-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C2jRP9APj9xqFj8d2hXIfXlBnx1/bZcWRfJjQHuerDVCUZJtze82tEQA9uFvxZoZ 9VbNCEKOF5bgWvxwZsFfKg== 0001190903-05-000327.txt : 20050418 0001190903-05-000327.hdr.sgml : 20050418 20050418164659 ACCESSION NUMBER: 0001190903-05-000327 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050418 DATE AS OF CHANGE: 20050418 EFFECTIVENESS DATE: 20050501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE VLI SEPARATE ACCOUNT 4 CENTRAL INDEX KEY: 0001041357 IRS NUMBER: 314156830 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-83010 FILM NUMBER: 05757227 BUSINESS ADDRESS: STREET 1: NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 614-249-7111 MAIL ADDRESS: STREET 1: NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 485BPOS 1 protectionls485b.txt BOA PROTECTION LAST SURVIVOR PEA 6 ================================================================================ '33 Act File No. 333-83010 '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. 6 |X| and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_| AMENDMENT NO. 6 |X| (Check appropriate box or boxes.) NATIONWIDE VLI SEPARATE ACCOUNT-4 (Exact Name of Registrant) NATIONWIDE LIFE INSURANCE COMPANY (Name of Depositor) ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code: (614) 249-7111 PATRICIA R. HATLER, ESQ. SECRETARY ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215-2220 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: MAY 1, 2005 It is proposed that this filing will become effective (check appropriate box) |_| Immediately upon filing pursuant to paragraph (b) |X| On MAY 1, 2005 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. ================================================================================ LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES Issued By NATIONWIDE LIFE INSURANCE COMPANY Through NATIONWIDE VLI SEPARATE ACCOUNT-4 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Date Of This Prospectus Is May 1, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PLEASE KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Variable life insurance is complex, and this prospectus is designed to help you become as fully informed as possible in making your decision to purchase or not to purchase the variable life insurance policy it describes. Prior to your purchase, we encourage you to take the time you need to understand the policy, its potential benefits and risks, and how it might or might not benefit you. In consultation with your financial adviser, you should use this prospectus to compare the benefits and risks of this policy versus those of other life insurance policies and alternative investment instruments. - -------------------------------------------------------------------------------- Please read this entire prospectus and consult with a trusted financial adviser. If you have policy specific questions or need additional information, contact us. Also, contact us for free copies of the prospectuses for the mutual funds available under the policy. ============================================================================ TELEPHONE: 1-800-547-7548 TDD: 1-800-238-3035 INTERNET: www.nationwidefinancial.com U.S.MAIL: Nationwide Life Insurance Company One Nationwide Plaza, RR1-04-D4 Columbus, OH 43215-2220 ============================================================================ - --------------------------------------------------------- ---------------------- PLEASE UNDERSTAND THAT THE POLICY TERMS WILL GOVERN THE WAY THE POLICY WORKS AND ALL RIGHTS AND OBLIGATIONS. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------------------------------------------------- THIS POLICY IS NOT: FDIC INSURED; A BANK DEPOSIT; AVAILABLE IN EVERY STATE; OR INSURED OR ENDORSED BY A BANK OR ANY FEDERAL GOVERNMENT AGENCY. ------------------------------------------------------------------- ------------------------------------------------------------------- THIS POLICY MAY DECREASE IN VALUE TO THE POINT OF BEING VALUELESS. ------------------------------------------------------------------- THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY NOT LAWFULLY BE MADE. - -------------------------------------------------------------------------------- The purpose of this policy is to provide life insurance protection for the beneficiary you name. IF YOUR PRIMARY NEED IS NOT LIFE INSURANCE PROTECTION, THEN PURCHASING THIS POLICY MAY NOT BE IN YOUR BEST INTERESTS. We make no claim that the policy is in any way similar or comparable to a systematic investment plan of a mutual fund. In thinking about buying this policy to replace existing life insurance, please carefully consider its advantages versus those of the policy you intend to replace, as well as any replacement costs. As always, consult your financial adviser. Not all terms, conditions, benefits, programs, features and investment options are available or approved for use in every state. - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- TABLE OF CONTENTS...................................I IN SUMMARY: POLICY BENEFITS.........................1 IN SUMMARY: POLICY RISKS............................3 IN SUMMARY: VARIABLE UNIVERSAL LIFE INSURANCE AND THE POLICY............................4 IN SUMMARY: FEE TABLES..............................6 AVAILABLE SUB-ACCOUNTS.............................12 THE POLICY.........................................25 Policy Owner....................................25 The Beneficiaries...............................25 To Purchase.....................................26 Coverage........................................26 Supplemental Coverage...........................26 Coverage Effective Dates........................26 Temporary Insurance Coverage....................26 To Cancel (Examination Right)...................26 To Change Coverage..............................27 Sub-Account Portfolio Transfers.................28 Fixed Account Transfers.........................29 Modes To Make A Transfer........................29 Conversion Right................................31 To Terminate Or Surrender.......................31 To Assign.......................................31 Proceeds Upon Maturity..........................31 Reminders, Reports And Illustrations............32 Errors Or Misstatements.........................33 Incontestability................................33 If We Modify The Policy.........................33 RIDERS.............................................33 Adjusted Sales Load Life Insurance Rider........33 Estate Protection Rider.........................34 Policy Split Option Rider.......................34 PREMIUM............................................35 Initial Premium.................................35 Subsequent Premiums.............................35 CHARGES............................................36 Sales Load......................................36 Premium Taxes...................................37 Surrender Charges...............................37 Partial Surrender Fee...........................38 Short-Term Trading Fees.........................38 ----------------------- Cost Of Insurance...............................39 Mortality And Expense Risk......................40 Per $1,000 Of Specified Amount..................40 Administrative..................................40 Policy Loan Interest............................40 Adjusted Sales Load Life Insurance Rider........40 Estate Protection Rider.........................41 Policy Split Option Rider.......................41 A Note On Charges...............................42 TO ALLOCATE NET PREMIUM AND SUB-ACCOUNT VALUATION..........................................43 Variable Investment Options.....................44 The Fixed Investment Option.....................44 Allocation Of Net Premium And Cash Value......................................45 When Sub-Account Accumulation Units Are Valued..45 How Investment Experience Is Determined.........45 Cash Value......................................46 Dollar Cost Averaging...........................47 Asset Rebalancing...............................48 THE DEATH BENEFIT..................................48 - ----------------- Calculation Of The Death Benefit Proceeds.......48 Death Benefit Options...........................49 The Minimum Required Death Benefit..............49 Changes In The Death Benefit Option.............50 Suicide.........................................50 i SURRENDERS.........................................51 Full Surrender..................................51 Partial Surrender...............................51 Reduction Of Specified Amount On A Partial Surrender.......................................51 THE PAYOUT OPTIONS.................................52 Interest Income.................................52 Income For A Fixed Period.......................52 Life Income With Payments Guaranteed............53 Fixed Income For Varying Periods................53 Joint And Survivor Life.........................53 Alternate Life Income...........................53 POLICY LOANS.......................................53 Loan Amount And Interest........................54 Collateral And Interest.........................54 Repayment.......................................54 --------- Net Effect Of Policy Loans......................54 LAPSE..............................................54 Guaranteed Policy Continuation Provision........55 Grace Period....................................55 Reinstatement...................................55 TAXES..............................................56 Types Of Taxes Of Which To Be Aware.............56 Buying The Policy...............................57 Investment Gain In The Policy...................58 Periodic Withdrawals, Non-Periodic Withdrawals And Loans...........................59 Terminal Illness................................60 Surrender Of The Policy.........................60 Withholding.....................................60 Exchanging The Policy For Another Life Insurance Policy................................61 Special Note Regarding The Policy Split Option Rider....................................61 Taxation Of Death Benefits......................61 Taxes And The Value Of Your Policy..............62 Tax Changes.....................................62 NATIONWIDE LIFE INSURANCE COMPANY..................63 NATIONWIDE VLI SEPARATE ACCOUNT-4..................63 Organization, Registration And Operation........63 Addition, Deletion, Or Substitution Of Mutual Funds...........................................64 Voting Rights...................................64 LEGAL PROCEEDINGS..................................65 Nationwide Life Insurance Company...............65 Nationwide Investment Services Corporation.....................................68 FINANCIAL STATEMENTS...............................68 APPENDIX A: DEFINITIONS...........................A-1 ii IN SUMMARY: POLICY BENEFITS Appendix A defines certain words and phrases we use in this prospectus. DEATH BENEFIT The primary benefit of your policy is life insurance coverage. While the policy is In Force, we will pay the Proceeds to your beneficiary when both Insureds die. YOUR CHOICE OF DEATH |X| Option One is THE GREATER OF the BENEFIT OPTIONS Specified Amount OR the minimum required Death Benefit under federal tax law. |X| Option Two is THE GREATER OF the Specified Amount plus the Cash Value OR the minimum required Death Benefit under federal tax law. |X| Option Three is THE GREATER OF the Specified Amount plus accumulated Premium payments (less any partial surrenders) OR the minimum required Death Benefit under federal tax law. For more information, see "The Death Benefit," beginning on page 48. 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 52. COVERAGE FLEXIBILITY Subject to conditions, you may choose to: |X| Change the Death Benefit option; |X| Increase or decrease the Specified Amount; |X| Change your beneficiaries; and |X| Change who owns the policy. For more information, see: "Changes In The Death Benefit Option," beginning on page 50; "To Change Coverage," beginning on page 27; "The Beneficiaries," beginning on page 25; and "To Assign," beginning on page 31. CONTINUATION OF COVERAGE IS GUARANTEED Your policy will remain In Force so long as you pay the Policy Continuation Premium Amount. For more information, see "Guaranteed Policy Continuation Provision," beginning on page 55. ACCESS TO CASH VALUE Subject to conditions, you may choose to borrow against, or withdraw, the Cash Value of your policy: |X| Take a policy loan of an amount no greater than 90% of the Sub-Account portfolios and 100% of the fixed account, less any surrender charges. The minimum amount is $200. For more information, see "Policy Loans," beginning on page 53. |X| Take a partial surrender of no less than $200. For more information, see "Partial Surrender," beginning on page 51. 1 |X| Surrender the policy at any time while either Insured is alive. The Cash Surrender Value will be the Cash Values of the Sub-Account portfolios and fixed account, less any policy loans and surrender charges. You may choose to receive the Cash Surrender Value in a lump sum, or you will have available the same payout options as if it constituted a Death Benefit. For more information, see "Full Surrender," beginning on page 51 and "The Payout Options," beginning on page 52. PREMIUM FLEXIBILITY While we would like you to select a premium payment plan, you will not be required to make your Premium payments accordingly. Within limits, you may vary the frequency and amount, and you might even be able to skip needing to make a Premium payment. For more information, see "Premium," beginning on page 35. INVESTMENT OPTIONS You may choose to allocate your Premiums after charges to the fixed or variable investment options in any proportion: |X| The fixed investment option will earn interest daily at an annual effective rateof 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 Experience will depend on the market performance of the Sub-Account portfolios you have chosen. For more information, see "To Allocate Net Premium And Sub-Account Valuation," beginning on page 43 and "Available Sub-Accounts," beginning on page 12. TRANSFERS BETWEEN AND AMONG INVESTMENT OPTIONS You may transfer between the fixed and variable investment options, subject to conditions. You may transfer among the Sub-Account portfolios of the variable investment option within limits. We have implemented procedures intended to reduce the potentially detrimental impact that frequent transfers have on Sub-Account Investment Experience. For more information, see "Sub-Account Portfolio Transfers," beginning on page 28. We also offer dollar cost averaging, an automated investment strategy that spreads out transfers over time to tryto reduce the investment risks of market fluctuations. For more information, see "Dollar Cost Averaging," beginning on page 47. TAXES Unless you make a withdrawal, generally you will not be taxed on any earnings. This is known as tax deferral. For more information, see "The Minimum Required Death Benefit," beginning on page 49. Also, your beneficiary generally will not have to include the Proceeds as taxable income. For more information, see "Taxes," beginning on page 56. Unlike other variable insurance products offered by Nationwide, these Flexible Premium Variable Universal Life Insurance Policies do 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 an Insured is alive. For more information, see "To Assign," beginning on page 31. 2 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 26. RIDERS You may purchase any of the available Riders to suit your needs. Availability will vary by state, and there may be an additional charge. |X| Adjusted Sales Load Life Insurance Rider |X| Estate Protection Rider |X| Policy Split Option Rider For more information, see "Riders," beginning on page 33. IN SUMMARY: POLICY RISKS IMPROPER USE Variable universal life insurance is not suitable as an investment vehicle for short-term savings. It is designed for long-term financial planning. You should not purchase the policy if you expect that you will need to access its Cash Value in the near future because substantial surrender charges will apply in the first several years from the Policy Date. UNFAVORABLE INVESTMENT EXPERIENCE The variable investment options to which you have chosen to allocate Net Premium may not generate a sufficient, let alone a positive, return, especially after the deductions for policy and Sub-Account portfolio charges. Besides Premium payments, Investment Experience will impact the Cash Value, and poor Investment Experience (in conjunction with your flexibility to make changes to the policy and deviate from your chosen premium payment plan) could cause the Cash Value of your policy to decrease, resulting in a Lapse of insurance coverage, sooner than might have been foreseen, and, potentially, even terminate without value. EFFECT OF PARTIAL SURRENDERS AND POLICY LOANS ON INVESTMENT RETURNS Partial surrenders or policy loans may accelerate a Lapse because the amount of either or both will no longer be available to generate any investment return. A partial surrender will reduce the amount of Cash Value allocated among the Sub-Account portfolios you have chosen, and to the fixed account, too, if there is not enough Cash Value in the Sub-Account portfolios. As collateral for a policy loan, we will transfer an equal amount of Cash Value to the policy loan in a policy loan account, which will also reduce the Cash Value allocated between and among your chosen investment options. Thus, the remainder of your policy's Cash Value is all that would be available to generate enough of an investment return to cover policy and Sub-Account portfolio charges and keep the policy In Force, at least until you repay the policy loan or make another Premium payment. There will always be a Grace Period, and the opportunity to reinstate insurance coverage. Under certain circumstances, however, the policy could terminate without value, and insurance coverage would cease. REDUCTION OF THE DEATH BENEFIT A partial surrender could, and a policy loan would, decrease the policy's Death Benefit, depending on how the Death Benefit relates to the policy's Cash Value. 3 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 59. 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. 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 a 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, including, but not limited to, transfer restrictions and short-term trading fees. For more information, see "Sub-Account Portfolio Transfers," beginning on page 28, "Modes To Make A Transfer," beginning on page 29, and "Short-Term Trading Fees," beginning on page 38. 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 options? Your reasons and decisions will affect the insurance and Cash Value aspects. While variable universal life insurance is designed primarily to provide life insurance protection, the Cash Value of a policy will be important to you in that it may impair (with poor investment results) or enhance (with favorable investment results) your ability to pay the costs of keeping the insurance In Force. Apart from the life insurance protection features, you will have an interest in maximizing the value of the policy as a financial asset. 4 IT IS SIMILAR, BUT ALSO DIFFERENT, TO SURVIVORSHIP UNIVERSAL LIFE INSURANCE. |X| You will pay Premiums for life insurance coverage on both Insureds. |X| The policy will provide for the accumulation of a Cash Surrender Value if you were to surrender it at any time while either Insured is alive. |X| The Cash Surrender Value could be substantially lower than the Premiums you have paid. What makes the policy different than survivorship universal life insurance is your opportunity to allocate Premiums after charges to the Sub-Account portfolios you have chosen (and the fixed account). Also, that its Cash Value will vary depending on the market performance of the Sub-Account portfolios, and you will bear this risk. FROM THE TIME WE ISSUE THE POLICY THROUGH THE INSUREDS' DEATHS, HERE IS A BASIC OVERVIEW. (BUT PLEASE READ THE REMAINDER OF THIS PROSPECTUS FOR THE DETAILS.) |X| At issue, the policy will require a minimum initial Premium payment. Among other considerations, this amount will be based on: the Insureds' ages; the underwriting classes; any substandard ratings; the Specified Amount; the amount of any supplemental coverage; the Death Benefit option; and the choice of any Riders. |X| At the time of a Premium payment, we will deduct some charges. We call these charges transaction fees. |X| You will then be able to allocate the Premium net of transaction fees, or Net Premium, between and among a fixed and the variable investment options. |X| From the policy's Cash Value, on a periodic basis, we will deduct other charges to help cover the mortality risks we assumed, and the sales and administrative costs. |X| You may be able to vary the timing and amount of Premium payments. So long as there is enough Cash Surrender Value to cover the policy's periodic charges as they come due, the policy will remain In Force. |X| After the first year from the Policy Date, you may request to increase or decrease the policy's Specified Amount. This flexibility will allow you to adjust the policy to meet your changing needs and circumstances, subject to: additional underwriting (for us to evaluate an increase of risk); confirmation that the policy's tax status is not jeopardized; and confirmation that the minimum and maximum insurance amounts remain met. |X| The policy will pay a Death Benefit to the beneficiary. You have a choice of one of three options. As your insurance needs change, you may be able to change Death Benefit options, rather than buying a new policy, or terminating this policy. |X| Prior to the Insureds' deaths, you may withdraw all, or a portion (after the first year from the Policy Date), of the policy's Cash Surrender Value. Or you may borrow against the Cash Surrender Value. Withdrawals and 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 FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING THE POLICY. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE POLICY, SURRENDER THE POLICY OR TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS. FOR MORE INFORMATION, SEE "CHARGES," BEGINNING ON PAGE 36.
=================================================================================================================================== TRANSACTION FEES =================================================================================================================================== =========================================== ============================= ========================================================= Charge When Charge Is Deducted Amount Deducted - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- SALES LOAD(1) Upon Making A Premium Maximum Guaranteed Currently Payment - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- $40 $40 - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- Per $1,000 Of Premium Payment - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- PREMIUM TAXES Upon Making A Premium $35 Per $1,000 Of Premium Payment Payment - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- --------------------------------------------------------- Upon transfer of sub-account value out of a 1% of the amount transferred from the sub-account SHORT-TERM TRADING FEE(2) sub-account within 60 days within 60 days of allocation to that sub-account after allocation to that sub-account - ------------------------------------------- ----------------------------- --------------------------------------------------------- - ------------------------------------------- ----------------------------- ------------------------------ -------------------------- SURRENDER CHARGES (3), (4), (5) Maximum (6) Minimum (7) Representative - For A Male and Female, ------------------------------ ---------------------- Both Age 55 And Non-tobacco Preferred Upon Full Surrender $100,991.02 $4,614.80 With A Specified Amount Of $1,000,000 And ------------------------------ ---------------------- Death Benefit Option One ----------------------------------------------------- Representative (8) $11,042.25 ----------------------------------------------------- Proportionately From The Policy's Cash Value - ------------------------------------------------------------------------------------------------------------------------------------ ILLUSTRATION CHARGE(9) Upon Requesting An Maximum Guaranteed Currently Illustration ------------------------- --------------------------- $25 0 - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- PARTIAL SURRENDER FEE(10) Upon A Maximum Guaranteed(11) Currently Partial Surrender - ------------------------------------------- ----------------------------- ----------------------------- --------------------------- $25 0 ----------------------------- --------------------------- From The Policy's Available Cash Value (12) - -----------------------------------------------------------------------------------------------------------------------------------
(1) We deduct one charge composed of the sales load and premium taxes. On the Policy Data Page, we call the combined charge a Premium Load. From the sixteenth year from the Policy Date, the current charge is $20 per $1,000 and the guaranteed charge is $25 per $1,000 of Premium Payment. (2) Short-term trading fees are only assessed in connection with Sub-Accounts that correspond to an underlying mutual fund that assesses a short-term trading fee. See "Total Annual Sub-Account Portfolio Operating Expenses" for a list of mutual funds that assess a short-term trading fee. For more information about transactions subject to short-term trading fees, see "Short-Term Trading Fees" beginning on page 38. 6 (3) This charge is comprised of two components. There is an underwriting component, which is based on the Insureds' ages when the policy was issued. There is also a sales expense component, which is based on and varies by the Insureds' sexes, ages (when the policy was issued) and underwriting classes. The amount of the charge we would deduct begins to decrease each year after the second from the Policy Date. For example, by the fourteenth year, the amount is 5% of the surrender charge, and, thereafter, there is no charge for a full surrender. A surrender charge will apply if you surrender or lapse the policy, or if you request to decrease the Specified Amount. We will calculate a separate surrender charge based on the Specified Amount, and each increase in the Specified Amount, which, when added together, will amount to your surrender charge. For more information, see "Surrender Charges," beginning on page 37. (4) To be able to present dollar amounts of this charge here, we assume a full surrender occurring in the first year from the Policy Date. (5) Ask for an illustration, or see the Policy Data Page for more information on your cost. (6) The amount is based on two insureds, one of whom is age 80 and highly rated (Table Q at least). The other is a male rated Table D, who uses tobacco (representing our greatest underwriting risk). We assume a policy with a Specified Amount of $1,000,000 and Death Benefit Option One. The stated surrender charge is for a surrender occurring in the first year from the Policy Date. (7) The amount is based on two females, both of whom are age 21 and do not use tobacco. We assume a policy with a Specified Amount of $1,000,000 and Death Benefit Option One. The stated surrender charge is for a surrender occurring in the first year from the Policy Date. (8) This amount may not be representative of your cost. (9) 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. This charge will not be deducted from the policy's Cash Value. (10) You may request a partial surrender after the first year from the Policy Date. (11) The charge is the lesser of $25 or 2% of the dollar amount of a partial surrender. (12) Besides this charge, the Cash Value available for a partial surrender is subject to any outstanding policy loans. 7 THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY, NOT INCLUDING SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES.
================================================================================================================================== PERIODIC CHARGES OTHER THAN SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES ================================================================================================================================== ===================================== ============================= ============================================================== Charge When Charge Is Deducted Amount Deducted From Cash Values - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------- ------------------- --------------------- COST OF INSURANCE (13), (14) Monthly Minimum Maximum Representative (15) Representative - For Male And -------------------- ------------------- --------------------- Female, Both Age 55 And $0.00001 $83.33 $0.0008 Non-tobacco, With A Specified -------------------- ------------------- --------------------- Amount Of $1,000,000 And Death -------------------------------------------------------------- Benefit Option One Per $1,000 Of Net Amount At Risk - Proportionately From Your Chosen Variable And Fixed Investment Options ------------------------------------- ----------------------------- -------------------------------------------------------------- MORTALITY AND EXPENSE RISK Monthly $0.80 Per $1,000 Of Cash Value (16) -------------------------------------------------------------- Proportionately From Your Chosen Variable Investment Options - ------------------------------------- ----------------------------- -------------------- ------------------- --------------------- PER $1,000 OF SPECIFIED AMOUNT (17), (18) Monthly Minimum Maximum Representative (19) ------------------------------------ ----------------------------- -------------------- ------------------- --------------------- $0.06 $0.40 $0.23 -------------------------------------------------------------- Per $1,000 Of Specified Amount - ------------------------------------- ----------------------------- ------------------------------- ------------------------------ ADMINISTRATIVE Monthly Maximum Guaranteed Currently ------------------------------- ------------------------------ $7.50 $5 ------------------------------- ------------------------------ Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- -------------------------------------------------------------- POLICY LOAN Annually Maximum Guaranteed Currently INTEREST(20) ------------------------------- ------------------------------ $45 $45 -------------------------------------------------------------- Per $1,000 On An Outstanding Policy Loan - ------------------------------------- ----------------------------- --------------------------------------------------------------
- --------------------------------------- (13) This charge varies by: the Insureds' sexes; ages; underwriting classes; any substandard ratings; the year from the Policy Date and the Specified Amount. (14) Ask for an illustration, or see the Policy Data Page for more information on your cost. (15) This amount may not be representative of your cost. (16) During the first through fifteenth years from the Policy Date, this charge is $0.80 per $1,000 of Cash Value in the variable investment options, and, thereafter, $0.30 per $1,000 of Cash Value in the variable investment options. (17) We deduct this charge during the first through third years from the Policy Date. This charge varies by the Insureds' ages, the year from the Policy Date and the Specified Amount. This charge does not apply to that portion of your Specified Amount that constitutes supplemental insurance coverage. For more information, see "Supplemental Coverage," beginning on page 26. (18) Ask for an illustration, or see the Policy Data Page for more information on your cost. (19) This amount may not be representative of your cost. 8 (20) We charge interest on the amount of an outstanding policy loan, at the rate of 4.5% per annum, which accrues daily and becomes due and payable at the end of the year from the Policy Date. If left unpaid, we will add it to the loan amount. As collateral or security for repayment, we transfer an equal amount of Cash Value to the loan account, on which interest accrues and is credited daily. The minimum guaranteed interest crediting rate is 3.0% per annum, and the current interest crediting rate is 3.0% per annum. (During the first year from the Policy Date, no policy loans may be taken.) The effect is a net cost of no more than 1.50% per annum. For more information, see "Policy Loans," beginning on page 53. 9
================================================================================================================================== PERIODIC CHARGES OTHER THAN SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES FOR RIDERS ================================================================================================================================== ===================================== ============================= ============================================================== Optional Charge (21) When Optional Charge Is Amount Deducted Deducted From Cash Value - ------------------------------------- ----------------------------- -------------------------------------------------------------- ADJUSTED SALES LOAD LIFE INSURANCE RIDER Monthly $0.13 -------------------------------------------------------------- Per $1,000 Of Premium And 1% Of Premium Load - Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- -------------------------------------------------------------- ESTATE PROTECTION RIDER (22) Monthly Minimum Maximum Representative -------------------- -------------------- -------------------- $0.00001 $83.33 $0.0008 -------------------- -------------------- -------------------- -------------------------------------------------------------- Per $1,000 Of Additional Death Benefit Protection - Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- -------------------------------------------------------------- - ------------------------------------- ----------------------------- -------------------- -------------------- -------------------- POLICY SPLIT OPTION Monthly Minimum Maximum Representative RIDER (23) -------------------- -------------------- -------------------- $0.01 $0.03 $0.02 -------------------------------------------------------------- Per $1,000 Of Specified Amount - Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- --------------------------------------------------------------
--------------------------------------- (21) You may elect one or all Riders available under this policy. Rider charges are taken from the policy's Cash Value at the beginning of the month starting with the Policy Date and we will not pro rate the monthly fee should the Rider terminate before the beginning of the next month. The continuation of a Rider is contingent on the policy being In Force. The amounts presented here may not be representative of your cost. Ask for an illustration, or see the Policy Data Page, for more information on your cost. (22) This charge varies (by: the Insureds' sexes; ages; underwriting classes; any substandard ratings; the year from the Policy Date and the Specified Amount) because we calculate it using the cost of insurance rate. (23) This charge varies by the Insureds' ages. THE NEXT ITEM SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE SUB-ACCOUNT PORTFOLIOS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY. THE TABLE DOES NOT REFLECT SHORT-TERM TRADING FEES. 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.
================================================================================================================================== TOTAL ANNUAL SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES ================================================================================================================================== TOTAL ANNUAL SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES MAXIMUM MINIMUM - ---------------------------------------------------------------------------------------- --------------------- ------------------- (expenses that are deducted from the Sub-Account portfolio assets, including 2.75% 0.26% management fees, distribution (12b-1) fees, and other expenses) - ---------------------------------------------------------------------------------------- --------------------- -------------------
10 THE FOLLOWING UNDERLYING MUTUAL FUNDS ASSESS A SHORT-TERM TRADING FEE IN CONNECTION WITH TRANSFERS FROM A SUB-ACCOUNT THAT OCCUR WITHIN 60 DAYS AFTER THE DATE OF ALLOCATION TO THAT SUB-ACCOUNT (SEE "SHORT-TERM TRADING FEES"): o American Century Variable Portfolios, Inc. - American Century VP International Fund: Class III o Fidelity Variable Insurance Products Fund - VIP Overseas Portfolio: Service Class R o Fidelity Variable Insurance Products Fund IV - VIP Natural Resources Portfolio: Service Class 2 o Franklin Templeton Variable Insurance Products Trust - Templeton Developing Markets Securities Fund: Class 3 o Franklin Templeton Variable Insurance Products Trust - Templeton Foreign Securities Fund: Class 3 o Franklin Templeton Variable Insurance Products Trust - Templeton Global Income Securities Fund: Class 3 o Gartmore Variable Insurance Trust - Dreyfus GVIT International Value Fund: Class III o Gartmore Variable Insurance Trust - Federated GVIT High Income Bond Fund: Class III o Gartmore Variable Insurance Trust - Gartmore GVIT Emerging Markets Fund: Class III o Gartmore Variable Insurance Trust - Gartmore GVIT Global Health Sciences Fund: Class III o Gartmore Variable Insurance Trust - Gartmore GVIT Global Technology and Communications Fund: Class III o Neuberger Berman Advisers Management Trust - AMT International Portfolio: Class S o Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund/VA: Class 3 11 THE FOLLOWING SECTION LISTS THE AVAILABLE SUB-ACCOUNTS AND IDENTIFIES THEIR INVESTMENT TYPES AND ADVISERS.
- ------------------------------------------------------------------------------------------------------------------------------------ AVAILABLE SUB-ACCOUNTS - ------------------------------------------------------------------------------------------------------------------------------------ We identify Sub-Accounts by the name of the underlying mutual funds. The Sub-Accounts available through this policy, their advisers, and their investment objectives 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 This sub-account is only available in policies issued before 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/MID CAP VALUE PORTFOLIO: CLASS A (formerly, AllianceBernstein Variable Products Series Fund, Inc. - AllianceBernstein Small Cap Value Portfolio: Class A) This sub-account is only available in policies issued before 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 INCOME & GROWTH FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP INTERNATIONAL FUND: CLASS I This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP INTERNATIONAL FUND: CLASS III This sub-account is only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP MID CAP VALUE 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 ULTRA FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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, INC. - AMERICAN CENTURY VP VISTA 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.: INITIAL SHARES This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth with current income as a secondary goal. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 INVESTMENT PORTFOLIOS - SMALL CAP STOCK INDEX PORTFOLIO: SERVICE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: To match performance of the S&P SmallCap 600 Index(R). - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES - FEDERATED AMERICAN LEADERS FUND II: PRIMARY SHARES This sub-account is only available in policies issued before 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 This sub-account is only available in policies issued before 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. - ------------------------------------------------ -----------------------------------------------------------------------------------
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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 This sub-account is only available in policies issued before 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 This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management and Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP OVERSEAS PORTFOLIO: SERVICE CLASS R - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP CONTRAFUND(R) PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP 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 GROWTH OPPORTUNITIES PORTFOLIO: SERVICE CLASS This sub-account is only available in policies issued before May 1, 2002. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - VIP 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 VALUE STRATEGIES PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ -----------------------------------------------------------------------------------
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FIDELITY VARIABLE INSURANCE PRODUCTS FUND IV - FIDELITY VIP FREEDOM FUND 2010 PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. - ------------------------------------------------ ----------------------------------------------------------------------------------- The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds (underlying Fidelity funds). Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund. Please refer to the prospectus for the Fidelity VIP Freedom Funds for more information. FIDELITY VARIABLE INSURANCE PRODUCTS FUND IV - FIDELITY VIP FREEDOM FUND 2020 PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. - ------------------------------------------------ ----------------------------------------------------------------------------------- The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds (underlying Fidelity funds). Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund. Please refer to the prospectus for the Fidelity VIP Freedom Funds for more information. FIDELITY VARIABLE INSURANCE PRODUCTS FUND IV - FIDELITY VIP FREEDOM FUND 2030 PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. - ------------------------------------------------ ----------------------------------------------------------------------------------- The assets of each Fidelity VIP Freedom Fund are invested in a combination of other Fidelity VIP funds: domestic and international equity funds, investment-grade and high yield fixed-income funds, and money market/short-term funds (underlying Fidelity funds). Each Fidelity VIP Freedom Fund, as a shareholder in an underlying Fidelity fund, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity fund. Please refer to the prospectus for the Fidelity VIP Freedom Funds for more information. FIDELITY VARIABLE INSURANCE PRODUCTS FUND IV - VIP NATURAL RESOURCES PORTFOLIO: SERVICE CLASS 2 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). 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 DEVELOPING MARKETS SECURITIES FUND: CLASS 3 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Templeton Asset Management, Ltd. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus).
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FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - TEMPLETON FOREIGN SECURITIES FUND: CLASS 1 This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Templeton Investment Counsel, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - TEMPLETON FOREIGN SECURITIES FUND: CLASS 3 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Templeton Investment Counsel, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - TEMPLETON GLOBAL INCOME SECURITIES FUND: CLASS 3 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Franklin Advisors, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High current income, with preservation of capital - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). GARTMORE VARIABLE INSURANCE TRUST - DREYFUS GVIT INTERNATIONAL VALUE FUND: CLASS I This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 INTERNATIONAL VALUE FUND: CLASS III - ------------------------------------------------ ----------------------------------------------------------------------------------- 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). 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 This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Federated Investment Management Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - FEDERATED GVIT HIGH INCOME BOND FUND: CLASS III - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Federated Investment Management Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus).
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GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT EMERGING MARKETS FUND: CLASS I This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 by investing primarily in equity securities of companies located in emerging market countries.. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT EMERGING MARKETS FUND: CLASS III - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 by investing primarily in equity securities of companies located in emerging market countries.. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND: CLASS I This sub-account is only available in policies issued before 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 This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 HEALTH SCIENCES FUND: CLASS III - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND: CLASS I This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 III - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus).
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GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL UTILITIES FUND: CLASS I This sub-account is only available in policies issued before 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: To provide as high level of income as is consistent with the preservation of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GROWTH FUND: CLASS I This sub-account is only available in policies issued before 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 This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth by investing primarily in equity securities of companies in Europe, Australasia, the Far East and other regions, including developing countries.. - ------------------------------------------------ -----------------------------------------------------------------------------------
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GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT INVESTOR DESTINATIONS FUNDS: CLASS II - --------------------------- -------------------------------------------------------------------------------------------------------- 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. FUND: CLASS II - --------------------------- ----------------------------------- -------------------------------------------------------------------- - --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return by seeking income and, DESTINATIONS MODERATELY secondarily, long term growth of capital. CONSERVATIVE FUND: CLASS II - --------------------------- ----------------------------------- -------------------------------------------------------------------- - --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return primarily by seeking growth of DESTINATIONS MODERATE capital and income. FUND: CLASS II - --------------------------- ----------------------------------- -------------------------------------------------------------------- - --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return primarily by seeking growth of DESTINATIONS MODERATELY capital, but also income. AGGRESSIVE FUND: CLASS II - --------------------------- ----------------------------------- -------------------------------------------------------------------- - --------------------------- ----------------------------------- -------------------------------------------------------------------- GARTMORE GVIT INVESTOR Investment Objective: To maximize total investment return primarily by seeking growth of DESTINATIONS AGGRESSIVE capital. FUND: CLASS II - --------------------------- ----------------------------------- -------------------------------------------------------------------- The Gartmore GVIT Investor Destinations Funds are designed to provide diversification and asset allocation across several types of investments and asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Gartmore GVIT Investor Destinations Funds, policy owners who select these Sub-Accounts will indirectly pay a proportionate share of the applicable fees and expenses of the underlying funds. Please refer to the prospectus for the Gartmore GVIT Investor Destinations Funds for more information. 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 as is consistent with the preservation of capital and maintenance of liquidity. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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: Total return through a flexible combination of capital appreciation and current income. - ------------------------------------------------ -----------------------------------------------------------------------------------
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GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT NATIONWIDE(R) LEADERS FUND: CLASS I This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return from a concentrated portfolio of U.S. securities. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT WORLDWIDE LEADERS FUND: CLASS I This sub-account is only available in policies issued before 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: Oberweis Asset Management, Inc.; 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: American Century Investment Management Inc.; The Dreyfus Corporation; Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company; Morgan Stanley Investment Management Inc.; Neuberger Berman, LLC; Waddell & Reed Investment Management Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - J.P. MORGAN GVIT BALANCED FUND: CLASS I This sub-account is only available in policies issued before 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 from a diversified portfolio of equity and fixed income securities. - ------------------------------------------------ -----------------------------------------------------------------------------------
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GARTMORE VARIABLE INSURANCE TRUST - VAN KAMPEN GVIT COMSTOCK VALUE FUND: CLASS I (formerly, 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: Seeks capital growth and income through investments in equity securities, including common stocks and securities convertibles into common stocks. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 over a market cycle of three to five years. - ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - BALANCED PORTFOLIO: SERVICE SHARES This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - FORTY PORTFOLIO: SERVICE SHARES (formerly, Janus Aspen Series - Capital Appreciation Portfolio: Service Shares) This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Janus Capital Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - RISK-MANAGED CORE PORTFOLIO: SERVICE SHARES This sub-account is only available in policies issued before 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. - ------------------------------------------------ -----------------------------------------------------------------------------------
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NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT GUARDIAN PORTFOLIO This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT INTERNATIONAL PORTFOLIO: CLASS S - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital by investing primarily in common stocks of foreign companies. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus). 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 This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT PARTNERS PORTFOLIO This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT REGENCY PORTFOLIO: CLASS S - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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: NON-SERVICE SHARES This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER CAPITAL APPRECIATION FUND/VA: NON-SERVICE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation and current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND/VA:NON-SERVICE SHARES This sub-account is no longer available to receive transfers or new premium payments effective May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND/VA: CLASS 3 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- This underlying mutual fund assesses a short-term trading fee (please see "Short-Term Trading Fees" later in this prospectus).
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OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER HIGH INCOME FUND/VA: NON-SERVICE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MAIN STREET(R) FUND/VA: NON-SERVICE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. - ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER MAIN STREET(R) SMALL CAP FUND/VA: NON-SERVICE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT GROWTH & INCOME FUND: CLASS IB This sub-account is only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Putnam Investment Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth and current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT INTERNATIONAL EQUITY FUND: CLASS IB This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Putnam Investment Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST - PUTNAM VT VOYAGER FUND: CLASS IB This sub-account is only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Putnam Investment Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- T. ROWE PRICE EQUITY SERIES, INC. - T. ROWE PRICE BLUE CHIP GROWTH PORTFOLIO: CLASS II - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: T. Rowe Price Investment Services - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- T. ROWE PRICE EQUITY SERIES, INC. - T. ROWE PRICE EQUITY INCOME PORTFOLIO: CLASS II - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: T. Rowe Price Investment Services - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Substantial dividend income as well as long-term growth of capital through investments in the common stocks of established companies. - ------------------------------------------------ ----------------------------------------------------------------------------------- T. ROWE PRICE EQUITY SERIES, INC. - T. ROWE PRICE LIMITED TERM BOND PORTFOLIO: CLASS II - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: T. Rowe Price Investment Services - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of income. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 This sub-account is only available in policies issued before 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 This sub-account is only available in policies issued before May 1, 2002. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth - ------------------------------------------------ -----------------------------------------------------------------------------------
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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. - ------------------------------------------------ ----------------------------------------------------------------------------------- VAN ECK WORLDWIDE INSURANCE TRUST - WORLDWIDE EMERGING MARKETS FUND: INITIAL CLASS This sub-account is only available in policies issued before 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 This sub-account is only available in policies issued before 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- WELLS FARGO VARIABLE TRUST FUNDS - WELLS FARGO ADVANTAGE OPPORTUNITY FUND VT (formerly, Strong Opportunity Fund II, Inc.: Investor Class) This sub-account is only available in policies issued before May 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Wells Fargo Funds Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Wells Capital Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: 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. You have voting rights with respect to the Sub-Accounts. For more information, see "Voting Rights" beginning on page 64. PLEASE REFER TO THE PROSPECTUS FOR EACH SUB-ACCOUNT PORTFOLIO FOR MORE DETAILED INFORMATION. 24 - -------------------------------------------------------------------------------- THE POLICY - -------------------------------------------------------------------------------- The policy is a legal contract between you and us. Any change to which we would want to make must be in writing, signed by our president and secretary, and attached to or endorsed on the policy. You may exercise all policy rights and options while either Insured is alive. You may also change the policy, but only in accordance with its terms. Generally, the policy is available for two insureds between the ages of 21-85 (although these ages may vary in your state). It is nonparticipating, meaning we will not be contributing any operating profits or surplus earnings toward the Proceeds from the policy. The policy will comprise and be evidenced by: a written contract; any Riders; any endorsements; and the application, including any supplemental application. We will consider the statements you make in the application as representations. We will rely on them as being true and complete. However, we will not void the policy or deny a claim unless a statement is a material misrepresentation. - -------------------------------------------------------------------------------- POLICY OWNER The policy belongs to the owner named in the application. The Insureds, jointly, are the owner, unless a different owner is named in the application, or thereafter changed. After the death of the first Insured, the last surviving Insured is the owner, unless otherwise provided. You may also name a contingent policy owner. A contingent owner will become the owner if the owner dies before any Proceeds become payable. Otherwise, ownership will pass to the owner's estate, if the owner is not the last surviving Insured. To the extent permitted by law, policy benefits are not subject to any legal process for the payment of any claim, and no right or benefit will be subject to claims of creditors (except as may be provided by assignment). You may name different owners or contingent owners (so long as the last surviving Insured is alive) by submitting your written request to us at our Home Office, which will become effective when signed, rather than the date on which we received it. There may be adverse tax consequences. For more information, see "Taxes," beginning on page 56. - -------------------------------------------------------------------------------- THE BENEFICIARIES The principal right of a beneficiary is to receive Proceeds constituting the Death Benefit upon the last surviving Insured's death. So long as the last surviving Insured is alive, you may: name more than one beneficiary; designate primary and contingent beneficiaries; change or add beneficiaries; and provide for another distribution than the following. If a primary beneficiary dies before the last surviving Insured, we will pay the Death Benefit to the remaining primary beneficiaries. We will pay multiple primary beneficiaries in equal shares. A contingent beneficiary will become the primary beneficiary if all primary beneficiaries die before the last surviving Insured, and before any Proceeds become payable. You may name more than one contingent beneficiary. We will also pay multiple contingent beneficiaries in equal shares. To change or add beneficiaries, you must submit your written request to us at our Home Office, which will become effective when signed, rather than the date on which we received it. The change will not affect any payment we made, or action we took, before we recorded the change. 25 TO PURCHASE To purchase the policy, you must submit to us a completed application and an initial Premium payment. We must receive evidence of insurability that satisfies our underwriting standards (this may require a medical examination) before we will issue a policy. We can provide you with the details of our underwriting standards. We reserve the right to reject an application for any reason permitted by law. Also, we reserve the right to modify our underwriting standards at any time. The minimum initial Specified Amount is $100,000. - -------------------------------- ----------------------------------------------- COVERAGE We will issue the policy only if the underwriting process has been completed, we have approved the application and both of the proposed Insureds are alive and in the same condition of health as described in the application. However, full insurance coverage will take effect only after you have paid the minimum initial Premium. We begin to deduct monthly charges from your policy Cash Value on the Policy Date. - -------------------------------- ----------------------------------------------- SUPPLEMENTAL COVERAGE Supplemental insurance coverage is also available. Supplemental insurance coverage is effectively term life insurance on the Insureds. It cannot exceed 90% of the total Specified Amount. There are no surrender charges, and there is no monthly charge per $1,000 of Specified Amount on the portion of Specified Amount that constitutes supplemental insurance coverage. - ----------------------------------------------- -------------------------------- COVERAGE EFFECTIVE DATES Full insurance coverage, and any supplemental insurance, will begin and be In Force on the Policy Date shown on the Policy Data Page. It will end upon the last surviving Insured's death, once we begin to pay the Proceeds, or when the policy matures. It could end if the policy were to Lapse. - -------------------------------- ----------------------------------------------- TEMPORARY INSURANCE COVERAGE Temporary insurance coverage, equal to the Specified Amount up to $1,000,000, may be available for no charge before full insurance coverage takes effect. During this time, temporary insurance coverage, equal to the Specified Amount up to $1,000,000, may be available for no charge before full insurance coverage takes effect. You must submit a temporary insurance agreement and make an initial Premium payment. The amount of the initial Premium will depend on the initial Specified Amount, and your choice of Death Benefit option and any Riders, for purposes of the policy. During this time, we will 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. 26 If you decide to cancel during the free look period, return the policy to the sales representative who sold it to you, or to us at our Home Office, along with your written cancellation request. Within seven days, we will refund the amount prescribed by the law of the state in which we issued the policy. We will treat the policy as if we never issued it. Because of the free look period, when we actually allocate Net Premium to the Sub-Account portfolios based on your choices depends on the right to examine law of the state in which you live. For more information, see "To Allocate Net Premium And Sub-Account Valuation," beginning on page 43. TO CHANGE COVERAGE After the first year from the Policy Date, you may request to change the Specified Amount; however, no change will take effect unless the Cash Surrender Value would be sufficient to keep the policy In Force for at least three months. Changes to the Specified Amount will alter the Death Benefit. For more information, see "Changes In The Death Benefit Option," beginning on page 50. You may request to increase the Specified Amount, by at least $10,000, which will increase the Net Amount At Risk. Because the cost of insurance charge is based on the Net Amount At Risk, and because there will be a separate cost of insurance rate for the increase, this will also cause the policy's cost of insurance charge to increase. As a result, there will be a corresponding increase in the periodic charges we deduct from the policy's Cash Value. Also, an increase in the Specified Amount may cause an increase to the amount of your subsequent Premium payments and the likelihood that the policy is at risk of lapsing sooner. For more information, see "Lapse," beginning on page 54. You may request to decrease the Specified Amount. We first apply decreases to the amount of insurance coverage as a result of any prior Specified Amount increases, starting with the most recent. Then we will decrease the initial Specified Amount. We will deny a request, however, to reduce the amount of your coverage below the minimum initial Specified Amount. For more information, see "To Purchase," beginning on page 26. Also, we will deny a request that would disqualify the policy as a contract for life insurance. For more information, see "The Minimum Required Death Benefit," beginning on page 49. To change the Specified Amount, you must submit your written request to us at our Home Office. For increases, you must provide us with evidence of insurability that satisfies our underwriting standards. The Insureds must be within the required issue ages of 21 and 85. If you have supplemental insurance coverage, we will make the change proportionately. Changes will become effective on the next monthly anniversary from the Policy Date after we approve the request. We reserve the right to limit the number of changes to one each year. 27 - -------------------------------- ----------------------------------------------- SUB-ACCOUNT PORTFOLIO TRANSFERS We will determine the amount you have available for transfers among the Sub-Account portfolios in Accumulation Units based on the Net Asset Value (NAV) per share of the mutual fund in which a Sub-Account portfolio invests. The mutual fund will determine its NAV once daily as of the close of the regular business session of the New York Stock Exchange (usually 4:00 p.m. Eastern time). An Accumulation Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests, however, because the Accumulation Unit value will reflect the deduction for any transaction fees and periodic charges. For more information, see "In Summary: Fee Tables," beginning on page 6, and "How Investment Experience Is Determined," beginning on page 45. Policy owners may request transfers to or from the Sub-Accounts once per valuation day, subject to the terms and conditions of the policy and the mutual funds. Neither the policies nor the mutual funds are designed to support active trading strategies that require frequent movement between or among Sub-Accounts (sometimes referred to as "market-timing" or "short-term trading"). If you intend to use an active trading strategy, you should consult your registered representative and request information on other Nationwide policies that offer mutual funds that are designed specifically to support active trading strategies. We discourage (and will take action to deter) short-term trading in this policy because the frequent movement between or among Sub-Accounts may negatively impact other investors in the policy. Short-term trading can result in: o the dilution of the value of the investors' interests in the mutual fund; o mutual fund managers taking actions that negatively impact performance (i.e., keeping a larger portion of the mutual fund assets in cash or liquidating investments prematurely in order to support redemption requests); and/or o increased administrative costs due to frequent purchases and redemptions. To protect investors in this policy from the negative impact of these practices, we have implemented, or reserve the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies. Redemption Fees. Some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to the Sub-Account. The fee is assessed against the amount transferred and is paid to the mutual fund. Redemption fees compensate the mutual fund for any negative impact on fund performance resulting from short-term trading. 28 U.S. Mail Restrictions. We monitor transfer activity in order to identify those who may be engaged in harmful trading practices. Transaction reports are produced and examined. Generally, a policy may appear on these reports if the policy owner (or a third party acting on their behalf) engages in a certain number of "transfer events" in a given period. A "transfer event" is any transfer, or combination of transfers, occurring in a given Valuation Period. For example, if a policy owner executes multiple transfers involving 10 Sub-Accounts in 1 day, this counts as 1 transfer event. A single transfer occurring in a given Valuation Period that involves only 2 Sub-Accounts (or one Sub-Account if the transfer is made to or from a fixed investment option) will also count as 1 transfer event. As a result of this monitoring process, we may restrict the form in which transfer requests will be accepted. In general, we will adhere to the following guidelines:
- ----------------------------------- ------------------------------------------------ Trading Behavior Nationwide's Response - ----------------------------------- ------------------------------------------------ 6 or more transfer events in one Nationwide will mail a letter to the policy calendar quarter owner notifying them that: (1) they have been identified as engaging in harmful trading practices; and (2) if their transfer events exceed 11 in 2 consecutive calendar quarters or 20 in one calendar year, the policy owner will be limited to submitting transfer requests via U.S. mail. - ----------------------------------- ------------------------------------------------ - ----------------------------------- ------------------------------------------------ More than 11 transfer events in 2 Nationwide will automatically limit the policy consecutive calendar quarters owner to submitting transfer requests via U.S. OR mail. More than 20 transfer events in one calendar year - ----------------------------------- ------------------------------------------------
