485BPOS 1 boamspvl2.txt BOA MSPVL II ================================================================================ '33 Act File No. 333-52615 '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. 13 |X| and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_| AMENDMENT NO. 13 |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 43215-2220 (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 MICHAEL R. MOSER, ESQ. ONE NATIONWIDE PLAZA ONE NATIONWIDE PLAZA, 1-09-V3 COLUMBUS, OHIO 43215-2220 COLUMBUS, OHIO 43215-2220 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: MAY 1, 2004 It is proposed that this filing will become effective (check appropriate box) |_| Immediately upon filing pursuant to paragraph (b) |X| On May 1, 2004 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: |_| This post-effective amendment designates a new effective date for a previously filed post-effective amendment. ================================================================================ MODIFIED SINGLE 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, 2004 -------------------------------------------------------------------------------- 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 advisor, 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............................2 IN SUMMARY: VARIABLE UNIVERSAL LIFE INSURANCE AND THE POLICY.......................................4 IN SUMMARY: FEE TABLES..............................6 AVAILABLE SUB-ACCOUNTS..............................9 THE POLICY.........................................19 Policy Owner....................................19 The Beneficiaries...............................19 To Purchase.....................................19 Coverage........................................20 Coverage Effective Date.........................20 Temporary Insurance Coverage....................20 To Cancel (Examination Right)...................20 To Change Coverage..............................21 Sub-Account Portfolio Transfers.................21 Fixed Account Transfers.........................22 Modes To Make A Transfer........................22 To Exchange.....................................23 To Terminate Or Surrender.......................23 To Assign.......................................24 Proceeds Upon Maturity..........................24 Reminders, Reports And Illustrations............24 Errors Or Misstatements.........................25 Incontestability................................25 If We Modify The Policy.........................25 RIDER..............................................25 Long-term Care Rider............................25 PREMIUM............................................26 Initial Premium.................................26 Subsequent Premiums.............................26 CHARGES............................................27 Tax Expense.....................................27 Surrender Charges...............................28 Cost Of Insurance...............................28 Mortality And Expense Risk......................28 Administrative Expense..........................29 Policy Loan Interest............................29 Long-term Care Rider............................29 A Note on Charges...............................29 TO ALLOCATE PREMIUM AND SUB-ACCOUNT VALUATION......31 Variable Investment Options.....................31 The Fixed Investment Option.....................31 Allocation Of Premium And Cash Value............32 When Sub-Account Units Are Valued...............32 How Investment Experience Is Determined.........32 Cash Value......................................33 Dollar Cost Averaging...........................34 Asset Rebalancing...............................35 THE DEATH BENEFIT..................................35 Calculation Of The Death Benefit Proceeds.......35 Death Benefit...................................35 Suicide.........................................36 SURRENDERS.........................................36 Full Surrender..................................36 Partial Surrender...............................36 THE PAYOUT OPTIONS.................................37 Interest Income.................................37 Income For A Fixed Period.......................37 Life Income With Payments Guaranteed............37 Fixed Income For Varying Periods................38 Joint And Survivor Life.........................38 Alternate Life Income...........................38 POLICY LOANS.......................................38 Loan Amount And Interest........................38 Collateral And Interest.........................38 Repayment.......................................39 Net Effect Of Policy Loans......................39 LAPSE..............................................40 Grace Period....................................40 Reinstatement...................................40 TAXES..............................................41 Types Of Taxes Of Which To Be Aware.............41 Buying The Policy...............................42 Investment Gain In The Policy...................42 Periodic Withdrawals, Non-Periodic Withdrawals And Loans....................................43 Terminal Illness................................44 Surrender Of The Policy.........................44 Withholding.....................................44 Exchanging The Policy For Another Life Insurance Policy.............................45 Taxation Of Death Benefits......................45 Taxes And The Value Of Your Policy..............45 Tax Changes.....................................46 NATIONWIDE LIFE INSURANCE COMPANY..................47 NATIONWIDE VLI SEPARATE ACCOUNT-4..................47 Organization, Registration And Operation........47 Addition, Deletion, Or Substitution Of Mutual Funds........................................48 Voting Rights...................................49 LEGAL PROCEEDINGS..................................49 Nationwide Life Insurance Company...............49 Nationwide Investment Services Corporation.....................................51 FINANCIAL STATEMENTS...............................51 APPENDIX A: DEFINITIONS...........................A-1 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 the Insured dies. The Death Benefit is THE GREATER OF the Specified Amount OR the applicable percentage of cash value under federal tax law. For more information, see "The Death Benefit" beginning on page 35. 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 37. COVERAGE FLEXIBILITY Subject to conditions, you may choose to: |X| Change your beneficiaries; and |X| Change who owns the policy. For more information, see "The Beneficiaries" beginning on page 19; and "To Assign" beginning on page 24. 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 in the first year than 50% of the policy's Cash Value, less surrender charge, and no greater than 90% of the policy's Cash Value, less surrender charge, in the following years . The minimum amount is $1,000. For more information, see "Policy Loans" beginning on page 38. |X| After the fifth year, take a partial surrender of no less than $500, but no more than 10% of total Premium payments or 100% of Cash Value less total Premium payments less any loan amount at the time of the partial surrender, so long as it does not reduce the policy's Cash Surrender Value below $10,000. For more information, see "Partial Surrender" beginning on page 36. |X| Surrender the policy at any time while the 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 36 and "The Payout Options" beginning on page 37. ADDITIONAL PREMIUM Though the policy is designed to be a single Premium policy, you may make additional Premium payments, subject to conditions. The minimum initial Premium is $10,000 for policies where the Insured is less than 71 years of age and $50,000 where the Insured is between the ages of 71 and 80. For more information, see "Premium" beginning on page 26. 1 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 an annual effective rate of at least 3%. |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 the "Available Sub-Accounts" section, to account for your allocations. Your investment return will depend on the Investment Experience of the Sub-Account portfolios you have chosen. For more information, see "Available Sub-Accounts," beginning on page 9 and "To Allocate Net Premium And Sub-Account Valuation" beginning on page 31. 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 within limits. For more information, see "Sub-Account Portfolio Transfer" beginning on page 21. We have implemented procedures intended to reduce the potentially detrimental impact that disruptive trading has on Sub-Account Investment Experience. For more information, see "Sub-Account Portfolio Transfers," beginning on page 21 and "Modes To Make A Transfer," beginning on page 22. 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 34. TAXES Unless you make a withdrawal, you will generally not be taxed on any earnings while your policy remains In Force. This is known as tax deferral. Also, your beneficiary will generally not have to include the Proceeds as taxable income. For more information, see "Taxes" beginning on page 41. Unlike other variable insurance products offered by Nationwide, this policy does not require distributions to be made before the death of the Insured. 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 24. 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 20. RIDER You may purchase add a Long-term Care Rider to the policy. Availability will vary by state. For more information, see "Rider" beginning on page 25. 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. 2 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) could cause the Cash Value of your policy to decrease, resulting in a Lapse of insurance coverage sooner than might have been foreseen, and, potentially, even terminate without value. EFFECT OF PARTIAL SURRENDERS AND POLICY LOANS ON INVESTMENT Partial surrenders or policy loans may accelerate a Lapse because the amount of either or RETURNS 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. If the partial surrender amount exceeds the Cash Value in the Sub-Account portfolios, the fixed account will be reduced as well. As collateral for a policy loan, we will transfer an equal amount of Cash Value to the 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 a policy loan will impact the policy's Death Benefit. For more information, see "Surrenders" beginning on page 36 and "Effect of Policy Loans" beginning on page 39. 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 43. 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. For more information, see "The Fixed Investment Option" beginning on page 31. 3 SUB-ACCOUNT PORTFOLIO LIMITATIONS Frequent trading among the Sub-Accounts may dilute the value of your Sub-Account units, cause the Sub-Account to incur higher transaction costs, and interfere with the Sub-Accounts' ability to pursue its stated investment objective. This disruption to the Sub-Account may result in lower Investment Experience and Cash Value. We have instituted procedures to minimize disruptive transfers. For more information, see " Sub-Account Portfolio Transfers," beginning on page 21 and "Modes To Make A Transfer," beginning on page 22. While we expect these procedures to reduce the adverse effect of disruptive transfers, we cannot assure you that we have eliminated these risks. 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 option? 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 TO, BUT ALSO DIFFERENT FROM, UNIVERSAL LIFE INSURANCE. |X| You will pay a Premium for life insurance coverage on the Insured. |X| The policy will provide for the accumulation of a Cash Surrender Value if you were to surrender it at any time while the Insured is alive. |X| The Cash Surrender Value could be substantially lower than the Premiums you have paid. What makes the policy different from 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 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 INSURED'S 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 Insured's age and sex; the underwriting class; any substandard ratings; the Specified Amount; and the choice of the Rider. |X| You will then be able to allocate the Premium between and among a fixed and the variable investment options. |X| From the policy's Cash Value each month, we will deduct other charges to help cover the mortality risks we assumed, and the sales and administrative costs. We call these charges periodic charges. 4 |X| 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. |X| The policy will pay a Death Benefit to the beneficiary. |X| Prior to the Insured's death, you may withdraw all, or a portion (after the fifth policy year), of the policy's Cash Surrender Value. Or you may borrow against the Cash Surrender Value. Withdrawals and loans are subject to restrictions, 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 FEE AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING THE POLICY. THE FIRST TABLE DESCRIBES THE FEE THAT YOU WILL PAY AT THE TIME THAT YOU SURRENDER THE POLICY. FOR MORE INFORMATION, SEE "CHARGES," BEGINNING ON PAGE 27.
=================================================================================================================================== TRANSACTION FEES ============================ =============================== ====================================================================== Charge When Charge Is Deducted Amount Deducted ============================ =============================== ====================================================================== SURRENDER CHARGES(1) Upon Full Surrender or Lapse Maximum Guaranteed Charge ---------------------------- ------------------------------- ---------------------------------------------------------------------- 10% of Initial Premium Payments ---------------------------- ------------------------------- ---------------------------------------------------------------------- From The Policy's Cash Value ---------------------------- ------------------------------- ---------------------------------- ----------------------------------- ILLUSTRATION CHARGE(2) Upon Requesting an Maximum Guaranteed Charge Currently Illustration ---------------------------- ------------------------------- ---------------------------------- ----------------------------------- $25 0 ---------------------------- ------------------------------- ---------------------------------------------------------------------- Proportionately From Policy's Cash Value ---------------------------- ------------------------------- ----------------------------------------------------------------------
(1) The amount of the charge we would deduct begins to decrease each year after the second from the Policy Date. For the third year from the Policy Date the charge is 9% of initial Premium, for the fourth year it is 8%, for the fifth year it is 7%, for the sixth year it is 6%, for the seventh year it is 5%, for the eighth year it is 4%, for the ninth year it is 3%, and, thereafter, there is no charge. Initial Premium may vary by: the Insured's sex; age (when the policy was issued); underwriting class and the Specified Amount (and any increases). (2) If we begin to charge for illustrations, you will be expected to pay the charge directly to us at the time of the request. 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 Amount Deducted Deducted From Cash Values ------------------------------ ----------------------- --------------------------- ---------------------- -------------------------- COST OF Monthly Minimum Maximum Representative(6) INSURANCE(3), (4), (5) $0.06 $83.33 $0.18 Representative - For An Age 35 Per $1,000 of Net Amount at Risk Male With A Long-term Care (Death Benefit less Cash Value) Specified Amount Of $500,000 Proportionately From Your Chosen Variable And Fixed Investment Options ------------------------------ ----------------------- ----------------------------------------------------------------------------- MORTALITY AND EXPENSE RISK Monthly Maximum And Current Charge $0.58 Per $1,000 Of Cash Value Proportionately From Your Chosen Variable Investment Options ------------------------------ ----------------------- -----------------------------------------------------------------------------
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------------------------------ ----------------------- ----------------------------------------------------------------------------- TAX EXPENSE(7) Monthly Maximum And Current Charges $0.42 Per $1,000 Of Cash Value(6) Proportionately From Your Chosen Variable And Fixed Investment Options ------------------------------ ----------------------- ----------------------------------------------------------------------------- ADMINISTRATIVE EXPENSE(8) Monthly Maximum The Greater Of: $10 Or $0.25 Per $1,000 Of Cash Value Proportionately From Your Chosen Variable And Fixed Investment Options ------------------------------ ----------------------- ----------------------------------------------------------------------------- POLICY LOAN Annually Maximum Guaranteed Currently INTEREST (9), (10), (11) (Accrues Daily) $60 $60 Per $1,000 Of An Outstanding Policy Loan ------------------------------ ----------------------- ---------------------------------- ------------------- ---------------------- LONG-TERM CARE RIDER(12) Monthly Minimum Maximum Representative Representative - For An Age 35 Male With A Long-term Care Specified Amount Of $500,000 $0.02 $5.73 $0.02 Per $1,000 Of Rider Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options ------------------------------ ----------------------- -----------------------------------------------------------------------------
----------- (3) This charge varies by: the Insured's sex; age; underwriting class; any substandard ratings; the year from the Policy Date and the Specified Amount. (4) Ask for a policy illustration, or see your Policy Data Page for information on your cost. (5) The current cost of insurance charge is calculated based on your policy's cash value and is equal to $0.54 per $1,000 of Cash Value for each month for the first ten years from the Policy Date and for all policies with Cash Value less than $100,000. For polices with at least $100,000 of Cash Value, for years after the tenth from the Policy Date, the charge is equal to $0.25 per $1,000 of Cash Value for each month. In New York, the current cost of insurance charge is $0.54 per $1,000 of Cash Value for each month in all years. (6) The representative charge may not be representative of the charge that a particular policy owner pays. (7) This charge applies for the first ten years from the Policy Date. (8) The current monthly administrative charge is $0.25 per $1,000 of Cash Value for the first ten years from the Policy Date on all policies with Cash Value less than $100,000. For policies with $100,000 or more of Cash Value, for years after the tenth from the Policy Date, the current charge is equal to $0.13 per $1,000 of Cash Value. The charge, however, is not less than $10 per month. In New York, the administrative charge is $0.25 per $1,000 of Cash Value each month in all years, subject to a maximum of $7.50 per month. (9) On the amount of an outstanding loan, we not only charge, but also credit, interest, so there is a net cost to you. Also, there are ordinary and preferred loans on which interest rates vary. For more information, see "Policy Loans" beginning on page 38. (10) We charge 6% interest per annum on the outstanding balance, which accrues daily and becomes due and payable at the end of the year from the Policy Date, or we add it to your loan. Meanwhile, we credit interest daily, too, on the 7 portion of your policy"s Cash Value corresponding to, and serving as collateral or security to ensure repayment of, the loan. It is 4% and 6% per annum currently for ordinary and preferred loans, respectively (guaranteed 4% minimally). (11) Your net cost for an ordinary loan is 2% per annum currently. There is no cost (a net cost of zero) for a preferred loan currently. For more information, see "Collateral And Interest," beginning on page 38. (12) This charge varies by any substandard ratings. The continuation of a Rider is contingent on the policy being In Force. 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. THE NEXT SECTION LISTS THE AVAILABLE SUB-ACCOUNTS. ALSO, APPENDIX B IDENTIFIES THE AVAILABLE MUTUAL FUNDS BY NAME, INVESTMENT TYPE, AND ADVISER.
TOTAL ANNUAL SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES Minimum Maximum (expenses that are deducted from the Sub-Account portfolio assets, including 0.27% 4.56% management fees, distribution (12b-1) fees, and other expenses)
8 -------------------------------------------------------------------------------- AVAILABLE SUB-ACCOUNTS -------------------------------------------------------------------------------- We identify Sub-Accounts by the name of the underlying mutual funds. The Sub-Accounts available through this policy are:
AIM VARIABLE INSURANCE FUNDS - AIM V.I. BASIC VALUE FUND: SERIES I SHARES ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: AIM Advisors, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. ------------------------------------------------ ----------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS - AIM V.I. CAPITAL APPRECIATION FUND: SERIES I SHARES ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: AIM Advisors, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Growth of capital. ------------------------------------------------ ----------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS - AIM V.I. CAPITAL DEVELOPMENT FUND: SERIES I SHARES ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: AIM Advisors, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. - ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO: CLASS A (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Alliance Capital Management, L.P. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Reasonable current income and reasonable opportunity for appreciation through investments primarily in dividend-paying common stocks of good quality. ------------------------------------------------ ----------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. - ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO: CLASS A (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Alliance Capital Management, L.P. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP BALANCED FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth and current income. ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP INCOME & GROWTH FUND: CLASS I (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP INTERNATIONAL FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ -----------------------------------------------------------------------------------
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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. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- CREDIT SUISSE TRUST - GLOBAL POST-VENTURE CAPITAL PORTFOLIO (not available to receive transfers or purchase payments effective May 1, 2002) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Credit Suisse Asset Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- CREDIT SUISSE TRUST - INTERNATIONAL FOCUS PORTFOLIO (not available to receive transfers or purchase payments effective May 1, 2002) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Credit Suisse Asset Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- CREDIT SUISSE TRUST - LARGE CAP VALUE PORTFOLIO (not available for policies issued on or after May 1, 2000) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Credit Suisse Asset Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Total return. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND - APPRECIATION PORTFOLIO: INITIAL SHARES ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND - DEVELOPING LEADERS PORTFOLIO: INITIAL SHARES (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Maximum capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND - GROWTH AND INCOME PORTFOLIO: INITIAL SHARES ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth, current income and growth of income. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ -----------------------------------------------------------------------------------
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FEDERATED INSURANCE SERIES - FEDERATED AMERICAN LEADERS FUND II: PRIMARY SHARES (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Federated Investment Management Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES - FEDERATED CAPITAL APPRECIATION FUND II: PRIMARY SHARES (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Federated Investment Management Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES - FEDERATED QUALITY BOND FUND II: PRIMARY SHARES ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Federated Investment Management Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Current income. ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP EQUITY-INCOME PORTFOLIO: SERVICE CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Reasonable income. ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP GROWTH PORTFOLIO: SERVICE CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP OVERSEAS PORTFOLIO: SERVICE CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management and Research Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III GROWTH OPPORTUNITIES PORTFOLIO: SERVICE CLASS (not available for policies issued on or after May 1, 2002) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III MID CAP PORTFOLIO: SERVICE CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP III VALUE STRATEGIES PORTFOLIO: SERVICE CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ -----------------------------------------------------------------------------------
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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. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - TEMPLETON FOREIGN SECURITIES FUND: CLASS 1 ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Templeton Investment Counsel, Inc ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - COMSTOCK GVIT VALUE FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Van Kampen Asset Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth and income. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - DREYFUS GVIT INTERNATIONAL VALUE FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: The Dreyfus Corporation ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - DREYFUS GVIT MID CAP INDEX FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: The Dreyfus Corporation ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - FEDERATED GVIT HIGH INCOME BOND FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Federated Investment Counseling ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High current income. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT MID CAP GROWTH FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of long-term capital appreciation. ------------------------------------------------ -----------------------------------------------------------------------------------
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GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND: CLASS I (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL UTILITIES FUND: CLASS I (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GOVERNMENT BOND FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of income. ------------------------------------------------ ----------------------------------------------------------------------------------- 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 affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT INTERNATIONAL GROWTH 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. ------------------------------------------------ -----------------------------------------------------------------------------------
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GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT INVESTOR DESTINATIONS FUNDS --------------------------- -------------------------------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking income and, DESTINATIONS CONSERVATIVE secondarily, long term growth of capital. The Fund invests in a FUND: CLASS II target allocation mix of 10% large cap U.S. stocks, 5% mid cap U.S. stocks, 5% international stocks, 35% bonds, and 45% short-term investments. --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking growth of capital DESTINATIONS MODERATELY and income. The Fund invests in a target allocation mix of 30% CONSERVATIVE FUND: CLASS large cap U.S. stocks, 10% mid cap U.S. stocks, 5% small cap U.S. II stocks, 15% international stocks, 25% bonds, and 15% short-term investments. --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return primarily by seeking growth of DESTINATIONS MODERATE capital. The Fund invests in a target allocation mix of 40% large FUND: CLASS II cap U.S. stocks, 15% mid cap U.S. stocks, 10% small cap U.S. stocks, 30% international funds, and 5% bonds. --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking income and, DESTINATIONS MODERATELY secondarily, long term growth of capital. The Fund invests in a AGGRESSIVE FUND: CLASS II target allocation mix of 10% large cap U.S. stocks, 5% mid cap U.S. stocks, 5% international stocks, 35% bonds, and 45% short-term investments. --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking growth of capital DESTINATIONS AGGRESSIVE and income. The Fund invests in a target allocation mix of 30% FUND: CLASS II large cap U.S. stocks, 10% mid cap U.S. stocks, 5% small cap U.S. stocks, 15% international stocks, 25% bonds, and 15% short-term investments. --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT MONEY MARKET FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of current income. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT NATIONWIDE(R) FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT NATIONWIDE(R) LEADERS FUND: CLASS I (not available for policies issued on or after May 1, 2003) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT U.S. GROWTH LEADERS FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ -----------------------------------------------------------------------------------
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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 affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GVIT SMALL CAP GROWTH FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-advisers: Neuberger Berman, LLC; Waddell & Reed Investment Management Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GVIT SMALL CAP VALUE FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: The Dreyfus Corporation; J.P. Morgan Investment Management Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GVIT SMALL COMPANY FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate 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. ------------------------------------------------ ----------------------------------------------------------------------------------- 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 affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: J.P. Morgan Investment Management Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - VAN KAMPEN GVIT MULTI SECTOR BOND FUND: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Morgan Stanley Investment Management Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Above average total return. ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - BALANCED PORTFOLIO: SERVICE SHARES (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - CAPITAL APPRECIATION PORTFOLIO: SERVICE SHARES (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. ------------------------------------------------ -----------------------------------------------------------------------------------
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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. ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - RISK-MANAGED CORE PORTFOLIO: SERVICE SHARES (FORMERLY KNOWN AS JANUS ASPEN SERIES - RISK - MANAGED LARGE CAP CORE PORTFOLIO: SERVICE SHARES) (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Enhanced Investment Technologies, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- MFS(R) VARIABLE INSURANCE TRUST - MFS VALUE SERIES: INITIAL CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Massachusetts Financial Services Company ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation and reasonable income. ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT FASCIANO PORTFOLIO: CLASS S ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT GROWTH PORTFOLIO ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT LIMITED MATURITY BOND PORTFOLIO: CLASS I ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Highest available current income. ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT MID-CAP GROWTH PORTFOLIO: CLASS I (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. ------------------------------------------------ -----------------------------------------------------------------------------------
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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. ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT SOCIALLY RESPONSIVE PORTFOLIO ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND/VA: INITIAL CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation and current income. ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND/VA: INITIAL CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND/VA: INITIAL CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of current income. ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MAIN STREET(R) FUND/VA: INITIAL CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MAIN STREET(R) SMALL CAP FUND/VA: INITIAL CLASS ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. ------------------------------------------------ ----------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT GROWTH & INCOME FUND: CLASS IB ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Putnam Investment Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth and current income. ------------------------------------------------ ----------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT INTERNATIONAL EQUITY FUND: CLASS IB (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Putnam Investment Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT VOYAGER FUND: CLASS IB ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Putnam Investment Management, LLC ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ -----------------------------------------------------------------------------------
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VAN ECK WORLDWIDE INSURANCE TRUST - WORLDWIDE EMERGING MARKETS FUND: INITIAL CLASS (not available for policies issued on or after May 1, 2002) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Van Eck Associates Corporation ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation by investing primarily in equity securities in emerging markets around the world. ------------------------------------------------ ----------------------------------------------------------------------------------- VAN ECK WORLDWIDE INSURANCE TRUST - WORLDWIDE HARD ASSETS FUND: INITIAL CLASS (not available for policies issued on or after May 1, 2002) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Van Eck Associates Corporation ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation by investing primarily in "hard asset securities." Income is a secondary consideration. ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------ ----------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - EMERGING MARKETS DEBT PORTFOLIO: CLASS I (not available for policies issued on or after May 1, 2004) ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. ------------------------------------------------ ----------------------------------------------------------------------------------- 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 ------------------------------------------------ ----------------------------------------------------------------------------------- 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. ------------------------------------------------------------------------------------------------------------------------------------
The Sub-Account portfolios listed above 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. We have entered into agency agreements with certain broker-dealer firms to distribute the policy. Some of those firms have an affiliate that acts as an investment adviser or a subadviser to one or more of the underlying funds that are offered under the policy. PLEASE REFER TO THE PROSPECTUS FOR EACH SUB-ACCOUNT PORTFOLIO FOR MORE DETAILED INFORMATION. 18 -------------------------------------------------------------------------------- THE POLICY -------------------------------------------------------------------------------- The policy is a legal contract between you and us. Any change we make must be in writing, signed by our president and secretary, and attached to or endorsed on the policy. You may exercise all policy rights and options while the Insured is alive. You may also change the policy, but only in accordance with its terms. Generally, the policy is available for an insured age 80 or younger (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: Policy Data Pages; 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. 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 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 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 41. -------------------------------------------------------------------------------- THE BENEFICIARIES The principal right of a beneficiary is to receive Proceeds constituting the Death Benefit upon the Insured's death. So long as the 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 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 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. 19 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. -------------------------------------------------------------------------------- COVERAGE We will issue the policy only if the underwriting process has been completed, we have approved the application and the proposed Insured is 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. -------------------------------------------------------------------------------- COVERAGE EFFECTIVE DATE Insurance coverage will begin and be In Force on the Policy Date shown on the policy data page. For a change in Specified Amount, the effective date will be on the next monthly anniversary from the Policy Date after we have approved your request. It will end upon the 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 options and any Riders, for purposes of the policy. During this time, we deposit your initial Premium payment into an interest bearing checking account. 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 insurance coverage takes effect, or five days from the date we mail a termination notice (accompanied by a refund equal to the Premium payment you submitted). 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, 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. Depending on the right to examine law in the state in which you live, this amount will be your initial premium or the policy's Cash Value. For more information, see "To Allocate Premium And Sub-Account Valuation" beginning on page 31. Any premium payments we receive after your right to cancel the policy expires will be allocated to the Sub-Accounts choices in effect when we receive that premium payment. 20 -------------------------------------------------------------------------------- TO CHANGE COVERAGE If you choose to make additional premium payments, then we may need to increase the Specified Amount to maintain the policy as life insurance under the Code. In this case, we will not accept the Premium and make the corresponding increase the Specified Amount, unless: 1) you provide us with evidence of the Insured's insurability; and 2) the Insured is in same underwriting rate class and in the same underwriting rate class multiple as when the policy was purchased. If you take a partial surrender, we reduce the Specified Amount, as well as the Cash Value, by the amount of the partial surrender. -------------------------------------------------------------------------------- SUB-ACCOUNT PORTFOLIO TRANSFERS We will determine the amount you have available for transfers among the Sub-Account portfolios in 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). A Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests, however, because the Unit value will reflect the deduction for any periodic charges. For more information, see "In Summary: Fee Tables" beginning on page 6, and "How Investment Experience Is Determined" beginning on page 32. Disruptive trading practices, which hamper the orderly pursuit of stated investment objectives by underlying mutual fund managers, may adversely affect the performance of the Sub-Accounts. Prior to the policy's Maturity Date, you may transfer among the available Sub-Account portfolios. However, in instances of disruptive trading that we may, or have already determined to be harmful to policy owners, we will attempt to curtail or limit the disruptive trading through the use of appropriate means available to us. If your trading activities, or those of a third party acting on your behalf, constitute disruptive trading, we will not limit your ability to initiate the trades as provided in your policy; however, we may limit your means for making a transfer or take other action we deem necessary to protect the interests of those investing in the affected Sub-Accounts. If you intend to use an active trading strategy, you should consult your registered representative and request information on our other policy that offers Sub-Accounts that are designed specifically to support active trading. We may add new underlying mutual funds, or new share classes of currently available underlying mutual funds, that assess short-term trading fees. In the case of new share class additions, your subsequent allocations may be limited to that new share class. Short-term trading fees are a charge assessed by an underlying mutual fund when you transfer out of a Sub-Account before the end of a stated period. These fees will only apply to Sub-Accounts corresponding to underlying mutual funds that impose such a charge. The underlying mutual fund intends short-term trading fees to compensate the fund and its shareholders for the negative impact on fund performance that may result from disruptive trading practices, including frequent trading and short-term trading (market timing) strategies. The fees generally are not intended to adversely impact policy owners not engaged in such strategies. The separate account will collect the short-term trading fees at the time of the transfer by reducing the policy owner's Sub-Account value. We will remit all such fees to the underlying mutual fund. 21 -------------------------------------------------------------------------------- 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. However, during the first 24 months following the initial Policy Date you may irrevocably elect to transfer all of the Cash Value to the fixed account. On transfers to the fixed account, you may request a transfer of up to 100% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period, but we may limit the transfer to 25%. On transfers from the fixed account, we reserve the right to limit the amount of the policy's cash value that you may transfer from the fixed account in a given policy year. We will declare the limit that may be transferred at the end of each interest rate guarantee period. An interest rate guaranteed period is the time that a stated interest rate is guaranteed to remain in effect. The period begins at the time of the transfer and ends on the last day of the calendar quarter. Each successive period is three months. Any transfers you make from the fixed account must be within 30 days of the end of a period. -------------------------------------------------------------------------------- MODES TO MAKE A TRANSFER To make a transfer, send your written request to us at our Home Office via first class U.S. mail. Upon receipt, we will process a transfer request at the end of the current Valuation Period. We may also permit you to use other modes of communication, subject to limitations. OUR CONTACT INFORMATION IS ON THE COVER PAGE OF THIS PROSPECTUS. With respect to any telephonic or electronic mode of communication, including the Internet, we monitor transfer activity for potentially disruptive trading practices. Generally, you are limited to 20 "transfer events" per calendar year. If you initiate transfer events within a lesser time interval at a pace that is equivalent to 20 within a year, you may be required to submit all subsequent transfers via U.S. Mail. To calculate transfer events, at the end of each Valuation Period, we will group together all of your transfer requests for the day. We will count this grouping as a "transfer event," regardless of the number of Sub-Accounts involved. Once 20 transfer events in a year or an equivalent number in a shorter period occur, you may continue to make transfers, but only by sending your written request to us at our Home Office via first class U.S. mail until the end of the year. Then, we begin to count transfer events over again. We have the right to restrict transfer requests, or take any other action we deem necessary, in order to protect policy owners and beneficiaries from the negative investment results that may result from harmful investment practices employed by some policy owners (or third parties acting on their behalf). In particular, we may restrict trading strategies designed to avoid or take advantage of our monitoring procedures and other measures aimed at curbing harmful trading practices. Some investment advisers/representatives manage the assets of multiple Nationwide policies pursuant to trading authority granted or conveyed by multiple policy owners. We generally will require multi-policy advisers to submit all transfer requests via U.S. mail. 22 We will employ reasonable procedures to confirm that instructions are genuine, especially with respect to the Internet and telephone, including: o requiring forms of personal identification before acting upon instructions; o providing you with written confirmation of completed transactions; and/or o recording 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. -------------------------------------------------------------------------------- TO EXCHANGE You have an exchange right under the policy. At any time within the first 24 months of coverage from the Policy Date, you may surrender this policy and use the Cash Surrender Value to purchase a new policy on the Insured's life without evidence of insurability. Afterwards, you may also surrender the policy and use the Cash Surrender Value to purchase a new policy on the same Insured's life, but subject to evidence of insurability that satisfies our underwriting standards. The new policy may be one of our available flexible premium adjustable life insurance policies. It may not have a greater Death Benefit than that of this policy immediately prior to the exchange date. It will have the same Specified Amount, Policy Date, and issue age. We will base Premiums on our rates in effect for the same sex, Attained Age and premium class of the Insured on the exchange date. You may transfer any Indebtedness to the new policy. You must make your request on our official forms to the Home Office. The policy must be In Force and not in a Grace Period. You must pay a surrender charge. For more information, see ""In Summary: Fee Tables,"" beginning on page 6. The exchange may have tax consequences. For more information, see "Exchanging The Policy For Another Life Insurance Policy" beginning on page 45. The new policy will take effect on the exchange date only if the Insured is alive. This policy will terminate when the new policy takes effect. -------------------------------------------------------------------------------- TO TERMINATE OR SURRENDER You have the right to terminate the policy. At any time, you may surrender the policy for its Cash Surrender Value. The policy will automatically terminate when the Insured dies, the policy matures, or the Grace Period ends. For more information, see "Surrenders" beginning on page 36. 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 44. The Cash Surrender Value will be reduced by the amount of a policy loan, if any. For more information see, "Policy Loans" beginning on page 38. 23 -------------------------------------------------------------------------------- TO ASSIGN You may assign any rights under the policy while the 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. Please see the "Policy Loans" section of this prospectus. For more information see, "Policy Loans" beginning on page 38. -------------------------------------------------------------------------------- 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 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, and you will still have in effect the long-term care Rider (though you will not be charged for it), the termination of benefits under which will coincide with the policy's extended Maturity Date (unless you decide otherwise). The Maturity Date extension will either be for the policy value (as defined below), or for the Specified Amount (subject to the law of the state in which you lived at the time you purchased the policy). It is your choice, and, in any event, the policy will be endorsed so that: > no additional Premium payments will be allowed; > no changes to the amount of the Specified Amount will be allowed; > no additional periodic charges will be deducted; > the Death Benefit will equal the Cash Value; and > 100% of the Cash Value will be transferred to the policy's fixed account. Notwithstanding your choice, the Proceeds will be the greater of the policy's Specified Amount or Cash Value. The Maturity Date will not be extended, however, where the policy will fail the definition of life insurance. For more information, see "The Payout Options" beginning on page 37, and "The Death Benefit" beginning on page 35. -------------------------------------------------------------------------------- REMINDERS, REPORTS AND We will send you scheduled Premium payment reminders and transaction confirmations. ILLUSTRATIONS 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 o outstanding policy indebtedness report We will send these reminders and reports to the address you provide on the application, or to another you may specify. 24 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. -------------------------------------------------------------------------------- ERRORS OR MISSTATEMENTS If you make an error or misstatement in completing the application, we will adjust the Death Benefit accordingly. To determine the adjusted Death Benefit, we will recalculate the Specified Amount as of the date of issue using the Insured's true age and sex. -------------------------------------------------------------------------------- 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 Insured's lifetime for two years from the Policy Date. For any change in Specified Amount requiring evidence of insurability, we will not contest payment of the Death Benefit based on such an increase after it has been In Force 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. -------------------------------------------------------------------------------- RIDER -------------------------------------------------------------------------------- A Rider is available for you to purchase to design the policy to meet your specific needs. Once the policy is In Force, we may require further evidence of insurability before you may add a Rider. Availability will vary by state. You will incur an additional charge so long as the policy remains in effect and the Rider's term has not expired, we 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 Rider, see "In Summary: Fee Tables" beginning on page 6, and "Charges" beginning on page 27. -------------------------------------------------------------------------------- LONG-TERM CARE RIDER This Rider is available to purchase at any time only within six months from the Policy Date. The Insured is paid a monthly benefit upon meeting the eligibility requirements, the Insured is paid a monthly benefit after 90 days of being confined to a care facility (other than a hospital) or provided personal assistance at home while under a physician's care. The benefit may not cover all of your long term-care costs. The benefits paid under the Rider are intended to be "qualified long-term care insurance" under federal tax law, and, generally, the benefits may not be taxable to the payee. See your tax adviser about the use of this Rider in your situation. 25 You will be charged for this Rider: so long as the policy remains In Force through maturity; 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. Because we deduct the charge for this benefit from the policy's Cash Value, your purchase of this Rider could reduce the amount of Proceeds payable when the Death Benefit depends on Cash Value. Also, the benefits paid under this Rider will reduce the Cash Surrender Value if you were to surrender the policy while the Insured is alive. More importantly, though, the benefits paid under this Rider will impact your policy's Death Benefit. The Proceeds payable upon the Insured's death will be adjusted to account for the benefits paid under this Rider. There is a free look period for this Rider. Within 30 days of receipt, you may return this Rider to the sales representative who sold it to you, or to us at our Home Office, and we will void this Rider and refund the related charges. ------------------------------------------------------------------------------- PREMIUM ------------------------------------------------------------------------------- This policy is designed to be a single premium policy and it 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. Upon request, we will furnish Premium receipts. -------------------------------------------------------------------------------- INITIAL PREMIUM The initial premium must be at least $10,000 for issue ages 0-70 and $50,000 for issue ages 71-80. The amount of your initial Premium will depend on the initial Specified Amount of insurance and any Riders you select. Generally, the higher the required initial Specified Amount, the higher the initial Premium will be. Also, the age, health, and activities of the Insured will affect our determination of the risk of issuing the policy. In general, the greater this risk, the higher the initial Premium will be, or the lower the Specified Amount will be. Whether we will issue full insurance coverage depends on the Insured meeting all underwriting requirements, you paying the initial Premium, and our delivery of the policy while the Insured is alive. We will not delay delivery of the policy to increase the likelihood that the Insured is not still living. 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. -------------------------------------------------------------------------------- SUBSEQUENT PREMIUMS While the policy is not designed for multiple Premium payments, you may make additional Premium payments at any time while the policy is In Force, subject to the following: > 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. Payments of additional Premium may require an in increase in the Specified Amount. For more information see, "To Change Coverage" beginning on page 21. The Insured must be in the same underwriting rate class and in the same underwriting rate class multiple as when the policy was purchased; 26 > 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 contract 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; and > We may require that policy indebtedness be repaid prior to accepting any additional Premium payments. Some, but not all, of the situations when we might exercise this right include when interest rates are low, when your policy loans exceed 90% of value of the Sub-Account portfolio allocations, or when a Premium payment may alter the character of the policy for tax purposes. For more information, see "Lapse" beginning on page 40. We will let you know ahead of time. If you decide to make a subsequent Premium payment, you must send it to our Home Office. Generally, each Premium payment must be at least $1,000, but we will accept a Premium payment of any amount required to keep the policy In Force. -------------------------------------------------------------------------------- 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 THE ACCOMPANYING FOOTNOTES, APPEARING EARLIER IN THE 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. If we begin to charge for illustrations, you will be expected to pay the charge in cash directly to us at the time of your request. We will not deduct this charge from your policy's Cash Value. However, 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. We will transfer the loan interest charge from your investment options to 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 Units.) More detail about these charges is contained in the prospectus for the mutual fund. -------------------------------------------------------------------------------- TAX EXPENSE To reimburse us for taxes imposed by federal, state and local governments. The monthly charge is computed by multiplying 0.5% on an annualized basis by the policy's Cash Value. This charge is incurred in policy years 1-10. -------------------------------------------------------------------------------- 27 -------------------------------------------------------------------------------- SURRENDER CHARGES The surrender charge is a percentage of initial Premium you pay at the time we issue the policy, rather than any subsequent Premiums you pay. This charge covers our policy underwriting and sales expenses, including for: processing the application; conducting any medical exams; determining insurability (and the Insured's underwriting class); and establishing policy records. The charge will apply if you surrender or lapse the policy. We will assess the surrender charge based on the following schedule: ----------------------------- ---------------------------- Surrender Charge As A Number of Completed Percentage Of Initial Policy Year Premium Payment ----------------------------- ---------------------------- 0 10% ----------------------------- ---------------------------- 1 10% ----------------------------- ---------------------------- 2 9% ----------------------------- ---------------------------- 3 8% ----------------------------- ---------------------------- 4 7% ----------------------------- ---------------------------- 5 6% ----------------------------- ---------------------------- 6 5% ----------------------------- ---------------------------- 7 4% ----------------------------- ---------------------------- 8 3% ----------------------------- ---------------------------- 9 or more 0 ----------------------------- ---------------------------- -------------------------------------------------------------------------------- COST OF INSURANCE The cost of insurance charge compensates us for providing insurance protection under the policy. The monthly charge is computed by multiplying 0.65% on an annualized basis by the policy's Cash Value. In New York, we will assess this charge for all years. In other states, we may reduce the charge to 0.30% on an annualized basis (and expect to do so for policy years 11 and later) for policies with at least $100,000 of Cash Surrender Value. This charge will never exceed the policy's Net Amount at Risk times the guaranteed cost of insurance rate based on the 1980 Commissioner's Standard Ordinary Table. We base the cost of insurance rates on our expectations as to future mortality and expense experience. The cost of insurance rate will vary by: the Insured's sex; age; underwriting class; any substandard ratings; for how long the policy has been In Force and the Specified Amount. -------------------------------------------------------------------------------- MORTALITY AND EXPENSE RISK This charge compensates us for assuming risks associated with mortality and expense costs. The mortality risk is that the Insured does not live as long as expected. The expense risk is that the costs of issuing and administering the policy are more than expected. We will deduct this charge proportionately from the Cash Values of each Sub-Account portfolio. The monthly charge is computed by multiplying 0.70% on an annualized basis by the policy's Sub-Account Cash Value. We may realize a profit from these charges. -------------------------------------------------------------------------------- 28 -------------------------------------------------------------------------------- ADMINISTRATIVE EXPENSE This charge reimburses us for the costs of maintaining the policy, including for accounting and record-keeping. We will determine this monthly charge by multiplying .030% on an annualized basis by the policy's Cash Value. In New York, we will assess this charge for all years, but the charge will not exceed $7.50 per month. In other states, we may reduce the charge to 0.15% on an annualized basis and expect to do so for policy years 11 and later. This charge is subject to a minimum of $10.00 per month in states other than New York. -------------------------------------------------------------------------------- POLICY LOAN INTEREST We charge interest on the amount of an outstanding policy loan, at the rate of 6% per annum, which will accrue daily and become due and payable at the end of each year from the Policy Date. If left unpaid, we will add it to the policy's outstanding indebtedness. As collateral or security for repayment, we will transfer an equal amount of Cash Value to the loan account on which will interest will accrue and be credited daily. The minimum guaranteed interest crediting rate is 4% per annum. The effect of the 6% interest on the loan balance and the 4% crediting on the policy loan account is a net cost of no more than 2% per annum. -------------------------------------------------------------------------------- LONG-TERM CARE RIDER The charge for this Rider compensates us for providing long-term care coverage once the Insured meets the eligibility requirements. The charge is the product of the Net Amount At Risk of the Rider and a long-term care rate cost of insurance rate. Because this Rider has no Cash Value, we define its Net Amount At Risk as the lesser of the Specified Amount of the Rider and the Net Amount At Risk of the policy. We base the long-term care cost of insurance rate on our expectations as to your need for long-term care over time. The long-term care cost of insurance rate will vary by: the Insured's sex; Attained Age; underwriting class; and any substandard ratings. -------------------------------------------------------------------------------- A NOTE ON CHARGES We make many assumptions and account for many economic and financial factors in establishing fees and charges. As we noted at the beginning of this "Charges" section, the deductions we make under the policy are designed to compensate us for the services and benefits we provide, the distribution and operational expenses we incur, and the risks we assume. Our initial expenses in distributing and establishing the contract exceed the deductions we make during the early stages of policy ownership. Nevertheless, we expect to make a profit over time because variable life insurance is intended to be a long term financial product. Accordingly, we have designed the policy with features and underlying investment options that we believe support and encourage long-term ownership. The "In Summary: Fee Tables" section, beginning on page 6 sets out the costs you incur when you purchase this policy. The following two sections describe how we use some of those charges to distribute the policy and how some of the underlying investment options pay us for services we provide to them. Neither of these transactions alters the charges you pay for the policy. Rather, these two sections provide you with information about how we set those charges. You should consider how these transactions may affect any advice you may receive with respect to the policy. 29 Distribution, Promotional and Sales Expenses Commissions to broker/dealer firms are among the promotional and sales expenses we incur when distributing the policy. We may pay a maximum gross commissions of up to 99% of first year premiums and 3% for renewal premiums after the first year. In lieu of these premium based commissions, we may pay an equivalent amount that we calculate as a percentage of assets. Asset-based commissions may be up to 0.25% of the non-loaned Cash Value per year. Combinations of payment forms that generally equate to this maximum commission amount may also be utilized. The actual level of commissions we pay depends on factors such as the level of premium we receive from the respective broker/dealer firms and the scope of the services they provide. Individual registered representatives typically receive a portion of the commissions we pay, depending on their arrangement with their broker/dealer firm. In addition to commissions, we may also furnish marketing and expense allowances to certain firms based on our assessment of that firm's capabilities and demonstrated willingness to promote and market our products. The firms determine how these allowances are spent. If you would like to know the exact compensation arrangement associated with this product, you should consult your registered representative. Revenue from Underlying Mutual Funds The underlying mutual funds incur expense each time they sell, administer, or redeem their shares. Since the Variable Account purchases fund shares on behalf of all policy holders, it serves as a single shareholder of the fund. By processing aggregated policy owner transactions, we relieve the fund of the expenses of processing individual policy owner transactions. We also pay the costs of selling the policy as outlined in the preceding section. Sales of the policy benefits the funds by allowing policy owners to purchase interests in the Sub-Accounts, which then results in the Variable Account's purchase of fund shares. We perform all of the accounting and recordkeeping for the Sub-Accounts, and pay any processing cost associated with the redemption of interests in the Sub-Accounts. The funds understand and acknowledge that, in performing these functions and incurring these costs, we provide substantial value to the funds. Accordingly, the underlying mutual funds pay us (or our affiliates) a fee for some of the distribution and operational services we provide and the related costs we incur. The underlying mutual funds understand and acknowledge the value of these services we provide. Accordingly, the underlying mutual funds pay us (or our affiliates) a fee for some of the distribution and operational services that we provide (and related costs incurred). These payments may be made pursuant to an underlying mutual fund's 12b-1 plan, in which case they are deducted from underlying mutual fund assets. Alternatively, such payments may be made pursuant to service/administration agreements between the underlying mutual fund's adviser (or its affiliates) and us (or our affiliates), in which case payments are typically made from assets outside of the underlying mutual fund assets. In some cases, however, payments received may derive from sub-transfer agent fees or fees taken pursuant to administrative service plans adopted by the underlying mutual fund. In setting the charges for this policy, we considered the amount of these payments expected to be received from the underlying mutual funds. Without these payments, our charges would be expected to be higher. We include only funds in the Variable Account that make these payments for the services we provide. 30 -------------------------------------------------------------------------------- TO ALLOCATE PREMIUM AND SUB-ACCOUNT VALUATION -------------------------------------------------------------------------------- You may allocate all or a portion of your Premium to any Sub-Account. The separate account is divided into Sub-Accounts that invest in shares of one or more portfolios of the different mutual funds available under the policy. Or you may allocate all or a portion of your Premium to the fixed investment option that is funded by the assets of our general account. 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 supervision of the management or investment practices or policies of the portfolios or mutual funds by the SEC. The "Available Sub-Accounts" section identifies the available mutual funds, by name, investment type and adviser. Your choices and any changes will appear on the Policy Data Page. 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 performance of any other Sub-Account portfolio. -------------------------------------------------------------------------------- THE FIXED INVESTMENT OPTION The 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 in any given year. 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. 31 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 Premium versus a transfer of 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 PREMIUM AND CASH VALUE We allocate your Premium payments to Sub-Accounts or the fixed account per your instructions. You must specify your Premium payments in whole percentages. The sum of allocations must equal 100%. -------------------------------------------------------------------------------- WHEN SUB-ACCOUNT UNITS ARE VALUED We will price Sub-Account Units on any day the New York Stock Exchange (NYSE) is open for business, unless we are closed. We will not price Sub-Account Units on these recognized holidays. o New Year's Day o Independence Day o Martin Luther King, Jr. Day o Labor Day o Presidents' Day o Thanksgiving o Good Friday o Christmas o Memorial Day In addition, we will not price Sub-Account Units if: > trading on the New York Stock Exchange is restricted; > an emergency exists making disposal or valuation of securities held in the separate account impracticable; or > 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. If we are closed on days when the New York Stock Exchange is open, you may not effect transactions. If you try, we will neither price the Sub-Account Units, nor effect the transaction, until the next day we, and the New York Stock Exchange, are open for business. Any transaction you try to effect when we are closed will not happen until the next day the NYSE and we are both open for business. We will process transactions we receive after the close of the NYSE on the next Valuation Period that we are open. -------------------------------------------------------------------------------- HOW INVESTMENT EXPERIENCE IS DETERMINED Though the number of Sub-Account Units will not change as a result of Investment Experience, changes in the net investment factor may cause the value of a Sub-Account 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, because of the deduction for mortality and expense risk charge, and any charge or credit for tax reserves. We determine the change in Sub-Account values at the end of a Valuation Period. The Sub-Account Unit value for a Valuation Period is determined by multiplying the Sub-Account Unit value as of the prior Valuation Period by 32 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 sum of: > the NAV per share of the mutual fund held in the Sub-Account as of the end of the current Valuation Period; and > 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). > 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 determined 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 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 the policy's Cash Value is part of the Death Benefit option you have chosen, then 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 Units credited to each Sub-Account, we divide the net amount you allocate to the Sub-Account by the Sub-Account 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 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 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. 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. 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," on page 31 and "Loan Amount and Interest," on page 38. 33 On any date during the policy year, the Cash Value equals the Cash Value on the preceding Valuation Period, plus any 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. For more information, see "Sub-Account Portfolio Transfers," beginning on page 21. 