AS INVESTMENT OPTIONS UNDER THE CONTRACT: GARTMORE VARIABLE INSURANCE TRUST - Gartmore GVIT Investor Destinations Aggressive Fund - Gartmore GVIT Investor Destinations Conservative Fund - Gartmore GVIT Investor Destinations Moderate Fund - Gartmore GVIT Investor Destinations Moderately Aggressive Fund - Gartmore GVIT Investor Destinations Moderately Conservative Fund 5. THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE IN CONNECTION WITH CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER JANUARY 25, 2002: GARTMORE VARIABLE INSURANCE TRUST - Turner GVIT Growth Focus Fund: Class I DREYFUS INVESTMENT PORTFOLIOS - European Equity Portfolio: Initial Shares 6. THE "UNDERLYING MUTUAL FUND ANNUAL EXPENSES" ARE MODIFIED AS FOLLOWS:
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, AFTER REIMBURSEMENTS AND WAIVERS) - ------------------------------------------------------------------------------------------------------------------------- Management Other 12b-1 Total Underlying Fees Expenses Fees Mutual Fund Expenses - ------------------------------------------------------------------------------------------------------------------------- GVIT Dreyfus GVIT Mid Cap Index Fund: Class I (formerly, 0.50% 0.40% 0.00% 0.90% NSAT Dreyfus NSAT Mid Cap Index Fund) GVIT Federated GVIT Equity Income Fund: Class I (formerly, 0.80% 0.31% 0.00% 1.11% NSAT Federated NSAT Equity Income Fund) GVIT Federated GVIT High Income Bond Fund: Class I 0.80% 0.32% 0.00% 1.12% (formerly, NSAT Federated NSAT High Income Bond Fund) GVIT Gartmore GVIT Government Bond Fund: Class I (formerly, 0.50% 0.23% 0.00% 0.73% NSAT Government Bond Fund) GVIT Gartmore GVIT Growth Fund: Class I (formerly, NSAT 0.60% 0.23% 0.00% 0.83% Capital Appreciation Fund) GVIT Gartmore GVIT Investor Destinations Aggressive Fund 0.13% 0.23% 0.25% 0.61% GVIT Gartmore GVIT Investor Destinations Conservative Fund 0.13% 0.23% 0.25% 0.61% GVIT Gartmore GVIT Investor Destinations Moderate Fund 0.13% 0.23% 0.25% 0.61% GVIT Gartmore GVIT Investor Destinations Moderately 0.13% 0.23% 0.25% 0.61% Aggressive Fund GVIT Gartmore GVIT Investor Destinations Moderately 0.13% 0.23% 0.25% 0.61% Conservative Fund GVIT Gartmore GVIT Money Market Fund: Class I (formerly, 0.39% 0.22% 0.00% 0.61% NSAT Money Market Fund) GVIT Gartmore GVIT Total Return Fund: Class I (formerly, 0.58% 0.23% 0.00% 0.81% NSAT Total Return Fund) GVIT Gartmore GVIT Worldwide Leaders Fund: Class I 1.00% 0.42% 0.00% 1.42% (formerly, NSAT Nationwide Global 50 Fund) GVIT GVIT Small Cap Growth Fund: Class I (formerly, NSAT 1.10% 0.50% 0.00% 1.60% Nationwide Small Cap Growth Fund) GVIT GVIT Small Cap Value Fund: Class I (formerly, NSAT 0.90% 0.30% 0.00% 1.20% Nationwide Small Cap Value Fund) GVIT GVIT Small Company Fund: Class I (formerly, NSAT 0.93% 0.26% 0.00% 1.19% Nationwide Small Company Fund) GVIT J.P. Morgan GVIT Balanced Fund: Class I (formerly, NSAT 0.75% 0.32% 0.00% 1.07% J.P. Morgan NSAT Balanced Fund) GVIT MAS GVIT Multi Sector Bond Fund: Class I (formerly, 0.75% 0.34% 0.00% 1.09% NSAT MAS NSAT Multi Sector Bond Fund) GVIT Strong GVIT Mid Cap Growth Fund: Class I (formerly, 0.90% 0.27% 0.00% 1.17% NSAT Strong NSAT Mid Cap Growth Fund) - -------------------------------------------------------------------------------------------------------------------------
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.
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, BEFORE REIMBURSEMENTS AND WAIVERS) ------------------------------------------------------------------------------------------------------------------------ Management Other 12b-1 Total Underlying Fees Expenses Fees Mutual Fund Expenses ------------------------------------------------------------------------------------------------------------------------ GVIT Gartmore GVIT Investor Destinations Aggressive Fund 0.13% 0.63% 0.25% 1.01% GVIT Gartmore GVIT Investor Destinations Conservative Fund 0.13% 0.63% 0.25% 1.01% GVIT Gartmore GVIT Investor Destinations Moderate Fund 0.13% 0.63% 0.25% 1.01% GVIT Gartmore GVIT Investor Destinations Moderately 0.13% 0.63% 0.25% 1.01% Aggressive Fund GVIT Gartmore GVIT Investor Destinations Moderately 0.13% 0.63% 0.25% 1.01% Conservative Fund ------------------------------------------------------------------------------------------------------------------------
7. THE PROVISION ENTITLED "MARKET TIMING FIRMS" IS MODIFIED AS FOLLOWS: Nationwide reserves the right to refuse or limit transfer requests (or take any other action it deems necessary) in order to protect policy owners and beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices that are employed by some policy owners (or third parties acting on their behalf). If Nationwide determines that a policy owner (or a third party acting on the policy owner's behalf) is engaging in harmful short-term trading, Nationwide reserves the right to take actions to protect investors, including exercising its right to terminate the ability of specified policy owners to submit transfer requests via telephone, facsimile, or over the internet. If Nationwide exercises this right, affected policy owners would be limited to submitting transfer requests via U.S. mail. Any action taken by Nationwide pursuant to this provision will be preceded by a 30 day written notice to the affected policy owner. 8. THE PROVISION ENTITLED "TAX MATTERS" IS MODIFIED AS FOLLOWS: 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 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 generally 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, a 10% tax penalty generally applies to the taxable portion of such distributions unless the policy owner is over age 59 1/2, 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 is in jeopardy of becoming a modified endowment contract. 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 U.S. 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. 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 life insurance policy (including 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 contract may be subject to mandatory back-up withholding (which cannot be waived). The mandatory back-up withholding rate is established by Section 3406 of the Internal Revenue Code and is applied against the income that is distributed. The mandatory backup withholding may arise if no taxpayer identification number is provided to Nationwide, or if the IRS notifies Nationwide that back-up withholding is required. ESTATE AND GENERATION-SKIPPING TRANSFER TAXES 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. The federal estate tax is integrated with the federal gift tax under a unified tax rate schedule. In general, in 2002, an estate of less than $1,000,000 (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 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 advisers 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 includable 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 if no taxpayer identification number, or an incorrect taxpayer identification number, is provided. 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, 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, you should consult your independent legal, tax and/or financial adviser. 9. "APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS" IS MODIFIED AS FOLLOWS: GARTMORE VARIABLE INSURANCE TRUST Gartmore Variable Insurance Trust (formerly, Nationwide Separate Account Trust) ("GVIT") is an open-end management investment company created under the laws of Massachusetts. GVIT offers shares in the mutual funds listed below, each with its own investment objectives. Shares of GVIT 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. Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Mutual Insurance Company, manages the assets of the Gartmore GVIT Emerging Markets Fund and Gartmore GVIT International Growth Fund. The remaining assets of GVIT are managed by Gartmore Mutual Fund Capital Trust ("GMF"), an indirect subsidiary of Nationwide Financial Services, Inc. DREYFUS GVIT MID CAP INDEX FUND: CLASS I (FORMERLY, DREYFUS NSAT MID CAP INDEX FUND) Subadviser: The Dreyfus Corporation Investment Objective: Capital appreciation. Under normal conditions, the Fund invests at least 80% of its net assets in equity securities of companies included in the Standard & Poor's MidCap 400 Index and in derivative instruments linked to the S&P 400. The Fund is neither sponsored by nor affiliated with Standard & Poor's Corporation. FEDERATED GVIT EQUITY INCOME FUND: CLASS I (FORMERLY, FEDERATED NSAT EQUITY INCOME FUND) Subadviser: Federated Investment Counseling Investment Objective: Above average income and capital appreciation. Under normal conditions, the Fund invests at least 80% of its net assets in income producing U.S. and foreign equity securities and securities that are convertible into common stock. FEDERATED GVIT HIGH INCOME BOND FUND: CLASS I (FORMERLY, FEDERATED NSAT HIGH INCOME BOND FUND) Subadviser: Federated Investment Counseling Investment Objective: To provide high current income. Under normal conditions, the Fund invests at least 80% of the Fund's net 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 GVIT EMERGING MARKETS FUND: CLASS I (FORMERLY, GARTMORE NSAT EMERGING MARKETS FUND) Subadviser: Gartmore Global Partners Investment Objective: Long term capital growth. Under normal conditions, the Fund invests at least 80% of its net assets in equity securities of companies located in emerging market or developing countries or that derive a significant portion of their earnings or revenue from emerging market countries. GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND: CLASS I (FORMERLY, GARTMORE NSAT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND) Investment Objective: Long term capital appreciation by investing under normal conditions at least 80% of its net assets in equity securities issued by companies with business operations in technology and communications and/or technology and communication related industries. These companies will be tied economically to a number of countries throughout the world, including the United States. GARTMORE GVIT GOVERNMENT BOND FUND: CLASS I (FORMERLY, GOVERNMENT BOND FUND) Investment Objective: Seeks as high a level of income as is consistent with the preservation of capital. Under normal conditions, the Fund invests at least 80% of its net assets in U.S. government and agency bonds, bills and notes. The duration of the Fund will typically be four to six years. GARTMORE GVIT GROWTH FUND: CLASS I (FORMERLY, CAPITAL APPRECIATION FUND) Investment Objective: Long-term capital appreciation. The Fund invests primarily in large capitalization companies. The Fund looks for companies whose earnings are expected to grow faster than other companies in the market. GARTMORE GVIT INTERNATIONAL GROWTH FUND: CLASS I (FORMERLY, 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. GARTMORE GVIT INVESTOR DESTINATIONS AGGRESSIVE FUND Investment Objective: To maximize total investment return primarily by seeking growth of capital. The Fund invests in a target allocation mix of 40% large cap U.S. stocks, 15% mid cap U.S. stocks, 10% small cap U.S. stocks, 30% international funds, and 5% bonds. GARTMORE GVIT INVESTOR DESTINATIONS CONSERVATIVE FUND Investment Objective: To maximize total investment return by seeking income and, secondarily, long term growth of capital. The Fund invests in a target allocation mix of 10% large cap U.S. stocks, 5% mid cap U.S. stocks, 5% international stocks, 35% bonds, and 45% short-term investments. GARTMORE GVIT INVESTOR DESTINATIONS MODERATE FUND Investment Objective: To maximize total investment return by seeking growth of capital and income. The Fund invests in a target allocation mix of 30% large cap U.S. stocks, 10% mid cap U.S. stocks, 5% small cap U.S. stocks, 15% international stocks, 25% bonds, and 15% short-term investments. GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY AGGRESSIVE FUND Investment Objective: To maximize total investment return primarily by seeking growth of capital, but also income. The Fund invests in a target allocation mix of 35% large cap U.S. stocks, 15% mid cap U.S. stocks, 5% small cap U.S. stocks, 25% international stocks, 15% bonds, and 5% short-term investments. GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND Investment Objective: To maximize total investment return by seeking income and, secondarily, growth of capital. The Fund invests in a target allocation mix of 20% large cap U.S. stocks, 10% mid cap U.S. stocks, 10% international stocks, 35% bonds, and 25% short-term investments. GARTMORE GVIT MONEY MARKET FUND: CLASS I (FORMERLY, MONEY MARKET FUND) Investment Objective: As high a level of current income as is consistent with the preservation of capital and maintenance of liquidity. The Fund invests in high-quality money market obligations maturing in 397 days or less. GARTMORE GVIT TOTAL RETURN FUND: CLASS I (FORMERLY, TOTAL RETURN FUND) Investment Objective: Seeks total return through a flexible combination of capital appreciation and current income. The Fund invests primarily in common stocks and convertible securities. GARTMORE GVIT WORLDWIDE LEADERS FUND: CLASS I (FORMERLY, NATIONWIDE GLOBAL 50 FUND) Subadviser: Gartmore Global Partners Investment Objective: Long-term capital growth. Under normal conditions, the Fund invests at least 80% of its net assets in equity securities of companies located throughout the world considered to be leaders. GVIT SMALL CAP GROWTH FUND: CLASS I (FORMERLY, NATIONWIDE SMALL CAP GROWTH FUND) Subadvisers: Miller Anderson & Sherrerd, LLP, Neuberger Berman, LLC and Waddell & Reed Investment Management Company Investment Objective: Seeks capital growth by investing in a broadly diversified portfolio of equity securities issued by U.S. and foreign companies with market capitalizations in the range of companies represented by the Russell 2000, known as small cap companies. Under normal conditions, the Fund will invest at least 80% of its net assets in the equity securities of small cap companies. GVIT SMALL CAP VALUE FUND: CLASS I (FORMERLY, NATIONWIDE SMALL CAP VALUE FUND) Subadviser: The Dreyfus Corporation Investment Objective: Capital appreciation. Under normal conditions, the Fund invests at least 80% of its net assets in equity securities of small capitalization companies. These are companies whose equity market capitalizations at the time of investment are similar to the market capitalizations of companies in the Russell 2000 Index. The Fund will invest in stocks of U.S. and foreign companies which the portfolio managers believe qualify as "value" companies. GVIT SMALL COMPANY FUND: CLASS I (FORMERLY, NATIONWIDE SMALL COMPANY FUND) Subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC, Gartmore Global Partners, Strong Capital Management, Inc. and Waddell & Reed Investment Management Company Investment Objective: Long-term growth of capital. Under normal conditions, the Fund will invest at least 80% of its net assets in equity securities issued by small capitalization companies. These are companies whose equity market capitalizations at the time of investment are similar to the market capitalizations of companies in the Russell 2000 Index. J.P. MORGAN GVIT BALANCED FUND: CLASS I (FORMERLY, J.P. MORGAN NSAT 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 conditions, the Fund invests approximately 50% of its net assets in equity securities and 30% of its net assets in fixed income securities (including U.S. government corporate, mortgage-backed and asset-backed 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. MAS GVIT MULTI SECTOR BOND FUND: CLASS I (FORMERLY, MAS NSAT 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. NATIONWIDE GVIT STRATEGIC VALUE FUND: CLASS I (FORMERLY, NATIONWIDE STRATEGIC VALUE FUND) (NOT AVAILABLE FOR POLICIES ISSUED 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 GVIT MID CAP GROWTH FUND: CLASS I (FORMERLY, STRONG NSAT MID CAP 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. Under normal conditions, the Fund invests at least 80% of its net assets in equity securities issued by mid capitalization companies. TURNER GVIT GROWTH FOCUS FUND: CLASS I (FORMERLY, TURNER NSAT GROWTH FOCUS FUND) (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER JANUARY 25, 2002) 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 15 to 30 common stocks. NATIONWIDE LIFE INSURANCE COMPANY 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: AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM) FAMILY OF INVESTMENTS - American Century VP Income & Growth - American Century VP International - American Century VP Value DREYFUS - Dreyfus Investment Portfolios - European Equity Portfolio - Initial Shares - The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares - Dreyfus Stock Index Fund, Inc. - Initial Shares - Dreyfus Variable Investment Fund -Appreciation Portfolio - Initial Shares (formerly, Capital Appreciation Portfolio) FEDERATED INSURANCE SERIES - Federated Quality Bond Fund II FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP Equity-Income Portfolio: Service Class - VIP Growth Portfolio: Service Class - VIP High Income Portfolio: Service Class* - VIP Overseas Portfolio: Service Class FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II Contrafund(R) Portfolio: Service Class FIDELITY VARIABLE INSURANCE PRODUCT FUND III - VIP III Growth Opportunities Portfolio: Service Class JANUS ASPEN SERIES - Capital Appreciation Portfolio: Service Shares - Global Technology Portfolio: Service Shares - International Growth Portfolio: Service Shares MORGAN STANLEY THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.) - Emerging Markets Debt Portfolio - Mid Cap Growth Portfolio - U.S. Real Estate Portfolio NATIONWIDE SEPARATE ACCOUNT TRUST - Capital Appreciation Fund - Dreyfus NSAT Mid Cap Index Fund (formerly, Nationwide(R) Mid Cap Index Fund) (formerly, Nationwide(R) Select Advisers Mid Cap Fund) - Federated NSAT Equity Income Fund (formerly, Nationwide(R) Equity Income Fund) - Federated NSAT High Income Bond Fund* (formerly, Nationwide(R) High Income Bond Fund) - Gartmore NSAT Emerging Markets Fund - Gartmore NSAT Global Technology and Communications Fund - Gartmore NSAT International Growth Fund - Government Bond Fund - J.P. Morgan NSAT Balanced Fund (formerly, Nationwide(R) Balanced Fund) - MAS NSAT Multi Sector Bond Fund* (formerly, Nationwide(R) Multi Sector Bond Fund) - Money Market Fund - Nationwide(R) Global 50 Fund (formerly, Nationwide(R) Global Equity Fund) (subadviser: J.P. Morgan Investment Management Inc.) - 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) - Nationwide(R) Small Cap Value Fund (subadviser: The Dreyfus Corporation) - 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) - Strong NSAT Mid Cap Growth Fund (formerly, Nationwide(R) Strategic Growth Fund) - Total Return Fund - Turner NSAT Growth Focus Fund NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT Guardian Portfolio - AMT Mid-Cap Growth Portfolio - AMT Partners Portfolio OPPENHEIMER VARIABLE ACCOUNT FUNDS - Oppenheimer Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) - Oppenheimer Capital Appreciation Fund/VA (formerly, Oppenheimer Growth Fund) - Oppenheimer Global Securities Fund/VA - Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer Growth & Income Fund) STRONG OPPORTUNITY FUND II, INC. VAN ECK WORLDWIDE INSURANCE TRUST - Worldwide Emerging Markets Fund - 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) - Global Post-Venture Capital Portfolio (formerly, Post-Venture Capital Portfolio) - 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) - Value Portfolio (formerly, Growth & Income Portfolio) NATIONWIDE SEPARATE ACCOUNT TRUST - Nationwide(R) Strategic Value Fund (subadviser: Strong Capital Management, Inc.) For general information or to obtain FREE copies of the: - prospectus, annual report or semi-annual report for any underlying mutual fund; and - 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: - - IS NOT A BANK DEPOSIT - - IS NOT FDIC INSURED - - IS NOT INSURED OR ENDORSED BY A BANK OR ANY FEDERAL GOVERNMENT AGENCY - - IS NOT AVAILABLE IN EVERY STATE - - MAY GO DOWN IN VALUE The life insurance policies offered by this prospectus are flexible premium variable universal life insurance policies (flexible premium variable adjustable life insurance policies in Puerto Rico). 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 Nationwide guarantees to keep the policy in force so long as minimum premium requirements have been met. 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 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. 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. MATURITY DATE- The policy anniversary on or next following the insured's 100th birthday. MINIMUM REQUIRED DEATH BENEFIT- The lowest death benefit which will qualify the policy as life insurance under Section 7702 of the Internal Revenue Code. NATIONWIDE- Nationwide Life Insurance Company. NET AMOUNT AT RISK- The death benefit minus the cash value. On the monthly anniversary date, the net amount at risk is the death benefit minus the cash value prior to subtraction of the base policy cost of insurance charge. NET PREMIUMS- 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. VALUATION PERIOD- Each day the New York Stock Exchange is open. VARIABLE ACCOUNT- Nationwide VLI Separate Account-4, a separate account of Nationwide that contains variable account allocations. The variable account is divided into sub-accounts, each of which invests in shares of a separate underlying mutual fund. 4 TABLE OF CONTENTS GLOSSARY OF SPECIAL TERMS.......................... SUMMARY OF POLICY EXPENSES......................... UNDERLYING MUTUAL FUND ANNUAL EXPENSES............. SYNOPSIS OF THE POLICIES........................... NATIONWIDE LIFE INSURANCE COMPANY.................. NATIONWIDE INVESTMENT SERVICES CORPORATION................................... INVESTING IN THE POLICY............................ The Variable Account and Underlying Mutual Funds The Fixed Account INFORMATION ABOUT THE POLICIES..................... Minimum Requirements for Policy Issuance Premium Payments Pricing POLICY CHARGES..................................... Sales Load Tax Expense Charges Surrender Charge Monthly Cost of Insurance Monthly Administrative Charge Mortality and Expense Risk Charge Income Tax Reduction of Charges SURRENDERING THE POLICY FOR CASH................... Surrenders (Redemptions) Cash Surrender Value Partial Surrenders Income Tax Withholding VARIATION IN CASH VALUE............................ POLICY PROVISIONS.................................. Policy Owner Beneficiary Changes in Existing Insurance Coverage OPERATION OF THE POLICY............................ Allocation of Net Premium and Cash Value How the Investment Experience is Determined Net Investment Factor Determining the Cash Value Transfers RIGHT TO REVOKE.................................... POLICY LOANS....................................... Taking a Policy Loan Effect on Investment Performance Loan Interest Effect on Death Benefit and Cash Value Repayment ASSIGNMENT......................................... POLICY OWNER SERVICES.............................. Dollar Cost Averaging Enhanced Dollar Cost Averaging DEATH BENEFIT INFORMATION.......................... Calculation of the Death Benefit Changes in the Death Benefit Option Proceeds Payable on Death Incontestability Error in Age or Sex Suicide Maturity Proceeds EXCHANGE RIGHTS.................................... GRACE PERIOD AND GUARANTEED POLICY CONTINUATION PERIOD Grace Period Guaranteed Policy Continuation Period Reinstatement TAX MATTERS........................................ Policy Proceeds Withholding Federal Estate and Generation-Skipping Transfers Taxes Non-Resident Aliens Taxation of Nationwide Tax Changes LEGAL CONSIDERATIONS............................... STATE REGULATION................................... REPORTS TO POLICY OWNERS........................... ADVERTISING........................................ LEGAL PROCEEDINGS.................................. EXPERTS............................................ REGISTRATION STATEMENT............................. DISTRIBUTION OF THE POLICIES....................... ADDITIONAL INFORMATION ABOUT NATIONWIDE.................................... APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS. APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES................. APPENDIX C: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES, AND DEATH BENEFITS .................... APPENDIX D: PERFORMANCE SUMMARY INFORMATION................... 5 SUMMARY OF POLICY EXPENSES Nationwide deducts certain charges from the policy. Charges are made for administrative and sales expenses, providing life insurance protection, and assuming the mortality and expense risks. Nationwide deducts a sales load and a premium expense charge from premium payments. The current sales load is 0.5% of each premium payment and is guaranteed never to exceed 2.5% of each premium payment. 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 from the cash value of the policy: - - monthly cost of insurance; - - monthly cost of any additional benefits provided by riders to the policy; - - monthly administrative expense charge; and - - monthly mortality and expense risk charge. The monthly mortality and expense charge is assessed monthly as follows: - ------------------------ ---------------------- ---------------------- VARIABLE CASH VALUE YEARS 1 THROUGH 15 YEARS 16 AND AFTER AMOUNT - ------------------------ ---------------------- ---------------------- First $25,000 0.60% 0.60% Next $225,000 0.30% 0.10% Amount Over $250,000 0.10% 0.10% - ------------------------ ---------------------- ---------------------- For policies which are surrendered during the first 9 policy years (first 14 years in Pennsylvania), Nationwide deducts a surrender charge (see "Surrender Charges"). For more information about any policy charge, see "Policy Charges" in this prospectus. 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (as a percentage of underlying mutual fund net assets, after expense reimbursement) - ----------------------------------------------------------------------------------------------------------------------------------- Management Other 12b-1 Total Underlying Fees Expenses Fees Mutual Fund Expenses - ----------------------------------------------------------------------------------------------------------------------------------- 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 - 1.00% 0.25% 0.00% 1.25% Initial 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 - 0.75% 0.03% 0.00% 0.78% Initial 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) NSAT Money Market Fund 0.39% 0.16% 0.00% 0.55% - ------------------------------------------------------------------------------------------------------------------------------------
7
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED) - ----------------------------------------------------------------------------------------------------------------------------------- Management Other 12b-1 Total Underlying Fees Expenses Fees Mutual Fund Expenses - ----------------------------------------------------------------------------------------------------------------------------------- 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. 8 Some underlying mutual funds are subject to fee waivers and expense reimbursements. The following chart shows what the expenses would have been for such funds without fee waivers and expense reimbursements.
