-----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, ODi8jrgVUfjgD7X/B0yyUET0Ai4YTaRgjL0CIv1rBQDqvx+DjebApkWOvJW3iOUz lLWSXLWwyPlNlaf2iL+n3w== 0001190903-03-000311.txt : 20030430 0001190903-03-000311.hdr.sgml : 20030430 20030430144402 ACCESSION NUMBER: 0001190903-03-000311 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20030430 EFFECTIVENESS DATE: 20030430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE VLI SEPARATE ACCOUNT 4 CENTRAL INDEX KEY: 0001041357 IRS NUMBER: 314156830 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-52617 FILM NUMBER: 03672389 BUSINESS ADDRESS: STREET 1: NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 614-249-7111 MAIL ADDRESS: STREET 1: NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 485BPOS 1 boalastsurvii.txt BOA LAST SURVIVOR II '33 Act File No. 333-52617 '40 Act File No. 811-8301 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-6 REGISTRATION UNDER THE SECURITIES ACT OF 1933 | | PRE-EFFECTIVE AMENDMENT NO. ___ | | POST-EFFECTIVE AMENDMENT NO. 10 |X| and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | | AMENDMENT NO. 10 |X| (Check appropriate box or boxes.) NATIONWIDE VLI SEPARATE ACCOUNT-4 (Exact Name of Registrant) NATIONWIDE LIFE INSURANCE COMPANY (Name of Depositor) ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code: (614) 249-7111 PATRICIA R. HATLER, ESQ. With Copies To: SECRETARY JOHN S. (SCOTT) KREIGHBAUM, ESQ. ONE NATIONWIDE PLAZA MICHAEL R. MOSER, ESQ. COLUMBUS, OHIO 43215-2220 ONE NATIONWIDE PLAZA, 1-09-V3 COLUMBUS, OHIO 43215-2220 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: It is proposed that this filing will become effective (check appropriate box) | | Immediately upon filing pursuant to paragraph (b) |X| On May 1, 2003 pursuant to paragraph (b) | | 60 days after filing pursuant to paragraph (a)(1) | | On (date) pursuant to paragraph (a)(1) of Rule 485. If appropriate, check the following box: |X| This post-effective amendment designates a new effective date for a previously filed post-effective amendment. LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES Issued By NATIONWIDE LIFE INSURANCE COMPANY Through NATIONWIDE VLI SEPARATE ACCOUNT-4 The Date Of This Prospectus Is May 1, 2003 PLEASE KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. Variable life insurance is complex, and this prospectus is designed to help you become as fully informed as possible in making your decision to purchase or not to purchase the variable life insurance policy it describes. Prior to your purchase, we encourage you to take the time you need to understand the policy, its potential benefits and risks, and how it might or might not benefit you. In consultation with your financial adviser, you should use this prospectus to compare the benefits and risks of this policy versus those of other life insurance policies and alternative investment instruments. Please read this entire prospectus and consult with a trusted financial adviser. If you have policy specific questions or need additional information, contact us. Also, contact us for free copies of the prospectuses for the mutual funds available under the policy. TELEPHONE: 1-800-547-7548 TDD: 1-800-238-3035 INTERNET: www.bestofamerica.com U.S. MAIL: Nationwide Life Insurance Company One Nationwide Plaza, RR1-04-D4 Columbus, OH 43215-2220 PLEASE UNDERSTAND THAT THE POLICY TERMS WILL GOVERN THE WAY THE POLICY WORKS AND ALL RIGHTS AND OBLIGATIONS. 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. THIS POLICY IS NOT: FDIC INSURED; A BANK DEPOSIT; AVAILABLE IN EVERY STATE; OR INSURED OR ENDORSED BY A BANK OR ANY FEDERAL GOVERNMENT AGENCY. THIS POLICY MAY DECREASE IN VALUE TO THE POINT OF BEING VALUELESS. THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY NOT LAWFULLY BE MADE. The purpose of this policy is to provide life insurance protection for the beneficiary you name. IF YOUR PRIMARY NEED IS NOT LIFE INSURANCE PROTECTION, THEN PURCHASING THIS POLICY MAY NOT BE IN YOUR BEST INTERESTS. We make no claim that the policy is in any way similar or comparable to a systematic investment plan of a mutual fund. In thinking about buying this policy to replace existing life insurance, please carefully consider its advantages versus those of the policy you intend to replace, as well as any replacement costs. As always, consult your financial adviser. Not all terms, conditions, benefits, programs, features and investment options are available or approved for use in every state. - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- TABLE OF CONTENTS...................................i IN SUMMARY: POLICY BENEFITS.........................1 IN SUMMARY: POLICY RISKS............................3 IN SUMMARY: VARIABLE UNIVERSAL LIFE INSURANCE AND THE POLICY......................................4 IN SUMMARY: FEE TABLES..............................6 THE POLICY.........................................12 Policy Owner....................................12 The Beneficiaries...............................12 To Purchase.....................................12 Coverage........................................13 Supplemental Coverage...........................13 Coverage Effective Dates........................13 Temporary Insurance Coverage....................13 To Cancel (Examination Right)...................13 To Change Coverage..............................13 Sub-Account Portfolio Transfers.................14 Fixed Account Transfers.........................14 Modes To Effect A Transfer......................15 Conversion Right................................15 To Terminate Or Surrender.......................15 To Assign.......................................16 Proceeds Upon Maturity..........................16 Reminders, Reports And Illustrations............16 Errors Or Misstatements.........................17 Incontestability................................17 If We Modify The Policy.........................17 RIDERS.............................................17 Estate Protection Rider.........................17 Policy Split Option Rider.......................18 PREMIUM............................................18 Initial Premium.................................18 Subsequent Premiums.............................19 CHARGES............................................19 Sales Load (Charge).............................19 Premium Taxes...................................20 Surrender Charges...............................20 Partial Surrender Fee...........................20 Cost Of Insurance...............................21 Mortality And Expense Risk......................21 Administrative (Per Policy).....................21 Administrative (Per Specified Amount)...........21 Loan Amount Interest............................21 Estate Protection Rider.........................22 Policy Split Option Rider.......................22 TO ALLOCATE NET PREMIUM AND SUB-ACCOUNT VALUATION..22 Variable Investment Options.....................22 The Fixed Investment Option.....................23 Allocation Of Net Premium And Cash Value........23 When Sub-Account Accumulation Units Are Valued..23 How Investment Experience Is Determined.........24 Cash Value......................................24 Dollar Cost Averaging...........................25 Asset Rebalancing...............................25 THE DEATH BENEFIT..................................26 Calculation Of The Death Benefit Proceeds.......26 Death Benefit Options...........................26 The Minimum Required Death Benefit..............26 Changes In The Death Benefit Option.............27 Suicide.........................................27 SURRENDERS.........................................28 Full Surrender..................................28 Partial Surrender...............................28 Reduction Of Specified Amount On A Partial Surrender.......................................28 THE PAYOUT OPTIONS.................................29 i Interest Income.................................29 Income For A Fixed Period.......................29 Life Income With Payments Guaranteed............29 Fixed Income For Varying Periods................29 Joint And Survivor Life.........................30 Alternate Life Income...........................30 POLICY LOANS.......................................30 Loan Amount And Interest........................30 Collateral And Interest.........................30 Repayment.......................................30 Effect Of Policy Loans..........................31 LAPSE..............................................31 Guaranteed Policy Continuation Provision........31 Grace Period....................................32 Reinstatement...................................32 TAXES..............................................32 Types Of Taxes Of Which To Be Aware.............33 Buying The Policy...............................33 Investment Gain In The Policy...................34 Periodic Withdrawals, Non-Periodic Withdrawals And Loans.......................................34 Terminal Illness................................35 Surrender Of The Policy.........................35 Withholding.....................................35 Exchanging The Policy For Another Life Insurance Policy...............................36 Special Note Regarding The Policy Split Option Rider...................................36 Taxation Of Death Benefits......................37 Taxes And The Value Of Your Policy..............37 Tax Changes.....................................37 NATIONWIDE LIFE INSURANCE COMPANY..................38 NATIONWIDE VLI SEPARATE ACCOUNT-4..................38 Organization, Registration And Operation........38 Addition, Deletion, Or Substitution Of Mutual Funds ...................................39 Voting Rights...................................40 LEGAL PROCEEDINGS..................................40 Nationwide Life Insurance Company...............40 Nationwide Investment Services Corporation......41 FINANCIAL STATEMENTS...............................41 APPENDIX A: DEFINITIONS...........................A-1 APPENDIX B: SUB-ACCOUNT PORTFOLIOS................B-1 ii IN SUMMARY: POLICY BENEFITS Appendix A defines certain words and phrases we use in this prospectus. DEATH BENEFIT The primary benefit of your policy is life insurance coverage. While the policy is In Force, we will pay the Proceeds to your beneficiary when both Insureds die. YOUR CHOICE OF DEATH BENEFIT OPTIONS |X| Option One is THE GREATER OF the Specified Amount OR the minimum required Death Benefit under federal tax law. |X| Option Two is THE GREATER OF the Specified Amount plus the Cash Value OR the minimum required Death Benefit under federal tax law. For more information, see "The Death Benefit," beginning on page 26. YOUR OR YOUR BENEFICIARY'S CHOICE OF POLICY PROCEEDS You or your beneficiary may choose to receive the Policy Proceeds in a lump sum, or there are a variety of options that will pay out over time. For more information, see "The Payout Options," beginning on page 29. COVERAGE FLEXIBILITY Subject to conditions, you may choose to: |X| Change the Death Benefit option; |X| Increase or decrease the Specified Amount; |X| Change your beneficiaries; and |X| Change who owns the policy. For more information, see: "Changes In The Death Benefit Option," beginning on page 27; "To Change Coverage," beginning on page 13; "The Beneficiaries," beginning on page 12; and "To Assign," beginning on page 16. CONTINUATION OF COVERAGE IS GUARANTEED Your policy will remain In Force so long as you pay the Policy Continuation Premium Amount. For more information, see "Guaranteed Policy Continuation Provision," beginning on page 31. ACCESS TO CASH VALUE Subject to conditions, you may choose to borrow against, or withdraw, the Cash Value of your policy: |X| Take a policy loan of an amount no greater than 90% of the Sub-Account portfolios and 100% of the fixed account, less any surrender charges. The minimum amount is $1,000. For more information, see "Policy Loans," beginning on page 30. |X| Take a partial surrender of no less than $500. For more information, see "Partial Surrender," beginning on page 28. 1 |X| Surrender the policy at any time while either Insured is alive. The Cash Surrender Value will be the Cash Values of the Sub-Account portfolios and fixed account, less any policy loans and surrender charges. You may choose to receive the Cash Surrender Value in a lump sum, or you will have available the same payout options as if it constituted a Death Benefit. For more information, see "Full Surrender," beginning on page 28 and "The Payout Options," beginning on page 29. PREMIUM FLEXIBILITY While we would like you to select a premium payment plan, you will not be required to make your Premium payments accordingly. Within limits, you may vary the frequency and amount, and you might even be able to skip needing to make a Premium payment. For more information, see "Premium," beginning on page 18. INVESTMENT OPTIONS You may choose to allocate your Premiums after charges to a fixed or variable investment options in any proportion: |X| The fixed investment option will earn interest daily at the annual effective rate stated on the Policy Data Page. |X| The variable investment options constitute the limitedly available mutual funds, and we have divided Nationwide VLI Separate Account-4 into an equal number of Sub-Account portfolios, identified in Appendix B to account for your allocations. Your Investment Experience will depend on the market performance of the Sub-Account portfolios you have chosen. For more information, see "To Allocate Net Premium And Sub-Account Valuation," beginning on page 22 and "Appendix B: Sub-Account Portfolios," beginning on page B-1. TRANSFERS BETWEEN AND AMONG INVESTMENT OPTIONS You may transfer between the fixed and variable investment options, subject to conditions. You may transfer among the Sub-Account portfolios of the variable investment option within limits. For more information, see "Sub-Account Portfolio Transfer," beginning on page 14. We also offer dollar cost averaging, an automated investment strategy that spreads out transfers over time to try to reduce the investment risks of market fluctuations. For more information, see "Dollar Cost Averaging," beginning on page 25. TAXES Unless you make a withdrawal, generally you will not be taxed on any earnings. This is known as tax deferral. For more information, see "The Minimum Required Death Benefit," beginning on page 26. Also, your beneficiary generally will not have to include the Proceeds as taxable income. For more information, see "Taxes," beginning on page 32. ASSIGNMENT You may assign the policy as collateral for a loan or another obligation while the Insured is alive. For more information, see "To Assign," beginning on page 16. EXAMINATION RIGHT For a limited time, you may cancel the policy, and you will receive a refund. For more information, see "To Cancel (Examination Right)," beginning on page 13. RIDERS You may purchase any of the available Riders to suit your needs. Availability will vary by state, and there may be an additional charge. |X| Estate Protection Rider |X| Policy Split Option Rider For more information, see "Riders," beginning on page 17. 2 IN SUMMARY: POLICY RISKS IMPROPER USE Variable universal life insurance is not suitable as an investment vehicle for short-term savings. It is designed for long-term financial planning. You should not purchase the policy if you expect that you will need to access its Cash Value in the near future because substantial surrender charges will apply in the first several years from the Policy Date. UNFAVORABLE INVESTMENT EXPERIENCE The variable investment options to which you have chosen to allocate Net Premium may not generate a sufficient, let alone a positive, return, especially after the deductions for policy and Sub-Account portfolio charges. Besides Premium payments, Investment Experience will impact the Cash Value, and poor Investment Experience (in conjunction with your flexibility to make changes to the policy and deviate from your chosen premium payment plan) could cause the Cash Value of your policy to decrease, resulting in a Lapse of insurance coverage, sooner than might have been foreseen. EFFECT OF PARTIAL SURRENDERS AND POLICY LOANS ON INVESTMENT RETURNS Partial surrenders or policy loans may accelerate a Lapse because the amount of either or both will no longer be available to generate any investment return. A partial surrender will reduce the amount of Cash Value allocated among the Sub-Account portfolios you have chosen, and to the fixed account, too, if there is not enough Cash Value in the Sub-Account portfolios. As collateral for a policy loan, we will transfer an equal amount of Cash Value to the policy loan in a policy loan account, which will also reduce the Cash Value allocated between and among your chosen investment options. Thus, the remainder of your policy's Cash Value is all that would be available to generate enough of an investment return to cover policy and Sub-Account portfolio charges and keep the policy In Force, at least until you repay the policy loan or make another Premium payment. There will always be a Grace Period, and the opportunity to reinstate insurance coverage. Under certain circumstances, however, the policy could terminate without value, and insurance coverage would cease. REDUCTION OF THE DEATH BENEFIT A partial surrender or policy loan would impact the policy's Death Benefit depending on how the Death Benefit option you have chosen at the time it becomes payable relates to the policy's Cash Value. ADVERSE TAX CONSEQUENCES Existing federal tax laws that benefit this policy may change at any time. These changes could alter the favorable federal income tax treatment the policy enjoys, such as the deferral of taxation on the gains in the policy's Cash Value and the exclusion from taxable income of the Proceeds we pay to the policy's beneficiaries. Also, not all policies are afforded the same tax treatment. For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 34. For example, distributions from the policy may be taxed differently. Special rules will apply for a policy that is considered a "modified endowment contract," including that a 10% penalty tax may be imposed on distributions, including any policy loan. In addition, there are federal estate and gift taxes, and state and local taxes, with which you should be aware. You should consult a qualified tax advisor on all tax matters involving your policy. FIXED ACCOUNT TRANSFER RESTRICTIONS AND LIMITATIONS We will not honor a request to transfer Cash Value to or from the fixed account until after the first year. Then, we will only honor a transfer request from the fixed account that is made within 30 days of the end of a calendar quarter, but not within 12 months of a previous request. We may also limit what percentage of Cash Value you will be permitted to transfer to or from the fixed account. 3 SUB-ACCOUNT PORTFOLIO LIMITATIONS You may request 20 transfer events among Sub-Account portfolios a year via the Internet, telephone, facsimile or the U.S. mail. Afterwards, you will only be able to make a transfer request via the U.S. mail through the end of the calendar year. The number of requests is not cumulative, and this limitation automatically resets at the beginning of every calendar year. For more information, see "Sub-Account Portfolio Transfers," beginning on page 14. SUB-ACCOUNT PORTFOLIO INVESTMENT RISK A comprehensive discussion of the risks of the mutual funds held by each Sub-Account portfolio may be found in that mutual fund's prospectus. You should read the mutual fund's prospectus carefully before investing. IN SUMMARY: VARIABLE UNIVERSAL LIFE INSURANCE AND THE POLICY VARIABLE UNIVERSAL LIFE INSURANCE, IN GENERAL, MAY BE IMPORTANT TO YOU IN TWO WAYS. |X| It will provide economic protection to a beneficiary. |X| It may build Cash Value. Why would you want to purchase this type of life insurance? How will you allocate the Net Premium among the variable investment options and the fixed investment options? Your reasons and decisions will affect the insurance and Cash Value aspects. While variable universal life insurance is designed primarily to provide life insurance protection, the Cash Value of a policy will be important to you in that it may impair (with poor investment results) or enhance (with favorable investment results) your ability to pay the costs of keeping the insurance In Force. Apart from the life insurance protection features, you will have an interest in maximizing the value of the policy as a financial asset. IT IS SIMILAR, BUT ALSO DIFFERENT, TO SURVIVORSHIP UNIVERSAL LIFE INSURANCE. |X| You will pay Premiums for life insurance coverage on both Insureds. |X| The policy will provide for the accumulation of a Cash Surrender Value if you were to surrender it at any time while either Insured is alive. |X| The Cash Surrender Value could be substantially lower than the Premiums you have paid. What makes the policy different than survivorship universal life insurance is your opportunity to allocate Premiums after charges to the Sub-Account portfolios you have chosen (and the fixed account). Also, that its Cash Value will vary depending on the market performance of the Sub-Account portfolios, and you will bear this risk. FROM THE TIME WE ISSUE THE POLICY THROUGH THE INSUREDS' DEATH, HERE IS A BASIC OVERVIEW. (BUT PLEASE READ THE REMAINDER OF THIS PROSPECTUS FOR THE DETAILS.) |X| At issue, the policy will require a minimum initial Premium payment. Among other considerations, this amount will be based on: the Insureds' ages; the underwriting classes; any substandard ratings; the Specified Amount; the amount of any supplemental coverage; the Death Benefit option; and the choice of any Riders. |X| At the time of a Premium payment, we will deduct some charges. We call these charges transaction fees. |X| You will then be able to allocate the Premium net of transaction fees, or Net Premium, between and among a fixed and the variable investment options. |X| From the policy's Cash Value, on a periodic basis, we will deduct other charges to help cover the mortality risks we assumed, and the sales and administrative costs. |X| You may be able to vary the timing and amount of Premium payments. So long as there is enough Cash Surrender Value to cover the policy's periodic charges as they come due, the policy will remain In Force. 4 |X| After the first year from the Policy Date, you may request to increase or decrease the policy's Specified Amount. This flexibility will allow you to adjust the policy to meet your changing needs and circumstances, subject to: additional underwriting (for us to evaluate an increase of risk); confirmation that the policy's tax status is not jeopardized; and confirmation that the minimum and maximum insurance amounts remain met. |X| The policy will pay a Death Benefit to the beneficiary. You have a choice of one of two options. As your insurance needs change, you may be able to change Death Benefit options, rather than buying a new policy, or terminating this policy. |X| Prior to the Insureds' deaths, you may withdraw all, or a portion (after the first year from the Policy Date), of the policy's Cash Surrender Value. Or you may borrow against the Cash Surrender Value. Withdrawals and policy loans are subject to restrictions, however, may reduce the Death Benefit and increase the likelihood of the policy Lapsing. There also could be adverse tax consequences. 5 IN SUMMARY: FEE TABLES THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING THE POLICY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE POLICY, SURRENDER THE POLICY OR TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS. FOR MORE INFORMATION, SEE "CHARGES," BEGINNING ON PAGE 19. ================================================================================ TRANSACTION FEES ================================================================================ =========================================== ============================= ======
Charge When Charge Is Deducted Amount Deducted - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- SALES LOAD (1) Upon Making A Premium Maximum Guaranteed Currently Payment - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- $50 $30 - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- Per $1,000 Of Premium Payment - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- PREMIUM TAXES Upon Making A Premium $35 Per $1,000 Of Premium Payment Payment - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- SURRENDER CHARGES (2), (3), (4) Maximum (5) Minimum (6) Representative - Male And Female, Both Age 55 And Non-tobacco Preferred With A Specified Amount Of $1,000,000 And Death Benefit Option One Upon Full Surrender - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- $44,912 $4,691 - ------------------------------------------- ----------------------------- ---------------------------- ---------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- Representative (7) - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- $11,301 - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- Proportionately From The Policy's Cash Value - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- ----------------- ----------------- --------------------- - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- ILLUSTRATION CHARGE Upon Requesting An Maximum Guaranteed Currently Illustration - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- $25 0 - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- - ------------------------------------------ ----------------------------- ----------------------------- --------------------------- PARTIAL SURRENDER FEE (8) Upon A Maximum Guaranteed (9) Currently Partial Surrender - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- $25 0 - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- From The Policy's Available Cash Value (10) - ------------------------------------------- ----------------------------- ---------------------------------------------------------
6 (1) We deduct one charge composed of the sales load and premium taxes. On the Policy Data Page, we call the combined charge a Premium Load. However, from the eleventh year from the Policy Date, there is no sales load charge. (2) This charge is comprised of two components. There is an underwriting component, which is based on the Insureds' ages when the policy was issued. There is also a sales expense component, which is based on and varies by the Insureds' sexes, ages (when the policy was issued) and underwriting classes. The amount of the charge we would deduct begins to decrease each year after the second from the Policy Date. For example, by the ninth year, the amount is 30% of the surrender charge, and, thereafter, there is no charge for a full surrender. (3) To be able to present dollar amounts of this charge here, we assume a full surrender occurring in the first year from the Policy Date. (4) Ask for an illustration, or see the Policy Data Page for more information on your cost. (5) The amount is based on two insureds, one of whom is age 80 and highly rated (Table Q at least). The other is a male rated Table D, who uses tobacco (representing our greatest underwriting risk). We assume a policy with a Specified Amount of $1,000,000 and Death Benefit Option One. The stated surrender charge is for a surrender occurring in the first year from the Policy Date. (6) The amount is based on two females, both of whom are age 21 and do not use tobacco. We assume a policy with a Specified Amount of $1,000,000 and Death Benefit Option One. The stated surrender charge is for a surrender occurring in the first year from the Policy Date. (7) This amount may not be representative of your cost. (8) You may request a partial surrender after the first year from the Policy Date. (9) The charge is the lesser of $25 or 2% of the dollar amount of a partial surrender. (10) Besides this charge, the Cash Value available for a partial surrender is subject to any outstanding policy loans. THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY, NOT INCLUDING SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES. ================================================================================ PERIODIC CHARGES OTHER THAN SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES ================================================================================ ===================================== ============================= ============
Charge When Charge Is Deducted Amount Deducted From Cash Values - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------- ------------------- --------------------- COST OF INSURANCE (11), (12) Monthly Minimum Maximum Representative (13) Representative - For Male And Female, Both Age 55 And Non-tobacco Preferred With A Specified Amount Of $1,000,000 And Death Benefit Option One - ------------------------------------- ----------------------------- -------------------- ------------------- --------------------- - ------------------------------------- ----------------------------- -------------------- ------------------- --------------------- $0.00007 $83.33 $0.004 - ------------------------------------- ----------------------------- -------------------- ------------------- --------------------- - ------------------------------------- ----------------------------- -------------------------------------------------------------- Per $1,000 Of Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------------------------------------------------- MORTALITY AND EXPENSE RISK Monthly $0.55 Per $1,000 Of Cash Value (14) - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------------------------------------------------- Proportionately From Your Chosen Variable Investment Options - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ ADMINISTRATIVE Monthly Maximum Guaranteed Currently (15) (PER POLICY) - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ $10 $10 - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ - ------------------------------------- ----------------------------- -------------------------------------------------------------- Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ ADMINISTRATIVE Monthly Maximum Guaranteed Currently (PER SPECIFIED AMOUNT) (16) - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ $0.004 $0.004 - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ - ------------------------------------- ----------------------------- -------------------------------------------------------------- Per $1,000 Of Specified Amount - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ LOAN AMOUNT Annually Maximum Guaranteed Currently INTEREST (17) - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ $60 $60 - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ - ------------------------------------- ----------------------------- -------------------------------------------------------------- Per $1,000 On Outstanding Policy Loan - ------------------------------------- ----------------------------- --------------------------------------------------------------
7 --------------------------------------- (11) This charge varies by: the Insureds' sexes; ages; underwriting classes; any substandard ratings; the year from the Policy Date and the Specified Amount. (12) Ask for an illustration, or see the Policy Data Page for more information on your cost. (13) This amount may not be representative of your cost. (14) During the first through tenth years from the Policy Date, this charge is: $0.55 per $1,000 on the first $25,000 of Cash Value; $0.55 per $1,000 on $25,001 up to $99,000 of Cash Value; and $0.55 per $1,000 on $100,000 and more of Cash Value. Thereafter, this charge is: $0.55 per $1,000 on the first $25,000 of Cash Value; $0.35 per $1,000 on $25,001 up to $99,000 of Cash Value; and $0.20 per $1,000 on $100,000 and more of Cash Value. (15) During the first through tenth years from the Policy Date, the monthly current amount is $10, and, thereafter, the monthly current amount is $5. (16) During the first through tenth years from the Policy Date, the monthly current charge is $4 per $1,000 of Specified Amount, and, thereafter, the monthly current charge is $2 per $1,000 of Specified Amount. (17) We charge interest on the amount of an outstanding policy loan, at the rate of 6.0% per annum, which accrues daily and becomes due and payable at the end of the year from the Policy Date. If left unpaid, we will add it to the loan amount. As collateral or security for repayment, we transfer an equal amount of Cash Value to the loan account, on which interest accrues and is credited daily. Meanwhile, the minimum guaranteed interest crediting rate is 5.1% per annum. On this basis, the effect is a net cost of no more than 0.90% per annum. For more information, see "Policy Loans," beginning on page 30. ================================================================================ PERIODIC CHARGES OTHER THAN SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES FOR RIDERS ================================================================================ ===================================== ============================= ============
Optional Charge (18) When Optional Charge Is Amount Deducted --------------- ------------------------ ---------------- Deducted From Cash Value -------- --------------- - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- ESTATE PROTECTION RIDER (19) Monthly Minimum Maximum Representative - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- $0.00007 $83.33 $0.004 - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- - ------------------------------------- ----------------------------- -------------------------------------------------------------- Per $1,000 Of Additional Death Benefit Protection - Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- POLICY SPLIT OPTION Monthly Minimum Maximum Representative RIDER (20) - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- $0.01 $0.03 $0.02 - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- - ------------------------------------- ----------------------------- -------------------------------------------------------------- Per $1,000 Of Specified Amount - Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- --------------------------------------------------------------
(18) You may elect any or all of these Riders available under this policy. The continuation of a Rider is contingent on the policy being In Force. The amounts presented here may not be representative of your cost. Ask for an illustration, or see the Policy Data Page, for more information on your cost. (19) This charge varies (by: the Insureds' sexes; ages; underwriting classes; any substandard ratings; the year from the Policy Date and the Specified Amount) because we calculate it using the cost of insurance rate. (20) This charge varies by the Insureds' ages. THE NEXT ITEM SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE SUB-ACCOUNT PORTFOLIOS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY. MORE DETAIL CONCERNING EACH SUB-ACCOUNT PORTFOLIO'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR THE MUTUAL FUND THAT CORRESPONDS TO THE SUB-ACCOUNT PORTFOLIO. PLEASE CONTACT US, AT THE TELEPHONE NUMBERS OR ADDRESS ON THE COVER PAGE OF THIS PROSPECTUS FOR FREE COPIES OF THE PROSPECTUSES FOR THE MUTUAL FUNDS AVAILABLE UNDER THE POLICY. ALSO, APPENDIX B IDENTIFIES THE AVAILABLE MUTUAL FUNDS, BY NAME, INVESTMENT TYPE AND ADVISER, AND INCLUDES EXPENSE INFORMATION FOR EACH MUTUAL FUND.
TOTAL ANNUAL SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES Minimum Maximum ------- ------- (expenses that are deducted from the Sub-Account portfolio assets, including 0.27% 4.37% management fees, distribution (12b-1) fees, and other expenses)
8 THE POLICY The policy is a legal contract between you and us (any change to which we would want to make must be in writing, signed by our president and corporate secretary, and attached to or endorsed on the policy. You may exercise all policy rights and options while either Insured is alive. You may also change the policy, but only in accordance with its terms. Generally, the policy is available for two insureds between the ages of 18-85 (although these ages may vary in your state). It is nonparticipating, meaning we will not be contributing any operating profits or surplus earnings toward the Proceeds from the policy. The policy will comprise and be evidenced by: a written contract; any Riders; any endorsements; and the application, including any supplemental application. We will consider the statements you make in the application as representations. We will rely on them as being true and complete. However, we will not void the policy or deny a claim unless a statement is a material misrepresentation. POLICY OWNER The policy belongs to the owner named in the application. The Insureds, jointly, are the owner, unless a different owner is named in the application, or thereafter changed. After the death of the first Insured, the last surviving Insured is the owner, unless otherwise provided. You may also name a contingent policy owner. A contingent owner will become the owner if the owner dies before any Proceeds become payable. Otherwise, ownership will pass to the owner's estate, if the owner is not the last surviving Insured. To the extent permitted by law, policy benefits are not subject to any legal process for the payment of any claim, and no right or benefit will be subject to claims of creditors (except as may be provided by assignment). You may name different owners or contingent owners (so long as the last surviving Insured is alive) by submitting your written request to us at our Home Office, which will become effective when signed, rather than the date on which we received it. There may be adverse tax consequences. For more information, see "Taxes," beginning on page 32. THE BENEFICIARIES The principal right of a beneficiary is to receive Proceeds constituting the Death Benefit upon the last surviving Insured's death. So long as the last surviving Insured is alive, you may: name more than one beneficiary; designate primary and contingent beneficiaries; change or add beneficiaries; and provide for another distribution than the following. If a primary beneficiary dies before the last surviving Insured, we will pay the Death Benefit to the remaining primary beneficiaries. We will pay multiple primary beneficiaries in equal shares. A contingent beneficiary will become the primary beneficiary if all primary beneficiaries die before the last surviving Insured, and before any Proceeds become payable. You may name more than one contingent beneficiary. We will also pay multiple contingent beneficiaries in equal shares. To change or add beneficiaries, you must submit your written request to us at our Home Office, which will become effective when signed, rather than the date on which we received it. The change will not affect any payment we made, or action we took, before we recorded the change. TO PURCHASE To purchase the policy, you must submit to us a completed application and an initial Premium payment. We must receive evidence of insurability that satisfies our underwriting standards (this may require a medical examination) before we will issue a policy. We can provide you with the details of our underwriting standards. We reserve the right to reject an application for any reason permitted by law. Also, we reserve the right to modify our underwriting standards at any time. The minimum initial Specified Amount is $100,000. 9 COVERAGE We will issue the policy only if the underwriting process has been completed, we have approved the application and both of the proposed Insureds are alive and in the same condition of health as described in the application. However, full insurance coverage will take effect only after you have paid the minimum initial Premium. We begin to deduct monthly charges from your policy Cash Value on the Policy Date. SUPPLEMENTAL COVERAGE Supplemental insurance coverage is also available. Supplemental insurance coverage is effectively term life insurance on the Insureds. It cannot exceed 90% of the total Specified Amount. There are no surrender charges, and there is no monthly charge per $1,000 of Specified Amount, on the portion of Specified Amount that constitutes supplemental insurance coverage. COVERAGE EFFECTIVE DATES Full insurance coverage will begin and be In Force on the Policy Date shown on the Policy Data Page. It will end upon the last surviving Insured's death, once we begin to pay the Proceeds, or when the policy matures. It could end if the policy were to Lapse. TEMPORARY INSURANCE COVERAGE Temporary insurance coverage, equal to the Specified Amount up to $1,000,000, may be available for no charge before full insurance coverage takes effect. You must submit a temporary insurance agreement and make an initial Premium payment. The amount of the initial Premium will depend on the initial Specified Amount, and your choice of Death Benefit option and any Riders, for purposes of the policy. During this time, we will hold onto your initial Premium payment. Temporary insurance coverage will remain In Force for no more than 60 days from the date of the temporary insurance agreement. Before then, temporary insurance coverage will terminate on the date full base insurance coverage takes effect, or five days from the date we mail a termination notice (accompanied by refund of the Premium payment). If we issue the policy, what we do with the Net Premium depends on the right to examine law of the state in which you live. TO CANCEL (EXAMINATION RIGHT) You may cancel your policy during the free look period. The free look period expires ten days after you receive the policy or longer if required by state law. If you decide to cancel during the free look period, return the policy to the sales representative who sold it to you, or to us at our Home Office, along with your written cancellation request. Within seven days, we will refund the amount prescribed by the law of the state in which we issued the policy. We will treat the policy as if we never issued it. Because of the free look period, when we actually allocate Net Premium to the Sub-Account portfolios based on your choices depends on the right to examine law of the state in which you live. For more information, see "To Allocate Net Premium And Sub-Account Valuation" beginning on page 22. TO CHANGE COVERAGE After the first year from the Policy Date, you may request to change the Specified Amount; however, no change will take effect unless the Cash Surrender Value would be sufficient to keep the policy In Force for at least three months. Changes to the Specified Amount will alter the Death Benefit. For more information, see "The Death Benefit," beginning on page 26. 10 You may request to increase the Specified Amount, by at least $10,000, which will increase the Net Amount At Risk. Because the cost of insurance charge is based on the Net Amount At Risk, and because there will be a separate cost of insurance rate for the increase, this will also cause the policy's cost of insurance charge to increase. As a result, there will be a corresponding increase in the periodic charges we deduct from the policy's Cash Value. Also, an increase in the Specified Amount may cause an increase to the amount of your subsequent Premium payments and the likelihood that the policy is at risk of lapsing sooner. For more information, see "Lapse," beginning on page 31. You may request to decrease the Specified Amount. We first apply decreases to the amount of insurance coverage as a result of any prior Specified Amount increases, starting with the most recent. Then we will decrease the initial Specified Amount. We will deny a request, however, to reduce the amount of your coverage below the minimum initial Specified Amount. For more information, see "To Purchase," beginning on page 12. Also, we will deny a request that would disqualify the policy as a contract for life insurance. For more information, see "The Minimum Required Death Benefit," beginning on page 26. To change the Specified Amount, you must submit your written request to us at our Home Office. You must provide us with evidence of insurability that satisfies our underwriting standards. The Insureds must be within the required issue ages of 21 and 85. If you have supplemental insurance coverage, we will make the change proportionately. Changes will become effective on the next monthly anniversary from the Policy Date after we approve the request. We reserve the right to limit the number of changes to one each year. SUB-ACCOUNT PORTFOLIO TRANSFERS Prior to the policy's Maturity Date, you may make transfers among the available Sub-Account portfolios. You will be able to submit transfer requests among the Sub-Account portfolios in writing by U.S. mail. On a daily basis, we will group transfer requests into transfer events. A "transfer event" is any Valuation Period on which allocations are moved between investment options, regardless of the quantity of reallocations. For example, if you move the Policy's Cash Value between 20 Sub-Account portfolios in one day, the entire reallocation only counts as one transfer event. Transfer events include transfers made pursuant to any dollar cost averaging program you have elected, and in rebalancing assets. For more information, see "Dollar Cost Averaging" at page 25, and "Asset Rebalancing," beginning on page 25. With the first 20 transfer events of a calendar year, you may choose to submit transfer requests over the telephone, or via the Internet. Afterwards, you must submit all transfer requests in writing by U.S. mail. We will process a transfer at the end of the Valuation Period on which we receive your request. We will determine the amount you have available for transfers among the Sub-Account portfolios in Accumulation Units based on the Net Asset Value (NAV) per share of the mutual fund in which a Sub-Account portfolio invests. The mutual fund will determine its NAV once daily as of the close of the regular business session of the New York Stock Exchange (usually 4:00 p.m. Eastern time). An Accumulation Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests, however, because the Accumulation Unit value will reflect the deduction for any transaction fees and periodic charges. For more information, see "In Summary: Fee Tables," beginning on page 6, and "How Investment Experience Is Determined," beginning on page 24. FIXED ACCOUNT TRANSFERS Prior to the policy's Maturity Date, you may also make transfers involving the fixed account. These transfers will be in dollars, and we reserve the right to limit their timing and amount, including that you may not request a transfer involving the fixed account before the end of the first year from the Policy Date. Also, you may not make more than one transfer every 12 months. On transfers to the fixed account, you may transfer 100% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period. However, we reserve the right to refuse any transfer to the fixed account if the fixed account's Cash Value comprises more than 25% of the policy's Cash Value. On transfers from the fixed account, you must make the transfer within 30 days after the end of a calendar quarter. 11 MODES TO EFFECT A TRANSFER To make a transfer request, contact us at the telephone numbers or address on the cover page of this prospectus. We will consider each request by any means as a single transfer regardless of the number of Sub-Accounts involved. We will employ reasonable procedures to confirm that instructions are genuine, including: o requiring forms of personal identification before acting upon instructions; o providing you with written confirmation of completed transactions; and/or o tape recording telephone instructions. If we follow these procedures, we will not be liable for any loss, damage, cost or expense from complying with what we reasonably believe to be genuine instructions. Rather, you will bear the risk of loss. Any computer system or telephone, whether it is yours, your service provider's, your representative's, or ours, can experience slowdowns or outages for a variety of reasons. These slowdowns or outages may delay or prevent our ability to process your request. Although we have taken precautions to help our system handle heavy usage, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request in writing. CONVERSION RIGHT You have a conversion right under the policy. At any time within the first 24 months of full coverage, you may elect to transfer all value of the Sub-Account Portfolios to the fixed account, irrespective of our right to refuse a transfer to the fixed account, and we will not assess a transfer charge. You must make this election on our official forms to the Home Office. TO TERMINATE OR SURRENDER You have the right to terminate the policy. Or you may surrender the policy for its Cash Surrender Value. The policy will automatically terminate when both Insureds die, the policy matures, or the Grace Period ends. For more information, see "Surrenders," beginning on page 28. Generally, if the policy has a Cash Surrender Value in excess of the Premiums you have paid, the excess upon surrender will be included in your income for federal tax purposes. For more information, see "Surrender Of The Policy," beginning on page 35. The Cash Surrender Value will be reduced by the outstanding amount of a policy loan. For more information, see "Effect Of Policy Loans," beginning on page 31. 12 TO ASSIGN You may assign any rights under the policy while an Insured is alive. If you do, your beneficiary's interest will be subject to the person(s) to whom you have assigned rights. Your assignment must be in writing, and it must be recorded at our Home Office before it will become effective. Your assignment will be subject to any outstanding policy loans. For more information, see "Policy Loans," beginning on page 30. PROCEEDS UPON MATURITY If the policy is In Force on the Maturity Date, we will pay you the Proceeds. Normally, we will pay the Proceeds within seven days after we receive your written request at our Home Office. The payment will be postponed, however, when: the New York Stock Exchange is closed; the SEC restricts trading or declares an emergency; the SEC permits us to defer it for the protection of our policy owners; or the Proceeds are to be paid from the fixed account. The Proceeds will equal the policy's Cash Value minus any Indebtedness. After we pay the Proceeds, the policy is terminated. We may offer to extend the Maturity Date to coincide with the last surviving Insured's death, after which we will pay the Proceeds to your beneficiary. During this time, you will still be able to request partial surrenders. Availability varies by state. If you accept this offer, the policy will be endorsed so that: o no changes to the Specified Amount will be allowed; o no additional Premium payments will be allowed; o no additional periodic charges will be deducted; o no Death Benefit option changes will be permitted; o 100% of the Cash Value of all Sub-Accounts will be transferred to the fixed account; o the Specified Amount will be what it was when the younger Insured reached Attained Age 85, but subject to any partial surrenders, which will affect the Specified Amount of a policy with Death Benefit Option One based on the younger Insured's Attained Age at the time the request for a partial surrender is made. While the younger Insured is between the Attained Ages of 86 and 90, a partial surrender will decrease the Specified Amount directly. If the younger Insured is over Attained Age 90, a partial surrender will reduce the Proceeds by the proportion that the partial surrender reduced the policy's Cash Value. Notwithstanding, the Proceeds will be the greater of the policy's Specified Amount or Cash Value; and o We will not permit you to extend the Maturity Date, however, beyond that which would cause the policy to fail to meet the definition of life insurance under the Code. For more information, see "The Payout Options," beginning on page 29, and "The Death Benefit," beginning on page 26. REMINDERS, REPORTS AND ILLUSTRATIONS We will send you scheduled Premium payment reminders and transaction confirmations. We will also send you semi-annual and annual reports that show: o the Specified Amount o the current Cash Value o Premiums paid o the Cash Surrender Value o all charges since the last report o outstanding Indebtedness We will send these reminders and reports to the address you provide on the application, or to another you may specify. At any time, you may ask for an illustration of future benefits and values under the policy. While we do not at present, we may charge if you ask for more than one illustration per year from the Policy Date. 13 ERRORS OR MISSTATEMENTS If you make an error or misstatement in completing the application, then we will adjust the Death Benefit and Cash Value accordingly. We will adjust the Death Benefit and Cash Value by the ratio of the last monthly cost of insurance charge deducted to the monthly cost of insurance charge that would have been deducted based on the true age and sex of each Insured. INCONTESTABILITY We will not contest payment of the Death Benefit based on the initial Specified Amount after the policy has been In Force during the lifetime of the last surviving Insured for two years from the Policy Date. Similarly, for any change in Specified Amount requiring evidence of insurability, we will not contest payment of the Death Benefit based on the change after it has been In Force during the lifetime of the last surviving Insured for two years from the effective date. IF WE MODIFY THE POLICY Any modification (or waiver) of our rights or requirements under the policy must be in writing and signed by our president or corporate secretary. No agent may bind us by making any promise not contained in the policy. We may modify the policy, our operations, or the separate account's operations to meet the requirements of any law (or regulation issued by a government agency) to which the policy, our company, or the separate account is subject. We may modify the policy to assure that it continues to qualify as a life insurance contract under the federal tax laws. We will notify you of all modifications, and we will make appropriate endorsements to the policy. RIDERS Riders are available for you to purchase to design the policy to meet your specific needs. You may purchase any of them only upon application. Availability will vary by state. You will be charged for a Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit; or you decide you no longer need the benefit and let us know in writing at our Home office.. For more information on the costs of the Riders, see "In Summary: Fee Tables," beginning on page 6, and "Charges," beginning on page 19. ESTATE PROTECTION RIDER The benefit is an additional Death Benefit we will pay to the beneficiary, to offset any additional estate tax, upon receiving proof that both Insureds died while the policy is In Force and the Rider is in effect. The Rider's term is four years from the Policy Date. The Rider's Death Benefit will equal your estate tax liability, up to 122.22% of the policy's initial Specified Amount. We will not pay this Rider's Death Benefit, let alone the Death Benefit, however, if either Insured commits suicide, while sane or insane, within two years from the Policy Date. Instead, we will pay back the total charge we had deducted for this Rider. For more information, see "Suicide," beginning on page 27. There is no Cash Surrender Value or loan value to this Rider. 14 Before the term expires, you may request to terminate this Rider in writing to our Home Office, and the additional Death Benefit will terminate effective on the next monthly anniversary from the Policy Date. This Rider will also terminate on the date the policy terminates. POLICY SPLIT OPTION RIDER The benefit is the option to exchange the policy for two policies, each on the life of one Insured, if the Insureds' marriage ends or there is a federal tax law change, while the policy is In Force (and not in a grace period) and this Rider is in effect. Each new policy will consist of half the Specified Amount (the lesser of the initial Specified Amount and the Specified Amount before the exchange), the Cash Value and any Indebtedness. We will base the Premium rates for each new policy on the respective Insured's age and underwriting class as of the effective date of the exchange. This Rider is available when you purchase the policy for issue ages 18-79. In the event that the Insureds' marriage ended, there must have been in effect, for the preceding year, a final divorce, dissolution or annulment decree from a court of competent jurisdiction. The change in federal estate tax law must have concerned the reduction of either the marital deduction, or federal estate tax rate, to less than that in effect on the Policy Date. In any event, you will have six months, once the final divorce, dissolution or annulment has been in effect for a year, or from the enactment of the federal tax law change, within which to make your request in writing to our Home Office. The option will last so long as both Insureds are alive, and it is before the year in which the older Insured reaches Attained Age 80. Before then, you may terminate this Rider in writing to our Home Office, which will become effective on the next monthly anniversary from the Policy Date. This Rider will terminate if you exercise the option. Otherwise, this Rider will terminate on the date the policy terminates. There is no Cash Surrender Value or loan value to this Rider. Exercising the option under this Rider may result in adverse tax consequences. For more information, see "Special Note Regarding The Policy Split Option Rider," beginning on page 36, but most definitely, consult your tax adviser before electing this Rider, let alone exercising your rights under it. You may elect this rider when you purchase the policy. PREMIUM This policy does not require a scheduled payment of Premium to keep it In Force. The policy will remain in effect as long as the conditions that cause the policy to Lapse do not exist. Each premium payment must be at least $50. Upon request, we will furnish Premium receipts. INITIAL PREMIUM The amount of your initial Premium will depend on the initial Specified Amount, the Death Benefit option, and any Riders you select. Generally, the higher the required initial Specified Amount, the higher the initial Premium will be. Similarly, because Death Benefit Option Two provides for a potentially greater Death Benefit than Death Benefit Option One, Death Benefit Option Two may require a higher amount of initial Premium. Also, the age, sex, health, and activities of both Insureds will affect our determination of the risk of issuing the policy. In general, the greater this risk, the higher the initial Premium will be. The amount of any supplemental coverage will also affect the amount of your initial Premium. Whether we will issue full insurance coverage depends on both Insureds meeting all underwriting requirements, you paying the initial Premium, and our delivery of the policy while both Insureds are alive. We will not delay delivery of the policy to increase the likelihood that the Insureds are not still alive. Depending on the outcome of our underwriting process, more or less Premium may be necessary for us to issue the policy. We also retain the right to not issue the policy, after which, if we exercise this right, we will return your payment within two business days thereafter. You may pay the initial Premium to our Home Office or to our authorized representative. 15 SUBSEQUENT PREMIUMS You may make additional Premium payments at any time while the policy is In Force, subject to the following: o We may require satisfactory evidence of insurability before accepting any additional Premium payment that results in an increase in the policy's Net Amount At Risk; and o We will refund any portion of Premium payments that exceed the applicable premium limit established by the IRS to qualify the policy as a contract for life insurance. As discussed in the "Taxes" section of this prospectus, additional Premium payments or other changes to the policy may jeopardize the policy's non-modified endowment status. We will monitor Premiums paid and other policy transactions and will notify you when the policy's non-modified endowment contract status is in jeopardy. We will send scheduled Premium payment reminder notices to you according to the Premium payment method shown on the Policy Data Page. If you decide to make a subsequent Premium payment, you must send it to our Home Office. CHARGES PLEASE READ AND CONSIDER THE FOLLOWING, WHICH WE INTEND TO BE AN AMPLIFICATION (BUT IT MAY ALSO BE DUPLICATIVE), IN CONJUNCTION WITH THE FEE TABLES, AND ACCOMPANYING FOOTNOTES, APPEARING EARLIER IN THIS PROSPECTUS. SEE "IN SUMMARY: FEE TABLES," BEGINNING ON PAGE 6. ALSO, SEE THE POLICY, INCLUDING THE POLICY DATA PAGE, AND THE RIDERS, FOR MORE INFORMATION. We will make deductions under the policy to compensate us for: the services and benefits we provide; the costs and expenses we incur; and the risks we assume. Every time you make a Premium payment, we will charge against that Premium payment a Premium Load, which is composed of the sales load and premium taxes. We will deduct all other charges from the policy's Cash Value (rather than a premium payment), except for mortality and expense risk and loan amount interest, in proportion to the balances of your Sub-Account portfolio, and the fixed account, allocations. We will only deduct the mortality and expense risk charge from the Cash Value of the Sub-Account portfolios, and we will only deduct the loan amount interest charge from the Cash Value of the loan account. There are also charges associated with the Sub-Account portfolios. While you will not pay them directly, they will affect the value of the assets in the Sub-Account portfolios. On a daily basis, the manager of each mutual fund that comprises the policy's available variable investment options deducts operating charges from that mutual fund's assets before calculating the NAV. (We use NAV to calculate the value of your corresponding Sub-Account portfolio allocation in Accumulation Units.) More detail about these charges is contained in the prospectus for the mutual fund. SALES LOAD (CHARGE) During years one through ten from the Policy Date, the sales load portion of the Premium Load charge is $30 per $1,000 of Premium, but, thereafter, there is no charge, to cover our sales expenses. 16 PREMIUM TAXES The Premium taxes portion of the Premium Load charge is $35 per $1,000 of Premium and reimburses us for state and local premium taxes (at the estimated rate of 2.25%), and for federal premium taxes (at the estimated rate of 1.25%). This is an estimated amount. If the actual tax liability is more or less, we will not adjust this charge, so we may profit from it. SURRENDER CHARGES A surrender charge will apply if you surrender or Lapse the policy, or if you request to decrease the Specified Amount. There are two components of the surrender charge meant to cover our policy underwriting (the underwriting component) and sales expenses (the sales component), including for: processing the application; conducting any medical exams; determining insurability (and the Insureds' underwriting classes); and establishing policy records. The surrender charge will equal the underwriting component plus 23.75% of the sales component. We will deduct the surrender charge based on the following schedule: - ------------------------------- ------------------------------------------- During Percentage Of Initial Policy Year Surrender Charge - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 1 100% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 2 100% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 3 90% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 4 80% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 5 70% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 6 60% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 7 45% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 8 30% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 9 15% - ------------------------------- ------------------------------------------- - ------------------------------- ------------------------------------------- 10 0 - ------------------------------- ------------------------------------------- The underwriting component is the product of that portion of the Specified Amount not including any supplemental coverage divided by 1,000 and the administrative target premium. The administrative target premium varies by the Insureds' ages when the policy was issued. The sales expense component is the lesser of the following two amounts. The first amount is the Guideline Annual Premium in the first year from the Policy Date. The second amount is the sum of all Premium payments you made during the first two years from the Policy Date. We will calculate a separate surrender charge based on the Specified Amount and each increase in the Specified Amount, which, when added together, will amount to your surrender charge. A surrender charge will also apply if you request a decrease in the Specified Amount. We will calculate the surrender charge for a decrease in the Specified Amount as if you surrendered the policy, though we will only deduct a portion of it from your policy's Cash Value. The amount of surrender charge we deduct will be a product of the surrender charge and the decrease in Specified Amount divided by the Specified Amount before the decrease. All things being equal, the surrender charge will be greater for a policy with: an older Insured; a male insured; a higher Specified Amount; more first year Premium; or a higher risk Insured. If you change the Death Benefit option, and it does not change our Net Amount At Risk, we will not deduct a surrender charge. 17 PARTIAL SURRENDER FEE You may request a partial surrender after the first year from the Policy Date, and we may charge a partial surrender fee, of the lesser of $25 or 2% of the dollar amount of the partial surrender, to compensate us for the administrative costs in calculating and generating the surrender amount. However, currently there is no charge for a partial surrender. COST OF INSURANCE The cost of insurance charge compensates us for underwriting insurance protection. The monthly cost of insurance charge is the product of the Net Amount At Risk and the cost of insurance rate. We base the cost of insurance charge rates on our expectations as to future mortality and expense experience. The cost of insurance rate will vary by: the Insureds' sexes; ages; underwriting classes; any substandard ratings; for how long the policy has been In Force and the Specified Amount. There will be a separate cost of insurance rate for the initial Specified Amount and any increases. The cost of insurance rates will never be greater than those guaranteed in the policy. We will uniformly apply a change in any cost of insurance rate for Insureds', of the same ages, sexes, underwriting classes, and any substandard ratings, on whom policies with the same Specified Amount have been In Force for the same length of time. The change could increase your cost of insurance charges, which, accordingly, would decrease your policy's Cash Value, and the converse is true, too. In contrast, you could cause your cost of insurance charge to decrease with a request to reduce the Specified Amount that also reduces the Net Amount At Risk. MORTALITY AND EXPENSE RISK Though the maximum guaranteed mortality and expense risk charge is higher, currently, we deduct this charge monthly according to the following schedule. During the first through tenth years from the Policy Date, the charge is: $0.55 per $1,000 on the first $25,000 of Cash Value; $0.55 per $1,000 on $25,001 up to $99,000 of Cash Value; and $0.55 per $1,000 on $100,000 and more of Cash Value. Thereafter, this charge is: $0.55 per $1,000 on the first $25,000 of Cash Value; $0.35 per $1,000 on $25,001 up to $99,000 of Cash Value; and $0.20 per $1,000 on $100,000 and more of Cash Value. This charge compensates us for assuming risks associated with mortality and expense costs, and we may profit from it. The mortality risk is that the Insureds do not live as long as expected. The expense risk is that the costs of issuing and administering the policy are more than expected. ADMINISTRATIVE (PER POLICY) Though the maximum guaranteed administrative (per policy) charge is higher, currently, during the first through tenth years from the Policy Date, the monthly charge is $10, and, thereafter, the monthly charge is $5. This charge reimburses us for the costs of maintaining the policy, including for accounting and record-keeping. ADMINISTRATIVE (PER SPECIFIED AMOUNT) The administrative (per Specified Amount) charge reimburses us for sales, underwriting, distribution and issuance costs, and we will deduct this charge from the policy's Cash Value. During the first through tenth years from the Policy Date, the monthly current charge is $10, which is also the maximum guaranteed charge. Thereafter, the monthly charge is $5. LOAN AMOUNT INTEREST We will charge interest on the amount of an outstanding policy loan, at the rate of 6.0% per annum, which will have accrued daily and become due and payable at the end of the year from the Policy Date. If left unpaid, we will add it to the loan amount. As collateral or security for repayment, we will transfer an equal amount of Cash Value to the loan account, on which interest will accrue and be credited daily. Meanwhile, the minimum guaranteed interest crediting rate is 5.1% per annum. On this basis, the effect is a net cost of no more than 0.90% per annum. 18 ESTATE PROTECTION RIDER This charge compensates us for, and while we make available, additional Death Benefit coverage. The charge is the product of the additional Death Benefit amount and your monthly cost of insurance rate. We use the same monthly cost of insurance rate that we use to calculate the cost of insurance charge. However, because we multiply the monthly cost of insurance rate by the Rider's Death Benefit, this charge should be less. POLICY SPLIT OPTION RIDER This charge compensates us for the option to exchange the policy for two policies, each on the life of one Insured. The charge is the product of the Specified Amount and the monthly policy split option cost rate. This rate is based on the average ages of the two Insured on the Policy Date, and is stated on the Policy Data Page. TO ALLOCATE NET PREMIUM AND SUB-ACCOUNT VALUATION You may choose to allocate all or a portion of your Net Premium to any Sub-Account. When this happens depends on the right to examine law of the state in which you live. Or you may choose to allocate all or a portion of your Net Premium to the fixed investment option, and we will allocate it when we receive it. Based on the right to examine law, some states require that we refund the initial Premium if you exercise your right to cancel the policy. Others require that we return the Cash Value. If yours is a state that requires us to refund the initial Premium, we will hold the initial Net Premium in the GVIT Gartmore GVIT Money Market Fund: Class I. Once your examination right ends, we will transfer the Cash Value to your Sub-Account allocations in effect at the time of the transfer. If yours is a state that requires us to refund the Cash Value, we will allocate the Net Premiums to the Sub-Account choices in effect when we receive the Premium payment. VARIABLE INVESTMENT OPTIONS The variable investment options constitute the limitedly available mutual funds, and we have divided the separate account into an equal number of Sub-Account portfolios to account for your allocations. Each Sub-Account portfolio invests in a mutual fund that is registered with the SEC. (This registration does not involve the SEC's supervision of the management or investment practices or policies of these mutual funds). Appendix B identifies the available mutual funds, by name, investment type and adviser, and includes expense information for each. Each Sub-Account portfolio's assets are held separately from the assets of the other Sub-Account portfolios, and each Sub-Account portfolio has investment objectives and policies that are different from those of the other Sub-Account portfolios. Thus, each Sub-Account portfolio operates as a separate investment fund, and the income or losses of one Sub-Account portfolio generally have no effect on the Investment Experience of any other Sub-Account portfolio. 