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 - VIP High Income Portfolio: Service Class (available only for policies issued prior to May 1, 2003), GVIT Gartmore GVIT Government Bond Fund: Class I, GVIT Federated GVIT High Income Bond Fund: Class I and the GVIT 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 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 so. 34 -------------------------------------------------------------------------------- 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 21. 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 Units Are Valued," beginning on page 32. 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. -------------------------------------------------------------------------------- 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 the Insured has died, as well as other customary information. 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 the Insured dies by suicide. While the policy is In Force, the Death Benefit will never be less than the Specified Amount. The Death Benefit may vary with the Cash Value of the policy, which will depend on investment performance and may take into account any insurance provided by any Riders, as well as outstanding indebtedness and any due and unpaid monthly deductions that accrued during a Grace Period. -------------------------------------------------------------------------------- DEATH BENEFIT The Death Benefit under the policy is the greater of the Specified Amount and the "applicable percentage of cash value." The applicable percentage of Cash Value is the lowest Death Benefit that will qualify the policy as life insurance under the guideline premium/cash value corridor test of Section 7702 of the Code. For this policy, this is the tax test for life insurance that we will use. This tax test for life insurance generally requires that the policy have a significant element of life insurance and not be primarily an investment vehicle. The test reaches this result by comparing the Death Benefit to an applicable percentage of the Cash Value. These percentages are set out in the Code, and vary only by the Attained Age of the Insured. 35 -------------------------------------------------------------------------------- SUICIDE If the Insured dies by 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 the Insured dies by suicide, while sane or insane, within two years from the date we accept an application for an increase in the Specified Amount, we will pay no more than the Death Benefit associated with the initial Specified Amount, plus the cost of insurance charges associated with the increase in Specified Amount. -------------------------------------------------------------------------------- SURRENDERS -------------------------------------------------------------------------------- FULL SURRENDER You may surrender the policy for the Cash Surrender Value at any time while the 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 33. To derive the Cash Surrender Value, we will deduct from the Cash Value Indebtedness and the surrender charge. The effective date of 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 at any time after the policy has been In Force for five years from the Policy Date. We permit partial surrenders if the partial surrender satisfies the following requirements: > the minimum partial surrender is $500; > the maximum partial surrender in any policy year is the maximum of: o 10% of the total Premium payments, and o 100% of cumulative earnings (Cash Value less total Premium payments less any loan amount at the time of the partial surrender). > after the partial surrender, the policy's Cash Surrender Value is at least $10,000; and > after the partial surrender, the policy continues to qualify as life insurance. We will reduce the Cash Value and the Specified Amount 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. Certain partial surrenders may result in currently taxable income and tax penalties. For more information see, "Surrender Of The Policy," beginning on page 44. 36 -------------------------------------------------------------------------------- THE PAYOUT OPTIONS -------------------------------------------------------------------------------- You have a number of options of receiving Proceeds, besides in a lump sum, which you may elect upon application. You may elect one or a combination of payout options. We will pay the Proceeds from our general account. If you do not make an election, when the Insured dies, the beneficiary may do so. If the beneficiary does not make an election, we will pay the Proceeds in a lump sum. Normally, we will make the lump sum payment 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 Units. For more information, see "When Sub-Account Units Are Valued," beginning on page 32. 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 interest can be paid at the end of 12-, six-, three- or one-month intervals or left to accumulate. 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 stated rate. The Proceeds can be paid at the beginning of 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 at an annually determined rate of at least 2.5% per year, compounded annually. 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 outlive the guaranteed period. The Proceeds can be paid at the beginning of 12-, six-, three- or one-month intervals. During the guaranteed period, we will pay interest on the outstanding balance at a rate of at least 2.5% per year, compounded annually. 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. Also, payments will cease upon your death. 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. 37 -------------------------------------------------------------------------------- FIXED INCOME FOR VARYING PERIODS You keep the Proceeds with us, but are paid a fixed amount at specified intervals until principal and interest have been exhausted. 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 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, compounded annually. 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. -------------------------------------------------------------------------------- JOINT AND SURVIVOR LIFE We pay you the Proceeds in equal payments at specified intervals for the life of the payee who lives longer. The Proceeds can be paid at the beginning of 12-, six-, three- or one-month intervals. 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 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 of the Insured's death, the Maturity Date, or the date the policy is surrendered, as applicable. The Proceeds can be paid at the end of 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, 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. To determine your maximum loan amount for the first policy year, multiply 50% by the difference between the Cash Value and any surrender charges. After the first Policy Year, multiply 90% by the difference between the Cash Value and any surrender charges. On the loan amount, we will charge interest, which will accrue daily and be payable at the end of each policy year. If you do not pay the interest, we will add it to the loan amount. The guaranteed policy loan amount interest rate in all policy years is 6%. -------------------------------------------------------------------------------- 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 if the loan amount exceeds 90% of the Cash Value you have allocated to Sub-Account portfolios. 38 Total policy indebtedness is composed of two components: i) preferred loans; and ii) regular loans. The amount in the policy loan account will be treated as a preferred loan to the extent such amount is less than or equal to the cash value minus the result of: o the premiums excluding any 1035 Exchange amount; less o any withdrawals not taxed as distributions; plus o any loans previously taxed as distributions; plus o any amounts reported to Nationwide as cost basis attributable to exchanges under Section 1035 of the Internal Revenue Code. Any additional loan amounts will be treated as regular loans. Preferred and regular loan amounts will be determined once a year and at any time a new loan is requested. On a current basis, preferred loans will be credited interest daily at an annualized effective rate of 6%, and regular loans will be credited interest daily at an annualized effective rate of 4%. The credited rate for all policy loan accounts is guaranteed never to be lower than that stated on the Policy Data Page. -------------------------------------------------------------------------------- REPAYMENT You may repay all or part of a policy loan at any time while your policy is In Force during the Insured's lifetime. The minimum repayment is $1,000. Interest on the loan amount will be due and payable at the end of each policy year from the Policy Date. If left unpaid, we will add it to the loan amount by transferring a corresponding amount of Cash Value from each Sub-Account to the loan account in the same proportion as your Sub-Account allocations. While your policy loan is outstanding, we will continue to treat any payments that you make as a Premium payment, unless you instruct otherwise. Similarly, we will apply a loan repayment in the same proportion as your current Sub-Account allocations, unless you instruct otherwise. Outstanding ordinary policy loan balances will be satisfied by your loan repayments before outstanding preferred policy loans. -------------------------------------------------------------------------------- NET 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. If your total Indebtedness ever exceeds the policy's Cash Value, your policy may Lapse. Repaying a policy loan will cause the Death Benefit less outstanding policy loans and net Cash Surrender Value to increase by the repayment amount. 39 -------------------------------------------------------------------------------- LAPSE -------------------------------------------------------------------------------- So long as your policy's Cash Surrender Value is enough to cover the deduction of charges on each monthly anniversary from the Policy Date, the policy will remain In Force. The Cash Surrender Value could be below the amount of a monthly deduction, for example, because you have not paid enough Premium, or because Investment Experience has decreased the Cash Surrender Value, or both. We do not guarantee that paying the initial or subsequent Premiums will offset adverse Investment Experience so that the policy will remain In Force. Stated another way, this policy will Lapse when the Grace Period ends before you make a required Premium payment as stated in a notice. -------------------------------------------------------------------------------- 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 three 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: > submitting a written request at any time within three years after the end of the Grace Period and prior to the Maturity Date; > providing further evidence of insurability we may require that is satisfactory to us; > paying sufficient Premium to cover all policy charges that were due and unpaid during the Grace Period; > paying additional Premiums at least equal to 3 times the maximum guaranteed cost of insurance charges; For more information, see "In Summary: Fee Tables" beginning on page 6. > paying or reinstating 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 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 a surrender charge calculated for the period between the initial Policy Date and the date of reinstatement. 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 provide otherwise. 40 -------------------------------------------------------------------------------- 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 2004, an estate of less than $1,500,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability. The $1.5 million amount increases to $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 2004, 48%, 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. 41 -------------------------------------------------------------------------------- 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 2004, 48%, 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. -------------------------------------------------------------------------------- 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. 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 informally 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. In 2003, the IRS issued formal guidance, in Revenue Ruling 2003-91, that indicates that if the number of underlying mutual funds available in a variable insurance product does not exceed twenty, the number of funds alone would not cause the policy to not qualify for the desired tax treatment. The IRS has also indicated that exceeding 20 investment options may be considered a factor, along with other factors including the number of transfer opportunities available under the policy, when determining whether the policy qualifies for the desired tax treatment. The revenue ruling did not indicate the number of 42 fund options, if any, that would cause the policy to not provide the desired tax treatment. 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. 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. 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 43 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," beginning on page 44. -------------------------------------------------------------------------------- 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. A distribution of income from a contract may be subject to mandatory back-up withholding. Mandatory back-up 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. 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: > the value each year of the life insurance protection provided; > an amount equal to any employer-paid Premiums; or > 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 44 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. -------------------------------------------------------------------------------- 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 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 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 Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the policies. 45 At present, we do not initially expect to incur any federal income tax liability that would be chargeable to the Units you hold in the separate account. Based upon these expectations, no charge is currently being made against your 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 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. 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. 46 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. 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. 47 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: > remove, combine, or add Sub-Accounts and make new Sub-Accounts available to you; > substitute shares of another mutual fund, which may have different fees and expenses, for shares of an existing mutual fund; > substitute or close Sub-Accounts to allocations; > transfer assets supporting the policies from one Sub-Account to another or from the separate account to another separate account; > combine the separate account with other separate accounts, and/or create new separate accounts; > 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 > modify the policy provisions to reflect changes in the Sub-Accounts and the separate account to comply with applicable law. 48 -------------------------------------------------------------------------------- VOTING RIGHTS Unless there is a change in existing law, on all matters submitted to shareholders, we will vote our portfolio shares attributable to your allocations in a Sub-Account only as you instruct. 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 Net Asset Value 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 Nationwide is a party to litigation and arbitration proceedings and inquiries from regulatory bodies in the ordinary course of its business, none of which is expected to have a material adverse effect on Nationwide. In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements. On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court by plaintiff Mercedes Castillo that challenged 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 was 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 defendants, which were allegedly used to fund certain tax-deferred retirement plans. The amended complaint seeks unspecified compensatory and punitive damages. 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. 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 was moot. Following appeal by the plaintiff, both of those decisions were affirmed by the Ohio Court of Appeals on September 9, 2003. The plaintiff filed a notice of appeal of the decision by the Ohio Court of Appeals on October 24, 2003. The Ohio Supreme Court announced on January 21, 2004 that the appeal was not accepted and the time for reconsideration has expired. On October 31, 2003, a lawsuit seeking class action status containing allegations similar to those made in the Castillo case was filed against 49 Nationwide in Arizona federal court by plaintiff Robert Helman (Robert Helman et al v. Nationwide Life Insurance Company et al). This lawsuit is in a very preliminary stage and Nationwide is evaluating its merits. Nationwide intends to defend this lawsuit vigorously. On August 15, 2001, Nationwide was named in a lawsuit filed in Connecticut federal court (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). The plaintiffs first amended their complaint on September 6, 2001 to include class action allegations, and have subsequently amended their complaint twice. As amended, in the current complaint, the plaintiffs seek to represent a class of ERISA qualified retirement plans that purchased variable annuities from Nationwide. Plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts, and that Nationwide acquired and breached ERISA fiduciary duties by accepting service payments from certain mutual funds that allegedly consisted of or diminished those ERISA plan assets. The complaint seeks disgorgement of some or all of the fees allegedly received by Nationwide and other unspecified relief for restitution, along with declaratory and injunctive relief and attorneys' fees. On December 3, 2001, the plaintiffs filed a motion for class certification. Plaintiffs filed a supplement to that motion on September 19, 2003. Nationwide opposed that motion on December 24, 2003. On January 30, 2004, Nationwide filed its Revised Memorandum in Support of Summary Judgment and a Motion Requesting that the Court Decide Summary Judgment before Class Certification. Plaintiffs are opposing that motion. Nationwide intends to defend this lawsuit vigorously. On May 1, 2003, a class action was filed against Nationwide in the United States District Court for the Eastern District of Louisiana (Edward Miller, Individually, and on behalf of all others similarly situated, v. Nationwide Life Insurance Company). The complaint alleges that in 2001, plaintiff Edward Miller purchased three group modified single premium variable annuities issued by Nationwide. Plaintiff alleges that Nationwide represented in its prospectus and promised in its annuity contracts that contract holders could transfer assets without charge among the various funds available through the contracts, that the transfer rights of contract holders could not be modified and that NLIC's expense charges under the contracts were fixed. Plaintiff claims that Nationwide has breached the contracts and violated federal securities laws by imposing trading fees on transfers that were supposed to have been without charge. Plaintiff seeks compensatory damages and rescission on behalf of himself and a class of persons who purchased this type of annuity or similar contracts issued by Nationwide between May 1, 2001 and April 30, 2002 inclusive and were allegedly damaged by paying transfer fees. Nationwide's motion to dismiss the complaint was granted by the Court on October 28, 2003. Plaintiff has appealed that dismissal. On January 21, 2004, Nationwide was named in a lawsuit filed in the U.S. District Court for the Northern District of Mississippi (United Investors Life Insurance Company v. Nationwide Life Insurance Company and/or Nationwide Life Insurance Company of America and/or Nationwide Life and Annuity Insurance Company and/or Nationwide Life and Annuity Company of America and/or Nationwide Financial Services, Inc. and/or Nationwide Financial Corporation, and John Does A-Z). In its complaint, the plaintiff alleges that Nationwide and/or its affiliated life insurance companies (1) tortiously interfered with the plaintiff's contractual and fiduciary relationship 50 with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W & R Insurance Agency, Inc. (collectively, "Waddell & Reed"), (2) conspired with and otherwise caused Waddell & Reed to breach its contractual and fiduciary obligations to the plaintiff, and (3) tortiously interfered with the plaintiff's contractual relationship with policyholders of insurance policies issued by the plaintiff. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, and costs and disbursements, including attorneys' fees. The plaintiff seeks to have each defendant judged jointly and severally liable for all damages. This lawsuit is in a very preliminary stage, and Nationwide intends to defend it vigorously. The financial services industry, including mutual fund, variable annuity and distribution companies have been the subject of increasing scrutiny by regulators, legislators, and the media over the past year. Numerous regulatory agencies, including the SEC and the New York Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund companies on those issues. Investigations and enforcement actions have also been commenced, on a smaller scale, regarding the sales practices of mutual fund and variable annuity distributors. These legal proceedings are expected to continue in the future. These investigations and proceedings could result in legal precedents, as well as new industry-wide legislation, rules, or regulations, that could significantly affect the financial services industry, including variable annuity companies. Nationwide has been contacted by regulatory agencies for information relating to market timing, late trading, and sales practices. Nationwide is cooperating with these regulatory agencies and is responding to those information requests. There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on Nationwide in the future. -------------------------------------------------------------------------------- NATIONWIDE INVESTMENT SERVICES CORPORATION The general distributor, Nationwide Investment Services Corporation, is not engaged in 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. 51 -------------------------------------------------------------------------------- APPENDIX A: DEFINITIONS -------------------------------------------------------------------------------- ATTAINED AGE - The Insured's age upon the issue of full insurance coverage plus the number of full years since the Policy Date. -------------------------------------------------------------------------------- CASH SURRENDER VALUE - The 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 pay to the beneficiary upon the 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 sufficient payment. -------------------------------------------------------------------------------- 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 person whose life we insure under the policy, and whose death triggers the Death Benefit. -------------------------------------------------------------------------------- INVESTMENT EXPERIENCE - The performance of a mutual fund in which a Sub-Account portfolio invests. -------------------------------------------------------------------------------- LAPSE - The policy terminates without value. -------------------------------------------------------------------------------- MATURITY DATE - The policy anniversary on or next following the Insured's 100th birthday. -------------------------------------------------------------------------------- NET AMOUNT AT RISK - The policy's base Death Benefit minus the policy's Cash Value. -------------------------------------------------------------------------------- NET ASSET VALUE (NAV) - The price of 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 Units. NAV does not reflect deductions we make for charges we take from Sub-Accounts. Unit values do reflect these deductions. -------------------------------------------------------------------------------- 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 adjusted to account for any unpaid charges or policy loans and Rider benefits. -------------------------------------------------------------------------------- PREMIUM - The amount of money you pay to begin and continue the policy. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- SUB-ACCOUNTS - The mechanism we use to account for your allocations of Premium and Cash Value among the policy's variable investment options. -------------------------------------------------------------------------------- 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 Unit value at $10 for each Sub-Account. -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- 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. 811-5311 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 MODIFIED SINGLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES This Statement of Additional Information ("SAI") contains additional information regarding the individual modified single 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, 2004 and the prospectuses for the policy's variable investment options . 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, 2004. TABLE OF CONTENTS NATIONWIDE LIFE INSURANCE COMPANY NATIONWIDE VLI SEPARATE ACCOUNT-4 NATIONWIDE INVESTMENT SERVICES CORPORATION (NISC) SERVICES UNDERWRITING PROCEDURE ILLUSTRATIONS ADVERTISING TAX DEFINITION OF LIFE INSURANCE FINANCIAL STATEMENTS 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 $147 billion as of December 31, 2003. 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 (NISC) 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. NISC was organized as an Oklahoma corporation in 1981. 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 99% of the target premium plus 4% of any excess Premium payments. 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 the 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. The report of KPMG LLP covering the December 31, 2001 financial statements of 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 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 Specified Amount depends upon the Insured's sex, issue age, risk class, and length of time the policy has been In Force. The Specified Amount will vary depending upon 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). Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate percentage multiples of the guaranteed cost of insurance rate on a standard basis. That is, guaranteed cost of insurance rates for substandard risks are guaranteed cost of insurance rates for standard risks times a percentage greater than 100%. These mortality tables are sex distinct. ILLUSTRATIONS Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the proposed Insured's age and Premium class, 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 Rating Agencies 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. MONEY MARKET YIELDS We may advertise the "yield" and "effective yield" for the money market sub-account. Yield and effective yield are annualized, which means that it is assumed that the underlying mutual fund generates the same level of net income throughout a year. Yield is a measure of the net dividend and interest income earned over a specific seven-day period (which period will be stated in the advertisement) expressed as a percentage of the offering price of the underlying mutual fund's units. The effective yield is calculated similarly, but reflects assumed compounding, calculated under rules prescribed by the SEC. Thus, effective yield will be slightly higher than yield, due to the compounding. HISTORICAL PERFORMANCE OF THE SUB-ACCOUNTS We will advertise historical performance of the sub-accounts in accordance with SEC prescribed calculations. Please note that performance information is annualized. However, if a sub-account has been available in the variable account for less than one year, the performance information for that sub-account is not annualized. Performance information is based on historical earnings and is not intended to predict or project future results. 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 Guideline Premium/Cash Value Corridor Test. GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST TABLE OF APPLICABLE PERCENTAGES OF CASH VALUE ----------------------------------------- ATTAINED AGE OF PERCENTAGE OF CASH 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% ----------------------------------------- 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, 2003, 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, 2003, 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, 2003, 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, 2004 ================================================================================ NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY December 31, 2003 Assets: Investments at fair value: AIM VIF - AIM V.I. Capital Appreciation Fund - Series I (AIMCapAp) 15,676 shares (cost $308,165)...................................................... $ 333,587 AIM VIF Basic Value Fund - Series I (AIMBVF) 187,447 shares (cost $1,837,837)................................................... 1,998,181 AIM VIF Capital Development Fund - Series I (AIMCDF) 53,623 shares (cost $662,580)...................................................... 681,552 Alliance Bernstein VPS Small Cap Value Portfolio - Class A (AllSmCpVal) 27,228 shares (cost $364,497)...................................................... 394,539 Alliance VPS Growth & Income Portfolio - Class A (AllGroInc) 415,913 shares (cost $8,098,848)................................................... 9,066,910 American Century VP Income & Growth Fund - Class I (ACVPIncGr) 4,175,328 shares (cost $23,383,279)................................................ 27,431,906 American Century VP Inflation Protection Fund - Class II (ACVPInfPr) 110,377 shares (cost $1,121,465)................................................... 1,137,990 American Century VP International Fund - Class I (ACVPInt) 9,654,518 shares (cost $54,068,272)................................................ 62,078,549 American Century VP Ultra Fund - Class I (ACVPUltra) 467,754 shares (cost $4,055,746)................................................... 4,293,980 American Century VP Value Fund - Class I (ACVPVal) 7,297,856 shares (cost $47,186,977)................................................ 56,850,302 Baron Capital Asset Trust (BCAT) 241,996 shares (cost $4,780,326)................................................... 5,210,169 Calvert Social Equity Portfolio (CVSSEP) 1,665 shares (cost $24,565)........................................................ 26,342 Comstock GVIT Value Fund - Class I (ComGVITVal) 725,308 shares (cost $5,784,270)................................................... 7,209,557 Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSGPVen) 88,687 shares (cost $747,431)...................................................... 838,089 Credit Suisse Trust- International Focus Portfolio (CSIntEq) 197,132 shares (cost $1,551,897)................................................... 1,744,619 Credit Suisse Trust - Large Cap Value Portfolio (CSLCapV) 174,735 shares (cost $1,930,545)................................................... 2,114,289 Dreyfus GVIT International Value Fund - Class I (DryGVITIntVal) 25,133 shares (cost $307,803)...................................................... 330,745 Dreyfus GVIT Mid Cap Index Fund - Class I (DryMidCapIx) 3,396,158 shares (cost $42,840,954)................................................ 50,161,252
Dreyfus IP - Mid Cap Stock Portfolio - Initial Shares (DryMidCapStk) 134,743 shares (cost $2,115,406)................................................... $ 2,131,639 Dreyfus IP - Small Cap Stock Index Portfolio - Service Class (DrySmCapIxS) 710,342 shares (cost $8,523,160)................................................... 9,312,583 Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares (DrySRGro) 674,797 shares (cost $17,060,057).................................................. 16,053,432 Dreyfus Stock Index Fund (DryStkIx) 12,047,601 shares (cost $332,644,982).............................................. 342,392,828 Dreyfus VIF - Appreciation Portfolio - Initial Shares (DryVIFApp) 933,289 shares (cost $29,854,266).................................................. 32,123,809 Dreyfus VIF - Developing Leaders Portfolio - Initial Shares (DryDevLeadI) 5,573 shares (cost $198,389)....................................................... 208,378 Dreyfus VIF - International Value Portfolio - Initial Shares (DryIntVal) 1,311,630 shares (cost $16,084,976)................................................ 17,759,474 Federated American Leaders Fund II - Primary Shares (FedAmLdII) 8,204 shares (cost $139,788)....................................................... 156,695 Federated Capital Appreciation Fund II - Primary Shares (FedCpApII) 18,496 shares (cost $94,231)....................................................... 100,989 Federated GVIT High Income Bond Fund - Class I (FGVITHiInc) 4,480,606 shares (cost $34,354,100)................................................ 35,934,459 Federated Quality Bond Fund II - Primary Shares (FedQualBd) 7,104,417 shares (cost $80,215,233)................................................ 84,116,295 Fidelity(R) VIP - Equity-Income Portfolio: Service Class (FidVIPEIS) 3,743,649 shares (cost $76,060,909)................................................ 86,515,732 Fidelity(R) VIP - Growth Portfolio: Service Class (FidVIPGrS) 3,593,139 shares (cost $115,422,064)............................................... 111,099,855 Fidelity(R) VIP - High Income Portfolio: Service Class (FidVIPHIS) 3,900,964 shares (cost $23,193,413)................................................ 26,994,674 Fidelity(R) VIP -Overseas Portfolio: Service Class (FidVIPOvS) 1,945,331 shares (cost $25,398,090)................................................ 30,210,995 Fidelity(R) VIP II - Contrafund Portfolio: Service Class (FidVIPConS) 4,170,948 shares (cost $82,314,393)................................................ 96,182,065 Fidelity(R) VIP II - Investment Grade Bond Portfolio: Service Class (FidVIPInvGrB) 50,876 shares (cost $681,232)...................................................... 692,425 Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class (FidVIPGrOPS) 1,041,624 shares (cost $15,262,495)................................................ 15,686,859 Fidelity(R) VIP III - Mid Cap Portfolio: Service Class (FidVIPMCap) 58,260 shares (cost $1,305,297).................................................... 1,404,055 Fidelity(R) VIP III - Value Strategies Portfolio: Service Class (FidVIPValStS) 353,043 shares (cost $4,015,958)................................................... 4,374,197 Franklin Templeton VIP - Franklin Rising Dividends Securities Fund - Class I (FTVIPFRDiv) 166,318 shares (cost $2,529,778)................................................... 2,707,660
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued Franklin Templeton VIP - Franklin Small Cap Value Securities Fund - Class I (FTVIPSmCpVal) 49,477 shares (cost $588,750)...................................................... $ 633,794 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class I (FTVIPFS) 99,128 shares (cost $1,148,947).................................................... 1,226,218 Franklin Templeton VIPT - Templeton Foreign Securities Fund - Class 2 (FTVIPFS2) 651,466 shares (cost $6,792,703)................................................... 7,973,943 Gartmore GVIT Emerging Markets Fund - Class I (GVITEmMrkts) 714,362 shares (cost $5,971,128)................................................... 7,029,322 Gartmore GVIT Global Financial Services Fund - Class I (GVITGIFin) 209,878 shares (cost $2,304,606)................................................... 2,390,512 Gartmore GVIT Global Health Sciences Fund - Class I (GVITGIHlth) 280,534 shares (cost $2,923,060)................................................... 2,794,115 Gartmore GVIT Global Technology and Communications Fund - Class I (GVITGITech) 1,579,595 shares (cost $5,228,584)................................................. 5,860,298 Gartmore GVIT Global Utilities Fund - Class I (GVITGlUtl) 92,589 shares (cost $792,362)...................................................... 848,111 Gartmore GVIT Government Bond Fund - Class I (GVITGvtBd) 13,290,763 shares (cost $161,259,030).............................................. 161,216,960 Gartmore GVIT Growth Fund - Class I (GVITGrowth) 1,493,112 shares (cost $14,301,791)................................................ 14,901,261 Gartmore GVIT ID Aggressive Fund (GVITIDAgg) 617,117 shares (cost $5,765,101)................................................... 6,473,553 Gartmore GVIT ID Conservative Fund (GVITIDCon) 481,926 shares (cost $4,819,607)................................................... 4,973,475 Gartmore GVIT ID Moderate Fund (GVITIDMod) 1,531,723 shares (cost $14,486,845)................................................ 16,144,362 Gartmore GVIT ID Moderately Aggressive Fund (GVITIDModAgg) 1,514,195 shares (cost $13,861,516)................................................ 16,050,469 Gartmore GVIT ID Moderately Conservative Fund (GVITIDModCon) 853,308 shares (cost $8,282,446)................................................... 8,942,671 Gartmore GVIT International Growth Fund - Class I (GVITIntGro) 327,946 shares (cost $1,855,382)................................................... 2,072,619 Gartmore GVIT Money Market Fund - Class I (GVITMyMkt) 163,998,205 shares (cost $163,998,205)............................................. 163,998,205 Gartmore GVIT Money Market Fund - Class V (GVITMyMkt5) 285,855,866 shares (cost $285,855,866)............................................. 285,855,866 Gartmore GVIT Nationwide(R) Leaders Fund - Class I (GVITLead) 30,903 shares (cost $352,561)...................................................... 364,967 Gartmore GVIT Nationwide(R) Strategic Value Fund - Class I (NWGVITStrVal) 162,368 shares (cost $1,250,968)................................................... 1,622,059 Gartmore GVIT Small Cap Growth Fund - Class I (GVITSmCapGr) 1,606,396 shares (cost $18,750,219)................................................ 20,834,951
Gartmore GVIT Small Cap Value Fund - Class I (GVITSmCapVal) 6,948,289 shares (cost $65,089,319) ............................................... $ 80,322,216 Gartmore GVIT Small Company Fund - Class I (GVITSmComp) 3,702,936 shares (cost $65,083,871) ............................................... 80,464,808 Gartmore GVIT Total Return Fund - Class I (GVITTotRt) 21,854,900 shares (cost $201,229,006) ............................................. 224,449,822 Gartmore GVIT U.S. Growth Leaders Fund - Class I (GVITUSGro) 403,755 shares (cost $4,538,628) .................................................. 4,336,326 Gartmore GVIT Worldwide Leaders Fund - Class I (GVITWLead) 391,898 shares (cost $2,879,238) .................................................. 3,652,485 Goldman Sachs VIT Mid Cap Value Fund (GSVITMidCap) 1,312,668 shares (cost $15,726,024) ............................................... 17,550,366 J. P. Morgan GVIT Balanced Fund - Class I (JPMorBal) 2,201,846 shares (cost $18,709,588) ............................................... 20,653,319 Janus AS - Balanced Portfolio - Service Shares (JanBal) 214,458 shares (cost $4,862,210) .................................................. 5,108,385 Janus AS - Capital Appreciation Portfolio - Service Shares (JanCapAp) 1,989,553 shares (cost $37,639,080) ............................................... 41,143,950 Janus AS - Global Technology Portfolio - Service Shares (JanGITech) 4,270,946 shares (cost $14,366,736) ............................................... 15,076,438 Janus AS - International Growth Portfolio - Service Shares (JanIntGro) 1,594,035 shares (cost $29,690,300) ............................................... 36,487,457 Janus AS - Risk-Managed Large Cap Core Portfolio - Service Shares (JanRsLgCpCr) 3,229 shares (cost $36,983) ....................................................... 40,329 MAS GVIT Multi Sector Bond Fund - Class I (MGVITMultiSec) 2,139,768 shares (cost $20,320,096) ............................................... 21,098,108 MFS VIT - MFS Investors Growth Stock Series - Initial Class (MFSVITInvGrwI) 51,831 shares (cost $431,385) ..................................................... 451,447 MFS VIT - MFS Value Series - Initial Class (MFSVITValIn) 24,923 shares (cost $244,025) ..................................................... 268,167 Neuberger Berman AMT - Fasciano Portfolio - S Class (NBAMTFas) 70,017 shares (cost $839,384) ..................................................... 868,214 Neuberger Berman AMT - Guardian Portfolio (NBAMTGuard) 996,883 shares (cost $11,535,984) ................................................. 13,936,421 Neuberger Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat) 89,462 shares (cost $1,206,893) ................................................... 1,180,900 Neuberger Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr) 2,535,083 shares (cost $34,033,578) ............................................... 38,862,821 Neuberger Berman AMT - Partners Portfolio (NBAMTPart) 862,689 shares (cost $10,878,361) ................................................. 13,285,411 Neuberger Berman AMT - Socially Responsive Portfolio (NBAMTSocRe) 10,361 shares (cost $119,494) ..................................................... 127,957 One Group(R)IT Mid Cap Growth Portfolio (ONEMidCap) 178,199 shares (cost $2,466,217) .................................................. 2,795,937
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued One Group(R)IT Mid Cap Value Portfolio (ONEMidCapV) 43,161 shares (cost $541,101) ..................................................... $ 594,760 Oppenheimer Aggressive Growth Fund/VA - Initial Class (OppAggGro) 1,485,832 shares (cost $49,348,926) ............................................... 54,544,883 Oppenheimer Capital Appreciation Fund/VA - Initial Class (OppCapAp) 3,413,362 shares (cost $111,450,274) .............................................. 118,443,670 Oppenheimer Global Securities Fund/VA - Initial Class (OppGlSec) 1,583,608 shares (cost $31,373,931) ............................................... 39,716,898 Oppenheimer High Income Fund/VA- Initial Class (OppHiIncInt) 178,880 shares (cost $1,479,815) .................................................. 1,540,159 Oppenheimer Main Street(R)Growth & Income Fund/VA - Initial Class (OppMSGrInc) 2,182,339 shares (cost $37,824,326) ............................................... 41,900,903 Oppenheimer Main Street(R)Small Cap Fund/VA - Initial Class (OppMaStSmCpI) 84,135 shares (cost $1,019,684) ................................................... 1,130,780 PIMCO VIT Low Duration Portfolio - Administrative Shares (PIMLowDur) 3,457,880 shares (cost $35,508,325) ............................................... 35,512,429 PIMCO VIT Real Return Portfolio - Administrative Shares (PIMRealRet) 676,756 shares (cost $8,322,112) .................................................. 8,364,705 PIMCO VIT Total Return Portfolio - Administrative Shares (PIMTotRet) 4,291,305 shares (cost $44,561,064) ............................................... 44,457,915 Pioneer High Yield VCT Portfolio - Class I Shares (PionHY) 725,592 shares (cost $8,185,048) .................................................. 8,308,025 Putnam VT Growth & Income Fund - IB Shares (PUTVTGrIncIB) 11,695 shares (cost $251,337) ..................................................... 272,015 Putnam VT International Equity Fund - IB Shares (PUTVTIntlEqIB) 58,111 shares (cost $689,827) ..................................................... 746,727 Putnam VT Voyager Fund - IB Shares (PUTVTVoyIB) 5,190 shares (cost $128,517) ...................................................... 134,728 Royce Capital Fund - Micro Cap (RoyMicro) 1,059,922 shares (cost $10,092,367) ............................................... 11,553,151 Strong GVIT Mid Cap Growth Fund - Class I (SGVITMdCpGr) 816,098 shares (cost $14,435,035) ................................................. 17,505,313 Strong Opportunity Fund II, Inc. (StOpp2) 1,772,796 shares (cost $28,040,842) ............................................... 33,665,399 T. Rowe Price Equity Income Portfolio - II (TRPEI2) 1,189,405 shares (cost $20,986,133) ............................................... 23,990,296 T. Rowe Price Mid Cap Growth Portfolio - II (TRPMCG2) 1,021,775 shares (cost $19,065,603) ............................................... 20,261,797 Turner GVIT Growth Focus Fund - Class I (TurnGVITGro) 357,617 shares (cost $1,056,074) .................................................. 1,122,916 Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) 701,163 shares (cost $6,171,272) .................................................. 8,519,136
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs) 395,519 shares (cost $4,682,112) ................................................. $ 5,881,371 Van Kampen UIF - Core Plus Fixed Income Portfolio - Class A (VKoreFI) 11,058 shares (cost $125,708) .................................................... 127,612 Van Kampen UIF - Emerging Markets Debt Portfolio (VKEmMkt) 1,022,298 shares (cost $8,136,289) ............................................... 9,241,576 Van Kampen UIF - Mid Cap Growth Portfolio (VKMidCapG) 432,907 shares (cost $3,174,293) ................................................. 3,688,370 Van Kampen UIF - U.S. Real Estate Portfolio (VKUSRealEst) 2,446,448 shares (cost $31,183,979) .............................................. 38,115,656 -------------- Total Investments ............................................................. 3,031,771,861 Accounts Receivable .................................................................... 1,122,370 -------------- Total Assets .................................................................. 3,032,894,231 Accounts Payable .......................................................................... -- -------------- Contract Owners Equity (note 7) ........................................................... $3,032,894,231 ==============
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS Year Ended December 31,2003
Total AIMCapAp AIMBVF AIMCDF --------------- -------- -------- -------- Investment activity: Reinvested dividends ......................... $ 31,481,906 -- 561 -- Mortality and expense risk charges (note 3) .. (4,623,114) (12) (2,701) (356) --------------- -------- -------- -------- Net investment income (loss) .............. 26,858,792 (12) (2,140) (356) --------------- -------- -------- -------- Proceeds from mutual fund shares sold ........ 2,548,803,981 790,915 802,933 814,014 Cost of mutual fund shares sold .............. (2,655,913,221) (806,140) (680,611) (749,495) --------------- -------- -------- -------- Realized gain (loss) on investments ....... (107,109,240) (15,225) 122,322 64,519 Change in unrealized gain (loss) on investments ............................ 590,219,136 25,422 177,090 18,972 --------------- -------- -------- -------- Net gain (loss) on investments ............ 483,109,896 10,197 299,412 83,491 --------------- -------- -------- -------- Reinvested capital gains ..................... 2,362,280 -- -- -- --------------- -------- -------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 512,330,968 10,185 297,272 83,135 =============== ======== ======== ======== AllSmCpVal AllGroInc ACVPIncGr ACVPInfPr ---------- ---------- ----------- --------- Investment activity: Reinvested dividends ......................... 239 17,558 364,306 8,265 Mortality and expense risk charges (note 3) .. (65) (11,357) (38,306) (18) -------- --------- ----------- -------- Net investment income (loss) .............. 174 6,201 326,000 8,247 -------- --------- ----------- -------- Proceeds from mutual fund shares sold ........ 666,455 489,347 27,562,017 633,896 Cost of mutual fund shares sold .............. (613,633) (414,647) (34,100,938) (644,438) -------- --------- ----------- -------- Realized gain (loss) on investments ....... 52,822 74,700 (6,538,921) (10,542) Change in unrealized gain (loss) on investments ............................ 30,043 969,726 12,592,379 16,524 -------- --------- ----------- -------- Net gain (loss) on investments ............ 82,865 1,044,426 6,053,458 5,982 -------- --------- ----------- -------- Reinvested capital gains ..................... 570 -- -- 261 -------- --------- ----------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... 83,609 1,050,627 6,379,458 14,490 ======== ========= =========== ========
ACVPInt ACVPUltra ACVPVal BCAT ------------- ---------- ----------- -------- Investment activity: Reinvested dividends ......................... $ 382,893 -- 491,839 -- Mortality and expense risk charges (note 3) .. (113,181) (3,225) (51,762) (5,203) ------------- ---------- ----------- -------- Net investment income (loss) .............. 269,712 (3,225) 440,077 (5,203) ------------- ---------- ----------- -------- Proceeds from mutual fund shares sold ........ 259,143,640 2,577,454 35,118,178 597,583 Cost of mutual fund shares sold .............. (254,752,669) (2,459,779) (37,713,979) (504,273) ------------- ---------- ----------- -------- Realized gain (loss) on investments ....... 4,390,971 117,675 (2,595,801) 93,310 Change in unrealized gain (loss) on investments ............................ 8,676,425 266,756 14,564,095 429,891 ------------- ---------- ----------- -------- Net gain (loss) on investments ............ 13,067,396 384,431 11,968,294 523,201 ------------- ---------- ----------- -------- Reinvested capital gains ..................... -- -- -- -- ------------- ---------- ----------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 13,337,108 381,206 12,408,371 517,998 ============= ========== =========== ======== CVSSEP ComGVITVal CSGPVen CSIntEq -------- ---------- -------- -------- Investment activity: Reinvested dividends ......................... 3 78,889 -- 7,373 Mortality and expense risk charges (note 3) .. (31) (6,691) (548) (671) -------- ---------- -------- -------- Net investment income (loss) .............. (28) 72,198 (548) 6,702 -------- ---------- -------- -------- Proceeds from mutual fund shares sold ........ 121,056 2,947,250 247,143 324,414 Cost of mutual fund shares sold .............. (135,191) (3,766,562) (409,206) (351,704) -------- ---------- -------- -------- Realized gain (loss) on investments ....... (14,135) (819,312) (162,063) (27,290) Change in unrealized gain (loss) on investments ............................ 1,777 2,375,390 438,373 478,435 -------- ---------- -------- -------- Net gain (loss) on investments ............ (12,358) 1,556,078 276,310 451,145 -------- ---------- -------- -------- Reinvested capital gains ..................... -- -- -- -- -------- ---------- -------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... (12,386) 1,628,276 275,762 457,847 ======== ========== ======== ========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31,2003
CSLCapV DryGVITIntVal DryMidCapIx DryMidCapStk ----------- ------------- ----------- ------------ Investment activity: Reinvested dividends ......................... $ 13,262 -- 185,500 5,242 Mortality and expense risk charges (note 3) .. (1,683) (4) (61,951) (1,248) ----------- ---------- ---------- ---------- Net investment income (loss) .............. 11,579 (4) 123,549 3,994 ----------- ---------- ---------- ---------- Proceeds from mutual fund shares sold ........ 887,650 2,675,753 6,778,707 1,924,937 Cost of mutual fund shares sold .............. (1,072,816) (2,647,366) (7,184,937) (1,904,012) ----------- ---------- ---------- ---------- Realized gain (loss) on investments ....... (185,166) 28,387 (406,230) 20,925 Change in unrealized gain (loss) on investments ............................ 572,829 22,942 12,149,701 16,660 ----------- ---------- ---------- ---------- Net gain (loss) on investments ............ 387,663 51,329 11,743,471 37,585 ----------- ---------- ---------- ---------- Reinvested capital gains ..................... -- -- 278 -- ----------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 399,242 51,325 11,867,298 41,579 =========== ========== ========== ========== DrySmCapIxS DrySRGro DryStkIx DryVIFApp ----------- ---------- ----------- ----------- Investment activity: Reinvested dividends ......................... 12,615 16,321 4,298,359 408,291 Mortality and expense risk charges (note 3) .. (3,590) (7,095) (491,217) (64,439) ---------- ---------- ----------- ----------- Net investment income (loss) .............. 9,025 9,226 3,807,142 343,852 ---------- ---------- ----------- ----------- Proceeds from mutual fund shares sold ........ 4,257,491 3,509,120 58,679,425 17,369,371 Cost of mutual fund shares sold .............. (3,644,648) (5,980,867) (88,978,811) (19,680,488) ---------- ---------- ----------- ----------- Realized gain (loss) on investments ....... 612,843 (2,471,747) (30,299,386) (2,311,117) Change in unrealized gain (loss) on investments ............................ 809,461 5,739,828 98,834,334 8,650,961 ---------- ---------- ----------- ----------- Net gain (loss) on investments ............ 1,422,304 3,268,081 68,534,948 6,339,844 ---------- ---------- ----------- ----------- Reinvested capital gains ..................... 40,118 -- -- -- ---------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... 1,471,447 3,277,307 72,342,090 6,683,696 ========== ========== =========== ===========
DryDevLeadI DryIntVal FedAmLdII FedCpApII ----------- --------- --------- --------- Investment activity: Reinvested dividends ......................... $ 47 119,310 -- -- Mortality and expense risk charges (note 3) .. (22) (11,721) (3) (3) -------- --------- ------ ------- Net investment income (loss) .............. 25 107,589 (3) (3) -------- --------- ------ ------- Proceeds from mutual fund shares sold ........ 55,206 684,738 1,614 16,899 Cost of mutual fund shares sold .............. (53,162) (620,526) (1,527) (15,873) -------- --------- ------ ------- Realized gain (loss) on investments ....... 2,044 64,212 87 1,026 Change in unrealized gain (loss) on investments ............................ 9,988 1,673,053 16,907 6,758 -------- --------- ------ ------- Net gain (loss) on investments ............ 12,032 1,737,265 16,994 7,784 -------- --------- ------ ------- Reinvested capital gains ..................... -- -- -- -- -------- --------- ------ ------- Net increase (decrease) in contract owners' equity resulting from operations ....... 12,057 1,844,854 16,991 7,781 ======== ========= ====== ======= FGVITHiInc FedQualBd FidVIPEIS FidVIPGrS ----------- ----------- ----------- ----------- Investment activity: Reinvested dividends ......................... 2,046,881 2,840,351 1,242,698 159,518 Mortality and expense risk charges (note 3) .. (41,960) (170,996) (120,815) (133,368) ----------- ----------- ----------- ----------- Net investment income (loss) .............. 2,004,921 2,669,355 1,121,883 26,150 ----------- ----------- ----------- ----------- Proceeds from mutual fund shares sold ........ 18,704,405 22,553,425 26,185,310 10,458,609 Cost of mutual fund shares sold .............. (18,188,417) (21,379,057) (30,985,796) (20,473,965) ----------- ----------- ----------- ----------- Realized gain (loss) on investments ....... 515,988 1,174,368 (4,800,486) (10,015,356) Change in unrealized gain (loss) on investments ............................ 2,464,263 (290,377) 24,626,814 35,886,353 ----------- ----------- ----------- ----------- Net gain (loss) on investments ............ 2,980,251 883,991 19,826,328 25,870,997 ----------- ----------- ----------- ----------- Reinvested capital gains ..................... -- -- -- -- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... 4,985,172 3,553,346 20,948,211 25,897,147 =========== =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31,2003
FidVIPHIS FidVIPOvS FidVIPConS FidVIPInvGrB ------------ ------------ ----------- ------------ Investment activity: Reinvested dividends........................... $ 1,544,303 177,286 226,310 -- Mortality and expense risk charges (note 3).... (29,554) (42,265) (103,893) (9) ------------ ------------ ----------- -------- Net investment income (loss)................ 1,514,749 135,021 122,417 (9) ------------ ------------ ----------- -------- Proceeds from mutual fund shares sold.......... 12,065,498 293,444,469 12,373,579 209,295 Cost of mutual fund shares sold................ (13,374,151) (286,367,810) (15,673,001) (210,339) ------------ ------------ ----------- -------- Realized gain (loss) on investments......... (1,308,653) 7,076,659 (3,299,422) (1,044) Change in unrealized gain (loss) on investments.............................. 5,412,898 5,539,950 23,252,143 11,193 ------------ ------------ ----------- -------- Net gain (loss) on investments.............. 4,104,245 12,616,609 19,952,721 10,149 ------------ ------------ ----------- -------- Reinvested capital gains....................... -- -- -- -- ------------ ------------ ----------- -------- Net increase (decrease) in contract owners' equity resulting from operations......... $ 5,618,994 12,751,630 20,075,138 10,140 ============ ============ =========== ======== FidVIPGrOPS FidVIPMCap FidVIPValStS FTVIPFRDiv ----------- ----------- ------------ ---------- Investment activity: Reinvested dividends........................... 77,532 -- -- 3,741 Mortality and expense risk charges (note 3).... (11,321) (27) (1,461) (62) ---------- ---------- ---------- -------- Net investment income (loss)................ 66,211 (27) (1,461) 3,679 ---------- ---------- ---------- -------- Proceeds from mutual fund shares sold.......... 2,051,628 2,092,255 3,384,401 371,893 Cost of mutual fund shares sold................ (3,234,244) (2,010,034) (3,097,032) (355,534) ---------- ---------- ---------- -------- Realized gain (loss) on investments......... (1,182,616) 82,221 287,369 16,359 Change in unrealized gain (loss) on investments.............................. 4,646,657 98,757 365,472 177,883 ---------- ---------- ---------- -------- Net gain (loss) on investments.............. 3,464,041 180,978 652,841 194,242 ---------- ---------- ---------- -------- Reinvested capital gains....................... -- -- 25,908 11,381 ---------- ---------- ---------- -------- Net increase (decrease) in contract owners' equity resulting from operations......... 3,530,252 180,951 677,288 209,302 ========== ========== ========== ========
FTVIPSmCpVal FTVIPFS FTVIPFS2 GVITEmMrkts ------------ ---------- --------- ----------- Investment activity: Reinvested dividends........................... $ 3 1,342 63,968 18,809 Mortality and expense risk charges (note 3).... (24) (47) (11,673) (3,173) --------- ---------- --------- ---------- Net investment income (loss)................ (21) 1,295 52,295 15,636 --------- ---------- --------- ---------- Proceeds from mutual fund shares sold.......... 936,703 2,345,982 707,310 5,537,602 Cost of mutual fund shares sold................ (892,172) (2,289,028) (579,514) (4,932,983) --------- ---------- --------- ---------- Realized gain (loss) on investments......... 44,531 56,954 127,796 604,619 Change in unrealized gain (loss) on investments.............................. 45,044 77,270 1,180,204 1,096,247 --------- ---------- --------- ---------- Net gain (loss) on investments.............. 89,575 134,224 1,308,000 1,700,866 --------- ---------- --------- ---------- Reinvested capital gains....................... -- -- -- -- --------- ---------- --------- ---------- Net increase (decrease) in contract owners' equity resulting from operations......... $ 89,554 135,519 1,360,295 1,716,502 ========= ========== ========= ========== GVITGlFin GVITGIHIth GVITGITech GVITGIUtl --------- ---------- ---------- --------- Investment activity: Reinvested dividends........................... 9,388 -- -- 2,839 Mortality and expense risk charges (note 3).... (699) (1,406) (3,687) (219) -------- --------- ---------- -------- Net investment income (loss)................ 8,689 (1,406) (3,687) 2,620 -------- --------- ---------- -------- Proceeds from mutual fund shares sold.......... 331,747 1,155,979 2,099,625 945,440 Cost of mutual fund shares sold................ (300,696) (992,497) (1,913,408) (911,030) -------- --------- ---------- -------- Realized gain (loss) on investments......... 31,051 163,482 186,217 34,410 Change in unrealized gain (loss) on investments.............................. 88,676 (124,144) 902,402 52,291 -------- --------- ---------- -------- Net gain (loss) on investments.............. 119,727 39,338 1,088,619 86,701 -------- --------- ---------- -------- Reinvested capital gains....................... 220,655 300,747 -- -- -------- --------- ---------- -------- Net increase (decrease) in contract owners' equity resulting from operations......... 349,071 338,679 1,084,932 89,321 ======== ========= ========== ========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31,2003
GVITGvtBd GVITGrowth GVITIDAgg GVITIDCon ------------- ----------- ---------- ---------- Investment activity: Reinvested dividends........................... $ 6,865,305 2,901 49,882 86,890 Mortality and expense risk charges (note 3).... (532,863) (5,035) (928) (3,132) ------------- ----------- ---------- ---------- Net investment income (loss)................ 6,332,442 (2,134) 48,954 83,758 ------------- ----------- ---------- ---------- Proceeds from mutual fund shares sold.......... 114,938,301 6,188,118 1,188,489 1,056,624 Cost of mutual fund shares sold................ (110,191,379) (13,448,525) (1,007,101) (1,041,921) ------------- ----------- ---------- ---------- Realized gain (loss) on investments......... 4,746,922 (7,260,407) 181,388 14,703 Change in unrealized gain (loss) on investments.............................. (7,366,374) 11,255,445 715,206 161,113 ------------- ----------- ---------- ---------- Net gain (loss) on investments.............. (2,619,452) 3,995,038 896,594 175,816 ------------- ----------- ---------- ---------- Reinvested capital gains....................... 303,327 -- 71,466 18,585 ------------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations......... $ 4,016,317 3,992,904 1,017,014 278,159 ============= =========== ========== ========== GVITIDMod GVITIDModAgg GVITIDModCon GVITIntGro ---------- ------------ ------------ ----------- Investment activity: Reinvested dividends........................... 182,405 143,129 149,895 -- Mortality and expense risk charges (note 3).... (9,355) (8,313) (6,584) (1,304) ---------- ---------- ---------- ----------- Net investment income (loss)................ 173,050 134,816 143,311 (1,304) ---------- ---------- ---------- ----------- Proceeds from mutual fund shares sold.......... 1,209,195 1,399,879 1,414,960 24,356,234 Cost of mutual fund shares sold................ (1,187,096) (1,269,848) (1,367,212) (24,068,402) ---------- ---------- ---------- ----------- Realized gain (loss) on investments......... 22,099 130,031 47,748 287,832 Change in unrealized gain (loss) on investments.............................. 1,669,089 2,253,214 677,003 217,181 ---------- ---------- ---------- ----------- Net gain (loss) on investments.............. 1,691,188 2,383,245 724,751 505,013 ---------- ---------- ---------- ----------- Reinvested capital gains....................... 6,002 -- 14,290 -- ---------- ---------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations......... 1,870,240 2,518,061 882,352 503,709 ========== ========== ========== ===========
GVITMyMkt GVITMyMkt5 GVITLead NWGVITStrVal ------------- ------------ ---------- ------------ Investment activity: Reinvested dividends........................... $ 1,349,554 2,122,609 456 605 Mortality and expense risk charges (note 3).... (178,361) (811,015) (171) (1,401) ------------- ------------ ---------- ---------- Net investment income (loss)................ 1,171,193 1,311,594 285 (796) ------------- ------------ ---------- ---------- Proceeds from mutual fund shares sold.......... 853,911,471 245,103,513 1,166,038 1,551,129 Cost of mutual fund shares sold................ (853,911,471) (245,103,513) (1,099,175) (1,700,606) ------------- ------------ ---------- ---------- Realized gain (loss) on investments......... -- -- 66,863 (149,477) Change in unrealized gain (loss) on investments.............................. -- -- 18,296 709,462 ------------- ------------ ---------- ---------- Net gain (loss) on investments.............. -- -- 85,159 559,985 ------------- ------------ ---------- ---------- Reinvested capital gains....................... -- -- -- -- ------------- ------------ ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations......... $ 1,171,193 1,311,594 85,444 559,189 ============= ============ ========== ========== GVITSmCapGr GVITSmCapVal GVITSmComp GVITTotRt ----------- ------------ ----------- ----------- Investment activity: Reinvested dividends........................... -- 283 -- 1,125,759 Mortality and expense risk charges (note 3).... (18,206) (87,765) (143,671) (169,244) ----------- ----------- ----------- ----------- Net investment income (loss)................ (18,206) (87,482) (143,671) 956,515 ----------- ----------- ----------- ----------- Proceeds from mutual fund shares sold.......... 30,763,549 17,193,665 15,828,540 28,795,389 Cost of mutual fund shares sold................ (28,663,551) (20,525,404) (17,085,425) (46,175,196) ----------- ----------- ----------- ----------- Realized gain (loss) on investments......... 2,099,998 (3,331,739) (1,256,885) (17,379,807) Change in unrealized gain (loss) on investments.............................. 2,410,575 30,637,626 24,310,071 65,736,490 ----------- ----------- ----------- ----------- Net gain (loss) on investments.............. 4,510,573 27,305,887 23,053,186 48,356,683 ----------- ----------- ----------- ----------- Reinvested capital gains....................... -- -- -- -- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations......... 4,492,367 27,218,405 22,909,515 49,313,198 =========== =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2003
GVITUSGro GVITWLead GSMCV GSVITMidCap ----------- ---------- ----- ----------- Investment activity: Reinvested dividends ............................ $ -- -- -- 110,952 Mortality and expense risk charges (note 3) ..... (1,851) (2,267) -- (22,446) ----------- ---------- ---- ---------- Net investment income (loss) ................. (1,851) (2,267) -- 88,506 ----------- ---------- ---- ---------- Proceeds from mutual fund shares sold ........... 9,040,179 2,535,774 715 1,164,994 Cost of mutual fund shares sold ................. (8,365,705) (3,110,739) (709) (1,028,999) ----------- ---------- ---- ---------- Realized gain (loss) on investments .......... 674,474 (574,965) 6 135,995 Change in unrealized gain (loss) on investments ............................... (163,614) 1,609,490 20 1,824,068 ----------- ---------- ---- ---------- Net gain (loss) on investments ............... 510,860 1,034,525 26 1,960,063 ----------- ---------- ---- ---------- Reinvested capital gains ........................ 292,900 -- -- 145,638 ----------- ---------- ---- ---------- Net increase (decrease) in contract owners' equity resulting from operations .......... $ 801,909 1,032,258 26 2,194,207 =========== ========== ==== ========== JPMorBal JanBal JanCapAp JanGlTech ----------- ---------- ----------- ---------- Investment activity: Reinvested dividends ............................ 341,045 64,137 85,049 -- Mortality and expense risk charges (note 3) ..... (30,113) (9,646) (52,521) (8,866) ----------- ---------- ----------- ---------- Net investment income (loss) ................. 310,932 54,491 32,528 (8,866) ----------- ---------- ----------- ---------- Proceeds from mutual fund shares sold ........... 9,520,008 1,286,111 13,968,635 3,241,461 Cost of mutual fund shares sold ................. (10,634,657) (1,200,804) (15,881,327) (5,680,610) ----------- ---------- ----------- ---------- Realized gain (loss) on investments .......... (1,114,649) 85,307 (1,912,692) (2,439,149) Change in unrealized gain (loss) on investments ............................... 4,225,049 246,371 8,271,924 7,347,499 ----------- ---------- ----------- ---------- Net gain (loss) on investments ............... 3,110,400 331,678 6,359,232 4,908,350 ----------- ---------- ----------- ---------- Reinvested capital gains ........................ -- -- -- -- ----------- ---------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .......... 3,421,332 386,169 6,391,760 4,899,484 =========== ========== =========== ==========
JanIntGro JanRsLgCpCr MGVITMultiSec MFSVITInvGrwI ------------ ----------- ------------- ------------- Investment activity: Reinvested dividends ............................ $ 311,752 29 1,376,276 -- Mortality and expense risk charges (note 3) ..... (52,143) -- (54,711) (23) ------------ ------ ----------- ------- Net investment income (loss) ................. 259,609 29 1,321,565 (23) ------------ ------ ----------- ------- Proceeds from mutual fund shares sold ........... 69,505,540 3,878 20,749,988 61,140 Cost of mutual fund shares sold ................. (67,097,232) (3,769) (19,687,278) (58,377) ------------ ------ ----------- ------- Realized gain (loss) on investments .......... 2,408,308 109 1,062,710 2,763 Change in unrealized gain (loss) on investments ............................... 6,998,962 3,346 550,178 20,062 ------------ ------ ----------- ------- Net gain (loss) on investments ............... 9,407,270 3,455 1,612,888 22,825 ------------ ------ ----------- ------- Reinvested capital gains ........................ -- -- -- -- ------------ ------ ----------- ------- Net increase (decrease) in contract owners' equity resulting from operations .......... $ 9,666,879 3,484 2,934,453 22,802 ============ ====== =========== ======= MFSVITValln NBAMTFas NBAMTGuard NBAMTLMat ----------- -------- ----------- --------- Investment activity: Reinvested dividends ............................ -- -- 115,483 38,809 Mortality and expense risk charges (note 3) ..... (32) (1,210) (19,717) (3) -------- -------- ----------- -------- Net investment income (loss) ................. (32) (1,210) 95,766 38,806 -------- -------- ----------- -------- Proceeds from mutual fund shares sold ........... 160,720 876,339 10,806,799 560,265 Cost of mutual fund shares sold ................. (155,959) (782,482) (13,679,213) (566,082) -------- -------- ----------- -------- Realized gain (loss) on investments .......... 4,761 93,857 (2,872,414) (5,817) Change in unrealized gain (loss) on investments ............................... 24,142 27,859 6,456,331 (25,993) -------- -------- ----------- -------- Net gain (loss) on investments ............... 28,903 121,716 3,583,917 (31,810) -------- -------- ----------- -------- Reinvested capital gains ........................ -- 311 -- -- -------- -------- ----------- -------- Net increase (decrease) in contract owners' equity resulting from operations .......... 28,871 120,817 3,679,683 6,996 ======== ======== =========== ========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2003