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (as a percentage of underlying mutual fund assets, before expense reimbursement) - -------------------------------------------------------------------- -------------- -------------- ------------ ------------------- Management Other 12b-1 Total Underlying Fees Expenses Fees Mutual Fund 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% - -------------------------------------------------------------------- -------------- -------------- ------------ -------------------
9 SYNOPSIS OF THE POLICIES The policy offered by this prospectus provides for life insurance coverage on the 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 insured's 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. Nationwide will keep the policy in force during the guaranteed policy continuation period provided premium requirements are met (see "Grace Period and Guaranteed Policy Continuation Period" and "Minimum Requirements for Policy Issuance"). PREMIUMS The minimum initial premium for which a policy may be issued is equal to three times the initial minimum monthly premium. The initial premium is shown on the policy data page. Each premium payment must be at least $50. Additional premium payments may be made at any time while the policy is in force, subject to certain restrictions (see "Premium Payments"). 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: - - Accidental Death Benefit Rider; - - Additional Protection Rider (not available in New York); - - Change of Insured Rider; - - Child Rider; - - Long Term Care Rider; - - Premium Waiver Rider; and - - Maturity Extension Endorsement (not available in New York); - - Maturity Extension for Specified Amount (not available in New York); - - Spouse Rider; and - - Waiver of Monthly Deductions Rider. POLICY CANCELLATION Policy owners may return the policy for any reason within certain time periods in accordance with applicable law and Nationwide will refund the policy value or the amount required by law. In New York, Nationwide will refund any premiums paid (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 10 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. 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 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 may be converted to a substantially comparable general account life insurance policy offered by Nationwide. 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 conversion. Nationwide will not require evidence of insurability for this conversion. The new policy will not be affected by the investment experience of any separate account. The new policy will be for an amount of insurance not exceeding the death benefit of the policy converted on the date of the conversion. 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, 11 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. 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. 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 by prospectus disclosure. Premium payments will be allocated to the fixed account at the election of the policy owner. The investment income earned by the fixed account will be allocated to the policies at varying rate(s) set by Nationwide. Current rates are set at the beginning of each calendar quarter. The guaranteed rate for any premium payment will be effective for not less than 3 months. Nationwide guarantees that the rate will not be less than 3.0% per year. Any interest in excess of 3.0% will be credited to fixed account allocations at Nationwide's sole discretion. The policy owner assumes the risk that interest credited to fixed account allocations may not exceed the minimum guarantee of 3.0% for any given year. New premium 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. Minimum requirements for policy issuance include: (1) the insured must be 85 (80 in New York) or younger; (2) Nationwide may require satisfactory evidence of insurability (including a medical exam); (3) a minimum specified amount of $50,000 for non-preferred policies ($100,000 for non-preferred policies in Pennsylvania, New Jersey, Texas Alabama Indiana, Maryland, North Dakota and New York); and (4) $100,000 for preferred policies. 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 the insured is still living. Additional premium payments may be made at any time while the policy is in force, subject to the following conditions: - - Nationwide may require satisfactory evidence of insurability before accepting any additional premium payment which results in an increase in the net amount at risk; - - during the guaranteed policy continuation period, the total premium payments, less any policy indebtedness and less any partial surrenders, must be greater than or equal to the sum of the minimum monthly premiums in order to guarantee that the policy remain in force. (The minimum monthly premiums are shown in the policy data page); - - 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 - - Nationwide may require policy indebtedness be repaid prior to accepting any additional premium payments. 12 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. Nationwide will send scheduled premium payment reminder notices to policy owners according to the premium mode shown on the policy data page. PRICING Premiums will not be priced when the New York Stock Exchange is closed or on the following nationally recognized holidays: - - New Year's Day - Independence Day - - Martin Luther King, Jr. Day - Labor Day - - Presidents' Day - Thanksgiving - - Good Friday - Christmas - - Memorial Day Nationwide also will not price premiums 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 2.5% of each premium payment. Currently, for all policy years the sales load is 0.5% of each premium payment. 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. TAX EXPENSE CHARGES A charge equal to 3.5% is deducted from all premium payments when the premium payments are received in order to compensate Nationwide for certain administrative expenses which are incurred by Nationwide for taxes. Such taxes include premium or other taxes imposed by various state and local jurisdictions, as well as federal taxes imposed under Section 848 of the Internal Revenue Code. These tax expenses 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 CHARGE Nationwide deducts a surrender charge from the cash value of any policy surrendered during the first 9 years (first 14 years in Pennsylvania). The charge is deducted proportionally from the cash value in each sub-account and the fixed account. The maximum initial surrender charge varies by issue age, sex, specified amount and underwriting classification. The surrender charge is calculated based on the initial specified amount. The following tables illustrate the maximum initial surrender charge per $1,000 of initial specified amount for policies which are issued on a standard basis (see Appendix B for specific examples). INITIAL SPECIFIED AMOUNT $50,000-$99,999* ---------------------------------------------------------- MALE FEMALE ISSUE NON-TOBACCO NON-TOBACCO MALE FEMALE AGE STANDARD STANDARD ---------------------------------------------------------- 25 $7.773 $7.518 $8.369 $7.818 35 $8.817 $8.396 $9.811 $8.889 45 $12.185 $11.390 $13.884 $12.164 55 $15.628 $13.995 $18.410 $15.106 65 $22.274 $19.043 $26.559 $20.607 ---------------------------------------------------------- *Specified amounts of less than $100,000 are not available in New York or New Jersey. 13 INITIAL SPECIFIED AMOUNT $100,000 OR MORE -------------------------------------------------------- MALE FEMALE ISSUE NON-TOBACCO NON-TOBACCO MALE FEMALE AGE STANDARD STANDARD -------------------------------------------------------- 25 $5.773 $5.518 $6.369 $5.818 35 $6.817 $6.396 $7.811 $6.889 45 $9.685 $8.890 $11.384 $9.664 55 $13.128 $11.495 $15.910 $12.606 65 $21.274 $18.043 $25.559 $19.607 -------------------------------------------------------- The surrender charge is comprised of two components: - - an underwriting component; and - - sales component. The underwriting component varies by issue age in the following manner: $1,000 OF INITIAL SPECIFIED AMOUNT ------------------------------------------------------- ISSUE AGE SPECIFIED AMOUNTS SPECIFIED AMOUNTS LESS THAN $100,000* $100,000 OR MORE ------------------------------------------------------- 0-35 $6.00 $4.00 36-55 $7.50 $5.00 56-85 $7.50 $6.50 ------------------------------------------------------- *Specified amounts of less than $100,000 are not available in New York or New Jersey. The underwriting component is designed to cover the administrative expenses associated with underwriting and issuing policies, including the costs of: - - processing applications; - - conducting medical exams; - - determining insurability and the insured's underwriting class; and - - establishing policy records. The remainder of the surrender charge that is not attributable to the underwriting component represents the sales component. In no event will the sales component exceed 26.5% of the lesser of the SEC guideline level premium required in the first year or the premiums actually paid in the first year. The purpose of the sales component is to reimburse Nationwide for some of the expenses incurred in the distribution of the policies. Nationwide also deducts 0.5% of each premium payment for sales load and is guaranteed never to exceed 2.5% of each premium payment. The surrender charge may be insufficient to recover certain expenses related to the sale of the policies. Unrecovered expenses are borne by Nationwide's general assets which may include profits, if any, from the mortality and expense risk charge. Additional premiums and/or income earned on assets in the variable account have no effect on these charges. Increases in Specified Amount Policies surrendered during the first 9 policy years (first 14 policy years in Pennsylvania) following an increase in the specified amount will incur a surrender charge associated with the increase. This surrender charge is comprised of an underwriting component and sales component. The maximum initial surrender charge associated with the increase is based on the insured's attained age at the time of the increase, the underwriting classification of the increase, the insured's sex, and the amount of the increase in specified amount. The actual initial surrender charge associated with the increase is based upon the maximum initial surrender charge and the premium received within one year of the increase in specified amount. Increases that are caused by a change in a death benefit option that do not change the net amount at risk are not subject to a surrender charge. The surrender charge associated with the increase in the specified amount for policy years following the increase in the specified amount is calculated as a percentage of the initial surrender charge. The following table illustrates the maximum initial surrender charge per $1,000 of specified amount increase for policies increasing coverage on a standard basis. This charge reflects both the underwriting and sales component. - ---------- ------------ ---------- ----------- ------------ ISSUE MALE FEMALE AGE NON-TOBACCO NON-TOBACCO MALE FEMALE STANDARD STANDARD - ---------- ------------ ---------- ----------- ------------ 25 $3.464 $3.311 $3.821 $3.491 35 $4.090 $3.837 $4.686 $4.133 45 $5.811 $5.334 $6.830 $5.798 55 $7.877 $6.897 $9.546 $7.563 65 $12.764 $10.826 $15.335 $11.764 75 $20.787 $17.389 $24.236 $18.682 80 $27.309 $23.309 $30.707 $24.647 - ---------- ------------ ---------- ----------- ------------ Reduction in Specified Amount Decreases in specified amount requested by a policy owner will incur a proportional surrender charge. This proportion is equal to the decrease in specified amount divided by the specified amount prior to the decrease. In the case of a policy with prior increases, these fractional surrender charges will be calculated separately for the initial specified amount and each increase in specified amount. For a policy with prior increases in specified amounts, these decreases will be made on a last in first out ("LIFO") basis and therefore decrease each segment in reverse order of its effective date. Decreases in the specified amount resulting from a partial surrender or a death benefit option change that do 14 not change the net amount risk will not incur a proportional surrender charge. Reductions to Surrender Charges Surrender charges are reduced in subsequent policy years as follows: - ---------------------- -------------------------------- SURRENDER CHARGE AS A % OF INITIAL COMPLETED NUMBER OF SURRENDER CHARGES POLICY YEARS - ---------------------- -------------------------------- 0 100% 1 100% 2 90% 3 80% 4 70% 5 60% 6 50% 7 40% 8 30% 9 and after 0% - ---------------------- -------------------------------- The surrender charge is reduced by any partial surrender charge actually paid on previous decreases in specified amount. For the initial specified amount, a completed policy year (in the chart above) is measured from the issue date. For any increase in specified amount, a completed policy year (in the chart above) is measured from the effective date of the increase. Special guaranteed maximum surrender charges apply in Pennsylvania (see "Appendix B"). MONTHLY COST OF INSURANCE 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. This deduction is charged proportionately to the cash value in each sub-account and the fixed account. If death benefit Option 1 or Option 3 (Option 3 is not available in New York) is in effect and there have been increases in the specified amount, then the cash value will first be considered a part of the initial specified amount. If the cash value exceeds the initial specified amount, the excess will then be considered a part of the additional increases in specified amount resulting from the increases in the order of the increases. Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates for policies issued on specified amounts less than $100,000 are based on the 1980 Commissioners' Extended Term Mortality Table, Age Last Birthday (1980 CET). Guaranteed cost of insurance rates for policies issued on specified amounts $100,000 or more 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 percentage multiples of the guaranteed cost of insurance rate on a standard basis. These mortality tables are sex distinct. In addition, separate mortality tables will be used for tobacco and non-tobacco. Mortality tables are unisex for: - - policies issued in the State of Montana; and - - group or sponsored arrangements (including employees of Nationwide and their family members). 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. Nationwide may also issue certain policies on a "non-medical" basis to certain categories of individuals. Due to the underwriting criteria established for policies issued on a non-medical basis, actual rates will be higher than the current cost of insurance rates being charged under policies that are medically underwritten. MONTHLY ADMINISTRATIVE CHARGE Nationwide deducts an administrative expense charge proportionately from the cash value in each sub-account and the fixed account on a monthly basis. This charge reimburses Nationwide for certain expenses related to the maintenance of the policies including accounting and record keeping, and periodic reporting to policy owners. Currently, this charge is $10 per month in the first year, and $5 per month in renewal years. Nationwide may, at its sole discretion, increase this charge. However, Nationwide guarantees that this charge will never exceed $10 per month in the first year and $7.50 per month in renewal years. 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 the insured may not live as long as expected. The expense risk assumed is that the 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 issuance, underwriting and other administrative expenses due to policies that lapse or are surrendered in early policy years. 15 Nationwide deducts the mortality and expense risk charge from the variable account on a monthly basis. Mortality and expense risk deductions will be charged proportionally to the cash value in each sub-account. The mortality and expense risk charge compensates Nationwide for assuming risks associated with mortality and administrative costs. The mortality and expense risk charge is assessed on a monthly basis as follows: - ------------------------ ---------------------- ---------------------- VARIABLE CASH VALUE COMPLETED COMPLETED AMOUNT YEARS 1 THROUGH 15 YEARS 16 AND AFTER - ------------------------ ---------------------- ---------------------- First $25,000 0.60% 0.60% Next $225,000 0.30% 0.10% Over $250,000 0.10% 0.10% - ------------------------ ---------------------- ---------------------- 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. Nationwide may realize a profit from this charge. 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 to Nationwide with respect to sales, underwriting, administrative or other costs. These charges may be reduced in certain group or 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: - - the number of insureds; - - the total premium expected to be paid; - - total assets under management for the policy owner; - - the nature of the relationship among individual insureds; - - the purpose for which the policies are being purchased; - - the expected persistency of individual policies; and - - 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 SURRENDERS (REDEMPTIONS) 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 6 months from the date of the 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 $200; (2) partial surrenders may not reduce the specified amount below the minimum specified amount; (3) during the first 10 policy years, the maximum amount of a partial surrender cannot exceed 10% of cash surrender value as of the beginning of the policy year; (4) beginning with the 11th policy year, the maximum amount of a partial surrender is the cash surrender value less the greater of $500 or three monthly deductions; and 16 (5) after the partial surrender, the policy continues to qualify as life insurance. When a partial surrender is made, the cash value will be reduced by the amount of the partial surrender. Further, the specified amount will be reduced by the amount necessary to prevent any increase to the net amount at risk, unless the partial surrender is treated as a preferred partial surrender. Preferred Partial Surrenders A partial surrender is considered a preferred partial surrender if: (1) the surrender occurs before the 15th policy anniversary; and (2) the surrender amount plus the amount of any previous preferred policy surrenders in that same policy year does not exceed 10% of the cash surrender value as of the beginning of the policy year. Reduction of the Specified Amount When a partial surrender is made, in addition to the cash value being reduced by the amount of the partial surrender, the specified amount may also be reduced (except in the case of a preferred partial surrender). The reduction to the specified amount will be made in the following order: (1) against the most recent increase in the specified amount; (2) against the next most recent increases in the specified amount in succession; and (3) against the specified amount under the original application. Nationwide reserves the right to deduct a fee from the partial surrender amount. The maximum fee is $25 or 5% of the partial surrender amount, whichever is less. Preferred partial surrenders are not subject to 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. In certain employer-sponsored life insurance arrangements, including equity split dollar arrangements, participants may be required to report for income tax purposes, one or more of the following: (1) the value each year of the life insurance protection provided; (2) an amount equal to any employer-paid premiums; or (3) some or all of the amount by which the current value exceeds the employer's interest in the policy. Participants should consult with the sponsor or the administrator of the plan, and/or with their personal tax or legal advisor, to determine the tax consequences, if any, of their employer-sponsored life insurance arrangements. 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, minus any surrender charge for decreases in specified amount, 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 the 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 the insured is living. Any change must be in a written form satisfactory to Nationwide and received at Nationwide's home office. Once received, the change will be effective when signed. The change will not affect any payment made or action taken by Nationwide before the change was received. Nationwide may require that the policy be submitted for endorsement before making a change. If the policy owner is other than the insured, names no contingent policy owner, and dies before the insured, the policy owner's rights in the policy belong to the policy owner's estate. 17 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 the insured is living. Any change must be in a written form satisfactory to Nationwide and received at Nationwide's home office. Once received, the change will be effective when signed. The change will not affect any payment made or action taken by Nationwide before the change was received. If any beneficiary predeceases the 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 the insured, 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. 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: (1) the request must be made in writing; (2) satisfactory evidence of insurability must be provided; (3) the increase must be for a minimum of $10,000; (4) the cash surrender value is sufficient to keep the policy in force for at least 3 months; and (5) the age at the time of increase must satisfy the same age requirements as new issues. Any approved increase will have an effective date of the monthly anniversary date on or next following the date Nationwide approves the supplemental application. Nationwide reserves the right to limit the number of specified amount increases to one each policy year. Specified Amount Decreases After the first policy year, the policy owner may also request a decrease to the specified amount. Any approved decrease will be effective on the monthly anniversary date on or next following the date Nationwide receives the request. Any such decrease will reduce the 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 reserves the right to limit the number of specified amount decreases to one each policy year. Nationwide will refuse a request for a decrease which would: (1) reduce the specified amount to less than the minimum specified amount; or (2) disqualify the policy as a contract for life insurance; or (3) result in both: (a) a negative guideline single premium; and (b) an aggregate 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 in which the policy owner may cancel the policy, unless a specific state requires premiums to be allocated to the fixed account. (In New York, premiums are allocated to either the NSAT Money Market Fund or the fixed account based on the policy owner's election.) At the expiration of this period, the premiums are used to purchase units of the sub-accounts which correspond to shares of the underlying mutual funds specified by the policy owner. Shares of the underlying mutual funds are purchased at net asset value, then converted into unit values for purposes of determining the policy owner's interest in the 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 18 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). (b) is the net asset value per share of the underlying mutual fund determined as of the end of the immediately preceding valuation period. Based on the change in the net investment factor, the value of an accumulation unit may increase or decrease. Changes in the net investment factor may not be directly proportional to changes in the net asset value of underlying mutual fund shares, because of the deduction for mortality and expense risk charge, and any charge or credit for tax reserves. Though the number of accumulation units will not change as a result of investment experience, the value of an accumulation unit may increase or decrease from valuation period to valuation period. DETERMINING 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. Nationwide will determine the value of the assets in a variable account at the end of each valuation period. The cash value will be determined at least monthly. 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 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 3%. (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 current applicable rates for each account. TRANSFERS Policy owners can transfer allocations without penalty or adjustment subject to the following conditions: - - Nationwide reserves the right to restrict transfers between the fixed account and the sub-accounts to one per policy year; - - transfers made to the fixed account may not be made in the first policy year; - - Nationwide reserves the right to restrict the amount transferred from the fixed account to 20% of that portion of the cash value attributable to the fixed account as of the end of the previous policy year (subject to state restrictions). Policy owners who have entered into Dollar Cost Averaging agreements with Nationwide may transfer under the terms of that agreement; - - Nationwide reserves the right to restrict the amount transferred to the fixed account to 20% of that portion of cash value attributable to the sub-accounts as of the close of business of the prior valuation period; and - - Nationwide reserves the right to refuse a transfer to the fixed account if the fixed account value is greater than or equal to 30% of the total policy value. 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 privileges upon 30 days written notice to policy owners. 19 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: - - submitted by any agent acting under a power of attorney on behalf of more than one policy owner; or - - 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: - - 10 days after receiving the policy; - - 45 days after signing the application; or - - 10 days after Nationwide delivers a Notice of Right of 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 seven days after it receives the policy. (In New York, Nationwide will refund any premiums paid.) The refunded policy value will reflect the deduction of any policy charges, unless otherwise required by law. This right varies by state. POLICY LOANS TAKING A POLICY LOAN The policy owner may take a policy loan at any time using the policy as security. In states other than New York, maximum policy indebtedness is limited to cash value attributable to both fixed and policy loan accounts, and 90% of the cash value of the variable account, less any surrender charges. In New York, maximum policy indebtedness is limited to 90% of the cash value attributable to the fixed account, policy loan account, and variable account, less any surrender charges. Nationwide will not grant a loan for an amount less than $200. 