Each January 1st, we will start the monitoring anew, so that each policy starts with 0 transfer events each January 1. See, however, the "Other Restrictions" provision below. Managers of Multiple Contracts. Some investment advisers/representatives manage the assets of multiple Nationwide contracts pursuant to trading authority granted or conveyed by multiple policy owners. These multi-contract advisers will be required by Nationwide to submit all transfer requests via U.S. mail. Other Restrictions. We reserve the right to refuse or limit 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 short-term trading or other harmful investment practices employed by some policy owners (or third parties acting on their behalf). In particular, trading strategies designed to avoid or take advantage of Nationwide's monitoring procedures (and other measures aimed at curbing harmful trading practices) 29 that are nevertheless determined by us to constitute harmful trading practices, may be restricted. Any restrictions that we implement will be applied consistently and uniformly. 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 within 60 days of the date of allocation to the Sub-Account. The separate account will collect the short-term trading fees at the time of the transfer by reducing the amount transferred. We will remit all such fees to the underlying mutual fund. - -------------------------------- ----------------------------------------------- FIXED ACCOUNT TRANSFERS Prior to the policy's Maturity Date, you may also make transfers involving the fixed account. These transfers will be in dollars, and we reserve the right to limit their timing and amount, including that you may not request a transfer involving the fixed account before the end of the first year from the Policy Date. Also, you may not make more than one transfer every 12 months. On transfers to the fixed account, you may transfer 100% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period. However, we reserve the right to refuse any transfer to the fixed account if the fixed account's Cash Value comprises more than 25% of the policy's Cash Value. On transfers from the fixed account, 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. The amount that may be transferred will be determined as of the end of each interest rate guarantee period. An interest rate guarantee 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 We will employ reasonable procedures to confirm that instructions are genuine, including: o requiring forms of personal identification before acting upon instructions; o providing you with written confirmation of completed transactions; and/or o tape recording telephone instructions. If we follow these procedures, we will not be liable for any loss, damage, cost 30 or expense from complying with what we reasonably believe to be genuine instructions. Rather, you will bear the risk of loss. Any computer system or telephone, whether it is yours, your service provider's, your representative's, or ours, can experience slowdowns or outages for a variety of reasons. These slowdowns or outages may delay or prevent our ability to process your request. Although we have taken precautions to help our system handle heavy usage, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request in writing. - -------------------------------- ----------------------------------------------- CONVERSION RIGHT You have a conversion right under the policy. At any time within the first 24 months of full coverage, you may elect to transfer all value of the Sub-Account Portfolios to the fixed account, irrespective of our right to refuse a transfer to the fixed account, and we will not assess a transfer charge. You must make this election on our official forms to the Home Office. - ----------------------------------------------- -------------------------------- TO TERMINATE OR SURRENDER You have the right to terminate the policy. Or you may surrender the policy for its Cash Surrender Value. The policy will automatically terminate when the last surviving Insured dies, the policy matures, or the Grace Period ends. For more information, see "Surrenders," beginning on page 51. 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 60. The Cash Surrender Value will be reduced by the outstanding amount of a policy loan. For more information, see "Policy Loans," beginning on page 53. - -------------------------------------------------------------------------------- TO ASSIGN You may assign any rights under the policy while either Insured is alive. If you do, your beneficiary's interest will be subject to the person(s) to whom you have assigned rights. Your assignment must be in writing, and it must be recorded at our Home Office before it will become effective. Your assignment will be subject to any outstanding policy loans. For more information, see "Policy Loans," beginning on page 53. - -------------------------------------------------------------------------------- PROCEEDS UPON MATURITY If the policy is In Force on the Maturity Date, we will pay you the Proceeds. Normally, we will pay the Proceeds within seven days after we receive your written request at our Home Office. The payment will be postponed, however, when: the New York Stock Exchange is closed; the SEC restricts trading or declares an emergency; the SEC permits us to defer it for the protection of our policy owners; or the Proceeds are to be paid from the fixed account. The Proceeds will equal the policy's Cash Value minus any Indebtedness. After we pay the Proceeds, the policy is terminated. We may offer to extend the Maturity Date to coincide with the last surviving Insured's death, after which we will pay the Proceeds to your beneficiary. During this time, you will still be able to request partial surrenders. Availability varies by state. If you accept this offer, the policy will be endorsed so that: > no changes to the Specified Amount will be allowed; 31 > no additional Premium payments will be allowed; > no additional periodic charges will be deducted; > 100% of the Cash Value of all Sub-Accounts will be transferred to the policy's fixed account; > the Specified Amount will be adjusted to what it was when the younger Insured reached Attained Age 85, but subject to any partial surrenders, which will affect the Specified Amount of a policy with Death Benefit Option One based on the younger Insured's Attained Age at the time the request for a partial surrender is made. While the younger Insured is between the Attained Ages of 86 and 90, a partial surrender will decrease the Specified Amount directly. If the younger Insured is over Attained Age 90, a partial surrender will reduce the Proceeds by the proportion that the partial surrender reduced the policy's Cash Value. Notwithstanding, the Proceeds will be the greater of the policy's Specified Amount or Cash Value; and > the Maturity Date will not be extended, however, beyond when the policy would fail the definition of life insurance under the Code. - ------------------------------------------------------------------------------- REMINDERS, REPORTS AND ILLUSTRATIONS We will send you scheduled Premium payment reminders and transaction confirmations. We will also send you semi-annual and annual reports that show: o the Specified Amount o the current Cash Value o Premiums paid o the Cash Surrender Value o all charges since the last o outstanding Indebtedness report We will send these reminders and reports to the address you provide on the application, or to another you may specify. At any time, you may ask for an illustration of future benefits and values under the policy. While we do not at present, we may charge if you ask for more than one illustration per year from the Policy Date. IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS When multiple copies of the same disclosure document(s), such as prospectuses, supplements, proxy statements and semi-annual and annual reports are required to be mailed to your household, we will mail only one copy of each document, unless notified otherwise by you. Household delivery will continue for the life of the contracts. Please call 1-866-223-0303 to resume regular delivery. Please allow 30 days for regular delivery to resume. 32 - -------------------------------- ----------------------------------------------- ERRORS OR MISSTATEMENTS If you make an error or misstatement in completing the application, then we will adjust the Death Benefit and Cash Value accordingly. We will adjust the Death Benefit and Cash Value by the ratio of the last monthly cost of insurance charge deducted to the monthly cost of insurance charge that would have been deducted on the true age and sex of each Insured. - -------------------------------- ----------------------------------------------- INCONTESTABILITY We will not contest payment of the Death Benefit based on the initial Specified Amount after the policy has been In Force during the lifetime of the last surviving Insured for two years from the Policy Date. Similarly, for any change in Specified Amount requiring evidence of insurability, we will not contest payment of the Death Benefit based on the change after it has been In Force during the lifetime of the last surviving Insured for two years from the effective date. - -------------------------------- ----------------------------------------------- IF WE MODIFY THE POLICY Any modification (or waiver) of our rights or requirements under the policy must be in writing and signed by our president or corporate secretary. No agent may bind us by making any promise not contained in the policy. We may modify the policy, our operations, or the separate account's operations to meet the requirements of any law (or regulation issued by a government agency) to which the policy, our company, or the separate account is subject. We may modify the policy to assure that it continues to qualify as a life insurance contract under the federal tax laws. We will notify you of all modifications, and we will make appropriate endorsements to the policy. - -------------------------------------------------------------------------------- RIDERS - -------------------------------------------------------------------------------- Riders are available for you to purchase to design the policy to meet your specific needs. You may only elect them upon application. Availability will vary by state. You will be charged for a Rider: so long as the policy remains In Force and the Rider's term has not expired; until we have paid the benefit; or you decide you no longer need the benefit, except for the Adjusted Sales Load Life Insurance Rider, and let us know in writing at our Home Office. You cannot change your election of this Rider. For more information on the costs of the Riders, see "In Summary: Fee Tables," beginning on page 6, and "Charges," beginning on page 36. - -------------------------------- ----------------------------------------------- ADJUSTED SALES LOAD LIFE INSURANCE RIDER This Rider is only available to purchase when you purchase the policy. The benefit is replacing the Premium Load we would otherwise deduct before allocating your Net Premiums with the Rider's monthly charge, which depends on whether you want to replace all or a portion of the Premium Load. We will deduct the Rider's charge from the policy's Cash Value over a period of up to fifteen years, but this depends on the number of years over which the Premium payments you plan to make will be covered by this Rider (a whole number up to seven years from the Policy Date). This deduction will last for nine years after the lesser of: o the number of years (from one to seven) you choose to have the Rider apply to your Premium payments; or 33 o the number of years during which you actually make Premium payments. So, say you want to replace all of the Premium Load on each of your Premium payments for five years, but the last Premium payment you make while the Rider is in effect is within the third year from the Policy Date. Instead of for fourteen years, we will deduct the Rider's charge through the twelfth year. Also, if you terminate your policy during the first ten years from the Policy Date, we will reduce your Cash Surrender Value. The more Premium Load you elect to replace, the higher the Rider's charge will be. If you purchase this Rider, you should expect that its charge, in the aggregate, would amount to more than if we had deducted the Premium Load from each of your Premium payments covered by it. To better understand how this Rider might benefit you, ask for an illustration of future benefits and rights under the policy with and without the purchase of this Rider. - -------------------------------------------------------------------------------- ESTATE PROTECTION RIDER The benefit is an additional Death Benefit we will pay to the beneficiary, to offset any additional estate tax, upon receiving proof that both Insureds died while the policy is In Force and the Rider is in effect. The Rider's term is four years from the Policy Date. The Rider's Death Benefit will equal your estate tax liability, up to 122.22% of the policy's initial Specified Amount. We will not pay this Rider's Death Benefit, let alone the Death Benefit, however, if either Insured commits suicide, while sane or insane, within two years from the Policy Date. Instead, we will pay back the total charge we had deducted for this Rider. For more information, see "Suicide," beginning on page 50. There is no Cash Surrender Value or loan value to this Rider. Before the term expires, you may request to terminate this Rider in writing to our Home Office, and the additional Death Benefit will terminate effective on the next monthly anniversary from the Policy Date. This Rider will also terminate on the date the policy terminates. - -------------------------------------------------------------------------------- POLICY SPLIT OPTION RIDER The benefit is the option to exchange the policy for two policies, each on the life of one Insured, if the Insureds' marriage ends or there is a qualifying federal tax law change, while the policy is In Force (and not in a grace period) and this Rider is in effect. Each new policy will consist of half the Specified Amount (the lesser of the initial Specified Amount and the Specified Amount before the exchange), the Cash Value and any Indebtedness. We will base the Premium rates for each new policy on the respective Insured's age and underwriting class as of the effective date of the exchange. In the event that the Insureds' marriage ended, there must have been in effect, for the preceding year, a final divorce, dissolution or annulment decree from a court of competent jurisdiction. The qualifying changes in federal tax law must have concerned the reduction of either the marital deduction, or federal estate tax rate, to less than that in effect on the Policy Date. In any event, you will have six months, once the final divorce, dissolution or annulment decree has been in effect for a year, or from the enactment of the federal tax law change, within which to make your request in writing to our Home Office. 34 The option will last so long as both Insureds are alive, and it is before the year in which the older Insured reaches Attained Age 80. Before then, you may terminate this Rider in writing to our Home Office, which will become effective on the next monthly anniversary from the Policy Date. This Rider will terminate if you exercise the option. Otherwise, this Rider will terminate on the date the policy terminates. There is no Cash Surrender Value or loan value to this Rider. Exercising the option under this Rider may result in adverse tax consequences. For more information, see "Special Note Regarding The Policy Split Option Rider," beginning on page 61, but most definitely, consult your tax adviser before electing this Rider, let alone exercising your rights under it. - -------------------------------------------------------------------------------- PREMIUM - -------------------------------------------------------------------------------- This policy does not require a scheduled payment of Premium to keep it In Force. The policy will remain in effect as long as the conditions that cause the policy to Lapse do not exist. Each Premium payment must be at least $50. Upon request, we will furnish Premium receipts. - -------------------------------- ----------------------------------------------- INITIAL PREMIUM The amount of your initial Premium will depend on the initial Specified Amount of insurance, the Death Benefit option, and any Riders you select. Generally, the higher the required initial Specified Amount, the higher the initial Premium will be. Similarly, because Death Benefit Options Two and Three provide for a potentially greater Death Benefit than Death Benefit Option One, Death Benefit Options Two and Three may require a higher amount of initial Premium. Also, the age, sex, health, and activities of both Insureds will affect our determination of the risk of issuing the policy. In general, the greater this risk, the higher the initial Premium will be. The amount of supplemental coverage will also affect the initial Premium. Whether we will issue full insurance coverage depends on both Insureds meeting all underwriting requirements, you paying the initial Premium, and our delivery of the policy while both Insureds are alive. We will not delay delivery of the policy to increase the likelihood that the Insureds are not still alive. Depending on the outcome of our underwriting process, more or less Premium may be necessary for us to issue the policy. We also retain the right to not issue the policy, after which, if we exercise this right, we will return your payment within two business days thereafter. You may pay the initial Premium to our Home Office or to our authorized representative. - -------------------------------------------------------------------------------- SUBSEQUENT PREMIUMS 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; and 35 > We will refund any portion of Premium payments that exceed the applicable premium limit established by the IRS to qualify the policy as a contract for life insurance. As discussed in the "Taxes" section of this prospectus, additional Premium payments or other changes to the policy may jeopardize the policy's non-modified endowment status. We will monitor Premiums paid and other policy transactions and will notify you when the policy's non-modified endowment contract status is in jeopardy. We will send scheduled Premium payment reminder notices to you according to the Premium payment method shown on the Policy Data Page. If you decide to make a subsequent Premium payment, you must send it to our Home Office. - -------------------------------------------------------------------------------- CHARGES - -------------------------------------------------------------------------------- PLEASE READ AND CONSIDER THE FOLLOWING, WHICH WE INTEND TO BE AN AMPLIFICATION (BUT IT MAY ALSO BE DUPLICATIVE), IN CONJUNCTION WITH THE FEE TABLES, AND 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 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, and we will only deduct the loan amount interest charge from the Cash Value of the loan account. We will transfer the loan interest charge from your investment options to the loan account. We take the monthly periodic charges in advance and we will not pro rate any monthly Rider charge should the Rider terminate before the beginning of the next month. There are also operating charges associated with the Sub-Account Portfolios. While you will not pay them directly, they will affect the value of the assets in the Sub-Account Portfolios. On a daily basis, the manager of each mutual fund that comprises the policy's available variable investment options deducts operating charges from that mutual fund's assets before calculating the NAV. (We use NAV to calculate the value of your corresponding Sub-Account portfolio allocation in Accumulation Units.) In addition, some mutual funds assess a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of the allocation to that Sub-Account. The fee is assessed against the amount transferred and is paid to the mutual fund. For more information on the operating charges and short-term trading fees assessed by the mutual funds held by the Sub-Account portfolios, please see the prospectus for the mutual fund and "Short-Term Trading Fees" in this prospectus. - -------------------------------------------------------------------------------- SALES LOAD During years one through fifteen from the Policy Date, the sales load portion of the Premium Load charge is $40 per $1,000 of Premium. Thereafter, it is guaranteed to be no greater than $25, and currently is $20 per $1,000 of Premium. We use the charge to offset our sales expenses. - -------------------------------------------------------------------------------- 36 - -------------------------------------------------------------------------------- PREMIUM TAXES The premium taxes portion of the Premium Load charge is $35 per $1,000 of Premium and reimburses us for state and local premium taxes (at the estimated rate of 2.25%), and for federal premium taxes (at the estimated rate of 1.25%). This is an estimated amount. If the actual tax liability is more or less, we will not adjust this charge, so we may profit from it. - -------------------------------------------------------------------------------- SURRENDER CHARGES A surrender charge will apply if you surrender or lapse the policy, or if you request to decrease the Specified Amount. There are two components of the surrender charge meant to cover our policy underwriting (the underwriting component) and sales expenses (the sales component), including for: processing the application; conducting any medical exams; determining insurability (and the Insureds' underwriting classes); and establishing policy records. The surrender charge will equal the underwriting component plus 22.5% of the sales component. We will deduct the surrender charge based on the following schedule: - -------------------------------- ----------------------------------------------- -------------------- --------------------- Percentage Of During Initial Surrender Policy Year Charge -------------------- --------------------- -------------------- --------------------- 1 100% -------------------- --------------------- -------------------- --------------------- 2 95% -------------------- --------------------- -------------------- --------------------- 3 85% -------------------- --------------------- -------------------- --------------------- 4 80% -------------------- --------------------- -------------------- --------------------- 5 70% -------------------- --------------------- -------------------- --------------------- 6 60% -------------------- --------------------- -------------------- --------------------- 7 50% -------------------- --------------------- -------------------- --------------------- 8 40% -------------------- --------------------- -------------------- --------------------- 9 30% -------------------- --------------------- -------------------- --------------------- 10 25% -------------------- --------------------- -------------------- --------------------- 11 20% -------------------- --------------------- -------------------- --------------------- 12 15% -------------------- --------------------- -------------------- --------------------- 13 10% -------------------- --------------------- -------------------- --------------------- 14 5% -------------------- --------------------- -------------------- --------------------- After 14 0 -------------------- --------------------- The underwriting component is the product of that portion of the Specified Amount not including any supplemental coverage divided by 1,000, and the administrative target premium. The administrative target premium is actuarially derived, and we use it to figure out how much to charge per Premium payment for underwriting expenses. The administrative target premium varies by the Insureds' ages when the policy was issued. The sales expense component is the lesser of the following two amounts. The first amount is the Guideline Annual Premium in the first year from the Policy Date. The second amount is the sum of all Premium payments you made during the first two years from the Policy Date. We will calculate a separate surrender charge based on the Specified Amount and each increase in the Specified Amount, which, when added together, will 37 amount to your surrender charge. A surrender charge will also apply if you request a decrease in the Specified Amount. We will calculate the surrender charge for a decrease in the Specified Amount as if you surrendered the policy, though we will only deduct a portion of it from your policy's Cash Value. The amount of surrender charge we deduct will be a product of the surrender charge and the decrease in Specified Amount divided by the Specified Amount before the decrease. All things being equal, the surrender charge will be greater for a policy with: an older Insured; a male insured; a higher Specified Amount; more first year Premium; or a higher risk Insured. If you change the Death Benefit option, and it does not result in a different Net Amount At Risk, we will not deduct a surrender charge. - -------------------------------------------------------------------------------- PARTIAL SURRENDER FEE You may request a partial surrender after the first year from the Policy Date, and we may charge a partial surrender fee, of the lesser of $25 or 2% of the dollar amount of the partial surrender, to compensate us for the administrative costs in calculating and generating the surrender amount. However, currently there is no charge for a partial surrender. - -------------------------------------------------------------------------------- SHORT-TERM TRADING FEES Some mutual funds may assess (or reserve the right to assess) a short-term trading fee in connection with transfers from a Sub-Account that occur within 60 days after the date of allocation to the Sub-Account. Short-term trading fees are intended to compensate the mutual fund (and policy owners with interests allocated in the mutual fund) for the negative impact on fund performance that may result from frequent, short-term trading strategies. Short-term trading fees are not intended to affect the large majority of policy owners not engaged in such strategies. Any short-term trading fee assessed by any mutual fund available in conjunction with the policies described in this prospectus will equal 1% of the amount determined to be engaged in short-term trading. Short-term trading fees will only apply to those Sub-Accounts corresponding to mutual funds that charge such fees. Please refer to the prospectus for each Sub-Account portfolio for more detailed information. Policy owners are responsible for monitoring the length of time allocations are held in any particular Sub-Account. We will not provide advance notice of the assessment of any applicable short-term trading fee. For a list of available sub-accounts that assess short-term trading fees, see "Total Annual Sub-Account Portfolio Operating Expenses" earlier in this prospectus. If a short-term trading fee is assessed, the mutual fund will charge the separate account 1% of the amount determined to be engaged in short-term trading. The separate account will then pass the short-term trading fee on to the specific policy owner that engaged in short-term trading by deducting an amount equal to the fee from that policy owner's sub-account value. All such fees will be remitted to the mutual fund; none of the fee proceeds will be retained by us or the separate account. 38 Transfers will be considered to be made on a first in/first out (FIFO) basis for purposes of determining short-term trading fees. In other words, units held the longest time will be treated as being transferred first, and units held for the shortest time will be treated as being transferred last. Some transactions are not subject to short-term trading fees. Transactions that are not subject to short-term trading fees include: o scheduled and systematic transfers, such as Dollar Cost Averaging and Asset Rebalancing; o policy loans or surrenders; or o payment of the Death Benefit proceeds upon the Insured's death. New share classes of currently available mutual funds may be added as investment options under the policy. These new share classes may require the assessment of short-term trading fees. When these new share classes are added, new Premium payments and exchange reallocations to the mutual funds in question may be limited to the new share class. - -------------------------------------------------------------------------------- COST OF INSURANCE The cost of insurance charge compensates us for underwriting insurance protection. We will determine this charge by multiplying the monthly cost of insurance rate by the Net Amount At Risk. 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 Insureds' sexes; ages; underwriting classes; any substandard ratings; for how long the policy has been In Force and the Specified Amount. There will be a separate cost of insurance rate for the initial Specified Amount and any increases. The cost of insurance rates will never be greater than those guaranteed in the policy. We will uniformly apply a change in any cost of insurance rate for Insureds, of the same ages, sexes, underwriting classes, and any substandard ratings, on whom policies with the same Specified Amount have been In Force for the same length of time. The change could increase your cost of insurance charges, which, accordingly, would decrease your policy's Cash Value, and the converse is true, too. In contrast, you could cause your cost of insurance charge to decrease with a request to reduce the Specified Amount that also reduces the Net Amount At Risk. - -------------------------------------------------------------------------------- 39 - -------------------------------------------------------------------------------- MORTALITY AND EXPENSE RISK Though the maximum guaranteed mortality and expense risk charge is higher, currently, we deduct this charge monthly according to the following schedule. During the first through fifteenth years from the Policy Date, the charge is $0.80 per $1,000 of Cash Value in the variable investment options, and thereafter, $0.30 per $1,000 of Cash Value in the variable investment options. This charge compensates us for assuming risks associated with mortality and expense costs, and we may profit from it. The mortality risk is that the Insureds do not live as long as expected. The expense risk is that the costs of issuing and administering the policy are more than expected. - ------------------------------ ------------------------------------------------- PER $1,000 OF SPECIFIED AMOUNT During the first three years from the Policy Date, we deduct a per $1,000 of Specified Amount charge from the policy's Cash Value, which reimburses us for sales, underwriting, distribution and issuance costs. The charge is the product of the Specified Amount (not including that portion constituting supplemental insurance coverage) and the Rider's cost rate, which will vary by the Insureds' ages, the year from the Policy Date and the Specified Amount. - -------------------------------- ----------------------------------------------- ADMINISTRATIVE Though the maximum guaranteed administrative charge is higher, currently, the monthly charge we deduct is $5. This charge reimburses us for the costs of maintaining the policy, including for accounting and record-keeping. - -------------------------------------------------------------------------------- POLICY LOAN INTEREST We will charge interest on the amount of an outstanding policy loan, at the rate of 4.5% per annum, which will have accrued daily and become due and payable at the end of the year from the Policy Date. If left unpaid, we will add it to the loan amount. As collateral or security for repayment, we will transfer an equal amount of Cash Value to the loan account, on which interest will accrue and be credited daily. The minimum guaranteed interest crediting rate is 3.0% per annum, and the current interest crediting rate is 3.0% per annum. The effect is a net cost of no more than 1.50%. - -------------------------------------------------------------------------------- ADJUSTED SALES LOAD LIFE INSURANCE RIDER The charge for this Rider replaces the Premium Load to cover our sales expenses and premium taxes. You will pay a Premium Load on any amount that you do not elect to be covered by the Rider. Especially since this premium tax portion is an estimated amount not subject to adjustment for the actual tax liability, we may profit from it. The charge is the product of: your aggregate Premiums since the Policy Date; the portion of Premium Load you choose to replace (expressed as a whole percentage of Premium paid); and the factor of 0.0001345, which is actuarially derived. The Rider's charge may vary. Each Premium payment you make will cause the Rider's charge to increase. The length of time of the charge will also vary (up to fifteen years). The length of time will be nine years and the lesser of: o the number of years you choose to have the Rider apply to your Premium payments; and 40 o the number of years during which you actually made Premium payments. For example, if you had chosen to have this Rider apply to your Premium payments for five years, but you only made Premium payments for three years while the Rider was in effect. We would adjust the number of years over which we would deduct this charge from fourteen to twelve years. If the policy terminates within the first ten years from the Policy Date, we will recover a portion of the Premium Load replaced by the Rider, based on the following schedule: -------------------- --------------------- Years Policy Has Percentage Been In Force -------------------- --------------------- 1 100% -------------------- --------------------- 2 90% -------------------- --------------------- 3 80% -------------------- --------------------- 4 70% -------------------- --------------------- 5 60% -------------------- --------------------- 6 50% -------------------- --------------------- 7 40% -------------------- --------------------- 8 30% -------------------- --------------------- 9 20% -------------------- --------------------- 10 10% -------------------- --------------------- -------------------- --------------------- 11+ 0 -------------------- --------------------- This deduction is equal to the product of the amount of Premium Load replaced by the Rider and the percentage from the table above that corresponds to the number of years the policy has been In Force. For example, say you terminate your policy after five years, on which you had chosen to replace the entire Premium Load for seven years. Assume that you paid $10,000 of Premium during this time. The Premium Load the Rider has replaced is $400, and 60% of this amount is $240, which we will deduct from your Cash Surrender Value. This deduction allows us to cover a portion of our sales expenses and premium taxes for which the Rider's charge would have compensated us had the policy remained In Force. - -------------------------------------------------------------------------------- ESTATE PROTECTION RIDER This charge compensates us for additional Death Benefit coverage while it is available. The charge is the product of the additional Death Benefit amount and your monthly cost of insurance rate. We use the same monthly cost of insurance rate that we use to calculate the cost of insurance charge. However, because we multiply the monthly cost of insurance rate by the Rider's Death Benefit, this charge should be less. - -------------------------------- ----------------------------------------------- POLICY SPLIT OPTION RIDER This charge compensates us for the option to exchange the policy for two policies, each on the life of one Insured. The charge is the product of the Specified Amount and the monthly policy split option cost rate. This rate is based on the average ages of the two Insureds on the Policy Date, and is stated on the Policy Data Page. - -------------------------------------------------------------------------------- 41 - -------------------------------------------------------------------------------- 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," 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. Distribution, Promotional and Sales Expenses Distribution, promotional and sales expenses include amounts we pay to broker-dealer firms as commissions, expense allowances and marketing allowances. We refer to these expenses collectively as "total compensation." The maximum total compensation we pay to any broker-dealer firm in conjunction with policy sales is 99% of first year target premiums and 3% of renewal premium after the first year. We have the ability to customize the total compensation package of our broker-dealer firms. We may vary the form of compensation paid or the amounts paid as commission, expense allowance or marketing allowance; however, the total compensation will not exceed the maximum (99% of first year target premiums and 3% of renewal premium after the first year). Commission may also be paid as an asset-based amount instead of a premium based amount. If an asset-based commission is paid, it will not exceed 0.25% of the non-loaned cash value per year. The actual amount and/or forms of total compensation we pay depends on factors such as the level of premiums we receive from respective broker-dealer firms and the scope of services they provide. Some broker-dealer firms may not receive maximum total compensation. Individual registered representatives typically receive a portion of the commissions/total compensation we pay, depending on their arrangement with their broker-dealer firm. If you would like to know the exact compensation arrangement associated with this product, you should consult your registered representative. 42 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 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. - -------------------------------------------------------------------------------- TO ALLOCATE NET PREMIUM AND SUB-ACCOUNT VALUATION - -------------------------------------------------------------------------------- You may choose to allocate all or a portion of your Net Premium to any Sub-Account. When this happens depends on the right to examine law of the state in which you live. Or you may choose to allocate all or a portion of your Net Premium to the fixed investment option, and we will allocate it when we receive it. Based on the right to examine law, some states require that we refund the initial Premium if you exercise your right to cancel the policy. Others require that we return the Cash Value. If yours is a state that requires us to refund the initial Premium, we will hold the initial Net Premium in the GVIT Gartmore GVIT Money Market Fund: Class I. Once your examination right ends, we will transfer the Cash Value to your Sub-Account allocations in effect at the time of the transfer. If yours is a state that requires us to refund the Cash Value, we will allocate the Net Premiums to the Sub-Account choices in effect when we receive the Premium payment. 43 - -------------------------------- ----------------------------------------------- VARIABLE INVESTMENT OPTIONS The variable investment options constitute the limitedly available mutual funds, and we have divided the separate account into an equal number of Sub-Account portfolios to account for your allocations. Each Sub-Account portfolio invests in a mutual fund that is registered with the SEC. (This registration does not involve the SEC's supervision of the management or investment practices or policies of these mutual funds.) The "Available Sub-Accounts" section identifies the available mutual funds, by name, investment type and adviser. Each Sub-Account portfolio's assets are held separately from the assets of the other Sub-Account portfolios, and each Sub-Account portfolio has investment objectives and policies that are different from those of the other Sub-Account portfolios. Thus, each Sub-Account portfolio operates as a separate investment fund, and the income or losses of one Sub-Account portfolio generally have no effect on the Investment Experience of any other Sub-Account portfolio. - -------------------------------------------------------------------------------- THE FIXED INVESTMENT OPTION The Net Premium you allocate to the fixed investment option is held in the fixed account, which is part of our general account. The general account contains all of our assets other than those in the separate accounts and funds the fixed investment option. These assets are subject to our general liabilities from business operations. The general account is used to support our insurance and annuity obligations. Any amounts in excess of the separate account liabilities are deposited into our general account. We bear the full investment risk for all amounts allocated to the fixed account. We guarantee that the amounts you allocate to the fixed investment option will be credited interest daily at a net effective annual interest rate of no less than the stated interest crediting rate on the Policy Data Page. We will credit any interest in excess of the guaranteed interest crediting rate at our sole discretion. You assume the risk that the actual rate may not exceed the guaranteed interest crediting rate. The amounts you allocate to the fixed investment option will not share in the investment performance of our general account. Rather, the investment income you earn on your allocations will be based on varying rates we set. The general account is not subject to the same laws as the separate account, and the SEC has not reviewed the disclosures in this prospectus relating to the fixed account. However, information about the fixed account is subject to federal securities laws relating to the accuracy and completeness of statements made by prospectus disclosure. Interest rates are set at the beginning of each calendar quarter and will be effective for at least three months. You may receive a different interest rate on Net Premium versus a transfer of Accumulation Units from a Sub-Account portfolio. In honoring your request to transfer an amount out of the fixed account, we will do so on a last-in, first out basis (LIFO). 44 ALLOCATION OF NET PREMIUM AND CASH VALUE We allocate your Net Premium payments to Sub-Accounts or the fixed account per your instructions. You must specify your Net Premium payments in whole percentages. The sum of allocations must equal 100%. - -------------------------------- ----------------------------------------------- WHEN SUB-ACCOUNT ACCUMULATION We will price Sub-Account Accumulation Units on any day the New York Stock Exchange UNITS ARE VALUED (NYSE) is open for business, unless we are closed. We will not price Sub-Account Accumulation Units on these recognized holidays. oNew Year's Day oLabor Day oMartin Luther King, Jr. Day oThanksgiving oPresidents' Day oChristmas oGood Friday oMemorial Day oIndependence Day In addition, we will not price Sub-Account Accumulation 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. Any transaction you try to effect when we are closed will not happen until the next day the NYSE and we are open for business. HOW INVESTMENT EXPERIENCE IS DETERMINED Though the number of Sub-Account Accumulation Units will not change as a result of Investment Experience, changes in the net investment factor may cause the value of a Sub-Account Accumulation Unit to increase or decrease from Valuation Period to Valuation Period. Changes in the net investment factor may not be directly proportional to changes in the NAV of the mutual fund shares. We determine the change in Sub-Account values at the end of a Valuation Period. The Sub-Account Accumulation Unit value for a Valuation Period is determined by multiplying the Sub-Account Accumulation Unit value as of the prior Valuation Period by the net investment factor for the Sub-Account for the current Valuation Period. We determine the net investment factor for any Valuation Period by dividing (a) by (b) where: (a) is the net of: > the NAV per share of the mutual fund held in the Sub-Account as of the end of the current Valuation Period; plus > the per share amount of any dividend or income distributions made by the mutual fund (if the date of the dividend or income distribution occurs during the current Valuation Period); plus or minus > a per share charge or credit for any taxes reserved for as a result of the Sub-Account's investment operations. 45 (b) is the NAV per share of the mutual fund as of the end of the immediately preceding Valuation Period. - -------------------------------------------------------------------------------- CASH VALUE The policy has a Cash Value. There is no guaranteed Cash Value. Rather, it will be based on the Accumulation Unit values, and vary with the Investment Experience of the Sub-Account portfolios to which you have allocated Net Premium, as well as the values of, and any daily crediting of interest to, the policy loan and fixed accounts. It will also vary because we deduct the policy's periodic charges from the Cash Value. So if you have chosen Death Benefit Option Two, your Death Benefit will fluctuate. We will determine the value of the assets in the separate account at the end of each Valuation Period. We will determine the Cash Value at least monthly. To determine the number of Sub-Account Accumulation Units credited to each Sub-Account, we divide the net amount you allocate to the Sub-Account by the Sub-Account Accumulation Unit value for the Sub-Account (using the next Valuation Period following when we receive the Premium). If you surrender part or all of the policy, we will deduct a number of Sub-Account Accumulation Units from the separate account and an amount from the fixed account that corresponds to the surrendered amount. Thus, your policy's Cash Value will be reduced by the surrendered amount. Similarly, when we assess charges or deductions, a number of Sub-Account Accumulation Units from the separate account and an amount from the fixed account that corresponds with the charge or deduction will be deducted from the policy's Cash Value. We make these deductions in the same proportion that your interests in the separate account and the fixed account bear to the policy's total Cash Value. The Cash Value in the policy loan and fixed accounts will be credited interest daily at the guaranteed minimum annual effective rate stated on the Policy Data Page. For there to be Cash Value in the policy loan account, you must have taken a policy loan. We may decide to credit interest in excess of the guaranteed minimum annual effective rate. For the fixed account, we will guarantee the current rate in effect through the end of the calendar quarter. Upon request, we will inform you of the current applicable rates for each account. For more information, see "The Fixed Investment Option," beginning on page 44 and "Policy Loans," beginning on page 53. On any date during the policy year, the Cash Value equals the Cash Value on the preceding Valuation Period, plus any Net Premium applied since the previous Valuation Period, minus any policy charges, plus or minus any investment results, and minus any partial surrenders. 46 DOLLAR COST AVERAGING You may elect to participate in a dollar cost averaging program. Dollar cost averaging is an investment strategy designed to reduce the investment risks associated with market fluctuations, which will promote a more stable Cash Value and Death Benefit over time. The strategy spreads the allocation of your Premium among the Sub-Account portfolios and the fixed investment option over a period of time to allow you to potentially reduce the risk of investing most of your Premium into the Sub-Accounts at a time when prices are high. There is no charge for dollar cost averaging, but it does count as a transfer event. For more information, see "Modes To Make A Transfer," beginning on page 29. On a monthly basis (or another frequency we may permit), a specified dollar amount of your Premium is systematically and automatically transferred from the fixed account to a Sub-Account portfolio. You may also have Premium transferred from the: Federated Insurance Series - Federated Quality Bond Fund II: Primary Shares; Fidelity Variable Insurance Products Fund - VIP High Income 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 III and 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. Periodically, we may offer enhanced dollar cost averaging programs on initial Premiums, participation in which will earn you interest on the Cash Value of the fixed account that is covered under the enhanced dollar cost averaging program. The interest we credit daily may be different than the net effective annual interest rate we credit on the Cash Value of the fixed account that is outside of the enhanced dollar cost averaging program. These programs will last for one year, and your Premium will be systematically and automatically transferred based on the following schedule: -------------------- --------------------- Fraction Of Remaining Cash Beginning Of Month Value Transferred -------------------- --------------------- -------------------- --------------------- 2 1/11 -------------------- --------------------- -------------------- --------------------- 3 1/10 -------------------- --------------------- -------------------- --------------------- 4 1/9 -------------------- --------------------- -------------------- --------------------- 5 1/8 -------------------- --------------------- -------------------- --------------------- 6 1/7 -------------------- --------------------- -------------------- --------------------- 7 1/6 -------------------- --------------------- -------------------- --------------------- 8 1/5 -------------------- --------------------- -------------------- --------------------- 9 1/4 -------------------- --------------------- -------------------- --------------------- 10 1/3 -------------------- --------------------- -------------------- --------------------- 11 1/2 -------------------- --------------------- -------------------- --------------------- 12 Remaining Amount -------------------- --------------------- 47 A dollar cost averaging program may not be available in all states. We do not assure the success of these strategies; success depends on market trends. We cannot guarantee that dollar cost averaging will result in a profit or protect against loss. You should carefully consider your financial ability to continue these programs over a long enough period of time to purchase Accumulation Units when their value is low, as well as when it is high. We may modify, suspend or discontinue these programs at any time. We will notify you in writing 30 days before we do this. - -------------------------------------------------------------------------------- ASSET REBALANCING You may elect to set up asset rebalancing. To do so, you must complete the Asset Rebalancing Program Form and submit it to our Home Office. (You will use the same form to change your investment allocation choices, or terminate asset rebalancing, too.) Thereafter, automatically, on a periodic basis, the Cash Value of your chosen Sub-Account portfolios (up to 20), having fluctuated with Investment Experience, will be rebalanced in proportion to your investment allocation choices. There is no charge for asset rebalancing, but it does count as a transfer event. For more information, see "Modes To Make A Transfer," beginning on page 29. You can schedule asset rebalancing to occur every three, six, or twelve months on days when we price Sub-Account Accumulation Units. For more information, see "When Sub-Account Accumulation Units Are Valued," beginning on page 45. Unless you elect otherwise, asset rebalancing will not affect the allocation of Net Premiums you pay after beginning the program. Manual transfers will not automatically terminate the program. Termination of the Asset Rebalancing program will only occur as a result of your specific instruction to do so. 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 both the Insureds have died, as well as other customary information. We require notice of the first death within one year from the date of death, even though the Proceeds are not calculated or paid until the second death. We will not dispute the payment of the Death Benefit after the policy has been In Force for two years from the Policy Date. The Death Benefit may be subject to an adjustment if you make an error or misstatement upon application, or if an Insured dies by suicide. While the policy is In Force, the Death Benefit will never be less than the Specified Amount. The Death Benefit will depend on which option you have chosen and the tax test you have elected, as discussed in greater detail below. Also, the Death Benefit may vary with the Cash Value of the policy, which will depend on investment performance and take into account any insurance provided by Riders, as well as outstanding Indebtedness and any due and unpaid monthly deductions that accrued during a Grace Period. 48 DEATH BENEFIT OPTIONS There are three Death Benefit options under the policy. You may choose one. If you do not choose one of the following Death Benefit options, we will assume that you intended to choose Death Benefit Option One. OPTION ONE The Death Benefit will be the greater of the Specified Amount, or the minimum required Death Benefit. OPTION TWO The Death Benefit will be the greater of the Specified Amount PLUS the Cash Value as of the date of death, or the minimum required Death Benefit. OPTION THREE The Death Benefit will be the greater of the Specified Amount PLUS the accumulated Premium account (which consists of all Premium payments minus all partial surrenders to the date of death), or the minimum required Death Benefit. The amount of the accumulated Premium account will be based on the Option Three Interest Rate stated on the Policy Data Page, which will be no less than zero or more than the Option Three Maximum Increase also stated on the Policy Data Page. Not all Death Benefit options are available in all states. - -------------------------------------------------------------------------------- THE MINIMUM REQUIRED DEATH BENEFIT Each Death Benefit option has a minimum required Death Benefit. The minimum required Death Benefit is the lowest Death Benefit that will qualify the policy as life insurance under Section 7702 of the Code. The tax tests for life insurance generally require that the policy has a significant element of life insurance and not be primarily an investment vehicle. At the time we issue the policy, you irrevocably elect one of the following tests to qualify the policy as life insurance under Section 7702 of the Code: >the cash value accumulation test; or >the guideline premium/cash value corridor test. The cash value accumulation test determines the minimum required Death Benefit by multiplying the account value by a percentage determined by methodology set out in the federal tax regulations. The percentages depend upon the Insureds' ages, sexes and underwriting classifications. Under the cash value accumulation test, there is no limit to the amount that may be paid in Premiums as long as there is sufficient Death Benefit in relation to the account value at all times. The guideline premium/cash value corridor test determines the minimum required Death Benefit by comparing the Death Benefit to an applicable percentage of the Cash Value. These percentages are set out in the Code and vary only by the younger Insured's Attained Age. 49 Regardless of which test you elect, we will monitor compliance to assure that the policy meets the statutory definition of life insurance for federal tax purposes. As a result, the Proceeds payable under a policy should be excludable from gross income of the beneficiary for federal income tax purposes. Conversely, if in the unlikely event that the policy did not qualify as life insurance because your Death Benefit failed to amount to the minimum required Death Benefit, the Proceeds payable under the policy would be includable in the gross income of the beneficiary for federal income tax purposes. Because of this adverse consequence, we may refuse additional Premium payments or return the gross Premium payments to you so that the policy continues to meet the Code's definition of life insurance. For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 59. If you do not elect a test, we will assume that you intended to elect the guideline premium/cash value corridor test. CHANGES IN THE DEATH BENEFIT OPTION After the first policy year, you may elect to change the Death Benefit option under the policy from either Option One to Option Two, from Option Two to Option One, from Option Three to Option One, or from Option Three to Option Two. You may not change from Option One or Option Two to Option Three. We will permit only one change of Death Benefit option per policy year. The effective date of a change will be the monthly anniversary date following the date we approve the change. For any change in the Death Benefit option to become effective, the Cash Surrender Value after the change must be sufficient to keep the policy In Force for at least three months. We will adjust the Specified Amount so that the Net Amount At Risk remains constant before and after the Death Benefit option change. We will make these changes proportionately with respect to any supplemental insurance coverage. Because your Net Amount At Risk will remain the same, reducing the Death Benefit option by itself does not alter the policy's cost of insurance. The policy's charges going forward, however, will be based on a new Specified Amount that will change the calculation of those charges. Depending on changes in factors such as fluctuations in policy's Cash Value, these charges may increase or decrease after the reduction. Where the policy owner has selected the guideline premium/cash value corridor test, a change in Death Benefit option will not be permitted if it would result in the total Premiums paid exceeding the maximum Premium limitations under Section 7702 of the Code. - -------------------------------------------------------------------------------- SUICIDE If either Insured commits suicide, while sane or insane, within two years from the Policy Date, we will pay no more than the sum of the Premiums paid, less any Indebtedness, and less any partial surrenders. Similarly, if either Insured commits suicide, while sane or insane, within two years from the effective date of an increase in the Specified Amount for which we require additional evidence of insurability, we will pay no more than the initial Specified Amount, plus the cost of insurance charges of the increase. 50 - -------------------------------------------------------------------------------- SURRENDERS - -------------------------------------------------------------------------------- FULL SURRENDER You may surrender the policy for the Cash Surrender Value at any time while an Insured is alive. We calculate the Cash Surrender Value based on the policy's Cash Value. For more information, see "Cash Value," beginning on page 46. To derive the Cash Surrender Value, we will deduct from the Cash Value, Indebtedness and the surrender charge. The effective date of a surrender will coincide with the date on which we receive the policy and your written request at our Home Office. We reserve the right to postpone payment of that portion of the Cash Surrender Value attributable to the fixed account for up to six months. - -------------------------------------------------------------------------------- PARTIAL SURRENDER You may request a partial surrender of the policy's Cash Surrender Value at any time after it has been In Force for one year from the Policy Date. After that up until the eleventh year from the Policy Date, the maximum aggregate annual amount of any partial surrender is limited to no more than 10% of the Cash Surrender Value as of the beginning of that year. Then, the maximum aggregate annual amount of any partial surrender cannot exceed the Cash Surrender Value, less the greater of $500 or the total monthly fees and expenses you must pay to keep the policy In Force for three months. The minimum amount of any partial surrender is $200. A partial surrender cannot cause the total Specified Amount to be reduced below the minimum Specified Amount indicated on the Policy Data Page, and after any partial surrender, the policy must continue to qualify as life insurance under Section 7702 of the Code. You may incur a partial surrender fee. For more information, see "In Summary: Fee Tables," beginning on page 6. We reserve the right to limit partial surrenders to one a year. - -------------------------------------------------------------------------------- REDUCTION OF SPECIFIED AMOUNT ON A PARTIAL SURRENDER We will reduce the Cash Value of the policy by the amount of any partial surrender in the same proportion as how you have allocated Cash Value among the Sub-Accounts. We will only reduce the Cash Value attributable to the fixed account when that of the Sub-Account is insufficient to cover the amount of the partial surrender. When you take a partial surrender, we will reduce the Specified Amount to ensure that the Net Amount At Risk does not increase. Because your Net Amount At Risk is the same before and after the reduction, a partial surrender by itself does not alter the policy's cost of insurance. The policy's charges going forward will be based on a new Specified Amount that will change the calculation of those charges. Depending on changes in variables such as the Cash Value, these charges may increase or decrease after the reduction in Specified Amount. Any reduction we make to the Specified Amount will be made in the following order: >against the most recent increase in the Specified Amount; >against the next most recent increases in the Specified Amount in succession; and 51 >against the Specified Amount under the original application. While we reserve the right to deduct a partial surrender fee of up to $25, we currently deduct none. Partial surrenders may be subject to income tax penalties. This could also cause your policy to become a "modified endowment contract" under the Code, which would change the income tax treatment of any distributions from the policy. For more information, see "Reduction Of Specified Amount On A Partial Surrender," beginning on page 51. - -------------------------------------------------------------------------------- THE PAYOUT OPTIONS - -------------------------------------------------------------------------------- You have a number of options of receiving Proceeds, besides in a lump sum, which you may elect upon application. We will pay the Proceeds from our general account. If you do not make an election, when the last surviving Insured dies, the beneficiary may do so. If the beneficiary does not make an election, we will pay the Proceeds in a lump sum. We will normally pay the Proceeds in a lump sum within seven days after we receive your written request at our Home Office. We will postpone any payment of Proceeds, however, on the days we are unable to price Sub-Account Accumulation Units. For more information, see "When Sub-Account Accumulation Units Are Valued," beginning on page 45. To elect more than one payout option, you must apportion at least $2,000 per option, which would amount to a payment, at specified intervals, of at least $20. At any time before Proceeds become payable, you may request to change your payout option in writing at our Home Office. Changing the beneficiary of the policy will revoke the payout options in effect at that time. Please note that for the remainder of The Payout Options section, "you" means the person we are obligated to pay. - -------------------------------- ----------------------------------------------- INTEREST INCOME You keep the Proceeds with us to earn interest at a specified rate. The Proceeds can be paid at the end of every twelve-, six-, three- or one-month intervals. You may withdraw any outstanding balance by making a written request of us at our Home Office. We will pay interest on the outstanding balance at a rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. Upon your death, we will pay any outstanding balance to your estate. - -------------------------------- ----------------------------------------------- INCOME FOR A FIXED PERIOD You keep the Proceeds with us, but are paid at specified intervals over a number of years (no more than 30). Each payment will consist of a portion of the Proceeds plus interest at a guaranteed rate. The Proceeds can be paid at the beginning of each twelve-, six-, three- or one-month interval. You may withdraw any outstanding balance by making a written request of us at our Home Office. We will pay interest at an annually determined rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. Upon your death, we will pay any outstanding balance to your estate. 52 - -------------------------------- ----------------------------------------------- LIFE INCOME WITH PAYMENTS GUARANTEED We pay you the Proceeds at specified intervals for a guaranteed period (10, 15 or 20 years), and, then, for the rest of your life, if you have outlived the guaranteed period. The Proceeds can be paid at the beginning of each twelve-, six-, three- or one-month interval. During the guaranteed period, we will pay interest on the outstanding balance at a rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin. If you die before the guaranteed period has elapsed, we will make the remaining payments to your estate. If you die after the guaranteed period has elapsed, we will make no payments to your estate. - -------------------------------- ----------------------------------------------- FIXED INCOME FOR VARYING PERIODS You keep the Proceeds with us, but are paid a fixed amount at specified intervals. The total amount payable each year may not be less than 5% of the original Proceeds. The Proceeds can be paid at the beginning of each twelve-, six-, three- or one-month interval. You may withdraw any outstanding balance by making a written request of us at our Home Office. We will pay interest on the outstanding balance at a rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. Upon your death, we will pay any outstanding balance to your estate. - -------------------------------- ----------------------------------------------- - -------------------------------- ----------------------------------------------- JOINT AND SURVIVOR LIFE We pay you the Proceeds in equal payments at specified intervals for the life of the last surviving payee. The Proceeds can be paid at the beginning of each twelve-, six-, three- or one-month interval. As the payments are based on the lifetimes of the payees, you cannot withdraw any amount you designate to this option after payments begin. Also, payments will cease upon the death of the last surviving payee. We will make no payments to the last surviving payee's estate. - -------------------------------- ----------------------------------------------- ALTERNATE LIFE INCOME We use the Proceeds to purchase an annuity with the payee as annuitant. The amount payable will be 102% of our current individual immediate annuity purchase rate on the date you choose this settlement option. The Proceeds can be paid at the end of every twelve-, six-, three- or one-month interval. As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin. Also, payments will cease upon your death. We will make no payments to your estate. - -------------------------------------------------------------------------------- POLICY LOANS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- While the policy is In Force and after the first year from the Policy Date, you may take an advance of money from the Cash Value otherwise only available upon surrender or maturity, or upon payment of the Death Benefit. We call this advance a policy loan. You may increase your risk of Lapse if you take a policy loan. There also may be adverse tax consequences. You should obtain competent tax advice before you decide to take a policy loan. 53 LOAN AMOUNT AND INTEREST The minimum policy loan you may take is $200. You may take no more than the maximum loan value. The maximum loan value is based on your Cash Surrender Value less 10% of your Cash Value allocated to the Sub-Accounts. For more information, see "Full Surrender," beginning on page 51. We charge interest, at the maximum guaranteed rate of 4.5% per annum, on the amount of an outstanding loan, which will accrue daily and be payable at the end of each policy year. If left unpaid, we will add the interest to the loan amount. - -------------------------------------------------------------------------------- COLLATERAL AND INTEREST As collateral or security, we will transfer a corresponding amount of Cash Value from each Sub-Account to the loan account in the same proportion as your Sub-Account allocations, unless you instruct otherwise. On this amount, we will credit interest daily based on the current rate in effect, which will not be less than the guaranteed interest crediting rate shown on the Policy Data Page. We may credit interest in excess of the minimum guaranteed interest crediting rate. - -------------------------------------------------------------------------------- REPAYMENT You may repay all or part of a policy loan at any time while your policy is In Force during either Insured's lifetime. The minimum repayment is $50. Interest on the loan amount will be due and payable at the end of each year from the Policy Date. If left unpaid, we will add it to the loan amount 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. - -------------------------------------------------------------------------------- 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. Repaying a policy loan will cause the Death Benefit and net Cash Surrender Value to increase by the repayment amount. - -------------------------------------------------------------------------------- LAPSE - -------------------------------------------------------------------------------- The policy is at risk of Lapsing when the Cash Surrender Value is insufficient to cover the monthly deduction of the periodic charges. However, it will not Lapse under the guaranteed policy continuation provision so long as you have at least paid the Policy Continuation Premium Amount, irrespective of poor investment results from your Net Premium allocation choices, or that the Cash Surrender Value is less than the amount of the policy's periodic charges deduction (or both). In any event, there is a Grace Period before your policy will Lapse. Also, you may always reinstate a policy that has Lapsed. 54 - -------------------------------- ----------------------------------------------- GUARANTEED POLICY CONTINUATION PROVISION The policy will not Lapse if you have at least paid the Policy Continuation Premium Amount during the guaranteed policy continuation period, as stated on the Policy Data Page. The Policy Continuation Premium Amount will vary by: the Insureds' ages; sexes; underwriting classes; any substandard ratings; the Specified Amount; and the Riders purchased. The Policy Continuation Premium Amount will not account, however, for any subsequent increases in the Specified Amount, policy loans or partial surrenders. For no charge, you may request that we determine whether your Premium payments are sufficient to keep the guaranteed policy continuation provision in effect at any time, and you should do so especially after you have: requested an increase in the Specified Amount; taken a policy loan; or requested a partial surrender. There are two levels of guarantees, an initial and limited guarantee, and, so, there are two minimum monthly Premium amounts stated on the Policy Data Page from which to choose. The initial policy continuation guarantee lasts five years from the Policy Date, if you at least pay the initial Policy Continuation Premium Amount. The limited policy continuation guarantee lasts until the younger Insured reaches Attained Age 75, if you at least pay the limited Policy Continuation Premium Amount. We will determine these amounts based upon the: Insureds' ages; sexes; risk classifications; the Specified Amount; and any Riders elected. If your Premium payments become insufficient for purposes of the limited policy continuation guarantee, we will notify you of the start of a Grace Period. Thereafter, if you do not pay the necessary amount, the limited policy continuation guarantee will terminate, and there is no opportunity to reinstate it. Also, the limited policy continuation guarantee is unavailable if the younger Insured is Attained Age 70 when full insurance coverage begins. There is no charge for the guaranteed policy continuation provision. When the guaranteed policy continuation period ends, if the Cash Surrender Value remains insufficient to cover the monthly deductions of periodic charges, the policy is at risk of Lapsing, and a Grace Period will begin. The guaranteed policy continuation provision is subject to state insurance restrictions and may be different in your state and for your policy. - -------------------------------------------------------------------------------- GRACE PERIOD We will send you a notice when the Grace Period begins. The notice will state an amount of Premium required to avoid Lapse that is equal to four times the current monthly deductions or, if it is less, the Premium that will bring the guaranteed policy continuation provision back into effect. If you do not pay this Premium within 61 days, the policy and all Riders will Lapse. The Grace Period will not alter the operation of the policy or the payment of Proceeds. - -------------------------------------------------------------------------------- REINSTATEMENT You may reinstate a Lapsed policy by: >submitting a written request at any time within three years after the end of the Grace Period and prior to the Maturity Date; >providing evidence of insurability of both Insureds that is satisfactory to us; 55 >paying sufficient Premium to cover all policy charges that were due and unpaid during the Grace Period; >paying sufficient Premium to keep the policy In Force for three months from the date of reinstatement, or, if the policy is in the guaranteed policy continuation period, paying the lesser of (a) and (b) where: (a) is Premium sufficient to keep the policy In Force for three months from the date of reinstatement; and (b) is Premium sufficient to bring the guaranteed policy continuation provision into effect; and >paying any Indebtedness against the policy which existed at the end of the Grace Period. At the same time, you may also reinstate any Riders, but subject to evidence of insurability. The effective date of a reinstated policy, including any Riders, will be the monthly anniversary date on or next following the date we approve the application for reinstatement. If the policy is reinstated, the Cash Value on the date of reinstatement, will be set equal to the lesser of: >the Cash Value at the end of the Grace Period; or >the surrender charge for the policy year in which the policy was reinstated. We will then add any Premiums or loan repayments that you made to reinstate the policy. The allocations to Sub-Account portfolios in effect at the start of the Grace Period will be reinstated, unless you instruct otherwise. - -------------------------------------------------------------------------------- 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 a life insurance 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. 56 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 gift tax is imposed on the value of the property (including cash) transferred by gift. Each donor is allowed to exclude an amount (in 2005, up to $11,000 per recipient) from the value of the gift. In addition, each donor is allowed a credit against the first $1 million in lifetime gifts (calculated after taking into account the $11,000 exclusion amount). An unlimited marital deduction may be available for certain lifetime gifts made by the donor to the donor's spouse. Unlike the estate tax, the gift tax is not scheduled to be repealed. In general, in 2005, 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 (but not the gift 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. If the estate tax is reinstated and Congress has not acted further, the size of estates that will not incur an estate tax will revert to $1 million. 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 2005, 47%, decreasing by 1 percentage point each year until 2007, when it will be 45%), and there is a provision for an aggregate $1 million exemption. The GSTT estate tax is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the GSTT tax is scheduled to be reinstated on January 1, 2011 at a rate of 55%. State and Local Taxes. State and local estate, inheritance, income and other tax consequences of ownership or receipt of Policy Proceeds depend on the circumstances of each policy owner or beneficiary. While these taxes may or may not be substantial in your case, the specific nature of these taxes preclude a useful description of them in this prospectus. - -------------------------------- ----------------------------------------------- BUYING THE POLICY Note to Non-Resident Aliens. Specific tax laws and rules apply to non-resident aliens of the United States including certain withholding requirements with respect to pre-death distributions from the policy. In addition, foreign law may impose additional taxes on the policy, the Death Benefit, or other distributions and/or ownership of the policy. If you are a non-resident alien, you should confer with a competent tax professional with respect to the tax treatment of this policy. 57 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 (such as where the premium is paid by someone other than 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. - -------------------------------- ----------------------------------------------- INVESTMENT GAIN IN THE POLICY The income tax treatment of changes in the policy's Cash Value depends on whether the policy is "life insurance" under the Code. If the policy meets the definition of life insurance, then the increase in the policy's Cash Value is not included in your taxable income for federal income tax purposes. To qualify as life insurance, the policy must meet certain tests set out in Section 7702 of the Code. For more information, see "The Minimum Required Death Benefit," beginning on page 49. 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 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 58 compliance. We will also monitor the Policy's compliance with Code Section 7702. Thus, the policy should receive federal income tax treatment as life insurance. - -------------------------------- ----------------------------------------------- PERIODIC WITHDRAWALS, NON-PERIODIC WITHDRAWALS AND LOANS The tax treatment described in this section applies to withdrawals and loans you choose to take from the policy. It also applies to Premiums we accept but then return to meet the Code's definition of life insurance. For more information, see "The Minimum Required Death Benefit," beginning on page 49. 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 the transaction, the Premiums paid into the policy. In addition, a 10% tax penalty generally applies to the taxable portion of such distributions unless the policy owner is over age 59 1/2, disabled, or the distribution is part of a series of substantially equal periodic payments as defined in the Code. When the Policy is Life Insurance that is NOT a Modified Endowment Contract. If the policy is not issued as a modified endowment contract, Nationwide will monitor Premiums paid and will notify the policy owner when the policy is in jeopardy of becoming a modified endowment contract. If a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued which causes a reduction in Death Benefits may still become fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Code. You should carefully consider this potential tax ramification and seek further information before initiating any changes in the terms of the policy. 59 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," or a "chronically ill individual," as those terms are 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 61. - -------------------------------------------------------------------------------- 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 backup withholding. Mandatory backup withholding means we are required to withhold taxes on a distribution, at the rate established by Section 3406 of the Code, and the recipient cannot elect to receive the entire distribution at once. Mandatory backup withholding may arise if we have not been provided a taxpayer identification number, or if the IRS notifies us that back-up withholding is required. In certain employer-sponsored life insurance arrangements, participants may be required to report for income tax purposes, one or more of the following: >the value each year of the life insurance protection provided; >an amount equal to any employer-paid Premiums; >some or all of the amount by which the current value exceeds the employer's interest in the policy; or >interest that is deemed to have been forgiven on a loan that was deemed to have been made by the employer. 60 Participants in an employer sponsored plan relating to this policy should consult with the sponsor or the administrator of the plan, and/or with their personal tax or legal adviser, to determine the tax consequences, if any, of their employer-sponsored life insurance arrangements. - -------------------------------- ----------------------------------------------- EXCHANGING THE POLICY FOR ANOTHER LIFE INSURANCE POLICY As described in the section "Surrenders," you ordinarily will pay taxes on amounts that you receive in excess of your Premium payments when you completely surrender the policy. If, however, you exchange the policy for another life insurance policy, a modified endowment contract or an annuity contract, you will not be taxed on the excess amount if the exchange meets the requirements of Code Section 1035. To meet Section 1035 requirements, the Insured named in the policy must be the Insured for the new policy or contract. Also, the new policy or contract cannot extend the Maturity Date of the policy or otherwise delay a distribution that would extend when tax would be payable under the policy. Generally, the new policy or contract will be treated as having the same date of issue and tax basis as the old contract. - -------------------------------- ----------------------------------------------- SPECIAL NOTE REGARDING THE A POLICY SPLIT OPTION RIDER Policy Split Option Rider is available for this Policy. This Rider permits you, under certain circumstances, to make a "policy split," resulting in two policies. Each of the policies will have as the Insured one of the Insureds. Existing tax law is unclear as to whether a policy split will be treated as a nontaxable exchange. If it is not treated as a nontaxable exchange, the result may be that you recognize taxable gain equal to the Policy's investment gain at the time of the policy split. Also, existing tax law is unclear as to whether the two policies resulting from a policy split will be treated as life insurance for federal tax purposes. If the resulting policies are life insurance for federal tax purposes, they may be treated as modified endowment contracts. You should consult with a tax adviser about the possible tax consequences associated with a policy split. - -------------------------------- ----------------------------------------------- TAXATION OF DEATH BENEFITS Federal Income Tax. The amount of the Death Benefit payable under a policy generally is excludable from gross income of the beneficiary under Section 101 of the Code. However, if the policy is transferred to a new owner for valuable consideration, then a portion of the Death Benefit may be includable in the beneficiary's gross income when it is paid. 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 61 liability. If the owner of the contract is not the Insured or the beneficiary, payment of the death benefit to the beneficiary will be treated as a gift by the owner to the beneficiary. - -------------------------------- ----------------------------------------------- TAXES AND THE VALUE OF YOUR POLICY As discussed in "Charges," the Accumulation Units you hold in the separate account are adjusted to reflect a Premium Tax charge for certain taxes assessed by federal and state taxing authorities. This charge relates to taxes associated with the payment of Premium or certain other policy acquisition costs. This charge decreases your Accumulation Unit values. For federal income tax purposes, the separate account is not a separate entity from Nationwide Life Insurance Company. Thus, the tax status of the separate account is not distinct from our status as a life insurance company. Investment income and realized capital gains on the assets of the separate account are reinvested and taken into account in determining the value of Sub-Account Accumulation Units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the policies. At present, we do not initially expect to incur any federal income tax liability that would be chargeable to the Accumulation Units you hold in the separate account. Based upon these expectations, no charge is currently being made against your Accumulation Units in the separate account for federal income taxes. If, however, we determine that taxes may be incurred, we reserve the right to assess a charge for taxes. We may also incur state and local taxes (in addition to those described in the discussion of the Premium Taxes) in several states. At present, these taxes are not significant. If they increase, however, charges for such taxes may be made that would decrease the value of your Accumulation Units in the separate account. - -------------------------------- ----------------------------------------------- TAX CHANGES The foregoing discussion, which is based on our understanding of federal tax laws as currently interpreted by the IRS, is general and is not intended as tax advice. The Code has been subjected to numerous amendments and changes, and it is reasonable to believe that it will continue to be revised. The United States Congress has, in the past, considered numerous legislative proposals that, if enacted, could change the tax treatment of the policies. It is reasonable to believe that such proposals, and future proposals, may be enacted into law. The U.S. Treasury Department may amend existing regulations, issue new regulations, or adopt new interpretations of existing law that may be at variance with its current positions on these matters. In addition, current state law (which is not discussed herein), and future amendments to state law, may affect the tax consequences of the policy. 