NBAMTMCGr NBAMTPart NBAMTSocRe ONEMidCap ------------ ----------- ---------- --------- Investment activity: Reinvested dividends ............................ $ -- -- -- -- Mortality and expense risk charges (note 3) ..... (56,614) (12,047) (17) (5,592) ------------ ---------- ------- -------- Net investment income (loss) ................. (56,614) (12,047) (17) (5,592) ------------ ---------- ------- -------- Proceeds from mutual fund shares sold ........... 23,350,558 4,284,614 23,647 354,836 Cost of mutual fund shares sold ................. (29,727,691) (4,846,027) (22,489) (338,505) ------------ ---------- ------- -------- Realized gain (loss) on investments .......... (6,377,133) (561,413) 1,158 16,331 Change in unrealized gain (loss) on investments ............................... 15,912,922 4,134,976 8,463 333,042 ------------ ---------- ------- -------- Net gain (loss) on investments ............... 9,535,789 3,573,563 9,621 349,373 ------------ ---------- ------- -------- Reinvested capital gains ........................ -- -- -- -- ------------ ---------- ------- -------- Net increase (decrease) in contract owners' equity resulting from operations .......... $ 9,479,175 3,561,516 9,604 343,781 ============ ========== ======= ======== ONEMidCapV OppAggGro OppCapAp OppGlSec ---------- ----------- ----------- ----------- Investment activity: Reinvested dividends ............................ 2,786 -- 360,891 236,600 Mortality and expense risk charges (note 3) ..... (1,722) (93,605) (212,284) (60,203) -------- ----------- ----------- ----------- Net investment income (loss) ................. 1,064 (93,605) 148,607 176,397 -------- ----------- ----------- ----------- Proceeds from mutual fund shares sold ........... 571,733 27,610,562 15,120,964 45,978,690 Cost of mutual fund shares sold ................. (487,867) (36,718,808) (21,967,629) (45,551,451) -------- ----------- ----------- ----------- Realized gain (loss) on investments .......... 83,866 (9,108,246) (6,846,665) 427,239 Change in unrealized gain (loss) on investments ............................... 59,721 21,592,176 33,617,086 12,200,617 -------- ----------- ----------- ----------- Net gain (loss) on investments ............... 143,587 12,483,930 26,770,421 12,627,856 -------- ----------- ----------- ----------- Reinvested capital gains ........................ -- -- -- -- -------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .......... 144,651 12,390,325 26,919,028 12,804,253 ======== =========== =========== ===========
OppHiIncInt OppMSGrInc OppMaStSmCpl PIMLowDur ------------ ----------- ------------ ---------- Investment activity: Reinvested dividends ............................ $ -- 307,192 -- 105,525 Mortality and expense risk charges (note 3) ..... (27) (35,175) (28) (19,377) ----------- ----------- -------- ---------- Net investment income (loss) ................. (27) 272,017 (28) 86,148 ----------- ----------- -------- ---------- Proceeds from mutual fund shares sold ........... 1,270,799 13,880,240 475,885 1,050,148 Cost of mutual fund shares sold ................. (1,247,675) (16,848,401) (441,866) (1,046,229) ----------- ----------- -------- ---------- Realized gain (loss) on investments .......... 23,124 (2,968,161) 34,019 3,919 Change in unrealized gain (loss) on investments ............................... 60,345 11,298,515 111,096 3,744 ----------- ----------- -------- ---------- Net gain (loss) on investments ............... 83,469 8,330,354 145,115 7,663 ----------- ----------- -------- ---------- Reinvested capital gains ........................ -- -- -- 24,408 ----------- ----------- -------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .......... $ 83,442 8,602,371 145,087 118,219 =========== =========== ======== ========== PIMRealRet PIMTotRet PionHY PUTVTGrIncIB ---------- ---------- ---------- ------------ Investment activity: Reinvested dividends ............................ 135,986 632,286 118,284 -- Mortality and expense risk charges (note 3) ..... (22,274) (90,338) (4,697) (33) ---------- ---------- ---------- ------- Net investment income (loss) ................. 113,712 541,948 113,587 (33) ---------- ---------- ---------- ------- Proceeds from mutual fund shares sold ........... 4,271,712 3,014,766 2,700,304 16,929 Cost of mutual fund shares sold ................. (4,116,793) (2,987,170) (2,479,005) (16,476) ---------- ---------- ---------- ------- Realized gain (loss) on investments .......... 154,919 27,596 221,299 453 Change in unrealized gain (loss) on investments ............................... 32,564 (110,836) 122,976 20,678 ---------- ---------- ---------- ------- Net gain (loss) on investments ............... 187,483 (83,240) 344,275 21,131 ---------- ---------- ---------- ------- Reinvested capital gains ........................ 173,353 290,711 -- -- ---------- ---------- ---------- ------- Net increase (decrease) in contract owners' equity resulting from operations .......... 474,548 749,419 457,862 21,098 ========== ========== ========== =======
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2003
PUTVTIntlEqIB PUTVTVoylB RoyMicro SGVITMdCpGr ------------- ---------- --------- ----------- Investment activity: Reinvested dividends ............................ $ -- -- -- -- Mortality and expense risk charges (note 3) ..... (31) (7) (16,213) (21,177) ----------- ------ --------- ----------- Net investment income (loss) ................. (31) (7) (16,213) (21,177) ----------- ------ --------- ----------- Proceeds from mutual fund shares sold ........... 2,063,871 9,410 1,178,050 14,136,370 Cost of mutual fund shares sold ................. (2,042,057) (9,194) (924,797) (20,357,824) ----------- ------ --------- ----------- Realized gain (loss) on investments .......... 21,814 216 253,253 (6,221,454) Change in unrealized gain (loss) on investments ............................... 56,900 6,212 1,459,001 11,980,636 ----------- ------ --------- ----------- Net gain (loss) on investments ............... 78,714 6,428 1,712,254 5,759,182 ----------- ------ --------- ----------- Reinvested capital gains ........................ -- -- 421,098 -- ----------- ------ --------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 78,683 6,421 2,117,139 5,738,005 =========== ====== ========= =========== StOpp2 TRPEI2 TRPMCG2 TurnGVITGro ----------- ---------- --------- ----------- Investment activity: Reinvested dividends ............................ 23,340 188,442 -- -- Mortality and expense risk charges (note 3) ..... (63,121) (38,497) (12,737) (526) ----------- ---------- --------- ---------- Net investment income (loss) ................. (39,781) 149,945 (12,737) (526) ----------- ---------- --------- ---------- Proceeds from mutual fund shares sold ........... 9,835,759 1,620,259 1,245,410 1,374,399 Cost of mutual fund shares sold ................. (12,216,012) (1,498,346) (974,419) (1,217,603) ----------- ---------- --------- ---------- Realized gain (loss) on investments .......... (2,380,253) 121,913 270,991 156,796 Change in unrealized gain (loss) on investments ............................... 12,212,543 3,003,853 1,198,675 130,920 ----------- ---------- --------- ---------- Net gain (loss) on investments ............... 9,832,290 3,125,766 1,469,666 287,716 ----------- ---------- --------- ---------- Reinvested capital gains ........................ -- -- -- -- ----------- ---------- --------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 9,792,509 3,275,711 1,456,929 287,190 =========== ========== ========= ==========
VEWrldEMkt VEWrldHAs VKoreFI VKEmMkt VKMidCapG VKUSRealEst ----------- ---------- ------- ---------- ---------- ----------- Investment activity: Reinvested dividends ............................ $ 7,942 13,563 22 -- -- -- Mortality and expense risk charges (note 3) ..... (5,758) (3,254) (44) (11,369) (4,221) (45,467) ----------- ---------- ------- ---------- ---------- ----------- Net investment income (loss) ................. 2,184 10,309 (22) (11,369) (4,221) (45,467) ----------- ---------- ------- ---------- ---------- ----------- Proceeds from mutual fund shares sold ........... 9,505,996 7,887,087 85,744 5,051,540 2,918,260 10,735,438 Cost of mutual fund shares sold ................. (8,449,508) (7,993,789) (86,251) (4,439,184) (2,908,329) (10,123,053) ----------- ---------- ------- ---------- ---------- ----------- Realized gain (loss) on investments .......... 1,056,488 (106,702) (507) 612,356 9,931 612,385 Change in unrealized gain (loss) on investments ............................... 2,226,271 1,336,812 1,903 1,121,269 999,073 9,192,176 ----------- ---------- ------- ---------- ---------- ----------- Net gain (loss) on investments ............... 3,282,759 1,230,110 1,396 1,733,625 1,009,004 9,804,561 ----------- ---------- ------- ---------- ---------- ----------- Reinvested capital gains ........................ -- -- 273 -- -- -- ----------- ---------- ------- ---------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 3,284,943 1,240,419 1,647 1,722,256 1,004,783 9,759,094 =========== ========== ======= ========== ========== ===========
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY Years Ended December 31, 2003 and 2002
Total AIMCapAp ------------------------------ -------------- 2003 2002 2003 2002 -------------- ------------- ------- ---- Investment activity: Net investment income (loss) .................... $ 26,858,792 28,058,001 (12) -- Realized gain (loss) on investments ............. (107,109,240) (173,891,391) (15,225) -- Change in unrealized gain (loss) on investments ............................... 590,219,136 (185,402,711) 25,422 -- Reinvested capital gains ........................ 2,362,280 8,167,207 -- -- -------------- ------------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations .......... 512,330,968 (323,068,894) 10,185 -- -------------- ------------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 684,393,099 806,276,709 145,264 -- Transfers between funds ......................... -- -- 190,591 -- Surrenders (note 6) ............................. (302,997,849) (118,040,336) (20) -- Death benefits (note 4) ......................... (2,544,257) (2,999,731) -- -- Net policy repayments (loans) (note 5) .......... 15,397,293 (31,525,439) (2,195) -- Deductions for surrender charges (note 2d) ...... (10,621,920) (7,798,703) (1) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (134,724,692) (129,307,494) (9,883) -- Asset charges (note 3): FPVUL & VEL contracts ........................ (3,761,238) (3,265,896) (331) -- MSP contracts ................................ (177,883) (177,913) -- -- SL contracts ................................. (840,000) (687,007) (21) -- -------------- ------------- ------- --- Net equity transactions ................... 244,122,553 512,474,190 323,404 -- -------------- ------------- ------- --- Net change in contract owners' equity .............. 756,453,521 189,405,296 333,589 -- Contract owners' equity beginning of period ........ 2,276,440,710 2,087,035,414 -- -- -------------- ------------- ------- --- Contract owners' equity end of period .............. $3,032,894,231 2,276,440,710 333,589 -- ============== ============= ======= === CHANGES IN UNITS: Beginning units ................................. 245,162,666 191,173,282 -- -- -------------- ------------- ------- --- Units purchased ................................. 152,117,332 145,379,173 27,974 -- Units redeemed .................................. (123,003,123) (91,389,789) (1,058) -- -------------- ------------- ------- --- Ending units .................................... 274,276,875 245,162,666 26,916 -- ============== ============= ======= === AIMBVF AIMCDF ------------------- -------------- 2003 2002 2003 2002 --------- ------- ------- ---- Investment activity: Net investment income (loss) .................... (2,140) (139) (356) -- Realized gain (loss) on investments ............. 122,322 44 64,519 -- Change in unrealized gain (loss) on investments ............................... 177,090 (16,746) 18,972 -- Reinvested capital gains ........................ -- -- -- -- --------- ------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations .......... 297,272 (16,841) 83,135 -- --------- ------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 391,184 8,073 188,767 -- Transfers between funds ......................... 968,277 401,732 409,243 250 Surrenders (note 6) ............................. (2,640) -- (14) -- Death benefits (note 4) ......................... -- -- (17) -- Net policy repayments (loans) (note 5) .......... (2,719) -- 7,850 -- Deductions for surrender charges (note 2d) ...... (93) -- (1) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (44,665) (570) (7,330) (15) Asset charges (note 3): FPVUL & VEL contracts ........................ (644) -- (317) -- MSP contracts ................................ (115) -- (5) -- SL contracts ................................. (75) -- (7) -- --------- ------- ------- --- Net equity transactions ................... 1,308,510 409,235 598,169 235 --------- ------- ------- --- Net change in contract owners' equity .............. 1,605,782 392,394 681,304 235 Contract owners' equity beginning of period ........ 392,394 -- 235 -- --------- ------- ------- --- Contract owners' equity end of period .............. 1,998,176 392,394 681,539 235 ========= ======= ======= === CHANGES IN UNITS: Beginning units ................................. 39,881 -- 24 -- --------- ------- ------- --- Units purchased ................................. 119,273 39,936 52,189 26 Units redeemed .................................. (6,914) (55) (868) (2) --------- ------- ------- --- Ending units .................................... 152,240 39,881 51,345 24 ========= ======= ======= ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2003 and 2002
AllSmCpVal AllGroInc ACVPIncGr ACVPInfPr --------------- ------------------ ------------------------ ---------------- 2003 2002 2003 2002 2003 2002 2003 2002 -------- ---- --------- ------ ----------- ---------- --------- ---- Investment activity: Net investment income (loss) ................. $ 174 -- 6,201 (9) 326,000 295,751 8,247 -- Realized gain (loss) on investments .......... 52,822 -- 74,700 (19) (6,538,921) (2,425,742) (10,542) -- Change in unrealized gain (loss) on investments ............................ 30,043 -- 969,726 (1,665) 12,592,379 (6,415,240) 16,524 -- Reinvested capital gains ..................... 570 -- -- -- -- -- 261 -- -------- --- --------- ------ ----------- ---------- --------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... 83,609 -- 1,050,627 (1,693) 6,379,458 (8,545,231) 14,490 -- -------- --- --------- ------ ----------- ---------- --------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 78,868 -- 1,935,130 (16) 4,338,258 8,242,700 97,055 -- Transfers between funds ...................... 244,139 -- 6,170,887 56,089 (14,535,270) 4,275,259 1,081,913 -- Surrenders (note 6) .......................... -- -- (26,111) -- (6,231,826) (859,189) (37,138) -- Death benefits (note 4) ...................... -- -- -- -- (54,131) (84,910) -- -- Net policy repayments (loans) (note 5) ....... (1,318) -- 2,451 -- 1,394,557 (1,414,722) (1,336) -- Deductions for surrender charges (note 2d) ... -- -- (915) -- (218,463) (56,765) (1,302) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (9,754) -- (117,488) -- (1,810,142) (2,134,843) (27,415) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (355) -- (1,648) -- (56,784) (51,840) (867) -- MSP contracts ............................. -- -- (6) -- (4,173) (4,113) (95) -- SL contracts .............................. (129) -- (85) -- (11,378) (9,375) (72) -- -------- --- --------- ------ ----------- ---------- --------- --- Net equity transactions ................ 311,451 -- 7,962,215 56,073 (17,189,352) 7,902,202 1,110,743 -- -------- --- --------- ------ ----------- ---------- --------- --- Net change in contract owners' equity ........... 395,060 -- 9,012,842 54,380 (10,809,894) (643,029) 1,125,233 -- Contract owners' equity beginning of period .................................... -- -- 54,380 -- 38,241,888 38,884,917 -- -- -------- --- --------- ------ ----------- ---------- --------- --- Contract owners' equity end of period ........... $395,060 -- 9,067,222 54,380 27,431,994 38,241,888 1,125,233 -- ======== === ========= ====== =========== ========== ========= === CHANGES IN UNITS: Beginning units .............................. -- -- 5,432 -- 4,372,283 3,582,704 -- -- -------- --- --------- ------ ----------- ---------- --------- --- Units purchased .............................. 29,601 -- 906,704 5,432 891,295 1,345,665 110,952 -- Units redeemed ............................... (966) -- (227,226) -- (2,955,831) (556,086) (1,962) -- -------- --- --------- ------ ----------- ---------- --------- --- Ending units ................................. 28,635 -- 684,910 5,432 2,307,747 4,372,283 108,990 -- ======== === ========= ====== =========== ========== ========= ===
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2003 and 2002
ACVPInt ACVPUltra ------------------------ -------------------- 2003 2002 2003 2002 ----------- ---------- --------- -------- Investment activity: Net investment income (loss) ................. $ 269,712 252,262 (3,225) 2,192 Realized gain (loss) on investments .......... 4,390,971 (7,025,164) 117,675 (65,437) Change in unrealized gain (loss) on investments ............................ 8,676,425 (1,505,283) 266,756 (28,521) Reinvested capital gains ..................... -- -- -- -- ----------- ---------- --------- -------- Net increase (decrease) in contract owners' equity resulting from operations ....... 13,337,108 (8,278,185) 381,206 (91,766) ----------- ---------- --------- -------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 9,177,412 14,523,861 866,962 381,461 Transfers between funds ...................... 2,991,552 (827,913) 2,721,084 767,998 Surrenders (note 6) .......................... (5,272,163) (1,534,093) (188,855) (326,526) Death benefits (note 4) ...................... (22,976) (53,686) (1,431) -- Net policy repayments (loans) (note 5) ....... 1,056,332 (1,212,686) 6,813 1,986 Deductions for surrender charges (note 2d) ... (184,821) (101,355) (6,620) (21,573) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (3,562,972) (2,687,623) (145,158) (45,493) Asset charges (note 3): FPVUL & VEL contracts ..................... (66,834) (64,935) (4,450) (1,707) MSP contracts ............................. (2,916) (3,820) (12) (8) SL contracts .............................. (9,789) (9,329) (260) (21) ----------- ---------- --------- -------- Net equity transactions ................ 4,102,825 8,028,421 3,248,073 756,117 ----------- ---------- --------- -------- Net change in contract owners' equity ........... 17,439,933 (249,764) 3,629,279 664,351 Contract owners' equity beginning of period .................................... 44,595,057 44,844,821 664,351 -- ----------- ---------- --------- -------- Contract owners' equity end of period ........... $62,034,990 44,595,057 4,293,630 664,351 =========== ========== ========= ======== CHANGES IN UNITS: Beginning units .............................. 5,642,120 4,459,878 82,661 -- ----------- ---------- --------- -------- Units purchased .............................. 2,534,766 2,071,974 388,084 88,490 Units redeemed ............................... (1,613,113) (889,732) (41,978) (5,829) ----------- ---------- --------- -------- Ending units ................................. 6,563,773 5,642,120 428,767 82,661 =========== ========== ========= ======== ACVPVal BCAT ----------------------- ------------------ Investment activity: 2003 2002 2003 2002 ---------- ---------- --------- ------ Net investment income (loss) ................. 440,077 228,704 (5,203) (29) Realized gain (loss) on investments .......... (2,595,801) (664,248) 93,310 79 Change in unrealized gain (loss) on investments ............................ 14,564,095 (7,152,115) 429,891 (48) Reinvested capital gains ..................... -- 1,740,826 -- -- ---------- ---------- --------- ------ Net increase (decrease) in contract owners' equity resulting from operations ....... 12,408,371 (5,846,833) 517,998 2 ---------- ---------- --------- ------ Equity transactions: Purchase payments received from contract owners (note 6) .................. 8,859,894 9,518,078 396,797 (1) Transfers between funds ...................... 4,460,692 14,238,176 4,262,979 69,454 Surrenders (note 6) .......................... (8,297,618) (1,379,551) (4,371) -- Death benefits (note 4) ...................... (14,776) (56,150) (174) -- Net policy repayments (loans) (note 5) ....... (95,718) (201,892) (2,751) -- Deductions for surrender charges (note 2d) ... (290,882) (91,144) (153) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (2,727,284) (2,572,725) (29,255) (296) Asset charges (note 3): FPVUL & VEL contracts ..................... (105,153) (84,853) -- -- MSP contracts ............................. (3,038) (3,108) -- -- SL contracts .............................. (26,503) (17,817) -- -- ---------- ---------- --------- ------ Net equity transactions ................ 1,759,614 19,349,014 4,623,072 69,157 ---------- ---------- --------- ------ Net change in contract owners' equity ........... 14,167,985 13,502,181 5,141,070 69,159 Contract owners' equity beginning of period .................................... 42,688,553 29,186,372 69,159 -- ---------- ---------- --------- ------ Contract owners' equity end of period ........... 56,856,538 42,688,553 5,210,229 69,159 ========== ========== ========= ====== CHANGES IN UNITS: Beginning units .............................. 3,650,314 2,161,177 7,134 -- ---------- ---------- --------- ------ Units purchased .............................. 1,337,198 1,905,197 473,014 7,164 Units redeemed ............................... (1,177,190) (416,060) (65,926) (30) ---------- ---------- --------- ------ Ending units ................................. 3,810,322 3,650,314 414,222 7,134 ========== ========== ========= ======
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
CVSSEP ComGVITVal --------------- ---------------------- 2003 2002 2003 2002 -------- ---- --------- ---------- Investment activity: Net investment income (loss) ................. $ (28) -- 72,198 64,404 Realized gain (loss) on investments .......... (14,135) -- (819,312) (1,155,697) Change in unrealized gain (loss) on investments ............................ 1,777 -- 2,375,390 (372,887) Reinvested capital gains ..................... -- -- -- -- -------- --- --------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... (12,386) -- 1,628,276 (1,464,180) -------- --- --------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 378 -- 1,087,630 1,857,957 Transfers between funds ...................... 39,135 -- (371,853) 478,332 Surrenders (note 6) .......................... -- -- (204,750) (151,738) Death benefits (note 4) ...................... -- -- (50,444) (16,024) Net policy repayments (loans) (note 5) ....... -- -- 10,868 (46,526) Deductions for surrender charges (note 2d) ... -- -- (7,178) (10,025) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (779) -- (372,399) (337,086) Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- (10,736) (8,716) MSP contracts ............................. -- -- (647) (766) SL contracts .............................. -- -- (2,037) (874) -------- --- --------- ---------- Net equity transactions ................ 38,734 -- 78,454 1,764,534 -------- --- --------- ---------- Net change in contract owners' equity ........... 26,348 -- 1,706,730 300,354 Contract owners' equity beginning of period .................................... -- -- 5,500,567 5,200,213 -------- --- --------- ---------- Contract owners' equity end of period ........... $ 26,348 -- 7,207,297 5,500,567 ======== --- ========= ========== CHANGES IN UNITS: Beginning units .............................. -- -- 743,874 528,392 -------- --- --------- ---------- Units purchased .............................. 2,181 -- 261,096 323,564 Units redeemed ............................... (79) -- (276,949) (108,082) -------- --- --------- ---------- Ending units ................................. 2,102 -- 728,021 743,874 ======== === ========= ========== CSGPVen CSIntEq ------------------- --------------------- 2003 2002 2003 2002 -------- -------- --------- --------- Investment activity: Net investment income (loss) ................. (548) (741) 6,702 (1,064) Realized gain (loss) on investments .......... (162,063) (342,320) (27,290) (31,534) Change in unrealized gain (loss) on investments ............................ 438,373 59,105 478,435 (339,704) Reinvested capital gains ..................... -- -- -- -- -------- -------- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ....... 275,762 (283,956) 457,847 (372,302) -------- -------- --------- --------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 116,741 138,218 185,548 257,124 Transfers between funds ...................... (18,531) (150,036) (46,871) (129,187) Surrenders (note 6) .......................... (21,295) (19,422) (124,610) (109,474) Death benefits (note 4) ...................... -- (2,132) -- -- Net policy repayments (loans) (note 5) ....... (2,623) 2,471 (2,371) (11,178) Deductions for surrender charges (note 2d) ... (747) (1,283) (4,368) (7,233) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (38,975) (44,394) (94,908) (100,884) Asset charges (note 3): FPVUL & VEL contracts ..................... (2,005) (2,071) (5,093) (5,555) MSP contracts ............................. (242) (361) (335) (397) SL contracts .............................. (140) (206) (658) (670) -------- -------- --------- --------- Net equity transactions ................ 32,183 (79,216) (93,666) (107,454) -------- -------- --------- --------- Net change in contract owners' equity ........... 307,945 (363,172) 364,181 (479,756) Contract owners' equity beginning of period .................................... 530,190 893,362 1,380,444 1,860,200 -------- -------- --------- --------- Contract owners' equity end of period ........... 838,135 530,190 1,744,625 1,380,444 ======== ======== ========= ========= CHANGES IN UNITS: Beginning units .............................. 84,647 92,656 190,594 206,416 -------- -------- --------- --------- Units purchased .............................. 51,522 18,681 63,129 33,740 Units redeemed ............................... (40,113) (26,690) (73,944) (49,562) -------- -------- --------- --------- Ending units ................................. 96,056 84,647 179,779 190,594 ======== ======== ========= =========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
CSLCapV DryGVITIntVal ----------------------- -------------- 2003 2002 2003 2002 ---------- ---------- ------- ---- Investment activity: Net investment income (loss) ................. $ 11,579 15,840 (4) -- Realized gain (loss) on investments .......... (185,166) (187,629) 28,387 -- Change in unrealized gain (loss) on investments ............................ 572,829 (413,957) 22,942 -- Reinvested capital gains ..................... -- -- -- -- ---------- ---------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... 399,242 (585,746) 51,325 -- ---------- ---------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 424,916 436,621 18,266 -- Transfers between funds ...................... (113,246) (1,251,071) 274,261 -- Surrenders (note 6) .......................... (121,277) (213,288) (6,158) -- Death benefits (note 4) ...................... (9,891) (7,975) -- -- Net policy repayments (loans) (note 5) ....... 9,098 2,593 (2,659) -- Deductions for surrender charges (note 2d) ... (4,251) (14,092) (216) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (145,128) (154,556) (3,785) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (4,419) (5,457) (258) -- MSP contracts ............................. (443) (500) (21) -- SL contracts .............................. (891) (727) (11) -- ---------- ---------- ------- --- Net equity transactions ................ 34,468 (1,208,452) 279,419 -- ---------- ---------- ------- --- Net change in contract owners' equity ........... 433,710 (1,794,198) 330,744 -- Contract owners' equity beginning of period .................................... 1,679,182 3,473,380 -- -- ---------- ---------- ------- --- Contract owners' equity end of period ........... $2,112,892 1,679,182 330,744 -- ========== ========== ======= === CHANGES IN UNITS: Beginning units .............................. 175,080 285,384 -- -- ---------- ---------- ------- --- Units purchased .............................. 66,176 47,298 24,937 -- Units redeemed ............................... (63,790) (157,602) (1,036) -- ---------- ---------- ------- --- Ending units ................................. 177,466 175,080 23,901 -- ========== ========== ======= === DryMidCapIx DryEuroEq ----------------------- --------------------- 2003 2002 2003 2002 ---------- ---------- -------- ---------- Investment activity: Net investment income (loss) ................. 123,549 65,809 -- (1,189) Realized gain (loss) on investments .......... (406,230) (468,952) -- (240,858) Change in unrealized gain (loss) on investments ............................ 12,149,701 (5,175,301) -- (17,058) Reinvested capital gains ..................... 278 243,793 -- -- ---------- ---------- ------ ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 11,867,298 (5,334,651) -- (259,105) ---------- ---------- ------ ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 8,936,277 7,501,528 (847) 376,786 Transfers between funds ...................... 4,583,904 12,585,211 841 (1,581,576) Surrenders (note 6) .......................... (1,823,209) (1,410,219) 186 (26,144) Death benefits (note 4) ...................... (7,598) (30,435) -- (3,280) Net policy repayments (loans) (note 5) ....... (91,127) (99,081) (193) (402) Deductions for surrender charges (note 2d) ... (63,915) (93,171) 7 (1,727) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,939,737) (1,703,300) (1,981) (84,449) Asset charges (note 3): FPVUL & VEL contracts ..................... (61,389) (49,277) -- (2,576) MSP contracts ............................. (1,729) (1,585) -- (82) SL contracts .............................. (23,449) (17,307) -- (527) ---------- ---------- ------ ---------- Net equity transactions ................ 9,508,028 16,682,364 (1,987) (1,323,977) ---------- ---------- ------ ---------- Net change in contract owners' equity ........... 21,375,326 11,347,713 (1,987) (1,583,082) Contract owners' equity beginning of period .................................... 28,785,471 17,437,758 1,987 1,585,069 ---------- ---------- ------ ---------- Contract owners' equity end of period ........... 50,160,797 28,785,471 -- 1,987 ========== ========== ====== ========== CHANGES IN UNITS: Beginning units .............................. 2,365,305 1,199,159 282 174,397 ---------- ---------- ------ ---------- Units purchased .............................. 1,262,238 1,402,464 147 58,103 Units redeemed ............................... (479,540) (236,318) (429) (232,218) ---------- ---------- ------ ---------- Ending units ................................. 3,148,003 2,365,305 -- 282 ========== ========== ====== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
DryMidCapStk DrySmCapIxS ------------------- --------------------- 2003 2002 2003 2002 ---------- ------ --------- --------- Investment activity: Net investment income (loss) ................. $ 3,994 76 9,025 3,092 Realized gain (loss) on investments .......... 20,925 -- 612,843 9,527 Change in unrealized gain (loss) on investments ............................ 16,660 (427) 809,461 (20,037) Reinvested capital gains ..................... -- -- 40,118 -- ---------- ------ --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ....... 41,579 (351) 1,471,447 (7,418) ---------- ------ --------- --------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 466,628 -- 903,885 365,357 Transfers between funds ...................... 1,646,939 28,932 4,763,665 2,178,207 Surrenders (note 6) .......................... -- -- (100,497) (35,945) Death benefits (note 4) ...................... -- -- (7,955) (4,196) Net policy repayments (loans) (note 5) ....... -- -- (2,413) (1,436) Deductions for surrender charges (note 2d) ... -- -- (3,523) (2,375) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (14,388) (255) (169,521) (27,049) Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- (5,854) (633) MSP contracts ............................. -- -- (5) -- SL contracts .............................. -- -- (1,040) (63) ---------- ------ --------- --------- Net equity transactions ................ 2,099,179 28,677 5,376,742 2,471,867 ---------- ------ --------- --------- Net change in contract owners' equity ........... 2,140,758 28,326 6,848,189 2,464,449 Contract owners' equity beginning of period ..... 28,326 -- 2,464,449 -- ---------- ------ --------- --------- Contract owners' equity end of period ........... $2,169,084 28,326 9,312,638 2,464,449 ========== ====== ========= ========= CHANGES IN UNITS: Beginning units .............................. 2,842 -- 321,221 -- ---------- ------ --------- --------- Units purchased .............................. 165,868 2,842 595,722 325,576 Units redeemed ............................... (3,245) -- (34,875) (4,355) ---------- ------ --------- --------- Ending units ................................. 165,465 2,842 882,068 321,221 ========== ====== ========= ========= DrySRGro DryStkIx ----------------------- ------------------------- 2003 2002 2003 2002 ---------- ---------- ----------- ----------- Investment activity: Net investment income (loss) ................. 9,226 20,637 3,807,142 3,050,358 Realized gain (loss) on investments .......... (2,471,747) (4,044,827) (30,299,386) (18,599,138) Change in unrealized gain (loss) on investments ............................... 5,739,828 (2,065,356) 98,834,334 (50,888,412) Reinvested capital gains ..................... -- -- -- -- ---------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... 3,277,307 (6,089,546) 72,342,090 (66,437,192) ---------- ---------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 3,401,462 5,506,507 54,327,291 67,681,915 Transfers between funds ...................... (1,839,608) (2,145,908) 6,016,875 51,084,841 Surrenders (note 6) .......................... (1,994,494) (934,968) (34,561,198) (10,065,375) Death benefits (note 4) ...................... (15,838) (47,141) (281,113) (424,395) Net policy repayments (loans) (note 5) ....... 889,748 (1,025,096) 7,880,937 (9,366,566) Deductions for surrender charges (note 2d) ... (69,919) (61,772) (1,211,580) (665,001) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,547,321) (1,889,457) (14,158,509) (14,484,498) Asset charges (note 3): FPVUL & VEL contracts ..................... (54,112) (55,265) (398,730) (369,254) MSP contracts ............................. (2,285) (2,737) (17,616) (20,608) SL contracts .............................. (5,345) (5,603) (174,435) (119,742) ---------- ---------- ----------- ----------- Net equity transactions ................ (1,237,712) (661,440) 17,421,922 83,251,317 ---------- ---------- ----------- ----------- Net change in contract owners' equity ........... 2,039,595 (6,750,986) 89,764,012 16,814,125 Contract owners' equity beginning of period ..... 14,014,403 20,765,389 252,617,859 235,803,734 ---------- ---------- ----------- ----------- Contract owners' equity end of period ........... 16,053,998 14,014,403 342,381,871 252,617,859 ========== ========== =========== =========== CHANGES IN UNITS: Beginning units .............................. 1,785,944 1,904,741 29,512,045 21,289,393 ---------- ---------- ----------- ----------- Units purchased .............................. 508,495 642,801 14,387,513 12,329,234 Units redeemed ............................... (677,229) (761,598) (11,708,418) (4,106,582) ---------- ---------- ----------- ----------- Ending units ................................. 1,617,210 1,785,944 32,191,140 29,512,045 ========== ========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
DryVIFApp DryDevLeadI ------------------------ -------------- 2003 2002 2003 2002 ----------- ---------- ------- ---- Investment activity: Net investment income (loss) ................. $ 343,852 335,056 25 -- Realized gain (loss) on investments .......... (2,311,117) (2,871,136) 2,044 -- Change in unrealized gain (loss) on investments ............................... 8,650,961 (4,395,323) 9,988 -- Reinvested capital gains ..................... -- -- -- -- ----------- ---------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... 6,683,696 (6,931,403) 12,057 -- ----------- ---------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 7,070,591 7,333,979 46,332 -- Transfers between funds ...................... (8,163,364) 2,497,836 155,556 -- Surrenders (note 6) .......................... (5,022,238) (1,827,641) (14) -- Death benefits (note 4) ...................... (36,800) (91,596) -- -- Net policy repayments (loans) (note 5) ....... 46,422 (52,117) (136) -- Deductions for surrender charges (note 2d) ... (176,060) (120,749) (1) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,810,329) (1,963,359) (7,571) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (50,854) (51,569) (167) -- MSP contracts ............................. (970) (1,413) -- -- SL contracts .............................. (9,613) (9,323) (3) -- ----------- ---------- ------- --- Net equity transactions ................ (8,153,215) 5,714,048 193,996 -- ----------- ---------- ------- --- Net change in contract owners' equity ........... (1,469,519) (1,217,355) 206,053 -- Contract owners' equity beginning of period ..... 33,593,414 34,810,769 -- -- ----------- ---------- ------- --- Contract owners' equity end of period ........... $32,123,895 33,593,414 206,053 -- =========== ========== ======= === CHANGES IN UNITS: Beginning units .............................. 3,534,935 3,024,640 -- -- ----------- ---------- ------- --- Units purchased .............................. 2,143,415 1,039,749 16,426 -- Units redeemed ............................... (2,853,632) (529,454) (454) -- ----------- ---------- ------- --- Ending units ................................. 2,824,718 3,534,935 15,972 -- =========== ========== ======= === DryIntVal FedAmLdII -------------------- -------------- 2003 2002 2003 2002 ---------- ------- ------- ---- Investment activity: Net investment income (loss) ................. 107,589 477 (3) -- Realized gain (loss) on investments .......... 64,212 4,559 87 -- Change in unrealized gain (loss) on investments ............................... 1,673,053 1,445 16,907 -- Reinvested capital gains ..................... -- -- -- -- ---------- ------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... 1,844,854 6,481 16,991 -- ---------- ------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 919,156 566 1,421 -- Transfers between funds ...................... 14,753,743 283,331 141,546 -- Surrenders (note 6) .......................... -- -- (15) -- Death benefits (note 4) ...................... -- -- -- -- Net policy repayments (loans) (note 5) ....... -- -- (165) -- Deductions for surrender charges (note 2d) ... -- -- -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (48,361) (261) (5,896) -- Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- (160) -- MSP contracts ............................. -- -- -- -- SL contracts .............................. -- -- (27) -- ---------- ------- ------- --- Net equity transactions ................ 15,624,538 283,636 136,704 -- ---------- ------- ------- --- Net change in contract owners' equity ........... 17,469,392 290,117 153,695 -- Contract owners' equity beginning of period ..... 290,117 -- -- -- ---------- ------- ------- --- Contract owners' equity end of period ........... 17,759,509 290,117 153,695 -- ========== ======= ======= === CHANGES IN UNITS: Beginning units .............................. 30,751 -- -- -- ---------- ------- ------- --- Units purchased .............................. 1,640,953 30,778 12,477 -- Units redeemed ............................... (287,625) (27) (278) -- ---------- ------- ------- --- Ending units ................................. 1,384,079 30,751 12,199 -- ========== ======= ======= ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
FedCpApII FGVITHiInc --------------- ----------------------- 2003 2002 2003 2002 -------- ---- ---------- ---------- Investment activity: Net investment income (loss) ..................... $ (3) -- 2,004,921 1,319,940 Realized gain (loss) on investments .............. 1,026 -- 515,988 (611,288) Change in unrealized gain (loss) on investments ................................ 6,758 -- 2,464,263 (400,507) Reinvested capital gains ......................... -- -- -- -- -------- --- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........... 7,781 -- 4,985,172 308,145 -------- --- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 25,326 -- 4,563,458 3,126,075 Transfers between funds .......................... 71,996 -- 17,326,217 5,754,546 Surrenders (note 6) .............................. -- -- (6,117,814) (754,952) Death benefits (note 4) .......................... -- -- (4,471) (51,018) Net policy repayments (loans) (note 5) ........... -- -- (346,516) (91,632) Deductions for surrender charges (note 2d) ....... -- -- (214,467) (49,878) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................. (3,985) -- (1,188,601) (898,909) Asset charges (note 3): FPVUL & VEL contracts ......................... (113) -- (38,129) (24,697) MSP contracts ................................. -- -- (1,166) (1,031) SL contracts .................................. (13) -- (14,552) (5,326) -------- --- ---------- ---------- Net equity transactions .................... 93,211 -- 13,963,959 7,003,178 -------- --- ---------- ---------- Net change in contract owners' equity ............... 100,992 -- 18,949,131 7,311,323 Contract owners' equity beginning of period ........................................ -- -- 16,985,297 9,673,974 -------- --- ---------- ---------- Contract owners' equity end of period ............... $100,992 -- 35,934,428 16,985,297 ======== === ========== ========== CHANGES IN UNITS: Beginning units .................................. -- -- 1,646,805 972,675 -------- --- ---------- ---------- Units purchased .................................. 9,442 -- 1,984,137 903,714 Units redeemed ................................... (1,063) -- (865,852) (229,584) -------- --- ---------- ---------- Ending units ..................................... 8,379 -- 2,765,090 1,646,805 ======== === ========== ========== FedQualBd FidVIPEIS ----------------------- ------------------------- 2003 2002 2003 2002 ---------- ---------- ----------- ----------- Investment activity: Net investment income (loss) ..................... 2,669,355 1,853,326 1,121,883 808,915 Realized gain (loss) on investments .............. 1,174,368 1,131,663 (4,800,486) (1,883,970) Change in unrealized gain (loss) on investments ................................ (290,377) 2,669,302 24,626,814 (12,798,194) Reinvested capital gains ......................... -- 749,114 -- 1,313,313 ---------- ---------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... 3,553,346 6,403,405 20,948,211 (12,559,936) ---------- ---------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 15,133,881 18,658,214 13,598,853 15,445,210 Transfers between funds .......................... (5,601,820) 10,101,606 (678,612) 21,606,404 Surrenders (note 6) .............................. (2,568,284) (1,325,764) (10,123,705) (5,446,667) Death benefits (note 4) .......................... (245,549) (195,925) (70,450) (67,369) Net policy repayments (loans) (note 5) ........... (175,480) (134,139) 619,515 (1,211,131) Deductions for surrender charges (note 2d) ....... (90,034) (87,591) (354,897) (359,851) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................. (3,385,659) (3,033,302) (4,570,361) (4,338,313) Asset charges (note 3): FPVUL & VEL contracts ......................... (77,962) (52,873) (146,122) (127,852) MSP contracts ................................. (3,430) (2,037) (6,653) (7,340) SL contracts .................................. (57,595) (29,757) (22,179) (16,311) ---------- ---------- ----------- ----------- Net equity transactions .................... 2,928,068 23,898,432 (1,754,611) 25,476,780 ---------- ---------- ----------- ----------- Net change in contract owners' equity ............... 6,481,414 30,301,837 19,193,600 12,916,844 Contract owners' equity beginning of period ........................................ 77,643,757 47,341,920 67,324,279 54,407,435 ---------- ---------- ----------- ----------- Contract owners' equity end of period ............... 84,125,171 77,643,757 86,517,879 67,324,279 ========== ========== =========== =========== CHANGES IN UNITS: Beginning units .................................. 6,075,274 4,041,811 7,162,706 4,738,152 ---------- ---------- ----------- ----------- Units purchased .................................. 2,424,791 2,687,269 2,301,580 3,762,318 Units redeemed ................................... (2,196,644) (653,806) (2,428,828) (1,337,764) ---------- ---------- ----------- ----------- Ending units ..................................... 6,303,421 6,075,274 7,035,458 7,162,706 ========== ========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
FidVIPGrS FidVIPHIS -------------------------- ----------------------- 2003 2002 2003 2002 ------------ ----------- ---------- ---------- Investment activity: Net investment income (loss) ..................... $ 26,150 (1,878) 1,514,749 1,636,877 Realized gain (loss) on investments .............. (10,015,356) (14,458,908) (1,308,653) (2,397,044) Change in unrealized gain (loss) on investments ................................ 35,886,353 (16,486,471) 5,412,898 1,427,374 Reinvested capital gains ......................... -- -- -- -- ------------ ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........... 25,897,147 (30,947,257) 5,618,994 667,207 ------------ ----------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 16,165,889 21,391,751 2,593,182 2,844,820 Transfers between funds .......................... 4,045,023 (2,032,736) 1,044,670 3,345,708 Surrenders (note 6) .............................. (3,187,880) (5,206,212) (1,028,375) (887,461) Death benefits (note 4) .......................... (38,946) (119,489) (8,171) (36,601) Net policy repayments (loans) (note 5) ........... (490,480) (281,790) (294,719) (30,274) Deductions for surrender charges (note 2d) ....... (111,755) (343,965) (36,051) (58,633) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................. (6,548,033) (7,134,458) (1,290,720) (1,052,089) Asset charges (note 3): FPVUL & VEL contracts ......................... (202,212) (199,244) (44,804) (29,561) MSP contracts ................................. (7,877) (9,408) (2,183) (1,976) SL contracts .................................. (30,240) (26,704) (6,530) (4,445) ------------ ----------- ---------- ---------- Net equity transactions .................... 9,593,489 6,037,745 926,299 4,089,488 ------------ ----------- ---------- ---------- Net change in contract owners' equity ............... 35,490,636 (24,909,512) 6,545,293 4,756,695 Contract owners' equity beginning of period ........................................ 75,616,692 100,526,204 20,450,086 15,693,391 ------------ ----------- ---------- ---------- Contract owners' equity end of period ............... $111,107,328 75,616,692 26,995,379 20,450,086 ============ =========== ========== ========== CHANGES IN UNITS: Beginning units .................................. 8,611,026 8,121,573 2,864,859 2,276,487 ------------ ----------- ---------- ---------- Units purchased .................................. 3,892,753 2,555,633 1,072,376 918,322 Units redeemed ................................... (2,611,859) (2,066,180) (1,028,026) (329,950) ------------ ----------- ---------- ---------- Ending units ..................................... 9,891,920 8,611,026 2,909,209 2,864,859 ============ =========== ========== ========== FidVIPOvS FidVIPConS ----------------------- ----------------------- 2003 2002 2003 2002 ---------- ---------- ---------- ---------- Investment activity: Net investment income (loss) ..................... 135,021 85,746 122,417 316,174 Realized gain (loss) on investments .............. 7,076,659 (3,204,525) (3,299,422) (3,079,747) Change in unrealized gain (loss) on investments ................................ 5,539,950 (1,355,909) 23,252,143 (3,098,925) Reinvested capital gains ......................... -- -- -- -- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........... 12,751,630 (4,474,688) 20,075,138 (5,862,498) ---------- ---------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 6,441,989 6,087,719 13,452,331 12,974,474 Transfers between funds .......................... (7,049,489) 3,102,344 14,597,101 5,512,356 Surrenders (note 6) .............................. (1,918,601) (1,715,388) (3,127,918) (3,283,106) Death benefits (note 4) .......................... (7,361) (84,623) (57,881) (94,985) Net policy repayments (loans) (note 5) ........... (342,607) (65,632) (39,547) (357,278) Deductions for surrender charges (note 2d) ....... (67,259) (113,332) (109,653) (216,909) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................. (1,499,215) (1,288,792) (5,280,214) (5,078,266) Asset charges (note 3): FPVUL & VEL contracts ......................... (39,163) (33,794) (189,880) (168,005) MSP contracts ................................. (1,297) (1,350) (4,782) (4,677) SL contracts .................................. (18,660) (11,416) (26,628) (21,552) ---------- ---------- ---------- ---------- Net equity transactions .................... (4,501,663) 5,875,736 19,212,929 9,262,052 ---------- ---------- ---------- ---------- Net change in contract owners' equity ............... 8,249,967 1,401,048 39,288,067 3,399,554 Contract owners' equity beginning of period ........................................ 21,945,750 20,544,702 56,889,026 53,489,472 ---------- ---------- ---------- ---------- Contract owners' equity end of period ............... 30,195,717 21,945,750 96,177,093 56,889,026 ========== ========== ========== ========== CHANGES IN UNITS: Beginning units .................................. 3,000,646 2,228,941 5,021,480 4,263,966 ---------- ---------- ---------- ---------- Units purchased .................................. 2,550,722 1,180,046 3,535,066 1,552,123 Units redeemed ................................... (2,672,782) (408,341) (1,600,094) (794,609) ---------- ---------- ---------- ---------- Ending units ..................................... 2,878,586 3,000,646 6,956,452 5,021,480 ========== ========== ========== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
FidVIPInvGrB FidVIPGrOPS --------------- ----------------------- 2003 2002 2003 2002 -------- ---- ---------- ---------- Investment activity: Net investment income (loss) .................... $ (9) -- 66,211 106,996 Realized gain (loss) on investments ............. (1,044) -- (1,182,616) (2,686,961) Change in unrealized gain (loss) on investments .................................. 11,193 -- 4,646,657 (1,001,774) Reinvested capital gains ........................ -- -- -- -- -------- --- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .......... 10,140 -- 3,530,252 (3,581,739) -------- --- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 52,310 -- 2,522,608 3,341,705 Transfers between funds ......................... 653,876 -- 115,567 (1,216,783) Surrenders (note 6) ............................. (648) -- (541,985) (695,078) Death benefits (note 4) ......................... -- -- (21,638) (45,894) Net policy repayments (loans) (note 5) .......... (7,733) -- (106,127) (71,207) Deductions for surrender charges (note 2d) ...... (23) -- (19,000) (45,922) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ..... (14,942) -- (1,032,932) (1,246,242) Asset charges (note 3) : FPVUL & VEL contracts ........................ (521) -- (40,656) (39,712) MSP contracts ................................ (1) -- (1,689) (2,127) SL contracts ................................. (34) -- (6,191) (5,381) -------- --- ---------- ---------- Net equity transactions ................... 682,284 -- 867,957 (26,641) -------- --- ---------- ---------- Net change in contract owners' equity .............. 692,424 -- 4,398,209 (3,608,380) Contract owners' equity beginning of period ........ -- -- 11,288,845 14,897,225 -------- --- ---------- ---------- Contract owners' equity end of period .............. $692,424 -- 15,687,054 11,288,845 ======== === ========== ========== CHANGES IN UNITS: Beginning units ................................. -- -- 1,624,590 1,683,078 -------- --- ---------- ---------- Units purchased ................................. 70,136 -- 576,401 451,771 Units redeemed .................................. (2,369) -- (467,818) (510,259) -------- --- ---------- ---------- Ending units .................................... 67,767 -- 1,733,173 1,624,590 ======== === ========== ========== FidVIPMCap FidVIPValStS ---------------- ------------------- 2003 2002 2003 2002 --------- ---- --------- ------- Investment activity: Net investment income (loss) .................... (27) -- (1,461) (2) Realized gain (loss) on investments ............. 82,221 -- 287,369 (11,066) Change in unrealized gain (loss) on investments .................................. 98,757 -- 365,472 (7,233) Reinvested capital gains ........................ -- -- 25,908 -- --------- --- --------- ------- Net increase (decrease) in contract owners' equity resulting from operations .......... 180,951 -- 677,288 (18,301) --------- --- --------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 125,191 -- 393,487 25,882 Transfers between funds ......................... 1,130,175 -- 3,393,887 162,479 Surrenders (note 6) ............................. (6,389) -- (89,905) (5,409) Death benefits (note 4) ......................... -- -- -- -- Net policy repayments (loans) (note 5) .......... 547 -- (8,493) (2,006) Deductions for surrender charges (note 2d) ...... (224) -- (3,152) (357) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ..... (25,008) -- (137,136) (8,123) Asset charges (note 3) : FPVUL & VEL contracts ........................ (953) -- (4,930) (263) MSP contracts ................................ (20) -- (219) (7) SL contracts ................................. (216) -- (332) (15) --------- --- --------- ------- Net equity transactions ................... 1,223,103 -- 3,543,207 172,181 --------- --- --------- ------- Net change in contract owners' equity .............. 1,404,054 -- 4,220,495 153,880 Contract owners' equity beginning of period ........ -- -- 153,880 -- --------- --- --------- ------- Contract owners' equity end of period .............. 1,404,054 -- 4,374,375 153,880 ========= === ========= ======= CHANGES IN UNITS: Beginning units ................................. -- -- 20,494 -- --------- --- --------- ------- Units purchased ................................. 102,276 -- 377,272 22,001 Units redeemed .................................. (2,594) -- (28,117) (1,507) --------- --- --------- ------- Ending units .................................... 99,682 -- 369,649 20,494 ========= === ========= =======
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
FTVIPFRDiv FTVIPSmCpVal FTVIPFS FTVIPFS2 ----------------- -------------- ---------------- ------------------- 2003 2002 2003 2002 2003 2002 2003 2002 ---------- ---- ------- ---- --------- ---- --------- ------- Investment activity: Net investment income (loss) .................... $ 3,679 -- (21) -- 1,295 -- 52,295 (66) Realized gain (loss) on investments ............. 16,359 -- 44,531 -- 56,954 -- 127,796 3,784 Change in unrealized gain (loss) on investments .................................. 177,883 -- 45,044 -- 77,270 -- 1,180,204 1,036 Reinvested capital gains ........................ 11,381 -- -- -- -- -- -- -- ---------- --- ------- --- --------- --- --------- ------- Net increase (decrease) in contract owners' equity resulting from operations .......... 209,302 -- 89,554 -- 135,519 -- 1,360,295 4,754 ---------- --- ------- --- --------- --- --------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 255,396 -- 133,840 -- 154,942 -- 889,757 7 Transfers between funds ......................... 2,304,502 -- 425,151 -- 971,236 -- 5,672,154 135,238 Surrenders (note 6) ............................. (6,889) -- (203) -- (13,074) -- (278) -- Death benefits (note 4) ......................... -- -- -- -- -- -- -- -- Net policy repayments (loans) (note 5) .......... (3,187) -- -- -- (1,863) -- (169) -- Deductions for surrender charges (note 2d) ...... (241) -- (7) -- (458) -- (10) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ..... (48,849) -- (13,992) -- (19,086) -- (87,200) (570) Asset charges (note 3) : FPVUL & VEL contracts ........................ (1,909) -- (485) -- (942) -- -- -- MSP contracts ................................ (27) -- -- -- (21) -- -- -- SL contracts ................................. (432) -- (67) -- (42) -- -- -- ---------- --- ------- --- --------- --- --------- ------- Net equity transactions ................... 2,498,364 -- 544,237 -- 1,090,692 -- 6,474,254 134,675 ---------- --- ------- --- --------- --- --------- ------- Net change in contract owners' equity .............. 2,707,666 -- 633,791 -- 1,226,211 -- 7,834,549 139,429 Contract owners' equity beginning of period ........ -- -- -- -- -- -- 139,429 -- ---------- --- ------- --- --------- --- --------- ------- Contract owners' equity end of period .............. $2,707,666 -- 633,791 -- 1,226,211 -- 7,973,978 139,429 ========== --- ======= --- ========= === ========= ======= CHANGES IN UNITS: Beginning units ................................. -- -- -- -- -- -- 14,717 -- ---------- --- ------- --- --------- --------- ------- Units purchased ................................. 225,681 -- 48,623 -- 95,303 -- 765,651 14,776 Units redeemed .................................. (5,662) -- (1,174) -- (2,892) -- (142,335) (59) ---------- --- ------- --- --------- --------- ------- Ending units .................................... 220,019 -- 47,449 -- 92,411 -- 638,033 14,717 ========== === ======= === ========= ========= =======
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
GVITEmMrkts GVITGIFin ---------------------- ------------------- 2003 2002 2003 2002 ---------- --------- --------- ------- Investment activity: Net investment income (loss) ................. $ 15,636 2,178 8,689 12 Realized gain (loss) on investments .......... 604,619 (208,680) 31,051 1,459 Change in unrealized gain (loss) on investments ............................ 1,096,247 (69,648) 88,676 (2,770) Reinvested capital gains ..................... -- -- 220,655 -- ---------- --------- --------- ------- Net increase (decrease) in contract owners' equity resulting from operations ....... 1,716,502 (276,150) 349,071 (1,299) ---------- --------- --------- ------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 739,518 358,607 216,607 11,120 Transfers between funds ...................... 3,659,985 449,980 1,782,009 128,508 Surrenders (note 6) .......................... (148,410) (91,560) (39,741) (676) Death benefits (note 4) ...................... (21,757) (32) -- -- Net policy repayments (loans) (note 5) ....... (16,541) (12,764) (20) 52 Deductions for surrender charges (note 2d) ... (5,203) (6,049) (1,393) (45) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (215,304) (121,146) (49,302) (1,871) Asset charges (note 3): FPVUL & VEL contracts ..................... (7,043) (3,530) (1,839) (61) MSP contracts ............................. (23) (22) -- -- SL contracts .............................. (1,065) (882) (586) (9) ---------- --------- --------- ------- Net equity transactions ................ 3,984,157 572,602 1,905,735 137,018 ---------- --------- --------- ------- Net change in contract owners' equity ........... 5,700,659 296,452 2,254,806 135,719 Contract owners' equity beginning of period .................................... 1,328,658 1,032,206 135,719 -- ---------- --------- --------- ------- Contract owners' equity end of period ........... $7,029,317 1,328,658 2,390,525 135,719 ========== ========= ========= ======= CHANGES IN UNITS: Beginning units .............................. 189,897 124,968 15,666 -- ---------- --------- --------- ------- Units purchased .............................. 463,182 110,858 187,771 15,968 Units redeemed ............................... (42,923) (45,929) (8,038) (302) ---------- --------- --------- ------- Ending units ................................. 610,156 189,897 195,399 15,666 ========== ========= ========= ======= GVITGIHlth GVITGITech ------------------- --------------------- 2003 2002 2003 2002 --------- ------- --------- --------- Investment activity: Net investment income (loss) ................. (1,406) (3) (3,687) 7,699 Realized gain (loss) on investments .......... 163,482 (9,448) 186,217 (557,839) Change in unrealized gain (loss) on investments ............................ (124,144) (4,801) 902,402 (182,901) Reinvested capital gains ..................... 300,747 -- -- -- --------- ------- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ....... 338,679 (14,252) 1,084,932 (733,041) --------- ------- --------- --------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 417,000 38,058 761,660 424,481 Transfers between funds ...................... 1,976,395 200,673 3,126,107 551,212 Surrenders (note 6) .......................... (35,257) (958) (85,018) (51,241) Death benefits (note 4) ...................... -- -- (3,024) (77) Net policy repayments (loans) (note 5) ....... (11,959) 729 (41,081) (6,795) Deductions for surrender charges (note 2d) ... (1,236) (63) (2,980) (3,385) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (93,935) (15,552) (205,903) (126,953) Asset charges (note 3): FPVUL & VEL contracts ..................... (2,766) (583) (7,143) (3,768) MSP contracts ............................. (1) (3) (273) (104) SL contracts .............................. (856) (94) (738) (391) --------- ------- --------- --------- Net equity transactions ................ 2,247,385 222,207 3,541,607 782,979 --------- ------- --------- --------- Net change in contract owners' equity ........... 2,586,064 207,955 4,626,539 49,938 Contract owners' equity beginning of period .................................... 207,955 -- 1,233,804 1,183,866 --------- ------- --------- --------- Contract owners' equity end of period ........... 2,794,019 207,955 5,860,343 1,233,804 ========= ======= ========= ========= CHANGES IN UNITS: Beginning units .............................. 24,935 -- 626,247 343,645 --------- ------- --------- --------- Units purchased .............................. 241,486 26,970 1,505,198 395,082 Units redeemed ............................... (20,922) (2,035) (208,008) (112,480) --------- ------- --------- --------- Ending units ................................. 245,499 24,935 1,923,437 626,247 ========= ======= ========= =========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
GVITGlUtl GVITGvtBd ----------------- ------------------------- 2003 2002 2003 2002 -------- ------ ----------- ----------- Investment activity: Net investment income (loss) .................. $ 2,620 210 6,332,442 7,334,221 Realized gain (loss) on investments ........... 34,410 1,070 4,746,922 2,614,575 Change in unrealized gain (loss) on investments ............................. 52,291 3,459 (7,366,374) 5,859,046 Reinvested capital gains ...................... -- -- 303,327 1,687,818 -------- ------ ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........ 89,321 4,739 4,016,317 17,495,660 -------- ------ ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ................... 105,327 1,181 35,042,205 37,748,208 Transfers between funds ....................... 622,122 90,509 (56,638,431) 62,139,131 Surrenders (note 6) ........................... (39,275) (58) (30,026,562) (10,847,917) Death benefits (note 4) ....................... -- -- (100,750) (278,238) Net policy repayments (loans) (note 5) ........ 583 -- 1,461,543 (2,010,932) Deductions for surrender charges (note 2d) .... (1,377) -- (1,052,613) (716,702) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .......................... (22,481) (1,572) (7,496,293) (6,195,100) Asset charges (note 3): FPVUL & VEL contracts ...................... (739) -- (132,496) (98,377) MSP contracts .............................. -- -- (21,841) (17,572) SL contracts ............................... (175) -- (71,479) (38,718) -------- ------ ----------- ----------- Net equity transactions ................. 663,985 90,060 (59,036,717) 79,683,783 -------- ------ ----------- ----------- Net change in contract owners' equity ............ 753,306 94,799 (55,020,400) 97,179,443 Contract owners' equity beginning of period ..................................... 94,799 -- 216,240,237 119,060,794 -------- ------ ----------- ----------- Contract owners' equity end of period ............ $848,105 94,799 161,219,837 216,240,237 ======== ====== =========== =========== CHANGES IN UNITS: Beginning units ............................... 10,923 -- 15,832,361 9,568,683 -------- ------ ----------- ----------- Units purchased ............................... 78,954 11,104 6,612,175 8,719,423 Units redeemed ................................ (11,010) (181) (10,705,279) (2,455,745) -------- ------ ----------- ----------- Ending units .................................. 78,867 10,923 11,739,257 15,832,361 ======== ====== =========== =========== GVITGrowth GVITIDAgg ----------------------- --------------------- 2003 2002 2003 2002 ---------- ---------- --------- --------- Investment activity: Net investment income (loss) .................. (2,134) (5,466) 48,954 5,823 Realized gain (loss) on investments ........... (7,260,407) (3,214,096) 181,388 (68,431) Change in unrealized gain (loss) on investments ............................. 11,255,445 (1,401,337) 715,206 (6,754) Reinvested capital gains ...................... -- -- 71,466 48 ---------- ---------- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ........ 3,992,904 (4,620,899) 1,017,014 (69,314) ---------- ---------- --------- --------- Equity transactions: Purchase payments received from contract owners (note 6) ................... 3,574,930 4,421,369 2,494,286 356,263 Transfers between funds ....................... (166,732) (473,530) 2,048,043 1,165,432 Surrenders (note 6) ........................... (2,673,167) (740,519) (58,372) (4,027) Death benefits (note 4) ....................... (17,888) (30,389) (70) -- Net policy repayments (loans) (note 5) ........ 13,728 (36,609) (23,098) 955 Deductions for surrender charges (note 2d) .... (93,711) (48,925) (2,046) (266) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .......................... (1,614,232) (1,770,278) (350,260) (85,654) Asset charges (note 3): FPVUL & VEL contracts ...................... (55,080) (53,371) (11,964) (2,163) MSP contracts .............................. (2,472) (2,888) (92) -- SL contracts ............................... (5,433) (5,006) (741) (355) ---------- ---------- --------- --------- Net equity transactions ................. (1,040,057) 1,259,854 4,095,686 1,430,185 ---------- ---------- --------- --------- Net change in contract owners' equity ............ 2,952,847 (3,361,045) 5,112,700 1,360,871 Contract owners' equity beginning of period ..................................... 11,948,427 15,309,472 1,360,871 -- ---------- ---------- --------- --------- Contract owners' equity end of period ............ 14,901,274 11,948,427 6,473,571 1,360,871 ========== ========== ========= ========= CHANGES IN UNITS: Beginning units ............................... 2,437,525 2,226,501 163,357 -- ---------- ---------- --------- --------- Units purchased ............................... 860,919 893,891 477,178 174,703 Units redeemed ................................ (1,076,072) (682,867) (51,091) (11,346) ---------- ---------- --------- --------- Ending units .................................. 2,222,372 2,437,525 589,444 163,357 ========== ========== ========= =========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
GVITIDCon GVITIDMod ---------------------- ---------------------- 2003 2002 2003 2002 ---------- --------- ---------- --------- Investment activity: Net investment income (loss) ................. $ 83,758 22,434 173,050 29,855 Realized gain (loss) on investments .......... 14,703 (2,457) 22,099 (75,739) Change in unrealized gain (loss) on investments ............................ 161,113 (7,246) 1,669,089 (11,572) Reinvested capital gains ..................... 18,585 1,006 6,002 2,904 ---------- --------- ---------- --------- Net increase (decrease) in contract owners' equity resulting from operations ....... 278,159 13,737 1,870,240 (54,552) ---------- --------- ---------- --------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 936,911 146,738 3,619,210 720,599 Transfers between funds ...................... 2,045,025 2,009,387 8,212,652 3,358,083 Surrenders (note 6) .......................... (35,948) (11,026) (253,774) (136,681) Death benefits (note 4) ...................... (21,942) (30) (30) -- Net policy repayments (loans) (note 5) ....... (16,162) -- (80,776) 9,644 Deductions for surrender charges (note 2d) ... (1,260) (729) (8,896) (9,030) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ...................... (303,132) (52,942) (901,469) (159,369) Asset charges (note 3): FPVUL & VEL contracts ..................... (7,634) (1,611) (29,616) (5,365) MSP contracts ............................. (1,553) (192) (1,348) (304) SL contracts .............................. (1,957) (362) (4,559) (277) ---------- --------- ---------- --------- Net equity transactions ................ 2,592,348 2,089,233 10,551,394 3,777,300 ---------- --------- ---------- --------- Net change in contract owners' equity ........... 2,870,507 2,102,970 12,421,634 3,722,748 Contract owners' equity beginning of period .................................... 2,102,970 -- 3,722,748 -- ---------- --------- ---------- --------- Contract owners'equity end of period ............ $4,973,477 2,102,970 16,144,382 3,722,748 ========== ========= ========== ========= CHANGES IN UNITS: Beginning units .............................. 209,267 -- 407,326 -- ---------- --------- ----------- --------- Units purchased .............................. 289,466 216,022 1,194,515 435,189 Units redeemed ............................... (40,004) (6,755) (130,206) (27,863) ---------- --------- ---------- --------- Ending units ................................. 458,729 209,267 1,471,635 407,326 ========== ========= ========== ========= GVITIDModAgg GVITIDModCon ---------------------- --------------------- 2003 2002 2003 2002 ---------- --------- --------- --------- Investment activity: Net investment income (loss) ................. 134,816 17,703 143,311 38,686 Realized gain (loss) on investments .......... 130,031 (55,749) 47,748 (16,140) Change in unrealized gain (loss) on investments ............................ 2,253,214 (64,260) 677,003 (16,778) Reinvested capital gains ..................... -- 5,036 14,290 4,544 ---------- --------- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ....... 2,518,061 (97,270) 882,352 10,312 ---------- --------- --------- --------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 3,913,779 700,167 2,460,009 630,127 Transfers between funds ...................... 7,209,340 3,021,509 2,128,280 3,553,672 Surrenders (note 6) .......................... (76,496) (4,601) (87,575) (2,690) Death benefits (note 4) ...................... (100) -- (22,472) -- Net policy repayments (loans) (note 5) ....... 25,879 (413) 15,603 (16,299) Deductions for surrender charges (note 2d) ... (2,682) (304) (3,070) (178) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ...................... (952,652) (166,058) (494,051) (84,043) Asset charges (note 3): FPVUL & VEL contracts ..................... (27,625) (3,730) (14,993) (2,422) MSP contracts ............................. (2,517) (611) (1,950) (398) SL contracts .............................. (2,677) (513) (6,010) (1,515) ---------- --------- --------- --------- Net equity transactions ................ 10,084,249 3,545,446 3,973,771 4,076,254 ---------- --------- --------- --------- Net change in contract owners' equity ........... 12,602,310 3,448,176 4,856,123 4,086,566 Contract owners' equity beginning of period .................................... 3,448,176 -- 4,086,566 -- ---------- --------- --------- --------- Contract owners' equity end of period ........... 16,050,486 3,448,176 8,942,689 4,086,566 ========== ========= ========= ========= CHANGES IN UNITS: Beginning units .............................. 396,964 -- 423,829 -- ---------- --------- --------- --------- Units purchased .............................. 1,179,488 432,613 476,737 435,080 Units redeemed ............................... (117,140) (35,649) (84,737) (11,251) ---------- --------- --------- --------- Ending units ................................. 1,459,312 396,964 815,829 423,829 ========== ========= ========= =========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