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. 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 3.9%. On a current basis, the cash value in the policy loan account is credited with an annual effective rate of 3% during policy years 1 through 10 and an annual effective rate of 3.9% 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 20 discretion. However, the crediting rate is guaranteed never to be lower than 3% during policy years 1 through 10 and 3.65% during the 11th and subsequent policy years. 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 difference 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 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 the 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. The 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, and if the guaranteed policy continuation provision is not in effect, 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. Alternatively, if the policy is in the guaranteed policy continuation period, a payment which will bring the guaranteed policy continuation provision into effect will be considered sufficient if such an amount is less than the premium required to bring the cash surrender value to zero and cover 3 months of deductions. 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 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 the 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 received at Nationwide's home office. Prior to being received, assignments will not affect any payments made or actions taken by Nationwide. Nationwide is not responsible for any assignment not submitted, nor is Nationwide responsible for the sufficiency of any assignment. Assignments are subject to any indebtedness owed to Nationwide before being received. 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. This program is not available in the State of New York. 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 Insurance Series - Federated Quality Bond Fund II, Fidelity VIP High Income Portfolio, NSAT Government Bond Fund, NSAT 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 21 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. ENHANCED DOLLAR COST AVERAGING Similar to Dollar Cost Averaging, Enhanced Dollar Cost Averaging ("Enhanced DCA") is a one-year transfer program that allows you to make regular investments over time. It involves the automatic transfer of a specified amount from a fixed account into the variable sub-accounts. Only the initial premium payment and any subsequent 1035 exchanges may be allocated to the Enhanced DCA Account. The fixed account for the Enhanced DCA will have a set rate of return on the amount in the account. Nationwide will set rates of return each quarter. This rate of return will apply for one year to all premiums allocated to the Enhanced DCA Account in that quarter. Nationwide does not guarantee that this program will result in profit or protect policy owners from loss. This program is not available in the State of New York. Transfers occur monthly or on another frequency if permitted by Nationwide. Nationwide will process transfers unit 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 will be 1/11th of the fixed account value one month after issue, 1/10th at the end of the 2nd month, 1/9th at the end of the 3rd month and so on. Nationwide reserves the right to stop establishing new Enhanced DCA 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 irrevocably elects either of the following tests qualifying the policy as life insurance under Section 7702 of the Internal Revenue Code: (1) the guideline premium/cash value corridor test; or (2) the cash value accumulation test. The cash value accumulation test is not available for policies issued for delivery in the State of New York. 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. In states other than New York, the policy owner may choose one of three death benefit options. In New York, only death benefit Options 1 and 2 are available. OPTION 1. The death benefit will be the greater of the specified amount or minimum required death benefit. 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, see the illustrations in Appendix C. OPTION 2. The death benefit will be the greater of the specified amount plus the cash value as of the date of death, or minimum required death benefit and will vary directly with the investment performance. OPTION 3. The death benefit is the greater of the minimum required death benefit or the sum of the specified amount on the date of death and accumulated premium account which consists of all premium payments accumulated to date of death less partial surrenders accumulated to date of death. The accumulations will be calculated based on the Option 3 interest rate shown on the policy data page. In no event will the accumulated premium account be less than zero or greater than the maximum accumulated premium account shown on the policy data page. For any death benefit option, the calculation of the minimum required death benefit is shown on the policy data page. The minimum required death benefit is the lowest death benefit which will qualify the policy as life insurance under Section 7702 of the Internal Revenue Code. 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 under Section 7702 of the Internal Revenue Code where the policy owner has selected guideline premium/cash value corridor test. CHANGES IN THE DEATH BENEFIT OPTION After the first policy year, the policy owner may elect to change the death benefit option under the policy from either Option 1 to Option 2, or from Option 2 to Option 1. Only one change of death benefit option is permitted per policy year. The effective date of a change will be the monthly anniversary date following the date the change is approved by Nationwide. In order for any change in the death benefit option to become effective, the cash surrender value, after a 22 change, must be sufficient to keep the policy in force for at least three months. Nationwide will adjust the specified amount so that the net amount at risk remains constant before and after the death benefit option change. 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 under Section 7702 of the Internal Revenue Code where the policy owner has selected guideline premium/cash value corridor test. PROCEEDS PAYABLE ON DEATH The actual death proceeds payable on the insured's death 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 insured's lifetime 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 insured's lifetime for 2 years from its effective date. ERROR IN AGE OR SEX If the age or sex of the insured has been misstated, the death benefit and cash value will be adjusted. The cash value will be adjusted to reflect the cost of insurance charges on the correct age and sex from the policy date. SUICIDE If the insured dies by suicide, while sane or insane, within two 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 the insured dies by suicide, while sane or insane, within two 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. EXCHANGE RIGHTS The policy owner may exchange the policy for a flexible premium adjustable life insurance policy offered by Nationwide on the policy date. The benefits for the new policy will not vary with the investment experience of a separate account. The exchange must be elected within 24 months from the policy date. No evidence of insurability will be required. The policy owner and beneficiary under the new policy will be the same as those under the exchanged policy on the effective date of the exchange. The new policy will have a death benefit on the exchange date not more than the death benefit of the original policy immediately prior to the exchange date. The new policy will have the same policy date and issue age as the original policy. The initial specified amount and any increases in specified amount will have the same rate class as those of the original policy. Any indebtedness may be transferred to the new policy. The exchange may be subject to an equitable adjustment in rates and values to reflect variances, if any, in the rates and values between the two policies. After the adjustment, any amount necessary to keep the policy in force must be paid by the policy owner to Nationwide in cash. The exchange may be subject to federal income tax withholding (see "Income Tax Withholding"). GRACE PERIOD AND GUARANTEED POLICY CONTINUATION PERIOD GRACE PERIOD If the cash surrender value on a monthly anniversary date is not sufficient to cover the current monthly deduction, and the guaranteed policy continuation provision is not in effect, a grace period will be allowed for the payment of a premium of the lesser of at least 3 times the current monthly deduction and the premium required to bring the guaranteed policy continuation provision back into effect. Nationwide will send the policy owner a notice at the start of the grace period, at the address in the application or another address specified by the policy owner, stating the amount of premium required. The grace period will end 61 days after the day the notice is mailed. If sufficient premium is not received by Nationwide by the end of the grace period, the policy will lapse without value. If death proceeds become payable during the grace period, Nationwide will pay the death proceeds. 23 GUARANTEED POLICY CONTINUATION PERIOD This policy will not lapse during the guaranteed policy continuation period provided that on each monthly anniversary date (1) is greater than or equal to (2) where: (1) is the sum of all premiums paid to date minus any indebtedness, and minus any partial surrenders; and (2) is the sum of minimum monthly premiums required since the policy date including the minimum monthly premium for the current monthly anniversary date. The guaranteed policy continuation period is the lesser of 30 policy years or the number of policy years until the insured reaches attained age 65. For policies issued to ages greater than 55, the guaranteed policy continuation period is 10 policy years. This provision is subject to state insurance restrictions. In the State of New York, the guaranteed policy continuation period is the lesser of 30 policy years or the number of policy years until the insured reaches attained age 65. For policies issued to ages greater than 62, the guaranteed policy continuation period is 3 policy years. In the State of Texas, the guaranteed policy continuation period is 9 policy years for all issue ages. In the State of Massachusetts, the guaranteed policy continuation period is 5 policy years for all issue ages. 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 owner may reinstate the policy 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 satisfactory to Nationwide; (3) paying sufficient premium to cover all policy charges that were due and unpaid during the grace period; (4) paying sufficient premium to keep the policy in force for 3 months from the date of reinstatement, or, if the policy is in the guaranteed policy continuation period, paying the lesser of (a) and (b) where: (a) is premium sufficient to keep the policy in force for 3 months from the date of reinstatement; and (b) is premium sufficient to bring the guaranteed policy continuation provision into effect; 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 date 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. Amounts allocated to underlying mutual funds at the start of the grace period will be reinstated, unless the policy owner provides otherwise. 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 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 generally 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 24 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 states 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, 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 U.S. 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. 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 life insurance policy (including 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 if no taxpayer identification number is provided to Nationwide, or if the IRS notifies Nationwide that back-up withholding is required. 25 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 2001, 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 insured dies, the death benefit will generally be included in the 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. 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 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, these taxes are not significant. If they increase, however, charges for such taxes may be made. 26 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. All information is subject to change without notice. You should consult your independent legal, tax and/or financial adviser for more information. 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: - - 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; - - 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 - - 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. 27 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 SEC under the Securities Act of 1933, as amended, with respect to the policies offered by this prospectus. This prospectus does not contain all the information in the Registration Statement and the exhibits to the Registration Statement. Statements contained in this prospectus as to the content of policies are summaries. You should read the policy to fully understand your contractual rights and obligations. 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: - - Nationwide VLI Separate Account-2; - - Nationwide VLI Separate Account-3; - - Nationwide VLI Separate Account-4; - - Nationwide Multi-Flex Variable Account; - - Nationwide Variable Account; - - Nationwide Variable Account-II; - - Nationwide Variable Account-5; - - Nationwide Variable Account-6; - - Nationwide Variable Account-8; - - Nationwide Variable Account-9; - - Nationwide Variable Account-10; 28 - - Nationwide VA Separate Account-A; - - Nationwide VA Separate Account-B; - - Nationwide VA Separate Account-C; - - Nationwide VL Separate Account-A; - - Nationwide VL Separate Account-B; - - Nationwide VL Separate Account-C; and - - 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 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
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- --------------------------------------------------------------------------------------------------------- POSITIONS AND OFFICES NAME AND BUSINESS ADDRESS WITH UNDERWRITER - --------------------------------------------------------------------------------------------------------- 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: - - Nationwide Variable Account; - - Nationwide Variable Account-II; - - Nationwide Variable Account-3; - - Nationwide Variable Account-4; - - Nationwide Variable Account-5; - - Nationwide Variable Account-6; - - Nationwide Fidelity Advisor Variable Account; - - Nationwide Variable Account-8; - - Nationwide Variable Account-9; - - Nationwide Variable Account-10; - - MFS Variable Account; - - Nationwide Multi-Flex Variable Account; - - Nationwide VLI Separate Account; - - Nationwide VLI Separate Account-2; - - Nationwide VLI Separate Account-3; - - Nationwide VLI Separate Account-4; and - - 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 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. 30
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 1647 Falls Road Partner, Fred W. Eckel Sons; President, Eckel Clarks Summit, PA 18411 Farms, Inc. (1) 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 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. 31 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 OFFICES OF THE DEPOSITOR NAME AND PRINCIPAL BUSINESS ADDRESS - ------------------------------------------------------------------------------------------------------------------- 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 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 - -------------------------------------------------------------------------------------------------------------------
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EXECUTIVE OFFICERS OF NATIONWIDE (CONTINUED) - ------------------------------------------------------------------------------------------------------------------- OFFICERS OF THE DEPOSITOR OFFICES OF THE DEPOSITOR NAME AND PRINCIPAL BUSINESS ADDRESS - ------------------------------------------------------------------------------------------------------------------- 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 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 33 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 Strategy 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 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 34 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 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. 35 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. 36 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 which offers its shares only as investment vehicles for variable annuity and variable life insurance products of insurance companies. American Century Variable Portfolios, Inc. is managed by American Century Investment Management, Inc. AMERICAN CENTURY VP 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. There can be no assurance that the Fund will achieve its objectives. 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. The 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. 37 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 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. ("Fund") is an open-end, non-diversified, management investment company incorporated under Maryland law on January 24, 1989 and commenced operations on September 29, 1989. The Fund offers its shares only as investment vehicles for variable annuity and variable life insurance products of insurance companies. The Dreyfus Corporation ("Dreyfus") serves as the Fund's manager, while Mellon Equity Associates, an affiliate of Dreyfus, serves as the Fund's index manager. Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation. Investment Objective: To provide investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price Index. The Fund is neither sponsored by nor affiliated with Standard & Poor's Corporation. DREYFUS VARIABLE INVESTMENT FUND Dreyfus Variable Investment Fund ("Fund") is an open-end, management investment company. It was organized as an unincorporated business trust under the laws of the Commonwealth of Massachusetts on October 29, 1986 and commenced operations on August 31, 1990. The Fund offers its shares only as investment vehicles for variable annuity and variable life insurance products of insurance companies. Dreyfus serves as the Fund's manager. APPRECIATION PORTFOLIO: INITIAL SHARES (FORMERLY, CAPITAL APPRECIATION PORTFOLIO) Investment Objective: Primarily is to provide long-term capital growth consistent with the preservation of capital; current income is a secondary investment objective. This Portfolio invests primarily in the common stocks of domestic and foreign issuers. Fayez Sarofim & Company serves as the sub-adviser and provides day-to-day management of the Portfolio. 38 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: - at least 65% in income-producing debt securities and preferred stocks, including convertible securities - up to 20% in common stocks and other equity securities when consistent with the Portfolio's primary objective or acquired as part of a unit combining fixed-income and equity securities Higher yields are usually available on securities that are lower-rated or that are unrated. Lower-rated securities are usually defined as Ba or lower by Moody's Investor Service, Inc. ("Moody's"); BB or lower by Standard & Poor's and may be deemed to be of a speculative nature. The Portfolio may also purchase lower-quality bonds such as those rated Ca3 by Moody's or C- by Standard & Poor's which provide poor protection for payment of principal and interest (commonly referred to as "junk bonds"). For a further discussion of lower-rated securities, please see the "Risks of Lower-Rated Debt Securities" section of the Portfolio's prospectus. VIP OVERSEAS PORTFOLIO: SERVICE CLASS Investment Objective: Long-term capital growth primarily through investments in foreign securities. This Portfolio provides a means for investors to diversify their own portfolios by participating in companies and economies outside the United States. FIDELITY VARIABLE INSURANCE PRODUCTS FUND II The Fidelity Variable Insurance Products Fund II ("VIP II") is an open-end, diversified, management investment company organized as a Massachusetts business trust on March 21, 1988. VIP II's shares are purchased by insurance companies to fund benefits under variable life insurance policies and variable annuity contracts. FMR is the manager of VIP II and its portfolios. VIP II CONTRAFUND(R) PORTFOLIO: SERVICE CLASS Investment Objective: 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. 39 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. 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. 40 FEDERATED NSAT HIGH INCOME BOND FUND (FORMERLY, NATIONWIDE HIGH INCOME BOND FUND) Subadviser: Federated Investment Counseling Investment Objective: To provide 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. 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: Seeks capital growth by investing in a broadly diversified portfolio of equity securities issued by U.S. and foreign companies with market capitalizations in the range of companies represented by the Russell 2000, known has small cap companies. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of small cap companies. The balance of the Fund's assets may be invested in equity securities of larger cap companies. NATIONWIDE SMALL CAP VALUE FUND Subadviser: The Dreyfus Corporation Investment Objective: Capital appreciation through investment in a diversified portfolio of equity securities of companies with a 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 41 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: 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. 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 42 "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 Portfolio's 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. serves as 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 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 43 Stanley Asset Management, Inc. serves as the Portfolio's investment adviser. VAN ECK WORLDWIDE INSURANCE TRUST Van Eck Worldwide Insurance Trust ("Van Eck Trust") is an open-end management investment company organized as a business trust under the laws of the Commonwealth of Massachusetts on January 7, 1987. Shares of Van Eck Trust are offered only to separate accounts of insurance companies to fund the benefits of variable life insurance policies and variable annuity contracts. The investment adviser 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. 44 APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES EXAMPLE 1: A female non-tobacco, age 45, purchases a policy with a specified amount of $50,000 and a scheduled premium of $750. She now wishes to surrender the policy during the first policy year. By using the initial surrender charge table reproduced below, (also see "Surrender Charges") the total surrender charge per thousand multiplied by the specified amount expressed in thousands equals the total surrender charge of $569.50 ($11.390 x 50=569.50). EXAMPLE 2: A male non-tobacco, age 35, purchases a policy with a specified amount of $100,000 and a scheduled premium of $1100. He now wants to surrender the policy in the sixth policy year. The total initial surrender charge is calculated using the method illustrated above (surrender charge per 1000 is 6.817 x 100=681.70 maximum initial surrender charge). Because the fifth policy year has been completed, the maximum initial surrender charge is reduced by multiplying it by the applicable percentage factor from the "Reductions to Surrender Charges" table below. (Also see "Reductions to Surrender Charges.") In this case, $681.70 x 60%=$409.02 which is the amount Nationwide deducts as a total surrender charge. Maximum surrender charge per $1,000 of initial specified amount for policies issued on a standard basis:
INITIAL SPECIFIED AMOUNT $50,000-$99,999* - ----------------------------------------------------------------------------------------------------------- ISSUE MALE FEMALE MALE FEMALE AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD - ----------------------------------------------------------------------------------------------------------- 25 $7.773 $7.518 $8.369 $7.818 35 $8.817 $8.396 $9.811 $8.889 45 $12.185 $11.390 $13.884 $12.164 55 $15.628 $13.995 $18.410 $15.106 65 $22.274 $19.043 $26.559 $20.607 - -----------------------------------------------------------------------------------------------------------
*Specified amounts of less than $100,000 are not available in New York or New Jersey.
INITIAL SPECIFIED AMOUNT $100,000 OR MORE - ----------------------------------------------------------------------------------------------------------- ISSUE MALE FEMALE MALE FEMALE AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD - ----------------------------------------------------------------------------------------------------------- 25 $5.773 $5.518 $6.369 $5.818 35 $6.817 $6.396 $7.811 $6.889 45 $9.685 $8.890 $11.384 $9.664 55 $13.128 $11.495 $15.910 $12.606 65 $21.274 $18.043 $25.559 $19.607 - -----------------------------------------------------------------------------------------------------------
45
REDUCTIONS TO SURRENDER CHARGES - ------------------------------------------------------------------------------------------------ NUMBER OF SURRENDER CHARGE NUMBER OF SURRENDER CHARGE COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES - ------------------------------------------------------------------------------------------------ 0 100% 5 60% 1 100% 6 50% 2 90% 7 40% 3 80% 8 30% 4 70% 9 or More 0% - ------------------------------------------------------------------------------------------------
The current surrender charges are the same for all states. However, in Pennsylvania the guaranteed maximum surrender charges are spread out over 14 years. The guaranteed maximum surrender charge in subsequent years in Pennsylvania is reduced in the following manner:
- ------------------------------------------------------------------------------------------------------------------- NUMBER OF SURRENDER CHARGE AS A NUMBER OF SURRENDER CHARGE AS A NUMBER OF SURRENDER CHARGE AS COMPLETED % OF INITIAL COMPLETED % OF INITIAL COMPLETED A % OF INITIAL POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES - ------------------------------------------------------------------------------------------------------------------- 0 100% 5 60% 10 20% 1 100% 6 50% 11 15% 2 90% 7 40% 12 10% 3 80% 8 30% 13 5% 4 70% 9 25% 14 or More 0% - -------------------------------------------------------------------------------------------------------------------