19 THE FIXED INVESTMENT OPTION The Net Premium you allocate to the fixed investment option is held in the fixed account, which is part of our general account. The general account contains all of our assets other than those in the separate accounts and funds the fixed investment option. These assets are subject to our general liabilities from business operations. The general account is used to support our insurance and annuity obligations. Any amounts in excess of the separate account liabilities are deposited into our general account. We bear the full investment risk for all amounts allocated to the fixed account. We guarantee that the amounts you allocate to the fixed investment option will be credited interest daily at a net effective annual interest rate of no less than the stated interest crediting rate on the Policy Data Page. We will credit any interest in excess of the guaranteed interest crediting rate at our sole discretion. You assume the risk that the actual rate may not exceed the guaranteed interest crediting rate. The amounts you allocate to the fixed investment option will not share in the investment performance of our general account. Rather, the investment income you earn on your allocations will be based on varying rates we set. The general account is not subject to the same laws as the separate account, and the SEC has not reviewed the disclosures in this prospectus relating to the fixed account. However, information about the fixed account is subject to federal securities laws relating to the accuracy and completeness of statements made by prospectus disclosure. Interest rates are set at the beginning of each calendar quarter and will be effective for at least three months. You may receive a different interest rate on Net Premium versus a transfer of Accumulation Units from a Sub-Account portfolio. In honoring your request to transfer an amount out of the fixed account, we will do so on a last-in, first out basis (LIFO). ALLOCATION OF NET PREMIUM AND CASH VALUE We allocate your Net Premium payments to Sub-Accounts or the fixed account per your instructions. You must specify your Net Premium payments in whole percentages. Any allocation must be at least 10%. The sum of allocations must equal 100%. WHEN SUB-ACCOUNT ACCUMULATION UNITS ARE VALUED We will price Sub-Account Accumulation Units on any day the New York Stock Exchange (NYSE) is open for business, unless we are closed. We will not price Sub-Account Accumulation Units on these recognized holidays. o New Year's Day o Labor Day o Martin Luther King, Jr. Day o Thanksgiving o Presidents' Day o Christmas o Good Friday o Memorial Day o Independence Day In addition, we will not price Sub-Account Accumulation Units if: o trading on the New York Stock Exchange is restricted; o an emergency exists making disposal or valuation of securities held in the separate account impracticable; or o the SEC, by order, permits a suspension or postponement for the protection of security holders. SEC rules and regulations govern when the conditions described above exist. Any transaction you try to effect when we are closed will not happen until the next day the NYSE and we are open for business. 20 HOW INVESTMENT EXPERIENCE IS DETERMINED Though the number of Sub-Account Accumulation Units will not change as a result of Investment Experience, changes in the net investment factor may cause the value of a Sub-Account Accumulation Unit to increase or decrease from Valuation Period to Valuation Period. Changes in the net investment factor may not be directly proportional to changes in the NAV of the mutual fund shares. We determine the change in Sub-Account values at the end of a Valuation Period. The Sub-Account Accumulation Unit value for a Valuation Period is determined by multiplying the Sub-Account Accumulation Unit value as of the prior Valuation Period by the net investment factor for the Sub-Account for the current Valuation Period. We determine the net investment factor for any Valuation Period by dividing (a) by (b) where: (a) is the net of: o the NAV per share of the mutual fund held in the Sub-Account as of the end of the current Valuation Period; plus o the per share amount of any dividend or income distributions made by the mutual fund (if the date of the dividend or income distribution occurs during the current Valuation Period); plus or minus o a per share charge or credit for any taxes reserved for as a result of the Sub-Account's investment operations. (b) is the NAV per share of the mutual fund as of the end of the immediately preceding Valuation Period. CASH VALUE The policy has a Cash Value. There is no guaranteed Cash Value. Rather, it will be based on the Accumulation Unit values, and vary with the Investment Experience of the Sub-Account portfolios to which you have allocated Net Premium, as well as the values of, and any daily crediting of interest to, the policy loan and fixed accounts. It will also vary because we deduct the policy's periodic charges from the Cash Value. So if you have chosen Death Benefit Option Two, your Death Benefit will fluctuate. We will determine the value of the assets in the separate account at the end of each Valuation Period. We will determine the Cash Value at least monthly. To determine the number of Sub-Account Accumulation Units credited to each Sub-Account, we divide the net amount you allocate to the Sub-Account by the Sub-Account Accumulation Unit value for the Sub-Account (using the next Valuation Period following when we receive the Premium). If you surrender part or all of the policy, we will deduct a number of Sub-Account Accumulation Units from the separate account and an amount from the fixed account that corresponds to the surrendered amount. Thus, your policy's Cash Value will be reduced by the surrendered amount. Similarly, when we assess charges or deductions, a number of Sub-Account Accumulation Units from the separate account and an amount from the fixed account that corresponds with the charge or deduction will be deducted from the policy's Cash Value. We make these deductions in the same proportion that your interests in the separate account and the fixed account bear to the policy's total Cash Value. 21 The Cash Value in the policy loan and fixed accounts will be credited interest daily at the guaranteed minimum annual effective rate stated on the Policy Data Page. For there to be Cash Value in the policy loan account, you must have taken a policy loan. We may decide to credit interest in excess of the guaranteed minimum annual effective rate. For the fixed account, we will guarantee the current rate in effect through the end of the calendar quarter. Upon request, we will inform you of the current applicable rates for each account. For more information, see "The Fixed Investment Option," beginning on page 23, and "Loan Amount Interest," beginning on page 21. 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 policy charges, plus or minus any investment results, and minus any partial surrenders. DOLLAR COST AVERAGING You may elect to participate in a dollar cost averaging program. Dollar cost averaging is an investment strategy designed to reduce the investment risks associated with market fluctuations, which will promote a more stable Cash Value and Death Benefit over time. The strategy spreads the allocation of your Premium among the Sub-Account portfolios and the fixed investment option over a period of time to allow you to potentially reduce the risk of investing most of your Premium into the Sub-Accounts at a time when prices are high. There is no charge for dollar cost averaging, but it does count as a transfer event. For more information, see "Sub-Account Portfolio Transfers," beginning on page 14. On a monthly basis (or another frequency we may permit), a specified dollar amount of your Premium is systematically and automatically transferred from the fixed account to a Sub-Account portfolio. You may also have Premium transferred from the: Federated Insurance Series - Federated Quality Bond Fund II: Primary Shares; Fidelity Variable Insurance Products Fund - VIP High Income Bond Portfolio: Service Class (available only for policies issued prior to May 1, 2003); GVIT Gartmore GVIT Government Bond Fund: Class I; GVIT Federated GVIT Government Bond Fund: Class I; and Gartmore GVIT Money Market Fund: Class I. We will continue to process transfers until there is no more value left in the fixed account or the originating mutual fund(s). You may also instruct us in writing to stop the transfers. If you have Premium transferred from the fixed account, the amount must be no more than 1/30th of the fixed account value at the time you elect to participate in the program. Either you elect to participate in the dollar cost averaging program upon application or by submitting an election form before the beginning of the month. A dollar cost averaging program may not be available in all states. We do not assure the success of these strategies; success depends on market trends. We cannot guarantee that dollar cost averaging will result in a profit or protect against loss. You should carefully consider your financial ability to continue these programs over a long enough period of time to purchase Accumulation Units when their value is low, as well as when it is high. We may modify, suspend or discontinue these programs at any time. We will notify you in writing 30 days before we do this. ASSET REBALANCING You may elect to set up asset rebalancing. To do so, you must complete the Asset Rebalancing Program Form and submit it to our Home Office. (You will use the same form to change your investment allocation choices, or terminate asset rebalancing, too.) Thereafter, automatically, on a periodic basis, the Cash Value of your chosen Sub-Account portfolios (up to 20), having fluctuated with Investment Experience, will be rebalanced in proportion to your investment allocation choices. There is no charge for asset rebalancing, but it does count as a transfer event. For more information, see "Sub-Account Portfolio Transfers," beginning on page 14. You can schedule asset rebalancing to occur every three, six, or twelve months on days when we price Sub-Account Units. For more information, see "When Sub-Account Accumulation Units Are Valued," beginning on page 23. Unless you elect otherwise, asset rebalancing will not affect the allocation of Net Premiums you pay after beginning the program. We reserve the right to modify, suspend or discontinue asset rebalancing at any time. 22 THE DEATH BENEFIT CALCULATION OF THE DEATH BENEFIT PROCEEDS We will calculate the Death Benefit and pay it to the beneficiary when we receive at our Home Office proof that both the Insureds have died, as well as other customary information. We require notice of the first death within one year from the date of death, even though the Proceeds are not calculated or paid until the second death. We will not dispute the payment of the Death Benefit after the policy has been In Force for two years from the Policy Date. The Death Benefit may be subject to an adjustment if you make an error or misstatement upon application, or if an Insured dies by suicide. While the policy is In Force, the Death Benefit will never be less than the Specified Amount. The Death Benefit will depend on which option you have chosen and the tax test you have elected, as discussed in greater detail below. Also, the Death Benefit may vary with the Cash Value of the policy, which will depend on investment performance and take into account any insurance provided by Riders, as well as outstanding Indebtedness and any due and unpaid monthly deductions that accrued during a Grace Period. DEATH BENEFIT OPTIONS There are two Death Benefit options under the policy. You may choose one. If you do not choose one of the following Death Benefit options, we will assume that you intended to choose Death Benefit Option One. OPTION ONE The Death Benefit will be the greater of the Specified Amount, or minimum required Death Benefit. OPTION TWO The Death Benefit will be the greater of the Specified Amount PLUS the Cash Value as of the date of death, or the minimum required Death Benefit. THE MINIMUM REQUIRED DEATH BENEFIT Each Death Benefit option has a minimum required Death Benefit. The minimum required Death Benefit is the lowest Death Benefit that will qualify the policy as life insurance under Section 7702 of the Code. The tax tests for life insurance generally require that the policy has a significant element of life insurance and not be primarily an investment vehicle. At the time we issue the policy, you irrevocably elect one of the following tests to qualify the policy as life insurance under Section 7702 of the Code: o the cash value accumulation test; or o the guideline premium/cash value corridor test. The cash value accumulation test determines the minimum required Death Benefit by multiplying the account value by a percentage determined by methodology set out in the federal tax regulations. The percentages depend upon the Insureds' ages, sexes and underwriting classifications. Under the cash value accumulation test, there is no limit to the amount that may be paid in premiums as long as there is sufficient death benefit in relation to the account value at all times. 23 The guideline premium/cash value corridor test determines the minimum required Death Benefit by comparing the Death Benefit to an applicable percentage of the Cash Value. These percentages are set out in the Code and only vary by the younger Insured's Attained Age. Regardless of which test you elect, we will monitor compliance to assure that the policy meets the statutory definition of life insurance for federal tax purposes. As a result, the Proceeds payable under a policy should be excludable from gross income of the beneficiary for federal income tax purposes. Conversely, if in the unlikely event that the policy did not qualify as life insurance because your Death Benefit failed to amount to the minimum required Death Benefit, the Proceeds payable under the policy would be includable in the gross income of the beneficiary for federal income tax purposes. Because of this adverse consequence, we may refuse additional Premium payments or return the gross Premium payments to you so that the policy continues to meet the Code's definition of life insurance. For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 34. If you do not elect a test, we will assume that you intended to elect the guideline premium/cash value corridor test. CHANGES IN THE DEATH BENEFIT OPTION After the first policy year, you may elect to change the Death Benefit option under the policy. A change from Option One to Option Two would cause a decrease in the Specified Amount by the Cash Value. Conversely, a change from Option Two to Option One would cause an increase in the Specified Amount by the Cash Value. We will permit only one change of Death Benefit option per policy year. The effective date of a change will be the monthly anniversary following the date we approve the change. For any change in Death Benefit option to become effective, the Cash Surrender Value after the change must be sufficient to keep the policy In Force for at least three months. We will adjust the Specified Amount so that the Net Amount At Risk remains constant before and after the Death Benefit option change. We will make these changes proportionately with respect to any supplemental insurance coverage. Because your Net Amount At Risk will remain the same, reducing the Specified Amount by itself does not alter the policy's cost of insurance. The policy's charges going forward, however, will be based on a new Specified Amount that will change the calculation of those charges. Depending on changes in factors such as fluctuations in policy's Cash Value, these charges may increase or decrease after the reduction. Where the policy owner has selected the guideline premium/cash value corridor test, a change in Death Benefit option will not be permitted if it would result in the total Premiums paid exceeding the maximum premium limitations under Section 7702 of the Code. SUICIDE If either Insured commits suicide, while sane or insane, within two years from the Policy Date, we will pay no more than the sum of the Premiums paid, less any Indebtedness, and less any partial surrenders. Similarly, if either Insured commits suicide, while sane or insane, within two years from the effective date of an increase in the Specified Amount for which we require additional evidence of insurability, we will pay no more than the initial Specified Amount, plus the cost of insurance charges of the increase. 24 SURRENDERS FULL SURRENDER You may surrender the policy for the Cash Surrender Value at any time while an Insured is alive. We calculate the Cash Surrender Value based on the policy's Cash Value. For more information, see "Cash Value," beginning on page 24. To derive the Cash Surrender Value, we will deduct from the Cash Value, Indebtedness and the surrender charge. The effective date of a surrender will coincide with the date on which we receive the policy and your written request at our Home Office. We reserve the right to postpone payment of that portion of the Cash Surrender Value attributable to the fixed account for up to six months. PARTIAL SURRENDER You may request a partial surrender of the policy's Cash Surrender Value at any time after it has been In Force for one year from the Policy Date. The maximum aggregate annual amount of any partial surrender cannot exceed the Cash Surrender Value, less the greater of $500 or the total monthly fees and expenses you must pay to keep the policy In Force for three months. The minimum amount of any partial surrender is $500. A partial surrender cannot cause the total Specified Amount to be reduced below the minimum Specified Amount indicated on the Policy Data Page, and after any partial surrender, the policy must continue to qualify as life insurance under Section 7702 of the Code. You may incur a partial surrender fee. For more information, see "In Summary: Fee Tables," beginning on page 6. We reserve the right to limit partial surrenders to one a year. REDUCTION OF SPECIFIED AMOUNT ON A PARTIAL SURRENDER We will reduce the Cash Value of the policy by the amount of any partial surrender in the same proportion as how you have allocated Cash Value among the Sub-Accounts. We will only reduce the Cash Value attributable to the fixed account when that of the Sub-Account is insufficient to cover the amount of the partial surrender. When you take a partial surrender, we will reduce the Specified Amount to ensure that the Net Amount At Risk does not increase. Because your Net Amount At Risk is the same before and after the reduction, a partial surrender by itself does not alter the policy's cost of insurance. The policy's charges going forward will be based on a new Specified Amount that will change the calculation of those charges. Depending on changes in variables such as the Cash Value, these charges may increase or decrease after the reduction in Specified Amount. Any reduction we make to the Specified Amount will be made in the following order: o against the most recent increase in the Specified Amount; o against the next most recent increases in the Specified Amount in succession; and o against the Specified Amount under the original application. While we reserve the right to deduct a partial surrender fee of up to $25, we currently deduct none. Partial surrenders could cause your policy to become a "modified endowment contract" under the Code, which would change the income tax treatment of any distributions from the policy. For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans" beginning on page 34. 25 THE PAYOUT OPTIONS You have a number of options of receiving Proceeds, besides in a lump sum, which you may elect upon application. We will pay the Proceeds from our general account. If you do not make an election, when the last surviving Insured dies, the beneficiary may do so. If the beneficiary does not make an election, we will pay the Proceeds in a lump sum. We will normally pay the Proceeds in a lump sum within seven days after we receive your written request at our Home Office. We will postpone any payment of Proceeds, however, on the days we are unable to price Sub-Account Accumulation Units. For more information, see "When Sub-Account Accumulation Units Are Valued," beginning on page 23. To elect more than one payout option, you must apportion at least $2,000 per option, which would amount to a payment, at specified intervals, of at least $20. At any time before Proceeds become payable, you may request to change your option in writing to our Home Office. At any time before Proceeds become payable, you may request to change your payout option in writing at our Home Office. Changing the beneficiary of the policy will revoke the payout options in effect at that time. Proceeds are neither assignable nor subject to claims of creditors or legal process. Please note that for the remainder of The Payout Options section, "you" means the person we are obligated to pay. INTEREST INCOME You keep the Proceeds with us to earn interest at a specified rate. The Proceeds can be paid at the end of every 12-, six-, three- or one-month intervals. You may withdraw any outstanding balance by making a written request of us at our Home Office. We will pay interest on the outstanding balance at a rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. Upon your death, we will pay any outstanding balance to your estate. INCOME FOR A FIXED PERIOD You keep the Proceeds with us, but are paid at specified intervals over a number of years (no more than 30). Each payment will consist of a portion of the Proceeds plus interest at a guaranteed rate. The Proceeds can be paid at the beginning of each 12-, six-, three- or one-month interval. You may withdraw any outstanding balance by making a written request of us at our Home Office. We will pay interest at an annually determined rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. Upon your death, we will pay any outstanding balance to your estate. LIFE INCOME WITH PAYMENTS GUARANTEED We pay you the Proceeds at specified intervals for a guaranteed period (10, 15 or 20 years), and, then, for the rest of your life, if you have outlived the guaranteed period. The Proceeds can be paid at the beginning of each 12-, six-, three- or one-month interval. During the guaranteed period, we will pay interest on the outstanding balance at a rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin. If you die before the guaranteed period has elapsed, we will make the remaining payments to your estate. If you die after the guaranteed period has elapsed, we will make no payments to your estate. FIXED INCOME FOR VARYING PERIODS You keep the Proceeds with us, but are paid a fixed amount at specified intervals. The total amount payable each year may not be less than 5% of the original Proceeds. The Proceeds can be paid at the beginning of each 12-, six-, three- or one-month interval. You may withdraw any outstanding balance by making a written request of us at our Home Office. We will pay interest on the outstanding balance at a rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. Upon your death, we will pay any outstanding balance to your estate. 26 JOINT AND SURVIVOR LIFE We pay you the Proceeds in equal payments at specified intervals for the life of the last surviving payee. The Proceeds can be paid at the beginning of each 12-, six-, three- or one-month interval. As the payments are based on the lifetimes of the payees, you cannot withdraw any amount you designate to this option after payments begin. Also, payments will cease upon the death of the last surviving payee. We will make no more payments to the last surviving payee's estate. ALTERNATE LIFE INCOME We use the Proceeds to purchase an annuity with the payee as annuitant. The amount payable will be 102% of our current individual immediate annuity purchase rate on the date you choose this settlement option. The Proceeds can be paid at the end of every 12-, six-, three- or one-month intervals. As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin. Also, payments will cease upon your death. We will make no payments to your estate. POLICY LOANS While the policy is In Force and after the first year from the Policy Date, you may take an advance of money from the Cash Value otherwise only available upon surrender or maturity, or upon payment of the Death Benefit. We call this advance a policy loan. You may increase your risk of Lapse if you take a policy loan. There also may be adverse tax consequences. You should obtain competent tax advice before you decide to take a policy loan. LOAN AMOUNT AND INTEREST The minimum policy loan you may take is $1,000. You may take no more than the maximum loan value. The maximum loan value is based on your Cash Surrender Value less 10% of your Cash Value allocated to the Sub-Accounts. For more information, see "Full Surrender," beginning on page 28. We charge interest, at the maximum guaranteed rate of 6.0% per annum, on the amount of an outstanding loan, which will accrue daily and be payable at the end of each year from the Policy Date. If left unpaid, we will add the interest to the loan amount.. COLLATERAL AND INTEREST As collateral or security, we will transfer to the loan account an amount equal to the amount of the policy loan. You may request that we transfer this amount from specific Sub-Account portfolios. We will only make a transfer from the fixed investment option when there is not enough Cash Value available in the Sub-Account portfolios. On this amount, we will credit interest daily based on the current rate in effect, which is set at the beginning, and guaranteed through the end, of each calendar quarter. The minimum guaranteed interest crediting rate, as stated on the Policy Data Page, is 5.1% per annum. We may credit interest in excess of the guaranteed interest crediting rate. REPAYMENT You may repay all or part of a policy loan at any time while your policy is In Force during either Insured's lifetime. Interest on the loan amount will be due and payable at the end of each year from the Policy Date. If left unpaid, we will add it to the loan amount. While your policy loan is outstanding, we will credit all payments you make as Premium payments, unless you provide written notice that they are to be applied as loan repayments. If you do not specify any Sub-Account portfolios to allocate loan repayments, we will transfer the amount from the policy loan account to the Sub-Account portfolios and fixed investment option based on your allocations as of the date of repayment. If you took any portion of a policy loan from the fixed investment option, we reserve the right to require that your loan repayments are first allocated to the fixed account. 27 EFFECT OF POLICY LOANS We will charge interest on the loan amount at the same time as the collateral amount will be credited interest. In effect, we will net the loan amount interest rate against the interest crediting rate, so that your actual cost of a policy loan will be less than the loan amount interest rate. For more information, see "In Summary: Fee Tables," in particular, the footnotes, beginning on page 6. Nevertheless, keep in mind that the Cash Value we transfer to our loan account as collateral for a policy loan will neither be affected by the investment performance of the Sub-Account portfolios, nor credited with the interest rates accruing on the fixed account. Whether repaid, a policy loan will affect the policy, the net Cash Surrender Value and the Death Benefit. Repaying a policy loan will cause the Death Benefit and net Cash Surrender Value to increase by the repayment amount. LAPSE The policy is at risk of Lapsing when the Cash Surrender Value is insufficient to cover the monthly deduction of the periodic charges. However, it will not Lapse under the guaranteed policy continuation provision so long as you have at least paid the Policy Continuation Premium Amount, irrespective of poor investment results from your Net Premium allocation choices, or that the Cash Surrender Value is less than the amount of the policy's periodic charges deduction (or both). In any event, there is a Grace Period before your policy will Lapse. Also, you may always reinstate a policy that has Lapsed. GUARANTEED POLICY CONTINUATION PROVISION The policy will not Lapse if you have at least paid the Policy Continuation Premium Amount during the guaranteed policy continuation period, both as stated on the Policy Data Page. The Policy Continuation Premium Amount will vary by: the Insureds' ages; sexes; underwriting classes; any substandard ratings; the Specified Amount; and the Riders purchased. The Policy Continuation Premium Amount will not account, however, for any subsequent increases in the Specified Amount, policy loans or partial surrenders. For no charge, you may request that we determine whether your Premium payments are sufficient to keep the guaranteed policy continuation provision in effect at any time, and you should do so especially after you have: requested an increase in the Specified Amount; taken a policy loan; or requested a partial surrender. There are two levels of guarantees, an initial and limited guarantee, and, so, there are two minimum monthly Premium amounts stated on the Policy Data Page from which to choose. The initial policy continuation guarantee lasts five years from the Policy Date, if you at least pay the initial Policy Continuation Premium Amount. The limited policy continuation guarantee lasts until the younger Insured reaches Attained Age 75, if you at least pay the limited Policy Continuation Premium Amount. We will determine these amounts based upon the ages, sexes, risk classifications, the Specified Amount, and any options or Riders you have elected. If your Premium payments become insufficient for purposes of the limited policy continuation guarantee, we will notify you of the start of a Grace Period. Thereafter, if you do not pay the necessary amount, the limited policy continuation guarantee will terminate, and there is no opportunity to reinstate it. Also, the limited policy continuation guarantee is unavailable if the younger Insured is Attained Age 70 when full insurance coverage begins. There is no charge for the guaranteed policy continuation provision. The guaranteed policy continuation provision is subject to state insurance restrictions and may be different in your state and for your policy. 28 GRACE PERIOD We will send you a notice when the Grace Period begins. The notice will state an amount of Premium required to avoid Lapse that is equal to four times the current monthly deductions or, if it is less, the Premium that will bring the guaranteed policy continuation provision back into effect. If you do not pay this Premium within 61 days, the policy and all Riders will Lapse. The Grace Period will not alter the operation of the policy or the payment of Proceeds. REINSTATEMENT You may reinstate a Lapsed policy by: o submitting a written request at any time within three years after the end of the Grace Period and prior to the Maturity Date; o providing evidence of insurability of both Insureds that is satisfactory to us; o paying sufficient Premium to cover all policy charges that were due and unpaid during the Grace Period; o paying sufficient Premium to keep the policy In Force for three months from the date of reinstatement, or, if the policy is in the guaranteed policy continuation period, paying the lesser of (a) or (b) where: (a) is Premium sufficient to keep the policy In Force for three months from the date of reinstatement; and (b) is Premium sufficient to bring the guaranteed policy continuation provision into effect; and o paying any Indebtedness against the policy which existed at the end of the Grace Period. At the same time, you may also reinstate any Riders, but subject to evidence of insurability satisfactory to us. The effective date of a reinstated policy, including any Riders, will be the monthly anniversary date on or next following the date we approve the application for reinstatement. If the policy is reinstated, the Cash Value on the date of reinstatement, will be set equal to the lesser of: o the Cash Value at the end of the Grace Period; or o the surrender charge for the policy year in which the policy was reinstated. We will then add any Premiums or loan repayments that you made to reinstate the policy. The allocations to Sub-Account portfolios in effect at the start of the Grace Period will be reinstated, unless you instruct otherwise. 29 TAXES The tax treatment of life insurance policies under the Code is a multifaceted subject. The tax treatment of your policy will depend on your particular circumstances. We urge you to seek competent tax advice regarding the tax treatment of the policy given your situation. The following discussion provides an overview of the Code's provisions relating to certain common transactions involving the policy. It is not and cannot be comprehensive. It cannot replace consulting with a competent tax professional. TYPES OF TAXES OF WHICH TO BE AWARE Federal Income Tax. Generally, the United States assesses a tax on income which is broadly defined to include all items of income from whatever source, unless the item is specifically excluded. Certain expenditures can reduce income for tax purposes and correspondingly the amount of tax payable. These expenditures are called deductions. While there are many more income tax concepts under the Code, the concepts of "income" and "deduction" are the most fundamental to the federal income tax treatment that pertains to this policy. Federal Transfer Tax. In addition to the income tax, the United States also assesses a tax on some or all of the value of certain transfers of wealth made by gift while a person is living(the federal gift tax), and by bequest or otherwise at the time of a person's death (the federal estate tax). The federal estate tax is integrated with the federal gift tax under a unified tax rate schedule. In general, in 2003, an estate of less than $1,000,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability. The $1 million amount increases to $1.5 million in 2004 and 2005; $2 million in 2006, 2007, and 2008; and $3.5 million in 2009. The federal estate tax is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the estate tax is scheduled to be reinstated with respect to decedents who die after December 31, 2010. Also, an unlimited marital deduction may be available for federal estate tax purposes for certain amounts that pass to the surviving spouse. In addition, if the transfer is made to someone two or more generations younger than the transferor, the transfer may be subject to the federal generation-skipping transfer tax ("GSTT"). The GSTT provisions generally apply to the same transfers that are subject to estate or gift taxes. The tax is imposed at a flat rate equal to the maximum estate tax rate for 2003, 49%, decreasing by 1 percentage point each year until 2007, when it will be 45%), and there is a provision for an aggregate $1 million exemption. The GSTT estate tax is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the GSTT tax is scheduled to be reinstated on January 1, 2011 at a rate of 55%. State and Local 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. While these taxes may or may not be substantial in your case, the specific nature of these taxes preclude a useful description of them in this prospectus. BUYING THE POLICY Note to Non-Resident Aliens. Specific tax laws and rules apply to non-resident aliens of the United States including certain withholding requirements with respect to pre-death distributions from the policy. In addition, foreign law may impose additional taxes on the policy, the Death Benefit, or other distributions and/or ownership of the policy. If you are a non-resident alien, you should confer with a competent tax professional with respect to the tax treatment of this policy. Federal Income Tax. Generally, the Code treats life insurance Premiums as a personal expense. This means that under the general rule you cannot deduct from your taxable income the Premiums paid to purchase the policy. Federal Transfer Tax. Generally, the Code treats the payment of Premiums on a life insurance policy as a gift when the Premium payment benefits someone, else like the policy owner. Gifts are not generally included in the recipient's taxable income. If you (whether or not you are the Insured) transfer ownership of the policy to another person, the transfer may be subject to a federal gift tax. The tax is imposed at a flat rate equal to the maximum estate tax rate (for 2003, 49%, decreasing by 1 percentage point each year until 2007, when it will be 45%), and there is a provision for an aggregate $1 million exemption. The GSTT estate tax is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the GSTT tax is scheduled to be reinstated on January 1, 2011. In addition, if you transfer the policy to someone two or more generations younger than you, the transfer may be subject to the GSTT, with the taxable amount equaling the value of the policy. 30 INVESTMENT GAIN IN THE POLICY The income tax treatment of changes in the policy's Cash Value depends on whether the policy is "life insurance" under the Code. If the policy meets the definition of life insurance, then the increase in the policy's Cash Value is not included in your taxable income for federal income tax purposes. To qualify as life insurance, the policy must meet certain tests set out in Section 7702 of the Code. For more information, see "The Minimum Required Death Benefit," beginning on page 26. In addition to meeting the tests required under Section 7702, Section 817(h) of the Code requires that the investments of the separate account be adequately diversified. Regulations under Code Section 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. If the failure to diversify is not corrected, you will be deemed to be the owner of the underlying securities and taxed on the earnings of your policy's 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 Code, we will take whatever steps are available to remain in compliance. We will monitor compliance with the Code Section 817(h) and the regulations applicable to Section 817(h) and, to the extent necessary, will change the objectives or assets of the Sub-Account investments to remain in compliance. We will also monitor the Policy's compliance with Code Section 7702. Thus, the policy should receive federal income tax treatment as life insurance. PERIODIC WITHDRAWALS, NON-PERIODIC WITHDRAWALS AND LOANS The tax treatment described in this section applies to withdrawals and loans you choose to take from the policy. It also applies to Premiums we accept but then return to meet the Code's definition of life insurance. For more information, see "The Minimum Required Death Benefit," beginning on page 26. The income tax treatment of distributions of cash from the policy depends on whether the policy is also a "modified endowment contract" under the Code. Generally, the income tax consequences of owning a life insurance contract that is not a modified endowment contract are more advantageous than the tax consequences of owning a life insurance contract that is a modified endowment contract. The policies offered by this prospectus may or may not be issued as modified endowment contracts. If a contract is issued as a modified endowment contract, it will always be a modified endowment contract; a contract that is not issued as a modified endowment contract can become a modified endowment contract due to subsequent transactions with respect to the contract, such as payment of additional Premiums. 31 When the Policy is Life Insurance that is a Modified Endowment Contract. Section 7702A of the 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. Under certain conditions, a policy may become a modified endowment contract, 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 Code. The Code provides special rules for the taxation of surrenders, partial surrenders, loans, collateral assignments and other pre-death distributions from modified endowment contracts. 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 Code. When the Policy is Life Insurance that is NOT a Modified Endowment Contract. 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 Code. You should carefully consider this potential tax ramification and seek further information before initiating any changes in the terms of the policy. Distributions from life insurance contracts that are not modified endowment contracts are treated as being (a) from the Premiums paid into the contract, and then (b) from the income in the contract. Because Premium payments are generally nondeductible, distributions not in excess of aggregate Premium payments are generally not includible in income; instead, they reduce the owner's "cost basis" in the contract. In addition, a loan from life insurance contracts that are not modified endowment contracts are not taxable when made, although it can be treated as a distribution if it is forgiven during the owner's lifetime. Contracts that are not modified endowment contracts are not subject to the 10% early distribution penalty tax. TERMINAL ILLNESS Certain distributions made under a policy on the life of a "terminally ill individual," as that term is defined in the Code, are treated as death proceeds. These distributions from the policy are subject to the Death Benefit rules of Section 101 of the Code described below in this section on Taxes under the heading "Taxation Of Death Benefits." SURRENDER OF THE POLICY 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 you receive 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 life insurance policy that is a modified endowment contract, are subject to federal income tax withholding. Generally, the recipient may elect not to have the withholding taken from the distribution. We will withhold income tax unless you advise us, in writing, of your request not to withhold. If you request that taxes not be withheld, or if the taxes withheld are insufficient, you may be liable for payment of an estimated tax. 32 A distribution of income from a contract may be subject to mandatory back-up withholding. Mandatory backup withholding means we are required to withhold taxes on a distribution, at the rate established by Section 3406 of the Code, and the recipient cannot elect to receive the entire distribution at once. Mandatory backup withholding may arise if we have not been provided a taxpayer identification number, or if the IRS notifies us that back-up withholding is required. In certain employer-sponsored life insurance arrangements, participants may be required to report for income tax purposes, one or more of the following: o the value each year of the life insurance protection provided; o an amount equal to any employer-paid Premiums; or o some or all of the amount by which the current value exceeds the employer's interest in the policy. Participants in an employer sponsored plan relating to this policy should consult with the sponsor or the administrator of the plan, and/or with their personal tax or legal adviser, to determine the tax consequences, if any, of their employer-sponsored life insurance arrangements. EXCHANGING THE POLICY FOR ANOTHER LIFE INSURANCE POLICY As described in the section "Surrenders," you ordinarily will pay taxes on amounts that you receive in excess of your Premium payments when you completely surrender the policy. If, however, you exchange the policy for another life insurance policy, a modified endowment contract or an annuity contract, you will not be taxed on the excess amount if the exchange meets the requirements of Code Section 1035. To meet Section 1035 requirements, the Insured named in the policy must be the Insured for the new policy or contract. Also, the new policy or contract cannot extend the Maturity Date of the policy or otherwise delay a distribution that would extend when tax would be payable under the policy. Generally, the new policy or contract will be treated as having the same date of issue and tax basis as the old contract. SPECIAL NOTE REGARDING THE POLICY SPLIT OPTION RIDER A Policy Split Option Rider is available for this Policy. This Rider permits you, under certain circumstances, to make a "policy split," whereby two policies results. Each of the policies will have as the Insured one of the Insureds. 33 Existing tax law is unclear as to whether a policy split will be treated as a nontaxable exchange. If it is not, the result may be that you recognize taxable gain equal to the Policy's investment gain at the time of the policy split. Also, existing tax law is unclear as to whether the two policies resulting from a policy split will be treated as life insurance for federal tax purposes. If the resulting policies are life insurance for federal tax purposes, they may be treated as modified endowment contracts. You should consult with a tax adviser about the possible tax consequences associated with a policy split. TAXATION OF DEATH BENEFITS Federal Income Tax. The amount of the Death Benefit payable under a policy generally is excludable from gross income of the beneficiary under Section 101 of the Code. However, if the policy is transferred for valuable consideration, then a portion of the Death Benefit may be includable in the beneficiary's gross income. Federal Transfer Taxes. 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 beneficiary is two or more generations younger than the Insured, the payment of the Proceeds at the death of the Insured may be subject to the GSTT. Pursuant to regulations issued by the U.S. Secretary of the Treasury, we may be required to withhold a portion of the Proceeds and pay them directly to the IRS as the GSTT liability. TAXES AND THE VALUE OF YOUR POLICY As discussed in "Charges," the Accumulation Units you hold in the separate account are adjusted to reflect a Premium Tax charge for certain taxes assessed by federal and state taxing authorities. This charge relates to taxes associated with the payment of Premium or certain other policy acquisition costs. This charge decreases your Accumulation Unit values. For federal income tax purposes, the separate account is not a separate entity from Nationwide Life Insurance Company. Thus, the tax status of the separate account is not distinct from our status as a life insurance company. Investment income and realized capital gains on the assets of the separate account are reinvested and taken into account in determining the value of Sub-Account Accumulation Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the policies. At present, we do not initially expect to incur any federal income tax liability that would be chargeable to the Accumulation Units you hold in the separate account. Based upon these expectations, no charge is currently being made against your Accumulation Units in the separate account for federal income taxes. If, however, we determine that taxes may be incurred, we reserve the right to assess a charge for taxes. We may also incur state and local taxes (in addition to those described in the discussion of the Premium Taxes) in several states. At present, these taxes are not significant. If they increase, however, charges for such taxes may be made that would decrease the value of your Accumulation Units in the separate account. TAX CHANGES The foregoing discussion, which is based on our understanding of federal tax laws as currently interpreted by the IRS, is general and is not intended as tax advice. The 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. 34 If you, the Insured, the 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, payment of the Death Benefit, 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. We make no representation as to the likelihood of the continuation of these current laws, interpretations, and policies. In 2001, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) was enacted into law. EGTRRA contained numerous changes to the federal income, gift, estate and generation skipping transfer taxes, many of which are not scheduled to become effective until a future date. Among other matters, EGTRRA provides for the repeal of the federal estate and generation skipping transfer taxes after 2009; however, unless Congress and the President enact additional legislation, EGTRRA also provides that all of those changes will "sunset" after 2010, and the estate and generation skipping transfer taxes will be reinstated as if EGTRRA had never been enacted. 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. NATIONWIDE LIFE INSURANCE COMPANY We are a stock life insurance company organized under Ohio law. We were founded in March, 1929 and our Home Office is One Nationwide Plaza, Columbus, Ohio 43215. We provide long-term savings products by issuing life insurance, annuities and other retirement products. NATIONWIDE VLI SEPARATE ACCOUNT-4 ORGANIZATION, REGISTRATION AND OPERATION Nationwide VLI Separate Account-4 is a separate account established under Ohio law. We own the assets in this account, and we are obligated to pay all benefits under the policies. We may use the account to support other variable life insurance policies we issue. It is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 ("1940 Act") and qualifies as a "separate account" within the meaning of the federal securities laws. This registration, however, does not involve the SEC's supervision of this account's management or investment practice or policies. It is divided into Sub-Accounts that may invest in shares of the available Sub-Account portfolios. We buy and sell the Sub-Account portfolio shares at NAV. Any dividends and distributions from a Sub-Account portfolio are reinvested at NAV in shares of that Sub-Account portfolio. 35 Income, gains, and losses, whether or not realized, from the assets in the account will be credited to, or charged against, the account without regard to our other income, gains, or losses. Income, gains, and losses credited to, or charged against, a Sub-Account reflect the Sub-Account's own Investment Experience and not the Investment Experience of our other assets. Its assets are held separately from our other assets and are not part of our general account. We may not use the separate account's assets to pay any of our liabilities other than those arising from the policies. If the separate account's assets exceed the required reserves and its other liabilities, we may transfer the excess to our general account. The separate account may include other Sub-Accounts that are not available under the policies, and are not discussed in this prospectus. If investment in the mutual funds or a particular portfolio is no longer possible, in our judgment becomes inappropriate for the purposes of the policy, or for any other reason in our sole discretion, we may substitute another mutual fund or portfolio without your consent. The substituted mutual fund or portfolio may have different fees and expenses. Substitution may be made with respect to existing investments or the investments of future Premium, or both. We will comply with federal securities laws to effect a substitution. Furthermore, we may close Sub-Accounts to allocations of Premiums or policy value, or both, at any time in our sole discretion. The mutual funds, which sell their shares to the Sub-Accounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the Sub-Accounts. In addition, we reserve the right to make other structural and operational changes affecting this separate account. WE DO NOT GUARANTEE ANY MONEY YOU PLACE IN THIS SEPARATE ACCOUNT. THE VALUE OF EACH SUB-ACCOUNT WILL INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE CORRESPONDING PORTFOLIO. YOU COULD LOSE SOME OR ALL OF YOUR MONEY. ADDITION, DELETION, OR SUBSTITUTION OF MUTUAL FUNDS Where permitted by applicable law, we reserve the right to: o remove, combine, or add Sub-Accounts and make new Sub-Accounts available; o substitute shares of another mutual fund, which may have different fees and expenses, for shares of an existing mutual fund; o substitute or close Sub-Accounts to allocations, at any time; o transfer assets supporting the policies from one Sub-Account to another or from the separate account to another separate account; o combine the separate account with other separate accounts, and/or create new separate accounts; o deregister the separate account under the 1940 Act, or operate the separate account as a management investment company under the 1940 Act, or as any other form permitted by the law; and o modify the policy provisions to reflect changes in the Sub-Accounts and the separate account to comply with applicable law. The portfolios that sell their shares to the Sub-Accounts pursuant to participation agreements also may terminate these agreements and discontinue offering their shares to the Sub-Accounts. We will not make any such changes without receiving necessary approval of the SEC and applicable state insurance departments. We will notify you of any changes. 36 VOTING RIGHTS Unless there is a change in existing law, we will vote our shares only as you instruct on all matters submitted to shareholders of the portfolios. Before a vote of a portfolio's shareholders occurs, you will have the right to instruct us based on the number of portfolio shares that corresponds to the amount of policy account value you have in the portfolio (as of a date set by the portfolio). We 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 NAV of that underlying mutual fund. We will designate a date for this determination not more than 90 days before the shareholder meeting. LEGAL PROCEEDINGS NATIONWIDE LIFE INSURANCE COMPANY The Company 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 the Company. 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. 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 the other named defendants. On January 25, 2002, the plaintiffs filed a motion for leave to amend their complaint to add three new named plaintiffs. On February 9, 2002, the plaintiffs filed a motion for class certification. On April 16, 2002, Nationwide filed a motion for summary judgment on the individual claims of plaintiff Mercedes Castillo. On May 28, 2002, the Court granted the motion of Marcus Shore to withdraw as a named plaintiff and denied plaintiffs' motion to add new persons as named plaintiffs, so the action is now proceeding with Mercedes Castillo as the only named plaintiff. On November 4, 2002, the Court issued a decision granting Nationwide's motion for summary judgment on all of plaintiff Mercedes Castillo's individual claims, and ruling that plaintiff's motion for class certification is moot. Judgment for Nationwide was entered on November 15, 2002. On December 16, 2002, plaintiff Mercedes Castillo filed a notice of appeal from the Court's orders (a) granting Nationwide's motion for summary judgment; and (b) denying Castillo's motion for leave to amend the complaint to add three new named plaintiffs. Nationwide's responsive brief is due by April 23, 2003 and plaintiff's reply brief is due by May 12, 2003. Nationwide intends to defend this lawsuit vigorously. On August 15, 2001, Nationwide was named in a lawsuit filed in Connecticut federal court titled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. On September 6, 2001, the plaintiffs 37 amended their complaint to include class action allegations. The plaintiffs seek to represent a class of retirement plans that purchased variable annuities from Nationwide to fund qualified ERISA retirement plans. The amended complaint alleges that the retirement plans purchased variable annuity contracts from Nationwide that allowed plan participants to invest in funds that were offered by separate mutual fund companies; that Nationwide was a fiduciary under ERISA and that Nationwide breached its fiduciary duty when it accepted certain fees from the mutual fund companies that purportedly were never disclosed by Nationwide; and that Nationwide violated ERISA by replacing many of the funds originally included in the plaintiffs' annuities with "inferior" funds because the new funds purportedly paid higher fees to Nationwide. The amended complaint seeks disgorgement of the fees allegedly received by Nationwide and other unspecified compensatory damages, declaratory and injunctive relief and attorney's fees. On December 3, 2001, the plaintiffs filed a motion for class certification. Nationwide is opposing that motion. Nationwide's Motion to Dismiss was denied on September 11, 2002. On January 14, 2003, plaintiffs filed a motion to file a second amended complaint and the motion was granted on February 21, 2003. The second amended complaint removes the claims asserted against Nationwide concerning a violation of ERISA through the replacement of many of the funds originally included in the plaintiffs' annuities with "inferior" funds that purportedly paid higher fees to Nationwide. Nationwide intends to defend this lawsuit vigorously. There can be no assurance that any such litigation will not have a material adverse effect on the Company in the future. NATIONWIDE INVESTMENT SERVICES CORPORATION Nationwide Investment Services Corporation (NISC) is not engaged in any litigation of a material nature. FINANCIAL STATEMENTS The Statement of Additional Information (SAI) contains financial statements of Nationwide Life Insurance Company and subsidiaries and Nationwide VLI Separate Account - 4. You may obtain a copy of the SAI FREE OF CHARGE by contacting us at the address or telephone number on the first page of this prospectus. You should distinguish the financial statements of the company and subsidiaries from the financial statements of the separate account. Please consider the financial statements of the company only as bearing on our ability to meet the obligations under the policy. You should not consider the financial statements of the company and subsidiaries as affecting the investment performance of the assets of the separate account. 38 APPENDIX A: DEFINITIONS ACCUMULATION UNIT - The measure of your investment in, or share of, a Sub-Account after we deduct for transaction fees and periodic charges. Initially, we set the Accumulation Unit value at $10 for each Sub-Account. ATTAINED AGE - The Insured's age upon the issue of full base insurance coverage plus the number of full years since the Policy Date. CASH SURRENDER VALUE - The policy's Cash Value , subject to Indebtedness and the surrender charge. CASH VALUE - The total of the Sub-Accounts you have chosen, which will vary with Investment Experience, and the policy loan and fixed accounts, to which interest will be credited daily. We will deduct partial surrenders and the policy's periodic charges from the Cash Value. CODE - The Internal Revenue Code of 1986, as amended. DEATH BENEFIT - The amount we will pay to the beneficiary upon the last surviving Insured's death, before payment of any unpaid outstanding loan balances or charges. GRACE PERIOD - A 61-day period after which the Policy will Lapse if you do not make a sufficient payment. GUIDELINE ANNUAL PREMIUM - The level annual premium amount that would be payable through maturity, assuming an investment return of 5% per annum, net of the policy's periodic charges, as described in Rule 6e-3(T)(c)(8)(i), promulgated under the Investment Company Act of 1940, though the SEC has neither approved nor disapproved the accuracy of any calculation using the Guideline Annual Premium. HOME OFFICE - Our Home Offices are located at One Nationwide Plaza, Columbus, Ohio 43215. IN FORCE - The insurance coverage is in effect. INDEBTEDNESS - The total amount of all outstanding policy loans, including principal and interest due. INSURED - The persons whose lives we insure under the policy. INVESTMENT EXPERIENCE - The performance of a mutual fund in which a Sub-Account portfolio invests. A-1 LAPSE - The policy terminates without value. MATURITY DATE - The policy anniversary on or next following the younger Insured's 100th birthday. NET AMOUNT AT RISK - The policy's Death Benefit, not including any supplemental insurance coverage, minus the policy's Cash Value. NET ASSET VALUE (NAV) - The price each share of a mutual fund in which a Sub-Account portfolio invests. It is calculated by subtracting the mutual fund's liabilities from its total assets, and dividing that figure by the number of shares outstanding. We use NAV to calculate the value of Accumulation Units. NAV does not reflect deductions we make for charges we take from Sub-Accounts. Accumulation Unit values do reflect these deductions. NET PREMIUM - Premium after transaction charges, but before any allocation to an investment option. POLICY CONTINUATION PREMIUM AMOUNT - The amount of Premium, on a monthly basis from the Policy Date, stated on the Policy Data Page, that you must pay, in the aggregate, to keep the policy In Force under the Guaranteed policy continuation provision; however, this amount does not account for any increases in the Specified Amount, policy loans or partial surrenders, so you should anticipate paying more if you intend to request an increase in Specified Amount; take a policy loan; or request a partial surrender. POLICY DATA PAGE(S) - The Policy Data Page contains more detailed information about the policy, some of which is unique and particular to the owner, the beneficiary and the Insured. POLICY DATE - The date the policy takes effect as shown on the Policy Data Page. Policy years and months are measured from this date. POLICY PROCEEDS OR PROCEEDS - Policy Proceeds may constitute the Death Benefit, or the amount payable if the policy matures or you choose to surrender the policy. PREMIUM - The amount of money you pay to begin and continue the policy. PREMIUM LOAD - The aggregate of the sales load and premium tax charges. RIDER - An optional benefit you may purchase under the policy. SEC - The Securities and Exchange Commission. SPECIFIED AMOUNT - The dollar or face amount of insurance the owner selects. This amount is used in determining the Death Benefit we will pay the beneficiary. SUB-ACCOUNTS - The mechanism we use to account for your allocations of Net Premium and Cash Value among the policy's variable investment options. US, WE, OUR or the COMPANY - Nationwide Life Insurance Company. VALUATION PERIOD - The period during which we determine the change in the value of the Sub-Accounts. One Valuation Period ends and another begins with the close of normal trading on the New York Stock Exchange. YOU, YOUR or the POLICY OWNER OR OWNER - The person named as the owner in the application, or the person assigned ownership rights. A-2 APPENDIX B: SUB-ACCOUNT PORTFOLIOS The Sub-Account portfolios 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. Total Sub-Account Portfolio Annual Operating Expenses are expenses that are deducted from underlying mutual fund assets, including management fees, distribution (12b-1) fees, and other expenses. PLEASE REFER TO THE PROSPECTUS FOR EACH SUB-ACCOUNT PORTFOLIO FOR MORE DETAILED INFORMATION. AIM VARIABLE INSURANCE FUNDS, INC. - AIM V.I. BASIC VALUE FUND: SERIES I SHARES - ------------------------------------------------ -------------------------------
Investment Adviser: AIM Advisors, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.16% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- AIM VARIABLE INSURANCE FUNDS, INC. - AIM V.I. CAPITAL APPRECIATION FUND: SERIES I SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: AIM Advisors, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Growth of capital. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.85% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. - ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO: CLASS A - ------------------------------------------------ ------------------------------- Investment Adviser: Alliance Capital Management, L.P. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Current income and capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.68% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. - ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO: CLASS A - ------------------------------------------------ ------------------------------- Investment Adviser: Alliance Capital Management, L.P. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.41%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive certain expenses associated with the underlying mutual fund to prevent total expenses, on an annualized basis, from exceeding 1.20%. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.13%. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP INCOME & GROWTH FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.70% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIOS II, INC. - AMERICAN CENTURY VP INFLATION PROTECTION FUND: CLASS II - ------------------------------------------------ ------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term total return using a strategy that seeks to protect against U.S. inflation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.76% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP INTERNATIONAL FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.30% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP ULTRA FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.00% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP VALUE FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.95% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.: INITIAL SHARES (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth with current income as a secondary goal. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.80% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- DREYFUS STOCK INDEX FUND, INC.: INITIAL SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: To match total return of S&P 500 Composite Stock Price Index. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.27% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- DREYFUS INVESTMENT PORTFOLIOS - SMALL CAP STOCK INDEX PORTFOLIO: SERVICE SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: To match performance of the S&P Small Cap 600 Index. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.60% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
DREYFUS VARIABLE INVESTMENT FUND - APPRECIATION PORTFOLIO: INITIAL SHARES - ------------------------------------------------ -------------------------------
Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.78% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- DREYFUS VARIABLE INVESTMENT FUND - DEVELOPING LEADERS PORTFOLIO: INITIAL SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Maximum capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.81% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- FEDERATED INSURANCE SERIES - FEDERATED AMERICAN LEADERS FUND II: PRIMARY SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: Federated Investment Management Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.13%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.88%. The investment adviser may discontinue the reimbursements and waivers at any time. FEDERATED INSURANCE SERIES - FEDERATED CAPITAL APPRECIATION FUND II: PRIMARY SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: Federated Investment Management Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 4.37%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.90%. The investment adviser may discontinue the reimbursements and waivers at any time. FEDERATED INSURANCE SERIES - FEDERATED QUALITY BOND FUND II: PRIMARY SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: Federated Investment Management Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.23%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.70%. The investment adviser may discontinue the reimbursements and waivers at any time. FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP EQUITY-INCOME PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Reasonable income and capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.67% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP GROWTH PORTFOLIO: SERVICE CLASS - ------------------------------------------------ -------------------------------
Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.77% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP HIGH INCOME PORTFOLIO: SERVICE CLASS (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High level of current income and capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.80% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP OVERSEAS PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management and Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.00% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II CONTRAFUND(R) PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.78% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP II INVESTMENT GRADE BOND PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High level of current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.64% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III GROWTH OPPORTUNITIES PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.80% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III MID CAP PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.80% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III VALUE STRATEGIES PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.52%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.10%. The investment adviser may discontinue the reimbursements and waivers at any time. FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - FRANKLIN RISING DIVIDENDS SECURITIES FUND: CLASS 1 - ------------------------------------------------ ------------------------------- Investment Adviser: Franklin Advisory Services, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.79%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.78%. The reimbursements and waivers are guaranteed to remain in effect until December 31, 2003. FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - FRANKLIN SMALL CAP VALUE SECURITIES FUND: CLASS 1 - ------------------------------------------------ ------------------------------- Investment Adviser: Franklin Advisory Services, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.79%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.76%. The reimbursements and waivers are guaranteed to remain in effect until December 31, 2003. FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - TEMPLETON FOREIGN SECURITIES FUND: CLASS 1 - ------------------------------------------------ ------------------------------- Investment Adviser: Templeton Investment Counsel, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.90%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.88%. The reimbursements and waivers are guaranteed to remain in effect until December 31, 2003. GARTMORE VARIABLE INSURANCE TRUST - COMSTOCK GVIT VALUE FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Van Kampen Asset Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth and income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.11% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
GARTMORE VARIABLE INSURANCE TRUST - DREYFUS GVIT INTERNATIONAL VALUE FUND: CLASS I - ------------------------------------------------ -------------------------------
Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.01%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *Underlying mutual fund annual expenses are estimated. GARTMORE VARIABLE INSURANCE TRUST - DREYFUS GVIT MID CAP INDEX FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.75% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - FEDERATED GVIT HIGH INCOME BOND FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Federated Investment Counseling - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.98% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT EMERGING MARKETS FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.41%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The underlying mutual fund operates under an expense cap of 1.41%. The expense cap is guaranteed to remain in effect until July 1, 2003. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.40%* Annual Operating Expenses: - ------------------------------------------------ -------------------------------
*The underlying mutual fund operates under an expense cap of 1.40%. The expense cap is guaranteed to remain in effect until July 1, 2003.
GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.30%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The underlying mutual fund operates under an expense cap of 1.30%. The expense cap is guaranteed to remain in effect until July 1, 2003. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.39%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.38%. The reimbursements and waivers are guaranteed to remain in effect until July 1, 2003. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL UTILITIES FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.24%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.20%. The reimbursements and waivers are guaranteed to remain in effect until July 1, 2003. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GOVERNMENT BOND FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High level of income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.73% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GROWTH FUND: CLASS I (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.85% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT INTERNATIONAL GROWTH FUND: CLASS I (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.33%* Annual Operating Expenses: - ------------------------------------------------ -------------------------------
*The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.30%. The reimbursements and waivers are guaranteed to remain in effect until July 1, 2003. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT INVESTOR DESTINATIONS FUNDS - --------------------------- ----------------------------------------------------
Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - --------------------------- ---------------------------------------------------- - --------------------------- ----------------------------------- ---------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking DESTINATIONS CONSERVATIVE income and, secondarily, long term growth of FUND 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. - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- Total Underlying Mutual Fund 0.56%* Annual Operating Expenses: - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking DESTINATIONS MODERATELY income and, secondarily, growth of capital. The CONSERVATIVE FUND 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. - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- Total Underlying Mutual Fund 0.56%* Annual Operating Expenses: - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking DESTINATIONS MODERATE FUND 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. - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- Total Underlying Mutual Fund 0.56%* Annual Operating Expenses: - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return primarily by DESTINATIONS MODERATELY seeking growth of capital, but also income. The AGGRESSIVE FUND 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. - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- Total Underlying Mutual Fund 0.56%* Annual Operating Expenses: - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return primarily by DESTINATIONS AGGRESSIVE seeking growth of capital. The Fund invests in a FUND 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. - --------------------------- ----------------------------------- ---------------- - --------------------------- ----------------------------------- ---------------- Total Underlying Mutual Fund 0.56%* Annual Operating Expenses: - --------------------------- ----------------------------------- ----------------
*The underlying mutual funds operate under an expense cap of 0.56%. The expense cap is guaranteed to remain in effect until May 1, 2003. The Investor Destination Funds are designed to provide diversification and asset allocation across several types of investments and asset classes, primarily by investing in underlying funds. Therefore, in addition to the expense of the Investor Destination Funds, a contract owner will be indirectly paying a proportionate share of the applicable fees and expenses of the underlying funds. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT MONEY MARKET FUND: CLASS I - ------------------------------------------------ -------------------------------
Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High level of current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.62% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT NATIONWIDE LEADERS FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.18%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The underlying mutual fund operates under an expense cap of 1.18%. The expense cap is guaranteed to remain in effect until July 1, 2003. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT NATIONWIDE FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.84% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT U.S. GROWTH LEADERS FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.18%* Annual Operating Expenses: - ------------------------------------------------ -------------------------------
*The underlying mutual fund operates under an expense cap of 1.18%. The expense cap is guaranteed to remain in effect until July 1, 2003. GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT WORLDWIDE LEADERS FUND: CLASS I (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ -------------------------------
Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.32% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GVIT SMALL CAP GROWTH FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-advisers: Neuberger Berman, LLC; Waddell & Reed Investment Management Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.35% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GVIT SMALL CAP VALUE FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: The Dreyfus Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.11% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GVIT SMALL COMPANY FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-advisers: The Dreyfus Corporation; Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company; Neuberger Berman, LLC; Strong Capital Management, Inc.; Waddell & Reed Investment Management Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.18% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - J.P. MORGAN GVIT BALANCED FUND: CLASS I (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: J.P. Morgan Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.00% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
GARTMORE VARIABLE INSURANCE TRUST - VAN KAMPEN GVIT MULTI SECTOR BOND FUND: CLASS I - ------------------------------------------------ -------------------------------
Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Sub-adviser: Morgan Stanley Investment Management Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Above average total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.02% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT MID CAP GROWTH FUND: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High level of long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.16% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- JANUS ASPEN SERIES - BALANCED PORTFOLIO: SERVICE SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: Janus Capital Management LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.92% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- JANUS ASPEN SERIES - CAPITAL APPRECIATION PORTFOLIO: SERVICE SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: Janus Capital Management LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.92% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- JANUS ASPEN SERIES - GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: Janus Capital Management, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.97% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- JANUS ASPEN SERIES - INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: Janus Capital Management, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.99% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- JANUS ASPEN SERIES - RISK-MANAGED LARGE CAP CORE PORTFOLIO: SERVICE SHARES - ------------------------------------------------ ------------------------------- Investment Adviser: Janus Capital Management, LLC; sub-adviser, Enhanced Investment Technologies, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.34% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
MFS(R) VARIABLE INSURANCE TRUST - MFS INVESTORS GROWTH STOCK SERIES: INITIAL CLASS - ------------------------------------------------ -------------------------------
Investment Adviser: Massachusetts Financial Services Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth and future income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.88% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- MFS(R) VARIABLE INSURANCE TRUST - MFS VALUE SERIES: INITIAL CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: Massachusetts Financial Services Company - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation and reasonable income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 2.94%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.90%. A reimbursement of 0.15% is guaranteed to remain in effect until January 1, 2005; the remainder of the waivers and reimbursements may be discontinued at any time. NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT FASCIANO PORTFOLIO: CLASS S - ------------------------------------------------ ------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.90%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.40%. The reimbursements and waivers are guaranteed to remain in effect until December 31, 2006. NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT GUARDIAN PORTFOLIO (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.98% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT LIMITED MATURITY BOND PORTFOLIO: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Highest available current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.76% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT MID-CAP GROWTH PORTFOLIO: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.95% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT PARTNERS PORTFOLIO (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ -------------------------------
Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.91% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT SOCIALLY RESPONSIVE PORTFOLIO - ------------------------------------------------ ------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.30% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER AGGRESSIVE GROWTH FUND/VA: INITIAL CLASS (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.68% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND/VA: INITIAL CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: OppenheimerFunds Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation and current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.66% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND/VA: INITIAL CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.67% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND/VA: INITIAL CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High level of current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.77% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MAIN STREET(R) FUND/VA: INITIAL CLASS - ------------------------------------------------ ------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.69% Annual Operating Expenses: - ------------------------------------------------ -------------------------------
OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MAIN STREET(R) SMALL CAP FUND/VA: INITIAL CLASS - ------------------------------------------------ -------------------------------
Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.00% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT GROWTH & INCOME FUND: CLASS IB - ------------------------------------------------ ------------------------------- Investment Adviser: Putnam Investment Management, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth and current income. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.77% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT INTERNATIONAL EQUITY FUND: CLASS IB - ------------------------------------------------ ------------------------------- Investment Adviser: Putnam Investment Management, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.24% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT VOYAGER FUND: CLASS IB - ------------------------------------------------ ------------------------------- Investment Adviser: Putnam Investment Management, LLC - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.85% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- STRONG OPPORTUNITY FUND II, INC.: INVESTOR CLASS (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2003) - ------------------------------------------------ ------------------------------- Investment Adviser: Strong Capital Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.38%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.09%. The investment adviser may discontinue the reimbursements and waivers at any time. VAN ECK WORLDWIDE INSURANCE TRUST - WORLDWIDE EMERGING MARKETS FUND (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2002) - ------------------------------------------------ ------------------------------- Investment Adviser: Van Eck Associates Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.36%* Annual Operating Expenses: - ------------------------------------------------ -------------------------------
*The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, excluding interest expense, total underlying mutual fund annual operating expenses are 1.30%. The investment adviser may discontinue the reimbursements and waivers at any time. VAN ECK WORLDWIDE INSURANCE TRUST - WORLDWIDE HARD ASSETS FUND (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2002) - ------------------------------------------------ -------------------------------
Investment Adviser: Van Eck Associates Corporation - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.23%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, excluding interest expense, total underlying mutual fund annual operating expenses are 1.20%. The investment adviser may discontinue the reimbursements and waivers at any time. THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - CORE PLUS FIXED INCOME PORTFOLIO: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Above-average total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 0.73%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 0.70%. The investment adviser may discontinue the reimbursements and waivers at any time. THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - EMERGING MARKETS DEBT PORTFOLIO: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: High total return. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.22% Annual Operating Expenses: - ------------------------------------------------ ------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - MID CAP GROWTH PORTFOLIO: CLASS I (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2002) - ------------------------------------------------ ------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Long-term capital growth - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.28%* Annual Operating Expenses: - ------------------------------------------------ ------------------------------- *The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.05%. The investment adviser may discontinue the reimbursements and waivers at any time. THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - U.S. REAL ESTATE PORTFOLIO: CLASS I - ------------------------------------------------ ------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Investment Objective: Above average current income and long-term capital appreciation. - ------------------------------------------------ ------------------------------- - ------------------------------------------------ ------------------------------- Total Underlying Mutual Fund 1.12%* Annual Operating Expenses: - ------------------------------------------------ -------------------------------
*The investment adviser has agreed to waive or reimburse certain expenses associated with the underlying mutual fund. Net of such waivers and reimbursements, total underlying mutual fund annual operating expenses are 1.10%. The investment adviser may discontinue the reimbursements and waivers at any time. OUTSIDE BACK COVER PAGE To learn more about this policy, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus. For a free copy of the SAI, to receive personalized illustrations of Death Benefits, net Cash Surrender Values, and Cash Values, and to request other information about this policy please call our Service Center at 1-800-547-7548 (TDD: 1-800-238-3035) or write to us at our Service Center at Nationwide Life Insurance Company, One Nationwide Plaza, RR1-04-D4, Columbus, OH 43215-2220. The SAI has been filed with the SEC and is incorporated by reference into this prospectus. The SEC maintains an Internet website (http://www.sec.gov) that contains the SAI and other information about us and the policy. Information about us and the policy (including the SAI) may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., or may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 450 Fifth Street, NW, Washington, D.C. 20549-0102. Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 942-8090. Investment Company Act of 1940 Registration File No. 811-8301. NATIONWIDE VLI SEPARATE ACCOUNT-4 (REGISTRANT) NATIONWIDE LIFE INSURANCE COMPANY (DEPOSITOR) One Nationwide Plaza, RR1-04-D4 Columbus, OH 43215-2220 1-800-547-7548 TDD: 1-800-238-3035 STATEMENT OF ADDITIONAL INFORMATION LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES This Statement of Additional Information ("SAI") contains additional information regarding the last survivor flexible premium variable universal life insurance policy offered by us, Nationwide Life Insurance Company. This SAI is not a prospectus and should be read together with the policy prospectus dated May 1, 2003 and the prospectuses for the available Sub-Account Portfolios. You may obtain a copy of these prospectuses by writing or calling us at our address or phone number shown above. The date of this Statement of Additional Information is May 1, 2003. TABLE OF CONTENTS NATIONWIDE LIFE INSURANCE COMPANY NATIONWIDE VLI SEPARATE ACCOUNT-4 NATIONWIDE INVESTMENT SERVICES CORPORATION SERVICES UNDERWRITING PROCEDURE FINANCIAL STATEMENTS ILLUSTRATIONS ADVERTISING PERFORMANCE DATA TAX DEFINITION OF LIFE INSURANCE NATIONWIDE LIFE INSURANCE COMPANY We are a stock life insurance company organized under the laws of the State of Ohio in March 1929 with our Home Office at One Nationwide Plaza, Columbus, Ohio 43215. We provide life insurance, annuities and retirement products. We are admitted to do business in all states, the District of Columbia and Puerto Rico. Nationwide is a member of the Nationwide group of companies and all of our common stock is owned by Nationwide Financial Services, Inc. ("NFS"), a holding company. NFS has two classes of common stock outstanding with different voting rights enabling Nationwide Corporation (the holder of all of the outstanding Class B Common Stock) to control NFS. Nationwide Corporation is a holding company, as well. All of the common stock is held by Nationwide Mutual Insurance Company (95.24%) and Nationwide Mutual Fire Insurance Company (4.76%), the ultimate controlling persons of the Nationwide group of companies. The Nationwide group of companies is one of America's largest insurance and financial services family of companies, with combined assets of over $129 billion as of December 31, 2002. NATIONWIDE VLI SEPARATE ACCOUNT-4 Nationwide VLI Separate Account-4 is a separate account that invests in mutual funds offered and sold to insurance companies and certain retirement plans. We established the separate account on December 3, 1987 pursuant to Ohio law. Although the separate account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 the SEC does not supervise our management or the management of the variable account. We serve as the custodian of the assets of the variable account. NATIONWIDE INVESTMENT SERVICES CORPORATION The policies are distributed by Nationwide Investment Services Corporation (NISC), One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide. For contracts issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation. The policies will be sold on a continuous basis 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). Gross first year commissions plus any expense allowance payments paid by Nationwide on the sale of these policies provided by NISC will not exceed 75% of the target premium plus 5% of any premium payments in excess of the target premium. The target premium is used to determine the amount of commissions paid to the producer for a given policy. We pay gross renewal commissions in years 2 through 10 on the sale of the policies provided by NISC that will not exceed 4% of actual Premium payment, and that will not exceed 2% in policy years 11 and thereafter. We have paid no underwriting commissions to NISC for each of this separate account's last three fiscal years. SERVICES We have responsibility for administration of the policies and the variable account. We also maintain the records of the name, address, taxpayer identification number, and other pertinent information for each policy owner and the number and type of policy issued to each policy owner and records with respect to the policy value of each policy. We are the custodian of the assets of the variable account. We will maintain a record of all purchases and redemption of shares of the mutual funds. We or our affiliates may have entered into agreements with either the investment adviser or distributor for the mutual funds. The agreements relate to administrative services we or our affiliate furnish and provide for an annual fee based on the average aggregate net assets of the variable account (and our affiliate life insurance company subsidiaries' other separate accounts) invested in particular mutual funds. These fees in no way affect the NAV of the mutual funds or fees paid by the policy owner. The financial statements of Nationwide Life Insurance Company and subsidiaries and Nationwide VLI Separate Account-4 for the periods indicated 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. KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215. UNDERWRITING PROCEDURE We underwrite the policies issued through Nationwide VLI Separate Account-4. The policy's cost of insurance depends upon each Insured's sex, issue age, risk class, and length of time the policy has been In Force. The rates will vary depending upon tobacco use and other risk factors. Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO). The mortality table is sex distinct. In addition, separate mortality tables will be used for tobacco and non-tobacco. We may deduct a "flat extra," which is an additional constant charge per $1,000 of Specified Amount for certain activities or medical conditions of the Insureds. We apply that same flat extra to all Insureds who engage in the same activity or have the same medical condition, irrespective of sex, issue age, underwriting class, or any substandard ratings. The rate class of an insured may affect the cost of insurance rate. We currently place 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. Any change in the cost of insurance rates will apply to all insureds of the same age, gender, risk class and whose policies have been in effect for the same length of time. Decreases may be reflected in the cost of insurance rate, as discussed earlier. The actual charges made during the policy year will be shown in the annual report delivered to policy owners. FINANCIAL STATEMENTS ================================================================================ 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, 2002, and the related statements of operations and changes in contract owners' equity, and the financial highlights for each of the periods indicated herein. 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, 2002, 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, 2002, and the results of its operations, changes in contract owners' equity, and financial highlights for each of the periods indicated herein, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Columbus, Ohio February 20, 2003 ================================================================================ ================================================================================ NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY December 31, 2002 Assets: Investments at fair value: Aim VIF Basic Value Fund - Series I (AIMBVF) 49,172 shares (cost $409,138) ................................................. $ 392,393 Aim VIF Capital Development Fund - Series I (AIMCDF) 25 shares (cost $231) ......................................................... 231 Alliance VPS Growth & Income Portfolio - Class A (AllGroInc) 3,272 shares (cost $56,044) ................................................... 54,379 American Century VP Income & Growth Fund - Class I (ACVPIncGr) 7,411,168 shares (cost $46,785,381) ........................................... 38,241,629 American Century VP International Fund - Class I (ACVPInt) 8,559,624 shares (cost $45,261,790) ........................................... 44,595,642 American Century VP Ultra Fund - Class I (ACVPUltra) 90,388 shares (cost $692,870) ................................................. 664,349 American Century VP Value Fund - Class I (ACVPVal) 6,975,297 shares (cost $47,589,585) ........................................... 42,688,815 Baron Capital Asset Trust (BCAT) 4,176 shares (cost $69,207) ................................................... 69,159 Comstock GVIT Value Fund - Class I (ComGVITVal) 718,088 shares (cost $6,450,659) .............................................. 5,500,555 Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSGPVen) 82,841 shares (cost $877,900) ................................................. 530,186 Credit Suisse Trust - International Focus Portfolio (CSIntEq) 206,654 shares (cost $1,666,159) .............................................. 1,380,446 Credit Suisse Trust - Large Cap Value Portfolio (CSLCapV) 172,401 shares (cost $2,068,268) .............................................. 1,679,183 Dreyfus GVIT Mid Cap Index Fund - Class I (DryMidCapIx) 2,612,116 shares (cost $33,614,923) ........................................... 28,785,521 Dreyfus IP - Mid Cap Stock Portfolio - Initial Shares (DryMidCapStk) 2,374 shares (cost $29,008) ................................................... 28,581 Dreyfus IP - Small Cap Stock Index Portfolio - Service Class (DrySmCapIxS) 257,246 shares (cost $2,484,454) .............................................. 2,464,417 Dreyfus Socially Responsible Growth Fund, Inc.- Initial Shares (DrySRGro) 741,552 shares (cost $20,761,794) ............................................. 14,015,340 Dreyfus Stock Index Fund (DryStkIx) 11,241,145 shares (cost $341,675,012) ......................................... 252,588,524 Dreyfus VIF - Appreciation Portfolio - Initial Shares (DryVIFApp) 1,167,251 shares (cost $39,974,911) ........................................... 33,593,493 Dreyfus VIF - International Value Portfolio - Initial Shares (DryIntVal) 28,896 shares (cost $288,675) ................................................. 290,119 Federated GVIT High Income Bond Fund - Class I (FGVITHiInc) 2,405,849 shares (cost $17,869,202) ........................................... 16,985,297
Federated Quality Bond Fund II - Primary Shares (FedQualBd) 6,630,530 shares (cost $73,452,065) ........................................... $ 77,643,505 Fidelity(R)VIP - Equity-Income Portfolio: Service Class (FidVIPEIS) 3,718,375 shares (cost $81,474,587) ........................................... 67,302,596 Fidelity(R)VIP - Growth Portfolio: Service Class (FidVIPGrS) 3,239,498 shares (cost $115,818,438) .......................................... 75,609,877 Fidelity(R)VIP - High Income Portfolio: Service Class (FidVIPHIS) 3,457,927 shares (cost $22,047,989) ........................................... 20,436,351 Fidelity(R)VIP - Overseas Portfolio: Service Class (FidVIPOvS) 2,005,276 shares (cost $22,664,759) ........................................... 21,937,714 Fidelity(R)VIP II - Contrafund Portfolio: Service Class (FidVIPConS) 3,153,487 shares (cost $66,273,384) ........................................... 56,888,913 Fidelity(R)VIP III - Growth Opportunities Portfolio: Service Class (FidVIPGrOpS) 964,737 shares (cost $15,509,711) ............................................. 11,287,417 Fidelity(R)VIP III - Value Strategies Portfolio: Service Class (FidVIPValStS) 19,479 shares (cost $161,119) ................................................. 153,887 Franklin Templeton VIT - Templeton Foreign Securities Fund - Class 2 (FTVIPFS) 14,801 shares (cost $138,394) ................................................. 139,430 Gartmore GVIT Emerging Markets Fund - Class I (GVITEmMrkts) 221,813 shares (cost $1,366,715) .............................................. 1,328,662 Gartmore GVIT Global Financial Services Fund - Class I (GVITGIFin) 15,148 shares (cost $138,493) ................................................. 135,724 Gartmore GVIT Global Health Sciences Fund - Class I (GVITGIHlth) 25,391 shares (cost $212,752) ................................................. 207,952 Gartmore GVIT Global Technology and Communications Fund - Class I (GVITGITech) 516,236 shares (cost $1,504,494) .............................................. 1,233,805 Gartmore GVIT Global Utilities Fund - Class I (GVITGlUtl) 12,776 shares (cost $91,342) .................................................. 94,800 Gartmore GVIT Government Bond Fund - Class I (GVITGvtBd) 17,606,710 shares (cost $208,886,090) ......................................... 216,210,395 Gartmore GVIT Growth Fund - Class I (GVITGrowth) 1,588,950 shares (cost $22,604,882) ........................................... 11,948,907 Gartmore GVIT ID Aggressive Fund (GVITIDAgg) 166,979 shares (cost $1,367,630) .............................................. 1,360,876 Gartmore GVIT ID Conservative Fund (GVITIDCon) 213,933 shares (cost $2,110,208) .............................................. 2,102,962 Gartmore GVIT ID Moderate Fund (GVITIDMod) 416,415 shares (cost $3,734,320) .............................................. 3,722,748 Gartmore GVIT ID Moderately Aggressive Fund (GVITIDModAgg) 406,145 shares (cost $3,512,434) .............................................. 3,448,173 Gartmore GVIT ID Moderately Conservative Fund (GVITIDModCon) 433,358 shares (cost $4,103,344) .............................................. 4,086,566 Gartmore GVIT International Growth Fund - Class I (GVITIntGro) 138,133 shares (cost $643,644) ................................................ 643,700 Gartmore GVIT Money Market Fund - Class I (GVITMyMkt) 250,730,933 shares (cost $250,730,933) ........................................ 250,730,933 Gartmore GVIT Money Market Fund - Class V (GVITMyMkt5) 263,553,712 shares (cost $263,553,712) ........................................ 263,553,712
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued Gartmore GVIT Nationwide(R)Leaders Fund - Class I (GVITLead) 13,602 shares (cost $134,295) ................................................. $ 128,404 Gartmore GVIT Nationwide(R)Strategic Value Fund - Class I (NWGVITStrVal) 210,396 shares (cost $1,853,224) .............................................. 1,514,854 Gartmore GVIT Small Cap Growth Fund - Class I (GVITSmCapGr) 1,179,668 shares (cost $11,721,431) ........................................... 11,395,588 Gartmore GVIT Small Cap Value Fund - Class I (GVITSmCapVal) 6,066,508 shares (cost $60,114,896) ........................................... 44,710,166 Gartmore GVIT Small Company Fund - Class I (GVITSmComp) 3,199,539 shares (cost $58,234,026) ........................................... 49,304,892 Gartmore GVIT Total Return Fund - Class I (GVITTotRt) 18,766,105 shares (cost $194,520,571) ......................................... 152,005,452 Gartmore GVIT U.S. Growth Leaders Fund - Class I (GVITUSGro) 53,165 shares (cost $440,613) ................................................. 401,924 Gartmore GVIT Worldwide Leaders Fund - Class I (GVITWLead) 438,635 shares (cost $3,840,896) .............................................. 3,004,652 Goldman Sachs Mid Cap Value Fund A (GSMCV) 31 shares (cost $709) ......................................................... 689 Goldman Sachs VIT Mid Cap Value Fund (GSVITMidCap) 6,859 shares (cost $72,504) ................................................... 72,778 J.P. Morgan GVIT Balanced Fund - Class I (JPMorBal) 2,347,427 shares (cost $21,201,580) ........................................... 18,920,263 Janus AS - Balanced Portfolio - Service Shares (JanBal) 460 shares (cost $9,999) ...................................................... 9,803 Janus AS - Capital Appreciation Portfolio - Service Shares (JanCapAp) 1,677,160 shares (cost $33,681,296) ........................................... 28,914,243 Janus AS - Global Technology Portfolio - Service Shares (JanGITech) 4,268,737 shares (cost $16,925,453) ........................................... 10,287,656 Janus AS - International Growth Portfolio - Service Shares (JanIntGro) 1,859,474 shares (cost $32,147,562) ........................................... 31,945,758 MAS GVIT Multi Sector Bond Fund - Class I (MGVITMultiSec) 2,418,522 shares (cost $22,216,051) ........................................... 22,443,885 Neuberger Berman AMT - Fasciano Portfolio - S Class (NBAMTFas) 3,601 shares (cost $34,754) ................................................... 35,725 Neuberger Berman AMT - Guardian Portfolio (NBAMTGuard) 1,394,611 shares (cost $18,978,234) ........................................... 14,922,340 Neuberger Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr) 3,064,531 shares (cost $47,766,121) ........................................... 36,682,442 Neuberger Berman AMT - Partners Portfolio (NBAMTPart) 922,460 shares (cost $12,243,971) ............................................. 10,516,046 One Group(R)IT Mid Cap Growth Portfolio (ONEMidCap) 16,272 shares (cost $204,119) ................................................. 200,797 One Group(R)IT Mid Cap Value Portfolio (ONEMidCapV) 37,030 shares (cost $393,028) ................................................. 386,967 Oppenheimer Aggressive Growth Fund/VA - Initial Class (OppAggGro) 1,600,596 shares (cost $63,181,629) ........................................... 46,785,409
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued Oppenheimer Capital Appreciation Fund/VA - Initial Class (OppCapAp) 2,798,445 shares (cost $101,118,298) .......................................... $ 74,494,608 Oppenheimer Global Securities Fund/VA - Initial Class (OppGlSec) 1,468,974 shares (cost $29,858,488) ........................................... 26,000,838 Oppenheimer Main Street Growth & Income Fund/VA - Initial Class (OppMSGrInc) 1,791,721 shares (cost $34,671,102) ........................................... 27,449,165 PIMCO VIT Low Duration Portfolio - Administrative Shares (PIMLowDur) 44,577 shares (cost $455,665) ................................................. 456,026 PIMCO VIT Real Return Portfolio - Administrative Shares (PIMRealRet) 42,331 shares (cost $493,713) ................................................. 503,742 PIMCO VIT Total Return Portfolio - Administrative Shares (PIMTotRet) 186,986 shares (cost $1,905,180) .............................................. 1,912,867 Pioneer High Yield VCT Portfolio - Class I Shares (PionHY) 418 shares (cost $3,870) ...................................................... 3,871 Royce Capital Fund - Micro Cap (RoyMicro) 56,792 shares (cost $429,838) ................................................. 431,620 Strong GVIT Mid Cap Growth Fund - Class I (SGVITMdCpGr) 2,393,207 shares (cost $26,380,772) ........................................... 17,470,414 Strong Opportunity Fund II, Inc.(StOpp2) 1,738,232 shares (cost $30,697,258) ........................................... 24,109,271 T. Rowe Price Equity Income Portfolio - II (TRPEI2) 10,489 shares (cost $171,180) ................................................. 171,492 T. Rowe Price Mid Cap Growth Portfolio - II (TRPMCG2) 8,729 shares (cost $127,827) .................................................. 125,346 Turner GVIT Growth Focus Fund - Class I (TurnGVITGro) 220,924 shares (cost $523,601) ................................................ 459,523 Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) 782,833 shares (cost $6,054,961) .............................................. 6,176,554 Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs) 233,573 shares (cost $2,543,351) .............................................. 2,405,797 Van Kampen UIF - Emerging Markets Debt Portfolio (VKEmMkt) 670,229 shares (cost $4,754,504) .............................................. 4,738,521 Van Kampen UIF - Mid Cap Growth Portfolio (VKMidCapG) 428,050 shares (cost $3,057,576) .............................................. 2,572,580 Van Kampen UIF - U.S. Real Estate Portfolio (VKUSRealEst) 2,253,311 shares (cost $27,790,512) ........................................... 25,530,014 -------------- Total Investments .......................................................... 2,276,360,846 Accounts Receivable ................................................................. 79,864 -------------- Total Assets ............................................................... 2,276,440,710 Accounts Payable ....................................................................... -- -------------- Contract Owners' Equity (note 7) ....................................................... $2,276,440,710 ==============
See accompanying notes to financial statements. ================================================================================ ================================================================================ NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS Year Ended December 31, 2002
Investment activity: Total AIMBVF AIMCDF AllGroInc -------------- ------- ------ --------- Reinvested dividends ............................ $ 32,060,947 5 -- -- Mortality and expense risk charges (note 3) ..... (4,002,946) (144) -- (9) -------------- ------- ---- ------ Net investment income (loss) ................. 28,058,001 (139) -- (9) -------------- ------- ---- ------ Proceeds from mutual fund shares sold ........... 2,471,626,230 688 305 815 Cost of mutual fund shares sold ................. (2,645,517,621) (644) (305) (834) -------------- ------- ---- ------ Realized gain (loss) on investments .......... (173,891,391) 44 -- (19) Change in unrealized gain (loss) on investments ............................... (185,402,711) (16,746) -- (1,665) -------------- ------- ---- ------ Net gain (loss) on investments ............... (359,294,102) (16,702) -- (1,684) -------------- ------- ---- ------ Reinvested capital gains ........................ 8,167,207 -- -- -- -------------- ------- ---- ------ Net increase (decrease) in contract owners' equity resulting from operations ....... $ (323,068,894) (16,841) -- (1,693) ============== ======= ==== ====== Investment activity: ACVPIncGr ACVPInt ACVPUltra ACVPVal ----------- ------------ ---------- ----------- Reinvested dividends ............................ 383,831 349,387 2,206 269,049 Mortality and expense risk charges (note 3) ..... (88,080) (97,125) (14) (40,345) ----------- ------------ ---------- ----------- Net investment income (loss) ................. 295,751 252,262 2,192 228,704 ----------- ------------ ---------- ----------- Proceeds from mutual fund shares sold ........... 8,346,065 295,569,995 1,354,802 11,172,734 Cost of mutual fund shares sold ................. (10,771,807) (302,595,159) (1,420,239) (11,836,982) ----------- ------------ ---------- ----------- Realized gain (loss) on investments .......... (2,425,742) (7,025,164) (65,437) (664,248) Change in unrealized gain (loss) on investments ............................... (6,415,240) (1,505,283) (28,521) (7,152,115) ----------- ------------ ---------- ----------- Net gain (loss) on investments ............... (8,840,982) (8,530,447) (93,958) (7,816,363) ----------- ------------ ---------- ----------- Reinvested capital gains ........................ -- -- -- 1,740,826 ----------- ------------ ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... (8,545,231) (8,278,185) (91,766) (5,846,833) =========== ============ ========== ===========
Investment activity: BCAT ComGVITVal CSGPVen CSIntEq ------- ---------- -------- -------- Reinvested dividends ............................ $ -- 71,838 -- -- Mortality and expense risk charges (note 3) ..... (29) (7,434) (741) (1,064) ------- ---------- -------- -------- Net investment income (loss) ................. (29) 64,404 (741) (1,064) ------- ---------- -------- -------- Proceeds from mutual fund shares sold ........... 2,490 2,120,078 242,585 897,429 Cost of mutual fund shares sold ................. (2,411) (3,275,775) (584,905) (928,963) ------- ---------- -------- -------- Realized gain (loss) on investments .......... 79 (1,155,697) (342,320) (31,534) Change in unrealized gain (loss) on investments ............................... (48) (372,887) 59,105 (339,704) ------- ---------- -------- -------- Net gain (loss) on investments ............... 31 (1,528,584) (283,215) (371,238) ------- ---------- -------- -------- Reinvested capital gains ........................ -- -- -- -- ------- ---------- -------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 2 (1,464,180) (283,956) (372,302) ======= ========== ======== ======== Investment activity: CSLCapV DryMidCapIx DryEuroEq DryMidCapStk ---------- ----------- ----------- ------------ Reinvested dividends ............................ 19,564 103,793 -- 85 Mortality and expense risk charges (note 3) ..... (3,724) (37,984) (1,189) (9) ---------- ---------- ----------- ---- Net investment income (loss) ................. 15,840 65,809 (1,189) 76 ---------- ---------- ----------- ---- Proceeds from mutual fund shares sold ........... 2,881,105 7,657,190 17,512,711 16 Cost of mutual fund shares sold ................. (3,068,734) (8,126,142) (17,753,569) (16) ---------- ---------- ----------- ---- Realized gain (loss) on investments .......... (187,629) (468,952) (240,858) -- Change in unrealized gain (loss) on investments ............................... (413,957) (5,175,301) (17,058) (427) ---------- ---------- ----------- ---- Net gain (loss) on investments ............... (601,586) (5,644,253) (257,916) (427) ---------- ---------- ----------- ---- Reinvested capital gains ........................ -- 243,793 -- -- ---------- ---------- ----------- ---- Net increase (decrease) in contract owners' equity resulting from operations ....... (585,746) (5,334,651) (259,105) (351) ========== ========== =========== ====
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2002
Investment activity: DrySmCapIxS DrySRGro DryStkIx DryVIFApp ----------- ---------- ----------- ----------- Reinvested dividends ............................ $ 3,603 37,572 3,545,872 415,687 Mortality and expense risk charges (note 3) ..... (511) (16,935) (495,514) (80,631) ----------- ---------- ----------- ----------- Net investment income (loss) ................. 3,092 20,637 3,050,358 335,056 ----------- ---------- ----------- ----------- Proceeds from mutual fund shares sold ........... 2,116,330 5,634,689 38,071,356 8,895,792 Cost of mutual fund shares sold ................. (2,106,803) (9,679,516) (56,670,494) (11,766,928) ----------- ---------- ----------- ----------- Realized gain (loss) on investments .......... 9,527 (4,044,827) (18,599,138) (2,871,136) Change in unrealized gain (loss) on investments ............................... (20,037) (2,065,356) (50,888,412) (4,395,323) ----------- ---------- ----------- ----------- Net gain (loss) on investments ............... (10,510) (6,110,183) (69,487,550) (7,266,459) ----------- ---------- ----------- ----------- Reinvested capital gains ........................ -- -- -- -- ----------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (7,418) (6,089,546) (66,437,192) (6,931,403) =========== ========== =========== =========== Investment activity: DryIntVal FGVITHiInc FedQualBd FidVIPEIS --------- ---------- ----------- ----------- Reinvested dividends ............................ 532 1,345,049 2,002,095 911,279 Mortality and expense risk charges (note 3) ..... (55) (25,109) (148,769) (102,364) -------- ---------- ----------- ----------- Net investment income (loss) ................. 477 1,319,940 1,853,326 808,915 -------- ---------- ----------- ----------- Proceeds from mutual fund shares sold ........... 985,767 8,101,099 24,040,253 13,258,117 Cost of mutual fund shares sold ................. (981,208) (8,712,387) (22,908,590) (15,142,087) -------- ---------- ----------- ----------- Realized gain (loss) on investments .......... 4,559 (611,288) 1,131,663 (1,883,970) Change in unrealized gain (loss) on investments ............................... 1,445 (400,507) 2,669,302 (12,798,194) -------- ---------- ----------- ----------- Net gain (loss) on investments ............... 6,004 (1,011,795) 3,800,965 (14,682,164) -------- ---------- ----------- ----------- Reinvested capital gains ........................ -- -- 749,114 1,313,313 -------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... 6,481 308,145 6,403,405 (12,559,936) ======== ========== =========== ===========
Investment activity: FidVIPGrS FidVIPHIS FidVIPOvS FidVIPConS ------------ ---------- ------------ ----------- Reinvested dividends ............................ $ 118,542 1,658,746 135,099 380,235 Mortality and expense risk charges (note 3) ..... (120,420) (21,869) (49,353) (64,061) ------------ ---------- ------------ ----------- Net investment income (loss) ................. (1,878) 1,636,877 85,746 316,174 ------------ ---------- ------------ ----------- Proceeds from mutual fund shares sold ........... 19,984,485 5,163,555 185,288,430 8,993,215 Cost of mutual fund shares sold ................. (34,443,393) (7,560,599) (188,492,955) (12,072,962) ------------ ---------- ------------ ----------- Realized gain (loss) on investments .......... (14,458,908) (2,397,044) (3,204,525) (3,079,747) Change in unrealized gain (loss) on investments ............................... (16,486,471) 1,427,374 (1,355,909) (3,098,925) ------------ ---------- ------------ ----------- Net gain (loss) on investments ............... (30,945,379) (969,670) (4,560,434) (6,178,672) ------------ ---------- ------------ ----------- Reinvested capital gains ........................ -- -- -- -- ------------ ---------- ------------ ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $(30,947,257) 667,207 (4,474,688) (5,862,498) ============ ========== ============ =========== Investment activity: FidVIPGrOpS FidVIPValStS FTVIPFS GVITEmMrkts ----------- ------------ -------- ----------- Reinvested dividends ............................ 122,231 -- -- 2,715 Mortality and expense risk charges (note 3) ..... (15,235) (2) (66) (537) ---------- -------- -------- ----------- Net investment income (loss) ................. 106,996 (2) (66) 2,178 ---------- -------- -------- ----------- Proceeds from mutual fund shares sold ........... 3,704,104 876,526 289,899 14,879,305 Cost of mutual fund shares sold ................. (6,391,065) (887,592) (286,115) (15,087,985) ---------- -------- -------- ----------- Realized gain (loss) on investments .......... (2,686,961) (11,066) 3,784 (208,680) Change in unrealized gain (loss) on investments ............................... (1,001,774) (7,233) 1,036 (69,648) ---------- -------- -------- ----------- Net gain (loss) on investments ............... (3,688,735) (18,299) 4,820 (278,328) ---------- -------- -------- ----------- Reinvested capital gains ........................ -- -- -- -- ---------- -------- -------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... (3,581,739) (18,301) 4,754 (276,150) ========== ======== ======== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2002
Investment activity: GVITGIFin GVITGIHlth GVITGITech GVITGlUtl --------- ---------- ---------- --------- Reinvested dividends ............................ $ 13 -- 8,117 289 Mortality and expense risk charges (note 3) ..... (1) (3) (418) (79) -------- -------- ---------- -------- Net investment income (loss) ................. 12 (3) 7,699 210 -------- -------- ---------- -------- Proceeds from mutual fund shares sold ........... 87,833 459,901 1,853,889 178,063 Cost of mutual fund shares sold ................. (86,374) (469,349) (2,411,728) (176,993) -------- -------- ---------- -------- Realized gain (loss) on investments .......... 1,459 (9,448) (557,839) 1,070 Change in unrealized gain (loss) on investments ............................... (2,770) (4,801) (182,901) 3,459 -------- -------- ---------- -------- Net gain (loss) on investments ............... (1,311) (14,249) (740,740) 4,529 -------- -------- ---------- -------- Reinvested capital gains ........................ -- -- -- -- -------- -------- ---------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (1,299) (14,252) (733,041) 4,739 ======== ======== ========== ======== Investment activity: GVITGvtBd GVITGrowth GVITIDAgg GVITIDCon ----------- ---------- ---------- --------- Reinvested dividends ............................ 7,805,516 -- 5,878 22,871 Mortality and expense risk charges (note 3) ..... (471,295) (5,466) (55) (437) ----------- ---------- ---------- -------- Net investment income (loss) ................. 7,334,221 (5,466) 5,823 22,434 ----------- ---------- ---------- -------- Proceeds from mutual fund shares sold ........... 27,953,399 1,705,331 2,183,680 343,063 Cost of mutual fund shares sold ................. (25,338,824) (4,919,427) (2,252,111) (345,520) ----------- ---------- ---------- -------- Realized gain (loss) on investments .......... 2,614,575 (3,214,096) (68,431) (2,457) Change in unrealized gain (loss) on investments ............................... 5,859,046 (1,401,337) (6,754) (7,246) ----------- ---------- ---------- -------- Net gain (loss) on investments ............... 8,473,621 (4,615,433) (75,185) (9,703) ----------- ---------- ---------- -------- Reinvested capital gains ........................ 1,687,818 -- 48 1,006 ----------- ---------- ---------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... 17,495,660 (4,620,899) (69,314) 13,737 =========== ========== ========== ========
Investment activity: GVITIDMod GVITIDModAgg GVITIDModCon GVITIntGro --------- ------------ ------------ ----------- Reinvested dividends ............................ $ 30,927 18,053 40,677 -- Mortality and expense risk charges (note 3) ..... (1,072) (350) (1,991) (581) --------- -------- -------- ----------- Net investment income (loss) ................. 29,855 17,703 38,686 (581) --------- -------- -------- ----------- Proceeds from mutual fund shares sold ........... 548,771 345,916 265,385 21,728,794 Cost of mutual fund shares sold ................. (624,510) (401,665) (281,525) (21,648,937) --------- -------- -------- ----------- Realized gain (loss) on investments .......... (75,739) (55,749) (16,140) 79,857 Change in unrealized gain (loss) on investments ............................... (11,572) (64,260) (16,778) (2,225) --------- -------- -------- ----------- Net gain (loss) on investments ............... (87,311) (120,009) (32,918) 77,632 --------- -------- -------- ----------- Reinvested capital gains ........................ 2,904 5,036 4,544 -- --------- -------- -------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (54,552) (97,270) 10,312 77,051 ========= ======== ======== =========== Investment activity: GVITMyMkt GVITMyMkt5 GVITLead NWGVITStrVal -------------- ----------- -------- ------------ Reinvested dividends ............................ 5,650,502 362,533 762 609 Mortality and expense risk charges (note 3) ..... (908,535) (81,276) (8) (1,929) -------------- ----------- ------- ---------- Net investment income (loss) ................. 4,741,967 281,257 754 (1,320) -------------- ----------- ------- ---------- Proceeds from mutual fund shares sold ........... 1,187,139,526 11,694,440 41,618 1,098,020 Cost of mutual fund shares sold ................. (1,187,139,526) (11,694,440) (47,834) (1,392,872) -------------- ----------- ------- ---------- Realized gain (loss) on investments .......... -- -- (6,216) (294,852) Change in unrealized gain (loss) on investments ............................... -- -- (5,890) (309,132) -------------- ----------- ------- ---------- Net gain (loss) on investments ............... -- -- (12,106) (603,984) -------------- ----------- ------- ---------- Reinvested capital gains ........................ -- -- -- -- -------------- ----------- ------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 4,741,967 281,257 (11,352) (605,304) ============== =========== ======= ==========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2002
Investment activity: GVITSmCapGr GVITSmCapVal GVITSmComp GVITTotRt ------------ ------------ ----------- ----------- Reinvested dividends ............................ $ -- 5,118 -- 1,289,065 Mortality and expense risk charges (note 3)...... (13,889) (66,465) (103,701) (114,328) ------------ ----------- ----------- ----------- Net investment income (loss) ................. (13,889) (61,347) (103,701) 1,174,737 ------------ ----------- ----------- ----------- Proceeds from mutual fund shares sold ........... 59,447,914 10,722,963 9,734,072 4,133,361 Cost of mutual fund shares sold ................. (63,593,513) (12,923,857) (12,550,150) (9,066,737) ------------ ----------- ----------- ----------- Realized gain (loss) on investments .......... (4,145,599) (2,200,894) (2,816,078) (4,933,376) Change in unrealized gain (loss) on investments ............................... (777,242) (15,654,025) (7,122,789) (23,481,195) ------------ ----------- ----------- ----------- Net gain (loss) on investments ............... (4,922,841) (17,854,919) (9,938,867) (28,414,571) ------------ ----------- ----------- ----------- Reinvested capital gains ........................ -- 1,237,982 -- -- ------------ ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (4,936,730) (16,678,284) (10,042,568) (27,239,834) ============ =========== =========== =========== Investment activity: GVITUSGro GVITWLead GSMCV GSVITMidCap --------- ----------- ------- ----------- Reinvested dividends ............................ -- 347,136 49 97 Mortality and expense risk charges (note 3)...... (9) (22,755) (6) (4) -------- ----------- ------- -------- Net investment income (loss) ................. (9) 324,381 43 93 -------- ----------- ------- -------- Proceeds from mutual fund shares sold ........... 258,958 35,948,437 15,500 100,494 Cost of mutual fund shares sold ................. (263,425) (44,211,659) (15,972) (100,266) -------- ----------- ------- -------- Realized gain (loss) on investments .......... (4,467) (8,263,222) (472) 228 Change in unrealized gain (loss) on investments ............................... (38,689) 7,274,386 (20) 274 -------- ----------- ------- -------- Net gain (loss) on investments ............... (43,156) (988,836) (492) 502 -------- ----------- ------- -------- Reinvested capital gains ........................ -- -- 175 28 -------- ----------- ------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... (43,165) (664,455) (274) 623 ======== =========== ======= ========
Investment activity: JPMorBal JanBal JanCapAp JanGITech ----------- ------ ----------- ---------- Reinvested dividends ............................ $ 352,792 105 95,053 -- Mortality and expense risk charges (note 3)...... (23,226) (5) (42,843) (10,468) ----------- ------ ----------- ---------- Net investment income (loss) ................. 329,566 100 52,210 (10,468) ----------- ------ ----------- ---------- Proceeds from mutual fund shares sold ........... 2,218,409 9,313 15,208,901 4,048,702 Cost of mutual fund shares sold ................. (2,735,959) (9,566) (19,511,691) (9,733,057) ----------- ------ ----------- ---------- Realized gain (loss) on investments .......... (517,550) (253) (4,302,790) (5,684,355) Change in unrealized gain (loss) on investments ............................... (1,744,993) (195) (1,194,674) (1,277,195) ----------- ------ ----------- ---------- Net gain (loss) on investments ............... (2,262,543) (448) (5,497,464) (6,961,550) ----------- ------ ----------- ---------- Reinvested capital gains ........................ -- -- -- -- ----------- ------ ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... $(1,932,977) (348) (5,445,254) (6,972,018) =========== ====== =========== ========== Investment activity: JanIntGro MGVITMultiSec NBAMTFas NBAMTGuard ------------ ------------- -------- ---------- Reinvested dividends ............................ 229,049 1,385,500 -- 102,234 Mortality and expense risk charges (note 3)...... (63,071) (58,965) (25) (31,276) ------------ ----------- ---- ---------- Net investment income (loss) ................. 165,978 1,326,535 (25) 70,958 ------------ ----------- ---- ---------- Proceeds from mutual fund shares sold ........... 213,021,908 38,094,837 298 5,495,841 Cost of mutual fund shares sold ................. (219,639,434) (38,614,611) (289) (7,006,391) ------------ ----------- ---- ---------- Realized gain (loss) on investments .......... (6,617,526) (519,774) 9 (1,510,550) Change in unrealized gain (loss) on investments ............................... (2,299,270) 942,199 971 (3,567,509) ------------ ----------- ---- ---------- Net gain (loss) on investments ............... (8,916,796) 422,425 980 (5,078,059) ------------ ----------- ---- ---------- Reinvested capital gains ........................ -- -- -- -- ------------ ----------- ---- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... (8,750,818) 1,748,960 955 (5,007,101) ============ =========== ==== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2002
Investment activity: NBAMTMCGr NBAMTPart ONEMidCap ONEMidCapV ------------ ---------- --------- ---------- Reinvested dividends $ -- 61,110 -- -- Mortality and expense risk charges (note 3) ..... (77,678) (12,222) (141) (121) ------------ ---------- -------- ------ Net investment income (loss) ................. (77,678) 48,888 (141) (121) ------------ ---------- -------- ------ Proceeds from mutual fund shares sold ........... 15,563,267 6,459,407 169,592 655 Cost of mutual fund shares sold ................. (20,552,889) (8,276,978) (171,896) (653) ------------ ---------- -------- ------ Realized gain (loss) on investments .......... (4,989,622) (1,817,571) (2,304) 2 Change in unrealized gain (loss) on investments ............................... (9,298,181) (1,372,811) (3,322) (6,061) ------------ ---------- -------- ------ Net gain (loss) on investments ............... (14,287,803) (3,190,382) (5,626) (6,059) ------------ ---------- -------- ------ Reinvested capital gains ........................ -- -- -- -- ------------ ---------- -------- ------ Net increase (decrease) in contract owners' equity resulting from operations ....... $(14,365,481) (3,141,494) (5,767) (6,180) ============ ========== ======== ====== Investment activity: OppAggGro OppCapAp OppGlSec OppMSGrInc ----------- ----------- ----------- ----------- Reinvested dividends ............................ 340,390 437,493 113,244 201,725 Mortality and expense risk charges (note 3) ..... (96,581) (157,188) (44,034) (25,294) ----------- ----------- ----------- ---------- Net investment income (loss) ................. 243,809 280,305 69,210 176,431 ----------- ----------- ----------- ---------- Proceeds from mutual fund shares sold ........... 19,100,411 16,475,609 17,886,621 4,892,253 Cost of mutual fund shares sold ................. (51,227,290) (26,009,474) (19,716,772) (6,909,103) ----------- ----------- ----------- ---------- Realized gain (loss) on investments .......... (32,126,879) (9,533,865) (1,830,151) (2,016,850) Change in unrealized gain (loss) on investments ............................... 14,324,781 (15,171,267) (4,252,562) (4,294,382) ----------- ----------- ----------- ---------- Net gain (loss) on investments ............... (17,802,098) (24,705,132) (6,082,713) (6,311,232) ----------- ----------- ----------- ---------- Reinvested capital gains -- -- -- -- ----------- ----------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... (17,558,289) (24,424,827) (6,013,503) (6,134,801) =========== =========== =========== ========== Investment activity: PIMLowDur PIMRealRet PIMTotRet PionHY --------- ---------- --------- ------ Reinvested dividends ............................ $ 600 991 9,379 34 Mortality and expense risk charges (note 3) ..... (87) (115) (841) (1) --------- ------- ------- ------ Net investment income (loss) ................. 513 876 8,538 33 --------- ------- ------- ------ Proceeds from mutual fund shares sold ........... 190,985 43,854 10,342 1,874 Cost of mutual fund shares sold ................. (190,923) (43,160) (10,201) (1,931) --------- ------- ------- ------ Realized gain (loss) on investments .......... 62 694 141 (57) Change in unrealized gain (loss) on investments ............................... 360 10,029 7,687 1 --------- ------- ------- ------ Net gain (loss) on investments ............... 422 10,723 7,828 (56) --------- ------- ------- ------ Reinvested capital gains ........................ 949 463 21,423 -- --------- ------- ------- ------ Net increase (decrease) in contract owners' equity resulting from operations ....... $ 1,884 12,062 37,789 (23) ========= ======= ======= ====== Investment activity: RoyMicro SGVITMdCpGr StOpp2 TRPEI2 -------- ----------- ----------- ------ Reinvested dividends ............................ -- -- 110,871 657 Mortality and expense risk charges (note 3) ..... (98) (39,586) (56,136) (66) ------ ----------- ----------- ------ Net investment income (loss) ................. (98) (39,586) 54,735 591 ------ ----------- ----------- ------ Proceeds from mutual fund shares sold ........... 9,670 7,346,919 9,101,411 2,085 Cost of mutual fund shares sold ................. (9,491) (13,457,986) (14,410,882) (1,975) ------ ----------- ----------- ------ Realized gain (loss) on investments .......... 179 (6,111,067) (5,309,471) 110 Change in unrealized gain (loss) on investments ............................... 1,783 (3,934,328) (3,489,957) 311 ------ ----------- ----------- ------ Net gain (loss) on investments ............... 1,962 (10,045,395) (8,799,428) 421 ------ ----------- ----------- ------ Reinvested capital gains ........................ 2,635 -- 562,955 -- ------ ----------- ----------- ------ Net increase (decrease) in contract owners' equity resulting from operations ....... 4,499 (10,084,981) (8,181,738) 1,012 ====== =========== =========== ======
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2002
Investment activity: TRPMCG2 TurnGVITGro VEWrldEMkt VEWrldHAs -------- ----------- ----------- ---------- Reinvested dividends ............................ $ -- -- 11,857 15,051 Mortality and expense risk charges (note 3) ..... (28) (185) (5,567) (1,040) -------- -------- ----------- ---------- Net investment income (loss) ................. (28) (185) 6,290 14,011 -------- -------- ----------- ---------- Proceeds from mutual fund shares sold ........... 50,251 683,637 15,144,754 2,597,702 Cost of mutual fund shares sold ................. (51,052) (870,690) (15,568,585) (2,884,262) -------- -------- ----------- ---------- Realized gain (loss) on investments .......... (801) (187,053) (423,831) (286,560) Change in unrealized gain (loss) on investments ............................... (2,480) (80,191) 4,487 (30,895) -------- -------- ----------- ---------- Net gain (loss) on investments ............... (3,281) (267,244) (419,344) (317,455) -------- -------- ----------- ---------- Reinvested capital gains ........................ -- -- -- -- -------- -------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (3,309) (267,429) (413,054) (303,444) ======== ======== =========== ========== Investment activity: VKEmMkt VKMidCapG VKUSRealEst ---------- ---------- ----------- Reinvested dividends ............................ 311,753 -- 813,832 Mortality and expense risk charges (note 3) ..... (6,148) (5,383) (30,552) ---------- ---------- ---------- Net investment income (loss) ................. 305,605 (5,383) 783,280 ---------- ---------- ---------- Proceeds from mutual fund shares sold ........... 4,570,032 1,868,053 5,327,379 Cost of mutual fund shares sold ................. (4,590,606) (2,705,060) (5,090,386) ---------- ---------- ---------- Realized gain (loss) on investments .......... (20,574) (837,007) 236,993 Change in unrealized gain (loss) on investments ............................... 40,303 (330,736) (2,563,674) ---------- ---------- ---------- Net gain (loss) on investments ............... 19,729 (1,167,743) (2,326,681) ---------- ---------- ---------- Reinvested capital gains ........................ -- -- 592,195 ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 325,334 (1,173,126) (951,206) ========== ========== ==========
See accompanying notes to financial statements. ================================================================================ ================================================================================ NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY Years Ended December 31, 2002 and 2001
Total AIMBVF ------------------------------ -------------- Investment activity: 2002 2001 2002 2001 -------------- ------------- ------- ---- Net investment income (loss) .................... $ 28,058,001 29,771,597 (139) -- Realized gain (loss) on investments ............. (173,891,391) (180,670,480) 44 -- Change in unrealized gain (loss) on investments ............................... (185,402,711) (49,709,311) (16,746) -- Reinvested capital gains ........................ 8,167,207 40,368,917 -- -- -------------- ------------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations .......... (323,068,894) (160,239,277) (16,841) -- -------------- ------------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 806,276,709 1,010,149,638 8,073 -- Transfers between funds ......................... -- -- 401,732 -- Surrenders (note 6) ............................. (118,040,336) (51,375,627) -- -- Death benefits (note 4) ......................... (2,999,731) (3,332,989) -- -- Policy loans (net of repayments) (note 5) ....... (31,525,439) (9,466,546) -- -- Deductions for surrender charges (note 2d) ...... (7,798,703) (3,772,586) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (129,307,494) (106,308,018) (570) -- Asset charges (note 3): FPVUL & VEL contracts ........................ (3,265,896) (2,763,063) -- -- MSP contracts ................................ (177,913) (198,693) -- -- SL contracts ................................. (687,007) (549,866) -- -- -------------- ------------- ------- --- Net equity transactions ................... 512,474,190 832,382,250 409,235 -- -------------- ------------- ------- --- Net change in contract owners' equity .............. 189,405,296 672,142,973 392,394 -- Contract owners' equity beginning of period ....................................... 2,087,035,414 1,414,892,441 -- -- -------------- ------------- ------- --- Contract owners' equity end of period .............. $2,276,440,710 2,087,035,414 392,394 -- ============== ============= ======= === CHANGES IN UNITS: Beginning units ................................. 191,173,282 116,096,849 -- -- -------------- ------------- ------- --- Units purchased ................................. 145,379,173 136,381,319 39,936 -- Units redeemed .................................. (91,389,789) (61,304,886) (55) -- -------------- ------------- ------- --- Ending units .................................... 245,162,666 191,173,282 39,881 -- ============== ============= ======= === AIMCDF AllGroInc ----------- ------------- Investment activity: 2002 2001 2002 2001 ---- ---- ------ ---- Net investment income (loss) .................... -- -- (9) -- Realized gain (loss) on investments ............. -- -- (19) -- Change in unrealized gain (loss) -- on investments ............................... -- -- (1,665) -- Reinvested capital gains ........................ -- -- -- -- --- --- ------ --- Net increase (decrease) in contract owners' equity resulting from operations .......... -- -- (1,693) -- --- --- ------ --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... -- -- (16) -- Transfers between funds ......................... 250 56,089 -- Surrenders (note 6) ............................. -- -- -- -- Death benefits (note 4) ......................... -- -- -- -- 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) ............................ (15) -- -- Asset charges (note 3): FPVUL & VEL contracts ........................ -- -- -- -- MSP contracts ................................ -- -- -- -- SL contracts ................................. -- -- -- -- --- --- ------ --- Net equity transactions ................... 235 -- 56,073 -- --- --- ------ --- Net change in contract owners' equity .............. 235 54,380 -- Contract owners' equity beginning of period ....................................... -- -- -- -- --- --- ------ --- Contract owners' equity end of period .............. 235 -- 54,380 -- === === ====== === CHANGES IN UNITS: Beginning units ................................. -- -- -- -- --- --- ------ --- Units purchased ................................. 26 -- 5,432 -- Units redeemed .................................. (2) -- -- -- --- --- ------ --- Ending units .................................... 24 -- 5,432 -- === === ====== ===
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
ACVPIncGr ACVPInt ------------------------ ------------------------ Investment activity: 2002 2001 2002 2001 ----------- ---------- ---------- ----------- Net investment income (loss)..................... $ 295,751 190,055 252,262 (41,095) Realized gain (loss) on investments.............. (2,425,742) (1,838,222) (7,025,164) (25,475,199) Change in unrealized gain (loss) on investments................................ (6,415,240) (668,796) (1,505,283) 6,676,950 Reinvested capital gains......................... -- -- -- 4,068,852 ----------- ---------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations........... (8,545,231) (2,316,963) (8,278,185) (14,770,492) ----------- ---------- ---------- ----------- Equity transactions: Purchase payments received from contract owners (note 6)...................... 8,242,700 16,904,735 14,523,861 15,964,755 Transfers between funds.......................... 4,275,259 8,194,621 (827,913) 3,600,743 Surrenders (note 6).............................. (859,189) (6,353,743) (1,534,093) (1,245,708) Death benefits (note 4).......................... (84,910) (25,257) (53,686) (52,127) Policy loans (net of repayments) (note 5)........ (1,414,722) (56,773) (1,212,686) (242,467) Deductions for surrender charges (note 2d)....... (56,765) (480,766) (101,355) (94,258) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)............................. (2,134,843) (1,951,663) (2,687,623) (2,510,290) Asset charges (note 3): FPVUL & VEL contracts......................... (51,840) (46,275) (64,935) (68,490) MSP contracts................................. (4,113) (4,657) (3,820) (7,374) SL contracts.................................. (9,375) (8,572) (9,329) (9,576) ----------- ---------- ---------- ----------- Net equity transactions.................... 7,902,202 16,171,650 8,028,421 15,335,208 ----------- ---------- ---------- ----------- Net change in contract owners' equity............... (643,029) 13,854,687 (249,764) 564,716 Contract owners' equity beginning of period........................................ 38,884,917 25,030,230 44,844,821 44,280,105 ----------- ---------- ---------- ----------- Contract owners' equity end of period............... $38,241,888 38,884,917 44,595,057 44,844,821 =========== ========== ========== =========== CHANGES IN UNITS: Beginning units.................................. 3,582,704 2,108,572 4,459,878 3,063,338 ----------- ---------- ---------- ----------- Units purchased.................................. 1,345,665 2,012,075 2,071,974 1,803,688 Units redeemed................................... (556,086) (537,943) (889,732) (407,148) ----------- ---------- ---------- ----------- Ending units..................................... 4,372,283 3,582,704 5,642,120 4,459,878 =========== ========== ========== =========== ACVPUltra ACVPVal --------------- ----------------------- Investment activity: 2002 2001 2002 2001 -------- ---- ---------- ---------- Net investment income (loss)..................... 2,192 -- 228,704 94,634 Realized gain (loss) on investments.............. (65,437) -- (664,248) 784,993 Change in unrealized gain (loss) on investments................................ (28,521) -- (7,152,115) 1,499,813 Reinvested capital gains......................... -- -- 1,740,826 -- -------- --- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........... (91,766) -- (5,846,833) 2,379,440 -------- --- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)...................... 381,461 -- 9,518,078 4,837,359 Transfers between funds.......................... 767,998 -- 14,238,176 16,354,241 Surrenders (note 6).............................. (326,526) -- (1,379,551) (440,086) Death benefits (note 4).......................... -- -- (56,150) (62,019) Policy loans (net of repayments) (note 5)........ 1,986 -- (201,892) (77,901) Deductions for surrender charges (note 2d)....... (21,573) -- (91,144) (33,300) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)............................. (45,493) -- (2,572,725) (1,132,828) Asset charges (note 3): FPVUL & VEL contracts......................... (1,707) -- (84,853) (39,218) MSP contracts................................. (8) -- (3,108) (2,191) SL contracts.................................. (21) -- (17,817) (5,079) -------- --- ---------- ---------- Net equity transactions.................... 756,117 -- 19,349,014 19,398,978 -------- --- ---------- ---------- Net change in contract owners' equity............... 664,351 -- 13,502,181 21,778,418 Contract owners' equity beginning of period........................................ -- -- 29,186,372 7,407,954 -------- --- ---------- ---------- Contract owners' equity end of period............... 664,351 -- 42,688,553 29,186,372 ======== === ========== ========== CHANGES IN UNITS: Beginning units.................................. -- -- 2,161,177 617,384 -------- --- ---------- ---------- Units purchased.................................. 88,490 -- 1,905,197 1,682,878 Units redeemed................................... (5,829) -- (416,060) (139,085) -------- --- ---------- ---------- Ending units..................................... 82,661 -- 3,650,314 2,161,177 ======== === ========== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
BCAT ComGVITVal -------------- ---------------------- Investment activity: 2002 2001 2002 2001 ------- ---- ---------- --------- Net investment income (loss) .................... $ (29) -- 64,404 55,324 Realized gain (loss) on investments ............. 79 -- (1,155,697) (117,452) Change in unrealized gain (loss) on investments ............................... (48) -- (372,887) (341,379) Reinvested capital gains ........................ -- -- -- -- ------- --- ---------- --------- Net increase (decrease) in contract owners' equity resulting from operations .......... 2 -- (1,464,180) (403,507) ------- --- ---------- --------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... (1) -- 1,857,957 1,335,353 Transfers between funds ......................... 69,454 -- 478,332 2,490,417 Surrenders (note 6) ............................. -- -- (151,738) (74,711) Death benefits (note 4) ......................... -- -- (16,024) (6,873) Policy loans (net of repayments) (note 5) ....... -- -- (46,526) 756 Deductions for surrender charges (note 2d) ...... -- -- (10,025) (5,653) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (296) -- (337,086) (295,375) Asset charges (note 3): FPVUL & VEL contracts ........................ -- -- (8,716) (8,213) MSP contracts ................................ -- -- (766) (850) SL contracts ................................. -- -- (874) (743) ------- --- ---------- --------- Net equity transactions ................... 69,157 -- 1,764,534 3,434,108 ------- --- ---------- --------- Net change in contract owners' equity .............. 69,159 -- 300,354 3,030,601 Contract owners' equity beginning of period ....................................... -- -- 5,200,213 2,169,612 ------- --- ---------- --------- Contract owners' equity end of period .............. $69,159 -- 5,500,567 5,200,213 ======= === ========== ========= CHANGES IN UNITS: Beginning units ................................. -- -- 528,392 180,572 ------- --- ---------- --------- Units purchased ................................. 7,164 -- 323,564 386,266 Units redeemed .................................. (30) -- (108,082) (38,446) ------- --- ---------- --------- Ending units .................................... 7,134 -- 743,874 528,392 ======= === ========== ========= CSGPVen CSIntEq -------------------- ---------------------- Investment activity: 2002 2001 2002 2001 -------- --------- --------- ---------- Net investment income (loss) .................... (741) (688) (1,064) (824) Realized gain (loss) on investments ............. (342,320) (390,882) (31,534) (1,154,946) Change in unrealized gain (loss) on investments ............................... 59,105 71,425 (339,704) 737,104 Reinvested capital gains ........................ -- -- -- -- -------- --------- --------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .......... (283,956) (320,145) (372,302) (418,666) -------- --------- --------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 138,218 250,521 257,124 361,952 Transfers between funds ......................... (150,036) (26,438) (129,187) (278,163) Surrenders (note 6) ............................. (19,422) (21,815) (109,474) (67,204) Death benefits (note 4) ......................... (2,132) (101) -- (114) Policy loans (net of repayments) (note 5) ....... 2,471 (34,453) (11,178) (26,312) Deductions for surrender charges (note 2d) ...... (1,283) (1,651) (7,233) (5,085) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (44,394) (57,060) (100,884) (122,795) Asset charges (note 3): FPVUL & VEL contracts ........................ (2,071) (2,815) (5,555) (6,614) MSP contracts ................................ (361) (703) (397) (507) SL contracts ................................. (206) (357) (670) (734) -------- --------- --------- ---------- Net equity transactions ................... (79,216) 105,128 (107,454) (145,576) -------- --------- --------- ---------- Net change in contract owners' equity .............. (363,172) (215,017) (479,756) (564,242) Contract owners' equity beginning of period ....................................... 893,362 1,108,379 1,860,200 2,424,442 -------- --------- --------- ---------- Contract owners' equity end of period .............. 530,190 893,362 1,380,444 1,860,200 ======== ========= ========= ========== CHANGES IN UNITS: Beginning units ................................. 92,656 80,230 206,416 210,354 -------- --------- --------- ---------- Units purchased ................................. 18,681 28,628 33,740 37,812 Units redeemed .................................. (26,690) (16,202) (49,562) (41,750) -------- --------- --------- ---------- Ending units .................................... 84,647 92,656 190,594 206,416 ======== ========= ========= ==========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY,Continued Years Ended December 31, 2002 and 2001
CSLCapV DryMidCapIx ----------------------- ----------------------- Investment activity: 2002 2001 2002 2001 ----------- --------- ---------- ---------- Net investment income (loss)..................... $ 15,840 (5,391) 65,809 54,108 Realized gain (loss) on investments.............. (187,629) 33,836 (468,952) (614,375) Change in unrealized gain (loss) on investments................................ (413,957) (66,654) (5,175,301) 601,633 Reinvested capital gains......................... -- -- 243,793 145,893 ----------- --------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........... (585,746) (38,209) (5,334,651) 187,259 ----------- --------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)...................... 436,621 479,149 7,501,528 4,313,632 Transfers between funds.......................... (1,251,071) 819,215 12,585,211 7,424,370 Surrenders (note 6).............................. (213,288) (30,177) (1,410,219) (158,510) Death benefits (note 4).......................... (7,975) -- (30,435) (19,824) Policy loans (net of repayments) (note 5)........ 2,593 (11,554) (99,081) (45,778) Deductions for surrender charges (note 2d)....... (14,092) (2,283) (93,171) (11,994) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)............................. (154,556) (170,041) (1,703,300) (922,352) Asset charges (note 3): FPVUL & VEL contracts......................... (5,457) (5,847) (49,277) (26,787) MSP contracts................................. (500) (626) (1,585) (1,036) SL contracts.................................. (727) (781) (17,307) (7,302) ----------- --------- ---------- ---------- Net equity transactions.................... (1,208,452) 1,077,055 16,682,364 10,544,419 ----------- --------- ---------- ---------- Net change in contract owners' equity............... (1,794,198) 1,038,846 11,347,713 10,731,678 Contract owners' equity beginning of period........................................ 3,473,380 2,434,534 17,437,758 6,706,080 ----------- --------- ---------- ---------- Contract owners' equity end of period............... $ 1,679,182 3,473,380 28,785,471 17,437,758 =========== ========= ========== ========== CHANGES IN UNITS: Beginning units.................................. 285,384 200,517 1,199,159 447,279 ----------- --------- ---------- ---------- Units purchased.................................. 47,298 104,429 1,402,464 842,197 Units redeemed................................... (157,602) (19,562) (236,318) (90,317) ----------- --------- ---------- ---------- Ending units..................................... 175,080 285,384 2,365,305 1,199,159 =========== ========= ========== ========== DryEuroEq DryMidCapStk ---------------------- ------------- Investment activity: 2002 2001 2002 2001 ---------- --------- ------ ---- Net investment income (loss)..................... (1,189) 9,312 76 -- Realized gain (loss) on investments.............. (240,858) (524,850) -- -- Change in unrealized gain (loss) on investments................................ (17,058) (19,212) (427) -- Reinvested capital gains......................... -- -- -- -- ---------- --------- ------ --- Net increase (decrease) in contract owners' equity resulting from operations........... (259,105) (534,750) (351) -- ---------- --------- ------ --- Equity transactions: Purchase payments received from contract owners (note 6)...................... 376,786 1,122,135 -- -- Transfers between funds.......................... (1,581,576) (279,014) 28,932 -- Surrenders (note 6).............................. (26,144) (37,778) -- -- Death benefits (note 4).......................... (3,280) (1,076) -- -- Policy loans (net of repayments) (note 5)........ (402) (528) -- -- Deductions for surrender charges (note 2d)....... (1,727) (2,858) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)............................. (84,449) (135,716) (255) -- Asset charges (note 3): FPVUL & VEL contracts......................... (2,576) (3,369) -- -- MSP contracts................................. (82) (341) -- -- SL contracts.................................. (527) (655) -- -- ---------- --------- ------ --- Net equity transactions.................... (1,323,977) 660,800 28,677 -- ---------- --------- ------ --- Net change in contract owners' equity............... (1,583,082) 126,050 28,326 -- Contract owners' equity beginning of period........................................ 1,585,069 1,459,019 -- -- ---------- --------- ------ --- Contract owners' equity end of period............... 1,987 1,585,069 28,326 -- ========== ========= ====== === CHANGES IN UNITS: Beginning units.................................. 174,397 115,223 -- -- ---------- --------- ------ --- Units purchased.................................. 58,103 113,434 2,842 -- Units redeemed................................... (232,218) (54,260) -- -- ---------- --------- ------ --- Ending units..................................... 282 174,397 2,842 -- ========== ========= ====== ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
DrySmCapIxS DrySRGro ----------------- ----------------------- Investment activity: 2002 2001 2002 2001 ---------- ---- ---------- ---------- Net investment income (loss)............ $ 3,092 -- 20,637 (3,669) Realized gain (loss) on investments..... 9,527 -- (4,044,827) (1,322,306) Change in unrealized gain (loss) on investments....................... (20,037) -- (2,065,356) (3,298,528) Reinvested capital gains................ -- -- -- -- ---------- --- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........................ (7,418) -- (6,089,546) (4,624,503) ---------- --- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)............. 365,357 -- 5,506,507 10,416,978 Transfers between funds................. 2,178,207 -- (2,145,908) 1,388,663 Surrenders (note 6)..................... (35,945) -- (934,968) (464,880) Death benefits (note 4)................. (4,196) -- (47,141) (77,433) Policy loans (net of repayments) (note 5)............................. (1,436) -- (1,025,096) (183,269) Deductions for surrender charges (note 2d) (2,375) -- (61,772) (35,176) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).................... (27,049) -- (1,889,457) (2,070,697) Asset charges (note 3): FPVUL & VEL contracts................ (633) -- (55,265) (60,803) MSP contracts........................ -- -- (2,737) (3,920) SL contracts......................... (63) -- (5,603) (5,979) ---------- --- ---------- ---------- Net equity transactions........... 2,471,867 -- (661,440) 8,903,484 ---------- --- ---------- ---------- Net change in contract owners' equity...... 2,464,449 -- (6,750,986) 4,278,981 Contract owners' equity beginning of period............................... -- -- 20,765,389 16,486,408 ---------- --- ---------- ---------- Contract owners' equity end of period...... $2,464,449 -- 14,014,403 20,765,389 ========== === ========== ========== CHANGES IN UNITS: Beginning units......................... -- -- 1,904,741 1,132,559 ---------- --- ---------- ---------- Units purchased......................... 325,576 -- 642,801 1,120,486 Units redeemed.......................... (4,355) -- (761,598) (348,304) ---------- --- ---------- ---------- Ending units............................ 321,221 -- 1,785,944 1,904,741 ========== === ========== ========== DryStkIx DryVIFApp ------------------------- ----------------------- Investment activity: 2002 2001 2002 2001 ----------- ----------- ---------- ---------- Net investment income (loss)............ 3,050,358 2,225,892 335,056 221,754 Realized gain (loss) on investments..... (18,599,138) (13,853,031) (2,871,136) (1,084,787) Change in unrealized gain (loss) on investments....................... (50,888,412) (22,871,757) (4,395,323) (1,683,766) Reinvested capital gains................ -- 1,239,287 -- -- ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........................ (66,437,192) (33,259,609) (6,931,403) (2,546,799) ----------- ----------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)............. 67,681,915 78,670,945 7,333,979 9,000,607 Transfers between funds................. 51,084,841 (16,553,579) 2,497,836 (1,111,989) Surrenders (note 6)..................... (10,065,375) (9,057,375) (1,827,641) (763,458) Death benefits (note 4)................. (424,395) (767,254) (91,596) (96,423) Policy loans (net of repayments) (note 5)............................. (9,366,566) (1,107,133) (52,117) (105,753) Deductions for surrender charges (note 2d) (665,001) (685,340) (120,749) (57,768) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).................... (14,484,498) (12,949,074) (1,963,359) (1,733,024) Asset charges (note 3): FPVUL & VEL contracts................ (369,254) (346,249) (51,569) (43,557) MSP contracts........................ (20,608) (32,180) (1,413) (1,513) SL contracts......................... (119,742) (71,257) (9,323) (7,972) ----------- ----------- ---------- ---------- Net equity transactions........... 83,251,317 37,101,504 5,714,048 5,079,150 ----------- ----------- ---------- ---------- Net change in contract owners' equity...... 16,814,125 3,841,895 (1,217,355) 2,532,351 Contract owners' equity beginning of period............................... 235,803,734 231,961,839 34,810,769 32,278,418 ----------- ----------- ---------- ---------- Contract owners' equity end of period...... 252,617,859 235,803,734 33,593,414 34,810,769 =========== =========== ========== ========== CHANGES IN UNITS: Beginning units......................... 21,289,393 18,907,653 3,024,640 2,588,042 ----------- ----------- ---------- ---------- Units purchased......................... 12,329,234 8,863,550 1,039,749 1,042,009 Units redeemed.......................... (4,106,582) (6,481,810) (529,454) (605,411) ----------- ----------- ---------- ---------- Ending units............................ 29,512,045 21,289,393 3,534,935 3,024,640 =========== =========== ========== ==========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