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, 62 payment of the Death Benefit, or other distributions and/or ownership of the policy, or a treaty may be amended and all or part of the favorable treatment may be eliminated. Any or all of the foregoing may change from time to time without any notice, and the tax consequences arising out of a policy may be changed retroactively. There is no way of predicting if, when, or to what extent any such change may take place. We make no representation as to the likelihood of the continuation of these current laws, interpretations, and policies. In 2001, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) was enacted into law. EGTRRA contained numerous changes to the federal income, gift, estate and generation skipping transfer taxes, many of which are not scheduled to become effective until a future date. Among other matters, EGTRRA provides for the repeal of the federal estate and generation skipping transfer taxes after 2009; however, unless Congress and the President enact additional legislation, EGTRRA also provides that all of those changes will "sunset" after 2010, and the estate and generation skipping transfer taxes will be reinstated as if EGTRRA had never been enacted. The foregoing is a general explanation as to certain tax matters pertaining to insurance policies. It is not intended to be legal or tax advice. You should consult your independent legal, tax and/or financial adviser. - -------------------------------------------------------------------------------- NATIONWIDE LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- We are a stock life insurance company organized under Ohio law. We were founded in March, 1929 and our Home Office is One Nationwide Plaza, Columbus, Ohio 43215. We provide long-term savings products by issuing life insurance, annuities and other retirement products. - -------------------------------------------------------------------------------- NATIONWIDE VLI SEPARATE ACCOUNT-4 - -------------------------------------------------------------------------------- - -------------------------------- ----------------------------------------------- ORGANIZATION, REGISTRATION AND OPERATION Nationwide VLI Separate Account-4 is a separate account established under Ohio law. We own the assets in this account, and we are obligated to pay all benefits under the policies. We may use the account to support other variable life insurance policies we issue. It is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 ("1940 Act") and qualifies as a "separate account" within the meaning of the federal securities laws. This registration, however, does not involve the SEC's supervision of this account's management or investment practice or policies. It is divided into Sub-Accounts that may invest in shares of the available Sub-Account portfolios. We buy and sell the Sub-Account portfolio shares at NAV. Any dividends and distributions from a Sub-Account portfolio are reinvested at NAV in shares of that Sub-Account portfolio. 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 63 account. We may not use the separate account's assets to pay any of our liabilities other than those arising from the policies. If the separate account's assets exceed the required reserves and its other liabilities, we may transfer the excess to our general account. The separate account may include other Sub-Accounts that are not available under the policies, and are not discussed in this prospectus. If investment in the mutual funds or a particular portfolio is no longer possible, in our judgment becomes inappropriate for the purposes of the policy, or for any other reason in our sole discretion, we may substitute another mutual fund or portfolio without your consent. The substituted mutual fund or portfolio may have different fees and expenses. Substitution may be made with respect to existing investments or the investments of future Premium, or both. We will comply with federal securities laws to effect a substitution. Furthermore, we may close Sub-Accounts to allocations of Premiums or policy value, or both, at any time in our sole discretion. The mutual funds, which sell their shares to the Sub-Accounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the Sub-Accounts. In addition, we reserve the right to make other structural and operational changes affecting this separate account. WE DO NOT GUARANTEE ANY MONEY YOU PLACE IN THIS SEPARATE ACCOUNT. THE VALUE OF EACH SUB-ACCOUNT WILL INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE CORRESPONDING PORTFOLIO. YOU COULD LOSE SOME OR ALL OF YOUR MONEY. - -------------------------------------------------------------------------------- ADDITION, DELETION, OR SUBSTITUTION OF MUTUAL FUNDS Where permitted by applicable law, we reserve the right to: >remove, combine, or add Sub-Accounts and make new Sub-Accounts available; >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, at any time; >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. - -------------------------------------------------------------------------------- VOTING RIGHTS Unless there is a change in existing law, we will vote our shares only as you instruct on all matters submitted to shareholders of the portfolios. 64 Before a vote of a portfolio's shareholders occurs, you will have the right to instruct us based on the number of portfolio shares that corresponds to the amount of policy account value you have in the portfolio (as of a date set by the portfolio). We will vote shares for which no instructions are received in the same proportion as those that are received. The number of shares which a policy owner may vote is determined by dividing the Cash Value of the amount they have allocated to an underlying mutual fund by the NAV of that underlying mutual fund. We will designate a date for this determination not more than 90 days before the shareholder meeting. - -------------------------------------------------------------------------------- LEGAL PROCEEDINGS - -------------------------------------------------------------------------------- - -------------------------------- ----------------------------------------------- NATIONWIDE LIFE INSURANCE COMPANY Nationwide is a party to litigation and arbitration proceedings in the ordinary course of its business. It is not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses. Some of the matters referred to below are in very preliminary stages, and Nationwide does not have sufficient information to make an assessment of plaintiffs' claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, that are difficult to quantify and cannot be defined based on the information currently available. Nationwide does not believe, based on information currently known by Nationwide's management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on Nationwide's consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on Nationwide's consolidated financial results in a particular quarterly or annual period. 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. The financial services industry, including mutual fund, variable annuity, life insurance and distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past two years. Numerous regulatory agencies, including the SEC, the NASD and the New York State 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 and life insurance companies on those issues. Nationwide has been contacted by the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered 65 in insurance products sponsored by Nationwide. Nationwide is cooperating with this investigation and is responding to information requests. In addition, state and federal regulators have commenced investigations or other proceedings relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales by producers on behalf of either the issuer or the purchaser. Also under investigation are compensation arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates. Related investigations and proceedings may be commenced in the future. Nationwide has been contacted by regulatory agencies and state attorneys general for information relating to these investigations into compensation and bidding arrangements, anti-competitive activities and unsuitable sales practices. Nationwide is cooperating with regulators in connection with these inquiries. Nationwide Mutual Insurance Company ("NMIC"), Nationwide's ultimate parent, has been contacted by certain regulators for information on these issues with respect to its operations and the operations of its subsidiaries, including Nationwide. Nationwide will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass its operations. These proceedings are expected to continue in the future, and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including life insurance and annuity companies. These proceedings could also affect the outcome of one or more of Nationwide's litigation matters. On April 13, 2004, Nationwide was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. The plaintiff purports to represent a class of persons in the United States who, through their ownership of a Nationwide annuity or insurance product, held units of any Nationwide sub-account invested in mutual funds which included foreign securities in their portfolios and which allegedly experienced market timing trading activity. The complaint contains allegations of negligence, reckless indifference and breach of fiduciary duty. The plaintiff seeks to recover compensatory and punitive damages in an amount not to exceed $75,000 per plaintiff or class member. Nationwide removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. The plaintiffs moved to remand on June 28, 2004. On July 12, 2004, Nationwide filed a memorandum opposing remand and requesting a stay pending the resolution of an unrelated case covering similar issues, which is an appeal from a decision of the same District Court remanding a removed market timing case to an Illinois state court. On July 30, 2004, the U.S. District Court granted Nationwide's request for a stay pending a decision by the Seventh Circuit on the unrelated case mentioned above. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding there entitled In Re Mutual Funds Investment Litigation. This lawsuit is in a preliminary stage, and Nationwide intends to defend it vigorously. On January 21, 2004, Nationwide was named in a lawsuit filed in the United States District Court for the Northern District of Mississippi entitled United 66 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, plaintiff United Investors alleges that Nationwide and/or its affiliated life insurance companies caused the replacement of variable insurance policies and other financial products issued by United Investors with policies issued by the Nationwide defendants. The plaintiff raises claims for (1) violations of the Federal Lanham Act, and common law unfair competition and defamation, (2) tortious interference with the plaintiff's contractual relationship with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W&R Insurance Agency, Inc., or with the plaintiff's contractual relationships with its variable policyholders, (3) civil conspiracy, and (4) breach of fiduciary duty. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, a constructive trust, and costs and disbursements, including attorneys' fees. Nationwide filed a motion to dismiss the complaint on June 1, 2004. On February 8, 2005 the court denied the motion to dismiss. Nationwide intends to defend this lawsuit vigorously. On October 31, 2003, Nationwide was named in a lawsuit seeking class action status filed in the United States District Court for the District of Arizona entitled Robert Helman et al v. Nationwide Life Insurance Company et al. The suit challenges the sale of deferred annuity products for use as investments in tax-deferred contributory retirement plans. On April 8, 2004, the plaintiff filed an amended class action complaint on behalf of all persons who purchased an individual variable deferred annuity contract or a certificate to a group variable annuity contract issued by Nationwide or Nationwide Life and Annuity Insurance Company which were allegedly used to fund certain tax-deferred retirement plans. The amended class action complaint seeks unspecified compensatory damages. Nationwide filed a motion to dismiss the complaint on May 24, 2004. On July 27, 2004, the court granted Nationwide's motion to dismiss. The plaintiff has appealed that dismissal to the United States Court of Appeals for the Ninth Circuit. Nationwide intends to defend this lawsuit vigorously. On May 1, 2003, Nationwide was named in a class action lawsuit filed in the United States District Court for the Eastern District of Louisiana entitled 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. The 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 Nationwide's expense charges under the contracts were fixed. The 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. The plaintiff seeks compensatory damages and rescission on behalf of himself and a class of persons who purchased this type of annuity or similar 67 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 District Court on October 28, 2003. The plaintiff appealed that dismissal to the United States Court of Appeals for the Fifth Circuit. On November 22, 2004, the Fifth Circuit Court of Appeals affirmed the judgment of the District Court dismissing the complaint. The time for further appeal by the plaintiff has expired. On August 15, 2001, Nationwide was named in a lawsuit filed in the United States District Court for the District of Connecticut entitled 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 5, 2001 to include class action allegations and have subsequently amended their complaint three times. As amended, in the current complaint the plaintiffs seek to represent a class of ERISA qualified retirement plans that purchased variable annuities from Nationwide. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that Nationwide breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by Nationwide, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys' fees. On December 13, 2001, the plaintiffs filed a motion for class certification. The plaintiffs filed a supplement to that motion on September 19, 2003. Nationwide opposed that motion on December 24, 2003. On July 6, 2004, Nationwide filed a Revised Memorandum in Support of Summary Judgment. The plaintiffs have opposed that motion. Nationwide intends to defend this lawsuit vigorously. - -------------------------------- ----------------------------------------------- - -------------------------------- ----------------------------------------------- NATIONWIDE INVESTMENT SERVICES CORPORATION Nationwide Investment Services Corporation (NISC) is not engaged in any litigation of a material nature. - -------------------------------------------------------------------------------- FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Statement of Additional Information (SAI) contains consolidated financial statements of Nationwide Life Insurance Company and subsidiaries and financial statements of 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 consolidated financial statements of the company and subsidiaries from the financial statements of the separate account. Please consider the consolidated financial statements of the company only as bearing on our ability to meet the obligations under the policy. You should not consider the consolidated financial statements of the company and subsidiaries as affecting the investment performance of the assets of the separate account. 68 - -------------------------------------------------------------------------------- APPENDIX A: DEFINITIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ACCUMULATION UNIT - The measure of your investment in, or share of, a Sub-Account after we deduct for transaction fees and periodic charges. Initially, we set the Accumulation Unit value at $10 for each Sub-Account. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ATTAINED AGE - The Insured's age upon the issue of full base insurance coverage plus the number of full years since the Policy Date. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CASH SURRENDER VALUE - The policy's Cash Value subject to Indebtedness and the surrender charge. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CASH VALUE - The total of the Sub-Accounts you have chosen, which will vary with Investment Experience and the policy loan and fixed accounts, to which interest will be credited daily. We will deduct partial surrenders and the policy's periodic charges from the Cash Value. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CODE - The Internal Revenue Code of 1986, as amended. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEATH BENEFIT - The amount we will pay to the beneficiary upon the last surviving Insured's death, before payment of any unpaid outstanding loan balances or charges. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GRACE PERIOD - A 61-day period after which the Policy will Lapse if you do not make a sufficient payment. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GUIDELINE ANNUAL PREMIUM - The level annual premium amount that would be payable through maturity, assuming an investment return of 5% per annum, net of the policy's periodic charges, as described in Rule 6e-3(T)(c)(8)(i), promulgated under the Investment Company Act of 1940, though the SEC has neither approved nor disapproved the accuracy of any calculation using the Guideline Annual Premium. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOME OFFICE - Our Home Offices are located at One Nationwide Plaza, Columbus, Ohio 43215. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- IN FORCE - The insurance coverage is in effect. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INDEBTEDNESS - The total amount of all outstanding policy loans, including principal and interest due. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INSURED - The persons whose lives we insure under the policy. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-1 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 younger Insured's 100th birthday. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET AMOUNT AT RISK - The policy's Death Benefit, not including any supplemental insurance coverage, minus the policy's Cash Value. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSET VALUE (NAV) - The price 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 Accumulation Units. NAV does not reflect deductions we make for charges we take from Sub-Accounts. Accumulation Unit values do reflect these deductions. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET PREMIUM - Premium after transaction charges, but before any allocation to an investment option. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- POLICY CONTINUATION PREMIUM AMOUNT - The amount of Premium, on a monthly basis from the Policy Date, stated on the Policy Data Page, that you must pay, in the aggregate, to keep the policy In Force under the Guaranteed policy continuation provision; however, this amount does not account for any increases in the Specified Amount, policy loans or partial surrenders, so you should anticipate paying more if you intend to request an increase in Specified Amount; take a policy loan; or request a partial surrender. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- POLICY DATA PAGE(S) - The Policy Data Page contains more detailed information about the policy, some of which is unique and particular to the owner, the beneficiary and the Insureds. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PREMIUM LOAD - The aggregate of the sales load and premium tax charges. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-2 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 coverage the owner selects, including any supplemental coverage. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUB-ACCOUNTS - The mechanism we use to account for your allocations of Net Premium and Cash Value among the policy's variable investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- US, WE, OUR or the COMPANY - Nationwide Life Insurance Company. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- VALUATION PERIOD - The period during which we determine the change in the value of the Sub-Accounts. One Valuation Period ends and another begins with the close of normal trading on the New York Stock Exchange. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- YOU, YOUR or the POLICY OWNER OR OWNER - The person named as the owner in the application, or the person assigned ownership rights. - -------------------------------------------------------------------------------- A-3 OUTSIDE BACK COVER PAGE To learn more about this policy, you should read the Statement of Additional Information (the "SAI") dated the same date as this prospectus. For a free copy of the SAI, to receive personalized illustrations of Death Benefits, net Cash Surrender Values, and Cash Values, and to request other information about this policy please call our Service Center at 1-800-547-7548 (TDD: 1-800-238-3035) or write to us at our Service Center at Nationwide Life Insurance Company, One Nationwide Plaza, RR1-04-D4, Columbus, OH 43215-2220. The SAI has been filed with the SEC and is incorporated by reference into this prospectus. The SEC maintains an Internet website (http://www.sec.gov) that contains the SAI and other information about us and the policy. Information about us and the policy (including the SAI) may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., or may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 450 Fifth Street, NW, Washington, D.C. 20549-0102. Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 942-8090. Investment Company Act of 1940 Registration File No. 811-8301. NATIONWIDE VLI SEPARATE ACCOUNT-4 (REGISTRANT) NATIONWIDE LIFE INSURANCE COMPANY (DEPOSITOR) One Nationwide Plaza, RR1-04-D4 Columbus, OH 43215-2220 1-800-547-7548 TDD: 1-800-238-3035 STATEMENT OF ADDITIONAL INFORMATION LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES This Statement of Additional Information ("SAI") contains additional information regarding the last survivor flexible premium variable universal life insurance policy offered by us, Nationwide Life Insurance Company ("Nationwide"). This SAI is not a prospectus and should be read together with the policy prospectus dated May 1, 2005 and the prospectuses for the available Sub-Account Portfolios. You may obtain a copy of these prospectuses by writing or calling us at our address or phone number shown above. The date of this Statement of Additional Information is May 1, 2005. SAI-1 TABLE OF CONTENTS NATIONWIDE LIFE INSURANCE COMPANY NATIONWIDE VLI SEPARATE ACCOUNT-4 NATIONWIDE INVESTMENT SERVICES CORPORATION SERVICES UNDERWRITING PROCEDURE ILLUSTRATIONS ADVERTISING TAX DEFINITION OF LIFE INSURANCE FINANCIAL STATEMENTS SAI-2 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 (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%), 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 $157 billion as of December 31, 2004. NATIONWIDE VLI SEPARATE ACCOUNT-4 Nationwide VLI Separate Account-4 is a separate account that invests in mutual funds offered and sold to insurance companies and certain retirement plans. We established the separate account on December 3, 1987 pursuant to Ohio law. Although the separate account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 the SEC does not supervise our management or the management of the variable account. We serve as the custodian of the assets of the variable account. NATIONWIDE INVESTMENT SERVICES CORPORATION The policies are distributed by Nationwide Investment Services Corporation (NISC), One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide. For contracts issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation. The policies will be sold on a continuous basis by licensed insurance agents in those states where the policies may lawfully be sold. Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 who are member firms of the National Association of Securities Dealers, Inc. (NASD). Gross first year commissions plus any expense allowance payments paid by Nationwide on the sale of these policies provided by NISC will not exceed 75% of the target premium plus 5% of any Premium payments in excess of the target premium. The target premium is used to determine the amount of commissions paid to the producer for a given policy. We pay gross renewal commissions in years 2 through 10 on the sale of the policies provided by NISC that will not exceed 4% of actual Premium payment, and that will not exceed 2% in policy years 11 and thereafter. We have paid no underwriting commissions to NISC for each of this separate account's last three fiscal years. SERVICES We have responsibility for administration of the policies and the variable account. We also maintain the records of the name, address, taxpayer identification number, and other pertinent information for each policy owner and the number and type of policy issued to each policy owner and records with respect to the policy value of each policy. We are the custodian of the assets of the variable account. We will maintain a record of all purchases and redemption of shares of the mutual funds. We or our affiliates may have entered into agreements with either the investment adviser or distributor for the mutual funds. The agreements relate to administrative services we or our affiliate furnish. Some of the services provided include distribution of underlying fund prospectuses, semi-annual and annual fund reports, proxy materials and fund communications, as well as SAI-3 maintaining the websites and voice response systems necessary for contract owners to execute trades in the funds. We also act as a limited agent for the fund for purposes of accepting the trades. For these services the funds agree to pay us an annual fee based on the average aggregate net assets of the variable account (and other separate accounts of Nationwide or life insurance company subsidiaries of Nationwide) invested in the particular fund. We take these anticipated fee payments into consideration when determining the expenses necessary to support the policies. Without these payments, policy charges would be higher. Only those funds that agree to pay us a fee will be offered in the policy. Generally, we expect to receive somewhere between 0.10% to 0.45% (an annualized rate of the daily net assets of the variable account) from the funds offered in the policies. What is actually received depends upon many factors, including but not limited to the type of fund (i.e., money market funds generally pay less revenue than other fund types) and the actual services rendered to the fund company. The financial statements of Nationwide VLI Separate Account-4 and the consolidated financial statements of Nationwide Life Insurance Company and subsidiaries for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, 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, 2004 consolidated financial statements of Nationwide Life Insurance Company and subsidiaries contains an explanatory paragraph that states that Nationwide Life Insurance Company and subsidiaries adopted the American Institute of Certified Public Accountants' Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts in 2004. KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215. UNDERWRITING PROCEDURE We underwrite the policies issued through Nationwide VLI Separate Account-4. The policy's cost of insurance depends upon each Insured's sex, issue age, risk class, and length of time the policy has been In Force. The rates will vary depending upon tobacco use and other risk factors. Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO). The mortality table is sex distinct. In addition, separate mortality tables will be used for tobacco and non-tobacco. We may deduct a "flat extra," which is an additional constant charge per $1,000 of Specified Amount for certain activities or medical conditions of the Insureds. We apply that same flat extra to all Insureds who engage in the same activity or have the same medical condition, irrespective of sex, issue age, underwriting class, or any substandard ratings. The rate class of an insured may affect the cost of insurance rate. We currently place insureds into both standard rate classes and substandard rate classes that involve a higher mortality risk. In an otherwise identical policy, an insured in the standard rate class will have a lower cost of insurance than an insured in a rate class with higher mortality risks. Any change in the cost of insurance rates will apply to all insureds of the same age, gender, risk class and whose policies have been in effect for the same length of time. Decreases may be reflected in the cost of insurance rate, as discussed earlier. The actual charges made during the policy year will be shown in the annual report delivered to policy owners. ILLUSTRATIONS Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the Insureds' ages and premium classes, the Death Benefits option, face amount, planned periodic Premiums, and Riders requested. We reserve the right to charge a reasonable fee of no more than $25 for this service to persons who request more than one policy illustration during a policy year. SAI-4 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 each test. GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST TABLE OF APPLICABLE PERCENTAGES OF CASH VALUE - ----------------------------------------- ATTAINED AGE OF PERCENTAGE OF CASH YOUNGER INSURED VALUE - ----------------------------------------- - ----------------------------------------- 0-40 250% - ----------------------------------------- - ----------------------------------------- 41 243% - ----------------------------------------- - ----------------------------------------- 42 236% - ----------------------------------------- - ----------------------------------------- 43 229% - ----------------------------------------- - ----------------------------------------- 44 222% - ----------------------------------------- - ----------------------------------------- 45 215% - ----------------------------------------- - ----------------------------------------- 46 209% - ----------------------------------------- - ----------------------------------------- 47 203% - ----------------------------------------- - ----------------------------------------- 48 197% - ----------------------------------------- - ----------------------------------------- 49 191% - ----------------------------------------- - ----------------------------------------- 50 185% - ----------------------------------------- - ----------------------------------------- SAI-5 - ----------------------------------------- ATTAINED AGE OF PERCENTAGE OF CASH YOUNGER INSURED VALUE - ----------------------------------------- 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% - ----------------------------------------- SAI-6 Cash Value Accumulation Test The Cash Value Accumulation Test also requires the Death Benefit to exceed an applicable percentage of the Cash Value. These applicable percentages are calculated by determining net single premiums, as defined in Code Section 7702(b), for each policy year given a set of actuarial assumptions. The relevant material assumptions include an interest rate of 4% and 1980 CSO guaranteed mortality as prescribed in Internal Revenue Code Section 7702 for the Cash Value Accumulation Test. The resulting net single premiums are then inverted (i.e., multiplied by 1/net single premium) to give the applicable Cash Value percentages. These premiums vary with the ages, sexes, and risk classifications of the Insureds. The table below provides an example of applicable percentages for the Cash Value Accumulation Test. This example is for a male non-tobacco preferred issue age 55 and a female non-tobacco preferred issue age 55. - ---------------------------------------- POLICY PERCENTAGE OF YEAR CASH VALUE - ---------------------------------------- - ---------------------------------------- 1 302% - ---------------------------------------- - ---------------------------------------- 2 290% - ---------------------------------------- - ---------------------------------------- 3 279% - ---------------------------------------- - ---------------------------------------- 4 269% - ---------------------------------------- - ---------------------------------------- 5 259% - ---------------------------------------- - ---------------------------------------- 6 249% - ---------------------------------------- - ---------------------------------------- 7 240% - ---------------------------------------- - ---------------------------------------- 8 231% - ---------------------------------------- - ---------------------------------------- 9 223% - ---------------------------------------- - ---------------------------------------- 10 215% - ---------------------------------------- - ---------------------------------------- 11 207% - ---------------------------------------- - ---------------------------------------- 12 200% - ---------------------------------------- - ---------------------------------------- 13 193% - ---------------------------------------- - ---------------------------------------- 14 186% - ---------------------------------------- - ---------------------------------------- 15 180% - ---------------------------------------- - ---------------------------------------- 16 174% - ---------------------------------------- - ---------------------------------------- 17 169% - ---------------------------------------- - ---------------------------------------- 18 164% - ---------------------------------------- - ---------------------------------------- 19 159% - ---------------------------------------- - ---------------------------------------- 20 154% - ---------------------------------------- - ---------------------------------------- 21 150% - ---------------------------------------- - ---------------------------------------- 22 146% - ---------------------------------------- - ---------------------------------------- 23 142% - ---------------------------------------- - ---------------------------------------- 24 139% - ---------------------------------------- - ---------------------------------------- 25 136% - ---------------------------------------- - ---------------------------------------- 26 133% - ---------------------------------------- - ---------------------------------------- 27 130% - ---------------------------------------- - ---------------------------------------- 28 127% - ---------------------------------------- - ---------------------------------------- 29 125% - ---------------------------------------- - ---------------------------------------- 30 123% - ---------------------------------------- - ---------------------------------------- 31 121% - ---------------------------------------- - ---------------------------------------- 32 119% - ---------------------------------------- - ---------------------------------------- 33 118% - ---------------------------------------- - ---------------------------------------- 34 116% - ---------------------------------------- - ---------------------------------------- 35 115% - ---------------------------------------- - ---------------------------------------- 36 113% - ---------------------------------------- - ---------------------------------------- 37 112% - ---------------------------------------- SAI-7 - ---------------------------------------- POLICY PERCENTAGE OF YEAR CASH VALUE - ---------------------------------------- - ---------------------------------------- 38 111% - ---------------------------------------- - ---------------------------------------- 39 110% - ---------------------------------------- - ---------------------------------------- 40 108% - ---------------------------------------- - ---------------------------------------- 41 107% - ---------------------------------------- - ---------------------------------------- 42 106% - ---------------------------------------- - ---------------------------------------- 43 104% - ---------------------------------------- - ---------------------------------------- 44 103% - ---------------------------------------- - ---------------------------------------- 45 102% - ---------------------------------------- SAI-8 Report of Independent Registered Public Accounting Firm 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, 2004, 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2004, 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, 2004, and the results of its operations, changes in contract owners' equity, and financial highlights for each of the periods indicated herein, in conformity with U.S. generally accepted accounting principles. KPMG LLP Columbus, Ohio March 4, 2005 NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY December 31, 2004
Assets: Investments at fair value: AIM VIF - Basic Value Fund - Series I Shares (AIMBValue) 542,954 shares (cost $5,940,249) ................................................. $ 6,428,574 AIM VIF - Capital Appreciation Fund - Series I Shares (AIMCapAp) 33,540 shares (cost $696,620) .................................................... 761,026 AIM VIF - Capital Development Fund - Series I Shares (AIMCapDev) 232,046 shares (cost $3,001,201) ................................................. 3,406,429 AIM VIF - International Growth Fund - Series I Shares (AIMIntGr) 183,842 shares (cost $3,489,370) ................................................. 3,634,550 Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A (AlVPGrIncA) 625,145 shares (cost $13,178,533) ................................................ 15,053,490 Alliance VPSF - Alliance Bernstein Small Cap Value Portfolio - Class A (AlVPSmCapVA) 177,050 shares (cost $2,669,485) ................................................. 2,981,530 American Century VP - Income & Growth Fund - Class I (ACVPIncGr) 4,159,629 shares (cost $23,766,795) .............................................. 30,448,486 American Century VP - Inflation Protection Fund - Class II (ACVPInflaPro) 474,221 shares (cost $4,940,081) ................................................. 5,003,027 American Century VP - International Fund - Class I (ACVPInt) 7,410,584 shares (cost $43,966,927) .............................................. 54,467,791 American Century VP - Ultra/(R)/ Fund - Class I (ACVPUltra) 612,131 shares (cost $5,664,088) ................................................. 6,219,256 American Century VP - Value Fund - Class I (ACVPVal) 7,753,351 shares (cost $53,360,551) .............................................. 67,841,825 Baron Capital Funds Trust - Baron Capital Asset Fund:Insurance Shares (BCFTCpAsset) 458,109 shares (cost $10,649,202) ................................................ 12,391,853 Calvert VS - Social Equity Portfolio (CVSSoEq) 6,246 shares (cost $98,120) ...................................................... 105,813 Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSGPVen) 81,516 shares (cost $677,843) .................................................... 908,906 Credit Suisse Trust - International Focus Portfolio (CSIntFoc) 183,570 shares (cost $1,456,545) ................................................. 1,844,874 Credit Suisse Trust - Large Cap Value Portfolio (CSLCapV) 164,377 shares (cost $2,022,400) ................................................. 2,202,652 Dreyfus IP - Mid Cap Stock Portfolio - Service Shares (DryMidCapStS) 75,821 shares (cost $1,230,545) .................................................. 1,335,969 Dreyfus IP - Small Cap Stock Index Portfolio - Service Class (DrySmCapIxS) 1,384,364 shares (cost $19,642,507) .............................................. 21,582,234 Dreyfus Socially Responsible Growth Fund, Inc., The (DrySRGro) 667,763 shares (cost $16,522,280) ................................................ 16,807,601 Dreyfus Stock Index Fund, Inc.- Initial Shares (DryStkIx) 11,870,555 shares (cost $320,242,824) ............................................ 366,681,451 Dreyfus VIF - Appreciation Portfolio - Initial Shares (DryVIFApp) 901,578 shares (cost $28,745,194) ................................................ 32,060,119
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued
Dreyfus VIF - Developing Leaders Portfolio - Initial Shares (DryVIFDevLd) 21,856 shares (cost $846,212) .......................................................... $ 908,123 Dreyfus VIF - International Value Portfolio - Initial Shares (DryVIFIntVal) 2,008,105 shares (cost $27,618,249) .................................................... 31,828,458 Federated IS - American Leaders Fund II - Primary Shares (FedAmLead) 15,023 shares (cost $275,202) .......................................................... 310,531 Federated IS - Capital Appreciation Fund II - Primary Shares (FedCapAp) 62,458 shares (cost $344,710) .......................................................... 364,129 Federated IS - Quality Bond Fund II - Primary Shares (FedQualBd) 8,172,393 shares (cost $92,972,356) .................................................... 95,371,826 Fidelity/(R)/VIP - Equity-Income Portfolio - Service Class (FidVIPEIS) 3,975,584 shares (cost $82,285,882) .................................................... 100,502,772 Fidelity/(R)/VIP - Growth Portfolio - Service Class (FidVIPGrS) 3,598,124 shares (cost $109,085,851) ................................................... 114,708,199 Fidelity/(R)/VIP - High Income Portfolio - Service Class (FidVIPHIS) 5,024,434 shares (cost $32,006,506) .................................................... 35,020,306 Fidelity/(R)/VIP - Overseas Portfolio - Service Class (FidVIPOvS) 2,463,192 shares (cost $36,824,470) .................................................... 42,958,076 Fidelity/(R)/VIP II - Contrafund/(R)/ Portfolio - Service Class (FidVIPConS) 4,477,514 shares (cost $92,009,248) .................................................... 118,788,457 Fidelity/(R)/VIP II - Investment Grade Bond Portfolio:Service Class (FidVIPIGBdS) 284,702 shares (cost $3,687,087) ....................................................... 3,752,376 Fidelity/(R)/VIP III - Growth Opportunities Portfolio - Service Class (FidVIPGrOpS) 1,047,556 shares (cost $14,891,569) .................................................... 16,813,268 Fidelity/(R)/VIP III - Mid Cap Portfolio - Service Class (FidVIPMCapS) 251,969 shares (cost $6,514,520) ....................................................... 7,576,718 Fidelity/(R)/VIP III - Value Strategies Portfolio - Service Class (FidVIPValS) 428,765 shares (cost $5,505,027) ....................................................... 6,041,295 Franklin Templeton VIP - Franklin Rising Dividends Securities Fund - Class I (FrVIPRisDiv) 490,511 shares (cost $8,055,335) ....................................................... 8,706,573 Franklin Templeton VIP - Franklin Small Cap Value Securities Fund - Class I (FTVIPSmCpVal) 248,236 shares (cost $3,396,085) ....................................................... 3,934,544 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 (FrVIPForSec2) 838,496 shares (cost $10,139,528) ...................................................... 12,032,424 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class I (FrVIPForSec) 283,939 shares (cost $3,579,142) ....................................................... 4,125,638 Gartmore GVIT Comstock Value Fund - Class I (GVITCVal) 1,026,355 shares (cost $9,496,948) ..................................................... 11,833,870 Gartmore GVIT Dreyfus International Value Fund - Class I (GVITDryIntVal) 302,783 shares (cost $4,264,475) ....................................................... 4,717,358 Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I (GVITDMidCapI) 3,974,186 shares (cost $53,046,041) .................................................... 65,971,486 Gartmore GVIT Emerging Markets Fund - Class I (GVITEmMrkts) 1,032,951 shares (cost $10,755,590) .................................................... 11,186,863 Gartmore GVIT Federated High Income Bond Fund - Class I (GVITFHiInc) 4,829,171 shares (cost $38,490,033) .................................................... 39,599,205 Gartmore GVIT Global Financial Services Fund - Class I (GVITGlFin1) 233,959 shares (cost $2,798,058) ....................................................... 2,999,352
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued
Gartmore GVIT Global Health Sciences Fund - Class I (GVITGlHlth) 464,398 shares (cost $4,794,708) ........................................... $ 4,964,414 Gartmore GVIT Global Technology and Communications Fund - Class I (GVITGlTech) 2,710,389 shares (cost $10,205,033) ........................................ 10,489,207 Gartmore GVIT Global Utilities Fund - Class I (GVITGlUtl1) 249,754 shares (cost $2,591,043) ........................................... 2,812,235 Gartmore GVIT Government Bond Fund - Class I (GVITGvtBd) 12,027,622 shares (cost $146,572,714) ...................................... 139,760,968 Gartmore GVIT Growth Fund - Class I (GVITGrowth) 1,482,290 shares (cost $13,806,610) ........................................ 15,949,437 Gartmore GVIT ID Aggressive Fund - Class II (GVITIDAgg) 1,137,197 shares (cost $11,554,240) ........................................ 13,100,509 Gartmore GVIT ID Conservative Fund - Class II (GVITIDCon) 780,355 shares (cost $7,955,942) ........................................... 8,154,711 Gartmore GVIT ID Moderate Fund - Class II (GVITIDMod) 2,901,423 shares (cost $29,436,961) ........................................ 32,670,021 Gartmore GVIT ID Moderately Aggressive Fund - Class II (GVITIDModAgg) 3,136,376 shares (cost $31,861,290) ........................................ 36,131,055 Gartmore GVIT ID Moderately Conservative Fund - Class II (GVITIDModCon) 1,274,789 shares (cost $12,922,587) ........................................ 13,907,950 Gartmore GVIT International Growth Fund - Class I (GVITIntGro) 261,843 shares (cost $1,685,258) ........................................... 1,874,798 Gartmore GVIT J.P.Morgan Balanced Fund - Class I (GVITJPBal) 2,101,092 shares (cost $17,928,708) ........................................ 20,968,897 Gartmore GVIT Mid Cap Growth Fund - Class I (GVITSMdCpGr) 1,184,195 shares (cost $24,337,096) ........................................ 29,296,976 Gartmore GVIT Money Market Fund - Class I (GVITMyMkt) 127,031,630 shares (cost $127,031,630) ..................................... 127,031,630 Gartmore GVIT Money Market Fund:Class V (GVITMyMkt5) 397,213,825 shares (cost $397,213,825) ..................................... 397,213,825 Gartmore GVIT Nationwide/(R)/ Fund: Class I (GVITNWFund) 21,879,179 shares (cost $201,691,450) ...................................... 243,515,259 Gartmore GVIT Nationwide/(R)/ Leaders Fund - Class I (GVITLead) 50,778 shares (cost $620,044) .............................................. 699,716 Gartmore GVIT Small Cap Growth Fund - Class I (GVITSmCapGr) 1,956,921 shares (cost $25,027,360) ........................................ 28,786,310 Gartmore GVIT Small Cap Value Fund - Class I (GVITSmCapVal) 7,360,818 shares (cost $72,656,190) ........................................ 92,893,526 Gartmore GVIT Small Company Fund - Class I (GVITSmComp) 3,904,696 shares (cost $73,610,384) ........................................ 89,651,814 Gartmore GVIT U.S. Growth Leaders Fund - Class I (GVITUSGro) 353,235 shares (cost $3,706,771) ........................................... 4,083,392 Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I (GVITVKMultiSec) 1,409,145 shares (cost $13,816,402) ........................................ 14,091,448 Gartmore GVIT Worldwide Leaders Fund - Class I (GVITWLead) 465,407 shares (cost $3,792,816) ........................................... 5,017,083 Goldman Sachs VIT - Mid Cap Value Fund (GSVITMidCap) 2,479,854 shares (cost $34,798,347) ........................................ 37,892,169
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued
Janus AS - Balanced Portfolio - Service Shares (JanBal) 326,874 shares (cost $7,641,038) ........................................... $ 8,250,298 Janus AS - Capital Appreciation Portfolio - Service Shares (JanCapAp) 1,740,451 shares (cost $33,395,230) ........................................ 42,449,589 Janus AS - Global Technology Portfolio - Service Shares (JanGlTech) 4,007,720 shares (cost $12,822,704) ........................................ 14,227,407 Janus AS - International Growth Portfolio - Service Shares (JanIntGro) 1,527,028 shares (cost $30,728,435) ........................................ 41,138,140 Janus AS - Risk-Managed Large Cap Core Portfolio - Service Shares (JanRMgLgCap) 25,029 shares (cost $335,351) .............................................. 340,150 MFS VIT - MFS Investors Growth Stock Series - Initial Class (MFSVITInvGrwI) 285,330 shares (cost $2,517,450) ........................................... 2,713,487 MFS VIT - MFS Value Series - Initial Class (MFSVITValIn) 84,802 shares (cost $917,019) .............................................. 1,028,644 Neuberger Berman AMT - Fasciano Portfolio - S Class Shares (NBAMTFasc) 181,846 shares (cost $2,339,097) ........................................... 2,514,928 Neuberger Berman AMT - Guardian Portfolio - I Class Shares (NBAMTGuard) 907,245 shares (cost $10,853,236) .......................................... 14,670,156 Neuberger Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat) 266,496 shares (cost $3,514,082) ........................................... 3,416,474 Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/- I Class (NBAMTMCGr) 2,435,948 shares (cost $32,568,686) ........................................ 43,432,944 Neuberger Berman AMT - Partners Portfolio (NBAMTPart) 1,210,134 shares (cost $17,467,752) ........................................ 22,169,660 Neuberger Berman AMT - Socially Responsive Portfolio - I Class (NBAMSocRes) 42,349 shares (cost $522,481) .............................................. 592,469 One Group/(R)/ IT Mid Cap Growth Portfolio (OGMidCapGr) 156,300 shares (cost $2,423,680) ........................................... 2,761,829 One Group/(R)/ IT Mid Cap Value Portfolio (OGMidCapV) 74,688 shares (cost $1,066,746) ............................................ 1,181,564 Oppenheimer Aggressive Growth Fund/VA - Initial Class (OppAggGro) 1,485,993 shares (cost $50,126,704) ........................................ 65,339,110 Oppenheimer Capital Appreciation Fund/VA - Initial Class (OppCapAp) 3,914,777 shares (cost $127,938,583) ....................................... 144,807,590 Oppenheimer Global Securities Fund/VA - Initial Class (OppGlSec) 2,044,874 shares (cost $45,933,804) ........................................ 60,344,220 Oppenheimer High Income Fund/VA - Initial Class (OppHighInc) 361,185 shares (cost $3,062,488) ........................................... 3,178,430 Oppenheimer Main Street/(R)/ Fund/VA - Initial Class (OppMSFund) 2,036,586 shares (cost $35,221,955) ........................................ 42,442,446 Oppenheimer Main Street/(R)/ Small Cap Fund/VA - Initial Class (OppMSSmCap) 115,537 shares (cost $1,595,311) ........................................... 1,854,372 PIMCO VIT - All Asset Portfolio - Administrative Shares (PVITAllAsset) 23,728 shares (cost $277,918) .............................................. 275,714 PIMCO VIT - Low Duration Portfolio - Administrative Shares (PIMLowDur) 4,655,465 shares (cost $47,935,816) ........................................ 47,951,292 PIMCO VIT - Real Return Portfolio - Administrative Shares (PIMRealRet) 1,453,864 shares (cost $18,598,639) ........................................ 18,783,919
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued
PIMCO VIT - Total Return Portfolio - Administrative Shares (PIMTotRet) 6,558,848 shares (cost $68,584,932) ................................ $ 68,933,493 Pioneer High Yield VCT Portfolio - Class I Shares (PVCTHiYield) 739,295 shares (cost $8,491,906) ................................... 8,627,574 Putnam VT - Growth & Income Fund - IB Shares (PVTGroInc) 37,890 shares (cost $871,396) ...................................... 963,918 Putnam VT - International Equity Fund - IB Shares (PVTIntEq) 108,718 shares (cost $1,397,687) ................................... 1,599,244 Putnam VT - Voyager II Fund - IB Shares (PVTVoyII) 12,294 shares (cost $314,423) ...................................... 334,410 Royce Capital Fund - Royce Micro-Cap Portfolio (RCFMicroCap) 2,325,853 shares (cost $26,017,200) ................................ 26,747,306 Strong Opportunity Fund II, Inc.(StOpp2) 1,658,616 shares (cost $27,422,077) ................................ 37,235,925 T.Rowe Price Equity Income Portfolio II (TRowEqInc2) 2,225,283 shares (cost $44,454,160) ................................ 49,646,068 T.Rowe Price Mid Cap Growth Fund II (TRowMidCap2) 1,378,384 shares (cost $27,588,065) ................................ 32,267,972 T.Rowe Price New America Growth Portfolio (TRowNewAmG) 134,931 shares (cost $2,620,250) ................................... 2,624,410 Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) 983,031 shares (cost $11,357,847) .................................. 14,951,903 Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs) 536,456 shares (cost $8,128,456) ................................... 9,849,324 Van Kampen UIF - Core Plus Fixed Income Portfolio - Class A (VKoreFI) 47,040 shares (cost $541,071) ...................................... 543,781 Van Kampen UIF - Emerging Markets Debt Portfolio (VKEmMkt) 1,126,341 shares (cost $9,545,980) ................................. 10,013,176 Van Kampen UIF - Mid Cap Growth Portfolio (VKMidCapG) 431,370 shares (cost $3,694,601) ................................... 4,468,996 Van Kampen UIF - U.S. Real Estate Portfolio - Class A (VKUSRealEst) 2,930,950 shares (cost $41,849,702) ................................ 60,025,862 --------------- Total Investments ................................................ 3,677,874,847 Accounts Receivable .................................................... 21,512 --------------- Total Assets ..................................................... 3,677,896,359 Accounts Payable ......................................................... - --------------- Contract Owners Equity (note 7) .......................................... $ 3,677,896,359 ===============
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS Year Ended December 31, 2004
Total AIMBValue AIMCapAp AIMCapDev ------------- ----------- --------- ---------- Investment activity: Reinvested dividends .............................................. $ 45,357,262 - - - Mortality and expense risk charges (note 3) ....................... (5,406,617) (8,019) (221) (3,040) ------------- ------- ------ ------- Net investment income (loss) .................................... 39,950,645 (8,019) (221) (3,040) ------------- ------- ------ ------- Proceeds from mutual fund shares sold ............................. 905,965,631 1,846,045 102,975 1,510,592 Cost of mutual fund shares sold ................................... (856,142,552) (1,656,639) (93,026) (1,498,044) ------------- ------- ------ ------- Realized gain (loss) on investments ............................. 49,823,079 189,406 9,949 12,548 Change in unrealized gain (loss) on investments ................... 199,826,035 327,981 38,984 386,257 ------------- ------- ------ ------- Net gain (loss) on investments .................................. 249,649,114 517,387 48,933 398,805 ------------- ------- ------ ------- Reinvested capital gains .......................................... 35,288,570 - - - ------------- ------- ------ ------- Net increase (decrease) in contract owners' equity resulting from operations ...................................................... $ 324,888,329 509,368 48,712 395,765 ============= ======= ====== ======= AIMIntGr AIVPGrIncA AIVPSmCapVA ACVPIncGr -------- ---------- ----------- --------- Investment activity: Reinvested dividends .............................................. 12,258 119,414 1,854 396,134 Mortality and expense risk charges (note 3) ....................... (1,302) (32,310) (761) (25,542) ------- --------- ------- --------- Net investment income (loss) .................................... 10,956 87,104 1,093 370,592 ------- --------- ------- --------- Proceeds from mutual fund shares sold ............................. 3,848 2,041,656 377,088 7,636,249 Cost of mutual fund shares sold ................................... (3,457) (1,603,534) (334,458) (6,932,446) ------- --------- ------- --------- Realized gain (loss) on investments ............................. 391 438,122 42,630 703,803 Change in unrealized gain (loss) on investments ................... 145,180 906,896 282,003 2,633,065 ------- --------- ------- --------- Net gain (loss) on investments .................................. 145,571 1,345,018 324,633 3,336,868 ------- --------- ------- --------- Reinvested capital gains .......................................... - - 23,850 - ------- --------- ------- --------- Net increase (decrease) in contract owners' equity resulting from operations ...................................................... 156,527 1,432,122 349,576 3,707,460 ======= ========= ======= =========
ACVPInflaPro ACVPInt ACVPUltra ACVPVal ------------ ----------- ---------- ---------- Investment activity: Reinvested dividends .............................................. $ 94,088 306,684 - 594,424 Mortality and expense risk charges (note 3) ....................... (348) (91,317) (8,604) (62,821) ----------- ----------- ---------- ---------- Net investment income (loss) .................................... 93,740 215,367 (8,604) 531,603 ----------- ----------- ---------- ---------- Proceeds from mutual fund shares sold ............................. 1,080,240 27,120,152 1,984,255 10,377,107 Cost of mutual fund shares sold ................................... (1,049,110) (22,008,522) (1,799,432) (7,880,755) ----------- ----------- ---------- ---------- Realized gain (loss) on investments ............................. 31,130 5,111,630 184,823 2,496,352 Change in unrealized gain (loss) on investments ................... 46,422 2,490,588 316,934 4,817,950 ----------- ----------- ---------- ---------- Net gain (loss) on investments .................................. 77,552 7,602,218 501,757 7,314,302 ----------- ----------- ---------- ---------- Reinvested capital gains .......................................... 1,234 - - 461,102 ----------- ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ..................................................... $ 172,526 7,817,585 493,153 8,307,007 =========== ========= ======= ========= BCFTCpAsset CVSSoEq CSGPVen CSIntFoc ----------- ---------- --------- --------- Investment activity: Reinvested dividends .............................................. - 76 - 16,674 Mortality and expense risk charges (note 3) ....................... (18,648) (352) (660) (462) ---------- ---------- --------- --------- Net investment income (loss) .................................... (18,648) (276) (660) 16,212 ---------- ---------- --------- --------- Proceeds from mutual fund shares sold ............................. 3,094,371 113,917 253,948 329,218 Cost of mutual fund shares sold ................................... (2,587,786) (111,659) (246,882) (295,815) ---------- ---------- --------- --------- Realized gain (loss) on investments ............................. 506,585 2,258 7,066 33,403 Change in unrealized gain (loss) on investments ................... 1,312,809 5,916 140,405 195,608 ---------- ---------- --------- --------- Net gain (loss) on investments .................................. 1,819,394 8,174 147,471 229,011 ---------- ---------- --------- --------- Reinvested capital gains .......................................... - - - - ---------- ---------- --------- --------- Net increase (decrease) in contract owners' equity resulting from operations ..................................................... 1,800,746 7,898 146,811 245,223 ========== ========== ========= =========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
CSLCapV DryEuroEq DryMidCapStS DrySmCapIxS ----------- --------- ------------ ----------- Investment activity: Reinvested dividends .............................................. $ 23,688 - 4,634 80,066 Mortality and expense risk charges (note 3) ....................... (3,383) - (2,808) (18,634) ----------- --------- ------------ ----------- Net investment income (loss) .................................... 20,305 - 1,826 61,432 ----------- --------- ------------ ----------- Proceeds from mutual fund shares sold ............................. 3,634,756 - 2,357,356 6,179,625 Cost of mutual fund shares sold ................................... (3,284,017) - (2,311,781) (5,068,471) ----------- --------- ------------ ----------- Realized gain (loss) on investments ............................. 350,739 - 45,575 1,111,154 Change in unrealized gain (loss) on investments ................... (3,491) 1 89,191 1,150,304 ----------- --------- ------------ ----------- Net gain (loss) on investments .................................. 347,248 1 134,766 2,261,458 ----------- --------- ------------ ----------- Reinvested capital gains .......................................... - - 30,048 451,800 ----------- --------- ------------ ----------- Net increase (decrease) in contract owners' equity resulting from operations ..................................................... $ 367,553 1 166,640 2,774,690 =========== ========= ============ =========== DrySRGro DryStkIx DryVIFApp DryVIFDevLd ---------- ---------- --------- ---------- Investment activity: Reinvested dividends .............................................. 64,846 6,475,060 526,142 1,706 Mortality and expense risk charges (note 3) ....................... (5,543) (564,831) (47,493) (201) ---------- ----------- ---------- -------- Net investment income (loss) .................................... 59,303 5,910,229 478,649 1,505 ---------- ----------- ---------- -------- Proceeds from mutual fund shares sold ............................. 1,343,891 65,411,376 6,796,002 118,878 Cost of mutual fund shares sold ................................... (1,721,175) (71,619,402) (6,743,327) (106,919) ---------- ----------- ---------- -------- Realized gain (loss) on investments ............................. (377,284) (6,208,026) 52,675 11,959 Change in unrealized gain (loss) on investments ................... 1,291,946 36,690,781 1,045,381 51,923 ---------- ----------- ---------- -------- Net gain (loss) on investments .................................. 914,662 30,482,755 1,098,056 63,882 ---------- ----------- ---------- -------- Reinvested capital gains .......................................... - - - - ---------- ----------- ---------- -------- Net increase (decrease) in contract owners' equity resulting from operations ..................................................... 973,965 36,392,984 1,576,705 65,387 ========== =========== ========== ========
DryVIFIntVal FedAmLead FedCapAp FedQualBd ------------ --------- -------- --------- Investment activity: Reinvested dividends .............................................. $ 324,814 2,634 764 3,576,416 Mortality and expense risk charges (note 3) ....................... (69,212) (74) (106) (167,907) ------------ --------- ------ --------- Net investment income (loss) .................................... 255,602 2,560 658 3,408,509 ------------ --------- ------ --------- Proceeds from mutual fund shares sold ............................. 8,696,717 26,030 24,052 10,348,349 Cost of mutual fund shares sold ................................... (6,721,450) (22,377) (21,714) (9,990,708) ------------ --------- ------ --------- Realized gain (loss) on investments ............................. 1,975,267 3,653 2,338 357,641 Change in unrealized gain (loss) on investments ................... 2,535,712 18,422 12,662 (1,501,593) ------------ --------- ------ --------- Net gain (loss) on investments .................................. 4,510,979 22,075 15,000 (1,143,952) ------------ --------- ------ --------- Reinvested capital gains .......................................... 477,666 - - 784,976 ------------ --------- ------ --------- Net increase (decrease) in contract owners' equity resulting from operations ..................................................... $ 5,244,247 24,635 15,658 3,049,533 ============ ========= ====== ========= FidVIPEIS FidVIPGrS FidVIPHIS FidVIPOvS ----------- ----------- ---------- ----------- Investment activity: Reinvested dividends .............................................. 1,266,828 180,204 2,135,602 359,718 Mortality and expense risk charges (note 3) ....................... (131,389) (149,383) (26,193) (53,304) ----------- ----------- ---------- ----------- Net investment income (loss) .................................... 1,135,439 30,821 2,109,409 306,414 ----------- ----------- ---------- ----------- Proceeds from mutual fund shares sold ............................. 16,955,361 18,514,234 6,672,329 16,239,064 Cost of mutual fund shares sold ................................... (16,223,665) (24,930,436) (5,643,809) (13,287,666) ----------- ----------- ---------- ----------- Realized gain (loss) on investments ............................. 731,696 (6,416,202) 1,028,520 2,951,398 Change in unrealized gain (loss) on investments ................... 7,762,067 9,944,558 (787,461) 1,320,701 ----------- ----------- ---------- ----------- Net gain (loss) on investments .................................. 8,493,763 3,528,356 241,059 4,272,099 ----------- ----------- ---------- ----------- Reinvested capital gains .......................................... 320,432 - - - ----------- ----------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ..................................................... 9,949,634 3,559,177 2,350,468 4,578,513 =========== =========== ========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
FidVIPConS FidVIPIGBdS FidVIPGrOpS FidVIPMCapS ------------ ----------- ----------- ----------- Investment activity: Reinvested dividends ............................. $ 255,594 35,184 78,276 - Mortality and expense risk charges (note 3) ...... (147,400) (636) (12,972) (1,265) ------------ ----------- ---------- ---------- Net investment income (loss) ................... 108,194 34,548 65,304 (1,265) ------------ ----------- ---------- ---------- Proceeds from mutual fund shares sold ............ 21,304,702 1,276,713 3,361,084 1,461,252 Cost of mutual fund shares sold .................. (18,367,721) (1,317,912) (3,819,471) (1,333,264) ------------ ----------- ---------- ---------- Realized gain (loss) on investments ............ 2,936,981 (41,199) (458,387) 127,988 Change in unrealized gain (loss) on investments .. 12,911,537 54,096 1,497,336 963,441 ------------ ----------- ---------- ---------- Net gain (loss) on investments ................. 15,848,518 12,897 1,038,949 1,091,429 ------------ ----------- ---------- ---------- Reinvested capital gains ......................... - 24,872 - - ------------ ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .............. $ 15,956,712 72,317 1,104,253 1,090,164 ============ =========== ========= ========= FidVIPValS FrVIPRisDiv FTVIPSmCpVal FrVIPForSec2 ---------- ----------- ------------ ------------- Investment activity: Reinvested dividends ............................. - 39,048 4,276 123,166 Mortality and expense risk charges (note 3) ...... (5,771) (2,018) (530) (30,602) ---------- ----------- ------------ ------------- Net investment income (loss) ................... (5,771) 37,030 3,746 92,564 ---------- ----------- ------------ ------------- Proceeds from mutual fund shares sold ............ 3,139,154 1,007,971 124,289 3,766,846 Cost of mutual fund shares sold .................. (2,733,715) (889,648) (110,862) (2,567,047) ---------- ----------- ------------ ------------- Realized gain (loss) on investments ............ 405,439 118,323 13,427 1,199,799 Change in unrealized gain (loss) on investments .. 178,029 473,356 493,415 711,656 ---------- ----------- ------------ ------------- Net gain (loss) on investments ................. 583,468 591,679 506,842 1,911,455 ---------- ----------- ------------ ------------- Reinvested capital gains ......................... 11,920 70,156 - - ---------- ----------- ------------ ------------- Net increase (decrease) in contract owners' equity resulting from operations .............. 589,617 698,865 510,588 2,004,019 ========== =========== ============ =============
FrVIPForSec GVITCVal GVITDryIntVal GVITDMidCapI ------------ --------- ------------ ------------ Investment activity: Reinvested dividends ............................. $ 27,532 125,030 35,118 320,476 Mortality and expense risk charges (note 3) ...... (866) (8,411) (322) (94,204) ------------ --------- ------------ ------------ Net investment income (loss) ................... 26,666 116,619 34,796 226,272 ------------ --------- ------------ ------------ Proceeds from mutual fund shares sold ............ 403,296 1,897,324 774,050 7,925,906 Cost of mutual fund shares sold .................. (353,321) (1,368,498) (735,289) (6,804,561) ------------ --------- ------------ ------------ Realized gain (loss) on investments ............ 49,975 528,826 38,761 1,121,345 Change in unrealized gain (loss) on investments .. 469,226 911,636 430,051 5,605,147 ------------ --------- ------------ ------------ Net gain (loss) on investments ................. 519,201 1,440,462 468,812 6,726,492 ------------ --------- ------------ ------------ Reinvested capital gains ......................... - - - 1,548,608 ------------ --------- ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. $ 545,867 1,557,081 503,608 8,501,372 ============ ========= ============ ============ GVITEmMrkts GVITFHiInc GVITGlFin1 GVITGlHlth ----------- ---------- ---------- ---------- Investment activity: Reinvested dividends ............................. 100,932 2,611,258 38,454 - Mortality and expense risk charges (note 3) ...... (12,126) (46,688) (4,578) (4,552) ----------- ---------- ---------- ---------- Net investment income (loss) ................... 88,806 2,564,570 33,876 (4,552) ----------- ---------- ---------- ---------- Proceeds from mutual fund shares sold ............ 9,008,834 16,711,804 1,724,726 1,925,072 Cost of mutual fund shares sold .................. (8,185,442) (15,461,612) (1,538,005) (1,955,351) ----------- ---------- ---------- ---------- Realized gain (loss) on investments ............ 823,392 1,250,192 186,721 (30,279) Change in unrealized gain (loss) on investments .. (626,920) (471,186) 115,389 298,651 ----------- ---------- ---------- ---------- Net gain (loss) on investments ................. 196,472 779,006 302,110 268,372 ----------- ---------- ---------- ---------- Reinvested capital gains ......................... 869,916 - 171,722 17,644 ----------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .............. 1,155,194 3,343,576 507,708 281,464 =========== ========== ========== ==========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
GVITGlTech GVITGlUtl1 GVITGvtBd GVITGrowth ---------- ---------- --------- ---------- Investment activity: Reinvested dividends ........................... $ - 22,294 7,860,238 49,742 Mortality and expense risk charges (note 3) .... (9,080) (1,487) (321,800) (2,810) ---------- ---------- --------- ---------- Net investment income (loss) ................. (9,080) 20,807 7,538,438 46,932 ---------- ---------- --------- ---------- Proceeds from mutual fund shares sold .......... 5,314,588 740,960 46,930,976 1,527,020 Cost of mutual fund shares sold ................ (4,703,020) (632,244) (45,971,366) (1,897,495) ---------- ---------- --------- ---------- Realized gain (loss) on investments .......... 611,568 108,716 959,610 (370,475) Change in unrealized gain (loss) on investments (347,539) 165,443 (6,769,675) 1,543,358 ---------- ---------- --------- ---------- Net gain (loss) on investments ............... 264,029 274,159 (5,810,065) 1,172,883 ---------- ---------- --------- ---------- Reinvested capital gains ....................... - 117,478 2,833,814 - ---------- ---------- --------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............ $ 254,949 412,444 4,562,187 1,219,815 ========== ========== ========= ========== GVITIDAgg GVITIDCon GVITIDMod GVITIDModAgg --------- --------- --------- ------------ Investment activity: Reinvested dividends ........................... 170,360 154,844 545,606 511,866 Mortality and expense risk charges (note 3) .... (4,741) (5,632) (27,058) (21,458) --------- --------- --------- ------------ Net investment income (loss) ................. 165,619 149,212 518,548 490,408 --------- --------- --------- ------------ Proceeds from mutual fund shares sold .......... 732,804 1,016,488 1,702,702 2,024,376 Cost of mutual fund shares sold ................ (545,520) (971,485) (1,371,307) (1,543,871) --------- --------- --------- ------------ Realized gain (loss) on investments .......... 187,284 45,003 331,395 480,505 Change in unrealized gain (loss) on investments 837,817 44,902 1,575,544 2,080,811 --------- --------- --------- ------------ Net gain (loss) on investments ............... 1,025,101 89,905 1,906,939 2,561,316 --------- --------- --------- ------------ Reinvested capital gains ....................... 243,504 65,900 135,430 422,100 --------- --------- --------- ------------ Net increase (decrease) in contract owners' equity resulting from operations ............ 1,434,224 305,017 2,560,917 3,473,824 ========= ========= ========= ============
GVITIDModCon GVITIntGro GVITJPBal GVITSMdCpGr ------------ ---------- --------- ----------- Investment activity: Reinvested dividends ........................... $ 276,016 14,900 384,846 - Mortality and expense risk charges (note 3) .... (14,727) (1,849) (19,471) (14,726) ------------ ---------- --------- ----------- Net investment income (loss) ................. 261,289 13,051 365,375 (14,726) ------------ ---------- --------- ----------- Proceeds from mutual fund shares sold .......... 1,477,076 1,835,913 4,640,648 4,381,628 Cost of mutual fund shares sold ................ (1,298,444) (1,572,812) (4,463,724) (3,477,837) ------------ ---------- --------- ----------- Realized gain (loss) on investments .......... 178,632 263,101 176,924 903,791 Change in unrealized gain (loss) on investments 325,139 (27,696) 1,096,457 1,889,603 ------------ ---------- --------- ----------- Net gain (loss) on investments ............... 503,771 235,405 1,273,381 2,793,394 ------------ ---------- --------- ----------- Reinvested capital gains ....................... 82,536 - - - ------------ ---------- --------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ............ $ 847,596 248,456 1,638,756 2,778,668 ============ ========== ========= =========== GVITMyMkt GVITMyMkt5 GVITNWFund GVITLead ----------- ------------ ---------- -------- Investment activity: Reinvested dividends ........................... 1,193,594 2,972,476 2,950,580 2,638 Mortality and expense risk charges (note 3) .... (101,131) (767,256) (198,603) (545) ----------- ------------ ---------- -------- Net investment income (loss) ................. 1,092,463 2,205,220 2,751,977 2,093 ----------- ------------ ---------- -------- Proceeds from mutual fund shares sold .......... 95,832,837 146,257,702 5,917,087 274,487 Cost of mutual fund shares sold ................ (95,832,837) (146,257,702) (5,811,509) (250,438) ----------- ------------ ---------- -------- Realized gain (loss) on investments .......... - - 105,578 24,049 Change in unrealized gain (loss) on investments - - 18,602,994 67,267 ----------- ------------ ---------- -------- Net gain (loss) on investments ............... - - 18,708,572 91,316 ----------- ------------ ---------- -------- Reinvested capital gains ....................... - - - 9,814 ----------- ------------ ---------- -------- Net increase (decrease) in contract owners' equity resulting from operations ............ 1,092,463 2,205,220 21,460,549 103,223 =========== ============ ========== ========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