GVITIntGro GVITMyMkt -------------------- --------------------------- 2003 2002 2003 2002 ---------- ------- ------------ ------------ Investment activity: Net investment income (loss) ................. $ (1,304) (581) 1,171,193 4,741,967 Realized gain (loss) on investments .......... 287,832 79,857 -- -- Change in unrealized gain (loss) on investments ............................ 217,181 (2,225) -- -- Reinvested capital gains ..................... -- -- -- -- ---------- ------- ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ....... 503,709 77,051 1,171,193 4,741,967 ---------- ------- ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) .................. 376,773 171,780 97,467,249 371,129,756 Transfers between funds ...................... 978,646 158,443 (114,357,039) (549,682,062) Surrenders (note 6) .......................... (74,725) (6,347) (55,824,565) (36,721,805) Death benefits (note 4) ...................... (132) (5) (379,114) (256,848) Net policy repayments (loans) (note 5) ....... 7,411 (794) 2,863,684 (9,505,772) Deductions for surrender charges (note 2d) ... (2,620) (419) (1,956,990) (2,426,141) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ...................... (378,411) (37,594) (12,868,661) (22,470,239) Asset charges (note 3): FPVUL & VEL contracts ..................... (2,606) (1,162) (488,660) (473,013) MSP contracts ............................. (7) (3) (24,579) (28,941) SL contracts .............................. (171) (139) (96,167) (99,128) ---------- ------- ------------ ------------ Net equity transactions ................ 904,158 283,760 (85,664,842) (250,534,193) ---------- ------- ------------ ------------ Net change in contract owners' equity ........... 1,407,867 360,811 (84,493,649) (245,792,226) Contract owners' equity beginning of period .................................... 643,696 282,885 250,677,064 496,469,290 ---------- ------- ------------ ------------ Contract owners' equity end of period ........... $2,051,563 643,696 166,183,415 250,677,064 ========== ======= ============ ============ CHANGES IN UNITS: Beginning units .............................. 128,905 42,921 20,878,155 42,392,789 ---------- ------- ------------ ------------ Units purchased .............................. 190,940 94,147 10,462,793 32,412,285 Units redeemed ............................... (16,934) (8,163) (17,508,918) (53,926,919) ---------- ------- ------------ ------------ Ending units ................................. 302,911 128,905 13,832,030 20,878,155 ========== ======= ============ ============ GVITMyMkt5 GVITLead -------------------------- ----------------- 2003 2002 2003 2002 ------------ ----------- ------- ------- Investment activity: Net investment income (loss) ................. 1,311,594 281,257 285 754 Realized gain (loss) on investments .......... -- -- 66,863 (6,216) Change in unrealized gain (loss) on investments ............................ -- -- 18,296 (5,890) Reinvested capital gains ..................... -- -- -- -- ------------ ----------- ------- ------- Net increase (decrease) in contract owners' equity resulting from operations ....... 1,311,594 281,257 85,444 (11,352) ------------ ----------- ------- ------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 192,507,440 7,651,281 85,026 10,364 Transfers between funds ...................... (101,290,021) 256,347,770 94,719 136,036 Surrenders (note 6) .......................... (61,768,748) (15,658) (5,325) (837) Death benefits (note 4) ...................... (89,736) -- (19) -- Net policy repayments (loans) (note 5) ....... 1,132,304 73,925 (6,100) 363 Deductions for surrender charges (note 2d) ... (2,165,370) (1,035) (187) (55) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ...................... (7,335,911) (783,607) (16,243) (5,842) Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- (718) (261) MSP contracts ............................. -- -- -- -- SL contracts .............................. -- -- (17) (15) ------------ ----------- ------- ------- Net equity transactions ................ 20,989,958 263,272,676 151,136 139,753 ------------ ----------- ------- ------- Net change in contract owners' equity ........... 22,301,552 263,553,933 236,580 128,401 Contract owners' equity beginning of period .................................... 263,553,933 -- 128,401 -- ------------ ----------- ------- ------- Contract owners' equity end of period ........... 285,855,485 263,553,933 364,981 128,401 ============ =========== ======= ======= CHANGES IN UNITS: Beginning units .............................. 26,310,238 -- 15,191 -- ------------ ----------- ------- ------- Units purchased .............................. 29,358,050 26,390,825 23,642 15,901 Units redeemed ............................... (27,258,836) (80,587) (4,358) (710) ------------ ----------- ------- ------- Ending units ................................. 28,409,452 26,310,238 34,475 15,191 ============ =========== ======= =======
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
NWGVITStrVal GVITSmCapGr ---------------------- ----------------------- 2003 2002 2003 2002 ---------- --------- ---------- ---------- Investment activity: Net investment income (loss) .................... $ (796) (1,320) (18,206) (13,889) Realized gain (loss) on investments ............. (149,477) (294,852) 2,099,998 (4,145,599) Change in unrealized gain (loss) on investments ............................... 709,462 (309,132) 2,410,575 (777,242) Reinvested capital gains ........................ -- -- -- -- ---------- --------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .......... 559,189 (605,304) 4,492,367 (4,936,730) ---------- --------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 129,319 180,856 3,843,574 3,355,003 Transfers between funds ......................... 98,035 145,080 3,039,194 4,195,392 Surrenders (note 6) ............................. (567,140) (125,218) (803,743) (588,945) Death benefits (note 4) ......................... (208) (3,004) (1,348) (11,194) Net policy repayments (loans) (note 5) .......... (8,467) (23,933) (65,073) (41,285) Deductions for surrender charges (note 2d) ...... (19,882) (8,273) (28,176) (38,910) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (79,591) (93,712) (1,984,001) (909,598) Asset charges (note 3): FPVUL & VEL contracts ........................ (3,104) (3,569) (33,684) (26,549) MSP contracts ................................ (444) (456) (548) (788) SL contracts ................................. (474) (512) (9,095) (5,754) ---------- --------- ---------- ---------- Net equity transactions ................... (451,956) 67,259 3,957,100 5,927,372 ---------- --------- ---------- ---------- Net change in contract owners' equity .............. 107,233 (538,045) 8,449,467 990,642 Contract owners' equity beginning of period ....................................... 1,514,852 2,052,897 11,395,584 10,404,942 ---------- --------- ---------- ---------- Contract owners' equity end of period .............. $1,622,085 1,514,852 19,845,051 11,395,584 ========== ========= ========== ========== CHANGES IN UNITS: Beginning units ................................. 202,694 205,945 1,119,506 680,832 ---------- --------- ---------- ---------- Units purchased ................................. 57,324 53,753 574,317 572,771 Units redeemed .................................. (103,607) (57,004) (240,102) (134,097) ---------- --------- ---------- ---------- Ending units .................................... 156,411 202,694 1,453,721 1,119,506 ========== ========= ========== ========== GVITSmCapVal GVITSmComp ------------------------ ------------------------ 2003 2002 2003 2002 ---------- ----------- ---------- ----------- Investment activity: Net investment income (loss) .................... (87,482) (61,347) (143,671) (103,701) Realized gain (loss) on investments ............. (3,331,739) (2,200,894) (1,256,885) (2,816,078) Change in unrealized gain (loss) on investments ............................... 30,637,626 (15,654,025) 24,310,071 (7,122,789) Reinvested capital gains ........................ -- 1,237,982 -- -- ---------- ----------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .......... 27,218,405 (16,678,284) 22,909,515 (10,042,568) ---------- ----------- ---------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 10,964,969 14,008,388 11,486,749 15,407,863 Transfers between funds ......................... 3,526,726 12,145,585 3,805,259 5,296,956 Surrenders (note 6) ............................. (3,697,081) (1,873,812) (3,898,963) (1,325,220) Death benefits (note 4) ......................... (38,805) (91,415) (36,812) (116,858) Net policy repayments (loans) (note 5) .......... 1,221,426 (1,420,340) 174,118 (553,626) Deductions for surrender charges (note 2d) ...... (129,605) (123,799) (136,682) (87,555) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (3,309,967) (3,198,085) (3,033,241) (2,890,107) Asset charges (note 3): FPVUL & VEL contracts ........................ (114,627) (99,851) (89,129) (75,237) MSP contracts ................................... (3,761) (3,814) (2,962) (3,007) SL contracts ................................. (22,315) (16,116) (15,599) (12,964) ---------- ----------- ---------- ----------- Net equity transactions ................... 8,396,960 19,326,741 8,252,738 15,640,245 ---------- ----------- ---------- ----------- Net change in contract owners' equity .............. 35,615,365 2,648,457 31,162,253 5,597,677 Contract owners' equity beginning of period ....................................... 44,710,049 42,061,592 49,304,733 43,707,056 ---------- ----------- ---------- ----------- Contract owners' equity end of period .............. 80,325,414 44,710,049 80,466,986 49,304,733 ========== =========== ========== =========== CHANGES IN UNITS: Beginning units ................................. 3,651,086 2,432,336 4,334,554 3,124,946 ---------- ----------- ---------- ----------- Units purchased ................................. 1,499,506 1,817,629 2,105,343 1,680,058 Units redeemed .................................. (909,157) (598,879) (1,273,924) (470,450) ---------- ----------- ---------- ----------- Ending units .................................... 4,241,435 3,651,086 5,165,973 4,334,554 ========== =========== ========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
GVITTotRt GVITUSGro -------------------------- ------------------- 2003 2002 2003 2002 ------------ ----------- --------- ------- Investment activity: Net investment income (loss) .................... $ 956,515 1,174,737 (1,851) (9) Realized gain (loss) on investments ............. (17,379,807) (4,933,376) 674,474 (4,467) Change in unrealized gain (loss) on investments ............................... 65,736,490 (23,481,195) (163,614) (38,689) Reinvested capital gains ........................ -- -- 292,900 -- ------------ ----------- --------- ------- Net increase (decrease) in contract owners' equity resulting from operations .......... 49,313,198 (27,239,834) 801,909 (43,165) ------------ ----------- --------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 7,905,976 9,319,075 501,154 29,652 Transfers between funds ......................... 23,708,643 58,351,114 3,039,266 421,915 Surrenders (note 6) ............................. (1,831,670) (2,387,464) (226,805) -- Death benefits (note 4) ......................... (264,630) (89,802) -- -- Net policy repayments (loans) (note 5) .......... (278,604) (223,510) (7,359) 200 Deductions for surrender charges (note 2d) ...... (64,211) (157,735) (7,951) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (5,873,435) (5,943,849) (159,062) (6,430) Asset charges (note 3): FPVUL & VEL contracts ........................ (148,808) (142,363) (6,441) (242) MSP contracts ................................ (11,110) (11,053) (57) (7) SL contracts ................................. (12,490) (11,353) (382) (1) ------------ ----------- --------- ------- Net equity transactions ................... 23,129,661 58,703,060 3,132,363 445,087 ------------ ----------- --------- ------- Net change in contract owners' equity .............. 72,442,859 31,463,226 3,934,272 401,922 Contract owners' equity beginning of period ....................................... 152,004,356 120,541,130 401,922 -- ------------ ----------- --------- ------- Contract owners' equity end of period .............. $224,447,215 152,004,356 4,336,194 401,922 ============ =========== ========= ======= CHANGES IN UNITS: Beginning units ................................. 19,713,536 12,722,718 48,858 -- ------------ ----------- --------- ------- Units purchased ................................. 4,267,609 8,036,058 336,513 49,630 Units redeemed .................................. (1,046,583) (1,045,240) (38,488) (772) ------------ ----------- --------- ------- Ending units .................................... 22,934,562 19,713,536 346,883 48,858 ============ =========== ========= ======= GVITWLead GSMCV ----------------------- ------------- 2003 2002 2003 2002 --------- ----------- ---- ------ Investment activity: Net investment income (loss) .................... (2,267) 324,381 -- 43 Realized gain (loss) on investments ............. (574,965) (8,263,222) 6 (472) Change in unrealized gain (loss) on investments ............................... 1,609,490 7,274,386 20 (20) Reinvested capital gains ........................ -- -- -- 175 --------- ----------- --- ------ Net increase (decrease) in contract owners' equity resulting from operations .......... 1,032,258 (664,455) 26 (274) --------- ----------- --- ------ Equity transactions: Purchase payments received from contract owners (note 6) ..................... 592,766 6,826,596 -- 7,983 Transfers between funds ......................... (323,570) (34,306,437) (763) (6,728) Surrenders (note 6) ............................. (398,551) (103,946) -- -- Death benefits (note 4) ......................... (1,209) (1,496) -- -- Net policy repayments (loans) (note 5) .......... 6,501 (31,594) -- -- Deductions for surrender charges (note 2d) ...... (13,972) (6,868) -- -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (234,093) (442,197) 737 (981) Asset charges (note 3): FPVUL & VEL contracts ........................ (10,839) (10,930) -- -- MSP contracts ................................ (282) (439) -- -- SL contracts ................................. (967) (35,418) -- -- --------- ----------- --- ------ Net equity transactions ................... (384,216) (28,112,729) (26) 274 --------- ----------- --- ------ Net change in contract owners' equity .............. 648,042 (28,777,184) -- -- Contract owners' equity beginning of period ....................................... 3,004,634 31,781,818 -- -- --------- ----------- --- ------ Contract owners' equity end of period .............. 3,652,676 3,004,634 -- -- ========= =========== === ====== CHANGES IN UNITS: Beginning units ................................. 406,549 3,271,213 -- -- --------- ----------- --- ------ Units purchased ................................. 122,092 759,503 77 810 Units redeemed .................................. (169,375) (3,624,167) (77) (810) --------- ----------- --- ------ Ending units .................................... 359,266 406,549 -- -- ========= =========== === ======
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
GSVITMidCap JPMorBal -------------------- ----------------------- 2003 2002 2003 2002 ----------- ------ ---------- ---------- Investment activity: Net investment income (loss) .................. $ 88,506 93 310,932 329,566 Realized gain (loss) on investments ........... 135,995 228 (1,114,649) (517,550) Change in unrealized gain (loss) on investments ................................ 1,824,068 274 4,225,049 (1,744,993) Reinvested capital gains ...................... 145,638 28 -- -- ----------- ------ ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........ 2,194,207 623 3,421,332 (1,932,977) ----------- ------ ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ................... 1,834,204 175 4,638,871 4,529,850 Transfers between funds ....................... 13,587,697 71,979 (1,225,528) 6,234,211 Surrenders (note 6) ........................... (14,049) -- (3,610,097) (742,801) Death benefits (note 4) ....................... -- -- (81,014) (28,048) Net policy repayments (loans) (note 5) ........ (2,677) -- (22,644) (45,563) Deductions for surrender charges (note 2d) .... (493) -- (126,556) (49,076) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .......................... (120,489) (3) (1,215,631) (1,110,055) Asset charges (note 3): FPVUL & VEL contracts ...................... -- -- (34,976) (28,325) MSP contracts .............................. -- -- (2,676) (2,736) SL contracts ............................... -- -- (7,848) (5,670) ----------- ------ ---------- ---------- Net equity transactions ................. 15,284,193 72,151 (1,688,099) 8,751,787 ----------- ------ ---------- ---------- Net change in contract owners' equity ............ 17,478,400 72,774 1,733,233 6,818,810 Contract owners' equity beginning of period ...... 72,774 -- 18,920,048 12,101,238 ----------- ------ ---------- ---------- Contract owners' equity end of period ............ $17,551,174 72,774 20,653,281 18,920,048 =========== ====== ========== ========== CHANGES IN UNITS: Beginning units ............................... 7,368 -- 2,162,462 1,196,199 ----------- ------ ---------- ---------- Units purchased ............................... 1,500,451 7,368 812,892 1,161,723 Units redeemed ................................ (120,161) -- (1,009,406) (195,460) ----------- ------ ---------- ---------- Ending units .................................. 1,387,658 7,368 1,965,948 2,162,462 =========== ====== ========== ========== JanBal JanCapAp ------------------ ----------------------- 2003 2002 2003 2002 --------- ------ ---------- ---------- Investment activity: Net investment income (loss) .................. 54,491 100 32,528 52,210 Realized gain (loss) on investments ........... 85,307 (253) (1,912,692) (4,302,790) Change in unrealized gain (loss) on investments ................................ 246,371 (195) 8,271,924 (1,194,674) Reinvested capital gains ...................... -- -- -- -- --------- ------ ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........... 386,169 (348) 6,391,760 (5,445,254) --------- ------ ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ................... 821,364 9,563 7,160,656 8,871,705 Transfers between funds ....................... 4,055,239 474 2,601,889 (606,807) Surrenders (note 6) ........................... (87,938) -- (1,153,173) (1,555,176) Death benefits (note 4) ....................... -- -- (23,216) (11,304) Net policy repayments (loans) (note 5) ........ (985) -- (116,736) (148,679) Deductions for surrender charges (note 2d) .... (3,083) -- (40,426) (102,748) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .......................... (71,347) 114 (2,497,360) (2,631,759) Asset charges (note 3): FPVUL & VEL contracts ...................... (649) -- (78,888) (74,053) MSP contracts .............................. -- -- (2,042) (2,533) SL contracts ............................... (134) -- (11,045) (10,399) --------- ------ ---------- ---------- Net equity transactions ................. 4,712,467 10,151 5,839,659 3,728,247 --------- ------ ---------- ---------- Net change in contract owners' equity ............ 5,098,636 9,803 12,231,419 (1,717,007) Contract owners' equity beginning of period ...... 9,803 -- 28,913,142 30,630,149 --------- ------ ---------- ---------- Contract owners' equity end of period ............ 5,108,439 9,803 41,144,561 28,913,142 ========= ====== ========== ========== CHANGES IN UNITS: Beginning units ............................... 977 -- 5,364,244 4,769,570 --------- ------ ---------- ---------- Units purchased ............................... 487,396 981 2,562,709 1,849,367 Units redeemed ................................ (39,293) (4) (1,568,119) (1,254,693) --------- ------ ---------- ---------- Ending units .................................. 449,080 977 6,358,834 5,364,244 ========= ====== ========== ==========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
JanGITech JanIntGro ------------------------ ----------------------- 2003 2002 2003 2002 ----------- ---------- ---------- ---------- Investment activity: Net investment income (loss) ................. $ (8,866) (10,468) 259,609 165,978 Realized gain (loss) on investments .......... (2,439,149) (5,684,355) 2,408,308 (6,617,526) Change in unrealized gain (loss) on investments ............................... 7,347,499 (1,277,195) 6,998,962 (2,299,270) Reinvested capital gains ..................... -- -- -- -- ----------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 4,899,484 (6,972,018) 9,666,879 (8,750,818) ----------- ---------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 3,378,471 4,426,057 5,987,682 9,446,001 Transfers between funds ...................... (1,559,502) (714,978) (7,806,540) 1,204,789 Surrenders (note 6) .......................... (537,101) (909,750) (1,040,879) (1,208,856) Death benefits (note 4) ...................... (10,154) (35,202) (39,662) (20,896) Net policy repayments (loans) (note 5) ....... (142,785) 78,133 (94,748) (47,861) Deductions for surrender charges (note 2d) ... (18,829) (60,105) (36,489) (79,867) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,174,052) (1,372,373) (2,024,536) (2,358,713) Asset charges (note 3): FPVUL & VEL contracts ..................... (38,787) (37,783) (60,533) (61,605) MSP contracts ............................. (817) (802) (1,406) (1,802) SL contracts .............................. (6,794) (6,122) (8,230) (7,993) ----------- ---------- ---------- ---------- Net equity transactions ................ (110,350) 1,367,075 (5,125,341) 6,863,197 ----------- ---------- ---------- ---------- Net change in contract owners' equity ........... 4,789,134 (5,604,943) 4,541,538 (1,887,621) Contract owners' equity beginning of period ..... 10,287,472 15,892,415 31,942,807 33,830,428 ----------- ---------- ---------- ---------- Contract owners' equity end of period ........... $15,076,606 10,287,472 36,484,345 31,942,807 =========== ========== ========== ========== CHANGES IN UNITS: Beginning units .............................. 4,230,880 3,857,628 6,832,396 5,358,130 ----------- ---------- ---------- ---------- Units purchased .............................. 1,494,645 1,916,583 1,706,716 2,442,179 Units redeemed ............................... (1,491,337) (1,543,331) (2,734,099) (967,913) ----------- ---------- ---------- ---------- Ending units ................................. 4,234,188 4,230,880 5,805,013 6,832,396 =========== ========== ========== ========== JanRsLgCpCr MGVITMultiSec -------------- ------------------------ 2003 2002 2003 2002 ------ ---- ---------- ----------- Investment activity: Net investment income (loss) ................. 29 -- 1,321,565 1,326,535 Realized gain (loss) on investments .......... 109 -- 1,062,710 (519,774) Change in unrealized gain (loss) on investments ............................... 3,346 -- 550,178 942,199 Reinvested capital gains ..................... -- -- -- -- ------ --- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... 3,484 -- 2,934,453 1,748,960 ------ --- ---------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 22,103 -- 3,695,958 7,798,773 Transfers between funds ...................... 16,103 -- 1,368,926 (21,679,787) Surrenders (note 6) .......................... -- -- (7,991,229) (3,165,292) Death benefits (note 4) ...................... -- -- (15,509) (34,790) Net policy repayments (loans) (note 5) ....... -- -- (50,134) (136,975) Deductions for surrender charges (note 2d) ... -- -- (280,141) (209,125) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (1,326) -- (972,724) (1,039,094) Asset charges (note 3): FPVUL & VEL contracts ..................... (37) -- (26,096) (18,792) MSP contracts ............................. -- -- (3,306) (2,089) SL contracts .............................. -- -- (4,084) (33,668) ------ --- ---------- ----------- Net equity transactions ................ 36,843 -- (4,278,339) (18,520,839) ------ --- ---------- ----------- Net change in contract owners' equity ........... 40,327 -- (1,343,886) (16,771,879) Contract owners' equity beginning of period ..... -- -- 22,443,888 39,215,767 ------ --- ---------- ----------- Contract owners' equity end of period ........... 40,327 -- 21,100,002 22,443,888 ====== === ========== =========== CHANGES IN UNITS: Beginning units .............................. -- -- 1,873,291 3,491,194 ------ --- ---------- ----------- Units purchased .............................. 3,396 -- 1,399,580 1,268,199 Units redeemed ............................... (118) -- (1,685,297) (2,886,102) ------ --- ---------- ----------- Ending units ................................. 3,278 -- 1,587,574 1,873,291 ====== === ========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
MFSVITInvGrwI MFSVITValIn NBAMTFas NBAMTGuard --------------- -------------- ---------------- ----------------------- 2003 2002 2003 2002 2003 2002 2003 2002 -------- ---- ------- ---- ------- ------ ---------- ---------- Investment activity: Net investment income (loss) ................. $ (23) -- (32) -- (1,210) (25) 95,766 70,958 Realized gain (loss) on investments .......... 2,763 -- 4,761 -- 93,857 9 (2,872,414) (1,510,550) Change in unrealized gain (loss) on investments ............................ 20,062 -- 24,142 -- 27,859 971 6,456,331 (3,567,509) Reinvested capital gains ..................... -- -- -- -- 311 -- -- -- -------- --- ------- --- ------- ------ ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 22,802 -- 28,871 -- 120,817 955 3,679,683 (5,007,101) -------- --- ------- --- ------- ------ ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 185,244 -- 36,952 -- 45,421 44 2,582,164 2,830,397 Transfers between funds ...................... 253,790 -- 208,644 -- 683,040 34,956 (5,575,421) 6,311,275 Surrenders (note 6) .......................... (19) -- (14) -- (2,040) -- (743,806) (593,380) Death benefits (note 4) ...................... -- -- -- -- -- -- (7,394) (19,798) Net policy repayments (loans) (note 5) ....... -- -- (7,285) -- (114) -- (104,624) 63,048 Deductions for surrender charges (note 2d) ... (1) -- (1) -- (71) -- (26,075) (39,204) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (9,922) -- 1,460 -- (14,456) (229) (756,478) (892,446) Asset charges (note 3): FPVUL & VEL contracts ..................... (427) -- (431) -- (113) -- (26,924) (25,529) MSP contracts ............................. (10) -- -- -- -- -- (1,184) (1,277) SL contracts .............................. (10) -- (25) -- -- -- (4,282) (3,604) -------- --- ------- --- ------- ------ ---------- ---------- Net equity transactions ................ 428,645 -- 239,300 -- 711,667 34,771 (4,664,024) 7,629,482 -------- --- ------- --- ------- ------ ---------- ---------- Net change in contract owners' equity ........... 451,447 -- 268,171 -- 832,484 35,726 (984,341) 2,622,381 Contract owners' equity beginning of period .................................... -- -- -- -- 35,726 -- 14,922,297 12,299,916 -------- --- ------- --- ------- ------ ---------- ---------- Contract owners' equity end of period ........... $451,447 -- 268,171 -- 868,210 35,726 13,937,956 14,922,297 ======== === ======= === ======= ====== ========== ========== CHANGES IN UNITS: Beginning units .............................. -- -- -- -- 3,552 -- 1,679,893 934,874 -------- --- ------- --- ------- ------ ---------- ---------- Units purchased .............................. 39,860 -- 23,541 -- 70,587 3,579 371,872 980,080 Units redeemed ............................... (935) -- (1,858) -- (5,001) (27) (940,733) (235,061) -------- --- ------- --- ------- ------ ---------- ---------- Ending units ................................. 38,925 -- 21,683 -- 69,138 3,552 1,111,032 1,679,893 ======== === ======= === ======= ====== ========== ==========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
NBAMTLMat NBAMTMCGr ----------------- ------------------------ 2003 2002 2003 2002 ---------- ---- ---------- ----------- Investment activity: Net investment income (loss) ................. $ 38,806 -- (56,614) (77,678) Realized gain (loss) on investments .......... (5,817) -- (6,377,133) (4,989,622) Change in unrealized gain (loss) on investments ............................ (25,993) -- 15,912,922 (9,298,181) Reinvested capital gains ..................... -- -- -- -- ---------- --- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... 6,996 -- 9,479,175 (14,365,481) ---------- --- ---------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 58,892 -- 8,083,193 8,190,191 Transfers between funds ...................... 1,139,481 -- (8,263,876) 7,542,838 Surrenders (note 6) .......................... (5,044) -- (5,907,368) (1,575,057) Death benefits (note 4) ...................... -- -- (11,596) (89,359) Net policy repayments (loans) (note 5) ....... (1,608) -- 1,432,261 (1,458,995) Deductions for surrender charges (note 2d) ... (177) -- (207,089) (104,061) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (16,514) -- (2,347,795) (2,601,985) Asset charges (note 3): FPVUL & VEL contracts ..................... (767) -- (69,062) (67,391) MSP contracts ............................. (244) -- (1,661) (2,374) SL contracts .............................. (113) -- (9,726) (9,477) ---------- --- ---------- ----------- Net equity transactions ................ 1,173,906 -- (7,302,719) 9,824,330 ---------- --- ---------- ----------- Net change in contract owners' equity ........... 1,180,902 -- 2,176,456 (4,541,151) Contract owners' equity beginning of period .................................... -- -- 36,682,614 41,223,765 ---------- --- ---------- ----------- Contract owners' equity end of period ........... $1,180,902 -- 38,859,070 36,682,614 ========== === ========== =========== CHANGES IN UNITS: Beginning units .............................. -- -- 4,122,483 3,163,605 ---------- --- ---------- ----------- Units purchased .............................. 119,449 -- 1,768,813 1,779,547 Units redeemed ............................... (2,531) -- (2,469,512) (820,669) ---------- --- ---------- ----------- Ending units ................................. 116,918 -- 3,421,784 4,122,483 ========== === ========== =========== NBAMTPart NBAMTSocRe ----------------------- -------------- 2003 2002 2003 2002 ---------- ---------- ------- ---- Investment activity: Net investment income (loss) ................. (12,047) 48,888 (17) -- Realized gain (loss) on investments .......... (561,413) (1,817,571) 1,158 -- Change in unrealized gain (loss) on investments ............................ 4,134,976 (1,372,811) 8,463 -- Reinvested capital gains ..................... -- -- -- -- ---------- ---------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations ....... 3,561,516 (3,141,494) 9,604 -- ---------- ---------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) .................. 1,560,523 2,243,539 12,253 -- Transfers between funds ...................... (777,622) 1,027,469 110,376 -- Surrenders (note 6) .......................... (726,406) (846,009) (544) -- Death benefits (note 4) ...................... (10,628) (14,152) -- -- Net policy repayments (loans) (note 5) ....... (33,461) (50,875) 771 -- Deductions for surrender charges (note 2d) ... (25,465) (55,894) (19) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (739,402) (775,373) (4,369) -- Asset charges (note 3): FPVUL & VEL contracts ..................... (31,895) (30,660) (108) -- MSP contracts ............................. (1,472) (1,734) -- -- SL contracts .............................. (5,506) (6,730) (9) -- ---------- ---------- ------- --- Net equity transactions ................ (791,334) 1,489,581 118,351 -- ---------- ---------- ------- --- Net change in contract owners' equity ........... 2,770,182 (1,651,913) 127,955 -- Contract owners' equity beginning 10,515,078 12,166,991 -- -- of period .................................... ---------- ---------- ------- --- 13,285,260 10,515,078 127,955 -- Contract owners' equity end of period ........... ========== ========== ======= === CHANGES IN UNITS: Beginning units .............................. 1,311,811 1,149,207 -- -- ---------- ---------- ------- --- Units purchased .............................. 292,732 421,809 10,750 -- Units redeemed ............................... (382,923) (259,205) (410) -- ---------- ---------- ------- --- Ending units ................................. 1,221,620 1,311,811 10,340 -- ========== ========== ======= ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
ONEMidCap ONEMidCapV -------------------- ----------------- 2003 2002 2003 2002 ---------- ------- ------- ------- Investment activity: Net investment income (loss) .................... $ (5,592) (141) 1,064 (121) Realized gain (loss) on investments ............. 16,331 (2,304) 83,866 2 Change in unrealized gain (loss) on investments ............................... 333,042 (3,322) 59,721 (6,061) Reinvested capital gains ........................ -- -- -- -- ---------- ------- ------- ------- Net increase (decrease) in contract owners' equity resulting from operations .......... 343,781 (5,767) 144,651 (6,180) ---------- ------- ------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 148,079 9,498 71,250 218 Transfers between funds ......................... 2,146,402 198,137 10,417 393,134 Surrenders (note 6) ............................. (1,316) -- (1,311) -- Death benefits (note 4) ......................... -- -- -- -- Net policy repayments (loans) (note 5) .......... (18) -- 1,747 -- Deductions for surrender charges (note 2d) ...... (46) -- (46) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (41,708) (1,068) (18,926) (209) Asset charges (note 3): FPVUL & VEL contracts ........................ -- -- -- -- MSP contracts ................................ -- -- -- -- SL contracts ................................. -- -- -- -- ---------- ------- ------- ------- Net equity transactions ................... 2,251,393 206,567 63,131 393,143 ---------- ------- ------- ------- Net change in contract owners' equity .............. 2,595,174 200,800 207,782 386,963 Contract owners' equity beginning of period ....................................... 200,800 -- 386,963 -- ---------- ------- ------- ------- Contract owners' equity end of period .............. $2,795,974 200,800 594,745 386,963 ========== ======= ======= ======= CHANGES IN UNITS: Beginning units ................................. 19,940 -- 39,000 -- ---------- ------- ------- ------- Units purchased ................................. 210,074 20,041 21,460 39,020 Units redeemed .................................. (10,796) (101) (15,171) (20) ---------- ------- ------- ------- Ending units .................................... 219,218 19,940 45,289 39,000 ========== ======= ======= ======= OppAggGro OppCapAp ------------------------ ------------------------- 2003 2002 2003 2002 ---------- ----------- ----------- ----------- Investment activity: Net investment income (loss) .................... (93,605) 243,809 148,607 280,305 Realized gain (loss) on investments ............. (9,108,246) (32,126,879) (6,846,665) (9,533,865) Change in unrealized gain (loss) on investments ............................... 21,592,176 14,324,781 33,617,086 (15,171,267) Reinvested capital gains ........................ -- -- -- -- ---------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .......... 12,390,325 (17,558,289) 26,919,028 (24,424,827) ---------- ----------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 10,246,131 16,675,961 21,175,779 22,643,251 Transfers between funds ......................... (4,627,220) (6,935,071) 5,061,719 6,797,617 Surrenders (note 6) ............................. (6,203,773) (2,565,511) (3,281,220) (3,904,475) Death benefits (note 4) ......................... (58,439) (71,684) (161,175) (95,963) Net policy repayments (loans) (note 5) .......... (117,265) 114,051 (378,614) 7,671 Deductions for surrender charges (note 2d) ...... (217,480) (169,498) (115,027) (257,961) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (3,537,336) (3,952,406) (5,117,399) (5,118,298) Asset charges (note 3): FPVUL & VEL contracts ........................ (100,746) (92,229) (146,416) (132,328) MSP contracts ................................ (3,202) (3,963) (4,244) (4,816) SL contracts ................................. (10,783) (9,962) (18,475) (15,625) ---------- ----------- ----------- ----------- Net equity transactions ................... (4,630,113) 2,989,688 17,014,928 19,919,073 ---------- ----------- ----------- ----------- Net change in contract owners' equity .............. 7,760,212 (14,568,601) 43,933,956 (4,505,754) Contract owners' equity beginning of period ....................................... 46,785,166 61,353,767 74,512,312 79,018,066 ---------- ----------- ----------- ----------- Contract owners' equity end of period .............. 54,545,378 46,785,166 118,446,268 74,512,312 ========== =========== =========== =========== CHANGES IN UNITS: Beginning units ................................. 5,745,655 5,473,091 7,585,502 5,810,866 ---------- ---------- ----------- ----------- Units purchased ................................. 2,222,342 1,838,149 3,794,651 2,942,041 Units redeemed .................................. (2,370,269) (1,565,585) (1,877,293) (1,167,405) ---------- ---------- ----------- ----------- Ending units .................................... 5,597,728 5,745,655 9,502,860 7,585,502 ========== ========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
OppGlSec OppHiIncInt ------------------------ ---------------- 2003 2002 2003 2002 ----------- ---------- --------- ---- Investment activity: Net investment income (loss) .................... $ 176,397 69,210 (27) -- Realized gain (loss) on investments ............. 427,239 (1,830,151) 23,124 -- Change in unrealized gain (loss) on investments ............................... 12,200,617 (4,252,562) 60,345 -- Reinvested capital gains ........................ -- -- -- -- ----------- ---------- --------- --- Net increase (decrease) in contract owners' equity resulting from operations .......... 12,804,253 (6,013,503) 83,442 -- ----------- ---------- --------- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 5,476,123 5,837,215 86,603 -- Transfers between funds ......................... 2,664,166 13,154,983 1,385,813 -- Surrenders (note 6) ............................. (4,447,211) (954,800) (49) -- Death benefits (note 4) ......................... (29,742) (17,981) -- -- Net policy repayments (loans) (note 5) .......... (626,888) (29,069) (229) -- Deductions for surrender charges (note 2d) ...... (155,902) (63,082) (2) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (1,938,422) (1,309,549) (14,205) -- Asset charges (note 3): FPVUL & VEL contracts ........................ (46,029) (31,533) (1,139) -- MSP contracts ................................ (956) (1,111) (5) -- SL contracts ................................. (7,141) (4,148) (68) -- ----------- ---------- --------- --- Net equity transactions ................... 887,998 16,580,925 1,456,719 -- ----------- ---------- --------- --- Net change in contract owners' equity .............. 13,692,251 10,567,422 1,540,161 -- Contract owners' equity beginning of period ....................................... 26,000,774 15,433,352 -- -- ----------- ---------- --------- --- Contract owners' equity end of period .............. $39,693,025 26,000,774 1,540,161 -- =========== ========== ========= === CHANGES IN UNITS: Beginning units ................................. 3,973,943 1,833,782 -- -- ----------- ---------- --------- --- Units purchased ................................. 1,728,441 2,687,789 139,643 -- Units redeemed .................................. (1,453,919) (547,628) (1,905) -- ----------- ---------- --------- --- Ending units .................................... 4,248,465 3,973,943 137,738 -- =========== ========== ========= === OppMSGrInc OppMaStSmCpI ----------------------- ---------------- 2003 2002 2003 2002 ---------- ---------- --------- ---- Investment activity: Net investment income (loss) .................... 272,017 176,431 (28) -- Realized gain (loss) on investments ............. (2,968,161) (2,016,850) 34,019 -- Change in unrealized gain (loss) on investments ............................... 11,298,515 (4,294,382) 111,096 -- Reinvested capital gains ........................ -- -- -- -- ---------- ---------- --------- --- Net increase (decrease) in contract owners' equity resulting from operations .......... 8,602,371 (6,134,801) 145,087 -- ---------- ---------- --------- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 6,963,803 7,548,303 71,748 -- Transfers between funds ......................... 4,692,400 4,691,788 1,019,368 -- Surrenders (note 6) ............................. (2,783,975) (1,659,687) (31,312) -- Death benefits (note 4) ......................... (59,961) (79,021) -- -- Net policy repayments (loans) (note 5) .......... (33,551) (209,331) (49,778) -- Deductions for surrender charges (note 2d) ...... (97,595) (109,652) (1,098) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (2,719,676) (2,641,355) (21,902) -- Asset charges (note 3): FPVUL & VEL contracts ........................ (94,183) (81,175) (987) -- MSP contracts ................................ (4,035) (4,002) (116) -- SL contracts ................................. (12,679) (10,177) (233) -- ---------- ---------- --------- --- Net equity transactions ................... 5,850,548 7,445,691 985,690 -- ---------- ---------- --------- --- Net change in contract owners'equity ............... 14,452,919 1,310,890 1,130,777 -- Contract owners'equity beginning of period ....................................... 27,448,873 26,137,983 -- -- ---------- ---------- --------- --- Contract owners'equity end of period ............... 41,901,792 27,448,873 1,130,777 -- ========== ========== ========= === CHANGES IN UNITS: Beginning units ................................. 3,375,910 2,604,263 -- -- ---------- ---------- --------- --- Units purchased ................................. 1,723,341 1,330,330 89,563 -- Units redeemed .................................. (1,008,813) (558,683) (8,036) -- ---------- ---------- --------- --- Ending units .................................... 4,090,438 3,375,910 81,527 -- ========== ========== ========= ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
PIMLowDur PIMRealRet --------------------- ------------------- 2003 2002 2003 2002 ----------- ------- --------- ------- Investment activity: Net investment income (loss) ................. $ 86,148 513 113,712 876 Realized gain (loss) on investments .......... 3,919 62 154,919 694 Change in unrealized gain (loss) on investments ............................... 3,744 360 32,564 10,029 Reinvested capital gains ..................... 24,408 949 173,353 463 ----------- ------- --------- ------- Net increase (decrease) in contract owners' equity resulting from operations ....... 118,219 1,884 474,548 12,062 ----------- ------- --------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 2,251,092 5,354 2,213,271 20,908 Transfers between funds ...................... 32,861,458 448,951 5,400,576 472,677 Surrenders (note 6) .......................... (6,219) -- (16,983) -- Death benefits (note 4) ...................... (41) -- (83) -- Net policy repayments (loans) (note 5) ....... (45) -- (8,469) -- Deductions for surrender charges (note 2d) ... (218) -- (595) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (171,238) 2,304 (203,282) (1,479) Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- -- -- MSP contracts ............................. -- -- -- -- SL contracts .............................. -- -- -- -- ----------- ------- --------- ------- Net equity transactions ................ 34,934,789 456,609 7,384,435 492,106 ----------- ------- --------- ------- Net change in contract owners' equity ........... 35,053,008 458,493 7,858,983 504,168 Contract owners' equity beginning of period ....................................... 458,493 -- 504,168 -- ----------- ------- --------- ------- Contract owners' equity end of period ........... $35,511,501 458,493 8,363,151 504,168 =========== ======= ========= ======= CHANGES IN UNITS: Beginning units .............................. 45,027 -- 48,671 -- ----------- ------- --------- ------- Units purchased .............................. 3,485,571 45,043 815,057 48,862 Units redeemed ............................... (116,918) (16) (119,425) (191) ----------- ------- --------- ------- Ending units ................................. 3,413,680 45,027 744,303 48,671 =========== ======= ========= ======= PIMTotRet PionHY ---------------------- ----------------- 2003 2002 2003 2002 ---------- --------- --------- ----- Investment activity: Net investment income (loss) ................. 541,948 8,538 113,587 33 Realized gain (loss) on investments .......... 27,596 141 221,299 (57) Change in unrealized gain (loss) on investments ............................... (110,836) 7,687 122,976 1 Reinvested capital gains ..................... 290,711 21,423 -- -- ---------- --------- --------- ----- Net increase (decrease) in contract owners' equity resulting from operations ....... 749,419 37,789 457,862 (23) ---------- --------- --------- ----- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 8,039,115 12,806 454,556 1,694 Transfers between funds ...................... 34,473,770 1,870,648 7,445,739 2,206 Surrenders (note 6) .......................... (191,424) -- (1,413) -- Death benefits (note 4) ...................... (13) -- -- -- Net policy repayments (loans) (note 5) ....... 930 -- 575 -- Deductions for surrender charges (note 2d) ... (6,711) -- (50) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (524,344) (7,134) (51,770) (13) Asset charges (note 3): FPVUL & VEL contracts ..................... -- -- -- -- MSP contracts ............................. -- -- -- -- SL contracts .............................. -- -- -- -- ---------- --------- --------- ----- Net equity transactions ................ 41,791,323 1,876,320 7,847,637 3,887 ---------- --------- --------- ----- Net change in contract owners' equity ........... 42,540,742 1,914,109 8,305,499 3,864 Contract owners' equity beginning of period ....................................... 1,914,109 -- 3,864 -- ---------- --------- --------- ----- Contract owners' equity end of period ........... 44,454,851 1,914,109 8,309,363 3,864 ========== ========= ========= ===== CHANGES IN UNITS: Beginning units .............................. 185,355 -- 373 -- ---------- --------- --------- ----- Units purchased .............................. 5,248,267 186,183 656,655 374 Units redeemed ............................... (1,323,543) (828) (51,591) (1) ---------- --------- --------- ----- Ending units ................................. 4,110,079 185,355 605,437 373 ========== ========= ========= =====
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
PUTVTGrIncIB PUTVTIntlEqIB PUTVTVoyIB RoyMicro --------------- -------------- -------------- -------------------- 2003 2002 2003 2002 2003 2002 2003 2002 -------- ---- ------- ---- ------- ---- ---------- ------- Investment activity: Net investment income (loss) ................. $ (33) -- (31) -- (7) -- (16,213) (98) Realized gain (loss) on investments .......... 453 -- 21,814 -- 216 -- 253,253 179 Change in unrealized gain (loss) on investments ............................... 20,678 -- 56,900 -- 6,212 -- 1,459,001 1,783 Reinvested capital gains ..................... -- -- -- -- -- -- 421,098 2,635 -------- --- ------- --- ------- --- ---------- ------- Net increase (decrease) in contract owners' equity resulting from operations ....... 21,098 -- 78,683 -- 6,421 -- 2,117,139 4,499 -------- --- ------- --- ------- --- ---------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 28,781 -- 14,483 -- 28,007 -- 1,969,963 2,759 Transfers between funds ...................... 228,994 -- 663,418 -- 105,251 -- 7,153,431 425,194 Surrenders (note 6) .......................... (15) -- (80) -- -- -- (4,850) -- Death benefits (note 4) ...................... -- -- -- -- -- -- (115) -- Net policy repayments (loans) (note 5) ....... -- -- -- -- -- -- 14,535 -- Deductions for surrender charges (note 2d) ... -- -- (3) -- -- -- (170) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (6,647) -- (9,364) -- (4,820) -- (136,227) 8,168 Asset charges (note 3): FPVUL & VEL contracts ..................... (198) -- (378) -- (113) -- -- -- MSP contracts ............................. -- -- (10) -- -- -- -- -- SL contracts .............................. -- -- (28) -- (15) -- -- -- -------- --- ------- --- ------- --- ---------- ------- Net equity transactions ................ 250,915 -- 668,038 -- 128,310 -- 8,996,567 436,121 -------- --- ------- --- ------- --- ---------- ------- Net change in contract owners' equity ........... 272,013 -- 746,721 -- 134,731 -- 11,113,706 440,620 Contract owners' equity beginning of period ....................................... -- -- -- -- -- -- 440,620 -- -------- --- ------- --- ------- --- ---------- ------- Contract owners' equity end of period ........... $272,013 -- 746,721 -- 134,731 -- 11,554,326 440,620 ======== === ======= === ======= === ========== ======= CHANGES IN UNITS: Beginning units .............................. -- -- -- -- -- -- 43,606 -- -------- --- ------- --- ------- --- ---------- ------- Units purchased .............................. 22,486 -- 59,178 -- 11,800 -- 805,112 43,688 Units redeemed ............................... (594) -- (835) -- (434) -- (79,688) (82) -------- --- ------- --- ------- --- ---------- ------- Ending units ................................. 21,892 -- 58,343 -- 11,366 -- 769,030 43,606 ======== === ======= === ======= === ========== =======
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
SGVITMdCpGr StOpp2 ------------------------- ----------------------- 2003 2002 2003 2002 ----------- ----------- ---------- ---------- Investment activity: Net investment income (loss) .................... $ (21,177) (39,586) (39,781) 54,735 Realized gain (loss) on investments ............. (6,221,454) (6,111,067) (2,380,253) (5,309,471) Change in unrealized gain (loss) on investments ............................... 11,980,636 (3,934,328) 12,212,543 (3,489,957) Reinvested capital gains ........................ -- -- -- 562,955 ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .......... 5,738,005 (10,084,981) 9,792,509 (8,181,738) ----------- ----------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 2,705,656 5,397,783 6,295,457 9,112,605 Transfers between funds ......................... (4,603,563) (123,294) (4,344,951) 6,258,465 Surrenders (note 6) ............................. (2,346,548) (1,048,979) (424,909) (1,893,414) Death benefits (note 4) ......................... (15,373) (36,286) (11,288) (22,226) Net policy repayments (loans) (note 5) .......... (60,881) 86,767 (119,731) (24,647) Deductions for surrender charges (note 2d) ...... (82,261) (69,304) (14,896) (125,094) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (1,258,967) (1,417,054) (1,567,108) (1,442,279) Asset charges (note 3): FPVUL & VEL contracts ........................ (36,188) (32,103) (39,692) (30,471) MSP contracts ................................ (718) (944) (964) (724) SL contracts ................................. (4,443) (4,086) (10,465) (8,102) ----------- ----------- ---------- ---------- Net equity transactions ................... (5,703,286) 2,752,500 (238,547) 11,824,113 ----------- ----------- ---------- ---------- Net change in contract owners' equity .............. 34,719 (7,332,481) 9,553,962 3,642,375 Contract owners' equity beginning of period ....................................... 17,470,890 24,803,371 24,109,124 20,466,749 ----------- ----------- ---------- ---------- Contract owners' equity end of period .............. $17,505,609 17,470,890 33,663,086 24,109,124 =========== =========== ========== ========== CHANGES IN UNITS: Beginning units ................................. 2,440,718 2,179,699 3,484,072 2,159,287 ----------- ----------- ---------- ---------- Units purchased ................................. 709,269 672,777 1,386,378 1,958,587 Units redeemed .................................. (1,415,267) (411,758) (1,315,809) (633,802) ----------- ----------- ---------- ---------- Ending units .................................... 1,734,720 2,440,718 3,554,641 3,484,072 =========== =========== ========== ========== TRPEI2 TRPMCG2 -------------------- -------------------- 2003 2002 2003 2002 ---------- ------- ---------- ------- Investment activity: Net investment income (loss) .................... 149,945 591 (12,737) (28) Realized gain (loss) on investments ............. 121,913 110 270,991 (801) Change in unrealized gain (loss) on investments ............................... 3,003,853 311 1,198,675 (2,480) Reinvested capital gains ........................ -- -- -- -- ---------- ------- ---------- ------- Net increase (decrease) in contract owners' equity resulting from operations .......... 3,275,711 1,012 1,456,929 (3,309) ---------- ------- ---------- ------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 3,384,985 943 1,805,611 19,238 Transfers between funds ......................... 17,388,304 170,100 16,971,347 109,523 Surrenders (note 6) ............................. (16,115) -- (8,490) -- Death benefits (note 4) ......................... -- -- -- -- Net policy repayments (loans) (note 5) .......... 2,277 -- 1,360 -- Deductions for surrender charges (note 2d) ...... (565) -- (298) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (216,195) (73) (90,036) (40) Asset charges (note 3): FPVUL & VEL contracts ........................ -- -- -- -- MSP contracts ................................ -- -- -- -- SL contracts ................................. -- -- -- -- ---------- ------- ---------- ------- Net equity transactions ................... 20,542,691 170,970 18,679,494 128,721 ---------- ------- ---------- ------- Net change in contract owners' equity .............. 23,818,402 171,982 20,136,423 125,412 Contract owners' equity beginning of period ....................................... 171,982 -- 125,412 -- ---------- ------- ---------- ------- Contract owners' equity end of period .............. 23,990,384 171,982 20,261,835 125,412 ========== ======= ========== ======= CHANGES IN UNITS: Beginning units ................................. 16,999 -- 12,242 -- ---------- ------- ---------- ------- Units purchased ................................. 2,037,182 17,054 1,490,359 12,263 Units redeemed .................................. (153,981) (55) (66,997) (21) ---------- ------- ---------- ------- Ending units .................................... 1,900,200 16,999 1,435,604 12,242 ========== ======= ========== =======
NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
TurnGVITGro VEWrldEMkt --------------------- ---------------------- 2003 2002 2003 2002 ---------- -------- ---------- --------- Investment activity: Net investment income (loss) .................... $ (526) (185) 2,184 6,290 Realized gain (loss) on investments ............. 156,796 (187,053) 1,056,488 (423,831) Change in unrealized gain (loss) on investments ............................... 130,920 (80,191) 2,226,271 4,487 Reinvested capital gains ........................ -- -- -- -- ---------- -------- ---------- --------- Net increase (decrease) in contract owners' equity resulting from operations .......... 287,190 (267,429) 3,284,943 (413,054) ---------- -------- ---------- --------- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 169,804 211,743 1,415,232 1,592,344 Transfers between funds ......................... 352,590 114,134 (428,461) 942,409 Surrenders (note 6) ............................. (83,300) (6,230) (1,268,860) (436,338) Death benefits (note 4) ......................... (88) (100) (3,830) (4,085) Net policy repayments (loans) (note 5) .......... (1,138) (3,033) (51,439) (43,381) Deductions for surrender charges (note 2d) ...... (2,920) (412) (44,481) (28,828) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (56,203) (44,247) (536,643) (603,586) Asset charges (note 3): FPVUL & VEL contracts ........................ (2,036) (1,336) (20,655) (19,998) MSP contracts ................................ (23) (25) (543) (589) SL contracts ................................. (448) (289) (2,560) (2,155) ---------- -------- ---------- --------- Net equity transactions ................... 376,238 270,205 (942,240) 1,395,793 ---------- -------- ---------- --------- Net change in contract owners' equity .............. 663,428 2,776 2,342,703 982,739 Contract owners' equity beginning of period ....................................... 459,519 456,743 6,176,511 5,193,772 ---------- -------- --------- --------- Contract owners' equity end of period .............. $1,122,947 459,519 8,519,214 6,176,511 ========== ======== ========== ========= CHANGES IN UNITS: Beginning units ................................. 208,046 118,103 830,944 674,864 ---------- -------- ---------- --------- Units purchased ................................. 187,485 127,507 266,387 293,150 Units redeemed .................................. (57,965) (37,564) (359,120) (137,070) ---------- -------- ---------- --------- Ending units .................................... 337,566 208,046 738,211 830,944 ========== ======== ========== ========= VEWrldHAs VKoreFI --------------------- -------------- 2003 2002 2003 2002 --------- --------- ------- ---- Investment activity: Net investment income (loss) .................... 10,309 14,011 (22) -- Realized gain (loss) on investments ............. (106,702) (286,560) (507) -- Change in unrealized gain (loss) on investments ............................... 1,336,812 (30,895) 1,903 -- Reinvested capital gains ........................ -- -- 273 -- --------- --------- ------- --- Net increase (decrease) in contract owners' equity resulting from operations .......... 1,240,419 (303,444) 1,647 -- --------- --------- ------- --- Equity transactions: Purchase payments received from contract owners (note 6) ..................... 581,718 524,252 13,411 -- Transfers between funds ......................... 2,069,447 957,588 115,209 -- Surrenders (note 6) ............................. (189,087) (105,792) (3,744) -- Death benefits (note 4) ......................... 1,053 (1,401) -- -- Net policy repayments (loans) (note 5) .......... (10,730) (52,772) (117) -- Deductions for surrender charges (note 2d) ...... (6,629) (6,990) (131) -- Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................ (201,734) (202,503) 1,505 -- Asset charges (note 3): FPVUL & VEL contracts ........................ (7,613) (7,185) (158) -- MSP contracts ................................ (364) (193) -- -- SL contracts ................................. (1,113) (741) (7) -- --------- --------- ------- --- Net equity transactions ................... 2,234,948 1,104,263 125,968 -- --------- --------- ------- --- Net change in contract owners' equity .............. 3,475,367 800,819 127,615 -- Contract owners' equity beginning of period ....................................... 2,406,075 1,605,256 -- -- --------- --------- ------- --- Contract owners' equity end of period .............. 5,881,442 2,406,075 127,615 -- ========= ========= ======= === CHANGES IN UNITS: Beginning units ................................. 293,707 190,667 -- -- --------- --------- ------- --- Units purchased ................................. 254,916 147,748 12,830 -- Units redeemed .................................. (53,604) (44,708) (360) -- --------- --------- ------- --- Ending units .................................... 495,019 293,707 12,470 -- ========= ========= ======= ===
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2003 and 2002
VKEmMkt VKMidCapG VKUSRealEst ---------------------- ---------------------- ----------------------- 2003 2002 2003 2002 2003 2002 ---------- --------- --------- ---------- ---------- ---------- Investment activity: Net investment income (loss) ................. $ (11,369) 305,605 (4,221) (5,383) (45,467) 783,280 Realized gain (loss) on investments .......... 612,356 (20,574) 9,931 (837,007) 612,385 236,993 Change in unrealized gain (loss) on investments ............................ 1,121,269 40,303 999,073 (330,736) 9,192,176 (2,563,674) Reinvested capital gains ..................... -- -- -- -- -- 592,195 ---------- --------- --------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ....... 1,722,256 325,334 1,004,783 (1,173,126) 9,759,094 (951,206) ---------- --------- --------- ---------- ---------- ---------- Equity transactions: Purchase payments received from contract owners (note 6) .................. 1,404,040 912,599 637,548 847,984 5,610,759 4,870,870 Transfers between funds ...................... 2,158,333 1,566,255 (150,262) 845,891 3,435,006 9,483,497 Surrenders (note 6) .......................... (314,799) (133,905) (117,736) (163,070) (4,004,219) (1,316,998) Death benefits (note 4) ...................... (1,923) 11,032 (2,153) (9,363) (44,256) (21,892) Net policy repayments (loans) (note 5) ....... 5,705 (37,266) (34,663) (33,471) (259,544) (84,652) Deductions for surrender charges (note 2d) ... (11,036) (8,847) (4,127) (10,774) (140,372) (87,012) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ......................... (440,506) (279,682) (210,696) (229,099) (1,698,142) (1,413,020) Asset charges (note 3): FPVUL & VEL contracts ..................... (15,557) (8,798) (6,340) (5,381) (55,622) (41,354) MSP contracts ............................. (642) (345) (108) (104) (7,297) (5,697) SL contracts .............................. (1,972) (877) (837) (703) (7,295) (4,466) ---------- --------- --------- ---------- ---------- ---------- Net equity transactions ................ 2,781,643 2,020,166 110,626 1,241,910 2,829,018 11,379,276 ---------- --------- --------- ---------- ---------- ---------- Net change in contract owners' equity ........... 4,503,899 2,345,500 1,115,409 68,784 12,588,112 10,428,070 Contract owners' equity beginning of period .................................... 4,738,513 2,393,013 2,572,866 2,504,082 25,528,406 15,100,336 ---------- --------- --------- ---------- ---------- ---------- Contract owners' equity end of period ........... $9,242,412 4,738,513 3,688,275 2,572,866 38,116,518 25,528,406 ========== ========= ========= ========== ========== ========== CHANGES IN UNITS: Beginning units .............................. 392,219 215,898 611,451 408,670 2,082,394 1,210,568 ---------- --------- --------- ---------- ---------- ---------- Units purchased .............................. 328,822 217,421 283,884 301,965 789,960 1,100,806 Units redeemed ............................... (126,847) (41,100) (276,697) (99,184) (566,947) (228,980) ---------- --------- --------- ---------- ---------- ---------- Ending units ................................. 594,194 392,219 618,638 611,451 2,305,407 2,082,394 ========== ========= ========= ========== ========== ==========
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2003 and 2002 (1) Background and 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 GVIT - Small Cap Growth Fund - Class II for which the Account was credited with 100,000 units. 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 - AIM V.I.Capital Appreciation Fund - Series I (AIMCapAp) AIM VIF Basic Value Fund - Series I (AIMBVF) AIM VIF Capital Development Fund - Series I (AIMCDF) Portfolios of Alliance Variable Products Series Funds; Alliance Bernstein VPS Small Cap Value Portfolio - Class A (AllSmCpVal) 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 Inflation Protection Fund - Class II (ACVPInfPr) 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 (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; Dreyfus GVIT International Value Fund - Class I (DryGVITIntVal) 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) (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF); Dreyfus VIF - Appreciation Portfolio - Initial Shares (DryVIFApp) Dreyfus VIF - Developing Leaders Portfolio - Initial Shares (DryDevLeadI) Dreyfus VIF - International Value Portfolio - Initial Shares (DryIntVal) Portfolios of Federated Insurance Series; Federated American Leaders Fund II - Primary Shares (FedAmLdII) Federated Capital Appreciation Fund II - Primary Shares (FedCpApII) Federated GVIT High Income Bond Fund - Class I (FGVITHiInc) 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) Fidelity(R) VIP II - Investment Grade Bond Portfolio: Service Class (FidVIPInvGrB) 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 - Mid Cap Portfolio: Service Class (FidVIPMCap) Fidelity(R) VIP III - Value Strategies Portfolio: Service Class (FidVIPValStS) Funds of the Franklin Templeton Variable Insurance Products (Franklin Templeton VIP); Franklin Templeton VIP - Franklin Rising Dividends Securities Fund - Class I (FTVIPFRDiv) Franklin Templeton VIP - Franklin Small Cap Value Securities Fund - Class I (FTVIPSmCpVal) Franklin Templeton VIP - Templeton Foreign Securities Fund - Class I (FTVIPFS) Franklin Templeton Variable Insurance Products Trust (Franklin Templeton VIPT); Franklin Templeton VIPT - Templeton Foreign Securities Fund - Class 2 (FTVIPFS2) Funds of the Gartmore Variable Insurance Trust (Gartmore GVIT); 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 (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 (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 Balanced Fund - Class I (JPMorBal) 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) Janus AS - Risk-Managed Large Cap Core Portfolio - Service Shares (JanRsLgCpCr) MAS GVIT Multi Sector Bond Fund - Class I (MGVITMultiSec) Funds of Massachusetts Financial Services Variable Insurance Trust (MFS VIT); MFS VIT - MFS Investors Growth Stock Series - Initial Class (MFSVITInvGrwI) MFS VIT - MFS Value Series - Initial Class (MFSVITValIn) 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 - Limited Maturity Bond Portfolio (NBAMTLMat) Neuberger Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr) Neuberger Berman AMT - Partners Portfolio (NBAMTPart) Neuberger Berman AMT - Socially Responsive Portfolio (NBAMTSocRe) 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 High Income Fund/VA - Initial Class (OppHiIncInt) Oppenheimer Main Street(R) Growth & Income Fund/VA - Initial Class (OppMSGrInc) Oppenheimer Main Street(R) Small Cap Fund/VA - Initial Class (OppMaStSmCpI) 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) Funds of the Putnam Variable Trust (Putnam VT); Putnam VT Growth & Income Fund - IB Shares (PUTVTGrIncIB) Putnam VT International Equity Fund - IB Shares (PUTVTIntlEqIB) Putnam VT Voyager Fund - IB Shares (PUTVTVoyIB) Royce Capital Fund - Micro Cap (RoyMicro) Strong GVIT 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) (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued Turner GVIT 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 - Core Plus Fixed Income Portfolio - Class A (VKoreFI) 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, 2003, 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. Consequently, the investment performance of publicly traded mutual funds and any corresponding underlying mutual funds may differ substantially. (c) Security Valuation, Transactions and Related Investment Income The fair value of the underlying mutual funds is based on the closing net asset value per share at December 31, 2003. 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 For individual flexible premium and survivorship contracts, the Company deducts a minimum of 5.0% to a maximum of 7.5% of all premiums received to cover premium tax and sales expense. The Company may, at its sole discretion, reduce the sales loading portion of the premium load. There are no deductions from premium on modified single premium contracts. 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 varies widely and 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 individual flexible premium survivorship and modified single premium contracts, the Company currently deducts a minimum monthly administration charge of $5 per policy month to a maximum of $10 per policy month to recover policy maintenance, accounting, record keeping and other administrative expenses. These charges are assessed monthly by liquidating units. Please refer to your prospectus to find your contract administration fees. 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 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 survivorship, modified single premium and corporate contracts, the charge is 100% of the initial surrender charge in the first year, declining to 0% of the initial surrender charge in the ninth year or later. 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. NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS, Continued (3) Asset Charges (a) Modified Single Premium Contracts (MSP) For modified single premium contracts, the Company deducts $0.58 per $1,000 of the cash value of the contracts. This charge is assessed monthly against each contract by liquidating units. (b) Flexible Premium and Variable Executive Life Contracts (SPVUL and VEL) For Choice Life(SM) contracts, the Company deducts $0.50 per $1,000 on the first $25,000 of cash value attributable to the variable account, $0.25 per $1,000 on $25,001 up to $250,000 of cash value attribut- able to the variable account and $0.08 per $1,000 over $250,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units. For Choice Life Protection(SM) contracts and Best of America(R) Protection(SM) contracts, the Company deducts $0.66 per $1,000 of cash value attributable to the variable account during the first through fifteenth years from the Policy Date. Thereafter, this charge is $0.25 per $1,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units. (c) Survivorship Life Contracts (SL) For Choice Survivorship and Last Survivor contracts, during the first ten policy years, the Company deducts $0.55 per $1,000 on the first $25,000 of cash value attributable to the variable account;$0.55 per $1,000 on $25,001 up to $99,999 of cash value attributable to the variable account; and $0.55 per $1,000 on $100,000 or more of cash value attributable to the variable account. After ten years from the Policy Date, the Company deducts $0.55 per $1,000 on the first $25,000 of cash value attributable to the variable account; $0.35 per $1,000 on $25,001 up to $99,999 of cash value attributable to the variable account; and $0.20 per $1,000 on $100,000 or more of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units. For ChoiceLife(SM) Survivorship II and Next Generation(SM) Survivorship Life contracts, during the first fifteen policy years, the Company deducts $0.60 per $1,000 on the first $25,000 of cash value attributable to the variable account; $0.30 per $1,000 on $25,001 up to $250,000 of cash value attributable to the variable account; and $0.10 per $1,000 over $250,000 of cash value attributable to the variable account. After fifteen years from the Policy Date, the Company deducts $0.60 per $1,000 on the first $25,000 of cash value attributable to the variable account and $0.10 per $1,000 over $25,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units. For Protection(SM) Survivorship and ChoiceLife Protection(SM) Survivorship Life contracts, during the first fifteen policy years, the Company deducts $0.80 per $1,000 of cash value attributable to the variable account. After fifteen years from the Policy Date, the Company deducts $0.30 per $1,000 of cash value attributable to the variable account. This charge is assessed monthly against each contract by liquidating units. (d) Corporate Contracts For the Corporate Flexible Premium series, the Company deducts from the assets of the 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 Account. Currently, this rate is 0.40% during the first through fourth policy years, 0.20% or 0.25% during the fifth through twentieth policy years, and 0.10% thereafter. This charge is assessed through the daily unit value calculation. 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, share- holder communications, preparation, postage, fund transfer agency and various other record keeping and customer service functions. These fees are paid to an affiliate of the Company. 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 through fixed to variable or variable to fixed transactions (exchanges) or through loan transactions. The fixed account assets are not reflected in the accompanying financial statements. The Account portion of contract owner loans is transferred to the fixed account for administration and collection. Loan repayments are transferred from the fixed account to the Account and are allocated to the sub accounts at the discretion of the contract owner. Loans and loan repayments are included in net policy repayments (loans) on the accompanying Statements of Changes in Contract Owners' Equity. Exchanges are initiated, under certain restrictions, at the discretion of the contract owner. The contract owner may transfer assets between a fixed dollar contract of the Company and the sub accounts of the Account. Exchanges from the Account to the fixed account are included in surrenders, and exchanges 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. For the periods ended December 31, 2003 and 2002, total loan repayments and exchanges to the Account from the fixed account were $80,663,208 and $26,619,667, respectively, and total loans and exchanges from the Account to the fixed account were $72,393,201 and $78,032,159, respectively. (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 five year period ended December 31, 2003.