DryIntVal FGVITHiInc --------------- ----------------------- Investment activity: 2002 2001 2002 2001 -------- ---- ---------- ---------- Net investment income (loss)..................... $ 477 -- 1,319,940 1,396,651 Realized gain (loss) on investments.............. 4,559 -- (611,288) (2,597,008) Change in unrealized gain (loss) on investments................................ 1,445 -- (400,507) 1,237,276 Reinvested capital gains......................... -- -- -- -- -------- --- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........... 6,481 -- 308,145 36,919 -------- --- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)...................... 566 -- 3,126,075 1,942,949 Transfers between funds.......................... 283,331 -- 5,754,546 (6,906,064) Surrenders (note 6).............................. -- -- (754,952) (202,910) Death benefits (note 4).......................... -- -- (51,018) (30,268) Policy loans (net of repayments) (note 5)........ -- -- (91,632) (23,836) Deductions for surrender charges (note 2d)....... -- -- (49,878) (15,354) Redemptions to pay cost of insurance charges and administrative charge (notes 2b and 2c)............................. (261) -- (898,909) (477,273) Asset charges (note 3): FPVUL & VEL contracts......................... -- -- (24,697) (10,073) MSP contracts................................. -- -- (1,031) (800) SL contracts.................................. -- -- (5,326) (2,394) -------- --- ---------- ---------- Net equity transactions.................... 283,636 -- 7,003,178 (5,726,023) -------- --- ---------- ---------- Net change in contract owners' equity............... 290,117 -- 7,311,323 (5,689,104) Contract owners' equity beginning of period........................................ -- -- 9,673,974 15,363,078 -------- --- ---------- ---------- Contract owners' equity end of period............... $290,117 -- 16,985,297 9,673,974 ======== === ========== ========== CHANGES IN UNITS: Beginning units.................................. -- -- 972,675 1,660,401 -------- --- ---------- ---------- Units purchased.................................. 30,778 -- 903,714 435,364 Units redeemed................................... (27) -- (229,584) (1,123,090) -------- --- ---------- ---------- Ending units..................................... 30,751 -- 1,646,805 972,675 ======== === ========== ========== FedQualBd FidVIPEIS ------------------------ ------------------------ Investment activity: 2002 2001 2002 2001 ---------- ----------- ----------- ---------- Net investment income (loss)..................... 1,853,326 1,359,733 808,915 411,117 Realized gain (loss) on investments.............. 1,131,663 5,098,570 (1,883,970) (701,218) Change in unrealized gain (loss) on investments................................ 2,669,302 (1,493,674) (12,798,194) (3,016,312) Reinvested capital gains......................... 749,114 147,643 1,313,313 1,383,058 ---------- ----------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........... 6,403,405 5,112,272 (12,559,936) (1,923,355) ---------- ----------- ----------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)...................... 18,658,214 10,012,591 15,445,210 13,788,407 Transfers between funds.......................... 10,101,606 (18,061,162) 21,606,404 18,394,027 Surrenders (note 6).............................. (1,325,764) (161,111) (5,446,667) (792,454) Death benefits (note 4).......................... (195,925) (55,447) (67,369) (202,403) Policy loans (net of repayments) (note 5)........ (134,139) (30,969) (1,211,131) (163,750) Deductions for surrender charges (note 2d)....... (87,591) (12,191) (359,851) (59,962) Redemptions to pay cost of insurance charges and administrative charge (notes 2b and 2c)............................. (3,033,302) (1,846,772) (4,338,313) (3,127,024) Asset charges (note 3): FPVUL & VEL contracts......................... (52,873) (21,564) (127,852) (99,874) MSP contracts................................. (2,037) (1,043) (7,340) (7,057) SL contracts.................................. (29,757) (2,164) (16,311) (11,473) ---------- ----------- ----------- ---------- Net equity transactions.................... 23,898,432 (10,179,832) 25,476,780 27,718,437 ---------- ----------- ----------- ---------- Net change in contract owners' equity............... 30,301,837 (5,067,560) 12,916,844 25,795,082 Contract owners' equity beginning of period........................................ 47,341,920 52,409,480 54,407,435 28,612,353 ---------- ----------- ----------- ---------- Contract owners' equity end of period............... 77,643,757 47,341,920 67,324,279 54,407,435 ========== =========== =========== ========== CHANGES IN UNITS: Beginning units.................................. 4,041,811 4,818,737 4,738,152 2,297,584 ---------- ----------- ----------- ---------- Units purchased.................................. 2,687,269 2,378,798 3,762,318 2,813,226 Units redeemed................................... (653,806) (3,155,724) (1,337,764) (372,658) ---------- ----------- ----------- ---------- Ending units..................................... 6,075,274 4,041,811 7,162,706 4,738,152 ========== =========== =========== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
FidVIPGrS FidVIPHIS -------------------------- ----------------------- Investment activity: 2002 2001 2002 2001 ------------ ----------- ---------- ---------- Net investment income (loss)..................... $ (1,878) (138,980) 1,636,877 1,945,684 Realized gain (loss) on investments.............. (14,458,908) (13,354,389) (2,397,044) (5,088,408) Change in unrealized gain (loss) on investments................................ (16,486,471) (10,987,478) 1,427,374 462,487 Reinvested capital gains......................... -- 6,737,804 -- -- ------------ ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........... (30,947,257) (17,743,043) 667,207 (2,680,237) ------------ ----------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)...................... 21,391,751 40,138,736 2,844,820 5,988,955 Transfers between funds.......................... (2,032,736) (7,406,015) 3,345,708 1,708,086 Surrenders (note 6).............................. (5,206,212) (5,421,805) (887,461) (2,262,302) Death benefits (note 4).......................... (119,489) (85,131) (36,601) (23,795) Policy loans (net of repayments) (note 5)........ (281,790) (455,745) (30,274) (66,288) Deductions for surrender charges (note 2d)....... (343,965) (410,249) (58,633) (171,180) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)............................. (7,134,458) (7,373,061) (1,052,089) (963,420) Asset charges (note 3): FPVUL & VEL contracts......................... (199,244) (212,959) (29,561) (24,816) MSP contracts................................. (9,408) (13,536) (1,976) (2,294) SL contracts.................................. (26,704) (27,391) (4,445) (4,741) ------------ ----------- ---------- ---------- Net equity transactions ................... 6,037,745 18,732,844 4,089,488 4,178,205 ------------ ----------- ---------- ---------- Net change in contract owners' equity............... (24,909,512) 989,801 4,756,695 1,497,968 Contract owners' equity beginning of period........................................ 100,526,204 99,536,403 15,693,391 14,195,423 ------------ ----------- ---------- ---------- Contract owners' equity end of period............... $ 75,616,692 100,526,204 20,450,086 15,693,391 ============ =========== ========== ========== CHANGES IN UNITS: Beginning units.................................. 8,121,573 6,561,226 2,276,487 1,807,889 ------------ ----------- ---------- ---------- Units purchased.................................. 2,555,633 3,919,641 918,322 1,016,232 Units redeemed................................... (2,066,180) (2,359,294) (329,950) (547,634) ------------ ----------- ---------- ---------- Ending units..................................... 8,611,026 8,121,573 2,864,859 2,276,487 ============ =========== ========== ========== FidVIPOvS FidVIPConS ------------------------ ----------------------- Investment activity: 2002 2001 2002 2001 ---------- ----------- ---------- ---------- Net investment income (loss)..................... 85,746 1,160,435 316,174 257,436 Realized gain (loss) on investments.............. (3,204,525) (12,490,138) (3,079,747) (5,093,795) Change in unrealized gain (loss) on investments................................ (1,355,909) 3,190,822 (3,098,925) (3,013,382) Reinvested capital gains......................... -- 1,957,820 -- 1,230,579 ---------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........... (4,474,688) (6,181,061) (5,862,498) (6,619,162) ---------- ----------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)...................... 6,087,719 10,190,419 12,974,474 15,319,963 Transfers between funds.......................... 3,102,344 (546,602) 5,512,356 3,681,440 Surrenders (note 6).............................. (1,715,388) (5,250,024) (3,283,106) (995,784) Death benefits (note 4).......................... (84,623) (56,878) (94,985) (90,406) Policy loans (net of repayments) (note 5)........ (65,632) (64,044) (357,278) (394,100) Deductions for surrender charges (note 2d)....... (113,332) (397,251) (216,909) (75,347) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c)............................. (1,288,792) (1,432,362) (5,078,266) (4,535,549) Asset charges (note 3): FPVUL & VEL contracts......................... (33,794) (33,180) (168,005) (150,018) MSP contracts................................. (1,350) (1,604) (4,677) (5,104) SL contracts.................................. (11,416) (6,274) (21,552) (18,408) ---------- ----------- ---------- ---------- Net equity transactions.................... 5,875,736 2,402,200 9,262,052 12,736,687 ---------- ----------- ---------- ---------- Net change in contract owners' equity............... 1,401,048 (3,778,861) 3,399,554 6,117,525 Contract owners' equity beginning of period........................................ 20,544,702 24,323,563 53,489,472 47,371,947 ---------- ----------- ---------- ---------- Contract owners' equity end of period............... 21,945,750 20,544,702 56,889,026 53,489,472 ========== =========== ========== ========== CHANGES IN UNITS: Beginning units.................................. 2,228,941 2,097,033 4,263,966 3,295,764 ---------- ----------- ---------- ---------- Units purchased.................................. 1,180,046 1,124,267 1,552,123 1,623,710 Units redeemed................................... (408,341) (992,359) (794,609) (655,508) ---------- ----------- ---------- ---------- Ending units..................................... 3,000,646 2,228,941 5,021,480 4,263,966 ========== =========== ========== ==========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
FidVIPGrOpS FidVIPValStS ------------------------ -------------- Investment activity: 2002 2001 2002 2001 ----------- ---------- ------- ---- Net investment income (loss).................. $ 106,996 17,074 (2) -- Realized gain (loss) on investments........... (2,686,961) (1,796,023) (11,066) -- Change in unrealized gain (loss) on investments............................. (1,001,774) (394,636) (7,233) -- Reinvested capital gains...................... -- -- -- -- ----------- ---------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations........ (3,581,739) (2,173,585) (18,301) -- ----------- ---------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6)................... 3,341,705 4,061,107 25,882 -- Transfers between funds....................... (1,216,783) 600,250 162,479 -- Surrenders (note 6)........................... (695,078) (236,679) (5,409) -- Death benefits (note 4)....................... (45,894) (18,957) -- -- Policy loans (net of repayments) (note 5)..... (71,207) (102,112) (2,006) -- Deductions for surrender charges (note 2d) (45,922) (17,909) (357) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......................... (1,246,242) (1,325,485) (8,123) -- Asset charges (note 3): FPVUL & VEL contracts...................... (39,712) (41,292) (263) -- MSP contracts.............................. (2,127) (2,602) (7) -- SL contracts............................... (5,381) (4,804) (15) -- ----------- ---------- ------- --- Net equity transactions................. (26,641) 2,911,517 172,181 -- ----------- ---------- ------- --- Net change in contract owners' equity............ (3,608,380) 737,932 153,880 -- Contract owners' equity beginning of period..................................... 14,897,225 14,159,293 -- -- ----------- ---------- ------- --- Contract owners' equity end of period............ $11,288,845 14,897,225 153,880 -- =========== ========== ======= === CHANGES IN UNITS: Beginning units............................... 1,683,078 1,359,801 -- -- ----------- ---------- ------- --- Units purchased............................... 451,771 601,865 22,001 -- Units redeemed................................ (510,259) (278,588) (1,507) -- ----------- ---------- ------- --- Ending units.................................. 1,624,590 1,683,078 20,494 -- =========== ========== ======= === FTVIPFS GVITEmMrkts -------------- --------------------- Investment activity: 2002 2001 2002 2001 ------- ---- --------- --------- Net investment income (loss).................. (66) -- 2,178 1,212 Realized gain (loss) on investments........... 3,784 -- (208,680) 40,116 Change in unrealized gain (loss) on investments............................. 1,036 -- (69,648) 31,257 Reinvested capital gains...................... -- -- -- -- ------- --- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations........ 4,754 -- (276,150) 72,585 ------- --- --------- --------- Equity transactions: Purchase payments received from contract owners (note 6)................... 7 -- 358,607 86,450 Transfers between funds....................... 135,238 -- 449,980 886,606 Surrenders (note 6)........................... -- -- (91,560) (24) Death benefits (note 4)....................... -- -- (32) (173) Policy loans (net of repayments) (note 5)..... -- -- (12,764) (3,481) Deductions for surrender charges (note 2d) -- -- (6,049) (2) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......................... (570) -- (121,146) (29,062) Asset charges (note 3): FPVUL & VEL contracts...................... -- -- (3,530) (892) MSP contracts.............................. -- -- (22) (431) SL contracts............................... -- -- (882) (201) ------- --- --------- --------- Net equity transactions................. 134,675 -- 572,602 938,790 ------- --- --------- --------- Net change in contract owners' equity............ 139,429 -- 296,452 1,011,375 Contract owners' equity beginning of period..................................... -- -- 1,032,206 20,831 ------- --- --------- --------- Contract owners' equity end of period............ 139,429 -- 1,328,658 1,032,206 ======= === ========= ========= CHANGES IN UNITS: Beginning units............................... -- -- 124,968 2,391 ------- --- --------- --------- Units purchased............................... 14,776 -- 110,858 126,952 Units redeemed................................ (59) -- (45,929) (4,375) ------- --- --------- --------- Ending units.................................. 14,717 -- 189,897 124,968 ======= === ========= =========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
GVITGIFin GVITGIHlth GVITGITech GVITGlUtl --------------- -------------- --------------------- ------------- Investment activity: 2002 2001 2002 2001 2002 2001 2002 2001 -------- ---- ------- ---- --------- --------- ------ ---- Net investment income (loss) ................. $ 12 -- (3) -- 7,699 (251) 210 -- Realized gain (loss) on investments .......... 1,459 -- (9,448) -- (557,839) (486,708) 1,070 -- Change in unrealized gain (loss) on investments ............................ (2,770) -- (4,801) -- (182,901) 108,169 3,459 -- Reinvested capital gains ..................... -- -- -- -- -- -- -- -- -------- --- ------- --- --------- --------- ------ --- Net increase (decrease) in contract owners' equity resulting from operations ....... (1,299) -- (14,252) -- (733,041) (378,790) 4,739 -- -------- --- ------- --- --------- --------- ------ --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 11,120 -- 38,058 -- 424,481 308,149 1,181 -- Transfers between funds ...................... 128,508 -- 200,673 -- 551,212 822,431 90,509 -- Surrenders (note 6) .......................... (676) -- (958) -- (51,241) (6,202) (58) -- Death benefits (note 4) ...................... -- -- -- -- (77) (158) -- -- Policy loans (net of repayments) (note 5) .... 52 -- 729 -- (6,795) (6,402) -- -- Deductions for surrender charges (note 2d) ... (45) -- (63) -- (3,385) (469) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,871) -- (15,552) -- (126,953) (101,924) (1,572) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (61) -- (583) -- (3,768) (3,053) -- -- MSP contracts ............................. -- -- (3) -- (104) (190) -- -- SL contracts .............................. (9) -- (94) -- (391) (128) -- -- -------- --- ------- --- --------- --------- ------ --- Net equity transactions ................ 137,018 -- 222,207 -- 782,979 1,012,054 90,060 -- -------- --- ------- --- --------- --------- ------ --- Net change in contract owners' equity ........... 135,719 -- 207,955 -- 49,938 633,264 94,799 -- Contract owners' equity beginning of period .................................... -- -- -- -- 1,183,866 550,602 -- -- -------- --- ------- --- --------- --------- ------ --- Contract owners' equity end of period ........... $135,719 -- 207,955 -- 1,233,804 1,183,866 94,799 -- ======== === ======= === ========= ========= ====== === CHANGES IN UNITS: Beginning units .............................. -- -- -- -- 343,645 91,498 -- -- -------- --- ------- --- --------- --------- ------ --- Units purchased .............................. 15,968 -- 26,970 -- 395,082 293,293 11,104 -- Units redeemed ............................... (302) -- (2,035) -- (112,480) (41,146) (181) -- -------- --- ------- --- --------- --------- ------ --- Ending units ................................. 15,666 -- 24,935 -- 626,247 343,645 10,923 -- ======== === ======= === ========= ========= ====== ===
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
GVITGvtBd GVITGrowth -------------------------- ----------------------- 2002 2001 2002 2001 Investment activity: ------------ ----------- ---------- ---------- Net investment income (loss) ................. $ 7,334,221 4,469,213 (5,466) (7,359) Realized gain (loss) on investments .......... 2,614,575 944,656 (3,214,096) (9,049,823) Change in unrealized gain (loss) on investments ............................ 5,859,046 (196,849) (1,401,337) 3,255,014 Reinvested capital gains ..................... 1,687,818 158,118 -- -- ------------ ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 17,495,660 5,375,138 (4,620,899) (5,802,168) ------------ ----------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 37,748,208 30,655,820 4,421,369 5,717,712 Transfers between funds ...................... 62,139,131 37,359,271 (473,530) (3,464,155) Surrenders (note 6) .......................... (10,847,917) (323,902) (740,519) (662,031) Death benefits (note 4) ...................... (278,238) (241,226) (30,389) (35,835) Policy loans (net of repayments) (note 5) .... (2,010,932) (304,285) (36,609) (121,485) Deductions for surrender charges (note 2d) ... (716,702) (24,509) (48,925) (50,094) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (6,195,100) (3,143,662) (1,770,278) (1,928,000) Asset charges (note 3): FPVUL & VEL contracts ..................... (98,377) (46,681) (53,371) (59,480) MSP contracts ............................. (17,572) (11,073) (2,888) (3,712) SL contracts .............................. (38,718) (6,758) (5,006) (5,083) ------------ ----------- ---------- ---------- Net equity transactions ................ 79,683,783 63,912,995 1,259,854 (612,163) ------------ ----------- ---------- ---------- Net change in contract owners' equity ........... 97,179,443 69,288,133 (3,361,045) (6,414,331) Contract owners' equity beginning of period .................................... 119,060,794 49,772,661 15,309,472 21,723,803 ------------ ----------- ---------- ---------- Contract owners'equity end of period ............ $216,240,237 119,060,794 11,948,427 15,309,472 ============ =========== ========== ========== CHANGES IN UNITS: Beginning units .............................. 9,568,683 4,270,820 2,226,501 2,348,405 ------------ ----------- ---------- ---------- Units purchased .............................. 8,719,423 5,632,298 893,891 868,642 Units redeemed ............................... (2,455,745) (334,435) (682,867) (990,546) ------------ ----------- ---------- ---------- Ending units ................................. 15,832,361 9,568,683 2,437,525 2,226,501 ============ =========== ========== ========== GVITIDAgg GVITIDCon ---------------- ---------------- 2002 2001 2002 2001 Investment activity: --------- ---- --------- ---- Net investment income (loss) ................. 5,823 -- 22,434 -- Realized gain (loss) on investments .......... (68,431) -- (2,457) -- Change in unrealized gain (loss) on investments ............................ (6,754) -- (7,246) -- Reinvested capital gains ..................... 48 -- 1,006 -- --------- --- --------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... (69,314) -- 13,737 -- --------- --- --------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 356,263 -- 146,738 -- Transfers between funds ...................... 1,165,432 -- 2,009,387 -- Surrenders (note 6) .......................... (4,027) -- (11,026) -- Death benefits (note 4) ...................... -- -- (30) -- Policy loans (net of repayments) (note 5) .... 955 -- -- -- Deductions for surrender charges (note 2d) (266) -- (729) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (85,654) -- (52,942) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (2,163) -- (1,611) -- MSP contracts ............................. -- -- (192) -- SL contracts .............................. (355) -- (362) -- --------- --- --------- --- Net equity transactions ................ 1,430,185 -- 2,089,233 -- --------- --- --------- --- Net change in contract owners' equity ........... 1,360,871 -- 2,102,970 -- Contract owners' equity beginning of period .................................... -- -- -- -- --------- --- --------- --- Contract owners'equity end of period ............ 1,360,871 -- 2,102,970 -- ========= === ========= === CHANGES IN UNITS: Beginning units .............................. -- -- -- -- --------- --- --------- --- Units purchased .............................. 174,703 -- 216,022 -- Units redeemed ............................... (11,346) -- (6,755) -- --------- --- --------- --- Ending units ................................. 163,357 -- 209,267 -- ========= === ========= ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
GVITIDMod GVITIDModAgg ------------------ ----------------- Investment activity: 2002 2001 2002 2001 ----------- ---- --------- ----- Net investment income (loss) ................ $ 29,855 -- 17,703 -- Realized gain (loss) on investments ......... (75,739) -- (55,749) -- Change in unrealized gain (loss) on investments ........................... (11,572) -- (64,260) -- Reinvested capital gains .................... 2,904 -- 5,036 -- ----------- --- --------- --- Net increase (decrease) in contract owners' equity resulting from operations ............................ (54,552) -- (97,270) -- ----------- --- --------- --- Equity transactions: Purchase payments received from contract owners (note 6) ................. 720,599 -- 700,167 -- Transfers between funds ..................... 3,358,083 -- 3,021,509 -- Surrenders (note 6) ......................... (136,681) -- (4,601) -- Death benefits (note 4) ..................... -- -- -- -- Policy loans (net of repayments)(note 5)..... 9,644 -- (413) -- Deductions for surrender charges (note 2d)... (9,030) -- (304) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ........................ (159,369) -- (166,058) -- Asset charges (note 3): FPVUL & VEL contracts .................... (5,365) -- (3,730) -- MSP contracts ............................ (304) -- (611) -- SL contracts ............................. (277) -- (513) -- ----------- --- --------- --- Net equity transactions ............... 3,777,300 -- 3,545,446 -- ----------- --- --------- --- Net change in contract owners' equity .......... 3,722,748 -- 3,448,176 -- Contract owners' equity beginning of period ................................... -- -- -- -- ----------- --- --------- --- Contract owners' equity end of period .......... $ 3,722,748 -- 3,448,176 -- =========== === ========= === CHANGES IN UNITS: Beginning units ............................. -- -- -- -- ----------- --- --------- --- Units purchased ............................. 435,189 -- 432,613 -- Units redeemed .............................. (27,863) -- (35,649) -- ----------- --- --------- --- Ending units ................................ 407,326 -- 396,964 -- =========== === ========= === GVITIDModCon GVITIntGro ---------------- ----------------- Investment activity: 2002 2001 2002 2001 --------- ---- ------- ------- Net investment income (loss) ................ 38,686 -- (581) 117 Realized gain (loss) on investments ......... (16,140) -- 79,857 (31,454) Change in unrealized gain (loss) on investments ........................... (16,778) -- (2,225) 2,021 Reinvested capital gains .................... 4,544 -- -- -- --------- --- ------- ------- Net increase (decrease) in contract owners' equity resulting from operations ............................ 10,312 -- 77,051 (29,316) --------- --- ------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ................. 630,127 -- 171,780 102,832 Transfers between funds ..................... 3,553,672 -- 158,443 198,272 Surrenders (note 6) ......................... (2,690) -- (6,347) (772) Death benefits (note 4) ........................ -- -- (5) -- Policy loans (net of repayments)(note 5)..... (16,299) -- (794) (243) Deductions for surrender charges (note 2d)... (178) -- (419) (58) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ........................ (84,043) -- (37,594) (12,270) Asset charges (note 3): FPVUL & VEL contracts .................... (2,422) -- (1,162) (369) MSP contracts ............................ (398) -- (3) (110) SL contracts ............................. (1,515) -- (139) (28) --------- --- ------- ------- Net equity transactions ............... 4,076,254 -- 283,760 287,254 --------- --- ------- ------- Net change in contract owners' equity .......... 4,086,566 -- 360,811 257,938 Contract owners' equity beginning of period ................................... -- -- 282,885 24,947 --------- --- ------- ------- Contract owners' equity end of period .......... 4,086,566 -- 643,696 282,885 ========= === ======= ======= CHANGES IN UNITS: Beginning units ............................. -- -- 42,921 2,697 --------- --- ------- ------- Units purchased ............................. 435,080 -- 94,147 42,203 Units redeemed .............................. (11,251) -- (8,163) (1,979) --------- --- ------- ------- Ending units ................................ 423,829 -- 128,905 42,921 ========= === ======= =======
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
GVITMyMkt GVITMyMkt5 ---------------------------- ------------------ Investment activity: 2002 2001 2002 2001 ------------- ------------ ----------- ---- Net investment income (loss) .................... $ 4,741,967 10,904,762 281,257 -- 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 .......... 4,741,967 10,904,762 281,257 -- ------------- ------------ ----------- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 371,129,756 535,199,396 7,651,281 -- Transfers between funds ......................... (549,682,062) (253,501,490) 256,347,770 -- Surrenders (note 6) ............................. (36,721,805) (5,384,696) (15,658) -- Death benefits (note 4) ......................... (256,848) (581,176) -- -- Policy loans (net of repayments) (note 5) ....... (9,505,772) (2,986,273) 73,925 -- Deductions for surrender charges (note 2d) ...... (2,426,141) (407,441) (1,035) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (22,470,239) (19,115,629) (783,607) -- Asset charges (note 3): FPVUL & VEL contracts ........................ (473,013) (375,913) -- -- MSP contracts ................................ (28,941) (32,277) -- -- SL contracts ................................. (99,128) (75,622) -- -- ------------- ------------ ----------- --- Net equity transactions ................... (250,534,193) 252,738,879 263,272,676 -- ------------- ------------ ----------- --- Net change in contract owners' equity .............. (245,792,226) 263,643,641 263,553,933 -- Contract owners' equity beginning of period ....................................... 496,469,290 232,825,649 -- -- ------------- ------------ ----------- --- Contract owners' equity end of period .............. $ 250,677,064 496,469,290 263,553,933 -- ============= ============ =========== === CHANGES IN UNITS: Beginning units ................................. 42,392,789 20,561,523 -- -- ------------- ------------ ----------- --- Units purchased ................................. 32,412,285 55,397,839 26,390,825 -- Units redeemed .................................. (53,926,919) (33,566,573) (80,587) -- ------------- ------------ ----------- --- Ending units .................................... 20,878,155 42,392,789 26,310,238 -- ============= ============ =========== === GVITLead NWGVITStrVal -------------- --------------------- Investment activity: 2002 2001 2002 2001 ------- ---- --------- --------- Net investment income (loss) .................... 754 -- (1,320) 6,897 Realized gain (loss) on investments ............. (6,216) -- (294,852) (76,573) Change in unrealized gain (loss) on investments ............................... (5,890) -- (309,132) (36,458) Reinvested capital gains ........................ -- -- -- 2,958 ------- --- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations .......... (11,352) -- (605,304) (103,176) ------- --- --------- --------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 10,364 -- 180,856 240,722 Transfers between funds ......................... 136,036 -- 145,080 813,847 Surrenders (note 6) ............................. (837) -- (125,218) (16,502) Death benefits (note 4) ......................... -- -- (3,004) (849) Policy loans (net of repayments) (note 5) ....... 363 -- (23,933) (10,094) Deductions for surrender charges (note 2d) ...... (55) -- (8,273) (1,249) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (5,842) -- (93,712) (93,260) Asset charges (note 3): FPVUL & VEL contracts ........................ (261) -- (3,569) (4,305) MSP contracts ................................ -- -- (456) (547) SL contracts ................................. (15) -- (512) (441) ------- --- --------- --------- Net equity transactions ................... 139,753 -- 67,259 927,322 ------- --- --------- --------- Net change in contract owners' equity .............. 128,401 -- (538,045) 824,146 Contract owners' equity beginning of period ....................................... -- -- 2,052,897 1,228,751 ------- --- --------- --------- Contract owners' equity end of period .............. 128,401 -- 1,514,852 2,052,897 ======= === ========= ========= CHANGES IN UNITS: Beginning units ................................. -- -- 205,945 117,590 ------- --- --------- --------- Units purchased ................................. 15,901 -- 53,753 102,821 Units redeemed .................................. (710) -- (57,004) (14,466) ------- --- --------- --------- Ending units .................................... 15,191 -- 202,694 205,945 ======= === ========= =========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
GVITSmCapGr GVITSmCapVal ------------------------ ------------------------ Investment activity: 2002 2001 2002 2001 ----------- ---------- ----------- ---------- Net investment income (loss) ................. $ (13,889) (8,378) (61,347) (13,984) Realized gain (loss) on investments .......... (4,145,599) (1,956,983) (2,200,894) (194,062) Change in unrealized gain (loss) on investments ............................ (777,242) 709,961 (15,654,025) 2,708,437 Reinvested capital gains ..................... -- -- 1,237,982 2,816,706 ----------- ---------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... (4,936,730) (1,255,400) (16,678,284) 5,317,097 ----------- ---------- ----------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 3,355,003 3,598,455 14,008,388 9,016,474 Transfers between funds ...................... 4,195,392 3,410,637 12,145,585 15,412,364 Surrenders (note 6) .......................... (588,945) (1,642,218) (1,873,812) (446,243) Death benefits (note 4) ...................... (11,194) (10,089) (91,415) (64,080) Policy loans (net of repayments) (note 5) .... (41,285) (33,956) (1,420,340) (282,493) Deductions for surrender charges (note 2d) ... (38,910) (9,433) (123,799) (33,766) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (909,598) (661,890) (3,198,085) (2,011,182) Asset charges (note 3): FPVUL & VEL contracts ..................... (26,549) (19,997) (99,851) (69,206) MSP contracts ............................. (788) (739) (3,814) (3,299) SL contracts .............................. (5,754) (2,320) (16,116) (8,441) ----------- ---------- ----------- ---------- Net equity transactions ................ 5,927,372 4,628,450 19,326,741 21,510,128 ----------- ---------- ----------- ---------- Net change in contract owners' equity ........... 990,642 3,373,050 2,648,457 26,827,225 Contract owners' equity beginning of period .................................... 10,404,942 7,031,892 42,061,592 15,234,367 ----------- ---------- ----------- ---------- Contract owners' equity end of period ........... $11,395,584 10,404,942 44,710,049 42,061,592 =========== ========== =========== ========== CHANGES IN UNITS: Beginning units .............................. 680,832 409,600 2,432,336 1,106,081 ----------- ---------- ----------- ---------- Units purchased .............................. 572,771 442,794 1,817,629 1,533,024 Units redeemed ............................... (134,097) (171,562) (598,879) (206,769) ----------- ---------- ----------- ---------- Ending units ................................. 1,119,506 680,832 3,651,086 2,432,336 =========== ========== =========== ========== GVITSmComp GVITTotRt ------------------------ ------------------------- Investment activity: 2002 2001 2002 2001 ----------- ---------- ----------- ----------- Net investment income (loss) ................. (103,701) (19,885) 1,174,737 621,454 Realized gain (loss) on investments .......... (2,816,078) (7,290,500) (4,933,376) (3,272,734) Change in unrealized gain (loss) on investments ............................ (7,122,789) 2,058,463 (23,481,195) (5,934,402) Reinvested capital gains ..................... -- -- -- 2,562,793 ----------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... (10,042,568) (5,251,922) (27,239,834) (6,022,889) ----------- ---------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 15,407,863 12,159,420 9,319,075 10,122,071 Transfers between funds ...................... 5,296,956 (2,921,935) 58,351,114 89,693,120 Surrenders (note 6) .......................... (1,325,220) (460,130) (2,387,464) (959,850) Death benefits (note 4) ...................... (116,858) (66,716) (89,802) (59,593) Policy loans (net of repayments) (note 5) .... (553,626) (211,792) (223,510) (350,619) Deductions for surrender charges (note 2d) ... (87,555) (34,816) (157,735) (72,628) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (2,890,107) (2,446,502) (5,943,849) (4,742,267) Asset charges (note 3): FPVUL & VEL contracts ..................... (75,237) (64,103) (142,363) (137,419) MSP contracts ............................. (3,007) (2,960) (11,053) (12,489) SL contracts .............................. (12,964) (9,607) (11,353) (8,780) ----------- ---------- ----------- ----------- Net equity transactions ................ 15,640,245 5,940,859 58,703,060 93,471,546 ----------- ---------- ----------- ----------- Net change in contract owners' equity ........... 5,597,677 688,937 31,463,226 87,448,657 Contract owners' equity beginning of period .................................... 43,707,056 43,018,119 120,541,130 33,092,473 ----------- ---------- ----------- ----------- Contract owners' equity end of period ........... 49,304,733 43,707,056 152,004,356 120,541,130 =========== ========== =========== =========== CHANGES IN UNITS: Beginning units .............................. 3,124,946 2,746,658 12,722,718 2,716,400 ----------- ---------- ----------- ----------- Units purchased .............................. 1,680,058 1,637,808 8,036,058 10,688,339 Units redeemed ............................... (470,450) (1,259,520) (1,045,240) (682,021) ----------- ---------- ----------- ----------- Ending units ................................. 4,334,554 3,124,946 19,713,536 12,722,718 =========== ========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
GVITUSGro GVITWLead GSMCV GSVITMidCap --------------- ------------------------ ------------- ------------- Investment activity: 2002 2001 2002 2001 2002 2001 2002 2001 -------- ---- ----------- ---------- ------ ---- ------ ---- Net investment income (loss) .................... $ (9) -- 324,381 491,832 43 -- 93 -- Realized gain (loss) on investments ............. (4,467) -- (8,263,222) (1,223,769) (472) -- 228 -- Change in unrealized gain (loss) on investments ............................... (38,689) -- 7,274,386 (4,809,630) (20) -- 274 -- Reinvested capital gains ........................ -- -- -- -- 175 -- 28 -- -------- --- ----------- ---------- ------ --- ------ --- Net increase (decrease) in contract owners' equity resulting from operations .......... (43,165) -- (664,455) (5,541,567) (274) -- 623 -- -------- --- ----------- ---------- ------ --- ------ --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 29,652 -- 6,826,596 12,723,229 7,983 -- 175 -- Transfers between funds ......................... 421,915 -- (34,306,437) (640,442) (6,728) -- 71,979 -- Surrenders (note 6) ............................. -- -- (103,946) (907,039) -- -- -- -- Death benefits (note 4) ......................... -- -- (1,496) (29,301) -- -- -- -- Policy loans (net of repayments) (note 5) ....... 200 -- (31,594) (44,008) -- -- -- -- Deductions for surrender charges (note 2d) ...... -- -- (6,868) (68,633) -- -- -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (6,430) -- (442,197) (608,881) (981) -- (3) -- Asset charges (note 3): FPVUL & VEL contracts ........................ (242) -- (10,930) (11,299) -- -- -- -- MSP contracts ................................ (7) -- (439) (575) -- -- -- -- SL contracts ................................. (1) -- (35,418) (75,060) -- -- -- -- -------- --- ----------- ---------- ------ --- ------ --- Net equity transactions ................... 445,087 -- (28,112,729) 10,337,991 274 -- 72,151 -- -------- --- ----------- ---------- ------ --- ------ --- Net change in contract owners' equity .............. 401,922 -- (28,777,184) 4,796,424 -- -- 72,774 -- Contract owners' equity beginning of period ....................................... -- -- 31,781,818 26,985,394 -- -- -- -- -------- --- ----------- ---------- ------ --- ------ --- Contract owners' equity end of period .............. $401,922 -- 3,004,634 31,781,818 -- -- 72,774 -- ======== === =========== ========== ====== === ====== === CHANGES IN UNITS: Beginning units ................................. -- -- 3,271,213 2,256,557 -- -- -- -- -------- --- ----------- ---------- ------ --- ------ --- Units purchased ................................. 49,630 -- 759,503 1,327,934 810 -- 7,368 -- Units redeemed .................................. (772) -- (3,624,167) (313,278) (810) -- -- -- -------- --- ----------- ---------- ------ --- ------ --- Ending units .................................... 48,858 -- 406,549 3,271,213 -- -- 7,368 -- ======== === =========== ========== ====== === ====== ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
JPMorBal JanBal ------------------------ ------------- Investment activity: 2002 2001 2002 2001 ----------- ---------- ------ ---- Net investment income (loss).................. $ 329,566 226,198 100 -- Realized gain (loss) on investments........... (517,550) (290,026) (253) -- Change in unrealized gain (loss) on investments............................. (1,744,993) (284,440) (195) -- Reinvested capital gains...................... -- -- -- -- ----------- ---------- ------ --- Net increase (decrease) in contract owners' equity resulting from operations........ (1,932,977) (348,268) (348) -- ----------- ---------- ------ --- Equity transactions: Purchase payments received from contract owners (note 6)................... 4,529,850 3,262,506 9,563 -- Transfers between funds....................... 6,234,211 3,546,264 474 -- Surrenders (note 6)........................... (742,801) (291,289) -- -- Death benefits (note 4) ...................... (28,048) (4,798) -- -- Policy loans (net of repayments) (note 5)..... (45,563) (104,338) -- -- Deductions for surrender charges (note 2d).... (49,076) (22,041) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......................... (1,110,055) (708,814) 114 -- Asset charges (note 3): FPVUL & VEL contracts...................... (28,325) (19,653) -- -- MSP contracts.............................. (2,736) (2,465) -- -- SL contracts............................... (5,670) (4,164) -- -- ----------- ---------- ------ --- Net equity transactions................. 8,751,787 5,651,208 10,151 -- ----------- ---------- ------ --- Net change in contract owners' equity............ 6,818,810 5,302,940 9,803 -- Contract owners' equity beginning of period..................................... 12,101,238 6,798,298 -- -- ----------- ---------- ------ --- Contract owners' equity end of period............ $18,920,048 12,101,238 9,803 -- =========== ========== ====== === CHANGES IN UNITS: Beginning units............................... 1,196,199 648,063 -- -- ----------- ---------- ------ --- Units purchased............................... 1,161,723 698,378 981 -- Units redeemed................................ (195,460) (150,242) (4) -- ----------- ---------- ------ --- Ending units.................................. 2,162,462 1,196,199 977 -- =========== ========== ====== === JanCapAp JanGITech ----------------------- ----------------------- Investment activity: 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Net investment income (loss).................. 52,210 230,698 (10,468) 88,214 Realized gain (loss) on investments........... (4,302,790) (6,754,756) (5,684,355) (7,338,510) Change in unrealized gain (loss) on investments............................. (1,194,674) (170,898) (1,277,195) 249,355 Reinvested capital gains...................... -- -- -- -- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations........ (5,445,254) (6,694,956) (6,972,018) (7,000,941) ---------- ---------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)................... 8,871,705 10,087,668 4,426,057 7,602,918 Transfers between funds....................... (606,807) 8,106,584 (714,978) 1,847,915 Surrenders (note 6)........................... (1,555,176) (301,372) (909,750) (488,064) Death benefits (note 4) ...................... (11,304) (70,562) (35,202) (8,194) Policy loans (net of repayments) (note 5)..... (148,679) (120,940) 78,133 (43,323) Deductions for surrender charges (note 2d).... (102,748) (22,804) (60,105) (36,930) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).......................... (2,631,759) (2,452,006) (1,372,373) (1,585,925) Asset charges (note 3): FPVUL & VEL contracts...................... (74,053) (70,990) (37,783) (45,749) MSP contracts.............................. (2,533) (2,884) (802) (1,223) SL contracts............................... (10,399) (9,847) (6,122) (5,981) ---------- ---------- ---------- ---------- Net equity transactions................. 3,728,247 15,142,847 1,367,075 7,235,444 ---------- ---------- ---------- ---------- Net change in contract owners' equity............ (1,717,007) 8,447,891 (5,604,943) 234,503 Contract owners' equity beginning of period..................................... 30,630,149 22,182,258 15,892,415 15,657,912 ---------- ---------- ---------- ---------- Contract owners' equity end of period............ 28,913,142 30,630,149 10,287,472 15,892,415 ========== ========== ========== ========== CHANGES IN UNITS: Beginning units............................... 4,769,570 2,695,290 3,857,628 2,380,162 ---------- ---------- ---------- ---------- Units purchased............................... 1,849,367 2,555,765 1,916,583 2,389,863 Units redeemed................................ (1,254,693) (481,485) (1,543,331) (912,397) ---------- ---------- ---------- ---------- Ending units.................................. 5,364,244 4,769,570 4,230,880 3,857,628 ========== ========== ========== ==========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
JanIntGro MGVITMultiSec ------------------------- ------------------------ Investment activity: 2002 2001 2002 2001 ----------- ----------- ----------- ---------- Net investment income (loss)...................... $ 165,978 169,625 1,326,535 1,900,995 Realized gain (loss) on investments............... (6,617,526) (11,364,969) (519,774) (88,690) Change in unrealized gain (loss) on investments................................. (2,299,270) 4,906,857 942,199 (477,943) Reinvested capital gains.......................... -- -- -- -- ----------- ----------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations............ (8,750,818) (6,288,487) 1,748,960 1,334,362 ----------- ----------- ----------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)....................... 9,446,001 13,346,220 7,798,773 12,132,219 Transfers between funds........................... 1,204,789 10,737,224 (21,679,787) 1,601,401 Surrenders (note 6)............................... (1,208,856) (254,359) (3,165,292) (1,045,750) Death benefits (note 4)........................... (20,896) (51,142) (34,790) (19,778) Policy loans (net of repayments) (note 5)......... (47,861) (111,482) (136,975) (58,777) Deductions for surrender charges (note 2d)........ (79,867) (19,246) (209,125) (79,128) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).............................. (2,358,713) (2,088,452) (1,039,094) (885,477) Asset charges (note 3): FPVUL & VEL contracts.......................... (61,605) (57,868) (18,792) (12,804) MSP contracts.................................. (1,802) (2,238) (2,089) (1,291) SL contracts................................... (7,993) (6,975) (33,668) (65,836) ----------- ----------- ----------- ---------- Net equity transactions..................... 6,863,197 21,491,682 (18,520,839) 11,564,779 ----------- ----------- ----------- ---------- Net change in contract owners' equity................ (1,887,621) 15,203,195 (16,771,879) 12,899,141 Contract owners' equity beginning of period......................................... 33,830,428 18,627,233 39,215,767 26,316,626 ----------- ----------- ----------- ---------- Contract owners' equity end of period................ $31,942,807 33,830,428 22,443,888 39,215,767 =========== =========== =========== ========== CHANGES IN UNITS: Beginning units................................... 5,358,130 2,253,062 3,491,194 2,433,129 ----------- ----------- ----------- ---------- Units purchased................................... 2,442,179 3,505,685 1,268,199 1,279,025 Units redeemed.................................... (967,913) (400,617) (2,886,102) (220,960) ----------- ----------- ----------- ---------- Ending units...................................... 6,832,396 5,358,130 1,873,291 3,491,194 =========== =========== =========== ========== NBAMTFas NBAMTGuard ------------- ----------------------- Investment activity: 2002 2001 2002 2001 ------ ---- ---------- ---------- Net investment income (loss)...................... (25) -- 70,958 16,565 Realized gain (loss) on investments............... 9 -- (1,510,550) (84,597) Change in unrealized gain (loss) on investments................................. 971 -- (3,567,509) (462,414) Reinvested capital gains.......................... -- -- -- 372,331 ------ --- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations............ 955 -- (5,007,101) (158,115) ------ --- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6)....................... 44 -- 2,830,397 2,897,841 Transfers between funds........................... 34,956 -- 6,311,275 4,877,663 Surrenders (note 6)............................... -- -- (593,380) (136,020) Death benefits (note 4)........................... -- -- (19,798) (10,284) Policy loans (net of repayments) (note 5)......... -- -- 63,048 (34,127) Deductions for surrender charges (note 2d)........ -- -- (39,204) (10,292) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c).............................. (229) -- (892,446) (543,447) Asset charges (note 3): FPVUL & VEL contracts.......................... -- -- (25,529) (20,511) MSP contracts.................................. -- -- (1,277) (1,230) SL contracts................................... -- -- (3,604) (2,148) ------ --- ---------- ---------- Net equity transactions..................... 34,771 -- 7,629,482 7,017,445 ------ --- ---------- ---------- Net change in contract owners' equity................ 35,726 -- 2,622,381 6,859,330 Contract owners' equity beginning of period......................................... -- -- 12,299,916 5,440,586 ------ --- ---------- ---------- Contract owners' equity end of period................ 35,726 -- 14,922,297 12,299,916 ====== === ========== ========== CHANGES IN UNITS: Beginning units................................... -- -- 934,874 396,791 ------ --- ---------- ---------- Units purchased................................... 3,579 -- 980,080 602,101 Units redeemed.................................... (27) -- (235,061) (64,018) ------ --- ---------- ---------- Ending units...................................... 3,552 -- 1,679,893 934,874 ====== === ========== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
NBAMTMCGr NBAMTPart ONEMidCap ONEMidCapV ------------------------- ---------------------- ------------- ------------- Investment activity: 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ----------- ---------- ---------- ------- ---- ------- ---- Net investment income (loss) ................. $ (77,678) (68,411) 48,888 25,456 (141) -- (121) -- Realized gain (loss) on investments .......... (4,989,622) (15,115,138) (1,817,571) (647,345) (2,304) -- 2 -- Change in unrealized gain (loss) on investments ............................ (9,298,181) 5,289,162 (1,372,811) 81,935 (3,322) -- (6,061) -- Reinvested capital gains ..................... -- -- -- 345,807 -- -- -- -- ------------ ----------- ---------- ---------- ------- --- ------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... (14,365,481) (9,894,387) (3,141,494) (194,147) (5,767) -- (6,180) -- ------------ ----------- ---------- ---------- ------- --- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 8,190,191 13,330,709 2,243,539 2,484,274 9,498 -- 218 -- Transfers between funds ...................... 7,542,838 4,624,300 1,027,469 1,241,216 198,137 -- 393,134 -- Surrenders (note 6) .......................... (1,575,057) (489,496) (846,009) (266,358) -- -- -- -- Death benefits (note 4) ...................... (89,359) (37,866) (14,152) (2,175) -- -- -- -- Policy loans (net of repayments) (note 5) .... (1,458,995) (450,986) (50,875) (62,396) -- -- -- -- Deductions for surrender charges (note 2d) ... (104,061) (37,038) (55,894) (20,154) -- -- -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (2,601,985) (2,553,992) (775,373) (703,703) (1,068) -- (209) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (67,391) (69,061) (30,660) (29,615) -- -- -- -- MSP contracts ............................. (2,374) (3,080) (1,734) (1,994) -- -- -- -- SL contracts .............................. (9,477) (9,276) (6,730) (6,346) -- -- -- -- ------------ ----------- ---------- ---------- ------- --- ------- --- Net equity transactions ................ 9,824,330 14,304,214 1,489,581 2,632,749 206,567 -- 393,143 -- ------------ ----------- ---------- ---------- ------- --- ------- --- Net change in contract owners' equity ........... (4,541,151) 4,409,827 (1,651,913) 2,438,602 200,800 -- 386,963 -- Contract owners' equity beginning of period .................................... 41,223,765 36,813,938 12,166,991 9,728,389 -- -- -- -- ------------ ----------- ---------- ---------- ------- --- ------- --- Contract owners' equity end of period ........... $ 36,682,614 41,223,765 10,515,078 12,166,991 200,800 -- 386,963 -- ============ =========== ========== ========== ======= === ======= === CHANGES IN UNITS: Beginning units .............................. 3,163,605 2,122,060 1,149,207 890,267 -- -- -- -- ------------ ----------- ---------- ---------- ------- --- ------- --- Units purchased .............................. 1,779,547 1,551,954 421,809 391,897 20,041 -- 39,020 -- Units redeemed ............................... (820,669) (510,409) (259,205) (132,957) (101) -- (20) -- ------------ ----------- ---------- ---------- ------- --- ------- --- Ending units ................................. 4,122,483 3,163,605 1,311,811 1,149,207 19,940 -- 39,000 -- ============ =========== ========== ========== ======= === ======= ===
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
OppAggGro OppCapAp -------------------------- ------------------------ Investment activity: 2002 2001 2002 2001 ------------ ----------- ----------- ---------- Net investment income (loss) ................. $ 243,809 414,854 280,305 248,102 Realized gain (loss) on investments .......... (32,126,879) (15,420,689) (9,533,865) (4,649,940) ------------ ----------- ----------- ---------- Change in unrealized gain (loss) on investments ............................ 14,324,781 (14,061,702) (15,171,267) (8,865,390) Reinvested capital gains ..................... -- 7,963,996 -- 5,442,934 ------------ ----------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... (17,558,289) (21,103,541) (24,424,827) (7,824,294) ------------ ----------- ----------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 16,675,961 27,928,131 22,643,251 22,484,374 Transfers between funds ...................... (6,935,071) 3,064,936 6,797,617 25,215,921 Surrenders (note 6) .......................... (2,565,511) (729,545) (3,904,475) (1,230,637) Death benefits (note 4) ...................... (71,684) (121,224) (95,963) (42,386) Policy loans (net of repayments) (note 5) .... 114,051 (308,647) 7,671 (262,756) Deductions for surrender charges (note 2d).... (169,498) (55,202) (257,961) (93,118) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (3,952,406) (4,174,920) (5,118,298) (4,183,259) Asset charges (note 3): FPVUL & VEL contracts ..................... (92,229) (96,929) (132,328) (117,473) MSP contracts ............................. (3,963) (7,267) (4,816) (5,580) SL contracts .............................. (9,962) (12,686) (15,625) (14,207) ------------ ----------- ----------- ---------- Net equity transactions ................ 2,989,688 25,486,647 19,919,073 41,750,879 ------------ ----------- ----------- ---------- Net change in contract owners' equity ........... (14,568,601) 4,383,106 (4,505,754) 33,926,585 Contract owners' equity beginning of period .................................... 61,353,767 56,970,661 79,018,066 45,091,481 ------------ ----------- ----------- ---------- Contract owners' equity end of period ........... $ 46,785,166 61,353,767 74,512,312 79,018,066 ============ =========== =========== ========== CHANGES IN UNITS: Beginning units .............................. 5,473,091 3,428,074 5,810,866 2,839,064 ------------ ----------- ----------- ---------- Units purchased .............................. 1,838,149 2,759,109 2,942,041 3,394,012 Units redeemed ............................... (1,565,585) (714,092) (1,167,405) (422,210) ------------ ----------- ----------- ---------- Ending units ................................. 5,745,655 5,473,091 7,585,502 5,810,866 ============ =========== =========== ========== OppGlSec OppMSGrInc ---------------------- ----------------------- Investment activity: 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Net investment income (loss) ................. 69,210 16,064 176,431 99,189 Realized gain (loss) on investments .......... (1,830,151) (1,428,357) (2,016,850) (1,287,366) ---------- ---------- ---------- ---------- Change in unrealized gain (loss) on investments ............................ (4,252,562) 324,428 (4,294,382) (953,747) Reinvested capital gains -- 697,893 -- -- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... (6,013,503) (389,972) (6,134,801) (2,141,924) ---------- ---------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 5,837,215 4,040,697 7,548,303 7,159,154 Transfers between funds ...................... 13,154,983 8,510,314 4,691,788 3,192,858 Surrenders (note 6) .......................... (954,800) (94,452) (1,659,687) (512,683) Death benefits (note 4) ...................... (17,981) (7,316) (79,021) (53,197) Policy loans (net of repayments) (note 5) .... (29,069) (33,018) (209,331) (139,092) Deductions for surrender charges (note 2d)... (63,082) (7,147) (109,652) (38,793) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,309,549) (578,185) (2,641,355) (2,123,587) Asset charges (note 3): FPVUL & VEL contracts ..................... (31,533) (13,992) (81,175) (66,208) MSP contracts ............................. (1,111) (1,000) (4,002) (4,577) SL contracts .............................. (4,148) (2,627) (10,177) (8,974) ---------- ---------- ---------- ---------- Net equity transactions ................ 16,580,925 11,813,274 7,445,691 7,404,901 ---------- ---------- ---------- ---------- Net change in contract owners' equity ........... 10,567,422 11,423,302 1,310,890 5,262,977 Contract owners' equity beginning of period .................................... 15,433,352 4,010,050 26,137,983 20,875,006 ---------- ---------- ---------- ---------- Contract owners' equity end of period ........... 26,000,774 15,433,352 27,448,873 26,137,983 ========== ========== ========== ========== CHANGES IN UNITS: Beginning units .............................. 1,833,782 418,007 2,604,263 1,862,664 ---------- ---------- ---------- ---------- Units purchased .............................. 2,687,789 1,535,801 1,330,330 1,274,868 Units redeemed ............................... (547,628) (120,026) (558,683) (533,269) ---------- ---------- ---------- ---------- Ending units ................................. 3,973,943 1,833,782 3,375,910 2,604,263 ========== ========== ========== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
PIMLowDur PIMRealRet PIMTotRet PionHY --------------- -------------- ---------------- ------------ Investment activity: 2002 2001 2002 2001 2002 2001 2002 2001 -------- ---- ------- ---- --------- ---- ----- ---- Net investment income (loss) .................... $ 513 -- 876 -- 8,538 -- 33 -- Realized gain (loss) on investments ............. 62 -- 694 -- 141 -- (57) -- Change in unrealized gain (loss) on investments ............................... 360 -- 10,029 -- 7,687 -- 1 -- Reinvested capital gains ........................ 949 -- 463 -- 21,423 -- -- -- -------- --- ------- --- --------- --- ----- --- Net increase (decrease) in contract owners' equity resulting from operations .......... 1,884 -- 12,062 -- 37,789 -- (23) -- -------- --- ------- --- --------- --- ----- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 5,354 -- 20,908 -- 12,806 -- 1,694 -- Transfers between funds ......................... 448,951 -- 472,677 -- 1,870,648 -- 2,206 -- Surrenders (note 6) ............................. -- -- -- -- -- -- -- -- Death benefits (note 4) ......................... -- -- -- -- -- -- -- -- 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) ............................ 2,304 -- (1,479) -- (7,134) -- (13) -- Asset charges (note 3): FPVUL & VEL contracts ........................ -- -- -- -- -- -- -- -- MSP contracts ................................ -- -- -- -- -- -- -- -- SL contracts ................................. -- -- -- -- -- -- -- -- -------- --- ------- --- --------- --- ----- --- Net equity transactions ................... 456,609 -- 492,106 -- 1,876,320 -- 3,887 -- -------- --- ------- --- --------- --- ----- --- Net change in contract owners' equity .............. 458,493 -- 504,168 -- 1,914,109 -- 3,864 -- Contract owners' equity beginning of period ....................................... -- -- -- -- -- -- -- -- -------- --- ------- --- --------- --- ----- --- Contract owners' equity end of period .............. $458,493 -- 504,168 -- 1,914,109 -- 3,864 -- ======== === ======= === ========= === ===== === CHANGES IN UNITS: Beginning units ................................. -- -- -- -- -- -- -- -- -------- --- ------- --- --------- --- ----- --- Units purchased ................................. 45,043 -- 48,862 -- 186,183 -- 374 -- Units redeemed .................................. (16) -- (191) -- (828) -- (1) -- -------- --- ------- --- --------- --- ----- --- Ending units .................................... 45,027 -- 48,671 -- 185,355 -- 373 -- ======== === ======= === ========= === ===== ===
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
RoyMicro SGVITMdCpGr --------------- ------------------------ Investment activity: 2002 2001 2002 2001 -------- ---- ----------- ---------- Net investment income (loss) ................. $ (98) -- (39,586) (50,333) Realized gain (loss) on investments .......... 179 -- (6,111,067) (9,951,425) Change in unrealized gain (loss) on investments ............................ 1,783 -- (3,934,328) 1,610,021 Reinvested capital gains ..................... 2,635 -- -- -- -------- --- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 4,499 -- (10,084,981) (8,391,737) -------- --- ----------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 2,759 -- 5,397,783 5,523,999 Transfers between funds ...................... 425,194 -- (123,294) 1,955,797 Surrenders (note 6) .......................... -- -- (1,048,979) (333,832) Death benefits (note 4) ...................... -- -- (36,286) (81,747) Policy loans (net of repayments) (note 5) .... -- -- 86,767 (34,689) Deductions for surrender charges (note 2d) ... -- -- (69,304) (25,260) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... 8,168 -- (1,417,054) (1,480,360) Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- (32,103) (36,320) MSP contracts ............................. -- -- (944) (1,630) SL contracts .............................. -- -- (4,086) (3,653) -------- --- ----------- ---------- Net equity transactions ................ 436,121 -- 2,752,500 5,482,305 -------- --- ----------- ---------- Net change in contract owners'equity ............ 440,620 -- (7,332,481) (2,909,432) Contract owners'equity beginning of period .................................... -- -- 24,803,371 27,712,803 -------- --- ----------- ---------- Contract owners'equity end of period ............ $440,620 -- 17,470,890 24,803,371 ======== === =========== ========== CHANGES IN UNITS: Beginning units .............................. -- -- 2,179,699 1,716,211 -------- --- ----------- ---------- Units purchased .............................. 43,688 -- 672,777 766,979 Units redeemed ............................... (82) -- (411,758) (303,491) -------- --- ----------- ---------- Ending units ................................. 43,606 -- 2,440,718 2,179,699 ======== === =========== ========== StOpp2 TRPEI2 ----------------------- --------------- Investment activity: 2002 2001 2002 2001 ---------- ---------- -------- ---- Net investment income (loss) ................. 54,735 54,966 591 -- Realized gain (loss) on investments .......... (5,309,471) (772,583) 110 -- Change in unrealized gain (loss) on investments ............................ (3,489,957) (2,619,628) 311 -- Reinvested capital gains ..................... 562,955 2,995,244 -- -- ---------- ---------- -------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... (8,181,738) (342,001) 1,012 -- ---------- ---------- -------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 9,112,605 6,298,359 943 -- Transfers between funds ...................... 6,258,465 10,335,015 170,100 -- Surrenders (note 6) .......................... (1,893,414) (65,790) -- -- Death benefits (note 4) ...................... (22,226) (9,812) -- -- Policy loans (net of repayments) (note 5) .... (24,647) (61,294) -- -- Deductions for surrender charges (note 2d) ... (125,094) (4,978) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,442,279) (726,268) (73) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (30,471) (15,103) -- -- MSP contracts ............................. (724) (667) -- -- SL contracts .............................. (8,102) (3,161) -- -- ---------- ---------- -------- --- Net equity transactions ................ 11,824,113 15,746,301 170,970 -- ---------- ---------- -------- --- Net change in contract owners'equity ............ 3,642,375 15,404,300 171,982 -- Contract owners'equity beginning of period .................................... 20,466,749 5,062,449 -- -- ---------- ---------- -------- --- Contract owners'equity end of period ............ 24,109,124 20,466,749 171,982 -- ========== ========== ======== === CHANGES IN UNITS: Beginning units .............................. 2,159,287 514,109 -- -- ---------- ----------- -------- --- Units purchased .............................. 1,958,587 1,835,688 17,054 -- Units redeemed ............................... (633,802) (190,510) (55) -- ---------- ----------- -------- --- Ending units ................................. 3,484,072 2,159,287 16,999 -- ========== =========== ======== ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
TRPMCG2 TurnGVITGro --------------- ------------------- Investment activity: 2002 2001 2002 2001 -------- ---- -------- -------- Net investment income (loss) ................. $ (28) -- (185) (25) Realized gain (loss) on investments .......... (801) -- (187,053) (129,160) Change in unrealized gain (loss) on investments ............................ (2,480) -- (80,191) 20,323 Reinvested capital gains ..................... -- -- -- -- -------- --- -------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... (3,309) -- (267,429) (108,862) -------- --- -------- -------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 19,238 -- 211,743 81,780 Transfers between funds ...................... 109,523 -- 114,134 435,327 Surrenders (note 6) .......................... -- -- (6,230) (35) Death benefits (note 4) ...................... -- -- (100) (113) Policy loans (net of repayments) (note 5) .... -- -- (3,033) (597) Deductions for surrender charges (note 2d) ... -- -- (412) (3) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (40) -- (44,247) (28,113) Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- (1,336) (989) MSP contracts ............................. -- -- (25) (88) SL contracts .............................. -- -- (289) (100) -------- --- -------- -------- Net equity transactions ................ 128,721 -- 270,205 487,069 -------- --- -------- -------- Net change in contract owners' equity ........... 125,412 -- 2,776 378,207 Contract owners' equity beginning of period .................................... -- -- 456,743 78,536 -------- --- -------- -------- Contract owners' equity end of period ........... $125,412 -- 459,519 456,743 ======== === ======== ======== CHANGES IN UNITS: Beginning units .............................. -- -- 118,103 12,379 -------- --- -------- -------- Units purchased .............................. 12,263 -- 127,507 114,014 Units redeemed ............................... (21) -- (37,564) (8,290) -------- --- -------- -------- Ending units ................................. 12,242 -- 208,046 118,103 ======== === ======== ======== VEWrldEMkt VEWrldHAs ---------------------- --------------------- Investment activity: 2002 2001 2002 2001 --------- ---------- --------- --------- Net investment income (loss) ................. 6,290 (2,447) 14,011 14,638 Realized gain (loss) on investments .......... (423,831) (1,077,231) (286,560) (58,287) Change in unrealized gain (loss) on investments ............................ 4,487 1,090,597 (30,895) (147,688) Reinvested capital gains ..................... -- -- -- -- --------- ---------- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ....... (413,054) 10,919 (303,444) (191,337) --------- ---------- --------- --------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 1,592,344 1,593,119 524,252 216,185 Transfers between funds ...................... 942,409 523,069 957,588 405,647 Surrenders (note 6) .......................... (436,338) (60,125) (105,792) (25,157) Death benefits (note 4) ...................... (4,085) (1,006) (1,401) (568) Policy loans (net of repayments) (note 5) .... (43,381) (28,101) (52,772) (6,129) Deductions for surrender charges (note 2d) ... (28,828) (4,549) (6,990) (1,904) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (603,586) (430,840) (202,503) (103,523) Asset charges (note 3): FPVUL & VEL contracts ..................... (19,998) (14,761) (7,185) (3,648) MSP contracts ............................. (589) (969) (193) (174) SL contracts .............................. (2,155) (1,581) (741) (485) --------- ---------- --------- --------- Net equity transactions ................ 1,395,793 1,574,256 1,104,263 480,244 --------- ---------- --------- --------- Net change in contract owners' equity ........... 982,739 1,585,175 800,819 288,907 Contract owners' equity beginning of period .................................... 5,193,772 3,608,597 1,605,256 1,316,349 --------- ---------- --------- --------- Contract owners' equity end of period ........... 6,176,511 5,193,772 2,406,075 1,605,256 ========= ========== ========= ========= CHANGES IN UNITS: Beginning units .............................. 674,864 466,520 190,667 141,512 --------- ---------- --------- --------- Units purchased .............................. 293,150 319,865 147,748 65,555 Units redeemed ............................... (137,070) (111,521) (44,708) (16,400) --------- ---------- --------- --------- Ending units ................................. 830,944 674,864 293,707 190,667 ========= ========== ========= =========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2002 and 2001
VKEmMkt VKMidCapG VKUSRealEst ---------------------- ---------------------- ----------------------- Investment activity: 2002 2001 2002 2001 2002 2001 ---------- --------- ---------- --------- ---------- ---------- Net investment income (loss) ................. $ 305,605 205,634 (5,383) (2,178) 783,280 529,601 Realized gain (loss) on investments .......... (20,574) 74,376 (837,007) (408,636) 236,993 300,313 Change in unrealized gain (loss) on investments ............................ 40,303 49,773 (330,736) (55,910) (2,563,674) 250,079 Reinvested capital gains ..................... -- -- -- -- 592,195 99,201 ---------- --------- ---------- --------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations 325,334 329,783 (1,173,126) (466,724) (951,206) 1,179,194 ---------- --------- ---------- --------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 912,599 641,906 847,984 738,460 4,870,870 3,267,141 Transfers between funds ...................... 1,566,255 152,417 845,891 1,543,608 9,483,497 6,526,951 Surrenders (note 6) .......................... (133,905) (25,095) (163,070) (22,224) (1,316,998) (155,221) Death benefits (note 4) ...................... 11,032 (13,792) (9,363) (1,499) (21,892) (34,548) Policy loans (net of repayments) (note 5) .... (37,266) 2,673 (33,471) (7,517) (84,652) (53,870) Deductions for surrender charges (note 2d) ... (8,847) (1,899) (10,774) (1,682) (87,012) (11,745) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (279,682) (183,169) (229,099) (115,928) (1,413,020) (631,660) Asset charges (note 3): FPVUL & VEL contracts ..................... (8,798) (5,656) (5,381) (2,912) (41,354) (18,091) MSP contracts ............................. (345) (280) (104) (89) (5,697) (1,627) SL contracts .............................. (877) (310) (703) (418) (4,466) (1,966) ---------- --------- ---------- --------- ---------- ---------- Net equity transactions ................ 2,020,166 566,795 1,241,910 2,129,799 11,379,276 8,885,364 ---------- --------- ---------- --------- ---------- ---------- Net change in contract owners' equity ........... 2,345,500 896,578 68,784 1,663,075 10,428,070 10,064,558 Contract owners' equity beginning of period .................................... 2,393,013 1,496,435 2,504,082 841,007 15,100,336 5,035,778 ---------- --------- ---------- --------- ---------- ---------- Contract owners' equity end of period ........... $4,738,513 2,393,013 2,572,866 2,504,082 25,528,406 15,100,336 ========== ========= ========= ========= ========== ========== CHANGES IN UNITS: Beginning units .............................. 215,898 146,421 408,670 96,842 1,210,568 455,844 ---------- --------- ---------- --------- ---------- ---------- Units purchased .............................. 217,421 122,473 301,965 335,953 1,100,806 837,832 Units redeemed ............................... (41,100) (52,996) (99,184) (24,125) (228,980) (83,108) ---------- --------- ---------- --------- ---------- ---------- Ending units ................................. 392,219 215,898 611,451 408,670 2,082,394 1,210,568 ========== ========= ========== ========= ========== ==========
See accompanying notes to financial statements. ================================================================================ ================================================================================ NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2002 and 2001 (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 is 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, Variable Executive Life and Survivorship Life Variable Life Insurance Policies through the Account. The primary distribution for contracts is through wholesalers and brokers. (b) The Contracts Only contracts with a front-end sales charge, 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 AIM Variable Insurance Funds, Inc.; AIM VIF Basic Value Fund - Series I (AIMBVF) AIM VIF Capital Development Fund - Series I (AIMCDF) Portfolios of Alliance Variable Products Series Funds; Alliance VPS Growth & Income Portfolio - Class A (AllGroInc) Portfolios of the American Century Variable Portfolios, Inc. (American Century VP); American Century VP Income & Growth Fund - Class I (ACVPIncGr) American Century VP International Fund - Class I (ACVPInt) American Century VP Ultra Fund - Class I (ACVPUltra) American Century VP Value Fund - Class I (ACVPVal) Baron Capital Asset Trust - Insurance Series; Baron Capital Asset Trust (BCAT) Calvert Variable Series (CVS), Inc.; *Calvert Social Equity Portfolio (CVSSEP) Comstock GVIT Value Fund - Class I (formerly Nationwide(R) SAT Federated Equity Income) (ComGVITVal) Portfolios of the Credit Suisse Trust; Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSGPVen) Credit Suisse Trust - International Focus Portfolio (CSIntEq) Credit Suisse Trust - Large Cap Value Portfolio (CSLCapV) Portfolio of the Dreyfus GVIT (formerly Nationwide(R) SAT); Dreyfus GVIT Mid Cap Index Fund - Class I (DryMidCapIx) Portfolios of the Dreyfus Investment Portfolios (Dreyfus IP); Dreyfus IP - European Equity Portfolio (DryEuroEq) Dreyfus IP - Mid Cap Stock Portfolio - Initial Shares (DryMidCapStk) Dreyfus IP - Small Cap Stock Index Portfolio - Service Class (DrySmCapIxS) Dreyfus Socially Responsible Growth Fund, Inc.- Initial Shares (DrySRGro) Dreyfus Stock Index Fund (DryStkIx) Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF); Dreyfus VIF - Appreciation Portfolio - Initial Shares (DryVIFApp) Dreyfus VIF - International Value Portfolio - Initial Shares (DryIntVal) Federated GVIT (formerly Nationwide(R)SAT) High Income Bond Fund - Class I (FGVITHiInc) Portfolios of Federated Insurance Series; Federated Quality Bond Fund II - Primary Shares (FedQualBd) Portfolios of the Fidelity(R) Variable Insurance Products (Fidelity(R) VIP); Fidelity(R) VIP - Equity-Income Portfolio:Service Class (FidVIPEIS) Fidelity(R) VIP - Growth Portfolio:Service Class (FidVIPGrS) Fidelity(R) VIP - High Income Portfolio:Service Class (FidVIPHIS) Fidelity(R) VIP - Overseas Portfolio:Service Class (FidVIPOvS) Portfolios of the Fidelity(R) Variable Insurance Products (Fidelity VIP II); Fidelity(R) VIP II - Contrafund Portfolio:Service Class (FidVIPConS) Portfolios of the Fidelity(R) Variable Insurance Products (Fidelity VIP III); Fidelity(R) VIP III - Growth Opportunities Portfolio:Service Class (FidVIPGrOpS) Fidelity(R) VIP III - Value Strategies Portfolio:Service Class (FidVIPValStS) Franklin Templeton Variable Insurance Products Trust (Franklin Templeton VIT); Franklin Templeton VIT - Templeton Foreign Securities Fund - Class 2 (FTVIPFS) Fundsof the Gartmore Variable Insurance Trust (Gartmore GVIT) (formerly Nationwide(R) SAT); Gartmore GVIT Emerging Markets Fund - Class I (GVITEmMrkts) Gartmore GVIT Global Financial Services Fund - Class I (GVITGlFin) Gartmore GVIT Global Health Sciences Fund - Class I (GVITGlHlth) Gartmore GVIT Global Technology and Communications Fund - Class I (GVITGlTech) Gartmore GVIT Global Utilities Fund - Class I (GVITGlUtl) Gartmore GVIT Government Bond Fund - Class I (GVITGvtBd) Gartmore GVIT Growth Fund - Class I (formerly Nationwide(R) SAT Capital Appreciation Fund) (GVITGrowth) Gartmore GVIT ID (Investor Destinations) Aggressive Fund (GVITIDAgg) Gartmore GVIT ID (Investor Destinations) Conservative Fund (GVITIDCon) Gartmore GVIT ID (Investor Destinations) Moderate Fund (GVITIDMod) Gartmore GVIT ID (Investor Destinations) Moderately Aggressive Fund (GVITIDModAgg) Gartmore GVIT ID (Investor Destinations) Moderately Conservative Fund (GVITIDModCon) Gartmore GVIT International Growth Fund - Class I (GVITIntGro) Gartmore GVIT Money Market Fund - Class I (GVITMyMkt) Gartmore GVIT Money Market Fund - Class V (GVITMyMkt5) Gartmore GVIT Nationwide(R) Leaders Fund - Class I (GVITLead) Gartmore GVIT Nationwide(R) Strategic Value Fund - Class I (NWGVITStrVal) Gartmore GVIT Small Cap Growth Fund - Class I (GVITSmCapGr) Gartmore GVIT Small Cap Value Fund - Class I (GVITSmCapVal) Gartmore GVIT Small Company Fund - Class I (GVITSmComp) Gartmore GVIT Total Return Fund - Class I (GVITTotRt) Gartmore GVIT U.S.Growth Leaders Fund - Class I (GVITUSGro) Gartmore GVIT Worldwide Leaders Fund - Class I (formerly Nationwide(R)SAT Global 50 Fund) (GVITWLead) Portfolios of Goldman Sachs Funds; Goldman Sachs Mid Cap Value Fund A (GSMCV) Goldman Sachs VIT Mid Cap Value Fund (GSVITMidCap) J.P.Morgan GVIT (formerly Nationwide(R)SAT) Balanced Fund - Class I (JPMorBal) (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued Portfolios of the Janus Aspen Series (Janus AS); Janus AS - Balanced Portfolio - Service Shares (JanBal) Janus AS - Capital Appreciation Portfolio - Service Shares (JanCapAp) Janus AS - Global Technology Portfolio - Service Shares (JanGITech) Janus AS - International Growth Portfolio - Service Shares (JanIntGro) MAS GVIT (formerly Nationwide(R) SAT) Multi Sector Bond Fund - Class I (MGVITMultiSec) Portfolios of the Neuberger Berman Advisers Management Trust (Neuberger Berman AMT); Neuberger Berman AMT - Fasciano Portfolio - S Class (NBAMTFas) Neuberger Berman AMT - Guardian Portfolio (NBAMTGuard) Neuberger Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr) Neuberger Berman AMT - Partners Portfolio (NBAMTPart) Portfolios of Bank One One Group(R) Investment Trust; *One Group(R) IT Balanced Portfolio (ONEBal) *One Group(R) IT Bond Portfolio (ONEBP) *One Group(R) IT Diversified Equity Portfolio (ONEDIVE) *One Group(R) IT Diversified Mid Cap Portfolio (ONEDivMid) *One Group(R) IT Equity Index Portfolio (ONEEqInd) *One Group(R) IT Government Bond Portfolio (ONEGovBd) *One Group(R) IT Large Cap Growth Portfolio (ONELgCap) One Group(R) IT Mid Cap Growth Portfolio (ONEMidCap) One Group(R) IT Mid Cap Value Portfolio (ONEMidCapV) Funds of the Oppenheimer Variable Account Funds; Oppenheimer Aggressive Growth Fund/VA - Initial Class (OppAggGro) Oppenheimer Capital Appreciation Fund/VA - Initial Class (OppCapAp) Oppenheimer Global Securities Fund/VA - Initial Class (OppGlSec) Oppenheimer Main Street Growth & Income Fund/VA - Initial Class (OppMSGrInc) Portfolios of PIMCO Variable Insurance Trust (PIMCO VIT); PIMCO VIT Low Duration Portfolio - Administrative Shares (PIMLowDur) PIMCO VIT Real Return Portfolio - Administrative Shares (PIMRealRet) PIMCO VIT Total Return Portfolio - Administrative Shares (PIMTotRet) Pioneer High Yield VCT Portfolio - Class I Shares (PionHY) Royce Capital Fund - Micro Cap (RoyMicro) Strong GVIT (formerly Nationwide(R) SAT) Mid Cap Growth Fund - Class I (SGVITMdCpGr) *Strong Opportunity Fund Inc.(STROpp) Strong Opportunity Fund II, Inc.(StOpp2) Portfolios of T.Rowe Price Funds; *T.Rowe Price Equity Income Fund (TRPEI) T.Rowe Price Equity Income Portfolio - II (TRPEI2) *T.Rowe Price Mid Cap Growth Fund, Inc.(TRPMCG) T.Rowe Price Mid Cap Growth Portfolio - II (TRPMCG2) Turner GVIT (formerly Nationwide(R) SAT) Growth Focus Fund - Class I (TurnGVITGro) Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT); Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs) Funds of the Van Kampen Universal Institutional Funds (Van Kampen UIF); Van Kampen UIF - Emerging Markets Debt Portfolio (VKEmMkt) Van Kampen UIF - Mid Cap Growth Portfolio (VKMidCapG) Van Kampen UIF - U. S. Real Estate Portfolio (VKUSRealEst) At December 31, 2002, contract owners have invested in all of the above funds except those noted with an asterisk (*). 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. A purchase payment could be presented as a negative equity transaction in the Statements of Changes in Contract Owners' Equity if a prior period purchase payment is refunded to a contract owner due to a contract cancellation during the free look period, and/or if a gain is realized by the contract owner during the free look period. 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. Con- sequently, 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, 2002. 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 of America 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 and survivorship life variable life insurance contracts, the Company deducts a charge for state premium taxes not to exceed 3.5% of all premiums received to cover the payment of these premium taxes. For Protection(SM) flexible premium contracts, the Company deducts a premium load charge not to exceed 7.50% for policy years 1-15, currently 5.50% (for policy years 16 and after, the maximum premium load is guaranteed not to exceed 6.00%). The Company may at its sole discretion reduce this sales loading. (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued For the Corporate Series, the Company deducts a front-end sales load not to exceed 9.0% from each premium payment received. The Company may reduce this charge where the size or nature of the group results in savings in sales, underwriting, or administrative costs. Variations due to differences in costs are determined in a manner not unfairly discriminatory to policy owners. (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). This charge is assessed against each contract by liquidating units. (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 to recover policy maintenance, accounting, record keeping and other administrative expenses. For all subsequent years, a monthly administrative charge is deducted (currently $5 per month not to exceed $7.50). For Protection (SM) flexible premium contracts, the Company deducts $5 per month (not to exceed $7.50) for all policy years. This charge is assessed against each contract by liquidating units. For Protection (SM) flexible premium contracts, the Company deducts a per $1,000 of specified amount charge for the first two policy years. This charge varies with the age of the insured and will not exceed $0.30 per $1,000 of specified amount. For Protection (SM) last survivor contracts, the Company deducts a per $1,000 of specified amount charge for the first 3 policy years. This charge varies with the age of the insured and will not exceed $0.40 per $1,000 of specified amount. These charges are assessed monthly against each contract by liquidating units. For the Corporate Series, the Company deducts a monthly administrative expense charge to recover policy maintenance, accounting, record keeping and other administrative expenses. These charges are assessed by liquidating units. Currently, this charge is $5 per month in all policy years (guaranteed not to exceed $10 per month). (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 and modified single premium life 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. For Protection (SM) flexible premium contracts and survivorship life contracts, the charge is 100% of the initial surrender charge in the first year, declining to 0% of the initial surrender charge in the 15th 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 by the Depositor, 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 0.70% 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 0.55% in policy years one through ten. In policy years eleven and greater, the Company deducts an annual rate of 0.55% 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 0.35%. If the cash value is greater than $100,000, the company reduces the annual rate to 0.20%. This charge is assessed monthly against each contract 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. For Protection (SM) flexible payment contracts, the Company deducts an annual rate of 0.80% for policy years 1-15. For policy years 16 and after the Company deducts an annual rate of 0.30%. This charge is assessed monthly against each contract by liquidating units. The Company 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 the Company. These charges may be reduced in certain group sponsored arrangements or special exchange programs made available by the Company. (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 variable cash surrender value plus 100% of a policy's fixed cash surrender value less applicable value of surrender charge. 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. Contract owners may, with certain restrictions, transfer their assets between the Account and a fixed dollar contract (fixed account) maintained in the accounts of the Company. The fixed account assets are not reflected in the accompanying financial statements. In addition, the Account portion of contract owner loans is transferred to the accounts of the Company for administration and collection. Loan repayments are transferred to the Account at the direction of the contract owner. For the years ended December 31, 2002 and 2001, total transfers to the Account from the fixed account were $26,619,667 and $12,164,827, respectively, and total transfers from the Account to the fixed account were $78,032,159 and $40,736,234, respectively. Transfers from the Account to the fixed account are included in surrenders, and transfers to the Account from the fixed account are included in purchase payments received from contract owners, as applicable, on the accompanying Statements of Changes in Contract Owners' Equity. (Continued) 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 contract expense rates, investment income ratio and total return for each period in the four year period ended December 31, 2002 and the period February 18, 1998 (commencement of operations) through December 31, 1998.