GVITNStrVal GVITSmCapGr GVITSmCapVal GVITSmComp ----------- ----------- ------------ ----------- Investment activity: Reinvested dividends ........................ $ - - 184 - Mortality and expense risk charges (note 3) . (458) (27,171) (122,308) (174,098) ----------- ----------- ------------ ----------- Net investment income (loss) .............. (458) (27,171) (122,124) (174,098) ----------- ----------- ------------ ----------- Proceeds from mutual fund shares sold ....... 2,058,564 5,626,780 14,699,696 20,752,533 Cost of mutual fund shares sold ............. (1,569,247) (4,217,380) (12,375,207) (16,481,454) ----------- ----------- ------------ ----------- Realized gain (loss) on investments ....... 489,317 1,409,400 2,324,489 4,271,079 Change in unrealized gain (loss) on investments ................................. (371,091) 1,674,218 5,004,439 660,494 ----------- ----------- ------------ ----------- Net gain (loss) on investments ............ 118,226 3,083,618 7,328,928 4,931,573 ----------- ----------- ------------ ----------- Reinvested capital gains .................... - - 6,436,436 10,264,062 ----------- ----------- ------------ ----------- Net increase (decrease) in contract owners' equity resulting from operations ......... $ 117,768 3,056,447 13,643,240 15,021,537 =========== =========== ============ =========== GVITTGroFoc GVITUSGro GVITVKMultiSec GVITWLead ----------- ----------- -------------- ----------- Investment activity: Reinvested dividends ........................ - - 856,552 - Mortality and expense risk charges (note 3) . (302) (3,470) (37,140) (1,131) ----------- ----------- -------------- ----------- Net investment income (loss) .............. (302) (3,470) 819,412 (1,131) ----------- ----------- -------------- ----------- Proceeds from mutual fund shares sold ....... 1,425,363 5,127,199 15,514,154 767,032 Cost of mutual fund shares sold ............. (1,331,929) (5,502,391) (14,793,062) (611,954) ----------- ----------- -------------- ----------- Realized gain (loss) on investments ....... 93,434 (375,192) 721,092 155,078 Change in unrealized gain (loss) on investments ................................. (66,842) 578,925 (502,965) 451,020 ----------- ----------- -------------- ----------- Net gain (loss) on investments ............ 26,592 203,733 218,127 606,098 ----------- ----------- -------------- ----------- Reinvested capital gains .................... - 165,876 - - ----------- ----------- -------------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ......... 26,290 366,139 1,037,539 604,967 =========== =========== ============== ===========
GSVITMidCap JanBal JanCapAp JanGlTech ----------- ------------ ------------ ------------ Investment activity: Reinvested dividends ........................... $ 206,880 172,114 9,912 - Mortality and expense risk charges (note 3) .... (81,212) (21,076) (52,786) (8,121) ----------- ------------ ------------ ------------ Net investment income (loss) ................. 125,668 151,038 (42,874) (8,121) ----------- ------------ ------------ ------------ Proceeds from mutual fund shares sold .......... 9,179,842 1,206,236 12,816,789 2,848,058 Cost of mutual fund shares sold ................ (6,868,913) (1,135,420) (11,672,912) (3,493,795) ----------- ------------ ------------ ------------ Realized gain (loss) on investments .......... 2,310,929 70,816 1,143,877 (645,737) Change in unrealized gain (loss) on investments 1,269,480 363,085 5,549,490 695,001 ----------- ------------ ------------ ------------ Net gain (loss) on investments ............... 3,580,409 433,901 6,693,367 49,264 ----------- ------------ ------------ ------------ Reinvested capital gains ....................... 3,321,362 - - - ----------- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ............ $ 7,027,439 584,939 6,650,493 41,143 =========== ============ ============ ============ JanIntGro JanRMgLgCap MFSVITInvGrwI MFSVITValIn ---------- ----------- ------------- ----------- Investment activity: Reinvested dividends ........................... 317,940 3,688 - 2,758 Mortality and expense risk charges (note 3) .... (60,843) (19) (393) (317) ---------- ----------- ------------- ----------- Net investment income (loss) ................. 257,097 3,669 (393) 2,441 ---------- ----------- ------------- ----------- Proceeds from mutual fund shares sold .......... 9,507,812 72,106 209,958 36,060 Cost of mutual fund shares sold ................ (6,943,923) (66,549) (203,448) (30,741) ---------- ----------- ------------- ----------- Realized gain (loss) on investments .......... 2,563,889 5,557 6,510 5,319 Change in unrealized gain (loss) on investments 3,612,548 1,454 175,975 87,483 ---------- ----------- ------------- ----------- Net gain (loss) on investments ............... 6,176,437 7,011 182,485 92,802 ---------- ----------- ------------- ----------- Reinvested capital gains ....................... - 20,216 - 8,180 ---------- ----------- ------------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ............ 6,433,534 30,896 182,092 103,423 ========== =========== ============= ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
NBAMTFasc NBAMTGuard NBAMTLMat NBAMTMCGr --------- ---------- ----------- ---------- Investment activity: Reinvested dividends ......................................... $ - 16,332 116,228 - Mortality and expense risk charges (note 3) .................. (2,756) (15,075) (440) (38,881) --------- ---------- ----------- ---------- Net investment income (loss) ............................... (2,756) 1,257 115,788 (38,881) --------- ---------- ----------- ---------- Proceeds from mutual fund shares sold ........................ 376,385 3,788,754 1,180,973 9,169,497 Cost of mutual fund shares sold .............................. (343,101) (3,199,012) (1,212,543) (9,313,417) --------- ---------- ----------- ---------- Realized gain (loss) on investments ........................ 33,284 589,742 (31,570) (143,920) Change in unrealized gain (loss) on investments .............. 147,002 1,416,484 (71,615) 6,035,016 --------- ---------- ----------- ---------- Net gain (loss) on investments ............................. 180,286 2,006,226 (103,185) 5,891,096 --------- ---------- ----------- ---------- Reinvested capital gains ..................................... 5,080 - - - --------- ---------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........................................... $ 182,610 2,007,483 12,603 5,852,215 ========= ========== =========== ========== NBAMTPart NBAMSocRes OGMidCapGr OGMidCapV ---------- ---------- ---------- ----------- Investment activity: Reinvested dividends ......................................... 1,782 - - 6,684 Mortality and expense risk charges (note 3) .................. (14,744) (215) (8,348) (2,876) ---------- ---------- ---------- ----------- Net investment income (loss) ............................... (12,962) (215) (8,348) 3,808 ---------- ---------- ---------- ----------- Proceeds from mutual fund shares sold ........................ 3,720,583 20,546 1,430,043 1,891,319 Cost of mutual fund shares sold .............................. (3,162,703) (18,175) (1,098,861) (1,859,756) ---------- ---------- ---------- ----------- Realized gain (loss) on investments ........................ 557,880 2,371 331,182 31,563 Change in unrealized gain (loss) on investments .............. 2,294,858 61,525 8,430 61,159 ---------- ---------- ---------- ----------- Net gain (loss) on investments ............................. 2,852,738 63,896 339,612 92,722 ---------- ---------- ---------- ----------- Reinvested capital gains ..................................... - - - - ---------- ---------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................................... 2,839,776 63,681 331,264 96,530 ========== ========== ========== ===========
OppAggGro OppCapAp OppGlSec OppHighInc ------------ ----------- ---------- ---------- Investment activity: Reinvested dividends ......................................... $ - 403,980 558,444 75,680 Mortality and expense risk charges (note 3) .................. (87,334) (288,314) (88,115) (589) ------------ ----------- ---------- ---------- Net investment income (loss) ............................... (87,334) 115,666 470,329 75,091 ------------ ----------- ---------- ---------- Proceeds from mutual fund shares sold ........................ 16,375,253 9,818,563 7,781,808 3,147,299 Cost of mutual fund shares sold .............................. (15,273,602) (10,907,738) (5,058,817) (3,088,359) ------------ ----------- ---------- ---------- Realized gain (loss) on investments ........................ 1,101,651 (1,089,175) 2,722,991 58,940 Change in unrealized gain (loss) on investments .............. 10,016,449 9,875,610 6,067,450 55,598 ------------ ----------- ---------- ---------- Net gain (loss) on investments ............................. 11,118,100 8,786,435 8,790,441 114,538 ------------ ----------- ---------- ---------- Reinvested capital gains ..................................... - - - - ------------ ----------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........................................... $ 11,030,766 8,902,101 9,260,770 189,629 ============ =========== ========== ========== OppMSFund OppMSSmCap PVITAllAsset PIMLowDur ---------- ---------- ------------ ----------- Investment activity: Reinvested dividends ......................................... 348,740 - 7,008 676,742 Mortality and expense risk charges (note 3) .................. (41,352) (390) (122) (139,280) ---------- ---------- ------------ ----------- Net investment income (loss) ............................... 307,388 (390) 6,886 537,462 ---------- ---------- ------------ ----------- Proceeds from mutual fund shares sold ........................ 10,178,132 811,056 18,338 22,601,947 Cost of mutual fund shares sold .............................. (9,795,596) (668,370) (17,830) (22,565,242) ---------- ---------- ------------ ----------- Realized gain (loss) on investments ........................ 382,536 142,686 508 36,705 Change in unrealized gain (loss) on investments .............. 3,143,915 147,966 (2,204) 11,372 ---------- ---------- ------------ ----------- Net gain (loss) on investments ............................. 3,526,451 290,652 (1,696) 48,077 ---------- ---------- ------------ ----------- Reinvested capital gains ..................................... - - 162 178,924 ---------- ---------- ------------ ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................................... 3,833,839 290,262 5,352 764,463 ========== ========== ============ ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
PIMRealRet PIMTotRet PVCTHiYield PVTGroInc --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 130,952 1,139,482 686,882 5,746 Mortality and expense risk charges (note 3) ......... (42,036) (186,370) (38,992) (346) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 88,916 953,112 647,890 5,400 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 5,721,632 16,709,532 10,897,848 44,630 Cost of mutual fund shares sold ..................... (5,526,505) (16,484,092) (10,705,870) (39,380) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 195,127 225,440 191,978 5,250 Change in unrealized gain (loss) on investments ..... 142,688 451,710 12,692 71,844 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 337,815 677,150 204,670 77,094 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 517,832 1,031,052 50,706 - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... $ 944,563 2,661,314 903,266 82,494 =============== =============== =============== =============== PVTIntEq PVTVoyll RCFMicroCap StOpp2 --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ 13,692 476 - - Mortality and expense risk charges (note 3) ......... (183) (177) (71,700) (58,999) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 13,509 299 (71,700) (58,999) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 432,306 28,947 5,524,492 13,537,266 Cost of mutual fund shares sold ..................... (377,312) (26,995) (4,064,463) (11,932,283) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 54,994 1,952 1,460,029 1,604,983 Change in unrealized gain (loss) on investments ..... 144,657 13,776 (730,678) 4,189,292 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 199,651 15,728 729,351 5,794,275 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - 1,893,810 - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... 213,160 16,027 2,551,461 5,735,276 =============== =============== =============== ===============
TRowEqInc2 TRowMidCap2 TRowNewAmG VEWrldEMkt --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 549,034 - 20 48,894 Mortality and expense risk charges (note 3) ......... (118,788) (81,638) (86) (6,503) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 430,246 (81,638) (66) 42,391 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 8,201,900 9,042,183 1,731 2,760,324 Cost of mutual fund shares sold ..................... (6,073,529) (7,377,402) (1,635) (1,713,759) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 2,128,371 1,664,781 96 1,046,565 Change in unrealized gain (loss) on investments ..... 2,187,744 3,483,713 4,161 1,246,193 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 4,316,115 5,148,494 4,257 2,292,758 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 997,736 - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... $ 5,744,097 5,066,856 4,191 2,335,149 =============== =============== =============== =============== VEWrldHAs VKoreFI VKEmMkt VKMidCapG --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ 23,518 12,934 746,936 - Mortality and expense risk charges (note 3) ......... (9,068) (634) (16,505) (4,266) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 14,450 12,300 730,431 (4,266) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 3,174,917 33,917 5,809,412 2,233,877 Cost of mutual fund shares sold ..................... (2,059,793) (33,240) (5,317,094) (1,712,882) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 1,115,124 677 492,318 520,995 Change in unrealized gain (loss) on investments ..... 521,610 807 (638,091) 260,318 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 1,636,734 1,484 (145,773) 781,313 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - 778 349,082 - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... 1,651,184 14,562 933,740 777,047 =============== =============== =============== ===============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004 VKUSRealEst --------------- Investment activity: Reinvested dividends ................................ $ 747,976 Mortality and expense risk charges (note 3) ......... (70,467) --------------- Net investment income (loss) ...................... 677,509 --------------- Proceeds from mutual fund shares sold ............... 10,042,043 Cost of mutual fund shares sold ..................... (7,873,059) --------------- Realized gain (loss) on investments ............... 2,168,984 Change in unrealized gain (loss) on investments ..... 11,244,483 --------------- Net gain (loss) on investments .................... 13,413,467 --------------- Reinvested capital gains ............................ 870,754 --------------- Net increase (decrease) in contract owners' equity resulting from operations ................. $ 14,961,730 =============== See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY Years Ended December 31, 2004 and 2003
Total AIMBValue ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... $ 39,950,645 26,858,792 (8,019) (2,140) Realized gain (loss) on investments ............ 49,823,079 (107,109,240) 189,406 122,322 Change in unrealized gain (loss) on investments ................................ 199,826,035 590,219,136 327,981 177,090 Reinvested capital gains ....................... 35,288,570 2,362,280 - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............ 324,888,329 512,330,968 509,368 297,272 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 696,489,200 684,393,099 951,110 391,184 Transfers between funds ........................ - - 3,429,618 968,277 Surrenders (note 6) ............................ (206,719,770) (302,997,849) (169,779) (2,640) Death benefits (note 4) ........................ (6,236,282) (2,544,257) (2,654) - Net policy repayments (loans) (note 5) ......... (11,006,812) 15,397,293 (40,254) (2,719) Deductions for surrender charges (note 2d) ..... (9,527,283) (10,621,920) (8,152) (93) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................. (138,037,750) (135,662,100) (231,454) (44,655) Asset charges (note 3): FPVUL & VEL contracts ........................ (4,687,281) (3,761,238) (6,476) (644) MSP contracts ................................ (207,054) (177,883) (480) (115) SL contracts ................................. (1,063,140) (840,000) (651) (75) Adjustments to maintain reserves ............... 1,109,971 937,408 369 (10) --------------- --------------- --------------- --------------- Net equity transactions .................... 320,113,799 244,122,553 3,921,197 1,308,510 --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ 645,002,128 756,453,521 4,430,565 1,605,782 Contract owners' equity beginning of period ....................................... 3,032,894,231 2,276,440,710 1,998,176 392,394 --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ $ 3,677,896,359 3,032,894,231 6,428,741 1,998,176 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 274,276,875 245,162,666 152,240 39,881 --------------- --------------- --------------- --------------- Units purchased ................................ 129,461,075 152,117,332 386,902 119,273 Units redeemed ................................. (99,166,550) (123,003,123) (98,060) (6,914) --------------- --------------- --------------- --------------- Ending units ................................... 304,571,400 274,276,875 441,082 152,240 =============== =============== =============== =============== AIMCapAp AIMCapDev ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... (221) (12) (3,040) (356) Realized gain (loss) on investments ............ 9,949 (15,225) 12,548 64,519 Change in unrealized gain (loss) on investments ................................ 38,984 25,422 386,257 18,972 Reinvested capital gains ....................... - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............ 48,712 10,185 395,765 83,135 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 132,482 145,264 434,256 188,767 Transfers between funds ........................ 342,788 190,591 2,019,398 409,243 Surrenders (note 6) ............................ (12,926) (20) (9,041) (14) Death benefits (note 4) ........................ - - (188) (17) Net policy repayments (loans) (note 5) ......... (21,560) (2,195) (6,360) 7,850 Deductions for surrender charges (note 2d) ..... (1,442) (1) (1,592) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) ............................. (58,520) (9,863) (103,262) (7,329) Asset charges (note 3): FPVUL & VEL contracts ........................ (2,020) (331) (3,689) (317) MSP contracts ................................ (7) - (78) (5) SL contracts ................................. (68) (21) (337) (7) Adjustments to maintain reserves ............... 98 (20) 197 (1) --------------- --------------- --------------- --------------- Net equity transactions .................... 378,825 323,404 2,329,304 598,169 --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ 427,537 333,589 2,725,069 681,304 Contract owners' equity beginning of period ....................................... 333,589 - 681,539 235 --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ 761,126 333,589 3,406,608 681,539 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 26,916 - 51,345 24 --------------- --------------- --------------- --------------- Units purchased ................................ 38,679 27,974 203,870 52,189 Units redeemed ................................. (7,999) (1,058) (32,623) (868) --------------- --------------- --------------- --------------- Ending units ................................... 57,596 26,916 222,592 51,345 =============== =============== =============== ===============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
AIMIntGr AlVPGrIncA ------------------------- ------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Investment activity: Net investment income (loss) ................... $ 10,956 - 87,104 6,201 Realized gain (loss) on investments ............ 391 - 438,122 74,700 Change in unrealized gain (loss) on investments ................................ 145,180 - 906,896 969,726 Reinvested capital gains ....................... - - - - ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .... 156,527 - 1,432,122 1,050,627 ----------- ----------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 528,884 - 2,495,128 1,935,130 Transfers between funds ........................ 2,870,628 - 3,133,978 6,170,887 Surrenders (note 6) ............................ - - (593,390) (26,111) Death benefits (note 4) ........................ - - (1,516) - Net policy repayments (loans) (note 5) ......... 81,270 - (15,914) 2,451 Deductions for surrender charges (note 2d) ..... - - (8,000) (915) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (2,762) - (445,540) (117,488) Asset charges (note 3): FPVUL & VEL contracts ........................ - - (9,515) (1,648) MSP contracts ................................ - - (126) (6) SL contracts ................................. - - (967) (85) Adjustments to maintain reserves ............... 46 - 324 - ----------- ----------- ----------- ----------- Net equity transactions .................... 3,478,066 - 4,554,462 7,962,215 ----------- ----------- ----------- ----------- Net change in contract owners' equity ............ 3,634,593 - 5,986,584 9,012,842 Contract owners' equity beginning of period ...... - - 9,067,222 54,380 ----------- ----------- ----------- ----------- Contract owners' equity end of period ............ $ 3,634,593 - 15,053,806 9,067,222 =========== =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ - - 684,910 5,432 ----------- ----------- ----------- ----------- Units purchased ................................ 305,417 - 593,254 906,704 Units redeemed ................................. (373) - (255,828) (227,226) ----------- ----------- ----------- ----------- Ending units ................................... 305,044 - 1,022,336 684,910 =========== =========== =========== ===========
AlVPSmCapVA ACVPIncGr ------------------------- ------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Investment activity: Net investment income (loss) ................... 1,093 174 370,592 326,000 Realized gain (loss) on investments ............ 42,630 52,822 703,803 (6,538,921) Change in unrealized gain (loss) on investments ................................ 282,003 30,043 2,633,065 12,592,379 Reinvested capital gains ....................... 23,850 570 - - ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .... 349,576 83,609 3,707,460 6,379,458 ----------- ----------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 547,328 78,868 4,417,994 4,338,258 Transfers between funds ........................ 1,848,424 244,139 (994,534) (14,535,270) Surrenders (note 6) ............................ (52,180) - (2,053,219) (6,231,826) Death benefits (note 4) ........................ - - (37,484) (54,131) Net policy repayments (loans) (note 5) ......... (17,020) (1,318) (105,752) 1,394,557 Deductions for surrender charges (note 2d) ..... (2,960) - (105,664) (218,463) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (81,732) (10,277) (1,717,476) (1,812,715) Asset charges (note 3): FPVUL & VEL contracts ........................ (3,744) (355) (72,566) (56,784) MSP contracts ................................ (196) - (5,078) (4,173) SL contracts ................................. (1,039) (129) (14,230) (11,378) Adjustments to maintain reserves ............... 175 523 (2,659) 2,573 ----------- ----------- ----------- ----------- Net equity transactions .................... 2,237,056 311,451 (690,668) (17,189,352) ----------- ----------- ----------- ----------- Net change in contract owners' equity ............ 2,586,632 395,060 3,016,792 (10,809,894) Contract owners' equity beginning of period ...... 395,060 - 27,431,994 38,241,888 ----------- ----------- ----------- ----------- Contract owners' equity end of period ............ 2,981,692 395,060 30,448,786 27,431,994 =========== =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 28,635 - 2,307,747 4,372,283 ----------- ----------- ----------- ----------- Units purchased ................................ 163,274 29,601 628,584 891,295 Units redeemed ................................. (10,755) (966) (664,271) (2,955,831) ----------- ----------- ----------- ----------- Ending units ................................... 181,154 28,635 2,272,060 2,307,747 =========== =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
ACVPInflaPro ACVPInt ------------------------- ------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Investment activity: Net investment income (loss) ................... $ 93,740 8,247 215,367 269,712 Realized gain (loss) on investments ............ 31,130 (10,542) 5,111,630 4,390,971 Change in unrealized gain (loss) on investments ................................ 46,422 16,524 2,490,588 8,676,425 Reinvested capital gains ....................... 1,234 261 - - ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .... 172,526 14,490 7,817,585 13,337,108 ----------- ----------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 682,774 97,055 8,108,982 9,177,412 Transfers between funds ........................ 3,208,826 1,081,913 (15,969,044) 2,991,552 Surrenders (note 6) ............................ (34,963) (37,138) (5,929,993) (5,272,163) Death benefits (note 4) ........................ (878) - (63,964) (22,976) Net policy repayments (loans) (note 5) ......... (11,494) (1,336) (210,622) 1,056,332 Deductions for surrender charges (note 2d) ..... (1,588) (1,302) (323,613) (184,821) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (137,340) (14,655) (2,277,204) (2,536,968) Asset charges (note 3): FPVUL & VEL contracts ........................ (7,076) (867) (76,978) (66,834) MSP contracts ................................ (68) (95) (2,916) (2,916) SL contracts ................................. (922) (72) (12,137) (9,789) Adjustments to maintain reserves ............... 7,462 (12,760) 1,415,438 (1,026,004) ----------- ----------- ----------- ----------- Net equity transactions .................... 3,704,733 1,110,743 (15,342,051) 4,102,825 ----------- ----------- ----------- ----------- Net change in contract owners' equity ............ 3,877,259 1,125,233 (7,524,466) 17,439,933 Contract owners' equity beginning of period ...... 1,125,233 - 62,034,990 44,595,057 ----------- ----------- ----------- ----------- Contract owners' equity end of period ............ $ 5,002,492 1,125,233 54,510,524 62,034,990 =========== =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 108,990 - 6,563,773 5,642,120 ----------- ----------- ----------- ----------- Units purchased ................................ 367,112 110,952 1,922,487 2,534,766 Units redeemed ................................. (18,170) (1,962) (3,459,384) (1,613,113) ----------- ----------- ----------- ----------- Ending units ................................... 457,932 108,990 5,026,876 6,563,773 =========== =========== =========== ===========
ACVPUltra ACVPVal ------------------------- ------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Investment activity: Net investment income (loss) ................... (8,604) (3,225) 531,603 440,077 Realized gain (loss) on investments ............ 184,823 117,675 2,496,352 (2,595,801) Change in unrealized gain (loss) on investments ................................ 316,934 266,756 4,817,950 14,564,095 Reinvested capital gains ....................... - - 461,102 - ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .... 493,153 381,206 8,307,007 12,408,371 ----------- ----------- ----------- ----------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 1,001,330 866,962 9,223,466 8,859,894 Transfers between funds ........................ 793,440 2,721,084 (836,390) 4,460,692 Surrenders (note 6) ............................ (76,543) (188,855) (2,071,577) (8,297,618) Death benefits (note 4) ........................ (2,474) (1,431) (128,332) (14,776) Net policy repayments (loans) (note 5) ......... (12,664) 6,813 (54,154) (95,718) Deductions for surrender charges (note 2d) ..... (10,489) (6,620) (186,385) (290,882) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (264,128) (149,049) (2,989,748) (2,814,997) Asset charges (note 3): FPVUL & VEL contracts ........................ (7,359) (4,450) (139,932) (105,153) MSP contracts ................................ (35) (12) (3,812) (3,038) SL contracts ................................. (858) (260) (35,235) (26,503) Adjustments to maintain reserves ............... 12,931 3,891 (104,182) 87,713 ----------- ----------- ----------- ----------- Net equity transactions .................... 1,433,151 3,248,073 2,673,719 1,759,614 ----------- ----------- ----------- ----------- Net change in contract owners' equity ............ 1,926,304 3,629,279 10,980,726 14,167,985 Contract owners' equity beginning of period ...... 4,293,630 664,351 56,856,538 42,688,553 ----------- ----------- ----------- ----------- Contract owners' equity end of period ............ 6,219,934 4,293,630 67,837,264 56,856,538 =========== =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 428,767 82,661 3,810,322 3,650,314 ----------- ----------- ----------- ----------- Units purchased ................................ 224,124 388,084 980,137 1,337,198 Units redeemed ................................. (90,555) (41,978) (816,731) (1,177,190) ----------- ----------- ----------- ----------- Ending units ................................... 562,336 428,767 3,973,728 3,810,322 =========== =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
BCFTCpAsset CVSSoEq --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (18,648) (5,203) (276) (28) Realized gain (loss) on investments ............ 506,585 93,310 2,258 (14,135) Change in unrealized gain (loss) on investments ................................ 1,312,809 429,891 5,916 1,777 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 1,800,746 517,998 7,898 (12,386) ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 1,557,056 396,797 27,982 378 Transfers between funds ........................ 3,997,490 4,262,979 45,380 39,135 Surrenders (note 6) ............................ (14,209) (4,371) - - Death benefits (note 4) ........................ (23,956) (174) (490) - Net policy repayments (loans) (note 5) ......... - (2,751) - - Deductions for surrender charges (note 2d) ..... (466) (153) - - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (135,050) (29,317) (1,300) (778) Asset charges (note 3): FPVUL & VEL contracts ........................ - - - - MSP contracts ................................ - - - - SL contracts ................................. - - - - Adjustments to maintain reserves ............... 122 62 16 (1) ------------ ------------ ------------ ------------ Net equity transactions .................... 5,380,987 4,623,072 71,588 38,734 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 7,181,733 5,141,070 79,486 26,348 Contract owners' equity beginning of period ...... 5,210,229 69,159 26,348 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 12,391,962 5,210,229 105,834 26,348 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 414,222 7,134 2,102 - ------------ ------------ ------------ ------------ Units purchased ................................ 457,370 473,014 7,191 2,181 Units redeemed ................................. (85,816) (65,926) (1,377) (79) ------------ ------------ ------------ ------------ Ending units ................................... 785,776 414,222 7,916 2,102 ============ ============ ============ ============
CSGPVen CSIntFoc --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... (660) (548) 16,212 6,702 Realized gain (loss) on investments ............ 7,066 (162,063) 33,403 (27,290) Change in unrealized gain (loss) on investments ................................ 140,405 438,373 195,608 478,435 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 146,811 275,762 245,223 457,847 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 96,376 116,741 178,156 185,548 Transfers between funds ........................ (64,524) (18,531) (57,836) (46,871) Surrenders (note 6) ............................ (48,252) (21,295) (132,454) (124,610) Death benefits (note 4) ........................ - - (9,980) - Net policy repayments (loans) (note 5) ......... (16,190) (2,623) (26,202) (2,371) Deductions for surrender charges (note 2d) ..... (2,051) (747) (6,102) (4,368) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (38,704) (38,975) (83,684) (94,902) Asset charges (note 3): FPVUL & VEL contracts ........................ (2,363) (2,005) (5,463) (5,093) MSP contracts ................................ (115) (242) (409) (335) SL contracts ................................. (212) (140) (1,006) (658) Adjustments to maintain reserves ............... 32 - 57 (6) ------------ ------------ ------------ ------------ Net equity transactions .................... (76,003) 32,183 (144,923) (93,666) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 70,808 307,945 100,300 364,181 Contract owners' equity beginning of period ...... 838,135 530,190 1,744,625 1,380,444 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 908,943 838,135 1,844,925 1,744,625 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 96,056 84,647 179,779 190,594 ------------ ------------ ------------ ------------ Units purchased ................................ 11,934 51,522 17,845 63,129 Units redeemed ................................. (20,088) (40,113) (32,010) (73,944) ------------ ------------ ------------ ------------ Ending units ................................... 87,902 96,056 165,614 179,779 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
CSLCapV DryEuroEq --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 20,305 11,579 - - Realized gain (loss) on investments ............ 350,739 (185,166) - - Change in unrealized gain (loss) on investments ................................ (3,491) 572,829 1 - Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 367,553 399,242 1 - ------------ ------------ ------------ ------------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 249,440 424,916 174 (847) Transfers between funds ........................ (264,596) (113,246) (322) 841 Surrenders (note 6) ............................ (127,174) (121,277) - 186 Death benefits (note 4) ........................ (424) (9,891) - - Net policy repayments (loans) (note 5) ......... 13,278 9,098 - (193) Deductions for surrender charges (note 2d) ..... (3,856) (4,251) - 7 Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (177,942) (110,261) 142 (234) Asset charges (note 3): FPVUL & VEL contracts ........................ (5,273) (4,419) 4 - MSP contracts ................................ (489) (443) - - SL contracts ................................. (1,021) (891) - - Adjustments to maintain reserves ............... 41,753 (34,867) 1 (1,747) ------------ ------------ ------------ ------------ Net equity transactions .................... (276,304) 34,468 (1) (1,987) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 91,249 433,710 - (1,987) Contract owners' equity beginning of period ...... 2,112,892 1,679,182 - 1,987 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 2,204,141 2,112,892 - - ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 177,466 175,080 - 282 ------------ ------------ ------------ ------------ Units purchased ................................ 44,442 66,176 40 147 Units redeemed ................................. (55,298) (63,790) (40) (429) ------------ ------------ ------------ ------------ Ending units ................................... 166,610 177,466 - - ============ ============ ============ ============
DryMidCapStS DrySmCapIxS --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 1,826 3,994 61,432 9,025 Realized gain (loss) on investments ............ 45,575 20,925 1,111,154 612,843 Change in unrealized gain (loss) on investments ................................ 89,191 16,660 1,150,304 809,461 Reinvested capital gains ....................... 30,048 - 451,800 40,118 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 166,640 41,579 2,774,690 1,471,447 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 167,960 466,628 1,507,884 903,885 Transfers between funds ........................ (1,129,850) 1,646,939 8,847,686 4,763,665 Surrenders (note 6) ............................ (511) - (232,500) (100,497) Death benefits (note 4) ........................ (700) - (14,604) (7,955) Net policy repayments (loans) (note 5) ......... - - (34,162) (2,413) Deductions for surrender charges (note 2d) ..... - - (20,068) (3,523) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (36,926) (9,983) (539,556) (184,176) Asset charges (note 3): FPVUL & VEL contracts ........................ - - (16,610) (5,854) MSP contracts ................................ - - (14) (5) SL contracts ................................. - - (3,158) (1,040) Adjustments to maintain reserves ............... 1,987 (4,405) 266 14,655 ------------ ------------ ------------ ------------ Net equity transactions .................... (998,040) 2,099,179 9,495,164 5,376,742 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ (831,400) 2,140,758 12,269,854 6,848,189 Contract owners' equity beginning of period ...... 2,169,084 28,326 9,312,638 2,464,449 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 1,337,684 2,169,084 21,582,492 9,312,638 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 165,465 2,842 882,068 321,221 ------------ ------------ ------------ ------------ Units purchased ................................ 66,560 165,868 993,416 595,722 Units redeemed ................................. (142,561) (3,245) (194,412) (34,875) ------------ ------------ ------------ ------------ Ending units ................................... 89,464 165,465 1,681,072 882,068 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
DrySRGro DryStkIx --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 59,303 9,226 5,910,229 3,807,142 Realized gain (loss) on investments ............ (377,284) (2,471,747) (6,208,026) (30,299,386) Change in unrealized gain (loss) on investments ................................ 1,291,946 5,739,828 36,690,781 98,834,334 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 973,965 3,277,307 36,392,984 72,342,090 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 3,031,894 3,401,462 50,295,788 54,327,291 Transfers between funds ........................ (552,670) (1,839,608) (23,413,482) 6,016,875 Surrenders (note 6) ............................ (848,938) (1,994,494) (19,851,823) (34,561,198) Death benefits (note 4) ........................ (51,852) (15,838) (418,016) (281,113) Net policy repayments (loans) (note 5) ......... (236,826) 889,748 (2,814,778) 7,880,937 Deductions for surrender charges (note 2d) ..... (85,377) (69,919) (949,964) (1,211,580) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (1,390,290) (1,562,110) (14,224,384) (14,145,740) Asset charges (note 3): FPVUL & VEL contracts ........................ (61,239) (54,112) (483,806) (398,730) MSP contracts ................................ (2,329) (2,285) (19,586) (17,616) SL contracts ................................. (5,909) (5,345) (235,161) (174,435) Adjustments to maintain reserves ............... (17,220) 14,789 23,777 (12,769) ------------ ------------ ------------ ------------ Net equity transactions .................... (220,756) (1,237,712) (12,091,435) 17,421,922 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 753,209 2,039,595 24,301,549 89,764,012 Contract owners' equity beginning of period ...... 16,053,998 14,014,403 342,381,871 252,617,859 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 16,807,207 16,053,998 366,683,420 342,381,871 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,617,210 1,785,944 32,191,140 29,512,045 ------------ ------------ ------------ ------------ Units purchased ................................ 420,665 508,495 9,694,670 14,387,513 Units redeemed ................................. (423,207) (677,229) (10,499,520) (11,708,418) ------------ ------------ ------------ ------------ Ending units ................................... 1,614,668 1,617,210 31,386,290 32,191,140 ============ ============ ============ ============
DryVIFApp DryVIFDevLd --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 478,649 343,852 1,505 25 Realized gain (loss) on investments ............ 52,675 (2,311,117) 11,959 2,044 Change in unrealized gain (loss) on investments ................................ 1,045,381 8,650,961 51,923 9,988 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 1,576,705 6,683,696 65,387 12,057 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 5,155,184 7,070,591 261,722 46,332 Transfers between funds ........................ (1,923,886) (8,163,364) 447,264 155,556 Surrenders (note 6) ............................ (2,852,877) (5,022,238) (12,945) (14) Death benefits (note 4) ........................ (54,788) (36,800) - - Net policy repayments (loans) (note 5) ......... (189,090) 46,422 (1,696) (136) Deductions for surrender charges (note 2d) ..... (171,561) (176,060) (1,984) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (1,531,036) (1,810,005) (54,734) (5,241) Asset charges (note 3): FPVUL & VEL contracts ........................ (59,428) (50,854) (2,293) (167) MSP contracts ................................ (1,368) (970) - - SL contracts ................................. (11,677) (9,613) (186) (3) Adjustments to maintain reserves ............... 376 (324) 1,587 (2,330) ------------ ------------ ------------ ------------ Net equity transactions .................... (1,640,151) (8,153,215) 636,735 193,996 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ (63,446) (1,469,519) 702,122 206,053 Contract owners' equity beginning of period ...... 32,123,895 33,593,414 206,053 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 32,060,449 32,123,895 908,175 206,053 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 2,824,718 3,534,935 15,972 - ------------ ------------ ------------ ------------ Units purchased ................................ 984,465 2,143,415 52,967 16,426 Units redeemed ................................. (1,132,045) (2,853,632) (5,713) (454) ------------ ------------ ------------ ------------ Ending units ................................... 2,677,138 2,824,718 63,226 15,972 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
DryVIFIntVal FedAmLead --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 255,602 107,589 2,560 (3) Realized gain (loss) on investments ............ 1,975,267 64,212 3,653 87 Change in unrealized gain (loss) on investments ................................ 2,535,712 1,673,053 18,422 16,907 Reinvested capital gains ....................... 477,666 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 5,244,247 1,844,854 24,635 16,991 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 3,476,792 919,156 27,860 1,421 Transfers between funds ........................ 6,719,770 14,753,743 128,436 141,546 Surrenders (note 6) ............................ (911,332) - (230) (15) Death benefits (note 4) ........................ (82,820) - - - Net policy repayments (loans) (note 5) ......... - - (5,434) (165) Deductions for surrender charges (note 2d) ..... (31,901) - (540) - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (345,852) (48,361) (16,976) (2,891) Asset charges (note 3): FPVUL & VEL contracts ........................ - - (818) (160) MSP contracts ................................ - - - - SL contracts ................................. - - (128) (27) Adjustments to maintain reserves ............... 336 - (77) (3,005) ------------ ------------ ------------ ------------ Net equity transactions .................... 8,824,993 15,624,538 132,093 136,704 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 14,069,240 17,469,392 156,728 153,695 Contract owners' equity beginning of period ...... 17,759,509 290,117 153,695 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 31,828,749 17,759,509 310,423 153,695 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,384,079 30,751 12,199 - ------------ ------------ ------------ ------------ Units purchased ................................ 1,096,389 1,640,953 12,175 12,477 Units redeemed ................................. (407,846) (287,625) (1,930) (278) ------------ ------------ ------------ ------------ Ending units ................................... 2,072,622 1,384,079 22,444 12,199 ============ ============ ============ ============
FedCapAp FedQualBd --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 658 (3) 3,408,509 2,669,355 Realized gain (loss) on investments ............ 2,338 1,026 357,641 1,174,368 Change in unrealized gain (loss) on investments ................................ 12,662 6,758 (1,501,593) (290,377) Reinvested capital gains ....................... - - 784,976 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 15,658 7,781 3,049,533 3,553,346 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 74,242 25,326 13,140,522 15,133,881 Transfers between funds ........................ 203,034 71,996 (345,664) (5,601,820) Surrenders (note 6) ............................ (97) - (1,290,987) (2,568,284) Death benefits (note 4) ........................ - - (51,692) (245,549) Net policy repayments (loans) (note 5) ......... (4,606) - 41,896 (175,480) Deductions for surrender charges (note 2d) ..... (84) - (85,221) (90,034) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (24,874) (3,985) (3,014,238) (3,453,738) Asset charges (note 3): FPVUL & VEL contracts ........................ (734) (113) (74,083) (77,962) MSP contracts ................................ - - (3,479) (3,430) SL contracts ................................. (82) (13) (67,031) (57,595) Adjustments to maintain reserves ............... 752 - (54,157) 68,079 ------------ ------------ ------------ ------------ Net equity transactions .................... 247,551 93,211 8,195,866 2,928,068 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 263,209 100,992 11,245,399 6,481,414 Contract owners' equity beginning of period ...... 100,992 - 84,125,171 77,643,757 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 364,201 100,992 95,370,570 84,125,171 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 8,379 - 6,303,421 6,075,274 ------------ ------------ ------------ ------------ Units purchased ................................ 22,324 9,442 2,476,528 2,424,791 Units redeemed ................................. (2,567) (1,063) (1,879,911) (2,196,644) ------------ ------------ ------------ ------------ Ending units ................................... 28,136 8,379 6,900,038 6,303,421 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
FidVIPEIS FidVIPGrS ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ................... $ 1,135,439 1,121,883 30,821 26,150 Realized gain (loss) on investments ............ 731,696 (4,800,486) (6,416,202) (10,015,356) Change in unrealized gain (loss) on investments ................................ 7,762,067 24,626,814 9,944,558 35,886,353 Reinvested capital gains ....................... 320,432 - - - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .... 9,949,634 20,948,211 3,559,177 25,897,147 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 14,140,360 13,598,853 16,493,502 16,165,889 Transfers between funds ........................ 996,764 (678,612) (2,755,076) 4,045,023 Surrenders (note 6) ............................ (5,572,610) (10,123,705) (5,758,486) (3,187,880) Death benefits (note 4) ........................ (155,714) (70,450) (172,812) (38,946) Net policy repayments (loans) (note 5) ......... (240,600) 619,515 (427,150) (490,480) Deductions for surrender charges (note 2d) ..... (245,813) (354,897) (489,519) (111,755) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (4,668,800) (4,569,939) (6,486,112) (6,639,047) Asset charges (note 3): FPVUL & VEL contracts ........................ (190,810) (146,122) (241,652) (202,212) MSP contracts ................................ (7,785) (6,653) (8,401) (7,877) SL contracts ................................. (30,570) (22,179) (36,204) (30,240) Adjustments to maintain reserves ............... 17,681 (422) (75,263) 91,014 ------------- ------------- ------------- ------------- Net equity transactions .................... 4,042,103 (1,754,611) 42,827 9,593,489 ------------- ------------- ------------- ------------- Net change in contract owners' equity ............ 13,991,737 19,193,600 3,602,004 35,490,636 Contract owners' equity beginning of period ...... 86,517,879 67,324,279 111,107,328 75,616,692 ------------- ------------- ------------- ------------- Contract owners' equity end of period ............ $ 100,509,616 86,517,879 114,709,332 111,107,328 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 7,035,458 7,162,706 9,891,920 8,611,026 ------------- ------------- ------------- ------------- Units purchased ................................ 2,168,134 2,301,580 4,277,317 3,892,753 Units redeemed ................................. (1,817,954) (2,428,828) (3,628,777) (2,611,859) ------------- ------------- ------------- ------------- Ending units ................................... 7,385,638 7,035,458 10,540,460 9,891,920 ============= ============= ============= =============
FidVIPHIS FidVIPOvS ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ................... 2,109,409 1,514,749 306,414 135,021 Realized gain (loss) on investments ............ 1,028,520 (1,308,653) 2,951,398 7,076,659 Change in unrealized gain (loss) on investments ................................ (787,461) 5,412,898 1,320,701 5,539,950 Reinvested capital gains ....................... - - - - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .... 2,350,468 5,618,994 4,578,513 12,751,630 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 2,785,596 2,593,182 6,310,522 6,441,989 Transfers between funds ........................ 5,531,034 1,044,670 6,679,008 (7,049,489) Surrenders (note 6) ............................ (1,199,507) (1,028,375) (3,264,689) (1,918,601) Death benefits (note 4) ........................ (88,758) (8,171) (97,444) (7,361) Net policy repayments (loans) (note 5) ......... 26,200 (294,719) (93,240) (342,607) Deductions for surrender charges (note 2d) ..... (86,439) (36,051) (81,763) (67,259) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (1,178,226) (1,345,170) (1,546,756) (1,282,804) Asset charges (note 3): FPVUL & VEL contracts ........................ (48,135) (44,804) (54,634) (39,163) MSP contracts ................................ (2,229) (2,183) (1,680) (1,297) SL contracts ................................. (7,483) (6,530) (28,364) (18,660) Adjustments to maintain reserves ............... (57,666) 54,450 372,976 (216,411) ------------- ------------- ------------- ------------- Net equity transactions .................... 5,674,387 926,299 8,193,936 (4,501,663) ------------- ------------- ------------- ------------- Net change in contract owners' equity ............ 8,024,855 6,545,293 12,772,449 8,249,967 Contract owners' equity beginning of period ...... 26,995,379 20,450,086 30,195,717 21,945,750 ------------- ------------- ------------- ------------- Contract owners' equity end of period ............ 35,020,234 26,995,379 42,968,166 30,195,717 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 2,909,209 2,864,859 2,878,586 3,000,646 ------------- ------------- ------------- ------------- Units purchased ................................ 1,057,111 1,072,376 1,576,627 2,550,722 Units redeemed ................................. (747,036) (1,028,026) (831,017) (2,672,782) ------------- ------------- ------------- ------------- Ending units ................................... 3,219,284 2,909,209 3,624,196 2,878,586 ============= ============= ============= =============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
FidVIPConS FidVIPIGBdS ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ................... $ 108,194 122,417 34,548 (9) Realized gain (loss) on investments ............ 2,936,981 (3,299,422) (41,199) (1,044) Change in unrealized gain (loss) on investments ................................ 12,911,537 23,252,143 54,096 11,193 Reinvested capital gains ....................... - - 24,872 - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .... 15,956,712 20,075,138 72,317 10,140 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 15,832,014 13,452,331 425,268 52,310 Transfers between funds ........................ 4,428,368 14,597,101 2,848,262 653,876 Surrenders (note 6) ............................ (6,881,163) (3,127,918) (112,251) (648) Death benefits (note 4) ........................ (260,368) (57,881) - - Net policy repayments (loans) (note 5) ......... (190,584) (39,547) (5,936) (7,733) Deductions for surrender charges (note 2d) ..... (303,706) (109,653) (10,424) (23) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (5,731,266) (5,238,758) (149,376) (14,944) Asset charges (note 3): FPVUL & VEL contracts ........................ (246,359) (189,880) (6,030) (521) MSP contracts ................................ (6,485) (4,782) (403) (1) SL contracts ................................. (33,578) (26,628) (1,483) (34) Adjustments to maintain reserves ............... 51,006 (41,456) 95 2 ------------- ------------- ------------- ------------- Net equity transactions .................... 6,657,879 19,212,929 2,987,722 682,284 ------------- ------------- ------------- ------------- Net change in contract owners' equity ............ 22,614,591 39,288,067 3,060,039 692,424 Contract owners' equity beginning of period ...... 96,177,093 56,889,026 692,424 - ------------- ------------- ------------- ------------- Contract owners' equity end of period ............ $ 118,791,684 96,177,093 3,752,463 692,424 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 6,956,452 5,021,480 67,767 - ------------- ------------- ------------- ------------- Units purchased ................................ 3,070,750 3,535,066 311,688 70,136 Units redeemed ................................. (2,495,940) (1,600,094) (27,409) (2,369) ------------- ------------- ------------- ------------- Ending units ................................... 7,531,262 6,956,452 352,046 67,767 ============= ============= ============= =============
FidVIPGrOpS FidVIPMCapS ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ................... 65,304 66,211 (1,265) (27) Realized gain (loss) on investments ............ (458,387) (1,182,616) 127,988 82,221 Change in unrealized gain (loss) on investments ................................ 1,497,336 4,646,657 963,441 98,757 Reinvested capital gains ....................... - - - - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .... 1,104,253 3,530,252 1,090,164 180,951 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 2,143,792 2,522,608 1,100,880 125,191 Transfers between funds ........................ 347,844 115,567 4,575,574 1,130,175 Surrenders (note 6) ............................ (1,255,890) (541,985) (181,579) (6,389) Death benefits (note 4) ........................ (42,868) (21,638) - - Net policy repayments (loans) (note 5) ......... (82,826) (106,127) (55,096) 547 Deductions for surrender charges (note 2d) ..... (63,633) (19,000) (21,433) (224) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (970,196) (1,033,397) (319,584) (25,008) Asset charges (note 3): FPVUL & VEL contracts ........................ (45,330) (40,656) (13,839) (953) MSP contracts ................................ (1,880) (1,689) (107) (20) SL contracts ................................. (7,582) (6,191) (2,191) (216) Adjustments to maintain reserves ............... 897 465 23 - ------------- ------------- ------------- ------------- Net equity transactions .................... 22,328 867,957 5,082,648 1,223,103 ------------- ------------- ------------- ------------- Net change in contract owners' equity ............ 1,126,581 4,398,209 6,172,812 1,404,054 Contract owners' equity beginning of period ...... 15,687,054 11,288,845 1,404,054 - ------------- ------------- ------------- ------------- Contract owners' equity end of period ............ 16,813,635 15,687,054 7,576,866 1,404,054 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 1,733,173 1,624,590 99,682 - ------------- ------------- ------------- ------------- Units purchased ................................ 566,599 576,401 366,580 102,276 Units redeemed ................................. (572,214) (467,818) (35,134) (2,594) ------------- ------------- ------------- ------------- Ending units ................................... 1,727,558 1,733,173 431,128 99,682 ============= ============= ============= =============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
FidVIPValS FrVIPRisDiv --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (5,771) (1,461) 37,030 3,679 Realized gain (loss) on investments ............ 405,439 287,369 118,323 16,359 Change in unrealized gain (loss) on investments ................................ 178,029 365,472 473,356 177,883 Reinvested capital gains ....................... 11,920 25,908 70,156 11,381 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 589,617 677,288 698,865 209,302 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 1,241,854 393,487 1,658,934 255,396 Transfers between funds ........................ 448,464 3,393,887 4,507,000 2,304,502 Surrenders (note 6) ............................ (210,668) (89,905) (248,370) (6,889) Death benefits (note 4) ........................ (8,734) - (19,008) - Net policy repayments (loans) (note 5) ......... (10,848) (8,493) (191,624) (3,187) Deductions for surrender charges (note 2d) ..... (13,283) (3,152) (18,481) (241) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (353,522) (137,357) (357,886) (62,487) Asset charges (note 3): FPVUL & VEL contracts ........................ (14,087) (4,930) (18,451) (1,909) MSP contracts ................................ (625) (219) (667) (27) SL contracts ................................. (1,255) (332) (2,296) (432) Adjustments to maintain reserves ............... 196 221 (8,863) 13,638 ------------ ------------ ------------ ------------ Net equity transactions .................... 1,077,492 3,543,207 5,300,288 2,498,364 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 1,667,109 4,220,495 5,999,153 2,707,666 Contract owners' equity beginning of period ...... 4,374,375 153,880 2,707,666 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 6,041,484 4,374,375 8,706,819 2,707,666 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 369,649 20,494 220,019 - ------------ ------------ ------------ ------------ Units purchased ................................ 159,620 377,272 484,374 225,681 Units redeemed ................................. (81,023) (28,117) (68,439) (5,662) ------------ ------------ ------------ ------------ Ending units ................................... 448,246 369,649 635,954 220,019 ============ ============ ============ ============
FTVIPSmCpVal FrVIPForSec2 --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 3,746 (21) 92,564 52,295 Realized gain (loss) on investments ............ 13,427 44,531 1,199,799 127,796 Change in unrealized gain (loss) on investments ................................ 493,415 45,044 711,656 1,180,204 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 510,588 89,554 2,004,019 1,360,295 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 481,894 133,840 2,142,386 889,757 Transfers between funds ........................ 2,556,824 425,151 761,090 5,672,154 Surrenders (note 6) ............................ (78,921) (203) (562,239) (278) Death benefits (note 4) ........................ (2,226) - (10,292) - Net policy repayments (loans) (note 5) ......... (9,024) - - (169) Deductions for surrender charges (note 2d) ..... (5,533) (7) (935) (10) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (146,202) (13,992) (275,606) (87,234) Asset charges (note 3): FPVUL & VEL contracts ........................ (6,113) (485) - - MSP contracts ................................ (13) - - - SL contracts ................................. (536) (67) - - Adjustments to maintain reserves ............... 148 - 197 34 ------------ ------------ ------------ ------------ Net equity transactions .................... 2,790,298 544,237 2,054,601 6,474,254 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 3,300,886 633,791 4,058,620 7,834,549 Contract owners' equity beginning of period ...... 633,791 - 7,973,978 139,429 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 3,934,677 633,791 12,032,598 7,973,978 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 47,449 - 638,033 14,717 ------------ ------------ ------------ ------------ Units purchased ................................ 207,280 48,623 500,088 765,651 Units redeemed ................................. (17,345) (1,174) (323,371) (142,335) ------------ ------------ ------------ ------------ Ending units ................................... 237,384 47,449 814,750 638,033 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
FrVIPForSec GVITCVal --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 26,666 1,295 116,619 72,198 Realized gain (loss) on investments ............ 49,975 56,954 528,826 (819,312) Change in unrealized gain (loss) on investments ................................ 469,226 77,270 911,636 2,375,390 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 545,867 135,519 1,557,081 1,628,276 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 800,890 154,942 1,307,022 1,087,630 Transfers between funds ........................ 1,855,158 971,236 2,482,872 (371,853) Surrenders (note 6) ............................ (141,121) (13,074) (159,407) (204,750) Death benefits (note 4) ........................ (3,480) - (9,702) (50,444) Net policy repayments (loans) (note 5) ......... (6,538) (1,863) (72,056) 10,868 Deductions for surrender charges (note 2d) ..... (8,841) (458) (20,575) (7,178) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (127,038) (26,446) (476,054) (338,859) Asset charges (note 3): FPVUL & VEL contracts ........................ (6,960) (942) (18,785) (10,736) MSP contracts ................................ (109) (21) (829) (647) SL contracts ................................. (1,053) (42) (2,867) (2,037) Adjustments to maintain reserves ............... (7,188) 7,360 41,631 (33,540) ------------ ------------ ------------ ------------ Net equity transactions .................... 2,353,720 1,090,692 3,071,250 78,454 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 2,899,587 1,226,211 4,628,331 1,706,730 Contract owners' equity beginning of period ...... 1,226,211 - 7,207,297 5,500,567 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 4,125,798 1,226,211 11,835,628 7,207,297 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 92,411 - 728,021 743,874 ------------ ------------ ------------ ------------ Units purchased ................................ 188,578 95,303 381,660 261,096 Units redeemed ................................. (19,421) (2,892) (99,619) (276,949) ------------ ------------ ------------ ------------ Ending units ................................... 261,568 92,411 1,010,062 728,021 ============ ============ ============ ============
GVITDryIntVal GVITDMidCapl --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 34,796 (4) 226,272 123,549 Realized gain (loss) on investments ............ 38,761 28,387 1,121,345 (406,230) Change in unrealized gain (loss) on investments ................................ 430,051 22,942 5,605,147 12,149,701 Reinvested capital gains ....................... - - 1,548,608 278 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 503,608 51,325 8,501,372 11,867,298 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 545,830 18,266 9,108,294 8,936,277 Transfers between funds ........................ 3,504,332 274,261 4,448,740 4,583,904 Surrenders (note 6) ............................ (23,470) (6,158) (3,369,706) (1,823,209) Death benefits (note 4) ........................ (2,400) - (73,274) (7,598) Net policy repayments (loans) (note 5) ......... (10,212) (2,659) (269,480) (91,127) Deductions for surrender charges (note 2d) ..... (1,737) (216) (181,331) (63,915) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (126,390) (3,785) (2,240,264) (1,939,737) Asset charges (note 3): FPVUL & VEL contracts ........................ (6,341) (258) (85,832) (61,389) MSP contracts ................................ (172) (21) (1,727) (1,729) SL contracts ................................. (813) (11) (32,833) (23,449) Adjustments to maintain reserves ............... 4,643 - 7,959 - ------------ ------------ ------------ ------------ Net equity transactions .................... 3,883,270 279,419 7,310,546 9,508,028 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 4,386,878 330,744 15,811,918 21,375,326 Contract owners' equity beginning of period ...... 330,744 - 50,160,797 28,785,471 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 4,717,622 330,744 65,972,715 50,160,797 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 23,901 - 3,148,003 2,365,305 ------------ ------------ ------------ ------------ Units purchased ................................ 269,128 24,937 1,178,344 1,262,238 Units redeemed ................................. (11,753) (1,036) (646,019) (479,540) ------------ ------------ ------------ ------------ Ending units ................................... 281,276 23,901 3,680,328 3,148,003 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITEmMrkts GVITFHiInc --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 88,806 15,636 2,564,570 2,004,921 Realized gain (loss) on investments ............ 823,392 604,619 1,250,192 515,988 Change in unrealized gain (loss) on investments ................................ (626,920) 1,096,247 (471,186) 2,464,263 Reinvested capital gains ....................... 869,916 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 1,155,194 1,716,502 3,343,576 4,985,172 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 1,469,478 739,518 7,483,798 4,563,458 Transfers between funds ........................ 2,333,432 3,659,985 (4,521,700) 17,326,217 Surrenders (note 6) ............................ (302,028) (148,410) (1,111,388) (6,117,814) Death benefits (note 4) ........................ (10,868) (21,757) (112,286) (4,471) Net policy repayments (loans) (note 5) ......... 20,856 (16,541) 53,334 (346,516) Deductions for surrender charges (note 2d) ..... (23,236) (5,203) (61,114) (214,467) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (463,356) (215,788) (1,311,610) (1,218,036) Asset charges (note 3): FPVUL & VEL contracts ........................ (19,049) (7,043) (45,479) (38,129) MSP contracts ................................ (359) (23) (1,403) (1,166) SL contracts ................................. (2,542) (1,065) (20,060) (14,552) Adjustments to maintain reserves ............... 218 484 (30,643) 29,435 ------------ ------------ ------------ ------------ Net equity transactions .................... 3,002,546 3,984,157 321,449 13,963,959 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 4,157,740 5,700,659 3,665,025 18,949,131 Contract owners' equity beginning of period ...... 7,029,317 1,328,658 35,934,428 16,985,297 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 11,187,057 7,029,317 39,599,453 35,934,428 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 610,156 189,897 2,765,090 1,646,805 ------------ ------------ ------------ ------------ Units purchased ................................ 453,619 463,182 1,023,294 1,984,137 Units redeemed ................................. (258,963) (42,923) (1,044,160) (865,852) ------------ ------------ ------------ ------------ Ending units ................................... 804,812 610,156 2,744,224 2,765,090 ============ ============ ============ ============
GVITGlFin1 GVITGlHlth --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 33,876 8,689 (4,552) (1,406) Realized gain (loss) on investments ............ 186,721 31,051 (30,279) 163,482 Change in unrealized gain (loss) on investments ................................ 115,389 88,676 298,651 (124,144) Reinvested capital gains ....................... 171,722 220,655 17,644 300,747 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 507,708 349,071 281,464 338,679 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 371,158 216,607 722,258 417,000 Transfers between funds ........................ (74,404) 1,782,009 1,590,936 1,976,395 Surrenders (note 6) ............................ (35,563) (39,741) (144,050) (35,257) Death benefits (note 4) ........................ (7,368) - (35,664) - Net policy repayments (loans) (note 5) ......... (3,710) (20) (1,194) (11,959) Deductions for surrender charges (note 2d) ..... (4,527) (1,393) (12,931) (1,236) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (138,498) (49,605) (219,134) (93,863) Asset charges (note 3): FPVUL & VEL contracts ........................ (5,261) (1,839) (9,432) (2,766) MSP contracts ................................ (30) - (105) (1) SL contracts ................................. (957) (586) (1,767) (856) Adjustments to maintain reserves ............... 473 303 195 (72) ------------ ------------ ------------ ------------ Net equity transactions .................... 101,313 1,905,735 1,889,112 2,247,385 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 609,021 2,254,806 2,170,576 2,586,064 Contract owners' equity beginning of period ...... 2,390,525 135,719 2,794,019 207,955 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 2,999,546 2,390,525 4,964,595 2,794,019 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 195,399 15,666 245,499 24,935 ------------ ------------ ------------ ------------ Units purchased ................................ 91,983 187,771 210,373 241,486 Units redeemed ................................. (84,344) (8,038) (51,138) (20,922) ------------ ------------ ------------ ------------ Ending units ................................... 203,038 195,399 404,734 245,499 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITGlTech GVITGlUtl1 --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (9,080) (3,687) 20,807 2,620 Realized gain (loss) on investments ............ 611,568 186,217 108,716 34,410 Change in unrealized gain (loss) on investments ................................ (347,539) 902,402 165,443 52,291 Reinvested capital gains ....................... - - 117,478 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 254,949 1,084,932 412,444 89,321 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 964,750 761,660 276,686 105,327 Transfers between funds ........................ 3,887,812 3,126,107 1,366,596 622,122 Surrenders (note 6) ............................ (129,273) (85,018) (23,567) (39,275) Death benefits (note 4) ........................ (6,512) (3,024) (324) - Net policy repayments (loans) (note 5) ......... (12,252) (41,081) (2,610) 583 Deductions for surrender charges (note 2d) ..... (15,310) (2,980) (2,983) (1,377) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (301,508) (206,424) (59,288) (22,472) Asset charges (note 3): FPVUL & VEL contracts ........................ (12,107) (7,143) (2,524) (739) MSP contracts ................................ (367) (273) (43) - SL contracts ................................. (970) (738) (268) (175) Adjustments to maintain reserves ............... (303) 521 161 (9) ------------ ------------ ------------ ------------ Net equity transactions .................... 4,373,960 3,541,607 1,551,836 663,985 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 4,628,909 4,626,539 1,964,280 753,306 Contract owners' equity beginning of period ...... 5,860,343 1,233,804 848,105 94,799 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 10,489,252 5,860,343 2,812,385 848,105 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,923,437 626,247 78,867 10,923 ------------ ------------ ------------ ------------ Units purchased ................................ 1,817,494 1,505,198 161,650 78,954 Units redeemed ................................. (434,485) (208,008) (39,213) (11,010) ------------ ------------ ------------ ------------ Ending units ................................... 3,306,446 1,923,437 201,304 78,867 ============ ============ ============ ============
GVITGvtBd GVITGrowth --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 7,538,438 6,332,442 46,932 (2,134) Realized gain (loss) on investments ............ 959,610 4,746,922 (370,475) (7,260,407) Change in unrealized gain (loss) on investments ................................ (6,769,675) (7,366,374) 1,543,358 11,255,445 Reinvested capital gains ....................... 2,833,814 303,327 - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 4,562,187 4,016,317 1,219,815 3,992,904 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 24,085,672 35,042,205 3,219,676 3,574,930 Transfers between funds ........................ (32,459,168) (56,638,431) (891,008) (166,732) Surrenders (note 6) ............................ (11,441,756) (30,026,562) (681,844) (2,673,167) Death benefits (note 4) ........................ (198,830) (100,750) (103,252) (17,888) Net policy repayments (loans) (note 5) ......... (351,504) 1,461,543 (122,620) 13,728 Deductions for surrender charges (note 2d) ..... (521,758) (1,052,613) (71,819) (93,711) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (4,884,014) (7,540,987) (1,447,388) (1,614,663) Asset charges (note 3): FPVUL & VEL contracts ........................ (115,093) (132,496) (64,513) (55,080) MSP contracts ................................ (17,435) (21,841) (2,240) (2,472) SL contracts ................................. (77,362) (71,479) (6,699) (5,433) Adjustments to maintain reserves ............... (38,598) 44,694 241 431 ------------ ------------ ------------ ------------ Net equity transactions .................... (26,019,846) (59,036,717) (171,466) (1,040,057) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ (21,457,659) (55,020,400) 1,048,349 2,952,847 Contract owners' equity beginning of period ...... 161,219,837 216,240,237 14,901,274 11,948,427 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 139,762,178 161,219,837 15,949,623 14,901,274 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 11,739,257 15,832,361 2,222,372 2,437,525 ------------ ------------ ------------ ------------ Units purchased ................................ 4,124,396 6,612,175 583,168 860,919 Units redeemed ................................. (5,732,867) (10,705,279) (609,750) (1,076,072) ------------ ------------ ------------ ------------ Ending units ................................... 10,130,786 11,739,257 2,195,790 2,222,372 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITIDAgg GVITIDCon --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 165,619 48,954 149,212 83,758 Realized gain (loss) on investments ............ 187,284 181,388 45,003 14,703 Change in unrealized gain (loss) on investments ................................ 837,817 715,206 44,902 161,113 Reinvested capital gains ....................... 243,504 71,466 65,900 18,585 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 1,434,224 1,017,014 305,017 278,159 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 3,434,152 2,494,286 2,139,028 936,911 Transfers between funds ........................ 2,820,256 2,048,043 1,412,054 2,045,025 Surrenders (note 6) ............................ (89,584) (58,372) (166,685) (35,948) Death benefits (note 4) ........................ (3,270) (70) (3,970) (21,942) Net policy repayments (loans) (note 5) ......... (112,058) (23,098) (15,024) (16,162) Deductions for surrender charges (note 2d) ..... (39,980) (2,046) (11,281) (1,260) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (784,266) (350,358) (457,690) (303,068) Asset charges (note 3): FPVUL & VEL contracts ........................ (28,497) (11,964) (13,122) (7,634) MSP contracts ................................ (334) (92) (3,162) (1,553) SL contracts ................................. (3,704) (741) (3,914) (1,957) Adjustments to maintain reserves ............... 161 98 147 (64) ------------ ------------ ------------ ------------ Net equity transactions .................... 5,192,876 4,095,686 2,876,381 2,592,348 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 6,627,100 5,112,700 3,181,398 2,870,507 Contract owners' equity beginning of period ...... 6,473,571 1,360,871 4,973,477 2,102,970 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 13,100,671 6,473,571 8,154,875 4,973,477 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 589,444 163,357 458,729 209,267 ------------ ------------ ------------ ------------ Units purchased ................................ 567,157 477,178 339,113 289,466 Units redeemed ................................. (109,907) (51,091) (78,084) (40,004) ------------ ------------ ------------ ------------ Ending units ................................... 1,046,694 589,444 719,758 458,729 ============ ============ ============ ============
