-----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, DiU3zePTSYqOBoC1de203KhekLng4TZeZcP7pW9+dlJrDy0Gbh56xdO8telk4qiS v+6BjFFOBh8c6oEnEk7gWg== 0001190903-05-000963.txt : 20051107 0001190903-05-000963.hdr.sgml : 20051107 20051107142106 ACCESSION NUMBER: 0001190903-05-000963 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20051107 DATE AS OF CHANGE: 20051107 EFFECTIVENESS DATE: 20051107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE VL SEPARATE ACCOUNT C CENTRAL INDEX KEY: 0001044822 IRS NUMBER: 311000740 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-43639 FILM NUMBER: 051182938 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 colifuturenlaicpea18.txt CVUL FUTURE NLAIC ================================================================================ 33' Act File No. 333-43639 40' Act File No. 811-8351 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. 18 |X| and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_| AMENDMENT NO. 18 |X| (Check appropriate box or boxes.) NATIONWIDE VL SEPARATE ACCOUNT-C (Exact Name of Registrant) NATIONWIDE LIFE AND ANNUITY 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 THOMAS E. BARNES, ESQ. SECRETARY ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215-2220 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: NOVEMBER 7, 2005 It is proposed that this filing will become effective (check appropriate box) |_| Immediately upon filing pursuant to paragraph (b) |X| On November 7, 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. ================================================================================ Nationwide Life Insurance Company: Nationwide Life and Annuity Insurance Company o Nationwide VLI Separate Account-4 o Nationwide VL Separate Account-C Prospectus supplement dated November 7, 2005 to Prospectus dated May 1, 2005 - -------------------------------------------------------------------------------- This supplement updates certain information contained in your prospectus. Please read it and keep it with your prospectus for future reference. - -------------------------------------------------------------------------------- 1. EFFECTIVE FOR APPLICATIONS SIGNED ON OR AFTER JANUARY 1, 2006, THE COST OF INSURANCE CHARGE, THE MORTALITY AND EXPENSE RISK CHARGE, AND THE ADDITIONAL (INSURANCE) PROTECTION RIDER CHARGE IN THE "PERIODIC CHARGES OTHER THAN SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES" TABLE ARE AMENDED AS FOLLOWS: - -------------------------------------------------------------------------------- PERIODIC CHARGES OTHER THAN SUB-ACCOUNT PORTFOLIO OPERATING EXPENSES
================================================================================ Charge When Charge Is Deducted Amount ------ ----------------------- ------- - -------------------------------------- ---------------------------- ---------------------------------------------------------------- COST OF INSURANCE(4), (5) Monthly Minimum Maximum Representative (6) - ------------------------------------- Representative - For An Issue Age 40, Non-tobacco, Tenth Policy Year, Specified Amount $250,000 - -------------------------------------- ---------------------------- ----------------------- ----------------- ---------------------- $0.03 per month $83.33 per $0.52 per month month - -------------------------------------- ---------------------------- ----------------------- ----------------- ---------------------- Per $1,000 Of Net Amount at Risk - Proportionately From Your Chosen Variable And Fixed Investment Options - -------------------------------------- ---------------------------- -------------------------------- ------------------------------- MORTALITY AND Daily, Based on an Annual Maximum Guaranteed Currently(7) EXPENSE RISK Effective Rate - -------------------------------------- ---------------------------- -------------------------------- ------------------------------- 0.75% of daily net assets 0.25% of daily net assets - -------------------------------------- ---------------------------- -------------------------------- ------------------------------- Proportionately From Your Chosen Variable Investment Options - -------------------------------------- ---------------------------- --------------------- -------------------- --------------------- ADDITIONAL (INSURANCE) PROTECTION Monthly Minimum Maximum Representative(12) RIDER (9), (10), (11) Representative - For An Issue Age 40, Non-tobacco, Tenth Policy Year, Specified Amount $250,000 - -------------------------------------- ---------------------------- --------------------- -------------------- --------------------- $0.01 per month $83.33 per month $0.20 per month - -------------------------------------- ---------------------------- ---------------------------------------------------------------- Per $1,000 Of Additional Protection Proportionately From Your Chosen Variable And Fixed Investment Options - -------------------------------------- ---------------------------- ---------------------------------------------------------------- (4) The charge varies by: the Insured's age; underwriting class; the year from the Policy Date; and Specified Amount. (5) The cost of insurance rate will increase over time, but will never exceed the Maximum indicated in the table. Ask for a policy illustration or see the Policy Data Page for more information on your cost. (6) This amount may not be representative of your cost. (7) Currently, the Mortality and Expense Risk charge declines over time, as follows:
---------------------------- --------------------------- ---------------------------- --------------------------- Charge for policy years 1-4 Charge for policy years Charge for policy years Charge for policy years 5-15 16-20 21+ ---------------------------- --------------------------- ---------------------------- --------------------------- 0.25% of daily net assets 0.20% of daily net assets 0.10% of daily net assets 0.10% of daily net assets ---------------------------- --------------------------- ---------------------------- ---------------------------
(9) The charge varies by: the Insured's age; underwriting class; the year from the Policy Date; and Specified Amount. (10) Ask for a policy illustration, or see the Policy Data Page, for more information your cost. (11) The continuation of the rider is contingent on the policy being In Force. (12) This amount may not be representative of your cost. 2. THE "PREMIUM LOAD (CHARGE)" PROVISION OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS: - -------------------------------------------------------------------------------- PREMIUM LOAD (CHARGE This charge partially recoups sales expenses and premium taxes. After this charge is deducted, the remaining premium is invested in the investment options you elect. The Premium load is calculated based on the policy's target premium, which is determined in accordance with SEC rules and regulations. The target premium is a specified percentage of the maximum Premium allowed under the Code to qualify the policy as life insurance. Your policy data page indicates your specific target premium. The premium ) load calculation applicable to your policy depends on the date that you applied for or purchased the policy, and the total premium paid to the policy in the first policy year (the "First Year Premium"). Premium Load Applicable To Policies With Applications Signed On Or After January 1, 2006
PREMIUM LOAD FOR POLICIES WITH LESS PREMIUM LOAD FOR POLICIES WITH THAN $500,000 IN FIRST YEAR PREMIUM POLICY YEAR $500,000 OR MORE IN FIRST YEAR (PER POLICY OWNER) PREMIUM (PER POLICY OWNER) 8.5% of Premium payments up to and 1 7% of Premium payments up to and including target premium including target premium PLUS PLUS 5% of Premium payments in excess of 4% of Premium payments in excess of target premium target premium 2 6% of Premium payments up to and including target premium PLUS 3% of Premium payments in excess of target premium 3 5% of Premium payments up to and including target premium PLUS 2% of Premium payments in excess of target premium 4 4% of Premium payments up to and including target premium PLUS 2% of Premium payments in excess of target premium 5 3% of Premium payments up to and including target premium PLUS 2% of Premium payments in excess of target premium 6 2% of Premium payments 7 5.5% of Premium payments up to 8 and including target premium PLUS 3.5% of Premium payments in excess of target premium 9 10 3.5% of Premium payments 11 +
- -------- --------------------------------------- - -------- --------------------------------------- PREMIUM LOAD (CHARGE) (CONTINUED) Premium Load Applicable To Policies Issued On Or After September 9, 2002 With Applications Signed Before January 1, 2006
PREMIUM LOAD FOR POLICIES WITH LESS PREMIUM LOAD FOR POLICIES WITH THAN $500,000 IN FIRST YEAR PREMIUM $500,000 OR MORE IN (PER POLICY OWNER) POLICY YEAR FIRST YEAR PREMIUM (PER POLICY OWNER) 9% of Premium payments up to and 1 9% of Premium payments for the base including target premium 2 (non-rider) portion of the Specified PLUS 3 Amount up to and including target premium 7% of Premium payments in excess 4 of target premium 5 PLUS 6.5% of Premium payments for the base (non-rider) portion of the Specified Amount in excess of target premium PLUS [3.29% - (A x B)] of Premium payments for the rider portion of the Specified Amount, where A = 1.29% of the Premium payments allocable to the rider portion of the Specified Amount; and B = the ratio of the rider portion of the Specified Amount to the total Specified Amount 6 3.5% of Premium payments 7 5.5% of Premium payments 8 9 10 3.5% of Premium payments 11 + 2% of Premium payments
- -------------------------------------------------------------------------------- Premium Load Applicable To Policies Issued Prior To September 9, 2002 POLICY YEAR PREMIUM LOAD FOR ALL POLICIES 1 9% of Premium payments for the base (non-rider) portion of the 2 Specified Amount up to and including target premium 3 PLUS 4 6.5% of Premium payments for the base (non-rider) portion of the 5 Specified Amount in excess of target premium 6 PLUS 7 6.5% of Premium payments for the rider portion of the Specified Amount 8+ 3.5% of Premium payments --------------------------------------------------------------------- 3. THE "MORTALITY AND EXPENSE RISK" PROVISION OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS: - -------------------------------------------------------------------------------- MORTALITY AND EXPENSE RISK The charge compensates us for assuming risks associated with mortality and expense costs, and we may profit from it. The mortality risk is that the Insured does not live as long as expected. The expense risk is that the costs of issuing and administering the policy are more than expected. This charge is guaranteed not to exceed 0.75% of the policy's Cash Value, on an annualized basis. The current charge, which applies to policies with applications signed on or after January 1, 2006, declines over time, as follows:
Charge for Charge for Charge for policy years 1-4 policy years 5-15 policy years 16+ 0.25% of daily net assets 0.20% of daily net assets 0.10% of daily net assets
- ---------------------------- ---------------------------- MORTALITY AND EXPENSE RISK A separate mortality and expense risk charge schedule applies to policies with (CONTINUED) applications signed before January 1, 2006, as follows:
Charge for Charge for Charge for policy years 1-4 policy years 5-20 policy years 21+ 0.40% of daily net assets 0.25% of daily net assets 0.10% of daily net assets
- -------------------------------------------------------------------------------- 4. THE "LEGAL PROCEEDINGS" PROVISION OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS: - ---------------------------- --------------------------------------------------- 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 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. On April 25, 2005, Nationwide filed a motion to dismiss. In response, on May 13, 2005, the plaintiff filed a First Amended Complaint purporting to represent, with certain exceptions, a class of all persons who held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing or stale price trading activity. The First Amended Complaint purports to disclaim, with respect to market timing or stale price trading in Nationwide's annuities sub-accounts, any allegation based on Nationwide's untrue statement, failure to disclose any material fact, or usage of any manipulative or deceptive device or contrivance in connection with any class member's purchases or sales of Nationwide annuities or units in annuities sub-accounts. The plaintiff claims, in the alternative, that if Nationwide is found with respect to market timing or stale price trading in its annuities sub-accounts, to have made any untrue statement, to have failed to disclose any material fact or to have used or employed any manipulative or deceptive device or contrivance, then the plaintiff purports to represent a class, with certain exceptions, of all persons who, prior to Nationwide's untrue statement, omission of material fact, use or employment of any manipulative or deceptive device or contrivance, held (through their ownership of an Nationwide annuity or insurance product) units of any Nationwide sub-account invested in mutual funds that included foreign securities in their portfolios and that experienced market timing activity. The First Amended Complaint alleges common law negligence and seeks to recover damages not to exceed $75,000 per plaintiff or class member, including all compensatory damages and costs. On June 24, 2005, Nationwide filed a motion to dismiss the First Amended Complaint. Nationwide intends to defend this lawsuit vigorously. 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 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 flied its answer on March 23, 2005. 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 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 The general distributor, Nationwide Investment Services Corporation, is not engaged in litigation of a material nature. - ---------------------------- --------------------------------------------------- 5. "APPENDIX A: DEFINITIONS" IN YOUR PROSPECTUS IS AMENDED: a. TO REPLACE THE DEFINITION OF DEATH BENEFIT WITH THE FOLLOWING: - -------------------------------------------------------------------------------- DEATH BENEFIT - The amount we pay to the beneficiary upon the Insured's death, before payment of any unpaid outstanding loan balances or charges. The Death Benefit consists of the base policy coverage and the Additional (insurance) Protection Rider coverage, if applicable. - -------------------------------------------------------------------------------- b. TO REPLACE THE DEFINITION OF NET AMOUNT AT RISK WITH THE FOLLOWING: - -------------------------------------------------------------------------------- NET AMOUNT AT RISK - The policy's Death Benefit minus the policy's Cash Value. - -------------------------------------------------------------------------------- CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES Issued By NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY Through NATIONWIDE VL SEPARATE ACCOUNT-C - -------------------------------------------------------------------------------- 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 purchase the variable life 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. 