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- The BEST of AMERICA(R)America's FUTURE Life Series(SM) American Century VP Income & Growth Fund - Class I 2002 ................................. 0.00% 1,357,662 $ 9.889493 $13,426,589 1.00% -19.37% 2001 ................................. 0.00% 1,161,596 12.265301 14,247,325 0.85% -8.35% 2000 ................................. 0.00% 804,658 13.383115 10,768,831 0.48% -10.62% 1999 ................................. 0.00% 463,779 14.972547 6,943,953 0.01% 18.02% 1998 ................................. 0.00% 97,382 12.686493 1,235,436 0.83% 26.86% American Century VP International Fund - Class I 2002 ................................. 0.00% 1,633,924 9.138486 14,931,592 0.78% -20.37% 2001 ................................. 0.00% 1,473,365 11.476396 16,908,920 0.08% -29.17% 2000 ................................. 0.00% 1,252,780 16.203538 20,299,468 0.10% -16.83% 1999 ................................. 0.00% 625,339 19.481449 12,182,510 0.00% 64.04% 1998 ................................. 0.00% 206,063 11.875895 2,447,183 0.03% 18.76% American Century VP Ultra Fund - Class I 2002 ................................. 0.00% 75,002 8.038471 602,901 0.66% -19.62% 5/1/02 American Century VP Value Fund - Class I 2002 ................................. 0.00% 2,232,546 12.103586 27,021,813 0.75% -12.62% 2001 ................................. 0.00% 1,382,368 13.851627 19,148,046 0.60% 12.82% 2000 ................................. 0.00% 380,941 12.277397 4,676,964 0.62% 18.14% 1999 ................................. 0.00% 169,333 10.392110 1,759,727 0.69% -0.85% 1998 ................................. 0.00% 59,424 10.481205 622,835 0.05% 4.81% Comstock GVIT Value Fund - Class I 2002 ................................. 0.00% 277,592 8.018258 2,225,804 1.34% -25.14% 2001 ................................. 0.00% 208,187 10.711409 2,229,976 1.63% -12.15% 2000 ................................. 0.00% 150,717 12.193117 1,837,710 1.02% -10.62% 1999 ................................. 0.00% 66,677 13.642236 909,623 0.30% 18.49% 1998 ................................. 0.00% 21,000 11.513398 241,781 0.73% 15.13% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2002 ................................. 0.00% 56,373 6.633112 373,928 0.00% -34.16% 2001 ................................. 0.00% 67,655 10.074042 681,559 0.00% -28.63% 2000 ................................. 0.00% 69,236 14.116099 977,342 0.00% -18.94% 1999 ................................. 0.00% 46,879 17.414110 816,356 0.00% 63.50% 1998 ................................. 0.00% 16,634 10.651002 177,169 0.00% 6.51%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Credit Suisse Trust - International Focus Portfolio 2002 ................................. 0.00% 158,237 $ 7.456827 $ 1,179,946 0.00% -19.90% 2001 ................................. 0.00% 166,542 9.309878 1,550,486 0.00% -22.27% 2000 ................................. 0.00% 161,421 11.977804 1,933,469 0.55% -25.90% 1999 ................................. 0.00% 138,513 16.163464 2,238,850 1.34% 53.43% 1998 ................................. 0.00% 56,767 10.534701 598,023 0.96% 5.35% Credit Suisse Trust - Large Cap Value Portfolio 2002 ................................. 0.00% 109,088 10.072243 1,098,761 0.76% -23.09% 2001 ................................. 0.00% 118,843 13.096944 1,556,480 0.00% 0.95% 2000 ................................. 0.00% 93,621 12.974256 1,214,663 2.02% 8.91% 1999 ................................. 0.00% 60,100 11.912913 715,966 1.08% 6.24% 1998 ................................. 0.00% 49,891 11.212895 559,423 1.26% 12.13% Dreyfus GVIT Mid Cap Index Fund - Class I 2002 ................................. 0.00% 1,255,638 12.903917 16,202,649 0.45% -15.30% 2001 ................................. 0.00% 707,320 15.235372 10,776,283 0.55% -1.30% 2000 ................................. 0.00% 312,214 15.436663 4,819,542 0.66% 15.21% 1999 ................................. 0.00% 61,224 13.399089 820,346 0.22% 20.92% 1998 ................................. 0.00% 26,958 11.080816 298,717 0.52% 10.81% Dreyfus IP - European Equity Portfolio 2002 ................................. 0.00% 282 7.045961 1,987 0.00% -22.64% 2001 ................................. 0.00% 103,773 9.107778 945,141 0.79% -28.13% 2000 ................................. 0.00% 70,183 12.672265 889,378 0.38% -2.00% 1999 ................................. 0.00% 10,415 12.930654 134,673 0.40% 29.31% 9/27/99 Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2002 ................................. 0.00% 142,420 7.675242 1,093,108 0.29% -23.25% 5/1/02 Dreyfus Socially Responsible Growth Fund, Inc.- Initial Shares 2002 ................................. 0.00% 1,313,324 8.237365 10,818,329 0.22% -28.94% 2001 ................................. 0.00% 1,235,879 11.592909 14,327,433 0.08% -22.57% 2000 ................................. 0.00% 953,352 14.972899 14,274,443 1.06% -11.03% 1999 ................................. 0.00% 480,241 16.829763 8,082,342 0.02% 30.08% 1998 ................................. 0.00% 105,696 12.938078 1,367,503 0.31% 29.38% Dreyfus Stock Index Fund 2002 ................................. 0.00% 11,929,984 9.564281 114,101,719 1.45% -22.36% 2001 ................................. 0.00% 8,587,826 12.319059 105,793,935 1.14% -12.18% 2000 ................................. 0.00% 6,631,938 14.027609 93,030,233 1.01% -9.28% 1999 ................................. 0.00% 3,757,311 15.462782 58,098,481 1.02% 20.60% 1998 ................................. 0.00% 1,025,141 12.821142 13,143,478 0.90% 28.21% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2002 ................................. 0.00% 1,148,080 10.890932 12,503,661 1.22% -16.71% 2001 ................................. 0.00% 978,777 13.076512 12,798,989 0.90% -9.31% 2000 ................................. 0.00% 721,134 14.418721 10,397,830 0.82% -0.65% 1999 ................................. 0.00% 505,299 14.513370 7,333,591 1.00% 11.46% 1998 ................................. 0.00% 110,355 13.021619 1,437,001 0.98% 30.22%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Federated GVIT High Income Bond Fund - Class I 2002 ................................ 0.00% 660,476 $10.772444 $ 7,114,941 10.09% 3.23% 2001 ................................ 0.00% 335,319 10.435872 3,499,346 11.31% 4.22% 2000 ................................ 0.00% 167,390 10.013612 1,676,179 9.51% -8.28% 1999 ................................ 0.00% 130,767 10.917180 1,427,607 6.75% 3.19% 1998 ................................ 0.00% 79,031 10.579676 836,122 4.68% 5.80% Federated Quality Bond Fund II - Primary Shares 2002 ................................ 0.00% 2,274,059 12.869670 29,266,389 3.20% 9.31% 2001 ................................ 0.00% 1,119,384 11.773915 13,179,532 2.92% 8.01% 2000 ................................ 0.00% 184,168 10.900349 2,007,495 0.89% 10.45% 1999 ................................ 0.00% 3,972 9.869090 39,200 0.00% -1.31% 5/3/99 Fidelity(R) VIP - Equity-Income Portfolio: Service Class 2002 ................................ 0.00% 3,282,138 10.112108 33,189,334 1.50% -17.00% 2001 ................................ 0.00% 2,522,098 12.182836 30,726,306 1.13% -5.09% 2000 ................................ 0.00% 1,731,014 12.835974 22,219,251 1.23% 8.30% 1999 ................................ 0.00% 1,196,502 11.851816 14,180,722 0.89% 6.25% 1998 ................................ 0.00% 511,915 11.154137 5,709,970 0.00% 11.54% Fidelity(R) VIP - Growth Portfolio: Service Class 2002 ................................ 0.00% 4,393,697 9.772625 42,937,953 0.14% -30.20% 2001 ................................ 0.00% 3,993,015 14.000586 55,904,550 0.00% -17.73% 2000 ................................ 0.00% 3,245,205 17.016859 55,223,196 0.07% -11.07% 1999 ................................ 0.00% 1,564,447 19.134456 29,934,842 0.04% 37.29% 1998 ................................ 0.00% 255,829 13.937692 3,565,666 0.00% 39.38% Fidelity(R) VIP - High Income Portfolio: Service Class 2002 ................................ 0.00% 1,244,727 7.297581 9,083,496 9.18% 3.62% 2001 ................................ 0.00% 1,007,961 7.042763 7,098,830 13.22% -11.90% 2000 ................................ 0.00% 775,357 7.993621 6,197,910 6.11% -22.61% 1999 ................................ 0.00% 664,736 10.329299 6,866,257 5.78% 8.07% 1998 ................................ 0.00% 368,689 9.557602 3,523,783 0.00% -4.42% Fidelity(R) VIP - Overseas Portfolio: Service Class 2002 ................................ 0.00% 1,180,783 8.136116 9,606,987 0.64% -20.34% 2001 ................................ 0.00% 903,417 10.213884 9,227,396 5.46% -21.27% 2000 ................................ 0.00% 709,131 12.973519 9,199,925 1.16% -19.15% 1999 ................................ 0.00% 392,522 16.046561 6,298,628 0.30% 42.46% 1998 ................................ 0.00% 92,817 11.263759 1,045,468 0.00% 12.64% Fidelity(R) VIP II - Contrafund Portfolio: Service Class 2002 ................................ 0.00% 3,355,920 11.945132 40,086,907 0.69% -9.42% 2001 ................................ 0.00% 2,969,205 13.187991 39,157,849 0.61% -12.36% 2000 ................................ 0.00% 2,414,828 15.048072 36,338,506 0.26% -6.71% 1999 ................................ 0.00% 1,324,909 16.131283 21,372,482 0.18% 24.15% 1998 ................................ 0.00% 362,774 12.993755 4,713,796 0.00% 29.94%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class 2002 ............................... 0.00% 1,183,841 $ 7.177547 $ 8,497,074 0.93% -21.92% 2001 ............................... 0.00% 1,134,917 9.192068 10,432,234 0.23% -14.44% 2000 ............................... 0.00% 959,519 10.743116 10,308,224 1.03% -17.18% 1999 ............................... 0.00% 673,044 12.971233 8,730,211 0.45% 4.18% 1998 ............................... 0.00% 193,229 12.450522 2,405,802 0.00% 24.51% Fidelity(R) VIP III - Value Strategies Portfolio: Service Class 2002 ................................ 0.00% 19,541 7.509507 146,743 0.00% -24.90% 5/1/02 Gartmore GVIT Emerging Markets Fund - Class I 2002 ................................ 0.00% 146,740 7.002885 1,027,603 0.23% -15.23% 2001 ................................ 0.00% 118,171 8.260926 976,202 0.24% -5.18% 2000 ................................ 0.00% 2,391 8.712299 20,831 0.00% -12.88% 10/2/00 Gartmore GVIT Global Financial Services Fund - Class I 2002 ................................. 0.00% 14,069 8.663891 121,892 0.02% -13.36% 5/1/02 Gartmore GVIT Global Health Sciences Fund - Class I 2002 ................................ 0.00% 24,643 8.340128 205,526 0.00% -16.60% 5/1/02 Gartmore GVIT Global Technology and Communications Fund - Class I 2002 ................................ 0.00% 469,967 1.972253 926,894 0.67% -42.78% 2001 ................................ 0.00% 287,368 3.446837 990,511 0.00% -42.72% 2000 ................................ 0.00% 91,498 6.017639 550,602 0.00% -39.82% 10/2/00 Gartmore GVIT Global Utilities Fund - Class I 2002 ................................ 0.00% 8,397 8.683837 72,918 0.61% -13.16% 5/1/02 Gartmore GVIT Government Bond Fund - Class I 2002 ................................ 0.00% 3,339,535 14.246814 47,577,734 4.66% 10.98% 2001 ................................ 0.00% 1,748,673 12.836894 22,447,530 5.61% 7.25% 2000 ................................ 0.00% 796,198 11.968657 9,529,421 6.29% 12.54% 1999 ................................ 0.00% 509,816 10.635188 5,421,989 6.57% -2.35% 1998 ................................ 0.00% 166,631 10.890820 1,814,748 3.55% 8.91% Gartmore GVIT Growth Fund - Class I 2002 ................................ 0.00% 1,934,729 5.100354 9,867,803 0.00% -28.72% 2001 ................................ 0.00% 1,791,588 7.155414 12,819,554 0.00% -28.13% 2000 ................................ 0.00% 1,582,653 9.956531 15,757,734 0.19% -26.53% 1999 ................................ 0.00% 1,343,877 13.552350 18,212,691 0.69% 4.28% 1998 ................................ 0.00% 485,064 12.996420 6,304,095 0.47% 29.96% Gartmore GVIT ID Aggressive Fund 2002 ................................ 0.00% 154,196 8.331709 1,284,716 0.86% -16.68% 1/25/02 Gartmore GVIT ID Conservative Fund 2002 ................................ 0.00% 202,573 10.050418 2,035,943 2.18% 0.50% 1/25/02 Gartmore GVIT ID Moderate Fund 2002 ................................ 0.00% 398,104 9.140249 3,638,770 1.66% -8.60% 1/25/02 Gartmore GVIT ID Moderately Aggressive Fund 2002 ................................ 0.00% 375,973 8.687687 3,266,336 1.05% -13.12% 1/25/02
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS,Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------- Gartmore GVIT ID Moderately Conservative Fund 2002 ................................. 0.00% 418,980 $ 9.642427 $ 4,039,984 1.99% -3.58% 1/25/02 Gartmore GVIT International Growth Fund - Class I 2002 ................................. 0.00% 72,938 5.008923 365,341 0.00% -24.10% 2001 ................................. 0.00% 26,572 6.599732 175,368 0.26% -28.65% 2000 ................................. 0.00% 2,697 9.249730 24,947 0.00% -7.50% 10/2/00 Gartmore GVIT Money Market Fund - Class I 2002 ................................. 0.00% 13,460,393 12.271344 165,177,113 1.51% 1.21% 2001 ................................. 0.00% 11,115,360 12.124461 134,767,749 3.18% 3.60% 2000 ................................. 0.00% 6,735,623 11.702768 78,825,433 5.56% 6.03% 1999 ................................. 0.00% 4,602,015 11.037591 50,795,159 4.09% 4.85% 1998 ................................. 0.00% 2,000,515 10.527225 21,059,872 4.03% 5.27% Gartmore GVIT Nationwide(R) Leaders Fund - Class I 2002 ................................. 0.00% 15,191 8.452459 128,401 1.19% -15.48% 5/1/02 Gartmore GVIT Nationwide(R)Strategic Value Fund - Class I 2002 ................................. 0.00% 103,027 7.561458 779,034 0.03% -25.36% 2001 ................................. 0.00% 124,500 10.130359 1,261,230 0.53% -3.26% 2000 ................................. 0.00% 114,604 10.471261 1,200,048 1.11% 7.61% 1999 ................................. 0.00% 96,106 9.730781 935,186 0.88% -3.07% 1998 ................................. 0.00% 34,463 10.038994 345,974 0.61% 0.39% Gartmore GVIT Small Cap Growth Fund - Class I 2002 ................................. 0.00% 741,006 10.222874 7,575,211 0.00% -33.29% 2001 ................................. 0.00% 479,685 15.323736 7,350,566 0.00% -10.84% 2000 ................................. 0.00% 220,651 17.186287 3,792,171 0.00% -16.17% 1999 ................................. 0.00% 32,108 20.501257 658,254 0.00% 105.01% 5/3/99 Gartmore GVIT Small Cap Growth Fund - Class I - Initial Funding By Depositor 2000 ................................. 0.00% 100,000 17.186295 1,718,630 0.00% -16.17% 1999 ................................. 0.00% 100,000 20.501257 2,050,126 0.00% 157.84% 5/3/99 Gartmore GVIT Small Cap Value Fund - Class I 2002 ................................. 0.00% 1,878,685 12.875081 24,188,222 0.01% -27.16% 2001 ................................. 0.00% 1,567,879 17.676405 27,714,464 0.04% 28.28% 2000 ................................. 0.00% 731,305 13.779795 10,077,233 0.00% 11.20% 1999 ................................. 0.00% 345,575 12.391945 4,282,346 0.00% 27.84% 1998 ................................. 0.00% 106,497 9.693575 1,032,337 0.00% -3.06% Gartmore GVIT Small Company Fund - Class I 2002 ................................. 0.00% 1,515,751 12.218656 18,520,440 0.00% -17.33% 2001 ................................. 0.00% 1,244,437 14.779740 18,392,455 0.13% -6.70% 2000 ................................. 0.00% 922,404 15.841678 14,612,427 0.02% 8.90% 1999 ................................. 0.00% 393,286 14.547287 5,721,244 0.00% 44.02% 1998 ................................. 0.00% 159,205 10.100944 1,608,121 0.00% 1.01%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Gartmore GVIT Total Return Fund - Class I 2002 ................................. 0.00% 3,234,937 $ 9.007395 $29,138,355 0.95% -17.35% 2001 ................................. 0.00% 3,002,565 10.898647 32,723,896 0.88% -11.82% 2000 ................................. 0.00% 2,459,963 12.359389 30,403,640 0.68% -2.12% 1999 ................................. 0.00% 1,852,310 12.627200 23,389,489 0.60% 6.94% 1998 ................................. 0.00% 702,365 11.807411 8,293,112 0.66% 18.07% Gartmore GVIT U.S. Growth Leaders Fund - Class I 2002 ................................. 0.00% 48,858 8.226323 401,922 0.00% -17.74% 5/1/02 Gartmore GVIT Worldwide Leaders Fund - Class I 2002 ................................. 0.00% 279,292 7.778516 2,172,477 2.00% -25.39% 2001 ................................. 0.00% 1,687,489 10.425406 17,592,758 1.84% -18.81% 2000 ................................. 0.00% 1,172,113 12.840541 15,050,565 0.94% -12.32% 1999 ................................. 0.00% 595,841 14.645021 8,726,104 0.11% 22.92% 1998 ................................. 0.00% 41,464 11.913908 493,998 0.79% 19.14% J.P. Morgan GVIT Balanced Fund - Class I 2002 ................................. 0.00% 1,025,461 9.174983 9,408,587 2.28% -12.31% 2001 ................................. 0.00% 730,655 10.463220 7,645,004 2.54% -3.67% 2000 ................................. 0.00% 382,020 10.862308 4,149,619 3.36% -0.35% 1999 ................................. 0.00% 224,583 10.900657 2,448,102 3.80% 0.87% 1998 ................................. 0.00% 67,360 10.806799 727,946 2.69% 8.07% Janus AS - Capital Appreciation Portfolio - Service Shares 2002 ................................. 0.00% 3,279,169 5.412895 17,749,797 0.32% -15.93% 2001 ................................. 0.00% 3,009,852 6.438372 19,378,547 1.01% -21.83% 2000 ................................. 0.00% 2,083,464 8.236248 17,159,926 1.22% -17.64% 1/27/00 Janus AS - Global Technology Portfolio - Service Shares 2002 ................................. 0.00% 3,153,932 2.437287 7,687,037 0.00% -40.93% 2001 ................................. 0.00% 2,757,839 4.126190 11,379,368 0.63% -37.31% 2000 ................................. 0.00% 1,878,974 6.582411 12,368,179 1.20% -34.18% 1/27/00 Janus AS - International Growth Portfolio - Service Shares 2002 ................................. 0.00% 2,935,440 4.703343 13,806,381 0.70% -25.76% 2001 ................................. 0.00% 2,646,977 6.335104 16,768,875 0.81% -23.43% 2000 ................................. 0.00% 1,639,208 8.273482 13,561,958 5.19% -17.27% 1/27/00 MAS GVIT (formerly Nationwide(R) SAT) Multi Sector Bond Fund - Class I 2002 ................................. 0.00% 574,913 12.296568 7,069,457 4.49% 7.21% 2001 ................................. 0.00% 1,505,377 11.469927 17,266,564 6.01% 4.19% 2000 ................................. 0.00% 1,105,931 11.008804 12,174,978 6.99% 5.65% 1999 ................................. 0.00% 590,762 10.419701 6,155,563 5.75% 1.56% 1998 ................................. 0.00% 74,773 10.260092 767,178 4.43% 2.60% Neuberger Berman AMT - Guardian Portfolio 2002 ................................. 0.00% 568,694 11.086748 6,304,967 0.75% -26.45% 2001 ................................. 0.00% 527,509 15.073287 7,951,295 0.29% -1.51% 2000 ................................. 0.00% 253,627 15.303939 3,881,492 0.40% 1.13% 1999 ................................. 0.00% 177,738 15.132896 2,689,691 0.19% 14.93% 1998 ................................. 0.00% 55,695 13.166703 733,320 0.00% 31.67%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Neuberger Berman AMT - Mid-Cap Growth Portfolio 2002 ............................... 0.00% 1,415,445 $10.561769 $14,949,603 0.00% -29.34% 2001 ............................... 0.00% 1,320,243 14.947072 19,733,767 0.00% -24.64% 2000 ............................... 0.00% 903,690 19.835316 17,924,977 0.00% -7.46% 1999 ............................... 0.00% 280,847 21.434231 6,019,739 0.00% 53.89% 1998 ............................... 0.00% 85,802 13.928381 1,195,083 0.00% 39.28% Neuberger Berman AMT - Partners Portfolio 2002 ............................... 0.00% 887,402 8.305600 7,370,406 0.54% -24.14% 2001 ............................... 0.00% 811,919 10.948898 8,889,618 0.33% -2.83% 2000 ............................... 0.00% 648,616 11.267369 7,308,196 0.65% 0.70% 1999 ............................... 0.00% 582,704 11.188893 6,519,813 0.98% 7.37% 1998 ............................... 0.00% 375,069 10.420882 3,908,550 0.01% 4.21% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2002 ............................... 0.00% 2,165,861 9.088271 19,683,932 0.63% -27.79% 2001 ............................... 0.00% 1,900,037 12.586003 23,913,871 0.86% -31.27% 2000 ............................... 0.00% 1,531,755 18.311377 28,048,543 0.00% -11.24% 1999 ............................... 0.00% 431,151 20.629873 8,894,590 0.00% 83.60% 1998 ............................... 0.00% 100,709 11.236019 1,131,568 0.00% 12.36% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2002 ............................... 0.00% 2,688,225 11.205948 30,124,110 0.57% -26.86% 2001 ............................... 0.00% 2,119,767 15.320868 32,476,670 0.59% -12.58% 2000 ............................... 0.00% 1,394,931 17.524709 24,445,760 0.09% -0.23% 1999 ............................... 0.00% 618,285 17.565274 10,860,345 0.13% 41.66% 1998 ............................... 0.00% 164,300 12.399968 2,037,315 0.00% 24.00% Oppenheimer Global Securities Fund/VA - Initial Class 2002 ............................... 0.00% 1,533,749 6.574074 10,082,979 0.55% -22.13% 2001 ............................... 0.00% 784,596 8.442846 6,624,223 0.39% -12.04% 2000 ............................... 0.00% 228,958 9.598100 2,197,562 0.00% -4.02% 5/1/00 Oppenheimer Main Street Growth & Income Fund/VA - Initial Class 2002 ............................... 0.00% 2,347,711 8.480652 19,910,120 0.75% -18.80% 2001 ............................... 0.00% 1,858,823 10.443747 19,413,077 0.50% -10.16% 2000 ............................... 0.00% 1,325,991 11.624742 15,414,303 0.28% -8.78% 1999 ............................... 0.00% 460,733 12.743006 5,871,123 0.24% 21.71% 1998 ............................... 0.00% 139,668 10.470163 1,462,347 0.00% 4.70% Strong GVIT Mid Cap Growth Fund - Class I 2002 ............................... 0.00% 863,328 7.864311 6,789,480 0.00% -37.01% 2001 ............................... 0.00% 781,507 12.485925 9,757,838 0.00% -30.31% 2000 ............................... 0.00% 569,923 17.915535 10,210,475 0.00% -15.38% 1999 ............................... 0.00% 211,257 21.171385 4,472,603 0.00% 84.75% 1998 ............................... 0.00% 36,919 11.459357 423,068 0.00% 14.59% Strong Opportunity Fund II, Inc. 2002 ............................... 0.00% 1,334,891 6.960374 9,291,341 0.50% -26.82% 2001 ............................... 0.00% 833,759 9.511087 7,929,954 0.65% -3.70% 2000 ............................... 0.00% 156,475 9.854316 1,541,954 0.00% -1.23% 5/1/00
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Turner GVIT Growth Focus Fund - Class I 2002 ............................... 0.00% 156,451 $ 2.210411 $ 345,821 0.00% -42.86% 2001 ............................... 0.00% 105,096 3.868223 406,535 0.00% -39.03% 2000 ............................... 0.00% 12,379 6.344311 78,536 0.00% -36.56% 10/2/00 Van Eck WIT - Worldwide Emerging Markets Fund 2002 ............................... 0.00% 596,497 7.312205 4,361,708 0.21% -2.90% 2001 ............................... 0.00% 527,543 7.530636 3,972,734 0.00% -1.81% 2000 ............................... 0.00% 408,641 7.669407 3,134,034 0.00% -41.87% 1999 ............................... 0.00% 194,066 13.192491 2,560,214 0.00% 100.28% 1998 ............................... 0.00% 43,904 6.586990 289,195 0.00% -34.13% Van Eck WIT - Worldwide Hard Assets Fund 2002 ............................... 0.00% 244,054 8.097327 1,976,185 0.75% -2.83% 2001 ............................... 0.00% 171,698 8.333503 1,430,846 1.04% -10.44% 2000 ............................... 0.00% 138,471 9.305371 1,288,524 0.70% 11.40% 1999 ............................... 0.00% 53,013 8.353043 442,820 0.82% 21.00% 1998 ............................... 0.00% 22,344 6.903203 154,245 0.00% -30.97% Van Kampen UIF - Emerging Markets Debt Portfolio 2002 ............................... 0.00% 229,797 12.411489 2,852,123 8.74% 9.22% 2001 ............................... 0.00% 135,438 11.363553 1,539,057 10.76% 10.10% 2000 ............................... 0.00% 116,206 10.321107 1,199,375 13.84% 11.39% 1999 ............................... 0.00% 62,633 9.266040 580,360 20.09% 29.37% 1998 ............................... 0.00% 21,992 7.162164 157,510 23.61% -28.38% Van Kampen UIF - Mid Cap Growth Portfolio 2002 ............................... 0.00% 282,160 4.228519 1,193,119 0.00% -31.16% 2001 ............................... 0.00% 197,987 6.142256 1,216,087 0.00% -29.31% 2000 ............................... 0.00% 38,928 8.689212 338,254 0.00% -13.11% 5/1/00 Van Kampen UIF - U.S.Real Estate Portfolio 2002 ............................... 0.00% 1,098,781 11.917684 13,094,925 4.01% -0.79% 2001 ............................... 0.00% 636,426 12.012213 7,644,885 5.40% 9.84% 2000 ............................... 0.00% 320,762 10.935907 3,507,823 8.01% 4.31% 1999 ............................... 0.00% 146,473 8.539870 1,250,860 4.73% -3.37% 1998 ............................... 0.00% 81,141 8.837916 717,117 0.01% -11.62% The BEST of AMERICA(R)Corporate Variable Universal Life Series(SM) Reduced Fee Tier (0.10%) American Century VP Income & Growth Fund - Class I 2002 ............................... 0.10% 483,390 7.585400 3,666,707 1.00% -19.45% 2001 ............................... 0.10% 559,907 9.417116 5,272,709 0.85% -8.44% 2000 ............................... 0.10% 540,359 10.285709 5,557,975 0.48% -10.70% 1999 ............................... 0.10% 55,124 11.518727 634,958 0.01% 15.19% 4/1/99 American Century VP International Fund - Class I 2002 ............................... 0.10% 1,065,487 7.479659 7,969,479 0.78% -20.45% 2001 ............................... 0.10% 1,067,581 9.402604 10,038,041 0.08% -29.24% 2000 ............................... 0.10% 619,313 13.288939 8,230,013 0.10% -16.91% 1999 ............................... 0.10% 218 15.993145 3,487 0.00% 59.93% 4/1/99
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- American Century VP Ultra Fund - Class I 2002.................................. 0.10% 3,004 $ 8.033091 $ 24,131 0.66% -19.67% 5/1/02 American Century VP Value Fund - Class I 2002.................................. 0.10% 455,713 11.944573 5,443,297 0.75% -12.71% 2001.................................. 0.10% 350,055 13.683342 4,789,922 0.60% 12.71% 2000.................................. 0.10% 124,532 12.140456 1,511,875 0.62% 18.02% 1999.................................. 0.10% 946 10.286399 9,731 0.69% 2.86% 4/1/99 Comstock GVIT Value Fund - Class I 2002.................................. 0.10% 211,612 6.747487 1,427,849 1.34% -25.22% 2001.................................. 0.10% 205,053 9.022847 1,850,162 1.63% -12.24% Credit Suisse Trust - Large Cap Value Portfolio 2002.................................. 0.10% 15,615 8.996113 140,474 0.76% -23.17% 2001.................................. 0.10% 25,873 11.709370 302,957 0.00% 0.84% Dreyfus GVIT Mid Cap Index Fund - Class I 2002.................................. 0.10% 185,632 11.781293 2,186,985 0.45% -15.39% 2001.................................. 0.10% 170,502 13.923857 2,374,045 0.55% -1.40% 2000.................................. 0.10% 97,058 14.122042 1,370,657 0.66% 15.09% Dreyfus IP - European Equity Portfolio 2001.................................. 0.10% 40,585 9.087189 368,804 0.79% -28.20% 2000.................................. 0.10% 36,592 12.656379 463,122 0.38% -2.10% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2002.................................. 0.10% 173,580 7.670098 1,331,376 0.29% -23.30% 5/1/02 Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares 2002.................................. 0.10% 103,586 5.982920 619,747 0.22% -29.02% 2001.................................. 0.10% 112,446 8.428546 947,756 0.08% -22.65% 2000.................................. 0.10% 42,696 10.896922 465,255 1.06% -11.12% Dreyfus Stock Index Fund 2002.................................. 0.10% 3,024,447 7.047709 21,315,422 1.45% -22.44% 2001.................................. 0.10% 2,163,531 9.086757 19,659,480 1.14% -12.27% 2000.................................. 0.10% 4,975,884 10.357445 51,537,445 1.01% -9.37% 1999.................................. 0.10% 1,242,820 11.428481 14,203,545 1.02% 14.28% 4/1/99 Dreyfus VIF - Appreciation Portfolio - Initial Shares 2002.................................. 0.10% 471,098 8.025278 3,780,692 1.22% -16.80% 2001.................................. 0.10% 285,642 9.645425 2,755,138 0.90% -9.40% 2000.................................. 0.10% 498,451 10.646157 5,306,588 0.82% -2.10% 1999.................................. 0.10% 117,874 10.726699 1,264,399 1.00% 7.27% 4/1/99 Dreyfus VIF - International Value Portfolio - Initial Shares 2002.................................. 0.10% 23,131 9.436677 218,280 0.37% -5.63% 9/3/02
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Federated GVIT High Income Bond Fund - Class I 2002.................................. 0.10% 383,942 $ 9.791148 $ 3,759,233 10.09% 3.12% 2001.................................. 0.10% 226,888 9.494719 2,154,238 11.31% 4.11% 2000.................................. 0.10% 1,268,447 9.119705 11,567,862 9.51% -8.37% 1999.................................. 0.10% 594,118 9.952512 5,912,967 6.75% -0.47% 4/1/99 Federated Quality Bond Fund II - Primary Shares 2002.................................. 0.10% 1,174,189 12.822629 15,056,190 3.20% 9.20% 2001.................................. 0.10% 1,268,418 11.742610 14,894,538 2.92% 7.91% 2000.................................. 0.10% 4,027,297 10.882300 43,826,254 0.89% 10.34% 1999.................................. 0.10% 1,129,926 9.862542 11,143,943 0.00% -1.37% 5/3/99 Fidelity(R) VIP - Equity-Income Portfolio: Service Class 2002.................................. 0.10% 1,076,277 8.837687 9,511,799 1.50% -17.08% 2001.................................. 0.10% 358,181 10.658123 3,817,537 1.13% -5.18% 2000.................................. 0.10% 215,028 11.240819 2,417,091 1.23% 8.20% 1999.................................. 0.10% 59,030 10.389282 613,279 0.89% 3.89% 4/1/99 Fidelity(R) VIP - Growth Portfolio: Service Class 2002.................................. 0.10% 1,133,702 6.390869 7,245,341 0.14% -30.27% 2001.................................. 0.10% 1,700,271 9.164946 15,582,892 0.00% -17.81% 2000.................................. 0.10% 1,184,884 11.150661 13,212,240 0.07% -11.16% Fidelity(R) VIP - High Income Portfolio: Service Class 2002.................................. 0.10% 844,975 7.243970 6,120,974 9.18% 3.51% 2001.................................. 0.10% 630,396 6.998020 4,411,524 13.22% -11.98% 2000.................................. 0.10% 591,491 7.950841 4,702,851 6.11% -22.69% Fidelity(R) VIP - Overseas Portfolio: Service Class 2002.................................. 0.10% 191,072 6.964010 1,330,627 0.64% -20.42% 2001.................................. 0.10% 108,597 8.751211 950,355 5.46% -21.35% 2000.................................. 0.10% 171,286 11.126859 1,905,875 1.16% -19.23% 1999.................................. 0.10% 490 13.776193 6,750 0.30% 37.76% 4/1/99 Fidelity(R) VIP II - Contrafund Portfolio: Service Class 2002.................................. 0.10% 166,146 8.645878 1,436,478 0.69% -9.51% 2001.................................. 0.10% 215,109 9.555012 2,055,369 0.61% -12.45% 2000.................................. 0.10% 209,278 10.913660 2,283,989 0.26% -6.81% Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class 2002.................................. 0.10% 37,306 5.819798 217,113 0.93% -21.99% 2001.................................. 0.10% 43,809 7.460705 326,846 0.23% -14.52% 2000.................................. 0.10% 3,187 8.728402 27,817 1.03% -17.26% Gartmore GVIT Emerging Markets Fund - Class I 2002.................................. 0.10% 32,769 6.987132 228,961 0.23% -15.31% 2001.................................. 0.10% 4,374 8.250608 36,088 0.24% -5.28% Gartmore GVIT Global Financial Services Fund - Class I 2002.................................. 0.10% 1,597 8.658094 13,827 0.02% -13.42% 5/1/02 Gartmore GVIT Global Technology and Communications Fund - Class I 2002.................................. 0.10% 109,706 1.967806 215,880 0.67% -42.84% 2001.................................. 0.10% 26,875 3.442527 92,518 0.00% -42.78%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ----------- -------------- ---------- --------- Gartmore GVIT Global Utilities Fund - Class I 2002 ................................. 0.10% 200 $ 8.678027 $ 1,736 0.61% -13.22% 5/1/02 Gartmore GVIT Government Bond Fund - Class I 2002 ................................. 0.10% 1,835,772 13.210181 24,250,880 4.66% 10.87% 2001 ................................. 0.10% 1,008,673 11.914756 12,018,093 5.61% 7.15% 2000 ................................. 0.10% 304,223 11.120055 3,382,976 6.29% 12.43% 1999 ................................. 0.10% 59,316 9.890955 586,692 6.57% -1.09% 4/1/99 Gartmore GVIT Growth Fund - Class I 2002 ................................. 0.10% 278,378 3.872224 1,077,942 0.00% -28.79% 2001 ................................. 0.10% 242,722 5.437881 1,319,893 0.00% -28.21% 2000 ................................. 0.10% 587,392 7.574275 4,449,069 0.19% -26.61% 1999 ................................. 0.10% 234,561 10.320007 2,420,671 0.69% 3.20% 4/1/99 Gartmore GVIT ID Aggressive Fund 2002 ................................. 0.10% 4,815 8.323942 40,080 0.86% -16.76% 1/25/02 Gartmore GVIT ID Moderately Aggressive Fund 2002 ................................. 0.10% 6,436 8.679579 55,862 1.05% -13.20% 1/25/02 Gartmore GVIT International Growth Fund - Class I 2002 ................................. 0.10% 15,806 4.997657 78,993 0.00% -24.18% 2001 ................................. 0.10% 6,321 6.591491 41,665 0.26% -28.72% Gartmore GVIT Money Market Fund - Class I 2002 ................................. 0.10% 1,193,207 11.481201 13,699,449 1.51% 1.11% 2001 ................................. 0.10% 14,433,921 11.355131 163,899,064 3.18% 3.50% 2000 ................................. 0.10% 8,179,266 10.971228 89,736,592 5.56% 5.92% 1999 ................................. 0.10% 4,669,469 10.357933 48,366,047 4.09% 3.58% 3/31/99 Gartmore GVIT Money Market Fund - Class V 2002 ................................. 0.10% 11,193,504 10.020530 112,164,843 0.28% 0.21% 10/21/02 Gartmore GVIT Nationwide(R)Strategic Value Fund - Class I 2002 ................................. 0.10% 68,838 7.672215 528,140 0.03% -25.43% 2001 ................................. 0.10% 43,765 10.289042 450,300 0.53% -3.35% 2000 ................................. 0.10% 505 10.645991 5,376 1.11% 7.50% Gartmore GVIT Small Cap Growth Fund - Class I 2002 ................................. 0.10% 65,945 10.185475 671,681 0.00% -33.35% 2001 ................................. 0.10% 38,878 15.282975 594,172 0.00% -10.93% 2000 ................................. 0.10% 29,192 17.157856 500,872 0.00% -16.25% Gartmore GVIT Small Cap Value Fund - Class I 2002 ................................. 0.10% 280,707 13.895068 3,900,443 0.01% -27.24% 2001 ................................. 0.10% 270,154 19.095903 5,158,835 0.04% 28.15% 2000 ................................. 0.10% 222,101 14.901350 3,309,605 0.00% 11.09%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ----------- -------------- ---------- --------- Gartmore GVIT Small Company Fund - Class I 2002 ................................. 0.10% 388,032 $ 12.407717 $ 4,814,591 0.00% -17.41% 2001 ................................. 0.10% 358,315 15.023475 5,383,136 0.13% -6.80% 2000 ................................. 0.10% 1,331,219 16.119172 21,458,148 0.02% 8.79% 1999 ................................. 0.10% 434,818 14.816849 6,442,633 0.00% 48.17% 4/1/99 Gartmore GVIT Total Return Fund - Class I 2002 ................................. 0.10% 16,109,248 7.452447 120,053,317 0.95% -17.44% 2001 ................................. 0.10% 9,361,607 9.026234 84,500,055 0.88% -11.91% 2000 ................................. 0.10% 43,448 10.246333 445,183 0.68% -2.22% Gartmore GVIT Worldwide Leaders Fund - Class I 2002 ................................. 0.10% 44,257 6.301972 278,906 2.00% -25.46% 2001 ................................. 0.10% 33,960 8.454886 287,128 1.84% -18.89% 2000 ................................. 0.10% 141,948 10.424035 1,479,671 0.94% -12.41% 1999 ................................. 0.10% 52,708 11.900760 627,265 0.11% 19.01% 4/1/99 J.P. Morgan GVIT Balanced Fund - Class I 2002 ................................. 0.10% 192,540 8.375591 1,612,636 2.28% -12.40% 2001 ................................. 0.10% 113,898 9.561159 1,088,997 2.54% -3.77% 2000 ................................. 0.10% 148,185 9.935839 1,472,342 3.36% -0.45% 1999 ................................. 0.10% 59,518 9.980828 594,039 3.80% -0.19% 4/1/99 Janus AS - Capital Appreciation Portfolio - Service Shares 2002 ................................. 0.10% 182,330 5.397045 984,043 0.32% -16.01% 2001 ................................. 0.10% 242,326 6.425959 1,557,177 1.01% -21.91% 2000 ................................. 0.10% 75,935 8.228654 624,843 1.22% -17.71% 1/27/00 Janus AS - Global Technology Portfolio - Service Shares 2002 ................................. 0.10% 293,034 2.430136 712,112 0.00% -40.99% 2001 ................................. 0.10% 422,625 4.118218 1,740,462 0.63% -37.38% 2000 ................................. 0.10% 157,837 6.576328 1,037,988 1.20% -34.24% 1/27/00 Janus AS - International Growth Portfolio - Service Shares 2002 ................................. 0.10% 520,482 4.689573 2,440,838 0.70% -25.83% 2001 ................................. 0.10% 498,186 6.322889 3,149,975 0.81% -23.51% 2000 ................................. 0.10% 230,451 8.265856 1,904,875 5.19% -17.34% 1/27/00 MAS GVIT (formerly Nationwide(R) SAT) Multi Sector Bond Fund - Class I 2002 ................................. 0.10% 479,688 11.964522 5,739,238 4.49% 7.10% 2001 ................................. 0.10% 246,281 11.171361 2,751,294 6.01% 4.08% 2000 ................................. 0.10% 271,955 10.733031 2,918,901 6.99% 5.55% 1999 ................................. 0.10% 232,330 10.168791 2,362,515 5.75% 1.69% 4/1/99 Neuberger Berman AMT - Guardian Portfolio 2002 ................................. 0.10% 67,810 8.005967 542,885 0.75% -26.52% 2001 ................................. 0.10% 136,520 10.895640 1,487,473 0.29% -1.61% 2000 ................................. 0.10% 57,098 11.073505 632,275 0.40% 1.03% Neuberger Berman AMT - Mid-Cap Growth Portfolio 2002 ................................. 0.10% 687,560 7.726029 5,312,108 0.00% -29.41% 2001 ................................. 0.10% 570,922 10.944879 6,248,672 0.00% -24.72% 2000 ................................. 0.10% 391,150 14.538915 5,686,897 0.00% -7.55% 1999 ................................. 0.10% 44,838 15.726546 705,147 0.00% 57.27% 4/1/99
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Neuberger Berman AMT - Partners Portfolio 2002 ................................. 0.10% 29,344 $ 7.762839 $ 227,793 0.54% -24.22% 2001 ................................. 0.10% 14,582 10.243656 149,373 0.33% -2.92% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2002 ................................. 0.10% 1,125,894 7.293537 8,211,750 0.63% -27.86% 2001 ................................. 0.10% 1,417,226 10.110661 14,329,092 0.86% -31.34% 2000 ................................. 0.10% 827,728 14.724854 12,188,174 0.00% -11.33% 1999 ................................. 0.10% 850 16.605768 14,115 0.00% 66.06% 4/1/99 Oppenheimer Capital Appreciation Fund/VA - Initial Class 2002 ................................. 0.10% 969,758 8.415727 8,161,219 0.57% -26.93% 2001 ................................. 0.10% 997,036 11.517595 11,483,457 0.59% -12.66% 2000 ................................. 0.10% 533,112 13.187632 7,030,485 0.09% -0.33% Oppenheimer Global Securities Fund/VA - Initial Class 2002 ................................. 0.10% 769,291 6.556537 5,043,885 0.55% -22.21% 2001 ................................. 0.10% 235,861 8.428773 1,988,019 0.39% -12.12% 2000 ................................. 0.10% 145,609 9.591764 1,396,647 0.00% -4.08% 5/1/00 Oppenheimer Main Street Growth & Income Fund/VA - Initial Class 2002 ................................. 0.10% 322,290 7.783700 2,508,609 0.75% -18.88% 2001 ................................. 0.10% 200,772 9.595068 1,926,421 0.50% -10.25% 2000 ................................. 0.10% 209,160 10.690852 2,236,099 0.28% -8.87% Strong GVIT Mid Cap Growth Fund - Class I 2002 ................................. 0.10% 509,655 6.092407 3,105,026 0.00% -37.08% 2001 ................................. 0.10% 481,759 9.682440 4,664,603 0.00% -30.38% 2000 ................................. 0.10% 499,194 13.906958 6,942,270 0.00% -15.46% 1999 ................................. 0.10% 240,293 16.450708 3,952,990 0.00% 64.51% 4/1/99 Strong Opportunity Fund II, Inc. 2002 ................................. 0.10% 226,501 6.941814 1,572,328 0.50% -26.89% 2001 ................................. 0.10% 282,804 9.495237 2,685,291 0.65% -3.80% 2000 ................................. 0.10% 285,161 9.847803 2,808,209 0.00% -1.30% 5/1/00 T.Rowe Price Equity Income Portfolio - II 2002 ................................. 0.10% 512 10.126777 5,185 0.77% 1.27% 9/3/02 T.Rowe Price Mid Cap Growth Portfolio - II 2002 ................................. 0.10% 844 10.253796 8,654 0.00% 2.54% 9/3/02 Turner GVIT Growth Focus Fund - Class I 2002 ................................. 0.10% 45,497 2.205430 100,340 0.00% -42.91% 2001 ................................. 0.10% 10,063 3.863379 38,877 0.00% -39.09% Van Eck WIT - Worldwide Emerging Markets Fund 2002 ................................. 0.10% 63,522 9.967428 633,151 0.21% -3.00% 2001 ................................. 0.10% 53,871 10.275468 553,550 0.00% -1.91% 2000 ................................. 0.10% 16,342 10.475365 171,188 0.00% -41.92%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ------- ---------- -------------- ---------- --------- Van Eck WIT - Worldwide Hard Assets Fund 2002 ................................. 0.10% 10,722 $11.332655 $ 121,509 0.75% -2.93% 2001 ................................. 0.10% 5,578 11.674866 65,122 1.04% -10.53% Van Kampen UIF - Emerging Markets Debt Portfolio 2002 ................................. 0.10% 2,680 16.152298 43,288 8.74% 9.11% 2001 ................................. 0.10% 147 14.803302 2,176 10.76% 9.99% 2000 ................................. 0.10% 1,276 13.458822 17,173 13.84% 11.28% Van Kampen UIF - Mid Cap Growth Portfolio 2002 ................................. 0.10% 63,481 4.217224 267,714 0.00% -31.23% 2001 ................................. 0.10% 83,050 6.132002 509,263 0.00% -29.38% 2000 ................................. 0.10% 49,713 8.683462 431,681 0.00% -13.17% 5/1/00 Van Kampen UIF - U.S.Real Estate Portfolio 2002 ................................. 0.10% 346,576 14.096819 4,885,619 4.01% -0.89% 2001 ................................. 0.10% 255,847 14.222851 3,638,874 5.40% 9.73% 2000 ................................. 0.10% 23,692 12.961511 307,084 8.01% 4.28% 9/21/00 The BEST of AMERICA(R) Corporate Variable Universal Life Series(SM) Reduced Fee Tier (0.25%) American Century VP Income & Growth Fund - Class I 2002 ................................. 0.25% 1,435 7.445299 10,684 1.00% -19.57% American Century VP International Fund - Class I 2002 ................................. 0.25% 49,356 5.898746 291,139 0.78% -20.57% American Century VP Value Fund - Class I 2002 ................................. 0.25% 90,011 10.366670 933,114 0.75% -12.84% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2002 ................................. 0.25% 1,104 4.810802 5,311 0.00% -34.32% Credit Suisse Trust - Large Cap Value Portfolio 2002 ................................. 0.25% 5,253 8.258105 43,380 0.76% -23.29% Dreyfus GVIT Mid Cap Index Fund - Class I 2002 ................................. 0.25% 1,993 8.927901 17,793 0.45% -15.51% Dreyfus Socially Responsible Growth Fund, Inc.- Initial Shares 2002 ................................. 0.25% 425 5.479795 2,329 0.22% -29.12% Dreyfus Stock Index Fund 2002 ................................. 0.25% 529,695 6.815999 3,610,401 1.45% -22.56% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2002 ................................. 0.25% 48,950 7.513649 367,793 1.22% -16.92% Federated GVIT High Income Bond Fund - Class I 2002 ................................. 0.25% 47,160 11.023733 519,879 10.09% 2.97% Federated Quality Bond Fund II - Primary Shares 2002 ................................. 0.25% 55,859 12.752372 712,335 3.20% 9.03% Fidelity(R) VIP - Equity-Income Portfolio: Service Class 2002 ................................. 0.25% 244,789 8.170844 2,000,133 1.50% -17.20%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Fidelity(R) VIP - Growth Portfolio: Service Class 2002 ................................. 0.25% 78,608 $ 5.726150 $ 450,121 0.14% -30.37% Fidelity(R) VIP - High Income Portfolio: Service Class 2002 ................................. 0.25% 606 9.275222 5,621 9.18% 3.36% Fidelity(R) VIP - Overseas Portfolio: Service Class 2002 ................................. 0.25% 1,213 6.254343 7,587 0.64% -20.54% Fidelity(R) VIP II - Contrafund Portfolio: Service Class 2002 ................................. 0.25% 7,198 8.162207 58,752 0.69% -9.65% Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class 2002 ................................. 0.25% 794 6.699267 5,319 0.93% -22.11% Gartmore GVIT Government Bond Fund - Class I 2002 ................................. 0.25% 1,141,119 12.065916 13,768,646 4.66% 10.71% Gartmore GVIT Growth Fund - Class I 2002 ................................. 0.25% 49,665 4.981328 247,398 0.00% -28.90% Gartmore GVIT International Growth Fund - Class I 2002 ................................. 0.25% 65 4.980814 324 0.00% -24.29% Gartmore GVIT Money Market Fund - Class I 2002 ................................. 0.25% 1,395,229 10.485477 14,629,642 1.51% 0.96% Gartmore GVIT Money Market Fund - Class V 2002 ................................. 0.25% 656 10.017601 6,572 0.28% 0.18% 10/21/02 Gartmore GVIT Nationwide(R) Strategic Value Fund - Class I 2002 ................................. 0.25% 42 7.632212 321 0.03% -25.55% Gartmore GVIT Small Cap Growth Fund - Class I 2002 ................................. 0.25% 209 10.129586 2,117 0.00% -33.45% Gartmore GVIT Small Cap Value Fund - Class I 2002 ................................. 0.25% 89,722 9.994656 896,741 0.01% -27.34% Gartmore GVIT Small Company Fund - Class I 2002 ................................. 0.25% 98,835 8.373012 827,547 0.00% -17.54% Gartmore GVIT Total Return Fund - Class I 2002 ................................. 0.25% 588 7.294217 4,289 0.95% -17.56% Gartmore GVIT Worldwide Leaders Fund - Class I 2002 ................................. 0.25% 85 6.219415 529 2.00% -25.58% J.P.Morgan GVIT Balanced Fund - Class I 2002 ................................. 0.25% 1,233 8.510165 10,493 2.28% -12.53% Janus AS - Capital Appreciation Portfolio - Service Shares 2002 ................................. 0.25% 318 5.373376 1,709 0.32% -16.14% Janus AS - Global Technology Portfolio - Service Shares 2002 ................................. 0.25% 708 2.419456 1,713 0.00% -41.08%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ------- ---------- -------------- ---------- --------- Janus AS - International Growth Portfolio - Service Shares 2002 ................................. 0.25% 905 $ 4.668998 $ 4,225 0.70% -25.94% MAS GVIT (formerly Nationwide(R) SAT) Multi Sector Bond Fund - Class I 2002 ................................. 0.25% 42,803 11.490701 491,836 4.49% 6.94% Neuberger Berman AMT - Guardian Portfolio 2002 ................................. 0.25% 535 7.435383 3,978 0.75% -26.63% Neuberger Berman AMT - Mid-Cap Growth Portfolio 2002 ................................. 0.25% 217,507 5.656826 1,230,399 0.00% -29.52% Neuberger Berman AMT - Partners Portfolio 2002 ................................. 0.25% 53,464 7.765195 415,158 0.54% -24.33% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2002 ................................. 0.25% 11,391 5.069121 57,742 0.63% -27.97% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2002 ................................. 0.25% 345,299 6.568116 2,267,964 0.57% -27.04% Oppenheimer Global Securities Fund/VA - Initial Class 2002 ................................. 0.25% 228,358 6.530337 1,491,255 0.55% -22.33% Oppenheimer Main Street Growth & Income Fund/VA - Initial Class 2002 ................................. 0.25% 1,058 7.414306 7,844 0.75% -19.00% PIMCO VIT Total Return Portfolio - Administrative Shares 2002 ................................. 0.25% 165 10.331952 1,705 0.98% 3.32% 8/30/02 Pioneer High Yield VCT Portfolio - Class I Shares 2002 ................................. 0.25% 162 10.362072 1,679 1.76% 3.62% 9/3/02 Strong GVIT Mid Cap Growth Fund - Class I 2002 ................................. 0.25% 5,143 4.953560 25,476 0.00% -37.17% Strong Opportunity Fund II, Inc. 2002 ................................. 0.25% 182,111 6.914071 1,259,128 0.50% -27.00% Van Eck WIT - Worldwide Emerging Markets Fund 2002 ................................. 0.25% 399 9.250254 3,691 0.21% -3.14% Van Eck WIT - Worldwide Hard Assets Fund 2002 ................................. 0.25% 497 9.692423 4,817 0.75% -3.08% Van Kampen UIF - Emerging Markets Debt Portfolio 2002 ................................. 0.25% 83 12.359143 1,026 8.74% 8.95% Van Kampen UIF - Mid Cap Growth Portfolio 2002 ................................. 0.25% 354 4.200344 1,487 0.00% -31.33% Van Kampen UIF - U.S.Real Estate Portfolio 2002 ................................. 0.25% 770 11.491482 8,848 4.01% -1.03%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- -------------- The BEST of AMERICA(R) Corporate Variable Universal Life Series(SM) Reduced Fee Tier (0.40%) Aim VIF Basic Value Fund - Series I 2002 ................................. 0.40% 39,881 $9.839124 $ 392,394 0.00% -1.61% 9/3/02 Aim VIF Capital Development Fund - Series I 2002 ................................. 0.40% 24 9.809368 235 0.00% -1.91% 9/3/02 Alliance VPS Growth & Income Portfolio - Class A 2002 ................................. 0.40% 5,432 10.011053 54,380 0.00% 0.11% 9/3/02 American Century VP Income & Growth Fund - Class I 2002 ................................. 0.40% 2,529,796 8.355578 21,137,908 1.00% -19.69% 2001 ................................. 0.40% 1,861,201 10.404509 19,364,883 0.85% -8.72% 2000 ................................. 0.40% 763,555 11.398555 8,703,424 0.48% -10.97% 1999 ................................. 0.40% 355,846 12.803106 4,555,934 0.01% 17.55% American Century VP International Fund - Class I 2002 ................................. 0.40% 2,893,353 7.397247 21,402,847 0.78% -20.69% 2001 ................................. 0.40% 1,918,932 9.326990 17,897,860 0.08% -29.46% 2000 ................................. 0.40% 1,191,245 13.221985 15,750,624 0.10% -17.16% 1999 ................................. 0.40% 204,837 15.960157 3,269,231 0.00% 63.39% 1998 ................................. 0.40% 3,234 9.768200 31,590 0.03% -2.32% 5/1/98 American Century VP Ultra Fund - Class I 2002 ................................. 0.40% 4,655 8.016962 37,319 0.66% -19.83% 5/1/02 American Century VP Value Fund - Class I 2002 ................................. 0.40% 872,044 10.653510 9,290,329 0.75% -12.97% 2001 ................................. 0.40% 428,754 12.241061 5,248,404 0.60% 12.37% 2000 ................................. 0.40% 111,911 10.893612 1,219,115 0.62% 17.67% 1999 ................................. 0.40% 23,107 9.257533 213,914 0.69% -1.25% 1998 ................................. 0.40% 440 9.374321 4,125 0.05% -6.26% 5/1/98 Baron Capital Asset Trust 2002 ................................. 0.40% 7,134 9.694252 69,159 0.00% -3.06% 9/3/02 Comstock GVIT Value Fund - Class I 2002 ................................. 0.40% 254,670 7.252185 1,846,914 1.34% -25.44% 2001 ................................. 0.40% 115,152 9.726929 1,120,075 1.63% -12.51% 2000 ................................. 0.40% 29,855 11.117142 331,902 1.02% -10.98% 1999 ................................. 0.40% 965 12.487973 12,051 0.30% 18.02% 1998 ................................. 0.40% 211 10.581467 2,233 0.73% 5.81% 5/1/98 Credit Suisse Trust - Global Post-Venture Capital Portfolio 2002 ................................. 0.40% 27,170 5.555805 150,951 0.00% -34.42% 2001 ................................. 0.40% 25,001 8.471776 211,803 0.00% -28.92% 2000 ................................. 0.40% 106,896 11.411760 1,219,871 0.00% -19.26% 1999 ................................. 0.40% 4,981 14.762349 73,531 0.00% 62.85% 1998 ................................. 0.40% 985 9.065227 8,929 0.00% -9.35% 5/1/98
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- ---------- Credit Suisse Trust - International Focus Portfolio 2002 ................................. 0.40% 32,357 $ 6.196425 $ 200,498 0.00% -20.22% 2001 ................................. 0.40% 39,874 7.767318 309,714 0.00% -22.59% 2000 ................................. 0.40% 48,933 10.033586 490,973 0.55% -26.19% 1999 ................................. 0.40% 3,445 13.593893 46,831 1.34% 52.82% Credit Suisse Trust - Large Cap Value Portfolio 2002 ................................. 0.40% 45,124 8.788383 396,567 0.76% -23.40% 2001 ................................. 0.40% 140,668 11.473418 1,613,943 0.00% 0.54% 2000 ................................. 0.40% 10,994 11.918959 131,037 2.02% 8.48% 1999 ................................. 0.40% 42,745 10.519954 449,675 1.08% 5.82% 1998 ................................. 0.40% 16,145 9.941469 160,505 1.26% -0.59% 5/1/98 Dreyfus GVIT Mid Cap Index Fund - Class I 2002 ................................. 0.40% 922,042 11.255500 10,378,044 0.45% -15.64% 2001 ................................. 0.40% 321,337 13.342471 4,287,430 0.55% -1.70% 2000 ................................. 0.40% 38,007 13.573326 515,881 0.66% 14.75% Dreyfus IP - European Equity Portfolio 2001 ................................. 0.40% 30,039 9.025727 271,124 0.79% -28.42% 2000 ................................. 0.40% 8,448 12.608842 106,519 0.38% -2.39% Dreyfus IP - Mid Cap Stock Portfolio - Initial Shares 2002 ................................. 0.40% 2,842 9.966854 28,326 0.60% -0.33% 9/3/02 Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2002 ................................. 0.40% 5,221 7.654697 39,965 0.29% -23.45% 5/1/02 Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares 2002 ................................. 0.40% 368,609 6.983004 2,573,998 0.22% -29.23% 2001 ................................. 0.40% 556,416 9.867078 5,490,200 0.08% -22.89% 2000 ................................. 0.40% 136,511 12.795380 1,746,710 1.06% -11.39% 1999 ................................. 0.40% 28,931 14.439525 417,750 0.02% 29.56% 1998 ................................. 0.40% 397 11.144998 4,425 0.31% 11.45% 5/1/98 Dreyfus Stock Index Fund 2002 ................................. 0.40% 14,027,919 8.097446 113,590,317 1.45% -22.67% 2001 ................................. 0.40% 10,538,036 10.471621 110,350,319 1.14% -12.53% 2000 ................................. 0.40% 7,299,831 11.972080 87,394,161 1.01% -9.64% 1999 ................................. 0.40% 3,707,136 13.249543 49,117,858 1.02% 20.12% 1998 ................................. 0.40% 111,613 11.030001 1,231,092 0.90% 10.30% 5/1/98 Dreyfus VIF - Appreciation Portfolio - Initial Shares 2002 ................................. 0.40% 1,866,807 9.074997 16,941,268 1.22% -17.05% 2001 ................................. 0.40% 1,760,221 10.939900 19,256,642 0.90% -9.67% 2000 ................................. 0.40% 1,368,457 12.111451 16,574,000 0.82% -1.05% 1999 ................................. 0.40% 843,808 12.239522 10,327,807 1.00% 11.01% 1998 ................................. 0.40% 10,106 11.025485 111,424 0.98% 10.25% 5/1/98 Dreyfus VIF - International Value Portfolio - Initial Shares 2002 ................................ 0.40% 7,620 9.427437 71,837 0.37% -5.73% 9/3/02
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Federated GVIT High Income Bond Fund - Class I 2002.................................. 0.40% 555,227 $10.070195 $ 5,591,244 10.09% 2.81% 2001.................................. 0.40% 410,468 9.794650 4,020,390 11.31% 3.80% 2000.................................. 0.40% 224,564 9.436226 2,119,037 9.51% -8.64% 1999.................................. 0.40% 80,137 10.328712 827,712 6.75% 2.78% 1998.................................. 0.40% 13,423 10.049520 134,895 4.68% 0.50% 5/1/98 Federated Quality Bond Fund II - Primary Shares 2002 ................................. 0.40% 2,571,167 12.682507 32,608,843 3.20% 8.87% 2001 ................................. 0.40% 1,654,009 11.649181 19,267,850 2.92% 7.58% 2000 ................................. 0.40% 607,272 10.828312 6,575,731 0.89% 10.01% 1999 ................................. 0.40% 18 9.842943 177 0.00% -1.57% 5/3/99 Fidelity(R) VIP - Equity-Income Portfolio: Service Class 2002 ................................. 0.40% 2,559,502 8.838834 22,623,013 1.50% -17.33% 2001 ................................. 0.40% 1,857,873 10.691577 19,863,592 1.13% -5.47% 2000 ................................. 0.40% 351,542 11.310203 3,976,011 1.23% 7.87% 1999 ................................. 0.40% 118,952 10.484615 1,247,166 0.89% 5.83% 1998 ................................. 0.40% 5,995 9.906965 59,392 0.00% -0.93% 5/1/98 Fidelity(R) VIP - Growth Portfolio: Service Class 2002.................................. 0.40% 3,005,019 8.313850 24,983,277 0.14% -30.48% 2001 ................................. 0.40% 2,428,287 11.958538 29,038,762 0.00% -18.06% 2000 ................................. 0.40% 2,131,137 14.593603 31,100,967 0.07% -11.42% 1999 ................................. 0.40% 758,262 16.475102 12,492,444 0.04% 36.74% 1998 ................................. 0.40% 185 12.048634 2,229 0.00% 20.49% 5/1/98 Fidelity(R) VIP - High Income Portfolio: Service Class 2002 ................................. 0.40% 774,551 6.765203 5,239,995 9.18% 3.20% 2001 ................................. 0.40% 638,130 6.555148 4,183,037 13.22% -12.25% 2000 ................................. 0.40% 441,041 7.470194 3,294,662 6.11% -22.92% 1999 ................................. 0.40% 230,895 9.691447 2,237,707 5.78% 7.64% 1998 ................................. 0.40% 77 9.003329 693 0.00% -9.97% 5/1/98 Fidelity(R) VIP - Overseas Portfolio: Service Class 2002 ................................. 0.40% 1,627,578 6.758846 11,000,549 0.64% -20.66% 2001 ................................. 0.40% 1,216,927 8.518959 10,366,951 5.46% -21.59% 2000 ................................. 0.40% 1,216,616 10.864367 13,217,763 1.16% -19.47% 1999 ................................. 0.40% 504,007 13.491426 6,799,773 0.30% 41.89% 1998 ................................. 0.40% 3,076 9.508092 29,247 0.00% -4.92% 5/1/98 Fidelity(R) VIP II - Contrafund Portfolio: Service Class 2002 ................................. 0.40% 1,492,216 10.257824 15,306,889 0.69% -9.79% 2001 ................................. 0.40% 1,079,652 11.370566 12,276,254 0.61% -12.71% 2000 ................................. 0.40% 671,658 13.026647 8,749,452 0.26% -7.09% 1999 ................................. 0.40% 230,228 14.020034 3,227,804 0.18% 23.65% 1998 ................................. 0.40% 2,712 11.338370 30,750 0.00% 13.38% 5/1/98 -----------