The illustrations of current values in this prospectus are the same for Pennsylvania. However, the illustrations of guaranteed values in this prospectus do not reflect guaranteed maximum surrender charges which are spread out over 14 years. If this policy is issued in Pennsylvania, please contact Nationwide's home office for an illustration. Nationwide has no plans to change the current surrender charges. 46 APPENDIX C: 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 policies change with investment performance. The illustrations illustrate 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 no 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 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 0.95%. This effective rate is based on the average of the fund expenses, after expense reimbursement, for the preceding year for all underlying 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 reimbursement and fees 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 or 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 -0.95%, 5.05% and 11.05%. The illustrations also reflect the fact that Nationwide makes monthly charges for providing insurance protection, recovering taxes, providing for administrative expenses, and assuming mortality and expense risks. 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. The cash surrender values shown in the illustrations reflect the fact that Nationwide will deduct a surrender charge from the policy's cash value for any policy surrendered in full during the first 9 policy years. The illustrations also 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. Upon request, Nationwide will furnish a comparable illustration based on the proposed insured's age, sex, smoking classification, rating classification and premium payment requested. 47
DEATH BENEFIT OPTION 1 $750 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 45 CURRENT VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 788 420 0 50,000 454 0 50,000 487 0 50,000 2 1,614 882 308 50,000 977 403 50,000 1,075 502 50,000 3 2,483 1,323 807 50,000 1,509 993 50,000 1,711 1,195 50,000 4 3,394 1,746 1,287 50,000 2,054 1,595 50,000 2,401 1,942 50,000 5 4,351 2,154 1,752 50,000 2,613 2,211 50,000 3,153 2,752 50,000 6 5,357 2,545 2,201 50,000 3,188 2,844 50,000 3,975 3,631 50,000 7 6,412 2,920 2,633 50,000 3,778 3,491 50,000 4,873 4,586 50,000 8 7,520 3,279 3,049 50,000 4,385 4,156 50,000 5,856 5,626 50,000 9 8,683 3,620 3,448 50,000 5,008 4,836 50,000 6,932 6,760 50,000 10 9,905 3,945 3,945 50,000 5,649 5,649 50,000 8,112 8,112 50,000 11 11,188 4,252 4,252 50,000 6,307 6,307 50,000 9,408 9,408 50,000 12 12,535 4,541 4,541 50,000 6,983 6,983 50,000 10,831 10,831 50,000 13 13,949 4,811 4,811 50,000 7,678 7,678 50,000 12,397 12,397 50,000 14 15,434 5,063 5,063 50,000 8,392 8,392 50,000 14,121 14,121 50,000 15 16,993 5,295 5,295 50,000 9,127 9,127 50,000 16,022 16,022 50,000 16 18,630 5,506 5,506 50,000 9,883 9,883 50,000 18,120 18,120 50,000 17 20,349 5,670 5,670 50,000 10,634 10,634 50,000 20,419 20,419 50,000 18 22,154 5,781 5,781 50,000 11,380 11,380 50,000 22,943 22,943 50,000 19 24,049 5,842 5,842 50,000 12,121 12,121 50,000 25,724 25,724 50,000 20 26,039 5,857 5,857 50,000 12,864 12,864 50,000 28,810 28,810 50,000 21 28,129 5,811 5,811 50,000 13,597 13,597 50,000 32,237 32,237 50,000 22 30,323 5,697 5,697 50,000 14,316 14,316 50,000 36,056 36,056 50,000 23 32,626 5,508 5,508 50,000 15,016 15,016 50,000 40,325 40,325 50,000 24 35,045 5,234 5,234 50,000 15,691 15,691 50,000 45,101 45,101 52,769 25 37,585 4,864 4,864 50,000 16,337 16,337 50,000 50,371 50,371 58,430 26 40,252 4,388 4,388 50,000 16,946 16,946 50,000 56,173 56,173 64,599 27 43,052 3,794 3,794 50,000 17,512 17,512 50,000 62,576 62,576 70,711 28 45,992 3,066 3,066 50,000 18,028 18,028 50,000 69,651 69,651 77,313 29 49,079 2,187 2,187 50,000 18,485 18,485 50,000 77,476 77,476 84,449 30 52,321 1,132 1,132 50,000 18,869 18,869 50,000 86,142 86,142 92,171
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 48
DEATH BENEFIT OPTION 2 $750 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 45 GUARANTEED VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 788 352 0 50,352 383 0 50,383 413 0 50,413 2 1,614 710 137 50,710 794 220 50,794 882 308 50,882 3 2,483 1,044 527 51,044 1,204 687 51,204 1,378 862 51,378 4 3,394 1,351 892 51,351 1,609 1,150 51,609 1,902 1,443 51,902 5 4,351 1,629 1,228 51,629 2,008 1,606 52,008 2,455 2,054 52,455 6 5,357 1,877 1,533 51,877 2,397 2,052 52,397 3,037 2,693 53,037 7 6,412 2,091 1,804 52,091 2,771 2,484 52,771 3,647 3,360 53,647 8 7,520 2,267 2,037 52,267 3,126 2,897 53,126 4,282 4,052 54,282 9 8,683 2,399 2,227 52,399 3,455 3,282 53,455 4,939 4,767 54,939 10 9,905 2,484 2,484 52,484 3,751 3,751 53,751 5,616 5,616 55,616 11 11,188 2,518 2,518 52,518 4,009 4,009 54,009 6,309 6,309 56,309 12,535 12 2,497 2,497 52,497 4,221 4,221 54,221 7,015 7,015 57,015 13 13,949 2,418 2,418 52,418 4,383 4,383 54,383 7,732 7,732 57,732 14 15,434 2,276 2,276 52,276 4,486 4,486 54,486 8,455 8,455 58,455 15 16,993 2,063 2,063 52,063 4,518 4,518 54,518 9,174 9,174 59,174 16 18,630 1,772 1,772 51,772 4,467 4,467 54,467 9,880 9,880 59,880 17 20,349 1,395 1,395 51,395 4,321 4,321 54,321 10,564 10,564 60,564 18 22,154 920 920 50,920 4,061 4,061 54,061 11,206 11,206 61,206 19 24,049 333 333 50,333 3,667 3,667 53,667 11,789 11,789 61,789 20 26,039 (*) (*) 49,623 3,120 3,120 53,120 12,291 12,291 62,291 21 28,129 (*) (*) 48,779 2,398 2,398 52,398 12,690 12,690 62,690 22 30,323 (*) (*) 47,791 1,484 1,484 51,484 12,963 12,963 62,963 23 32,626 (*) (*) 46,649 354 354 50,354 13,084 13,084 63,084 24 35,045 (*) (*) 45,340 (*) (*) 48,985 13,022 13,022 63,022 25 37,585 (*) (*) 43,847 (*) (*) 47,345 12,736 12,736 62,736 26 40,252 (*) (*) 42,143 (*) (*) 45,393 12,173 12,173 62,173 27 43,052 (*) (*) 40,199 (*) (*) 43,079 11,267 11,267 61,267 28 45,992 (*) (*) 37,974 (*) (*) 40,344 9,939 9,939 59,939 29 49,079 (*) (*) 35,431 (*) (*) 37,126 8,099 8,099 58,099 30 52,321 (*) (*) 32,537 (*) (*) 33,365 5,654 5,654 55,654
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 49
DEATH BENEFIT OPTION 1 $1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 CURRENT VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,260 613 0 50,000 665 0 50,000 717 24 50,000 2 2,583 1,241 548 50,000 1,384 691 50,000 1,534 841 50,000 3 3,972 1,843 1,219 50,000 2,119 1,495 50,000 2,420 1,796 50,000 4 5,431 2,432 1,878 50,000 2,885 2,330 50,000 3,398 2,844 50,000 5 6,962 3,011 2,526 50,000 3,684 3,199 50,000 4,479 3,994 50,000 6 8,570 3,578 3,162 50,000 4,518 4,102 50,000 5,674 5,258 50,000 7 10,259 4,134 3,788 50,000 5,389 5,042 50,000 6,998 6,651 50,000 8 12,032 4,679 4,402 50,000 6,299 6,022 50,000 8,465 8,187 50,000 9 13,893 5,213 5,005 50,000 7,252 7,044 50,000 10,091 9,883 50,000 10 15,848 5,736 5,736 50,000 8,248 8,248 50,000 11,896 11,896 50,000 11 17,901 6,248 6,248 50,000 9,291 9,291 50,000 13,902 13,902 50,000 12 20,056 6,664 6,664 50,000 10,302 10,302 50,000 16,057 16,057 50,000 13 22,318 6,996 6,996 50,000 11,293 11,293 50,000 18,398 18,398 50,000 14 24,694 7,253 7,253 50,000 12,276 12,276 50,000 20,964 20,964 50,000 15 27,189 7,430 7,430 50,000 13,246 13,246 50,000 23,787 23,787 50,000 16 29,808 7,476 7,476 50,000 14,162 14,162 50,000 26,881 26,881 50,000 17 32,559 7,393 7,393 50,000 15,029 15,029 50,000 30,310 30,310 50,000 18 35,447 7,164 7,164 50,000 15,835 15,835 50,000 34,135 34,135 50,000 19 38,479 6,786 6,786 50,000 16,583 16,583 50,000 38,440 38,440 50,000 20 41,663 6,262 6,262 50,000 17,280 17,280 50,000 43,325 43,325 50,000 21 45,006 5,562 5,562 50,000 17,909 17,909 50,000 48,902 48,902 51,348 22 48,517 4,657 4,657 50,000 18,453 18,453 50,000 55,106 55,106 57,861 23 52,202 3,511 3,511 50,000 18,894 18,894 50,000 61,938 61,938 65,035 24 56,073 2,081 2,081 50,000 19,212 19,212 50,000 69,460 69,460 72,933 25 60,136 318 318 50,000 19,382 19,382 50,000 77,735 77,735 81,622 26 64,403 (*) (*) (*) 19,383 19,383 50,000 86,836 86,836 91,178 27 68,883 (*) (*) (*) 19,179 19,179 50,000 96,840 96,840 101,682 28 73,587 (*) (*) (*) 18,731 18,731 50,000 107,829 107,829 113,221 29 78,527 (*) (*) (*) 17,979 17,979 50,000 119,892 119,892 125,887 30 83,713 (*) (*) (*) 16,842 16,842 50,000 133,124 133,124 139,780
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 50
DEATH BENEFIT OPTION 1 $1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 GUARANTEED VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,260 467 0 50,000 514 0 50,000 560 0 50,000 2 2,583 909 216 50,000 1,031 338 50,000 1,160 467 50,000 3 3,972 1,292 669 50,000 1,520 896 50,000 1,770 1,146 50,000 4 5,431 1,613 1,059 50,000 1,973 1,419 50,000 2,385 1,831 50,000 5 6,962 1,863 1,378 50,000 2,381 1,896 50,000 3,001 2,516 50,000 6 8,570 2,036 1,620 50,000 2,735 2,319 50,000 3,611 3,196 50,000 7 10,259 2,123 1,776 50,000 3,023 2,677 50,000 4,208 3,861 50,000 8 12,032 2,110 1,833 50,000 3,229 2,952 50,000 4,778 4,500 50,000 9 13,893 1,984 1,776 50,000 3,335 3,127 50,000 5,307 5,099 50,000 10 15,848 1,730 1,730 50,000 3,321 3,321 50,000 5,779 5,779 50,000 11 17,901 1,333 1,333 50,000 3,166 3,166 50,000 6,179 6,179 50,000 12 20,056 777 777 50,000 2,847 2,847 50,000 6,487 6,487 50,000 13 22,318 43 43 50,000 2,338 2,338 50,000 6,681 6,681 50,000 14 24,694 (*) (*) 50,000 1,603 1,603 50,000 6,733 6,733 50,000 15 27,189 (*) (*) 50,000 598 598 50,000 6,604 6,604 50,000 16 29,808 (*) (*) 50,000 (*) (*) 50,000 6,237 6,237 50,000 17 32,559 (*) (*) 50,000 (*) (*) 50,000 5,561 5,561 50,000 18 35,447 (*) (*) 50,000 (*) (*) 50,000 4,474 4,474 50,000 19 38,479 (*) (*) 50,000 (*) (*) 50,000 2,850 2,850 50,000 20 41,663 (*) (*) 50,000 (*) (*) 50,000 527 527 50,000 21 45,006 (*) (*) 50,000 (*) (*) 50,000 (*) (*) 50,000 22 48,517 (*) (*) (*) (*) (*) (*) (*) (*) (*) 23 52,202 (*) (*) (*) (*) (*) (*) (*) (*) (*) 24 56,073 (*) (*) (*) (*) (*) (*) (*) (*) (*) 25 60,136 (*) (*) (*) (*) (*) (*) (*) (*) (*) 26 64,403 (*) (*) (*) (*) (*) (*) (*) (*) (*) 27 68,883 (*) (*) (*) (*) (*) (*) (*) (*) (*) 28 73,587 (*) (*) (*) (*) (*) (*) (*) (*) (*) 29 78,527 (*) (*) (*) (*) (*) (*) (*) (*) (*) 30 83,713 (*) (*) (*) (*) (*) (*) (*) (*) (*)
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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
DEATH BENEFIT OPTION 2 $1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 CURRENT VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,260 606 0 50,606 657 0 50,657 708 15 50,708 2 2,583 1,220 527 51,220 1,361 668 51,361 1,508 815 51,508 3 3,972 1,802 1,178 51,802 2,072 1,448 52,072 2,366 1,742 52,366 4 5,431 2,366 1,811 52,366 2,805 2,250 52,805 3,302 2,748 53,302 5 6,962 2,913 2,428 52,913 3,561 3,076 53,561 4,326 3,841 54,326 6 8,570 3,443 3,027 53,443 4,341 3,925 54,341 5,446 5,030 55,446 7 10,259 3,955 3,609 53,955 5,146 4,800 55,146 6,671 6,325 56,671 8 12,032 4,451 4,174 54,451 5,978 5,700 55,978 8,013 7,736 58,013 9 13,893 4,930 4,722 54,930 6,836 6,628 56,836 9,483 9,275 59,483 10 15,848 5,392 5,392 55,392 7,721 7,721 57,721 11,094 11,094 61,094 11 17,901 5,838 5,838 55,838 8,636 8,636 58,636 12,861 12,861 62,861 12 20,056 6,168 6,168 56,168 9,478 9,478 59,478 14,694 14,694 64,694 13 22,318 6,395 6,395 56,395 10,257 10,257 60,257 16,611 16,611 66,611 14 24,694 6,532 6,532 56,532 10,980 10,980 60,980 18,633 18,633 68,633 15 27,189 6,571 6,571 56,571 11,635 11,635 61,635 20,761 20,761 70,761 16 29,808 6,454 6,454 56,454 12,160 12,160 62,160 22,943 22,943 72,943 17 32,559 6,186 6,186 56,186 12,549 12,549 62,549 25,187 25,187 75,187 18 35,447 5,752 5,752 55,752 12,779 12,779 62,779 27,485 27,485 77,485 19 38,479 5,154 5,154 55,154 12,844 12,844 62,844 29,847 29,847 79,847 20 41,663 4,406 4,406 54,406 12,747 12,747 62,747 32,289 32,289 82,289 21 45,006 3,481 3,481 53,481 12,452 12,452 62,452 34,790 34,790 84,790 22 48,517 2,361 2,361 52,361 11,927 11,927 61,927 37,333 37,333 87,333 23 52,202 1,024 1,024 51,024 11,138 11,138 61,138 39,897 39,897 89,897 24 56,073 (*) (*) (*) 10,048 10,048 60,048 42,459 42,459 92,459 25 60,136 (*) (*) (*) 8,618 8,618 58,618 44,990 44,990 94,990 26 64,403 (*) (*) (*) 6,820 6,820 56,820 47,476 47,476 97,476 27 68,883 (*) (*) (*) 4,616 4,616 54,616 49,887 49,887 99,887 28 73,587 (*) (*) (*) 1,964 1,964 51,964 52,191 52,191 102,191 29 78,527 (*) (*) (*) (*) (*) (*) 54,344 54,344 104,344 30 83,713 (*) (*) (*) (*) (*) (*) 56,286 56,286 106,286
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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
DEATH BENEFIT OPTION 2 $1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 GUARANTEED VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,260 459 0 50,459 504 0 50,504 550 0 50,550 2 2,583 885 192 50,885 1,005 312 51,005 1,131 438 51,131 3 3,972 1,248 624 51,248 1,468 844 51,468 1,709 1,086 51,709 4 5,431 1,540 985 51,540 1,884 1,330 51,884 2,279 1,725 52,279 5 6,962 1,755 1,269 51,755 2,244 1,759 52,244 2,829 2,344 52,829 6 8,570 1,885 1,469 51,885 2,535 2,119 52,535 3,350 2,934 53,350 7 10,259 1,923 1,577 51,923 2,746 2,400 52,746 3,828 3,482 53,828 8 12,032 1,856 1,579 51,856 2,859 2,581 52,859 4,245 3,968 54,245 9 13,893 1,671 1,464 51,671 2,854 2,646 52,854 4,578 4,370 54,578 10 15,848 1,358 1,358 51,358 2,712 2,712 52,712 4,805 4,805 54,805 11 17,901 904 904 50,904 2,415 2,415 52,415 4,900 4,900 54,900 12 20,056 300 300 50,300 1,942 1,942 51,942 4,839 4,839 54,839 13 22,318 (*) (*) 49,536 1,274 1,274 51,274 4,591 4,591 54,591 14 24,694 (*) (*) 48,599 387 387 50,387 4,122 4,122 54,122 15 27,189 (*) (*) 47,472 (*) (*) 49,250 3,387 3,387 53,387 16 29,808 (*) (*) 46,130 (*) (*) 47,822 2,329 2,329 52,329 17 32,559 (*) (*) 44,541 (*) (*) 46,056 878 878 50,878 18 35,447 (*) (*) 42,666 (*) (*) 43,893 (*) (*) 48,947 19 38,479 (*) (*) 40,468 (*) (*) 41,272 (*) (*) 46,443 20 41,663 (*) (*) 37,913 (*) (*) 38,133 (*) (*) 43,267 21 45,006 (*) (*) 34,976 (*) (*) 34,423 (*) (*) 39,317 22 48,517 (*) (*) (*) (*) (*) (*) (*) (*) (*) 23 52,202 (*) (*) (*) (*) (*) (*) (*) (*) (*) 24 56,073 (*) (*) (*) (*) (*) (*) (*) (*) (*) 25 60,136 (*) (*) (*) (*) (*) (*) (*) (*) (*) 26 64,403 (*) (*) (*) (*) (*) (*) (*) (*) (*) 27 68,883 (*) (*) (*) (*) (*) (*) (*) (*) (*) 28 73,587 (*) (*) (*) (*) (*) (*) (*) (*) (*) 29 78,527 (*) (*) (*) (*) (*) (*) (*) (*) (*) 30 83,713 (*) (*) (*) (*) (*) (*) (*) (*) (*)
(1) NO POLICY LOANS AND NO PARTIAL WIT HDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 53
DEATH BENEFIT OPTION 1 $1500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 45 CURRENT VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,575 961 63 100,000 1,031 134 100,000 1,102 204 100,000 2 3,229 1,953 1,056 100,000 2,156 1,258 100,000 2,367 1,470 100,000 3 4,965 2,917 2,109 100,000 3,317 2,509 100,000 3,750 2,943 100,000 4 6,788 3,852 3,134 100,000 4,515 3,797 100,000 5,263 4,545 100,000 5 8,703 4,759 4,131 100,000 5,752 5,124 100,000 6,919 6,290 100,000 6 10,713 5,636 5,098 100,000 7,030 6,491 100,000 8,733 8,194 100,000 7 12,824 6,485 6,036 100,000 8,349 7,900 100,000 10,723 10,274 100,000 8 15,040 7,303 6,944 100,000 9,712 9,353 100,000 12,906 12,547 100,000 9 17,367 8,092 7,823 100,000 11,120 10,851 100,000 15,305 15,036 100,000 10 19,810 8,851 8,851 100,000 12,575 12,575 100,000 17,943 17,943 100,000 11 22,376 9,579 9,579 100,000 14,080 14,080 100,000 20,846 20,846 100,000 12 25,069 10,277 10,277 100,000 15,636 15,636 100,000 24,043 24,043 100,000 13 27,898 10,942 10,942 100,000 17,245 17,245 100,000 27,572 27,572 100,000 14 30,868 11,576 11,576 100,000 18,911 18,911 100,000 31,478 31,478 100,000 15 33,986 12,137 12,137 100,000 20,598 20,598 100,000 35,772 35,772 100,000 16 37,261 12,648 12,648 100,000 22,328 22,328 100,000 40,522 40,522 100,000 17 40,699 13,104 13,104 100,000 24,103 24,103 100,000 45,781 45,781 100,000 18 44,309 13,502 13,502 100,000 25,924 25,924 100,000 51,612 51,612 100,000 19 48,099 13,845 13,845 100,000 27,800 27,800 100,000 58,090 58,090 100,000 20 52,079 14,142 14,142 100,000 29,747 29,747 100,000 65,304 65,304 100,000 21 56,258 14,353 14,353 100,000 31,734 31,734 100,000 73,331 73,331 100,000 22 60,646 14,468 14,468 100,000 33,762 33,762 100,000 82,283 82,283 100,000 23 65,253 14,479 14,479 100,000 35,828 35,828 100,000 92,243 92,243 108,847 24 70,091 14,375 14,375 100,000 37,933 37,933 100,000 103,225 103,225 120,773 25 75,170 14,145 14,145 100,000 40,077 40,077 100,000 115,332 115,332 133,785 26 80,504 13,777 13,777 100,000 42,261 42,261 100,000 128,680 128,680 147,981 27 86,104 13,260 13,260 100,000 44,488 44,488 100,000 143,423 143,423 162,068 28 91,984 12,580 12,580 100,000 46,762 46,762 100,000 159,720 159,720 177,289 29 98,158 11,718 11,718 100,000 49,086 49,086 100,000 177,747 177,747 193,744 30 10,4641 10,651 10,651 100,000 51,462 51,462 100,000 197,708 197,708 211,548
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 54
DEATH BENEFIT OPTION 1 $1500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 45 GUARANTEED VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,575 930 33 100,000 999 102 100,000 1,068 171 100,000 2 3,229 1,852 955 100,000 2,048 1,151 100,000 2,253 1,356 100,000 3 4,965 2,735 1,927 100,000 3,118 2,310 100,000 3,534 2,726 100,000 4 6,788 3,575 2,857 100,000 4,206 3,488 100,000 4,919 4,201 100,000 5 8,703 4,372 3,744 100,000 5,311 4,683 100,000 6,417 5,789 100,000 6 10,713 5,122 4,583 100,000 6,431 5,893 100,000 8,038 7,499 100,000 7 12,824 5,820 5,371 100,000 7,562 7,113 100,000 9,788 9,340 100,000 8 15,040 6,461 6,102 100,000 8,697 8,338 100,000 11,679 11,320 100,000 9 17,367 7,038 6,769 100,000 9,832 9,563 100,000 13,720 13,451 100,000 10 19,810 7,547 7,547 100,000 10,961 10,961 100,000 15,924 15,924 100,000 11 22,376 7,982 7,982 100,000 12,079 12,079 100,000 18,306 18,306 100,000 12 25,069 8,336 8,336 100,000 13,180 13,180 100,000 20,882 20,882 100,000 13 27,898 8,607 8,607 100,000 14,260 14,260 100,000 23,676 23,676 100,000 14 30,868 8,786 8,786 100,000 15,312 15,312 100,000 26,713 26,713 100,000 15 33,986 8,864 8,864 100,000 16,326 16,326 100,000 30,024 30,024 100,000 16 37,261 8,828 8,828 100,000 17,290 17,290 100,000 33,641 33,641 100,000 17 40,699 8,665 8,665 100,000 18,193 18,193 100,000 37,600 37,600 100,000 18 44,309 8,357 8,357 100,000 19,015 19,015 100,000 41,943 41,943 100,000 19 48,099 7,882 7,882 100,000 19,737 19,737 100,000 46,718 46,718 100,000 20 52,079 7,218 7,218 100,000 20,337 20,337 100,000 51,988 51,988 100,000 21 56,258 6,345 6,345 100,000 20,795 20,795 100,000 57,831 57,831 100,000 22 60,646 5,239 5,239 100,000 21,087 21,087 100,000 64,340 64,340 100,000 23 65,253 3,875 3,875 100,000 21,189 21,189 100,000 71,634 71,634 100,000 24 70,091 2,222 2,222 100,000 21,070 21,070 100,000 79,853 79,853 100,000 25 75,170 233 233 100,000 20,684 20,684 100,000 89,157 89,157 103,423 26 80,504 (*) (*) 100,000 19,975 19,975 100,000 99,451 99,451 114,369 27 86,104 (*) (*) 100,000 18,867 18,867 100,000 110,798 110,798 125,202 28 91,984 (*) (*) 100,000 17,261 17,261 100,000 123,320 123,320 136,885 29 98,158 (*) (*) 100,000 15,037 15,037 100,000 137,160 137,160 149,504 30 10,4641 (*) (*) 100,000 12,059 12,059 100,000 152,491 152,491 163,165
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 55
DEATH BENEFIT OPTION 2 $1500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 45 CURRENT VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,575 956 59 100,956 1,027 129 101,027 1,097 200 101,097 2 3,229 1,941 1,044 101,941 2,143 1,245 102,143 2,353 1,455 102,353 3 4,965 2,893 2,086 102,893 3,289 2,482 103,289 3,719 2,911 103,719 4 6,788 3,813 3,095 103,813 4,468 3,750 104,468 5,207 4,489 105,207 5 8,703 4,699 4,071 104,699 5,678 5,049 105,678 6,827 6,199 106,827 6 10,713 5,552 5,013 105,552 6,920 6,382 106,920 8,592 8,054 108,592 7 12,824 6,370 5,922 106,370 8,195 7,746 108,195 10,517 10,068 110,517 8 15,040 7,155 6,796 107,155 9,503 9,144 109,503 12,616 12,257 112,616 9 17,367 7,904 7,634 107,904 10,845 10,576 110,845 14,907 14,638 114,907 10 19,810 8,617 8,617 108,617 12,220 12,220 112,220 17,408 17,408 117,408 11 22,376 9,294 9,294 109,294 13,630 13,630 113,630 20,139 20,139 120,139 12 25,069 9,934 9,934 109,934 15,074 15,074 115,074 23,122 23,122 123,122 13 27,898 10,537 10,537 110,537 16,552 16,552 116,552 26,384 26,384 126,384 14 30,868 11,101 11,101 111,101 18,065 18,065 118,065 29,961 29,961 129,961 15 33,986 11,580 11,580 111,580 19,565 19,565 119,565 33,836 33,836 133,836 16 37,261 11,999 11,999 111,999 21,076 21,076 121,076 38,066 38,066 138,066 17 40,699 12,354 12,354 112,354 22,593 22,593 122,593 42,684 42,684 142,684 18 44,309 12,639 12,639 112,639 24,111 24,111 124,111 47,723 47,723 147,723 19 48,099 12,858 12,858 112,858 25,634 25,634 125,634 53,232 53,232 153,232 20 52,079 13,024 13,024 113,024 27,176 27,176 127,176 59,272 59,272 159,272 21 56,258 13,087 13,087 113,087 28,687 28,687 128,687 65,847 65,847 165,847 22 60,646 13,039 13,039 113,039 30,155 30,155 130,155 73,002 73,002 173,002 23 65,253 12,869 12,869 112,869 31,565 31,565 131,565 80,786 80,786 180,786 24 70,091 12,568 12,568 112,568 32,903 32,903 132,903 89,254 89,254 189,254 25 75,170 12,123 12,123 112,123 34,150 34,150 134,150 98,463 98,463 198,463 26 80,504 11,525 11,525 111,525 35,291 35,291 135,291 108,478 108,478 208,478 27 86,104 10,765 10,765 110,765 36,307 36,307 136,307 119,374 119,374 219,374 28 91,984 9,831 9,831 109,831 37,181 37,181 137,181 131,230 131,230 231,230 29 98,158 8,710 8,710 108,710 37,886 37,886 137,886 144,128 144,128 244,128 30 10,4641 7,383 7,383 107,383 38,394 38,394 138,394 158,159 158,159 258,159
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 56
DEATH BENEFIT OPTION 2 $1,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 45 GUARANTEED VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 1,575 926 29 100,926 995 97 100,995 1,064 166 101,064 2 3,229 1,841 943 101,841 2,035 1,138 102,035 2,239 1,341 102,239 3 4,965 2,711 1,903 102,711 3,090 2,283 103,090 3,503 2,695 103,503 4 6,788 3,535 2,817 103,535 4,158 3,440 104,158 4,862 4,144 104,862 5 8,703 4,311 3,682 104,311 5,235 4,607 105,235 6,323 5,694 106,323 6 10,713 5,033 4,495 105,033 6,317 5,778 106,317 7,890 7,352 107,890 7 12,824 5,698 5,250 105,698 7,398 6,949 107,398 9,569 9,120 109,569 8 15,040 6,299 5,940 106,299 8,470 8,111 108,470 11,363 11,004 111,363 9 17,367 6,829 6,560 106,829 9,526 9,257 109,526 13,276 13,007 113,276 10 19,810 7,282 7,282 107,282 10,557 10,557 110,557 15,313 15,313 115,313 11 22,376 7,650 7,650 107,650 11,554 11,554 111,554 17,477 17,477 117,477 12 25,069 7,930 7,930 107,930 12,507 12,507 112,507 19,774 19,774 119,774 13 27,898 8,115 8,115 108,115 13,410 13,410 113,410 22,212 22,212 122,212 14 30,868 8,199 8,199 108,199 14,251 14,251 114,251 24,796 24,796 124,796 15 33,986 8,170 8,170 108,170 15,013 15,013 115,013 27,533 27,533 127,533 16 37,261 8,018 8,018 108,018 15,680 15,680 115,680 30,428 30,428 130,428 17 40,699 7,729 7,729 107,729 16,233 16,233 116,233 33,483 33,483 133,483 18 44,309 7,284 7,284 107,284 16,645 16,645 116,645 36,691 36,691 136,691 19 48,099 6,664 6,664 106,664 16,888 16,888 116,888 40,046 40,046 140,046 20 52,079 5,852 5,852 105,852 16,934 16,934 116,934 43,543 43,543 143,543 21 56,258 4,831 4,831 104,831 16,752 16,752 116,752 47,174 47,174 147,174 22 60,646 3,586 3,586 103,586 16,314 16,314 116,314 50,935 50,935 150,935 23 65,253 2,101 2,101 102,101 15,591 15,591 115,591 54,820 54,820 154,820 24 70,091 358 358 100,358 14,546 14,546 114,546 58,818 58,818 158,818 25 75,170 (*) (*) 98,329 13,133 13,133 113,133 62,908 62,908 162,908 26 80,504 (*) (*) 95,976 11,292 11,292 111,292 67,053 67,053 167,053 27 86,104 (*) (*) 93,253 8,951 8,951 108,951 71,207 71,207 171,207 28 91,984 (*) (*) 90,101 6,021 6,021 106,021 75,299 75,299 175,299 29 98,158 (*) (*) 86,462 2,411 2,411 102,411 79,255 79,255 179,255 30 10,4641 (*) (*) 82,288 (*) (*) 98,032 83,002 83,002 183,002
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 57
DEATH BENEFIT OPTION 1 $2,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 CURRENT VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 2,625 1,453 290 100,000 1,566 403 100,000 1,679 517 100,000 2 5,381 2,936 1,774 100,000 3,256 2,094 100,000 3,591 2,428 100,000 3 8,275 4,390 3,344 100,000 5,016 3,970 100,000 5,696 4,650 100,000 4 11,314 5,816 4,886 100,000 6,849 5,919 100,000 8,019 7,089 100,000 5 14,505 7,212 6,399 100,000 8,760 7,946 100,000 10,582 9,769 100,000 6 17,855 8,581 7,883 100,000 10,753 10,055 100,000 13,416 12,718 100,000 7 21,373 9,921 9,340 100,000 12,833 12,251 100,000 16,550 15,969 100,000 8 25,066 11,234 10,769 100,000 15,004 14,539 100,000 20,020 19,555 100,000 9 28,945 12,520 12,171 100,000 17,274 16,925 100,000 23,866 23,517 100,000 10 33,017 13,778 13,778 100,000 19,646 19,646 100,000 28,137 28,137 100,000 11 37,293 15,009 15,009 100,000 22,129 22,129 100,000 32,891 32,891 100,000 12 41,782 16,062 16,062 100,000 24,585 24,585 100,000 38,065 38,065 100,000 13 46,497 16,956 16,956 100,000 27,044 27,044 100,000 43,742 43,742 100,000 14 51,446 17,711 17,711 100,000 29,533 29,533 100,000 50,018 50,018 100,000 15 56,644 18,316 18,316 100,000 32,048 32,048 100,000 56,980 56,980 100,000 16 62,101 18,802 18,802 100,000 34,628 34,628 100,000 64,759 64,759 100,000 17 67,831 19,171 19,171 100,000 37,284 37,284 100,000 73,483 73,483 100,000 18 73,848 19,410 19,410 100,000 40,019 40,019 100,000 83,300 83,300 100,000 19 80,165 19,518 19,518 100,000 42,849 42,849 100,000 94,378 94,378 102,872 20 86,798 19,502 19,502 100,000 45,794 45,794 100,000 106,716 106,716 114,186 21 93,763 19,268 19,268 100,000 48,812 48,812 100,000 120,384 120,384 126,403 22 101,076 18,789 18,789 100,000 51,910 51,910 100,000 135,461 135,461 142,234 23 108,755 18,030 18,030 100,000 55,097 55,097 100,000 152,086 152,086 159,691 24 116,818 16,951 16,951 100,000 58,389 58,389 100,000 170,413 170,413 178,933 25 125,284 15,509 15,509 100,000 61,805 61,805 100,000 190,607 190,607 200,137 26 134,173 13,649 13,649 100,000 65,373 65,373 100,000 212,849 212,849 223,491 27 143,506 11,313 11,313 100,000 69,130 69,130 100,000 237,338 237,338 249,204 28 153,307 8,427 8,427 100,000 73,121 73,121 100,000 264,294 264,294 277,509 29 163,597 4,893 4,893 100,000 77,403 77,403 100,000 293,999 293,999 308,699 30 174,402 579 579 100,000 82,049 82,049 100,000 326,716 326,716 343,052
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 58