GVITIDMod GVITIDModAgg --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 518,548 173,050 490,408 134,816 Realized gain (loss) on investments ............ 331,395 22,099 480,505 130,031 Change in unrealized gain (loss) on investments ................................ 1,575,544 1,669,089 2,080,811 2,253,214 Reinvested capital gains ....................... 135,430 6,002 422,100 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 2,560,917 1,870,240 3,473,824 2,518,061 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 7,928,864 3,619,210 7,254,544 3,913,779 Transfers between funds ........................ 9,313,826 8,212,652 13,619,108 7,209,340 Surrenders (note 6) ............................ (545,430) (253,774) (531,514) (76,496) Death benefits (note 4) ........................ (22,514) (30) (942,384) (100) Net policy repayments (loans) (note 5) ......... (344,684) (80,776) (353,846) 25,879 Deductions for surrender charges (note 2d) ..... (88,106) (8,896) (95,420) (2,682) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (2,179,316) (906,725) (2,249,180) (953,658) Asset charges (note 3): FPVUL & VEL contracts ........................ (75,434) (29,616) (81,649) (27,625) MSP contracts ................................ (6,469) (1,348) (4,587) (2,517) SL contracts ................................. (10,205) (4,559) (8,312) (2,677) Adjustments to maintain reserves ............... (5,549) 5,256 202 1,006 ------------ ------------ ------------ ------------ Net equity transactions .................... 13,964,983 10,551,394 16,606,962 10,084,249 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 16,525,900 12,421,634 20,080,786 12,602,310 Contract owners' equity beginning of period ...... 16,144,382 3,722,748 16,050,486 3,448,176 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 32,670,282 16,144,382 36,131,272 16,050,486 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,471,635 407,326 1,459,312 396,964 ------------ ------------ ------------ ------------ Units purchased ................................ 1,561,230 1,194,515 1,880,490 1,179,488 Units redeemed ................................. (311,211) (130,206) (407,636) (117,140) ------------ ------------ ------------ ------------ Ending units ................................... 2,721,654 1,471,635 2,932,166 1,459,312 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITIDModCon GVITIntGro --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 261,289 143,311 13,051 (1,304) Realized gain (loss) on investments ............ 178,632 47,748 263,101 287,832 Change in unrealized gain (loss) on investments ................................ 325,139 677,003 (27,696) 217,181 Reinvested capital gains ....................... 82,536 14,290 - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 847,596 882,352 248,456 503,709 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 2,154,210 2,460,009 252,026 376,773 Transfers between funds ........................ 3,059,048 2,128,280 (982,540) 978,646 Surrenders (note 6) ............................ (60,961) (87,575) (39,152) (74,725) Death benefits (note 4) ........................ (99,902) (22,472) (64) (132) Net policy repayments (loans) (note 5) ......... (118,076) 15,603 (2,500) 7,411 Deductions for surrender charges (note 2d) ..... (19,732) (3,070) (5,944) (2,620) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (760,400) (495,026) (69,098) (66,125) Asset charges (note 3): FPVUL & VEL contracts ........................ (24,201) (14,993) (3,348) (2,606) MSP contracts ................................ (4,040) (1,950) (189) (7) SL contracts ................................. (8,196) (6,010) (204) (171) Adjustments to maintain reserves ............... 87 975 433,435 (312,286) ------------ ------------ ------------ ------------ Net equity transactions .................... 4,117,837 3,973,771 (417,578) 904,158 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 4,965,433 4,856,123 (169,122) 1,407,867 Contract owners' equity beginning of period ...... 8,942,689 4,086,566 2,051,563 643,696 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 13,908,122 8,942,689 1,882,441 2,051,563 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 815,829 423,829 302,911 128,905 ------------ ------------ ------------ ------------ Units purchased ................................ 518,256 476,737 75,954 190,940 Units redeemed ................................. (147,527) (84,737) (135,145) (16,934) ------------ ------------ ------------ ------------ Ending units ................................... 1,186,558 815,829 243,720 302,911 ============ ============ ============ ============
GVITJPBal GVITSMdCpGr --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 365,375 310,932 (14,726) (21,177) Realized gain (loss) on investments ............ 176,924 (1,114,649) 903,791 (6,221,454) Change in unrealized gain (loss) on investments ................................ 1,096,457 4,225,049 1,889,603 11,980,636 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 1,638,756 3,421,332 2,778,668 5,738,005 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 2,759,896 4,638,871 2,740,526 2,705,656 Transfers between funds ........................ (1,062,356) (1,225,528) 8,464,512 (4,603,563) Surrenders (note 6) ............................ (1,835,320) (3,610,097) (739,209) (2,346,548) Death benefits (note 4) ........................ (39,280) (81,014) (15,356) (15,373) Net policy repayments (loans) (note 5) ......... 5,368 (22,644) (170,470) (60,881) Deductions for surrender charges (note 2d) ..... (91,815) (126,556) (91,667) (82,261) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (1,007,232) (1,217,180) (1,124,136) (1,258,797) Asset charges (note 3): FPVUL & VEL contracts ........................ (41,577) (34,976) (45,277) (36,188) MSP contracts ................................ (2,267) (2,676) (824) (718) SL contracts ................................. (8,513) (7,848) (5,401) (4,443) Adjustments to maintain reserves ............... 194 1,549 221 (170) ------------ ------------ ------------ ------------ Net equity transactions .................... (1,322,902) (1,688,099) 9,012,919 (5,703,286) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 315,854 1,733,233 11,791,587 34,719 Contract owners' equity beginning of period ...... 20,653,281 18,920,048 17,505,609 17,470,890 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 20,969,135 20,653,281 29,297,196 17,505,609 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,965,948 2,162,462 1,734,720 2,440,718 ------------ ------------ ------------ ------------ Units purchased ................................ 462,314 812,892 1,770,411 709,269 Units redeemed ................................. (600,256) (1,009,406) (511,493) (1,415,267) ------------ ------------ ------------ ------------ Ending units ................................... 1,828,006 1,965,948 2,993,638 1,734,720 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITMyMkt GVITMyMkt5 ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ................... $ 1,092,463 1,171,193 2,205,220 1,311,594 Realized gain (loss) on investments ............ - - - - Change in unrealized gain (loss) on investments ................................ - - - - Reinvested capital gains ....................... - - - - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .... 1,092,463 1,171,193 2,205,220 1,311,594 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 91,624,704 97,467,249 181,752,108 192,507,440 Transfers between funds ........................ (75,103,776) (114,357,039) (34,685,180) (101,290,021) Surrenders (note 6) ............................ (38,910,568) (55,824,565) (31,071,081) (61,768,748) Death benefits (note 4) ........................ (461,846) (379,114) (223,796) (89,736) Net policy repayments (loans) (note 5) ......... (1,204,930) 2,863,684 (2,686) 1,132,304 Deductions for surrender charges (note 2d) ..... (1,487,186) (1,956,990) (582,301) (2,165,370) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (11,958,702) (16,170,050) (6,034,070) (7,334,396) Asset charges (note 3): FPVUL & VEL contracts ........................ (419,623) (488,660) - - MSP contracts ................................ (27,238) (24,579) - - SL contracts ................................. (83,030) (96,167) - - Adjustments to maintain reserves ............... (2,214,087) 3,301,389 1,246 (1,515) ------------- ------------- ------------- ------------- Net equity transactions .................... (40,246,282) (85,664,842) 109,154,240 20,989,958 ------------- ------------- ------------- ------------- Net change in contract owners' equity ............ (39,153,819) (84,493,649) 111,359,460 22,301,552 Contract owners' equity beginning of period ...... 166,183,415 250,677,064 285,855,485 263,553,933 ------------- ------------- ------------- ------------- Contract owners' equity end of period ............ $ 127,029,596 166,183,415 397,214,945 285,855,485 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 13,832,030 20,878,155 28,409,452 26,310,238 ------------- ------------- ------------- ------------- Units purchased ................................ 8,059,518 10,462,793 26,328,821 29,358,050 Units redeemed ................................. (11,543,946) (17,508,918) (15,545,871) (27,258,836) ------------- ------------- ------------- ------------- Ending units ................................... 10,347,602 13,832,030 39,192,402 28,409,452 ============= ============= ============= =============
GVITNWFund GVITLead ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ................... 2,751,977 956,515 2,093 285 Realized gain (loss) on investments ............ 105,578 (17,379,807) 24,049 66,863 Change in unrealized gain (loss) on investments ................................ 18,602,994 65,736,490 67,267 18,296 Reinvested capital gains ....................... - - 9,814 - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .... 21,460,549 49,313,198 103,223 85,444 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ............................... 7,086,110 7,905,976 89,246 85,026 Transfers between funds ........................ (754,832) 23,708,643 209,198 94,719 Surrenders (note 6) ............................ (2,436,781) (1,831,670) (30,949) (5,325) Death benefits (note 4) ........................ (199,992) (264,630) (2) (19) Net policy repayments (loans) (note 5) ......... (320,612) (278,604) (10,408) (6,100) Deductions for surrender charges (note 2d) ..... (205,286) (64,211) (1,397) (187) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (5,361,854) (5,875,204) (23,120) (16,243) Asset charges (note 3): FPVUL & VEL contracts ........................ (173,614) (148,808) (997) (718) MSP contracts ................................ (12,330) (11,110) - - SL contracts ................................. (14,327) (12,490) (42) (17) Adjustments to maintain reserves ............... 1,782 1,769 91 - ------------- ------------- ------------- ------------- Net equity transactions .................... (2,391,736) 23,129,661 231,620 151,136 ------------- ------------- ------------- ------------- Net change in contract owners' equity ............ 19,068,813 72,442,859 334,843 236,580 Contract owners' equity beginning of period ...... 224,447,215 152,004,356 364,981 128,401 ------------- ------------- ------------- ------------- Contract owners' equity end of period ............ 243,516,028 224,447,215 699,824 364,981 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 22,934,562 19,713,536 34,475 15,191 ------------- ------------- ------------- ------------- Units purchased ................................ 917,003 4,267,609 29,157 23,642 Units redeemed ................................. (1,151,367) (1,046,583) (7,890) (4,358) ------------- ------------- ------------- ------------- Ending units ................................... 22,700,198 22,934,562 55,742 34,475 ============= ============= ============= =============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITNStrVal GVITSmCapGr --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (458) (796) (27,171) (18,206) Realized gain (loss) on investments ............ 489,317 (149,477) 1,409,400 2,099,998 Change in unrealized gain (loss) on investments ................................ (371,091) 709,462 1,674,218 2,410,575 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 117,768 559,189 3,056,447 4,492,367 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 61,038 129,319 3,870,884 3,843,574 Transfers between funds ........................ (1,771,832) 98,035 2,840,268 3,039,194 Surrenders (note 6) ............................ (2,570) (567,140) (563,151) (803,743) Death benefits (note 4) ........................ - (208) (19,870) (1,348) Net policy repayments (loans) (note 5) ......... (426) (8,467) (80,632) (65,073) Deductions for surrender charges (note 2d) ..... (99) (19,882) (53,430) (28,176) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (24,384) (79,625) (1,043,252) (994,625) Asset charges (note 3): FPVUL & VEL contracts ........................ (1,177) (3,104) (41,546) (33,684) MSP contracts ................................ (188) (444) (673) (548) SL contracts ................................. (197) (474) (11,652) (9,095) Adjustments to maintain reserves ............... (18) 34 988,085 (989,376) ------------ ------------ ------------ ------------ Net equity transactions .................... (1,739,853) (451,956) 5,885,031 3,957,100 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ (1,622,085) 107,233 8,941,478 8,449,467 Contract owners' equity beginning of period ...... 1,622,085 1,514,852 19,845,051 11,395,584 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ - 1,622,085 28,786,529 19,845,051 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 156,411 202,694 1,453,721 1,119,506 ------------ ------------ ------------ ------------ Units purchased ................................ 24,511 57,324 700,563 574,317 Units redeemed ................................. (180,922) (103,607) (290,886) (240,102) ------------ ------------ ------------ ------------ Ending units ................................... - 156,411 1,863,398 1,453,721 ============ ============ ============ ============
GVITSmCapVal GVITSmComp --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... (122,124) (87,482) (174,098) (143,671) Realized gain (loss) on investments ............ 2,324,489 (3,331,739) 4,271,079 (1,256,885) Change in unrealized gain (loss) on investments ................................ 5,004,439 30,637,626 660,494 24,310,071 Reinvested capital gains ....................... 6,436,436 - 10,264,062 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 13,643,240 27,218,405 15,021,537 22,909,515 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 11,262,248 10,964,969 12,360,798 11,486,749 Transfers between funds ........................ (4,422,156) 3,526,726 (7,948,742) 3,805,259 Surrenders (note 6) ............................ (3,082,384) (3,697,081) (6,004,130) (3,898,963) Death benefits (note 4) ........................ (86,192) (38,805) (194,390) (36,812) Net policy repayments (loans) (note 5) ......... (511,704) 1,221,426 (392,018) 174,118 Deductions for surrender charges (note 2d) ..... (186,303) (129,605) (269,700) (136,682) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (3,786,368) (3,358,389) (3,220,796) (3,057,512) Asset charges (note 3): FPVUL & VEL contracts ........................ (158,950) (114,627) (116,411) (89,129) MSP contracts ................................ (4,943) (3,761) (3,675) (2,962) SL contracts ................................. (31,043) (22,315) (20,594) (15,599) Adjustments to maintain reserves ............... (71,394) 48,422 (27,428) 24,271 ------------ ------------ ------------ ------------ Net equity transactions .................... (1,079,189) 8,396,960 (5,837,086) 8,252,738 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 12,564,051 35,615,365 9,184,451 31,162,253 Contract owners' equity beginning of period ...... 80,325,414 44,710,049 80,466,986 49,304,733 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 92,889,465 80,325,414 89,651,437 80,466,986 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 4,241,435 3,651,086 5,165,973 4,334,554 ------------ ------------ ------------ ------------ Units purchased ................................ 944,605 1,499,506 1,744,812 2,105,343 Units redeemed ................................. (954,598) (909,157) (1,962,591) (1,273,924) ------------ ------------ ------------ ------------ Ending units ................................... 4,231,442 4,241,435 4,948,194 5,165,973 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITTGroFoc GVITUSGro --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (302) (526) (3,470) (1,851) Realized gain (loss) on investments ............ 93,434 156,796 (375,192) 674,474 Change in unrealized gain (loss) on investments ................................ (66,842) 130,920 578,925 (163,614) Reinvested capital gains ....................... - - 165,876 292,900 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 26,290 287,190 366,139 801,909 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 95,836 169,804 685,388 501,154 Transfers between funds ........................ (1,186,628) 352,590 (834,030) 3,039,266 Surrenders (note 6) ............................ (22,176) (83,300) (176,278) (226,805) Death benefits (note 4) ........................ (386) (88) (7,312) - Net policy repayments (loans) (note 5) ......... (2,830) (1,138) (14,916) (7,359) Deductions for surrender charges (note 2d) ..... (858) (2,920) (11,543) (7,951) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (22,424) (57,261) (249,472) (161,867) Asset charges (note 3): FPVUL & VEL contracts ........................ (827) (2,036) (9,914) (6,441) MSP contracts ................................ (8) (23) (276) (57) SL contracts ................................. (175) (448) (942) (382) Adjustments to maintain reserves ............... (8,761) 1,058 523 2,805 ------------ ------------ ------------ ------------ Net equity transactions .................... (1,149,237) 376,238 (618,772) 3,132,363 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ (1,122,947) 663,428 (252,633) 3,934,272 Contract owners' equity beginning of period ...... 1,122,947 459,519 4,336,194 401,922 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ - 1,122,947 4,083,561 4,336,194 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 337,566 208,046 346,883 48,858 ------------ ------------ ------------ ------------ Units purchased ................................ 63,741 187,485 111,043 336,513 Units redeemed ................................. (401,307) (57,965) (167,120) (38,488) ------------ ------------ ------------ ------------ Ending units ................................... - 337,566 290,806 346,883 ============ ============ ============ ============
GVITVKMultiSec GVITWLead --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 819,412 1,321,565 (1,131) (2,267) Realized gain (loss) on investments ............ 721,092 1,062,710 155,078 (574,965) Change in unrealized gain (loss) on investments ................................ (502,965) 550,178 451,020 1,609,490 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 1,037,539 2,934,453 604,967 1,032,258 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 2,572,366 3,695,958 528,376 592,766 Transfers between funds ........................ (7,238,858) 1,368,926 640,260 (323,570) Surrenders (note 6) ............................ (2,328,979) (7,991,229) (131,528) (398,551) Death benefits (note 4) ........................ (9,534) (15,509) (6,904) (1,209) Net policy repayments (loans) (note 5) ......... (66,170) (50,134) 11,246 6,501 Deductions for surrender charges (note 2d) ..... (28,653) (280,141) (12,284) (13,972) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (823,722) (1,057,623) (254,858) (234,284) Asset charges (note 3): FPVUL & VEL contracts ........................ (26,060) (26,096) (12,977) (10,839) MSP contracts ................................ (3,253) (3,306) (286) (282) SL contracts ................................. (3,679) (4,084) (1,382) (967) Adjustments to maintain reserves ............... (89,250) 84,899 (80) 191 ------------ ------------ ------------ ------------ Net equity transactions .................... (8,045,792) (4,278,339) 759,583 (384,216) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ (7,008,253) (1,343,886) 1,364,550 648,042 Contract owners' equity beginning of period ...... 21,100,002 22,443,888 3,652,676 3,004,634 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 14,091,749 21,100,002 5,017,226 3,652,676 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,587,574 1,873,291 359,266 406,549 ------------ ------------ ------------ ------------ Units purchased ................................ 417,112 1,399,580 178,586 122,092 Units redeemed ................................. (1,024,478) (1,685,297) (97,204) (169,375) ------------ ------------ ------------ ------------ Ending units ................................... 980,208 1,587,574 440,648 359,266 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GSMdCpValA GSVITMidCap -------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ - - 125,668 88,506 Realized gain (loss) on investments ............ - 6 2,310,929 135,995 Change in unrealized gain (loss) on investments ................................ - 20 1,269,480 1,824,068 Reinvested capital gains ....................... - - 3,321,362 145,638 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... - 26 7,027,439 2,194,207 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... - - 4,622,376 1,834,204 Transfers between funds ........................ - (763) 10,080,864 13,587,697 Surrenders (note 6) ............................ - - (848,903) (14,049) Death benefits (note 4) ........................ - - (65,516) - Net policy repayments (loans) (note 5) ......... - - 60,952 (2,677) Deductions for surrender charges (note 2d) ..... - - (22,239) (493) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. - (74) (514,068) (121,300) Asset charges (note 3): FPVUL & VEL contracts ........................ - - - - MSP contracts ................................ - - - - SL contracts ................................. - - - - Adjustments to maintain reserves ............... - 811 467 811 ------------ ------------ ------------ ------------ Net equity transactions .................... - (26) 13,313,933 15,284,193 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ - - 20,341,372 17,478,400 Contract owners' equity beginning of period ...... - - 17,551,174 72,774 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ - - 37,892,546 17,551,174 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ - - 1,387,658 7,368 ------------ ------------ ------------ ------------ Units purchased ................................ - 77 1,543,439 1,500,451 Units redeemed ................................. - (77) (544,517) (120,161) ------------ ------------ ------------ ------------ Ending units ................................... - - 2,386,580 1,387,658 ============ ============ ============ ============
JanBal JanCapAp -------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 151,038 54,491 (42,874) 32,528 Realized gain (loss) on investments ............ 70,816 85,307 1,143,877 (1,912,692) Change in unrealized gain (loss) on investments ................................ 363,085 246,371 5,549,490 8,271,924 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 584,939 386,169 6,650,493 6,391,760 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 1,160,576 821,364 6,422,848 7,160,656 Transfers between funds ........................ 1,679,870 4,055,239 (7,394,698) 2,601,889 Surrenders (note 6) ............................ (69,424) (87,938) (1,752,563) (1,153,173) Death benefits (note 4) ........................ (28,654) - (18,232) (23,216) Net policy repayments (loans) (note 5) ......... 472 (985) (134,220) (116,736) Deductions for surrender charges (note 2d) ..... (4,315) (3,083) (120,894) (40,426) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (178,672) (71,400) (2,242,458) (2,498,629) Asset charges (note 3): FPVUL & VEL contracts ........................ (2,507) (649) (91,384) (78,888) MSP contracts ................................ - - (2,106) (2,042) SL contracts ................................. (435) (134) (11,896) (11,045) Adjustments to maintain reserves ............... 193 53 463 1,269 ------------ ------------ ------------ ------------ Net equity transactions .................... 2,557,104 4,712,467 (5,345,140) 5,839,659 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 3,142,043 5,098,636 1,305,353 12,231,419 Contract owners' equity beginning of period ...... 5,108,439 9,803 41,144,561 28,913,142 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 8,250,482 5,108,439 42,449,914 41,144,561 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 449,080 977 6,358,834 5,364,244 ------------ ------------ ------------ ------------ Units purchased ................................ 491,143 487,396 1,474,265 2,562,709 Units redeemed ................................. (269,377) (39,293) (2,272,205) (1,568,119) ------------ ------------ ------------ ------------ Ending units ................................... 670,846 449,080 5,560,894 6,358,834 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
JanGlTech JanIntGro --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (8,121) (8,866) 257,097 259,609 Realized gain (loss) on investments ............ (645,737) (2,439,149) 2,563,889 2,408,308 Change in unrealized gain (loss) on investments ................................ 695,001 7,347,499 3,612,548 6,998,962 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 41,143 4,899,484 6,433,534 9,666,879 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 2,795,478 3,378,471 5,532,358 5,987,682 Transfers between funds ........................ (1,856,896) (1,559,502) (3,450,776) (7,806,540) Surrenders (note 6) ............................ (653,867) (537,101) (1,699,195) (1,040,879) Death benefits (note 4) ........................ (8,038) (10,154) (31,014) (39,662) Net policy repayments (loans) (note 5) ......... (47,148) (142,785) (118,742) (94,748) Deductions for surrender charges (note 2d) ..... (63,144) (18,829) (120,978) (36,489) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (1,005,570) (1,177,248) (1,873,360) (1,976,426) Asset charges (note 3): FPVUL & VEL contracts ........................ (42,706) (38,787) (75,471) (60,533) MSP contracts ................................ (828) (817) (1,518) (1,406) SL contracts ................................. (7,949) (6,794) (9,874) (8,230) Adjustments to maintain reserves ............... 365 3,196 72,014 (48,110) ------------ ------------ ------------ ------------ Net equity transactions .................... (890,303) (110,350) (1,776,556) (5,125,341) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ (849,160) 4,789,134 4,656,978 4,541,538 Contract owners' equity beginning of period ...... 15,076,606 10,287,472 36,484,345 31,942,807 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 14,227,446 15,076,606 41,141,323 36,484,345 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 4,234,188 4,230,880 5,805,013 6,832,396 ------------ ------------ ------------ ------------ Units purchased ................................ 1,097,931 1,494,645 1,967,284 1,706,716 Units redeemed ................................. (1,360,705) (1,491,337) (2,257,961) (2,734,099) ------------ ------------ ------------ ------------ Ending units ................................... 3,971,414 4,234,188 5,514,336 5,805,013 ============ ============ ============ ============
JanRMgLgCap MFSVITInvGrwI --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 3,669 29 (393) (23) Realized gain (loss) on investments ............ 5,557 109 6,510 2,763 Change in unrealized gain (loss) on investments ................................ 1,454 3,346 175,975 20,062 Reinvested capital gains ....................... 20,216 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 30,896 3,484 182,092 22,802 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 26,758 22,103 421,652 185,244 Transfers between funds ........................ 263,556 16,103 1,862,074 253,790 Surrenders (note 6) ............................ (1,148) - (42,476) (19) Death benefits (note 4) ........................ - - - - Net policy repayments (loans) (note 5) ......... (8,162) - (13,232) - Deductions for surrender charges (note 2d) ..... (210) - (5,325) (1) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (11,240) (1,327) (136,202) (9,922) Asset charges (note 3): FPVUL & VEL contracts ........................ (592) (37) (5,923) (427) MSP contracts ................................ - - (123) (10) SL contracts ................................. (39) - (321) (10) Adjustments to maintain reserves ............... 53 1 (85) - ------------ ------------ ------------ ------------ Net equity transactions .................... 268,976 36,843 2,080,039 428,645 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 299,872 40,327 2,262,131 451,447 Contract owners' equity beginning of period ...... 40,327 - 451,447 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 340,199 40,327 2,713,578 451,447 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 3,278 - 38,925 - ------------ ------------ ------------ ------------ Units purchased ................................ 22,085 3,396 192,674 39,860 Units redeemed ................................. (1,821) (118) (17,309) (935) ------------ ------------ ------------ ------------ Ending units ................................... 23,542 3,278 214,290 38,925 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
MFSVITValIn NBAMTFasc --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 2,441 (32) (2,756) (1,210) Realized gain (loss) on investments ............ 5,319 4,761 33,284 93,857 Change in unrealized gain (loss) on investments ................................ 87,483 24,142 147,002 27,859 Reinvested capital gains ....................... 8,180 - 5,080 311 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 103,423 28,871 182,610 120,817 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 237,958 36,952 262,754 45,421 Transfers between funds ........................ 497,492 208,644 1,252,168 683,040 Surrenders (note 6) ............................ (3,873) (14) (5,568) (2,040) Death benefits (note 4) ........................ (1,340) - (766) - Net policy repayments (loans) (note 5) ......... (2,552) (7,285) (2,002) (114) Deductions for surrender charges (note 2d) ..... (1,273) (1) (90) (71) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (66,618) (13,032) (41,206) (14,451) Asset charges (note 3): FPVUL & VEL contracts ........................ (2,558) (431) (1,073) (113) MSP contracts ................................ (8) - - - SL contracts ................................. (177) (25) (113) - Adjustments to maintain reserves ............... 108 14,492 135 (5) ------------ ------------ ------------ ------------ Net equity transactions .................... 657,159 239,300 1,464,239 711,667 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 760,582 268,171 1,646,849 832,484 Contract owners' equity beginning of period ...... 268,171 - 868,210 35,726 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 1,028,753 268,171 2,515,059 868,210 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 21,683 - 69,138 3,552 ------------ ------------ ------------ ------------ Units purchased ................................ 56,865 23,541 131,687 70,587 Units redeemed ................................. (6,330) (1,858) (21,661) (5,001) ------------ ------------ ------------ ------------ Ending units ................................... 72,218 21,683 179,164 69,138 ============ ============ ============ ============
NBAMTGuard NBAMTLMat --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 1,257 95,766 115,788 38,806 Realized gain (loss) on investments ............ 589,742 (2,872,414) (31,570) (5,817) Change in unrealized gain (loss) on investments ................................ 1,416,484 6,456,331 (71,615) (25,993) Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 2,007,483 3,679,683 12,603 6,996 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 1,609,514 2,582,164 274,148 58,892 Transfers between funds ........................ (1,745,024) (5,575,421) 2,164,314 1,139,481 Surrenders (note 6) ............................ (254,328) (743,806) (77,310) (5,044) Death benefits (note 4) ........................ (86,740) (7,394) - - Net policy repayments (loans) (note 5) ......... (49,656) (104,624) (24,204) (1,608) Deductions for surrender charges (note 2d) ..... (34,342) (26,075) (1,843) (177) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (647,614) (782,786) (104,620) (16,529) Asset charges (note 3): FPVUL & VEL contracts ........................ (31,107) (26,924) (6,232) (767) MSP contracts ................................ (910) (1,184) (379) (244) SL contracts ................................. (5,082) (4,282) (895) (113) Adjustments to maintain reserves ............... (31,122) 26,308 62 15 ------------ ------------ ------------ ------------ Net equity transactions .................... (1,276,411) (4,664,024) 2,223,041 1,173,906 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 731,072 (984,341) 2,235,644 1,180,902 Contract owners' equity beginning of period ...... 13,937,956 14,922,297 1,180,902 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 14,669,028 13,937,956 3,416,546 1,180,902 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,111,032 1,679,893 116,918 - ------------ ------------ ------------ ------------ Units purchased ................................ 232,109 371,872 250,023 119,449 Units redeemed ................................. (342,317) (940,733) (31,293) (2,531) ------------ ------------ ------------ ------------ Ending units ................................... 1,000,824 1,111,032 335,648 116,918 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
NBAMTMCGr NBAMTPart --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (38,881) (56,614) (12,962) (12,047) Realized gain (loss) on investments ............ (143,920) (6,377,133) 557,880 (561,413) Change in unrealized gain (loss) on investments ................................ 6,035,016 15,912,922 2,294,858 4,134,976 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 5,852,215 9,479,175 2,839,776 3,561,516 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 5,727,688 8,083,193 1,780,040 1,560,523 Transfers between funds ........................ (2,771,470) (8,263,876) 5,925,040 (777,622) Surrenders (note 6) ............................ (1,757,193) (5,907,368) (837,024) (726,406) Death benefits (note 4) ........................ (25,890) (11,596) (37,496) (10,628) Net policy repayments (loans) (note 5) ......... (101,094) 1,432,261 52,094 (33,461) Deductions for surrender charges (note 2d) ..... (131,963) (207,089) (43,044) (25,465) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (2,134,402) (2,335,277) (746,454) (739,323) Asset charges (note 3): FPVUL & VEL contracts ........................ (84,046) (69,062) (38,362) (31,895) MSP contracts ................................ (1,769) (1,661) (1,569) (1,472) SL contracts ................................. (12,056) (9,726) (8,439) (5,506) Adjustments to maintain reserves ............... 14,566 (12,518) 641 (79) ------------ ------------ ------------ ------------ Net equity transactions .................... (1,277,629) (7,302,719) 6,045,427 (791,334) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 4,574,586 2,176,456 8,885,203 2,770,182 Contract owners' equity beginning of period ...... 38,859,070 36,682,614 13,285,260 10,515,078 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 43,433,656 38,859,070 22,170,463 13,285,260 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 3,421,784 4,122,483 1,221,620 1,311,811 ------------ ------------ ------------ ------------ Units purchased ................................ 1,091,843 1,768,813 918,586 292,732 Units redeemed ................................. (1,042,877) (2,469,512) (408,852) (382,923) ------------ ------------ ------------ ------------ Ending units ................................... 3,470,750 3,421,784 1,731,354 1,221,620 ============ ============ ============ ============
NBAMSocRes OGMidCapGr --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... (215) (17) (8,348) (5,592) Realized gain (loss) on investments ............ 2,371 1,158 331,182 16,331 Change in unrealized gain (loss) on investments ................................ 61,525 8,463 8,430 333,042 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 63,681 9,604 331,264 343,781 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 129,580 12,253 158,474 148,079 Transfers between funds ........................ 320,250 110,376 (276,630) 2,146,402 Surrenders (note 6) ............................ (4,621) (544) (177,267) (1,316) Death benefits (note 4) ........................ - - (1,030) - Net policy repayments (loans) (note 5) ......... (2,044) 771 - (18) Deductions for surrender charges (note 2d) ..... (716) (19) (461) (46) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (40,158) (4,369) (68,502) (41,748) Asset charges (note 3): FPVUL & VEL contracts ........................ (1,194) (108) - - MSP contracts ................................ (25) - - - SL contracts ................................. (250) (9) - - Adjustments to maintain reserves ............... 140 - 87 40 ------------ ------------ ------------ ------------ Net equity transactions .................... 400,962 118,351 (365,329) 2,251,393 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 464,643 127,955 (34,065) 2,595,174 Contract owners' equity beginning of period ...... 127,955 - 2,795,974 200,800 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 592,598 127,955 2,761,909 2,795,974 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 10,340 - 219,218 19,940 ------------ ------------ ------------ ------------ Units purchased ................................ 36,335 10,750 153,069 210,074 Units redeemed ................................. (4,401) (410) (179,553) (10,796) ------------ ------------ ------------ ------------ Ending units ................................... 42,274 10,340 192,734 219,218 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
OGMidCapV OppAggGro --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 3,808 1,064 (87,334) (93,605) Realized gain (loss) on investments ............ 31,563 83,866 1,101,651 (9,108,246) Change in unrealized gain (loss) on investments ................................ 61,159 59,721 10,016,449 21,592,176 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 96,530 144,651 11,030,766 12,390,325 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 200,088 71,250 9,824,252 10,246,131 Transfers between funds ........................ 322,510 10,417 (2,527,142) (4,627,220) Surrenders (note 6) ............................ (318) (1,311) (3,470,078) (6,203,773) Death benefits (note 4) ........................ (790) - (94,766) (58,439) Net policy repayments (loans) (note 5) ......... - 1,747 (478,916) (117,265) Deductions for surrender charges (note 2d) ..... - (46) (210,489) (217,480) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (31,214) (18,966) (3,142,394) (3,543,409) Asset charges (note 3): FPVUL & VEL contracts ........................ - - (120,103) (100,746) MSP contracts ................................ - - (2,816) (3,202) SL contracts ................................. - - (12,403) (10,783) Adjustments to maintain reserves ............... 65 40 (1,847) 6,073 ------------ ------------ ------------ ------------ Net equity transactions .................... 490,341 63,131 (236,702) (4,630,113) ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 586,871 207,782 10,794,064 7,760,212 Contract owners' equity beginning of period ...... 594,745 386,963 54,545,378 46,785,166 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 1,181,616 594,745 65,339,442 54,545,378 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 45,289 39,000 5,597,728 5,745,655 ------------ ------------ ------------ ------------ Units purchased ................................ 55,450 21,460 2,629,430 2,222,342 Units redeemed ................................. (22,563) (15,171) (2,311,400) (2,370,269) ------------ ------------ ------------ ------------ Ending units ................................... 78,176 45,289 5,915,758 5,597,728 ============ ============ ============ ============
OppCapAp OppGlSec --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 115,666 148,607 470,329 176,397 Realized gain (loss) on investments ............ (1,089,175) (6,846,665) 2,722,991 427,239 Change in unrealized gain (loss) on investments ................................ 9,875,610 33,617,086 6,067,450 12,200,617 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 8,902,101 26,919,028 9,260,770 12,804,253 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 23,669,318 21,175,779 6,960,044 5,476,123 Transfers between funds ........................ 4,779,426 5,061,719 7,910,846 2,664,166 Surrenders (note 6) ............................ (4,620,095) (3,281,220) (1,475,823) (4,447,211) Death benefits (note 4) ........................ (192,026) (161,175) (81,242) (29,742) Net policy repayments (loans) (note 5) ......... (421,134) (378,614) (100,632) (626,888) Deductions for surrender charges (note 2d) ..... (328,037) (115,027) (102,825) (155,902) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (5,210,128) (5,134,931) (2,045,172) (1,638,101) Asset charges (note 3): FPVUL & VEL contracts ........................ (180,963) (146,416) (73,087) (46,029) MSP contracts ................................ (5,059) (4,244) (1,519) (956) SL contracts ................................. (22,776) (18,475) (12,227) (7,141) Adjustments to maintain reserves ............... (8,286) 17,532 432,717 (300,321) ------------ ------------ ------------ ------------ Net equity transactions .................... 17,460,240 17,014,928 11,411,080 887,998 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 26,362,341 43,933,956 20,671,850 13,692,251 Contract owners' equity beginning of period ...... 118,446,268 74,512,312 39,693,025 26,000,774 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 144,808,609 118,446,268 60,364,875 39,693,025 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 9,502,860 7,585,502 4,248,465 3,973,943 ------------ ------------ ------------ ------------ Units purchased ................................ 3,908,910 3,794,651 2,366,576 1,728,441 Units redeemed ................................. (1,986,762) (1,877,293) (1,184,275) (1,453,919) ------------ ------------ ------------ ------------ Ending units ................................... 11,425,008 9,502,860 5,430,766 4,248,465 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
OppHighInc OppMSFund --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 75,091 (27) 307,388 272,017 Realized gain (loss) on investments ............ 58,940 23,124 382,536 (2,968,161) Change in unrealized gain (loss) on investments ................................ 55,598 60,345 3,143,915 11,298,515 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 189,629 83,442 3,833,839 8,602,371 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 345,332 86,603 6,830,182 6,963,803 Transfers between funds ........................ 1,411,694 1,385,813 (5,157,620) 4,692,400 Surrenders (note 6) ............................ (121,394) (49) (1,808,071) (2,783,975) Death benefits (note 4) ........................ - - (57,470) (59,961) Net policy repayments (loans) (note 5) ......... (21,942) (229) (167,212) (33,551) Deductions for surrender charges (note 2d) ..... (12,864) (2) (162,716) (97,595) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (146,004) (19,051) (2,636,462) (2,720,356) Asset charges (note 3): FPVUL & VEL contracts ........................ (5,776) (1,139) (116,761) (94,183) MSP contracts ................................ (53) (5) (5,220) (4,035) SL contracts ................................. (356) (68) (15,873) (12,679) Adjustments to maintain reserves ............... 75 4,846 4,362 680 ------------ ------------ ------------ ------------ Net equity transactions .................... 1,448,712 1,456,719 (3,292,861) 5,850,548 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 1,638,341 1,540,161 540,978 14,452,919 Contract owners' equity beginning of period ...... 1,540,161 - 41,901,792 27,448,873 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 3,178,502 1,540,161 42,442,770 41,901,792 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 137,738 - 4,090,438 3,375,910 ------------ ------------ ------------ ------------ Units purchased ................................ 147,625 139,643 1,008,403 1,723,341 Units redeemed ................................. (24,497) (1,905) (1,348,277) (1,008,813) ------------ ------------ ------------ ------------ Ending units ................................... 260,866 137,738 3,750,564 4,090,438 ============ ============ ============ ============
OppMSSmCap PVITAllAsset --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... (390) (28) 6,886 - Realized gain (loss) on investments ............ 142,686 34,019 508 - Change in unrealized gain (loss) on investments ................................ 147,966 111,096 (2,204) - Reinvested capital gains ....................... - - 162 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 290,262 145,087 5,352 - ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 372,804 71,748 (4) - Transfers between funds ........................ 337,728 1,019,368 271,546 - Surrenders (note 6) ............................ (149,423) (31,312) - - Death benefits (note 4) ........................ (4,692) - - - Net policy repayments (loans) (note 5) ......... 1,588 (49,778) - - Deductions for surrender charges (note 2d) ..... (8,483) (1,098) - - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (110,310) (21,917) (1,184) - Asset charges (note 3): FPVUL & VEL contracts ........................ (5,139) (987) - - MSP contracts ................................ (414) (116) - - SL contracts ................................. (315) (233) - - Adjustments to maintain reserves ............... 129 15 27 - ------------ ------------ ------------ ------------ Net equity transactions .................... 433,473 985,690 270,385 - ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 723,735 1,130,777 275,737 - Contract owners' equity beginning of period ...... 1,130,777 - - - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 1,854,512 1,130,777 275,737 - ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 81,527 - - - ------------ ------------ ------------ ------------ Units purchased ................................ 65,547 89,563 25,169 - Units redeemed ................................. (35,110) (8,036) (555) - ------------ ------------ ------------ ------------ Ending units ................................... 111,964 81,527 24,614 - ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
PIMLowDur PIMRealRet --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 537,462 86,148 88,916 113,712 Realized gain (loss) on investments ............ 36,705 3,919 195,127 154,919 Change in unrealized gain (loss) on investments ................................ 11,372 3,744 142,688 32,564 Reinvested capital gains ....................... 178,924 24,408 517,832 173,353 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 764,463 118,219 944,563 474,548 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 6,466,440 2,251,092 2,797,084 2,213,271 Transfers between funds ........................ 9,533,832 32,861,458 7,867,118 5,400,576 Surrenders (note 6) ............................ (3,088,632) (6,219) (852,849) (16,983) Death benefits (note 4) ........................ (141,070) (41) (21,796) (83) Net policy repayments (loans) (note 5) ......... - (45) - (8,469) Deductions for surrender charges (note 2d) ..... (98,060) (218) (21,200) (595) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (998,114) (170,379) (292,236) (201,746) Asset charges (note 3): FPVUL & VEL contracts ........................ - - - - MSP contracts ................................ - - - - SL contracts ................................. - - - - Adjustments to maintain reserves ............... (4,423) (859) (3,936) (1,536) ------------ ------------ ------------ ------------ Net equity transactions .................... 11,669,973 34,934,789 9,472,185 7,384,435 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 12,434,436 35,053,008 10,416,748 7,858,983 Contract owners' equity beginning of period ...... 35,511,501 458,493 8,363,151 504,168 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 47,945,937 35,511,501 18,779,899 8,363,151 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 3,413,680 45,027 744,303 48,671 ------------ ------------ ------------ ------------ Units purchased ................................ 2,874,199 3,485,571 1,162,498 815,057 Units redeemed ................................. (1,748,257) (116,918) (367,807) (119,425) ------------ ------------ ------------ ------------ Ending units ................................... 4,539,622 3,413,680 1,538,994 744,303 ============ ============ ============ ============
PIMTotRet PVCTHiYield --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 953,112 541,948 647,890 113,587 Realized gain (loss) on investments ............ 225,440 27,596 191,978 221,299 Change in unrealized gain (loss) on investments ................................ 451,710 (110,836) 12,692 122,976 Reinvested capital gains ....................... 1,031,052 290,711 50,706 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 2,661,314 749,419 903,266 457,862 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 10,162,492 8,039,115 1,284,216 454,556 Transfers between funds ........................ 14,787,330 34,473,770 (1,391,140) 7,445,739 Surrenders (note 6) ............................ (1,849,835) (191,424) (202,487) (1,413) Death benefits (note 4) ........................ (87,364) (13) (27,808) - Net policy repayments (loans) (note 5) ......... - 930 - 575 Deductions for surrender charges (note 2d) ..... (28,288) (6,711) (7,654) (50) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (1,169,340) (521,426) (246,358) (53,419) Asset charges (note 3): FPVUL & VEL contracts ........................ - - - - MSP contracts ................................ - - - - SL contracts ................................. - - - - Adjustments to maintain reserves ............... (5,184) (2,918) 5,499 1,649 ------------ ------------ ------------ ------------ Net equity transactions .................... 21,809,811 41,791,323 (585,732) 7,847,637 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 24,471,125 42,540,742 317,534 8,305,499 Contract owners' equity beginning of period ...... 44,454,851 1,914,109 8,309,363 3,864 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 68,925,976 44,454,851 8,626,897 8,309,363 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 4,110,079 185,355 605,437 373 ------------ ------------ ------------ ------------ Units purchased ................................ 2,932,313 5,248,267 483,764 656,655 Units redeemed ................................. (947,478) (1,323,543) (504,541) (51,591) ------------ ------------ ------------ ------------ Ending units ................................... 6,094,914 4,110,079 584,660 605,437 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
PVTGroInc PVTIntEq --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 5,400 (33) 13,509 (31) Realized gain (loss) on investments ............ 5,250 453 54,994 21,814 Change in unrealized gain (loss) on investments ................................ 71,844 20,678 144,657 56,900 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 82,494 21,098 213,160 78,683 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 149,342 28,781 157,048 14,483 Transfers between funds ........................ 539,848 228,994 571,550 663,418 Surrenders (note 6) ............................ (13,683) (15) (18,702) (80) Death benefits (note 4) ........................ - - - - Net policy repayments (loans) (note 5) ......... (10,414) - (236) - Deductions for surrender charges (note 2d) ..... (1,153) - (853) (3) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (52,578) (6,648) (66,042) (9,365) Asset charges (note 3): FPVUL & VEL contracts ........................ (1,892) (198) (2,789) (378) MSP contracts ................................ (8) - (144) (10) SL contracts ................................. (56) - (480) (28) Adjustments to maintain reserves ............... 92 1 77 1 ------------ ------------ ------------ ------------ Net equity transactions .................... 609,498 250,915 639,429 668,038 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 691,992 272,013 852,589 746,721 Contract owners' equity beginning of period ...... 272,013 - 746,721 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 964,005 272,013 1,599,310 746,721 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 21,892 - 58,343 - ------------ ------------ ------------ ------------ Units purchased ................................ 54,544 22,486 54,566 59,178 Units redeemed ................................. (6,610) (594) (5,367) (835) ------------ ------------ ------------ ------------ Ending units ................................... 69,826 21,892 107,542 58,343 ============ ============ ============ ============
PVTVoyII RCFMicroCap --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 299 (7) (71,700) (16,213) Realized gain (loss) on investments ............ 1,952 216 1,460,029 253,253 Change in unrealized gain (loss) on investments ................................ 13,776 6,212 (730,678) 1,459,001 Reinvested capital gains ....................... - - 1,893,810 421,098 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 16,027 6,421 2,551,461 2,117,139 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 114,522 28,007 5,455,688 1,969,963 Transfers between funds ........................ 111,066 105,251 8,683,586 7,153,431 Surrenders (note 6) ............................ (139) - (980,613) (4,850) Death benefits (note 4) ........................ (2,104) - (63,360) (115) Net policy repayments (loans) (note 5) ......... (3,574) - 60,952 14,535 Deductions for surrender charges (note 2d) ..... (9) - (31,357) (170) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (35,112) (4,820) (483,476) (137,413) Asset charges (note 3): FPVUL & VEL contracts ........................ (913) (113) - - MSP contracts ................................ - - - - SL contracts ................................. (88) (15) - - Adjustments to maintain reserves ............... 61 - (7,524) 1,186 ------------ ------------ ------------ ------------ Net equity transactions .................... 183,710 128,310 12,633,896 8,996,567 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 199,737 134,731 15,185,357 11,113,706 Contract owners' equity beginning of period ...... 134,731 - 11,554,326 440,620 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 334,468 134,731 26,739,683 11,554,326 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 11,366 - 769,030 43,606 ------------ ------------ ------------ ------------ Units purchased ................................ 19,141 11,800 1,170,660 805,112 Units redeemed ................................. (3,643) (434) (371,060) (79,688) ------------ ------------ ------------ ------------ Ending units ................................... 26,864 11,366 1,568,630 769,030 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
StOpp2 TRowEqInc2 --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ (58,999) (39,781) 430,246 149,945 Realized gain (loss) on investments ............ 1,604,983 (2,380,253) 2,128,371 121,913 Change in unrealized gain (loss) on investments ................................ 4,189,292 12,212,543 2,187,744 3,003,853 Reinvested capital gains ....................... - - 997,736 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 5,735,276 9,792,509 5,744,097 3,275,711 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 5,364,084 6,295,457 5,856,754 3,384,985 Transfers between funds ........................ (2,354,336) (4,344,951) 15,347,540 17,388,304 Surrenders (note 6) ............................ (3,743,160) (424,909) (624,002) (16,115) Death benefits (note 4) ........................ (35,354) (11,288) (101,604) - Net policy repayments (loans) (note 5) ......... 186,860 (119,731) 101,586 2,277 Deductions for surrender charges (note 2d) ..... (111,528) (14,896) (18,144) (565) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (1,439,780) (1,539,180) (650,674) (216,716) Asset charges (note 3): FPVUL & VEL contracts ........................ (50,514) (39,692) - - MSP contracts ................................ (1,454) (964) - - SL contracts ................................. (12,877) (10,465) - - Adjustments to maintain reserves ............... 37,521 (27,928) 22,052 521 ------------ ------------ ------------ ------------ Net equity transactions .................... (2,160,538) (238,547) 19,933,508 20,542,691 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 3,574,738 9,553,962 25,677,605 23,818,402 Contract owners' equity beginning of period ...... 33,663,086 24,109,124 23,990,384 171,982 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 37,237,824 33,663,086 49,667,989 23,990,384 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 3,554,641 3,484,072 1,900,200 16,999 ------------ ------------ ------------ ------------ Units purchased ................................ 1,034,598 1,386,378 2,287,540 2,037,182 Units redeemed ................................. (1,260,747) (1,315,809) (746,150) (153,981) ------------ ------------ ------------ ------------ Ending units ................................... 3,328,492 3,554,641 3,441,590 1,900,200 ============ ============ ============ ============
TRowMidCap2 TRowNewAmG --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... (81,638) (12,737) (66) - Realized gain (loss) on investments ............ 1,664,781 270,991 96 - Change in unrealized gain (loss) on investments ................................ 3,483,713 1,198,675 4,161 - Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 5,066,856 1,456,929 4,191 - ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 3,574,312 1,805,611 553,966 - Transfers between funds ........................ 4,848,514 16,971,347 2,066,602 - Surrenders (note 6) ............................ (870,149) (8,490) - - Death benefits (note 4) ........................ (78,028) - - - Net policy repayments (loans) (note 5) ......... - 1,360 - - Deductions for surrender charges (note 2d) ..... (33,245) (298) - - Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (502,182) (90,693) (352) - Asset charges (note 3): FPVUL & VEL contracts ........................ - - - - MSP contracts ................................ - - - - SL contracts ................................. - - - - Adjustments to maintain reserves ............... 364 657 1,374 - ------------ ------------ ------------ ------------ Net equity transactions .................... 6,939,586 18,679,494 2,621,590 - ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 12,006,442 20,136,423 2,625,781 - Contract owners' equity beginning of period ...... 20,261,835 125,412 - - ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 32,268,277 20,261,835 2,625,781 - ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,435,604 12,242 - - ------------ ------------ ------------ ------------ Units purchased ................................ 1,051,136 1,490,359 242,989 - Units redeemed ................................. (544,684) (66,997) (35) - ------------ ------------ ------------ ------------ Ending units ................................... 1,942,056 1,435,604 242,954 - ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
VEWrldEMkt VEWrldHAs --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... $ 42,391 2,184 14,450 10,309 Realized gain (loss) on investments ............ 1,046,565 1,056,488 1,115,124 (106,702) Change in unrealized gain (loss) on investments ................................ 1,246,193 2,226,271 521,610 1,336,812 Reinvested capital gains ....................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 2,335,149 3,284,943 1,651,184 1,240,419 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 1,397,150 1,415,232 1,142,488 581,718 Transfers between funds ........................ 4,094,266 (428,461) 1,737,814 2,069,447 Surrenders (note 6) ............................ (741,016) (1,268,860) (256,163) (189,087) Death benefits (note 4) ........................ (28,574) (3,830) (166) 1,053 Net policy repayments (loans) (note 5) ......... (110,950) (51,439) (17,776) (10,730) Deductions for surrender charges (note 2d) ..... (34,947) (44,481) (14,723) (6,629) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (498,772) (537,123) (282,138) (201,892) Asset charges (note 3): FPVUL & VEL contracts ........................ (25,885) (20,655) (12,825) (7,613) MSP contracts ................................ (499) (543) (516) (364) SL contracts ................................. (3,423) (2,560) (3,295) (1,113) Adjustments to maintain reserves ............... (7,567) 480 (3,917) 158 ------------ ------------ ------------ ------------ Net equity transactions .................... 4,039,783 (942,240) 2,288,783 2,234,948 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 6,374,932 2,342,703 3,939,967 3,475,367 Contract owners' equity beginning of period ...... 8,519,214 6,176,511 5,881,442 2,406,075 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ $ 14,894,146 8,519,214 9,821,409 5,881,442 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 738,211 830,944 495,019 293,707 ------------ ------------ ------------ ------------ Units purchased ................................ 415,455 266,387 243,756 254,916 Units redeemed ................................. (199,128) (359,120) (82,217) (53,604) ------------ ------------ ------------ ------------ Ending units ................................... 954,538 738,211 656,558 495,019 ============ ============ ============ ============
VKoreFI VKEmMkt --------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................... 12,300 (22) 730,431 (11,369) Realized gain (loss) on investments ............ 677 (507) 492,318 612,356 Change in unrealized gain (loss) on investments ................................ 807 1,903 (638,091) 1,121,269 Reinvested capital gains ....................... 778 273 349,082 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .... 14,562 1,647 933,740 1,722,256 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................... 62,392 13,411 1,323,678 1,404,040 Transfers between funds ........................ 372,898 115,209 504,330 2,158,333 Surrenders (note 6) ............................ (2,737) (3,744) (1,343,729) (314,799) Death benefits (note 4) ........................ - - (26,100) (1,923) Net policy repayments (loans) (note 5) ......... (4,730) (117) (65,000) 5,705 Deductions for surrender charges (note 2d) ..... (106) (131) (27,754) (11,036) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .. (24,990) (3,299) (486,288) (458,327) Asset charges (note 3): FPVUL & VEL contracts ........................ (1,071) (158) (18,785) (15,557) MSP contracts ................................ (10) - (866) (642) SL contracts ................................. (41) (7) (2,496) (1,972) Adjustments to maintain reserves ............... 59 4,804 (19,795) 17,821 ------------ ------------ ------------ ------------ Net equity transactions .................... 401,664 125,968 (162,805) 2,781,643 ------------ ------------ ------------ ------------ Net change in contract owners' equity ............ 416,226 127,615 770,935 4,503,899 Contract owners' equity beginning of period ...... 127,615 - 9,242,412 4,738,513 ------------ ------------ ------------ ------------ Contract owners' equity end of period ............ 543,841 127,615 10,013,347 9,242,412 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 12,470 - 594,194 392,219 ------------ ------------ ------------ ------------ Units purchased ................................ 41,826 12,830 287,526 328,822 Units redeemed ................................. (3,378) (360) (299,616) (126,847) ------------ ------------ ------------ ------------ Ending units ................................... 50,918 12,470 582,104 594,194 ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
VKMidCapG VKUSRealEst ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................... $ (4,266) (4,221) 677,509 (45,467) Realized gain (loss) on investments ........................ 520,995 9,931 2,168,984 612,385 Change in unrealized gain (loss) on investments ............ 260,318 999,073 11,244,483 9,192,176 Reinvested capital gains ................................... - - 870,754 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ............................... 777,047 1,004,783 14,961,730 9,759,094 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ... 619,682 637,548 7,106,016 5,610,759 Transfers between funds .................................... 69,430 (150,262) 5,390,914 3,435,006 Surrenders (note 6) ........................................ (432,797) (117,736) (2,883,199) (4,004,219) Death benefits (note 4) .................................... (11,296) (2,153) (169,996) (44,256) Net policy repayments (loans) (note 5) ..................... (29,804) (34,663) (81,516) (259,544) Deductions for surrender charges (note 2d) ................. (9,778) (4,127) (153,064) (140,372) Redemptions to pay cost of insurance charges and administrative charges (notes 2b and 2c) .................. (192,616) (211,573) (2,145,706) (1,709,998) Asset charges (note 3): FPVUL & VEL contracts .................................... (8,360) (6,340) (85,785) (55,622) MSP contracts ............................................ (135) (108) (8,685) (7,297) SL contracts ............................................. (839) (837) (10,809) (7,295) Adjustments to maintain reserves ........................... 290 877 (10,031) 11,856 ------------ ------------ ------------ ------------ Net equity transactions ................................ 3,777 110,626 6,948,139 2,829,018 ------------ ------------ ------------ ------------ Net change in contract owners' equity ........................ 780,824 1,115,409 21,909,869 12,588,112 Contract owners' equity beginning of period .................. 3,688,275 2,572,866 38,116,518 25,528,406 ------------ ------------ ------------ ------------ Contract owners' equity end of period ........................ $ 4,469,099 3,688,275 60,026,387 38,116,518 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................ 618,638 611,451 2,305,407 2,082,394 ------------ ------------ ------------ ------------ Units purchased ............................................ 230,285 283,884 910,758 789,960 Units redeemed ............................................. (232,627) (276,697) (522,667) (566,947) ------------ ------------ ------------ ------------ Ending units ............................................... 616,296 618,638 2,693,498 2,305,407 ============ ============ ============ ============
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-4 NOTES TO FINANCIAL STATEMENTS December 31, 2004 and 2003 (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: Funds of the AIM Variable Insurance Fund (AIM VIF); AIM VIF - Basic Value Fund - Series I Shares (AIMBValue) AIM VIF - Capital Appreciation Fund - Series I Shares (AIMCapAp) AIM VIF - Capital Development Fund - Series I Shares (AIMCapDev) AIM VIF - International Growth Fund - Series I Shares (AIMIntGr) Portfolios of Alliance Bernstein; Alliance Bernstein Growth and Income Fund - Class A (AlGrIncA)* Portfolios of Alliance Variable Product Series Funds, Inc. (Alliance VPSF); Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A (AlVPGrIncA) Alliance VPSF - Alliance Bernstein Small Cap Value Portfolio - Class A (AlVPSmCapVA) 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 (ACVPInflaPro) American Century VP - International Fund - Class I (ACVPInt) American Century VP - Ultra/(R)/ Fund - Class I (ACVPUltra) American Century VP - Value Fund - Class I (ACVPVal) Portfolios of Baron Capital Asset Trust Insurance Series; Baron Capital Funds Trust - Baron Capital Asset Fund: Insurance Shares (BCFTCpAsset) Portfolio of the Calvert Variable Series (Calvert VS); Calvert VS - Social Equity Portfolio (CVSSoEq) Portfolios of the Credit Suisse Trust; Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSGPVen) Credit Suisse Trust - International Focus Portfolio (CSIntFoc) Credit Suisse Trust - Large Cap Value Portfolio (CSLCapV) Portfolios of the Dreyfus Investment Portfolios (Dreyfus IP); Dreyfus IP - Mid Cap Stock Portfolio - Service Shares (DryMidCapStS) Dreyfus IP - Small Cap Stock Index Portfolio - Service Class (DrySmCapIxS) Funds of Dreyfus Inc.; Dreyfus Mid Cap Index Fund, Inc. (DryMdCpInx)* Dreyfus Socially Responsible Growth Fund, Inc., The (DrySRGro) Dreyfus Stock Index Fund, Inc. - Initial Shares (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 (DryVIFDevLd) Dreyfus VIF - International Value Portfolio - Initial Shares (DryVIFIntVal) Portfolios of Federated Insurance Series (Federated IS); Federated IS - American Leaders Fund II - Primary Shares (FedAmLead) Federated IS - Capital Appreciation Fund II - Primary Shares (FedCapAp) Federated IS - 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/(R)/ VIP II); Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class (FidVIPConS) Fidelity/(R)/ VIP II - Investment Grade Bond Portfolio: Service Class (FidVIPIGBdS) Portfolios of the Fidelity/(R)/ Variable Insurance Products (Fidelity/(R)/ VIP III); Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class (FidVIPGrOpS) Fidelity/(R)/ VIP III - Mid Cap Portfolio - Service Class (FidVIPMCapS) Fidelity/(R)/ VIP III - Value Strategies Portfolio - Service Class (FidVIPValS) Funds of the Franklin Templeton Variable Insurance Products Trust (Franklin Templeton VIP); Franklin Templeton VIP - Franklin Rising Dividends Securities Fund - Class I (FrVIPRisDiv) Franklin Templeton VIP - Franklin Small Cap Value Securities Fund - Class I (FTVIPSmCpVal) Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 (FrVIPForSec2) Franklin Templeton VIP - Templeton Foreign Securities Fund - Class I (FrVIPForSec) Funds of the Gartmore Variable Insurance Trust (Gartmore GVIT) (Gartmore is an affiliate of the Company); Gartmore GVIT Comstock Value Fund - Class I (GVITCVal) Gartmore GVIT Dreyfus International Value Fund - Class I (GVITDryIntVal) Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I (GVITDMidCapI) Gartmore GVIT Emerging Markets Fund - Class I (GVITEmMrkts) Gartmore GVIT Federated High Income Bond Fund - Class I (GVITFHiInc) Gartmore GVIT Global Financial Services Fund - Class I (GVITGlFin1) 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 (GVITGlUtl1) Gartmore GVIT Government Bond Fund - Class I (GVITGvtBd) Gartmore GVIT Growth Fund - Class I (GVITGrowth) Gartmore GVIT ID Aggressive Fund - Class II (GVITIDAgg) Gartmore GVIT ID Conservative Fund - Class II (GVITIDCon) Gartmore GVIT ID Moderate Fund - Class II (GVITIDMod) Gartmore GVIT ID Moderately Aggressive Fund - Class II (GVITIDModAgg) Gartmore GVIT ID Moderately Conservative Fund - Class II (GVITIDModCon) Gartmore GVIT International Growth Fund - Class I (GVITIntGro) Gartmore GVIT J.P. Morgan Balanced Fund - Class I (GVITJPBal) Gartmore GVIT Mid Cap Growth Fund - Class I (GVITSMdCpGr) Gartmore GVIT Money Market Fund - Class I (GVITMyMkt) Gartmore GVIT Money Market Fund: Class V (GVITMyMkt5) Gartmore GVIT Nationwide/(R)/ Fund: Class I (GVITNWFund) Gartmore GVIT Nationwide/(R)/ Leaders Fund - Class I (GVITLead) 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) (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued) Gartmore GVIT U.S. Growth Leaders Fund - Class I (GVITUSGro) Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I (GVITVKMultiSec) Gartmore GVIT Worldwide Leaders Fund - Class I (GVITWLead) Portfolios of Goldman Sachs Asset Management Funds (Goldman Sachs VIT); Goldman Sachs VIT - Mid Cap Value Fund (GSVITMidCap) 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 (JanGlTech) Janus AS - International Growth Portfolio - Service Shares (JanIntGro) Janus AS - Risk-Managed Large Cap Core Portfolio - Service Shares (JanRMgLgCap) Funds of the 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 Shares (NBAMTFasc) Neuberger Berman AMT - Guardian Portfolio - I Class Shares (NBAMTGuard) Neuberger Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat) Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/ - I Class (NBAMTMCGr) Neuberger Berman AMT - Partners Portfolio (NBAMTPart) Neuberger Berman AMT - Socially Responsive Portfolio - I Class (NBAMSocRes) Portfolios of One Group/(R)/ Investment Trust (One Group/(R)/ IT); One Group/(R)/ IT Balanced Portfolio (OGBal)* One Group/(R)/ IT Bond Portfolio (OGBond)* One Group/(R)/ IT Diversified Equity Portfolio (OGDivEq)* One Group/(R)/ IT Diversified Mid Cap Portfolio (OGDivMidCap)* One Group/(R)/ IT Equity Index Portfolio (OGEqIndx)* One Group/(R)/ IT Government Bond Portfolio (OGGvtBd)* One Group/(R)/ IT Large Cap Growth Portfolio (OGLgCapGr)* One Group/(R)/ IT Mid Cap Growth Portfolio (OGMidCapGr) One Group/(R)/ IT Mid Cap Value Portfolio (OGMidCapV) Funds of the Oppenheimer Variable Account Funds (Oppenheimer VA); 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 (OppHighInc) Oppenheimer Main Street/(R)/ Fund/VA - Initial Class (OppMSFund) Oppenheimer Main Street/(R)/ Small Cap Fund/VA - Initial Class (OppMSSmCap) Portfolios of PIMCO Variable Insurance Trust (PIMCO VIT); PIMCO VIT - All Asset Portfolio - Administrative Shares (PVITAllAsset) PIMCO VIT - Low Duration Portfolio - Administrative Shares (PIMLowDur) PIMCO VIT - Real Return Portfolio - Administrative Shares (PIMRealRet) PIMCO VIT - Total Return Portfolio - Administrative Shares (PIMTotRet) Portfolio of Pioneer Variable Contracts Trust Funds (Pioneer VCT); Pioneer High Yield VCT Portfolio - Class I Shares (PVCTHiYield) Funds of the Putnam Variable Trust (Putnam VT); Putnam VT - Growth & Income Fund - IB Shares (PVTGroInc) Putnam VT - International Equity Fund - IB Shares (PVTIntEq) Putnam VT - Voyager II Fund - IB Shares (PVTVoyII) Portfolios of Royce Capital Funds; Royce Capital Fund - Royce Micro-Cap Portfolio (RCFMicroCap) Strong Variable Insurance Funds, Inc.; Strong Opportunity Fund II, Inc. (StOpp2) (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued) Portfolios of T. Rowe Price Funds, Inc.; T. Rowe Price Equity Income Fund, Inc. (TRPEqInc)* T. Rowe Price Equity Income Portfolio II (TRowEqInc2) T. Rowe Price Mid Cap Growth Fund II (TRowMidCap2) T. Rowe Price MidCap Growth Fund (TRPMidCapGr)* T. Rowe Price New America Growth Portfolio (TRowNewAmG) 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 Van Kampen Universal Institutional Funds, Inc. (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 - Class A (VKUSRealEst) At December 31, 2004, contract owners were 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 Investments in underlying mutual funds are valued on the closing net asset value per share at December 31, 2004 of such funds, which value their investment securities at fair value. Fund purchases and sales are accounted for on the trade date (date the order to buy or sell is executed). The cost of investments sold is determined on a specific identification basis, and dividends (which include capital gain distributions) are accrued as of the ex-dividend date and are reinvested in the underlying mutual funds. (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 provisions of 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 U.S generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued) (2) Policy Charges (a) Deductions from Premium For individual flexible premium and survivorship contracts, the Company deducts a minimum of 0.5% 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 of 9.0% (5.5% starting in the seventh policy year) 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. For Protection/SM/ flexible premium contracts, the Company deducts a policy expense 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, and declines a specified amount each year 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. (Continued) 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 a mortality and expense risk charge equal to an annualized rate of 0.70% of the cash value of the sub-accounts. 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 a mortality and expense risk charge of $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 attributable 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 a mortality and expense risk charge of $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 a mortality and expense risk charge of $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 a mortality and expense risk charge of $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 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 annualized 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, 0.25% 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. (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued) (4) Death Benefits Death benefit proceeds result in a redemption of the contract value from the Account and payment of those proceeds, less any outstanding policy loans (and policy charges), to the legal beneficiary. For last survivor flexible premium contracts, the proceeds are payable on the death of the last surviving insured. In the event that the guaranteed death benefit exceeds the contract value on the date of death, the excess is paid by the Company's general account. (5) Policy Loans (Net of Repayments) Contract provisions allow contract owners to borrow 90% of a policy's variable cash surrender value plus 100% of a policy's fixed cash surrender value less applicable value of surrender charge. Interest is charged on the outstanding loan and is due and payable in advance on the policy anniversary. At the time the loan is granted, the amount of the loan is transferred from the Account to the Company's general account as collateral for the outstanding loan. Collateral amounts in the general account are credited with the stated rate of interest in effect at the time the loan is made, subject to a guaranteed minimum rate. Interest credited is paid by the Company's general account to the Account. Loan repayments result in a transfer of collateral including interest back to the Account. (6) Related Party Transactions The Company performs various services on behalf of the Mutual Fund Companies in which the Account invests and may receive fees for the services performed. These services include, among other things, shareholder communications, preparation, postage, fund transfer agency and various other record keeping and customer service functions. These fees are paid to an affiliate of the Company. Contract owners may, with certain restrictions, transfer their assets between the Account and a fixed dollar contract (fixed account) maintained in the accounts of the Company. These transfers are the result of the contract owner executing fund exchanges. Fund exchanges from the Account to the fixed account are included in surrenders, and fund exchanges from the fixed account to the Account are included in purchase payments received from contact owners, as applicable, on the accompanying Statements of Change in Contract Owners' Equity. Policy loan transactions (note 5), executed at the direction of the contract owner, also result in transfers between the Account and the fixed account of the Company. The fixed account assets are not reflected in the accompanying financial statements. For the periods ended December 31, 2004 and 2003, total transfers into the Account from the fixed account were $46,330,959 and $80,663,208, respectively, and total transfers from the Account to the fixed account were $52,265,691 and $72,393,201, 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 periods indicated, and the contract expense rates, investment income ratio and total return for each period in the five year period ended December 31, 2004.