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ----------- -------------- ---------- --------- Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class 2002 ................................ 0.40% 402,649 $ 6.381088 $ 2,569,339 0.93% -22.23% 2001 ................................ 0.40% 504,352 8.204875 4,138,145 0.23% -14.78% 2000 ................................ 0.40% 397,095 9.628054 3,823,252 1.03% -17.51% 1999 ................................ 0.40% 125,424 11.671298 1,463,861 0.45% 3.77% 1998 ................................ 0.40% 1,228 11.247664 13,812 0.00% 12.48% 5/1/98 Fidelity(R) VIP III - Value Strategies Portfolio: Service Class 2002 ................................ 0.40% 953 7.489405 7,137 0.00% -25.11% 5/1/02 Franklin Templeton VIT - Templeton Foreign Securities Fund - Class 2 2002 ................................ 0.40% 14,717 9.474024 139,429 0.00% -5.26% 9/3/02 Gartmore GVIT Emerging Markets Fund - Class I 2002 ................................ 0.40% 10,388 6.940105 72,094 0.23% -15.57% 2001 ................................ 0.40% 2,423 8.219735 19,916 0.24% -5.56% Gartmore GVIT Global Health Sciences Fund - Class I 2002 ................................ 0.40% 292 8.317804 2,429 0.00% -16.82% 5/1/02 Gartmore GVIT Global Technology and Communications Fund - Class I 2002 ................................ 0.40% 46,574 1.954523 91,030 0.67% -43.01% 2001 ................................ 0.40% 29,402 3.429593 100,837 0.00% -42.95% Gartmore GVIT Global Utilities Fund - Class I 2002 ................................ 0.40% 2,326 8.660608 20,145 0.61% -13.39% 5/1/02 Gartmore GVIT Government Bond Fund - Class I 2002 ................................ 0.40% 9,515,935 13.728864 130,642,977 4.66% 10.54% 2001 ................................ 0.40% 6,811,337 12.419760 84,595,171 5.61% 6.82% 2000 ................................ 0.40% 3,170,399 11.626380 36,860,264 6.29% 12.09% 1999 ................................ 0.40% 1,312,872 10.372218 13,617,395 6.57% -2.74% 1998 ................................ 0.40% 270,361 10.664112 2,883,160 3.55% 6.64% 5/1/98 Gartmore GVIT Growth Fund - Class I 2002 ................................ 0.40% 174,753 4.322008 755,284 0.00% -29.01% 2001 ................................ 0.40% 192,191 6.087822 1,170,025 0.00% -28.42% 2000 ................................ 0.40% 178,360 8.505270 1,517,000 0.19% -26.82% 1999 ................................ 0.40% 65,598 11.623180 762,457 0.69% 3.86% 1998 ................................ 0.40% 847 11.191056 9,479 0.47% 11.91% 5/1/98 Gartmore GVIT ID Aggressive Fund 2002 ................................ 0.40% 4,346 8.300685 36,075 0.86% -16.99% 1/25/02 Gartmore GVIT ID Conservative Fund 2002 ................................ 0.40% 6,694 10.013037 67,027 2.18% 0.13% 1/25/02 Gartmore GVIT ID Moderate Fund 2002 ................................ 0.40% 9,222 9.106228 83,978 1.66% -8.94% 1/25/02 Gartmore GVIT ID Moderately Aggressive Fund 2002 ................................ 0.40% 14,555 8.655338 125,978 1.05% -13.45% 1/25/02 Gartmore GVIT ID Moderately Conservative Fund 2002 ................................ 0.40% 4,849 9.606563 46,582 1.99% -3.93% 1/25/02
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------- Gartmore GVIT International Growth Fund - Class I 2002 ................................. 0.40% 40,096 $ 4.964024 $ 199,038 0.00% -24.41% 2001 ................................. 0.40% 10,028 6.566849 65,852 0.26% -28.94% Gartmore GVIT Money Market Fund - Class I 2002 ................................. 0.40% 4,829,326 11.838269 57,170,860 1.51% 0.81% 2001 ................................. 0.40% 16,843,508 11.743544 197,802,477 3.18% 3.19% 2000 ................................. 0.40% 5,646,634 11.380873 64,263,624 5.56% 5.60% 1999 ................................. 0.40% 3,786,796 10.776865 40,809,789 4.09% 4.43% 1998 ................................. 0.40% 394,891 10.319833 4,075,209 4.03% 3.20% 4/30/98 Gartmore GVIT Money Market Fund - Class V 2002 ................................. 0.40% 15,116,078 10.014669 151,382,518 0.28% 0.15% 10/21/02 Gartmore GVIT Nationwide(R)Strategic Value Fund - Class I 2002 ................................. 0.40% 30,787 6.735208 207,357 0.03% -25.66% 2001 ................................. 0.40% 37,680 9.059635 341,367 0.53% -3.64% 2000 ................................. 0.40% 2,481 9.402302 23,327 1.11% 7.18% 1999 ................................. 0.40% 791 8.772237 6,939 0.88% -3.46% Gartmore GVIT Small Cap Growth Fund - Class I 2002 ................................. 0.40% 312,346 10.074004 3,146,575 0.00% -33.55% 2001 ................................. 0.40% 162,269 15.161271 2,460,204 0.00% -11.20% 2000 ................................. 0.40% 59,757 17.072794 1,020,219 0.00% -16.50% 1999 ................................. 0.40% 118 20.447188 2,413 0.00% 104.47% 5/3/99 Gartmore GVIT Small Cap Value Fund - Class I 2002 ................................. 0.40% 1,401,972 11.216089 15,724,643 0.01% -27.45% 2001 ................................. 0.40% 594,303 15.460620 9,188,293 0.04% 27.76% 2000 ................................. 0.40% 152,675 12.101060 1,847,529 0.00% 10.76% 1999 ................................. 0.40% 8,548 10.925665 93,393 0.00% 27.33% Gartmore GVIT Small Company Fund - Class I 2002 ................................. 0.40% 2,331,936 10.781666 25,142,155 0.00% -17.66% 2001 ................................. 0.40% 1,522,194 13.093906 19,931,465 0.13% -7.08% 2000 ................................. 0.40% 493,035 14.091380 6,947,544 0.02% 8.47% 1999 ................................. 0.40% 72,698 12.991606 944,464 0.00% 43.45% 1998 ................................. 0.40% 257 9.056852 2,328 0.00% -9.43% 5/1/98 Gartmore GVIT Total Return Fund - Class I 2002 ................................. 0.40% 368,763 7.615719 2,808,395 0.95% -17.68% 2001 ................................. 0.40% 358,546 9.251754 3,317,179 0.88% -12.17% 2000 ................................. 0.40% 212,989 10.534111 2,243,650 0.68% -2.51% 1999 ................................. 0.40% 42,084 10.805244 454,728 0.60% 6.52% 1998 ................................. 0.40% 70 10.144232 710 0.66% 1.44% 5/1/98 Gartmore GVIT Worldwide Leaders Fund - Class I 2002 ................................. 0.40% 82,915 6.666122 552,722 2.00% -25.69% 2001 ................................. 0.40% 1,549,764 8.970354 13,901,932 1.84% -19.14% 2000 ................................. 0.40% 942,496 11.093053 10,455,158 0.94% -12.67% 1999 ................................. 0.40% 468,148 12.702408 5,946,607 0.11% 22.43%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------- Goldman Sachs VIT Mid Cap Value Fund 2002 ................................. 0.40% 7,368 $ 9.877029 $ 72,774 0.27% -1.23% 9/3/02 J.P.Morgan GVIT Balanced Fund - Class I 2002 ................................. 0.40% 943,228 8.363123 7,888,332 2.28% -12.66% 2001 ................................. 0.40% 351,646 9.575644 3,367,237 2.54% -4.06% 2000 ................................. 0.40% 117,858 9.980967 1,176,337 3.36% -0.75% 1999 ................................. 0.40% 43,881 10.056111 441,272 3.80% 0.47% 1998 ................................. 0.40% 349 10.009481 3,493 2.69% 0.09% 5/1/98 Janus AS - Balanced Portfolio - Service Shares 2002 ................................. 0.40% 977 10.033996 9,803 2.14% 0.34% 9/3/02 Janus AS - Capital Appreciation Portfolio - Service Shares 2002 ................................. 0.40% 1,902,427 5.349794 10,177,593 0.32% -16.26% 2001 ................................. 0.40% 1,517,392 6.388873 9,694,425 1.01% -22.14% 2000 ................................. 0.40% 535,891 8.205940 4,397,489 1.22% -17.94% 1/27/00 Janus AS - Global Technology Portfolio - Service Shares 2002 ................................. 0.40% 783,206 2.408830 1,886,610 0.00% -41.17% 2001 ................................. 0.40% 677,164 4.094407 2,772,585 0.63% -37.57% 2000 ................................. 0.40% 343,351 6.558143 2,251,745 1.20% -34.42% 1/27/00 Janus AS - International Growth Portfolio - Service Shares 2002 ................................. 0.40% 3,375,569 4.648509 15,691,363 0.70% -26.05% 2001 ................................. 0.40% 2,212,967 6.286392 13,911,578 0.81% -23.74% 2000 ................................. 0.40% 383,403 8.243024 3,160,400 5.19% -17.57% 1/27/00 MAS GVIT (formerly Nationwide(R) SAT) Multi Sector Bond Fund - Class I 2002 ................................. 0.40% 775,887 11.784392 9,143,357 4.49% 6.78% 2001 ................................. 0.40% 1,739,536 11.036224 19,197,909 6.01% 3.77% 2000 ................................. 0.40% 1,055,243 10.635225 11,222,747 6.99% 5.23% 1999 ................................. 0.40% 460,632 10.106222 4,655,249 5.75% 1.15% 1998 ................................. 0.40% 15,549 9.991296 155,355 4.43% -0.09% 5/1/98 Neuberger Berman AMT - Fasciano Portfolio - S Class 2002 ................................. 0.40% 3,552 10.057930 35,726 0.00% 0.58% 9/3/02 Neuberger Berman AMT - Guardian Portfolio 2002 ................................. 0.40% 1,042,854 7.738827 8,070,467 0.75% -26.74% 2001 ................................. 0.40% 270,845 10.563782 2,861,148 0.29% -1.90% 2000 ................................. 0.40% 86,066 10.768698 926,819 0.40% 0.73% 1999 ................................. 0.40% 25,154 10.690765 268,916 0.19% 14.47% 1998 ................................. 0.40% 838 9.338993 7,826 0.00% -6.61% 5/1/98 Neuberger Berman AMT - Mid-Cap Growth Portfolio 2002 ................................. 0.40% 1,801,971 8.429938 15,190,504 0.00% -29.62% 2001 ................................. 0.40% 1,272,440 11.978031 15,241,326 0.00% -24.95% 2000 ................................. 0.40% 827,220 15.959556 13,202,064 0.00% -7.83% 1999 ................................. 0.40% 315,266 17.314889 5,458,796 0.00% 53.28% 1998 ................................. 0.40% 70 11.296584 791 0.00% 12.97% 5/1/98
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Neuberger Berman AMT - Partners Portfolio 2002 ........................... 0.40% 341,601 $ 7.323519 $ 2,501,721 0.54% -24.45% 2001 ........................... 0.40% 322,706 9.693032 3,128,000 0.33% -3.22% 2000 ........................... 0.40% 241,651 10.015242 2,420,193 0.65% 0.03% 1999 ........................... 0.40% 94,285 9.985118 941,447 0.98% 6.94% 1998 ........................... 0.40% 26,750 9.337008 249,765 0.01% -6.63% 5/1/98 One Group(R) IT Mid Cap Growth Portfolio 2002 ........................... 0.40% 19,940 10.070202 200,800 0.00% 0.70% 9/18/02 One Group(R) IT Mid Cap Value Portfolio 2002 ........................... 0.40% 39,000 9.922131 386,963 0.00% -0.78% 9/18/02 Oppenheimer Aggressive Growth Fund/VA - Initial Class 2002 ........................... 0.40% 2,442,509 7.709999 18,831,742 0.63% -28.08% 2001 ........................... 0.40% 2,155,828 10.720152 23,110,804 0.86% -31.54% 2000 ........................... 0.40% 1,068,591 15.659821 16,733,944 0.00% -11.59% 1999 ........................... 0.40% 138,018 17.712996 2,444,712 0.00% 82.87% 1998 ........................... 0.40% 1,235 9.685930 11,962 0.00% -3.14% 5/1/98 Oppenheimer Capital Appreciation Fund/VA - Initial Class 2002 ........................... 0.40% 3,582,220 9.479881 33,959,019 0.57% -27.15% 2001 ........................... 0.40% 2,694,063 13.013036 35,057,939 0.59% -12.93% 2000 ........................... 0.40% 911,021 14.945030 13,615,236 0.09% -0.63% 1999 ........................... 0.40% 188,390 15.039330 2,833,259 0.13% 41.09% 1998 ........................... 0.40% 767 10.659314 8,176 0.00% 6.59% 5/1/98 Oppenheimer Global Securities Fund/VA - Initial Class 2002 ........................... 0.40% 1,442,545 6.504237 9,382,655 0.55% -22.45% 2001 ........................... 0.40% 813,325 8.386697 6,821,110 0.39% -12.39% 2000 ........................... 0.40% 43,440 9.572769 415,841 0.00% -4.27% 5/1/00 Oppenheimer Main Street Growth & Income Fund/VA - Initial Class 2002 ........................... 0.40% 704,851 7.125335 5,022,300 0.75% -19.12% 2001 ........................... 0.40% 544,668 8.809927 4,798,485 0.50% -10.52% 2000 ........................... 0.40% 327,513 9.845729 3,224,604 0.28% -9.14% 1999 ........................... 0.40% 97,691 10.835877 1,058,568 0.24% 21.22% 1998 ........................... 0.40% 18,485 8.938847 165,235 0.00% -10.61% 5/1/98 PIMCO VIT Low Duration Portfolio - Administrative Shares 2002 ........................... 0.40% 45,027 10.182621 458,493 0.26% 1.83% 9/3/02 PIMCO VIT Real Return Portfolio - Administrative Shares 2002 ........................... 0.40% 48,671 10.358691 504,168 0.39% 3.59% 8/30/02 PIMCO VIT Total Return Portfolio - Administrative Shares 2002 ........................... 0.40% 185,190 10.326715 1,912,404 0.98% 3.27% 8/30/02 Pioneer High Yield VCT Portfolio - Class I Shares 2002 ........................... 0.40% 211 10.356990 2,185 1.76% 3.57% 9/3/02 Royce Capital Fund - Micro Cap 2002 ........................... 0.40% 43,606 10.104573 440,620 0.00% 1.05% 9/3/02
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- --------- --------- Strong GVIT Mid Cap Growth Fund - Class I 2002 ........................... 0.40% 1,062,592 $ 7.106122 $ 7,550,908 0.00% -37.27% 2001 ........................... 0.40% 916,433 11.327538 10,380,930 0.00% -30.59% 2000 ........................... 0.40% 647,094 16.319202 10,560,058 0.00% -15.72% 1999 ........................... 0.40% 128,669 19.361969 2,491,285 0.00% 84.02% 1998 ........................... 0.40% 477 10.521882 5,019 0.00% 5.22% 5/1/98 Strong Opportunity Fund II, Inc. 2002 ........................... 0.40% 1,740,569 6.886442 11,986,327 0.50% -27.11% 2001 ........................... 0.40% 1,042,724 9.447854 9,851,504 0.65% -4.09% 2000 ........................... 0.40% 72,473 9.828296 712,286 0.00% -1.49% 5/1/00 T.Rowe Price Equity Income Portfolio - II 2002 ........................... 0.40% 16,487 10.116880 166,797 0.77% 1.17% 9/3/02 T.Rowe Price Mid Cap Growth Portfolio - II 2002 ........................... 0.40% 11,398 10.243767 116,758 0.00% 2.44% 9/3/02 Turner GVIT Growth Focus Fund - Class I 2002 ........................... 0.40% 6,098 2.190553 13,358 0.00% -43.09% 2001 ........................... 0.40% 2,944 3.848878 11,331 0.00% -39.27% Van Eck WIT - Worldwide Emerging Markets Fund 2002 ........................... 0.40% 170,526 6.907806 1,177,961 0.21% -3.29% 2001 ........................... 0.40% 93,450 7.142729 667,488 0.00% -2.20% 2000 ........................... 0.40% 41,537 7.303734 303,375 0.00% -42.10% 1999 ........................... 0.40% 10,044 12.613718 126,692 0.00% 99.48% Van Eck WIT - Worldwide Hard Assets Fund 2002 ........................... 0.40% 38,434 7.898317 303,564 0.75% -3.22% 2001 ........................... 0.40% 13,391 8.161281 109,288 1.04% -10.80% 2000 ........................... 0.40% 3,041 9.149843 27,825 0.70% 10.96% 1999 ........................... 0.40% 252 8.246159 2,078 0.82% 20.52% Van Kampen UIF - Emerging Markets Debt Portfolio 2002 ........................... 0.40% 159,659 11.537562 1,842,076 8.74% 8.79% 2001 ........................... 0.40% 80,313 10.605749 851,780 10.76% 9.66% 2000 ........................... 0.40% 28,939 9.671636 279,887 13.84% 10.94% 1999 ........................... 0.40% 12,553 8.717559 109,432 20.09% 28.86% Van Kampen UIF - Mid Cap Growth Portfolio 2002 ........................... 0.40% 265,456 4.183540 1,110,546 0.00% -31.43% 2001 ........................... 0.40% 127,633 6.101338 778,732 0.00% -29.60% 2000 ........................... 0.40% 8,201 8.666239 71,072 0.00% -13.34% 5/1/00 Van Kampen UIF - U.S. Real Estate Portfolio 2002 ........................... 0.40% 636,267 11.848822 7,539,014 4.01% -1.18% 2001 ........................... 0.40% 318,295 11.990690 3,816,577 5.40% 9.40% 2000 ........................... 0.40% 111,390 10.960329 1,220,871 8.01% 4.19% 1999 ........................... 0.40% 38,697 8.593033 332,525 4.73% -3.76% -----------
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued Contract Owners' Equity -------------- Contract Owners' Equity Total By Year 2002 ....................................................... $2,276,440,710 ============== 2001 ....................................................... $2,087,035,414 ============== 2000 ....................................................... $1,414,892,441 ============== 1999 ....................................................... $ 648,293,593 ============== 1998 ....................................................... $ 107,989,704 ============== * This represents the annualized contract expense rate 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 dividends for the period indicated, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by average net assets. The ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. *** This represents the 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 in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the Account. The total return is calculated for the period indicated or from the effective date through the end of the period. ================================================================================ INDEPENDENT AUDITORS' REPORT The Board of Directors Nationwide Life Insurance Company: We have audited the consolidated financial statements of Nationwide Life Insurance Company and subsidiaries (collectively the "Company") as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules 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, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. As discussed in note 2 to the consolidated financial statements, the Company changed its methods of accounting for derivative instruments and hedging activities, and for purchased or retained interests in securitized financial assets in 2001. KPMG LLP Columbus, Ohio January 30, 2003 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, ------------------------------------ 2002 2001 ============================================================================================================================ ASSETS: Investments: Securities available-for-sale, at fair value: Fixed maturity securities (cost $23,134.3 in 2002; $17,961.6 in 2001) $ 24,169.0 $ 18,370.8 Equity securities (cost $85.1 in 2002; $83.0 in 2001) 84.3 94.0 Mortgage loans on real estate, net 7,923.2 7,113.1 Real estate, net 116.6 172.0 Policy loans 629.2 591.1 Other long-term investments 137.5 125.0 Short-term investments, including amounts managed by a related party 1,210.3 1,011.3 - ---------------------------------------------------------------------------------------------------------------------------- 34,270.1 27,477.3 - ---------------------------------------------------------------------------------------------------------------------------- Cash 0.9 22.6 Accrued investment income 328.7 306.7 Deferred policy acquisition costs 2,971.1 3,189.0 Other assets 1,243.6 646.0 Assets held in separate accounts 47,208.2 59,513.0 - ---------------------------------------------------------------------------------------------------------------------------- $ 86,022.6 $ 91,154.6 ============================================================================================================================ LIABILITIES AND SHAREHOLDER'S EQUITY: Future policy benefits and claims $ 31,679.8 $ 25,216.0 Short-term debt - 100.0 Long-term debt, payable to Nationwide Financial Services, Inc. 600.0 300.0 Other liabilities 2,985.8 2,307.9 Liabilities related to separate accounts 47,208.2 59,513.0 - ---------------------------------------------------------------------------------------------------------------------------- 82,473.8 87,436.9 - ---------------------------------------------------------------------------------------------------------------------------- Commitments and contingencies (notes 11, 16 and 17) Shareholder's equity: Common stock, $1 par value. Authorized 5.0 shares; 3.8 shares issued and outstanding 3.8 3.8 Additional paid-in capital 171.1 646.1 Retained earnings 2,979.6 2,863.1 Accumulated other comprehensive income 394.3 204.7 - ---------------------------------------------------------------------------------------------------------------------------- 3,548.8 3,717.7 - ---------------------------------------------------------------------------------------------------------------------------- $ 86,022.6 $ 91,154.6 ============================================================================================================================
See accompanying notes to consolidated financial statements, including note 14 which describes related party transactions. 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, --------------------------------------------- 2002 2001 2000 =========================================================================================================================== REVENUES: Policy charges $ 973.8 $ 1,017.3 $ 1,091.4 Life insurance premiums 259.9 251.1 240.0 Net investment income 1,838.5 1,724.7 1,653.9 Net realized (losses) gains on investments, hedging instruments and hedged items: Unrelated parties (107.6) (62.7) (19.4) Related parties 23.2 44.4 - Other 8.8 8.2 11.1 - --------------------------------------------------------------------------------------------------------------------------- 2,996.6 2,983.0 2,977.0 - --------------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES: Interest credited to policyholder account values 1,241.2 1,238.7 1,182.4 Other benefits and claims 326.0 280.3 241.6 Policyholder dividends on participating policies 45.2 41.7 44.5 Amortization of deferred policy acquisition costs 670.1 347.9 352.1 Interest expense on debt, primarily with a related party 36.0 6.2 1.3 Other operating expenses 508.6 439.3 472.0 - --------------------------------------------------------------------------------------------------------------------------- 2,827.1 2,354.1 2,293.9 - --------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before federal income taxes and cumulative effect of adoption of accounting principles 169.5 628.9 683.1 Federal income tax expense 8.7 161.2 207.3 - --------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before cumulative effect of adoption of accounting principles 160.8 467.7 475.8 Income (loss) from discontinued operations, net of tax 0.7 1.2 (0.5) Cumulative effect of adoption of accounting principles, net of tax - (7.1) - - --------------------------------------------------------------------------------------------------------------------------- Net income $ 161.5 $ 461.8 $ 475.3 ===========================================================================================================================
See accompanying notes to consolidated financial statements, including note 14 which describes related party transactions. 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, 2002, 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 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, net of tax - - - 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) --------------- - ----------------------------------------------------------------------------------------------------------- Balance as of December 31, 2000 $ 3.8 $ 646.1 $ 2,436.3 $ 116.7 $ 3,202.9 ========================================================================================================================= Comprehensive income: Net income - - 461.8 - 461.8 Net unrealized gains on securities available-for-sale arising during the year, net of tax - - - 98.2 98.2 Cumulative effect of adoption of accounting principles, net of tax - - - (1.4) (1.4) Accumulated net losses on cash flow hedges, net of tax - - - (8.8) (8.8) --------------- Total comprehensive income 549.8 --------------- Dividends to shareholder - - (35.0) - (35.0) - ------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2001 $ 3.8 $ 646.1 $ 2,863.1 $ 204.7 $ 3,717.7 ========================================================================================================================= Comprehensive income: Net income - - 161.5 - 161.5 Net unrealized gains on securities available-for-sale arising during the year, net of tax - - - 178.6 178.6 Accumulated net gains on cash flow hedges, net of tax - - - 11.0 11.0 --------------- Total comprehensive income 351.1 --------------- Returns of capital to shareholder - (475.0) - - (475.0) Dividends to shareholder - - (45.0) - (45.0) - ------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2002 $ 3.8 $ 171.1 $ 2,979.6 $ 394.3 $ 3,548.8 =========================================================================================================================
See accompanying notes to consolidated financial statements, including note 14 which describes related party transactions. 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, ---------------------------------------------- 2002 2001 2000 =================================================================================================================================== Cash flows from operating activities: Net income $ 161.5 $ 461.8 $ 475.3 Adjustments to reconcile net income to net cash provided by operating activities: (Income) loss from discontinued operations (0.7) (1.2) 0.5 Interest credited to policyholder account values 1,241.2 1,238.7 1,182.4 Capitalization of deferred policy acquisition costs (648.2) (743.0) (778.9) Amortization of deferred policy acquisition costs 670.1 347.9 352.1 Amortization and depreciation (0.7) (31.5) (12.7) Realized losses (gains) on investments, hedging instruments and hedged items: Unrelated parties 107.6 62.7 19.4 Related parties (23.2) (44.4) - Cumulative effect of adoption of accounting principles - 10.9 - Increase in accrued investment income (22.0) (55.3) (12.8) (Increase) decrease in other assets (606.1) (271.8) (95.7) Increase (decrease) in policy liabilities 36.2 33.0 (0.3) Increase in other liabilities 426.9 302.8 234.2 Other, net 33.0 8.3 22.3 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by continuing operations 1,375.6 1,318.9 1,385.8 Net cash provided by (used in) discontinued operations 0.7 1.7 (1.7) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,376.3 1,320.6 1,384.1 - ----------------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from maturity of securities available-for-sale 3,887.7 3,933.9 2,988.7 Proceeds from sale of securities available-for-sale 1,534.9 497.2 582.1 Proceeds from repayments of mortgage loans on real estate 1,009.0 1,204.4 911.7 Proceeds from sale of real estate 56.8 29.1 18.7 Proceeds from sale of limited partnership to related party 54.5 158.9 - Proceeds from repayments of policy loans and sale of other invested assets 58.3 68.9 79.3 Cost of securities available-for-sale acquired (9,874.5) (7,123.6) (3,475.5) Cost of mortgage loans on real estate acquired (1,810.2) (2,123.1) (1,318.0) Cost of real estate acquired (2.0) (0.4) (7.1) Short-term investments, net (193.1) (568.7) (26.5) Disposal of subsidiary, net of cash (20.0) - - Collateral received - securities lending, net 158.9 791.6 - Other, net (303.8) (192.2) (182.3) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used in continuing operations (5,443.5) (3,324.0) (428.9) Net cash provided by discontinued operations - 0.6 19.8 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (5,443.5) (3,323.4) (409.1) - ----------------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net change in short-term debt (100.0) (18.7) 118.7 Net proceeds from issuance of long-term debt to Nationwide Financial Services, Inc. 300.0 300.0 - Capital returned to shareholder (475.0) - (120.0) Cash dividends paid to shareholder (35.0) (35.0) (100.0) Increase in investment and universal life insurance product account values 6,278.9 5,976.7 4,517.0 Decrease in investment and universal life insurance product account values (1,923.4) (4,216.0) (5,377.1) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 4,045.5 2,007.0 (961.4) - ----------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash (21.7) 4.2 13.6 Cash, beginning of year 22.6 18.4 4.8 - ----------------------------------------------------------------------------------------------------------------------------------- Cash, end of year $ 0.9 $ 22.6 $ 18.4 ===================================================================================================================================
See accompanying notes to consolidated financial statements, including note 14 which describes related party transactions. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements December 31, 2002, 2001 and 2000 (1) Organization and Description of Business Nationwide Life Insurance Company (NLIC, or collectively with its subsidiaries, the Company) is a leading provider of life insurance and retirement savings products in the United States of America (U.S.) 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 sells its products through a diverse network of distribution channels, including independent broker/dealers, wirehouse and regional firms, financial institutions, pension plan administrators, life insurance specialists, Nationwide Retirement Solutions, Nationwide Provident agents and Nationwide agents. Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity Insurance Company (NLAIC) 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 U.S. (GAAP), which differ from statutory accounting practices. The statutory financial statements of NLIC and NLAIC are presented on the basis of accounting practices prescribed or permitted by the Ohio Department of Insurance (the Department). The State of Ohio has adopted the National Association of Insurance Commissioners (NAIC) statutory accounting practices (NAIC SAP) as the basis of its statutory accounting practices. NLIC and NLAIC have no statutory accounting practices that differ from NAIC SAP. See also note 13. 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 (DAC) for investment products and universal life insurance products, valuation allowances for mortgage loans on real estate, impairment losses on other investments and federal income taxes. Although some variability is inherent in these estimates, management believes the amounts provided are appropriate. (a) Consolidation Policy The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling interest. All significant intercompany balances and transactions have been eliminated. 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, Investment Income 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 DAC, future policy benefits and claims, and deferred federal income tax, reported as a separate component of accumulated other comprehensive income (AOCI) in shareholders' equity. The adjustment to DAC represents the change in amortization of DAC that would have been required as a charge or credit to operations had such unrealized amounts been realized and allocated to the product lines. The adjustment to future policy benefits and claims represents the increase in policy reserves from using a lower discount rate that would have been required if such unrealized gains been realized and the proceeds reinvested at lower market interest rates. Management regularly reviews its fixed maturity and equity securities portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. A number of criteria are considered during this process including, but not limited to, the current fair value as compared to amortized cost or cost, as appropriate, of the security, the length of time the security's fair value has been below amortized cost/cost, and by how much, and specific credit issues related to the issuer, and current economic conditions. Also, the Company estimates the cash flows over the life of certain purchased beneficial interests in securitized financial assets. 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 is recognized and the purchased beneficial interest is written down to fair value. Other-than-temporary impairment losses result in a permanent reduction of the cost basis of the underlying investment For mortgage-backed securities, the Company recognizes income using a constant effective yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments; any resulting adjustment is included in net investment income. All other investment income is recorded on the accrual basis. 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. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When the Company determines that a loan is impaired, a provision for loss is established equal to the difference between the carrying value and the estimated value of the mortgage loan. Estimated value is based on the present value of expected future cash flows discounted at the loan's effective interest rate, or the fair value of the collateral, if the loan is collateral dependent. Loans in foreclosure and loans considered impaired are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in net investment income in the period received. The valuation allowance account for mortgage loans on real estate is maintained at a level believed adequate by the Company to absorb estimated probable credit losses. The Company's periodic evaluation of the adequacy of the allowance for losses is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. Real estate is carried at cost less accumulated depreciation. Real estate designated as held for disposal is carried at the lower of the carrying value at the time of such designation or fair value less cost to sell. Other long-term investments are carried on the equity method of accounting. 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Changes in valuation allowances and impairment losses for other-than-temporary declines in fair values are included in realized gains and losses on investments, hedging instruments and hedged items. (c) Derivative Instruments Derivatives are carried at fair value. On the date the derivative contract is entered into, the Company designates the derivative as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), a foreign currency fair value or cash flow hedge (foreign currency hedge) or a non-hedge transaction. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for entering into various hedge transactions. This process includes linking all derivatives that are designated as fair value, cash flow or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used for hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. The Company enters into interest rate swaps, cross-currency swaps or Eurodollar Futures to hedge the fair value of existing fixed rate assets and liabilities. In addition, the Company uses short treasury future positions to hedge the fair value of bond and mortgage loan commitments. Typically, the Company is hedging the risk of changes in fair value attributable to changes in benchmark interest rates. Derivative instruments classified as fair value hedges are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items. Changes in the fair value of the hedged item, attributable to the risk being hedged, are also recorded in realized gains and losses on investments, hedging instruments and hedged items. The adjustment of the carrying amount of hedged assets using Eurodollar Futures and firm commitments using Treasury Futures are accounted for in the same manner as other components of the carrying amount of that asset. The adjustment of the carrying amount is amortized to investment income over the life of the asset. The Company may enter into "receive fixed/pay variable" interest rate swaps to hedge existing floating rate assets or to hedge cash flows from the anticipated purchase of investments. These derivative instruments are classified as cash flow hedges and are carried at fair value, with the offset recorded in AOCI to the extent the hedging relationship is effective. The ineffective portion of the hedging relationship is recorded in realized gains and losses on investments, hedging instruments and hedged items. Gains and losses on cash flow derivative instruments are reclassified out of AOCI and recognized in earnings over the same period(s) that the hedged item affects earnings. Amounts receivable or payable under interest rate and foreign currency swaps are recognized as an adjustment to net investment income or interest credited to policyholder account values consistent with the nature of the hedged item, except for interest rate swaps hedging the anticipated sale of investments where amounts receivable or payable under the swaps are recorded as realized gains and losses on investments, hedging instruments and hedged items, and except for interest rate swaps hedging the anticipated purchase of investments where amounts receivable or payable under the swaps are recorded in AOCI to the extent the hedging relationship is effective. From time to time, the Company may enter into a derivative transaction that will not qualify for hedge accounting. These include basis swaps (receive one variable rate, pay another variable rate) to hedge variable rate assets or foreign-denominated liabilities. These instruments are carried at fair value, with changes in fair value recorded in 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 Consolidated Financial Statements, Continued The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative expires, or is sold, terminated or exercised, the derivative is dedesignated as a hedging instrument, because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair value hedge, the Company continues to carry the derivative on the consolidated balance sheet at its fair value and no longer adjusts the hedged item for changes in fair value. The adjustment of the carrying amount of the hedged item is accounted for in the same manner as other components of the carrying amount of that item. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the Company continues to carry the derivative on the consolidated balance sheet at its fair value, removes any asset or liability that was recorded pursuant to recognition of the firm commitment from the consolidated balance sheet and recognizes any gain or loss in net realized gains and losses on investments, hedging instruments and hedged items. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the Company continues to carry the derivative on the consolidated balance sheet at fair value and gains and losses that were accumulated in AOCI are recognized immediately in realized gains and losses on investments, hedging instruments and hedged items. In all other situations in which hedge accounting is discontinued, the Company continues to carry the derivative at its fair value on the consolidated balance sheet, and recognizes any changes in fair value in net realized gains and losses on investments, hedging instruments and hedged items. Prior to the January 1, 2001 adoption of SFAS 133, defined in note 2(k), provided they met specific criteria, interest rate and foreign currency swaps and futures were considered hedges and accounted for under the accrual and deferral method, respectively. Amounts receivable or payable under interest rate and foreign currency swaps were recognized as an adjustment to net investment income or interest credited to policyholder account values consistent with the nature of the hedged item. Changes in the fair value of interest rate swaps were not recognized on the consolidated balance sheets, except for interest rate swaps designated as hedges of fixed maturity securities available-for-sale, for which changes in fair values were reported in AOCI. Gains and losses on foreign currency swaps were 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. (d) 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. The timing of revenue recognition as it relates to fees assessed on investment contracts and universal life contracts is determined based on the nature of such fees. Asset fees, cost of insurance and policy administration charges are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in income over the periods benefited. Surrender charges are recognized upon surrender of a contract in accordance with contractual terms. Policy benefits and claims that are charged to expense include interest credited to policy account values and benefits and claims incurred in the period in excess of related policy account values. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued 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. (e) Deferred Policy Acquisition Costs The costs of acquiring business, principally commissions, certain expenses of the policy issue and underwriting department and certain variable sales expenses that relate to and vary with the production of new and renewal business have been deferred. DAC is subject to recoverability testing at the time of policy issuance and loss recognition testing at the end of each reporting period. For investment products (principally individual and group annuities) and universal life insurance products, DAC is 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, less policy benefits and policy maintenance expenses. The DAC asset related to investment products and universal life insurance products is adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale as described in note 2(b). The most significant assumptions that are involved in the estimation of future gross profits include future net separate account performance, surrender/lapse rates, interest margins and mortality. The Company's long-term assumption for net separate account performance is 8 percent. If actual net separate account performance varies from the 8 percent assumption, the Company assumes different performance levels over the next three years, such that the mean return equals the long-term assumption. This process is referred to as a reversion to the mean. The assumed net separate account return assumptions used in the DAC models are intended to reflect what is anticipated. However, based on historical returns of the S&P 500 Index, the Company's policy regarding the reversion to the mean process does not permit such returns to be below zero percent or in excess of 15 percent during the three-year reversion period. Changes in assumptions can have a significant impact on the calculation of DAC on investment products and universal life insurance products and their related amortization patterns. In the event actual experience differs from assumptions or assumptions are revised, the Company is required to record an increase or decrease in DAC amortization expense (DAC unlocking), which could be significant. In general, increases in the estimated general and separate account returns result in increased expected future profitability and may lower the rate of DAC amortization, while increases in lapse/surrender and mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization. Due to the magnitude of the DAC asset related to the individual variable annuity business, the sensitivity of the calculation to minor changes in the underlying assumptions and the related volatility that could result in the reported DAC balance without meaningful improvement in its reasonableness, the Company evaluates the appropriateness of the individual variable annuity DAC balance within pre-set parameters. Should the recorded balance of individual variable annuity DAC fall outside of these parameters for a prescribed period of time, or should the recorded balance fall outside of these parameters and the Company determines it is not reasonably possible to get back within this period of time, assumptions are required to be unlocked and the DAC is recalculated using revised best estimate assumptions. Otherwise, DAC on individual variable annuity business is not unlocked to reflect updated assumptions. In the event DAC assumptions are unlocked and revised, the Company will continue to use the reversion to the mean process. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued For other investment products and universal life insurance products, DAC is unlocked each quarter to reflect revised best estimate assumptions, including the use of a reversion to the mean methodology over the next three years as it relates to net separate account performance. Any resulting DAC unlocking adjustments are reflected currently as a charge or credit to DAC amortization expense. For traditional life insurance products, DAC is 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 is estimated using the same assumptions as those used for computing liabilities for future policy benefits at issuance. Under existing accounting guidance, the concept of DAC unlocking does not apply to traditional life insurance products, although evaluations of DAC for recoverability at the time of policy issuance and loss recognition testing at each reporting period are required. (f) Separate Accounts Separate account assets and liabilities represent contractholders' funds which have been segregated into accounts with specific investment objectives. Separate account assets are recorded at fair value. The investment income and gains or losses of these accounts accrue directly to the contractholders. For certain contracts offered through separate accounts, the Company guarantees the contractholder a minimum return. 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. Such fees are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. (g) Future Policy Benefits The liability for future policy benefits for investment products in the accumulation phase, universal life insurance and variable universal life insurance policies is the policy account balance, which represents participants' net premiums and deposits plus investment performance and interest credited less applicable contract charges. The liability for future policy benefits for traditional life insurance policies has 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. The liability for future policy benefits for payout annuities has been calculated using the present value of future benefits and maintenance costs discounted using interest rates varying from 3.0% to 13.0%. Also, as of December 31, 2002, the calculated reserve was adjusted to reflect the incremental reserve that would be required if unrealized gains and losses had been realized and therefore resulted in the use of a lower discount rate, as discussed in note 2(b). (h) Participating Business Participating business represented approximately 15% in 2002 (17% in 2001 and 21% in 2000) of the Company's life insurance in-force, 59% of the number of life insurance policies in-force in 2002 (63% in 2001 and 66% in 2000), and 9% of life insurance statutory premiums in 2002 (9% in 2001 and 8% in 2000). The provision for policyholder dividends was based on then current dividend scales and has been included in Future policy benefits and claims in the accompanying consolidated balance sheets. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (i) Federal Income Tax Through September 30, 2002, the Company filed a consolidated federal income tax return with Nationwide Mutual Insurance Company (NMIC), the ultimate majority shareholder of NFS. The members of the NMIC consolidated federal income tax return group participated in a tax sharing arrangement, which provided, in effect, for each member to bear essentially the same federal income tax liability as if separate tax returns were filed. As a result of NFS' acquisition of Nationwide Life Insurance Company of America (NLICA) and subsidiaries on October 1, 2002, under Internal Revenue Code regulations, NFS and its subsidiaries cannot file a life/non-life consolidated federal income tax return until five full years following NFS' departure from the NMIC consolidated federal income tax return group. Therefore, NFS and its direct non-life insurance company subsidiaries will file a consolidated federal income tax return; NLIC and NLAIC will file a consolidated federal income tax return; the direct non-life insurance companies under NLIC will file separate federal income tax returns; NLICA and its direct life insurance company subsidiaries will file a consolidated federal income tax return; and the direct non-life insurance companies under NLICA will file a consolidated federal income tax return, until 2008, when NFS expects to be able to file a single consolidated federal income tax return with all of its subsidiaries. The Company provides for federal income taxes based on amounts the Company believes it will ultimately owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain expenses and the realization of certain tax credits. In the event the ultimate deductibility of certain expenses or the realization of certain tax credits differ from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. 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. (j) 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (k) Recently Issued Accounting Pronouncements In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities - an interpretation of ARB No. 51 (FIN 46). Accounting Research Bulletin No. 51, Consolidated Financial Statements (ARB 51) states that consolidation is usually necessary when a company has a "controlling financial interest" in another company, a condition most commonly achieved via ownership of a majority voting interest. FIN 46 clarifies the application of ARB 51, to certain "variable interest entities" (VIE) where (i) the equity investors are not empowered to make sufficient decisions about the entity's operations, or do not receive expected returns or absorb expected losses commensurate with their equity ownership; or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. VIEs are consolidated by their primary beneficiary, which is a party having a majority of the entity's expected losses, expected residual returns, or both. A company holding a significant variable interest in a VIE, but not deemed the primary beneficiary is subject to certain disclosure requirements specified by FIN 46. FIN 46 applies immediately to entities formed after January 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. It applies in the interim period beginning after June 15, 2003 to VIEs for which an enterprise holds a variable interest that it acquired prior to February 1, 2003 with earlier adoption permitted. FIN 46 may be applied on a prospective basis with a cumulative-effect adjustment made as of the date of initial application or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. The Company is evaluating the potential impact of adopting FIN 46 on the results of operations and financial position and currently expects to adopt FIN 46 on July 1, 2003. See note 19 for transitional disclosures pertaining to VIE relationships in which the Company has a significant variable interest. In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees - an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34 (FIN 45). FIN 45 requires a guarantor to provide more detailed interim and annual financial statement disclosures about obligations under certain guarantees it has issued. It also requires a guarantor to recognize, at the inception of new guarantees issued or modified after December 31, 2002, a liability for the fair value of the obligation undertaken in issuing the guarantee. Although superceded by FIN 45, the guidance provided in FASB Interpretation No. 34, Disclosure of Indirect Guarantees of Indebtedness of Others has been incorporated into FIN 45 without change. The adoption of the transitional components of FIN 45 by the Company on December 15, 2002 resulted in the inclusion of transition disclosures in note 17. The adoption of the remaining components of FIN 45 on January 1, 2003 is not expected to have a material impact on the financial position or results of operations of the Company. In June 2002, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146), which the Company adopted January 1, 2003. Adoption of SFAS 146 is not expected to have any impact on the financial position or results of operations of the Company. In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections (SFAS 145), which the Company adopted on October 1, 2002. The adoption of SFAS 145 did not have any impact on the financial position or results of operations of the Company. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued In October 2001, the FASB issued SFAS 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 (APB 30). SFAS 144 was adopted by the Company on January 1, 2002 and carries forward many of the provisions of SFAS 121 and APB 30 for recognition and measurement of the impairment of long-lived assets to be held and used, and measurement of long-lived assets to be disposed of by sale. 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. The adoption of SFAS 144 did not have a material impact on the results of operations or financial position of the Company. In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142). 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 (APB 17) and carries forward provisions in APB 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 Company adopted SFAS 142 on January 1, 2002, at which time, the Company had no unamortized goodwill and therefore, the adoption of SFAS 142 did not have any impact on the results of operations or financial position of the Company. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133, as amended by SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 (SFAS 137), and SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (SFAS 138), was adopted by the Company effective January 1, 2001. All references hereafter to SFAS 133 include the amendments outlined in SFAS 137 and SFAS 138. Upon adoption, the provisions of SFAS 133 were applied prospectively. 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. 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 AOCI as of 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. The adoption of SFAS 133 may 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 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 AOCI. (l) Discontinued Operations As described more fully in note 14, NLIC paid a dividend to NFS in the form of all of the shares of common stock of Nationwide Securities, Inc. (NSI), a wholly owned broker/dealer subsidiary engaged in the asset management business. The accompanying consolidated financial statements and related notes reflect this business as discontinued operations. (m) Reclassification Certain items in the 2001 and 2000 consolidated financial statements and related footnotes have been reclassified to conform to the 2002 presentation. 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, 2002 and 2001 were:
Gross Gross Amortized unrealized unrealized Estimated (in millions) cost gains losses fair value ================================================================================================================== December 31, 2002: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ $ 64.4 $ 0.3 $ 774.3 838.4 Obligations of states and political subdivisions 20.8 1.1 - 21.9 Debt securities issued by foreign governments 39.3 2.7 - 42.0 Corporate securities 14,143.5 934.5 116.6 14,961.4 Mortgage-backed securities - U.S. Government 3,808.9 157.3 154.8 3,811.4 backed Asset-backed securities 4,347.5 146.5 0.1 4,493.9 ------------------------------------------------------------------------------------------------------------------ Total fixed maturity securities 23,134.3 1,306.5 271.8 24,169.0 Equity securities 85.1 7.1 7.9 84.3 ------------------------------------------------------------------------------------------------------------------ Total $ 23,219.4 $ 1,313.6 $ 279.7 $ 24,253.3 ================================================================================================================== December 31, 2001: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ $ 23.1 $ 0.5 $ 263.2 285.8 Obligations of states and political subdivisions 7.6 0.3 - 7.9 Debt securities issued by foreign governments 41.8 2.6 - 44.4 Corporate securities 11,769.8 470.6 176.5 12,063.9 Mortgage-backed securities - U.S. Government backed 2,012.3 67.8 3.7 2,076.4 Asset-backed securities 3,866.9 76.7 51.2 3,892.4 ------------------------------------------------------------------------------------------------------------------ Total fixed maturity securities 17,961.6 641.1 231.9 18,370.8 Equity securities 83.0 11.0 - 94.0 ------------------------------------------------------------------------------------------------------------------ Total $ 18,044.6 $ 652.1 $ 231.9 $ 18,464.8 ==================================================================================================================
As of December 31, 2002, the Company had unrealized losses on fixed maturity securities available-for-sale of $271.8 million, including $7.3 million related to securities that had a fair value that was less than 80% of amortized cost as of December 31, 2002 and 2001. As part of the Company's normal assessment of other-than-temporary impairments of investments, as described in note 2(b), each of these securities were evaluated and no further impairments were deemed necessary as of December 31, 2002. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The amortized cost and estimated fair value of fixed maturity securities available-for-sale as of December 31, 2002, 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.