DEATH BENEFIT OPTION 1 $2,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 GUARANTEED VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 2,625 1,392 229 100,000 1,502 339 100,000 1,612 449 100,000 2 5,381 2,722 1,559 100,000 3,029 1,866 100,000 3,349 2,187 100,000 3 8,275 3,958 2,912 100,000 4,549 3,503 100,000 5,193 4,147 100,000 4 11,314 5,094 4,164 100,000 6,056 5,126 100,000 7,149 6,219 100,000 5 14,505 6,120 5,307 100,000 7,540 6,727 100,000 9,222 8,408 100,000 6 17,855 7,028 6,331 100,000 8,991 8,294 100,000 11,418 10,720 100,000 7 21,373 7,806 7,225 100,000 10,398 9,817 100,000 13,744 13,163 100,000 8 25,066 8,438 7,973 100,000 11,742 11,277 100,000 16,204 15,739 100,000 9 28,945 8,906 8,557 100,000 13,005 12,656 100,000 18,803 18,455 100,000 10 33,017 9,192 9,192 100,000 14,168 14,168 100,000 21,552 21,552 100,000 11 37,293 9,279 9,279 100,000 15,213 15,213 100,000 24,466 24,466 100,000 12 41,782 9,150 9,150 100,000 16,120 16,120 100,000 27,570 27,570 100,000 13 46,497 8,785 8,785 100,000 16,870 16,870 100,000 30,896 30,896 100,000 14 51,446 8,159 8,159 100,000 17,433 17,433 100,000 34,477 34,477 100,000 15 56,644 7,235 7,235 100,000 17,774 17,774 100,000 38,349 38,349 100,000 16 62,101 5,962 5,962 100,000 17,842 17,842 100,000 42,553 42,553 100,000 17 67,831 4,276 4,276 100,000 17,569 17,569 100,000 47,140 47,140 100,000 18 73,848 2,087 2,087 100,000 16,869 16,869 100,000 52,175 52,175 100,000 19 80,165 (*) (*) 100,000 15,639 15,639 100,000 57,747 57,747 100,000 20 86,798 (*) (*) 100,000 13,764 13,764 100,000 63,989 63,989 100,000 21 93,763 (*) (*) 100,000 11,112 11,112 100,000 71,078 71,078 100,000 22 101,076 (*) (*) (*) 7,521 7,521 100,000 79,256 79,256 100,000 23 108,755 (*) (*) (*) 2,795 2,795 100,000 88,840 88,840 100,000 24 116,818 (*) (*) (*) (*) (*) (*) 100,154 100,154 105,162 25 125,284 (*) (*) (*) (*) (*) (*) 112,682 112,682 118,316 26 134,173 (*) (*) (*) (*) (*) (*) 126,418 126,418 132,739 27 143,506 (*) (*) (*) (*) (*) (*) 141,460 141,460 148,533 28 153,307 (*) (*) (*) (*) (*) (*) 157,912 157,912 165,808 29 163,597 (*) (*) (*) (*) (*) (*) 175,881 175,881 184,675 30 174,402 (*) (*) (*) (*) (*) (*) 195,479 195,479 205,253
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 59
DEATH BENEFIT OPTION 2 $2,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 CURRENT VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 2,625 1,437 275 101,437 1,549 387 101,549 1,662 499 101,662 2 5,381 2,892 1,730 102,892 3,208 2,045 103,208 3,537 2,375 103,537 3 8,275 4,306 3,260 104,306 4,918 3,872 104,918 5,585 4,538 105,585 4 11,314 5,678 4,748 105,678 6,683 5,753 106,683 7,821 6,891 107,821 5 14,505 7,008 6,194 107,008 8,504 7,691 108,504 10,266 9,452 110,266 6 17,855 8,297 7,599 108,297 10,383 9,686 110,383 12,940 12,242 112,940 7 21,373 9,544 8,963 109,544 12,322 11,741 112,322 15,866 15,284 115,866 8 25,066 10,750 10,285 110,750 14,323 13,858 114,323 19,069 18,604 119,069 9 28,945 11,915 11,567 111,915 16,389 16,040 116,389 22,578 22,229 122,578 10 33,017 13,040 13,040 113,040 18,521 18,521 118,521 26,425 26,425 126,425 11 37,293 14,123 14,123 114,123 20,721 20,721 120,721 30,655 30,655 130,655 12 41,782 14,983 14,983 114,983 22,805 22,805 122,805 35,114 35,114 135,114 13 46,497 15,642 15,642 115,642 24,786 24,786 124,786 39,846 39,846 139,846 14 51,446 16,124 16,124 116,124 26,687 26,687 126,687 44,902 44,902 144,902 15 56,644 16,412 16,412 116,412 28,485 28,485 128,485 50,297 50,297 150,297 16 62,101 16,547 16,547 116,547 30,214 30,214 130,214 56,106 56,106 156,106 17 67,831 16,533 16,533 116,533 31,871 31,871 131,871 62,375 62,375 162,375 18 73,848 16,354 16,354 116,354 33,435 33,435 133,435 69,133 69,133 169,133 19 80,165 16,012 16,012 116,012 34,902 34,902 134,902 76,432 76,432 176,432 20 86,798 15,519 15,519 115,519 36,275 36,275 136,275 84,340 84,340 184,340 21 93,763 14,763 14,763 114,763 37,434 37,434 137,434 92,798 92,798 192,798 22 101,076 13,717 13,717 113,717 38,335 38,335 138,335 101,834 101,834 201,834 23 108,755 12,353 12,353 112,353 38,934 38,934 138,934 111,473 111,473 211,473 24 116,818 10,642 10,642 110,642 39,179 39,179 139,179 121,741 121,741 221,741 25 125,284 8,552 8,552 108,552 39,018 39,018 139,018 132,670 132,670 232,670 26 134,173 6,055 6,055 106,055 38,395 38,395 138,395 144,290 144,290 244,290 27 143,506 3,121 3,121 103,121 37,252 37,252 137,252 156,637 156,637 256,637 28 153,307 (*) (*) (*) 35,528 35,528 135,528 169,752 169,752 269,752 29 163,597 (*) (*) (*) 33,147 33,147 133,147 183,665 183,665 283,665 30 174,402 (*) (*) (*) 30,015 30,015 130,015 198,395 198,395 298,395
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 60
DEATH BENEFIT OPTION 1 $2,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT MALE: NON-TOBACCO ISSUE: AGE 55 GUARANTEED VALUES 0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 2,625 1,376 214 101,376 1,485 322 101,485 1,594 432 101,594 2 5,381 2,677 1,515 102,677 2,979 1,816 102,979 3,295 2,132 103,295 3 8,275 3,869 2,823 103,869 4,446 3,400 104,446 5,075 4,029 105,075 4 11,314 4,944 4,014 104,944 5,876 4,946 105,876 6,933 6,003 106,933 5 14,505 5,890 5,076 105,890 7,252 6,439 107,252 8,864 8,050 108,864 6 17,855 6,698 6,001 106,698 8,561 7,864 108,561 10,861 10,164 110,861 7 21,373 7,355 6,773 107,355 9,784 9,203 109,784 12,916 12,335 112,916 8 25,066 7,841 7,376 107,841 10,895 10,430 110,895 15,012 14,547 115,012 9 28,945 8,139 7,790 108,139 11,868 11,519 111,868 17,131 16,782 117,131 10 33,017 8,230 8,230 108,230 12,674 12,674 112,674 19,252 19,252 119,252 11 37,293 8,098 8,098 108,098 13,287 13,287 113,287 21,356 21,356 121,356 12 41,782 7,728 7,728 107,728 13,679 13,679 113,679 23,421 23,421 123,421 13 46,497 7,105 7,105 107,105 13,822 13,822 113,822 25,426 25,426 125,426 14 51,446 6,211 6,211 106,211 13,681 13,681 113,681 27,343 27,343 127,343 15 56,644 5,018 5,018 105,018 13,210 13,210 113,210 29,132 29,132 129,132 16 62,101 3,488 3,488 103,488 12,354 12,354 112,354 30,732 30,732 130,732 17 67,831 1,576 1,576 101,576 11,040 11,040 111,040 32,070 32,070 132,070 18 73,848 (*) (*) 99,222 9,183 9,183 109,183 33,048 33,048 133,048 19 80,165 (*) (*) 96,369 6,692 6,692 106,692 33,559 33,559 133,559 20 86,798 (*) (*) 92,968 3,482 3,482 103,482 33,495 33,495 133,495 21 93,763 (*) (*) 88,984 (*) (*) 99,476 32,747 32,747 132,747 22 101,076 (*) (*) (*) (*) (*) (*) 31,201 31,201 131,201 23 108,755 (*) (*) (*) (*) (*) (*) 28,733 28,733 128,733 24 116,818 (*) (*) (*) (*) (*) (*) 25,203 25,203 125,203 25 125,284 (*) (*) (*) (*) (*) (*) 20,435 20,435 120,435 26 134,173 (*) (*) (*) (*) (*) (*) 14,208 14,208 114,208 27 143,506 (*) (*) (*) (*) (*) (*) 6,249 6,249 106,249 28 153,307 (*) (*) (*) (*) (*) (*) (*) (*) (*) 29 163,597 (*) (*) (*) (*) (*) (*) (*) (*) (*) 30 174,402 (*) (*) (*) (*) (*) (*) (*) (*) (*)
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5 THEREAFTER. CURRENT VALUES REFLECT A 4% OF PREMIUM CHARGE ON ALL PREMIUMS UP TO THE TARGET PREMIUM AND 4% ON PREMIUMS IN EXCESS OF TARGET FOR ANY SINGLE POLICY YEAR. (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. 61 APPENDIX D: PERFORMANCE SUMMARY INFORMATION The following performance tables display historical investments 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 advisers. The performance figures shown 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. 62
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 VP Income 10/30/97 13.38 26.86 18.02 -10.62 1.28 -10.62 5.49 33.83 NA Growth American Century VP 05/01/94 16.20 18.76 64.04 -16.83 5.14 -16.83 36.44 62.04 119.92 International American Century VP Value 05/01/96 12.28 4.81 -0.85 18.14 5.71 18.14 17.14 22.77 NA Credit Suisse Warburg Pincus Trust - Value Portfolio (formerly, 10/31/97 12.97 12.13 6.24 8.91 6.93 8.91 15.71 29.74 NA Warburg Pincus Trust - Growth & Income Portfolio) Credit Suisse Warburg Pincus Trust - International Equity 06/30/95 11.98 5.35 53.43 -25.90 2.70 -25.90 13.70 19.78 28.77 Portfolio Credit Suisse Warburg Pincus Trust - Global Post Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post Venture Capital Portfolio 09/30/96 14.12 6.51 63.50 -18.94 2.92 -18.94 32.53 41.16 NA Portfolio) (formerly, Warburg Pincus Trust - Post Venture Capital Portfolio Portfolio) Dreyfus Investment Portfolios - European Equity Portfolio - Initial 04/30/99 12.67 NA NA -2.00 6.60 -2.00 NA NA NA Shares Dreyfus Socially Responsible Growth Fund - 10/06/93 14.97 29.38 30.08 -11.03 0.13 -11.03 15.73 49.73 133.13 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 Investment Fund - Appreciation Fund - Initial Shares (formerly, 04/05/93 14.42 30.22 11.46 -0.65 -0.01 -0.65 10.73 44.19 131.81 Capital Appreciation Portfolio) Federated Insurance Series - - Federated Quality Bond 04/22/99 10.90 NA NA 10.45 2.00 10.45 NA NA NA 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 Portfolio: 10/09/86 17.02 39.38 37.29 -11.07 0.23 -11.07 22.09 70.17 140.96 Service Class Fidelity VIP High Income Portfolio: 09/15/85 7.99 -4.42 8.07 -22.61 2.13 -22.61 -16.36 -20.06 7.18 Service Class Fidelity VIP Overseas Portfolio 01/28/87 12.97 12.64 42.46 -19.15 0.25 -19.15 15.18 29.74 63.85 Service Class Fidelity VIP II Contraband Portfolio: 01/03/95 15.05 29.94 24.15 -6.71 3.36 -6.71 15.81 50.48 126.50 Service Class Fidelity VIP III Growth Opportunity Port. Service 01/03/95 10.74 24.51 4.18 -17.18 0.80 -17.18 -13.71 7.43 65.12 Class Janus Aspen Series Capital Appreciation Portfolio: 05/01/97 8.24 58.11 66.95 -19.35 2.73 -19.35 34.64 112.88 NA 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 Growth Portfolio Service 05/02/94 8.27 17.24 82.31 -16.97 0.89 -16.97 51.38 77.48 183.19 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 Index Fund (formerly, NSAT Nationwide Mid Cap Index Fund) (formerly, NSAT 10/31/97 15.44 10.81 20.92 15.21 7.36 15.21 39.31 54.37 NA Nationwide Select Advisers Mid Cap Index Fund) NSAT Federated NSAT Equity Income Fund (formerly, NSAT Nationwide Equity 10/31/97 12.19 15.13 18.49 -10.62 2.38 -10.62 5.90 21.93 NA Income Fund) NSAT Federated NSAT High Income Bond Fund (formerly, NSAT Nationwide 10/31/97 10.01 5.80 3.19 -8.28 3.01 -8.28 -5.35 0.14 NA High Income Bond Fund) NSAT Gartmore NSAT 08/30/00 9.25 NA NA NA 4.10 NA NA NA NA International Growth 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 Technology & Communication 06/30/00 6.02 NA NA NA -0.87 NA NA NA NA 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 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 VP Income 44.27 10.20 NA 12.26 Growth American Century VP 134.44 17.45 17.07 13.64 International American Century VP Value 73.81 7.08 NA 12.58 Credit Suisse Warburg Pincus Trust - Value Portfolio (formerly, 34.79 9.07 NA 9.89 Warburg Pincus Trust - Growth & Income Portfolio) Credit Suisse Warburg Pincus Trust - International Equity 38.16 6.20 5.19 6.05 Portfolio Credit Suisse Warburg Pincus Trust - Global Post Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post Venture Capital Portfolio 56.15 12.18 NA 11.05 Portfolio) (formerly, Warburg Pincus Trust - Post Venture Capital Portfolio Portfolio) Dreyfus Investment Portfolios - European Equity Portfolio - Initial 26.62 NA NA 15.21 Shares Dreyfus Socially Responsible Growth Fund - 241.79 14.40 18.45 18.52 Initial Shares Dreyfus Stock Index Fund - 372.79 11.94 17.98 14.80 Initial Shares Dreyfus Variable Investment Fund - Appreciation Fund - Initial Shares (formerly, 240.42 12.97 18.31 17.16 Capital Appreciation Portfolio) Federated Insurance Series - - Federated Quality Bond 8.24 NA NA 4.80 Fund II Fidelity VIP Equity-Income 496.75 8.68 13.44 13.38 Portfolio: Service Class Fidelity VIP Growth Portfolio: 763.87 19.39 19.23 16.37 Service Class Fidelity VIP High Income Portfolio: 239.56 -7.19 1.40 8.33 Service Class Fidelity VIP Overseas Portfolio 207.59 9.07 10.38 8.40 Service Class Fidelity VIP II Contraband Portfolio: 216.24 14.59 17.76 21.18 Service Class Fidelity VIP III Growth Opportunity Port. Service 118.81 2.42 10.55 13.96 Class Janus Aspen Series Capital Appreciation Portfolio: 169.51 28.64 NA 31.07 Service Shares Janus Aspen Series Global -34.11 NA NA NA Portfolio: Service Shares Janus Aspen Series Intl Growth Portfolio Service 238.98 21.07 23.14 20.11 Shares NSAT Capital Appreciation 151.05 -0.15 11.05 11.15 Fund NSAT Dreyfus NSAT Mid Cap Index Fund (formerly, NSAT Nationwide Mid Cap Index Fund) (formerly, NSAT 53.81 15.57 NA 14.56 Nationwide Select Advisers Mid Cap Index Fund) NSAT Federated NSAT Equity Income Fund (formerly, NSAT Nationwide Equity 24.09 6.83 NA 7.05 Income Fund) NSAT Federated NSAT High Income Bond Fund (formerly, NSAT Nationwide 2.42 0.05 NA 0.76 High Income Bond Fund) NSAT Gartmore NSAT -13.70 NA NA NA International Growth Fund NSAT Gartmore NSAT -24.83 NA NA NA Emerging Markets Fund NSAT Gartmore NSAT Global Technology & Communication -24.96 NA NA NA Fund NSAT Government Bond Fund 365.31 6.17 6.32 8.84
63
PERFORMANCE TABLE - TOTAL RETURN (CONTINUED) 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 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, NSAT Nationwide Balanced Fund) NSAT MAS NSAT Multi Sector Bond Fund (formerly the NSAT Nationwide Multi 10/31/97 11.01 2.60 1.56 5.65 3.41 5.65 7.30 10.09 NA 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 Fund (formerly, Nationwide 10/31/97 12.84 19.14 22.92 -12.32 3.21 -12.32 7.78 28.41 NA Global Equity Fund) Nationwide Small Cap Growth Fund (formerly, Nationwide Select Advisers 05/03/99 17.19 NA NA -16.17 7.27 -16.17 NA NA NA Small Cap Growth Fund) Nationwide Small Cap Value 10/31/97 13.78 -3.06 27.84 11.20 7.53 11.20 42.15 37.80 NA NSAT Small Company Fund 10/23/95 15.84 1.01 44.02 8.90 9.13 8.90 56.83 58.42 128.34 Nationwide Strategic Value 10/31/97 10.47 0.39 -3.07 7.61 6.25 7.61 4.31 4.71 NA Fund NSAT Strong NSAT Mid Cap Growth Fund (formerly, NSAT Nationwide Strategic 10/31/97 17.92 14.59 84.75 -15.38 13.44 -15.38 56.34 79.16 NA Growth Fund) NSAT Total Return Fund 11/08/82 12.36 18.07 6.94 -2.12 0.61 -2.12 4.67 23.59 94.91 NSAT Turner NSAT Return 07/03/95 6.34 NA NA NA -0.50 NA NA NA NA Fund Neuberger & Berman AMT 11/03/97 15.30 31.67 14.93 1.13 3.17 1.13 16.23 53.04 NA Guardian Portfolio Neuberger & Berman AMT Mid 11/03/97 19.84 39.28 53.89 -7.46 6.79 -7.46 42.41 98.35 NA Cap Growth Portfolios Neuberger & Berman AMT 03/22/94 11.27 4.21 7.37 0.70 5.89 0.70 8.12 12.67 91.61 Partners Port folio Oppenheimer Variable Account Fund - Aggressive Growth Fund/VA (formerly, 08/15/86 18.31 12.36 83.60 -11.24 2.67 -11.24 62.97 83.11 145.85 Oppenheimer Capital Appreciation Fund) Oppenheimer Variable Account Fund - Capital Appreciation Fund/VA 04/03/85 17.52 24.00 41.66 -0.23 3.26 -0.23 41.33 75.25 177.99 (formerly, Oppenheimer Growth Fund) Oppenheimer Global 06/30/95 9.60 14.10 58.48 5.09 5.53 5.09 66.55 90.04 174.06 Securities Fund /VA Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer 07/05/95 11.62 4.70 21.71 -8.78 2.16 -8.78 11.03 16.25 104.07 Growth & Income Fund) Strong Opportunity Fund 06/30/95 9.85 13.54 34.91 6.35 6.85 6.35 43.48 62.91 141.47 II, Inc The Universal 06/16/97 10.32 -28.38 29.37 11.39 3.31 11.39 44.11 3.21 NA Institutional Funds, Inc. - - Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio) The Universal Institutional Funds, Inc. - - Mid Cap Growth Portfolio 11/08/82 8.69 NA NA -7.33 7.58 -7.33 NA NA NA The Universal 07/03/95 10.94 -11.62 -3.37 28.06 6.00 28.06 23.74 9.36 86.69 Institutional Funds, Inc. - - US Real Estate Portfolio Van Eck Worldwide 12/27/95 7.67 -34.13 100.28 -41.87 -2.47 -41.87 16.43 -23.31 -14.02 Insurance Trust - Worldwide Emerging Markets Fund Van Eck Worldwide Insurance Trust - Worldwide Hard Assets Fund 09/01/89 9.31 -30.97 21.00 11.40 11.97 11.40 34.80 -6.95 8.02 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 NSAT JP Morgan NSAT 10.21 2.80 NA 3.12 Balanced Fund (formerly, NSAT Nationwide Balanced Fund) NSAT MAS NSAT Multi Sector Bond Fund (formerly the NSAT Nationwide Multi 11.23 3.26 NA 3.42 Sector Bond Fund) NSAT Money Market Fund 251.64 5.38 5.31 6.79 NSAT Nationwide Global 50 Fund (formerly, Nationwide 29.91 8.69 NA 8.62 Global Equity Fund) Nationwide Small Cap Growth Fund (formerly, Nationwide Select Advisers 71.86 NA NA 38.61 Small Cap Growth Fund) Nationwide Small Cap Value 35.58 11.28 NA 10.09 NSAT Small Company Fund 161.16 16.57 17.95 20.33 Nationwide Strategic Value 6.42 1.55 NA 1.98 Fund NSAT Strong NSAT Mid Cap Growth Fund (formerly, NSAT Nationwide Strategic 83.09 21.45 NA 21.04 Growth Fund) NSAT Total Return Fund 1106.41 7.32 14.28 14.71 NSAT Turner NSAT Return -40.30 NA NA NA Fund Neuberger & Berman AMT 61.00 15.24 NA 16.27 Guardian Portfolio Neuberger & Berman AMT Mid 132.47 25.65 NA 30.62 Cap Growth Portfolios Neuberger & Berman AMT 155.48 4.06 13.89 14.85 Partners Port folio Oppenheimer Variable Account Fund - Aggressive Growth Fund/VA (formerly, 826.36 22.34 19.71 16.75 Oppenheimer Capital Appreciation Fund) Oppenheimer Variable Account Fund - Capital Appreciation Fund/VA 992.62 20.56 22.69 16.40 (formerly, Oppenheimer Growth Fund) Oppenheimer Global 333.84 23.86 22.34 15.58 Securities Fund /VA Oppenheimer Main Street Growth & Income Fund/VA (formerly, Oppenheimer 155.61 5.15 15.33 18.65 Growth & Income Fund) Strong Opportunity Fund 357.67 17.67 19.28 19.24 II, Inc The Universal 4.01 1.06 NA 1.12 Institutional Funds, Inc. - - Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio) The Universal Institutional Funds, Inc. - - Mid Cap Growth Portfolio 28.25 NA NA 23.01 The Universal 102.27 3.03 13.30 13.69 Institutional Funds, Inc. - - US Real Estate Portfolio Van Eck Worldwide -14.88 -8.46 -2.98 -3.15 Insurance Trust - Worldwide Emerging Markets Fund Van Eck Worldwide Insurance Trust - Worldwide Hard Assets Fund 63.62 -2.37 1.55 4.44
**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 table displays three types of total return. Simply stated, total return shows the percentage change in unit values, with dividends and capital gains reinvested, after the deduction of a 0.60% asset charge (and the deduction of applicable investment advisory fees and other expenses of the 64 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. 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 INSURANC CHARGES, SURRENDER CHARGES AND A MONTHLY ADMINISTRATIVE CHARGE. 65 PERFORMANCE TABLE - CASH VALUE
1 YEAR TO 2 YEARS TO 3 YEARS TO 12/31/00 12/31/00 12/31/00 FUND CASH CASH CASH UNDERLYING INVESTMENT INCEPTION ACCUM SURR. ACCUM SURR. ACCUM SURR. OPTIONS DATE** VALUE VALUE VALUE VALUE VALUE VALUE American Century VP 10/30/97 $14,193 $3,156 $31,093 $20,057 $52,522 $42,589 Income & Growth American Century VP 05/01/94 $13,132 $2,095 $35,122 $24,085 $61,215 $51,283 International American Century VP 05/01/96 $18,884 $7,848 $37,564 $26,528 $56,920 $46,987 Value Credit Suisse Warburg 10/31/97 $17,393 $6,357 $35,956 $24,920 $56,548 $46,616 Pincus Trust - Value Portfolio (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Credit Suisse Warburg 06/30/95 $11,583 $0,547 $29,899 $18,863 $48,966 $39,033 Pincus Trust - International Equity Portfolio Credit Suisse Warburg 09/30/96 $13,038 $2,001 $34,379 $23,343 $56,650 $46,717 Pincus Trust - Global Post Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post Venture Capital Portfolio Portfolio) (formerly, Warburg Pincus Trust - Post Venture Capital Portfolio Portfolio) Dreyfus Investment 04/30/99 $15,685 $4,648 NA NA NA NA Portfolios European Equity Portfolio - Initial Shares Dreyfus Socially 10/06/93 $14,216 $3,180 $32,867 $21,831 $56,854 $46,921 Responsible Growth Fund - Initial Shares Dreyfus Stock Index 09/29/89 $14,456 $3,419 $32,040 $21,004 $54,522 $44,589 Fund - Initial Shares Dreyfus Variable 04/05/93 $15,908 $4,872 $33,625 $22,589 $56,802 $46,869 Investment Fund - -Appreciation Fund - Initial Shares (formerly, Capital Appreciation Portfolio) Federated Insurance 04/22/99 $17,768 $6,731 NA NA NA NA Series - Federated Quality Bond Fund II Fidelity VIP 10/09/86 $17,304 $6,268 $35,736 $24,700 $56,076 $46,143 Equity-Income Portfolio: Service Class Fidelity VIP Growth 10/09/86 $14,255 $3,219 $33,999 $22,963 $61,402 $51,470 Portfolio: Service Class Fidelity VIP High 09/15/85 $12,199 $1,163 $25,591 $14,555 $38,124 $28,192 Income Portfolio: Service Class Fidelity VIP Overseas 01/28/87 $12,740 $1,704 $31,295 $20,259 $52,001 $42,068 Portfolio Service Class Fidelity VIP II 01/03/95 $14,879 $3,842 $33,491 $22,455 $57,561 $47,629 Contraband Portfolio: Service Class Fidelity VIP III 01/03/95 $13,100 $2,063 $26,820 $15,784 $43,926 $33,993 Growth Opportunity Port. Service Class Janus Aspen Series 05/01/97 $12,803 $1,767 $34,833 $23,797 $69,392 $59,459 Capital Appreciation Portfolio: Service Shares Janus Aspen Series 01/18/00 NA NA NA NA NA NA Global Portfolio: Service Shares Janus Aspen Series 05/02/94 $13,272 $2,236 $37,784 $26,748 $66,292 $56,359 Intl. Growth Portfolio Service Shares NSAT Capital 04/15/92 $11,638 $0,601 $23,864 $12,828 $39,829 $29,896 Appreciation Fund NSAT Dreyfus NSAT Mid 10/31/97 $18,704 $7,668 $41,021 $29,984 $65,414 $55,482 Cap Index Fund (formerly, NSAT Nationwide Mid Cap Index Fund) (formerly, NSAT Nationwide Select Advisers Mid Cap Index Fund) NSAT Federated NSAT 10/31/97 $14,312 $3,276 $31,298 $20,262 $50,631 $40,699 Equity Income Fund (formerly, NSAT Nationwide Equity Income Fund) 5 YEARS TO 10 YEARS TO INCEPTION TO 12/31/00 12/31/00 12/31/00 CASH CASH CASH UNDERLYING INVESTMENT ACCUM SURR. ACCUM SURR. ACCUM SURR. OPTIONS VALUE VALUE VALUE VALUE VALUE VALUE American Century VP NA NA NA NA $78,267 $69,438 Income & Growth American Century VP $132,142 $124,416 NA NA $204,344 $198,826 International American Century VP NA NA NA NA $111,702 $103,977 Value Credit Suisse Warburg NA NA NA NA $78,386 $69,556 Pincus Trust - Value Portfolio (formerly, Warburg Pincus Trust - Growth & Income Portfolio) Credit Suisse Warburg $92,504 $84,779 NA NA $109,974 $103,352 Pincus Trust - International Equity Portfolio Credit Suisse Warburg NA NA NA NA $108,741 $101,015 Pincus Trust - Global Post Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post Venture Capital Portfolio Portfolio) (formerly, Warburg Pincus Trust - Post Venture Capital Portfolio Portfolio) Dreyfus Investment NA NA NA NA $36,381 $25,345 Portfolios European Equity Portfolio - Initial Shares Dreyfus Socially $129,792 $122,067 NA NA $267,778 $263,363 Responsible Growth Fund - Initial Shares Dreyfus Stock Index $125,825 $118,100 $435,486 $435,486 $561,268 $561,268 Fund - Initial Shares Dreyfus Variable $128,613 $120,888 NA NA $283,685 $279,270 Investment Fund - -Appreciation Fund - Initial Shares (formerly, Capital Appreciation Portfolio) Federated Insurance NA NA NA NA $35,395 $24,358 Series - Federated Quality Bond Fund II Fidelity VIP $117,544 $109,819 $407,916 $407,916 $784,384 $784,384 Equity-Income Portfolio: Service Class Fidelity VIP Growth $138,282 $130,557 $492,976 $492,976 $1,049,348 $1,049,348 Portfolio: Service Class Fidelity VIP High $74,033 $66,308 $218,181 $218,181 $471,545 $471,545 Income Portfolio: Service Class Fidelity VIP Overseas $105,771 $98,046 $288,910 $288,910 $483,036 $483,036 Portfolio Service Class Fidelity VIP II $128,435 $120,710 NA NA $182,588 $175,966 Contraband Portfolio: Service Class Fidelity VIP III $96,744 $89,019 NA NA $133,978 $127,356 Growth Opportunity Port. Service Class Janus Aspen Series NA NA NA NA $104,344 $95,515 Capital Appreciation Portfolio: Service Shares Janus Aspen Series NA NA NA NA $10,421 $0,615 Global Portfolio: Service Shares Janus Aspen Series $151,083 $143,358 NA NA $253,024 $247,506 Intl. Growth Portfolio Service Shares NSAT Capital $92,131 $84,406 NA NA $243,257 $239,946 Appreciation Fund NSAT Dreyfus NSAT Mid NA NA NA NA $89,446 $80,617 Cap Index Fund (formerly, NSAT Nationwide Mid Cap Index Fund) (formerly, NSAT Nationwide Select Advisers Mid Cap Index Fund) NSAT Federated NSAT NA NA NA NA $71,007 $62,178 Equity Income Fund (formerly, NSAT Nationwide Equity Income Fund)
66 PERFORMANCE TABLE - CASH VALUE (CONTINUED)
1 YEAR TO 2 YEARS TO 3 YEARS TO 12/31/00 12/31/00 12/31/00 FUND CASH CASH CASH UNDERLYING INVESTMENT INCEPTION ACCUM SURR. ACCUM SURR. ACCUM SURR. OPTIONS DATE** VALUE VALUE VALUE VALUE VALUE VALUE NSAT Federated NSAT 10/31/97 $14,595 $3,559 $29,678 $18,641 $45,503 $35,570 High Income Bond Fund (formerly, NSAT Nationwide High Income Bond Fund) NSAT Gartmore NSAT 08/30/00 NA NA NA NA NA NA International Growth Fund NSAT Gartmore NSAT 08/30/00 NA NA NA NA NA NA Emerging Markets Fund NSAT Gartmore NSAT 06/30/00 NA NA NA NA NA NA Global Technology & Communication Fund NSAT Government Bond 11/08/82 $18,131 $7,094 $35,535 $24,499 $54,474 $44,541 Fund NSAT JP Morgan NSAT 10/31/97 $15,976 $4,939 $31,991 $20,955 $49,184 $39,252 Balanced Fund (formerly, NSAT Nationwide Balanced Fund) NSAT MAS NSAT Multi 10/31/97 $16,950 $5,913 $33,975 $22,939 $51,298 $41,365 Sector Bond Fund (formerly the NSAT Nationwide Multi Sector Bond Fund) NSAT Money Market Fund 11/10/81 $17,043 $6,007 $34,767 $23,730 $53,238 $43,305 NSAT Nationwide Global 10/31/97 $13,924 $2,888 $31,225 $20,189 $51,723 $41,790 50 Fund (formerly, Nationwide Global Equity Fund) Nationwide Small Cap 05/03/99 $13,418 $2,382 NA NA NA NA Growth Fund (formerly, Nationwide Select Advisers Small Cap Growth Fund) Nationwide Small Cap 10/31/97 $18,025 $6,989 $40,967 $29,931 $62,463 $52,530 Value NSAT Small Company Fund 10/23/95 $17,618 $6,582 $42,756 $31,720 $67,616 $57,683 Nationwide Strategic 10/31/97 $17,269 $6,233 $33,813 $22,777 $50,117 $40,184 Value Fund NSAT Strong NSAT Mid 10/31/97 $13,607 $2,571 $39,231 $28,194 $67,599 $57,666 Cap Growth Fund (formerly, NSAT Nationwide Strategic Growth Fund) NSAT Total Return Fund 11/08/82 $15,675 $4,638 $32,409 $21,372 $52,099 $42,167 NSAT Turner NSAT 07/03/95 NA NA NA NA NA NA Return Fund Neuberger & Berman 11/03/97 $16,250 $5,214 $34,934 $23,898 $59,769 $49,836 AMT Guardian Portfolio Neuberger & Berman 11/03/97 $15,010 $3,974 $37,791 $26,755 $69,717 $59,785 AMT Mid Cap Growth Portfolios Neuberger & Berman AMT 03/22/94 $16,078 $5,042 $33,372 $22,335 $51,110 $41,177 Partners Port folio Oppenheimer Variable 08/15/86 $14,510 $3,474 $41,139 $30,103 $70,152 $60,219 Account Fund - Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) Oppenheimer Variable 04/03/85 $16,130 $5,094 $38,972 $27,935 $66,961 $57,028 Account Fund - Capital Appreciation Fund/VA (formerly, Oppenheimer Growth Fund) Oppenheimer Global 06/30/95 $17,015 $5,979 $43,972 $32,936 $74,217 $64,284 Securities Fund /VA Oppenheimer Main 07/05/95 $14,564 $3,528 $32,450 $21,413 $50,804 $40,872 Street Growth & Income Fund/VA (formerly, Oppenheimer Growth & Income Fund) Strong Opportunity 06/30/95 $17,130 $6,094 $40,388 $29,351 $66,328 $56,396 Fund II, Inc The Universal 06/16/97 $18,003 $6,967 $41,255 $30,218 $56,945 $47,013 Institutional Funds, Inc. - Emerging Markets Debt Portfolio The Universal 11/08/82 $14,937 $3,901 NA NA NA NA Institutional Funds, Inc. - Mid Cap Growth Portfolio The Universal 07/03/95 $20,860 $9,824 $40,530 $29,494 $57,418 $47,485 Institutional Funds, Inc. - US Real Estate Portfolio Van Eck Worldwide 12/27/95 $8,990 $2,046 $28,127 $17,090 $39,510 $29,577 Insurance Trust - Worldwide Emerging Markets Fund Van Eck Worldwide 09/01/89 $17,884 $6,848 $39,651 $28,614 $53,674 $43,741 Insurance Trust - Worldwide Hard Assets Fund 5 YEARS TO 10 YEARS TO INCEPTION TO 12/31/00 12/31/00 12/31/00 CASH CASH CASH UNDERLYING INVESTMENT ACCUM SURR. ACCUM SURR. ACCUM SURR. OPTIONS VALUE VALUE VALUE VALUE VALUE VALUE NSAT Federated NSAT NA NA NA NA $65,678 $56,849 High Income Bond Fund (formerly, NSAT Nationwide High Income Bond Fund) NSAT Gartmore NSAT NA NA NA NA $15,448 $4,411 International Growth Fund NSAT Gartmore NSAT NA NA NA NA $13,396 $2,359 Emerging Markets Fund NSAT Gartmore NSAT NA NA NA NA $13,174 $2,138 Global Technology & Communication Fund NSAT Government Bond $101,801 $94,076 $252,028 $252,028 $737,934 $737,934 Fund NSAT JP Morgan NSAT NA NA NA NA $68,242 $59,413 Balanced Fund (formerly, NSAT Nationwide Balanced Fund) NSAT MAS NSAT Multi NA NA NA NA $71,654 $62,825 Sector Bond Fund (formerly the NSAT Nationwide Multi Sector Bond Fund) NSAT Money Market Fund $98,178 $90,453 $222,946 $222,946 $610,193 $610,193 NSAT Nationwide Global NA NA NA NA $73,966 $65,137 50 Fund (formerly, Nationwide Global Equity Fund) Nationwide Small Cap NA NA NA NA $43,060 $32,023 Growth Fund (formerly, Nationwide Select Advisers Small Cap Growth Fund) Nationwide Small Cap NA NA NA NA $86,592 $77,762 Value NSAT Small Company Fund $139,873 $132,147 NA NA $174,614 $167,992 Nationwide Strategic NA NA NA NA $72,141 $63,312 Value Fund NSAT Strong NSAT Mid NA NA NA NA $94,664 $85,835 Cap Growth Fund (formerly, NSAT Nationwide Strategic Growth Fund) NSAT Total Return Fund $113,706 $105,981 $370,979 $370,979 $1,353,297 $1,353,297 NSAT Turner NSAT NA NA NA NA $10,320 $0,717 Return Fund Neuberger & Berman NA NA NA NA $82,166 $73,337 AMT Guardian Portfolio Neuberger & Berman NA NA NA NA $105,141 $96,312 AMT Mid Cap Growth Portfolios Neuberger & Berman AMT $110,571 $102,845 NA NA $192,779 $187,261 Partners Port folio Oppenheimer Variable $147,208 $139,482 $509,409 $509,409 $1,069,863 $1,069,863 Account Fund - Aggressive Growth Fund/VA (formerly, Oppenheimer Capital Appreciation Fund) Oppenheimer Variable $152,572 $144,847 $532,061 $532,061 $1,286,519 $1,286,519 Account Fund - Capital Appreciation Fund/VA (formerly, Oppenheimer Growth Fund) Oppenheimer Global $161,232 $153,506 $473,403 $473,403 $508,561 $508,561 Securities Fund /VA Oppenheimer Main $113,100 $105,375 NA NA $144,004 $137,382 Street Growth & Income Fund/VA (formerly, Oppenheimer Growth & Income Fund) Strong Opportunity $143,038 $135,313 NA NA $372,545 $369,234 Fund II, Inc The Universal NA NA NA NA $72,616 $63,786 Institutional Funds, Inc. - Emerging Markets Debt Portfolio The Universal NA NA NA NA $36,468 $25,431 Institutional Funds, Inc. - Mid Cap Growth Portfolio The Universal $114,047 $106,322 NA NA $142,358 $135,736 Institutional Funds, Inc. - US Real Estate Portfolio Van Eck Worldwide $7,980 $60,254 NA NA $89,462 $82,840 Insurance Trust - Worldwide Emerging Markets Fund Van Eck Worldwide $90,870 $83,145 $220,466 $220,466 $262,796 $262,796 Insurance Trust - Worldwide Hard Assets Fund