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) AIM VIF - AIM V.I.Capital Appreciation Fund - Series I 2003 ............................. 0.00% 26,916 $12.393708 $ 333,589 0.00% 23.94% 5/1/03 AIM VIF Basic Value Fund - Series I 2003 ............................. 0.00% 62,247 13.164786 819,468 0.06% 33.63% AIM VIF Capital Development Fund - Series I 2003 ............................. 0.00% 33,912 13.294993 450,860 0.00% 35.36% Alliance Bernstein VPS Small Cap Value Portfolio - Class A 2003 ............................. 0.00% 28,635 13.796395 395,060 0.13% 37.96% 5/1/03 Alliance VPS Growth & Income Portfolio - Class A 2003 ............................. 0.00% 145,925 13.282209 1,938,206 0.51% 32.50% American Century VP Income & Growth Fund - Class I 2003 ............................. 0.00% 1,520,999 12.792293 19,457,065 1.28% 29.35% 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% American Century VP Inflation Protection Fund - Class II 2003 ............................. 0.00% 108,990 10.324182 1,125,233 1.85% 3.24% 4/30/03 American Century VP International Fund - Class I 2003 ............................. 0.00% 1,660,633 11.378318 18,895,210 0.73% 24.51% 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% American Century VP Ultra Fund - Class I 2003 ............................. 0.00% 208,689 10.039885 2,095,214 0.00% 24.90% 2002 ............................. 0.00% 75,002 8.038471 602,901 0.66% -19.62% 5/1/02 American Century VP Value Fund - Class I 2003 ............................. 0.00% 2,467,117 15.608555 38,508,131 1.04% 28.96% 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% Comstock GVIT Value Fund - Class I 2003 ............................. 0.00% 432,461 10.538646 4,557,553 1.34% 31.43% 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% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2003 ............................. 0.00% 58,125 9.794203 569,288 0.00% 47.66% 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%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------------- Credit Suisse Trust - International Focus Portfolio 2003 ............................. 0.00% 152,971 $ 9.924331 $ 1,518,135 0.49% 33.09% 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% Credit Suisse Trust - Large Cap Value Portfolio 2003 ............................. 0.00% 114,258 12.606777 1,440,425 0.76% 25.16% 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% Dreyfus GVIT International Value Fund - Class I 2003 ............................. 0.00% 23,901 13.838062 330,744 0.00% 38.38% 5/1/03 Dreyfus GVIT Mid Cap Index Fund - Class I 2003 ............................. 0.00% 1,562,296 17.375180 27,145,174 0.50% 34.65% 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% 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 2003 ............................. 0.00% 440,723 10.574853 4,660,581 0.27% 37.78% 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 2003 ............................. 0.00% 1,330,170 10.379305 13,806,240 0.11% 26.00% 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% Dreyfus Stock Index Fund 2003 ............................. 0.00% 12,939,837 12.277012 158,862,534 1.54% 28.36% 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% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2003 ............................. 0.00% 1,185,642 13.196450 15,646,265 1.18% 21.17% 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% Dreyfus VIF - Developing Leaders Portfolio - Initial Shares 2003 ............................. 0.00% 15,972 12.900917 206,053 0.11% 29.01% 5/1/03 Federated American Leaders Fund II - Primary Shares 2003 ............................. 0.00% 12,199 12.598945 153,695 0.00% 25.99% 5/1/03 Federated Capital Appreciation Fund II - Primary Shares 2003 ............................. 0.00% 8,379 12.052976 100,992 0.00% 20.53% 5/1/03 Federated GVIT High Income Bond Fund - Class I 2003 ............................. 0.00% 1,164,352 13.171585 15,336,361 7.99% 22.27% 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%
(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 Quality Bond Fund II - Primary Shares 2003 ............................. 0.00% 2,262,363 $13.467590 $30,468,577 3.30% 4.65% 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 2003 ............................. 0.00% 3,691,492 13.167905 48,609,216 1.66% 30.22% 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% Fidelity(R) VIP - Growth Portfolio: Service Class 2003 ............................. 0.00% 4,622,588 12.976175 59,983,511 0.18% 32.78% 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% Fidelity(R) VIP - High Income Portfolio: Service Class 2003 ............................. 0.00% 1,549,745 9.265750 14,359,550 6.36% 26.97% 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% Fidelity(R) VIP - Overseas Portfolio: Service Class 2003 ............................. 0.00% 1,414,346 11.651219 16,478,855 0.63% 43.20% 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% Fidelity(R) VIP II - Contrafund Portfolio: Service Class 2003 ............................. 0.00% 3,745,714 15.331836 57,428,673 0.30% 28.35% 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% Fidelity(R) VIP II - Investment Grade Bond Portfolio: Service Class 2003 ............................ 0.00% 67,767 10.217718 692,424 0.00% 2.18% 5/1/03 Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class 2003 ............................. 0.00% 1,245,460 9.306474 11,590,841 0.59% 29.66% 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% Fidelity(R) VIP III - Mid Cap Portfolio: Service Class 2003 ............................. 0.00% 99,682 14.085331 1,404,054 0.00% 40.85% 5/1/03 Fidelity(R) VIP III - Value Strategies Portfolio: Service Class 2003 ............................. 0 00% 284,603 11.849148 3,372,303 0.00% 57.79% 2002 ............................. 0.00% 19,541 7.509507 146,743 0.00% -24.90% 5/1/02 Franklin Templeton VIP - Franklin Rising Dividends Securities Fund - Class I 2003 ............................. 0.00% 220,019 12.306508 2,707,666 0.48% 23.07% 5/1/03 Franklin Templeton VIP - Franklin Small Cap Value Securities Fund - Class I 2003 ............................. 0.00% 47,449 13.357313 633,791 0.00% 33.57% 5/1/03 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class I 2003 ............................. 0.00% 92,411 13.269107 1,226,211 0.42% 32.69% 5/1/03
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------------- Gartmore GVIT Emerging Markets Fund - Class I 2003 ............................. 0.00% 343,512 $11.573140 $ 3,975,512 0.61% 65.26% 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 2003 ............................. 0.00% 137,222 12.255125 1,681,673 1.08% 41.45% 2002 ............................. 0.00% 14,069 8.663891 121,892 0.02% -13.36% 5/1/02 Gartmore GVIT Global Health Sciences Fund - Class I 2003 ............................. 0.00% 170,154 11.400451 1,939,832 0.00% 36.69% 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 2003 ............................. 0.00% 1,041,511 3.061527 3,188,614 0.00% 55.23% 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 2003 ............................. 0.00% 50,633 10.772327 545,435 1.02% 24.05% 2002 ............................. 0.00% 8,397 8.683837 72,918 0.61% -13.16% 5/1/02 Gartmore GVIT Government Bond Fund - Class I 2003 ............................. 0.00% 3,340,824 14.531815 48,548,236 3.25% 2.00% 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% Gartmore GVIT Growth Fund - Class I 2003 ............................. 0.00% 2,002,653 6.770126 13,558,213 0.02% 32.74% 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% Gartmore GVIT ID Aggressive Fund 2003 ............................. 0.00% 539,178 10.986753 5,923,816 1.57% 31.87% 2002 ............................. 0.00% 154,196 8.331709 1,284,716 0.86% -16.68% 1/25/02 Gartmore GVIT ID Conservative Fund 2003 ............................. 0.00% 430,237 10.845040 4,665,937 2.59% 7.91% 2002 ............................. 0.00% 202,573 10.050418 2,035,943 2.18% 0.50% 1/25/02 Gartmore GVIT ID Moderate Fund 2003 ............................. 0.00% 1,419,724 10.972970 15,578,589 2.05% 20.05% 2002 ............................. 0.00% 398,104 9.140249 3,638,770 1.66% -8.60% 1/25/02 Gartmore GVIT ID Moderately Aggressive Fund 2003 ............................. 0.00% 1,386,608 11.002361 15,255,962 1.61% 26.64% 2002 ............................. 0.00% 375,973 8.687687 3,266,336 1.05% -13.12% 1/25/02 Gartmore GVIT ID Moderately Conservative Fund 2003 ............................. 0.00% 794,151 10.963279 8,706,499 2.33% 13.70% 2002 ............................. 0.00% 418,980 9.642427 4,039,984 1.99% -3.58% 1/25/02 Gartmore GVIT International Growth Fund - Class I 2003 ............................. 0.00% 195,693 6.793220 1,329,386 0.00% 35.62% 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 2003 ............................. 0.00% 10,900,245 12.348118 134,597,511 0.63% 0.63% 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%
(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 Nationwide(R)Leaders Fund - Class I 2003.............................. 0.00% 21,594 $10.598061 $ 228,855 0.15% 25.38% 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 2003.............................. 0.00% 99,848 10.495857 1,047,990 0.04% 38.81% 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% Gartmore GVIT Small Cap Growth Fund - Class I 2003.............................. 0.00% 890,100 13.725736 12,217,278 0.00% 34.26% 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 Value Fund - Class I 2003.............................. 0.00% 2,161,994 20.194975 43,661,415 0.00% 56.85% 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% Gartmore GVIT Small Company Fund - Class I 2003.............................. 0.00% 1,696,669 17.229813 29,233,290 0.00% 41.01% 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% Gartmore GVIT Total Return Fund - Class I 2003.............................. 0.00% 3,352,137 11.485510 38,501,003 0.59% 27.51% 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% Gartmore GVIT U.S. Growth Leaders Fund - Class I 2003.............................. 0.00% 242,970 12.515174 3,040,812 0.00% 52.14% 2002.............................. 0.00% 48,858 8.226323 401,922 0.00% -17.74% 5/1/02 Gartmore GVIT Worldwide Leaders Fund - Class I 2003.............................. 0.00% 280,311 10.583316 2,966,620 0.00% 36.06% 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% GVIT Small Cap Growth Fund - Class II 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 J. P. Morgan GVIT Balanced Fund - Class I 2003.............................. 0.00% 1,222,571 10.864458 13,282,571 1.76% 18.41% 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% Janus AS - Balanced Portfolio - Service Shares 2003.............................. 0.00% 60,397 11.425728 690,080 2.34% 13.72% Janus AS - Capital Appreciation Portfolio - Service Shares 2003.............................. 0.00% 3,484,342 6.508092 22,676,418 0.25% 20.23% 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
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------------- Janus AS - Global Technology Portfolio - Service Shares 2003.............................. 0.00% 3,237,773 $ 3.569969 $11,558,749 0.00% 46.47% 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 2003.............................. 0.00% 3,013,609 6.327527 19,068,692 1.02% 34.53% 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 Janus AS - Risk-Managed Large Cap Core Portfolio - Service Shares 2003.............................. 0.00% 3,278 12.302260 40,327 0.30% 23.02% 5/1/03 MAS GVIT Multi Sector Bond Fund - Class I 2003.............................. 0.00% 589,360 13.786437 8,125,175 5.42% 12.12% 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% MFS VIT - MFS Investors Growth Stock Series - Initial Class 2003.............................. 0.00% 38,925 11.597867 451,447 0.00% 15.98% 5/1/03 MFS VIT - MFS Value Series - Initial Class 2003.............................. 0.00% 21,683 12.367820 268,171 0.00% 23.68% 5/1/03 Neuberger Berman AMT - Fasciano Portfolio - S Class 2003.............................. 0.00% 26,989 12.595173 339,931 0.00% 25.06% Neuberger Berman AMT - Guardian Portfolio 2003.............................. 0.00% 601,395 14.608014 8,785,187 0.89% 31.76% 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 0.21% 14.93% Neuberger Berman AMT - Limited Maturity Bond Portfolio 2003.............................. 0.00% 116,918 10.100257 1,180,902 12.48% 1.00% 5/1/03 Neuberger Berman AMT - Mid-Cap Growth Portfolio 2003.............................. 0.00% 1,575,959 13.526477 21,317,173 0.00% 28.07% 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% Neuberger Berman AMT - Partners Portfolio 2003.............................. 0.00% 883,657 11.219837 9,914,488 0.00% 35.09% 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% Neuberger Berman AMT - Socially Responsive Portfolio 2003.............................. 0.00% 10,340 12.374746 127,955 0.00% 23.75% 5/1/03 Oppenheimer Aggressive Growth Fund/VA - Initial Class 2003.............................. 0.00% 2,289,693 11.413972 26,134,492 0.00% 25.59% 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% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2003.............................. 0.00% 2,916,468 14.673413 42,794,539 0.38% 30.94% 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%
(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*** -------- --------- ---------- -------------- ---------- --------------- Oppenheimer Global Securities Fund/VA - Initial Class 2003.............................. 0.00% 1,978,401 $ 9.402230 $18,601,381 0.73% 43.02% 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 High Income Fund/VA - Initial Class 2003.............................. 0.00% 137,738 11.181817 1,540,161 0.00% 11.82% 5/1/03 Oppenheimer Main Street(R) Growth & Income Fund/VA - Initial Class 2003.............................. 0.00% 2,733,213 10.746526 29,372,545 0.90% 26.72% 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% Oppenheimer Main Street(R) Small Cap Fund/VA - Initial Class 2003.............................. 0.00% 81,527 13.869971 1,130,777 0.00% 38.70% 5/1/03 Putnam VT Growth & Income Fund - IB Shares 2003.............................. 0.00% 21,892 12.425216 272,013 0.00% 24.25% 5/1/03 Putnam VT International Equity Fund - IB Shares 2003.............................. 0.00% 58,343 12.798803 746,721 0.00% 27.99% 5/1/03 Putnam VT Voyager Fund - IB Shares 2003.............................. 0.00% 11,366 11.853879 134,731 0.00% 18.54% 5/1/03 Strong GVIT Mid Cap Growth Fund - Class I 2003.............................. 0.00% 1,048,110 11.020618 11,550,820 0.00% 40.13% 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% Strong Opportunity Fund II, Inc. 2003.............................. 0.00% 1,535,336 9.536128 14,641,161 0.08% 37.01% 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 Turner GVIT Growth Focus Fund - Class I 2003.............................. 0.00% 215,089 3.336873 717,725 0.00% 50.96% 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 2003.............................. 0.00% 596,383 11.274461 6,723,897 0.11% 54.19% 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% Van Eck WIT - Worldwide Hard Assets Fund 2003.............................. 0.00% 345,678 11.747435 4,060,830 0.41% 45.08% 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% Van Kampen UIF - Core Plus Fixed Income Portfolio - Class A 2003.............................. 0.00% 12,470 10.233765 127,615 0.05% 2.34% 5/1/03 Van Kampen UIF - Emerging Markets Debt Portfolio 2003.............................. 0.00% 310,596 15.869838 4,929,108 0.00% 27.86% 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%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Van Kampen UIF - Mid Cap Growth Portfolio 2003.............................. 0.00% 308,361 $ 5.994500 $ 1,848,470 0.00% 41.76% 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 2003.............................. 0.00% 1,225,582 16.388129 20,084,996 0.00% 37.51% 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% The BEST of AMERICA(R)Corporate Variable Universal Life Series(SM) Reduced Fee Tier ((0.10%) AIM VIF Basic Value Fund - Series I 2003........................ 0.10% 173 13.147350 2,274 0.06% 33.49% AIM VIF Capital Development Fund - Series I 2003.............................. 0.10% 1,045 13.277382 13,875 0.00% 35.22% Alliance VPS Growth & Income Portfolio - Class A 2003.............................. 0.10% 8,268 13.264628 109,672 0.51% 32.37% American Century VP Income & Growth Fund - Class I 2003.............................. 0.10% 44,282 9.802103 434,057 1.28% 29.22% 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 2003.............................. 0.10% 860,133 9.303615 8,002,346 0.73% 24.39% 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 American Century VP Ultra Fund - Class I 2003.............................. 0.10% 865 10.023142 8,670 0.00% 24.77% 2002.............................. 0.10% 3,004 8.033091 24,131 0.66% -19.67% 5/1/02 American Century VP Value Fund - Class I 2003.............................. 0.10% 68,891 15.388111 1,060,102 1.04% 28.83% 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 Baron Capital Asset Trust 2003.............................. 0.10% 13,790 12.603456 173,802 0.00% 29.88% Calvert Social Equity Portfolio 2003.............................. 0.10% 1,026 12.560357 12,887 0.01% 22.05% Comstock GVIT Value Fund - Class I 2003.............................. 0.10% 233,799 8.859580 2,071,361 1.34% 31.30% 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 2003.............................. 0.10% 9,715 11.248621 109,280 0.76% 25.04% 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 2003.............................. 0.10% 216,768 15.847726 3,435,280 0.50% 34.52% 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%
(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*** -------- --------- ----------- -------------- ---------- --------- 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 - Mid Cap Stock Portfolio - Initial Shares 2003.............................. 0.10% 98,265 13.128294 1,290,052 1.02% 31.59% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2003.............................. 0.10% 220,855 10.557229 2,331,617 0.27% 37.64% 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 2003.............................. 0.10% 85,500 7.531118 643,911 0.11% 25.88% 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 2003.............................. 0.10% 1,165,447 9.037627 10,532,875 1.54% 28.23% 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 2003.............................. 0.10% 55,181 9.714448 536,053 1.18% 21.05% 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 2003.............................. 0.10% 64,009 12.854570 822,808 2.67% 36.22% 2002.............................. 0.10% 23,131 9.436677 218,280 0.37% -5.63% 9/3/02 Federated GVIT High Income Bond Fund - Class I 2003.............................. 0.10% 22,729 11.959792 271,834 7.99% 22.15% 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 2003.............................. 0.10% 711,865 13.404948 9,542,513 3.30% 4.54% 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 2003.............................. 0.10% 318,394 11.496883 3,660,539 1.66% 30.09% 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 2003.............................. 0.10% 1,108,591 8.477377 9,397,944 0.18% 32.65% 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 2003.............................. 0.10% 674,902 9.188481 6,201,324 6.36% 26.84% 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%
(Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ----------- -------------- ---------- --------- Fidelity(R) VIP - Overseas Portfolio:Service Class 2003 ............................. 0.10% 100,484 $ 9.962776 $ 1,001,100 0.63% 43.06% 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 2003 ............................. 0.10% 200,777 11.086093 2,225,832 0.30% 28.22% 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 2003 ............................. 0.10% 17,795 7.538466 134,147 0.59% 29.53% 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% Fidelity(R) VIP III - Value Strategies Portfolio:Service Class 2003 ............................. 0.10% 9,280 11.829409 109,777 0.00% 57.63% Franklin Templeton VIPT - Templeton Foreign Securities Fund -Class 2 2003 ............................. 0.10% 172,783 12.525565 2,164,205 1.96% 32.08% Gartmore GVIT Emerging Markets Fund - Class I 2003 ............................. 0.10% 47,949 11.535602 553,121 0.61% 65.10% 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 2003 ............................. 0.10% 4,317 12.234704 52,817 1.08% 41.31% 2002 ............................. 0.10% 1,597 8.658094 13,827 0.02% -13.42% 5/1/02 Gartmore GVIT Global Health Sciences Fund - Class I 2003 ............................. 0.10% 8,967 11.381435 102,057 0.00% 36.56% Gartmore GVIT Global Technology and Communications Fund - Class I 2003 ............................. 0.10% 111,866 3.051579 341,368 0.00% 55.08% 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% Gartmore GVIT Global Utilities Fund - Class I 2003 ............................. 0.10% 1,184 10.754365 12,733 1.02% 23.93% 2002 ............................. 0.10% 200 8.678027 1,736 0.61% -13.22% 5/1/02 Gartmore GVIT Government Bond Fund - Class I 2003 ............................. 0.10% 112,900 13.460973 1,519,744 3.25% 1.90% 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 2003 ............................. 0.10% 27,011 5.134813 138,696 0.02% 32.61% 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 2003 ............................. 0.10% 23,514 10.965564 257,844 1.57% 31.74% 2002 ............................. 0.10% 4,815 8.323942 40,080 0.86% -16.76% 1/25/02 Gartmore GVIT ID Conservative Fund 2003 ............................. 0.10% 13,104 10.824110 141,839 2.59% 7.80% Gartmore GVIT ID Moderate Fund 2003 ............................. 0.10% 1,913 10.951794 20,951 2.05% 19.93% Gartmore GVIT ID Moderately Aggressive Fund 2003 ............................. 0.10% 6,422 10.981133 70,521 1.61% 26.52% 2002 ............................. 0.10% 6,436 8.679579 55,862 1.05% -13.20% 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 2003 ............................. 0.10% 2,011 $10.942135 $ 22,005 2.33% 13.58% Gartmore GVIT International Growth Fund - Class I 2003 ............................. 0.10% 40,966 6.771174 277,388 0.00% 35.49% 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 2003 ............................. 0.10% 8,030,895 10.081195 80,961,019 0.70% 0.61% 2002 ............................. 0.10% 11,193,504 10.020530 112,164,843 0.28% 0.21% 10/21/02 Gartmore GVIT Nationwide(R) Leaders Fund - Class I 2003 ............................. 0.10% 8,556 10.580391 90,526 0.15% 25.26% Gartmore GVIT Nationwide(R) Strategic Value Fund - Class I 2003 ............................. 0.10% 6,148 10.638965 65,408 0.04% 38.67% 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 2003 ............................. 0.10% 81,334 13.661888 1,111,176 0.00% 34.13% 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 2003 ............................. 0.10% 270,768 21.773115 5,895,463 0.00% 56.70% 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% Gartmore GVIT Small Company Fund - Class I 2003 ............................. 0.10% 334,150 17.478961 5,840,595 0.00% 40.87% 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 2003 ............................. 0.10% 19,180,432 9.493288 182,085,365 0.59% 27.38% 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 U.S. Growth Leaders Fund - Class I 2003 ............................. 0.10% 36,540 12.494332 456,543 0.00% 51.98% Gartmore GVIT Worldwide Leaders Fund - Class I 2003 ............................. 0.10% 11,041 8.565807 94,575 0.00% 35.92% 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 Goldman Sachs VIT Mid Cap Value Fund 2003 ............................. 0.10% 855 12.680880 10,842 1.72% 28.26% J. P. Morgan GVIT Balanced Fund - Class I 2003 ............................. 0.10% 19,620 9.907971 194,394 1.76% 18.30% 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
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------- Janus AS - Balanced Portfolio - Service Shares 2003 ............................. 0.10% 8,186 $11.410593 $ 93,407 2.34% 13.61% Janus AS - Capital Appreciation Portfolio - Service Shares 2003 ............................. 0.10% 178,232 6.482555 1,155,399 0.25% 20.11% 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 2003 ............................. 0.10% 272,134 3.555943 967,693 0.00% 46.33% 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 2003 ............................. 0.10% 176,234 6.302712 1,110,752 1.02% 34.40% 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 Multi Sector Bond Fund - Class I 2003 ............................. 0.10% 3,251 13.400762 43,566 5.42% 12.00% 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 - Fasciano Portfolio - S Class 2003 ............................. 0.10% 1,074 12.578474 13,509 0.00% 24.94% Neuberger Berman AMT - Guardian Portfolio 2003 ............................. 0.10% 21,062 10.538218 221,956 0.89% 31.63% 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 2003 ............................. 0.10% 392,036 9.884865 3,875,223 0.00% 27.94% 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 Neuberger Berman AMT - Partners Portfolio 2003 ............................. 0.10% 6,882 10.476169 72,097 0.00% 34.95% 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% One Group(R) IT Mid Cap Value Portfolio 2003 ............................. 0.10% 5,997 13.170159 78,981 0.57% 32.62% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2003 ............................. 0.10% 588,192 9.150815 5,382,436 0.00% 25.46% 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 2003 ............................. 0.10% 882,196 11.008811 9,711,929 0.38% 30.81% 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 2003 ............................. 0.10% 441,202 9.367798 4,133,091 0.73% 42.88% 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
(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*** -------- ---------- ---------- -------------- ---------- --------- Oppenheimer Main Street(R) Growth & Income Fund/VA - Initial Class 2003 ............................. 0.10% 236,533 $ 9.853529 $2,330,685 0.90% 26.59% 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% PIMCO VIT Low Duration Portfolio - Administrative Shares 2003 ............................. 0.10% 456,933 10.421178 4,761,780 1.22% 2.24% PIMCO VIT Real Return Portfolio - Administrative Shares 2003 ............................. 0.10% 24,527 11.276054 276,568 2.35% 8.75% PIMCO VIT Total Return Portfolio - Administrative Shares 2003 ............................. 0.10% 4,202 10.847595 45,582 2.71% 4.94% Pioneer High Yield VCT Portfolio - Class I Shares 2003 ............................. 0.10% 82,218 13.752414 1,130,696 5.84% 32.65% Royce Capital Fund - Micro Cap 2003 ............................. 0.10% 76,384 15.072020 1,151,261 0.00% 49.01% Strong GVIT Mid Cap Growth Fund - Class I 2003 ............................. 0.10% 121,377 8.529042 1,035,230 0.00% 39.99% 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. 2003 ............................. 0.10% 223,707 9.501191 2,125,483 0.08% 36.87% 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 2003 ............................. 0.10% 19,960 12.663048 252,754 1.80% 25.05% 2002 ............................. 0.10% 512 10.126777 5,185 0.77% 1.27% 9/3/02 T. Rowe Price Mid Cap Growth Portfolio - II 2003 ............................. 0.10% 168,799 14.145535 2,387,752 0.00% 37.95% 2002 ............................. 0.10% 844 10.253796 8,654 0.00% 2.54% 9/3/02 Turner GVIT Growth Focus Fund - Class I 2003 ............................. 0.10% 32,705 3.326027 108,778 0.00% 50.81% 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 2003 ............................. 0.10% 26,838 15.353127 412,047 0.11% 54.03% 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% Van Eck WIT - Worldwide Hard Assets Fund 2003 ............................. 0.10% 7,570 16.424776 124,336 0.41% 44.93% 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 2003 ............................. 0.10% 11,686 20.632384 241,110 0.00% 27.74% 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 2003 ............................. 0.10% 22,063 5.972526 131,772 0.00% 41.62% 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
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Van Kampen UIF - U.S. Real Estate Portfolio 2003 .......................... 0.10% 189,968 $19.365338 $ 3,678,795 0.00% 37.37% 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 (0.20%) AIM VIF Basic Value Fund - Series I 2003 .......................... 0.20% 4,973 13.129953 65,295 0.06% 33.36% AIM VIF Capital Development Fund - Series I 2003 .......................... 0.20% 288 13.259800 3,819 0.00% 35.09% Alliance VPS Growth & Income Portfolio - Class A 2003 .......................... 0.20% 5,515 13.247066 73,058 0.51% 32.24% American Century VP Income & Growth Fund - Class I 2003 .......................... 0.20% 166,512 9.621502 1,602,096 1.28% 29.09% American Century VP International Fund - Class I 2003 .......................... 0.20% 384,244 7.337502 2,819,391 0.73% 24.26% American Century VP Ultra Fund - Class I 2003 .......................... 0.20% 1,924 10.006426 19,252 0.00% 24.65% American Century VP Value Fund - Class I 2003 .......................... 0.20% 190,981 13.355894 2,550,722 1.04% 28.70% Baron Capital Asset Trust 2003 .......................... 0.20% 276,028 12.586755 3,474,297 0.00% 29.75% Comstock GVIT Value Fund - Class I 2003 .......................... 0.20% 7,421 8.794319 65,263 1.34% 31.17% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2003 .......................... 0.20% 7,043 7.096703 49,982 0.00% 47.36% Credit Suisse Trust - International Focus Portfolio 2003 .......................... 0.20% 9,647 8.456964 81,584 0.49% 32.82% Credit Suisse Trust - Large Cap Value Portfolio 2003 .......................... 0.20% 20,469 10.326271 211,368 0.76% 24.91% Dreyfus GVIT Mid Cap Index Fund - Class I 2003 .......................... 0.20% 280,100 12.010005 3,364,002 0.50% 34.38% Dreyfus IP - Mid Cap Stock Portfolio - Initial Shares 2003 .......................... 0.20% 8,456 13.110902 110,866 1.02% 31.46% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2003 .......................... 0.20% 13,371 10.539624 140,925 0.27% 37.50% Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares 2003 .......................... 0.20% 15,093 6.898125 104,113 0.11% 25.75% Dreyfus Stock Index Fund 2003 .......................... 0.20% 3,957,858 8.740894 34,595,217 1.54% 28.11% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2003 .......................... 0.20% 265,908 9.095533 2,418,575 1.18% 20.93% Dreyfus VIF - International Value Portfolio - Initial Shares 2003 .......................... 0.20% 611,687 12.837546 7,852,560 2.67% 36.08% Federated GVIT High Income Bond Fund - Class I 2003 .......................... 0.20% 777,021 13.465993 10,463,359 7.99% 22.03% Federated Quality Bond Fund II - Primary Shares 2003 .......................... 0.20% 705,554 13.342573 9,413,906 3.30% 4.44% Fidelity(R) VIP - Equity-Income Portfolio: Service Class 2003 .......................... 0.20% 141,957 10.629864 1,508,984 1.66% 29.96% Fidelity(R) VIP - Growth Portfolio: Service Class 2003 .......................... 0.20% 595,465 7.595988 4,523,145 0.18% 32.52% Fidelity(R) VIP - High Income Portfolio: Service Class 2003 .......................... 0.20% 87,435 11.765514 1,028,718 6.36% 26.72%
(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 - Overseas Portfolio: Service Class 2003 ............................. 0.20% 315,760 $ 8.947944 $ 2,825,403 0.63% 42.92% Fidelity(R) VIP II - Contrafund Portfolio: Service Class 2003 ............................. 0.20% 143,092 10.466376 1,497,655 0.30% 28.10% Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class 2003 ............................. 0.20% 13,277 8.678086 115,219 0.59% 29.40% Fidelity(R) VIP III - Value Strategies Portfolio: Service Class 2003 ............................. 0.20% 973 11.809676 11,491 0.00% 57.47% Franklin Templeton VIPT - Templeton Foreign Securities Fund - Class 2 2003 ............................. 0.20% 155,351 12.508977 1,943,282 1.96% 31.95% Gartmore GVIT Emerging Markets Fund - Class I 2003 ............................. 0.20% 21,189 11.498175 243,635 0.61% 64.93% Gartmore GVIT Global Financial Services Fund - Class I 2003 ............................. 0.20% 8,215 12.214302 100,340 1.08% 41.17% Gartmore GVIT Global Health Sciences Fund - Class I 2003 ............................. 0.20% 4,437 11.362461 50,415 0.00% 36.42% Gartmore GVIT Global Technology and Communications Fund - Class I 2003 ............................. 0.20% 78,739 3.041648 239,496 0.00% 54.92% Gartmore GVIT Global Utilities Fund - Class I 2003 ............................. 0.20% 12,612 10.736432 135,408 1.02% 23.80% Gartmore GVIT Government Bond Fund - Class I 2003 ............................. 0.20% 1,095,538 12.295487 13,470,173 3.25% 1.80% Gartmore GVIT Growth Fund - Class I 2003 ............................. 0.20% 40,423 6.605859 267,029 0.02% 32.47% Gartmore GVIT ID Aggressive Fund 2003 ............................. 0.20% 2,814 10.944415 30,798 1.57% 31.60% Gartmore GVIT ID Conservative Fund 2003 ............................. 0.20% 1,756 10.803228 18,970 2.59% 7.69% Gartmore GVIT ID Moderate Fund 2003 ............................. 0.20% 4,545 10.930659 49,680 2.05% 19.81% Gartmore GVIT ID Moderately Aggressive Fund 2003 ............................. 0.20% 5,607 10.959933 61,452 1.61% 26.39% Gartmore GVIT ID Moderately Conservative Fund 2003 ............................. 0.20% 3,486 10.921034 38,071 2.33% 13.47% Gartmore GVIT International Growth Fund - Class I 2003 ............................. 0.20% 8,703 6.749218 58,738 0.00% 35.35% Gartmore GVIT Money Market Fund - Class I 2003 ............................. 0.20% 221,572 10.540982 2,335,586 0.63% 0.42% Gartmore GVIT Money Market Fund - Class V 2003 ............................. 0.20% 6,564,517 10.069143 66,099,060 0.70% 0.50% Gartmore GVIT Nationwide(R) Leaders Fund - Class I 2003 ............................. 0.20% 1,086 10.562758 11,471 0.15% 25.13% Gartmore GVIT Nationwide(R) Strategic Value Fund - Class I 2003 ............................. 0.20% 9,101 10.583982 96,325 0.04% 38.53% Gartmore GVIT Small Cap Growth Fund - Class I 2003 ............................. 0.20% 108,065 13.598245 1,469,494 0.00% 34.00% Gartmore GVIT Small Cap Value Fund - Class I 2003 ............................. 0.20% 234,794 15.661984 3,677,340 0.00% 56.54% Gartmore GVIT Small Company Fund - Class I 2003 ............................. 0.20% 126,604 11.795728 1,493,386 0.00% 40.73% Gartmore GVIT Total Return Fund - Class I 2003 ............................. 0.20% 20,659 9.292141 191,966 0.59% 27.26%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Gartmore GVIT U.S. Growth Leaders Fund - Class I 2003 ............................. 0.20% 5,224 $12.473517 $ 65,162 0.00% 51.83% Gartmore GVIT Worldwide Leaders Fund - Class I 2003 ............................. 0.20% 3,219 8.453981 27,213 0.00% 35.79% Goldman Sachs VIT Mid Cap Value Fund 2003 ............................. 0.20% 528,186 12.664093 6,688,997 1.72% 28.13% J. P. Morgan GVIT Balanced Fund - Class I 2003 ............................. 0.20% 104,019 10.067605 1,047,222 1.76% 18.18% Janus AS - Balanced Portfolio - Service Shares 2003 ............................. 0.20% 5,017 11.395477 57,171 2.34% 13.49% Janus AS - Capital Appreciation Portfolio - Service Shares 2003 ............................. 0.20% 262,941 6.457142 1,697,847 0.25% 19.99% Janus AS - Global Technology Portfolio - Service Shares 2003 ............................. 0.20% 102,131 3.541982 361,746 0.00% 46.18% Janus AS - International Growth Portfolio - Service Shares 2003 ............................. 0.20% 245,144 6.277993 1,539,012 1.02% 34.26% MAS GVIT Multi Sector Bond Fund - Class I 2003 ............................. 0.20% 9,884 12.870615 127,213 5.42% 11.89% Neuberger Berman AMT - Fasciano Portfolio - S Class 2003 ............................. 0.20% 1,829 12.561832 22,976 0.00% 24.81% Neuberger Berman AMT - Guardian Portfolio 2003 ............................. 0.20% 30,298 9.787595 296,545 0.89% 31.50% Neuberger Berman AMT - Mid-Cap Growth Portfolio 2003 ............................. 0.20% 274,225 7.237810 1,984,788 0.00% 27.81% Neuberger Berman AMT - Partners Portfolio 2003 ............................. 0.20% 14,991 10.479833 157,103 0.00% 34.82% One Group(R) IT Mid Cap Growth Portfolio 2003 ............................. 0.20% 4,483 12.785745 57,318 0.00% 26.89% One Group(R) IT Mid Cap Value Portfolio 2003 ............................. 0.20% 7,236 13.153260 95,177 0.57% 32.49% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2003 ............................. 0.20% 163,694 6.360255 1,041,136 0.00% 25.34% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2003 ............................. 0.20% 710,846 8.592296 6,107,799 0.38% 30.68% Oppenheimer Global Securities Fund/VA - Initial Class 2003 ............................. 0.20% 78,177 9.333505 729,665 0.73% 42.73% Oppenheimer Main Street(R) Growth & Income Fund/VA - Initial Class 2003 ............................. 0.20% 50,314 9.386344 472,265 0.90% 26.47% PIMCO VIT Low Duration Portfolio - Administrative Shares 2003 ............................. 0.20% 1,032,781 10.407346 10,748,509 1.22% 2.14% PIMCO VIT Real Return Portfolio - Administrative Shares 2003 ............................. 0.20% 41,728 11.260965 469,898 2.35% 8.64% PIMCO VIT Total Return Portfolio - Administrative Shares 2003 ............................. 0.20% 805,938 10.833078 8,730,789 2.71% 4.83% Pioneer High Yield VCT Portfolio - Class I Shares 2003 ............................. 0.20% 38,729 13.734162 531,910 5.84% 32.52% Royce Capital Fund - Micro Cap 2003 ............................. 0.20% 58,726 15.052067 883,948 0.00% 48.87% Strong GVIT Mid Cap Growth Fund - Class I 2003 ............................. 0.20% 155,794 6.935054 1,080,440 0.00% 39.85% Strong Opportunity Fund II, Inc. 2003 ............................. 0.20% 202,631 9.466409 1,918,188 0.08% 36.73% T. Rowe Price Equity Income Portfolio - II 2003 ............................. 0.20% 546,267 12.646299 6,908,256 1.80% 24.92%
(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*** -------- ------- ---------- -------------- ---------- ---------- T. Rowe Price Mid Cap Growth Portfolio - II 2003.............................. 0.20% 473,916 $14.126799 $6,694,916 0.00% 37.82% Turner GVIT Growth Focus Fund - Class I 2003.............................. 0.20% 17,434 3.315211 57,797 0.00% 50.66% Van Eck WIT - Worldwide Emerging Markets Fund 2003.............................. 0.20% 6,811 14.249147 97,051 0.11% 53.88% Van Eck WIT - Worldwide Hard Assets Fund 2003.............................. 0.20% 17,418 14.048159 244,691 0.41% 44.79% Van Kampen UIF - Emerging Markets Debt Portfolio 2003.............................. 0.20% 3,595 15.787831 56,757 0.00% 27.61% Van Kampen UIF - Mid Cap Growth Portfolio 2003.............................. 0.20% 70,714 5.950642 420,794 0.00% 41.48% Van Kampen UIF - U.S.Real Estate Portfolio 2003.............................. 0.20% 40,136 15.786980 633,626 0.00% 37.24% The BEST of AMERICA(R)Corporate Variable Universal Life Series(SM) Reduced Fee Tier (0.25%) AIM VIF Basic Value Fund - Series I 2003.............................. 0.25% 1,947 13.121262 25,547 0.06% 33.29% AIM VIF Capital Development Fund - Series I 2003.............................. 0.25% 2,553 13.251011 33,830 0.00% 35.02% Alliance VPS Growth & Income Portfolio - Class A 2003.............................. 0.25% 278,219 13.238290 3,683,144 0.51% 32.17% American Century VP Income & Growth Fund - Class I 2003.............................. 0.25% 225,657 9.606659 2,167,810 1.28% 29.03% 2002.............................. 0.25% 1,435 7.445299 10,684 1.00% -19.57% American Century VP International Fund - Class I 2003.............................. 0.25% 674,427 7.326221 4,941,001 0.73% 24.20% 2002.............................. 0.25% 49,356 5.898746 291,139 0.78% -20.57% American Century VP Ultra Fund - Class I 2003.............................. 0.25% 138,103 9.998079 1,380,765 0.00% 24.59% American Century VP Value Fund - Class I 2003.............................. 0.25% 248,298 13.335325 3,311,135 1.04% 28.64% 2002.............................. 0.25% 90,011 10.366670 933,114 0.75% -12.84% Baron Capital Asset Trust 2003.............................. 0.25% 17,272 12.578424 217,255 0.00% 29.69% Comstock GVIT Value Fund - Class I 2003.............................. 0.25% 3,887 8.780739 34,131 1.34% 31.11% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2003.............................. 0.25% 30,888 7.085747 218,865 0.00% 47.29% 2002.............................. 0.25% 1,104 4.810802 5,311 0.00% -34.32% Credit Suisse Trust - International Focus Portfolio 2003.............................. 0.25% 17,161 8.443905 144,906 0.49% 32.76% Credit Suisse Trust - Large Cap Value Portfolio 2003.............................. 0.25% 15,477 10.310367 159,574 0.76% 24.85% 2002.............................. 0.25% 5,253 8.258105 43,380 0.76% -23.29% Dreyfus GVIT Mid Cap Index Fund - Class I 2003.............................. 0.25% 70,843 11.991494 849,513 0.50% 34.31% 2002.............................. 0.25% 1,993 8.927901 17,793 0.45% -15.51% Dreyfus IP - Mid Cap Stock Portfolio - Initial Shares 2003.............................. 0.25% 647 13.102225 8,477 1.02% 31.39% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2003.............................. 0.25% 145,429 10.530847 1,531,491 0.27% 37.44%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Dreyfus Socially Responsible Growth Fund, Inc.- Initial Shares 2003.............................. 0.25% 71,544 $ 6.887482 $ 492,758 0.11% 25.69% 2002.............................. 0.25% 425 5.479795 2,329 0.22% -29.12% Dreyfus Stock Index Fund 2003.............................. 0.25% 4,843,218 8.727408 42,268,740 1.54% 28.04% 2002.............................. 0.25% 529,695 6.815999 3,610,401 1.45% -22.56% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2003.............................. 0.25% 487,461 9.081512 4,426,883 1.18% 20.87% 2002.............................. 0.25% 48,950 7.513649 367,793 1.22% -16.92% Dreyfus VIF - International Value Portfolio - Initial Shares 2003.............................. 0.25% 561,722 12.829044 7,206,356 2.67% 36.02% Federated GVIT High Income Bond Fund - Class I 2003.............................. 0.25% 33,606 13.445225 451,840 7.99% 21.97% 2002.............................. 0.25% 47,160 11.023733 519,879 10.09% 2.97% Federated Quality Bond Fund II - Primary Shares 2003.............................. 0.25% 204,710 13.311504 2,724,998 3.30% 4.38% 2002.............................. 0.25% 55,859 12.752372 712,335 3.20% 9.03% Fidelity(R) VIP - Equity-Income Portfolio:Service Class 2003.............................. 0.25% 374,570 10.613484 3,975,493 1.66% 29.89% 2002.............................. 0.25% 244,789 8.170844 2,000,133 1.50% -17.20% Fidelity(R) VIP - Growth Portfolio:Service Class 2003.............................. 0.25% 585,819 7.584268 4,443,008 0.18% 32.45% 2002.............................. 0.25% 78,608 5.726150 450,121 0.14% -30.37% Fidelity(R) VIP - High Income Portfolio:Service Class 2003.............................. 0.25% 93,070 11.747355 1,093,326 6.36% 26.65% 2002.............................. 0.25% 606 9.275222 5,621 9.18% 3.36% Fidelity(R) VIP - Overseas Portfolio:Service Class 2003.............................. 0.25% 301,169 8.934131 2,690,683 0.63% 42.85% 2002.............................. 0.25% 1,213 6.254343 7,587 0.64% -20.54% Fidelity(R) VIP II - Contrafund Portfolio:Service Class 2003.............................. 0.25% 964,994 10.450250 10,084,429 0.30% 28.03% 2002.............................. 0.25% 7,198 8.162207 58,752 0.69% -9.65% Fidelity(R) VIP III - Growth Opportunities Portfolio:Service Class 2003.............................. 0.25% 197,613 8.664666 1,712,251 0.59% 29.34% 2002.............................. 0.25% 794 6.699267 5,319 0.93% -22.11% Fidelity(R) VIP III - Value Strategies Portfolio:Service Class 2003.............................. 0.25% 15,729 11.799819 185,599 0.00% 57.40% Franklin Templeton VIPT - Templeton Foreign Securities Fund - Class 2 2003.............................. 0.25% 9,405 12.500683 117,569 1.96% 31.88% Gartmore GVIT Emerging Markets Fund - Class I 2003.............................. 0.25% 14,303 11.479519 164,192 0.61% 64.85% Gartmore GVIT Global Financial Services Fund - Class I 2003.............................. 0.25% 958 12.204124 11,692 1.08% 41.10% Gartmore GVIT Global Health Sciences Fund - Class I 2003.............................. 0.25% 9,013 11.352997 102,325 0.00% 36.35% Gartmore GVIT Global Technology and Communications Fund - Class I 2003.............................. 0.25% 118,132 3.036698 358,731 0.00% 54.84% Gartmore GVIT Global Utilities Fund - Class I 2003.............................. 0.25% 1,187 10.727488 12,734 1.02% 23.74% Gartmore GVIT Government Bond Fund - Class I 2003.............................. 0.25% 1,556,780 12.276554 19,111,894 3.25% 1.75% 2002.............................. 0.25% 1,141,119 12.065916 13,768,646 4.66% 10.71% Gartmore GVIT Growth Fund - Class I 2003.............................. 0.25% 76,188 6.595662 502,510 0.02% 32.41% 2002.............................. 0.25% 49,665 4.981328 247,398 0.00% -28.90%
(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 Aggressive Fund 2003.............................. 0.25% 4,309 $10.933839 $ 47,114 1.57% 31.54% Gartmore GVIT ID Conservative Fund 2003.............................. 0.25% 929 10.792806 10,027 2.59% 7.64% Gartmore GVIT ID Moderate Fund 2003.............................. 0.25% 7,829 10.920096 85,493 2.05% 19.75% Gartmore GVIT ID Moderately Aggressive Fund 2003.............................. 0.25% 3,797 10.949354 41,575 1.61% 26.33% Gartmore GVIT ID Moderately Conservative Fund 2003.............................. 0.25% 2,613 10.910488 28,509 2.33% 13.41% Gartmore GVIT International Growth Fund - Class I 2003.............................. 0.25% 4,806 6.738255 32,384 0.00% 35.28% 2002.............................. 0.25% 65 4.980814 324 0.00% -24.29% Gartmore GVIT Money Market Fund - Class I 2003.............................. 0.25% 2,168,315 10.524702 22,820,869 0.63% 0.37% 2002.............................. 0.25% 1,395,229 10.485477 14,629,642 1.51% 0.96% Gartmore GVIT Money Market Fund - Class V 2003.............................. 0.25% 1,814,317 10.063117 18,257,684 0.70% 0.45% 2002.............................. 0.25% 656 10.017601 6,572 0.28% 0.18% 10/21/02 Gartmore GVIT Nationwide(R)Leaders Fund - Class I 2003.............................. 0.25% 1,148 10.553942 12,116 0.15% 25.07% Gartmore GVIT Nationwide(R)Strategic Value Fund - Class I 2003.............................. 0.25% 22,022 10.567653 232,721 0.04% 38.46% 2002.............................. 0.25% 42 7.632212 321 0.03% -25.55% Gartmore GVIT Small Cap Growth Fund - Class I 2003.............................. 0.25% 59,176 13.566592 802,817 0.00% 33.93% 2002.............................. 0.25% 209 10.129586 2,117 0.00% -33.45% Gartmore GVIT Small Cap Value Fund - Class I 2003.............................. 0.25% 258,610 15.637860 4,044,107 0.00% 56.46% 2002.............................. 0.25% 89,722 9.994656 896,741 0.01% -27.34% Gartmore GVIT Small Company Fund - Class I 2003.............................. 0.25% 492,798 11.777552 5,803,954 0.00% 40.66% 2002.............................. 0.25% 98,835 8.373012 827,547 0.00% -17.54% Gartmore GVIT Total Return Fund - Class I 2003.............................. 0.25% 49,376 9.277816 458,101 0.59% 27.19% 2002.............................. 0.25% 588 7.294217 4,289 0.95% -17.56% Gartmore GVIT U.S.Growth Leaders Fund - Class I 2003.............................. 0.25% 33,465 12.463103 417,078 0.00% 51.76% Gartmore GVIT Worldwide Leaders Fund - Class I 2003.............................. 0.25% 34,022 8.440937 287,178 0.00% 35.72% 2002.............................. 0.25% 85 6.219415 529 2.00% -25.58% Goldman Sachs VIT Mid Cap Value Fund 2003.............................. 0.25% 259,089 12.655709 3,278,955 1.72% 28.07% J. P. Morgan GVIT Balanced Fund - Class I 2003.............................. 0.25% 86,171 10.052086 866,198 1.76% 18.12% 2002.............................. 0.25% 1,233 8.510165 10,493 2.28% -12.53% Janus AS - Balanced Portfolio - Service Shares 2003.............................. 0.25% 14,950 11.387925 170,249 2.34% 13.44% Janus AS - Capital Appreciation Portfolio - Service Shares 2003.............................. 0.25% 677,613 6.444456 4,366,847 0.25% 19.93% 2002.............................. 0.25% 318 5.373376 1,709 0.32% -16.14% Janus AS - Global Technology Portfolio - Service Shares 2003.............................. 0.25% 97,833 3.535026 345,842 0.00% 46.11% 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 2003 ............................. 0.25% 92,562 $ 6.265664 $ 579,962 1.02% 34.20% 2002 ............................. 0.25% 905 4.668998 4,225 0.70% -25.94% MAS GVIT Multi Sector Bond Fund - Class I 2003 ............................. 0.25% 515,327 12.850783 6,622,355 5.42% 11.84% 2002 ............................. 0.25% 42,803 11.490701 491,836 4.49% 6.94% Neuberger Berman AMT - Fasciano Portfolio - S Class 2003 ............................. 0.25% 3,926 12.553503 49,285 0.00% 24.75% Neuberger Berman AMT - Guardian Portfolio 2003 ............................. 0.25% 52,239 9.772505 510,506 0.89% 31.43% 2002 ............................. 0.25% 535 7.435383 3,978 0.75% -26.63% Neuberger Berman AMT - Mid-Cap Growth Portfolio 2003 ............................. 0.25% 284,185 7.226636 2,053,702 0.00% 27.75% 2002 ............................. 0.25% 217,507 5.656826 1,230,399 0.00% -29.52% Neuberger Berman AMT - Partners Portfolio 2003 ............................. 0.25% 44,110 10.463664 461,552 0.00% 34.75% 2002 ............................. 0.25% 53,464 7.765195 415,158 0.54% -24.33% One Group(R) IT Mid Cap Growth Portfolio 2003 ............................. 0.25% 6,068 12.777560 77,534 0.00% 26.83% One Group(R) IT Mid Cap Value Portfolio 2003 ............................. 0.25% 1,068 13.144807 14,039 0.57% 32.42% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2003 ............................. 0.25% 809,116 6.350438 5,138,241 0.00% 25.28% 2002 ............................. 0.25% 11,391 5.069121 57,742 0.63% -27.97% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2003 ............................. 0.25% 503,219 8.579039 4,317,135 0.38% 30.62% 2002 ............................. 0.25% 345,299 6.568116 2,267,964 0.57% -27.04% Oppenheimer Global Securities Fund/VA - Initial Class 2003 ............................. 0.25% 162,279 9.316393 1,511,855 0.73% 42.66% 2002 ............................. 0.25% 228,358 6.530337 1,491,255 0.55% -22.33% Oppenheimer Main Street(R) Growth & Income Fund/VA - Initial Class 2003 ............................. 0.25% 264,755 9.371848 2,481,244 0.90% 26.40% 2002 ............................. 0.25% 1,058 7.414306 7,844 0.75% -19.00% PIMCO VIT Low Duration Portfolio - Administrative Shares 2003 ............................. 0.25% 1,496,037 10.400435 15,559,436 1.22% 2.09% PIMCO VIT Real Return Portfolio - Administrative Shares 2003 ............................. 0.25% 73,396 11.253423 825,956 2.35% 8.58% PIMCO VIT Total Return Portfolio - Administrative Shares 2003 ............................. 0.25% 1,182,357 10.825824 12,799,989 2.71% 4.78% 2002 ............................. 0.25% 165 10.331952 1,705 0.98% 3.32% 8/30/02 Pioneer High Yield VCT Portfolio - Class I Shares 2003 ............................. 0.25% 379,007 13.725038 5,201,885 5.84% 32.45% 2002 ............................. 0.25% 162 10.362072 1,679 1.76% 3.62% 9/3/02 Royce Capital Fund - Micro Cap 2003 ............................. 0.25% 85,061 15.042113 1,279,497 0.00% 48.79% Strong GVIT Mid Cap Growth Fund - Class I 2003 ............................. 0.25% 74,105 6.924341 513,128 0.00% 39.79% 2002 ............................. 0.25% 5,143 4.953560 25,476 0.00% -37.17% Strong Opportunity Fund II, Inc. 2003 ............................. 0.25% 169,629 9.449055 1,602,834 0.08% 36.66% 2002 ............................. 0.25% 182,111 6.914071 1,259,128 0.50% -27.00% T. Rowe Price Equity Income Portfolio - II 2003 ............................. 0.25% 167,637 12.637920 2,118,583 1.80% 24.86% T. Rowe Price Mid Cap Growth Portfolio - II 2003 ............................. 0.25% 279,141 14.117448 3,940,759 0.00% 37.75%
(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*** -------- --------- ---------- -------------- ---------- --------- Turner GVIT Growth Focus Fund - Class I 2003 ............................. 0.25% 23,948 $ 3.309832 $ 79,264 0.00% 50.59% Van Eck WIT - Worldwide Emerging Markets Fund 2003 ............................. 0.25% 38,302 14.227140 544,928 0.11% 53.80% 2002 ............................. 0.25% 399 9.250254 3,691 0.21% -3.14% Van Eck WIT - Worldwide Hard Assets Fund 2003 ............................. 0.25% 12,374 14.026509 173,564 0.41% 44.72% 2002 ............................. 0.25% 497 9.692423 4,817 0.75% -3.08% Van Kampen UIF - Emerging Markets Debt Portfolio 2003 ............................. 0.25% 68,138 15.763497 1,074,093 0.00% 27.55% 2002 ............................. 0.25% 83 12.359143 1,026 8.74% 8.95% Van Kampen UIF - Mid Cap Growth Portfolio 2003 ............................. 0.25% 74,914 5.939719 444,968 0.00% 41.41% 2002 ............................. 0.25% 354 4.200344 1,487 0.00% -31.33% Van Kampen UIF - U.S. Real Estate Portfolio 2003 ............................. 0.25% 151,526 15.762653 2,388,452 0.00% 37.17% 2002 ............................. 0.25% 770 11.491482 8,848 4.01% -1.03% The BEST of AMERICA(R) Corporate Variable Universal Life Series(SM) Reduced Fee Tier (0.40%) AIM VIF Basic Value Fund - Series I 2003 ............................. 0.40% 82,900 13.095200 1,085,592 0.06% 33.09% 2002 ............................. 0.40% 39,881 9.839124 392,394 0.00% -1.61% 9/3/02 AIM VIF Capital Development Fund - Series I 2003 ............................. 0.40% 13,547 13.224712 179,155 0.00% 34.82% 2002 ............................. 0.40% 24 9.809368 235 0.00% -1.91% 9/3/02 Alliance VPS Growth & Income Portfolio - Class A 2003 ............................. 0.40% 246,983 13.212012 3,263,142 0.51% 31.97% 2002 ............................. 0.40% 5,432 10.011053 54,380 0.00% 0.11% 9/3/02 American Century VP Income & Growth Fund - Class I 2003 ............................. 0.40% 350,297 10.765053 3,770,966 1.28% 28.84% 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 2003 ............................. 0.40% 2,984,336 9.173579 27,377,042 0.73% 24.01% 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% American Century VP Ultra Fund - Class I 2003 ............................. 0.40% 79,186 9.973091 789,729 0.00% 24.40% 2002 ............................. 0.40% 4,655 8.016962 37,319 0.66% -19.83% 5/1/02 American Century VP Value Fund - Class I 2003 ............................. 0.40% 835,035 13.683795 11,426,448 1.04% 28.44% 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% Baron Capital Asset Trust 2003 ............................. 0.40% 107,132 12.553439 1,344,875 0.00% 29.49% 2002 ............................. 0.40% 7,134 9.694252 69,159 0.00% -3.06% 9/3/02 Calvert Social Equity Portfolio 2003 ............................. 0.40% 1,076 12.510533 13,461 0.01% 21.69%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------- Comstock GVIT Value Fund - Class I 2003 ............................. 0.40% 50,453 $ 9.493770 $ 478,989 1.34% 30.91% 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% 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% 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 2003 ............................. 0.40% 17,547 10.955988 192,245 0.76% 24.66% 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% Dreyfus GVIT Mid Cap Index Fund - Class I 2003 ............................. 0.40% 1,017,996 15.095175 15,366,828 0.50% 34.11% 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 2003 ............................. 0.40% 58,097 13.076217 759,689 1.02% 31.20% 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 2003 ............................. 0.40% 61,690 10.504526 648,024 0.27% 37.23% 2002 ............................. 0.40% 5,221 7.654697 39,965 0.29% -23.45% 5/1/02 Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares 2003 ............................. 0.40% 114,903 8.763701 1,006,976 0.11% 25.50% 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% Dreyfus Stock Index Fund 2003 ............................. 0.40% 9,284,780 10.352696 96,122,505 1.54% 27.85% 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% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2003 ............................. 0.40% 830,526 10.952239 9,096,119 1.18% 20.69% 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% Dreyfus VIF - International Value Portfolio - Initial Shares 2003 ............................. 0.40% 146,661 12.803571 1,877,785 2.67% 35.81% 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 2003 ........................................ 0.40% 767,382 $12.263819 $ 9,411,034 7.99% 21.78% 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% Federated Quality Bond Fund II - Primary Shares 2003 ........................................ 0.40% 2,418,929 13.218733 31,975,177 3.30% 4.23% 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 2003 ........................................ 0.40% 2,509,045 11.463982 28,763,647 1.66% 29.70% 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% Fidelity(R) VIP - Growth Portfolio: Service Class 2003 ........................................ 0.40% 2,979,457 10.995198 32,759,720 0.18% 32.25% 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% Fidelity(R) VIP - High Income Portfolio: Service Class 2003 ........................................ 0.40% 504,057 8.555502 4,312,461 6.36% 26.46% 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% Fidelity(R) VIP - Overseas Portfolio: Service Class 2003 ........................................ 0.40% 746,827 9.640353 7,199,676 0.63% 42.63% 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% Fidelity(R) VIP II - Contrafund Portfolio: Service Class 2003 ........................................ 0.40% 1,901,875 13.113640 24,940,504 0.30% 27.84% 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% Fidelity(R) VIP III - Growth Opportunities Portfolio: Service Class 2003 ........................................ 0.40% 259,028 8.240791 2,134,596 0.59% 29.14% 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% Fidelity(R) VIP III - Value Strategies Portfolio: Service Class 2003 ........................................ 0.40% 59,064 11.770364 695,205 0.00% 57.16% 2002 ........................................ 0.40% 953 7.489405 7,137 0.00% -25.11% 5/1/02 Franklin Templeton VIPT - Templeton Foreign Securities Fund - Class 2 2003 ........................................ 0.40% 300,494 12.475864 3,748,922 1.96% 31.68% 2002 ........................................ 0.40% 14,717 9.474024 139,429 0.00% -5.26% 9/3/02 Gartmore GVIT Emerging Markets Fund - Class I 2003 ........................................ 0.40% 183,203 11.423706 2,092,857 0.61% 64.60% 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%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- ---------- ---------- -------------- ---------- --------- Gartmore GVIT Global Financial Services Fund - Class I 2003 ...................................... 0.40% 44,687 $12.173639 $ 544,003 1.08% 40.89% Gartmore GVIT Global Health Sciences Fund - Class I 2003 ...................................... 0.40% 52,928 11.324625 599,390 0.00% 36.15% 2002 ...................................... 0.40% 292 8.317804 2,429 0.00% -16.82% 5/1/02 Gartmore GVIT Global Technology and Communications Fund - Class I 2003 ...................................... 0.40% 573,189 3.021924 1,732,134 0.00% 54.61% 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 2003 ...................................... 0.40% 13,251 10.700667 141,795 1.02% 23.56% 2002 ...................................... 0.40% 2,326 8.660608 20,145 0.61% -13.39% 5/1/02 Gartmore GVIT Government Bond Fund - Class I 2003 ...................................... 0.40% 5,633,215 13.947593 78,569,790 3.25% 1.59% 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% Gartmore GVIT Growth Fund - Class I 2003 ...................................... 0.40% 76,097 5.714099 434,826 0.02% 32.21% 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% Gartmore GVIT ID Aggressive Fund 2003 ...................................... 0.40% 19,629 10.902206 213,999 1.57% 31.34% 2002 ...................................... 0.40% 4,346 8.300685 36,075 0.86% -16.99% 1/25/02 Gartmore GVIT ID Conservative Fund 2003 ...................................... 0.40% 12,703 10.761565 136,704 2.59% 7.48% 2002 ...................................... 0.40% 6,694 10.013037 67,027 2.18% 0.13% 1/25/02 Gartmore GVIT ID Moderate Fund 2003 ...................................... 0.40% 37,624 10.888513 409,669 2.05% 19.57% 2002 ...................................... 0.40% 9,222 9.106228 83,978 1.66% -8.94% 1/25/02 Gartmore GVIT ID Moderately Aggressive Fund 2003 ...................................... 0.40% 56,878 10.917690 620,976 1.61% 26.14% 2002 ...................................... 0.40% 14,555 8.655338 125,978 1.05% -13.45% 1/25/02 Gartmore GVIT ID Moderately Conservative Fund 2003 ...................................... 0.40% 13,568 10.878938 147,605 2.33% 13.24% 2002 ...................................... 0.40% 4,849 9.606563 46,582 1.99% -3.93% 1/25/02 Gartmore GVIT International Growth Fund - Class I 2003 ...................................... 0.40% 52,743 6.705480 353,667 0.00% 35.08% 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 2003 ...................................... 0.40% 541,898 11.864684 6,429,449 0.63% 0.22% 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% Gartmore GVIT Money Market Fund - Class V 2003 ...................................... 0.40% 11,999,723 10.045042 120,537,722 0.70% 0.30% 2002 ...................................... 0.40% 15,116,078 10.014669 151,382,518 0.28% 0.15% 10/21/02 Gartmore GVIT Nationwide(R) Leaders Fund - Class I 2003 ...................................... 0.40% 2,091 10.527571 22,013 0.15% 24.88%
(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 Nationwide(R) Strategic Value Fund - Class I 2003 ...................................... 0.40% 19,292 $ 9.311693 $ 179,641 0.04% 38.25% 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 2003 ...................................... 0.40% 315,046 13.471955 4,244,286 0.00% 33.73% 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 2003 ...................................... 0.40% 1,315,269 17.522719 23,047,089 0.00% 56.23% 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 2003 ...................................... 0.40% 2,515,752 15.142892 38,095,761 0.00% 40.45% 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% Gartmore GVIT Total Return Fund - Class I 2003 ...................................... 0.40% 331,958 9.672247 3,210,780 0.59% 27.00% 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% Gartmore GVIT U.S. Growth Leaders Fund - Class I 2003 ...................................... 0.40% 28,684 12.431976 356,599 0.00% 51.53% Gartmore GVIT Worldwide Leaders Fund - Class I 2003 ...................................... 0.40% 30,673 9.033664 277,090 0.00% 35.52% 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% Goldman Sachs VIT Mid Cap Value Fund 2003 ...................................... 0.40% 599,528 12.630569 7,572,380 1.72% 27.88% 2002 ...................................... 0.40% 7,368 9.877029 72,774 0.27% -1.23% 9/3/02 J. P. Morgan GVIT Balanced Fund - Class I 2003 ...................................... 0.40% 533,567 9.863609 5,262,896 1.76% 17.94% 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% Janus AS - Balanced Portfolio - Service Shares 2003 ...................................... 0.40% 360,530 11.365300 4,097,532 2.34% 13.27% 2002 ...................................... 0.40% 977 10.033996 9,803 2.14% 0.34% 9/3/02 Janus AS - Capital Appreciation Portfolio - Service Shares 2003 ...................................... 0.40% 1,755,706 6.406568 11,248,050 0.25% 19.75% 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