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 - Basic Value Fund - Series I Shares 2004 ...................................... 0.00% 218,854 $14.622048 $ 3,200,094 0.00% 11.07% 2003 ...................................... 0.00% 62,247 13.164786 819,468 0.06% 33.63% AIM VIF - Capital Appreciation Fund - Series I Shares 2004 ...................................... 0.00% 57,596 13.214909 761,126 0.00% 6.63% 2003 ...................................... 0.00% 26,916 12.393708 333,589 0.00% 23.94% 05/01/03 AIM VIF - Capital Development Fund - Series I Shares 2004 ...................................... 0.00% 122,266 15.355666 1,877,476 0.00% 15.50% 2003 ...................................... 0.00% 33,912 13.294993 450,860 0.00% 35.36% Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004 ...................................... 0.00% 243,956 14.804614 3,611,674 0.92% 11.46% 2003 ...................................... 0.00% 145,925 13.282209 1,938,206 0.51% 32.50% Alliance VPSF - Alliance Bernstein Small Cap Value Portfolio - Class A 2004 ...................................... 0.00% 181,154 16.459431 2,981,692 0.13% 19.30% 2003 ...................................... 0.00% 28,635 13.796395 395,060 0.13% 37.96% 05/01/03 American Century VP - Income & Growth Fund - Class I 2004 ...................................... 0.00% 1,546,166 14.454301 22,348,749 1.37% 12.99% 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% American Century VP - Inflation Protection Fund - Class II 2004 ...................................... 0.00% 457,932 10.924094 5,002,492 3.35% 5.81% 2003 ...................................... 0.00% 108,990 10.324182 1,125,233 1.85% 3.24% 04/30/03 American Century VP - International Fund - Class I 2004 ...................................... 0.00% 1,713,168 13.076396 22,402,063 0.56% 14.92% 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% American Century VP - Ultra/(R)/ Fund - Class I 2004 ...................................... 0.00% 229,742 11.111676 2,552,819 0.00% 10.68% 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% 05/01/02 American Century VP - Value Fund - Class I 2004 ...................................... 0.00% 2,668,438 17.845717 47,620,189 0.97% 14.33% 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% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2004 ...................................... 0.00% 54,638 11.556117 631,403 0.00% 17.99% 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% Credit Suisse Trust - International Focus Portfolio 2004 ...................................... 0.00% 141,708 11.387391 1,613,684 0.99% 14.74% 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%
(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*** ---------- ---------- ---------- -------------- ---------- --------- Credit Suisse Trust - Large Cap Value Portfolio 2004 ...................................... 0.00% 114,260 $14.036771 $ 1,603,841 0.58% 11.34% 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% 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% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004 ...................................... 0.00% 589,810 12.889095 7,602,117 0.57% 21.88% 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% 05/01/02 Dreyfus Socially Responsible Growth Fund, Inc., The 2004 ...................................... 0.00% 1,320,272 11.023895 14,554,540 0.40% 6.21% 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% Dreyfus Stock Index Fund, Inc. - Initial Shares 2004 ...................................... 0.00% 13,432,296 13.583304 182,454,960 1.82% 10.64% 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% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2004 ...................................... 0.00% 1,281,098 13.862320 17,758,990 1.67% 5.05% 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% Dreyfus VIF - Developing Leaders Portfolio - Initial Shares 2004 ...................................... 0.00% 63,226 14.363942 908,175 0.28% 11.34% 2003 ...................................... 0.00% 15,972 12.900917 206,053 0.11% 29.01% 05/01/03 Federated IS - American Leaders Fund II - Primary Shares 2004 ...................................... 0.00% 22,444 13.830995 310,423 1.17% 9.78% 2003 ...................................... 0.00% 12,199 12.598945 153,695 0.00% 25.99% 05/01/03 Federated IS - Capital Appreciation Fund II - Primary Shares 2004 ...................................... 0.00% 28,136 12.944293 364,201 0.42% 7.39% 2003 ...................................... 0.00% 8,379 12.052976 100,992 0.00% 20.53% 05/01/03 Federated IS - Quality Bond Fund II - Primary Shares 2004 ...................................... 0.00% 2,361,192 13.955112 32,950,699 3.92% 3.62% 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% Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class 2004 ...................................... 0.00% 3,986,154 14.666699 58,463,721 1.39% 11.38% 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% Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004 ...................................... 0.00% 4,602,660 13.399667 61,674,111 0.16% 3.26% 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%
(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 - High Income Portfolio - Service Class 2004 ...................................... 0.00% 1,366,190 $10.142968 $ 13,857,221 8.03% 9.47% 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% Fidelity/(R)/ VIP - Overseas Portfolio - Service Class 2004 ...................................... 0.00% 1,749,970 13.222678 23,139,290 0.98% 13.49% 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% Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class 2004 ...................................... 0.00% 4,151,040 17.683622 73,405,422 0.24% 15.34% 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% Fidelity/(R)/ VIP II - Investment Grade Bond Portfolio: Service Class 2004 ...................................... 0.00% 352,046 10.659014 3,752,463 1.68% 4.32% 2003 ...................................... 0.00% 67,767 10.217718 692,424 0.00% 2.18% 05/01/03 Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class 2004 ...................................... 0.00% 1,211,402 9.963454 12,069,748 0.48% 7.06% 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% Fidelity/(R)/ VIP III - Mid Cap Portfolio - Service Class 2004 ...................................... 0.00% 431,128 17.574515 7,576,866 0.00% 24.77% 2003 ...................................... 0.00% 99,682 14.085331 1,404,054 0.00% 40.85% 05/01/03 Fidelity/(R)/ VIP III - Value Strategies Portfolio - Service Class 2004 ...................................... 0.00% 337,180 13.506506 4,554,124 0.00% 13.99% 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% 05/01/02 Franklin Templeton VIP - Franklin Rising Dividends Securities Fund - Class I 2004 ...................................... 0.00% 635,954 13.690957 8,706,819 0.70% 11.25% 2003 ...................................... 0.00% 220,019 12.306508 2,707,666 0.48% 23.07% 05/01/03 Franklin Templeton VIP - Franklin Small Cap Value Securities Fund - Class I 2004 ...................................... 0.00% 237,384 16.575156 3,934,677 0.23% 24.09% 2003 ...................................... 0.00% 47,449 13.357313 633,791 0.00% 33.57% 05/01/03 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class I 2004 ...................................... 0.00% 261,568 15.773327 4,125,798 1.08% 18.87% 2003 ...................................... 0.00% 92,411 13.269107 1,226,211 0.42% 32.69% Gartmore GVIT Comstock Value Fund - Class I 2004 ...................................... 0.00% 665,190 12.382749 8,236,881 1.39% 17.50% 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% Gartmore GVIT Dreyfus International Value Fund - Class I 2004 ...................................... 0.00% 281,276 16.772215 4,717,622 1.91% 20.29% 2003 ...................................... 0.00% 23,901 13.838062 330,744 0.00% 38.38% 05/01/03 Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I 2004 ...................................... 0.00% 1,662,184 20.108596 33,424,187 0.56% 15.73% 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%
(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 Emerging Markets Fund - Class I 2004 ...................................... 0.00% 466,980 $13.973799 $ 6,525,485 1.04% 20.74% 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% 10/02/00 Gartmore GVIT Federated High Income Bond Fund - Class I 2004 ...................................... 0.00% 1,351,330 14.501407 19,596,186 7.58% 10.10% 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% Gartmore GVIT Global Financial Services Fund - Class I 2004 ...................................... 0.00% 121,742 14.827817 1,805,168 1.37% 20.99% 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% 05/01/02 Gartmore GVIT Global Health Sciences Fund - Class I 2004 ...................................... 0.00% 256,666 12.296466 3,156,085 0.00% 7.86% 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% 05/01/02 Gartmore GVIT Global Technology and Communications Fund - Class I 2004 ...................................... 0.00% 1,025,772 3.193545 3,275,849 0.00% 4.31% 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% 10/02/00 Gartmore GVIT Global Utilities Fund - Class I 2004 ...................................... 0.00% 134,138 14.000446 1,877,992 1.64% 29.97% 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% 05/01/02 Gartmore GVIT Government Bond Fund - Class I 2004 ...................................... 0.00% 3,187,198 15.005858 47,826,641 5.38% 3.26% 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% Gartmore GVIT Growth Fund - Class I 2004 ...................................... 0.00% 2,009,968 7.322345 14,717,679 0.34% 8.16% 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% Gartmore GVIT ID Aggressive Fund - Class II 2004 ...................................... 0.00% 937,068 12.527746 11,739,350 1.85% 14.03% 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% 01/25/02 Gartmore GVIT ID Conservative Fund - Class II 2004 ...................................... 0.00% 593,680 11.349571 6,738,013 2.49% 4.65% 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% 01/25/02 Gartmore GVIT ID Moderate Fund - Class II 2004 ...................................... 0.00% 2,369,740 12.019313 28,482,647 2.21% 9.54% 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% 01/25/02 Gartmore GVIT ID Moderately Aggressive Fund - Class II 2004 ...................................... 0.00% 2,664,904 12.332826 32,865,797 2.01% 12.09% 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% 01/25/02
(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 - Class II 2004 ...................................... 0.00% 934,806 $11.748118 $ 10,982,211 2.38% 7.16% 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% 01/25/02 Gartmore GVIT International Growth Fund - Class I 2004 ...................................... 0.00% 125,904 7.757434 976,692 0.85% 14.19% 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% 10/02/00 Gartmore GVIT J.P. Morgan Balanced Fund - Class I 2004 ...................................... 0.00% 1,256,734 11.786975 14,813,092 1.94% 8.49% 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% Gartmore GVIT Mid Cap Growth Fund - Class I 2004 ...................................... 0.00% 1,022,504 12.710961 12,997,008 0.00% 15.34% 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% Gartmore GVIT Money Market Fund - Class I 2004 ...................................... 0.00% 9,274,680 12.448310 115,454,092 0.80% 0.81% 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% Gartmore GVIT Nationwide/(R)/ Fund: Class I 2004 ...................................... 0.00% 3,312,776 12.605461 41,759,069 1.30% 9.75% 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% Gartmore GVIT Nationwide/(R)/ Leaders Fund - Class I 2004 ...................................... 0.00% 24,720 12.589767 311,219 0.48% 18.79% 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% 05/01/02 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% Gartmore GVIT Small Cap Growth Fund - Class I 2004 ...................................... 0.00% 936,378 15.567128 14,576,716 0.00% 13.42% 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% Gartmore GVIT Small Cap Growth Fund - Class I - Intial Funding by Depositor 2000 ...................................... 0.00% 100,000 17.186295 1,718,630 0.00% -16.17% Gartmore GVIT Small Cap Value Fund - Class I 2004 ...................................... 0.00% 2,111,792 23.688343 50,024,853 0.00% 17.30% 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%
(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 Small Company Fund - Class I 2004 0.00% 1,765,320 $20.507271 $ 36,201,896 0.00% 19.02% 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% Gartmore GVIT Turner 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% 10/02/00 Gartmore GVIT U.S. Growth Leaders Fund - Class I 2004 0.00% 184,294 14.068165 2,592,678 0.00% 12.41% 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% 05/01/02 Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2004 0.00% 588,866 14.687199 8,648,792 4.55% 6.53% 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% Gartmore GVIT Worldwide Leaders Fund - Class I 2004 0.00% 281,954 12.241206 3,451,457 0.00% 15.67% 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% Janus AS - Balanced Portfolio - Service Shares 2004 0.00% 90,538 12.373264 1,120,251 2.45% 8.29% 2003 0.00% 60,397 11.425728 690,080 2.34% 13.72% Janus AS - Capital Appreciation Portfolio - Service Shares 2004 0.00% 3,379,686 7.677436 25,947,323 0.02% 17.97% 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% 01/27/00 Janus AS - Global Technology Portfolio - Service Shares 2004 0.00% 3,258,384 3.590186 11,698,205 0.00% 0.57% 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% 01/27/00 Janus AS - International Growth Portfolio - Service Shares 2004 0.00% 3,009,298 7.509901 22,599,530 0.85% 18.69% 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% 01/27/00 Janus AS - Risk-Managed Large Cap Core Portfolio - Service Shares 2004 0.00% 23,542 14.450740 340,199 2.52% 17.46% 2003 0.00% 3,278 12.302260 40,327 0.30% 23.02% 05/01/03 MFS VIT - MFS Investors Growth Stock Series - Initial Class 2004 0.00% 214,290 12.663111 2,713,578 0.00% 9.18% 2003 0.00% 38,925 11.597867 451,447 0.00% 15.98% 05/01/03 MFS VIT - MFS Value Series - Initial Class 2004 0.00% 72,218 14.245099 1,028,753 0.45% 15.18% 2003 0.00% 21,683 12.367820 268,171 0.00% 23.68% 05/01/03 Neuberger Berman AMT - Fasciano Portfolio - S Class Shares 2004 0.00% 57,292 14.091031 807,303 0.00% 11.88% 2003 0.00% 26,989 12.595173 339,931 0.00% 25.06%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ------------ -------------- ---------- ---------- Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004................. 0.00% 572,382 $ 16.918157 $ 9,683,649 0.12% 15.81% 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% Neuberger Berman AMT - Limited Maturity Bond Portfolio 2004................. 0.00% 335,648 10.178954 3,416,546 4.28% 0.78% 2003................. 0.00% 116,918 10.100257 1,180,902 12.48% 1.00% 05/01/03 Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/ - I Class 2004................. 0.00% 1,604,468 15.732356 25,242,062 0.00% 16.31% 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% Neuberger Berman AMT - Partners Portfolio 2004................. 0.00% 902,952 13.348803 12,053,328 0.01% 18.98% 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% Neuberger Berman AMT - Socially Responsive Portfolio - I Class 2004................. 0.00% 42,274 14.018027 592,598 0.00% 13.28% 2003................. 0.00% 10,340 12.374746 127,955 0.00% 23.75% 05/01/03 Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004................. 0.00% 2,473,214 13.671269 33,811,974 0.00% 19.78% 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% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2004................. 0.00% 3,086,788 15.691176 48,435,334 0.31% 6.94% 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% Oppenheimer Global Securities Fund/VA - Initial Class 2004................. 0.00% 2,460,964 11.203969 27,572,564 1.15% 19.16% 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% 05/01/00 Oppenheimer High Income Fund/VA - Initial Class 2004................. 0.00% 260,866 12.184423 3,178,502 4.03% 8.97% 2003................. 0.00% 137,738 11.181817 1,540,161 0.00% 11.82% 05/01/03 Oppenheimer Main Street/(R)/ Fund/VA - Initial Class 2004................. 0.00% 2,802,124 11.763032 32,961,474 0.83% 9.46% 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% Oppenheimer Main Street/(R)/ Small Cap Fund/VA - Initial Class 2004................. 0.00% 111,964 16.563464 1,854,512 0.00% 19.42% 2003................. 0.00% 81,527 13.869971 1,130,777 0.00% 38.70% 05/01/03 Putnam VT - Growth & Income Fund - IB Shares 2004................. 0.00% 69,826 13.805820 964,005 1.11% 11.11% 2003................. 0.00% 21,892 12.425216 272,013 0.00% 24.25% 05/01/03 Putnam VT - International Equity Fund - IB Shares 2004................. 0.00% 107,542 14.871493 1,599,310 1.30% 16.19% 2003................. 0.00% 58,343 12.798803 746,721 0.00% 27.99% 05/01/03
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ------------ -------------- ---------- ---------- Putnam VT - Voyager II Fund - IB Shares 2004................. 0.00% 26,864 $ 12.450430 $ 334,468 0.20% 5.03% 2003................. 0.00% 11,366 11.853879 134,731 0.00% 18.54% 05/01/03 Strong Opportunity Fund II, Inc. 2004................. 0.00% 1,509,654 11.273634 17,019,287 0.00% 18.22% 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% 05/01/00 Van Eck WIT - Worldwide Emerging Markets Fund 2004................. 0.00% 535,204 14.193509 7,596,423 0.53% 25.89% 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% Van Eck WIT - Worldwide Hard Assets Fund 2004................. 0.00% 392,894 14.564221 5,722,195 0.31% 24.23% 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% Van Kampen UIF - Core Plus Fixed Income Portfolio - Class A 2004................. 0.00% 50,918 10.680729 543,841 3.92% 4.37% 2003................. 0.00% 12,470 10.233765 127,615 0.05% 2.34% 05/01/03 Van Kampen UIF - Emerging Markets Debt Portfolio 2004................. 0.00% 310,368 17.466655 5,421,091 7.52% 10.06% 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% Van Kampen UIF - Mid Cap Growth Portfolio 2004................. 0.00% 328,124 7.289089 2,391,725 0.00% 21.60% 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% 05/01/00 Van Kampen UIF - U.S. Real Estate Portfolio - Class A 2004................. 0.00% 1,415,482 22.352530 31,639,604 1.61% 36.39% 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% The BEST of AMERICA/(R)/ Corporate Variable Universal Life Series/SM/ Reduced Fee Tier(0.10%) AIM VIF - Basic Value Fund - Series I Shares 2004................. 0.10% 27,138 14.588087 395,892 0.00% 10.96% 2003................. 0.10% 173 13.147350 2,274 0.06% 33.49% AIM VIF - Capital Appreciation Fund - Series I Shares 2003................. 0.10% 1,045 13.277382 13,875 0.00% 35.22% AIM VIF - Capital Development Fund - Series I Shares 2004................. 0.10% 12,220 15.320003 187,210 0.00% 15.38% Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004................. 0.10% 13,180 14.770235 194,672 0.92% 11.35% 2003................. 0.10% 8,268 13.264628 109,672 0.51% 32.37% American Century VP - Income & Growth Fund - Class I 2004................. 0.10% 39,010 11.064552 431,628 1.37% 12.88% 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%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ------------ -------------- ---------- ---------- American Century VP - International Fund - Class I 2004................. 0.10% 881,348 $ 10.681395 $ 9,414,026 0.56% 14.81% 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% American Century VP - Ultra/(R)/ Fund - Class I 2004................. 0.10% 9,976 11.082064 110,555 0.00% 10.56% 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% 05/01/02 American Century VP - Value Fund - Class I 2004................. 0.10% 59,642 17.576102 1,048,274 0.97% 14.22% 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% Baron Capital Funds Trust - Baron Capital Asset Fund: Insurance Shares 2004................. 0.10% 128,444 15.819001 2,031,856 0.00% 25.51% 2003................. 0.10% 13,790 12.603456 173,802 0.00% 29.88% Calvert VS - Social Equity Portfolio 2004................. 0.10% 1,026 13.445930 13,796 0.08% 7.05% 2003................. 0.10% 1,026 12.560357 12,887 0.01% 22.05% 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 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 - Service Shares 2004................. 0.10% 2,784 15.013547 41,798 0.43% 14.36% 2003................. 0.10% 98,265 13.128294 1,290,052 1.02% 31.59% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004................. 0.10% 219,642 12.854754 2,823,444 0.57% 21.76% 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% 05/01/02 Dreyfus Socially Responsible Growth Fund, Inc., The 2004................. 0.10% 88,956 7.990838 710,833 0.40% 6.10% 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, Inc. - Initial Shares 2004................. 0.10% 1,151,618 9.989249 11,503,799 1.82% 10.53% 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% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2004................. 0.10% 44,950 10.194416 458,239 1.67% 4.94% 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% Dreyfus VIF - International Value Portfolio - Initial Shares 2004................. 0.10% 69,786 15.412931 1,075,607 1.23% 19.90% 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% 09/03/02
(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 IS - Quality Bond Fund II - Primary Shares 2004................. 0.10% 720,724$ 13.876320$ 10,000,997 3.92% 3.52% 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% Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class 2004................. 0.10% 300,426 12.792683 3,843,255 1.39% 11.27% 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% Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004................. 0.10% 1,103,628 8.745297 9,651,555 0.16% 3.16% 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 2004................. 0.10% 668,456 10.048366 6,716,891 8.03% 9.36% 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% Fidelity/(R)/ VIP - Overseas Portfolio - Service Class 2004................. 0.10% 127,656 11.295209 1,441,901 0.98% 13.37% 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% Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class 2004................. 0.10% 194,978 12.773836 2,490,617 0.24% 15.22% 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 2004................. 0.10% 19,294 8.062568 155,559 0.48% 6.95% 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 2004................. 0.10% 9,532 13.470536 128,401 0.00% 13.87% 2003................. 0.10% 9,280 11.829409 109,777 0.00% 57.63% Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 2004................. 0.10% 202,324 14.831493 3,000,767 1.11% 18.41% 2003................. 0.10% 172,783 12.525565 2,164,205 1.96% 32.08% Gartmore GVIT Comstock Value Fund - Class I 2004................. 0.10% 230,518 10.399470 2,397,265 1.39% 17.38% 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% Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I 2004................. 0.10% 193,708 18.322527 3,549,220 0.56% 15.62% 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*** ---------- ---------- ------------ -------------- ---------- ---------- Gartmore GVIT Emerging Markets Fund - Class I 2004................. 0.10% 70,226 $ 13.914559 $ 977,164 1.04% 20.62% 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 Federated High Income Bond Fund - Class I 2004................. 0.10% 95,632 13.154128 1,257,956 7.58% 9.99% 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% Gartmore GVIT Global Financial Services Fund - Class I 2004................. 0.10% 5,676 14.788326 83,939 1.37% 20.87% 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% 05/01/02 Gartmore GVIT Global Health Sciences Fund - Class I 2004................. 0.10% 49,544 12.263680 607,592 0.00% 7.75% 2003................. 0.10% 8,967 11.381435 102,057 0.00% 36.56% Gartmore GVIT Global Technology and Communications Fund - Class I 2004................. 0.10% 675,570 3.180008 2,148,318 0.00% 4.21% 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 2004................. 0.10% 13,192 13.963148 184,202 1.64% 29.84% 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% 05/01/02 Gartmore GVIT Government Bond Fund - Class I 2004................. 0.10% 68,418 13.886189 950,065 5.38% 3.16% 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% Gartmore GVIT Growth Fund - Class I 2004................. 0.10% 47,844 5.548096 265,443 0.34% 8.05% 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% Gartmore GVIT ID Aggressive Fund - Class II 2004................. 0.10% 24,186 12.491088 302,109 1.85% 13.91% 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% 01/25/02 Gartmore GVIT ID Conservative Fund - Class II 2004................. 0.10% 21,194 11.316349 239,839 2.49% 4.55% 2003................. 0.10% 13,104 10.824110 141,839 2.59% 7.80% Gartmore GVIT ID Moderate Fund - Class II 2004................. 0.10% 39,950 11.984122 478,766 2.21% 9.43% 2003................. 0.10% 1,913 10.951794 20,951 2.05% 19.93% Gartmore GVIT ID Moderately Aggressive Fund - Class II 2004................. 0.10% 14,182 12.296725 174,392 2.01% 11.98% 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% 01/25/02 Gartmore GVIT ID Moderately Conservative Fund - Class II 2004................. 0.10% 9,038 11.713743 105,869 2.38% 7.05% 2003................. 0.10% 2,011 10.942135 22,005 2.33% 13.58%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT- 4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ------------ -------------- ---------- ---------- Gartmore GVIT International Growth Fund - Class I 2004................. 0.10% 50,722 $ 7.724537 $ 391,804 0.85% 14.08% 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 J.P. Morgan Balanced Fund - Class I 2004................. 0.10% 59,166 10.738528 635,356 1.94% 8.38% 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% Gartmore GVIT Mid Cap Growth Fund - Class I 2004................. 0.10% 102,944 9.827397 1,011,672 0.00% 15.22% 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% 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% Gartmore GVIT Money Market Fund: Class V 2004................. 0.10% 13,954,380 10.160839 141,788,209 0.91% 0.79% 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)/ Fund: Class I 2004................. 0.10% 19,034,918 10.408568 198,126,238 1.30% 9.64% 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 Nationwide/(R)/ Leaders Fund - Class I 2004................. 0.10% 12,564 12.556222 157,756 0.48% 18.67% 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 2004................. 0.10% 70,962 15.479228 1,098,437 0.00% 13.30% 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 2004................. 0.10% 250,742 25.513967 6,397,423 0.00% 17.18% 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 2004................. 0.10% 254,060 20.783025 5,280,135 0.00% 18.90% 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% Gartmore GVIT Turner 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%
(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 U.S. Growth Leaders Fund - Class I 2004................. 0.10% 44,170 $ 14.030717 $ 619,737 0.00% 12.30% 2003................. 0.10% 36,540 12.494332 456,543 0.00% 51.98% Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2004................. 0.10% 6,318 14.262059 90,108 4.55% 6.43% 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% Gartmore GVIT Worldwide Leaders Fund - Class I 2004................. 0.10% 120,048 9.897753 1,188,205 0.00% 15.55% 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% Goldman Sachs VIT - Mid Cap Value Fund 2004................. 0.10% 117,114 15.947340 1,867,657 0.74% 25.76% 2003................. 0.10% 855 12.680880 10,842 1.72% 28.26% Janus AS - Balanced Portfolio - Service Shares 2004................. 0.10% 11,560 12.344530 142,703 2.45% 8.18% 2003................. 0.10% 8,186 11.410593 93,407 2.34% 13.61% Janus AS - Capital Appreciation Portfolio - Service Shares 2004................. 0.10% 112,522 7.639669 859,631 0.02% 17.85% 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% 01/27/00 Janus AS - Global Technology Portfolio - Service Shares 2004................. 0.10% 151,606 3.572518 541,615 0.00% 0.47% 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% 01/27/00 Janus AS - International Growth Portfolio - Service Shares 2004................. 0.10% 150,980 7.472984 1,128,271 0.85% 18.57% 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% 01/27/00 Neuberger Berman AMT - Fasciano Portfolio - S Class Shares 2004................. 0.10% 51,200 14.058294 719,785 0.00% 11.76% 2003................. 0.10% 1,074 12.578474 13,509 0.00% 24.94% Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004................. 0.10% 26,978 12.192566 328,931 0.12% 15.70% 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/(R)/ - I Class 2004................. 0.10% 394,394 11.485392 4,529,770 0.00% 16.19% 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% Neuberger Berman AMT - Partners Portfolio 2004................. 0.10% 162,162 12.451586 2,019,174 0.01% 18.86% 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%
(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*** ---------- ---------- ------------ -------------- ---------- ---------- One Group/(R)/ IT Mid Cap Growth Portfolio 2004................. 0.10% 2,456 $ 14.403351 $ 35,375 0.00% 12.51% One Group/(R)/ IT Mid Cap Value Portfolio 2004................. 0.10% 5,950 15.182812 90,338 0.58% 15.28% 2003................. 0.10% 5,997 13.170159 78,981 0.57% 32.62% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004................. 0.10% 538,726 10.949589 5,898,828 0.00% 19.66% 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% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2004................. 0.10% 876,150 11.760631 10,304,077 0.31% 6.83% 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 2004................. 0.10% 419,770 11.151785 4,681,185 1.15% 19.04% 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% 05/01/00 Oppenheimer Main Street/(R)/ Fund/VA - Initial Class 2004................. 0.10% 62,892 10.774785 677,648 0.83% 9.35% 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 2004................. 0.10% 435,394 10.602263 4,616,162 1.29% 1.74% 2003................. 0.10% 456,933 10.421178 4,761,780 1.22% 2.24% PIMCO VIT - Real Return Portfolio - Administrative Shares 2004................. 0.10% 96,300 12.266232 1,181,238 1.03% 8.78% 2003................. 0.10% 24,527 11.276054 276,568 2.35% 8.75% PIMCO VIT - Total Return Portfolio - Administrative Shares 2004................. 0.10% 50,172 11.365760 570,243 1.92% 4.78% 2003................. 0.10% 4,202 10.847595 45,582 2.71% 4.94% Pioneer High Yield VCT Portfolio - Class I Shares 2004................. 0.10% 16,298 14.846381 241,966 5.59% 7.95% 2003................. 0.10% 82,218 13.752414 1,130,696 5.84% 32.65% Royce Capital Fund - Royce Micro-Cap Portfolio 2004................. 0.10% 11,820 17.141696 202,615 0.00% 13.73% 2003................. 0.10% 76,384 15.072020 1,151,261 0.00% 49.01% Strong Opportunity Fund II, Inc. 2004................. 0.10% 184,596 11.221097 2,071,370 0.00% 18.10% 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% 05/01/00 T. Rowe Price Equity Income Portfolio II 2004................. 0.10% 11,962 14.499419 173,442 1.46% 14.50% 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% 09/03/02 T. Rowe Price Mid Cap Growth Fund II 2004................. 0.10% 172,276 16.682608 2,874,013 0.00% 17.94% 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% 09/03/02
(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*** ---------- ---------- ------------ -------------- ---------- ---------- Van Eck WIT - Worldwide Emerging Markets Fund 2004................. 0.10% 32,436 $ 19.308855 $ 626,302 0.53% 25.76% 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 2004................. 0.10% 7,980 20.342743 162,335 0.31% 24.10% 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 2004................. 0.10% 6,174 22.685707 140,062 7.52% 9.95% 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 2004................. 0.10% 21,882 7.255105 158,756 0.00% 21.47% 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% 05/01/00 Van Kampen UIF - U.S. Real Estate Portfolio - Class A 2004................. 0.10% 110,058 26.386900 2,904,089 1.61% 36.26% 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% 09/21/00 The BEST of AMERICA/(R)/ Corporate Variable Universal Life Series/SM/ Reduced Fee Tier (0.20%) AIM VIF - Basic Value Fund - Series I Shares 2004................. 0.20% 23,358 14.554224 339,958 0.00% 10.85% 2003................. 0.20% 4,973 13.129953 65,295 0.06% 33.36% AIM VIF - Capital Appreciation Fund - Series I Shares 2003a ............... 0.20% 288 13.259800 3,819 0.00% 35.09% AIM VIF - Capital Development Fund - Series I Shares 2004................. 0.20% 996 15.284432 15,223 0.00% 15.27% AIM VIF - International Growth Fund - Series I Shares 2004................. 0.20% 126,346 11.923183 1,506,446 1.36% 19.23% 05/03/04 Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004................. 0.20% 28,554 14.735953 420,770 0.92% 11.24% 2003................. 0.20% 5,515 13.247066 73,058 0.51% 32.24% American Century VP - Income & Growth Fund - Class I 2004................. 0.20% 141,218 10.849845 1,532,193 1.37% 12.77% 2003................. 0.20% 166,512 9.621502 1,602,096 1.28% 29.09% American Century VP - International Fund - Class I 2004................. 0.20% 434,052 8.415693 3,652,848 0.56% 14.69% 2003................. 0.20% 384,244 7.337502 2,819,391 0.73% 24.26% American Century VP - Fund - Ultra/(R)/ Class I 2004................. 0.20% 7,212 11.052535 79,711 0.00% 10.45% 2003................. 0.20% 1,924 10.006426 19,252 0.00% 24.65% American Century VP - Value Fund - Class I 2004................. 0.20% 321,958 15.239704 4,906,545 0.97% 14.10% 2003................. 0.20% 190,981 13.355894 2,550,722 1.04% 28.70% Baron Capital Funds Trust - Baron Capital Asset Fund: Insurance Shares 2004................. 0.20% 401,660 15.782247 6,339,097 0.00% 25.39% 2003................. 0.20% 276,028 12.586755 3,474,297 0.00% 29.75%
(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*** ---------- ---------- ------------ -------------- ---------- ---------- Credit Suisse Trust - Global Post-Venture Capital Portfolio 2004................. 0.20% 7,744 $ 8.356633 $ 64,714 0.00% 17.75% 2003................. 0.20% 7,043 7.096703 49,982 0.00% 47.36% Credit Suisse Trust - International Focus Portfolio 2004................. 0.20% 10,148 9.684322 98,276 0.99% 14.51% 2003................. 0.20% 9,647 8.456964 81,584 0.49% 32.82% Credit Suisse Trust - Large Cap Value Portfolio 2004................. 0.20% 35,398 11.474634 406,179 0.58% 11.12% 2003................. 0.20% 20,469 10.326271 211,368 0.76% 24.91% Dreyfus IP - Mid Cap Stock Portfolio - Service Shares 2004................. 0.20% 20,268 14.978665 303,588 0.43% 14.25% 2003................. 0.20% 8,456 13.110902 110,866 1.02% 31.46% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004................. 0.20% 330,608 12.820499 4,238,560 0.57% 21.64% 2003................. 0.20% 13,371 10.539624 140,925 0.27% 37.50% Dreyfus Socially Responsible Growth Fund, Inc., The 2004................. 0.20% 29,340 7.311886 214,531 0.40% 6.00% 2003................. 0.20% 15,093 6.898125 104,113 0.11% 25.75% Dreyfus Stock Index Fund, Inc. - Initial Shares 2004................. 0.20% 4,920,402 9.651621 47,489,855 1.82% 10.42% 2003................. 0.20% 3,957,858 8.740894 34,595,217 1.54% 28.11% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2004................. 0.20% 290,942 9.535398 2,774,248 1.67% 4.84% 2003................. 0.20% 265,908 9.095533 2,418,575 1.18% 20.93% Dreyfus VIF - International Value Portfolio - Initial Shares 2004................. 0.20% 1,014,594 15.377151 15,601,565 1.23% 19.78% 2003................. 0.20% 611,687 12.837546 7,852,560 2.67% 36.08% Federated IS - Quality Bond Fund II - Primary Shares 2004................. 0.20% 1,045,524 13.797947 14,426,085 3.92% 3.41% 2003................. 0.20% 705,554 13.342573 9,413,906 3.30% 4.44% Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class 2004................. 0.20% 253,254 11.816128 2,992,482 1.39% 11.16% 2003................. 0.20% 141,957 10.629864 1,508,984 1.66% 29.96% Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004................. 0.20% 1,398,590 7.828218 10,948,467 0.16% 3.06% 2003................. 0.20% 595,465 7.595988 4,523,145 0.18% 32.52% Fidelity/(R)/ VIP - High Income Portfolio - Service Class 2004................. 0.20% 373,660 12.853699 4,802,913 8.03% 9.25% 2003................. 0.20% 87,435 11.765514 1,028,718 6.36% 26.72% Fidelity/(R)/ VIP - Overseas Portfolio - Service Class 2004................. 0.20% 373,770 10.134523 3,787,981 0.98% 13.26% 2003................. 0.20% 315,760 8.947944 2,825,403 0.63% 42.92% Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class 2004................. 0.20% 708,896 12.047726 8,540,585 0.24% 15.11% 2003................. 0.20% 143,092 10.466376 1,497,655 0.30% 28.10% Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class 2004................. 0.20% 24,564 9.272138 227,761 0.48% 6.85% 2003................. 0.20% 13,277 8.678086 115,219 0.59% 29.40% Fidelity/(R)/ VIP III - Value Strategies Portfolio - Service Class 2004................. 0.20% 7,530 13.434633 101,163 0.00% 13.76% 2003................. 0.20% 973 11.809676 11,491 0.00% 57.47% Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 2004................. 0.20% 41,174 14.797053 609,254 1.11% 18.29% 2003................. 0.20% 155,351 12.508977 1,943,282 1.96% 31.95% Gartmore GVIT Comstock Value Fund - Class I 2004................. 0.20% 49,480 10.312567 510,266 1.39% 17.26% 2003................. 0.20% 7,421 8.794319 65,263 1.34% 31.17%
(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 Dreyfus Mid Cap Index Fund - Class I 2004................. 0.20% 458,242 $ 13.871631 $ 6,356,564 0.56% 15.50% 2003................. 0.20% 280,100 12.010005 3,364,002 0.50% 34.38% Gartmore GVIT Emerging Markets Fund - Class I 2004................. 0.20% 16,822 13.855548 233,078 1.04% 20.50% 2003................. 0.20% 21,189 11.498175 243,635 0.61% 64.93% Gartmore GVIT Federated High Income Bond Fund - Class I 2004................. 0.20% 810,264 14.795923 11,988,604 7.58% 9.88% 2003................. 0.20% 777,021 13.465993 10,463,359 7.99% 22.03% Gartmore GVIT Global Financial Services Fund - Class I 2004................. 0.20% 7,074 14.748909 104,334 1.37% 20.75% 2003................. 0.20% 8,215 12.214302 100,340 1.08% 41.17% Gartmore GVIT Global Health Sciences Fund - Class I 2004................. 0.20% 16,466 12.231005 201,396 0.00% 7.64% 2003................. 0.20% 4,437 11.362461 50,415 0.00% 36.42% Gartmore GVIT Global Technology and Communications Fund - Class I 2004................. 0.20% 448,724 3.166487 1,420,879 0.00% 4.10% 2003................. 0.20% 78,739 3.041648 239,496 0.00% 54.92% Gartmore GVIT Global Utilities Fund - Class I 2004................. 0.20% 21,186 13.925951 295,035 1.64% 29.71% 2003................. 0.20% 12,612 10.736432 135,408 1.02% 23.80% Gartmore GVIT Government Bond Fund - Class I 2004................. 0.20% 1,951,516 12.671201 24,728,051 5.38% 3.06% 2003................. 0.20% 1,095,538 12.295487 13,470,173 3.25% 1.80% Gartmore GVIT Growth Fund - Class I 2004................. 0.20% 47,838 7.130400 341,104 0.34% 7.94% 2003................. 0.20% 40,423 6.605859 267,029 0.02% 32.47% Gartmore GVIT ID Aggressive Fund - Class II 2004................. 0.20% 7,054 12.454537 87,854 1.85% 13.80% 2003................. 0.20% 2,814 10.944415 30,798 1.57% 31.60% Gartmore GVIT ID Conservative Fund - Class II 2004................. 0.20% 2,950 11.283226 33,286 2.49% 4.44% 2003................. 0.20% 1,756 10.803228 18,970 2.59% 7.69% Gartmore GVIT ID Moderate Fund - Class II 2004................. 0.20% 28,510 11.949051 340,667 2.21% 9.32% 2003................. 0.20% 4,545 10.930659 49,680 2.05% 19.81% Gartmore GVIT ID Moderately Aggressive Fund - Class II 2004................. 0.20% 19,906 12.260724 244,062 2.01% 11.87% 2003................. 0.20% 5,607 10.959933 61,452 1.61% 26.39% Gartmore GVIT ID Moderately Conservative Fund - Class II 2004................. 0.20% 11,104 11.679461 129,689 2.38% 6.94% 2003................. 0.20% 3,486 10.921034 38,071 2.33% 13.47% Gartmore GVIT International Growth Fund - Class I 2004................. 0.20% 12,706 7.691798 97,732 0.85% 13.97% 2003................. 0.20% 8,703 6.749218 58,738 0.00% 35.35% Gartmore GVIT J.P. Morgan Balanced Fund - Class I 2004................. 0.20% 132,248 10.900634 1,441,587 1.94% 8.27% 2003................. 0.20% 104,019 10.067605 1,047,222 1.76% 18.18% Gartmore GVIT Mid Cap Growth Fund - Class I 2004................. 0.20% 763,680 7.982767 6,096,280 0.00% 15.11% 2003................. 0.20% 155,794 6.935054 1,080,440 0.00% 39.85% Gartmore GVIT Money Market Fund - Class I 2004................. 0.20% 30,788 10.605257 326,515 0.80% 0.61% 2003................. 0.20% 221,572 10.540982 2,335,586 0.63% 0.42% Gartmore GVIT Money Market Fund: Class V 2004................. 0.20% 8,296,360 10.138533 84,112,920 0.91% 0.69% 2003................. 0.20% 6,564,517 10.069143 66,099,060 0.70% 0.50%
(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)/ Fund: Class I 2004................. 0.20% 32,724 $ 10.177848 $ 333,060 1.30% 9.53% 2003................. 0.20% 20,659 9.291410 191,966 0.59% 27.26% Gartmore GVIT Nationwide/(R)/ Leaders Fund - Class I 2004................. 0.20% 3,700 12.522767 46,334 0.48% 18.56% 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 2004................. 0.20% 269,788 15.391720 4,152,501 0.00% 13.19% 2003................. 0.20% 108,065 13.598245 1,469,494 0.00% 34.00% Gartmore GVIT Small Cap Value Fund - Class I 2004................. 0.20% 271,422 18.334546 4,976,399 0.00% 17.06% 2003................. 0.20% 234,794 15.661984 3,677,340 0.00% 56.54% Gartmore GVIT Small Company Fund - Class I 2004................. 0.20% 346,438 14.011465 4,854,104 0.00% 18.78% 2003................. 0.20% 126,604 11.795728 1,493,386 0.00% 40.73% Gartmore GVIT Turner Growth Focus Fund - Class I 2003................. 0.20% 17,434 3.315211 57,797 0.00% 50.66% Gartmore GVIT U.S. Growth Leaders Fund - Class I 2004................. 0.20% 8,230 13.993330 115,165 0.00% 12.18% 2003................. 0.20% 5,224 12.473517 65,162 0.00% 51.83% Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2004................. 0.20% 13,584 13.684149 185,885 4.55% 6.32% 2003................. 0.20% 9,884 12.870615 127,213 5.42% 11.89% Gartmore GVIT Worldwide Leaders Fund - Class I 2004................. 0.20% 2,874 9.758795 28,047 0.00% 15.43% 2003................. 0.20% 3,219 8.453981 27,213 0.00% 35.79% Goldman Sachs VIT - Mid Cap Value Fund 2004................. 0.20% 907,474 15.910334 14,438,214 0.74% 25.63% 2003................. 0.20% 528,186 12.664093 6,688,997 1.72% 28.13% Janus AS - Balanced Portfolio - Service Shares 2004................. 0.20% 229,366 12.315866 2,824,841 2.45% 8.08% 2003................. 0.20% 5,017 11.395477 57,171 2.34% 13.49% Janus AS - Capital Appreciation Portfolio - Service Shares 2004................. 0.20% 233,906 7.602120 1,778,181 0.02% 17.73% 2003................. 0.20% 262,941 6.457142 1,697,847 0.25% 19.99% Janus AS - Global Technology Portfolio - Service Shares 2004................. 0.20% 173,558 3.554928 616,986 0.00% 0.37% 2003................. 0.20% 102,131 3.541982 361,746 0.00% 46.18% Janus AS - International Growth Portfolio - Service Shares 2004................. 0.20% 586,420 7.436235 4,360,757 0.85% 18.45% 2003................. 0.20% 245,144 6.277993 1,539,012 1.02% 34.26% Neuberger Berman AMT - Fasciano Portfolio - S Class Shares 2004................. 0.20% 4,062 14.025658 56,972 0.00% 11.65% 2003................. 0.20% 1,829 12.561832 22,976 0.00% 24.81% Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004................. 0.20% 19,660 11.312789 222,409 0.12% 15.58% 2003................. 0.20% 30,298 9.787595 296,545 0.89% 31.50% Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/ - I Class 2004................. 0.20% 470,456 8.401327 3,952,455 0.00% 16.08% 2003................. 0.20% 274,225 7.237810 1,984,788 0.00% 27.81% Neuberger Berman AMT - Partners Portfolio 2004................. 0.20% 229,766 12.443485 2,859,090 0.01% 18.74% 2003................. 0.20% 14,991 10.479833 157,103 0.00% 34.82% One Group/(R)/ IT Mid Cap Growth Portfolio 2004................. 0.20% 8,286 14.370472 119,074 0.00% 12.39% 2003................. 0.20% 4,483 12.785745 57,318 0.00% 26.89%
(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*** ---------- ---------- ------------ -------------- ---------- ---------- One Group/(R)/ IT Mid Cap Value Portfolio 2004................. 0.20% 14,900 $ 15.148180 $ 225,708 0.58% 15.17% 2003................. 0.20% 7,236 13.153260 95,177 0.57% 32.49% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004................. 0.20% 260,230 7.602891 1,978,500 0.00% 19.54% 2003................. 0.20% 163,694 6.360255 1,041,136 0.00% 25.34% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2004................. 0.20% 1,451,308 9.169906 13,308,358 0.31% 6.72% 2003................. 0.20% 710,846 8.592296 6,107,799 0.38% 30.68% Oppenheimer Global Securities Fund/VA - Initial Class 2004................. 0.20% 342,972 11.099865 3,806,943 1.15% 18.92% 2003................. 0.20% 78,177 9.333505 729,665 0.73% 42.73% Oppenheimer Main Street/(R)/ Fund/VA - Initial Class 2004................. 0.20% 86,940 10.253671 891,454 0.83% 9.24% 2003................. 0.20% 50,314 9.386344 472,265 0.90% 26.47% PIMCO VIT - Low Duration Portfolio - Administrative Shares 2004................. 0.20% 2,001,144 10.577591 21,167,283 1.29% 1.64% 2003................. 0.20% 1,032,781 10.407346 10,748,509 1.22% 2.14% PIMCO VIT - Real Return Portfolio - Administrative Shares 2004................. 0.20% 225,144 12.237557 2,755,213 1.03% 8.67% 2003................. 0.20% 41,728 11.260965 469,898 2.35% 8.64% PIMCO VIT - Total Return Portfolio - Administrative Shares 2004................. 0.20% 1,390,690 11.339186 15,769,293 1.92% 4.67% 2003................. 0.20% 805,938 10.833078 8,730,789 2.71% 4.83% Pioneer High Yield VCT Portfolio - Class I Shares 2004................. 0.20% 41,538 14.811836 615,254 5.59% 7.85% 2003................. 0.20% 38,729 13.734162 531,910 5.84% 32.52% Royce Capital Fund - Royce Micro-Cap Portfolio 2004................. 0.20% 251,888 17.101898 4,307,763 0.00% 13.62% 2003................. 0.20% 58,726 15.052067 883,948 0.00% 48.87% Strong Opportunity Fund II, Inc. 2004................. 0.20% 266,180 11.168856 2,972,926 0.00% 17.98% 2003................. 0.20% 202,631 9.466409 1,918,188 0.08% 36.73% T. Rowe Price Equity Income Portfolio II 2004................. 0.20% 1,400,944 14.465784 20,265,753 1.46% 14.39% 2003................. 0.20% 546,267 12.646299 6,908,256 1.80% 24.92% T. Rowe Price Mid Cap Growth Fund II 2004................. 0.20% 835,584 16.643864 13,907,346 0.00% 17.82% 2003................. 0.20% 473,916 14.126799 6,694,916 0.00% 37.82% T. Rowe Price New America Growth Portfolio 2004................. 0.20% 222,430 10.808909 2,404,226 0.00% 8.09% 05/03/04 Van Eck WIT - Worldwide Emerging Markets Fund 2004................. 0.20% 120,164 17.902527 2,151,239 0.53% 25.64% 2003................. 0.20% 6,811 14.249147 97,051 0.11% 53.88% Van Eck WIT - Worldwide Hard Assets Fund 2004................. 0.20% 70,582 17.381825 1,226,844 0.31% 23.98% 2003................. 0.20% 17,418 14.048159 244,691 0.41% 44.79% Van Kampen UIF - Emerging Markets Debt Portfolio 2004................. 0.20% 105,242 17.341685 1,825,074 7.52% 9.84% 2003................. 0.20% 3,595 15.787831 56,757 0.00% 27.61% Van Kampen UIF - Mid Cap Growth Portfolio 2004................. 0.20% 98,272 7.221303 709,652 0.00% 21.35% 2003................. 0.20% 70,714 5.950642 420,794 0.00% 41.48% Van Kampen UIF - U.S. Real Estate Portfolio - Class A 2004................. 0.20% 98,428 21.489618 2,115,180 1.61% 36.12% 2003................. 0.20% 40,136 15.786980 633,626 0.00% 37.24%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ------------ -------------- ---------- ---------- The BEST of AMERICA/(R)/ Corporate Variable Universal Life Series/SM/ Reduced Fee Tier (0.25%) AIM VIF - Basic Value Fund - Series I Shares 2004 ................ 0.25% 98,126 $ 14.537319 $ 1,426,489 0.00% 10.79% 2003 ................ 0.25% 1,947 13.121262 25,547 0.06% 33.29% AIM VIF - Capital Appreciation Fund - Series I Shares 2003 ................ 0.25% 2,553 13.251011 33,830 0.00% 35.02% AIM VIF - Capital Development Fund - Series I Shares 2004 ................ 0.25% 27,246 15.266666 415,956 0.00% 15.21% AIM VIF - International Growth Fund - Series I Shares 2004 ................ 0.25% 26,402 11.919243 314,692 1.36% 19.19% 05/03/04 Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004 ................ 0.25% 426,728 14.718823 6,280,934 0.92% 11.18% 2003 ................ 0.25% 278,219 13.238290 3,683,144 0.51% 32.17% American Century VP - Income & Growth Fund - Class I 2004 ................ 0.25% 368,640 10.827688 3,991,519 1.37% 12.71% 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 2004 ................ 0.25% 923,768 8.398563 7,758,324 0.56% 14.64% 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/(R)/ Fund - Class I 2004 ................ 0.25% 212,496 11.037791 2,345,486 0.00% 10.40% 2003 ................ 0.25% 138,103 9.998079 1,380,765 0.00% 24.59% American Century VP - Value Fund - Class I 2004 ................ 0.25% 351,012 15.208626 5,338,410 0.97% 14.05% 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 Funds Trust - Baron Capital Asset Fund: Insurance Shares 2004 ................ 0.25% 84,614 15.763932 1,333,849 0.00% 25.33% 2003 ................ 0.25% 17,272 12.578424 217,255 0.00% 29.69% Calvert VS - Social Equity Portfolio 2004 ................ 0.25% 826 13.399142 11,068 0.08% 6.89% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2004 ................ 0.25% 25,520 8.339563 212,826 0.00% 17.69% 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 2004 ................ 0.25% 13,758 9.664537 132,965 0.99% 14.46% 2003 ................ 0.25% 17,161 8.443905 144,906 0.49% 32.76% Credit Suisse Trust - Large Cap Value Portfolio 2004 ................ 0.25% 16,952 11.451229 194,121 0.58% 11.07% 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 IP - Mid Cap Stock Portfolio - Service Shares 2004 ................ 0.25% 41,246 14.961281 617,093 0.43% 14.19% 2003 ................ 0.25% 647 13.102225 8,477 1.02% 31.39% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004 ................ 0.25% 376,014 12.803427 4,814,268 0.57% 21.58% 2003 ................ 0.25% 145,429 10.530847 1,531,491 0.27% 37.44% Dreyfus Socially Responsible Growth Fund, Inc., The 2004 ................ 0.25% 154,666 7.296964 1,128,592 0.40% 5.95% 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, - Initial Inc. Shares 2004 ................ 0.25% 5,809,448 9.631920 55,956,138 1.82% 10.36% 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%
(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 VIF - Appreciation Portfolio - Initial Shares 2004 ........................................ 0.25% 555,430 $ 9.515935 $ 5,285,436 1.67% 4.78% 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 2004 ........................................ 0.25% 481,030 15.359280 7,388,274 1.23% 19.72% 2003 ........................................ 0.25% 561,722 12.829044 7,206,356 2.67% 36.02% Federated IS - Quality Bond Fund II - Primary Shares 2004 ........................................ 0.25% 1,438,890 13.758938 19,797,598 3.92% 3.36% 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 2004 ........................................ 0.25% 1,061,120 11.792032 12,512,761 1.39% 11.10% 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 2004 ........................................ 0.25% 1,835,224 7.812236 14,337,203 0.16% 3.01% 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 2004 ........................................ 0.25% 593,920 12.827432 7,618,468 8.03% 9.19% 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 2004 ........................................ 0.25% 460,116 10.113816 4,653,529 0.98% 13.20% 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/(R)/ Portfolio - Service Class 2004 ........................................ 0.25% 970,084 12.023156 11,663,471 0.24% 15.05% 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 2004 ........................................ 0.25% 451,498 9.253175 4,177,790 0.48% 6.79% 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 2004 ........................................ 0.25% 29,960 13.416717 401,965 0.00% 13.70% 2003 ........................................ 0.25% 15,729 11.799819 185,599 0.00% 57.40% Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 2004 ........................................ 0.25% 173,760 14.779865 2,568,149 1.11% 18.23% 2003 ........................................ 0.25% 9,405 12.500683 117,569 1.96% 31.88% Gartmore GVIT Comstock Value Fund - Class I 2004 ........................................ 0.25% 36,102 10.291496 371,544 1.39% 17.21% 2003 ........................................ 0.25% 3,887 8.780739 34,131 1.34% 31.11% Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I 2004 ........................................ 0.25% 317,498 13.843332 4,395,230 0.56% 15.44% 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% Gartmore GVIT Emerging Markets Fund - Class I 2004 ........................................ 0.25% 68,036 13.826171 940,677 1.04% 20.44% 2003 ........................................ 0.25% 14,303 11.479519 164,192 0.61% 64.85% Gartmore GVIT Federated High Income Bond Fund - Class I 2004 ........................................ 0.25% 157,482 14.765731 2,325,337 7.58% 9.82% 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% Gartmore GVIT Global Financial Services Fund - Class I 2004 ........................................ 0.25% 8,572 14.729262 126,259 1.37% 20.69% 2003 ........................................ 0.25% 958 12.207124 11,692 1.08% 41.10%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT- 4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ---------- -------------- ---------- --------- Gartmore GVIT Global Health Sciences Fund - Class I 2004 ........................................ 0.25% 24,814 $12.214711 $ 303,096 0.00% 7.59% 2003 ........................................ 0.25% 9,013 11.352997 102,325 0.00% 36.35% Gartmore GVIT Global Technology and Communications Fund - Class I 2004 ........................................ 0.25% 674,980 3.159750 2,132,768 0.00% 4.05% 2003 ........................................ 0.25% 118,132 3.036698 358,731 0.00% 54.84% Gartmore GVIT Global Utilities Fund - Class I 2004 ........................................ 0.25% 17,668 13.907406 245,716 1.64% 29.64% 2003 ........................................ 0.25% 1,187 10.727488 12,734 1.02% 23.74% Gartmore GVIT Government Bond Fund - Class I 2004 ........................................ 0.25% 2,572,680 12.645377 32,532,509 5.38% 3.00% 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 2004 ........................................ 0.25% 73,454 7.115834 522,686 0.34% 7.89% 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% Gartmore GVIT ID Aggressive Fund - Class II 2004 ........................................ 0.25% 14,712 12.436282 182,963 1.85% 13.74% 2003 ........................................ 0.25% 4,309 10.933839 47,114 1.57% 31.54% Gartmore GVIT ID Conservative Fund - Class II 2004 ........................................ 0.25% 6,398 11.266714 72,084 2.49% 4.39% 2003 ........................................ 0.25% 929 10.792806 10,027 2.59% 7.64% Gartmore GVIT ID Moderate Fund - Class II 2004 ........................................ 0.25% 18,974 11.931529 226,389 2.21% 9.26% 2003 ........................................ 0.25% 7,829 10.920096 85,493 2.05% 19.75% Gartmore GVIT ID Moderately Aggressive Fund - Class II 2004 ........................................ 0.25% 90,230 12.242773 1,104,665 2.01% 11.81% 2003 ........................................ 0.25% 3,797 10.949354 41,575 1.61% 26.33% Gartmore GVIT ID Moderately Conservative Fund - Class II 2004 ........................................ 0.25% 21,136 11.662359 246,496 2.38% 6.89% 2003 ........................................ 0.25% 2,613 10.910488 28,509 2.33% 13.41% Gartmore GVIT International Growth Fund - Class I 2004 ........................................ 0.25% 28,960 7.675467 222,282 0.85% 13.91% 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 J.P. Morgan Balanced Fund - Class I 2004 ........................................ 0.25% 138,252 10.878396 1,503,960 1.94% 8.22% 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% Gartmore GVIT Mid Cap Growth Fund - Class I 2004 ........................................ 0.25% 989,792 7.966452 7,885,130 0.00% 15.05% 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% Gartmore GVIT Money Market Fund - Class I 2004 ........................................ 0.25% 877,048 10.583572 9,282,301 0.80% 0.56% 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 2004 ........................................ 0.25% 9,126,608 10.127388 92,428,700 0.91% 0.64% 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)/ Fund: Class I 2004 ........................................ 0.25% 200,466 10.157086 2,036,150 1.30% 9.48% 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 Nationwide/(R)/ Leaders Fund - Class I 2004 ........................................ 0.25% 13,762 12.506076 172,109 0.48% 18.50% 2003 ........................................ 0.25% 1,148 10.553942 12,116 0.15% 25.07%
(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 ........................................ 0.25% 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 2004 ........................................ 0.25% 283,520 15.348222 4,351,528 0.00% 13.13% 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 2004 ........................................ 0.25% 557,634 18.297168 10,203,123 0.00% 17.01% 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 2004 ........................................ 0.25% 766,554 13.982897 10,718,646 0.00% 18.72% 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 Turner Growth Focus Fund - Class I 2003 ........................................ 0.25% 23,948 3.309832 79,264 0.00% 50.59% Gartmore GVIT U.S. Growth Leaders Fund - Class I 2004 ........................................ 0.25% 50,246 13.974657 702,171 0.00% 12.13% 2003 ........................................ 0.25% 33,465 12.463103 417,078 0.00% 51.76% Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2004 ........................................ 0.25% 63,742 13.656231 870,475 4.55% 6.27% 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% Gartmore GVIT Worldwide Leaders Fund - Class I 2004 ........................................ 0.25% 34,068 9.738860 331,783 0.00% 15.38% 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 2004 ........................................ 0.25% 315,450 15.891856 5,013,086 0.74% 25.57% 2003 ........................................ 0.25% 259,089 12.655709 3,278,955 1.72% 28.07% Janus AS - Balanced Portfolio - Service Shares 2004 ........................................ 0.25% 53,754 12.301545 661,257 2.45% 8.02% 2003 ........................................ 0.25% 14,950 11.387925 170,249 2.34% 13.44% Janus AS - Capital Appreciation Portfolio - Service Shares 2004 ........................................ 0.25% 956,584 7.583386 7,254,146 0.02% 17.67% 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 2004 ........................................ 0.25% 204,340 3.546168 724,624 0.00% 0.32% 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% Janus AS - International Growth Portfolio - Service Shares 2004 ........................................ 0.25% 680,002 7.417926 5,044,205 0.85% 18.39% 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% Neuberger Berman AMT - Fasciano Portfolio - S Class Shares 2004 ........................................ 0.25% 22,204 14.009370 311,064 0.00% 11.60% 2003 ........................................ 0.25% 3,926 12.553503 49,285 0.00% 24.75% Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004 ........................................ 0.25% 91,408 11.289714 1,031,970 0.12% 15.53% 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/(R)/ - I Class 2004 ........................................ 0.25% 678,994 8.384158 5,692,793 0.00% 16.02% 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%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT- 4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ---------- -------------- ---------- --------- Neuberger Berman AMT - Partners Portfolio 2004 ........................................ 0.25% 191,928 $12.418080 $ 2,383,377 0.01% 18.68% 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 2004 ........................................ 0.25% 82,778 14.354104 1,188,204 0.00% 12.34% 2003 ........................................ 0.25% 6,068 12.777560 77,534 0.00% 26.83% One Group/(R)/ IT Mid Cap Value Portfolio 2004 ........................................ 0.25% 22,074 15.130897 333,999 0.58% 15.11% 2003 ........................................ 0.25% 1,068 13.144807 14,039 0.57% 32.42% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004 ........................................ 0.25% 1,726,784 7.587355 13,101,723 0.00% 19.48% 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 2004 ........................................ 0.25% 1,591,142 9.151191 14,560,844 0.31% 6.67% 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 2004 ........................................ 0.25% 436,776 11.073978 4,836,848 1.15% 18.87% 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)/ Fund/VA - Initial Class 2004 ........................................ 0.25% 192,090 10.232719 1,965,603 0.83% 9.19% 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 - All Asset Portfolio - Administrative Shares 2004 ........................................ 0.25% 10,938 11.208609 122,600 6.86% 12.09% 05/03/04 PIMCO VIT - Low Duration Portfolio - Administrative Shares 2004 ........................................ 0.25% 554,690 10.565271 5,860,450 1.29% 1.58% 2003 ........................................ 0.25% 1,496,037 10.400435 15,559,436 1.22% 2.09% PIMCO VIT - Real Return Portfolio - Administrative Shares 2004 ........................................ 0.25% 309,916 12.223233 3,788,175 1.03% 8.62% 2003 ........................................ 0.25% 73,396 11.253423 825,956 2.35% 8.58% PIMCO VIT - Total Return Portfolio - Administrative Shares 2004 ........................................ 0.25% 1,511,060 11.325918 17,114,142 1.92% 4.62% 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% 08/30/02 Pioneer High Yield VCT Portfolio - Class I Shares 2004 ........................................ 0.25% 53,634 14.794578 793,492 5.59% 7.79% 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% 09/30/02 Royce Capital Fund - Royce Micro-Cap Portfolio 2004 ........................................ 0.25% 271,392 17.082044 4,635,930 0.00% 13.56% 2003 ........................................ 0.25% 85,061 15.042113 1,279,497 0.00% 48.79% Strong Opportunity Fund II, Inc. 2004 ........................................ 0.25% 469,872 11.142802 5,235,691 0.00% 17.93% 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 2004 ........................................ 0.25% 366,698 14.448971 5,298,409 1.46% 14.33% 2003 ........................................ 0.25% 167,637 12.637920 2,118,583 1.80% 24.86% T. Rowe Price Mid Cap Growth Fund II 2004 ........................................ 0.25% 179,746 16.624542 2,988,195 0.00% 17.76% 2003 ........................................ 0.25% 279,141 14.117448 3,940,759 0.00% 37.75% T. Rowe Price New America Growth Portfolio 2004 ........................................ 0.25% 560 10.805340 6,051 0.00% 8.05% 05/03/04
(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*** ---------- ---------- ---------- -------------- ---------- --------- Van Eck WIT - Worldwide Emerging Markets Fund 2004 ...................................... 0.25% 212,994 $17.865954 $ 3,805,341 0.53% 25.58% 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 2004 ...................................... 0.25% 31,156 17.346378 540,444 0.31% 23.92% 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 2004 ...................................... 0.25% 37,344 17.306300 646,286 7.52% 9.79% 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 2004 ...................................... 0.25% 137,920 7.204463 993,640 0.00% 21.29% 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 - Class A 2004 ...................................... 0.25% 352,704 21.445777 7,564,011 1.61% 36.05% 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 Shares 2004 ...................................... 0.40% 73,606 14.486704 1,066,308 0.00% 10.63% 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% 09/03/02 AIM VIF - Capital Appreciation Fund - Series I Shares 2003 ...................................... 0.40% 13,547 13.224712 179,155 0.00% 34.82% 2002 ...................................... 0.40% 24 9.809368 235 0.00% -1.91% 09/03/02 AIM VIF - Capital Development Fund - Series I Shares 2004 ...................................... 0.40% 59,864 15.213529 910,743 0.00% 15.04% AIM VIF - International Growth Fund - Series I Shares 2004 0.40% 152,296 11.907437 1,813,455 1.36% 19.07% 05/03/04 Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004 ...................................... 0.40% 309,918 14.667608 4,545,756 0.92% 11.02% 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% 09/03/02 American Century VP - Income & Growth Fund - Class I 2004 ...................................... 0.40% 177,026 12.115153 2,144,697 1.37% 12.54% 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% American Century VP - International Fund - Class I 2004 ...................................... 0.40% 1,074,540 10.500552 11,283,263 0.56% 14.47% 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% American Century VP - Fund - Ultra/(R)/ Class I 2004 ...................................... 0.40% 102,910 10.993709 1,131,363 0.00% 10.23% 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% 05/01/02 American Century VP - Value Fund - Class I 2004 ...................................... 0.40% 572,678 15.582659 8,923,846 0.97% 13.88% 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%
(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*** ---------- ---------- ---------- -------------- ---------- --------- Baron Capital Funds Trust - Baron Capital Asset Fund: Insurance Shares 2004 ........................................ 0.40% 171,058 $15.709055$ 2,687,160 0.00% 25.14% 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% 09/03/02 Calvert VS - Social Equity Portfolio 2004 ........................................ 0.40% 6,064 13.352495 80,970 0.08% 6.73% 2003 ........................................ 0.40% 1,076 12.510533 13,461 0.01% 21.69% 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% 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% 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% 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 - Service Shares 2004 ........................................ 0.40% 25,166 14.909204 375,205 0.43% 14.02% 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% 09/03/02 Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004 ........................................ 0.40% 164,998 12.752292 2,104,103 0.57% 21.40% 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% 05/01/02 Dreyfus Socially Responsible Growth Fund, Inc., The 2004 ........................................ 0.40% 21,434 9.270823 198,711 0.40% 5.79% 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% Dreyfus Stock Index Fund, Inc. - Initial Shares 2004 ........................................ 0.40% 6,072,526 11.408542 69,278,668 1.82% 10.20% 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% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2004 ........................................ 0.40% 504,718 11.458946 5,783,536 1.67% 4.63% 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% Dreyfus VIF - International Value Portfolio - Initial Shares 2004 ........................................ 0.40% 507,212 15.305834 7,763,303 1.23% 19.54% 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% 09/03/02 Federated IS - Quality Bond Fund II - Primary Shares 2004 ........................................ 0.40% 1,333,708 13.642560 18,195,191 3.92% 3.21% 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%
(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 - Equity-Income Portfolio - Service Class 2004 ........................................ 0.40% 1,784,684 $12.717880 $ 22,697,397 1.39% 10.94% 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% Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004 ........................................ 0.40% 1,600,358 11.308717 18,097,996 0.16% 2.85% 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% Fidelity/(R)/ VIP - High Income Portfolio - Service Class 2004 ........................................ 0.40% 217,058 9.328110 2,024,741 8.03% 9.03% 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% Fidelity/(R)/ VIP - Overseas Portfolio - Service Class 2004 ........................................ 0.40% 912,684 10.896942 9,945,465 0.98% 13.03% 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% Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class 2004 ........................................ 0.40% 1,506,264 15.064815 22,691,589 0.24% 14.88% 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% Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class 2004 ........................................ 0.40% 20,800 8.787333 182,777 0.48% 6.63% 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% Fidelity/(R)/ VIP III - Value Strategies Portfolio - Service Class 2004 ........................................ 0.40% 64,044 13.363171 855,831 0.00% 13.53% 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% 05/01/02 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 2004 ........................................ 0.40% 397,492 14.728417 5,854,428 1.11% 18.06% 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% 09/03/02 Gartmore GVIT Comstock Value Fund - Class I 2004 ........................................ 0.40% 28,772 11.110531 319,672 1.39% 17.03% 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% Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I 2004 ........................................ 0.40% 1,048,696 17.400194 18,247,514 0.56% 15.27% 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% Gartmore GVIT Emerging Markets Fund - Class I 2004 ........................................ 0.40% 182,748 13.738334 2,510,653 1.04% 20.26% 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%
(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 Federated High Income Bond Fund - Class I 2004 ........................................ 0.40% 329,516 $13.448117 $ 4,431,370 7.58% 9.66% 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% Gartmore GVIT Global Financial Services Fund - Class I 2004 ........................................ 0.40% 59,974 14.670465 879,846 1.37% 20.51% 2003 ........................................ 0.40% 44,687 12.173639 544,003 1.08% 40.89% Gartmore GVIT Global Health Sciences Fund - Class I 2004 ........................................ 0.40% 57,244 12.165918 696,426 0.00% 7.43% 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% 05/01/02 Gartmore GVIT Global Technology and Communications Fund - Class I 2004 ........................................ 0.40% 481,400 3.139672 1,511,438 0.00% 3.90% 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 2004 ........................................ 0.40% 15,120 13.851870 209,440 1.64% 29.45% 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% 05/01/02 Gartmore GVIT Government Bond Fund - Class I 2004 ........................................ 0.40% 2,350,974 14.345081 33,724,912 5.38% 2.85% 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% Gartmore GVIT Growth Fund - Class I 2004 ........................................ 0.40% 16,686 6.155504 102,711 0.34% 7.72% 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% Gartmore GVIT ID Aggressive Fund - Class II 2004 ........................................ 0.40% 63,674 12.381734 788,395 1.85% 13.57% 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% 01/25/02 Gartmore GVIT ID Conservative Fund - Class II 2004 ........................................ 0.40% 95,536 11.217265 1,071,653 2.49% 4.23% 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% 01/25/02 Gartmore GVIT ID Moderate Fund - Class II 2004 ........................................ 0.40% 264,480 11.879208 3,141,813 2.21% 9.10% 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% 01/25/02 Gartmore GVIT ID Moderately Aggressive Fund - Class II 2004 ........................................ 0.40% 142,944 12.189084 1,742,356 2.01% 11.65% 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% 01/25/02 Gartmore GVIT ID Moderately Conservative Fund - Class II 2004 ........................................ 0.40% 210,474 11.611205 2,443,857 2.38% 6.73% 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% 01/25/02 Gartmore GVIT International Growth Fund - Class I 2004 ........................................ 0.40% 25,428 7.626680 193,931 0.85% 13.74% 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%
(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 J.P. Morgan Balanced Fund - Class I 2004 ........................................ 0.40% 241,606 $10.658428 $ 2,575,140 1.94% 8.06% 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% Gartmore GVIT Mid Cap Growth Fund - Class I 2004 ........................................ 0.40% 114,718 11.394076 1,307,106 0.00% 14.88% 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% Gartmore GVIT Money Market Fund - Class I 2004 ........................................ 0.40% 165,086 11.913109 1,966,688 0.80% 0.41% 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% Gartmore GVIT Money Market Fund: Class V 2004 ........................................ 0.40% 7,815,054 10.093995 78,885,116 0.91% 0.49% 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)/ Fund: Class I 2004 ........................................ 0.40% 119,314 10.573030 1,261,511 1.30% 9.31% 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% Gartmore GVIT Nationwide/(R)/ Leaders Fund - Class I 2004 ........................................ 0.40% 996 12.456136 12,406 0.48% 18.32% 2003 ........................................ 0.40% 2,091 10.527571 22,013 0.15% 24.88% 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% Gartmore GVIT Small Cap Growth Fund - Class I 2004 ........................................ 0.40% 302,750 15.218321 4,607,347 0.00% 12.96% 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% Gartmore GVIT Small Cap Value Fund - Class I 2004 ........................................ 0.40% 1,039,852 20.471824 21,287,667 0.00% 16.83% 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% Gartmore GVIT Small Company Fund - Class I 2004 ........................................ 0.40% 1,815,822 17.951460 32,596,656 0.00% 18.55% 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% Gartmore GVIT Turner 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%
(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 U.S. Growth Leaders Fund - Class I 2004 ........................................ 0.40% 3,866 $13.918876 $ 53,810 0.00% 11.96% 2003 ........................................ 0.40% 28,684 12.431976 356,599 0.00% 51.53% Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2004 ........................................ 0.40% 307,698 13.963330 4,296,489 4.55% 6.11% 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% Gartmore GVIT Worldwide Leaders Fund - Class I 2004 ........................................ 0.40% 1,704 10.407118 17,734 0.00% 15.20% 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% Goldman Sachs VIT - Mid Cap Value Fund 2004 ........................................ 0.40% 1,046,542 15.836525 16,573,589 0.74% 25.38% 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% 09/03/02 Janus AS - Balanced Portfolio - Service Shares 2004 ........................................ 0.40% 285,628 12.258707 3,501,430 2.45% 7.86% 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% 09/03/02 Janus AS - Capital Appreciation Portfolio - Service Shares 2004 ........................................ 0.40% 878,196 7.527514 6,610,633 0.02% 17.50% 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% 01/27/00 Janus AS - Global Technology Portfolio - Service Shares 2004 ........................................ 0.40% 183,526 3.520024 646,016 0.00% 0.16% 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% 01/27/00 Janus AS - International Growth Portfolio - Service Shares 2004 ........................................ 0.40% 1,087,636 7.363272 8,008,560 0.85% 18.21% 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% 01/27/00 Neuberger Berman AMT - Fasciano Portfolio - S Class Shares 2004 ........................................ 0.40% 44,406 13.960609 619,935 0.00% 11.43% 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% 09/03/02 Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004 ........................................ 0.40% 290,396 11.715274 3,402,069 0.12% 15.35% 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% Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/ - I Class 2004 ........................................ 0.40% 322,438 12.456893 4,016,576 0.00% 15.84% 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%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** ---------- ---------- ---------- -------------- ---------- --------- Neuberger Berman AMT - Partners Portfolio 2004 ........................................ 0.40% 244,546 $11.676716 $ 2,855,494 0.01% 18.50% 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% One Group/(R)/ IT Mid Cap Growth Portfolio 2004 ........................................ 0.40% 99,214 14.304998 1,419,256 0.00% 12.17% 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% 09/18/02 One Group/(R)/ IT Mid Cap Value Portfolio 2004 ........................................ 0.40% 35,252 15.079159 531,571 0.58% 14.94% 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% 09/18/02 Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004 ........................................ 0.40% 916,804 11.505640 10,548,417 0.00% 19.30% 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% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2004 ........................................ 0.40% 4,419,620 13.168552 58,199,996 0.31% 6.51% 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% Oppenheimer Global Securities Fund/VA - Initial Class 2004 ........................................ 0.40% 1,770,284 10.996730 19,467,335 1.15% 18.69% 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% 05/01/00 Oppenheimer Main Street/(R)/ Fund/VA - Initial Class 2004 ........................................ 0.40% 606,518 9.804476 5,946,591 0.83% 9.02% 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% PIMCO VIT - All Asset Portfolio - Administrative Shares 2004 ........................................ 0.40% 13,676 11.197507 153,137 6.86% 11.98% 05/03/04 PIMCO VIT - Low Duration Portfolio - Administrative Shares 2004 ........................................ 0.40% 1,548,394 10.528355 16,302,042 1.29% 1.43% 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% 09/03/02 PIMCO VIT - Real Return Portfolio - Administrative Shares 2004 ........................................ 0.40% 907,634 12.180321 11,055,273 1.03% 8.45% 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% 08/30/02 PIMCO VIT - Total Return Portfolio - Administrative Shares 2004 ........................................ 0.40% 3,142,992 11.286156 35,472,298 1.92% 4.46% 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% 08/30/02 Pioneer High Yield VCT Portfolio - Class I Shares 2004 ........................................ 0.40% 473,190 14.742883 6,976,185 5.59% 7.63% 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% 09/03/02 Royce Capital Fund - Royce Micro-Cap Portfolio 2004 ........................................ 0.40% 1,033,530 17.022607 17,593,375 0.00% 13.39% 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% 09/03/02
(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*** ---------- ---------- ---------- -------------- ---------- --------- Strong Opportunity Fund II, Inc. 2004 ...................................... 0.40% 898,190 $11.065086 $ 9,938,550 0.00% 17.75% 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% 05/01/00 T. Rowe Price Equity Income Portfolio II 2004 ...................................... 0.40% 1,661,986 14.398668 23,930,385 1.46% 14.16% 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% 09/03/02 T. Rowe Price Mid Cap Growth Fund II 2004 ...................................... 0.40% 754,450 16.566668 12,498,723 0.00% 17.58% 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% 09/03/02 T .Rowe Price New America Growth Portfolio 2004 ...................................... 0.40% 19,964 10.794628 215,504 0.00% 7.95% 05/03/04 Van Eck WIT - Worldwide Emerging Markets Fund 2004 ...................................... 0.40% 53,740 13.301843 714,841 0.53% 25.39% 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% Van Eck WIT - Worldwide Hard Assets Fund 2004 ...................................... 0.40% 153,946 14.093195 2,169,591 0.31% 23.73% 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% Van Kampen UIF - Emerging Markets Debt Portfolio 2004 ...................................... 0.40% 122,976 16.107486 1,980,834 7.52% 9.62% 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% Van Kampen UIF - Mid Cap Growth Portfolio 2004 ...................................... 0.40% 30,098 7.154160 215,326 0.00% 21.11% 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% 05/01/00 Van Kampen UIF - U.S. Real Estate Portfolio - Class A 2004 ...................................... 0.40% 716,826 22.046498 15,803,503 1.61% 35.85% 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% -------------- Contract Owners' Equity Total By Year 2004 ......................................................................... $ 3,677,896,359 =============== 2003 ......................................................................... $ 3,032,894,231 =============== 2002 ......................................................................... $ 2,276,440,710 =============== 2001 ......................................................................... $ 2,087,035,414 =============== 2000 ......................................................................... $ 1,414,892,441 ===============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-4 (NOTES TO FINANCIAL STATEMENTS, Continued) * This represents the annual 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 mutual funds 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, including changes in the value of the underlying mutual fund, which reflects the reduction of unit value for expenses assessed. 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. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders 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, 2004 and 2003, and the related consolidated statements of income, shareholder's equity, and cash flows for each of the years in the three-year period ended December 31, 2004. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. As discussed in note 3 to the consolidated financial statements, the Company adopted the American Institute of Certified Public Accountants' Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, in 2004. /s/KPMG LLP Columbus, Ohio March 1, 2005 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS)
YEARS ENDED DECEMBER 31, ---------------------------------------------------- ---------------------------------------------------- 2004 2003 2002 ================================================================================================================================== ================================================================================================================================== REVENUES: Policy charges $ 1,025.2 $ 924.1 $ 973.8 Life insurance premiums 270.4 279.8 259.9 Net investment income 2,000.5 1,973.1 1,832.9 Net realized losses on investments, hedging instruments and hedged items (36.4) (85.2) (75.5) Other 9.8 12.8 8.7 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total revenues 3,269.5 3,104.6 2,999.8 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES: Interest credited to policyholder account values 1,277.2 1,309.2 1,244.4 Other benefits and claims 347.2 361.8 326.1 Policyholder dividends on participating policies 36.2 41.2 45.2 Amortization of deferred policy acquisition costs 410.1 375.9 670.1 Interest expense on debt, primarily with Nationwide Financial Services, Inc. (NFS) 59.3 48.4 36.0 Other operating expenses 604.5 533.7 508.5 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 2,734.5 2,670.2 2,830.3 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before federal income tax expense 535.0 434.4 169.5 Federal income tax expense 120.0 96.2 8.7 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations 415.0 338.2 160.8 Discontinued operations, net of tax - - 0.7 Cumulative effect of adoption of accounting principles, net of tax (3.3) (0.6) - - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 411.7 $ 337.6 $ 161.5 ================================================================================================================================== ==================================================================================================================================
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 per share amounts)
DECEMBER 31, --------------------------------------- --------------------------------------- 2004 2003 =================================================================================================================================== =================================================================================================================================== ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity securities (cost $26,708.7 in 2004; $25,850.2 in 2003) $ 27,652.0 $ 26,946.8 Equity securities (cost $37.7 in 2004; $74.0 in 2003) 48.1 85.6 Mortgage loans on real estate, net 8,649.2 8,345.8 Real estate, net 83.9 96.5 Policy loans 644.5 618.3 Other long-term investments 539.6 130.6 Short-term investments, including amounts managed by a related party 1,645.8 1,860.8 - ----------------------------------------------------------------------------------------------------------------------------------- Total investments 39,263.1 38,084.4 Cash 15.5 0.1 Accrued investment income 364.2 367.1 Deferred policy acquisition costs 3,416.6 3,219.3 Other assets 2,099.8 1,872.3 Assets held in separate accounts 60,798.7 57,084.5 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $ 105,957.9 $ 100,627.7 =================================================================================================================================== LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Future policy benefits and claims $ 36,383.1 $ 35,379.1 Short-term debt 215.0 199.8 Long-term debt, payable to NFS 700.0 700.0 Other liabilities 3,645.2 3,264.7 Liabilities related to separate accounts 60,798.7 57,084.5 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 101,742.0 96,628.1 - ----------------------------------------------------------------------------------------------------------------------------------- Shareholder's equity: Common stock, $1 par value; authorized - 5.0 shares; issued and outstanding - 3.8 shares 3.8 3.8 Additional paid-in capital 274.4 271.3 Retained earnings 3,543.9 3,257.2 Accumulated other comprehensive income 393.8 467.3 - ----------------------------------------------------------------------------------------------------------------------------------- Total shareholder's equity 4,215.9 3,999.6 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 105,957.9 $ 100,627.7 ===================================================================================================================================
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, 2004, 2003 and 2002 (in millions)