67 **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 $10,000 for a 45 year-old male, non-tobacco preferred, with a level death benefit and an initial specified amount of $506,995.21. The cash surrender value figures reflect the deduction of all applicable policy charges, including a 0.60% 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. 68 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. - -------------------------------------------------------------------------------- 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. PART I - FINANCIAL INFORMATION ITEM 1 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Income (Unaudited) (in millions)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------------------------------------- 2001 2000 2001 2000 ============================================================================================================================== REVENUES Policy charges $ 243.9 $ 284.8 $ 768.0 $ 823.5 Life insurance premiums 59.4 51.7 189.8 180.7 Net investment income 435.0 412.6 1,286.8 1,229.6 Net realized gains (losses) on investments, hedging instruments and hedged items 36.7 (2.1) 34.9 (15.9) Other 3.3 3.6 12.4 12.8 - ------------------------------------------------------------------------------------------------------------------------------ 778.3 750.6 2,291.9 2,230.7 - ------------------------------------------------------------------------------------------------------------------------------ BENEFITS AND EXPENSES Interest credited to policyholder account balances 314.8 292.4 923.9 876.9 Other benefits and claims 66.8 56.2 209.0 185.2 Policyholder dividends on participating policies 9.5 8.3 31.1 31.8 Amortization of deferred policy acquisition costs 85.2 91.6 265.2 263.7 Interest expense on short-term borrowings 0.8 - 4.7 - Other operating expenses 109.8 125.2 327.3 365.7 - ------------------------------------------------------------------------------------------------------------------------------ 586.9 573.7 1,761.2 1,723.3 - ------------------------------------------------------------------------------------------------------------------------------ Income before federal income tax expense and cumulative effect of adoption of accounting principles 191.4 176.9 530.7 507.4 Federal income tax expense 52.8 50.9 141.9 157.2 - ------------------------------------------------------------------------------------------------------------------------------ Income before cumulative effect of adoption of accounting principles 138.6 126.0 388.8 350.2 Cumulative effect of adoption of accounting principles, net of tax - - (7.1) - - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 138.6 $ 126.0 $ 381.7 $ 350.2 ==============================================================================================================================
See accompanying notes to unaudited consolidated financial statements. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Balance Sheets (in millions, except per share amounts)
(UNAUDITED) SEPTEMBER 30, DECEMBER 31, 2001 2000 ============================================================================================================================== ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity securities (cost $16,964.3 in 2001; $15,245.8 in 2000) $ 17,573.4 $ 15,443.0 Equity securities (cost $106.3 in 2001; $103.5 in 2000) 96.5 109.0 Mortgage loans on real estate, net 6,809.7 6,168.3 Real estate, net 191.3 310.7 Policy loans 586.8 562.6 Other long-term investments 117.9 101.8 Short-term investments 771.2 442.6 - ------------------------------------------------------------------------------------------------------------------------------ 26,146.8 23,138.0 - ------------------------------------------------------------------------------------------------------------------------------ Cash 24.9 18.4 Accrued investment income 308.0 251.4 Deferred policy acquisition costs 3,035.1 2,865.6 Other assets 753.1 396.7 Assets held in separate accounts 54,526.6 65,897.2 - ------------------------------------------------------------------------------------------------------------------------------ $ 84,794.5 $ 92,567.3 ============================================================================================================================== LIABILITIES AND SHAREHOLDER'S EQUITY Future policy benefits and claims $ 24,764.0 $ 22,183.6 Short-term borrowings 25.0 118.7 Other liabilities 1,743.5 1,164.9 Liabilities related to separate accounts 54,526.6 65,897.2 - ------------------------------------------------------------------------------------------------------------------------------ 81,059.1 89,364.4 - ------------------------------------------------------------------------------------------------------------------------------ Shareholder's equity: Capital shares, $1 par value. Authorized 5.0 million shares, issued and outstanding 3.8 million shares 3.8 3.8 Additional paid-in capital 646.1 646.1 Retained earnings 2,783.0 2,436.3 Accumulated other comprehensive income 302.5 116.7 - ------------------------------------------------------------------------------------------------------------------------------ 3,735.4 3,202.9 - ------------------------------------------------------------------------------------------------------------------------------ $ 84,794.5 $ 92,567.3 ==============================================================================================================================
See accompanying notes to unaudited consolidated financial statements. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Shareholder's Equity (Unaudited) Nine Months Ended September 30, 2001 and 2000 (in millions)
ACCUMULATED ADDITIONAL OTHER TOTAL COMMON PAID-IN RETAINED COMPREHENSIVE SHAREHOLDER'S STOCK CAPITAL EARNINGS INCOME (LOSS) EQUITY ================================================================================================================================== Balance as of January 1, 2000 $ 3.8 $ 766.1 $ 2,011.0 $ (15.9) $ 2,765.0 Comprehensive income: Net income - - 350.2 - 350.2 Net unrealized gains on securities available-for- sale arising during the period, net of tax - - - 45.5 45.5 ----------------- Total comprehensive income 395.7 Dividends to shareholder - - (90.0) - (90.0) - ---------------------------------------------------------------------------------------------------------------------------------- Balance as of September 30, 2000 $ 3.8 $ 766.1 $ 2,271.2 $ 29.6 $ 3,070.7 ================================================================================================================================== BALANCE AS OF JANUARY 1, 2001 $ 3.8 $ 646.1 $ 2,436.3 $ 116.7 $ 3,202.9 Comprehensive income: Net income - - 381.7 - 381.7 Net unrealized gains on securities available-for- sale arising during the period, net of tax - - - 176.1 176.1 Cumulative effect of adoption of accounting principles, net of tax - - - 5.9 5.9 Accumulated net gains on cash flow hedges, net of tax - - - 3.8 3.8 ----------------- Total comprehensive income 567.5 Dividends to shareholder - - (35.0) - (35.0) - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE AS OF SEPTEMBER 30, 2001 $ 3.8 $ 646.1 $ 2,783.0 $ 302.5 $ 3,735.4 ==================================================================================================================================
See accompanying notes to unaudited consolidated financial statements. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2001 and 2000 (in millions)
2001 2000 ============================================================================================================================ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 381.7 $ 350.2 Adjustments to reconcile net income to net cash provided by operating activities: Interest credited to policyholder account balances 923.9 876.9 Capitalization of deferred policy acquisition costs (556.9) (586.8) Amortization of deferred policy acquisition costs 265.2 263.7 Amortization and depreciation (23.4) (7.4) Realized (gains) losses on investments, hedging instruments and hedged items (34.9) 15.9 Cumulative effect of adoption of accounting principles 10.9 - Increase in accrued investment income (56.6) (9.2) Increase in other assets (186.8) (53.3) Increase in policy liabilities 21.1 0.5 Increase in other liabilities 248.6 269.7 Other, net 2.4 27.4 - ---------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 995.2 1,147.6 - ---------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity of securities available-for-sale 3,076.6 2,479.2 Proceeds from sale of securities available-for-sale 247.7 432.3 Proceeds from repayments of mortgage loans on real estate 639.8 609.4 Proceeds from sale of real estate 168.5 2.2 Proceeds from repayments of policy loans and sale of other invested assets 57.3 17.2 Cost of securities available-for-sale acquired (4,958.7) (2,345.8) Cost of mortgage loans on real estate acquired (1,246.8) (950.1) Cost of real estate acquired (0.3) (6.1) Short-term investments, net (328.6) (197.3) Other, net (150.9) (116.8) - ---------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (2,495.4) (75.8) - ---------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issuance of short-term borrowings (93.7) - Cash dividends paid (35.0) (140.0) Increase in investment and universal life insurance product account balances 4,517.3 3,609.4 Decrease in investment and universal life insurance product account balances (2,881.9) (4,544.0) - ---------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 1,506.7 (1,074.6) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash 6.5 (2.8) Cash, beginning of period 18.4 4.8 - ---------------------------------------------------------------------------------------------------------------------------- Cash, end of period $ 24.9 $ 2.0 ============================================================================================================================
See accompanying notes to unaudited consolidated financial statements. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements Nine Months Ended September 30, 2001 (1) Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements of Nationwide Life Insurance Company and subsidiaries (NLIC or collectively, the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), which differ from statutory accounting practices prescribed or permitted by regulatory authorities, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The financial information included herein reflects all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of financial position and results of operations. Operating results for all periods presented are not necessarily indicative of the results that may be expected for the full year. All significant intercompany balances and transactions have been eliminated. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2000 included in the Company's annual report on Form 10-K. (2) New Accounting Principles ------------------------- 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, was adopted by the Company effective 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. The adoption of SFAS 133 resulted 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) was recorded in accumulated other comprehensive income at January 1, 2001. The adoption of SFAS 133 resulted 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 resulted in the Company reporting total derivative instrument assets and liabilities of $44.8 million and $107.1 million, respectively, as of January 1, 2001. 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued In November 1999, the Emerging Issues Task Force (EITF) issued EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets (EITF 99-20). The Company adopted EITF 99-20 on April 1, 2001. EITF 99-20 establishes the method of recognizing interest income and impairment on asset-backed investment securities. EITF 99-20 requires the Company to update the estimate of cash flows over the life of certain retained beneficial interests in securitization transactions and purchased beneficial interests in securitized financial assets. Pursuant to EITF 99-20, based on current information and events, if the Company estimates that the fair value of its beneficial interests is not greater than or equal to its carrying value and if there has been a decrease in the estimated cash flows since the last revised estimate, considering both timing and amount, then an other-than-temporary impairment should be recognized. The cumulative effect, net of tax, upon adoption of EITF 99-20 on April 1, 2001 decreased net income by $2.3 million with a corresponding increase to accumulated other comprehensive income. In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141) and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and the use of the pooling-of-interests method has been eliminated. SFAS 142 applies to all acquired intangible assets whether acquired singularly, as part of a group, or in a business combination. SFAS 142 supersedes APB Opinion No. 17, Intangible Assets, and will carry forward provisions in Opinion 17 related to internally developed intangible assets. SFAS 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization method to an impairment-only approach. The amortization of goodwill from past business combinations will cease upon adoption of this statement, which will be January 1, 2002 for the Company. Companies will also be required to evaluate all existing goodwill and intangible assets with indefinite lives for impairment within six months of adoption. Any transitional impairment losses will be recognized in the first interim period in the year of adoption and will be recognized as the effect of a change in accounting principle. The Company does not expect any material impact of adopting SFAS 141 and SFAS 142 on the results of operations and financial position. In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and APB Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS 144 is effective for fiscal years beginning after December 15, 2001 (January 1, 2002 for the Company) and will carry forward many of the provisions of SFAS 121 and Opinion 30. Under SFAS 144, if a long-lived asset is part of a group that includes other assets and liabilities, then the provisions of SFAS 144 apply to the entire group. In addition, SFAS 144 does not apply to goodwill and other intangible assets that are not amortized. Management does not expect the adoption of SFAS 144 to have a material impact on the results of operations or financial position of the Company. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued (3) Derivatives ----------- QUALITATIVE DISCLOSURE Interest Rate Risk Management The Company is exposed to changes in the fair value of fixed rate investments (commercial mortgage loans and corporate bonds) due to changes in interest rates. To manage this risk, the Company enters into various types of derivative instruments to minimize fluctuations in fair values resulting from changes in interest rates. The Company principally uses interest rate swaps and short Eurodollar futures to manage this risk. Under interest rate swaps, the Company receives variable interest rate payments and makes fixed rate payments, thereby creating floating rate investments. Short Eurodollar futures change the fixed rate cash flow exposure to variable rate cash flows. With short Eurodollar futures, if interest rates rise (fall), the gains (losses) on the futures adjust the fixed rate income on the investments, thereby creating floating rate investments. As a result of entering into commercial mortgage loan and private placement commitments, the Company is exposed to changes in the fair value of the commitment due to changes in interest rates during the commitment period. To manage this risk, the Company enters into short Treasury futures. With short Treasury futures, if interest rates rise (fall), the gains (losses) on the futures will offset the change in fair value of the commitment. Floating rate investments (commercial mortgage loans and corporate bonds) expose the Company to fluctuations in cash flow and investment income due to changes in interest rates. To manage this risk, the Company enters into receive fixed, pay variable over-the-counter interest rate swaps or long Eurodollar futures strips to convert the variable rate investments to a fixed rate. In using interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments, thereby creating fixed rate assets. The long Eurodollar futures change the variable rate cash flow exposure to fixed rate cash flows. With long Eurodollar futures, if interest rates rise (fall), the losses (gains) on the futures are used to reduce the variable rate income on the investments, thereby creating fixed rate investments. Foreign Currency Risk Management In conjunction with the Company's medium-term note programs, from time to time, the Company issues both fixed and variable rate liabilities denominated in foreign currencies. As a result, the Company is exposed to changes in fair value of the liabilities due to changes in foreign currency exchange rates and interest rates. To manage these risks, the Company enters into cross-currency interest rate swaps to convert these liabilities to a variable US dollar rate. For a fixed rate liability, the cross-currency interest rate swap is structured to receive a fixed rate, in the foreign currency, and pay a variable US dollar rate, generally 3-month libor. For a variable rate foreign liability, the cross-currency interest rate swap is structured to receive a variable rate, in the foreign currency, and pay a variable US dollar rate, generally 3-month libor. The Company is exposed to changes in fair value of fixed rate investments denominated in a foreign currency due to changes in foreign currency exchange rates and interest rates. To manage this risk, the Company uses cross-currency interest rate swaps to convert these assets to variable US dollar rate instruments. Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in the foreign currency, and receive a variable US dollar rate, generally 3-month libor. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued Non-Hedging Derivatives The Company may enter into over-the-counter basis swaps (receive one variable rate, pay another variable rate) to change the rate characteristics of a specific investment to better match the variable rate paid on a liability. While the pay-side terms of the basis swap will line up with the terms of the asset, the Company may not be able to match the receive-side terms of the derivative to a specific liability; therefore, basis swaps may not receive hedge accounting treatment. QUANTITATIVE DISCLOSURE Fair Value Hedges Changes in the fair value of derivative instruments designated as fair value hedges, and the corresponding changes in the fair value of the hedged asset or liability, attributable to the risk being hedged, are included in net realized gains and losses on investments, hedging instruments and hedged items in the consolidated statements of income. Amounts receivable or payable under interest rate swaps are recognized as an adjustment to net investment income or interest credited to policyholder account balances consistent with the nature of the hedged item. During the three and nine months ended September 30, 2001, losses of $4.2 million and $3.2 million, respectively, were recognized in net realized gains and losses on investments, hedging instruments and hedged items. This represents the ineffective portion of the fair value hedging relationships. There were no gains or losses attributable to the portion of the derivative instrument's change in value excluded from the assessment of hedge effectiveness. There were also no gains or losses recognized in earnings as a result of hedged firm commitments no longer qualifying as fair value hedges. Cash Flow Hedges Changes in the fair value of derivative instruments designated as cash flow hedges are reported in accumulated other comprehensive income (AOCI). Amounts receivable or payable under interest rate swaps are recognized as an adjustment to net investment income or interest credited to policyholder account balances consistent with the nature of the hedged item. In the event that a derivative instrument was liquidated and the hedged item remained on the books, the gain or loss on the derivative would be reclassified out of AOCI over the life of the underlying asset. The Company is not anticipating any reclassifications out of AOCI over the next 12-month period. The ineffective portion of cash flow hedges is included in net realized gains and losses on investments, hedging instruments and hedged items in the consolidated statements of income. For the three months ended September 30, 2001, the ineffective portion of cash flow hedges was less than $0.1 million. There were no gains or losses attributable to the portion of the derivative instruments' change in value excluded from the assessment of hedge effectiveness. Other Derivative Instruments, Including Embedded Derivatives Net realized gains and losses on investments, hedging instruments and hedged items for the three and nine months ended September 30, 2001 include a gain of $0.4 million and a loss of $1.4 million, respectively, related to other derivative instruments, including embedded derivatives. For the three and nine months ended September 30, 2001 a $50.6 million gain and a $14.2 million loss, respectively, were recorded on the change in value of cross-currency interest rate swaps hedging variable rate medium-term notes denominated in foreign currencies. An offsetting loss of $50.4 million and a gain of $12.6 million were recorded to reflect the change in spot rates during the three and nine months ended September 30, 2001 on these variable rate liabilities. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued (4) Comprehensive Income (Loss) --------------------------- Comprehensive income (loss) includes net income as well as certain items that are reported directly within a separate component of shareholder's equity that bypass net income. Other comprehensive income (loss) is comprised of unrealized gains (losses) on securities available-for-sale and accumulated net gains on cash flow hedges. The related before and after federal income tax amounts are as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------------------------------------------------------------------- (in millions) 2001 2000 2001 2000 =================================================================================================================== Unrealized gains (losses) on securities available-for-sale arising during the period: Transition adjustment - EITF 99-20 $ - $ - $ 3.5 $ - Gross 229.3 116.0 381.4 86.6 Adjustment to deferred policy acquisition costs (78.1) (34.9) (122.2) (25.8) Related federal income tax expense (52.9) (28.4) (91.9) (21.3) ------------------------------------------------------------------------------------------------------------------- Net 98.3 52.7 170.8 39.5 ------------------------------------------------------------------------------------------------------------------- Reclassification adjustment for net losses (gains) on securities available-for-sale realized during the period: Gross 6.4 (2.9) 11.7 9.2 Related federal income tax (benefit) expense (2.2) 1.0 (4.1) (3.2) ------------------------------------------------------------------------------------------------------------------- Net 4.2 (1.9) 7.6 6.0 ------------------------------------------------------------------------------------------------------------------- Other comprehensive income on securities available-for-sale 102.5 50.8 178.4 45.5 ------------------------------------------------------------------------------------------------------------------- Accumulated net gain on cash flow hedges: Transition adjustment - FAS 133 - - 5.6 - Gross 5.0 - 5.8 - Related federal income tax expense (1.8) - (4.0) - ------------------------------------------------------------------------------------------------------------------- Other comprehensive income on cash flow hedges 3.2 - 7.4 - ------------------------------------------------------------------------------------------------------------------- Total Other Comprehensive Income $ 105.7 $ 50.8 $ 185.8 $ 45.5 ===================================================================================================================
(5) Segment Disclosures ------------------- The Company uses differences in products as the basis for defining its reportable segments. The Company reports three product segments: Individual Annuity, Institutional Products and Life Insurance. 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued 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 programs. 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 (COLI) and bank-owned life insurance (BOLI) products, which provide a death benefit and also allow the customer to build cash value on a tax-advantaged basis. 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 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, hedging instruments and hedged items in the Corporate segment. The following table summarizes the financial results of the Company's business segments for the three months ended September 30, 2001 and 2000.