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ---------- -------------- ---------- --------- Janus AS - Global Technology Portfolio - Service Shares 2003 ............................. 0.40% 524,317 $ 3.514240 $ 1,842,576 0.00% 45.89% 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 2003 ............................. 0.40% 2,277,464 6.228826 14,185,927 1.02% 34.00% 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 Multi Sector Bond Fund - Class I 2003 ............................. 0.40% 469,752 13.159481 6,181,693 5.42% 11.67% 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% Neuberger Berman AMT - Fasciano Portfolio - S Class 2003 ............................. 0.40% 35,320 12.528578 442,509 0.00% 24.56% 2002 ............................. 0.40% 3,552 10.057930 35,726 0.00% 0.58% 9/3/02 Neuberger Berman AMT - Guardian Portfolio 2003 ............................. 0.40% 406,038 10.156098 4,123,762 0.89% 31.24% 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% Neuberger Berman AMT - Mid-Cap Growth Portfolio 2003 ............................. 0.40% 895,379 10.753194 9,628,184 0.00% 27.56% 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% Neuberger Berman AMT - Partners Portfolio 2003 ............................. 0.40% 271,980 9.853739 2,680,020 0.00% 34.55% 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% One Group(R) IT Mid Cap Growth Portfolio 2003 ............................. 0.40% 208,667 12.752960 2,661,122 0.00% 26.64% 2002 ............................. 0.40% 19,940 10.070202 200,800 0.00% 0.70% 9/18/02 One Group(R) IT Mid Cap Value Portfolio 2003 ............................. 0.40% 30,988 13.119525 406,548 0.57% 32.22% 2002 ............................. 0.40% 39,000 9.922131 386,963 0.00% -0.78% 9/18/02 Oppenheimer Aggressive Growth Fund/VA - Initial Class 2003 ............................. 0.40% 1,747,033 9.644393 16,849,073 0.00% 25.09% 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% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2003 ............................. 0.40% 4,490,131 12.363752 55,514,866 0.38% 30.42% 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% Oppenheimer Global Securities Fund/VA - Initial Class 2003 ............................. 0.40% 1,588,406 9.265284 14,717,033 0.73% 42.45% 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
(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*** -------- --------- ---------- -------------- ---------- --------- Oppenheimer Main Street(R) Growth & Income Fund/VA - Initial Class 2003 ............................. 0.40% 805,623 $ 8.993106 $ 7,245,053 0.90% 26.21% 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% PIMCO VIT Low Duration Portfolio - Administrative Shares 2003 ............................. 0.40% 427,929 10.379703 4,441,776 1.22% 1.94% 2002 ............................. 0.40% 45,027 10.182621 458,493 0.26% 1.83% 9/3/02 PIMCO VIT Real Return Portfolio - Administrative Shares 2003 ............................. 0.40% 604,652 11.230805 6,790,729 2.35% 8.42% 2002 ............................. 0.40% 48,671 10.358691 504,168 0.39% 3.59% 8/30/02 PIMCO VIT Total Return Portfolio - Administrative Shares 2003 ............................. 0.40% 2,117,582 10.804064 22,878,491 2.71% 4.62% 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 2003 ............................. 0.40% 105,483 13.697677 1,444,872 5.84% 32.26% 2002 ............................. 0.40% 211 10.356990 2,185 1.76% 3.57% 9/3/02 Royce Capital Fund - Micro Cap 2003 ............................. 0.40% 548,859 15.012271 8,239,620 0.00% 48.57% 2002 ............................. 0.40% 43,606 10.104573 440,620 0.00% 1.05% 9/3/02 Strong GVIT Mid Cap Growth Fund - Class I 2003 ............................. 0.40% 335,334 9.918443 3,325,991 0.00% 39.58% 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% Strong Opportunity Fund II, Inc. 2003 ............................. 0.40% 1,423,338 9.397220 13,375,420 0.08% 36.46% 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 2003 ............................. 0.40% 1,166,336 12.612824 14,710,791 1.80% 24.67% 2002 ............................. 0.40% 16,487 10.116880 166,797 0.77% 1.17% 9/3/02 T. Rowe Price Mid Cap Growth Portfolio - II 2003 ............................. 0.40% 513,748 14.089414 7,238,408 0.00% 37.54% 2002 ............................. 0.40% 11,398 10.243767 116,758 0.00% 2.44% 9/3/02 Turner GVIT Growth Focus Fund - Class I 2003 ............................. 0.40% 48,390 3.293722 159,383 0.00% 50.36% 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 2003 ............................. 0.40% 69,877 10.608507 741,291 0.11% 53.57% 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 2003 ............................. 0.40% 111,979 11.413041 1,278,021 0.41% 44.50% 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%
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- -------- ---------- -------------- ---------- --------- Van Kampen UIF - Emerging Markets Debt Portfolio 2003 ............................. 0.40% 200,179 $14.693571 $ 2,941,344 0.00% 27.35% 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 2003 ............................. 0.40% 142,586 5.907110 842,271 0.00% 41.20% 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 2003 ............................. 0.40% 698,195 16.228488 11,330,649 0.00% 36.96% 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% -------------- Contract Owners' Equity Total By Year 2003 .................................................................. $3,032,894,231 ============== 2002 .................................................................. $2,276,440,710 ============== 2001 .................................................................. $2,087,035,414 ============== 2000 .................................................................. $1,414,892,441 ============== 1999 .................................................................. $ 648,293,593 ==============
* This represents the 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 to the contractholder accounts either through reductions in unit values or redemption of units. 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 accompanying consolidated balance sheets of Nationwide Life Insurance Company and subsidiaries (the Company) as of December 31, 2003 and 2002, and the related consolidated statements of earnings, shareholder's equity, and cash flows for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. 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. /s/ KPMG LLP Columbus, Ohio March 11, 2004 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Earnings (in millions)
YEARS ENDED DECEMBER 31, --------------------------------------- 2003 2002 2001 ==================================================================================================================================== REVENUES: Policy charges $ 924.1 $ 973.8 $1,017.3 Life insurance premiums 279.8 259.9 251.1 Net investment income 1,980.0 1,838.5 1,724.7 Net realized gains (losses) on investments, hedging instruments and hedged items: Unrelated parties (100.8) (107.6) (62.7) Related parties - 23.2 44.4 Other income 12.7 8.8 8.2 ------------------------------------------------------------------------------------------------------------------------------------ Total revenues 3,095.8 2,996.6 2,983.0 ------------------------------------------------------------------------------------------------------------------------------------ BENEFITS AND EXPENSES: Interest credited to policyholder account values 1,300.4 1,241.2 1,238.7 Other benefits and claims 361.8 326.0 280.3 Policyholder dividends on participating policies 41.2 45.2 41.7 Amortization of deferred policy acquisition costs 375.9 670.1 347.9 Interest expense on debt, primarily with Nationwide Financial Services, Inc. (NFS) 48.4 36.0 6.2 Other operating expenses 533.7 508.6 439.3 ------------------------------------------------------------------------------------------------------------------------------------ Total benefits and expenses 2,661.4 2,827.1 2,354.1 ------------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations before federal income tax expense 434.4 169.5 628.9 Federal income tax expense 96.2 8.7 161.2 ------------------------------------------------------------------------------------------------------------------------------------ Income from continuing operations 338.2 160.8 467.7 Income from discontinued operations, net of tax - 0.7 1.2 Cumulative effect of adoption of accounting principle, net of tax (0.6) - (7.1) ------------------------------------------------------------------------------------------------------------------------------------ Net income $ 337.6 $ 161.5 $ 461.8 ====================================================================================================================================
See accompanying notes to consolidated financial statements, including note 15 which describes related party transactions. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Balance Sheets (in millions, except share amounts)
DECEMBER 31, December 31, 2003 2002 ============================================================================================================================= ASSETS: Investments: Securities available-for-sale, at fair value: Fixed maturity securities (cost $25,850.2 in 2003; $23,134.3 in 2002) $ 26,946.8 $ 24,169.0 Equity securities (cost $74.0 in 2003; $85.1 in 2002) 85.6 84.3 Mortgage loans on real estate, net 8,345.8 7,923.2 Real estate, net 96.5 116.6 Policy loans 618.3 629.2 Other long-term investments 130.6 137.5 Short-term investments, including amounts managed by a related party 1,860.8 1,210.3 ----------------------------------------------------------------------------------------------------------------------------- Total invested assets 38,084.4 34,270.1 ----------------------------------------------------------------------------------------------------------------------------- Cash 0.1 0.9 Accrued investment income 367.1 328.7 Deferred policy acquisition costs 3,219.3 2,971.1 Other assets 1,815.5 1,243.6 Assets held in separate accounts 57,084.5 47,208.2 ----------------------------------------------------------------------------------------------------------------------------- Total assets $ 100,570.9 $ 86,022.6 ============================================================================================================================= LIABILITIES AND SHAREHOLDER'S EQUITY: Future policy benefits and claims $ 35,322.3 $ 31,679.8 Short-term debt 199.8 - Long-term debt, payable to NFS 700.0 600.0 Other liabilities 3,264.7 2,985.8 Liabilities related to separate accounts 57,084.5 47,208.2 ----------------------------------------------------------------------------------------------------------------------------- Total liabilities 96,571.3 82,473.8 ----------------------------------------------------------------------------------------------------------------------------- Shareholder's equity: Capital shares, $1 par value. Authorized 5.0 million shares; 3.8 million shares issued 3.8 3.8 and outstanding Additional paid-in capital 271.3 171.1 Retained earnings 3,257.2 2,979.6 Accumulated other comprehensive income 467.3 394.3 ----------------------------------------------------------------------------------------------------------------------------- Total shareholder's equity 3,999.6 3,548.8 ----------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 100,570.9 $ 86,022.6 =============================================================================================================================
See accompanying notes to consolidated financial statements, including note 15 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, 2003, 2002 and 2001 (in millions)
ACCUMULATED ADDITIONAL OTHER TOTAL CAPITAL PAID-ON RETAINED COMPREHENSIVE SHAREHOLDER'S SHARES CAPITAL EARNINGS INCOME EQUTY ================================================================================================================================= ================================================================================================================================= Balance as of January 1, 2001 $ 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 period, 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 --------------- Dividend to NFS - - (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 period, 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 NFS - (475.0) - - (475.0) Dividend to NFS - - (45.0) - (45.0) --------------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2002 $ 3.8 $ 171.1 $2,979.6 $ 394.3 $ 3,548.8 ================================================================================================================================= Comprehensive income: Net income - - 337.6 - 337.6 Net unrealized gains on securities available-for-sale arising during the period, net of tax - - - 99.6 99.6 Accumulated net losses on cash flow hedges, net of tax - - - (26.6) (26.6) --------------- Total comprehensive income 410.6 --------------- Capital contributed by NFS - 200.2 - - 200.2 Return of capital to NFS - (100.0) - - (100.0) Dividend to NFS - - (60.0) - (60.0) --------------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2003 $ 3.8 $ 271.3 $3,257.2 $ 467.3 $ 3,999.6 =================================================================================================================================
See accompanying notes to unaudited consolidated financial statements, including note 15 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, ---------------------------------------- 2003 2002 2001 =========================================================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 337.6 $ 161.5 $ 461.8 Adjustments to reconcile net income to net cash provided by operating activities: Income from discontinued operations - (0.7) (1.2) Interest credited to policyholder account values 1,300.4 1,241.2 1,238.7 Capitalization of deferred policy acquisition costs (567.2) (648.2) (743.0) Amortization of deferred policy acquisition costs 375.9 670.1 347.9 Amortization and depreciation 69.3 (0.7) (31.5) Realized losses (gains) on investments, hedging instruments and hedged items: Unrelated parties 100.8 107.6 62.7 Related parties - (23.2) (44.4) Cumulative effect of adoption of accounting principles (0.9) - 10.9 Increase in other assets (640.7) (606.1) (271.8) Increase in policy and other liabilities 299.1 463.1 335.8 Other, net 1.1 11.0 (47.0) --------------------------------------------------------------------------------------------------------------------------- Net cash provided by continuing operations 1,275.4 1,375.6 1,318.9 Net cash provided by discontinued operations - 0.7 1.7 --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,275.4 1,376.3 1,320.6 --------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturity of available-for-sale securities 4,101.6 3,887.7 3,933.9 Proceeds from sale of available-for-sale securities 2,220.5 1,534.9 497.2 Proceeds from repayments of mortgage loans on real estate 1,478.3 1,009.0 1,204.4 Proceeds from sale of limited partnership to related parties - 54.5 158.9 Cost of available-for-sale securities acquired (9,366.7) (9,874.5) (7,123.6) Cost of mortgage loans on real estate acquired (1,914.4) (1,810.2) (2,123.1) Short-term investments, net (639.9) (193.1) (568.7) Disposal of subsidiary, net of cash - (20.0) - Other, net 254.2 (31.8) 697.0 --------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (3,866.4) (5,443.5) (3,324.0) Net cash provided by discontinued operations - - 0.6 --------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (3,866.4) (5,443.5) (3,323.4) --------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in short-term debt 199.8 (100.0) (18.7) Net proceeds from issuance of long-term debt to NFS 100.0 300.0 300.0 Capital contributed by NFS 200.2 - - Capital returned to NFS (100.0) (475.0) - Cash dividends paid to NFS (60.0) (35.0) (35.0) Increase in investment and universal life insurance product account values 5,116.1 6,278.9 5,976.7 Decrease in investment and universal life insurance product account values (2,865.9) (1,923.4) (4,216.0) --------------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 2,590.2 4,045.5 2,007.0 --------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash (0.8) (21.7) 4.2 Cash, beginning of period 0.9 22.6 18.4 --------------------------------------------------------------------------------------------------------------------------- Cash, end of period $ 0.1 $ 0.9 $ 22.6 ===========================================================================================================================
See accompanying notes to consolidated financial statements, including note 15 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, 2003, 2002 and 2001 (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, other investment products sold to institutions, life insurance and an advisory services program. The Company markets its products through a diverse distribution network, including independent broker/dealers, wirehouse and regional firms, financial institutions, pension plan administrators, life insurance specialists, certified public accounting firms and the following affiliated producers: Nationwide Retirement Solutions, TBG Financial, 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 Ohio Department of Insurance 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 14 for discussion of statutory capital requirements and dividend limitations. 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 the balance and amortization of deferred policy acquisition costs (DAC) for investment products, universal life insurance products, valuation allowances for mortgage loans on real estate, impairment losses on other investments and accruals related to federal income taxes and pension and other postretirement benefits. Although some variability is inherent in these estimates, the recorded amounts reflect management's best estimates and 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 financial interest and, as discussed in note 2(n), effective December 31, 2003, the Company applied the provisions of FIN 46R to those special purpose entities (SPIEs) with which it is associated. 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 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 marketable equity securities as held-to-maturity, available-for-sale or trading. All fixed maturity and marketable equity securities are classified as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of adjustments to deferred policy acquisition costs (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 changes 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 discount rate that would have been required if such unrealized gains been realized and the proceeds reinvested at then current market interest rates, which were lower than the then current effective portfolio rate. The fair value of fixed maturity and marketable equity securities is generally obtained from independent pricing services based on market quotations. For fixed maturity securities not priced by independent services (generally private placement securities and securities that do not trade regularly), an internally developed pricing model or "corporate pricing matrix" is most often used. The corporate pricing matrix is developed by obtaining spreads versus the US Treasury yield for corporate securities with varying weighted average lives and bond ratings. The weighted average life and bond rating of a particular fixed maturity security to be priced using the corporate matrix are important inputs into the model and are used to determine a corresponding spread that is added to the US Treasury yield to create an estimated market yield for the that bond. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security. Additionally, the Company's internal corporate pricing matrix is not suitable for valuing certain fixed maturity securities, particularly those with complex cash flows such as certain mortgage-backed and asset-backed securities. In these cases, a separate "structured product pricing matrix" has been developed to value, as appropriate, using the same methodology described above. For securities for which quoted market prices are not available and for which the Company's structured product pricing matrix is not suitable for estimating fair values, qualified company representatives determine the fair value using other modeling techniques, primarily using a commercial software application utilized in valuing complex securitized investments with variable cash flows. As of December 31, 2003, 68% of the fair values of fixed maturity securities were obtained from independent pricing services, 21% from the Company's pricing matricies and 11% from other sources. 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, specific credit issues related to the issuer, and current economic conditions. Other-than-temporary impairment losses result in a permanent reduction of the cost basis of the underlying investment. 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 an adverse change 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. Impairment losses are recorded on investments in 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. 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 using the interest-method without anticipating the impact of prepayments. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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 its best estimate of probable credit losses inherent in the portfolio at the balance sheet date. The valuation allowance for mortgage loans is comprised of a specific component, based on known impairments by specific loan and an unallocated component that is derived based on the Company's estimate of impairments inherent in the portfolio at the balance sheet date, but not specifically identified by loan. The unallocated component is derived for principal amounts related to loans without a specific reserve. 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. Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Changes in the Company's mortgage loan valuation allowances and recognition of impairment losses for other-than-temporary declines in the fair values of applicable investments 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The Company enters into interest rate swaps, cross-currency swaps or Euro 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 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 identified 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 derivative instruments that are initially recognized into AOCI are reclassified out of AOCI and recognized in earnings over the same period(s) that the hedged item affects earnings. Accrued interest 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 initially 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. The Company does not enter into speculative positions. Although these transactions do not qualify for hedge accounting, or have not been designated in hedging relationships by the Company, they provide the Company with an economic hedge, which is used as part of its overall risk management strategies. For example, the Company may sell credit default protection through a credit default swap. Although the credit default swap may not be effective in hedging specific investments, the income stream allows the Company to manage overall investment yields. The Company may enter into a cross-currency basis swap (pay a variable US rate and receive a variable foreign-denominated rate) to eliminate the foreign currency exposure of a variable rate foreign-denominated liability. Although basis swaps may qualify for hedge accounting, the Company has chosen not to designate these derivatives as hedging instruments due to the difficulty in assessing and monitoring effectiveness for both sides of the basis swap. Derivative instruments that do not qualify for hedge accounting, or are not designated as hedging instruments are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items. (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 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 or 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 growth per year. 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 negative or in excess of 15 percent during the three-year reversion period. Changes in assumptions can have a significant impact on the amount of DAC reported for 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 balance related to the individual variable annuity business, the sensitivity of the calculation to minor changes in the underlying assumptions, the complexity and judgments involved in related estimate, 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 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. For other investment products and universal life insurance products, DAC is set 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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 performed as 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 based primarily on market quotations of the underlying securities. The investment income and gains or losses of these accounts accrue directly to the contractholders. The activity of the separate accounts is not reflected in the consolidated statements of income and cash flows except for the fees the Company receives. 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 3.0% 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, 2003 and 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 13% in 2003 (15% in 2002 and 17% in 2001) of the Company's life insurance in-force, 56% of the number of life insurance policies in-force in 2003 (59% in 2002 and 63% in 2001), and 11% of life insurance statutory premiums in 2003 (9% in 2002 and 9% in 2001). 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. (i) Federal Income Tax 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 items 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. Management has used best estimates to establish reserves based on current facts and circumstances regarding tax exposure items where the ultimate deductibility is open to interpretation. Quarterly, management evaluates the appropriateness of such reserves based on any new developments specific to their fact patterns. Information considered includes results of completed tax examinations, Technical Advice Memorandums and other rulings issued by the Internal Revenue Service or the tax courts. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to 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 in the consolidated balance sheets on a gross basis, separately from the related balances of the Company. (k) Recently Issued Accounting Pronouncements In December 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 132 (revised 2003) Employers' Disclosures about Pensions and Other Postretirement Benefits an amendment of FASB Statements No. 87, 88 and 106 (SFAS 132R). SFAS 132R provides revised disclosure guidance for pension and other postretirement benefit plans but does not change the measurement or recognition of those plans under existing guidance. Disclosures previously required under SFAS No. 132 Employers' Disclosures about Pensions and Other Postretirement Benefits, which was replaced by SFAS 132R, were retained. In addition, SFAS 132R requires additional disclosures about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit pension plans. The Company adopted SFAS 132R effective December 31, 2003, except for disclosures about estimated benefit payments, which is expected to be adopted in the second quarter of 2004, as permitted by SFAS 132R. In January 2003, the 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" (VIEs) 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) the entity does not have sufficient equity 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 to entities formed after January 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. In October 2003, the FASB delayed the implementation date of FIN 46 for VIEs acquired prior to January 31, 2003 to interim periods ending after December 15, 2003, with early adoption permitted. In December 2003, the FASB issued Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest Entities - an interpretation of ARB No. 51 (FIN 46R) that required all public companies to apply the provisions of FIN 46 or FIN 46R to special purpose entities created prior to February 1, 2003. Once adopted by an entity, FIN 46R replaces FIN 46. Public companies, including the Company, at a minimum, must apply the unmodified provisions of FIN 46 to entities that were considered "special purpose entities" in practice and under applicable FASB pronouncements or guidance by the end of the first reporting period ending after December 15, 2003. The Company had no special purpose entity VIE's as of December 31, 2003. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The Company is required to apply the provisions of FIN 46R to all entities created after December 31, 2003 and to all other entities no later than the beginning of the first reporting period beginning after March 15, 2004. 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 plans to adopt the remaining provisions of FIN 46R during the first quarter of 2004. The adoption of the remaining provisions of FIN 46R is not expected to have a material impact on the results of operations or financial position of the Company. In July 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1). SOP 03-1 addresses a number of topics; the most significant of which to the Company is the accounting for contracts with guaranteed minimum death benefits (GMDB). SOP 03-1 requires companies to evaluate the significance of the GMDB benefit to determine whether the contract should be accounted for as an investment or insurance contract. For contracts determined to be insurance contracts, companies are required to establish a reserve to recognize a portion of the assessment (revenue) that compensates the insurance company for benefits to be provided in future periods. SOP 03-1 also provides guidance on separate account presentation, interest in separate accounts, gains and losses on the transfer of assets from the general account to a separate account, liability valuation, return based on a contractually referenced pool of assets or index, annuitization options and sales inducements to contract holders. The Company adopted SOP 03-1 on January 1, 2004. As a result, the Company expects to record a cumulative effect adjustment resulting from the adoption of accounting principles of approximately $3.3 million, net of tax, during the first quarter of 2004. See note 21 for further discussion. In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150). SFAS 150 establishes standards for the classification and measurement of certain freestanding financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. Further, SFAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives. As originally issued the guidance in SFAS 150 was generally effective for financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003. Adjustments required as a result of the application of SFAS 150 to existing instruments should be reported as a cumulative effect of a change in accounting principle. The adoption of SFAS 150 on July 1, 2003 did not have any impact on the results of operations or financial position of the Company. In April 2003, the FASB released SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS 149 on July 1, 2003 did not have a material impact on the results of operations or financial position of the Company. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements In April 2003, the FASB released Statement 133 Implementation Issue B36, Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (DIG B36). DIG B36 addresses the need to separately account for an embedded derivative within a reinsurer's receivable and ceding company's payable arising from modified coinsurance or similar arrangements. Paragraph 12.a. of SFAS 133 indicates that an embedded derivative must be separated from the host contract (bifurcated) if the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract. DIG B36 concludes that bifurcation is necessary in a modified coinsurance and similar arrangement because the yield on the receivable and payable is based on or referenced to a specified proportion of the ceding company's return on either its general account assets or a specified block of those assets, rather than the overall creditworthiness of the ceding company. The effective date of implementation was the first day of the first fiscal quarter beginning after September 15, 2003, October 1, 2003 for the Company. Upon adoption of DIG B36 on October 1, 2003, the Company recorded a derivative liability of $0.9 million, deferred taxes of $0.3 million and a charge of $0.6 million as a cumulative effect of adoption of this accounting principal. In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees - an Iinterpretation 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 FIN 45 on January 1, 2003 did not 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 did not 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. 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 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, while providing additional criteria to determine when a long-lived asset is actually held-for-sale. SFAS 144 also broadens the definition of "discontinued operations," but does not allow for the accrual of future operating losses before they occur as previously required by APB 30. Under SFAS 144, if a long-lived asset is part of a group that includes other assets and liabilities, then the provisions of SFAS 144 apply to the entire group. In addition, SFAS 144 does not apply to goodwill and other intangible assets that are not amortized. The adoption of SFAS 144 did not have a material impact on the results of operations or financial position of the Company. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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 2001. 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 increases the Company's exposure to the volatility of reported earnings and other comprehensive income. The amount of volatility will, in part, vary with the level of derivative and hedging activities, fluctuations in market interest rates, foreign currency exchange rates and other hedged risks, during any period; and the effectiveness of hedging derivatives in offsetting changes in fiar value and cash flows attributable to those hedged risks. 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 certain asset-backed investment securities that are not of high credit quality. 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 less than its carrying value and that there has been an adverse change 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 15, 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements (m) Reclassification Certain items in the 2002 and 2001 consolidated financial statements and related footnotes have been reclassified to conform to the 2003 presentation. (3) INVESTMENTS The amortized cost, gross unrealized gains and losses and estimated fair value of securities available-for-sale as of December 31, 2003 and 2002 were:
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED ESTIMATED (in millions) COST GAINS LOSSES FAIR VALUE ======================================================================================================================= December 31, 2003: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $1,042.5 $ 61.0 $ 1.9 $1,101.6 Obligations of states and political subdivisions 167.6 1.0 5.2 163.4 Debt securities issued by foreign governments 51.8 2.0 0.8 53.0 Public securities 10,000.0 503.7 26.2 10,477.5 Private securities 6,454.2 469.1 25.3 6,898.0 Mortgage-backed securities - U.S. Government backed 3,990.1 73.9 21.8 4,042.2 Asset-backed securities 4,144.0 129.0 61.9 4,211.1 ----------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 25,850.2 1,239.7 143.1 26,946.8 Equity securities 74.0 11.8 0.2 85.6 ----------------------------------------------------------------------------------------------------------------------- Total $25,924.2 $1,251.5 $ 143.3 $27,032.4 ======================================================================================================================= DECEMBER 31, 2002: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 774.3 $ 64.4 $ 0.3 $ 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 Public securities 8,744.3 445.4 75.2 9,114.5 Private securities 5,399.2 489.1 41.4 5,846.9 Mortgage-backed securities - U.S. Government backed 4,347.5 146.5 0.1 4,493.9 Asset-backed securities 3,808.9 157.3 154.8 3,811.4 ----------------------------------------------------------------------------------------------------------------------- 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 =======================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The amortized cost and estimated fair value of fixed maturity securities available-for-sale as of December 31, 2003, 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 $1,056.7 $1,079.1 Due after one year through five years 7,442.2 7,784.5 Due after five years through ten years 6,704.7 7,123.5 Due after ten years 2,512.5 2,706.4 ------------------------------------------------------------------------------------------------------------------------- Subtotal 17,716.1 18,693.5 Mortgage-backed securities - U.S. Government backed 3,990.1 4,042.2 Asset-backed securities 4,144.0 4,211.1 ------------------------------------------------------------------------------------------------------------------------- Total $25,850.2 $26,946.8 ========================================================================================================================= The components of unrealized gains on securities available-for-sale, net, were as follows as of December 31: (in millions) 2003 2002 ========================================================================================================================= Unrealized gains, before adjustments and taxes $ 1,108.2 $ 1,033.9 Adjustment to deferred policy acquisition costs (243.7) (300.6) Adjustment to future policy benefits and claims (110.6) (133.2) Deferred federal income tax (264.2) (210.0) ------------------------------------------------------------------------------------------------------------------------- Net unrealized gains $ 489.7 $ 390.1 ========================================================================================================================= An analysis of the change in gross unrealized gains on securities available-for-sale for the years ended December 31: (in millions) 2003 2002 2001 ========================================================================================================================= Fixed maturity securities $ 61.9 $ 625.5 $ 212.0 Equity securities 12.4 (11.8) 5.5 ------------------------------------------------------------------------------------------------------------------------- Net change $ 74.3 $ 613.7 $ 217.5 =========================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements An analysis of selected data about gross unrealized losses on available-for-sale securities by time on an unrealized loss position as of December 31, 2003 and 2002 follows:
LESS THAN OR EQUAL TO MORE TOTAL ONE YEAR THAN ONE YEAR ------------------------------------------------------------------------------------- GROSS GROSS GROSS ESTIMATED UNREALIZED ESTIMATED UNREALIZED ESTIMATED UNREALIZED (in millions) FAIR VALUE LOSSES FAIR VALUE LOSSES FAIR VALUE LOSSES ========================================================================================================================== December 31, 2003: Fixed maturity securities: U.S. Treasury securities and $ 154.4 $ 1.9 $ - $ - $ 154.4 $ 1.9 obligations of U.S. Government corporations and agencies Obligations of states and 123.4 5.2 - - 123.4 5.2 political subdivisions Debt securities issued by 19.9 0.8 - - 19.9 0.8 foreign governments Public securities 1,236.7 24.5 31.7 1.7 1,268.4 26.2 Private securities 832.3 21.4 49.1 3.9 881.4 25.3 Mortgage-backed securities - 984.9 21.7 5.3 0.1 990.2 21.8 U.S. Government backed Asset-backed securities 787.0 36.2 260.4 25.7 1,047.4 61.9 -------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 4,138.6 111.7 346.5 31.4 4,485.1 143.1 Equity securities 6.2 0.1 2.0 0.1 8.2 0.2 -------------------------------------------------------------------------------------------------------------------------- Total $ 4,144.8 $ 111.8 $ 348.5 $ 31.5 $ 4,493.3 $ 143.3 ========================================================================================================================== % of gross unrealized loss 78.0% 22.0% DECEMBER 31, 2002: Fixed maturity securities: U.S. Treasury securities and $ 55.3 $ 0.3 $ - $ - $ 55.3 $ 0.3 obligations of U.S. Government corporations and agencies Obligations of states and - - - - - - political subdivisions Debt securities issued by - - - - - - foreign governments Public securities 590.5 46.5 266.7 28.7 857.2 75.2 Private securities 245.6 32.8 70.4 8.6 316.0 41.4 Mortgage-backed securities - 51.4 0.1 19.6 - 71.0 0.1 U.S. Government backed Asset-backed securities 576.3 62.6 260.8 92.2 837.1 154.8 -------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 1,519.1 142.3 617.5 129.5 2,136.6 271.8 Equity securities 24.6 3.9 16.1 4.0 40.7 7.9 -------------------------------------------------------------------------------------------------------------------------- Total $ 1,543.7 $ 146.2 $ 633.6 $ 133.5 $ 2,177.3 $ 279.7 ========================================================================================================================== % of gross unrealized loss 52.3% 47.7%
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements Proceeds from the sale of securities available-for-sale during 2003, 2002 and 2001 were $2.22 billion, $1.53 billion and $497.2 million, respectively. During 2003, gross gains of $104.0 million ($42.0 million and $31.3 million in 2002 and 2001, respectively) and gross losses of $27.6 million ($16.6 million and $10.1 million in 2002 and 2001, respectively) were realized on those sales. The Company had $27.2 million and $28.0 million of real estate investments as of December 31, 2003 and 2002, respectively, that were non-income producing during the preceding twelve months. Real estate is presented at cost less accumulated depreciation of $22.4 million as of December 31, 2003 ($18.6 million as of December 31, 2002). The carrying value of real estate held for disposal totaled $10.5 million and $46.0 million as of December 31, 2003 and 2002, respectively. The recorded investment of mortgage loans on real estate considered to be impaired was $46.3 million as of December 31, 2003 ($27.4 million as of December 31, 2002), which includes $46.3 million ($10.9 million as of December 31, 2002) of impaired mortgage loans on real estate for which the related valuation allowance was $3.9 million ($2.5 million as of December 31, 2002). Impaired mortgage loans with no valuation allowance are a result of collateral dependent loans where the fair value of the collateral is estimated to be greater than the recorded investment of the loan. During 2003, the average recorded investment in impaired mortgage loans on real estate was $15.4 million ($5.5 million in 2002) and interest income recognized on those loans using the cash-basis method of income recognition, totaled $3.3 million in 2003 ($0.1 million in 2002). Activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31 was:
(in millions) 2003 2002 2001 ================================================================================================================= Allowance, beginning of period $ 43.4 $ 42.9 $ 45.3 Net (reductions) additions (credited) charged to allowance (14.3) 0.5 (2.4) -------------------------------------------------------------------------------------------------------------- Allowance, end of period $ 29.1 $ 43.4 $ 42.9 =================================================================================================================
During the third quarter of 2003, the Company refined its analysis of the overall performance of the mortgage loan portfolio and related allowance for mortgage loan losses. This analysis included an evaluation of the current composition of the portfolio, historical losses by property type, current economic conditions and expected losses incurred as of the balance sheet date, but not yet identified by specific loan. As a result of the analysis, the total valuation allowance was reduced by $12.1 million. An analysis of investment income (loss) from continuing operations by investment type follows for the years ended December 31:
(in millions) 2003 2002 2001 ===================================================================================================================== Securities available-for-sale: Fixed maturity securities $1,453.1 1,332.5 1,181.1 Equity securities 1.4 1.9 1.8 Mortgage loans on real estate 579.7 563.8 527.9 Real estate 21.7 26.8 33.1 Short-term investments 9.3 12.6 28.0 Derivatives (100.3) (79.6) (19.7) Other 64.8 31.0 20.9 --------------------------------------------------------------------------------------------------------------------- Gross investment income 2,029.7 1,889.0 1,773.1 Less investment expenses 49.7 50.5 48.4 --------------------------------------------------------------------------------------------------------------------- Net investment income $1,980.0 1,838.5 1,724.7 =====================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements An analysis of net realized losses on investments, hedging instruments and hedged items, by source follows for the years ended December 31:
(in millions) 2003 2002 2001 ============================================================================================================= UNRELATED PARTIES: Realized gains on sales, net of hedging losses: Fixed maturity securities, available-for-sale $ 98.5 $ 42.0 $ 30.1 Hedging losses on fixed maturity sales (42.4) (36.2) (1.5) Equity securities, available-for-sale 5.5 - 1.2 Real estate 4.2 14.0 3.3 Mortgage loans on real estate 3.0 3.2 11.2 Mortgage loan hedging losses (2.4) (1.2) (8.1) Other - 0.1 1.2 ------------------------------------------------------------------------------------------------------------- Total realized gains on sales - unrelated parties 66.4 21.9 37.4 ------------------------------------------------------------------------------------------------------------- Realized losses on sales, net of hedging gains: Fixed maturity securities, available-for-sale (27.2) (15.7) (9.3) Hedging gains on fixed maturity sales 9.2 10.7 0.1 Equity securities, available-for-sale (0.4) (0.9) (0.8) Real estate (0.3) (3.0) (1.4) Mortgage loans on real estate (5.0) (3.3) (0.6) Mortgage loan hedging gains 0.5 0.9 - Other (2.0) (1.0) (7.7) ------------------------------------------------------------------------------------------------------------- Total realized losses on sales - unrelated parties (25.2) (12.3) (19.7) ------------------------------------------------------------------------------------------------------------- Other-than-temporary impairments: Fixed maturity securities, available-for-sale (159.4) (111.6) (66.1) Equity securities, available-for-sale (8.0) - (13.8) Real estate (0.8) (2.4) - Mortgage loans on real estate 11.7 (6.3) (0.7) ------------------------------------------------------------------------------------------------------------- Total other-than-temporary impairments (156.5) (120.3) (80.6) ------------------------------------------------------------------------------------------------------------- Credit default swaps 13.3 (6.4) (0.5) Derivatives, excluding hedging gains and losses on 1.2 9.5 0.7 sales, and credit default swaps ------------------------------------------------------------------------------------------------------------- Total unrelated parties (100.8) (107.6) (62.7) Gain on sale of limited partnership - related party - 23.2 44.4 ------------------------------------------------------------------------------------------------------------- Net realized losses on investments, $ (100.8) $ (84.4) $ (18.3) hedging instruments and hedged items =============================================================================================================
Fixed maturity securities with an amortized cost of $7.8 million as of December 31, 2003 and $7.3 million as of December 31, 2002 were on deposit with various regulatory agencies as required by law. As of December 31, 2003 and 2002 the Company had pledged fixed maturity securities with a fair value of $101.2 million and $152.4 million, respectively, as collateral to various derivative counterparties. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements As of December 31, 2003 and 2002 the Company held collateral of $544.5 million and $413.1 million, respectively, on derivative transactions. This amount is invested in short-term investments with a corresponding liability recorded in other liabilities. The Company also held $163.0 million and $25.9 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2003 and 2002, respectively. As of December 31, 2003 and 2002, the Company had loaned securities with a fair value of $958.1 million and $950.5 million, respectively. As of December 31, 2003 and 2002 the Company held collateral of $976.6 million and $974.5 million, respectively. This amount is invested 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 (GMDB) on individual variable annuity contracts. These adjustments were primarily driven by the sustained downturn in the equity markets. (5) VARIABLE ANNUITY CONTRACTS The Company issues traditional variable annuity contracts through its separate accounts, for which investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contract holder. The Company also issues non-traditional variable annuity contracts in which the Company provides various forms of guarantees to benefit the related contract holders. There are three primary guarantee types that are provided under non-traditional variable annuity contracts: (1) Guaranteed Minimum Death Benefits (GMDB); (2) Guaranteed Minimum Accumulation Benefits (GMAB); and (3) Guaranteed Minimum Income Benefits (GMIB). The GMDB provides a specified minimum return upon death. Many, but not all of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse and the survivor has the option to terminate the contract or continue it and have the death benefit paid into the contract and a second death benefit paid upon the survivor's death. There are six primary GMDB types that the company offers. o RETURN OF PREMIUM - provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as "net premiums". There are two variations of this benefit. In general, there is no lock in age for this benefit, however for some contracts, the GMDB reverts to the account value at a specified age, typically age 75. o RESET - provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90 and for others the GMDB reverts to the account value at age 75, 85, 86 or 90. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements o RATCHET - provides the greater of a return of premium death benefit or the highest specified "anniversary" account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference being based on the definition of anniversary: monthaversary - evaluated monthly, annual - evaluated annually, and five-year - evaluated every fifth year. o ROLLUP - provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit. For certain contracts, this GMDB locks in at age 86 and for others the GMDB reverts to the account value at age 75. o COMBO - provides the greater of annual ratchet death benefit or rollup death benefit. This benefit locks in at either age 81 or 86. o EARNINGS ENHANCEMENT - provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit, one where the benefit expires at age 86 and a credit of 4% of account value is deposited into the contract and the second where the benefit doesn't have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract. The GMAB is a living benefit that provides the contract holder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified period of time, 5, 7 or 10 years, selected by the contract holder at the issuance of the variable annuity contract. In some cases, the contract holder also has the option, after a specified period of time, to drop the rider and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options (GTOs) or adherence to limitations required by an approved asset allocation strategy. The GMIB is a living benefit that provides the contract holder with a guaranteed annuitization value. The GMIB types are: o RATCHET - provides an annuitization value equal to the greater of account value, net premiums or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals. o ROLLUP - provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums. o COMBO - provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements Following is a summary of the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees as of December 31, 2003 and 2002:
2003 2002 ----------------------------------------------- ---------------------------------------------- ACCOUNT NET AMOUNT WTD. AVG. Account Net amount Wtd. Avg. (in millions) VALUE AT RISK 1 ATTAINED AGE value at risk 1 attained age ============================================================================================================================== GMDB: Return of premium $ 9,760.0 $ 199.8 56.0 $ 8,737.4 $ 736.7 54.0 Reset 17,534.2 569.4 61.0 14,710.3 1,776.9 60.0 Ratchet 8,147.7 141.0 63.0 6,058.3 411.2 63.0 Roll-up 669.7 22.2 68.0 616.7 32.8 67.0 Combo 2,128.7 39.6 67.0 1,104.0 111.6 65.0 ------------------------------------------------------------------------------------------------------------------------------ Subtotal $ 38,240.3 972.0 61.0 $ 31,226.7 3,069.2 59.0 ============== ============= Earnings enhancement $ 314.1 10.9 59.0 $ 213.1 1.7 61.0 ----------------------------------- -------------------------------- Total - GMDB $ 982.9 61.0 $ 3,070.9 59.0 =================================== ================================ GMAB: 5 Year $ 79.9 $ 0.1 N/A n/a n/a n/a 7 Year 125.5 0.5 N/A n/a n/a n/a 10 Year 43.4 0.1 N/A n/a n/a n/a ------------------------------------------------------------------------------------------------------------------------------ Total - GMAB $ 248.8 $ 0.7 N/A n/a n/a n/a ============================================================================================================================== GMIB: 2 Ratchet $ 416.6 $ - N/A $ 307.8 $ - n/a Roll-up 1,131.9 - N/A 664.4 - n/a Combo 1.1 - N/A 0.1 - n/a ------------------------------------------------------------------------------------------------------------------------------ Total - GMIB $ 1,549.6 $ - N/A $ 972.3 $ - n/a ==============================================================================================================================
1 Net amount at risk is calculated on a seriatum basis and represents the greater of the respective guaranteed benefit less the account value and zero. As it relates to GMIB, net amount at risk is calculated as if all policies were eligible to annuitize immediately, although all GMIB options have a waiting period of at least 7 years from issuance, with the earliest annuitizations beginning in 2005. 2 The weighted average period remaining until expected annuitization is not meaningful and has not been presented because there is currently no net GMIB exposure. Please refer to note 8 for discussion about the use of derivatives in managing the guarantee risks discussed above. Also, refer to the equity market risk section of note 12 for discussion about the risks associated with these guarantees. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements Following is a rollforward of the liabilities for guarantees on variable annuity contracts reflected in the general account for the years ended December 31, 2003 and 2002:
(in millions) GMDB GMAB GMIB TOTAL ========================================================================================================================== Balance as of December 31, 2001 $ 10.8 $ - $ - $ 10.8 Change in fair value 23.6 - - 23.6 Paid guarantee benefits (20.7) - - (20.7) -------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2002 13.7 - - 13.7 NEW BUSINESS ACQUIRED - 4.7 - 4.7 Change in fair value 30.0 (0.4) - 29.6 Paid guarantee benefits, net of reinsurance (21.9) - - (21.9) -------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2003 $ 21.8 $ 4.3 $ - $ 26.1 ==========================================================================================================================
Account balances of contracts with guarantees were invested in separate accounts as follows as of each December 31:
(in millions) 2003 2002 =============================================================================================================== Bond mutual funds $ 4,620.3 $ 4,476.3 Domestic equity mutual funds 26,399.4 20,040.6 International equity mutual funds 1,622.0 1,158.7 Money market funds 1,792.9 2,550.2 --------------------------------------------------------------------------------------------------------------- Total $ 34,434.6 $ 28,225.8 ===============================================================================================================
(6) SHORT-TERM DEBT NLIC has established a $500.0 million commercial paper program under which borrowings are unsecured and are issued for terms of 364 days or less. NLIC had $199.8 million of commercial paper outstanding as of December 31, 2003 at a weighted average effective rate of 1.07%, none as of December 31, 2002. See also note 16. The Company paid interest on short-term debt totaling $1.3 million, $0.7 million and $5.3 million in 2003, 2002 and 2001, respectively, including $0.1 million and $0.5 million to NFS in 2003 and 2002, respectively. (7) LONG-TERM DEBT, PAYABLE TO NATIONWIDE FINANCIAL SERVICES, INC. Following is a summary of surplus notes payable to NFS as of each December 31:
(in millions) 2003 2002 ==================================================================================================================== 7.50% surplus note, due December 17, 2031 $ 300.0 $ 300.0 8.15% surplus note, due June 27, 2032 300.0 300.0 6.75% surplus note, due December 23, 2033 100.0 - -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Total long-term debt $ 700.0 $ 600.0 ====================================================================================================================
The Company made interest payments to NFS on surplus notes totaling $47.1 million in 2003, $30.1 million in 2002 and none in 2001. Payments of interest and principal under the notes require the prior approval of the Ohio Department of Insurance. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements (8) DERIVATIVE FINANCIAL INSTRUMENTS QUALITATIVE DISCLOSURE Interest Rate Risk Management From time to time the Company purchases fixed rate investments to back variable rate liabilities. As a result, the Company can be exposed to interest rate risk due to the mismatch between variable rate liabilities and fixed rate assets. To mitigate 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 pay fixed/receive variable interest rate swaps and short Euro futures to manage this risk. Under interest rate swaps, the Company receives variable interest rate payments and makes fixed rate payments. The fixed interest paid on the swap offsets the fixed interest received on the investment, resulting in the Company receiving the variable interest payments on the swap, generally 3-month libor. The net receipt of a variable rate will then match the variable rate paid on the liability. Short Euro futures, when considered in combination with the fixed-rate instruments, effectively change the fixed rate cash flow exposure to variable rate cash flows. With short Euro futures, if interest rates rise (fall), the gains (losses) on the futures are recognized in investment income. When combined with the fixed income received on the investment, the gains and losses on the Euro futures contracts results in a variable stream of cash inflows, which matches the variable interest paid on the liability. As a result of entering into commercial mortgage loan and private placement commitments, the Company is exposed to changes in the fair value of such commitments due to changes in interest rates during the commitment period prior to the loans being funded. To manage this risk, the Company enters into short Treasury futures during the commitment period. 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 variability in cash flows and investment income due to changes in interest rates. Such variability poses risks to the Company when the assets are funded with fixed rate liabilities. To manage this risk, the Company enters into receive fixed, pay variable interest rate swaps. In using interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments. The variable interest paid on the swap offsets the variable interest received on the investment, resulting in the Company receiving the fixed interest payments on the swap. The net receipt of a fixed rate will then match the fixed rate paid on the liability. 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 resulting, when combined with the hedged obligations, in net U.S. dollar cash outflows. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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. In both cases, the terms of the foreign currency received on the swap will exactly match the terms of the foreign currency paid on the liability, thus eliminating currency risk. Because the resulting cash flows in both cases remain variable, the Company has designated such cross-currency interest rate swaps as fair value hedging relationships. 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. To manage this risk, the Company uses cross-currency interest rate swaps , resulting, when combined with hedged investments, in net U.S. dollar cash inflows. Cross-currency interest rate swaps on investments are structured to pay a fixed rate, in the foreign currency and receive a variable U.S. dollar rate, generally 3-month libor. The terms of the foreign currency paid on the swap will exactly match the terms of the foreign currency received on the asset, thus eliminating currency risk. Because the resulting cash inflows remain variable, the Company has designated such cross-currency interest rate swaps in fair value hedging relationships. Equity Market Risk Management Many of the Company's individual variable annuity contracts offer GMDB features. The GMDB generally provides a benefit if the annuitant dies and the contract value is less than a specified amount, which may be based on the premiums paid less amounts withdrawn or contract value on a specified anniversary date. A decline in the stock market causing the 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 contract value, which could result in additional GMDB claims. To manage this risk, the Company has implemented a GMDB economic hedging program for primarily for certain new business generated after December 2002. The program does not qualify for hedge accounting under FAS 133, but is designed to offset changes in the value of the GMDB obligation up to a return of the contractholder's premiums paid less amounts withdrawn. Currently the program shorts S&P 500 index futures, which provides an offset to changes in the value of the designated obligation. Prior to implementation of the GMDB hedging program in 2003, the Company managed the risk of these benefits primarily by entering into reinsurance arrangements. See note 12 for additional discussion. The Company also offers certain variable annuity products with a guaranteed minimum accumulation benefit (GMAB) rider. The GMAB provides the contract holder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified period of time, 5, 7 or 10 years, selected by the contract holder at the issuance of the variable annuity contract. In some cases, the contract holder also has the option, after a specified period of time, to drop the rider and continue the variable annuity contract without the GMAB. The GMAB is an embedded derivative, as such, the equity exposure in this product is recognized at fair value, separately from the annuity contract, with changes in fair value recognized in the income statement. The Company is exposed to equity market risk to the extent that the underlying investment options, which can include fixed and variable components, selected by the contract holder do not generate enough earnings over the life of the contract to at least equal the adjusted premiums. The Company is economically hedging the GMAB exposure for those risks that exceed a level considered acceptable by purchasing interest rate futures and shorting S&P 500 futures. The GMAB economic hedge does not qualify for hedge accounting under FAS 133. Other Non-Hedging Derivatives From time-to-time, the Company enters into 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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. These assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. The combined credit default swap and cash instrument provides the duration and credit spread targeted by the Company. The credit default swaps do not qualify for hedge accounting treatment. The Company also has purchased credit default protection on selected debt instruments exposed to short-term credit concerns, or because the combination of the corporate bond and purchased default protection provides sufficient spread and duration targeted by the Company. The purchased credit default protection does not qualify for hedge accounting treatment. QUANTITATIVE DISCLOSURE Fair Value Hedges During the years ended December 31, 2003, 2002 and 2001 gains of $4.2 million, $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, 2003 and 2002, the ineffective portion of cash flow hedges was a loss of $5.4 and a gain of $1.8 million in 2002. There were no net 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 $0.2 million in losses out of AOCI over the next 12-month period. In general, 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 or less. However, in 2003, the Company did enter into a hedge of a forecasted purchase of shares of a specified mutual fund, where delivery of the shares will occur 30 years in the future. During 2003, 2002 and 2001 the Company did not discontinue any cash flow hedges because the original forecasted transaction was no longer probable. Additionally, no amounts were reclassified from AOCI into earnings because it became probable that a forecasted transaction would not occur. Other Derivative Instruments, Including Embedded Derivatives Net realized gains and losses on investments, hedging instruments and hedged items for the years ended December 31, 2003, 2002 and 2001 include a net gain of $11.8 million, a net loss of $2.2 million and a net loss of $1.6 million, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. For the years ended December 31, 2003, 2002 and 2001, net gains of $4.2 million, $120.4 million and a net 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 additional net gain of $0.9, loss of $119.6 million and a net 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, 2003, 2002 and 2001, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The notional amount of derivative financial instruments outstanding as of December 31, 2003 and 2002 were as follows:
(in millions) 2003 2002 =================================================================================================================== INTEREST RATE SWAPS: Pay fixed/receive variable rate swaps hedging investments $1,954.7 $ 2,206.5 Pay variable/receive fixed rate swaps hedging investments 188.2 229.7 Pay variable/receive variable rate swaps 154.0 221.0 Pay variable/receive fixed rate swaps hedging liabilities 500.0 500.0 Pay variable/receive variable rate swaps 430.0 430.0 Other contracts hedging investments 842.5 690.8 CROSS CURRENCY INTEREST RATE SWAPS: Hedging foreign currency denominated investments 580.1 111.0 Hedging foreign currency denominated liabilities 2,643.9 3,033.6 Futures contracts 2,615.8 4,250.9 ------------------------------------------------------------------------------------------------------------------- Total $9,909.2 $11,673.5 ===================================================================================================================
(9) 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. Effective October 1, 2002, Nationwide Corporation's ownership in NFS decreased from 80% to 63%, and as a result, NFS and its subsidiaries, including the Company, no longer qualify to be included in the NMIC consolidated federal income tax return. 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. 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 until 2008, when NFS expects to be able to file a single consolidated federal income tax return with all of its subsidiaries, including NLIC. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31, 2003 and 2002 were as follows:
(in millions) 2003 2002 ======================================================================================================================== DEFERRED TAX ASSETS: Future policy benefits $ 594.8 $ 549.6 Derivatives 11.7 40.2 Other 104.4 40.1 ------------------------------------------------------------------------------------------------------------------------ Gross deferred tax assets 710.9 629.9 Less valuation allowance (7.0) (7.0) ------------------------------------------------------------------------------------------------------------------------ Net deferred tax assets 703.9 622.9 ------------------------------------------------------------------------------------------------------------------------ DEFERRED TAX LIABILITIES: Fixed maturity securities 390.0 402.2 Equity securities and other investments 42.7 37.4 Deferred policy acquisition costs 840.8 762.0 Other 88.1 50.5 ------------------------------------------------------------------------------------------------------------------------ Gross deferred tax liabilities 1,361.6 1,252.1 ------------------------------------------------------------------------------------------------------------------------ Net deferred tax liability $ 657.7 $ 629.2 ========================================================================================================================
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, 2003. The Company's current federal income tax liability was $106.3 million and $176.4 million as of December 31, 2003 and 2002, 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) 2003 2002 2001 ====================================================================================================================== Current $ 106.7 $ 63.7 $ 32.2 Deferred (10.5) (55.0) 129.0 ---------------------------------------------------------------------------------------------------------------------- Federal income tax expense $ 96.2 $ 8.7 $161.2 ======================================================================================================================
The customary relationship between federal income tax expense and pre-tax income from continuing operations before cumulative effect of adoption of accounting principles did not exist in 2002. This is a result of the impact of the $121.5 million tax benefit associated with the $347.1 million of accelerated DAC amortization reported in 2002 (see note 4) being calculated at the U.S. federal corporate income tax rate of 35%. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements Total federal income tax expense for the years ended December 31, 2003, 2002 and 2001 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:
2003 2002 2001 ---------------------- ----------------------- ----------------------- (in millions) AMOUNT % Amount % Amount % ===================================================================================================================== Computed (expected) tax expense $ 152.0 35.0 $ 59.3 35.0 $ 220.1 35.0 Tax exempt interest and dividends received deduction (45.7) (10.5) (38.9) (22.9) (48.8) (7.7) Income tax credits (10.8) (2.5) (12.7) (7.5) (11.5) (1.8) Other, net 0.7 0.1 1.0 0.5 1.4 0.1 --------------------------------------------------------------------------------------------------------------------- Total (effective rate for each year) $ 96.2 22.1 $ 8.7 5.1 $ 161.2 25.6 =====================================================================================================================
Total federal income tax paid (refunded) was $176.0 million, $71.0 million and $(45.4) million during the years ended December 31, 2003, 2002 and 2001, 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements (10) 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, 2003, 2002 and 2001 were as follows:
YEARS ENDED DECEMBER 31, ------------------------------------------- (in millions) 2003 2002 2001 ===================================================================================================================== Unrealized (losses) gains on securities available-for-sale arising during the period: Gross $ (16.7) $ 527.5 $ 164.0 Adjustment to deferred policy acquisition costs 56.9 (205.7) (71.7) Adjustment to future policy benefits and claims 22.6 (133.2) - Related federal income tax expense (22.4) (66.0) (32.3) --------------------------------------------------------------------------------------------------------------------- Net unrealized gains 40.4 122.6 60.0 --------------------------------------------------------------------------------------------------------------------- Reclassification adjustment for net losses on securities available-for-sale realized during the period: Gross 91.0 86.2 58.7 Related federal income tax benefit (31.8) (30.2) (20.5) --------------------------------------------------------------------------------------------------------------------- Net reclassification adjustment 59.2 56.0 38.2 --------------------------------------------------------------------------------------------------------------------- Other comprehensive income on securities 99.6 178.6 98.2 available-for-sale --------------------------------------------------------------------------------------------------------------------- Accumulated net (losses) gains on cash flow hedges: Gross (40.9) 16.9 (13.5) Related federal income tax benefit (expense) 14.3 (5.9) 4.7 --------------------------------------------------------------------------------------------------------------------- Other comprehensive (loss) income on cash flow hedges (26.6) 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 $ 73.0 $ 189.6 $ 88.0 =====================================================================================================================
Reclassification adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during 2003, 2002 and 2001 and, therefore, are not reflected in the table above. (11) 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 The fair value of a financial instrument is defined as the amount at which the financial instrument could be bought, or in case of liabilities incurred, or sold, or in the case of liabilities settled, in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is to be based on the best information available in the circumstances. Such estimates of fair value should consider prices for similar assets or similar liabilities and the results of valuation techniques to the extent available in the circumstances. Examples of valuation techniques include the present value of estimated expected future cash flows using discount rates commensurate with the risks involved, option-pricing models, matrix pricing, option-adjusted spread models, and fundamental analysis. Valuation techniques for measuring assets and liabilities must be consistent with the objective of measuring fair value and should incorporate assumptions that market participants would use in their estimates of values, future revenues, and future expenses, including assumptions about interest rates, default, prepayment, and volatility. 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 matrix pricing, present value or other suitable 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, the Company's estimate of the fair values 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 the estimates of fair value and have not been considered in arriving at such estimates. In estimating its fair value disclosures, the Company used the following methods and assumptions: Fixed maturity and equity securities: The fair value of fixed maturity and marketable equity securities is generally obtained from independent pricing services based on market quotations. For fixed maturity securities not priced by independent services (generally private placement securities and securities that do not trade regularly), an internally developed pricing model or "corporate pricing matrix" is most often used. The corporate pricing matrix is developed by obtaining spreads versus the US Treasury yield for corporate securities with varying weighted average lives and bond ratings. The weighted average life and bond rating of a particular fixed maturity security to be priced using the corporate matrix are important inputs into the model and are used to determine a corresponding spread that is added to the US Treasury yield to create an estimated market yield for the that bond. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular fixed maturity security. Additionally, the Company's internal corporate pricing matrix is not suitable for valuing certain fixed maturity securities, particularly those with complex cash flows such as certain mortgage-backed and asset-backed securities. In these cases, a separate "structured product pricing matrix" has been developed to value, as appropriate, using the same methodology described above. For securities for which quoted market prices are not available and for which the Company's structured product pricing matrix is not suitable for estimating fair values, qualified company representatives determine the fair value using other modeling techniques, primarily using a commercial software application utilized in valuing complex securitized investments with variable cash flows. As of December 31, 2003, 68% of the fair values of fixed maturity securities were obtained from independent pricing services, 21% from the Company's pricing matricies and 11% from other sources. 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 fair value is based on the present value of expected future cash flows discounted at the loan's effective interest rate. Policy loans, short-term investments and cash: The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair value. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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. 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 12. 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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:
2003 2002 --------------------------- -------------------------- CARRYING ESTIMATED Carrying Estimated (in millions) AMOUNT FAIR VALUE amount fair value ==================================================================================================================== ASSETS Investments: Securities available-for-sale: Fixed maturity securities $26,946.8 $26,946.8 $ 24,169.0 $ 24,169.0 Equity securities 85.6 85.6 84.3 84.3 Mortgage loans on real estate, net 8,345.8 8,830.0 7,923.2 8,536.4 Policy loans 618.3 618.3 629.2 629.2 Short-term investments 1,860.8 1,860.8 1,210.3 1,210.3 Cash 0.1 0.1 0.9 0.9 Assets held in separate accounts 57,084.5 57,084.5 47,208.2 47,208.2 LIABILITIES Investment contracts (28,663.4) (27,239.8) (25,276.3) (23,634.1) Policy reserves on life insurance contracts (6,658.9) (6,706.7) (6,403.5) (6,479.6) Short-term debt (199.8) (199.8) - - Long-term debt, payable to NFS (700.0) (803.7) (600.0) (728.5) Collateral received - securities lending and derivatives (1,521.1) (1,521.1) (1,363.6) (1,363.6) Liabilities related to separate accounts (57,084.5) (56,118.6) (47,208.2) (45,524.6) DERIVATIVE FINANCIAL INSTRUMENTS Interest rate swaps hedging assets (99.4) (99.4) (141.2) (141.2) Cross currency interest rate swaps 599.1 599.1 325.1 325.1 Futures contracts (25.2) (25.2) (45.7) (45.7) Other derivatives 4.6 4.6 - - --------------------------------------------------------------------------------------------------------------------
(12) 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, mortgagees on real estate mortgage loans or other parties, including reinsurers and derivatives counterparties, default on their contractual obligations. The Company mitigates this risk by adhering to investment policies that provide portfolio diversification on an asset class, creditor, and industry basis, and by complying with investment limitations governed by State insurance laws and regulations, as applicable. The Company actively monitors and manages exposures, including restructuring, reducing, or liquidating investments, and determines whether any securities are impaired or loans are deemed uncollectible and takes charges in the period such assessments are made. The ratings of reinsurers who owe the Company money are regularly monitored along with outstanding balances as part of the Company's reinsurance collection process, with timely follow-up on delayed payments. The aggregate credit risk taken in the investment portfolio is influenced by management's risk/return preferences, the economic and credit environment, the relationship of credit risk in the asset portfolio to other business risks that the Company is exposed to and the Company's current and expected future capital position. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements Interest Rate Risk: The risk that interest rates will change and cause a decrease in the value of an insurer's investments relative to the value of its liabilities, and/or an unfavorable change in prepayment activity, resulting in compressed interest margins. For example, if 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. In some investments that contain borrower options, this risk may be realized through unfavorable cash flow patterns, e.g. increased principal repayment when interest rates have declined. When unfavorable interest rate movements occur, interest margins may compress, reducing profitability. The Company mitigates this risk by offering products that transfer this risk to the purchaser and/or by attempting to approximately match the maturity schedule of its assets with the expected payouts of its liabilities, both at inception and on an ongoing basis. In some investments that permit prepayment at the borrower option, make-whole provisions are required such that if the borrower prepays in a lower-rate environment, the Company be compensated for the loss of future income. In other situations, the Company accepts some interest rate risk in exchange for a higher yield on the investment. 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 practices that identify and minimize the adverse impact of this risk. Ratings Risk: The risk that rating agencies change their outlook or rating of the Company or a subsidiary of the company. The rating agencies generally utilize proprietary capital adequacy models in the process of establishing ratings for the Company and certain subsidiaries. The Company is at risk to changes in these models and the impact that changes in the underlying business that it is engaged in can have on such models. To mitigate this risk, the Company maintains regular communications with the rating agencies and evaluates the impact of significant transactions on such capital adequacy models and considers the same in the design of transactions to 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. 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 uinderlying 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 $391.8 million extending into 2004 were outstanding as of December 31, 2003. The Company also had $110.3 million of commitments to purchase fixed maturity securities outstanding as of December 31, 2003. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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. Any exposures related to derivative activity are aggregated with other credit exposures between the Company and the derivative counterparty to assess adherence to established credit limits. As of December 31, 2003, the Company's credit risk from these derivative financial instruments was $75.8 million, net of $544.5 million of cash collateral and $163.0 million in securities pledged as collateral. 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, 2003, approximately 80% 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 GMDB or GMAB claims, which may require the Company to accelerate the amortization of DAC. Many of the Company's individual variable annuity contracts offer GMDB features. The GMDB generally provides a benefit if the annuitant dies and the contract value is less than a specified amount, which may be based on the premiums paid less amounts withdrawn or contract value on a specified anniversary date. A decline in the stock market causing the 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 contract value, which could result in additional GMDB claims. The Company utilizes a combination of risk management techniques to mitigate this risk. In general, for most contracts issued prior to July 2002, the Company obtained reinsurance from independent third parties, whereas for certain contracts issued after December 2002, the Company has been executing an economic hedging program. The GMDB economic hedging program is designed to offset changes in the economic value of the GMDB obligation up to a return of the contract holder's premium payments, however the first 10% of GMDB claims are not hedged. Currently the program shorts S&P 500 index futures, which provides an offset to changes in the value of the designated obligation. The Company's economic evaluation of the GMDB obligation is not consistent with current accounting treatment of the GMDB obligation. Therefore the hedging activity will lead to volatility of earnings. This volatility was negligible in 2003. As of December 31, 2003, the net amount at risk, defined as the excess of the death benefit over the account value, was $2.8 billion before reinsurance and $982.9 million net of reinsurance. As of December 31, 2003 and 2002, the Company's reserve for GMDB claims was $21.8 million and $13.7 million, respectively. See note 21 for discussion of the impact of adopting a new accounting principle regarding GMDB reserves in 2004. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The Company also offers certain variable annuity products with a GMAB rider. The GMAB provides the contract holder with a guaranteed return of premium, adjusted proportionately for withdrawals, after a specified period of time, 5, 7 or 10 years, selected by the contract holder at the time of issuance of the variable annuity contract. In some cases, the contract holder also has the option, after a specified period of time, to drop the rider and continue the variable annuity contract without the GMAB. The design of the GMAB rider limits the risk to the Company in a variety of ways including the requirement that a significant portion of the premium be allocated to a guaranteed term option (GTO) that is a fixed rate investment, thereby reducing the equity exposure. The GMAB represents an embedded derivative in the variable annuity contract that is required to be separated from and valued apart from the host variable annuity contract. The embedded derivative is carried at fair value and reported in other future policy benefits and claims. The Company initially records an offset to the fair value of the embedded derivative on the balance sheet, which is amortized through the income statement over the term of the GMAB period of the contract. The fair value of the GMAB embedded derivative is calculated based on actuarial assumptions related to the projected benefit cash flows incorporating numerous assumptions including, but not limited to, expectations of contract holder persistency, market returns, correlation's of market returns and market return volatility. The Company began selling contracts with the GMAB feature on May 1, 2003. Beginning October 1, 2003, the Company launched an enhanced version of the rider that offered increased equity exposure to the contract holder in return for a higher charge. The Company simultaneously began economically hedging the GMAB exposure for those risks that exceed a level it considered acceptable. The GMAB economic hedge consists of shorting interest rate futures and S&P 500 futures contracts and does not qualify for hedge accounting under FAS 133. See note 2(c) for discussion of economic hedges. The objective of the GMAB economic hedge strategy is to manage the exposures with risk beyond a level considered acceptable to the Company. The Company is exposed to equity market risk related to the GMAB feature should the growth in the underlying investments, including any GTO investment, fail to reach the guaranteed return level. The GMAB embedded derivative will create volatility in earnings, however the hedging program provides substantial mitigation of this exposure. This volatility was negligible in 2003. The fair value of the GMAB embedded derivative as of December 31, 2003 was $4.3 million. Changes in the fair value of the GMAB embedded derivative and the hedging instruments totaled $(0.4) million and $(0.1) million, respectively, during the year ended December 31, 2003. 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, 2003, the Company has a diversified portfolio with no more than 23% in any geographic area and no more than 2% with any one borrower. As of December 31, 2003, 31% of the carrying value of the Company's commercial mortgage loan portfolio financed retail properties. Significant Business Concentrations: As of December 31, 2003, 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 overly vulnerable to a single 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 18, 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 $635.9 million as of December 31, 2003. 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 contractholder. 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 each of the underlying contract. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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 pledged securities at all times and is entitled to receive from the borrower any payments for interest or dividends received on such securities during the period it is pledged as collateral. 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 on such securities during the loan term. (13) PENSION PLAN, POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND RETIREMENT SAVINGS PLAN The Company, together with certain affiliated companies, sponsors pension plans covering all employees of participating companies 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, 2003, 2002 and 2001 were $13.2 million, $10.0 million and $5.0 million, respectively. The Company has recorded a prepaid pension asset of $7.7 million as of December 31, 2003 compared to pension liability of $0.5 million as of December 31, 2002. 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, hired prior to June 1, 2000, 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, by no more than three percent through 2006, at which time the cap will be frozen. 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 Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was signed into law on December 8, 2003. FASB Staff Position FAS 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 permits employers that sponsor postretirement benefit plans to defer accounting for the effects of the Act until the FASB issues guidance on how to account for the provisions of the Act. Specific authoritative guidance on accounting for the Act is pending. The issued guidance could require the plan sponsor to change previously reported information. The Company will defer recognition of the Act until the guidance is issued. Any measures of the accumulated postretirement benefit obligation (APBO) and net periodic postretirement benefit cost (NPPBC) do not reflect the effects of the Act. The Company's accrued postretirement benefit expense as of December 31, 2003 and 2002 was $50.5 million and $51.9 million, respectively, and the NPPBC for 2003, 2002 and 2001 was $1.1 million, $3.5 million and $2.9 million, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements Information regarding the funded status of the pension plans as a whole and the postretirement life and health care benefit plan as a whole, both of which are U.S. plans, as of December 31, 2003 and 2002 follows:
PENSION BENEFITS POSTRETIREMENT BENEFITS --------------------------- ------------------------------ (in millions) 2003 2002 2003 2002 ======================================================================================================================== CHANGE IN BENEFIT OBLIGATION: Benefit obligation at beginning of year $ 2,236.2 $ 2,132.2 $ 269.7 $ 314.0 Service cost 104.0 103.3 9.9 13.2 Interest cost 131.7 135.6 19.5 22.5 Participant contributions - - 4.2 4.0 Plan amendment 1.6 (11.5) - (117.7) Actuarial loss (gain) 85.1 (13.1) (2.8) 54.0 Benefits paid (101.6) (97.6) (20.4) (20.3) Impact of settlement/curtailment - (12.7) - - Impact of plan merger - - 26.7 - ------------------------------------------------------------------------------------------------------------------------ Benefit obligation at end of year 2,457.0 2,236.2 306.8 269.7 ------------------------------------------------------------------------------------------------------------------------ CHANGE IN PLAN ASSETS: Fair value of plan assets at beginning of year 1,965.0 2,200.7 106.9 119.7 Actual return on plan assets 265.4 (142.4) 16.5 (12.7) Employer contributions1 113.6 4.3 20.3 16.2 Participant contributions - - 4.2 4.0 Benefits paid1 (101.6) (97.6) (20.4) (20.3) ------------------------------------------------------------------------------------------------------------------------ Fair value of plan assets at end of year 2,242.4 1,965.0 127.5 106.9 ------------------------------------------------------------------------------------------------------------------------ Funded status (214.6) (271.2) (179.3) (162.8) Unrecognized prior service cost 30.3 33.6 (103.3) (116.9) Unrecognized net losses 192.1 225.9 56.9 71.9 Unrecognized net (asset) obligation at transition (2.5) (3.8) - 0.1 ------------------------------------------------------------------------------------------------------------------------ Prepaid (accrued) benefit cost, net $ 5.3 $ (15.5) $ (225.7) $ (207.7) ======================================================================================================================== ------------------------------------------------------------------------------------------------------------------------ Accumulated benefit obligation $ 2,020.2 $ 1,821.0 N/A N/A ========================================================================================================================
________ 1 Employer contributions and benefits paid include only those amounts contributed directly to or paid directly from plan assets. Effective January 1, 2003, the pension plan was amended to improve benefits for certain participants, resulting in an increase in the projected benefit of $1.6 million. 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 by 3 percent per year, at which time the cap will be frozen. 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. The plan sponsor and participating employers, including the Company, expect to contribute $130.0 million to the pension plan and $20.0 million to the postretirement benefit plan in 2004. 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements On June 30, 2002, NMIC Medicare operations ceased, and all Medicare employees were terminated as Nationwide employees. Curtailment charges of $10.5 million and curtailment credits of $10.0 million were directly assigned to NMIC for the years ended December 31, 2003 and 2002 respectively. Weighted average assumptions used in calculating benefit obligations and the funded status of the pension plan and postretirement life and health care benefit plan as of the end of each period presented were as follows:
PENSION BENEFITS POSTRETIREMENT BENEFITS ---------------------------- ----------------------------- 2003 2002 2003 2002 =================================================================================================================== Discount rate 5.50% 6.00% 6.10% 6.60% Rate of increase in future compensation levels 4.00% 4.50% - - Assumed health care cost trend rate: Initial rate - - 11.00%1 11.30%1 Ultimate rate - - 5.20%1 5.70%1 Declining period - - 11 YEARS 11 Years -------------------------------------------------------------------------------------------------------------------
________ 1 The 2003 initial rate is 12.0% for participants over age 65, with an ultimate rate of 5.6% and the 2002 initial rate is 12.3% for participants over age 65, with an ultimate rate of 6.3%. The Company uses a December 31 measurement date for all plans. The asset allocation for the pension plan as a whole at the end of 2003 and 2002, and the target allocation for 2004, by asset category, are as follows:
TARGET ALLOCATION PERCENTAGE PERCENTAGE OF PLAN ASSETS ----------------------------------------------------------------------------------------------------------------------------------- Asset Category 2004 2003 2002 =================================================================================================================================== Equity Securities 40 - 65 45% 43% Debt Securities 25 - 50 55% 57% Real Estate 0 - 10 0% 0% Total - 100% 100% ===================================================================================================================================
The plan employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. Plan language requires investment in a group annuity contract backed by fixed investments with an interest rate guarantee to match liabilit ies for specific classes of retirees. On a periodic basis, the portfolio is analyzed to establish the optimal mix of assets given current market conditions given the risk tolerance. In the most recent study, asset sub-classes were considered in debt securities (diversified US investment grade bonds, diversified high-yield US securities, and international fixed income, emerging markets, and commercial mortgage loans) and equity investments (domestic equities, private equities, international equities, emerging market equities and real estate investments). Each asset sub-class chosen contains a diversified blend of securities from that sub-class. Investment mix is measured and monitored on an on-going basis through regular investment reviews, annual liability measurements, and periodic asset/liability studies. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The asset allocation for the other postretirement life and healthcare benefit plan as a whole at the end of 2003 and 2002, and the target allocation for 2004, by asset category, are as follows:
TARGET ALLOCATION PERCENTAGE PERCENTAGE OF PLAN ASSETS --------------------------------------------------------------------------------------------------------------------------------- Asset Category 2004 2003 2002 ================================================================================================================================= - Equity Securities 50 - 80 59% 53% Debt Securities 20 - 50 35% 39% Other 0 - 10 6% 8% Total - 100% 100% =================================================================================================================================
The other postretirement life and health care benefit plan employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. Plan investments for retiree life insurance benefits include a retiree life insurance contract issued by NLIC and for retiree medical liabilities both a group annuity contract issued by NLIC backed by fixed investments with an interest rate guarantee and a separate account invested in diversified US equities. The investment mix is measured and monitored on an on-going basis through regular investment reviews, annual liability measurements, and periodic asset/liability studies. The components of net periodic pension cost for the pension plan as a whole for the years ended December 31, 2003, 2002 and 2001 were as follows:
(in millions) 2003 2002 2001 ======================================================================================================================== Service cost (benefits earned during the period) $ 104.0 $ 103.3 $ 89.3 Interest cost on projected benefit obligation 131.7 135.6 129.1 Expected return on plan assets (156.7) (178.6) (183.8) Recognized gains 0.1 - (7.8) Amortization of prior service cost 4.5 4.4 3.2 Amortization of unrecognized transition asset (1.3) (1.3) (1.3) ------------------------------------------------------------------------------------------------------------------------ Net periodic pension cost $ 82.3 $ 63.4 $ 28.7 ========================================================================================================================
Weighted average assumptions used in calculating the net periodic pension cost, set at the beginning of each year, for the pension plan were as follows:
2003 2002 2001 ==================================================================================================================== Weighted average discount rate 6.00% 6.50% 6.75% Rate of increase in future compensation levels 4.50% 4.75% 5.00% Expected long-term rate of return on plan assets 7.75% 8.25% 8.00% --------------------------------------------------------------------------------------------------------------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The Company employs a prospective building block approach in determining the long-term expected rate of return for plan assets. This process is integrated with the determination of other economic assumptions such as discount rate and salary scale. Historical markets are studied and long-term historical relationships between equities and fixed-income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run called a risk premium. Historic risk premiums are used to develop expected real rates of return of each asset sub-class. The expected real rates of return, reduced for investment expenses, are applied to the target allocation of each asset sub-class to produce an expected real rate of return for the target portfolio. This expected real rate of return will vary by plan and will change when the plan's target investment portfolio changes. Current market factors such as inflation and interest rates are incorporated in the process as follows. For a given measurement date, the discount rate is set by reference to the yield on high-quality corporate bonds to approximate the rate at which plan benefits could effectively be settled. The historic real rate of return is subtracted from these bonds to generate an assumed inflation rate. The expected long-term rate of return for plan assets is the assumed inflation rate plus the expected real rate of return. This process effectively sets the expected return for the plan's portfolio at the yield for the reference bond portfolio, adjusted for expected risk premiums of the target asset portfolio. Given the prospective nature of this calculation, short-term fluctuations in the market do not impact the expected risk premiums. However, as the yield for the reference bond fluctuates, the assumed inflation rate and the expected long-term rate are adjusted in tandem. In 2002, the pension plan's target investment portfolio 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, 2003, 2002 and 2001 were as follows:
(in millions) 2003 2002 2001 ===================================================================================================================== Service cost (benefits attributed to employee service during the year) $ 9.9 $ 13.2 $ 12.6 Interest cost on accumulated postretirement benefit obligation 19.5 22.5 21.4 Expected return on plan assets (8.0) (9.2) (9.6) Amortization of unrecognized transition obligation of affiliates - 0.6 0.6 Net amortization and deferral (9.9) (0.5) (0.4) --------------------------------------------------------------------------------------------------------------------- NPPBC $11.5 $ 26.6 $ 24.6 =====================================================================================================================
Weighted average actuarial assumptions used for the measurement of the NPPBC, set at the beginning of each year, for the postretirement benefit plan for 2003, 2002 and 2001 were as follows:
2003 2002 2001 ========================================================================================================================== Discount rate 6.60% 7.25% 7.50% Long-term rate of return on plan assets 7.50% 7.75% 8.00% Assumed health care cost trend rate: Initial rate 11.30% 1 11.00% 1 11.00% Ultimate rate 5.70% 1 5.50% 1 5.50% Declining period 11 YEARS 4 Years 4 Years --------------------------------------------------------------------------------------------------------------------------
1 The 2003 initial rate is 12.0% for participants over age 65, with an ultimate rate of 5.6% and the 2002 initial rate is 12.3% for participants over age 65, with an ultimate rate of 6.3%. Because current plan costs are very close to the employer dollar caps, the health care cost trend has an immaterial effect on plan obligations and expense 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, 2003 and on the NPPBC for the year ended December 31, 2003 was not calculated. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The Company, together with other affiliated companies, sponsors defined contribution retirement savings plans 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 these plans totaled $5.5 million, $5.7 million and $5.6 million for 2003, 2002 and 2001, respectively, including $0.5 million and $0.4 million related to discontinued operations for 2002 and 2001, respectively. (14) 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, 2003 and 2002 was $2.23 billion and $1.61 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2003, 2002 and 2001 was $444.4 million, $92.5 million and $83.1 million, respectively. The Company is limited in the amount of shareholder dividends it may pay without prior approval by the Department. As of January 1, 2004, based on statutory financial results as of and for the year ended December 31, 2003, NLIC could pay dividends totaling $284.4 million without obtaining prior approval. In February 2004, NLIC obtained prior approval from the Ohio Department of Insurance to pay a dividend to NFS in the amount of $75.0 million because the December 31, 2003 statutory financial statements had not been filed at the time of the dividend. 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 (15) RELATED PARTY TRANSACTIONS 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 and 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, 2003, 2002 and 2001, the Company made payments to NMIC and Nationwide Services Company, LLC, totaling $170.4 million, $135.6 million and $139.8 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. 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 $5.22 billion and $4.50 billion as of December 31, 2003 and 2002, respectively. Total revenues from these contracts were $138.9 million, $143.3 million and $150.7 million for the years ended December 31, 2003, 2002 and 2001, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances were $111.8 million, $114.8 million and $122.5 million for the years ended December 31, 2003, 2002 and 2001, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties who are similarly situated. 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, 2003 and 2002, customer allocations to GGI funds were $12.80 billion and $12.21 billion, respectively. For the years ended December 31, 2003 and 2002, GGI paid the Company $38.6 million and $35.3 million, respectively, for the distribution and servicing of these funds. 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, 2003, 2002 and 2001 were $286.7 million, $325.0 million and $200.7 million, respectively, while benefits, claims and expenses ceded were $247.5 million, $328.4 million and $210.1 million, respectively. 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 $24.8 million, $24.9 million and $26.4 million for the years ended December 31, 2003, 2002 and 2001, respectively. The Company leases office space from NMIC and certain of its subsidiaries. For the years ended December 31, 2003, 2002 and 2001, the Company made lease payments to NMIC and its subsidiaries of $17.5 million, $20.2 million and $18.7 million, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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, 2003 and 2002, the Company had no borrowings from affiliated entities under such agreements. During 2003, 2002 and 2001, the most the Company had outstanding at any given time was $126.0 million, $224.9 million and $368.5 million, respectively, and the Company incurred interest expense on intercompany repurchase agreements of $0.1 million, $0.3 million and $0.2 million for 2003, 2002 and 2001, respectively. 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 $205.9 million and $87.0 million as of December 31, 2003 and 2002, respectively, and are included in short-term investments on the accompanying consolidated balance sheets. For the years ending December 31, 2003, 2002 and 2001, the Company paid NCMC fees and expenses totaling $0.3 million, $0.3 million and $0.4 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 each of the years in the three year period ended December 31, 2003 were $62.0 million, $50.3 million and $52.9 million, respectively. Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in note 9, beginning October 1, 2002, NLIC files a consolidated federal income tax return with NLAIC. Total payments to (from) NMIC were $71.0 million and $(45.4) million for the years ended December 31, 2002 and 2001, respectively. Total payments to (from) NLAIC were $(2.7) million and $0 for the years ended December 31, 2003 and 2002, respectively. In the third quarter of 2003, NLIC received a capital contribution of 100% of the common stock of Nationwide Retirement Plan Solutions (NRPS) from NFS. The capital contribution was valued at $0.2 million. Immediately after receipt of this capital contribution, NRPS was dissolved into NLIC. In first quarter 2003 NLIC received a $200.0 million capital contribution from NFS for general corporate purposes. In 2003 and 2002, NLIC paid dividends of $60.0 million and $35.0 million, respectively, to NFS. During 2003 and 2002 NLIC paid dividends in the form of return of capital of $100.0 million and $475.0 million to NFS, respectively. Furthermore, in February 2004, NLIC paid a $75.0 million dividend to NFS. 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 issued NFS a 7.50%, $300.0 million surplus note maturing on December 17, 2031. In June 2002, NLIC issued NFS an 8.15%, $300.0 million surplus note maturing June 27, 2032. In December 2003, NLIC issued NFS a 6.75%, $100.0 million surplus note maturing December 23, 2033. The Company made interest payments on surplus notes to NFS totaling $47.1 million and $30.1 million in 2003 and 2002, respectively. In addition, the Company made interest payments on unsecured notes to NFS totaling less than $0.1 million and $0.5 million in 2003 and 2002, respectively. As of December 31, 2003 there were no outstanding balances on unsecured notes to NFS. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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. (16) BANK LINES OF CREDIT The Company has available as a source of funds a $1.00 billion revolving credit facility entered into by NFS, NLIC and NMIC. The facility is comprised of a five-year $700.0 million agreement maturing in May of 2005 and a 364 day $300.0 million agreement maturing in May of 2004 with a group of financial institutions. The Company and NMIC intend to renew both parts of the credit facility in 2004. 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 $935.0 million. The Company had no amounts outstanding under this agreement as of December 31, 2003. NLIC is currently required to maintain an available credit facility equal to 50% of any amounts outstanding under its $500.0 million commercial paper program. Therefore, availability under the aggregate $1.00 billion credit facility is reduced by an amount equal to 50% of any commercial paper outstanding. NLIC had $199.8 million of commercial paper outstanding as of December 31, 2003. Also, the Company has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. This is an uncommitted facility, which is contingent on the liquidity of the securities lending program. The maximum amount available under the agreement is $100.0 million. The borrowing rate on this program rate is equal to fed funds plus 3 basis points. There were no amounts outstanding under this agreement as of December 31, 2003. (17) CONTINGENCIES On October 29, 1998, the Company was named in a lawsuit filed in Ohio state court by plaintiff Mercedes Castillo that challenged 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 was brought as a class action on behalf of all persons who purchased individual deferred annuity contracts or participated in group annuity contracts sold by the Company and the other named Company affiliates, which were allegedly used to fund certain tax-deferred retirement plans. The amended complaint seeks unspecified compensatory and punitive damages. 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. On November 4, 2002, the Court issued a decision granting the Company's motion for summary judgment on all of plaintiff Mercedes Castillo's individual claims, and ruling that plaintiff's motion for class certification was moot. Following appeal by the plaintiff, both of those decisions were affirmed by the Ohio Court of Appeals on September 9, 2003. The plaintiff filed a notice of appeal of the decision by the Ohio Court of Appeals on October 24, 2003. The Ohio Supreme Court announced on January 21, 2004 that the appeal was not accepted and the time for reconsideration has expired. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements On October 31, 2003, a lawsuit seeking class action status containing allegations similar to those made in the Castillo case was filed against NLIC in Arizona federal court by plaintiff Robert Helman (Robert Helman et al v. Nationwide Life Insurance Company et al). This lawsuit is in a very preliminary stage and the Company is of evaluating its merits. The Company intends to defend this lawsuit vigorously. On August 15, 2001, the Company was named in a lawsuit filed in Connecticut federal court (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). The plaintiffs first amended their complaint on September 6, 2001 to include class action allegations, and have subsequently amended their complaint twice. As amended, in the current complaint, the plaintiffs seek to represent a class of ERISA qualified retirement plans that purchased variable annuities from NLIC. Plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts, and that the Company acquired and breached ERISA fiduciary duties by accepting service payments from certain mutual funds that allegedly consisted of or diminished those ERISA plan assets. The complaint seeks disgorgement of some or all of the fees allegedly received by the Company and other unspecified relief for restitution, along with declaratory and injunctive relief and attorneys' fees. On December 3, 2001, the plaintiffs filed a motion for class certification. Plaintiffs filed a supplement to that motion on September 19, 2003. The Company opposed that motion on December 24, 2003. On January 30, 2004, the Company filed its Revised Memorandum in Support of Summary Judgment, and a Motion Requesting that the Court Decide Summary Judgment before Class Certification. Plaintiffs are opposing that motion. The Company intends to defend this lawsuit vigorously. On May 1, 2003, a class action was filed against NLIC in the United States District Court for the Eastern District of Louisiana, (Edward Miller, Individually, and on behalf of all others similarly situated, v. Nationwide Life Insurance Company). The complaint alleges that in 2001, plaintiff Edward Miller purchased three group modified single premium variable annuities issued by NLIC. Plaintiff alleges that NLIC represented in its prospectus and promised in its annuity contracts that contract holders could transfer assets without charge among the various funds available through the contracts, that the transfer rights of contract holders could not be modified and that NLIC's expense charges under the contracts were fixed. Plaintiff claims that NLIC has breached the contracts and violated federal securities laws by imposing trading fees on transfers that were supposed to have been without charge. Plaintiff seeks compensatory damages and rescission on behalf of himself and a class of persons who purchased this type of annuity or similar contracts issued by NLIC between May 1, 2001 and April 30, 2002 inclusive and were allegedly damaged by paying transfer fees. The Company's motion to dismiss the complaint was granted by the Court on October 28, 2003. Plaintiff has appealed that dismissal. On January 21, 2004, the Company was named in a lawsuit filed in the U.S. District Court for the Northern District of Mississippi (United Investors Life Insurance Company v. Nationwide Life Insurance Company and/or Nationwide Life Insurance Company of America and/or Nationwide Life and Annuity Insurance Company and/or Nationwide Life and Annuity Company of America and/or Nationwide Financial Services, Inc. and/or Nationwide Financial Corporation, and John Does A-Z). In its complaint, the plaintiff alleges that the Company and/or its affiliated life insurance companies (1) tortiously interfered with the plaintiff's contractual and fiduciary relationship with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W & R Insurance Agency, Inc. (collectively, "Waddell & Reed"), (2) conspired with and otherwise caused Waddell & Reed to breach its contractual and fiduciary obligations to the plaintiff, and (3) tortiously interfered with the plaintiff's contractual relationship with policyholders of insurance policies issued by the plaintiff. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, and costs and disbursements, including attorneys' fees. The plaintiff seeks to have each defendant judged jointly and severally liable for all damages. This lawsuit is in a very preliminary stage, and the Company intends to defend it vigorously. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The financial services industry, including mutual fund, variable annuity and distribution companies have been the subject of increasing scrutiny by regulators, legislators, and the media over the past year. Numerous regulatory agencies, including the United States Securities and Exchange Commission and the New York Attorney General, have commenced industry-wide investigations regarding late trading and market timing in connection with mutual funds and variable insurance contracts, and have commenced enforcement actions against some mutual fund companies on those issues. Investigations and enforcement actions have also been commenced, on a smaller scale, regarding the sales practices of mutual fund and variable annuity distributors. These legal proceedings are expected to continue in the future. These investigations and proceedings could result in legal precedents, as well as new industry-wide legislation, rules, or regulations, that could significantly affect the financial services industry, including variable annuity companies. The Company has been contacted by regulatory agencies for information relating to market timing, late trading, and sales practices. The Company is cooperating with these regulatory agencies and is responding to those information requests. There can be no assurance that any such litigation or regulatory actions will not have a material adverse effect on the Company in the future. (18) SECURITIZATION TRANSACTIONS To date, the Company has sold $290.1 million of credit enhanced equity interests in Tax Credit Funds to unrelated third parties. The Company has guaranteed cumulative after-tax yields to third party investors ranging from 5.10% to 5.25% and as of December 31, 2003 held guarantee reserves totaling $2.9 million on these transactions. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds 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 stabilization collateral set aside 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 $824.2 million. The Company does not anticipate making any payments related to the guarantees. At the time of the sales, $4.3 million of net sale proceeds were set aside as collateral 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 collateral is released. During 2003 and 2002, $3.1 million and $0.5 million of stabilization collateral had been released into income, respectively. 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 may 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. (19) 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. In addition, the Company reports certain other revenues and expenses in a Corporate segment. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements 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 group retirement plans, medium-term note program and structured products initiatives. 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 and expenses of the Company's non-insurance subsidiaries not reported within the three product segments. 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 pre-tax operating earnings. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The following tables summarize the financial results of the Company's business segments for the years ended December 31, 2003, 2002 and 2001.
INDIVIDUAL INSTITUTIONAL LIFE (in millions) ANNUITY PRODUCTS INSURANCE CORPORATE TOTAL =========================================================================================================================== 2003 Net investment income $ 807.9 $ 787.7 $ 324.3 $ 60.1 $ 1,980.0 Other operating revenue 517.7 162.3 536.2 0.4 1,216.6 Net realized losses on investments, hedging - - - (100.8) (100.8) instruments and hedged items --------------------------------------------------------------------------------------------------------------------------- Total operating revenues 1,325.6 950.0 860.5 (40.3) 3,095.8 --------------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account values 602.5 512.3 185.6 - 1,300.4 Amortization of deferred policy acquisition costs 228.4 45.6 101.9 - 375.9 Interest expense on debt, primarily with NFS - - - 48.4 48.4 Other benefits and expenses 324.0 183.1 423.0 6.6 936.7 --------------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 1,154.9 741.0 710.5 55.0 2,661.4 --------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before federal income tax expense 170.7 209.0 150.0 (95.3) $ 434.4 =============== Net realized losses on investments, hedging instruments and hedged items - - - 100.8 ------------------------------------------------------------------------------------------------------------ Pre-tax operating earnings 1 $ 170.7 $ 209.0 $ 150.0 $ 5.5 ============================================================================================================ ------------------------------------------------------------------------------------------------------------ Assets as of period end $ 49,392.5 $ 33,837.4 $ 11,243.5 $ 6,097.5 $ 100,570.9 =========================================================================================================================== 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 Net realized losses on investments, hedging instruments and hedged items - - - (84.4) (84.4) --------------------------------------------------------------------------------------------------------------------------- Total operating revenues 1,194.7 978.1 866.3 (42.5) 2,996.6 --------------------------------------------------------------------------------------------------------------------------- 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, primarily with NFS - - - 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 --------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before federal income tax expense (122.8) 203.4 171.5 (82.6) 169.5 =============== Net realized losses on investments, hedging instruments and hedged items - - - 84.4 --------------------------------------------------------------------------------------------------------------------------- Pre-tax operating (loss) earnings 1 $ (122.8) $ 203.4 $ 171.5 $ 1.8 =========================================================================================================================== --------------------------------------------------------------------------------------------------------------------------- Assets as of period end $ 40,830.0 $ 30,440.7 $ 9,676.3 $ 5,075.6 $ 86,022.6 ===========================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements
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 (0.3) 1,276.6 Net realized losses on investments, hedging instruments and hedged items - - - (18.3) (18.3) --------------------------------------------------------------------------------------------------------------------------- Total operating revenues 1,090.7 1,056.9 834.8 0.6 2,983.0 --------------------------------------------------------------------------------------------------------------------------- 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 primarily with NFS - - - 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 --------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before 231.4 211.3 189.7 (3.5) $ 628.9 federal income tax expense ============ Net realized losses on investments, hedging instruments and hedged items not related to securitizations - - - 20.2 --------------------------------------------------------------------------------------------------------------------------- Pre-tax operating earnings 1 $ 231.4 $ 211.3 $ 189.7 $ 16.7 =========================================================================================================================== --------------------------------------------------------------------------------------------------------------------------- 2 Assets as of period end $ 43,885.4 $ 34,130.1 $ 9,129.0 $ 4,010.1 $ 91,154.6 ===========================================================================================================================
____________ 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. 2 Inclues $24.8 million of assets related to discontinued operations. 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. (20) VARIABLE INTEREST ENTITIES As of December 31, 2003, the Company has relationships with eight VIEs where the Company is the primary beneficiary. Each of these VIEs is a conduit that assists the Company in structured products transactions. One of the VIEs is used in the securitization of mortgage loans, while the others are involved in the sale of Low-Income-Housing Tax Credit Funds (Tax Credit Funds) to third-party investors where the Company provides guaranteed returns (See note 18). The Company has not yet adopted FIN 46 or FIN 46R as it relates to these VIEs. As such, these VIEs and their results of operations are not included in the consolidated financial statements. The net assets of these VIEs totaled $176.1 million as of December 31, 2003. The most significant components of net assets are $58.7 million of mortgage loans on real estate, $241.9 million of other long-term investments, $37.9 million in other assets, $59.2 million of short-term debt and $103.3 million of other liabilities. The total exposure to loss on these VIEs where the Company may be the primary beneficiary is less than $0.1 million as of December 31, 2003. For the mortgage loan VIE, which is the VIE to which the short-term debt relates to, the creditors have no recourse against the Company in the event of default by the VIE. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements In addition to the VIEs described above, the Company also holds variable interests, in the form of limited partnership (LP) or similar investments, in a number of tax credit funds. These investments have been held by the Company for periods of 1 to 7 years and allow the Company to experience certain tax credits and other tax benefits from affordable housing projects. The Company also has certain investments in securitization transactions that qualify as VIEs, but for which the Company is not the primary beneficiary. The total exposure to loss on these VIEs where the Company is not the primary beneficiary is $44.2 million as of December 31, 2003. (21) SUBSEQUENT EVENT As discussed in note 2(n), the Company adopted SOP 03-1 effective January 1, 2004. In connection with this adoption, the following cumulative effect adjustments are expected to be recorded in the 2004 consolidated financial statements.