Amortized Estimated (in millions) cost fair value ================================================================================================================== Fixed maturity securities available for sale: Due in one year or less $ 1,100.2 $ 965.0 Due after one year through five years 6,769.6 7,155.4 Due after five years through ten years 5,107.7 5,553.1 Due after ten years 2,000.4 2,190.2 ------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------ Subtotal 14,977.9 15,863.7 Mortgage-backed securities - U.S. Government backed 3,808.9 3,811.4 Asset-backed securities 4,347.5 4,493.9 ------------------------------------------------------------------------------------------------------------------ Total $ 23,134.3 $ 24,169.0 ==================================================================================================================
The components of unrealized gains on securities available-for-sale, net, were as follows as of December 31:
(in millions) 2002 2001 ================================================================================================================== Unrealized gains, before adjustments and taxes $ 1,033.9 $ 420.2 Adjustment to deferred policy acquisition costs (300.6) (94.9) Adjustment to future policy benefits and claims (133.2) - Deferred federal income tax (210.0) (113.9) ------------------------------------------------------------------------------------------------------------------ Net unrealized gains $ 390.1 $ 211.4 ==================================================================================================================
An analysis of the change in gross unrealized gains on securities available-for-sale for the years ended December 31:
(in millions) 2002 2001 2000 ================================================================================================================== Securities available-for-sale: Fixed maturity securities $ 625.5 $ 212.0 $ 280.5 Equity securities (11.8) 5.5 (2.5) ------------------------------------------------------------------------------------------------------------------ Net change $ 613.7 $ 217.5 $ 278.0 ==================================================================================================================
Proceeds from the sale of securities available-for-sale during 2002, 2001 and 2000 were $1.53 billion, $497.8 million and $602.0 million, respectively. During 2002, gross gains of $42.0 million ($31.3 million and $12.4 million in 2001 and 2000, respectively) and gross losses of $16.6 million ($10.1 million and $15.4 million in 2001 and 2000, respectively) were realized on those sales. The Company had $28.0 million and $25.2 million of real estate investments as of December 31, 2002 and 2001, respectively, that were non-income producing the preceding twelve months. Real estate is presented at cost less accumulated depreciation of $18.6 million as of December 31, 2002 ($22.0 million as of December 31, 2001). The carrying value of real estate held for disposal totaled $46.0 million and $33.4 million as of December 31, 2002 and 2001, respectively. 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 $27.4 million as of December 31, 2002 ($29.9 million as of December 31, 2001), which includes $10.9 million ($5.3 million as of December 31, 2001) of impaired mortgage loans on real estate for which the related valuation allowance was $2.5 million ($1.0 million as of December 31, 2001) and $16.5 million ($24.6 million as of December 31, 2001) of impaired mortgage loans on real estate for which there was no valuation allowance. Impaired mortgage loans with no valuation allowance are a result of collateral dependent loans where the fair value of the collateral is greater than the recorded investment of the loan. During 2002, the average recorded investment in impaired mortgage loans on real estate was $5.5 million ($7.9 million in 2001) and interest income recognized on those loans totaled $0.1 million in 2002 ($0.4 million in 2001) 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 for the years ended December 31 was as follows:
(in millions) 2002 2001 2000 =================================================================================================================== Allowance, beginning of year $ 42.9 $ 45.3 $ 44.4 Additions (reductions) charged (credited) to operations 1.5 (1.2) 4.1 Direct write-downs charged against the allowance (1.0) (1.2) (3.2) Allowance on acquired mortgage loans - - - ------------------------------------------------------------------------------------------------------------------- Allowance, end of year $ 43.4 $ 42.9 $ 45.3 ===================================================================================================================
An analysis of investment income (loss) from continuing operations by investment type follows for the years ended December 31:
(in millions) 2002 2001 2000 =================================================================================================================== Securities available-for-sale: Fixed maturity securities $ 1,332.5 $ 1,181.1 $ 1,095.5 Equity securities 1.9 1.8 2.6 Mortgage loans on real estate 563.8 527.9 494.5 Real estate 26.8 33.1 32.2 Short-term investments 12.6 28.0 26.0 Derivatives (79.6) (19.7) 3.9 Other 31.0 20.9 49.3 ------------------------------------------------------------------------------------------------------------------- Gross investment income 1,889.0 1,773.1 1,704.0 Less investment expenses 50.5 48.4 50.1 ------------------------------------------------------------------------------------------------------------------- Net investment income $ 1,838.5 $ 1,724.7 $ 1,653.9 ===================================================================================================================
An analysis of net realized losses on investments, hedging instruments and hedged items from continuing operations, by source follows for the years ended December 31:
(in millions) 2002 2001 2000 =================================================================================================================== UNRELATED PARTIES: Realized gains on sales, net of hedging losses: Fixed maturity securities, available-for-sale $ 42.0 $ 30.1 $ 7.4 Hedging losses on fixed maturity sales (41.1) (1.5) - Equity securities, available-for-sale - 1.2 5.0 Real estate 14.0 3.3 3.5 Mortgage loans on real estate 3.2 11.2 0.2 Mortgage loan hedging losses (1.2) (8.1) - Other 0.1 1.2 1.8 ------------------------------------------------------------------------------------------------------------------- Total realized gains on sales - unrelated parties 17.0 37.4 17.9 ------------------------------------------------------------------------------------------------------------------- Realized losses on sales, net of hedging gains: Fixed maturity securities, available-for-sale (15.7) (9.3) (15.1) Hedging gains on fixed maturity sales 10.7 0.1 - Equity securities, available-for-sale (0.9) (0.8) (0.3) Real estate (3.0) (1.4) (0.9) Mortgage loans on real estate (3.3) (0.6) (2.6) Mortgage loans hedging gains 0.9 - - Other (1.0) (7.7) (0.3) ------------------------------------------------------------------------------------------------------------------- Total realized losses on sales - unrelated parties (12.3) (19.7) (19.2) ------------------------------------------------------------------------------------------------------------------- Derivatives, excluding hedging gains and losses on sales 8.0 0.2 (2.7) Other-than-temporary impairments: Fixed maturity securities, available-for-sale (111.6) (66.1) (10.5) Equity securities, available-for-sale - (13.8) - Real estate (2.4) - (3.3) Mortgage loans on real estate (6.3) (0.7) (1.6) ------------------------------------------------------------------------------------------------------------------- Total other-than-temporary impairments (120.3) (80.6) (15.4) ------------------------------------------------------------------------------------------------------------------- Total - unrelated parties (107.6) (62.7) (19.4) Related parties - gain on sale of limited partnership 23.2 44.4 - ------------------------------------------------------------------------------------------------------------------- Net realized losses on investments, hedging instruments and hedged items $ (84.4) $ (18.3) $ (19.4) ===================================================================================================================
Fixed maturity securities with an amortized cost of $7.3 million as of December 31, 2002 and $6.6 million as of December 31, 2001 were on deposit with various regulatory agencies as required by law. As of December 31, 2002 and 2001 the Company had pledged fixed maturity securities with a fair value of $152.4 million and $112.3 million, respectively, as collateral to various derivative counterparties. As of December 31, 2002 and 2001 the Company held collateral of $413.1 million and $18.0 million, respectively, on derivative transactions. This amount is included in short-term investments with a corresponding liability recorded in other liabilities. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued As of December 31, 2002 and 2001, the Company had loaned securities with a fair value of $950.5 million and $775.5 million, respectively. As of December 31, 2002 and 2001 the Company held collateral of $974.5 million and $791.6 million, respectively. This amount is included in short-term investments with a corresponding liability recorded in other liabilities. (4) Deferred Policy Acquisition Costs As part of the regular quarterly analysis of DAC, at the end of the third quarter of 2002, the Company determined that using actual experience to date and assumptions consistent with those used in the second quarter of 2002, its individual variable annuity DAC balance would be outside a pre-set parameter of acceptable results. The Company also determined that it was not reasonably possible that the DAC would return to an amount within the acceptable parameter within a prescribed period of time. Accordingly, the Company unlocked its DAC assumptions for individual variable annuities and reduced the DAC asset to the amount calculated using the revised assumptions. Because the Company unlocked the net separate account growth rate assumption for individual variable annuities for the three-year reversion period, the Company unlocked that assumption for all investment products and variable universal life insurance products to be consistent across product lines. Therefore, the Company recorded an acceleration of DAC amortization totaling $347.1 million, before tax, or $225.6 million, net of $121.5 million of federal income tax benefit, which has been reported in the following segments in the amounts indicated, net of tax: Individual Annuity - $213.4 million, Institutional Products - $7.8 million and Life Insurance - $4.4 million. The acceleration of DAC amortization was the result of unlocking certain assumptions underlying the calculation of DAC for investment products and variable universal life insurance products. The most significant assumption changes were the resetting of the Company's anchor date for reversion to the mean calculations to September 30, 2002, and resetting the assumption for net separate account growth to 8 percent during the three-year reversion period for all investment products and variable life insurance products, as well as increasing the future lapses and costs related to guaranteed minimum death benefits on individual variable annuity contracts. These adjustments were primarily driven by the sustained downturn in the equity markets. (5) Short-term Debt NLIC has established a $500 million commercial paper program under which borrowings are unsecured and are issued for terms of 364 days or less. NLIC had no commercial paper outstanding as of December 31, 2002 and $100.0 million outstanding, at an average effective rate of 1.90%, as of December 31, 2001. See also note 15. The Company paid interest on short-term debt totaling $0.7 million, $5.3 million and $1.3 million in 2002, 2001 and 2000, respectively, including 0.5 million to NFS in 2002. (6) Long-term Debt, payable to Nationwide Financial Services, Inc. In December 2001, NLIC sold NFS a 7.50%, $300.0 million surplus note maturing on December 17, 2031. In June 2002, NLIC sold NFS an 8.15%, $300.0 million surplus note maturing June 27, 2032. Principal and interest payments are subject to prior approval by the superintendent of insurance of the State of Ohio. The Company made interest payments on surplus notes to NFS totaling $30.1 million in 2002, none in 2001. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (7) Derivative Financial Instruments 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 fluctuations in variable rate income on the investments, thereby creating fixed rate investments. Foreign Currency Risk Management In conjunction with the Company's medium-term note program, 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 U.S. 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 U.S. 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 U.S. 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 U.S. dollar rate instruments. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in the foreign currency, and receive a variable U.S. dollar rate, generally 3-month libor. Non-Hedging Derivatives From time-to-time, the Company enters 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 is not able to match the receive-side terms of the derivative to a specific liability; therefore, basis swaps do not receive hedge accounting treatment. The Company sells credit default protection on selected debt instruments and combines the credit default swap with selected assets the Company owns, to replicate a higher yielding bond. The credit default swaps do not receive hedge accounting treatment. QUANTITATIVE DISCLOSURE Fair Value Hedges During the years ended December 31, 2002 and 2001, gains of $7.1 million and $2.1 million, respectively, were recognized in net realized 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 instruments' change in fair 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 For the year ended December 31, 2002, the ineffective portion of cash flow hedges was a gain of $1.8 million, and was immaterial in 2001. There were no gains or losses attributable to the portion of the derivative instruments' change in fair value excluded from the assessment of hedge effectiveness. The Company anticipates reclassifying less than $0.1 million in losses out of AOCI over the next 12-month period. As of December 31, 2002, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows associated with forecasted transactions is twelve months. During 2002 and 2001, the Company did not discontinue any cash flow hedges because the original forecasted transaction was no longer probable. Other Derivative Instruments, Including Embedded Derivatives Net realized gains and losses on investments, hedging instruments and hedged items for the years ended December 31, 2002 and 2001 include a loss of $2.2 million and $1.6 million, respectively, related to other derivative instruments, including embedded derivatives. For the years ended December 31, 2002 and 2001, a gain of $120.4 million and a loss of $27.7 million, respectively, were recorded in net realized losses on investments, hedging instruments and hedged items reflecting the change in fair value of cross-currency interest rate swaps hedging variable rate medium-term notes denominated in foreign currencies. An offsetting loss of $119.6 million and a gain of $26.3 million were recorded in net realized losses on investments, hedging instruments and hedged items to reflect the change in spot rates of these foreign currency denominated obligations during the years ended December 31, 2002 and 2001, respectively. 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, 2002 and 2001 were as follows:
(in millions) 2002 2001 =================================================================================================================== Interest rate swaps: Pay fixed/receive variable rate swaps hedging investments $ 2,206.5 $ 1,952.3 Pay variable/receive fixed rate swaps hedging investments 229.7 698.4 Pay variable/receive variable rate swaps hedging investments 221.0 197.8 Other contracts hedging investments 690.8 523.0 Cross currency interest rate swaps: Hedging foreign currency denominated investments 111.0 56.1 Hedging foreign currency denominated liabilities 3,963.6 2,500.4 Interest rate futures contracts 4,250.9 6,019.4 ------------------------------------------------------------------------------------------------------------------- Total $ 11,673.5 $ 11,947.4 ===================================================================================================================
(8) Federal Income Tax Effective October 1, 2002, Nationwide Corporation's ownership in NFS decreased from 80% to 63%, and as a result, NFS and its subsidiaries, inlcuding the Company, no longer qualify to be included in the NMIC consolidated federal income tax return. Also, see note 2(i) for a discussion of changes related to the Company's federal income tax consolidation group. The tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31, 2002 and 2001 were as follows:
(in millions) 2002 2001 =================================================================================================================== Deferred tax assets: Equity securities $ - $ 6.5 Mortgage loans on real estate and real estate - 7.5 Future policy benefits 102.0 8.2 Liabilities in separate accounts 447.6 482.5 Derivatives 118.6 93.0 Other 40.1 81.8 ------------------------------------------------------------------------------------------------------------------- Gross deferred tax assets 708.3 679.5 Less valuation allowance (7.0) (7.0) ------------------------------------------------------------------------------------------------------------------- Net deferred tax assets 701.3 672.5 ------------------------------------------------------------------------------------------------------------------- Deferred tax liabilities: Fixed maturity securities 402.2 173.0 Equity securities and other investments 37.4 31.7 Deferred policy acquisition costs 762.0 861.3 Derivatives 78.4 91.5 Deferred tax on realized investment gains - 26.1 Other 50.5 68.8 ------------------------------------------------------------------------------------------------------------------- Gross deferred tax liabilities 1,330.5 1,252.4 ------------------------------------------------------------------------------------------------------------------- Net deferred tax liability $ 629.2 $ 579.9 ===================================================================================================================
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 each of the years in the three-year period ended December 31, 2002. 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 $176.4 million and $186.2 million as of December 31, 2002 and 2001, respectively. Federal income tax expense attributable to income from continuing operations before cumulative effect of adoption of accounting principles for the years ended December 31 was as follows:
(in millions) 2002 2001 2000 =================================================================================================================== Current $ 63.7 $ 32.2 $ 77.6 Deferred (55.0) 129.0 129.7 ------------------------------------------------------------------------------------------------------------------- Federal income tax expense $ 8.7 $ 161.2 $ 207.3 ===================================================================================================================
The customary relationship between federal income tax (benefit) expense and pre-tax (loss) income from continuing operations before cumulative effect of adoption of accounting principles does not exist in 2002. This is a result of the impact of the $347.1 million of accelerated DAC amortization reported in 2002 (see note 4) compared to the level of pre-tax earnings. Total federal income tax expense for the years ended December 31, 2002, 2001 and 2000 differs from the amount computed by applying the U.S. federal income tax rate to income from continuing operations before federal income tax expense and cumulative effect of adoption of accounting principles as follows:
2002 2001 2000 ---------------------- ---------------------- ---------------------- (in millions) Amount % Amount % Amount % =================================================================================================================== Computed (expected) tax expense $59.3 35.0 $220.1 35.0 $239.1 35.0 Tax exempt interest and dividends received deduction (38.9) (22.9) (48.8) (7.7) (24.7) (3.6) Income tax credits (12.7) (7.5) (11.5) (1.8) (8.0) (1.2) Other, net 1.0 0.5 1.4 0.1 0.9 0.1 ------------------------------------------------------------------------------------------------------------------- Total (effective rate of each year) $ 8.7 5.1 $161.2 25.6 $207.3 30.3 ===================================================================================================================
Total federal income tax paid (refunded) was $71.0 million, $(45.4) million and $74.6 million during the years ended December 31, 2002, 2001 and 2000, respectively. The 2002 amount includes $56.0 million for previously deferred intercompany gains for tax purposes that became due when NFS no longer qualified to be included in the NMIC consolidated federal income tax return, as described in note 2(i). NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (9) Comprehensive Income Comprehensive income 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 is comprised of net unrealized gains on securities available-for-sale and accumulated net gains (losses) on cash flow hedges. The related before and after federal income tax amounts for the years ended December 31, 2002, 2001 and 2000 were as follows:
(in millions) 2002 2001 2000 =================================================================================================================== Unrealized gains on securities available-for-sale arising during the period: Gross $ 527.5 $ 164.0 $ 264.5 Adjustment to deferred policy acquisition costs (205.7) (71.7) (74.0) Adjustment to future policy benefits and claims (133.2) - - Related federal income tax expense (66.0) (32.3) (66.7) ------------------------------------------------------------------------------------------------------------------- Net unrealized gains 122.6 60.0 123.8 ------------------------------------------------------------------------------------------------------------------- Reclassification adjustment for net losses on securities available-for-sale realized during the period: Gross 86.2 58.7 13.5 Related federal income tax benefit (30.2) (20.5) (4.7) ------------------------------------------------------------------------------------------------------------------- Net reclassification adjustment 56.0 38.2 8.8 ------------------------------------------------------------------------------------------------------------------- Other comprehensive income on securities available-for-sale 178.6 98.2 132.6 ------------------------------------------------------------------------------------------------------------------- Accumulated net gain (loss) on cash flow hedges: Gross 16.9 (13.5) - Related federal income tax (expense) benefit (5.9) 4.7 - ------------------------------------------------------------------------------------------------------------------- Other comprehensive income (loss) on cash flow hedges 11.0 (8.8) - ------------------------------------------------------------------------------------------------------------------- Accumulated net loss on transition adjustments: Transition adjustment - SFAS 133 - (5.6) - Transition adjustment - EITF 99-20 - 3.5 - Related federal income tax benefit - 0.7 - ------------------------------------------------------------------------------------------------------------------- Other comprehensive loss on transition adjustments - (1.4) - ------------------------------------------------------------------------------------------------------------------- Total other comprehensive income $ 189.6 $ 88.0 $ 132.6 ===================================================================================================================
Reclassification adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during 2002 and 2001 and, therefore, are not reflected in the table above. (10) 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The fair value of a financial instrument is defined as the amount at which the financial instrument could be exchanged in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is to be based on estimates using present value or other valuation techniques. Many of the Company's assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by management using present value or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments. Although insurance contracts, other than policies such as annuities that are classified as investment contracts, are specifically exempted from the disclosure requirements, estimated fair value of policy reserves on life insurance contracts is provided to make the fair value disclosures more meaningful. The tax ramifications of the related unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. In estimating its fair value disclosures, the Company 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. Estimated value is based on the present value of expected future cash flows discounted at the loan's effective interest rate, or the fair value of the collateral, if the loan is collateral dependent. Policy loans, short-term investments and cash: The carrying amounts reported in the consolidated balance sheets for these instruments approximate 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 in this analysis are similar to currently offered contracts with maturities consistent with those remaining for the contracts being valued. Policy reserves on life insurance contracts: Included are disclosures for individual and corporate-owned 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, for which the Company has used discounted cash flow analyses similar to those used for investment contracts with known maturities to estimate fair value. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Short-term debt and collateral received - securities lending and derivatives: The carrying amounts reported in the consolidated balance sheets for these instruments approximates their fair value. Long-term debt, payable to NFS: The fair value for long-term debt is based on estimated market prices. Commitments to extend credit: Commitments to extend credit have nominal fair value because of the short-term nature of such commitments. See note 11. Interest rate and cross currency interest rate swaps: The fair value for interest rate and cross currency interest rate swaps are calculated with pricing models using current rate assumptions. Futures contracts: The fair value for futures contracts is based on quoted market prices. 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:
2002 2001 ------------------------------- ------------------------------- Carrying Estimated Carrying Estimated (in millions) amount fair value amount fair value =================================================================================================================== Assets: Investments: Securities available-for-sale: Fixed maturity securities $ 24,169.0 $ 24,169.0 $ 18,370.8 $ 18,370.8 Equity securities 84.3 84.3 94.0 94.0 Mortgage loans on real estate, net 7,923.2 8,536.4 7,113.1 7,293.3 Policy loans 629.2 629.2 591.1 591.1 Short-term investments 1,210.3 1,210.3 1,011.3 1,011.3 Cash 0.9 0.9 22.6 22.6 Assets held in separate accounts 47,208.2 47,208.2 59,513.0 59,513.0 Liabilities: Investment contracts (25,276.3) (23,634.1) (19,549.5) (18,421.0) Policy reserves on life insurance contracts (6,403.5) (6,479.6) (5,666.5) (5,524.4) Collateral received - securities lending and derivatives (1,363.6) (1,363.6) (809.6) (809.6) Short-term debt - - (100.0) (100.0) Long-term debt, payable to NFS (600.0) (600.0) (300.0) (300.0) Liabilities related to separate accounts (47,208.2) (45,524.6) (59,513.0) (58,387.3) Derivative financial instruments: Interest rate swaps hedging assets (141.2) (141.2) (5.6) (5.6) Cross currency interest rate swaps 325.1 325.1 (66.0) (66.0) Futures contracts (45.7) (45.7) (33.0) (33.0) -------------------------------------------------------------------------------------------------------------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (11) Risk Disclosures The following is a description of the most significant risks facing the Company and how it mitigates those risks: Credit Risk: The risk that issuers of securities owned by the Company or mortgagors on mortgage loans on real estate owned by the Company will default or that other parties, including reinsurers, which owe the Company money, will not pay. The Company minimizes this risk by adhering to a conservative investment strategy, by maintaining sound 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 U. S., 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 mortgaged property represents the collateral if the commitment is funded. The Company's policy for new mortgage loans on real estate is to generally lend no more than 80% 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 $252.5 million extending into 2003 were outstanding as of December 31, 2002. The Company also had $77.3 million of commitments to purchase fixed maturity securities outstanding as of December 31, 2002. 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 the Company, 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, 2002, the Company's credit risk from these derivative financial instruments was $73.3 million, net of $387.1 million of cash collateral and $25.9 million in securities pledged as collateral. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Equity Market Risk: Asset fees calculated as a percentage of the separate account assets are a significant source of revenue to the Company. As of December 31, 2002, 76% of separate account assets were invested in equity mutual funds. Gains and losses in the equity markets will result in corresponding increases and decreases in the Company's separate account assets and the reported asset fee revenue. In addition, a decrease in separate account assets may decrease the Company's expectations of future profit margins due to a decrease in asset fee revenue and/or an increase in guaranteed minimum death benefit (GMDB) claims, which may require the Company to accelerate the amortization of DAC. The Company's individual variable annuity contracts offer GMDB features. The GMDB generally provides a benefit if the annuitant dies and the policyholder contract value is less than a specified amount, which may be based on the premiums paid less amounts withdrawn or policyholder contract value on a specified anniversary date. A decline in the stock market causing the policyholder contract value to fall below this specified amount, which varies from contract to contract based on the date the contract was entered into as well as the GMDB feature elected, will increase the net amount at risk, which is the GMDB in excess of the policyholder contract value, which could result in additional GMDB claims. As of December 31, 2002, the net amount at risk, defined as the excess of the death benefit over the account value, was $6.55 billion before reinsurance and $2.96 billion net of reinsurance. As of December 31, 2002, the Company's reserve for GMDB claims was $13.7 million Significant Concentrations of Credit Risk: The Company grants mainly commercial mortgage loans on real estate to customers throughout the U. S. As of December 31, 2002, the Company has a diversified portfolio with no more than 22% in any geographic area and no more than 1% with any one borrower. As of December 31, 2002, 33% of the carrying value of the Company's commercial mortgage loan portfolio financed retail properties. Significant Business Concentrations: As of December 31, 2002, the Company did not have a material concentration of financial instruments in a single investee, industry or geographic location. Also, the Company did not have a concentration of business transactions with a particular customer, lender or distribution source, a market or geographic area in which business is conducted that makes it vulnerable to an event which could cause a severe impact to the Company's financial position. Guarantee Risk: In connection with the selling of securitized interests in Low Income Housing Tax Credit Funds (Tax Credit Funds), see note 17, the Company guarantees a specified minimum return to the investor. The guaranteed return varies by transaction and follows general market trends. The Company's risk related to securitized interests in Tax Credit Funds is that the tax benefits provided to the investor are not sufficient to provide the guaranteed cumulative after-tax yields. The Company mitigates these risks by having qualified individuals with extensive industry experience perform due diligence on each of the underlying properties to ensure they will be capable of delivering the amount of credits anticipated and by requiring cash reserves to be held at various levels within these structures to provide for possible shortfalls in the amount of credits generated. Reinsurance: The Company has entered into reinsurance contracts to cede a portion of its general account individual annuity business. Total recoveries due from these contracts were $362.3 million as of December 31, 2002. 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 contracts, trusts have been established as collateral for the recoveries. The trust assets are invested in investment grade securities, the fair value of which must at all times be greater than or equal to 100% or 102% of the reinsured reserves, as outlined in the underlying contract. Collateral - Derivatives: The Company enters into agreements with various counterparties to execute over-the-counter derivative transactions. The Company's policy is to include a Credit Support Annex with each agreement to protect the Company for any exposure above the approved credit threshold. This also protects the counterparty against exposure to the Company. The Company generally posts securities as collateral and receives cash as collateral from counterparties. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest or dividends received during the loan term. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Collateral - Securities Lending: The Company, through its agent, lends certain portfolio holdings and in turn receives cash collateral. The cash collateral is invested in high-quality short-term investments. The Company's policy requires a minimum of 102% of the fair value of the securities loaned be maintained as collateral. Net returns on the investments, after payment of a rebate to the borrower, are shared between the Company and its agent. Both the borrower and the Company can request or return the loaned securities at any time. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest or dividends received during the loan term. (12) Pension Plan, Postretirement Benefits Other than Pensions and Retirement Savings Plan The Company is a participant, together with other affiliated companies except for Nationwide Provident, in pension plans 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 costs charged to operations by the Company during the years ended December 31, 2002, 2001 and 2000 were $10.0 million, $5.0 million and $1.9 million, respectively. The Company has recorded a pension liability of $0.5 million as of December 31, 2002 compared to a prepaid pension asset of $9.4 million as of December 31, 2001. In addition to the defined benefit pension plan, the Company, together with certain 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, 2002 and 2001 was $51.9 million and $53.8 million, respectively, and the net periodic postretirement benefit cost (NPPBC) for 2002, 2001 and 2000 was $3.5 million, $2.9 million and $3.8 million, respectively. 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, 2002 and 2001 follows:
Pension Benefits Postretirement Benefits --------------------------- ---------------------------- (in millions) 2002 2001 2002 2001 =================================================================================================================== Change in benefit obligation: Benefit obligation at beginning of year $ 2,132.2 $ 1,981.7 $ 314.0 $ 276.4 Service cost 103.3 89.3 13.2 12.6 Interest cost 135.6 129.1 22.5 21.4 Participant contributions - - 4.0 3.3 Plan amendment (11.5) 27.7 (117.7) 0.2 Actuarial (gain) loss (13.1) (5.8) 54.0 20.2 Benefits paid (97.6) (89.8) (20.3) (20.1) Impact of settlement/curtailment (12.7) - - - ------------------------------------------------------------------------------------------------------------------- Benefit obligation at end of year 2,236.2 2,132.2 269.7 314.0 =================================================================================================================== Change in plan assets: Fair value of plan assets at beginning of year 2,200.7 2,337.1 119.7 119.4 Actual return on plan assets (142.4) (46.6) (12.7) (0.2) Employer contribution 4.3 - 16.2 17.3 Participant contributions - - 4.0 3.3 Benefits paid (97.6) (89.8) (20.3) (20.1) ------------------------------------------------------------------------------------------------------------------- Fair value of plan assets at end of year 1,965.0 2,200.7 106.9 119.7 ------------------------------------------------------------------------------------------------------------------- Funded status (271.2) 68.5 (162.8) (194.3) Unrecognized prior service cost 33.6 49.5 (116.9) 0.2 Unrecognized net losses (gains) 225.9 (79.3) 71.9 (4.0) Unrecognized net (asset) obligation at transition (3.8) (5.1) 0.1 0.8 ------------------------------------------------------------------------------------------------------------------- Prepaid (accrued) benefit cost, net $ (15.5) $ 33.6 $ (207.7) $ (197.3) ===================================================================================================================
Two significant plan changes were enacted to the postretirement benefit plans as of December 31, 2002. The postretirement medical plan was revised to reflect the current expectation that there will be no further increases in the benefit cap after 2006. Prior to 2007, it is assumed that benefit caps will increase 3% per year. The postretirement death benefit plan was revised to reflect that all employer subsidies will be phased out beginning in 2007. The 2007 subsidy is assumed to be 2/3 of the current subsidy and the 2008 subsidy is assumed to be 1/3 of the current amount. There is no employer subsidized benefit assumed after 2008. Effective January 1, 2002, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) raised IRS limits for benefits and salaries considered in qualified pension plans. The projected benefit obligation decreased by $11.5 million from December 31, 2001 due to the anticipation of the EGTRRA sunset provisions not recognized in the December 31, 2001 calculations. Pension costs in 2002 and December 31, 2002 pension liabilities include curtailment charges and gains calculated for the disposal of a segment of participants. Settlement credits of $10.0 million were directly assigned to NMIC and no costs were assigned to the Company. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued 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 --------------------------- --------------------------- 2002 2001 2002 2001 =================================================================================================================== Weighted average discount rate 6.00% 6.50% 6.60% 7.25% Rate of increase in future compensation levels 4.50% 4.75% - - Assumed health care cost trend rate: Initial rate - - 11.30%1 11.00% Ultimate rate - - 5.70%1 5.50% Declining period - - 11 Years 4 Years ------------------------------------------------------------------------------------------------------------------- ---------- 1 The 2002 initial rate is 12.3% for participants over age 65, with an ultimate rate of 6.39%.
The components of net periodic pension cost for the pension plan as a whole for the years ended December 31, 2002, 2001 and 2000 were as follows:
(in millions) 2002 2001 2000 =================================================================================================================== Service cost (benefits earned during the period) $ 103.3 $ 89.3 $ 81.4 Interest cost on projected benefit obligation 135.6 129.1 125.3 Expected return on plan assets (178.6) (183.8) (184.5) Recognized gains - (7.8) (11.8) Amortization of prior service cost 3.2 3.2 4.4 Amortization of unrecognized transition asset (1.3) (1.3) (1.3) ------------------------------------------------------------------------------------------------------------------- Net periodic pension cost $ 63.4 $ 28.7 $ 12.3 ===================================================================================================================
A curtailment gain of $19.8 million was recognized in 2000 as the result of a former affiliate of NMIC ending its participation in the pension plan. Assumptions used in calculating the net periodic pension cost for the pension plan were as follows:
2002 2001 2000 =================================================================================================================== Weighted average discount rate 6.50% 6.75% 7.00% Rate of increase in future compensation levels 4.75% 5.00% 5.25% Expected long-term rate of return on plan assets 8.25% 8.00% 8.25% -------------------------------------------------------------------------------------------------------------------
The plan's investment strategy was modified based on the recommendations of a pension optimization study. This change in investment strategy is expected to increase long-term real rates of return 0.50% while maintaining the same aggregate risk level. For this reason, the expected long-term rate of return was increased to 8.25% in 2002 from 8.00% in 2001. The components of NPPBC for the postretirement benefit plan as a whole for the years ended December 31, 2002, 2001 and 2000 were as follows:
(in millions) 2002 2001 2000 ==================================================================================================================== Service cost (benefits attributed to employee service during the year) $ 13.2 $ 12.6 $ 12.2 Interest cost on accumulated postretirement benefit obligation 22.4 21.4 18.7 Expected return on plan assets (9.2) (9.6) (7.9) Amortization of unrecognized transition obligation of affiliates 0.6 0.6 0.6 Net amortization and deferral (0.4) (0.4) (1.3) -------------------------------------------------------------------------------------------------------------------- NPPBC $ 26.6 $ 24.6 $ 22.3 ====================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Actuarial assumptions used for the measurement of the NPPBC for the postretirement benefit plan for 2002, 2001 and 2000 were as follows:
2002 2001 2000 ==================================================================================================================== Discount rate 7.25% 7.50% 7.80% Long-term rate of return on plan assets 7.75% 8.00% 8.30% Assumed health care cost trend rate: Initial rate 11.30% 11.00% 13.00% Ultimate rate 5.70% 5.50% 5.50% Declining period 11 Years 4 Years 5 Years --------------------------------------------------------------------------------------------------------------------
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, 2002 and on the NPPBC for the year ended December 31, 2002 was not calculated. The Company, together with other affiliated companies, sponsors a defined contribution retirement savings plan covering substantially all employees of the Company. Employees may make salary deferral contributions of up to 22%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company's expense for contributions to this plan totaled $5.7 million, $5.6 million and $4.4 million for 2002, 2001 and 2000, respectively, including amounts related to discontinued operations that are immaterial. (13) Shareholder's Equity, Regulatory Risk-Based Capital, Retained Earnings and Dividend Restrictions The State of Ohio, where NLIC and NLAIC are domiciled, 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 total adjusted capital, as defined by the NAIC, to 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 for all periods presented herein. The statutory capital and surplus of NLIC as of December 31, 2002 and 2001 was $1.61 billion and $1.76 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2002, 2001 and 2000 was $92.5 million, $83.1 million and $158.7 million, respectively. The NAIC completed a project to codify statutory accounting principles (Codification), which became effective January 1, 2001 for NLIC and NLAIC. 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, 2002 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 the State 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, interest and shareholder dividends in the future. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (14) Related Party Transactions During 2001, the Company entered into a transaction with NMIC, whereby it sold 78% of its interest in a limited partnership (representing 49% of the limited partnership) to NMIC for $158.9 million. As a result of this sale, the Company recorded a realized gain of $44.4 million, and related tax expense of $15.5 million. During 2002, the Company entered into transactions with NMIC and Nationwide Indemnity Company (NIC), whereby it sold 100% of its remaining interest in the limited partnership (representing 15.11% of the limited partnership) to NMIC and NIC for a total of $54.5 million. As a result of this sale, the Company recorded a realized gain of $23.2 million and related tax expense of $8.1 million. The sales prices for each transaction, which were paid in cash, represented the fair value of the portions of limited partnership interests that were sold and were based on valuations of the limited partnership and its underlying investments as of the effective dates of the transactions. The valuations were completed by qualified management of the limited partnership and utilized a combination of internal and independent valuations of the underlying investments of the limited partnership. Additionally, senior financial officers and the Boards of Directors of the Company and NMIC separately reviewed, through their respective Finance Committees, and approved the process and methodology of the valuations prior to the execution of these transactions. The Company no longer holds an economic or voting interest in the limited partnership. NLIC has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $4.50 billion and $4.68 billion as of December 31, 2002 and 2001, respectively. Total revenues from these contracts were $143.3 million, $150.7 million and $156.8 million for the years ended December 31, 2002, 2001 and 2000, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances were $114.8 million, $122.5 million and $135.8 million for the years ended December 31, 2002, 2001 and 2000, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties who are similarly situated. As discussed in more detail in note 2(i), through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC and beginning October 1, 2002, will file a consolidated federal income tax return with NLICA. Total payments to (from) NMIC were $71.0 million, $(45.4) million and $74.6 million for the years ended December 31, 2002, 2001 and 2000, respectively. NLIC has a reinsurance agreement with NMIC whereby all of NLIC's accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets and investment earnings are paid to the reinsurer. Under the terms of NLIC's agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. Risk of asset default is retained by NLIC, although a fee is paid to NLIC 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 for the years ended December 31, 2002, 2001 and 2000 were $325.0 million, $200.7 million and $170.1 million, respectively, while benefits, claims and expenses ceded were $328.4 million, $210.1 million and $171.0 million, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued 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 investment management, 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, Nationwide Services Company, LLC, 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, 2002, 2001 and 2000, the Company made payments to NMIC and Nationwide Services Company, LLC, totaling $135.6 million, $139.8 million and $150.3 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. Under a marketing agreement with NMIC, NLIC makes payments to cover a portion of the agent marketing allowance that is paid to Nationwide agents. These costs cover product development and promotion, sales literature, rent and similar items. Payments under this agreement totaled $24.9 million, $26.4 million and $31.4 million for the years ended December 31, 2002, 2001 and 2000, respectively. The Company leases office space from NMIC and certain of its subsidiaries. For the years ended December 31, 2002, 2001 and 2000, the Company made lease payments to NMIC and its subsidiaries of $20.2 million, $18.7 million and $14.1 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 interest. As of December 31, 2002 and 2001, the Company had no borrowings from affiliated entities under such agreements. During 2002 and 2001, the most the Company had outstanding at any given time was $224.9 million and $368.5 million, respectively, and the Company incurred interest expense on intercompany repurchase agreements of $0.3 million and $0.2 million for 2002 and 2001, respectively. Transactions under the agreements during 2000 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 for the benefit of the Company were $87.0 million and $54.8 million as of December 31, 2002 and 2001, respectively, and are included in short-term investments on the accompanying consolidated balance sheets. For the years ending December 31, 2002, 2001 and 2000, the Company paid NCMC fees and expenses totaling $0.3 million, $0.4 million and $0.3 million, respectively. 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, 2002 were $50.3 million, $52.9 million and $65.0 million, respectively. Funds of Gartmore Global Investments, Inc. (GGI), an affiliate, are offered as investment options in certain of the Company's products. As of December 31, 2002, total GGI funds in the Company's products were $12.21 billion. For the year ended December 31, 2002, GGI paid the Company $38.8 million for the distribution and servicing of these funds. During 2002, NLIC paid a dividend of $35.0 million and dividends in the form of return of capital of $475.0 million to NFS. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued In addition, in June 2002, NLIC paid a dividend to NFS in the form of all of the shares of common stock of NSI, a wholly owned broker/dealer subsidiary. Therefore, the results of the operations of NSI have been reflected as discontinued operations for all periods presented. This was a transaction between related parties and therefore was recorded at carrying value, $10.0 million, of the underlying components of the transaction rather than fair value. Such amount represents a non-cash transaction that is not reflected in the Consolidated Statement of Cash Flows. In December 2001, NLIC sold NFS a 7.50%, $300.0 million surplus note maturing on December 17, 2031. In June 2002, NLIC sold NFS an 8.15%, $300.0 million surplus note maturing June 27, 2032. The Company made interest payments on surplus notes to NFS totaling $30.1 million in 2002 and none in 2001. In addition, the Company made interest payments on unsecured notes to NFS totaling $0.5 million in 2002. (15) Bank Lines of Credit The Company has available as a source of funds 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 financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility contains covenants, including, but not limited to, requirements that the Company maintain consolidated tangible net worth, as defined, in excess of $1.69 billion and NLIC maintain statutory surplus in excess of $935 million. The Company had no amounts outstanding under this agreement as of December 31, 2002. NLIC is currently required to maintain an available credit facility equal to 50% of any amounts outstanding under its $500 million commercial paper program. Therefore, availability under the aggregate $1 billion credit facility is reduced by an amount equal to 50% of any commercial paper outstanding. NLIC did not have any commercial paper outstanding as of December 31, 2002. (16) 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 seeks to bring 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 plaintiff contends were used to fund certain tax-deferred retirement plans. The amended complaint seeks unspecified compensatory and punitive damages. 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 the other named defendants. On January 25, 2002, the plaintiffs filed a motion for leave to amend their complaint to add three new named plaintiffs. On February 9, 2002, the plaintiffs filed a motion for class certification. On April 16, 2002, the Company and the other named defendants filed a motion for summary judgment on the individual claims of plaintiff Mercedes Castillo. On May 28, 2002, the Court denied plaintiffs' motion to add new persons as named plaintiffs, but granted Marcus Shore's request to withdraw as named plaintiff, so the action is now proceeding with Mercedes Castillo as the only named plaintiff. On November 4, 2002, the Court issued a decision granting the Company's and the other defendants' motion for summary judgment on all of plaintiff Mercedes Castillo's individual claims, and ruling that plaintiff's motion for class certification is moot. Judgment for the Company was entered on November 15, 2002. On December 16, 2002, plaintiff Mercedes Castillo filed a notice of appeal from the court's orders (a) granting the defendants' motion for summary judgment; and (b) denying plaintiff's motion for leave to amend the complaint to add three new named plaintiffs. The Company's responsive brief is due by April 23, 2003 and plaintiff's reply brief is due by May 12, 2003. The Company intends to defend this lawsuit vigorously. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued On August 15, 2001, the Company was named in a lawsuit filed in Connecticut federal court titled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. On September 6, 2001, the plaintiffs amended their complaint to include class action allegations. Plaintiffs seek to represent a class of retirement plans that purchased variable annuities from NLIC to fund qualified ERISA retirement plans. The amended complaint alleges that the retirement plans purchased variable annuity contracts from the Company that allowed plan participants to invest in funds that were offered by separate mutual fund companies; that the Company was a fiduciary under ERISA; that the Company breached its fiduciary duty when it accepted certain fees from the mutual fund companies that purportedly were never disclosed by the Company; and that the Company violated ERISA by replacing many of the funds originally included in the plaintiff's annuities with "inferior" funds because the new funds purportedly paid higher fees to the Company. The amended complaint seeks disgorgement of the fees allegedly received by the Company and other unspecified compensatory damages, declaratory and injunctive relief and attorney's fees. On December 3, 2001, the plaintiffs filed a motion for class certification. The Company is opposing that motion. The Company's Motion to Dismiss was denied on September 11, 2002. On January 14, 2003, plaintiffs filed a motion to file a second amended complaint and the motion was granted on February 21, 2003. The second amended complaint removes the claims asserted against the Company concerning a violation of ERISA through the replacement of many of the funds originally included in the plaintiffs' annuities with "inferior" funds that purportedly paid higher fees to the Company. The Company intends to defend this lawsuit vigorously. There can be no assurance that any such litigation will not have a material adverse effect on the Company in the future. (17) Securitization Transactions During 2002, the Company sold credit enhanced equity interests in Tax Credit Funds to unrelated third parties for $125.3 million and recognized $6.8 million of income. The Company guaranteed cumulative after-tax yield to unrelated third party investors ranging from 5.15% to 5.25%. These guarantees are in effect for approximately 15 years. The Tax Credit Funds will provide a stream of tax benefits to the investors that will generate a yield and return of capital. To the extent that the tax benefits are not sufficient to provide these cumulative after-tax yields, then the Company must fund any shortfall, which is mitigated by cash reserves established by the Company at the inception of the transactions. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $368.7 million. The Company does not anticipate making any payments related to the guarantees. At the time of the sales, $4.9 million of net sale proceeds were set aside as reserves for certain properties owned by the Tax Credit Funds that had not met all of the criteria necessary to generate tax credits. Such criteria include completion of construction and the leasing of each unit to a qualified tenant among other criteria. Properties meeting the necessary criteria are considered to have "stabilized." The properties are evaluated regularly and upon stabilizing, the reserve is released, and during 2002, $0.5 million of stabilization reserves were released into income. To the extent there are cash deficits in any specific property owned by the Tax Credit Funds, property reserves, property operating guarantees and reserves held by the Tax Credit Funds are exhausted before the Company is required to perform under its guarantees. To the extent the Company is ever required to perform under its guarantees, it can recover any such funding out of the cash flow distributed from the sale of any and/or all of the underlying properties of the Tax Credit Funds. This cash flow distribution would be paid to the Company prior to any cash flow distributions to unrelated third party investors. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (18) Segment Information 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. During the second quarter of 2002, the Company paid a dividend to NFS that resulted in the disposal of a portion of the business that had been reported in the Corporate segment (see note 14). As a result, this business has been reported as discontinued operations. Also, structured products transactions previously reported in the Corporate segment are now reported in the Institutional Products segment. Amounts reported for all periods have been revised to reflect these changes and to conform to the 2002 presentation. The Individual Annuity segment consists of individual The BEST of AMERICA(R) and private label deferred variable annuity products, deferred fixed annuity products and income products. Individual deferred 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 prescribed periods. The Institutional Products segment is comprised of the Company's Private and Public Sector pension plans, medium-term note program and structured products transactions. The Private Sector includes the 401(k) business generated through fixed and variable annuities. The Public Sector includes the Internal Revenue Code Section 457 business in the form of fixed and variable annuities. The Life Insurance segment consists of investment life products, including individual variable life and COLI products, traditional life insurance products and universal life insurance. Life insurance products provide a death benefit and generally 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, unallocated expenses and interest expense on debt. In addition to these operating revenues and expenses, the Company also reports net realized gains and losses on investments not related to securitizations, hedging instruments and hedged items in the Corporate segment, but does not consider them as part of operating income. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The following tables summarize the financial results of the Company's business segments for the years ended December 31, 2002, 2001 and 2000.
Individual Institutional Life (in millions) Annuity Products Insurance Corporate Total =================================================================================================================== 2002: Net investment income $ 668.5 $ 800.2 $ 328.6 $ 41.2 $ 1,838.5 Other operating revenue 526.2 177.9 537.7 0.7 1,242.5 ------------------------------------------------------------------------------------------------------------------- Total operating revenue 1 1,194.7 978.1 866.3 41.9 3,081.0 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account values 505.9 548.9 186.4 - 1,241.2 Amortization of deferred policy acquisition costs 528.2 53.7 88.2 - 670.1 Interest expense on debt - - - 36.0 36.0 Other benefits and expenses 283.4 172.1 420.2 4.1 879.8 ------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 1,317.5 774.7 694.8 40.1 2,827.1 ------------------------------------------------------------------------------------------------------------------- Operating (loss) income before federal income taxes 1 (122.8) 203.4 171.5 1.8 253.9 Net realized losses on investments, hedging instruments and hedged items - - - (84.4) (84.4) ------------------------------------------------------------------------------------------------------------------- (Loss) income from continuing operations before federal income taxes and cumulative effect of adoption of accounting $ (122.8) $ 203.4 $ 171.5 $ $ 169.5 principles (82.6) =================================================================================================================== Assets as of year end $ 40,830.0 $ 30,440.7 $ 9,676.3 $ 5,075.6 $ 86,022.6 =================================================================================================================== --------- 1 Excludes net realized gains and losses on investments not related to securitizations, hedging instruments and hedged items, discontinued operations and cumulative effect of adoption of accounting principles.
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 =================================================================================================================== 2001: Net investment income $ 534.7 $ 847.5 $ 323.3 $ 19.2 $ 1,724.7 Other operating revenue 556.0 209.4 511.5 1.6 1,278.5 ------------------------------------------------------------------------------------------------------------------- Total operating revenue 1 1,090.7 1,056.9 834.8 20.8 3,003.2 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account values 433.2 627.8 177.7 - 1,238.7 Amortization of deferred policy acquisition costs 220.0 47.6 80.3 - 347.9 Interest expense on debt - - - 6.2 6.2 Other benefits and expenses 206.1 170.2 387.1 (2.1) 761.3 ------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 859.3 845.6 645.1 4.1 2,354.1 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income taxes 1 231.4 211.3 189.7 16.7 649.1 Net realized losses on investments, hedging instruments and hedged items - - - (20.2) (20.2) ------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before federal income taxes and cumulative effect of adoption of accounting $ 231.4 $ 211.3 $ 189.7 $ (3.5) $ principles 628.9 =================================================================================================================== 2 Assets as of year end $ 43,885.4 $ 34,130.1 $ 9,129.0 $ 4,010.1 $ 91,154.6 =================================================================================================================== 2000: Net investment income $ 482.0 $ 827.4 $ 289.2 $ 55.3 $ 1,653.9 Other operating revenue 625.9 251.6 462.1 2.9 1,342.5 ------------------------------------------------------------------------------------------------------------------- Total operating revenue 1 1,107.9 1,079.0 751.3 58.2 2,996.4 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account values 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 debt - - - 1.3 1.3 Other benefits and expenses 192.1 181.0 368.8 16.2 758.1 ------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 827.2 859.0 590.2 17.5 2,293.9 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income taxes 1 280.7 220.0 161.1 40.7 702.5 Net realized losses on investments, hedging instruments and hedged items - - - (19.4) (19.4) ------------------------------------------------------------------------------------------------------------------- Income from continuing operations before federal income taxes and cumulative effect of adoption of accounting principles $ 280.7 $ 220.0 $ 161.1 $ 21.3 $ 683.1 =================================================================================================================== 3 Assets as of year end $ 45,422.5 $ 37,217.3 $ 8,103.3 $ 1,824.2 $ 92,567.3 ===================================================================================================================
---------- 1 Excludes net realized gains and losses on investments not related to securitizations, hedging instruments and hedged items, discontinued operations and cumulative effect of adoption of accounting principles. 2 Includes $24.8 million of assets related to discontinued operations. 3 Includes $22.5 million of assets related to discontinued operations. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The Company has no significant revenue from customers located outside of the U.S. nor does the Company have any significant long-lived assets located outside the U.S. (19) Variable Interest Entities As of December 31, 2002, the Company had investments of $71.0 million in Tax Credit Funds for the purpose of generating favorable after-tax investment returns for the Company. These Tax Credit Funds and those that the Company has sold to others with a guarantee of the cumulative after-tax return, which are described in more detail in note 17, may be considered a VIE in accordance with FIN 46. See note 2(k). The Company's maximum exposure to loss as a result of its involvement in these VIEs is $439.6 million, which is comprised of the carrying value of the Tax Credit Funds held by the Company for its own use and the maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees. (20) Subsequent Event On February 13, 2003, NFS contributed as additional paid-in capital $200.0 million cash to NLIC for general corporate purposes. ILLUSTRATIONS Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the proposed Insureds' ages and premium classes, the Death Benefits option, face amount, planned periodic Premiums, and Riders requested. We reserve the right to charge a reasonable fee for this service to persons who request more than one policy illustration during a policy year. ADVERTISING Independent financial rating services, including Moody's, Standard & Poor's and A.M. Best Company rank and rate us. 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. We may advertise these ratings from time to time. In addition, we may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend us or the policies. Furthermore, we 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. TAX DEFINITION OF LIFE INSURANCE Section 7702(b)(1) of the Internal Revenue Code provides that if one of two alternate tests is met, a policy will be treated as life insurance for federal tax purposes. The two tests are referred to as the Cash Value Accumulation Test and the Guideline Premium/Cash Value Corridor Test. The tables below show the numeric requirements for each test. GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST TABLE OF APPLICABLE PERCENTAGES OF CASH VALUE - ----------------------------------------- ATTAINED AGE OF PERCENTAGE OF CASH YOUNGER INSURED VALUE - ----------------------------------------- - ----------------------------------------- 0-40 250% - ----------------------------------------- - ----------------------------------------- 41 243% - ----------------------------------------- - ----------------------------------------- 42 236% - ----------------------------------------- - ----------------------------------------- 43 229% - ----------------------------------------- - ----------------------------------------- 44 222% - ----------------------------------------- - ----------------------------------------- 45 215% - ----------------------------------------- - ----------------------------------------- 46 209% - ----------------------------------------- - ----------------------------------------- 47 203% - ----------------------------------------- - ----------------------------------------- 48 197% - ----------------------------------------- - ----------------------------------------- 49 191% - ----------------------------------------- - ----------------------------------------- 50 185% - ----------------------------------------- - ----------------------------------------- 51 178% - ----------------------------------------- - ----------------------------------------- 52 171% - ----------------------------------------- - ----------------------------------------- 53 164% - ----------------------------------------- - ----------------------------------------- 54 157% - ----------------------------------------- - ----------------------------------------- 55 150% - ----------------------------------------- - ----------------------------------------- 56 146% - ----------------------------------------- - ----------------------------------------- 57 142% - ----------------------------------------- - ----------------------------------------- 58 138% - ----------------------------------------- - ----------------------------------------- 59 134% - ----------------------------------------- - ----------------------------------------- 60 130% - ----------------------------------------- - ----------------------------------------- 61 128% - ----------------------------------------- - ----------------------------------------- 62 126% - ----------------------------------------- - ----------------------------------------- 63 124% - ----------------------------------------- - ----------------------------------------- 64 122% - ----------------------------------------- - ----------------------------------------- 65 120% - ----------------------------------------- - ----------------------------------------- 66 119% - ----------------------------------------- - ----------------------------------------- 67 118% - ----------------------------------------- - ----------------------------------------- 68 117% - ----------------------------------------- - ----------------------------------------- 69 116% - ----------------------------------------- - ----------------------------------------- 70 115% - ----------------------------------------- - ----------------------------------------- 71 113% - ----------------------------------------- - ----------------------------------------- 72 111% - ----------------------------------------- - ----------------------------------------- 73 109% - ----------------------------------------- - ----------------------------------------- 74 107% - ----------------------------------------- - ----------------------------------------- 75 105% - ----------------------------------------- - ----------------------------------------- 76 105% - ----------------------------------------- - ----------------------------------------- 77 105% - ----------------------------------------- - ----------------------------------------- 78 105% - ----------------------------------------- - ----------------------------------------- 79 105% - ----------------------------------------- - ----------------------------------------- 80 105% - ----------------------------------------- - ----------------------------------------- 81 105% - ----------------------------------------- - ----------------------------------------- 82 105% - ----------------------------------------- - ----------------------------------------- 83 105% - ----------------------------------------- - ----------------------------------------- 84 105% - ----------------------------------------- - ----------------------------------------- 85 105% - ----------------------------------------- - ----------------------------------------- 86 105% - ----------------------------------------- - ----------------------------------------- 87 105% - ----------------------------------------- - ----------------------------------------- 88 105% - ----------------------------------------- - ----------------------------------------- 89 105% - ----------------------------------------- - ----------------------------------------- 90 105% - ----------------------------------------- - ----------------------------------------- 91 104% - ----------------------------------------- - ----------------------------------------- 92 103% - ----------------------------------------- - ----------------------------------------- 93 102% - ----------------------------------------- - ----------------------------------------- 94 101% - ----------------------------------------- - ----------------------------------------- 95 101% - ----------------------------------------- - ----------------------------------------- 96 101% - ----------------------------------------- - ----------------------------------------- 97 101% - ----------------------------------------- - ----------------------------------------- 98 101% - ----------------------------------------- - ----------------------------------------- 99 101% - ----------------------------------------- - ----------------------------------------- 100 100% - ----------------------------------------- Cash Value Accumulation Test The Cash Value Accumulation Test also requires the Death Benefit to exceed an applicable percentage of the Cash Value. These applicable percentages are calculated by determining net single premiums, as defined in Code Section 7702(b), for each policy year given a set of actuarial assumptions. The relevant material assumptions include an interest rate of 4% and 1980 CSO guaranteed mortality as prescribed in Internal Revenue Code Section 7702 for the Cash Value Accumulation Test. The resulting net single premiums are then inverted (i.e., multiplied by 1/net single premium) to give the applicable Cash Value percentages. These premiums vary with the ages, sexes, and risk classifications of the Insureds. The table below provides an example of applicable percentages for the Cash Value Accumulation Test. This example is for a male non-tobacco preferred issue age 55 and a female non-tobacco preferred issue age 55. - ---------------------------------------- POLICY PERCENTAGE OF YEAR CASH VALUE - ---------------------------------------- - ---------------------------------------- 1 302% - ---------------------------------------- - ---------------------------------------- 2 290% - ---------------------------------------- - ---------------------------------------- 3 279% - ---------------------------------------- - ---------------------------------------- 4 269% - ---------------------------------------- - ---------------------------------------- 5 259% - ---------------------------------------- - ---------------------------------------- 6 249% - ---------------------------------------- - ---------------------------------------- 7 240% - ---------------------------------------- - ---------------------------------------- 8 231% - ---------------------------------------- - ---------------------------------------- 9 223% - ---------------------------------------- - ---------------------------------------- 10 215% - ---------------------------------------- - ---------------------------------------- 11 207% - ---------------------------------------- - ---------------------------------------- 12 200% - ---------------------------------------- - ---------------------------------------- 13 193% - ---------------------------------------- - ---------------------------------------- 14 186% - ---------------------------------------- - ---------------------------------------- 15 180% - ---------------------------------------- - ---------------------------------------- 16 174% - ---------------------------------------- - ---------------------------------------- 17 169% - ---------------------------------------- - ---------------------------------------- 18 164% - ---------------------------------------- - ---------------------------------------- 19 159% - ---------------------------------------- - ---------------------------------------- 20 154% - ---------------------------------------- - ---------------------------------------- 21 150% - ---------------------------------------- - ---------------------------------------- 22 146% - ---------------------------------------- - ---------------------------------------- 23 142% - ---------------------------------------- - ---------------------------------------- 24 139% - ---------------------------------------- - ---------------------------------------- 25 136% - ---------------------------------------- - ---------------------------------------- 26 133% - ---------------------------------------- - ---------------------------------------- 27 130% - ---------------------------------------- - ---------------------------------------- 28 127% - ---------------------------------------- - ---------------------------------------- 29 125% - ---------------------------------------- - ---------------------------------------- 30 123% - ---------------------------------------- - ---------------------------------------- 31 121% - ---------------------------------------- - ---------------------------------------- 32 119% - ---------------------------------------- - ---------------------------------------- 33 118% - ---------------------------------------- - ---------------------------------------- 34 116% - ---------------------------------------- - ---------------------------------------- 35 115% - ---------------------------------------- - ---------------------------------------- 36 113% - ---------------------------------------- - ---------------------------------------- 37 112% - ---------------------------------------- - ---------------------------------------- 38 111% - ---------------------------------------- - ---------------------------------------- 39 110% - ---------------------------------------- - ---------------------------------------- 40 108% - ---------------------------------------- - ---------------------------------------- 41 107% - ---------------------------------------- - ---------------------------------------- 42 106% - ---------------------------------------- - ---------------------------------------- 43 104% - ---------------------------------------- - ---------------------------------------- 44 103% - ---------------------------------------- - ---------------------------------------- 45 102% - ---------------------------------------- PART C. OTHER INFORMATION Item 27. Exhibits (a) Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant - Filed previously with initial registration statement (1933 Act File No. 333-31725) and hereby incorporated by reference. (b) Not Applicable (c) Underwriting or Distribution of contracts between the Depositor and Principal Underwriter - Filed previously with the Post-Effective Amendment No. 1 to the registration statement (1933 Act File No. 333-66572) and hereby incorporated by reference. (d) The form of the contract - Filed previously with initial registration statement (1933 Act File No. 333-94037, 1940 Act File No. 811-08301) and hereby incorporated by reference. (e) The form of the contract application - Filed previously with Pre-Effective Amendment No. 1 to the registration statement (1933 Act File No. 333-94037, 1940 Act File No. 811-08301) and hereby incorporated by reference. (f) Articles of Incorporation of Depositor - Filed previously with initial registration statement (1933 Act File No. 333-94037, 1940 Act File No. 811-08301) and hereby incorporated by reference. (g) Reinsurance Contracts -Filed previously with registration statement (333-46338) and hereby incorporated by reference . (h) Participation Agreements - Filed previously with registration statement (333-46338) and hereby incorporated by reference. (i) Not Applicable (j) Not Applicable (k) Opinion of Counsel - Filed previously with initial registration statement (1933 Act File No. 333-94037, File No. 811-08301) and hereby incorporated by reference. (l) Not Applicable (m) Not Applicable (n) Independent Auditors' Consent - Attached hereto. (o) Not Applicable (p) Not Applicable (q) Redeemability Exemption Procedures - Filed previously with registration statement (333-46338) and hereby incorporated by reference. Item 28. DIRECTORS AND OFFICERS OF THE DEPOSITOR W.G. Jurgensen, Director, Chairman of the Board and Chief Executive Officer Joseph J. Gasper, Director, President and Chief Operating Officer Patricia R. Hatler, Executive Vice President, General Counsel and Secretary Richard D. Headley, Executive Vice President Donna A. James, Executive Vice President-Chief Administrative Officer Michael C. Keller, Executive Vice President-Chief Information Officer Douglas C. Robinette, Executive Vice President-Corporate Strategy Robert A. Rosholt, Executive Vice President-Finance and Investments John R. Cook, Jr., Senior Vice President-Chief Communications Officer David A. Diamond, Senior Vice President-Corporate Strategy Philip C. Gath, Senior Vice President-Chief Actuary-Nationwide Financial David K. Hollingsworth, Senior Vice President-President-Nationwide Insurance Sales David R. Jahn, Senior Vice President-Product Management Richard A. Karas, Senior Vice President-Sales-Financial Services Gregory S. Lashutka, Senior Vice President-Corporate Relations Gary D. McMahan, Senior Vice President Michael D. Miller, Senior Vice President-NI Finance Brian W. Nocco, Senior Vice President and Treasurer Mark D. Phelan, Senior Vice President-Technology and Operations Kathleen D. Ricord, Senior Vice President-Marketing and Strategy John S. Skubik, Senior Vice President-Consumer Finance Mark R. Thresher, Senior Vice President-Chief Financial Officer Richard M. Waggoner, Senior Vice President-Operations Susan A. Wolken, Senior Vice President-Product Management and Nationwide Financial Marketing James G. Brocksmith, Jr., Director Henry S. Holloway, Director James F. Patterson, Director Gerald D. Prothro, Director Joseph A. Alutto, Director Donald L. McWhorter, Director Arden L. Shisler, Director Alex Shumate, Director Lydia M. Marshall, Director David O. Miller, Director The business address of the Directors and Officers of the Depositor is: One Nationwide Plaza Columbus, Ohio 43215 Item 29. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT. *Subsidiaries for which separate financial statements are filed **Subsidiaries included in the respective consolidated financial statements ***Subsidiaries included in the respective group financial statements filed for unconsolidated subsidiaries ****Other subsidiaries