Accumulated Additional Other Total Capital paid-in Retained Comprehensive Shareholder's Shares capital earnings income equity =================================================================================================================================== 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 - - - 178.6 178.6 arising during the period, net of tax Accumulated net gains on cash flow hedges, net - - - 11.0 11.0 of tax ---------------- ---------------- Total comprehensive income 351.1 ---------------- ---------------- Capital returned 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 - - - 99.6 99.6 arising during the period, net of tax Accumulated net losses on cash flow hedges, net - - - (26.6) (26.6) of tax ---------------- Total comprehensive income 410.6 ---------------- Capital contributed by NFS - 200.2 - - 200.2 Capital returned 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 - ----------------------------------------------------------------------------------------------------------------------------------- Comprehensive income: Net income - - 411.7 - 411.7 Net unrealized losses on securities available-for-sale - - - (42.7) (42.7) arising during the period, net of tax Accumulated net losses on cash flow hedges, net - - - (30.8) (30.8) of tax ---------------- Total comprehensive income 338.2 ---------------- Capital contributed by NFS - 3.1 - - 3.1 Dividend to NFS - - (125.0) - (125.0) - ----------------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2004 $ 3.8 $ 274.4 $3,543.9 $ 393.8 $ 4,215.9 ===================================================================================================================================
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 Cash Flows For the Years Ended December 31, 2004, 2003 and 2002 (in millions)
2004 2003 2002 =================================================================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 411.7 $ 337.6 $ 161.5 Adjustments to reconcile net income to net cash provided by operating activities: Interest credited to policyholder account values 1,277.2 1,309.2 1,244.4 Capitalization of deferred policy acquisition costs (496.4) (567.2) (648.2) Amortization of deferred policy acquisition costs 410.1 375.9 670.1 Amortization and depreciation 73.0 69.3 (0.7) Net realized losses on investments, hedging instruments and 36.4 85.2 75.5 hedged items Decrease (increase) in accrued investment income 2.9 (38.4) (22.0) Increase in other assets (306.4) (697.5) (606.1) Increase in policy and other liabilities 324.4 342.3 463.1 Income from discontinued operations - - (0.7) Other, net 1.5 45.4 38.7 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by continuing operations 1,734.4 1,261.8 1,375.6 Net cash provided by discontinued operations - - 0.7 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,734.4 1,261.8 1,376.3 - ----------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturity of securities available-for-sale 3,099.4 4,101.6 3,887.7 Proceeds from sale of securities available-for-sale 2,485.5 2,220.5 1,534.9 Proceeds from repayments of mortgage loans on real estate 1,920.9 1,478.3 1,009.0 Cost of securities available-for-sale acquired (6,291.4) (9,366.7) (9,874.5) Cost of mortgage loans on real estate acquired (2,169.9) (1,914.4) (1,810.2) Net change in short-term investments 205.9 (639.9) (193.1) Disposal of subsidiary, net of cash - - (20.0) Collateral received (paid) - securities lending, net 89.4 (26.1) 158.9 Other, net (357.2) 280.3 (136.2) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (1,017.4) (3,866.4) (5,443.5) - ----------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of long-term debt to NFS - 100.0 300.0 Net change in short-term debt 15.2 199.8 (100.0) Capital contributed by NFS 3.1 200.2 - Capital returned to NFS - (100.0) (475.0) Cash dividends paid to NFS (125.0) (60.0) (35.0) Investment and universal life insurance product deposits 3,561.6 5,116.1 6,278.9 Investment and universal life insurance product withdrawals (4,156.5) (2,852.3) (1,923.4) Other, net - - - ----------------------------------------------------------------------------------------------------------------------------------- Net cash (used in) provided by financing activities (701.6) 2,603.8 4,045.5 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash 15.4 (0.8) (21.7) Cash, beginning of period 0.1 0.9 22.6 - ----------------------------------------------------------------------------------------------------------------------------------- Cash, end of period $ 15.5 $ 0.1 $ 0.9 ===================================================================================================================================
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, 2004, 2003 AND 2002 (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 group retirement plans, other investment products sold to institutions, life insurance and advisory services. The Company sells its products through a diverse network of distribution channels, including independent broker/dealers, financial institutions, wirehouse and regional firms, financial institutions, pension plan administrators, life insurance specialists and representatives of certain certified public accounting firms. The Company also sells its products through the following affiliated producers: Nationwide Retirement Solutions, Inc. (NRS); TBG Insurance Services Corporation (TBG Financial); Nationwide Financial Network (NFN, formerly referred to as Nationwide Provident) producers; 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 (ODI). The ODI 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 Note 13 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 and universal life insurance products, impairment losses on investments, valuation allowances for mortgage loans on real estate, federal income taxes, and pension and other postretirement employee benefits. Although some variability is inherent in these estimates, the recorded amounts reflect management's best estimates based on facts and circumstances as of the balance sheet date. 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. As discussed in Notes 3 and 11, effective December 31, 2003, the Company applied the provisions of Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities - an interpretation of ARB No. 51 (FIN 46R), issued by the Financial Accounting Standards Board (FASB), to those variable interest entities (VIEs) with which it is associated. This resulted in deconsolidating certain VIEs which the Company previously had consolidated, as of that date. All significant intercompany balances and transactions have been eliminated. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (b) Valuation of Investments, Investment Income and Related Gains and Losses The Company is required to classify its fixed maturity securities and 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 DAC, future policy benefits and claims, and deferred federal income tax, reported as a separate component of accumulated other comprehensive income (AOCI) in shareholder's 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 U.S. 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 U.S. 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, for valuing certain fixed maturity securities with complex cash flows such as certain mortgage-backed and asset-backed securities, a "structured product model" is used. The structured product model uses third party pricing tools. For securities for which quoted market prices are not available and for which the Company's structured product model 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, 2004, 70.0% of the fair values of fixed maturity securities were obtained from independent pricing services, 21.2% from the Company's pricing matrices and 8.8% from other sources. Management regularly reviews each investment in its fixed maturity and equity securities portfolios to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. Under the Company's accounting policy for equity securities and debt securities that can be contractually prepaid or otherwise settled in a way that may limit the Company's ability to fully recover cost, an impairment is deemed to be other-than-temporary unless the Company has both the ability and intent to hold the investment for a reasonable period until the security's forecasted recovery and evidence exists indicating that recovery will occur in a reasonable period of time. Also, for such debt securities the Company estimates cash flows over the life of purchased beneficial interests in securitized financial assets. If the Company estimates that the fair value of its beneficial interests is not greater than or equal to its carrying value based on current information and events, and if there has been an adverse change in estimated cash flows since the last revised estimate, considering both timing and amount, then the Company recognizes an other-than-temporary impairment and writes down the purchased beneficial interest to fair value. For other debt and equity securities, an other-than-temporary impairment charge is taken when the Company does not have the ability and intent to hold the security until the forecasted recovery or if it is no longer probable that the Company will recover all amounts due under the contractual terms of the security. Many 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 amount and length of time a security's fair value has been below amortized cost or cost; specific credit issues and financial prospects related to the issuer; the Company's intent to hold or dispose of the security; and current economic conditions. Other-than-temporary impairment losses result in a permanent reduction to the cost basis of the underlying investment. Impairment losses are recorded on investments in real estate and other 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 amounts. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 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. 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 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. In addition to the valuation allowance on specific loans, the Company maintains an unallocated allowance for probable losses inherent in the loan portfolio as of the balance sheet date, but not yet specifically identified by loan. Changes in the valuation allowance are recorded in net realized gains and losses on investments, hedging instruments and hedged items. Loans in foreclosure 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 and reflects the Company's best estimate of probable credit losses, including losses incurred at the balance sheet date, but not yet identified by specific loan. 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 expected to be and, for ongoing hedging relationships, have been highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not, or is not expected to be, 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, CONTINUED 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 U.S. 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 that are 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 recorded in 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 while exposing the Company to acceptable credit risk. The Company may enter into a cross-currency basis swap (pay a variable U.S. 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 (COLI), bank-owned life insurance (BOLI) and other interest-sensitive life insurance policies. Revenues for investment products and universal life insurance products consist of net investment income, asset fees, cost of insurance, policy administration and surrender charges that have been earned and assessed against policy account balances during the period. The timing of revenue recognition as it relates to fees assessed on investment contracts and universal life contracts is determined based on the nature of such fees. Asset fees, cost of insurance and policy administration charges are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in income over the periods benefited. Surrender charges are recognized upon surrender of a contract in accordance with contractual terms. Policy benefits and claims that are charged to expense include interest credited to policy account values and benefits and claims incurred in the period in excess of related policy account values. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Traditional Life Insurance Products: Traditional life insurance products include those products with fixed and guaranteed premiums and benefits and consist primarily of whole life insurance, limited-payment life insurance, term life insurance and certain annuities with life contingencies. Premiums for traditional life insurance products are recognized as revenue when due. Benefits and expenses are associated with earned premiums so as to result in recognition of profits over the life of the contract. This association is accomplished by the provision for future policy benefits and the deferral and amortization of policy acquisition costs. (e) Deferred Policy Acquisition Costs The Company has deferred the costs of acquiring investment products and universal life insurance products 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. 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 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 currently 8% growth per year. If actual net separate account performance varies from the 8% 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 Standard and Poor's (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% 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. The Company evaluates the appropriateness of the individual variable annuity DAC balance within pre-set parameters. These parameters are designed to appropriately reflect the Company's long-term expectations with respect to individual variable annuity contracts while also evaluating the potential impact of short-term experience on the Company's recorded individual variable annuity DAC balance. If the recorded balance of individual variable annuity DAC falls outside of these parameters for a prescribed period of time, or if the recorded balance falls 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 DAC is recalculated using revised best estimate assumptions. Otherwise, DAC is not unlocked to reflect updated assumptions. If DAC assumptions were unlocked and revised, the Company would continue to use the reversion to the mean process. For other investment products and universal life insurance products, DAC is adjusted 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 in the consolidated statements of income. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (f) Separate Accounts Separate account assets and liabilities represent contract holders' 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 contract holders. The activity of the separate accounts is not reflected in the consolidated statements of income except for: (i) the fees the Company receives, which are assessed on a daily or monthly basis and recognized as revenue when assessed and earned; and (ii) the activity related to guaranteed minimum death benefit (GMDB) and guaranteed minimum income benefit (GMIB) contracts, which are riders to existing variable annuity contracts. (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 funding agreements to an unrelated third party trust equals the balance that accrues to the benefit of the contract holder, including interest credited. The funding agreements constitute insurance obligations considered annuity contracts under Ohio insurance law. 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 5.4% to 6.0% 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, 2004 and 2003, the calculated reserve was adjusted to reflect the incremental reserve that would be required if unrealized gains and losses had been realized and the proceeds reinvested at lower rates, which would have resulted in the use of a lower discount rate, as discussed in Note 2(b). (h) Participating Business Participating business represented approximately 11% in 2004 (13% in 2003 and 15% in 2002) of the Company's life insurance in force, 55% of the number of life insurance policies in force in 2004 (56% in 2003 and 59% in 2002) and 7% of life insurance statutory premiums in 2004 (11% in 2003 and 9% in 2002). 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 items or the realization of certain tax credits differs from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. Any such change could significantly affect the amounts reported in the consolidated statements of income. 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 (IRS) or the tax courts. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The Company utilizes the asset and liability method of accounting for income tax. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is determined that it is more likely than not that the deferred tax asset will not be fully 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) Discontinued Operations As described more fully in Note 16, during 2002 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. As such, the results of operations of NSI are reflected as discontinued operations in 2002. (l) Reclassification Certain items in the 2003 and 2002 consolidated financial statements and related notes have been reclassified to conform to the current presentation. (3) RECENTLY ISSUED ACCOUNTING STANDARDS In March 2004, the Emerging Issues Task Force (EITF) reached consensus on further guidance concerning the identification of and accounting for other-than-temporary impairments and disclosures for cost method investments, as required by EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (EITF 03-1), which was issued on October 23, 2003. The Company disclosed in its Quarterly Report on Form 10-Q for the period ended June 30, 2004 that this additional guidance would be applied during its third quarter beginning July 1, 2004. Also, effective June 30, 2004, the Company revised its method of evaluating securities to be sold based on additional interpretation of the intent to hold criteria in EITF 03-1. This revision had no impact on the Company's financial position or results of operations. On September 8, 2004, the FASB exposed for comment FASB Staff Position (FSP) EITF Issue 03-1-a, which was intended to provide guidance related to the application of paragraph 16 of EITF 03-1, and proposed FSP EITF Issue 03-1-b, which proposed a delay in the effective date of EITF 03-1 for debt securities that are impaired because of interest rate and/or sector spread increases. Based on comments received on these proposals, on September 30, 2004 the FASB issued FSP EITF 03-1-1, Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1, which delayed the effectiveness of the guidance in EITF 03-1 in its entirety, with the exception of certain disclosure requirements. The delay had no impact on the Company's financial position or results of operations. The Company continues to actively monitor its portfolio for any securities deemed to be other-than-temporarily impaired, based on the guidance in Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities, and the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 59, Accounting for Noncurrent Marketable Equity Securities. Due to uncertainty regarding the ultimate guidance to be issued, the Company cannot reasonably estimate the impact on the Company's financial position or results of operations, if any, of adopting EITF 03-1. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED In June 2004, the FASB issued FSP FAS 97-1, Situations in Which Paragraphs 17(b) and 20 of FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, Permit or Require Accrual of an Unearned Revenue Liability (FSP FAS 97-1), to clarify the guidance related to unearned revenue reserves (URR). The primary purpose of FSP FAS 97-1 is to address the practice question of whether Statement of Position (SOP) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1), issued by the American Institute of Certified Public Accountants (AICPA), restricts the application of the URR guidance in SFAS No. 97 to situations in which profits are expected to be followed by losses. Because the Company was computing its URR in accordance with FSP FAS 97-1 at the time SOP 03-1 was adopted, the issuance of FSP FAS 97-1 had no impact on the Company's financial position or results of operations at the time of adoption. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was signed into law on December 8, 2003. In accordance with FSP FAS 106-1, Accounting and Disclosure Requirements Related to The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP FAS 106-1), issued in January 2004, the Company elected to defer accounting for the effects of the Act until the FASB issues guidance on how to account for the provisions of the Act. In May 2004, the FASB issued FSP FAS 106-2, Accounting and Disclosure Requirements Related to The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP FAS 106-2), which superceded FSP FAS 106-1 and provided guidance on accounting and disclosures related to the Act. Specifically, measures of the accumulated postretirement benefit obligation and net periodic postretirement benefit cost on or after the date of enactment must reflect the effects of the Act. The Company's adoption of FSP FAS 106-2, effective June 30, 2004, had no impact on the Company's financial position or results of operations due the application of Company maximum contribution caps and because the Company does not apply to the United States government for benefit reimbursements. In December 2003, the FASB issued 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 postretirement benefit plans on both an interim period and annual basis. See Note 15 for required disclosures. The Company adopted SFAS 132R effective December 31, 2003, except for the provisions relating to annual disclosures about estimated benefit payments, which was adopted in the fourth quarter of 2004, as permitted by SFAS 132R. Adoption of this Statement had no impact on the Company's financial position or results of operations. In July 2003, the AICPA issued SOP 03-1 to address many topics. The most significant topic affecting the Company was the accounting for contracts with GMDB. SOP 03-1 requires companies to evaluate the significance of a GMDB to determine whether a 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 effective January 1, 2004, which resulted in a $3.3 million charge, net of tax, as the cumulative effect of adoption of this accounting principle. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes the components of cumulative effect adjustments recorded in the Company's 2004 consolidated statements of income:
(in millions) JANUARY 1, 2004 =================================================================================================================================== Increase in future policy benefits: Ratchet interest crediting $ (12.3) Secondary guarantees - life insurance (2.4) GMDB claim reserves (1.8) GMIB claim reserves (1.0) - ----------------------------------------------------------------------------------------------------------------------------------- Subtotal (17.5) Adjustment to amortization of deferred policy 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) ===================================================================================================================================
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 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 at risk for the entity to finance its activities without additional subordinated financial support from other parties. VIEs are consolidated by their primary beneficiary, which is a party having a majority of the entity's expected losses, expected residual returns, or both. A company holding a significant variable interest in a VIE but not deemed the primary beneficiary is subject to certain disclosure requirements specified by FIN 46. FIN 46 applied to entities formed after January 31, 2003. In October 2003, the FASB delayed the implementation date of FIN 46 for VIEs formed prior to January 31, 2003 to interim periods ending after December 15, 2003, with earlier adoption permitted. In December 2003, the FASB issued FIN 46R, which 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. At a minimum, public companies were required to apply the provisions of FIN 46R or the unmodified provisions of FIN 46 to entities that were considered "special purpose entities" in practice and under applicable GAAP by the end of the first reporting period ending after December 15, 2003. Companies were permitted to apply either FIN 46 or FIN 46R to special purpose entities at the initial effective date on an entity-by-entity basis. The Company has no variable interests in special purpose entities. The primary difference between FIN 46R and FIN 46 was the criteria to be followed in determining the primary beneficiary. The primary beneficiary could be different based on the two Interpretations. The Company adopted the remaining provisions of FIN 46R effective January 1, 2004. See Note 19 for further discussion. In May 2003, the FASB issued 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 the cumulative effect of a change in accounting principle. In November 2003, the FASB issued FSP No. 150-3, Effective Date, Disclosures, and Transition for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests under FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (FSP 150-3). FSP 150-3 clarified that SFAS 150 does not apply to certain mandatorily redeemable financial instruments issued by limited-life subsidiaries, including those issued by subsidiary trusts of the Company. The adoption of SFAS 150 on July 1, 2003 had no impact on the Company's financial position or results of operations. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 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 had no impact on the Company's financial position or results of operations 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 (i.e. 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 or 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 the cumulative effect of adoption of this accounting principle. (4) 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; 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. 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 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 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 underlying 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 generally to 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 $243.7 million extending into 2005 were outstanding as of December 31, 2004. The Company also had $68.1 million of commitments to purchase fixed maturity securities outstanding as of December 31, 2004. 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, 2004, the Company's credit risk from these derivative financial instruments was $46.3 million, net of $415.7 million of cash collateral and $222.5 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, 2004, approximately 82% of separate account assets were invested in equity mutual funds. Gains and losses in the equity markets result in corresponding increases and decreases in the Company's separate account assets and 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 guaranteed minimum accumulation benefit (GMAB) claims, which may require the Company to accelerate the amortization of DAC. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Many of the Company's individual variable annuity contracts offer GMDB features. A 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. This 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 2004. As of December 31, 2004, the net amount at risk, defined as the excess of the death benefit over the account value, was $1.71 billion before reinsurance and $296.5 million net of reinsurance. As of December 31, 2004 and 2003, the Company's reserve for GMDB claims was $23.6 million and $21.8 million, respectively. See Note 3 for discussion of the impact of adopting a new accounting principle regarding GMDB reserves in 2004. The Company also offers certain variable annuity products with a GMAB rider. A 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. A 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, correlations 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 SFAS 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 2004 and 2003. As of December 31, 2004 and 2003, the fair value of the GMAB embedded derivative was valued at $20.6 million and $4.3 million, respectively. The increase in the fair value of the GMAB embedded derivative was driven by the value of new business sold during 2004. 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, 2004, the Company had a diversified portfolio with no more than 25.1% in any geographic region of the U.S. and no more than 1.6% with any one borrower. As of December 31, 2004, 30.0% of the carrying value of the Company's commercial mortgage loan portfolio financed retail properties. Significant Business Concentrations: As of December 31, 2004, 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Guarantee Risk: In connection with the selling of securitized interests in Low-Income-Housing Tax Credit Funds (Tax Credit Funds), 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. See Note 18 for further discussion of Tax Credit Funds. Reinsurance: The Company has entered into reinsurance contracts to cede a portion of its general account life, annuity and health business. Total amounts recoverable under these reinsurance contracts include ceded reserves, paid and unpaid claims, and certain other amounts and totaled $894.3 million as of December 31, 2004. 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 contract holder. 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 contracts. 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 to 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. (5) 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 for financial instruments. For this reason, among others, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value of a financial instrument is defined as the amount at which the financial instrument could be bought or sold, or in the case of liabilities incurred or 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Although insurance contracts are specifically exempted from the disclosure requirements (other than those that are classified as investment contracts), 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 available-for-sale: 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 U.S. 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 U.S. 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, for valuing certain fixed maturity securities with complex cash flows such as certain mortgage-backed and asset-backed securities, a "structured product model" is used. The structured product model uses third party pricing tools. For securities for which quoted market prices are not available and for which the Company's structured product model 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, 2004, 70.0% of the fair values of fixed maturity securities were obtained from independent pricing services, 21.2% from the Company's pricing matrices and 8.8% from other sources. Mortgage loans on real estate, net: The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses based on 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 values. Separate account assets and liabilities: The fair values of assets held in separate accounts are based on quoted market prices of the underlying securities. The fair value of liabilities related to separate accounts are the amounts payable on demand, which are net of certain surrender charges. Investment contracts: The fair values of the Company's liabilities under investment type contracts are 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 life insurance, COLI, BOLI, 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 approximate their fair values. Long-term debt, payable to NFS: The fair values for long-term debt are based on estimated market prices. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Commitments to extend credit: Commitments to extend credit have nominal fair values because of the short-term nature of such commitments. See Note 4. Interest rate and cross-currency interest rate swaps: The fair values for interest rate and cross-currency interest rate swaps are calculated with pricing models using current rate assumptions. Futures contracts: The fair values for futures contracts are based on quoted market prices. The following table summarizes the carrying amounts and estimated fair values of financial instruments subject to disclosure requirements and policy reserves on life insurance contracts as of December 31:
2004 2003 ------------------------------- ------------------------------- ------------------------------- ------------------------------- CARRYING ESTIMATED Carrying Estimated (in millions) AMOUNT FAIR VALUE amount fair value =========================================================================================================================== =========================================================================================================================== ASSETS Investments: Securities available-for-sale: Fixed maturity securities $ 27,652.0 $ 27,652.0 $ 26,946.8 $ 26,946.8 Equity securities 48.1 48.1 85.6 85.6 Mortgage loans on real estate, net 8,649.2 8,942.7 8,345.8 8,830.0 Policy loans 644.5 644.5 618.3 618.3 Short-term investments 1,645.8 1,645.8 1,860.8 1,860.8 Cash 15.5 15.5 0.1 0.1 Assets held in separate accounts 60,798.7 60,798.7 57,084.5 57,084.5 LIABILITIES Investment contracts (29,196.6) (26,870.6) (28,663.4) (27,239.8) Policy reserves on life insurance contracts (7,186.5) (7,153.9) (6,715.7) (6,311.3) Short-term debt (215.0) (215.0) (199.8) (199.8) Long-term debt, payable to NFS (700.0) (743.9) (700.0) (803.7) Collateral received - securities lending and derivatives (1,289.9) (1,289.9) (1,521.1) (1,521.1) Liabilities related to separate accounts (60,798.7) (59,651.2) (57,084.5) (56,118.6) Derivative financial instruments Interest rate swaps hedging assets (72.1) (72.1) (99.4) (99.4) Cross-currency interest rate swaps 495.0 495.0 599.1 599.1 Futures contracts (6.5) (6.5) (25.2) (25.2) Other derivatives 36.1 36.1 4.6 4.6 - ---------------------------------------------------------------------------------------------------------------------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (6) DERIVATIVE FINANCIAL INSTRUMENTS QUALITATIVE DISCLOSURE Interest Rate Risk Management The Company periodically 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 this mismatch, with fluctuations in the fair values of the derivatives offsetting changes in the fair values of the investments 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 U.S. 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 U.S. Treasury futures during the commitment period. With short U.S. Treasury futures, if interest rates rise (fall), the gains (losses) on the futures will offset the change in fair value of the commitment attributable to the change in interest rates. The Company periodically purchases variable rate investments (i.e. commercial mortgage loans and corporate bonds). As a result, the Company can be exposed 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 may enter 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 (MTN) program, the Company periodically 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 related interest rates. To manage these risks, the Company enters into cross-currency interest rate swaps to convert these liabilities to a U.S. dollar rate. For a fixed rate foreign 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 U.S. 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 U.S. 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The Company is exposed to changes in fair value of fixed rate investments denominated in a foreign currency due to changes in foreign currency exchange rates and related interest rates. To manage this risk, the Company uses cross-currency interest rate swaps to convert these assets to variable U.S. dollar rate instruments. 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 U.S. 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. A GMDB generally provides a benefit if the annuitant dies and the contract value is less than a contractually defined amount. Such specified amounts vary from contract to contract based on the date the contract was entered into as well as the GMDB feature elected. A decline in the stock market may cause the contract value to fall below this specified amount and the net amount at risk to increase. The net amount at risk is the amount by which the GMDB exceeds the contract value at any given time and is a primary indicator of potential future GMDB claims. To manage this risk, the Company has implemented a GMDB hedging program for certain new and existing business. The program, which is an economic hedge but does not qualify for hedge accounting under SFAS 133, as discussed in Note 2(c), is designed to offset a specified portion of changes in the value of the GMDB obligation. Currently the program shorts S&P 500 index futures, which in turn provides a partial 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 4 for additional discussion. The Company also offers certain variable annuity products with a GMAB rider. A 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. A GMAB is an embedded derivative, and 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 statements of income. 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 SFAS 133. See Note 2(c). Other Non-Hedging Derivatives The Company periodically enters into basis swaps (receive one variable rate, pay another variable rate) to better match the cash flows received from the specific variable-rate investments with the variable rate paid on a group of liabilities. While the pay-side terms of the basis swap will line up with the terms of the asset, the Company is not able to match the receive-side terms of the derivative to a specific liability; therefore, basis swaps do not receive hedge accounting treatment. The Company sells credit default protection on selected debt instruments and combines the credit default swap with selected assets the Company owns to replicate a higher yielding bond. These assets may have sufficient duration for the related liability, but do not earn a sufficient credit spread. The combined credit default swap and investments provide 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED QUANTITATIVE DISCLOSURE Fair Value Hedges During the years ended December 31, 2004, 2003 and 2002, a net loss of $11.3 million, a net gain of $4.2 million and a net gain of $7.1 million, respectively, were recognized in net realized gains and losses on investments, hedging instruments and hedged items. This represents the ineffective portion of the fair value hedging relationships. There were no gains or losses attributable to the portion of the derivative 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 years ended December 31, 2004, 2003 and 2002, the ineffective portion of cash flow hedges was a net gain of $1.0 million, a net loss of $5.4 million and a net gain of $1.8 million, respectively. 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 $0.5 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, other than those relating to variable interest on existing financial instruments, 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 2004, 2003 and 2002, 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 due to the probability 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, 2004, 2003 and 2002 included a net gain of $8.1 million, a net gain of $11.8 million and a net loss of $2.2 million, respectively, related to other derivative instruments, including embedded derivatives, not designated in hedging relationships. For the years ended December 31, 2004, 2003 and 2002, a net loss of $5.9 million and net gains of $4.2 million and $120.4 million, respectively, were recorded in net realized gains and losses on investments, hedging instruments and hedged items reflecting the change in fair value of cross-currency interest rate swaps hedging variable rate MTNs denominated in foreign currencies. Additional net gains of $5.9 million and $0.9 million and a net loss of $119.6 million were recorded in net realized gains and 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, 2004, 2003 and 2002, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes the notional amount of derivative financial instruments outstanding as of December 31:
(in millions) 2004 2003 =================================================================================================================================== Interest rate swaps: Pay fixed/receive variable rate swaps hedging investments $ 1,891.5 $ 1,954.7 Pay variable/receive fixed rate swaps hedging investments 152.8 188.2 Pay variable/receive variable rate swaps 145.0 154.0 Pay variable/receive fixed rate swaps hedging liabilities 275.0 500.0 Pay variable/receive variable rate swaps hedging liabilities 280.0 430.0 Pay fixed/receive variable rate swaps hedging liabilities 275.0 - Other contracts hedging investments 43.9 10.0 Cross-currency interest rate swaps: Hedging foreign currency denominated investments 400.9 580.1 Hedging foreign currency denominated liabilities 2,028.8 2,643.9 Credit default swaps and other non-hedging instruments 836.0 832.5 Equity option contracts 190.9 - Futures contracts 387.0 2,615.8 - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 6,906.8 $ 9,909.2 ===================================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (7) INVESTMENTS The following table summarizes the amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale as of the dates indicated:
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED ESTIMATED (in millions) COST GAINS LOSSES FAIR VALUE =================================================================================================================================== =================================================================================================================================== December 31, 2004: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations $ 81.1 $ 13.9 $ 0.1 $ 94.9 Agencies not backed by the full faith and credit of the U. S. Government1 1,101.0 81.6 1.0 1,181.6 Obligations of states and political subdivisions 246.8 3.1 2.7 247.2 Debt securities issued by foreign governments 41.6 2.7 0.1 44.2 Corporate securities Public 10,192.0 448.9 26.4 10,614.5 Private 6,633.6 342.9 24.1 6,952.4 Mortgage-backed securities - U.S. Government-backed 4,628.8 59.5 16.3 4,672.0 Asset-backed securities 3,783.8 87.7 26.3 3,845.2 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 26,708.7 1,040.3 97.0 27,652.0 Equity securities 37.7 10.5 0.1 48.1 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total securities available-for-sale $ 26,746.4 $ 1,050.8 $ 97.1 $27,700.1 =================================================================================================================================== =================================================================================================================================== 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 Corporate securities Public 10,000.0 503.7 26.2 10,477.5 Private 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 securities available-for-sale $ 25,924.2 $ 1,251.5 $ 143.3 $ 27,032.4 =================================================================================================================================== ===================================================================================================================================
- --------- 1 During the fourth quarter of 2004, the Company began reporting separately amounts for agencies not backed by the full faith and credit of the U.S. Government. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The table below summarizes the amortized cost and estimated fair value of fixed maturity securities available-for-sale, by maturity, as of December 31, 2004. 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 $ 1,354.4 $ 1,375.3 Due after one year through five years 7,289.8 7,607.0 Due after five years through ten years 6,807.0 7,150.5 Due after ten years 2,844.9 3,002.0 - ------------------------------------------------------------------------------------------------------------------------------------ Subtotal 18,296.1 19,134.8 Mortgage-backed securities - U.S. Government-backed 4,628.8 4,672.0 Asset-backed securities 3,783.8 3,845.2 - ------------------------------------------------------------------------------------------------------------------------------------ Total $ 26,708.7 $ 27,652.0 ====================================================================================================================================
The following table presents the components of unrealized gains on securities available-for-sale, net, as of December 31:
(in millions) 2004 2003 ================================================================================================================================== Net unrealized gains, before adjustments and taxes $ 953.7 $ 1,108.2 Adjustment to DAC (144.6) (243.7) Adjustment to future policy benefits and claims (121.6) (110.6) Deferred federal income tax (240.6) (264.2) - ---------------------------------------------------------------------------------------------------------------------------------- Net unrealized gains $ 446.9 $ 489.7 ==================================================================================================================================
The following table presents an analysis of the net (decrease) increase in net unrealized gains on securities available-for-sale for the years ended December 31:
(in millions) 2004 2003 2002 =============================================================================================================================== Fixed maturity securities $ (153.3) $ 61.9 625.5 Equity securities (1.2) 12.4 (11.8) - ------------------------------------------------------------------------------------------------------------------------------- Net change $ (154.5) $ 74.3 613.7 ===============================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes by time the gross unrealized losses on securities available-for-sale in an unrealized loss position as of the dates indicated:
LESS THAN OR EQUAL MORE TOTAL TO 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, 2004: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations $ 5.7 $ 0.1 $ 0.2 $ - $ 5.9 $ 0.1 Agencies not backed by the full faith and credit of the U.S. Government1 179.9 1.0 - - 179.9 1.0 Obligations of states and political subdivisions 68.6 0.5 52.7 2.2 121.3 2.7 Debt securities issued by foreign governments - - 7.5 0.1 7.5 0.1 Corporate securities Public 1,522.3 17.9 291.5 8.5 1,813.8 26.4 Private 994.2 16.3 184.2 7.8 1,178.4 24.1 Mortgage-backed securities - U.S. - Government-backed 1,271.5 10.5 225.1 5.8 1,496.6 16.3 Asset-backed securities 728.0 15.4 229.3 10.9 957.3 26.3 - ----------------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 4,770.2 61.7 990.5 35.3 5,760.7 97.0 Equity securities 0.7 0.1 - - 0.7 0.1 - ----------------------------------------------------------------------------------------------------------------------------------- Total $4,770.9 $ 61.8 $ 990.5 $ 35.3 $5,761.4 $ 97.1 =================================================================================================================================== % of gross unrealized losses 64% 36% December 31, 2003: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 154.4 $ 1.9 $ - $ - $ 154.4 $ 1.9 Obligations of states and political subdivisions 123.4 5.2 - - 123.4 5.2 Debt securities issued by foreign governments 19.9 0.8 - - 19.9 0.8 Corporate securities Public 1,236.7 24.5 31.7 1.7 1,268.4 26.2 Private 832.3 21.4 49.1 3.9 881.4 25.3 Mortgage-backed securities - U.S. Government-backed 984.9 21.7 5.3 0.1 990.2 21.8 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 losses 78.0% 22.0%
- --------- 1 During the fourth quarter of 2004, the Company began reporting separately amounts for agencies not backed by the full faith and credit of the U.S. Government. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Proceeds from the sale of securities available-for-sale during 2004, 2003 and 2002 were $2.49 billion, $2.22 billion and $1.53 billion, respectively. During 2004, gross gains of $61.5 million ($104.0 million and $42.0 million in 2003 and 2002, respectively) and gross losses of $8.7 million ($27.6 million and $16.6 million in 2003 and 2002, respectively) were realized on those sales. The Company had $18.0 million and $27.2 million of real estate investments as of December 31, 2004 and 2003, respectively, that were non-income producing during the preceding twelve months. Real estate is presented at cost less accumulated depreciation of $20.9 million as of December 31, 2004 ($22.4 million as of December 31, 2003). The carrying value of real estate held for disposal totaled $2.8 million and $10.5 million as of December 31, 2004 and 2003, respectively. The recorded investment of mortgage loans on real estate considered to be impaired was $30.0 million as of December 31, 2004 ($46.3 million as of December 31, 2003), for which the related valuation allowance was $7.6 million ($3.9 million as of December 31, 2003). 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 2004, the average recorded investment in impaired mortgage loans on real estate was $10.0 million ($15.4 million in 2003). Interest income recognized on those loans, which is recognized when received using the cash basis method of income recognition, totaled $1.6 million in 2004 ($3.3 million in 2003). The following table summarizes activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31:
(in millions) 2004 2003 2002 ========================================================================================================================= Allowance, beginning of period $ 29.1 $ 43.4 $ 42.9 Net additions (reductions) charged (credited) to allowance 4.2 (14.3) 0.5 - ------------------------------------------------------------------------------------------------------------------------- Allowance, end of period $ 33.3 $ 29.1 $ 43.4 =========================================================================================================================
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 probable losses inherent in the loan portfolio 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes net realized losses on investments, hedging instruments and hedged items from continuing operations by source for the years ended December 31:
(in millions) 2004 2003 2002 =================================================================================================================================== =================================================================================================================================== Realized gains on sales, net of hedging losses: Fixed maturity securities available-for-sale $ 57.5 $ 98.5 $ 42.0 Hedging losses on fixed maturity sales (15.2) (42.4) (36.2) Equity securities available-for-sale 4.0 5.5 - Real estate 3.7 4.2 14.0 Mortgage loans on real estate 10.7 3.0 3.2 Mortgage loan hedging losses (4.0) (2.4) (1.2) Other 8.3 - 0.1 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total realized gains on sales 65.0 66.4 21.9 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Realized losses on sales, net of hedging gains: Fixed maturity securities available-for-sale (7.8) (27.2) (15.7) Hedging gains on fixed maturity sales 3.7 9.2 10.7 Equity securities available-for-sale (0.9) (0.4) (0.9) Real estate (1.2) (0.3) (3.0) Mortgage loans on real estate (6.8) (5.0) (3.3) Mortgage loan hedging gains 2.2 0.5 0.9 Other (1.9) (2.0) (1.0) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total realized losses on sales (12.7) (25.2) (12.3) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Other-than-temporary and other investment impairments: Fixed maturity securities available-for-sale (79.7) (159.4) (111.6) Equity securities available-for-sale (0.6) (8.0) - Real estate (3.2) (0.8) (2.4) Mortgage loans on real estate, including valuation allowance adjustment (7.1) 11.7 (6.3) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total other-than-temporary and other investment impairments (90.6) (156.5) (120.3) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Credit default swaps 0.3 13.3 (6.4) Periodic net coupon settlements on non-qualifying derivatives 6.6 15.6 8.9 Other derivatives (5.0) 1.2 9.5 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total unrelated parties (36.4) (85.2) (98.7) Gain on sale of limited partnership - related parties - - 23.2 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Net realized losses on investments, hedging instruments and hedged items $ (36.4) $ (85.2) $ (75.5) =================================================================================================================================== ===================================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes net investment income from continuing operations by investment type for the years ended December 31:
(in millions) 2004 2003 2002 =================================================================================================================================== Securities available-for-sale: Fixed maturity securities $1,461.9 $ 1,453.1 $ 1,332.5 Equity securities 1.2 1.4 1.9 Mortgage loans on real estate 577.4 579.7 563.8 Real estate 17.9 21.7 26.8 Short-term investments 8.9 9.3 12.6 Derivatives (94.3) (107.2) (85.2) Other 78.4 64.8 31.0 - ----------------------------------------------------------------------------------------------------------------------------------- Gross investment income 2,051.4 2,022.8 1,883.4 Less investment expenses 50.9 49.7 50.5 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income $2,000.5 $ 1,973.1 $ 1,832.9 ===================================================================================================================================
Fixed maturity securities with an amortized cost of $52.3 million and $7.8 million as of December 31, 2004 and 2003, respectively, were on deposit with various regulatory agencies as required by law. As of December 31, 2004 and 2003, the Company had pledged fixed maturity securities with a fair value of $51.4 million and $101.2 million, respectively, as collateral to various derivative counterparties. As of December 31, 2004 and 2003, the Company had received $874.2 million and $976.6 million, respectively, of cash collateral on securities lending and $415.7 million and $544.5 million, respectively, of cash for derivative collateral. As of December 31, 2004, the Company had received $191.8 million of non-cash collateral on securities lending. Both the cash and non-cash collateral amounts are included in short-term investments with a corresponding liability recorded in other liabilities. As of December 31, 2004 and 2003, the Company had loaned securities with a fair value of $1.04 billion and $958.1 million, respectively. The Company also held $222.5 million and $163.0 million of securities as off-balance sheet collateral on derivative transactions as of December 31, 2004 and 2003, respectively. (8) 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, in 2002, the Company recorded an acceleration of DAC amortization totaling $347.1 million, before tax, or $225.6 million, net of $121.5 million of tax benefit, which has been reported in the following segments in the amounts indicated, net of tax: Individual Investments - $213.4 million, Retirement Plans - - $7.8 million and Individual Protection - $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, resetting the assumption for annual net separate account growth to 8% during the three-year reversion period for all investment products and variable life insurance products, and increasing the future lapses and costs related to GMDB on individual variable annuity contracts. These adjustments were primarily driven by the sustained downturn in the equity markets. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (9) 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) GMDB; (2) GMAB; and (3) 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. 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. The Company offers six primary GMDB types: 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. 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 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: (1) the benefit expires at age 86, and a credit of 4% of account value is deposited into the contract; and (2) the benefit does not 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 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, CONTINUED The following table summarizes the account values and net amount at risk, net of reinsurance, for variable annuity contracts with guarantees invested in both general and separate accounts as of the dates indicated:
DECEMBER 31, 2004 December 31, 2003 -------------------------------------------- ------------------------------------------- -------------------------------------------- ------------------------------------------- ACCOUNT NET AMOUNT WTD. AVG. Account Net amount Wtd. avg. (in millions) VALUE AT RISK1 ATTAINED AGE value at risk1 attained age ================================================================================================================================== ================================================================================================================================== GMDB: Return of premium $ 9,675.4 $ 54.1 59 $ 9,700.4 $ 199.8 56 Reset 17,315.9 153.2 62 17,021.2 569.4 61 Ratchet 9,621.0 42.3 64 7,793.4 140.9 63 Rollup 638.6 9.7 68 647.7 22.2 68 Combo 2,519.9 19.2 67 2,128.7 39.6 67 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Subtotal 39,770.8 278.5 62 37,291.4 971.9 61 Earnings enhancement 310.1 18.0 60 314.1 10.9 59 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total - GMDB $40,080.9 $ 296.5 62 $ 37,605.5 $ 982.8 61 ================================================================================================================================== ================================================================================================================================== GMAB: 5 Year $ 460.6 $ 0.1 N/A $ 79.9 $ 0.1 N/A 7 Year 568.4 - N/A 125.5 0.4 N/A 10 Year 304.0 - N/A 43.4 0.1 N/A - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total - GMAB $ 1,333.0 $ 0.1 N/A $ 248.8 $ 0.6 N/A ================================================================================================================================== ================================================================================================================================== GMIB2: Ratchet $ 437.7 $ - N/A $ 416.6 $ - N/A Rollup 1,188.2 - N/A 1,131.9 - N/A Combo 1.0 - N/A 1.1 - N/A - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total - GMIB $ 1,626.9 $ - N/A $ 1,549.6 $ - 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table is a rollforward of the liabilities for guarantees on variable annuity contracts reflected in the Company's general account for the years indicated:
(in millions) GMDB GMAB GMIB TOTAL ============================================================================================================================== Balance as of December 31, 2002 $ 13.7 $ - $ - $ 13.7 Expense provision 30.0 - - 30.0 Net claims paid (21.9) - - (21.9) Value of new business sold - 4.7 - 4.7 Change in fair value - (0.4) - (0.4) - ------------------------------------------------------------------------------------------------------------------------------ Balance as of December 31, 2003 21.8 4.3 - 26.1 Expense provision 25.0 - 0.8 25.8 Net claims paid (23.2) - - (23.2) Value of new business sold - 24.7 - 24.7 Change in fair value - (8.4) - (8.4) - ------------------------------------------------------------------------------------------------------------------------------ Balance as of December 31, 2004 $ 23.6 $ 20.6 $ 0.8 $ 45.0 ==============================================================================================================================
The following table summarizes account balances of contracts with guarantees that were invested in separate accounts as of the dates indicated:
DECEMBER 31, December 31, (in millions) 2004 2003 ==================================================================================================================================== Mutual funds: Bond $ 4,136.8 $ 4,370.7 Domestic equity 27,402.4 24,612.9 International equity 1,831.3 1,508.4 - ------------------------------------------------------------------------------------------------------------------------------------ Total mutual funds 33,370.5 30,492.0 Money market funds 1,313.6 1,620.3 - ------------------------------------------------------------------------------------------------------------------------------------ Total $ 34,684.1 $ 32,112.3 ====================================================================================================================================
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 regularly evaluates estimates used and adjusts the additional liability balance as appropriate, with a related charge or credit to other benefits and claims in the period of evaluation 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 as of December 31, 2004 and December 31, 2003 (except where noted otherwise): o Data used was based on a combination of historical numbers and future projections involving 50 and 250 stochastically generated economic scenarios as of December 31, 2004 and 2003, respectively o Mean gross equity performance - 8.1% o Equity volatility - 18.7% o Mortality - 100% of Annuity 2000 table o Asset fees - equivalent to mutual fund and product loads o Discount rate - 8.0% NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED Lapse rate assumptions vary by duration as shown below:
DURATION (YEARS) 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 embedded derivatives under SFAS 133, as amended, resulting in the related liabilities being separated from the host insurance product and recognized at fair value, with changes in fair value reported in earnings, and therefore, excluded from the SOP 03-1 policy benefits. GMIB claim reserves are determined each period by estimating the expected value of 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 regularly evaluates estimates used and adjusts the additional liability balance as appropriate, with a related charge or credit to other benefits and claims in the period of evaluation if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in calculating GMIB claim reserves are consistent with those used for calculating GMDB claim reserves. In addition, the calculation of 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. (10) SHORT-TERM DEBT The following table summarizes short-term debt as of December 31:
(in millions) 2004 2003 =================================================================================================================================== $800.0 million commercial paper program $ 134.7 $ 199.8 $350.0 million securities lending program facility 47.7 - $250.0 million securities lending program facility 32.6 - - ----------------------------------------------------------------------------------------------------------------------------------- Total short-term debt $ 215.0 $ 199.8 ===================================================================================================================================
The Company has available as a source of funds a $1.00 billion revolving credit facility entered into by NFS, NLIC and Nationwide Mutual Insurance Company (NMIC) with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that the Company maintain consolidated tangible net worth, as defined, in excess of $2.29 billion and NLIC maintain statutory surplus in excess of $1.56 billion. The Company had no amounts outstanding under this agreement as of December 31, 2004. NLIC also has an $800.0 million commercial paper program under which borrowings are unsecured and are issued for terms of 270 days or less. NLIC is required to maintain an available credit facility equal to 50% of any amounts outstanding under the commercial paper program. Therefore, borrowing capacity under the aggregate $1.00 billion revolving credit facility is reduced by 50% of any amounts outstanding under the commercial paper program. NLIC had $134.7 million and $199.8 million in commercial paper outstanding as of December 31, 2004 and 2003, respectively, at a weighted average effective interest rate of 2.14% in 2004 and 1.07% in 2003. NLIC 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 borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. These loans are collateral for the facility. The maximum amount available under the agreement is $350.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. NLIC had $47.7 million outstanding under this agreement as of December 31, 2004. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED In addition to the agreement described above, NMIC 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 borrowing facility was established to fund commercial mortgage loans that were originated with the intent of sale through securitization. These loans are collateral for the facility. Because NLIC has a variable interest in the profits from the securitization of these loans, NLIC consolidates the assets and liabilities associated with these loans and the corresponding borrowings in accordance with FIN 46R. The maximum amount available under the agreement is $250.0 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. NMIC had $32.6 million outstanding under this agreement as of December 31, 2004. The Company paid interest on short-term debt totaling $3.6 million, $1.3 million and $0.7 million in 2004, 2003 and 2002, respectively, including less than $0.1 million, $0.1 million and $0.5 million to NFS in 2004, 2003 and 2002, respectively. (11) LONG-TERM DEBT The following table summarizes surplus notes payable to NFS as of December 31:
(in millions) 2004 2003 ==================================================================================================================================== 8.15% surplus note, due June 27, 2032 $ 300.0 $ 300.0 7.50% surplus note, due December 17, 2031 300.0 300.0 6.75% surplus note, due December 23, 2033 100.0 100.0 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Total long-term debt $ 700.0 $ 700.0 ====================================================================================================================================
The Company made interest payments to NFS on surplus notes totaling $50.7 million in 2004, $47.1 million in 2003 and $30.1 million in 2002. Payments of interest and principal under the notes require the prior approval of the ODI. (12) FEDERAL INCOME TAX Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, the ultimate majority shareholder of NFS. Effective October 1, 2002, Nationwide Corporation's ownership in NFS decreased from 79.8% to 63.0%. Therefore, 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 (IRC) 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; and the direct non-life insurance companies under NLIC will file separate federal income tax returns, until 2008, when NFS becomes eligible to file a single life/non-life consolidated federal income tax return with all of its subsidiaries. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes the tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31:
(in millions) 2004 2003 ============================================================================================================================== DEFERRED TAX ASSETS: Future policy benefits $ 715.5 $ 594.8 Derivatives - 11.7 Other 117.0 104.4 - ------------------------------------------------------------------------------------------------------------------------------ Gross deferred tax assets 832.5 710.9 Less valuation allowance (7.0) (7.0) - ------------------------------------------------------------------------------------------------------------------------------ Deferred tax assets, net of valuation allowance 825.5 703.9 - ------------------------------------------------------------------------------------------------------------------------------ DEFERRED TAX LIABILITIES: Fixed maturity securities 318.2 390.0 Equity securities and other investments 20.9 42.7 Deferred policy acquisition costs 908.1 840.8 Derivatives 31.2 - Other 101.9 88.1 - ------------------------------------------------------------------------------------------------------------------------------ Gross deferred tax liabilities 1,380.3 1,361.6 - --------------------------------------------------------------------------------------------------------- ------------------- Net deferred tax liability $ 554.8 $ 657.7 ==============================================================================================================================
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 during 2004, 2003 and 2002. The Company's current federal income tax liability was $145.3 million and $106.3 million as of December 31, 2004 and 2003, respectively. The following table summarizes federal income tax expense attributable to income from continuing operations before the cumulative effect of adoption of accounting principles for the years ended December 31:
(in millions) 2004 2003 2002 ========================================================================================================================= Current $ 181.5 $ 106.7 $ 63.7 Deferred (61.5) (10.5) (55.0) - ------------------------------------------------------------------------------------------------------------------------- Federal income tax expense $ 120.0 $ 96.2 $ 8.7 =========================================================================================================================
The customary relationship between federal income tax expense and pre-tax income from continuing operations before the cumulative effect of adoption of accounting principles did not exist in 2002. This was because 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 8), which was 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, CONTINUED Total federal income tax expense for the years ended December 31, 2004, 2003 and 2002 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 the cumulative effect of adoption of accounting principles as follows:
2004 2003 2002 ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- (in millions) AMOUNT % Amount % Amount % ==================================================================================================================================== ==================================================================================================================================== Computed (expected) tax expense $ 187.2 35.0 $ 152.0 35.0 $ 59.3 35.0 Tax exempt interest and dividends (47.2) (8.8) (45.7) (10.5) (38.9) (22.9) received deduction Income tax credits (9.7) (1.8) (10.8) (2.5) (12.7) (7.5) Release of Phase III tax liability (5.1) (1.0) - - - - Other, net (5.2) (1.0) 0.7 0.1 1.0 0.5 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Total $ 120.0 22.4 $ 96.2 22.1 $ 8.7 5.1 ==================================================================================================================================== ====================================================================================================================================
The Jobs Creation Act of 2004 suspends policyholder surplus accounts (PSA) during 2005 and 2006 and provides that direct and indirect distributions from the PSA during any taxable year beginning after 2004 and before 2007 be treated as zero. Because NLIC has the ability and intent to distribute this PSA balance to its shareholder during the noted period, the potential tax liability was eliminated as of December 31, 2004 (see "Release of Phase III tax liability" above). The Jobs Creation Act of 2004 had no other significant impact on the Company's tax position. Total federal income tax paid was $142.3 million, $176.2 million and $71.0 million during the years ended December 31, 2004, 2003 and 2002, respectively. The 2002 amount includes $56.0 million for previously deferred intercompany gains for tax purposes that became due when NFS no longer qualified for inclusion in the NMIC consolidated federal income tax return. (13) SHAREHOLDERS' 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 exceeded the minimum risk-based capital requirements for all periods presented herein. The statutory capital and surplus of NLIC as of December 31, 2004 and 2003 was $2.39 billion and $2.23 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2004, 2003 and 2002 was $317.7 million, $444.4 million and $92.5 million, respectively. The Company is limited in the amount of shareholder dividends it may pay without prior approval by the ODI. As of January 1, 2005, based on statutory financial results as of and for the year ended December 31, 2004, NLIC could pay dividends totaling $192.7 million without obtaining prior approval. On March 1, 2005, NLIC paid a $25.0 million dividend to NFS. 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 shareholder. The Company currently does not expect such regulatory requirements to impair its ability to pay future operating expenses, interest and shareholder dividends. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (14) COMPREHENSIVE INCOME Comprehensive income includes net income and certain items that are reported directly within separate components of shareholder's equity that bypass net income (other comprehensive income or loss). The following table summarizes the Company's other comprehensive (loss) income, before and after federal income tax benefit (expense), for the years ended December 31:
(in millions) 2004 2003 2002 ==================================================================================================================================== Net unrealized (losses) gains on securities available-for-sale arising during the period: Gross unrealized (losses) gains $ (182.0) $ (16.7) $ 527.5 Adjustment to deferred policy acquisition costs 99.1 56.9 (205.7) Adjustment to future policy benefits and claims (11.0) 22.6 (133.2) Related federal income tax benefit (expense) 33.3 (22.4) (66.0) - ------------------------------------------------------------------------------------------------------------------------------------ Net unrealized (losses) gains (60.6) 40.4 122.6 - ------------------------------------------------------------------------------------------------------------------------------------ Reclassification adjustment for net realized losses on securities available-for-sale realized during the period: Gross unrealized losses 27.5 91.0 86.2 Related federal income tax benefit (9.6) (31.8) (30.2) - ------------------------------------------------------------------------------------------------------------------------------------ Net reclassification adjustment 17.9 59.2 56.0 - ------------------------------------------------------------------------------------------------------------------------------------ Other comprehensive (loss) income on securities available-for- (42.7) 99.6 178.6 sale - ------------------------------------------------------------------------------------------------------------------------------------ Accumulated net holding (losses) gains on cash flow hedges: Gross unrealized holding (losses) gains (47.4) (40.9) 16.9 Related federal income tax benefit (expense) 16.6 14.3 (5.9) - ------------------------------------------------------------------------------------------------------------------------------------ Other comprehensive (loss) income on cash flow hedges (30.8) (26.6) 11.0 - ------------------------------------------------------------------------------------------------------------------------------------ Total other comprehensive (loss) income $ (73.5) $ 73.0 $ 189.6 ====================================================================================================================================
Adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during the years ended December 31, 2004, 2003 and 2002, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (15) PENSION PLAN, POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND RETIREMENT SAVINGS PLAN The Company, together with other 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 issued by NLIC. All participants are eligible for benefits based on an account balance feature. Most participants are eligible for benefits based on the highest average annual salary of a specified number of consecutive years of the last ten years of service, if it is of greater value than the account balance feature. 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, 2004, 2003 and 2002 were $13.7 million, $13.2 million and $10.0 million, respectively. The Company recorded prepaid pension assets of $14.6 million and $7.7 million as of December 31, 2004 and 2003, respectively. 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 are 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 3% 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 Company's accrued postretirement benefit expense as of December 31, 2004 and 2003 was $49.3 million and $50.5 million, respectively. The net periodic benefit cost for the Company's postretirement benefit plan as a whole was $1.1 million, $1.1 million and $3.5 million for 2004, 2003 and 2002, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following tables summarizes information regarding the funded status of the Company's pension plan as a whole and the postretirement benefit plan as a whole, both of which are U.S. plans, as of the years ended December 31:
PENSION BENEFITS POSTRETIREMENT BENEFITS ----------------------------- ------------------------------ ----------------------------- ------------------------------ (in millions) 2004 2003 2004 2003 ==================================================================================================================================== CHANGE IN BENEFIT OBLIGATION: Benefit obligation at beginning of year $ 2,457.0 $ 2,236.2 $ 306.8 $ 269.7 Service cost 121.8 104.0 9.2 9.9 Interest cost 134.0 131.7 17.5 19.5 Participant contributions - - 4.1 4.2 Plan amendment - 1.6 (13.3) - Actuarial loss (gain) 125.7 85.1 (10.1) (2.8) Benefits paid (105.4) (101.6) (22.3) (20.4) Impact of plan merger - - - 26.7 - ------------------------------------------------------------------------------------------------------------------------------------ Benefit obligation at end of year 2,733.1 2,457.0 291.9 306.8 - ------------------------------------------------------------------------------------------------------------------------------------ CHANGE IN PLAN ASSETS: Fair value of plan assets at beginning of year 2,242.4 1,965.0 127.5 106.9 Actual return on plan assets 187.3 265.4 6.2 16.5 Employer contributions1 130.0 113.6 20.1 20.3 Participant contributions - - 4.1 4.2 Benefits paid1 (105.4) (101.6) (22.3) (20.4) - ------------------------------------------------------------------------------------------------------------------------------------ Fair value of plan assets at end of year 2,454.3 2,242.4 135.6 127.5 - ------------------------------------------------------------------------------------------------------------------------------------ Funded status (278.8) (214.6) (156.3) (179.3) Unrecognized prior service cost 25.8 30.3 (103.0) (103.3) Unrecognized net loss 298.2 192.1 48.0 56.9 Unrecognized net asset at transition (1.2) (2.5) - - - ------------------------------------------------------------------------------------------------------------------------------------ Prepaid (accrued) benefit cost, net $ 44.0 $ 5.3 $ (211.3) $ (225.7) ==================================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------------ Accumulated benefit obligation $ 2,271.6 $ 2,020.2 N/A N/A ====================================================================================================================================
1 Employer contributions and benefits paid include only those amounts contributed directly to or paid directly from plan assets. As a result of the 2004 postretirement health plan change, the effect of a 1% increase or decrease in the assumed health care cost trend rate on the accumulated postretirement benefit obligation (APBO) as a whole as of December 31, 2004 is $1.7 million. There is no effect on the service and interest cost for the year because health care cost trend had no material effect on plan liabilities or expense prior to the plan change at the end of 2004. Prior to 2004, the postretirement health plan costs approximated the employer dollar caps, and the health care cost trend had an immaterial effect on plan obligations and expense for the postretirement benefit plan as a whole. For this reason, the effect of a 1% increase or decrease in the assumed health care cost trend rate on the APBO as of December 31, 2003 and on the net periodic benefit cost 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, CONTINUED 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% 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 all participating employers, including the Company, expect to contribute $125.0 million to the pension plan and $18.0 million to the postretirement benefit plan in 2005. The following table summarizes benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter:
PENSION POSTRETIREMENT (in millions) BENEFITS BENEFITS - ------------------------------------------------------------------------------------------------------------------------------ 2005 $ 110.2 $ 23.7 2006 112.0 20.6 2007 114.4 20.1 2008 117.6 19.6 2009 125.1 19.1 2010-2014 761.5 107.7 - ------------------------------------------------------------------------------------------------------------------------------
The following table summarizes the weighted average assumptions used to calculate the benefit obligations and funded status of the Company's pension plan as a whole and the postretirement benefit plan as a whole as of the December 31 measurement date for all plans:
PENSION BENEFITS POSTRETIREMENT BENEFITS ---------------------------- ----------------------------- ---------------------------- ----------------------------- 2004 2003 2004 2003 =================================================================================================================================== =================================================================================================================================== Discount rate 5.00% 5.50% 5.70% 6.10% Rate of increase in future compensation levels 3.50% 4.00% - - Assumed health care cost trend rate: Initial rate - - 10%1 11.00%1 Ultimate rate - - 5.2%1 5.20%1 Declining period - - 10 YEARS 11 Years - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
- ------------ 1 The 2004 initial rate was 11.0% for participants over age 65, with an ultimate rate of 5.7%, and the 2003 initial rate was 12.0% for participants over age 65, with an ultimate rate of 5.6%. The pension plan employs a total return investment approach using a mix of equities and fixed income investments to maximize the long-term return on plan assets in exchange 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 liabilities 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 U.S. investment grade bonds, diversified high-yield U.S. securities, 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 continually 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, CONTINUED The following table summarizes the asset allocation for the Company's pension plan as a whole at the end of 2004 and 2003 and the target allocation for 2005, by asset category:
TARGET ALLOCATION PERCENTAGE PERCENTAGE OF PLAN ASSETS AT END OF ------------------------- ------------------------------- ------------------------- ------------------------------- Asset Category 2005 2004 2003 ================================================================================================================================== ================================================================================================================================== Equity securities 40 - 65% 48% 45% Debt securities 25 - 50% 52% 55% Real estate 0 - 10% - - - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total - 100% 100% ================================================================================================================================== ==================================================================================================================================
The postretirement benefit plan employs a total return investment approach using a mix of equities and fixed income investments to maximize the long-term return on plan assets in exchange 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 generally include a retiree life insurance contract issued by NLIC. For retiree medical liabilities, plan investments include both a group annuity contract issued by NLIC backed by fixed investments with an interest rate guarantee and a separate account invested in diversified U.S. equities. Investment mix is measured and monitored continually through regular investment reviews, annual liability measurements and periodic asset/liability studies. The following table summarizes the asset allocation for the Company's postretirement benefit plan as a whole at the end of 2004 and 2003 and the target allocation for 2005, by asset category:
TARGET ALLOCATION PERCENTAGE PERCENTAGE OF PLAN ASSETS AT END OF --------------------------- --------------------------------- --------------------------- --------------------------------- Asset Category 2005 2004 2003 =================================================================================================================================== =================================================================================================================================== Equity securities 50 - 80% 60% 59% Debt securities 20 - 50% 35% 35% Other 0 - 10% 5% 6% - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total - 100% 100% =================================================================================================================================== ===================================================================================================================================
The following table summarizes the components of net periodic benefit cost for the Company's pension plan as a whole for the years ended December 31:
(in millions) 2004 2003 2002 =================================================================================================================================== Service cost $ 121.8 $ 104.0 $ 103.3 Interest cost 134.0 131.7 135.6 Expected return on plan assets (167.7) (156.7) (178.6) Recognized net actuarial loss - 0.1 - Amortization of prior service cost 4.5 4.5 4.4 Amortization of unrecognized transition asset (1.3) (1.3) (1.3) - ----------------------------------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 91.3 $ 82.3 $ 63.4 ===================================================================================================================================
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes the weighted average assumptions used to calculate the Company's net periodic pension cost, set at the beginning of each year, for the pension plan as a whole:
2004 2003 2002 =================================================================================================================================== Discount rate 5.50% 6.00% 6.50% Rate of increase in future compensation levels 4.00% 4.50% 4.75% Expected long-term rate of return on plan assets 7.25% 7.75% 8.25% - -----------------------------------------------------------------------------------------------------------------------------------
The Company employs a prospective building block approach in determining the expected long-term rate of return on 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 investments 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. Historical risk premiums are used to develop expected real rates of return for 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 into the process. 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 historical real rate of return is subtracted from these bonds to generate an assumed inflation rate. The expected long-term rate of return on 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. The following table summarizes the components of net periodic benefit cost for the Company's postretirement benefit plan as a whole for the years ended December 31:
(in millions) 2004 2003 2002 ============================================================================================================================= Service cost $ 9.2 $ 9.9 $ 13.2 Interest cost 17.5 19.5 22.5 Expected return on plan assets (8.9) (8.0) (9.2) Recognized net actuarial loss - - 0.6 Net amortization and deferral (12.1) (9.9) (0.5) - ----------------------------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 5.7 $ 11.5 $ 26.6 =============================================================================================================================