(in millions) JANUARY 1, 2004 ================================================================================================================================== Increase in future policy benefits - ratchet interest crediting $ (12.3) Increase in future policy benefits - secondary guarantees - life insurance (2.4) Increase in future policy benefits - GMDB claim reserves (1.8) Increase in future policy benefits - GMIB claim reserves (1.0) Deferred acquisition costs related to above 12.4 Deferred federal income taxes 1.8 Cumulative effect of adoption of accounting principle, net of tax $ (3.3) ==================================================================================================================================
Under SOP 03-1, the Company's GMDB claim reserves are determined by estimating the expected value of death benefits on contracts that trigger a policy benefit and recognizing the excess ratably over the accumulation period based on total expected assessments. The Company will regularly evaluate estimates used and will adjust the additional liability balance as appropriate, with a related charge or credit to other benefits and claims, if actual experience or other evidence suggests that earlier assumptions should be revised. The following assumptions and methodology were used to determine the GMDB claim reserves upon adoption of SOP 03-1: o Data used was based on a combination of historical numbers and future projections involving 250 stochastically generated investment performance scenarios o Mean gross equity performance of 8.1% o Equity volatility of 18.7% o Mortality - 100% of Annuity 2000 table o Discount rate of 8.0% Lapse rate assumptions vary by duration as shown below:
DURATION 1 2 3 4 5 6 7 8 9 10+ --------------------------------------------------------------------------------------------------------------------- Minimum 4.50% 5.50% 6.50% 8.50% 10.50% 10.50% 10.50% 17.50% 17.50% 17.50% MAXIMUM 4.50% 8.50% 11.50% 17.50% 22.50% 22.50% 22.50% 22.50% 22.50% 19.50%
GMABs are considered derivatives under SFAS 133 resulting in the related liabilities being recognized at fair value with changes in fair value reported in earnings, and therefore, excluded from the SOP 03-1 claim reserve. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements The GMIB claim reserves will be determined each period by estimating the expected value of the annuitization benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total assessments. The Company will regularly evaluate estimates used and will adjust the additional liability balance as appropriate, with a related charge or credit to other benefits and claims, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in calculating the GMIB claim reserves are consistent with those used for calculating the GMDB claim reserves. In addition, the calculation of the GMIB claim reserves assumes utilization ranges from a low of 3% when the contract holder's annuitization value is 10% in the money to 100% utilization when the contract holder is 90% in the money. PART C. OTHER INFORMATION Item 26. Exhibits (a) Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant - Filed previously with initial registration statement (333-52615) and hereby incorporated by reference. (b) Not Applicable (c) Underwriting or Distribution of contracts between the Depositor and Principal Underwriter - Filed previously with the registration statement (333-31725) and hereby incorporated by reference. (d) The form of the contract - Filed previously with initial registration statement (333-52615) and hereby incorporated by reference. (e) The form of the contract application - Filed previously with initial registration statement (333-52615) and hereby incorporated by reference. (f) Articles of Incorporation of Depositor - Filed previously with initial registration statement (333-52615) 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 Pre-Effective Amendment No. 1 to the registration statement (333-52615) 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 27. DIRECTORS AND OFFICERS OF THE DEPOSITOR Arden L. Shisler, Director and Chairman of the Board W.G. Jurgensen, Director and Chief Executive Officer Joseph J. Gasper, Director, President and Chief Operating Officer Mark R. Thresher, President and Chief Operating Officer-Elect and Chief Financial Officer Patricia R. Hatler, Executive Vice President, General Counsel and Secretary Terri L. Hill, Executive Vice President-Chief Administrative Officer Michael C. Keller, Executive Vice President-Chief Information Officer Kathleen D. Ricord, Executive Vice President-Chief Marketing Officer Robert A. Rosholt, Executive Vice President-Chief Finance and Investment Officer W. Kim Austen, Senior Vice President-Property and Casualty Commercial/Farm Product Pricing David A. Diamond, Senior Vice President Dennis P. Drent, Senior Vice President-Internal Audits Philip C. Gath, Senior Vice President-Chief Actuary-Nationwide Financial J. Lynn Greenstein, Senior Vice President-Property and Casualty Personal Lines Product Pricing Kelly A. Hamilton, Senior Vice President-NI Finance David K. Hollingsworth, Senior Vice President-President-Nationwide Insurance Sales David R. Jahn, Senior Vice President-Property and Casualty Claims Richard A. Karas, Senior Vice President-Sales-Financial Services M. Eileen Kennedy, Senior Vice President-NF Finance Gale V. King, Senior Vice President-Property and Casualty Human Resources Srinivas Koushik, Senior Vice President-Chief Technology Officer Gregory S. Lashutka, Senior Vice President-Corporate Relations Gary D. McMahan, Senior Vice President Brian W. Nocco, Senior Vice President and Treasurer Mark D. Phelan, Senior Vice President-Technology and Operations John S. Skubik, Senior Vice President-Consumer Finance Katherine A. Stumph, Senior Vice President-Marketing, Strategy and Urban Market Operations Mark D. Torkos, Senior Vice President-Property and Casualty Systems Richard M. Waggoner, Senior Vice President-Operations Robert O. Wilson, Senior Vice President-Corporate Strategy 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 Martha J. Miller de Lombera, Director The business address of the Directors and Officers of the Depositor is: One Nationwide Plaza, Columbus, Ohio 43215 Item 28. 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 The company is inactive and formerly registered as an 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 former Massachusetts, Inc. Provident Mutual Companies in Massachusetts. ------------------------------------------------------------------------------------------------------------------------------------ 1717 Insurance Agency of Texas, Inc. Texas Established to grant proper licensing to former Provident Mutual Companies in Texas. ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Companies, Inc. (The) Texas This company acts as a holding company. ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Company (The) Texas The company is a third-party administrator providing record keeping services for 401(k) plans. ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Investment Advisors, Inc. Texas The company is an investment advisor registered with the Securities and Exchange Commission. ------------------------------------------------------------------------------------------------------------------------------------ 401(k) Investment Services, Inc. Texas The company is a broker-dealer registered with the National Association of Securities Dealers, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Affiliate Agency, Inc. Delaware The company is an insurance agency marketing life insurance and annuity products through financial institutions. ------------------------------------------------------------------------------------------------------------------------------------ Affiliate Agency of Ohio, Inc. Ohio The company is an insurance agency marketing life insurance and annuity products through financial institutions. ------------------------------------------------------------------------------------------------------------------------------------ AGMC Reinsurance Ltd. Turks & Caicos The company is in the business of reinsurance of Islands mortgage guaranty risks. ------------------------------------------------------------------------------------------------------------------------------------ AID Finance Services, Inc. Iowa The company operates as a holding company. ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Document Solutions, Inc. Iowa The company provides general printing services to its affiliated companies as well as to unaffiliated companies. ------------------------------------------------------------------------------------------------------------------------------------ ALLIED General Agency Company Iowa The company acts as a general agent and surplus lines broker for property and casualty insurance products. ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Group Insurance Marketing Iowa The company engages in the direct marketing of Company property and casualty insurance products. ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Group, Inc. Iowa The company is a property and casualty insurance holding company. ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Property and Casualty Iowa The company underwrites general property and Insurance Company casualty insurance. ------------------------------------------------------------------------------------------------------------------------------------ Allied Texas Agency, Inc. Texas The company acts as a managing general agent to place personal and commercial automobile insurance with Colonial County Mutual Insurance Company for the independent agency companies. ------------------------------------------------------------------------------------------------------------------------------------ Allnations, Inc. Ohio The company engages in promoting, extending, and strengthening cooperative insurance organizations throughout the world. ------------------------------------------------------------------------------------------------------------------------------------ AMCO Insurance Company Iowa The company underwrites general property and casualty insurance. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ AMH Investments England and Wales The company provides benefits to a number of associates. ------------------------------------------------------------------------------------------------------------------------------------ American Marine Underwriters, Inc. Florida The company is an underwriting manager for ocean cargo and hull insurance. ------------------------------------------------------------------------------------------------------------------------------------ Asset Management Holdings, plc England and Wales The company 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 United Kingdom The company is an investment holding company. ------------------------------------------------------------------------------------------------------------------------------------ Cal-Ag Insurance Services, Inc. California The company is a small captive insurance brokerage firm serving principally, but not exclusively, the "traditional" agent producers of Crestbrook Insurance Company. ------------------------------------------------------------------------------------------------------------------------------------ CalFarm Insurance Agency California The company was originally incorporated to assist agents and affiliated companies in account completion for marketing products of Crestbrook Insurance Company. The agency also assisted other in-house agencies in a brokerage capacity to accommodate policyholders. ------------------------------------------------------------------------------------------------------------------------------------ Cap Pro Holding, Inc. Delaware The company operates as a holding company. ------------------------------------------------------------------------------------------------------------------------------------ Coda Capital Management, LLC Pennsylvania The company is a convertible bond manager. ------------------------------------------------------------------------------------------------------------------------------------ Colonial County Mutual Insurance Texas The company underwrites non-standard automobile and Company motorcycle insurance and various other commercial liability coverages in Texas. ------------------------------------------------------------------------------------------------------------------------------------ Cooperative Service Company Nebraska The company is an insurance agency that sells and services commercial insurance. The company also provides loss control and compliance consulting services and audit, compilation, and tax preparation services. ------------------------------------------------------------------------------------------------------------------------------------ Corviant Corporation Delaware The purpose of the company is to create a captive distribution network through which affiliates can sell multi-manager investment products, insurance products and sophisticated estate planning services. ------------------------------------------------------------------------------------------------------------------------------------ Crestbrook Insurance Company Ohio The company is an Ohio-based multi-line insurance corporation that is authorized to write personal, automobile, homeowners and commercial insurance. ------------------------------------------------------------------------------------------------------------------------------------ Damian Securities Limited England and Wales The company 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 objectives. ------------------------------------------------------------------------------------------------------------------------------------ Delfi Realty Corporation Delaware The company is an inactive company. ------------------------------------------------------------------------------------------------------------------------------------ Depositors Insurance Company Iowa The company underwrites general property and casualty insurance. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ 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 The purpose of the company is to sell property and LLC casualty insurance products including, but not limited to, automobile or other vehicle insurance and homeowner's insurance. ------------------------------------------------------------------------------------------------------------------------------------ DVM Insurance Agency, Inc. California The company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company. ------------------------------------------------------------------------------------------------------------------------------------ Europewide Life, SA Luxembourg The company writes life insurance including coinsurance and reinsurance, with the ability to write policies and contracts. ------------------------------------------------------------------------------------------------------------------------------------ F&B, Inc. Iowa The company is an insurance agency that places business not written by the Farmland Insurance Companies with other carriers. ------------------------------------------------------------------------------------------------------------------------------------ Farmland Mutual Insurance Iowa The company provides property and casualty insurance Company primarily to agricultural businesses. ------------------------------------------------------------------------------------------------------------------------------------ Fenplace Limited England and Wales The company is currently inactive. ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Alabama The company is an insurance agency marketing life Agency of Alabama, Inc. insurance and annuity products through financial institutions. ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Ohio The company is an insurance agency marketing life Agency of Ohio, Inc. insurance and annuity products through financial institutions. ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Oklahoma The company is an insurance agency marketing life Agency of Oklahoma, Inc. insurance and annuity products through financial institutions. ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Distributors Texas The company is an insurance agency marketing life Agency of Texas, Inc. insurance and annuity products through financial institutions. ------------------------------------------------------------------------------------------------------------------------------------ Financial Horizons Securities Oklahoma The company is a limited broker-dealer doing Corporation business solely in the financial institutions market. ------------------------------------------------------------------------------------------------------------------------------------ Florida Records Administrator, Inc. Florida The company administers the deferred compensation plan for the public employees of the State of Florida. ------------------------------------------------------------------------------------------------------------------------------------ Four P Finance Company Pennsylvania The company is an inactive company. ------------------------------------------------------------------------------------------------------------------------------------ G.I.L. Nominees Limited England and Wales The company acts as a nominee. The company is dormant within the meaning of Section 249AA of the Companies Act of 1985 (English Law). ------------------------------------------------------------------------------------------------------------------------------------ Gartmore 1990 Limited England and Wales The company is engaged as a general partner in a limited partnership formed to invest in unlisted securities. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore 1990 Trustee Limited England and Wales The company is dormant within the meaning of Section 249AA of the Companies Act of 1985 (English Law). ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Capital Management Limited England and Wales The company is engaged in investment management and advisory services to business, institutional and private investors. The company has completed the transfer of its investment management activity to Gartmore Investment Limited. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Distribution Services, Delaware The company is a limited broker-dealer. Inc. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Emerging Managers, Delaware The company acquires and holds interest in a LLC registered investment advisor and provides investment management services. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Fund Managers Jersey, Channel The company is engaged in investment administration International Limited Islands and support. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Fund Managers Limited England and Wales The company is engaged in authorized unit trust management and OEIC management. It is also the authorized Corporate Director of the Gartmore OEIC Funds. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Asset Management, Delaware The company operates as a holding company. Inc. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Asset Management Delaware The company acts as a holding company for the 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 Global Ventures, Inc. Delaware The company acts as a holding company. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Group Limited England and Wales The company 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. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Indosuez UK Recovery Fund England and Wales The company is a general partner in two limited (G.P.) Limited partnerships formed to invest in unlisted securities. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Limited England and 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 Management plc England and Wales The company is an investment holding company and provides services to other companies within the Gartmore Group in the UK. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Services GmbH Germany The company is engaged in marketing support. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Services Limited England The company is engaged in investment holding. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investor Services, Inc. Ohio The company provides transfer and dividend disbursing agent services to various mutual fund entities. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Japan Limited Japan The company is the renamed survivor entity of the merger of Gartmore Investment Management Japan Limited and Gartmore NC Investment Trust Management Company Ltd. The company is engaged in the business of investment management. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Managers (Jersey) Ltd Jersey, Channel The company serves as the manager of four AIB Govett Islands Jersey funds - AIB Grofunds Currency Funds Limited, Govett Securities & Investments Limited, Govett Singapore Growth Fund Limited and Govett Safeguard Funds Limited. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Morley & Associates, Inc. Oregon The company brokers or places book value maintenance agreements (wrap contracts) and guaranteed I contracts (GICs) for collective investment trusts and accounts. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Morley Capital Management, Oregon The company is an investment advisor and stable Inc. value money manager. -------------------------------------x---------------------------------------------------------------------------------------------- Gartmore Morley Financial Services, Oregon The company is a holding company. Inc. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Mutual Fund Capital Trust Delaware The trust acts as a registered investment advisor. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore No. 1 General Partner Ltd. Scotland The company is a Gartmore No. 1 General Partner to Scottish Limited Partnership, itself a general partner of Gartmore Direct Fund I Limited Partnership, a private equity investment vehicle. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore No. 2 General Partner Ltd. Scotland The company is a Gartmore No. 2 General Partner to Scottish Limited Partnership, itself a general partner of Gartmore Direct Fund I Limited Partnership, a private equity investment vehicle. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Nominees Limited England and Wales The company acts as a nominee. The company is dormant within the meaning of Section 249AA of the Companies Act 1985 (English Law). ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Pension Trustees Limited England and Wales Until April 1999, the company acted as a trustee of the Gartmore Pension Fund established by Gartmore Investment Management plc, which was merged with the National Westminster Bank Pension Fund on April 1, 1999. As a result all assets and liabilities of the Gartmore Pension Fund were transferred to the National Westminster Bank Fund. On November 22, 2000, the company changed its name from Gartmore Pension Fund Trustees Limited to Gartmore Pension Trust Limited. On November 30, 2000, the company became the trustee of the Gartmore Pension Scheme. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Riverview, LLC Delaware The company provides customized solutions, in the form of expert advice 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 Securities Limited England and Wales The company is engaged in investment holding and is a partner in Gartmore Global Partners. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Separate Accounts LLC Delaware The company acts as an investment advisor registered with the Securities and Exchange Commission. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Trust Company Oregon The company is an Oregon state bank with trust power. ------------------------------------------------------------------------------------------------------------------------------------ Gartmore U.S. Limited England and Wales The company is a joint partner in Gartmore Global Partners. ------------------------------------------------------------------------------------------------------------------------------------ Gates, McDonald & Company Ohio The company provides services to employers for managing workers' and unemployment compensation matters and employee benefits costs. ------------------------------------------------------------------------------------------------------------------------------------ Gates, McDonald & Company of Nevada The company provides self-insurance administration, Nevada claims examining and data processing services. ------------------------------------------------------------------------------------------------------------------------------------ Gates, McDonald & Company of New New York The company provides workers' 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 company 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 company is an insurance agency and provides commercial property and casualty brokerage services. ------------------------------------------------------------------------------------------------------------------------------------ Landmark Financial Services of New New York The company is an insurance agency marketing life York, Inc. insurance and annuity products through financial institutions. ------------------------------------------------------------------------------------------------------------------------------------ Lone Star General Agency, Inc. Texas The company acts as general agent to market non-standard automobile and motorcycle insurance for Colonial County Mutual Insurance Company. ------------------------------------------------------------------------------------------------------------------------------------ MedProSolutions, Inc. Massachusetts The company provides third-party administration services for workers compensation, automobile injury and disability claims. ------------------------------------------------------------------------------------------------------------------------------------ National Casualty Company Wisconsin The company underwrites various property and casualty coverage, as well as individual and group accident and health insurance. ------------------------------------------------------------------------------------------------------------------------------------ National Casualty Company of England It is organized for profit under the Companies Act America, Ltd. of 1948 of England for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of any and every kind, except life insurance; to act as underwriting agents and insurance manager in all of the respective branches, and to act as agent or manager for any insurance company, club, or association or for any underwriter or syndicate of underwriters and to purchase, take on, lease or in exchange, hire or otherwise acquire and hold for any estate or interest in any lands, buildings, easements, rights, privileges, concessions, patents, and any real or personal property of any kind necessary or convenient for the purposes in connection with the company's business or any branch or department thereof. This company is currently inactive. ------------------------------------------------------------------------------------------------------------------------------------ National Deferred Compensation, Ohio The company administers deferred compensation plans Inc. for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Advantage Mortgage Iowa The company is engaged in making residential (1-4 Company family) mortgage loans. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Affinity Insurance Kansas The company is a shell insurer with no active Company of America policies or liabilities. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Affordable Housing, Ohio The company invests in affordable multi-family LLC housing projects throughout the U.S. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Agribusiness Insurance Iowa The company provides property and casualty insurance Company primarily to agricultural businesses. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Arena, LLC Ohio The purpose of the company is to develop Nationwide Arena and to engage in related Arena district development activity. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Asset Management England and Wales The company is a holding company of a group engaged Holdings, Ltd. in the management of pension fund assets, unit trusts and other collective investment schemes, investment trusts and portfolios for corporate clients. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Assurance Company Wisconsin The company underwrites non-standard automobile and motorcycle insurance. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Capital Mortgage, LLC Ohio This company 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 profit. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Cash Management Ohio The company buys and sells investment securities of Company a short-term nature as agent for other corporations, foundations, and insurance company separate accounts. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Community Development Ohio The company holds investments in low-income housing Corporation, LLC funds. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Corporation Ohio The company acts primarily as a holding company for entities affiliated with Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Credit Enhancement Ohio The company is currently a shell company. Insurance Company ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Assignment Ohio The company acts as an administrator of structured Company settlements. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution Delaware The company engages in the business of an insurance Distributors Agency, Inc. agency. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution New Mexico The company engages in the business of an insurance Distributors Agency, Inc. of New agency. Mexico ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution Massachusetts The company engages in the business of an insurance Distributors Insurance Agency, Inc. agency. of Massachusetts ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Services Bermuda The company is a long-term insurer that issues (Bermuda) Ltd. variable annuity and variable life products to persons outside the United States and Bermuda. ------------------------------------------------------------------------------------------------------------------------------------ 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 company 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 company provides distribution services for its affiliate Nationwide Towarzystwo Ubezpieczen na Zycie S.A. in Poland. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Structured Ohio The company serves to capture and report the results Products, LLC of the structured products business unit. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Foundation Ohio The not-for-profit company contributes to non-profit activities and projects. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide General Insurance Company Ohio The company transacts a general insurance business, except life insurance. The corporation primarily provides automobile and fire insurance to select customers. ------------------------------------------------------------------------------------------------------------------------------------ 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 company 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 Home Mortgage Ohio This company performs the marketing function for Distributors, Inc. Nationwide Advantage Mortgage Company. ------------------------------------------------------------------------------------------------------------------------------------ *Nationwide Indemnity Company Ohio The company is involved in the reinsurance business by assuming business from Nationwide Mutual Insurance Company and other insurers within the Nationwide Insurance organization. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Insurance Company of Wisconsin The company is an independent agency personal lines America underwriter of property/casualty insurance. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Insurance Company of Ohio The company 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 company is a special risk, excess and surplus Underwriters lines underwriting manager. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Investment Services Oklahoma This is a limited broker-dealer company doing Corporation business in the deferred compensation market and acts as an investment advisor. ------------------------------------------------------------------------------------------------------------------------------------ **Nationwide Life and Annuity Ohio The company engages in underwriting life insurance Insurance Company and granting, purchasing, and disposing of annuities. ------------------------------------------------------------------------------------------------------------------------------------ *Nationwide Life and Annuity Delaware The company provides individual life insurance Company of America products. ------------------------------------------------------------------------------------------------------------------------------------ *Nationwide Life Insurance Company Pennsylvania The company provides individual life insurance and of America group annuity products. ------------------------------------------------------------------------------------------------------------------------------------ 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 type of insurance appertaining thereto. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ **Nationwide Life Insurance Ohio This company provides individual life insurance, Company group life and health insurance, fixed and variable annuity products, and other life insurance products. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Lloyds Texas The company markets commercial property insurance in Texas. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Management Systems, Inc. Ohio The company offers a preferred provider organization and other related products and services. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Martima Vida Previdencia Brazil The company operates as a licensed insurance company S.A. in the categories of life and unrestricted private pension plans in Brazil. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Mortgage Holdings, Inc. Ohio The company acts as a holding company. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Mutual Fire Insurance Ohio The company engages in a general insurance and Company reinsurance business, except life insurance. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Mutual Insurance Ohio The company engages in a 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 company engages in a general insurance business, Insurance Company except life insurance. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Provident Distributors, Delaware The company is an inactive company. Inc. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Provident Holding Pennsylvania The company is a holding company for non-insurance Company subsidiaries. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Realty Investors, Ltd. Ohio The company is engaged in the business of developing, owning and operating real estate investments. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Delaware The company markets and administers deferred Inc. compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Alabama The company provides retirement products, Inc. of Alabama marketing/education and administration to public employees and educators. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Arizona The company markets and administers deferred Inc. of Arizona compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Arkansas The company markets and administers deferred Inc. of Arkansas compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Montana The company markets and administers deferred Inc. of Montana compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Nevada The company markets and administers deferred Inc. of Nevada compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, New Mexico The company markets and administers deferred Inc. of New Mexico compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Ohio The company provides retirement products, Inc. of Ohio marketing/education and administration to public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Oklahoma The company markets and administers deferred Inc. of Oklahoma compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, South Dakota The company markets and administers deferred Inc. of South Dakota compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Texas The company markets and administers deferred Inc. of Texas compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Wyoming The company markets and administers deferred Inc. of Wyoming compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Retirement Solutions, Massachusetts The company markets and administers deferred Insurance Agency, Inc. compensation plans for public employees. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Securities, Inc. Ohio The company is a registered broker-dealer and provides investment management and administrative services. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Services Company, LLC Ohio The company performs shared services functions for the Nationwide organization. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Services Sp. z o.o. Poland The company provides services to Nationwide Global Holdings, Inc. in Poland. ------------------------------------------------------------------------------------------------------------------------------------ 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 company is authorized to engage in the business na Zycie S.A. of life insurance and pension products in Poland. ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Trust Company, FSB United States 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 Holding Company, Ltd. England and Wales The company 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. ------------------------------------------------------------------------------------------------------------------------------------ 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 I, Delaware The company owns and manages contributed securities LLC to achieve long - term capital appreciation from the contributed securities and through investments in a portfolio of other equity investments in financial service and other related companies as determined by the company to be undervalued or in need of changes in capital structure or to present other special situations that have the potential for significant earnings growth from among other things, major financial service industry trends, unfilled niches and synergies with other firms in the portfolio. ------------------------------------------------------------------------------------------------------------------------------------ NFS Distributors, Inc. Delaware The company acts primarily as a holding company for Nationwide Financial Services, Inc. distribution companies. ------------------------------------------------------------------------------------------------------------------------------------ NFSB Investments, Ltd. Bermuda The company buys and sells investment securities for its own account in order to enhance the investment returns of its affiliates. ------------------------------------------------------------------------------------------------------------------------------------ NGH Luxembourg S. a. r. L. Luxembourg The company acts primarily as a holding company for the European operations for Nationwide Global Holdings, Inc. ------------------------------------------------------------------------------------------------------------------------------------ NGH Netherlands, B.V. Netherlands The company acts as a holding company for other Nationwide overseas companies. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ 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. ------------------------------------------------------------------------------------------------------------------------------------ PanEuroLife Luxembourg The company provides individual life insurance primarily in the United Kingdom, Belgium and France. ------------------------------------------------------------------------------------------------------------------------------------ Pension Associates, Inc. Wisconsin The company provides pension plan administration and record keeping services, and pension plan and compensation consulting. ------------------------------------------------------------------------------------------------------------------------------------ PNAM, Inc. Delaware The company is a holding company. ------------------------------------------------------------------------------------------------------------------------------------ Premier Agency, Inc. Iowa This company is an insurance agency. ------------------------------------------------------------------------------------------------------------------------------------ Provestco, Inc. Delaware The company serves as a general partner in certain real estate limited partnerships invested in by Nationwide Life Insurance Company of America. ------------------------------------------------------------------------------------------------------------------------------------ Quick Sure Auto Agency, Inc. Texas The company is an insurance agency and operates as an employee agent "storefront" for Titan Insurance Services. ------------------------------------------------------------------------------------------------------------------------------------ RCMD Financial Services, Inc. Delaware The company is a holding company. ------------------------------------------------------------------------------------------------------------------------------------ Retention Alternatives, Ltd. Bermuda The company is a captive insurer and writes first dollar insurance policies in workers' compensation, general liability and automobile liability for its affiliates in the United States. ------------------------------------------------------------------------------------------------------------------------------------ RF Advisors, Inc. Pennsylvania The company is an inactive company. ------------------------------------------------------------------------------------------------------------------------------------ Riverview International Group, Inc. Delaware The company is an investment advisor and a broker dealer. ------------------------------------------------------------------------------------------------------------------------------------ RP&C International, Inc. Ohio The company is an investment-banking firm, which provides specialist advisory services and innovative financial solutions to public and private companies internationally. ------------------------------------------------------------------------------------------------------------------------------------ Scottsdale Indemnity Company Ohio The company engages in a general insurance business, except life insurance. ------------------------------------------------------------------------------------------------------------------------------------ Scottsdale Insurance Company Ohio The company primarily provides excess and surplus lines of property and casualty insurance. ------------------------------------------------------------------------------------------------------------------------------------ Scottsdale Surplus Lines Insurance Arizona The company provides excess and surplus lines 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 is an inactive company. ------------------------------------------------------------------------------------------------------------------------------------ TBG Aviation, LLC California The company holds an investment in a leased airplane and maintains an operating agreement with Flight Options. ------------------------------------------------------------------------------------------------------------------------------------ TBG Danco Insurance Company California The corporation provides for life insurance and individual executive estate planning to maximize benefit value. ------------------------------------------------------------------------------------------------------------------------------------ TBG Financial and Insurance California The corporation consults with corporate clients and Services Corporation financial institutions on the development and implementation of proprietary and/or private placement insurance products for the financing of executive benefit programs and individual executive's estate planning requirements. As a broker dealer, TBG Financial Services provides complete and flexible access to institutional insurance investment products. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ TBG Financial and Insurance Hawaii The corporation consults with corporate clients and Services Corporation of Hawaii financial institutions on the development and implementation of proprietary, private placement and institutional insurance products. ------------------------------------------------------------------------------------------------------------------------------------ TBG Insurance Services California The company markets and administers executive Corporation benefit plans. ------------------------------------------------------------------------------------------------------------------------------------ THI Holdings (Delaware), Inc. Delaware The company acts as a holding company for the Titan, Victoria and Whitehall groups. ------------------------------------------------------------------------------------------------------------------------------------ Titan Auto Agency, Inc. Michigan The company is an insurance agency that primarily sells non-standard automobile insurance for Titan Insurance Company in Michigan. ------------------------------------------------------------------------------------------------------------------------------------ Titan Auto Insurance Nevada The company is an insurance agency that operates as an employee agent "storefront" for Titan Indemnity Company in Nevada. ------------------------------------------------------------------------------------------------------------------------------------ Titan Auto Insurance of Pennsylvania The company is an insurance agency that operates as Pennsylvania, Inc. an employee agent "storefront" for Titan Indemnity Company in Pennsylvania (currently inactive). ------------------------------------------------------------------------------------------------------------------------------------ Titan Auto Insurance of Arizona, Arizona The company is an insurance agency that operates as Inc. an employee agent "storefront" for Titan Indemnity Company in Arizona. ------------------------------------------------------------------------------------------------------------------------------------ Titan Auto Insurance of New Mexico, New Mexico The company is an insurance agency that operates as Inc. an employee agent "storefront" for Titan Indemnity Company in New Mexico. ------------------------------------------------------------------------------------------------------------------------------------ Titan Auto Insurance, Inc. Colorado The company is an insurance agency and operates as an employee agent "storefront" for Titan Indemnity Company in Colorado. ------------------------------------------------------------------------------------------------------------------------------------ Titan Holdings Service Corporation Texas The company acts as a holding company specifically for Titan corporate employees. ------------------------------------------------------------------------------------------------------------------------------------ Titan Indemnity Company Texas The company is a multi-line licensed insurance company and is operating primarily as a property and casualty insurance company. ------------------------------------------------------------------------------------------------------------------------------------ Titan Insurance Company Michigan This is a property and casualty insurance company. ------------------------------------------------------------------------------------------------------------------------------------ Titan Insurance Services, Inc. Texas The company is a Texas grand fathered managing general agency. ------------------------------------------------------------------------------------------------------------------------------------ Titan National Auto Call Center, Texas The company is licensed as an insurance agency that Inc. operates as an employee agent "call center" for Titan Indemnity Company. ------------------------------------------------------------------------------------------------------------------------------------ Vertboise, SA Luxembourg The company acts as a real property holding company. ------------------------------------------------------------------------------------------------------------------------------------ Veterinary Pet Insurance Company California The company provides pet insurance. ------------------------------------------------------------------------------------------------------------------------------------ Veterinary Pet Services, Inc. California The company acts as a holding company. ------------------------------------------------------------------------------------------------------------------------------------ Victoria Automobile Insurance Ohio The company is a property and casualty insurance Company company. ------------------------------------------------------------------------------------------------------------------------------------ Victoria Financial Corporation Delaware The company acts as a holding company specifically for all Victoria corporate employees. ------------------------------------------------------------------------------------------------------------------------------------ Victoria Fire & Casualty Company Ohio The company is a property and casualty insurance company. ------------------------------------------------------------------------------------------------------------------------------------ Victoria Insurance Agency, Inc. Ohio The company is an insurance agency that acts as a broker for independent agents appointed with the Victoria companies in the state of Ohio. ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS COMPANY ORGANIZATION SECURITIES (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ------------------------------------------------------------------------------------------------------------------------------------ Victoria National Insurance Company Ohio The company is a property and casualty insurance company. ------------------------------------------------------------------------------------------------------------------------------------ Victoria Select Insurance Company Ohio The company is a property and casualty insurance company. ------------------------------------------------------------------------------------------------------------------------------------ Victoria Specialty Insurance Company Ohio The company is a property and casualty insurance company. ------------------------------------------------------------------------------------------------------------------------------------ VPI Services, Inc. California The company operates as a nationwide pet registry service for holders of Veterinary Pet Insurance policies, including pet indemnification and lost pet recovery program. ------------------------------------------------------------------------------------------------------------------------------------ Washington Square Administrative Pennsylvania The company provides administrative services to Services, Inc. Nationwide Life and Annuity Company of America. ------------------------------------------------------------------------------------------------------------------------------------ Western Heritage Insurance Company Arizona The company underwrites excess and surplus lines of property and casualty insurance. ------------------------------------------------------------------------------------------------------------------------------------ William J. Lynch and Associates, California The company specializes in the analysis and funding Inc. of corporate benefit liabilities. ------------------------------------------------------------------------------------------------------------------------------------ W.I. of Florida Florida The company is an insurance agency and operates as an employee agent "storefront" for Titan Indemnity Company in Florida. ------------------------------------------------------------------------------------------------------------------------------------ W.I. of New York New York The company is an insurance agency and operates as an employee agent "storefront" for Titan Indemnity Company in New York (currently inactive). ------------------------------------------------------------------------------------------------------------------------------------ Whitehall Holdings, Inc. Texas The company acts as a holding company especially for the Titan agencies. ------------------------------------------------------------------------------------------------------------------------------------ Whitehall Insurance agency of Texas The company is a Texas licensed insurance agency Texas, Inc. (currently inactive). ------------------------------------------------------------------------------------------------------------------------------------ Whitehall of Indiana, Inc. Indiana The company is an insurance agency and operates as an employee agent "storefront" for Titan Indemnity Company in Indiana. ------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------- COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) ----------------------------------------------------------------------------------------------------------------------------------- * MFS Variable Account Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Multi-Flex Variable Account Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-A Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-B Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-C Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VA Separate Account-D Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-II Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-3 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-4 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-5 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-6 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-7 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-8 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-9 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-10 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-11 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-12 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-13 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-14 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-15 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-16 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Variable Account-17 Ohio Issuer of Annuity Contracts ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Provident VA Separate Pennsylvania Issuer of Annuity Contracts Account 1 ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Provident VA Separate Delaware Issuer of Annuity Contracts Account A ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VL Separate Account-A Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- Nationwide VL Separate Account-B Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VL Separate Account-C Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VL Separate Account-D Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-2 Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-3 Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-4 Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-5 Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide VLI Separate Account-6 Ohio Issuer of Life Insurance Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Provident VLI Separate Pennsylvania Issuer of Life Insurance Account 1 Policies ----------------------------------------------------------------------------------------------------------------------------------- * Nationwide Provident VLI Separate Delaware Issuer of Life Insurance Account A 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 MANAGEMENT | | | (SIC) | | | | | | SYSTEMS, INC. | | | | | | 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 AFFINITY | | | ALLIED | | | INDEMNITY COMPANY | | | INSURANCE COMPANY | | | GROUP, INC. | | | (NW INDEMNITY) | | | OF AMERICA | | | (AGI) | | | Common Stock: 28,000 | | | |___| | | |___| ------------- Shares | | | Common Stock: 500,000 | |___| Common Stock: 850 Shares | | | | | | ------------- Shares | | | ------------- | | | | | | | | | | | | Casualty-100% | | | Casualty-100% | | | Casualty-100% | | ------------------------------- | ---------------------------- | | (See Page 2) | | | | | | | | ---------------------------- | -------------------------------- | ------------------------------- | | NEWHOUSE CAPITAL | | | | LONE STAR | | | PARTNERS, LLC | | -------------------------------- | | GENERAL AGENCY, INC. | | | | | | RP&C | | | | | | Casualty-70% | | | INTERNATIONAL | | | Common Stock: 1,000 | | | |___| | | |___| ------------- Shares | | | GGV-19% | |___| Common Stock: 963 | | | | | | | | | ------------- Shares | | | | | | Fire-10% | | | | | | Casualty-100% | | ---------------------------- | | Casualty-23.88% | | ------------------------------- | | -------------------------------- | || | ---------------------------- | | || | | | | -------------------------------- | ------------------------------- | | NATIONWIDE LLOYDS | | | NATIONWIDE CAPITAL | | | COLONIAL COUNTY | | | |___| | MORTGAGE, LLC | | | MUTUAL INSURANCE | | | A TEXAS LLOYDS |___| | | | | COMPANY | | | | |___| Mutual-5% | | | | | | | | | | | | Surplus Debentures: | | | | | | NW Indemnity-95% | | | ------------------- | | ---------------------------- | | | | | | | | -------------------------------- | | Assurance | | ---------------------------- | | | Lone Star | | | THI HOLDINGS | | -------------------------------- | | | | | DELAWARE, INC. | | | NATIONWIDE INSURANCE | | ------------------------------- | | (THI) | | | COMPANY OF FLORIDA | | | | | | | | | ------------------------------- | | Common Stock: 100 Shares |___|___| Common Stock: 10,000 | | | NATIONWIDE SERVICES | | | | | | ------------ Shares | | | COMPANY, LLC | | Casualty-100% | | | | | | | | | | | Casualty-100% | | | Single Member Limited | | (See page 3) | | | | |---| Liability Company | ---------------------------- | -------------------------------- | | | | | | Casualty-100% | | -------------------------------- | ------------------------------- | | NATIONWIDE CREDIT | | | | ENHANCEMENT INSURANCE | | ------------------------------- |___| COMPANY | | | AMERICAN MARINE | | | | | UNDERWRITERS, INC. | | Casualty-100% | | | | | | | | 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: 13,642,432 | | | ALTERNATIVES, LTD. | | | | | | ------------- | | | Common Stock: 120,000 SHARES | |___| Common Stock: 100 Shares | | | 13,642,432 | | | ------------- | | | ------------- | | | | | | | | | | | | | | | Fire-100% | | | | | | | | | | | | Casualty-100% | | | Casualty 95.2% | | -------------------------------- | -------------------------------- | | Fire 4.8% | | | | | | | | -------------------------------- | | (See Page 4) | | | | | | -------------------------------- | | | | | | | | 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 | | | | CRESTBROOK 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 December 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 | | | (Allied P & C) |___| | 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: 75,843 | | | AGENCY, INC. | | ------------- Shares | |___| | | | | | | | NMHI-100% | | | AMCO-100% | | | | | | | 8% Preferred: 39,500 | | | | | ------------- Shares | | ---------------------------- | | | | AGI-24% | | ---------------------------- ---------------------------- | AMCO-76% | | | CALFARM INSURANCE | | CAL-AG INSURANCE | | | | | AGENCY | | SERVICES, INC. | | 7% Preferred: 40,000 | | | | | | | ------------- Shares | |___| Common Stock: 1,000 |___| Common Stock: 100 | | | | ------------- Shares | | ------------- Shares | | AMCO- 25% | | | | | | Allied P&C-50% | | AMCO-100% | | CalFarm Insurance | | Depositors-25% | | | | Agency-100% | ---------------------------- ---------------------------- ---------------------------- | | ---------------------------- | AGMC | | REINSURANCE, LTD. | | | | Common Stock: 11,000 | | ------------- Shares | | | | NAMC-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: 5,645,527 | | | ------------- Shares | | ------------- Shares | | | | | | | | SIC-100% | ___| SIC-80.5% | | ---------------------------- | ---------------------------- | | | ---------------------------- | ---------------------------- | | WESTERN | | | VETERINARY PET | | | HERITAGE INSURANCE | | | INSURANCE CO. | | | COMPANY | | | | |___| | |___| | | Common Stock: 4,776,076 | | | VPSI-100% | | ------------- Shares | | | | | | | | | | SIC-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 December 31, 2003
Page 2 ------------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | |______ |Guaranty Fund |______ |Certificate | | | |Casualty | | (See Page 1) | ------------------------- __________________________________________________________________________ | | | | --------------------------------- | | TITAN INDEMNITY COMPANY | ---------------------------------- | (TITAN) | | VICTORIA FINANCIAL CORP. | | | | (VICTORIA) | |Common Stock: 4,319,951 Shares | | | |------------ | ___|Common Stock: 1,000 Shares| | | | |------------ | | | | | | |THI-100% | | | | --------------------------------- | |THI-100% | | | ---------------------------------- | | --------------------------------- | | TITAN INSURANCE COMPANY | | ---------------------------------- | (TITAN INSURANCE) | | | VICTORIA FIRE & | | | | | CASUALTY COMPANY | |Common Stock: 1,000,000 Shares | | | (VICTORIA FIRE) | |------------ | |___| | | | | |Common Stock: 1,500 Shares|___ | | | |------------ | | |Titan-100% | | | | | --------------------------------- | | | | | | |Victoria-100% | | | | ---------------------------------- | --------------------------------- | | | TITAN AUTO AGENCY, INC. | | | | (MI) | | ---------------------------------- | | | | | VICTORIA INSURANCE | | |Common Stock: 1,000 Shares | | | AGENCY INC. | | |------------ | | | | | | | |___|Common Stock: 497 Shares Class B|___| | | |------------ 3 Shares Class A| | |Titan Insurance-100% | | | | --------------------------------- |Victoria-100% of | | |Class A & Class B | | ---------------------------------- | | | ---------------------------------- | | VICTORIA AUTOMOBILE | | | INSURANCE COMPANY | | | | | |Common Stock: 1,500 Shares|___| |------------ | | | | | | | | |Victoria Fire-100% | | ---------------------------------- | | | ---------------------------------- | | VICTORIA NATIONAL | | | INSURANCE COMPANY | | | | | |Common Stock: 1,000 Shares|___| |------------ | | | | | | | | |Victoria Fire-100% | | ---------------------------------- | | | ---------------------------------- | | VICTORIA SELECT | | | INSURANCE COMPANY | | | | | |Common Stock: 1,000 Shares|___| |------------- | | | | | | | | |Victoria Fire-100% | | ---------------------------------- | | | ---------------------------------- | | VICTORIA SPECIALITY | | | INSURANCE COMPANY | | | | | |Common Stock: 1,000 Shares|___| |------------ | | | | | |Victoria Fire-100% | ----------------------------------
NATIONWIDE(R) -------------------------------------- ___________________| NATIONWIDE MUTUAL |_____________________________________________ ___________________| INSURANCE COMPANY |_____________________________________________ | (CASUALTY) | | (See Page 1) | -------------------------------------- | | ------------------------------------ | THI HOLDINGS DELAWARE, INC. | | (THI) | | | |Common Stock: 1,000 Shares| |------------ | | | | | |THI-100% | ------------------------------------ | | | _____________________________________|______________________________________________________________________________ | ---------------------------------- | WHITEHALL HOLDINGS, INC. | | (WHITEHALL) | | | |Common Stock: 1,000 Shares| |------------ | | | | | |THI-100% | ---------------------------------- | | | | | ---------------------------------- | ---------------------------------- | TITAN AUTO INSURANCE | | | WHITEHALL INSURANCE | | OF ARIZONA, INC. | | | AGENCY OF TEXAS, INC. | | | | | | |Common Stock: 100,000 Shares|___|___|Common Stock: 1,000 Shares|________________________ |------------ | | |------------ | | | | | | | | | | | | | | |Whitehall-100% | | |Whitehall-100% | | ---------------------------------- | ---------------------------------- | | | | | ---------------------------------- | ---------------------------------- ---------------------------------- | TITAN AUTO INSURANCE | | | WHITEHALL OF | | TITAN INSURANCE | | OF NEW MEXICO, INC. | | | INDIANA, INC. | | SERVICES INC. | | | | | | | (TITAN SERVICES) | |Common Stock: 1,000 Shares|___|___|Common Stock: 10,000 Shares| ___| | |------------ | | |------------ | | |Common Stock: 1 Share | | | | | | | |------------ | | | | | | | | | |Whitehall-100% | | |Whitehall-100% | | |Whitehall Ins.-100% | ---------------------------------- | ---------------------------------- | ---------------------------------- | | | | ---------------------------------- | ---------------------------------- | ---------------------------------- | TITAN AUTO INSURANCE | | | WI OF | | | TITAN NATIONAL AUTO | | (NV) | | | FLORIDA, INC. | | | CALL CENTER, INC. | | | | | | | | | |Common Stock: 1,000 Shares|___|___|Common Stock: 100 Shares| |___|Common Stock: 100 Shares| |------------ | | |------------ | | |------------ | | | | | | | | | | | | | | | | | |Whitehall-100% | | |Whitehall-100% | | |Titan Services-100% | ---------------------------------- | ---------------------------------- | ---------------------------------- | | | | ---------------------------------- | ---------------------------------- | ---------------------------------- | TITAN AUTO INSURANCE | | | TITAN AUTO | | | QUICK SURE AUTO | | OF PENNSYLVANIA, INC. | | | INSURANCE, INC | | | AGENCY, INC. | | | | | | | | | |Common Stock: 1,000 Shares|___|___|Common Stock: 1,000 Shares| |___|Common Stock: 1,050 Shares| |------------ | | |------------ | |------------ | | | | | | | | | | | | | | | |Whitehall-100% | | |Whitehall-100% | |Titan Services-100% | ---------------------------------- | ---------------------------------- ---------------------------------- | | | ---------------------------------- | | WHI OF | | | NEW YORK, INC. | | | | |___|Common Stock: 100 Shares| |------------ | | | | | |Whitehall-100% | ----------------------------------
-------------------------------------- ________________| NATIONWIDE MUTUAL | ________________| FIRE INSURANCE COMPANY | | (CASUALTY) | | (See Page 1) | -------------------------------------- ______________________________________________________________ | | | ---------------------------------- | TITAN HOLDINGS | | SERVICE CORPORATION | | (TITAN HOLDINGS) | | | |Common Stock: 100,00 Share | |------------ | | | |THI-100% | ---------------------------------- Subsidiary Companies __ Solid Line Contractual Association __ Double Line Limited Liability Company __ Dotted Line December 31, 2003 Page 3 ________________________________________________________________________________ | | | | | | | | | --------------------------------- --------------------------------- | | 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.AA,R.L. | | | 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 MARITIMA VIDA e | | |Shares | | | PREVIDENCIA SA | |---| | | | | |NGH-.01% | | |Common Stock: 134,822,225 | | | | |------------ Shares | | | | | | | | | | | |SIAM-48.98% | | | | --------------------------------- | | | | |DPSA-86.4% | | --------------------------------- --------------------------------- | | PANEUROLIFE (PEL) | | --------------------------------- | | | | EUROPE WIDE LIFE SA | |Common Stock: 1,300,000 Shares| | | | |------------ |___|___| | | | | |Common Stock: 65,000 | | | | |------------- |___ |LUX SA-100% | | | Shares | |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: 13,642,432 Shares | | ------------- | | | | | | | |Casualty 95.2% | |Fire 4.8% | ------------------------------------ | | ___________________________________________________________________________________________________________ _______ | | | | --------------------------------- --------------------------------- --------------------------------- | | 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 5) | | --------------------------------- --------------------------------- --------------------------------- | --------------------------------- | | NGH | | | NETHERLANDS B.V. | | | | |___|Common Stock: 40 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 7) | | |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 December 31, 2003 Page 4 (left side) ------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | |________________________ |Guaranty Fund |________________________ |Certificate | | | |Casualty | | (See Page 1) | -------------------- __________________________________________________________________________________________________ | | | ------------------------------ ---------------------------------- | ----------------------------- | TBG INSURANCE | | NATIONWIDE LIFE INSURANCE | | | NATIONWIDE FINANCIAL | | SERVICES CORPORATION | | COMPANY (NW LIFE) | | | SERVICES CAPITAL TRUST | | (TGB) | | | | | | ___| | ___| Common Stock: 3,814,779 Shares | |___| | | | | | | ------------ | | | | | | | | | | | | | | | | | | | | | | | |NFS-63% | | | NFS-100% | | | NFS-63% | | ------------------------------ | ---------------------------------- | ----------------------------- | | | | ------------------------------ | | ----------------------------- | | TBG AVATION, LLC | | ---------------------------------- | | CAP PRO HOLDING, INC. | | | | | | NATIONWIDE LIFE AND | | | | | | | | | ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | |__| | |__| Common Stock: 66,000 Shares | |___| | | | | | | ------------ | | | | | | | | | | | | |TGB-100% | | | NW Life-100% | | NFS-63% | | ------------------------------ | ---------------------------------- ----------------------------- | | | ------------------------------ | ---------------------------------- | | TBG DANCO INSURANCE | | | NATIONWIDE INVESTMENT | | | COMPANY | | | SERVICES CORPORATION | | | | | | | |__| | |__| Common Stock: 5,000 Shares | | | | | | ------------ | | | | | | | | | | | | |TGN-100% | | | | | ------------------------------ | | NW Life-100% | | | ---------------------------------- | ------------------------------ | | | TGB FINANCIAL & INSURANCE | | ---------------------------------- | | SERVICES CORPORATION | | | NATIONWIDE FINANCIAL | |__| | |__| ASSIGNMENT COMPANY | | | | | | | | | | | | NW LIFE-100% | | | | | ---------------------------------- | | | | | |TGN-100% | | ---------------------------------- | ------------------------------ | | NATIONWIDE PROPERTIES LTD. | | | | | | ------------------------------ | | Units: | | | TGB FINANCIAL & INSURANCE | |__| ----- | | | SERVICES CORPORATION | | | NW LIFE-97.6% | | | OF HAWAII | | | Casualty-2.4% | |__| | | ---------------------------------- | | | | | | | | ---------------------------------- | | | | | NATIONWIDE COMMUNITY | | |TGN-100% | | | DEVELOPMENT CORP., LLC | | ------------------------------ | | | | |--| Units: | | ------------------------------ | | ----- | | | WILLIAM J. LYNCH & | | | NW LIFE-67% | | | ASSOCIATES, INC. | | | NW Indemnity-33% | | | | | ---------------------------------- | | | | |__| | | ---------------------------------- | | | | NATIONWIDE AFFORDABLE | | | | | HOUSING, LLC | |TGN-100% | |--| | ------------------------------ | NW Life-45% | | NW Indemnity-45% | ----------------------------------
(middle) NATIONWIDE(R) --------------------- ______________________| NATIONWIDE MUTUAL |_________________________________ ______________________| INSURANCE COMPANY |_________________________________ | (CASUALTY) | | | (See Page 1) | | --------------------- | | --------------------------------------------- | NATIONWIDE CORPORATION (NW CORP) | | Common Stock: 13,642,432 | | ------------ Shares | | ------ | | Casualty 95.2% | | Fire 4.8% | --------------------------------------------- | | ------------------------------------ | 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 | | | | || | | DISTRIBUTORS AGENCY | | | | || | | OF ALABAMA, INC. | | | FLORIDA | || | | |_| | RECORDS |_|| | | Common Stock: 10,000 Shares | | | ADMINISTRATOR, INC |__| | | ------------ | | | | | | | | | | | | | | | | | | NFIDAI-100% | | | | | --------------------------------- | ----------------------------- | | | --------------------------------- | ----------------------------- -------------------------------- | | LANDMARK FINANCIAL | | | | | 401(k) INVESTMENT | | | SERVICES OF | | | | | SERVICES, INC. | | | | | | FINANCIAL HORIZONS | | | | | NEW YORK, INC. | | _| DISTRIBUTORS | |Common Stock: 1,000,000 Shares|___| | Common Stock: 10,000 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.| | | | | 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 6)| | NFS-100% | -------------------------------- | ----------------------------- ------------------------------- | | _______________________________________ | | | | | -------------------------------- | ----------------------------- -------------------------------- | NATIONWIDE RETIREMENT | | | NATIONWIDE FINANCIAL | | NFSB INVESTMENTS LTD. | | SOLUTIONS, INC. (NRS) | | | STRUCTURED PRODUCTS, LlLC | | | | | | | | | Common Stock: 12,000 Shares | | Common Stock: 236,494 Shares | |---| | | ------------ | | ------------- | | | | | | | | | | | | NFSDI-100% | | NFS-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 December 31, 2003
Page 5 (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: 13,642,432 Shares | | ------------- | | | | | | Shares | | ------ | | Casualty 95.2% | | Fire 4.8% | ------------------------------------------ | | | --------------------------------- | 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% | ----------------------------- ----------------------------- ----------------------------- | | ___| 1717 INSURANCE | ___| AGENCY OF TEXAS, INC. | | | ----------------------------- Subsidiary Companies - Solid Line Contractual Association - Double Line Limited Liability Company - Dotted Line December 31, 2003 Page 6 (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. | | | GARTMORE GROUP LTD. | | | (RIG) | | | (GGL) | | | |__|__| | | | | | | | | GGAMT - 79% | __| NAMHL - 83% | | | AL - 21% | | --------------------------- | --------------------------- | | | | | --------------------------- | | | | NATIONWIDE UK HOLDING | | --------------------------- | | COMPANY, LTD. | | | GARTMORE RIVERVIEW, LLC | | | (NUKHCL) | | | | | | | | | | | | | | | | | | GGL - 100% | | | | | --------------------------- | | RIG - 70% | | | | --------------------------- | --------------------------- | | | ASSET MANAGEMENT | | | | HOLDINGS PLC | | | _| (AMH) | | || | | | || | | | || | NUKHCL - 100% | | || --------------------------- | || | | || --------------------------- | || | GARTMORE INVESTMENT | | || | MANAGEMENT PLC | | ||_| (GIM) |__|__ || | | | || | AMH - 99.99% | | || | GNL - .01% | | || --------------------------- | || | | || --------------------------- | || | AMH INVESTMENTS | | || | | | ||_| | | | | | | | | | | | | AMH - 100% | |__ | --------------------------- | | | --------------------------- | | GARTMORE GLOBAL | | | INVESTMENTS, INC. | |__| (GGL) | | | | | | (See Page 8) | --------------------------- (middle) NATIONWIDE(R) ------------------- __| NATIONWIDE MUTUAL |____________________________________________________________________________ __| INSURANCE COMPANY |____________________________________________________________________________ | (CASUALTY) | | | (See Page 1) | | ------------------- | ---------------------------------------- | NATIONWIDE CORPORATION (NW CORP) | | Common Stock: 13,642,432 | | ------------ Shares | | | | | | Casualty 95.2% | | Fire 4.8% | ---------------------------------------- | | ------------------------------------- | 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 PENSION | | | | | | INTERNATIONAL LIMITED | | | TRUSTEES, LTD. | |___| | |__| (GFMI) | |__| | | | | | | | | | | GIM - 50% | | GISL - 99.99% | | GIM - 99% | | | GSL - 50% | | GSL - .01% | | GSL - 1% | | -------------------------- -------------------------- -------------------------- | | | -------------------------- -------------------------- | | GARTMORE INDOSUEZ UK | | GARTMORE MANAGERS | | | RECOVERY FUND (G.P.) LTD.| | (JERSEY) LTD. | |___| (GENERAL PARTNER) | | | | | | | GFMI - 94% | | | GIM - 50% | | GSL - 3% | | | GNL - 50% | | GIM - 3% | | -------------------------- -------------------------- | | -------------------------- -------------------------- | |GARTMORE 1990 TRUSTEE LTD.| | | | | (GENERAL PARTNER) | | GARTMORE NO. 1 | |___| | | GENERAL PARTNER, LTD. | | | _____| | | GIM - 50% | | | | GSL - 50% | | | -------------------------- | GIM - 100% | -------------------------- -------------------------- | GARTMORE NO. 2 | | GENERAL PARTNER, LTD. | _____| | | | | | | GIM - 100% | --------------------------
------------------------------------- | NATIONWIDE MUTUAL | __________| FIRE INSURANCE COMPANY | __________| (FIRE) | | (See Page 1) | ------------------------------------- _________________________________________________ | | | -------------------------- -------------------------- | | DAMIAN SECURITIES LTD. | | GARTMORE CAPITAL | | | | | MANAGEMENT LTD. | |__| | | (GCM) | | | | | | | | GIM - 50% | | GIM - 99.99% | | | GSL - 50% | | GSL - 0.1% | | -------------------------- -------------------------- | | | -------------------------- -------------------------- | | GARTMORE NOMINEES LTD. | | GARTMORE U.S. LTD. | | | (GNL) | | (GUS) | |__| | | | | | | | | | | | | | | | GIM - 99.99% | | | | | GSL - .01% | | GCM - 100% | | -------------------------- -------------------------- | | | -------------------------- -------------------------- | | GARTMORE SECURITIES LTD. | | GARTMORE GLOBAL PARTNERS | | | (GSL) | | (GENERAL PARTNER) | |__| |_____| | | | | | | | | GIM - 99.99% | | GUS - 50% | | | GNL - .01% | | GSL - 50% | | -------------------------- -------------------------- | | -------------------------- | | GIL NOMINEES LTD. | | | | |__| | | | | GIM - 50% | | GSL - 50% | -------------------------- Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line December 31, 2003
Page 7 (left side) NATIONWIDE(R) ----------------------- ------------------------------------- | FARMLAND MUTUAL | | NATIONWIDE MUTUAL | | INSURANCE COMPANY |______________________| INSURANCE COMPANY |_____________________________________ | |______________________| |_____________________________________ | Guaranty Fund | | (CASUALTY) | | | Certificate | | (See Page 1) | | | | ------------------------------------- | | Casualty | | | (See Page 1) | | ----------------------- | ------------------------------------ | NATIONWIDE CORPORATION (NW CORP) | | Common Stock: 13,642,432 | | ------------ Shares | | | | Casualty-95.2% | | Fire-4.8% | ------------------------------------ | | ------------------------------------ | GARTMORE GLOBAL | | ASSET MANAGEMENT | | TRUST (GGAMT) | | | | | | NW Corp.-100% | ------------------------------------ | | ------------------------------------ | NATIONWIDE ASSET | | MANAGEMENT HOLDINGS, LTD | | (NAMHL) | | | | | | GGAMT-100% | ------------------------------------ | | ------------------------------------ | GARTMORE GROUP LTD | | (GGL) | | | | | | NAMHL-83% | ------------------------------------ | | ------------------------------------- | GARTMORE GLOBAL | | INVESTMENTS, INC. (GGI) | | | | Common Stock: 958,750 Shares | ____________________________________________________________________| ------------ | | | | GGAMT-94% | | | | Preferred Stock: 500,000 Shares | | | | --------------- | | | | GGAMT-100% | | | ------------------------------------- -------------------------------- --------------------------------- | GARTMORE MUTUAL FUND | | GARTMORE S.A. CAPITAL | | CAPITAL TRUST | ___| TRUST (GSA) | | | | | |__________________________________________________ | | | | | | DELAWARE BUSINESS TRUST | | | DELAWARE BUSINESS TRUST | -------------------------------- | --------------------------------- | | | | | --------------------------------- | | GARTMORE SEPARATE | | | ACCOUNTS, LLC | |__| | | | | | | GSA-60% | | --------------------------------- | | | | | --------------------------------- | | GARTMORE EMERGING | |__| MANAGERS, LLC | | (GEM) | __| | | | GSA-100% | | --------------------------------- | | | | | --------------------------------- | | NORTHPOINTE | | | CAPITAL LLC | |--| | | | | | | GEM-65% | | --------------------------------- | | | | | --------------------------------- | | CODA CAPITAL | | | MANAGEMENT LLC | |--| | | | | GEM-79% | ---------------------------------
(right side) ------------------------------------- | NATIONWIDE MUTUAL | __________| FIRE INSURANCE COMPANY | __________| (FIRE) | | (See Page 1) | ------------------------------------- ------------------------------ ------------------------- ------------------------------------ | GARTMORE GLOBAL ASSET | | GGI MGT LLC | | NEWHOUSE S | | MANAGEMENT, INC. | | (GGIMGT) | | SITUATIONS FUND I, LLC | ___________________________________| (GGAMI) |---| |---| | | | | | | GGIMGT-10% | | | | | | Class A Preferred: 10,000 Shares | | GSA-100% | | GGAMI-100% | | GGAMI-75% | ------------------------------ ------------------------ ------------------------------------ | ------------------------------------- | ------------------------------------- ------------------------------------ | GARTMORE | | | GARTMORE MORLEY | | GARTMORE MORLEY CAPITAL | | INVESTORS SERVICES, INC. | | | FINANCIAL SERVICES, INC. | | MANAGEMENT, INC | | |____|____| (MORLEY) |_____| | | Common Stock: 5 Shares | | | | | | Common Stock: 500 Shares | | ------------ | | | Common Stock: 82,343 Shares | | | ------------ | | | | | ------------ | | | | | GGAMI-100% | | | GGAMI-100% | | | Morley-100% | ------------------------------------- | ------------------------------------- | ------------------------------------ | | ------------------------------------- | ------------------------------------- | ------------------------------------ | NATIONWIDE GLOBAL FUNDS | | | GARTMORE GLOBAL | | | GARTMORE | | | | | VENTURES, INC. | | | TRUST COMPANY | | |____|____| (GGV) | |__| | | | | | | | | Common Stock: 2,000 Shares | | LUXEMBOURG SICAV |____| | | | | ------------ | | | | | | | | | | | | | GGAMI-100% | | | Morley-100% | ------------------------------------- | ------------------------------------- | ------------------------------------ | | ------------------------------------- | ------------------------------------- | ------------------------------------ | GARTMORE DISTRIBUTION | | | CORVIANT CORPORATION | | | GARTMORE MORLEY & | | SERVICES, INC. | | | (CC) | | | ASSOCIATES, INC. | | | | | | | | | | |____|____| Common Stock 450,000 shares | |__| Common Stock: 3,500 Shares | | Common Stock: 10,000 Shares | | ------------ | | ------------ | | ------------ | | Series A Preferred 250,000 shares | | | | | | ------------------ | | Morley-100% | | GGAMI-100% | | | | | | | | GGAMI-100% | | | ------------------------------------- -------------------------------------- ------------------------------------ Subsidiary Companies - Solid Line Contractual Association - Double Line Limited Liability Company - Dotted Line December 31, 2003
Page 8 Item 29. 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, suit or proceeding; o any threatened, pending or completed investigative action, suit 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 cousel, the mater 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 30. PRINCIPAL UNDERWRITER (a) Nationwide Investment Services Corporation ("NISC") serves as principal underwriter and general distributor for the following separate investment accounts of Nationwide or its affiliates:
Multi-Flex Variable Account Nationwide VL Separate Account-C Nationwide Variable Account Nationwide VL Separate Account-D Nationwide Variable Account-II Nationwide VLI Separate Account-2 Nationwide Variable Account-4 Nationwide VLI Separate Account-3 Nationwide Variable Account-5 Nationwide VLI Separate Account-4 Nationwide Variable Account-6 Nationwide VLI Separate Account-6 Nationwide Variable Account-7 Nationwide Variable Account-8 Nationwide Variable Account-9 Nationwide Variable Account-10 Nationwide Variable Account-11 Nationwide Variable Account-13 Nationwide Variable Account-14 Nationwide VA Separate Account-A Nationwide VA Separate Account-B Nationwide VA Separate Account-C
(b) Directors and Officers of NISC: Joseph J. Gasper, Director and Chairman of the Board Richard A. Karas, Director and Vice Chairman John M. Davis, President William G. Goslee, Senior Vice President Mark R. Thresher, Director, Senior Vice President and Treasurer Thomas E. Barnes, Vice President and Secretary 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 Assistant Secretary Dina A. Tantra, Assistant Secretary Mark D. Maxwell, Assistant Secretary E. Gary Berndt, 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 NET UNDERWRITING COMPENSATION ON BROKERAGE COMPENSATION UNDERWRITER DISCOUNTS AND REDEMPTION OR COMMISSIONS COMMISSIONS ANNUITIZATION ----------------------------- ------------------------- ----------------------- ----------------- ------------------- ----------------------------- ------------------------- ----------------------- ----------------- ------------------- N/A N/A N/A N/A Nationwide Investment Services Corporation ----------------------------- ------------------------- ----------------------- ----------------- -------------------
Item 31. LOCATION OF ACCOUNTS AND RECORDS John Davis Nationwide Life Insurance Company One Nationwide Plaza Columbus, OH 43215 Item 32. MANAGEMENT SERVICES Not Applicable Item 33. 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 Registration Statement and has caused this Registration Statement to be signed on its behalf in the City of Columbus, and State of Ohio, on this 22nd day of April, 2004. NATIONWIDE VLI SEPARATE ACCOUNT-4 ---------------------------------------------------------------------------- (Registrant) NATIONWIDE LIFE INSURANCE COMPANY ---------------------------------------------------------------------------- (Depositor) By: /s/ MICHAEL R., ESQ. ---------------------------------------------------------------------------- Michael R. Moser, 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 22nd day of April, 2004.
W. G. JURGENSEN ------------------------------------------------------------------------- W. G. Jurgensen, Director and Chief Executive Officer JOSEPH J. GASPER ------------------------------------------------------------------------- Joseph J. Gasper, Director and President and Chief Operating Officer JOSEPH A. ALUTTO ------------------------------------------------------------------------- Joseph A. Alutto, Director JAMES G. BROCKSMITH, JR. ------------------------------------------------------------------------- James G. Brocksmith, Jr., Director HENRY S. HOLLOWAY ------------------------------------------------------------------------- Henry S. Holloway, Director LYDIA M. MARSHALL ------------------------------------------------------------------------- Lydia M. Marshall, Director DONALD L. MCWHORTER ------------------------------------------------------------------------- Donald L. McWhorter, Director DAVID O. MILLER ------------------------------------------------------------------------- David O. Miller, Director JAMES F. PATTERSON ------------------------------------------------------------------------- James F. Patterson, Director MARTHA J. MILLER DE LOMBERA ------------------------------------------------------------------------- Martha J. Miller de Lombera, Director GERALD D. PROTHRO ------------------------------------------------------------------------- Gerald D. Prothro, Director ARDEN L. SHISLER ------------------------------------------------------------------------- Arden L. Shisler, Director ALEX SHUMATE ------------------------------------------------------------------------- Alex Shumate, Director By /s/ MICHAEL R. MOSER ------------------------------------------------------ Michael R. Moser Attorney-in-Fact