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Advisory Services, Inc. Pennsylvania Registered investment advisor. - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Brokerage Services, Inc. Pennsylvania This company is registered as a broker-dealer. - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Capital Management Company Pennsylvania The company is registered as a broker-dealer and investment advisor. - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Insurance Agency of Massachusetts Established to grant proper licensing to Massachusetts Provident Mutual Companies in Massachusetts. - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Insurance Agency of Texas Texas Established to grant proper licensing to Provident Mutual Companies in Texas. - ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Companies, Inc. (The) Texas This corporation acts as a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Company (The) Texas The corporation is a third-party administrator providing record keeping services for 401(k) plans. - ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Investment Advisors, Inc. Texas The corporation is an investment advisor registered with the Securities and Exchange Commission - ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Investment Services, Inc. Texas The corporation is a broker-dealer registered with the National Association of Securities Dealers, a self-regulatory body of the Securities and Exchange Commission - ------------------------------------------------------------------------------------------------------------------------------------ Affiliate Agency of Ohio, Inc. Ohio The corporation is an insurance agency marketing life insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ Affiliate Agency, Inc. Delaware The corporation is an insurance agency marketing life insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ AGMC Reinsurance Ltd. Turks & Caicos The corporation is a captive reinsurer. Islands - ------------------------------------------------------------------------------------------------------------------------------------ AID Finance Services, Inc. Iowa The corporation is a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Document Solutions, Inc. Iowa The corporation provides general printing services to its affiliated companies as well as to unaffiliated companies. - ------------------------------------------------------------------------------------------------------------------------------------ ALLIED General Agency Company Iowa The corporation acts as a managing general agent and surplus lines broker for property and casualty insurance products. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Group Insurance Marketing Iowa The corporation engages in the direct Company marketing of property and casualty insurance products. - ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Group, Inc. Iowa The corporation is a property and casualty insurance holding company. - ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Property and Casualty Iowa The corporation underwrites general property and Insurance Company casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Allied Texas Agency, Inc. Texas The corporation acts as a managing general agent to place personal and commercial automobile insurance with CCMIC for the independent agency companies. - ------------------------------------------------------------------------------------------------------------------------------------ Allnations, Inc. Ohio The corporation engages in promoting, extending, and strengthening cooperative insurance organizations throughout the world. - ------------------------------------------------------------------------------------------------------------------------------------ AMCO Insurance Company Iowa The corporation underwrites general property and casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------ American Marine Underwriters, Inc. Florida The corporation is an underwriting manager for ocean cargo and hull insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Asset Management Holdings, plc England and Wales The corporation is a holding company of a group engaged in the management of pension fund assets, unit trusts and other collective investment schemes, investment trusts and portfolios for corporate clients. - ------------------------------------------------------------------------------------------------------------------------------------ Audenstar Limited England To market insurance products and to carry on business in the fields of life, pension, house, motor, marine, fire, employers' liability, accident and other insurance; to act as insurance brokers and consultants and as agents for effecting insurance and obtaining policies in respect of all and every kind of risk and against death, injury or loss arising out of, or through, or in connection with any accidents and against loss or damage to real or personal property. - ------------------------------------------------------------------------------------------------------------------------------------ Cal-Ag Insurance Services, Inc. California The corporation is a small captive insurance brokerage firm serving principally, but not exclusively, the "traditional" agent producers of CalFarm Insurance Company. - ------------------------------------------------------------------------------------------------------------------------------------ CalFarm Insurance Agency California The corporation assists agents and affiliated companies in account completion for marketing CalFarm Products. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Calfarm Insurance Company California The corporation is a California-based multi-line insurance corporation that writes agricultural, commercial, personal and individual health coverages and benefits from the sponsorship of the California Farm Bureau. - ------------------------------------------------------------------------------------------------------------------------------------ Cap Pro Holding, Inc. Delaware This company operates as a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Coda Capital Management, LLC Pennsylvania The company is a convertible bond manager. - ------------------------------------------------------------------------------------------------------------------------------------ Colonial County Mutual Texas The corporation underwrites non-standard automobile Insurance Company and motorcycle insurance and various other commercial liability coverage in Texas. - ------------------------------------------------------------------------------------------------------------------------------------ Cooperative Service Company Nebraska The corporation is an insurance agency that sells and services commercial insurance. The corporation also provides loss control and compliance consulting services and audit, compilation, and tax preparation services. - ------------------------------------------------------------------------------------------------------------------------------------ Corviant Corporation Delaware The purpose of the corporation is to create a captive distribution network through which affiliates can sell multi-manager investment products, insurance products and sophisticated estate planning services. - ------------------------------------------------------------------------------------------------------------------------------------ Damian Securities Limited England & Wales The corporation is engaged in investment holding. - ------------------------------------------------------------------------------------------------------------------------------------ Dancia Life S.A. Luxembourg The purpose of this company is to carry out, on its own behalf or on behalf of third parties, any insurance business including coinsurance, reinsurance relating to human life, whether undertaken in Luxembourg or abroad, all real estate business and all business relating to movable assets, all financial business, and other business related directly to the company's objectives which would promote or facilitate the realization of the company's objective. - ------------------------------------------------------------------------------------------------------------------------------------ Delfi Realty Corporation Delaware This is an inactive company. - ------------------------------------------------------------------------------------------------------------------------------------ Depositors Insurance Company Iowa The corporation underwrites general property and casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Dinamica Participacoes SA Brazil The company participates in other companies related to the registrant's international operations. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Discover Insurance Agency, LLC California The purpose of the company is to sell property and casualty insurance products including, but not limited to, automobile or other vehicle insurance and homeowner's insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Discover Insurance Agency of Texas, Texas To sell property and casualty insurance products LLC including, but not limited to, automobile or other vehicle insurance and homeowner's insurance. - ------------------------------------------------------------------------------------------------------------------------------------ DVM Insurance Agency California The Company places pet insurance business written by Vetrinary Pet Insurance Company outside of California with National Casualty Company - ------------------------------------------------------------------------------------------------------------------------------------ F&B, Inc. Iowa The corporation is an insurance agency that places business not written by the Farmland Insurance Companies with other carriers. - ------------------------------------------------------------------------------------------------------------------------------------ Farmland Mutual Insurance Iowa The corporation provides property and casualty Company insurance primarily to agricultural businesses. - ------------------------------------------------------------------------------------------------------------------------------------ Fenplace Limited England & Wales Currently inactive - ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Alabama The corporation is an insurance agency marketing Agency of Alabama, Inc. life insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Ohio The corporation is an insurance agency marketing Agency of Ohio, Inc. life insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Oklahoma The corporation is an insurance agency marketing Agency of Oklahoma, Inc. life insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Texas The corporation is an insurance agency marketing Agency of Texas, Inc. life insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Securities Oklahoma The corporation is a limited broker-dealer doing Corporation business solely in the financial institutions market. - ------------------------------------------------------------------------------------------------------------------------------------ Florida Records Administrator, Inc. Florida The corporation administers the deferred compensation plan for the public employees of the State of Florida. - ------------------------------------------------------------------------------------------------------------------------------------ Four P Finance Company Pennsylvania This is an inactive company. - ------------------------------------------------------------------------------------------------------------------------------------ G.I.L. Nominees Limited England & Wales The company is dormant within the meaning of Section 249AA of the Companies Act of 1985 (English Law). - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore 1990 Limited England & Wales The company is engaged as a general partner in a limited partnership formed to invest in unlisted securities. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore 1990 Trustee Limited England & Wales The company is dormant within the meaning of Section 249AA of the Companies Act of 1985 (English Law). - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Asset Management, Inc. Delaware The company serves as a registered investment advisor/performing equity investment functions. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Capital Management Limited England & Wales The company is engaged in investment management and advisory services to business, institutional and private investors. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Distribution Services, Inc. Delaware The corporation is a limited broker-dealer. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Emerging Managers, LLC Delaware This is a limited liability company. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Fund Managers Jersey, The company is engaged in investment administration International Limited Channel Islands and support. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Fund Managers Limited England & Wales The company is engaged in authorized unit trust management. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Asset Management, Delaware This company operates as a holding company. Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Asset Delaware The company acts as a holding company for the Management Trust Gartmore Group and as a registered investment advisor. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Investments, Inc. Delaware The company acts as a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Partners Delaware The partnership is engaged in investment management. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Indosuez UK Recovery Fund England & Wales The company is a general partner in two limited (G.P.) Limited partnerships formed to invest in unlisted securities. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Limited England & Wales The company is engaged in investment management and advisory services to pension funds, unit trusts and other collective investment schemes, investment trusts and portfolios for corporate or other institutional clients. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment England & Wales The company is an investment holding company and Management plc provides services to other companies within the Gartmore Group. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Services Germany The company is engaged in marketing support. GmbH - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Services England The company isengaged in investment holding. Limited - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investor Services, Inc. Ohio The corporation provides transfer and dividend disbursing agent services to various mutual fund entities. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Japan Limited Japan The company is engaged in the business of investment management. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Morley and Associates, Oregon The corporation brokers or places book value Inc. maintenance agreements (wrap contracts) and guaranteed I contracts (GICs) for collective investment trusts and accounts. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Morley Capital Oregon The corporation is an investment advisor and stable Management, Inc. value money manager. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Morley Financial Oregon The corporation is a holding company. Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Mutual Fund Capital Delaware The trust acts as a registered investment advisor. Trust - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Nominees Limited England & Wales The company is dormant within the meaning of Section 249AA of the Companies Act 1985 (English Law). - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Pension Trustees England & Wales The company is the trustee of the Gartmore Limited Pension Scheme. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Riverview LLC Delaware The company provides customized solutions, in the form of expert advise and investment management services, to a limited number of institutional investors, through construction of hedge fund and alternative asset portfolios and their integration into the entire asset allocation framework. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore S.A. Capital Trust Delaware The trust acts as a registered investment advisor. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Secretaries (Jersey) Ltd. Jersey, Channel The company acts as a nominee. The company is Islands dormant. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Securities Limited England & Wales The company is engaged in investment holding and is a partner in Gartmore Global Partners. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Trust Company Oregon The corporation is an Oregon state bank with trust power. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore U.S. Limited England & Wales The company is a joint partner in Gartmore Global Partners. - ------------------------------------------------------------------------------------------------------------------------------------ Gates, McDonald & Company Ohio The company provides services to employers for managing worker's and unemployment compensation matters and employee benefits costs. - ------------------------------------------------------------------------------------------------------------------------------------ Gates, McDonald & Company of Nevada The corporation provides self-insurance Nevada administration, claims examining and data processing services. - ------------------------------------------------------------------------------------------------------------------------------------ Gates, McDonald & Company of New New York The corporation provides worker's York, Inc. compensation/self-insured claims administration services to employers with exposure in New York. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ GatesMcDonald Health Plus, Inc. Ohio The corporation provides medical management and cost containment services to employers. - ------------------------------------------------------------------------------------------------------------------------------------ GGI MGT LLC Delaware The company is a passive investment holder in Newhouse Special Situations Fund I, LLC for the purpose of allocation of earnings to Gartmore management team as it relates to the ownership and management of Newhouse Special Situations Fund I, LLC. - ------------------------------------------------------------------------------------------------------------------------------------ Institutional Concepts, Inc. New York This company holds insurance licenses in numerous states. - ------------------------------------------------------------------------------------------------------------------------------------ Insurance Intermediaries, Inc. Ohio The corporation is an insurance agency and provides commercial property and casualty brokerage services. - ------------------------------------------------------------------------------------------------------------------------------------ Landmark Financial Services of New New York The corporation is an insurance agency marketing York, Inc. life insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ Lone Star General Agency, Inc. Texas The corporation acts as general agent to market non-standard automobile and motorcycle insurance for Colonial County Mutual Insurance Company. - ------------------------------------------------------------------------------------------------------------------------------------ Market Street Fund Delaware This is an open-end diversified management company that serves as an investment medium for the variable life policies and variable annuity of NLICA and NLAICA. - ------------------------------------------------------------------------------------------------------------------------------------ Market Street Investment Management Pennsylvania This is an inactive company. Company - ------------------------------------------------------------------------------------------------------------------------------------ MedProSolutions, Inc. Massachusetts The corporation provides third-party administration services for workers compensation, automobile injury and disability claims. - ------------------------------------------------------------------------------------------------------------------------------------ **National Casualty Company Wisconsin The corporation underwrites various property and casualty coverage, as well as individual and group accident and health insurance. - ------------------------------------------------------------------------------------------------------------------------------------ National Casualty Company of England This company is currently inactive. America, Ltd. - ------------------------------------------------------------------------------------------------------------------------------------ National Deferred Compensation, Ohio The corporation administers deferred compensation Inc. plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Advantage Mortgage Iowa The company is engaged in making Company (name change) residential (1-4 family) mortgage loans. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Affinity Insurance Kansas It is a shell insurer with no active policies or Company of America liabilities. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Affordable Housing, Ohio The company invests in affordable multi- family LLC housing projects throughout the U.S. - ------------------------------------------------------------------------------------------------------------------------------------ **Nationwide Agency, Inc. Ohio The corporation is an insurance agency. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Agribusiness Insurance Iowa The corporation provides property and casualty Company insurance primarily to agricultural businesses. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Arena, LLC Ohio The purpose of this company is to develop Nationwide Arena and to engage in related Arena district development activity. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Asset Management England & Wales This company acts as a holding company. Holdings, Ltd. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Assurance Company Wisconsin The corporation underwrites non-standard auto and motorcycle insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Capital Mortgage, LLC Ohio This is a holding company that funds/owns commercial mortgage loans for an interim basis, hedges the loans during the ownership period, and then sells the loans as part of a securitization to generate a profit. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Cash Management Ohio The corporation buys and sells investment securities Company of a short-term nature as agent for other corporations, foundations, and insurance company separate accounts. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Community Development Ohio The company hold investments in low-income housing Corporation, LLC funds. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Corporation Ohio The corporation acts primarily as a holding company for entities affiliated with NMIC and NMFIC. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Assignment Ohio The corporation acts as an administrator of Company structured settlements. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution Delaware The corporation engages in the business of an Distributors Agency, Inc. insurance agency. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution New Mexico The corporation engages in the business of an Distributors Agency, Inc. of New insurance agency. Mexico - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution Massachusetts The corporation engages in the business of an Distributors Insurance Agency, Inc. insurance agency. of Massachusetts - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Services Bermuda The corporation is a long-term insurer that issues (Bermuda) Ltd. variable annuity and variable life products to persons outside the United States and Bermuda. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Services Delaware The Trust's sole purpose is to issue and sell Capital Trust certain securities representing individual beneficial interests in the assets of the Trust. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Services Delaware The Trust's sole purpose is to issue and sell Capital Trust II certain securities representing individual beneficial interests in the assets of the Trust. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Services, Inc. Delaware The corporation acts primarily as a holding company for companies within the Nationwide organization that offer or distribute long-term savings and retirement products. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Sp. Z o.o Poland The corporation provides services to Nationwide Global Holdings, Inc. in Poland. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Foundation Ohio The corporation contributes to non-profit activities and projects. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide General Ohio The corporation transacts a general insurance Insurance Company business, except life insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Finance, LLC Ohio The company acts as a support company for Nationwide Global Holdings, Inc., in its international capitalization efforts. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Funds Luxembourg This company is formed to issue shares of mutual funds. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Holdings, Inc. Ohio The corporation is a holding company for international operations. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Holdings, Inc. Luxembourg It serves as an extension of Nationwide Global Luxembourg Branch Holdings, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Holdings-NGH Brazil The company acts as a holding company. Brazil Participacoes LTDA - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Japan, Inc. Delaware The company acts as a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Limited Hong Kong The corporation is a holding company for Asian operations. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Health Plans, Inc. Ohio The corporation operates as a Health Insurance Corporation (HIC). - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Holdings, SA Brazil The purpose of the company is to participate in other companies related to the registrant's international operations. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Home Mortgage Ohio This corporation performs the marketing function for Distributors, Inc. Nationwide Advantage Mortgage Company. - ------------------------------------------------------------------------------------------------------------------------------------ *Nationwide Indemnity Company Ohio Acts as a reinsurer by assuming business from NMIC and other insurers within the Nationwide Insurance organization. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Insurance Company Wisconsin The corporation is an independent agency personal of America lines underwriter of property/casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Insurance Company of Ohio The corporation transacts general insurance business Florida except life insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Insurance Sales Company, Ohio The company provides administrative services for the LLC product sales and distribution channels of Nationwide Mutual Insurance Company and its affiliated and subsidiary insurance companies. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide International California The corporation is a special risk, excess and Underwriters, Inc. surplus lines underwriting manager. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Investment Oklahoma It is a limited broker-dealer company doing business Services Corporation in the deferred compensation market and acts as an investment advisor. - ------------------------------------------------------------------------------------------------------------------------------------ **Nationwide Life and Annuity Ohio The corporation engages in underwriting Insurance Company life insurance and granting, purchasing, and disposing of annuities. - ------------------------------------------------------------------------------------------------------------------------------------ *Nationwide Life and Annuity Delaware The company insures against personal injury, Company of America disablement or death resulting from traveling or general accidents and against disablement resulting from sickness and every insurance appertaining thereto. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Life Assurance Thailand The company acts as a holding company. Company, Ltd. - ------------------------------------------------------------------------------------------------------------------------------------ *Nationwide Life Insurance Company Pennsylvania The company insures against personal injury, of America disablement or death resulting from traveling or general accidents and against disablement resulting from sickness and every insurance appertaining thereto. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Life Insurance Company Delaware The company insures against personal injury, of Delaware disablement or death resulting from traveling or general accidents and against disablement resulting from sickness and every insurance appertaining thereto. - ------------------------------------------------------------------------------------------------------------------------------------ **Nationwide Life Insurance Ohio This corporation provides individual life, group Company life and health insurance, fixed and variable annuity products, and other life insurance products. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Lloyds Texas The corporation markets commercial property insurance in Texas. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Management System, Ohio The corporation offers a preferred provider Inc. organization and other related products and services. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Martima Vida Brazil To operate as a licensed insurance company in the Previdencia S.A. categories of Life and Unrestricted Private Pension Plans in Brazil. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Mortgage Holdings, Ohio The corporation acts as a holding company. Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Mutual Fire Ohio The company engages in a general insurance and Insurance Company reinsurance business, except life insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Mutual Insurance Ohio The company engages in general insurance and Company reinsurance business, except life insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Properties, Ltd. Ohio The company is engaged in the business of developing, owning and operating real estate and real estate investments. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Property and Casualty Ohio The corporation engages in a general insurance Insurance Company business, except life insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Provident Distributors, Delaware This is an inactive company. Inc - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Provident Holding Pennsylvania This is a holding company for non-insurance Company subsidiaries. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Plan Ohio The corporation is an insurance agency providing Services, Inc. individual and group life, disability and health insurance and marketing retirement plan administration and investments. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Delaware The corporation markets and administers deferred Inc. compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Alabama The corporation provides retirement Inc. of Alabama products, marketing/education and administration to public employees and educators. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Arizona The corporation markets and administers deferred Inc. of Arizona. compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Arkansas The corporation markets and administers deferred Inc. of Arkansas compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Montana The corporation markets and administers deferred Inc. of Montana compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Nevada The corporation markets and administers deferred Inc. of Nevada compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, New Mexico The corporation markets and administers Inc. of New Mexico deferred compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Ohio The corporation provides retirement products, Inc. of Ohio marketing/education and administration to public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Oklahoma The corporation markets and administers Inc. of Oklahoma deferred compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, South Dakota The corporation markets and administers deferred Inc. of South Dakota compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Texas The corporation markets and administers deferred Inc. of Texas compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Wyoming The corporation markets and administers deferred Inc. of Wyoming compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Massachusetts The corporation markets and administers deferred Insurance Agency, Inc. compensation plans for public employees. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Securities, Inc. Ohio The corporation is a registered broker-dealer and provides investment management and administrative services. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Services Company, Ohio The company performs shared services functions for LLC the Nationwide organization. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Services Sp. Zo.o Poland The corporation provides services to Nationwide Global Holdings, Inc. in Poland. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Strategic Investment Ohio The company acts as a private equity fund investing Fund, LLC in companies for investment purposes and to create strategic opportunities for Nationwide. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Towarzystwo Ubezpieczen Poland The corporation is authorized to engage in the na Zycie S.A. business of life insurance and pension products in Poland. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Trust Company, FSB This is a federal savings bank chartered by the Office of Thrift Supervision in the United States Department of the Treasury to exercise custody and fiduciary powers. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide UK Asset Management England & Wales The company acts as a holding company. Holdings, Ltd. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide UK Holding Company, England & Wales The company acts as a holding company. Ltd. - ------------------------------------------------------------------------------------------------------------------------------------ Newhouse Capital Partners, LLC Delaware The company invests in financial services companies that specialize in e-commerce and promote distribution of financial services. - ------------------------------------------------------------------------------------------------------------------------------------ Newhouse Special Situations Fund, Delaware The company plans to own and manage Contributed LLC Securities and to achieve long - term capital appreciation from the Contributed Securities and through investments in a portfolio of other equity investments in financial service by the Company to be undervalued. - ------------------------------------------------------------------------------------------------------------------------------------ NFS Distributors, Inc. Delaware The corporation acts primarily as a holding company for Nationwide Financial Services, Inc. distribution companies. - ------------------------------------------------------------------------------------------------------------------------------------ NFSB Investments, Inc. Bermuda The corporation buys and sells investment securities (new company Jul 02) for its own account in order to enhance the investment returns of its affiliates. - ------------------------------------------------------------------------------------------------------------------------------------ NGH Luxembourg, S, A. Luxembourg The company acts primarily as a holding company for Nationwide Global Holdings, Inc. European operations. - ------------------------------------------------------------------------------------------------------------------------------------ NGH Netherlands, B.V. Netherlands The company acts as a holding company for other Nationwide overseas companies. - ------------------------------------------------------------------------------------------------------------------------------------ NGH UK, Ltd. United Kingdom The company functions as a support company for other Nationwide overseas companies. - ------------------------------------------------------------------------------------------------------------------------------------ NorthPointe Capital, LLC Delaware The company acts as a registered investment advisor. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ PanEuroLife Luxembourg This Luxembourg-based life insurance company provides individual life insurance primarily in the United Kingdom, Belgium and France. - ------------------------------------------------------------------------------------------------------------------------------------ Pension Associates, Inc. Wisconsin The corporation provides pension plan administration and record keeping services and pension plan compensation consulting. - ------------------------------------------------------------------------------------------------------------------------------------ PNAM, Inc. Delaware This is a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Premier Agency, Inc. Iowa This corporation is an insurance agency. - ------------------------------------------------------------------------------------------------------------------------------------ Provestco, Inc. Delaware The company serves as a general partner in certain real estate limited partnerships invested in by NLICA. - ------------------------------------------------------------------------------------------------------------------------------------ RCMD Financial Services, Inc. Delaware This is a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Retention Alternatives, Ltd. Bermuda The company will write first dollar insurance policies in the following lines of insurance: workers compensation, general liability and automobile liability for its affiliates in the United States. - ------------------------------------------------------------------------------------------------------------------------------------ RF Advisors, Inc. Pennsylvania This is an inactive company. - ------------------------------------------------------------------------------------------------------------------------------------ Riverview Agency Texas The corporation is an insurance agency licensed with the Texas Department of Insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Riverview International Group, Inc. Delaware This company is an investment advisor and a broker/dealer. - ------------------------------------------------------------------------------------------------------------------------------------ SBSC Ltd. (Thailand) Thailand This company acts as a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Scottsdale Indemnity Company Ohio The corporation engages in a general insurance business, except life insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Scottsdale Insurance Company Ohio The corporation primarily provides excess and surplus lines of property and casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Scottsdale Surplus Lines Arizona The corporation provides excess and surplus lines Insurance Company coverage on a non-admitted basis. - ------------------------------------------------------------------------------------------------------------------------------------ Siam Ar-Na-Khet Company Limited Thailand The company is a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Software Development Corp. Delaware The company once used to customize and sell IMACS, NLICA (fka Provident Mutual Life Insurance) direct response administration system. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ TBG Insurance Services California The corporation markets and administers executive Corporation benefit plans. - ------------------------------------------------------------------------------------------------------------------------------------ Vertboise, SA Luxembourg The company acts as a real property holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Veterinary Pet Insurance Company California This company provides pet insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Veterinary Pet Services, Inc. California This corporation acts as a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Villanova Securities, LLC Delaware The purpose of the company is to provide brokerage services for block mutual fund trading for both affiliated and non-affiliated investment advisors and perform block mutual fund trading directly with fund companies. - ------------------------------------------------------------------------------------------------------------------------------------ VPI Services, Inc. California The company operates as a nationwide pet registry service for holders of Veterinary Pet Insurance policies, including pet idemnification and last pet recovery program. - ------------------------------------------------------------------------------------------------------------------------------------ Washington Square Administrative Pennsylvania This company provided administrative services to Services, Inc. NLACA. - ------------------------------------------------------------------------------------------------------------------------------------ Western Heritage Insurance Arizona The corporation underwrites excess and surplus lines Company of property and casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - --------------------------------------------------------------------------------------------------------------------------------- * MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-A Ohio Nationwide Life and Issuer of Annuity Contracts Annuity Separate Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-B Ohio Nationwide Life and Issuer of Annuity Contracts Annuity Separate Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-C Ohio Nationwide Life and Issuer of Annuity Contracts Annuity Separate Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-D Ohio Nationwide Life and Issuer of Annuity Contracts Annuity Separate Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-7 Ohio Nationwide Life Separate Issuer of Annuity Contracts (formerly, Nationwide Fidelity Account Advisor Variable Account) - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-9 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-10 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-11 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-12 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-13 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- Nationwide Variable Account-14 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- Nationwide Variable Account-15 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - ---------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - --------------------------------------------------------------------------------------------------------------------------------- Nationwide Variable Account-16 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- Nationwide Variable Account-17 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account - --------------------------------------------------------------------------------------------------------------------------------- Nationwide VL Separate Account-A Ohio Nationwide Life and Issuer of Life Insurance Annuity Separate Account Policies - --------------------------------------------------------------------------------------------------------------------------------- Nationwide VL Separate Account-B Ohio Nationwide Life and Issuer of Life Insurance Annuity Separate Account Policies - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VL Separate Account-C Ohio Nationwide Life and Issuer of Life Insurance Annuity Separate Account Policies - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VL Separate Account-D Ohio Nationwide Life and Issuer of Life Insurance Annuity Separate Account Policies - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance Account Policies - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance Account Policies - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance Account Policies - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-4 Ohio Nationwide Life Separate Issuer of Life Insurance Account Policies - --------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-5 Ohio Nationwide Life Separate Issuer of Life Insurance Account Policies - --------------------------------------------------------------------------------------------------------------------------------- Nationwide VLI Separate Account-6 Ohio Nationwide Life Separate Issuer of Life Insurance Account Policies - ---------------------------------------------------------------------------------------------------------------------------------
(left side) ----------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | | | Guaranty Fund |__________________________________________ | ------------- |__________________________________________ | Certificate | | ----------- | | | | Casualty | ----------------------- | | | | | | | ---------------------------- | - ---------------------------- | | NATIONWIDE GENERAL | | | F & B, INC. | | | INSURANCE COMPANY | | | | | | | | | Common Stock: 1 Share | | | Common Stock: 20,000 |___| | ------------- | | | ------------- Shares | | | |___| | | | | Farmland | | | Casualty-100% | | | Mutual-100% | | ---------------------------- | | | | | - ---------------------------- | ---------------------------- | | | NATIONWIDE PROPERTY | | - ---------------------------- | | AND CASUALTY | | | COOPERATIVE SERVICE | | | INSURANCE COMPANY | | | COMPANY | | | | | | | | | Common Stock: 60,000 |___| | Common Stock: 600 Shares | | | ------------- Shares | | | ------------- |___| | | | | | | Casualty-100% | | | Farmland | ---------------------------- | | Mutual-100% | | - ---------------------------- ---------------------------- | | NATIONWIDE ASSURANCE | | | COMPANY | | | (ASSURANCE) | | | | | | Common Stock: 1,750 |___| | ------------- Shares | | | | | | Casualty-100% | | ---------------------------- | | ---------------------------- | | NATIONWIDE AGRIBUSINESS | | | INSURANCE COMPANY | | | | | | Common Stock: 1,000,000 | | | ------------- Shares | | | |___| | Casualty-99.9% | | | Other Capital: | | | -------------- | | | Casualty-Pfd. | | ---------------------------- | | ---------------------------- | | NATIONAL CASUALTY | | | COMPANY | | | (NC) | | | | | | Common Stock: 100 Shares |___| | ------------- | | | | Casualty-100% | ---------------------------- | | ---------------------------- | NCC OF AMERICA, LTD. | | (INACTIVE) | | | | | | NC-100% | | | ----------------------------
NATIONWIDE(R) (middle) ------------------------------------------ | | | | | | __| NATIONWIDE MUTUAL |__________________________________________ __| INSURANCE COMPANY |__________________________________________ | (CASUALTY) | | | | | | | ------------------------------------------ | | | ______________________________________________________________________________________________________________________ | | | | | -------------------------------- | ------------------------------- | | | SCOTTSDALE | | | SCOTTSDALE | ---------------------------- | | INSURANCE COMPANY | | | INDEMNITY COMPANY | | NATIONWIDE | | | (SIC) | | | | | HEALTH PLANS, INC. (NHP) | | | | | | Common Stock: 50,000 | | | |___| Common Stock: 30,136 | |___| ------------- Shares | |___| Common Stock: 100 Shares | | | ------------- Shares | | | | | | ------------- | | | | | | | | | | | | Casualty-100% | | | Casualty-100% | | | Casualty-100% | | | (See Page 2) | | ------------------------------- | ---------------------------- | -------------------------------- | | | | ------------------------------- | ---------------------------- | -------------------------------- | | NATIONWIDE | | | NATIONWIDE MANAGEMENT | | | ALLIED | | | INDEMNITY COMPANY | | | SYSTEMS, INC. | | | GROUP, INC. | | | (NW INDEMNITY) | | | | | | (AGI) | | | Common Stock: 28,000 | |___| Common Stock: 100 Shares | | | | |___| ------------- Shares | | | ------------- | |___| Common Stock: 850 Shares | | | | | | | | | ------------- | | | | | | NHP-100% | | | | | | Casualty-100% | | ---------------------------- | | Casualty-100% | | ------------------------------- | | | (See Page 2) | | | ---------------------------- | -------------------------------- | ------------------------------- | | NATIONWIDE | | | | LONE STAR | | | AGENCY, INC. | | -------------------------------- | | GENERAL AGENCY, INC. | | | | | | RP&C | | | | |___| Common Stock: 100 Shares | | | INTERNATIONAL | | | Common Stock: 1,000 | | ------------- | | | | |___| ------------- Shares | | | |___| Common Stock: 963 | | | | | NHP-99% | | | ------------- Shares | | | | ---------------------------- | | | | | Casualty-100% | | | Casualty-23.88% | | ------------------------------- ---------------------------- | -------------------------------- | || | NATIONWIDE AFFINITY | | | || | INSURANCE COMPANY | | -------------------------------- | ------------------------------- | OF AMERICA | | | NATIONWIDE CAPITAL | | | COLONIAL COUNTY | | |___| | MORTGAGE, LLC | | | MUTUAL INSURANCE | | Common Stock: 500,000 | | | | | | COMPANY | | ------------- Shares | |___| Mutual-5% | | | | | | | | | | | Surplus Debentures: | | Casualty-100% | | | NW Indemnity-95% | | | ------------------- | ---------------------------- | | | | | | | -------------------------------- | | Assurance | ---------------------------- | | | Lone Star | | NEWHOUSE CAPITAL | | -------------------------------- | | | | PARTNERS, LLC | | | NATIONWIDE INSURANCE | | ------------------------------- | | | | COMPANY OF FLORIDA | | | Casualty-70% |___| | | | ------------------------------- | | |___| Common Stock: 10,000 | | | NATIONWIDE SERVICES | | GGAMI-19% | | | ------------ Shares | | | COMPANY, LLC | | | | | | | | | | Fire-10% | | | Casualty-100% | | | Single Member Limited | ---------------------------- | | | |---| Liability Company | | -------------------------------- | | | ---------------------------- | | | Casualty-100% | | | | | | | | | | | ------------------------------- | NATIONWIDE LLOYDS | | | | |===| | ------------------------------- | A TEXAS LLOYDS | | | AMERICAN MARINE | | | | | UNDERWRITERS, INC. | | | | | | ---------------------------- | | Common Stock: 20 Shares | |___| ------------- | | | | Casualty-100% | | | -------------------------------
(right side) ------------------------------------------ ------------------------ | | | NATIONWIDE | | | | FOUNDATION | | | | | | NATIONWIDE MUTUAL | | MEMBERSHIP | ==| FIRE INSURANCE COMPANY | | NONPROFIT | | (FIRE) | | CORPORATION | | | ------------------------ | | | | ------------------------------------------ | |_______________________________________________________________________________________________ | | | _______________________________________________________________________________ | | | | | | | | | | -------------------------------- | -------------------------------- | ------------------------ | | NATIONWIDE CASH | | | NATIONWIDE | | | | | | MANAGEMANT COMPANY | | | CORPORATION | | | RETENTION | | | | | | Common Stock: Control | | | ALTERNATIVES, LTD. | | | | | | ------------- ------- | | | | |___| Common Stock: 100 Shares | | | 13,642,432 100% | | | | | | ------------- | | | | | | | | | | | | Shares | | | Fire-100% | | | | | | ------ | | | | | | Casualty-100% | | | Casualty 12,992,922 | | ------------------------ | -------------------------------- | | Fire 649,510 | | | | | | | | -------------------------------- | | (See Page 3) | | | | | | -------------------------------- | | | | | | | | NATIONWIDE | | -------------------------------- | | | ARENA LLC | | | ALLNATIONS, INC. | | |---| | | | Common Stock: 12,248 Shares | | | | | | | ------------- | | | | | | | | | | | Casualty-90% | | | Casualty-16.2% | | | | | |___| Fire-16.2% |--- | -------------------------------- | | Preferred Stock: 1,466 Shares| | | | ---------------- | | -------------------------------- | | | | | NATIONWIDE INSURANCE | | | Casualty-6.8% | | | SALES COMPANY, LLC | | | Fire-6.8% | | | (NISC) | | -------------------------------- | | | | |---| Single Member Limited |__ | -------------------------------- | | Liability Company | | | | NATIONWIDE INTERNATIONAL | | | | | | | UNDERWRITERS | | | Casualty-100% | | | | | | -------------------------------- | | | Common Stock: 1,000 | | | | |___| ------------- Shares | | | | | | | | -------------------------------- | | | | | | INSURANCE | | | | Casualty-100% | | | INTERMEDIARIES, INC. | | | -------------------------------- | | | | | | | Common Stock: 1,615 | | | -------------------------------- | | ------------- Shares | | | | CALFARM INSURANCE | | | | | | | COMPANY | | | | | | | | | | NISC-100% | | | | Common Stock: 52,000 | | -------------------------------- | |___| ------------- Shares | | | | | | | -------------------------------- | | | | | | DISCOVER INSURANCE | | | | Casualty-100% | | | AGENCY LLC | | | -------------------------------- | | | | | | | Single Member Limited | | | -------------------------------- | | Liability Company |-- | | NATIONWIDE REALTY | | | | | | INVESTORS, LTD | | | NISC-100% | | | | | | | | | Casualty-95% | | -------------------------------- |---| | | | | NW Indemnity-5% | | -------------------------------- | | | | | DISCOVER INSURANCE | | -------------------------------- | | AGENCY OF | | | | TEXAS, LLC | | -------------------------------- | | | | | NATIONWIDE STRATEGIC | |---| Single Member Limited | | | INVESTMENT FUND, LLC | |---| Liability Company | | | | | | |---| Single Member Limited | | | | | Liability Company | -------------------------------- | | | Casualty-100% | | | -------------------------------- Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2003
Page 1
(left side) ----------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | | | Guaranty Fund |__________________________________________ | ------------- |__________________________________________ | Certificate | | ----------- | | | | Casualty | | (See Page 1)| | | ----------------------- _________________________________________________ | | | | | | - ---------------------------- | ---------------------------- | NATIONWIDE INSURANCE | | | AID FINANCE | | COMPANY OF AMERICA | | | SERVICES, INC. | | | | | (AID FINANCE) | | Common Stock: 12,000 | | | | | ------------- Shares |___| | Common Stock: 10,000 | | | | | ------------- Shares | | | | | | | AGI-100% | | | AGI-100% | - ---------------------------- | ---------------------------- | | - ---------------------------- | | | ALLIED DOCUMENT | | ---------------------------- | SOLUTIONS, INC. | | | ALLIED | | | | | GROUP INSURANCE | | Common Stock: 10,000 | | | MARKETING COMPANY | | ------------- Shares |___| | | | | | | Common Stock: 20,000 | | | | | ------------- Shares | | AGI-100% | | | | - ---------------------------- | | Aid Finance-100% | | ---------------------------- - ---------------------------- | | DEPOSITORS | | ---------------------------- | INSURANCE COMPANY | | | PREMIER | | (DEPOSITORS) | | | AGENCY | | | | | INC. | | Common Stock: 300,000 |___|______| | | ------------- Shares | | | Common Stock: 100,000 | | | | | ------------- Shares | | AGI-100% | | | | - ---------------------------- | | AGI-100% | | ---------------------------- - ---------------------------- | | ALLIED PROPERTY | | | AND CASUALTY | | | INSURANCE COMPANY | | | |___| | Common Stock: 300,000 | | ------------- Shares | | | | AGI-100% | - ----------------------------
NATIONWIDE(R) (middle) ------------------------------------------ | | | | | | _______________| NATIONWIDE MUTUAL |______________________________________________________ _______________| INSURANCE COMPANY |______________________________________________________ | (CASUALTY) | | (See Page 1) | | | | | ------------------------------------------ |__________________________________________________________________________ | | ---------------------------- | ALLIED | | GROUP, INC. | | (AGI) | | | | Common Stock: 850 Shares | | ------------- | | | | Casualty-100% | ---------------------------- | | | | _______________________________________________________________________________________________________________ | | | | | | ---------------------------- | ---------------------------- | NATIONWIDE MORTGAGE | | | AMCO | | HOLDINGS INC. | | | INSURANCE COMPANY | | (NMH) | | | (AMCO) | ___| |___| ___| | | | AGI-100% | | | Common Stock: 300,000 | | | | | | ------------- Shares | | | | | | | | ---------------------------- | | AGI-100% | | | ---------------------------- | ---------------------------- | | | NATIONWIDE HOME | | ---------------------------- | | MORTGAGE DISTRIBUTORS | | | ALLIED | | | INC. | | | GENERAL AGENCY | |___| | | | COMPANY | | | NMHI-100% | |___| | | | | | | Common Stock: 5,000 | | | | | | ------------- Shares | | ---------------------------- | | | | | | AMCO-100% | | ---------------------------- | ---------------------------- | | NATIONWIDE | | | | ADVANTAGE MORTGAGE | | ---------------------------- | | COMPANY (NAMC) | | | | |___| | | | ALLIED TEXAS | | Common Stock: 54,348 | | | AGENCY, INC. | | ------------- Shares | |___| | | | | | | | NMHI-89.75% | | | AMCO-100% | ---------------------------- | | | | | | | | | ---------------------------- ---------------------------- | | AGMC | | ---------------------------- ---------------------------- | REINSURANCE, LTD. | | | CALFARM INSURANCE | | CAL-AG INSURANCE | | | | | AGENCY | | SERVICES, INC. | | Common Stock: 11,000 | | | | | | | ------------- Shares | |___| Common Stock: 1,000 |___| Common Stock: 100 | | | | ------------- Shares | | ------------- Shares | | NAMC-100% | | | | | ---------------------------- | AMCO-100% | | CalFarm Insurance | | | | Agency-100% | ---------------------------- ----------------------------
(right) ------------------------------------------ | | | | | | _______________| NATIONWIDE MUTUAL | _______________| FIRE INSURANCE COMPANY | | (FIRE) | | (See Page 1) | | | | | ------------------------------------------ _____________________________________ | | ---------------------------- | SCOTTSDALE | | INSURANCE COMPANY | | (SIC) | | | | Common Stock: 30,136 | | ------------- Shares | | | | Casualty-100% | ---------------------------- | | | |____________________________________________________________ | | | | | | | | | ---------------------------- ---------------------------- | | SCOTTSDALE | | VETERINARY PET | | | SURPLUS LINES | | SERVICES, INC. | | | INSURANCE COMPANY | | (VPSI) | |___| | | | | | Common Stock: 10,000 | | Common Stock: 1,695,985 | | | ------------- Shares | | ------------- Shares | | | | | | | | SIC-100% | | SIC-5.1% | | ---------------------------- |___| | | | | Preferred-A 403,226 | | ---------------------------- | | ----------- Shares | | | WESTERN | | | | | | HERITAGE INSURANCE | | | SIC-100% | | | COMPANY | | | | |___| | | | Preferred-B 250,596 | | Common Stock: 4,776,076 | | | ----------- Shares | | ------------- Shares | | | | | | | | SIC-96.5% | | SIC-100% | | ---------------------------- ---------------------------- | | ---------------------------- | | VETERINARY PET | | | INSURANCE CO. | | | | |___| | | | VPSI-100% | | | | | | | | ---------------------------- | | ---------------------------- | | DVM INSURANCE | | | AGENCY, INC. | |___| | | | VPSI-100% | | | | | ---------------------------- | | ---------------------------- | | VPI SERVICES, INC. | |___| | | VPSI-100% | | | ---------------------------- Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2003
Page 2 ________________________________________________________________________________ | | | | | | | --------------------------------- --------------------------------- | | NATIONWIDE TOWARZYSTWO | | NATIONWIDE GLOBAL HOLDINGS, | | | UBEZPIECZEN NA ZYCIE SA | | INC.-LUXEMBOURG BRANCH | | | | | (BRANCH) | | |Common Stock: 1,952,000 Shares | | |___ | |------------ | | | | | | | | | |NGH-100% | | Endowment Capital- | | --------------------------------- --------------------------------- | | | --------------------------------- --------------------------------- | | | | | | | NATIONWIDE | | NGH LUXEMBOURG S.A. | | | FINANCIAL SP. Z O.O. | | (LUX SA) | |___| | |Common Stock: 5,894 Shares| | |Common Stock: 40,950 Shares | ___|------------ |___ | |------------ | | | | | | | | | | | | | | | | | |NGH-100% | | |BRANCH-99.98% | | --------------------------------- | --------------------------------- | | | --------------------------------- | --------------------------------- | | SIAM AR-NA-KHET | | | NGH UK, LTD. | | | COMPANY LTD. (SIAM) | | | | |---| | | | | | | | |___| | | | | | | | | | | | | | | |NGH-48.99% | | | | | --------------------------------- | |LUX SA-100% | | | | --------------------------------- | | | | | | | --------------------------------- | | | NATIONWIDE LIFE ASSURANCE | | --------------------------------- | | COMPANY, LTD. | | | NATIONWIDE GLOBAL HOLDINGS | | | | | | -NGH BRASIL PARTICIPACOES, | | | | | | LTDA (NGH BRASIL) | | |NGH-24.3% | |___| | | |SIAM-37.7% | | | Shares | | --------------------------------- | | ------ | | | |LUX SA 6,164,899 | | | |NGH 1 | | | --------------------------------- | --------------------------------| | | | | SBSC LTD (THAILAND) | | | | |Common Stock: 24,500 | | --------------------------------- | |------------ | | | NATIONWIDE MARTIMA VIDA e | | |Shares | | | PREVIDENCIA SA | |---| | | | | |NGH-.01% | | |Common Stock: 134,822,225 | | | | |------------ Shares | |SIAM-48.98% | | | | --------------------------------- | | | | |DPSA-86.4% | | --------------------------------- --------------------------------- | | | PANEUROLIFE (PEL) | | --------------------------------- | | | | CLARIENT LIFE INSURANCE | |Common Stock: 1,300,000 Shares| |___| | |------------ |___| |Common Stock: 65,000 Shares | | | | |------------ | | | | | Shares | |LUX SA-100% | | | ------ | |LUF | | |LUX SA-100% 64,999 | --------------------------------- | |NGH 1 | | | --------------------------------- | | | --------------------------------- | --------------------------------- | VERTBOIS, SA | |___| | | | | | | | | DANICA LIFE S. A | | | | | | | | | | | | | | | | | | | | | | PEL-99.99% | | | | LUX SA-.01% | |LUX SA-100% | --------------------------------- --------------------------------- (middle) NATIONWIDE(R) ------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | -------------------- | |___________|NATIONWIDE MUTUAL |________________________ |Guaranty Fund |___________|INSURANCE COMPANY |________________________ |Certificate | | (CASUALTY) | | | | (See Page 1) | |Casualty | -------------------- | (See Page 1) | | ------------------- | ----------------------------------- | NATIONWIDE CORPORATION (NW CORP) | | Common Stock: Control | | ------------- ------- | | 13,642,432 100% | | | | Shares | | ------ | |Casualty 12,992,922 | |Fire 649,510 | --------------------------------- | | ___________________________________________________________________________________________________________ _______ | | | | --------------------------------- --------------------------------- --------------------------------- | | NATIONWIDE GLOBAL | | NATIONWIDE | | NATIONWIDE FINANCIAL | | | HOLDINGS, INC. (NGH) | | SECURITIES, INC. | | SERVICES, INC. (NFS) | | | | | | | | _______|___|Common Stock: 1 Share | |Common Stock: 7,676 Share | |Common Stock: Control | | |------------ | |------------ | |------------ ------- | | | | | | |Class A Public-100% | | | | | | |Class B NW Corp-100% | | |NW Corp.-100% | |NW Corp.-100% | | (See Page 4) | | --------------------------------- --------------------------------- --------------------------------- | | --------------------------------- | | NATIONWIDE GLOBAL LIMITED | | | | | |Common Stock: 20,343,752 Shares| |___|------------ | | | Shares | | | ------ | | |NGH 20,343,751 | | |LUX SA 1 | | --------------------------------- | | --------------------------------- | | NGH | | | NETHERLANDS B.V. | | | | |___|Common Stock: 40 Shares| | |------------ | | | | | | | | |NGH-100% | | --------------------------------- | | | --------------------------------- | | NATIONWIDE GLOBAL | | | JAPAN, INC. | |___| | | |Common Stock: 100 Shares| | |------------ | | | | | |NGH - 100% | | --------------------------------- | | --------------------------------- | | NATIONWIDE | | | SERVICES SP. Z O.O. | | | | | |Common Stock: 80 Shares| |___|------------ | | | | | | | | |NGH-100% | | --------------------------------- | --------------------------------- | | NATIONWIDE GLOBAL | | | FINANCE, LLC | | | | |---| Single Member Limited | | Liability Company | | | | | |NGH-100% | ---------------------------------
(right side) ------------------------- |NATIONWIDE MUTUAL | _________________________________|FIRE INSURANCE COMPANY | _________________________________| (FIRE) | | (See Page 1) | ------------------------- ________________________________________________________________ | | | | --------------------------------- --------------------------------- | GARTMORE GLOBAL ASSET | | GATES, MCDONALD | | MANAGEMENT TRUST | | & COMPANY (GATES) | | (GGAMT) | | | | | _____|Common Stock: 254 Shares| | | | |------------ | | | | | | |NW Corp-100% | | | | | (See Page 6) | | |NW Corp.-100% | --------------------------------- | --------------------------------- | | | --------------------------------- | | MEDPROSOLUTIONS, INC. | | | | | | | |____| | | | | | | | | |Gates-100% | | --------------------------------- | | | --------------------------------- | | GATES, MCDONALD & | | | COMPANY OF NEW YORK, INC. | | | | |____|Common Stock: 3 Shares | | |------------ | | | | | | | | |Gates-100% | | --------------------------------- | | --------------------------------- | | GATES, MCDONALD & | | | COMPANY OF NEVADA | | | | | |Common Stock: 40 Shares| |____|------------ | | | | | | | | |Gates-100% | | --------------------------------- | | --------------------------------- | | GATESMCDONALD | | | HEALTH PLUS, INC. | | | | |____|Common Stock: 200 Shares| |------------ | | | |Gates-100% | --------------------------------- Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2003 Page 3 (left side) ------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | |________________________ |Guaranty Fund |________________________ |Certificate | | | |Casualty | | (See Page 1) | -------------------- __________________________________________________________________________________________________ | | | - --------------------------- ---------------------------------- | ----------------------------- | NATIONWIDE FINANCIAL | | NATIONWIDE LIFE INSURANCE | | | TBG INSURANCE | | SERVICES CAPITAL TRUST | | COMPANY (NW LIFE) | | | SERVICES CORPORATION | | | | | | | | | Preferred Stock: | ___| Common Stock: 3,814,779 Shares | |___| | | --------------- | | | ------------ | | | | | | | | | | | | | | | | | | | | | NFS-100% | | | NFS-100% | | | NFS-63% | - --------------------------- | ---------------------------------- | ----------------------------- | | | | ----------------------------- | ---------------------------------- | | CAP PRO HOLDING, INC. | | | NATIONWIDE LIFE AND | | | | | | ANNUITY INSURANCE COMPANY | | | | | | | | | | |__| Common Stock: 66,000 Shares | |___| | | | ------------ | | | | | | | | | | NW Life-100% | | NFS-63% | | ---------------------------------- ----------------------------- | | ---------------------------------- | | NATIONWIDE INVESTMENT | | | SERVICES CORPORATION | | | | |__| Common Stock: 5,000 Shares | | | ------------ | | | | | | | | | | NW Life-100% | | ---------------------------------- | | ---------------------------------- | | NATIONWIDE FINANCIAL | |__| ASSIGNMENT COMPANY | | | | | | NW LIFE-100% | | ---------------------------------- | | ---------------------------------- | | NATIONWIDE PROPERTIES LTD. | | | | | | Units: | |__| ----- | | | NW LIFE-97.6% | | | Casualty-2.4% | | ---------------------------------- | | ---------------------------------- | | NATIONWIDE COMMUNITY | | | DEVELOPMENT CORP., LLC | | | | |--| Units: | | | ----- | | | NW LIFE-67% | | | NW Indemnity-33% | | ---------------------------------- | | ---------------------------------- | | NATIONWIDE AFFORDABLE | | | HOUSING, LLC | |--| | | NW Life-45% | | NW Indemnity-45% | ----------------------------------
(middle) NATIONWIDE(R) --------------------- ______________________| NATIONWIDE MUTUAL |_________________________________ ______________________| INSURANCE COMPANY |_________________________________ | (CASUALTY) | | | (See Page 1) | | --------------------- | | --------------------------------------------- | NATIONWIDE CORPORATION (NW CORP) | | Common Stock: Control: | | ------------ ------- | | 13,642,432 100% | | Shares | | ------ | | Casualty 12,992,922 | | Fire 649,510 | --------------------------------------------- | | ------------------------------------ | NATIONWIDE FINANCIAL | | SERVICES, INC. (NFS) | | Common Stock: Control | | ------------ ------- | | Class A Public-100% | | Class B NW Corp-100% | ------------------------------------ | | _________________________________________________________________________________________________________________________ | | | ----------------------------- ---------------------------- ----------------------------------- | NATIONWIDE TRUST | | NFS DISTRIBUTORS, INC. | | NATIONWIDE FINANCIAL | | COMPANY, FSB | | (NFSDI) | | SERVICES CAPITAL TRUST II | | | | | | | | Common Stock: 2,800,000 | | | | | | ------------ Shares | | | | | | | | | | | | | | | | | | NFS-100% | | NFS-100% | | NFS-100% | ----------------------------- ---------------------------- ----------------------------------- | | _____________________________________________________________________________________________ | | | | | | | | ----------------------------- ---------------------------- | ----------------------------------- | NATIONWIDE FINANCIAL | | NATIONAL DEFERRED | | | | | INSTITUTION DISTRIBUTORS | | COMPENSATION, INC. | | | THE 401(K) COMPANIES, INC. | | AGENCY, INC. (NFIDAI) | | | | | (401(K)) | | | | | | | | | Common Stock: 1,000 Shares| | | | | | | ------------ | | | | | | | | | | | | | | NFSDI-100% | | NFSDI-100% | | | NFSDI-100% | ----------------------------- --------------------------- | ----------------------------------- ||| || | | --------------------------------- ||| ----------------------------- || -------------------------------- | | FINANCIAL HORIZONS | ||| | | || | NATIONWIDE RETIREMENT | | | DISTRIBUTORS AGENCY | ||| | | || | PLAN SERVICES, INC. | | | OF ALABAMA, INC. | ||| | FLORIDA | || | | | | Common Stock: 10,000 Shares |_||| | RECORDS |_|| | Common Stock: Control | | | ------------ | ||| | ADMINISTRATOR, INC |__| | ------------- ------- | | | | ||| | | | Class A NFS-100% | | | | ||| | | | Class B NFSDI-100% | | | | ||| | | | | | | NFIDAI-100% | ||| | | | | | --------------------------------- ||| ----------------------------- -------------------------------- | ||| | --------------------------------- ||| ----------------------------- -------------------------------- | | LANDMARK FINANCIAL | ||| | | | 401(k) INVESTMENT | | | SERVICES OF | ||| | | | SERVICES, INC. | | | NEW YORK, INC. | ||| | FINANCIAL HORIZONS | | | | | Common Stock: 10,000 Shares | |||_| DISTRIBUTORS | |Common Stock: 1,000,000 Shares|___| | ------------ |_|||_| AGENCY OF OHIO, INC | |------------- | | | | ||| | | | | | | | ||| | | | | | | NFIDAI-100% | ||| | | |401(k)-100% | | --------------------------------- ||| ----------------------------- -------------------------------- | ||| | --------------------------------- ||| ----------------------------- -------------------------------- | | FINANCIAL HORIZONS | ||| | | | 401(k) INVESTMENT | | | SECURITIES CORP. | ||| | | | ADVISORS, INC. | | | | ||| | FINANCIAL HORIZONS | | | | | Common Stock: 10,000 Shares | |||_| DISTRIBUTORS | |Common Stock: 1,000 Shares |___| | ------------ |_|||_| AGENCY OF | |------------- | | | | ||| | OKLAHOMA, INC | | | | | | ||| | | | | | | NFIDAI-100% | ||| | | |401(k)-100% | | --------------------------------- ||| ----------------------------- -------------------------------- | ||| | --------------------------------- ||| ----------------------------- -------------------------------- | | AFFILIATE AGENCY, INC. | ||| | | | THE 401(k) COMPANY | | | | ||| | | | | | | Common Stock: 100 Shares | ||| | FINANCIAL HORIZONS |Common Stock: 855,000 Shares | | | ------------ |_|||_| DISTRIBUTORS | |------------- |___| | | |||_| AGENCY OF TEXAS, INC | | | | | | ||| | | | | | | NFIDAI-100% | ||| | | |401(k)-100% | | --------------------------------- ||| ----------------------------- -------------------------------- | ||| | --------------------------------- ||| ------------------------------ -------------------------------- | | NATIONWIDE FINANCIAL | ||| | AFFILIATE AGENCY | | | | | INSTITUTION DISTRIBUTORS | ||| | OF OHIO, INC. | | | | |INSURANCE AGENCY, INC. OF MASS.| |||_| | | RIVERVIEW AGENCY, INC. |___| | Common Stock: 100 Shares |_||__| Common Stock: 750 Shares | | |___| | ------------ | | | ------------ | | | | | | | | | | | NFIDAI-100% | | | NFIDAI-100% | | | --------------------------------- | ------------------------------ -------------------------------- | --------------------------------- | | NATIONWIDE FINANCIAL | | | INSTITUTION DISTRIBUTORS | | | AGENCY, INC. OF NEW MEXICO | | | Common Stock: 100 Shares |_| | ------------ | | | | NFIDAI-100% | ---------------------------------
(right side) ------------------------- | NATIONWIDE MUTUAL | ____________| FIRE INSURANCE COMPANY | ____________| (FIRE) | | (See Page 1) | -------------------------- _______________________________________________________________________________________________________________ | | | -------------------------------- ----------------------------- ------------------------------- | PENSION ASSOCIATES, INC. | | NATIONWIDE LIFE INSURANCE | | NATIONWIDE FINANCIAL | | | | COMPANY OF AMERICA | | SERVICES, (BERMUDA) LTD. | | Common Stock: 1,000 Shares | | (NLICA) | | (NFSB) | | ------------ | | | | Common Stock: 250,000 Shares | | | | | | | | | | | | | | NFS-100% | | NFS-100% (See Page 5)| | NFS-100% | -------------------------------- ----------------------------- ------------------------------- | _______________________________________ | | | -------------------------------- -------------------------------- | NATIONWIDE RETIREMENT | | NFSB INVESTMENTS LTD. | | SOLUTIONS, INC. (NRS) | | | | | | Common Stock: 12,000 Shares | | Common Stock: 236,494 Shares |__ | ------------ | | ------------- | | | | | | | | | | NFSDI-100% | | | NFSB-100% | -------------------------------- | -------------------------------- | | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF | | ALABAMA | | | NEW MEXICO | | Common Stock: 10,000 Shares |_|_| Common Stock: 1,000 Shares| | ------------ | | | ------------ | | | | | | | NRS-100% | | | NRS-100% | -------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF | | ARIZONA | | | SO. DAKOTA | | Common Stock: 1,000 Shares |_|_| Common Stock: 1,000 Shares| | ------------ | | | ------------ | | | | | | | NRS-100% | | | NRS-100% | -------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF | | ARKANSAS | | | WYOMING | | Common Stock: 50,000 Shares |_|_| Common Stock: 500 Shares | | ------------ | | | ------------ | | | | | | | NRS-100% | | | NRS-100% | -------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | | | SOLUTIONS, INS. | | | | | AGENCY, INC. | |_| NATIONWIDE RETIREMENT | | Common Stock: 1,000 Shares |_|_| SOLUTIONS, INC. OF | | ------------ | | | OHIO | | | | | | | NRS-100% | | | | -------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | | | SOLUTIONS, INC. OF | | | | | MONTANA | | | NATIONWIDE RETIREMENT | | | |_| SOLUTIONS, INC. OF | | Common Stock: 500 Shares |_|_| OKLAHOMA | | ------------ | | | | | | | | | | NRS-100% | | | | ------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | | | SOLUTIONS, INC. OF | | | | | NEVADA | | | NATIONWIDE RETIREMENT | | Common Stock: 1,000 Shares | |_| SOLUTIONS, INC. OF | | ------------ |_|_| TEXAS | | | | | | NRS-100% | | | -------------------------------- -----------------------------
Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2003 Page 4 (left side) NATIONWIDE(R) --------------------- -------------------------- | FARMLAND MUTUAL |___________| NATIONWIDE MUTUAL |____________________________ | INSURANCE COMPANY |___________| INSURANCE COMPANY |____________________________ | | | (CASUALTY) | | | Guaranty Fund | | (See Page 1) | | | ------------- | -------------------------- | | Certificate | | | ----------- | | | | | | Casualty | | | (See Page 1) | | --------------------- | | | | ------------------------------------------ | NATIONWIDE CORPORATION (NW CORP) | | | | Common Stock: Control: | | ------------- -------- | | 13,642,432 100% | | | | Shares | | ------ | Casualty 12,992,922 | | Fire 649,510 | ------------------------------------------ | | | --------------------------------- | NATIONWIDE FINANCIAL | | SERVICES, INC. (NFS) | | | | Common Stock: Control | | ------------- ------- | | Class A Public - 100% | | Class B NW Corp - 100%| --------------------------------- | | | ---------------------------------- | NATIONWIDE LIFE INSURANCE | | COMPANY OF AMERICA | _______________________________________| (NLICA) | | | | | | | | NFS - 100% | | | ---------------------------------- | | | | | | | | | ----------------------------- ----------------------------- ----------------------- | NATIONWIDE LIFE AND | | NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | ANNUITY COMPANY OF | | COMPANY OF DELAWARE | | PROVIDENT HOLDING | | AMERICA | | | ___| COMPANY |___ | | | | | | (NPHC) | | | | | | | | | NLICA - 100% | | NLICA - 100% | | | NLICA - 100% | ----------------------------- ----------------------------- | ----------------------- | | ----------------------------- | ----------------------- | WASHINGTON SQUARE | | | FOUR P FINANCE | | ADMINISTRATIVE | | | COMPANY | | SERVICES, INC. |__|__| | | | | | | | NPHC - 100% | | | NPHC - 100% | ----------------------------- | ----------------------- | | ----------------------------- | ----------------------- | | | | | | SOFTWARE | | | NATIONWIDE | | DEVELOPMENT | | | PROVIDENT | | CORP. |__|__| DISTRIBUTORS, INC. | | | | | | | | | | | | NPHC - 100% | | | NPHC - 100% | ----------------------------- | ----------------------- | | ----------------------------- | ----------------------- | RF ADVISERS, INC. | | | DELFI REALTY | | | | | CORPORATION | | | | | | | |__|__| | | NPHC - 100% | | | NPHC - 100% | ----------------------------- | ----------------------- | | ----------------------------- | ----------------------- | PNAM, INC. | | | INSTITUTIONAL | | | | | CONCEPTS, INC. | | |__|__| | | | | | | | NPHC - 100% | | | NPHC - 100% | ----------------------------- | ----------------------- | | ----------------------------- | ----------------------- | PROVESTCO, INC. | | | 1717 CAPITAL | | | | | MANAGEMENT COMPANY |___ | |__|__| |___ | | | | | NPHC - 100% | | NPHC - 100% | ----------------------------- -----------------------
(right side) ------------------------------------- | NATIONWIDE MUTUAL | __________| FIRE INSURANCE COMPANY | __________| (FIRE) | | (See Page 1) | ------------------------------------- ----------------------------- ----------------------------- | RCMD FINANCIAL | | 1717 BROKERAGE | | SERVICES, INC. | | SERVICES, INC. | | (RCMD) | | (BSI) | _____| |___| | | | | | | | | NPHC - 100% | | RCMD - 100% | | ----------------------------- ----------------------------- | | | | | | | ----------------------------- ----------------------------- | | 1717 ADVISORY | | 1717 INSURANCE | | | SERVICES, INC. | | AGENCY OF | | | | | MASSACHUSETTS, INC. | | | | | | | | RCMD - 100% | | BSI - 100% | | ----------------------------- ----------------------------- | | | ----------------------------- | | MARKET STREET | | | INVESTMENT | |__| MANAGEMENT COMPANY | | | | NPHC - 100% | ----------------------------- ----------------------------- | | ___| 1717 INSURANCE | ___| AGENCY OF TEXAS, INC. | | | ----------------------------- Subsidiary Companies - Solid Line Contractual Association - Double Line Limited Liability Company - Dotted Line March 31, 2003 Page 5 (left side) --------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | | |Guaranty Fund | |------------- |_______________________ |Certificate |_______________________ |----------- | | | |Casualty | | (See Page 1) | --------------------- _________________________________________________________________ | | | _____________ --------------------------- | | | | AUDENSTAR LIMITED | | --------------------------- | | (AL) | | | NATIONWIDE ASSET | | | | | | MANAGEMENT HOLDINGS, LTD. | | | | | | (NAMHL) | | | | | | | | | GGAMT - 100% | | | | | --------------------------- | | GGAMT - 100% | | | | --------------------------- | --------------------------- | | | | RIVERVIEW INTERNATIONAL | | --------------------------- | | GROUP, INC. | | | NATIONWIDE UK ASSET | | | (RIG) | | | MANAGEMENT HOLDINGS, LTD. | | | |__| | (NUKAMHL) | | | | | | | | GGAMT - 79% | | | | | AL - 21% | | | | --------------------------- | NAMHL - 100% | | | --------------------------- | | | | --------------------------- --------------------------- | | GARTMORE RIVERVIEW, LLC | | NATIONWIDE UK HOLDING | | | | | COMPANY, LTD. | | | | | (NUKHCL) | | | | | | | | | | | | | RIG - 70% | | NUKAMHL - 96.37% | | --------------------------- --------------------------- | | | --------------------------- | | ASSET MANAGEMENT | | | HOLDINGS PLC | | | (AMH) | | | | | | | | | NUKHCL - 100% | | --------------------------- | | | --------------------------- | | GARTMORE INVESTMENT | | | MANAGEMENT PLC | | | (GIM) |__| | | | AMH - 99.99% | | GNL - .01% | --------------------------- (middle) NATIONWIDE(R) ------------------- | NATIONWIDE MUTUAL |____________________________________________________________________________ | INSURANCE COMPANY |____________________________________________________________________________ | (CASUALTY) | | | (See Page 1) | | ------------------- | ---------------------------------------- | NATIONWIDE CORPORATION (NW CORP) | | Common Stock: Control: | | ------------ ------- | | 13,642,432 100% | | Shares | | Casualty 12,992,922 | | Fire 649,510 | ---------------------------------------- | | ------------------------------------- | GARTMORE GLOBAL | | ASSET MANAGEMENT | | TRUST (GGAMT) | | | | NW Corp.-100% | ------------------------------------- | | ________________________________________________________________________________________________ ________________________________________________________________________________________________ | | -------------------------- -------------------------- | -------------------------- | GARTMORE INVESTMENT LTD. | | GARTMORE INVESTMENT | | | GARTMORE FUND | | (GIL) | | SERVICES LTD. | | | MANAGERS LTD. | |__ | | ___| (GISL) | |__| (GFM) | | | | | | | | | | | | GIM - 99.9% | | | GIM - 80% | | | GIM - 99.99% | | | GNL - 0.1% | | | GNL - 20% | | | GNL - .01% | | -------------------------- | -------------------------- | -------------------------- | | | | | | -------------------------- | -------------------------- | -------------------------- | | GARTMORE JAPAN | | | | | | | | | LIMITED | | | GARTMORE INVESTMENT | | | FENPLACE LIMITED | | | | | | SERVICES GMBH | | | | | | | |__| | | | | | | | | | | | | | | | GIL - 100% | | | | | | GFM - 100% | | | | | | GISL - 100% | | | | | -------------------------- | -------------------------- | -------------------------- | | | | -------------------------- | -------------------------- | -------------------------- | | GARTMORE 1990 LTD. | | | GARTMORE FUND MANAGERS | | | GARTMORE SECURITIES LTD. | | | | | | INTERNATIONAL LIMITED | | | (GSL) | |___| | |__| (GFMI) | |__| | | | | | | | | | | GIM - 50% | | GISL - 99.99% | | GIM - 99.99% | | | GSL - 50% | | GSL - .01% | | GNL - .01% | | -------------------------- -------------------------- -------------------------- | | | -------------------------- -------------------------- | | GARTMORE INDOSUEZ UK | | GARTMORE SECRETARIES | | | RECOVERY FUND (G.P.) LTD.| | (JERSEY) LTD. | |___| | | | | | | | GFMI - 94% | | | GIM - 50% | | GSL - 3% | | | GNL - 50% | | GIM - 3% | | -------------------------- -------------------------- | | -------------------------- | |GARTMORE 1990 TRUSTEE LTD.| | | (GENERAL PARTNER) | |___| | | | | GIM - 50% | | GSL - 50% | --------------------------
------------------------------------- | NATIONWIDE MUTUAL | | FIRE INSURANCE COMPANY | __________| (FIRE) | | (See Page 1) | ------------------------------------- ___________________________________________________________________ | _________________________________________________ | | | | | -------------------------- -------------------------- | -------------------------- | | DAMIAN SECURITIES LTD. | | GARTMORE CAPITAL | | | GARTMORE GLOBAL | | | | | MANAGEMENT LTD. | | | INVESTMENT, INC. (GGI) | |__| | | (GCM) | |__| | | | | | | | | See Page 7 | | | GIM - 50% | | GIM - 99.99% | | | | | | GSL - 50% | | GSL - 0.1% | | | | | -------------------------- -------------------------- | -------------------------- | | | -------------------------- | -------------------------- -------------------------- | | GARTMORE GLOBAL | | | GARTMORE NOMINEES LTD. | | GARTMORE U.S. LTD. | | | VENTURES, INC. | | | (GNL) | | (GUS) | |__| | |__| | | | | | | | | | | | | | | | | | | | | | GIM - 99.99% | | | | GGAMT - 100% | | | GSL - .01% | | GCM - 100% | -------------------------- | -------------------------- -------------------------- | | | -------------------------- -------------------------- | | GARTMORE PENSION | | GARTMORE GLOBAL PARTNERS | | | TRUSTEES, LTD. | | (GENERAL PARTNER) | |__| | | | | | | | | | | GIM - 99% | | GUS - 50% | | | GSL - 1% | | GSL - 50% | | -------------------------- -------------------------- | | -------------------------- | | GIL NOMINEES LTD. | | | | |__| | | | | GIM - 50% | | GSL - 50% | --------------------------
Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2003 Page 6 (left side) NATIONWIDE(R) ------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | -------------------- | | | NATIONWIDE MUTUAL |_____________________________ |Guaranty Fund |_______| INSURANCE COMPANY |_____________________________ |Certificate |_______| | | | | | (CASUALTY) | | | Casualty | | (See Page 1) | | | (See Page 1) | --------------------- | - --------------------- | | ------------------------------------------ | NATIONWIDE CORPORATION (NW CORP) | | Common Stock: Control: | | 13,642,432 100% | | Shares | |Casualty 12,992,922 | |Fire 649,510 | ------------------------------------------ | | ------------------------------------ | GARTMORE GLOBAL | | ASSET MANAGEMENT | | TRUST (GGAMT) | | | |NW Corp.- 100% | ------------------------------------ | | ------------------------------------- | GARTMORE GLOBAL | | INVESTMENTS, INC. (GGI) | | | ____| Common Stock: 958,750 Shares | | | GGAMT-94% | | | Preferred Stock: 500,000 Shares | | | GGAMT-100% | | ------------------------------------- | | | | | ------------------------------------- | | GARTMORE S.A. CAPITAL | | | TRUST (GSA) | | | |____ | | | | | DELAWARE BUSINESS TRUST | | ------------------------------------- | | | | | -------------------------------------- | | GARTMORE EMERGING | | | MANAGERS, LLC | | | (GEM) |___ | | | | | | | | | | GSA-100% | | | -------------------------------------- | | | | | | | | --------------------------------------- | | | NORTHPOINTE | | | | CAPITAL LLC |--| | | | | | | GEM-65% | | | --------------------------------------- | | | | | | | | --------------------------------------- | | | CODA CAPITAL | | | | MANAGEMENT LLC | | | | |--- | | GEM-79% | | --------------------------------------- | | | | | --------------------------------------- | | GARTMORE MUTUAL FUND | | | CAPITAL TRUST | |__ | | | DELAWARE BUSINESS TRUST | --------------------------------------- | | | | --------------------------------------- | MARKET STREET FUND | | | | | | DELAWARE BUSINESS TRUST | --------------------------------------- (right side) ------------------------------------- | NATIONWIDE MUTUAL | __________| FIRE INSURANCE COMPANY | __________| (FIRE) | | (See Page 1) | ------------------------------------- ------------------------------------- | GARTMORE GLOBAL ASSET | | MANAGEMENT, INC. | __________| (GGAMI) |______ | | | | GSA-100% | | ------------------------------------- | | ------------------------------------- | | GARTMORE | | | INVESTORS SERVICES, INC. | | | | | | Common Stock: 5 Shares | | | ------------ |______| | | | | | | | GGAMI-100% | | ------------------------------------- | | ------------------------------------- | ------------------------------------- | NATIONWIDE GLOBAL FUNDS | | | GARTMORE MORLEY | | | | | FINANCIAL SERVICES, INC. | | |______| | (MORLEY) | | |_____________| |___ | LUXEMBOURG SICAV | | | Common Stock: 82,343 Shares | | | | | | ------------ | | | | | | GGAMI-100% | | ------------------------------------- | ------------------------------------- | | | ------------------------------------- | ------------------------------------- | | GARTMORE DISTRIBUTION | | | GARTMORE MORLEY CAPITAL | | | SERVICES, INC. | | | MANAGEMENT, INC | | | | | | | | | | | | | | | Common Stock: 10,000 Shares |______| | Common Stock: 500 Shares |___| | ------------ | | | ------------ | | | | | | | | | GGAMI-100% | | | Morley-100% | | ------------------------------------- | ------------------------------------- | | | ------------------------------------- | ------------------------------------- | | CORVIANT CORPORATION | | | GARTMORE | | | (CC) | | | TRUST COMPANY | | | | | | | | | Common Stock: 450,000 Shares| | | Common Stock: 2,000 Shares | | | ------------ | | | ------------ | | | Series A Preferred: 250,000 Shares|______| | |___| | | | | | | | | | | | | | GGAMI-100% | | | Morley-100% | | ------------------------------------- | ------------------------------------- | | | | | | | ------------------------------------- | ------------------------------------- | | VILLANOVA SECURITIES, LLC | | | GARTMORE MORLEY & | | | | | | ASSOCIATES, INC. | | | | | | | | | | | | Common Stock: 3,500 Shares | | | | | | ------------ |___| | | | | | | CC-100% | | | Morley-100% | ------------------------------------- | ------------------------------------- | ------------------------------------- | ------------------------------------- | | | | | | GGI MGT LLC | | | NEWHOUSE SPECIAL | | (GGIMGT) | | | SITUATIONS FUND I, LLC | | | | | | | |------------ | Common Stock: 10,000 Shares | | | | ------------ | | | | GGIMGT-10% | | | | Class A Preferred: 10,000 Shares | | GGAMI-100% | | GGAMI-75% | ------------------------------------- ------------------------------------- Subsidiary Companies - Solid Line Contractual Association - Double Line Limited Liability Company - Dotted Line March 31, 2003
Page 7 Item 30. INDEMNIFICATION Ohio's General Corporation Law expressly authorizes and Nationwide's Amended and Restated Code of Regulations provides for indemnification by Nationwide of any person who, because such person is or was a director, officer or employee of Nationwide was or is a party; or is threatened to be made a party to: o any threatened, pending or completed civil action, suit or proceeding; o any threatened, pending or completed criminal action, suit or proceeding; o any threatened, pending or completed administrative action or proceeding; o any threatened, pending or completed investigative action or proceeding; , The indemnification will be for actual and reasonable expenses, including attorney's fees, judgments, fines and amounts paid in settlement by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the Ohio's General Corporation Law. Nationwide has been informed that in the opinion of the Securities and Exchange Commission the indemnification of directors, officers or persons controlling Nationwide for liabilities arising under the Securities Act of 1933 ("Act") is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by a director, officer or controlling person in connection with the securities being registered, the registrant will submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act. Nationwide and the directors, officers and/or controlling persons will be governed by the final adjudication of such issue. Nationwide will not be required to seek the court's determination if, in the opinion of Nationwide's counsel, the matter has been settled by controlling precedent. However, the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding is permitted Item 31. PRINCIPAL UNDERWRITER (a) NISC serves as principal underwriter and general distributor for Multi-Flex Variable Account, Nationwide Variable Account, Nationwide Variable Account-II, Nationwide Variable Account-4, Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide Variable Account-7, Nationwide Variable Account-8, Nationwide Variable Account-9, Nationwide Variable Account-10, Nationwide Variable Account-13, Nationwide Variable Account-14, Nationwide VA Separate Account-A, Nationwide VA Separate Account-B, Nationwide VA Separate Account-C, Nationwide VL Separate Account-C, Nationwide VL Separate Account-D, Nationwide VLI Separate Account-2, Nationwide VLI Separate Account-3, Nationwide VLI Separate Account-4, and Nationwide VLI Separate Account-5, all of which are separate investment accounts of Nationwide or its affiliates. (b) The NISC Officers and Directors are: Joseph J. Gasper, Director and Chairman of the Board Richard A. Karas, Director and Vice Chairman Mark R. Thresher, Director, Senior Vice President and Treasurer Duane C. Meek, President William G. Goslee, Senior Vice President Kevin S. Crossett, Vice President Trey Rouse, Vice President Peter R. Salvator, Vice President Barbara J. Shane, Vice President-Compliance Officer Karen R. Tackett, Vice President Alan A. Todryk, Vice President-Taxation Carol L. Dove, Associate Vice President-Treasury Services and Assistant Treasurer Glenn W. Soden, Associate Vice President and Secretary Thomas E. Barnes, Associate Vice President and Assistant Secretary John F. Delaloye, Assistant Secretary Dina A. Tantra, Assistant Secretary Mark D. Maxwell, Assistant Secretary E. Gary Berndt, Assistant Treasurer Terry C. Smetzer, Assistant Treasurer The business address of the Directors and Officers of Nationwide Investment Services Corporation is: One Nationwide Plaza, Columbus, Ohio 43215 (c)
- ------------------------------ ------------------------ ----------------------- ------------------ ------------------- NAME OF PRINCIPAL UNDERWRITER NET UNDERWRITING COMPENSATION ON BROKERAGE COMPENSATION DISCOUNTS AND REDEMPTION OR COMMISSIONS COMMISSIONS ANNUITIZATION - ------------------------------ ------------------------ ----------------------- ------------------ ------------------- - ------------------------------ ------------------------ ----------------------- ------------------ ------------------- Nationwide Investment N/A N/A N/A N/A Services Corporation. - ------------------------------ ------------------------ ----------------------- ------------------ -------------------
Item 32. LOCATION OF ACCOUNTS AND RECORDS John Davis Nationwide Life Insurance Company One Nationwide Plaza Columbus, OH 43215 Item 33. MANAGEMENT SERVICES Not Applicable Item 34.FEE REPRESENTATION Nationwide represents that the fees and charges deducted under the contract in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred and risks assumed by Nationwide. SIGNATURES As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VLI SEPARATE ACCOUNT-4, certifies that it meets the requirements of the Securities Act Rule 485(a) for effectiveness of this Post-Effective Amendment and has caused this Post-Effective Amendment to be signed on its behalf in the City of Columbus, and State of Ohio, on this 30th day of April, 2003. NATIONWIDE VLI SEPARATE ACCOUNT-4 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Registrant) NATIONWIDE LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Depositor) By: /s/ STEVEN SAVINI, ESQ. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Steven Savini, Esq. As required by the Securities Act of 1933, the Registration Statement has been signed by the following persons in the capacities indicated on this 30th day of April, 2003. SIGNATURE TITLE W.G. JURGENSEN Director and Chief Executive Officer - -------------------------------------------- W. G. Jurgensen JOSEPH J. GASPER Director and President and - -------------------------------------------- Joseph J. Gasper Chief Operating Officer JOSEPH A. ALUTTO Director - -------------------------------------------- Joseph A. Alutto JAMES G. BROCKSMITH, JR. Director - -------------------------------------------- James G. Brocksmith, Jr. HENRY S. HOLLOWAY Director - -------------------------------------------- Henry S. Holloway LYDIA M. MARSHALL Director - -------------------------------------------- Lydia M. Marshall DONALD L. MCWHORTER Director - -------------------------------------------- Donald L. McWhorter DAVID O. MILLER Director - -------------------------------------------- David O. Miller JAMES F. PATTERSON Director - -------------------------------------------- James F. Patterson GERALD D. PROTHRO Director - -------------------------------------------- Gerald D. Prothro ARDEN L. SHISLER Director - -------------------------------------------- Arden L. Shisler ALEX SHUMATE Director - -------------------------------------------- Alex Shumate By /s/ STEVEN SAVINI ----------------------------------- Steven Savini Attorney-in-Fact EX-99.2N 4 boalastsurviiexhibit.txt AUDITORS' CONSENT INDEPENDENT AUDITORS' CONSENT The Board of Directors of Nationwide Life Insurance Company and Contract Owners of Nationwide VLI Separate Account - 4: We consent to the use of our reports for Nationwide VLI Separate Account-4 dated February 20, 2003 and for Nationwide Life Insurance Company and subsidiaries dated January 30, 2003, included herein, and to the reference to our firm under the heading "Services" in the Statement of Additional Information (File No. 333-52617). Our report for Nationwide Life Insurance Company and subsidiaries refers to a change to the method of accounting for derivative instruments and hedging activities, and for purchased or retained interests in securitized financial assets. KPMG LLP Columbus, Ohio April 28, 2003 -----END PRIVACY-ENHANCED MESSAGE-----