INDIVIDUAL INSTITUTIONAL LIFE (in millions) ANNUITY PRODUCTS INSURANCE CORPORATE TOTAL =================================================================================================================== 2001 Net investment income $ 135.7 $ 211.8 $ 80.7 $ 6.8 $ 435.0 Other operating revenue 134.4 47.3 121.6 3.3 306.6 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 270.1 259.1 202.3 10.1 741.6 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 111.0 159.2 44.6 - 314.8 Amortization of deferred policy acquisition costs 53.0 10.4 21.8 - 85.2 Interest expense on short-term borrowings - - - 0.8 0.8 Other benefits and expenses 52.7 40.5 92.5 0.4 186.1 ------------------------------------------------------------------------------------------------------------------- Total expenses 216.7 210.1 158.9 1.2 586.9 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense(1) 53.4 49.0 43.4 8.9 154.7 Net realized gains on investments, hedging instruments and hedged items - - - 36.7 36.7 ------------------------------------------------------------------------------------------------------------------- Income before federal income tax expense and cumulative effect of adoption of accounting principles $ 53.4 $ 49.0 $ 43.4 $ 45.6 $ 191.4 ===================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued
INDIVIDUAL INSTITUTIONAL LIFE (in millions) ANNUITY PRODUCTS INSURANCE CORPORATE TOTAL =================================================================================================================== 2000 Net investment income $ 119.5 $ 203.7 $ 73.5 $ 15.9 $ 412.6 Other operating revenue 153.6 68.9 114.0 3.6 340.1 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 273.1 272.6 187.5 19.5 752.7 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 98.8 153.6 40.0 - 292.4 Amortization of deferred policy acquisition costs 60.9 15.2 15.5 - 91.6 Other benefits and expenses 41.6 46.0 92.9 9.2 189.7 ------------------------------------------------------------------------------------------------------------------- Total expenses 201.3 214.8 148.4 9.2 573.7 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense(1) 71.8 57.8 39.1 10.3 179.0 Net realized losses on investments, hedging instruments and hedged items - - - (2.1) (2.1) ------------------------------------------------------------------------------------------------------------------- Income (loss) before federal income tax expense and cumulative effect of adoption of accounting principles $ 71.8 $ 57.8 $ 39.1 $ 8.2 $ 176.9 ===================================================================================================================
-------------- (1) Excludes net realized gains and losses on investments, hedging instruments and hedged items. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued The following table summarizes the financial results of the Company's business segments for the nine months ended September 30, 2001 and 2000.
INDIVIDUAL INSTITUTIONAL LIFE (in millions) ANNUITY PRODUCTS INSURANCE CORPORATE TOTAL =================================================================================================================== 2001 Net investment income $ 387.3 $ 635.3 $ 241.7 $ 22.5 $ 1,286.8 Other operating revenue 422.8 158.6 376.7 12.1 970.2 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 810.1 793.9 618.4 34.6 2,257.0 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 316.4 476.0 131.5 - 923.9 Amortization of deferred policy acquisition costs 164.2 36.2 64.8 - 265.2 Interest expense on short-term borrowings - - - 4.7 4.7 Other benefits and expenses 152.4 123.3 286.2 5.5 567.4 ------------------------------------------------------------------------------------------------------------------- Total expenses 633.0 635.5 482.5 10.2 1,761.2 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense(1) 177.1 158.4 135.9 24.4 495.8 Net realized gains on investments, hedging instruments and hedged items - - - 34.9 34.9 ------------------------------------------------------------------------------------------------------------------- Income before federal income tax expense and cumulative effect of adoption of accounting principles $ 177.1 $ 158.4 $ 135.9 $ 59.3 $ 530.7 =================================================================================================================== Assets as of period end $ 39,944.9 $ 33,120.7 $ 8,548.1 $ 3,180.8 $ 84,794.5 ===================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Unaudited Consolidated Financial Statements, Continued
INDIVIDUAL INSTITUTIONAL LIFE (in millions) ANNUITY PRODUCTS INSURANCE CORPORATE TOTAL =================================================================================================================== 2000 Net investment income $ 361.1 $ 612.2 $ 214.2 $ 42.1 $ 1,229.6 Other operating revenue 476.0 192.7 335.5 12.8 1,017.0 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 837.1 804.9 549.7 54.9 2,246.6 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 296.8 465.5 114.6 - 876.9 Amortization of deferred policy acquisition costs 175.1 39.2 49.4 - 263.7 Other benefits and expenses 150.6 127.4 276.8 27.9 582.7 ------------------------------------------------------------------------------------------------------------------- Total expenses 622.5 632.1 440.8 27.9 1,723.3 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense(1) 214.6 172.8 108.9 27.0 523.3 Net realized losses on investments, hedging instruments and hedged items - - - (15.9) (15.9) ------------------------------------------------------------------------------------------------------------------- Income before federal income tax expense and cumulative effect of adoption of accounting principles $ 214.6 $ 172.8 $ 108.9 $ 11.1 $ 507.4 =================================================================================================================== Assets as of period end $ 47,255.8 $ 40,005.9 $ 7,939.0 $ 2,486.5 $ 97,687.2 ===================================================================================================================
---------- (1) Excludes net realized gains and losses on investments, hedging instruments and hedged items. (6) 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. ITEM 2 MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS INTRODUCTION The following analysis of unaudited consolidated results of operations of the Company should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere herein. Management's discussion and analysis contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the results of operations and businesses of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated or projected, forecast, estimated or budgeted in such forward looking statements include, among others, the following possibilities: (i) the potential impact on the Company's reported net income that could result from the adoption of certain accounting standards issued by the Financial Accounting Standards Board; (ii) tax law changes impacting the tax treatment of life insurance and investment products; (iii) heightened competition, including specifically the intensification of price competition, the entry of new competitors and the development of new products by new and existing competitors; (iv) adverse state and federal legislation and regulation, including limitations on premium levels, increases in minimum capital and reserves, and other financial viability requirements; (v) failure to expand distribution channels in order to obtain new customers or failure to retain existing customers; (vi) inability to carry out marketing and sales plans, including, among others, development of new products and/or changes to certain existing products and acceptance of the new and/or revised products in the market; (vii) changes in interest rates and the capital markets causing a reduction of investment income and/or asset fees, reduction in the value of the Company's investment portfolio or a reduction in the demand for the Company's products; (viii) general economic and business conditions which are less favorable than expected; (ix) unanticipated changes in industry trends and ratings assigned by nationally recognized rating organizations; and (x) inaccuracies in assumptions regarding future persistency, mortality, morbidity and interest rates used in calculating reserve amounts. RESULTS OF OPERATIONS Revenues Total operating revenues, which exclude net realized gains and losses on investments, hedging instruments and hedged items for third quarter 2001 increased to $741.6 million compared to $752.7 million for the same period in 2000. For the first nine months of 2001 and 2000, total operating revenues were $2.26 billion and $2.25 billion, respectively. Policy charges include asset fees, which are primarily earned from separate account assets generated from sales of individual and group variable annuities and investment life insurance products; cost of insurance charges earned on universal life insurance products; administration fees, which include fees charged per contract on a variety of the Company's products and premium loads on universal life insurance products; and surrender fees, which are charged as a percentage of premiums withdrawn during a specified period of annuity and certain life insurance contracts. Policy charges for the comparable periods of 2001 and 2000 were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- (in millions) 2001 2000 2001 2000 ===================================================================================================== Asset fees $ 149.7 $ 185.6 $ 466.6 $ 541.5 Cost of insurance charges 51.5 40.4 147.7 112.5 Administrative fees 26.4 35.7 98.8 99.6 Surrender fees 16.3 23.1 54.9 69.9 ----------------------------------------------------------------------------------------------------- Total policy charges $ 243.9 $ 284.8 $ 768.0 $ 823.5 =====================================================================================================
The decline in asset fees reflects a decrease in total average separate account assets of $12.07 billion (18%) and $5.28 billion (8%) for the three and nine months ended September 30, 2001, respectively, compared to the same periods a year ago. Market depreciation on variable annuity and investment life insurance products, partially offset by net flows into these products, have resulted in the decrease in average separate account balances. Cost of insurance charges are assessed on the net amount at risk on universal life insurance policies. The net amount at risk is equal to a policy's death benefit minus the related policyholder account value. The amount charged is based on the insured's age and other underwriting factors. The increase in cost of insurance charges is due primarily to growth in the net amount at risk related to corporate and individual investment life insurance reflecting expanded distribution and increased acceptance by producers and consumers. The net amount at risk related to corporate and individual investment life insurance grew to $32.0 billion as of September 30, 2001 compared to $26.30 billion a year ago. The decline in administrative fees in third quarter 2001 compared to a year ago is partially attributable to a decrease in premiums on individual investment life policies and certain corporate-owned life policies where the Company collects a premium load. Also contributing to the decline are case terminations in the Institutional Products segment that generated additional administrative fees in third quarter 2000. Surrender charges decreased as a result of continued improvement in customer retention in the Individual Annuity segment in the first nine months of 2001 compared to the same period a year ago. Net investment income includes the investment income earned on investments supporting fixed annuities and certain life insurance products as well as the yield on the Company's general account invested assets which are not allocated to product segments, net of related investment expenses. General account assets supporting insurance products are closely correlated to the underlying reserves on these products. Net investment income grew from $412.6 million in the third quarter of 2000 to $435.0 million in the third quarter of 2001 and from $1.23 billion in the first nine months of 2000 to $1.29 billion in the first nine months of 2001. The increases were primarily due to increased invested assets to support growth in individual fixed annuity, institutional products and life insurance policy reserves, partially offset by lower yields. General account reserves supporting these products increased $2.96 billion to $24.76 billion as of the end of third quarter 2001 compared to $21.80 billion a year ago. Realized gains and losses on investments, hedging instruments and hedged items are not considered by the Company to be recurring components of earnings. The Company makes decisions concerning the sale of invested assets based on a variety of market, business, tax and other factors. In addition, included in this caption are changes in the fair value of items qualifying as fair value hedges, the related hedged items and the ineffective portion of cash flow hedges, all of which are not considered recurring components of earnings. Other income includes management fees, commissions and other income earned by subsidiaries of the Company that provide investment management, marketing, distribution and administration services. Benefits and Expenses Interest credited to policyholder account balances totaled $314.8 million in third quarter 2001 compared to $292.4 million in third quarter 2000, while year-to-date 2001 interest credited totaled $923.9 million compared to $876.9 million a year ago and principally relates to fixed annuities, both individual and institutional, and investment life insurance products. The growth in interest credited reflects the increase in policy reserves for these products, partially offset by lower crediting rates in the Institutional segment. The decline in amortization of deferred policy acquisition costs (DAC), which totaled $85.2 million and $91.6 million in the third quarter of 2001 and 2000, respectively, is consistent with lower earnings in the Individual Annuity segment. On a year-to-date basis, DAC amortization totaled $265.2 million in 2001 compared to $263.7 million in 2000. Operating expenses decreased 12% to $109.8 million in third quarter 2001 compared to $125.2 million in third quarter 2000. For the first nine months of 2001, operating expenses were $327.3 million, down 11% from $365.7 million for the first nine months of 2000. The decrease reflects the Company's commitment to aggressive expense management in response to volatile equity markets. Federal income tax expense was $52.8 million in third quarter 2001 compared to $50.9 million in third quarter 2000, representing effective tax rates of 27.6% and 28.8% for third quarter 2001 and 2000 respectively. For the first nine months of 2001 and 2000 federal income tax expense was $141.9 million and $157.2 million, representing effective tax rates of 26.7% and 31.0%, respectively. An increase in tax exempt income and investment tax credits resulted in the decrease in effective rates. Other Data In managing business, the Company analyzes operating performance using a non-GAAP measure called net operating income. The Company calculates net operating income by adjusting net income to exclude net realized gains and losses on investments, hedging instruments and hedged items and cumulative effect of change in accounting principles. Net operating income or similar measures are commonly used in the insurance industry as a measure of ongoing earnings performance. The excluded items are important in understanding the Company's overall results of operations. Net operating income should not be viewed as a substitute for net income determined in accordance with GAAP, and you should note that the Company's definition of net operating income may differ from that used by other companies. However, the Company believes that the presentation of net operating income as it is measured for management purposes enhances the understanding of the Company's results of operations by highlighting the results from ongoing operations and the underlying profitability factors of the Company's business. The Company excludes net realized gains and losses on investments, hedging instruments and hedged items from net operating income because the timing of transactions resulting in recognition of gains or losses is largely at the Company's discretion and the amount of these gains and losses is heavily influenced by and fluctuates in part according to the availability of market opportunities. Including the fluctuating effects of these transactions could distort trends in the underlying profitability of the Company's business. The following table reconciles the Company's reported net income to net operating income for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------- (in millions) 2001 2000 2001 2000 =========================================================================================================== Net income $ 138.6 $ 126.0 $ 381.7 $ 350.2 Net realized (gains) losses on investments, hedging instruments and hedged items, net of tax (23.9) 1.3 (22.7) 10.3 Cumulative effect of adoption of accounting principles, net of tax - - 7.1 - ----------------------------------------------------------------------------------------------------------- Net operating income $ 114.7 $ 127.3 $ 366.1 $ 360.5 ===========================================================================================================
Recently Issued Accounting Pronouncements See note 2 to the unaudited consolidated financial statements for a discussion of recently issued accounting pronouncements. Sales Information In managing business, the Company regularly monitors and reports a non-GAAP measure titled sales. Sales or similar measures are commonly used in the insurance industry as a measure of business generated in the period. Sales should not be viewed as a substitute for revenues determined in accordance with GAAP, and the Company's definition of sales might differ from that used by other companies. Sales generate assets, which ultimately drive revenues from policy charges. Sales are comprised of statutory premiums or deposits on annuities, pension plans and life insurance products sold to a wide variety of customer bases. Statutory premiums and deposits are calculated in accordance with accounting practices prescribed or permitted by regulatory authorities and then adjusted to arrive at sales. Sales also include deposits on administration only group pension plans. Sales are stated net of internal replacements, which in the Company's opinion provides a more meaningful disclosure of sales. In addition, sales exclude: funding agreements issued to secure notes issued to foreign and domestic investors through an unrelated third party trust under the Company's two medium-term note programs; BOLI; large case pension plan acquisitions; and deposits into Nationwide employee and agent benefit plans. Although these products contribute to asset and earnings growth, they do not produce steady production flow that lends itself to meaningful comparisons and are therefore excluded from sales. The Company believes that the presentation of sales as measured for management purposes enhances the understanding of the Company's business and helps depict trends that may not be apparent in the results of operations due to differences between the timing of sales and revenue recognition. The Company's flagship products are marketed under The BEST of AMERICA(R) brand, and include individual and group variable annuities and variable life insurance. The BEST of AMERICA products allow customers to choose from investment options managed by premier mutual fund managers. The Company has also developed private label variable and fixed annuity products in conjunction with other financial services providers which allow those providers to sell products to their own customer bases under their own brand name. The Company also markets group deferred compensation retirement plans to employees of state and local governments for use under Internal Revenue Code (IRC) Section 457. The Company utilizes its sponsorship by the National Association of Counties and The United States Conference of Mayors when marketing IRC Section 457 products. Sales by product and segment for the comparable periods of 2001 and 2000 are summarized as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------------------------------------- (in millions) 2001 2000 2001 2000 ====================================================================================================== The BEST of AMERICA products $ 895.1 $ 1,398.3 $ 2,948.3 $ 4,282.1 Private label annuities 359.7 235.6 1,116.7 784.3 Other - 5.8 2.8 81.0 ------------------------------------------------------------------------------------------------------ Total individual variable annuity sales 1,254.8 1,639.7 4,067.8 5,147.4 ------------------------------------------------------------------------------------------------------ Deferred fixed annuities 543.7 133.5 1,296.9 325.0 Immediate fixed annuities 29.4 26.2 102.5 95.8 ------------------------------------------------------------------------------------------------------ Total individual fixed annuity sales 573.1 159.7 1,399.4 420.8 ------------------------------------------------------------------------------------------------------ Total individual annuity sales $ 1,827.9 $ 1,799.4 $ 5,467.2 $ 5,568.2 ====================================================================================================== The BEST of AMERICA products $ 716.4 $ 897.3 $ 2,425.0 $ 3,046.4 Other 16.6 11.1 43.9 37.4 ------------------------------------------------------------------------------------------------------ Total private sector pension plan sales 733.0 908.4 2,468.9 3,083.8 ------------------------------------------------------------------------------------------------------ Total public sector pension plan sales - IRC Section 457 annuities 366.8 427.5 1,156.9 1,732.8 ------------------------------------------------------------------------------------------------------ Total institutional products sales $ 1,099.8 $ 1,335.9 $ 3,625.8 $ 4,816.6 ====================================================================================================== The BEST of AMERICA variable life series $ 120.4 $ 155.8 $ 409.9 $ 419.2 Corporate-owned life insurance 78.0 152.9 593.7 476.2 Traditional/Universal life insurance 56.7 59.2 178.9 179.8 ------------------------------------------------------------------------------------------------------ Total life insurance sales $ 255.1 $ 367.9 $ 1,182.5 $ 1,075.2 ======================================================================================================
The Company sells its products through a broad distribution network. Unaffiliated entities that sell the Company's products to their own customer base include independent broker/dealers, brokerage firms, financial institutions, pension plan administrators and life insurance specialists. Representatives of the Company who market products directly to a customer base identified by the Company consists of Nationwide Retirement Solutions. The Company also distributes savings products through the agency distribution force of its ultimate parent company, Nationwide Mutual Insurance Company. Sales by distribution channel are summarized as follows.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- (in millions) 2001 2000 2001 2000 ===================================================================================================== Independent broker/dealers $ 937.2 $ 1,456.2 $ 3,198.7 $ 4,593.4 Brokerage firms 568.5 294.5 1,598.2 902.7 Financial institutions 818.8 736.6 2,361.8 2,148.1 Pension plan administrators 224.7 228.7 767.8 819.6 Life insurance specialists 78.1 154.9 593.8 482.5 Nationwide agents 171.2 184.6 533.7 619.5 Nationwide Retirement Solutions 384.3 447.7 1,221.5 1,894.2 -----------------------------------------------------------------------------------------------------
The decrease in sales in the independent broker/dealer channel reflects lower demand for variable annuities due to volatile equity markets and a shift in private sector pension plan sales from group annuities issued by the Company to trust products issued by an affiliate, Nationwide Trust Company. Sales through brokerage firms increased 93% in third quarter 2001 compared to third quarter 2000 and are up 77% for the first nine months, principally due to the addition of Waddell & Reed as a distributor. Sales through financial institutions grew 11% in third quarter 2001 compared to a year ago, and grew 10% for the first nine months of 2001 compared to the first nine months of 2000, driven mainly by the appointment of new distributors in the bank channel who sell fixed annuity products. The increase in sales through life insurance specialists during the first nine months of 2001 compared to the same period a year ago reflects increased sales of COLI products that occurred in the first half of 2001. Third quarter 2001 sales through this channel were impacted by the volatile economic climate as fewer businesses are creating new employee benefit programs. Nationwide Retirement Solutions sales reached $384.3 million during third quarter 2001, a 14% decrease from a year ago. In this channel, sales declined from a year ago reflecting the impact of previously lost cases on recurring deposits. The decline in sales is also attributable to a shift in both Private and Public sector sales from group annuity contracts issued by the Company to administration only and Trust Company products provided by affiliates. Lower sales through this channel for the first nine months of 2001 compared to the same period a year ago reflects the impact of previously lost cases on recurring deposits. BUSINESS SEGMENTS The Company 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. The following table summarizes operating income before federal income tax expense for the Company's business segments for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- (in millions) 2001 2000 2001 2000 ================================================================================================================= Individual Annuity $ 53.4 $ 71.8 $ 177.1 $ 214.6 Institutional Products 49.0 57.8 158.4 172.8 Life Insurance 43.4 39.1 135.9 108.9 Corporate 8.9 10.3 24.4 27.0 ----------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense $ 154.7 $ 179.0 $ 495.8 $ 523.3 =================================================================================================================
Individual Annuity 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 following table summarizes certain selected financial data for the Company's Individual Annuity segment for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- (in millions) 2001 2000 2001 2000 ================================================================================================================= INCOME STATEMENT DATA Revenues: Policy charges $ 120.2 $ 147.0 $ 374.9 $ 437.8 Net investment income 135.7 119.5 387.3 361.1 Premiums on immediate annuities 14.2 6.6 47.9 38.2 ----------------------------------------------------------------------------------------------------------------- 270.1 273.1 810.1 837.1 ----------------------------------------------------------------------------------------------------------------- Benefits and expenses: Interest credited to policyholder account balances 111.0 98.8 316.4 296.8 Other benefits 16.4 7.5 52.0 39.4 Amortization of deferred policy acquisition costs 53.0 60.9 164.2 175.1 Other operating expenses 36.3 34.1 100.4 111.2 ----------------------------------------------------------------------------------------------------------------- 216.7 201.3 633.0 622.5 ----------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense $ 53.4 $ 71.8 $ 177.1 $ 214.6 ================================================================================================================= OTHER DATA Sales: Individual variable annuities $ 1,254.8 $ 1,639.7 $ 4,067.8 $ 5,147.4 Individual fixed annuities 573.1 159.7 1,399.4 420.8 ----------------------------------------------------------------------------------------------------------------- Total individual annuity sales $ 1,827.9 $ 1,799.4 $ 5,467.2 $ 5,568.2 ================================================================================================================= Average account balances: General account $ 7,808.8 $ 6,893.1 $ 7,336.1 $ 6,965.6 Separate account 32,754.8 39,008.8 34,006.6 38,146.1 ----------------------------------------------------------------------------------------------------------------- Total average account balances $ 40,563.6 $ 45,901.9 $ 41,342.7 $ 45,111.7 ================================================================================================================= Account balances as of period end: Individual variable annuities $ 32,758.2 $ 41,645.8 Individual fixed annuities 5,164.1 3,792.0 ----------------------------------------------------------------------------------------------------------------- Total account balances $ 37,922.3 $ 45,437.8 ================================================================================================================= Return on average equity 12.0% 21.5% 14.3% 20.9% Pre-tax operating income to average account balances 0.53% 0.63% 0.57% 0.63% ------------------------------------------------------------------------------------ -----------------------------