The following table summarizes the weighted average assumptions used to calculate the Company's net periodic benefit cost, set at the beginning of each year, for the postretirement benefit plan as a whole:
2004 2003 2002 ============================================================================================================================= Discount rate 6.10% 6.60% 7.25% Expected long-term rate of return on plan assets 7.00% 7.50% 7.75% Assumed health care cost trend rate: Initial rate 11%1 11.3%1 11.00% Ultimate rate 5.2%1 5.7%1 5.50% Declining period 11 YEARS 11 Years 4 Years - -----------------------------------------------------------------------------------------------------------------------------
- ---------- 1 The 2004 initial rate was 11.0% for participants over 65, with an ultimate rate of 5.7%, and the 2003 initial rate was 12.0% for participants over age 65, with an ultimate rate of 5.6%. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 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 80%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company's expense for contributions to these plans totaled $5.8 million, $5.5 million and $5.7 million for 2004, 2003 and 2002, respectively, including $0.5 million related to discontinued operations for 2002. (16) RELATED PARTY TRANSACTIONS The Company has entered into significant, recurring transactions and agreements with NMIC and other affiliates as a part of its ongoing operations. The nature of the transactions and agreements include annuity and life insurance contracts, reinsurance agreements, cost sharing agreements, administration services agreements, marketing agreements, office space leases, intercompany repurchase agreements and cash management services agreements. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, the number of full-time employees, 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 (NSC), 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, 2004, 2003 and 2002, the Company made payments to NMIC and NSC totaling $194.6 million, $170.4 million and $135.6 million, respectively. The Company does not believe that expenses recognized under these agreements are materially different than expenses that would have been recognized had the Company operated on a stand-alone basis. The Company 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 $5.75 billion and $5.22 billion as of December 31, 2004 and 2003, respectively. Total revenues from these contracts were $136.5 million, $138.9 million and $143.3 million for the years ended December 31, 2004, 2003 and 2002, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $107.9 million, $111.8 million and $114.8 million for the years ended December 31, 2004, 2003 and 2002, 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 to the Company's customers as investment options in certain of the Company's products. As of December 31, 2004 and 2003, customer allocations to GGI funds totaled $14.06 billion and $12.80 billion, respectively. For the years ended December 31, 2004 and 2003, GGI paid the Company $44.5 million and $38.6 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. 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, 2004, 2003 and 2002 were $335.6 million, $286.7 million and $325.0 million, respectively, while benefits, claims and expenses ceded were $336.0 million, $247.5 million and $328.4 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 $23.2 million, $24.8 million and $24.9 million for the years ended December 31, 2004, 2003 and 2002, respectively. The Company leases office space from NMIC and certain of its subsidiaries. For the years ended December 31, 2004, 2003 and 2002, the Company made lease payments to NMIC and its subsidiaries of $18.4 million, $17.5 million and $20.2 million, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The Company also participates in intercompany repurchase agreements with affiliates whereby the seller transfers 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, 2004 and 2003, the Company had no borrowings from affiliated entities under such agreements. During 2004, 2003 and 2002, the most the Company had outstanding at any given time was $227.7 million, $126.0 million and $224.9 million, respectively, and the amounts the Company incurred for interest expense on intercompany repurchase agreements were immaterial. 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 $498.4 million and $688.7 million as of December 31, 2004 and 2003, respectively, and are included in short-term investments on the consolidated balance sheets. For each of the years in the three-year period ending December 31, 2004, the Company paid NCMC fees and totaling less than $0.1 million under this agreement. The Company purchased fixed maturity securities available-for-sale from NFN totaling $829.9 million during the year ended December 31, 2004. NFN recorded gross realized gains of $23.4 million on these transactions. Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the years ended December 31, 2004, 2003 and 2002 were $63.1 million, $62.0 million and $50.3 million, respectively. Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 12. Beginning October 1, 2002, NLIC files a consolidated federal income tax return with NLAIC. Total payments to NMIC were $37.4 million, $2.4 million and $71.0 million in the years ended December 31, 2004, 2003 and 2002, respectively. Payments made in 2004 and 2003 relate to tax years prior to deconsolidation. 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 the first quarter of 2003, NLIC received a $200.0 million capital contribution from NFS for general corporate purposes. On March 1, 2005, NLIC paid a $25.0 million dividend to NFS. In 2004 and 2003, NLIC paid dividends to NFS totaling $125.0 million and $60.0 million, respectively. During 2003, NLIC returned capital totaling $100.0 million 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. Therefore, the results of operations of NSI have been reflected as discontinued operations for all periods presented. This was a related party transaction and thus was recorded at the $10.0 million carrying value of the underlying components of the transaction rather than at fair value. This amount represents a non-cash transaction that is not reflected in the consolidated statement of cash flows. In December 2001, NLIC issued to NFS a 7.50%, $300.0 million surplus note maturing on December 17, 2031. In June 2002, NLIC issued to NFS an 8.15%, $300.0 million surplus note maturing June 27, 2032. In December 2003, NLIC issued to NFS a 6.75%, $100.0 million surplus note maturing December 23, 2033. The Company made interest payments on surplus notes to NFS totaling $50.7 million, $47.1 million and $30.1 million in 2004, 2003 and 2002, respectively. In addition, the Company made interest payments on unsecured notes to NFS totaling less than $0.1 million, $0.1 million and $0.5 million in 2004, 2003 and 2002, respectively. As of December 31, 2004, 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, CONTINUED (17) CONTINGENCIES The Company is a party to litigation and arbitration proceedings in the ordinary course of its business. It is not possible to determine the ultimate outcome of the pending investigations and legal proceedings or to provide reasonable ranges of potential losses. Some of the matters referred to below are in very preliminary stages, and the Company does not have sufficient information to make an assessment of plaintiffs' claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, that are difficult to quantify and cannot be defined based on the information currently available. The Company does not believe, based on information currently known by the Company's management, that the outcomes of such pending investigations and legal proceedings are likely to have a material adverse effect on the Company's consolidated financial position. However, given the large and/or indeterminate amounts sought in certain of these matters and inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could have a material adverse effect on the Company's consolidated financial results in a particular quarterly or annual period. 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. The financial services industry, including mutual fund, variable annuity, life insurance and distribution companies, has also been the subject of increasing scrutiny by regulators, legislators and the media over the past two years. Numerous regulatory agencies, including the SEC, the NASD and the New York State 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 and life insurance companies on those issues. The Company has been contacted by the SEC and the New York State Attorney General, who are investigating market timing in certain mutual funds offered in insurance products sponsored by the Company. The Company is cooperating with this investigation and is responding to information requests. In addition, state and federal regulators have commenced investigations or other proceedings relating to compensation and bidding arrangements and possible anti-competitive activities between insurance producers and brokers and issuers of insurance products, and unsuitable sales by producers on behalf of either the issuer or the purchaser. Also under investigation are compensation arrangements between the issuers of variable insurance contracts and mutual funds or their affiliates. Related investigations and proceedings may be commenced in the future. The Company has been contacted by regulatory agencies and state attorneys general for information relating to investigations into these compensation and bidding arrangements, anti-competitive activities and unsuitable sales practices. The Company is cooperating with regulators in connection with these inquiries. NMIC, NFS' ultimate parent, has been contacted by certain regulators for information on these issues with respect to its operations and the operations of its subsidiaries, including the Company. The Company will cooperate with NMIC in responding to these inquiries to the extent that any inquiries encompass its operations. These proceedings are expected to continue in the future, and could result in legal precedents and new industry-wide legislation, rules and regulations that could significantly affect the financial services industry, including life insurance and annuity companies. These proceedings could also affect the outcome of one or more of the Company's litigation matters. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED On April 13, 2004, NLIC was named in a class action lawsuit filed in Circuit Court, Third Judicial Circuit, Madison County, Illinois, entitled Woodbury v. Nationwide Life Insurance Company. The plaintiff purports to represent a class of persons in the United States who, through their ownership of a Nationwide annuity or insurance product, held units of any Nationwide sub-account invested in mutual funds which included foreign securities in their portfolios and which allegedly experienced market timing trading activity. The complaint contains allegations of negligence, reckless indifference and breach of fiduciary duty. The plaintiff seeks to recover compensatory and punitive damages in an amount not to exceed $75,000 per plaintiff or class member. NLIC removed this case to the United States District Court for the Southern District of Illinois on June 1, 2004. The plaintiffs moved to remand on June 28, 2004. On July 12, 2004, NLIC filed a memorandum opposing remand and requesting a stay pending the resolution of an unrelated case covering similar issues, which is an appeal from a decision of the same District Court remanding a removed market timing case to an Illinois state court. On July 30, 2004, the U.S. District Court granted NLIC's request for a stay pending a decision by the Seventh Circuit on the unrelated case mentioned above. On December 27, 2004, the case was transferred to the United States District Court for the District of Maryland and included in the multi-district proceeding there entitled In Re Mutual Funds Investment Litigation. This lawsuit is in a preliminary stage, and NLIC intends to defend it vigorously. On January 21, 2004, the Company was named in a lawsuit filed in the United States District Court for the Northern District of Mississippi entitled 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, plaintiff United Investors alleges that the Company and/or its affiliated life insurance companies caused the replacement of variable insurance policies and other financial products issued by United Investors with policies issued by the Nationwide defendants. The plaintiff raises claims for (1) violations of the Federal Lanham Act, and common law unfair competition and defamation, (2) tortious interference with the plaintiff's contractual relationship with Waddell & Reed, Inc. and/or its affiliates, Waddell & Reed Financial, Inc., Waddell & Reed Financial Services, Inc. and W&R Insurance Agency, Inc., or with the plaintiff's contractual relationships with its variable policyholders, (3) civil conspiracy, and (4) breach of fiduciary duty. The complaint seeks compensatory damages, punitive damages, pre- and post-judgment interest, a full accounting, a constructive trust, and costs and disbursements, including attorneys' fees. The Company filed a motion to dismiss the complaint on June 1, 2004. On February 8, 2005 the court denied the motion to dismiss. The Company intends to defend this lawsuit vigorously On October 31, 2003, NLIC was named in a lawsuit seeking class action status filed in the United States District Court for the District of Arizona entitled Robert Helman et al v. Nationwide Life Insurance Company et al. The suit challenges the sale of deferred annuity products for use as investments in tax-deferred contributory retirement plans. On April 8, 2004, the plaintiff filed an amended class action complaint on behalf of all persons who purchased an individual variable deferred annuity contract or a certificate to a group variable annuity contract issued by NLIC or Nationwide Life and Annuity Insurance Company (NLAIC) which were allegedly used to fund certain tax-deferred retirement plans. The amended class action complaint seeks unspecified compensatory damages. NLIC filed a motion to dismiss the complaint on May 24, 2004. On July 27, 2004, the court granted NLIC's motion to dismiss. The plaintiff has appealed that dismissal to the United States Court of Appeals for the Ninth Circuit. NLIC intends to defend this lawsuit vigorously. On May 1, 2003, NLIC was named in a class action lawsuit filed in the United States District Court for the Eastern District of Louisiana entitled 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. The 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. The 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. The 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. NLIC's motion to dismiss the complaint was granted by the District Court on October 28, 2003. The plaintiff appealed that dismissal to the United States Court of Appeals for the Fifth Circuit. On November 22, 2004, the Fifth Circuit Court of Appeals affirmed the judgment of the District Court dismissing the complaint. The time for further appeal by the plaintiff has expired. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED On August 15, 2001, the Company was named in a lawsuit filed in the United States District Court for the District of Connecticut entitled 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 5, 2001 to include class action allegations and have subsequently amended their complaint three times. As amended, in the current complaint the plaintiffs seek to represent a class of ERISA qualified retirement plans that purchased variable annuities from NLIC. The plaintiffs allege that they invested ERISA plan assets in their variable annuity contracts and that the Company breached ERISA fiduciary duties by allegedly accepting service payments from certain mutual funds. The complaint seeks disgorgement of some or all of the payments allegedly received by the Company, other unspecified relief for restitution, declaratory and injunctive relief, and attorneys' fees. On December 13, 2001, the plaintiffs filed a motion for class certification. The plaintiffs filed a supplement to that motion on September 19, 2003. The Company opposed that motion on December 24, 2003. On July 6, 2004, the Company filed a Revised Memorandum in Support of Summary Judgment. The plaintiffs have opposed that motion. The Company intends to defend this lawsuit vigorously. (18) SECURITIZATION TRANSACTIONS The Company has sold $469.3 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 4.60% to 5.25% over periods ending between 2002 and 2021 and as of December 31, 2004 held guarantee reserves totaling $4.7 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. If 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 $1.27 billion. The Company does not anticipate making any payments related to the guarantees. At the time of the sales, $5.1 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 others. Properties meeting the necessary criteria are considered to have "stabilized." The properties are evaluated regularly, and the collateral is released when stabilized. During 2004 and 2003, $0.1 million and $3.1 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 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) VARIABLE INTEREST ENTITIES As of December 31, 2004, the Company had relationships with 14 VIEs where the Company was 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 Tax Credit Funds to third party investors where the Company provides guaranteed returns (see Note 18). Effective January 1, 2004, the Company began applying the provisions of FIN 46R to these entities. FIN 46R did not require the restatement of any prior periods. As such, for periods subsequent to December 31, 2003, the results of operations and financial position of these VIEs are included along with corresponding minority interest liabilities and related income in the accompanying consolidated financial statements. The net assets of these VIEs totaled $366.4 million as of December 31, 2004. The most significant components of net assets were $32.1 million of mortgage loans on real estate, $401.2 million of other long-term investments, $35.6 million of other assets, $32.6 million of short-term debt, and $116.3 million of other liabilities. The total exposure to loss on these VIEs where the Company is the primary beneficiary was less than $0.1 million as of December 31, 2004. For the mortgage loan VIE, to which the short-term debt relates, 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, CONTINUED In addition to the VIEs described above, the Company holds variable interests, in the form of limited partnerships or similar investments, in a number of Tax Credit Funds where the Company is not the primary beneficiary. These investments have been held by the Company for periods of 1 to 8 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 other securitization transactions that qualify as VIEs, but for which the Company is not the primary beneficiary. The total exposure to loss on these VIEs was $36.3 million as of December 31, 2004. (20) SEGMENT INFORMATION Management of the Company views its business primarily based on the underlying products, and this is the basis used for defining its reportable segments. During the second quarter of 2004, the Company reorganized its segment reporting structure and now reports four segments: Individual Investments, Retirement Plans, Individual Protection, and Corporate and Other. The Company has reclassified segment results for all prior periods presented to be consistent with the new reporting structure. The primary segment profitability measure that management uses is pre-tax operating earnings, which is calculated by adjusting income from continuing operations before federal income taxes and the cumulative effect of adoption of accounting principles, if any, to exclude net realized gains and losses on investments, hedging instruments and hedged items, except for periodic net coupon settlements on non-qualifying derivatives and realized gains and losses related to securitizations, if any. The Individual Investments segment consists of individual The BEST of AMERICA(R) and private label deferred variable annuity products, deferred fixed annuity products, income products, and advisory services program revenues and expenses. This segment differs from the former Individual Annuity segment due to the addition of the advisory services program results. 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, individual 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 individual fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. The Retirement Plans segment is comprised of the Company's private- and public-sector retirement plans business. This segment differs from the former Institutional Products segment because it no longer includes the results of the structured products and MTN businesses. The private sector includes IRC Section 401(k) business and the public sector includes IRC Section 457 and Section 401(a) business, both in the form of fixed and variable annuities. The Individual Protection segment consists of investment life insurance products, including individual variable, COLI and BOLI products, traditional life insurance products and universal life insurance. This segment is unchanged from the former Life Insurance segment. Life insurance products provide a death benefit and generally allow the customer to build cash value on a tax-advantaged basis. The Corporate and Other segment includes certain structured products business, the MTN program, net investment income not allocated to product segments, periodic net coupon settlements on non-qualifying derivatives, unallocated expenses, interest expense on debt, revenue and expenses of the Company's non-insurance subsidiaries not reported in other segments, and realized gains and losses related to securitizations. This segment differs from the former Corporate segment as it now includes results from the structured products and MTN businesses, but no longer includes results from the advisory services program. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED The following table summarizes the Company's business segment operating results for the years ended December:
INDIVIDUAL RETIREMENT INDIVIDUAL (in millions) INVESTMENTS PLANS PROTECTION ======================================================================================================== 2004 REVENUES: Net investment income $ 824.8 $ 627.9 $ 327.2 Other operating revenue 591.7 157.0 547.5 Net realized losses on investments, hedging instruments and hedged items1 - - - - -------------------------------------------------------------------------------------------------------- Total revenues 1,416.5 784.9 874.7 - -------------------------------------------------------------------------------------------------------- Benefits and expenses: Interest credited to policyholder account values 573.5 435.5 181.5 Amortization of DAC 276.1 39.6 94.4 Interest expense on debt - - - Other benefits and expenses 346.9 184.5 428.2 - -------------------------------------------------------------------------------------------------------- Total benefits and expenses 1,196.5 659.6 704.1 - -------------------------------------------------------------------------------------------------------- Income from continuing operations before federal income tax expense 220.0 125.3 170.6 Net realized losses on investments, hedging instruments and hedged items1 - - - - -------------------------------------------------------------------------------------------------------- Pre-tax operating earnings $ 220.0 $ 125.3 $ 170.6 ======================================================================================================== - -------------------------------------------------------------------------------------------------------- Assets as of period end $ 52,642.5 $ 29,668.7 $ 12,932.4 ======================================================================================================== 2003 REVENUES: Net investment income $ 807.9 $ 640.2 $ 324.3 Other operating revenue 517.7 150.0 536.2 Net realized losses on investments, hedging instruments and hedged items1 - - - - -------------------------------------------------------------------------------------------------------- Total revenues 1,325.6 790.2 860.5 - -------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES: Interest credited to policyholder account values 602.5 443.2 185.6 Amortization of DAC 228.4 45.6 101.9 Interest expense on debt - - - Other benefits and expenses 328.4 178.9 423.0 - -------------------------------------------------------------------------------------------------------- Total benefits and expenses 1,159.3 667.7 710.5 - -------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before federal income tax expense 166.3 122.5 150.0 Net realized losses on investments, hedging instruments and hedged items1 - - - - -------------------------------------------------------------------------------------------------------- Pre-tax operating earnings $ 166.3 $ 122.5 $ 150.0 ======================================================================================================== - -------------------------------------------------------------------------------------------------------- Assets as of period end $ 49,419.2 $ 29,226.9 $ 11,286.6 ========================================================================================================
CORPORATE AND OTHER TOTAL ================================= $ 220.6 $ 2,000.5 15.8 1,312.0 (43.0) (43.0) - --------------------------------- 193.4 3,269.5 - --------------------------------- 86.7 1,277.2 - 410.1 59.3 59.3 28.3 987.9 - --------------------------------- 174.3 2,734.5 - --------------------------------- 19.1 535.0 =============== 43.0 - ------------------ $ 62.1 ================== - --------------------------------- $ 10,714.3 $105,957.9 ================================= $ 200.7 $ 1,973.1 28.4 1,232.3 (100.8) (100.8) - --------------------------------- 128.3 3,104.6 - --------------------------------- 77.9 1,309.2 - 375.9 48.4 48.4 6.4 936.7 - --------------------------------- 132.7 2,670.2 - --------------------------------- (4.4) $ 434.4 =============== 100.8 - ------------------ $ 96.4 ================== - --------------------------------- $ 10,695.0 $ 100,627.7 ================================= 1 Excluding periodic net coupon settlements on non-qualifying derivatives. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE FINANCIAL SERVICES, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
INDIVIDUAL RETIREMENT INDIVIDUAL CORPORATE (in millions) INVESTMENTS PLANS PROTECTION AND OTHER TOTAL ==================================================================================================================================== ==================================================================================================================================== 2002 REVENUES: Net investment income $ 668.5 $ 648.5 $ 328.6 $ 187.3 $ 1,832.9 Other operating revenue 526.2 169.8 537.7 17.6 1,251.3 Net realized losses on investments, hedging instruments and hedged items1 - - - (84.4) (84.4) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Total revenues 1,194.7 818.3 866.3 120.5 2,999.8 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ BENEFITS AND EXPENSES: Interest credited to policyholder account values 505.9 460.7 186.4 91.4 1,244.4 Amortization of DAC 528.2 53.7 88.2 - 670.1 Interest expense on debt - - - 36.0 36.0 Other benefits and expenses 285.6 167.8 420.2 6.2 879.8 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Total benefits and expenses 1,319.7 682.2 694.8 133.6 2,830.3 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations before federal income tax expense (125.0) 136.1 171.5 (13.1) $ 169.5 =============== =============== Net realized losses on investments, hedging instruments and hedged items1 - - - 84.4 - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- Pre-tax operating earnings (loss) $ (125.0) $ 136.1 $ 171.5 $ 71.3 ===================================================================================================================== ===================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Assets as of period end $ 40,994.0 $ 26,182.4 $ 9,704.2 $ 9,142.0 $ 86,022.6 ==================================================================================================================================== ====================================================================================================================================
- ---------- 1 Excluding periodic net coupon settlements on non-qualifying derivatives. 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 (1933 Act File No. 333-31725) and hereby incorporated by reference. (b) Not Applicable (c) Underwriting or Distribution of contracts between the Depositor and Principal Underwriter - Filed previously with the Post-Effective Amendment No. 1 to the registration statement (1933 Act File No. 333-66572) and hereby incorporated by reference. (d) The form of the contract - Filed previously with initial registration statement (1933 Act File No. 333-94037, 1940 Act File No. 811-08301) and hereby incorporated by reference. (e) The form of the contract application - Filed previously with Pre-Effective Amendment No. 1 to the registration statement (1933 Act File No. 333-94037, 1940 Act File No. 811-08301) and hereby incorporated by reference. (f) Articles of Incorporation of Depositor - Filed previously with initial registration statement (1933 Act File No. 333-94037, 1940 Act File No. 811-08301) and hereby incorporated by reference. (g) Reinsurance Contracts -Filed previously with registration statement (333-46338) and hereby incorporated by reference. (h) Participation Agreements - Filed previously with registration statement (333-46338) and hereby incorporated by reference. (i) Not Applicable (j) Not Applicable (k) Opinion of Counsel - Filed previously with initial registration statement (1933 Act File No. 333-94037, File No. 811-08301) and hereby incorporated by reference. (l) Not Applicable (m) Not Applicable (n) Consent of Independent Registered Public Accounting Firm - 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, Chairman of the Board W.G. Jurgensen, Director and Chief Executive Officer Mark R. Thresher, President and Chief Operating Officer Patricia R. Hatler, Executive Vice President and Chief Legal and Governance Officer 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 W. Kim Austen, Senior Vice President-Property and Casualty Commercial/Farm Product Pricing J. Stephen Baine, Senior Vice President-Corporate Strategy James R. Burke, Senior Vice President-P/C Strategic Planning and Operations David A. Diamond, Senior Vice President Thomas W. Dietrich, Senior Vice President-Division General Counsel Dennis P. Drent, Senior Vice President-Internal Audits Peter A. Golato, Senior Vice President-Individual Protection Business Head J. Lynn Greenstein, Senior Vice President-Property and Casualty Personal Lines Product Pricing Kelly A. Hamilton, Senior Vice President-PC Finance David K. Hollingsworth, Senior Vice President-PCIO Brokerage Operations & Sponsor Relations David R. Jahn, Senior Vice President-Property and Casualty Claims Richard A. Karas, Senior Vice President-Non-Affiliated Sales M. Eileen Kennedy, Senior Vice President-Chief Financial Officer 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 Katherine A. Mabe, Senior Vice President-Marketing, Strategy and Urban Operations Duane C. Meek, Senior Vice President-Group Business Head Keith I. Millner, Senior Vice President-In Retirement Business Head Brian W. Nocco, Senior Vice President and Treasurer R. Dennis Noice, Senior Vice President-NF Systems Mark D. Phelan, Senior Vice President-Individual Investments Business Head Steven P. Rothman, Senior Vice President-IT Strategy and Solutions Delivery Gary I. Siroko, Senior Vice President-CIO Strategic Investments John S. Skubik, Senior Vice President-Consumer Finance Gail G. Snyder, Senior Vice President-Enterprise Portfolio & Strategy Management Mark D. Torkos, Senior Vice President-Property and Casualty Systems Thomas E. Barnes, Vice President-Assistant to the CEO and Secretary Joseph A. Alutto, Director James G. Brocksmith, Jr., Director Keith W. Eckel, Director Lydia M. Marshall, Director Donald L. McWhorter, Director Martha James Miller de Lombera, Director David O. Miller, Director James F. Patterson, Director Gerald D. Prothro, Director Alex Shumate, 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 - ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Advisory Services, Inc. Pennsylvania The company was formerly registered as an investment advisor and is currently inactive. - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Brokerage Services, Inc. Pennsylvania The 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 The company was established to grant proper licensing Massachusetts, Inc. to Provident Mutual Life Insurance Company (n.k.a. Nationwide Life Insurance Company of America) affiliates in Massachusetts. - ------------------------------------------------------------------------------------------------------------------------------------ 1717 Insurance Agency of Texas, Inc. Texas The company was established to grant proper licensing to former Provident Mutual Life Insurance Company (n.k.a. Nationwide Life Insurance Company of America) affiliates in Texas. - ------------------------------------------------------------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------------------------------------------------------------ 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, Inc. Iowa The company is a property and casualty insurance holding company. - ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Group Insurance Marketing Iowa The company engages in the direct marketing of Company property and casualty insurance products. - ------------------------------------------------------------------------------------------------------------------------------------ ALLIED Property and Casualty Iowa The company underwrites general property and casualty Insurance Company 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. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ 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 an insurance agency. - ------------------------------------------------------------------------------------------------------------------------------------ CalFarm Insurance Agency California The company is an insurance agency. - ------------------------------------------------------------------------------------------------------------------------------------ Capital Pro Holding, Inc. Delaware The company operates as a holding company. - ------------------------------------------------------------------------------------------------------------------------------------ Capital Professional Advisors, Inc. Delaware The company provides training and financial support for certain financial services firms. The company also provides financial services support through a broker-dealer subsidiary, an investment advisor subsidiary and an insurance agency subsidiary. - ------------------------------------------------------------------------------------------------------------------------------------ Cap Pro Advisory Services, Inc. Delaware The company is an investment advisor that is registered in the State of Minnesota. It provides investment advisory services for customers of financial services firms that have contractual agreements with its parent company, Capital Professional Advisors, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Cap Pro Brokerage Services, Inc.* Delaware The company is a registered broker-dealer that conducts a general securities business. It provides investment advisory services for customers of financial services firms that have contractual agreements with its parent company, Capital Professional Advisors, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Cap Pro Insurance Agency Services, Delaware The company is a licensed insurance agency that sells Inc. and services insurance products for financial services firms that have contractual agreements with its parent company, Capital Professional Advisors, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Colonial County Mutual Insurance Texas The company underwrites non-standard automobile and Company* motorcycle insurance and other various 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 (f.k.a. CalFarm Insurance Company) 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. - ------------------------------------------------------------------------------------------------------------------------------------ Delfi Realty Corporation Delaware The company is currently inactive. - ------------------------------------------------------------------------------------------------------------------------------------ Depositors Insurance Company Iowa The company underwrites general property and casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (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 This company places pet insurance business not written by Veterinary Pet Insurance Company outside of California with National Casualty Company. - ------------------------------------------------------------------------------------------------------------------------------------ Europewide Financial S.A (f.k.a. Luxembourg The purpose of this company is to carry out, on its Dancia Life S.A.)* own behalf or on behalf of third parties, any insurance business, including coinsurance and 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 that would promote or facilitate the realization of the company's objectives. - ------------------------------------------------------------------------------------------------------------------------------------ Europewide Life SA (f.k.a. Luxembourg The company writes life insurance including CLARIENT Life Insurance SA)* coinsurance and reinsurance. - ------------------------------------------------------------------------------------------------------------------------------------ F&B, Inc. Iowa The company is an insurance agency that places business not written by Farmland Mutual Insurance Company and its affiliates 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 Texas The company is an insurance agency marketing life Agency of Texas, Inc. insurance and annuity products through financial institutions. - ------------------------------------------------------------------------------------------------------------------------------------ Financial Settlement Services Ohio The company is an insurance agency in the business of Agency, Inc. selling structured settlement products. - ------------------------------------------------------------------------------------------------------------------------------------ Four P Finance Company Pennsylvania The company is currently inactive. - ------------------------------------------------------------------------------------------------------------------------------------ Gardiner Point Hospitality LLC Ohio The company holds the assets of a hotel in foreclosure. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore 1990 Limited England and Wales The company is engaged as a general partner in a limited partnership formed to invest in unlisted securities. This company is currently in members' voluntary liquidation. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore 1990 Trustee Limited England and Wales The company is dormant within the meaning of Section 249AA of the Companies Act 1985 of the United Kingdom. This company is currently in members' voluntary liquidation. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Capital Management England and Wales The company is engaged in investment management and Limited* advisory services to business, institutional and private investors. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Distribution Services, Delaware The company is a limited purpose broker-dealer. Inc.* - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Emerging Managers, Delaware The company acquires and holds interests in LLC registered investment advisors 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 Delaware The company operates as a holding company. Management,Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Asset Management Delaware The company acts as a holding company for the Trust* Gartmore group of companies and as a registered investment advisor for registered investment companies. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Investments, Inc.* Delaware The company acts as a holding company and provides other business services for the Gartmore group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Partners* Delaware The partnership is engaged in investment management. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Global Ventures, Inc. Delaware The company acts as a holding company for subsidiaries in the Nationwide group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Group Limited* England and Wales The company is a holding company for 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 England and Wales The company is a general partner in two limited Fund (G.P.) Limited partnerships formed to invest in unlisted securities. The company is currently in members' voluntary dissolution. - ------------------------------------------------------------------------------------------------------------------------------------ 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 of companies in the United Kingdom. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Services Germany The company is engaged in marketing support for GmbH subsidiaries of the Nationwide group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Investment Services England and Wales The company is engaged in investment holding for Limited* subsidiaries of the Nationwide group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ 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) Limited* 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. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Morley & Associates, Inc. Oregon The company brokers or places book-value maintenance agreements (wrap contracts) and guaranteed investment contracts for collective investment trusts and accounts. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Morley Capital Management, Oregon The company is an investment advisor and stable value Inc. money manager. - ------------------------------------------------------------------------------------------------------------------------------------ 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, Scotland The company is a general partner in Scottish Limited Ltd.* Partnership, itself a general partner of Gartmore Direct Fund I Limited Partnership, a private equity investment vehicle. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore No. 2 General Partner, Scotland The company is a general partner in Scottish Limited Ltd.* 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 of 1985 of England and Wales. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Pension Trustees, Ltd. England and Wales Until April 1999, the company acted as a trustee of the Gartmore Pension Fund established by Gartmore Investment Management plc. Gartmore Pension Fund 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 Riverview II, LLC Delaware The company is a holding company for Gartmore Riverview, LLC. - ------------------------------------------------------------------------------------------------------------------------------------ Gartmore Riverview Polyphony Fund Delaware The company invests in limited partnerships and other LLC* entities and retains managers to invest, reinvest and trade in securities and other financial instruments. - ------------------------------------------------------------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Gates, McDonald & Company* Ohio The company provides services to employers for managing workers' 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' compensation and York, Inc. self-insured claims administration services to employers with exposure in New York. - ------------------------------------------------------------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------------------------------------------------------------ GIL 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 of England and Wales. - ------------------------------------------------------------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------------------------------------------------------------ Life REO Holdings, LLC Ohio The company serves as a holding company for foreclosure entities. - ------------------------------------------------------------------------------------------------------------------------------------ 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 This is a limited liability company organized for America, Ltd. profit under the Companies Act of 1948 of England for the purpose of carrying on the business of insurance, reinsurance, indemnity, and guarantee of various kinds. 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 makes residential mortgage loans. Company* - ------------------------------------------------------------------------------------------------------------------------------------ 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 multi-family housing projects LLC throughout the U.S. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Agribusiness Insurance Iowa The company provides property and casualty insurance Company primarily to agricultural businesses. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (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 development activity. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Asset Management England and Wales The company is a holding company for a group engaged Holdings, Limited* 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 Atlantic Insurance Ohio The company writes personal lines residential Company property insurance in the State of Florida. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Capital Mortgage, LLC Ohio This company is a holding company that funds/owns commercial mortgage loans on 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 inactive. Insurance Company - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Assignment Ohio The company acts as an administrator of structured Company settlements. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution Delaware The company is an insurance agency. Distributors Agency, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution New Mexico The company is an insurance agency. Distributors Agency, Inc. of New Mexico - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Institution Massachusetts The company is an insurance agency. Distributors Insurance Agency, Inc. 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 of the United States and Bermuda. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Services Delaware The Trust's sole purpose is to issue and sell certain Capital Trust 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 certain Capital Trust II securities representing individual beneficial interests in the assets of the Trust. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Services, Delaware The company acts primarily as a holding company for Inc.* 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. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Financial Structured Ohio The company captures and reports the results of the Products, LLC structured products business unit. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Foundation* Ohio The company contributes to non-profit activities and projects. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide General Insurance Ohio The company transacts a general insurance business, Company except life insurance, and 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 issues shares of mutual funds. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Holdings, Inc.* Ohio The company is a holding company for the international operations of Nationwide. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Holdings-NGH Brazil The company acts as a holding company for Brasil Participacoes, Ltda. subsidiaries of the Nationwide group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Global Services EIG Luxembourg The company provides shared services to PanEuroLife, Europewide Life SA, Europewide Financial S.A. (f.k.a. Dancia Life S.A.) and Nationwide Global Holdings, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ 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 and casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Insurance Company of Ohio The company transacts general insurance business Florida* except life insurance. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Insurance Management Ohio The company provides management services to Cap Pro Services, Inc. Insurance Agency Services, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ 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 Underwriters surplus 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 Company Delaware The company provides individual life insurance of America** products. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Life and Annuity Ohio The company engages in underwriting life Insurance Company** insurance and granting, purchasing, and disposing of annuities. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Life Insurance Ohio The company provides individual life insurance, group Company* life and health insurance, fixed and variable annuity products, and other life insurance products. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Life Insurance Pennsylvania The company provides individual life insurance and Company of America* group annuity products. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Life Insurance Company Delaware The company insures against personal injury, of Delaware* disability or death resulting from traveling, sickness or other general accidents, and every type of insurance appertaining thereto. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ 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 Maritima Vida E Brazil The company operates as a licensed insurance company Previdencia SA* in the categories of life and unrestricted private pension plans in Brazil. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Mutual Capital, LLC Ohio The company acts as a private equity fund investing (f.k.a. Nationwide Strategic in companies for investment purposes and to create Investment Fund, LLC). strategic opportunities for Nationwide. - ------------------------------------------------------------------------------------------------------------------------------------ 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 Private Equity Fund, LLC Ohio The company invests in private equity funds. - ------------------------------------------------------------------------------------------------------------------------------------ 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 currently inactive. 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 and real estate investment. - ------------------------------------------------------------------------------------------------------------------------------------ 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, marketing Inc. of Alabama and 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, marketing Inc. of Ohio and 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. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (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, Ohio The company performs shared services functions for LLC the Nationwide organization. - ------------------------------------------------------------------------------------------------------------------------------------ Nationwide Services Sp. Z o.o. Poland The company provides services to Nationwide Global Holdings, Inc. in Poland. - ------------------------------------------------------------------------------------------------------------------------------------ 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 for 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 Delaware The company owns and manages contributed securities I, LLC in order to achieve long-term capital appreciation from thecontributed securities and through investments in a portfolio of other equity investments in financial service and other related companies. - ------------------------------------------------------------------------------------------------------------------------------------ NF Reinsurance Ltd.* Bermuda The company serves as a captive reinsurer for Nationwide Life Insurance Company's universal life, term life and annuity business. - ------------------------------------------------------------------------------------------------------------------------------------ NFS Distributors, Inc. Delaware The company acts primarily as a holding company for Nationwide Financial Services, Inc.'s 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 of Nationwide Global Holdings, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ NGH Netherlands B.V. Netherlands The company acts as a holding company for other Nationwide overseas companies. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (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 currently inactive. - ------------------------------------------------------------------------------------------------------------------------------------ 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 that provides specialist advisory services and innovative financial solutions to public and private companies internationally. - ------------------------------------------------------------------------------------------------------------------------------------ Scottsdale Indemnity Company Ohio The company is engaged 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 Corporation Delaware The company is currently inactive. - ------------------------------------------------------------------------------------------------------------------------------------ TBG Advisory Services Corporation California The company is an investment advisor. (d.b.a. TBG Advisors) - ------------------------------------------------------------------------------------------------------------------------------------ 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 life insurance and individual executive estate planning. - ------------------------------------------------------------------------------------------------------------------------------------ TBG Financial Acquisition Delaware The company was formed in order to redomesticate TBG Corporation (n.k.a. TBG Insurance Insurance Services Corporation from California to Services Corporation)* Delaware. On December 23, 2004, TBG Insurance Services Corporation was merged into TBG Financial Acquisition Corporation. The name was changed to "TBG Insurance Services Corporation" on the same day. The company markets and administers executive benefit plans. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ TBG Financial & Insurance California The company 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 & Insurance Services Corporation provides access to institutional insurance investment products. - ------------------------------------------------------------------------------------------------------------------------------------ TBG Financial & Insurance Services Hawaii The corporation consults with corporate clients and Corporation of Hawaii financial institutions on the development and implementation of proprietary, private placement and institutional insurance products. - ------------------------------------------------------------------------------------------------------------------------------------ THI Holdings (Delaware), Inc.* Delaware The company acts as a holding company for certain subsidiaries of the Nationwide group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ The 401(k) Companies, Inc. Texas The company acts as a holding company for certain subsidiaries of the Nationwide group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ The 401(k) Company Texas The company is a third-party administrator providing record-keeping services for 401(k) plans. - ------------------------------------------------------------------------------------------------------------------------------------ Titan Auto Agency, Inc. (d.b.a. Michigan The company is an insurance agency that primarily Arlans Agency) 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. The company is 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 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 grandfathered 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. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ COMPANY STATE/COUNTRY NO. VOTING PRINCIPAL BUSINESS OF SECURITIES ORGANIZATION (SEE ATTACHED CHART UNLESS OTHERWISE INDICATED) - ------------------------------------------------------------------------------------------------------------------------------------ Victoria Financial Corporation Delaware The company acts as a holding company specifically for corporate employees of the Victoria group of companies. - ------------------------------------------------------------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------------------------------------------------------------ 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 Ohio The company is a property and casualty insurance Company 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 Arizona The company underwrites excess and surplus lines Company of property and casualty insurance. - ------------------------------------------------------------------------------------------------------------------------------------ W.H.I. of New York, Inc. New York The company is an insurance agency and operates as an employee agent "storefront" for Titan Indemnity Company in New York. This company is currently inactive. - ------------------------------------------------------------------------------------------------------------------------------------ Whitehall Holdings, Inc. Texas The company acts as a holding company for the Titan group of agencies. - ------------------------------------------------------------------------------------------------------------------------------------ Whitehall Insurance Agency of Texas The company is a Texas licensed insurance agency. Texas, Inc. The company is currently inactive. - ------------------------------------------------------------------------------------------------------------------------------------ Whitehall of Indiana, Inc. (d.b.a. Indiana The company is an insurance agency and operates as an Titan Auto Insurance of Indiana) employee agent "storefront" for Titan Indemnity Company in Indiana. - ------------------------------------------------------------------------------------------------------------------------------------ W.I. of Florida (d.b.a. Titan Auto Florida The company is an insurance agency and operates as an Insurance) employee agent "storefront" for Titan Indemnity Company in Florida. - ------------------------------------------------------------------------------------------------------------------------------------ William J. Lynch and Associates, California The company specializes in the analysis and funding Inc. of corporate benefit liabilities. - ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- 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 VL Separate Account-G 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 VLI Separate Account-7 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: 94,992 | | | ------------- Shares | | | |___| | Casualty-100% | | | 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 | | | | (SIC) | | | | | | | | | | Common Stock: 50,000 | | |___| Common Stock: 30,136 | |___| ------------- Shares | | | | ------------- Shares | | | | | | | | | | | | | | Casualty-100% | | | Casualty-100% | | | | (See Page 2) | | ------------------------------- | | -------------------------------- | | | | ------------------------------- | ---------------------------- | -------------------------------- | | NATIONWIDE | | | NATIONWIDE MANAGEMENT | | | ALLIED | | | INDEMNITY COMPANY | | | SYSTEMS, INC. | | | GROUP, INC. | | | (NW INDEMNITY) | | | | | | (AGI) | | | Common Stock: 28,000 | |___| Common Stock: 100 Shares | | | | |___| ------------- Shares | | | ------------- | |__| Common Stock: 850 Shares | | | | | | | | | ------------- | | | | | | Casualty-100% | | | | | | Casualty-100% | | ---------------------------- | | Casualty-100% | | ------------------------------- | | | (See Page 2) | | | ---------------------------- | | | | | | NATIONWIDE AFFINITY | | -------------------------------- | ------------------------------- | | INSURANCE COMPANY | | | | LONE STAR | | | OF AMERICA | | -------------------------------- | | GENERAL AGENCY, INC. | | | | | | RP&C | | | | | | Common Stock: 500,000 |___| | INTERNATIONAL | | | Common Stock: 1,000 | | | ------------- Shares | | | | |___| ------------- Shares | | | | |___| Common Stock: 1,050 | | | | | | Casualty-100% | | | ------------- Shares | | | | | ---------------------------- | | | | | Casualty-100% | | | | Casualty-21.9% | | ------------------------------- | ---------------------------- | -------------------------------- | || | | NEWHOUSE CAPITAL | | | || | | PARTNERS, LLC | | -------------------------------- | ------------------------------- | | | | | NATIONWIDE CAPITAL | | | COLONIAL COUNTY | | | Casualty-70% |___| | MORTGAGE, LLC | | | MUTUAL INSURANCE | | | | | | | | | COMPANY | | | GGV-19% | |___| Mutual-5% | | | | | | | | | | | | Surplus Debentures: | | | Fire-10% | | | NW Indemnity-95% | | | ------------------- | | ---------------------------- | | | | | | | | -------------------------------- | | Assurance | | ---------------------------- | | | Lone Star | | | | | -------------------------------- | | | | | NATIONWIDE LLOYDS | | | NATIONWIDE INSURANCE | | ------------------------------- | | |___| | COMPANY OF FLORIDA | | | | A TEXAS LLOYDS |___| | | | ------------------------------- | | | |___| Common Stock: 10,000 | | | NATIONWIDE SERVICES | | | | | | ------------ Shares | | | COMPANY, LLC | | | | | | | | | | | ---------------------------- | | Casualty-100% | | | Single Member Limited | | | | | |---| Liability Company | | ---------------------------- | -------------------------------- | | | | | THI HOLDINGS | | | | Casualty-100% | | | DELAWARE, INC. | | -------------------------------- | ------------------------------- | | (THI) | | | NATIONWIDE CREDIT | | | | | | | ENHANCEMENT INSURANCE | | ------------------------------- | Common Stock: 100 Shares | |___| COMPANY | | | AMERICAN MARINE | | | | | | | | UNDERWRITERS, INC. | | Casualty-100% | | | Casualty-100% | | | | | | | | | | | Common Stock: 20 Shares | | (See page 3) | | -------------------------------- |___| ------------- | ---------------------------- | | | | | Casualty-100% | | -------------------------------- | | | | | ------------------------------- | | BLUESPARK, LLC | |---| | | | Casualty-100% | ---------------------------- | | | | NATIONWIDE ATLANTIC | | -------------------------------- | INSURANCE COMPANY | | | |___| | 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. | | | | | | ------------- Shares | | | Common Stock: 120,000 SHARES | |___| Common Stock: 100 Shares | | | | | | ------------- | | | ------------- | | | | | | | | | | | | | | | Fire-100% | | | | | | | | | | | | Casualty-100% | | | Casualty 95.2% | | -------------------------------- | -------------------------------- | | Fire 4.8% | | | | | | | | -------------------------------- | | (See Page 4) | | | | | | -------------------------------- | | | | | | | | NATIONWIDE | | -------------------------------- | | | ARENA LLC | | | ALLNATIONS, INC. | | |---| | | | Common Stock: 12,033 Shares | | -------------------------------- | | | | | ------------- | | | | | | | | | | | | NATIONWIDE | | | Casualty-90% | | | Casualty-16.5% | | | PRIVATE EQUITY | | | | |___| Fire-16.5% |__|--| FUND, LLC | | -------------------------------- | | Preferred Stock: 1,466 Shares| | | | | | ---------------- | | Casualty-100% | | -------------------------------- | | | | | | | 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 | |___| Single Member Limited | | | MUTUAL CAPITAL,LLC | |___| Liability Company | | | | | | |---| Single Member Limited | | | | | Liability Company | -------------------------------- | | | Casualty-100% | | | -------------------------------- Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2005
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 | | AMCO | | ADVANTAGE MORTGAGE | | INSURANCE COMPANY | | COMPANY (NAMC) | | (AMCO) | | | ___| | |Common Stock: 333,837 | | | Common Stock: 300,000 | |------------ Shares | | | ------------- Shares | | | | | | |AGI-70.09% | | | AGI-100% | |AMCO-17.21% | | ---------------------------- |Allied P&C-8.47% | | |Depositors-4.23% | | ---------------------------- ----------------------------- | | ALLIED | | | | GENERAL AGENCY | | | | COMPANY | | |___| | ----------------------------- | | Common Stock: 5,000 | | AGMC | | | ------------- Shares | | REINSURANCE, LTD. | | | | | | | | AMCO-100% | | Common Stock: 11,000 | | ---------------------------- | ------------- Shares | | | | | ---------------------------- | NAMC-100% | | | | ----------------------------- | | ALLIED TEXAS | | | AGENCY, INC. | |___| | | | | | | AMCO-100% | | | | | | | | ---------------------------- | | ---------------------------- ---------------------------- | | CALFARM INSURANCE | | CAL-AG INSURANCE | | | AGENCY | | SERVICES, INC. | | | | | | |___| Common Stock: 1,000 |___| Common Stock: 100 | | ------------- Shares | | ------------- Shares | | | | | | AMCO-100% | | CalFarm Insurance | | | | Agency-100% | ---------------------------- ----------------------------
(right) ------------------------------------------ | | | | | | _______________| NATIONWIDE MUTUAL | _______________| FIRE INSURANCE COMPANY | | (FIRE) | | (See Page 1) | | | | | ------------------------------------------ _____________________________________ | | ---------------------------- | SCOTTSDALE | | INSURANCE COMPANY | | (SIC) | | | | Common Stock: 30,136 | | ------------- Shares | | | | Casualty-100% | ---------------------------- | | | |____________________________________________________________ | | | | | | | | | ---------------------------- ---------------------------- | | SCOTTSDALE | | VETERINARY PET | | | SURPLUS LINES | | SERVICES, INC. | | | INSURANCE COMPANY | | (VPSI) | |___| | | | | | Common Stock: 10,000 | | Common Stock: 5,645,527 | | | ------------- Shares | | ------------- Shares | | | | | | | | SIC-100% | ___| SIC-60.5% | | ---------------------------- | ---------------------------- | | | ---------------------------- | ---------------------------- | | 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 March 31, 2005
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: 100 Shares| |------------ | | | | | |Casualty-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 March 31, 2005 Page 3 _______________________________________________________________________________ | | | | | | | | | | | | | | --------------------------------- --------------------------------- | | | NATIONWIDE TOWARZYSTWO | | NGH LUXEMBOURG S.a.r.L | | | | UBEZPIECZEN NA ZYCIE SA | | (LUX SA) | | | | | | | | | |Common Stock: 17,400,000 Shares| ___|Common Stock: 225,739 Shares |_| | |------------ | | |------------ | | | | | | |NGH-64.27% | | | |NGH-100% | | |NETHER-35.73% | | | --------------------------------- | --------------------------------- | | | | | --------------------------------- | --------------------------------- | | | | | | NGH UK, LTD. | | | | NATIONWIDE | | | | | | | FINANCIAL SP. Z O.O. | | | | | |___| | | | | | | |Common Stock: 25,700 Shares | |___| | |- | |------------ | | | | | | | | | | | | | | | | |LUX SA-100% | | | |NGH-100% | | --------------------------------- | | --------------------------------- | | | | | | --------------------------------- | --------------------------------- | | | SIAM AR-NA-KHET | | | GRUPO VIDA PARTICIPACOES | | | | COMPANY LTD. (SIAM) | | | LTDA (GRUPO) | | |---| | | | | | | | |___| | | | | | | |_| | | | | | | |NGH-48.99% | | | | | --------------------------------- | | | | | |LUX SA-99.99% | | --------------------------------- | |NGH-.01% | |- | PANEUROLIFE (PEL) | | --------------------------------- | | | | | | |Common Stock: 1,300,000 Shares| | | | |------------ | | --------------------------------- | | |__| | NATIONWIDE MARITIMA VIDA e | | | | |___| PREVIDENCIA SA | | |LUX SA-99.99% | | | | | |NGH-.01% | | |Common Stock: 1,121,362,977 | | --------------------------------- | |------------ Shares | | | | | | | | | | | | | | | | | | | |LUX SA-.000003% | | --------------------------------- | |NGH BRASIL-99.45% | |- | VERTBOIS, SA | | --------------------------------- | | | | | | | | | | | | --------------------------------- | | | | | EUROPEWIDE LIFE SA | | | | | | (EURO) | | | | | | | | | | | | | | | PEL-99.99% | | | |_| | LUX SA-.01% | |___| | | --------------------------------- | | | | | |LUX SA-99.99% | | | |NGH-.01% | | | --------------------------------- | | | | | | | | | --------------------------------- | --------------------------------- | | NATIONWIDE GLOBAL | | | EUROPEWIDE FINANCIAL SA | | | SERVICES EIG | | | (EURO FIN) | | | | | | | | | | |___| |_| |PEL-25% | | | |EURO FIN-25% | | | |EURO-25% |______|LUX SA-99.99% | |BRANCH-25% |______|NGH-.01% | --------------------------------- --------------------------------- (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: 7,000,000 Shares| |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. | | | (NETHER) | |___| | | |NW Corp.-99.84% | | |-------- | | | | | |NGH-.16% | | --------------------------------- | --------------------------------- | | NATIONWIDE | | | SERVICES SP. Z O.O. | | | | | |Common Stock: 24,906 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 | | FINANCIAL SETTLEMENT | | GATES, MCDONALD | | MANAGEMENT TRUST | | SERVICES AGENCY, INC. | | & COMPANY (GATES) | | (GGAMT) | | | | | | | |Common Stock: 1,500 Shares | _____|Common Stock: 254 Shares| | | |------------ | | |------------ | | | | | | | | |NW Corp-100% | | | | | | | (See Page 7) | |NW Corp.-100% | | |NW Corp.-100% | --------------------------------- ------------------------------ | --------------------------------- | | | --------------------------------- | | MEDPROSOLUTIONS, INC. | | | | | | | |____| | | | | | | | | |Gates-100% | | --------------------------------- | | | --------------------------------- | | GATES, MCDONALD & | | | COMPANY OF NEW YORK, INC. | | | | |____|Common Stock: 3 Shares | | |------------ | | | | | | | | |Gates-100% | | --------------------------------- | | --------------------------------- | | GATES, MCDONALD & | | | COMPANY OF NEVADA | | | | | |Common Stock: 40 Shares| |____|------------ | | | | | | | | |Gates-100% | | --------------------------------- | | --------------------------------- | | GATESMCDONALD | | | HEALTH PLUS, INC. | | | | |____|Common Stock: 200 Shares| |------------ | | | |Gates-100% | --------------------------------- Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2005
Page 4 (left side) ------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | |________________________ |Guaranty Fund |________________________ |Certificate | | | |Casualty | | (See Page 1) | -------------------- __________________________________________________________________________________________________ | | | ------------------------------ ---------------------------------- | ----------------------------- | TBG INSURANCE | | NATIONWIDE LIFE INSURANCE | | | NATIONWIDE FINANCIAL | | SERVICES CORP. | | COMPANY (NW LIFE) | | | SERVICES CAPITAL TRUST | | | | | | | | ___| | ___| Common Stock: 3,814,779 Shares | |___| | | | | | | ------------ | | | | | | | | | | | | Preferred Stock | | | | | | | | | --------------- | | |NFS-63% | | | NFS-100% | | | NFS-100% | | ------------------------------ | ---------------------------------- | ----------------------------- | | | | ------------------------------ | | ----------------------------- | | TBG AVIATION, LLC | | ---------------------------------- | | CAPITAL PRO HOLDING, INC. | | | | | | NATIONWIDE LIFE AND | | | (CAP PRO) | | | | | | ANNUITY INSURANCE COMPANY | | | | | | | | | | | | | |__| | |__| Common Stock: 66,000 Shares | |___| | | | | | | ------------ | | | | | | | | | | | | |TBG-100% | | | NW Life-100% | | NFS-63% | | ------------------------------ | ---------------------------------- ----------------------------- | | | | ------------------------------ | ---------------------------------- ----------------------------- | | TBG DANCO INSURANCE | | | NATIONWIDE INVESTMENT | | CAPITAL PROFESSIONAL | | | COMPANY | | | SERVICES CORPORATION | | ADVISORS, INC. | | | | | | | | (CPAI) | |__| | |__| Common Stock: 5,000 Shares | ___| | | | | | | ------------ | | | | | | | | | | | | | | | | | | | | | | | |TBG-100% | | | NW Life-100% | | | CAP PRO-100% | | ------------------------------ | ---------------------------------- | ----------------------------- | | | | ------------------------------ | | ----------------------------- | | TBG FINANCIAL & INSURANCE | | ---------------------------------- | | CAP PRO INSURANCE | | | SERVICES CORPORATION | | | NATIONWIDE FINANCIAL | | | AGENCY SERVICES, INC. | |__| | |__| ASSIGNMENT COMPANY | | | | | | | | | | |___| | | | | | | NW LIFE-100% | | | | | | | | ---------------------------------- | | | | | | | | | | | |TBG-100% | | ---------------------------------- | | CPAI-100% | | ------------------------------ | | NATIONWIDE PROPERTIES LTD. | | ----------------------------- | | | | | | ------------------------------ | | Units: | | ----------------------------- | | TBG FINANCIAL & INSURANCE | |__| ----- | | | CAP PRO BROKERAGE | | | SERVICES CORPORATION | | | NW LIFE-97.6% | | | SERVICES, INC. | | | OF HAWAII | | | Casualty-2.4% | | | | |__| | | ---------------------------------- |___| | | | | | | | | | | | | ---------------------------------- | | | | | | | | NATIONWIDE COMMUNITY | | | | | |TBG-100% | | | DEVELOPMENT CORP., LLC | | | CPAI-100% | | ------------------------------ | | | | ----------------------------- | |--| Units: | | | ------------------------------ | | ----- | | ----------------------------- | | WILLIAM J. LYNCH & | | | NW LIFE-67% | | | CAP PRO ADVISORY | | | ASSOCIATES, INC. | | | NW Indemnity-33% | | | SERVICES , INC. | | | | | ---------------------------------- | | | | | | | | | | |__| | | ---------------------------------- |___| | | | | | | NATIONWIDE AFFORDABLE | | | | | | | | HOUSING, LLC | | | | |TBG-100% | |--| | | CPAI-100% | | ------------------------------ | | NW Life-45% | ----------------------------- | | | NW Indemnity-45% | | | ---------------------------------- | ------------------------------ | | | TBG ADVISORY | | | | SERVICES CORPORATION | | | | | | |__| | | | | | | | | | | | |TBG-100% | | ------------------------------ | | ------------------------------ | ---------------------------------- ---------------------------------- | TEAMSTAFF,INC. | | | LIFE REO HOLDINGS LLC | | GARDINER POINT | | | | | (REO) | | HOSPITALITY LLC | | | | | | | | | |-|--| |---| | | Common Stock: 15,710,000 | | | | | | ------------ Shares | | | | | | | | | | | |NW Life-14% | | NW LIFE-100% | | REO-100% | ------------------------------ ---------------------------------- ----------------------------------
(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% | ------------------------------------ | | ___________________________________________________________________________________________________________________________________ | | | | - --------------------------- ----------------------------- ---------------------------- --------------------------------- | REGISTERED INVESTMENT | | NATIONWIDE TRUST | | NFS DISTRIBUTORS, INC. | | NATIONWIDE FINANCIAL | | ADVISORS SERVICES, INC. | | COMPANY, FSB | | (NFSDI) | | SERVICES CAPITAL TRUST II | | | | | | | | | | | | Common Stock: 2,800,000 | | | | | | | | ------------ Shares | | | | | | | | | | | | | | | | | | | | | | NFS-100% | | 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. | | | | |_| | | Common Stock: 10,000 Shares | | | | ------------ | | | | | | | | | | | | NFIDAI-100% | | | --------------------------------- | | | | | ----------------------------- -------------------------------- | | | | | 401(k) INVESTMENT | | | | | | SERVICES, INC. | | | | FINANCIAL HORIZONS | | | | |___| DISTRIBUTORS | |Common Stock: 1,000,000 Shares|___| |___| AGENCY OF OHIO, INC | |------------- | | | | | | | | | | NFIDAI-100% | |401(k)-100% | | | ----------------------------- -------------------------------- | | --------------------------------- | ----------------------------- -------------------------------- | | NATIONWIDE FINANCIAL | | | | | 401(k) INVESTMENT | | | INSTITUTION DISTRIBUTORS | | | | | ADVISORS, INC. | | |INSURANCE AGENCY, INC. OF MASS.| | | FINANCIAL HORIZONS | | | | | Common Stock: 100 Shares |_|___| DISTRIBUTORS | |Common Stock: 1,000 Shares |___| | ------------ | |___| AGENCY OF TEXAS, INC | |------------- | | | | | | | | | | | NFIDAI-100% | | | | |401(k)-100% | | --------------------------------- | ----------------------------- -------------------------------- | | | --------------------------------- | -------------------------------- | | NATIONWIDE FINANCIAL | | | THE 401(k) COMPANY | | | INSTITUTION DISTRIBUTORS | | | | | | AGENCY, INC. OF NEW MEXICO | | |Common Stock: 855,000 Shares | | | Common Stock: 100 Shares |_| |------------- |___| | ------------ | | | | | | | | NFIDAI-100% | |401(k)-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% | -------------------------------- ----------------------------- | -------------------------------- | | | | -------------------------------- -------------------------------- | ----------------------------- | | NF REINSURANCE, LTD. | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF | | | Common Stock: 250,000 Shares | | ALABAMA | | | NEW MEXICO | |-- | ------------ | | Common Stock: 10,000 Shares |_|_| Common Stock: 1,000 Shares| | | | | ------------ | | | ------------ | | | | | | | | | | | NFS-100% | | NRS-100% | | | NRS-100% | | -------------------------------- -------------------------------- | ----------------------------- | | | -------------------------------- -------------------------------- | ----------------------------- | | NATIONWIDE INSURANCE | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | | MANAGEMENT SERVICES, INC. | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF | | | | | ARIZONA | | | SO. DAKOTA | |-- | | | Common Stock: 1,000 Shares |_|_| Common Stock: 1,000 Shares| | | | ------------ | | | ------------ | | | | | | | | | NFS-100% | | NRS-100% | | | NRS-100% | -------------------------------- -------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF | | ARKANSAS | | | WYOMING | | Common Stock: 50,000 Shares |_|_| Common Stock: 500 Shares | | ------------ | | | ------------ | | | | | | | NRS-100% | | | NRS-100% | -------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | | | SOLUTIONS, INS. | | | | | AGENCY, INC. | |_| NATIONWIDE RETIREMENT | | Common Stock: 1,000 Shares |_|_| SOLUTIONS, INC. OF | | ------------ | | | OHIO | | | | | | | NRS-100% | | | | -------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | | | SOLUTIONS, INC. OF | | | | | MONTANA | | | NATIONWIDE RETIREMENT | | | |_| SOLUTIONS, INC. OF | | Common Stock: 500 Shares |_|_| OKLAHOMA | | ------------ | | | | | | | | | | NRS-100% | | | | ------------------------------- | ----------------------------- | -------------------------------- | ----------------------------- | NATIONWIDE RETIREMENT | | | | | SOLUTIONS, INC. OF | | | | | NEVADA | | | NATIONWIDE RETIREMENT | | Common Stock: 1,000 Shares | |_| SOLUTIONS, INC. OF | | ------------ |_|_| TEXAS | | | | | | NRS-100% | | | -------------------------------- ----------------------------- Subsidiary Companies -- Solid Line Contractual Association -- Double Line Limited Liability Company -- Dotted Line March 31, 2005
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 March 31, 2005 Page 6 (left side) --------------------- | FARMLAND MUTUAL | | INSURANCE COMPANY | | | |Guaranty Fund | |------------- |_______________________ |Certificate |_______________________ |----------- | | | |Casualty | | (See Page 1) | --------------------- _______________________________ | _____________ --------------------------- | | | AUDENSTAR LIMITED | --------------------------- | | (AL) | | NATIONWIDE ASSET | | | |__ | MANAGEMENT HOLDINGS, LTD. | | | | | | (NAMHL) | | | | | | | | | GGL - 100% | | | | | --------------------------- | | GGAMT - 100% | | | | --------------------------- | --------------------------- | | | | RIVERVIEW INTERNATIONAL | | --------------------------- | | GROUP, INC. | | | GARTMORE GROUP LTD. | | | (RIG) | | | (GGL) | | | |__|__| | | | | | | | | GGL - 79% | __| NAMHL - 83% | | | AL - 21% | | --------------------------- | --------------------------- | | | | | --------------------------- | --------------------------- | | NATIONWIDE UK HOLDING | | |GARTMORE RIVERVIEW II, LLC | | | COMPANY, LTD. | | | (RIVER II) | | | (NUKHCL) | | | | | | | | | | | | | | | RIG - 100% | | | GGL - 100% | | --------------------------- | --------------------------- | | | | | | | --------------------------- | | | | ASSET MANAGEMENT | | --------------------------- | | HOLDINGS PLC | | | GARTMORE RIVERVIEW, LLC | | _| (AMH) | | | (RIVER) | || | | | | | || | | | | | || | NUKHCL - 100% | | | | || --------------------------- | | RIVER II-100% | || | | --------------------------- || --------------------------- | | || | GARTMORE INVESTMENT | | | || | MANAGEMENT PLC | | | ||_| (GGI) |__|__ --------------------------- | | | | | GARTMORE RIVERVIEW | | | AMH - 99.99% | | | POLYPHONY, LLC | | | GNL - .01% | | | | | --------------------------- | | | | | | River - .04% | | | | Casualty - 80.14% | | | | Fire - 19.82% | | | --------------------------- | | | | | | | |__ | | | --------------------------- | | GARTMORE GLOBAL | | | INVESTMENTS, INC. | |__| (GGI) | | | | | | (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% | *In Members Voluntary Liquidation -------------------------- -------------------------- | 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 - 0.01% | | -------------------------- -------------------------- | | | -------------------------- -------------------------- | | 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 March 31, 2005
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 | ____________________________________________________________________| ------------ | | | | GGL-100% | | | | Preferred Stock: 500,000 Shares | | | | --------------- | | | | GGL-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% | ---------------------------------
(right side) ------------------------------------- | NATIONWIDE MUTUAL | __________| FIRE INSURANCE COMPANY | __________| (FIRE) | | (See Page 1) | ------------------------------------- ------------------------------ ------------------------- ------------------------------------ | GARTMORE GLOBAL ASSET | | GGI MGT LLC | | NEWHOUSE SPECIAL | | MANAGEMENT, INC. | | (GGIMGT) | | SITUATIONS FUND I, LLC | ___________________________________| (GGAMI) |---| |---| | | | | | | | | | | | | GGIMGT-10%(common units) | | GSA-100% | | GGAMI-100% | | GGV-75%(preferred units) | ------------------------------ ------------------------ ------------------------------------ | ------------------------------------- | ------------------------------------- ------------------------------------ | 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 March 31, 2005
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 or proceeding; o any threatened, pending or completed investigative action or proceeding; , The indemnification will be for actual and reasonable expenses, including attorney's fees, judgments, fines and amounts paid in settlement by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the Ohio's General Corporation Law. Nationwide has been informed that in the opinion of the Securities and Exchange Commission the indemnification of directors, officers or persons controlling Nationwide for liabilities arising under the Securities Act of 1933 ("Act") is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by a director, officer or controlling person in connection with the securities being registered, the registrant will submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act. Nationwide and the directors, officers and/or controlling persons will be governed by the final adjudication of such issue. Nationwide will not be required to seek the court's determination if, in the opinion of Nationwide's counsel, the matter has been settled by controlling precedent. However, the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding is permitted Item 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 VL Separate Account-G Nationwide Variable Account-4 Nationwide VLI Separate Account-2 Nationwide Variable Account-5 Nationwide VLI Separate Account-3 Nationwide Variable Account-7 Nationwide VLI Separate Account-5 Nationwide Variable Account-8 Nationwide VLI Separate Account-6 Nationwide Variable Account-9 Nationwide VLI Separate Account-7 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: Mark D. Phelan, Chairman of the Board Rhodes B. Baker, Director and President William G. Goslee, Jr., Senior Vice President M. Eileen Kennedy, Director and Senior Vice President and Treasurer Thomas E. Barnes, Vice President and Secretary 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 ----------------------------- ------------------------- ----------------------- ----------------- ------------------- ----------------------------- ------------------------- ----------------------- ----------------- ------------------- Nationwide Investment N/A N/A N/A N/A Services Corporation ----------------------------- ------------------------- ----------------------- ----------------- -------------------
Item 31. LOCATION OF ACCOUNTS AND RECORDS M. Eileen Kennedy 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 18th day of April, 2005. NATIONWIDE VLI SEPARATE ACCOUNT-4 ----------------------------------------- (Registrant) NATIONWIDE LIFE INSURANCE COMPANY ----------------------------------------- (Depositor) By: /s/ JAMIE RUFF CASTO, ESQ. ----------------------------------------- Jamie Ruff Casto, 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 18th day of April, 2005. W. G. JURGENSEN - ------------------------------------------------------------------------- W. G. Jurgensen, Director and Chief Executive Officer ARDEN L. SHISLER - ------------------------------------------------------------------------- Arden L. Shisler, Chairman of the Board and President JOSEPH A. ALUTTO - ------------------------------------------------------------------------- Joseph A. Alutto, Director JAMES G. BROCKSMITH, JR. - ------------------------------------------------------------------------- James G. Brocksmith, Jr., Director KEITH W. ECKEL - ------------------------------------------------------------------------- Keith W. Eckel, Director LYDIA M. MARSHALL - ------------------------------------------------------------------------- Lydia M. Marshall, Director DONALD L. MCWHORTER - ------------------------------------------------------------------------- Donald L. McWhorter, Director MARTHA JAMES MILLER DE LOMBERA - ------------------------------------------------------------------------- Martha James Miller de Lombera, Director DAVID O. MILLER - ------------------------------------------------------------------------- David O. Miller, Director JAMES F. PATTERSON - ------------------------------------------------------------------------- James F. Patterson, Director GERALD D. PROTHRO - ------------------------------------------------------------------------- Gerald D. Prothro, Director ALEX SHUMATE - ------------------------------------------------------------------------- Alex Shumate, Director By /s/ JAMIE RUFF CASTO ------------------------------------------------------ Jamie Ruff Casto Attorney-in-Fact EX-99.N 3 exhibitn.txt CONSENT CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors of Nationwide Life Insurance Company and Contract Owners of Nationwide VLI Separate Account - 4: We consent to the use of our reports for Nationwide VLI Separate Account-4 dated March 4, 2005 and for Nationwide Life Insurance Company and subsidiaries dated March 1, 2005, included herein, and to the reference to our firm under the heading "Services" in the Statement of Additional Information (File No. 333-83010). Our report for Nationwide Life Insurance Company and subsidiaries refers to the adoption of the American Institute of Certified Public Accountants' Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Separate Accounts in 2004. KPMG LLP Columbus, Ohio April 18, 2005 -----END PRIVACY-ENHANCED MESSAGE-----