Pre-tax operating earnings totaled $53.4 million in third quarter 2001, down 26% compared to a year ago earnings of $71.8 million. For the first nine months of 2001 pre-tax operating earnings were $177.1 million compared to $214.6 million for the first nine months of 2000. Asset fees decreased to $103.1 million in the third quarter of 2001, down 17% from $124.1 million in the same period a year ago. For the first nine months of 2001, asset fees totaled $318.7 million down 12% from the first nine months of 2000 total of $361.9 million. Asset fees are calculated daily and charged as a percentage of separate account assets. The decrease in asset fees is due to market depreciation on investments underlying reserves. For the three and nine months ended September 30, 2001, average separate account assets decreased 16% to $32.75 billion and 11% to $34.01 billion respectively, compared to the same periods a year ago. Surrender fees decreased by $5.6 million to $12.8 million in the third quarter of 2001 compared to a year ago. For the first nine months of 2001, surrender fees totaled $42.3 million compared to $61.3 million in the same period a year ago. These decreases were due to improved persistency in individual variable and fixed annuities. Operating expenses were $36.3 million in third quarter 2001, an increase of 6% over third quarter 2000. During the first nine months of 2001, operating expenses totaled $100.4 million, a decrease of 10% over the first nine months of 2000 total of $111.2 million reflecting management's focus on expense management in response to volatile equity markets. The following table depicts the interest spread on average general account reserves in the Individual Annuity segment for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- 2001 2000 2001 2000 ======================================================================================================== Net investment income 7.50% 7.89% 7.65% 7.84% Interest credited 5.69 5.73 5.75 5.68 -------------------------------------------------------------------------------------------------------- Interest spread 1.81% 2.16% 1.90% 2.16% ========================================================================================================
Interest spreads narrowed in the third quarter of 2001 and on a year-to-date basis compared to the prior year. A combination of the current competitive environment, a sharp decline in interest rates and a by-product of the Company's investment strategy all contributed to the reduction in spreads. As a strategic move to maintain market share, the Company did not lower crediting rates in the third quarter as quickly as earned rates declined. In addition, throughout 2001, the Company had a significant increase in cash flows in the general account due to strong fixed annuity sales. During the time between when a commitment is made to purchase a commercial mortgage loan or private placement bond and closing, typically 30 to 60 days, the cash is invested short-term. This strategy, while sound over the long-term, can provide short-term pressure on spreads, especially in a declining interest rate environment. Led by variable product deposits of $1.42 billion offset by withdrawals and surrenders of $1.09 billion, Individual Annuity segment deposits in third quarter 2001 of $1.99 billion offset by withdrawals and surrenders totaling $1.17 billion generated net flows of $825.7 million compared to the $641.1 million achieved a year ago. Despite the competitive nature of the individual annuity market, the Company has demonstrated the ability to generate positive net flows by expanding its broad distribution network and innovative product development resources. The decrease in pre-tax operating income to average assets in third quarter and the first nine months of 2001 compared to the same periods in 2000 is primarily a result of the Company's expense structure not being as elastic as the revenue stream. Individual Annuity sales, which exclude internal replacements, during third quarter 2001 were $1.83 billion, up slightly from $1.80 billion in the year ago quarter, while year-to-date 2001 sales of individual annuities were $5.47 billion compared to $5.57 billion in 2000. The addition of new selling arrangements and volatile equity markets drove the growth in sales of deferred fixed annuities which totaled $543.7 million in the third quarter 2001 compared to $133.5 million in third quarter 2000, offsetting the decline in variable annuity sales. Sales of deferred fixed annuities for the first nine months of 2001 were $1.30 billion compared to $325.0 million for the first nine months of 2000. Institutional Products 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 programs. 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 sales figures do not include business generated through the Company's two medium-term note programs, large case pension plan acquisitions and Nationwide employee and agent benefit plans, however the income statement data does reflect this business. The following table summarizes certain selected financial data for the Company's Institutional Products segment for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- (in millions) 2001 2000 2001 2000 ================================================================================================================= INCOME STATEMENT DATA Revenues: Asset fees $ 42.4 $ 57.2 $ 135.4 $ 167.8 Net investment income 211.8 203.7 635.3 612.2 Other 4.9 11.7 23.2 24.9 ----------------------------------------------------------------------------------------------------------------- 259.1 272.6 793.9 804.9 ----------------------------------------------------------------------------------------------------------------- Benefits and expenses: Interest credited to policyholder account balances 159.2 153.6 476.0 465.5 Other benefits and expenses 50.9 61.2 159.5 166.6 ----------------------------------------------------------------------------------------------------------------- 210.1 214.8 635.5 632.1 ----------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense $ 49.0 $ 57.8 $ 158.4 $ 172.8 ================================================================================================================= OTHER DATA Sales: Private sector pension plans $ 733.0 $ 908.4 $ 2,468.9 $ 3,083.8 Public sector pension plans 366.8 427.5 1,156.9 1,732.8 ----------------------------------------------------------------------------------------------------------------- Total institutional products sales $ 1,099.8 $ 1,335.9 $ 3,625.8 $ 4,816.6 ================================================================================================================= Average account balances: General account $ 11,769.0 $ 10,344.4 $ 11,427.7 $ 10,461.6 Separate account 22,714.2 28,628.2 23,692.3 28,220.0 ----------------------------------------------------------------------------------------------------------------- Total average account balances $ 34,483.2 $ 38,972.6 $ 35,120.0 $ 38,681.6 ================================================================================================================= Account balances as of period end: Private sector pension plans $ 15,334.0 $ 19,482.3 Public sector pension plans 14,600.5 18,950.4 Medium-term notes 2,880.5 1,287.2 ----------------------------------------------------------------------------------------------------------------- Total account balances $ 32,815.0 $ 39,719.9 ================================================================================================================= Return on average equity 20.6% 26.9% 22.8% 26.0% Pre-tax operating income to average account balances 0.57% 0.59% 0.60% 0.60% -----------------------------------------------------------------------------------------------------------------
Asset fees declined 26% to $42.4 million in the quarter ended September 30, 2001 compared to a year ago, while year-to-date 2001 asset fees were $135.4 million compared to $167.8 million in 2000. The decline was driven by a 21% decrease in average separate account assets in the quarter compared to the quarter ended a year ago and a 16% drop in year-to-date average separate account assets for the first nine months of 2001 compared to the same period a year ago. Net investment income increased to $211.8 million (4%) in the third quarter of 2001 compared to a year ago. Year-to-date net investment income also increased 4% from the same period a year ago. Driving these increases were 14% and 9% increases in the average general account balance in the third quarter and first nine months of 2001, respectively, compared to the same periods a year ago, offset by lower yields. Institutional Products segment results reflect an increase in interest spread income attributable to growth in average general account assets. Interest spread is the differential between net investment income and interest credited to policyholder account balances. Interest spreads vary depending on crediting rates offered by competitors, performance of the investment portfolio, including the rate of prepayments, changes in market interest rates and other factors. The following table depicts the interest spread on average general account reserves in the Institutional Products segment for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- 2001 2000 2001 2000 ===================================================================================================== Net investment income 7.20% 7.88% 7.41% 7.80% Interest credited 5.41 5.94 5.55 5.93 ----------------------------------------------------------------------------------------------------- Interest spread 1.79% 1.94% 1.86% 1.87% =====================================================================================================
Interest spread on average general account reserves decreased from the prior year for the quarter and year-to-date. For Institutional pension products, the Company sets interest crediting rates prior to the start of the quarter. In addition, the time between when a deposit is received and an investment commitment is made, and the actual close on a commercial mortgage loan or private placement bond can be 30 to 60 days. These practices will put pressure on spreads in a declining interest rate environment. In addition, the Company experienced a significant amount of transfers into the general account placing further pressure on spreads. Other benefits and expenses in third quarter 2001 decreased 17% compared to a year ago. For the first nine months of 2001 other benefits and expenses totaled $159.5 million, down 4% from the first nine months of 2000. The decreases are the result of expense reductions in the group public sector pension business in response to a lower revenue base. Institutional Product sales during third quarter 2001 reached $1.10 billion compared to sales of $1.34 billion in third quarter 2000. For the first nine months of 2001, sales reached $3.63 billion compared to sales of $4.82 billion for the same period a year ago. The Private Sector continues to be impacted by the volatile equity markets, which reduced the average plan size of take-over cases and a slowing economy, which has resulted in reduced demand for new cases. In the Public Sector, sales declined from a year ago reflecting the impact of previously lost cases on recurring deposits. Institutional Products segment deposits in third quarter 2001 of $1.13 billion offset by participant withdrawals and surrenders totaling $918.7 million generated net flows from participant activity of $214.7 million, a 18% increase over third quarter 2000. Year-to-date 2001 net flows decreased 8% to $426.5 million compared to year-to-date 2000 net flows of $464.3 million. Life Insurance The Life Insurance segment consists of insurance products, including universal life insurance, COLI and BOLI products, which provide a death benefit and also allow the customer to build cash value on a tax-advantaged basis. The following table summarizes certain selected financial data for the Company's Life Insurance segment for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- (in millions) 2001 2000 2001 2000 ================================================================================================================= INCOME STATEMENT DATA Revenues: Total policy charges $ 76.3 $ 68.9 $ 234.5 $ 193.0 Net investment income 80.7 73.5 241.7 214.2 Other 45.3 45.1 142.2 142.5 ----------------------------------------------------------------------------------------------------------------- 202.3 187.5 618.4 549.7 ----------------------------------------------------------------------------------------------------------------- Benefits 104.6 97.0 319.6 292.2 Operating expenses 54.3 51.4 162.9 148.6 ----------------------------------------------------------------------------------------------------------------- 158.9 148.4 482.5 440.8 ----------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense $ 43.4 $ 39.1 $ 135.9 $ 108.9 ================================================================================================================= OTHER DATA Sales: The BEST of AMERICA variable life series $ 120.4 $ 155.8 $ 409.9 $ 419.2 Corporate-owned life insurance 78.0 152.9 593.7 476.2 Traditional/Universal life insurance 56.7 59.2 178.9 179.8 ----------------------------------------------------------------------------------------------------------------- Total life insurance sales $ 255.1 $ 367.9 $ 1,182.5 $ 1,075.2 ================================================================================================================= Policy reserves as of period end: Corporate investment life insurance $ 2,981.6 $ 2,378.8 Individual investment life insurance 1,944.7 2,152.1 Traditional life insurance 1,853.2 1,807.0 Universal life insurance 779.4 770.7 ----------------------------------------------------------------------------------------------------------------- Total policy reserves $ 7,558.9 $ 7,108.6 ================================================================================================================= Return on average equity 10.8% 12.6% 12.0% 12.1% -----------------------------------------------------------------------------------------------------------------
Life Insurance segment results reflect increased revenues driven by growth in investment life insurance in force. Life Insurance segment earnings increased 11% to $43.4 million for the third quarter 2001, up from $39.1 million a year ago. On a year-to-date basis segment earnings increased 25% to $135.9 million in 2001 from $108.9 million in 2000. The increase in Life Insurance segment earnings is attributable to strong sales and increased investment life earnings due to reserve growth in both individual and corporate investment life insurance products. Driven primarily by increased policy charges, revenues from investment life products increased to $97.6 million in third quarter 2001 compared to $83.9 million in third quarter 2000, while year-to-date revenues increased to $296.9 million for 2001 compared to $232.9 million for 2000. The revenue growth reflects significantly increased policy reserve levels driven by corporate investment life reserves, which include both BOLI and COLI products, which reached $2.98 billion as of September 30, 2001, up from $2.38 billion in the same period a year ago. Pre-tax operating earnings from investment life products totaled $25.1 million in third quarter 2001 a 20% increase from $20.9 million in third quarter 2000, while the first nine months of 2001 reached $77.4 compared to $61.1 million a year ago, a 27% increase. The strong revenue growth discussed previously was offset by higher life insurance benefits due to the growth in the number of policies in-force in the third quarter and first nine months of 2001. Traditional/Universal life pre-tax operating earnings increased slightly to $18.3 million in third quarter 2001 compared to $18.2 million in the same period a year ago. For the first nine months of 2001, pre-tax operating earnings increased 22% to $58.5 million compared to $47.8 million for the first nine months of 2000, reflecting higher investment earnings and lower operating expenses. Total life insurance sales, excluding BOLI and Nationwide employee and agent benefit plan sales, decreased 31% to $255.1 million in third quarter 2001 compared to $367.9 million during the same period in 2000. For the first nine months of 2001, total life insurance sales, excluding BOLI and Nationwide employee and agent benefit plan sales, increased $107.3 million over 2000 and totaled $1.18 billion. In the quarter, individual market sales were adversely impacted by uncertainty surrounding estate planning. While the number of applications and policies issued are in line with prior year, the average size is down. COLI sales are down given the depressed economic environment where corporations are not forming new executive benefit plans and existing plans are being funded at lower levels. Corporate The following table summarizes certain selected financial data for the Company's Corporate segment for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------------------------------- (in millions) 2001 2000 2001 2000 ================================================================================================================= INCOME STATEMENT DATA Operating revenues(1) $ 10.1 $ 19.5 $ 34.6 $ 54.9 Operating expenses 1.2 9.2 10.2 27.9 ----------------------------------------------------------------------------------------------------------------- Operating income before federal income tax expense(1) $ 8.9 $ 10.3 $ 24.4 $ 27.0 =================================================================================================================
---------- (1) Excludes net realized gains and losses on investments, hedging instruments and hedged items. The Corporate segment consists of net investment income on invested assets not allocated to the three product segments, unallocated expenses and interest expense on short-term borrowings. The decline in revenues reflects a decrease in net investment income on real estate investments and fewer investments retained in the corporate segment as more capital and the related investments earnings are allocated to the product segments to support growth. In addition to these operating revenues and expenses, the Company also reports net realized gains and losses on investments, hedging instruments and hedged items in the Corporate segment. The Company realized net investment gains of $37.4 million and net losses on hedges and hedged items of $0.7 million during the third quarter of 2001 compared to realized net investment losses of $2.1 million during the third quarter of 2000. For the first nine months of 2001, the Company realized net investment gains of $33.0 million and net gains on hedges and hedged items of $1.9 million compared to realized net investment losses of $15.9 million during the first nine months of 2000. During the third quarter and first nine months of 2001, a net investment gain of $44.4 million was realized upon the reduction of an interest in a real estate partnership investment. In addition, the Company realized an after tax loss of $4.8 million related to the adoption of FAS 133 in first quarter 2001 and an after tax loss of $2.3 related to the adoption of EITF 99-20 in second quarter 2001. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Omitted due to reduced disclosure format. PART II - OTHER INFORMATION CONTENTS OF REGISTRATION STATEMENT This Post-Effective Amendment No. 11 to Form S-6 Registration Statement comprises the following papers and documents: - The facing sheet. - Cross-reference to items required by Form N-8B-2. - The prospectus consisting of 143 pages. - Representations and Undertakings. - Signatures. - Independent Auditors' Consent The following exhibits required by Forms N-8B-2 and S-6: 1. Power of Attorney dated April 4, 2001. Attached hereto. 2. Resolution of the Depositor's Board of Filed previously in connection with Securities and Exchange Directors authorizing the establishment of Commission File No. 333-31725 and is hereby incorporated by the Registrant, adopted reference. 3. Distribution Contracts Filed previously in connection with Securities and Exchange Commission File No. 333-27133 and is hereby incorporated by reference. 4. Form of Security Filed previously in connection with Securities and Exchange Commission File No. 333-31725 and is hereby incorporated by reference. 5. Articles of Incorporation of Depositor Filed previously in connection with Securities and Exchange Commission File No. 333-27133 and is hereby incorporated by reference. 6. Application form of Security Filed previously in connection with Securities and Exchange Commission File No. 333-31725 and is hereby incorporated by reference. 7. Opinion of Counsel Filed previously in connection with Securities and Exchange Commission File No. 333-31725 and is hereby incorporated by reference.
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 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. Naitionwide 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 "SEC") 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 SEC 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 SEC such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the SEC heretofore or hereafter duly adopted pursuant to authority conferred in that section. (f) 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. 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. KPMG LLP Columbus, Ohio April 26 2001 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 this Post-Effective Amendment No. 11 and has caused this Post-Effective Amendment to be signed on its behalf in the City of Columbus, and the State of Ohio, on this 15th day of January, 2002. NATIONWIDE VLI SEPARATE ACCOUNT-4 ---------------------------------------------------------------- (Registrant) (Seal) NATIONWIDE LIFE INSURANCE COMPANY ---------------------------------------------------------------- Attest: (Depositor) By: /s/ GLENN W. SODEN By: /s/STEVEN SAVINI - ---------------------------------------------- ---------------------------------------------------------------- Glenn W. Soden Steven Savini Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment has been signed below by the following persons in the capacities indicated on the 15th day of January, 2002.
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 - ---------------------------------------- Officer and Director Joseph J. Gasper W.G. JURGENSEN Chief Executive Officer - ---------------------------------------- And Director W.G. Jurgensen DAVID O. MILLER Chairman of the Board and - ---------------------------------------- Director David O. Miller 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
EX-1 3 l92154aex1.txt EX-1 POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENT, that each of the undersigned as directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY and NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY, both Ohio corporations, which have filed or will file with the U.S. Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended, the Investment Company Act of 1940, as amended, and if applicable, the Securities Exchange Act of 1934, various registration statements and amendments thereto for the registration of current, as well as any future separate accounts established by said corporation for the purpose of registering under said Act(s) immediate or deferred variable annuity contracts, fixed interest rate options subject to a market value adjustment, group flexible fund retirement annuity contracts and variable life insurance policies in connection with the separate accounts listed on Exhibit A. As such, the undersigned hereby constitute and appoint W. G. Jurgensen, Joseph J. Gasper, Robert J. Woodward, Jr., Philip C. Gath, Richard A. Karas, Edwin P. McCausland, Jr., Susan A. Wolken, Steven R. Savini and Mark R. Thresher, and each of them with power to act without the others, his/her attorney, with full power of substitution for and in his/her name, place and stead, in any and all capacities, to approve, and sign such Applications and Registration Statements, and any and all amendments thereto, with power to affix the corporate seal of said corporation thereto and to attest said seal and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, hereby granting unto said attorneys, and each of them, full power and authority to do and perform all and every act and thing requisite to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming that which said attorneys, or any of them, may lawfully do or cause to be done by virtue hereof. This instrument may be executed in one or more counterparts. Page 2 April 4, 2001 IN WITNESS WHEREOF, the undersigned have herewith set their names and seals as of this 4th day of April, 2001. /s/ Lewis J. Alphin /s/ W. G. Jurgensen - ----------------------------------- --------------------------------- LEWIS J. ALPHIN, Director W. G. JURGENSEN, Chief Executive Officer and Director /s/ A. I. Bell /s/ David O. Miller - ----------------------------------- ---------------------------------- A. I. BELL, Director DAVID O. MILLER, Chairman of the Board and Director /s/ Nancy C. Breit /s/ Robert A. Oakley - ------------------------------------ --------------------------------- NANCY C. BREIT, Director ROBERT A. OAKLEY, Executive Vice President and Chief Financial Officer /s/ Yvonne M. Curl /s/ Ralph M. Paige - ------------------------------------ --------------------------------- YVONNE M. CURL, Director RALPH M. PAIGE, Director /s/ Kenneth D. Davis /s/ James F. Patterson - ------------------------------------ --------------------------------- KENNETH D. DAVIS, Director JAMES F. PATTERSON, Director /s/ Keith W. Eckel /s/ Arden L. Shisler - ------------------------------------ --------------------------------- KEITH W. ECKEL, Director ARDEN L. SHISLER, Director /s/ Willard J. Engel /s/ Robert L. Stewart - ------------------------------------ --------------------------------- WILLARD J. ENGEL, Director ROBERT L. STEWART, Director /s/ Fred C. Finney - ------------------------------------ FRED C. FINNEY, Director /s/ Joseph J. Gasper - ------------------------------------ JOSEPH J. GASPER, President and Chief Operating Officer and Director EXHIBIT A - - MFS Variable Account; - - Multi-Flex Variable Account; - - Nationwide Variable Account; - - Nationwide Variable Account-II; - - Nationwide Variable Account-3; - - Nationwide Variable Account-4; - - Nationwide Variable Account-5; - - Nationwide Variable Account-6; - - Nationwide Fidelity Advisor Variable Account; - - Nationwide Variable Account-8; - - Nationwide Variable Account-9; - - Nationwide Variable Account-10; - - Nationwide Variable Account-11; - - Nationwide Variable Account-12; - - Nationwide Variable Account-13; - - Nationwide VA Separate Account-A; - - Nationwide VA Separate Account-B; - - Nationwide VA Separate Account-C; - - Nationwide VA Separate Account-D. - - Nationwide Multiple Maturity Separate Account; - - Nationwide Multiple Maturity Separate Account-2; - - Nationwide Multiple Maturity Separate Account-A - - Nationwide DC Variable Account; - - NACo Variable Account; - - Nationwide VLI Separate Account; - - Nationwide VLI Separate Account-2; - - Nationwide VLI Separate Account-3; - - Nationwide VLI Separate Account-4; - - Nationwide VLI Separate Account-5; - - Nationwide VLI Separate Account-6; - - Nationwide VL Separate Account-A; - - Nationwide VL Separate Account-B; - - Nationwide VL Separate Account-C; and - - Nationwide VL Separate Account-D. -----END PRIVACY-ENHANCED MESSAGE-----