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 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: 1-877-351-8808 TDD: 1-800-238-3035 U.S. MAIL: Nationwide Life and Annuity Insurance Company Corporate Insurance Markets One Nationwide Plaza, (1-11-08) 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 INTEREST. 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.....................................9 - ---------------------- THE POLICY................................................28 - ---------- Policy Owner Rights....................................28 ------------------- The Beneficiary........................................28 --------------- To Purchase............................................29 ----------- Coverage...............................................30 -------- Coverage Effective Date................................30 ----------------------- To Cancel (Examination Right)..........................30 ----------------------------- To Change Coverage.....................................30 ------------------ Sub-Account Portfolio Transfers........................31 ------------------------------- Fixed Account Transfers................................32 ----------------------- Modes To Make A Transfer...............................32 ------------------------ To Irrevocably Transfer Cash Value Or Exchange The Policy 33 --------------------------------------------------------- To Terminate Or Surrender..............................33 ------------------------- To Assign..............................................34 --------- Proceeds Upon Maturity.................................34 ---------------------- Reports And Illustrations..............................35 ------------------------- Errors Or Misstatements................................35 ----------------------- Incontestability.......................................35 ---------------- If We Modify The Policy................................35 ----------------------- RIDERS....................................................35 - ------ Change Of Insured Rider................................36 ----------------------- Additional (insurance) Protection Rider................36 --------------------------------------- PREMIUM...................................................36 - ------- Initial Premium........................................36 --------------- Subsequent Premiums....................................36 ------------------- CHARGES...................................................37 - ------- Premium Load (Charge)..................................38 --------------------- Partial Surrender Fee..................................39 --------------------- Cost Of Insurance......................................39 ----------------- Mortality And Expense Risk.............................39 -------------------------- Policy Loan Interest...................................40 -------------------- Administrative.........................................40 -------------- Additional (insurance) Protection Rider................40 --------------------------------------- A Note on Charges......................................40 ----------------- TO ALLOCATE PREMIUM AND SUB-ACCOUNT VALUATION.................................................42 - --------- Variable Investment Options............................42 --------------------------- The Fixed Investment Option............................42 --------------------------- Allocation Of Premium And Cash Value...................43 ------------------------------------ When Sub-Account Units Are Valued......................43 --------------------------------- How Investment Experience Is Determined................43 --------------------------------------- Cash Value.............................................44 ---------- Dollar Cost Averaging..................................44 --------------------- THE DEATH BENEFIT.........................................45 - ----------------- Calculation Of The Death Benefit Proceeds..............45 ----------------------------------------- Death Benefit Options..................................46 --------------------- The Minimum Required Death Benefit.....................46 ---------------------------------- Changes In The Death Benefit Option....................47 ----------------------------------- Suicide................................................48 ------- SURRENDERS................................................48 - ---------- Full Surrender.........................................48 -------------- Other Amounts Paid At Surrender........................48 ------------------------------- Partial Surrender......................................49 ----------------- Reduction Of Specified Amount On A Partial Surrender...49 ---------------------------------------------------- THE PAYOUT OPTIONS........................................50 - ------------------ Interest Income........................................50 --------------- Income For A Fixed Period..............................50 ------------------------- Life Income With Payments Guaranteed...................50 ------------------------------------ Fixed Income For Varying Periods.......................51 -------------------------------- Joint And Survivor Life................................51 ----------------------- Alternate Life Income..................................51 --------------------- POLICY LOANS..............................................51 - ------------ Loan Amount And Interest...............................51 ------------------------ Collateral.............................................52 ---------- Repayment..............................................52 --------- Net Effect Of Loans....................................52 ------------------- LAPSE.....................................................52 - ----- Grace Period...........................................52 ------------ Reinstatement..........................................52 ------------- TAXES.....................................................53 - ----- Types Of Taxes Of Which To Be Aware....................53 ----------------------------------- Buying The Policy......................................54 ----------------- Investment Gain In The Policy..........................54 ----------------------------- Periodic Withdrawals, Non-Periodic Withdrawals And Loans 55 -------------------------------------------------------- Surrender Of The Policy................................56 ----------------------- Withholding............................................56 ----------- Exchanging The Policy For Another Life Insurance Policy 57 ------------------------------------------------------- Taxation Of Death Benefits.............................57 -------------------------- Special Considerations for Corporations................57 --------------------------------------- Taxes And The Value Of Your Policy.....................58 ---------------------------------- Tax Changes............................................58 ----------- NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY...................................................59 - ------- NATIONWIDE VL SEPARATE ACCOUNT-C..........................59 - -------------------------------- Organization, Registration And Operation...............59 ---------------------------------------- Addition, Deletion, Or Substitution Of Mutual Funds....60 --------------------------------------------------- Voting Rights..........................................60 ------------- LEGAL PROCEEDINGS.........................................61 - ----------------- Nationwide Life And Annuity Insurance -------------------------------------- Company................................................61 ------- Nationwide Investment Services Corporation.............64 ------------------------------------------ FINANCIAL STATEMENTS......................................64 - -------------------- APPENDIX A: DEFINITIONS..................................A-1 - ----------------------- IN SUMMARY: POLICY BENEFITS Appendix A defines certain words and phrases we use in this prospectus. DEATH BENEFIT The primary benefit of your policy is life insurance coverage. While the policy is In Force, we will pay the Proceeds to your beneficiary when the Insured dies. YOUR CHOICE OF DEATH BENEFIT OPTIONS |X| Option One is THE GREATER OF the Specified Amount OR the minimum required Death Benefit under federal tax law. |X| Option Two is THE GREATER OF the Specified Amount plus the Cash Value OR the minimum required Death Benefit under federal tax law. |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 "Death Benefit Options," beginning on page 46. 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 50. 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 47; "Reduction Of Specified Amount On A Partial Surrender," beginning on page 49; "The Beneficiary," beginning on page 28; and "Policy Owner Rights," beginning on page 28. 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 PLUS 100% of the Fixed Account PLUS 100% of the loan account immediately prior to the policy loan. |X| The minimum amount is $500. For more information, see "Loan Amount And Interest," beginning on page 51. |X| Take a partial surrender of no less than $500. For more information, see "Partial Surrender," beginning on page 49. |X| Surrender the policy at any time while the Insured is alive. The Cash Surrender Value will be the Cash Values of the Sub-Account portfolios and fixed account, less any policy loans. 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 48 and "The Payout Options beginning on page 50. 1 PREMIUM FLEXIBILITY You will not be required to make your Premium payments according to a schedule. 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 36. INVESTMENT OPTIONS You may choose to allocate your Premiums after charges to the fixed or variable investment options: |X| The fixed investment option will earn interest daily at an annual effective rate no less than the stated interest crediting rate on the Policy Data Page. |X| The variable investment options constitute the limitedly available mutual funds, and we have divided Nationwide VL Separate Account-C into a 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. We have implemented procedures intended to reduce the potentially detrimental impact that disruptive trading has on Sub-Account Investment Experience. For more information, see "Sub-Account Portfolio Transfers," beginning on page 31; "Modes To Make A Transfer," beginning on page 32 and "Available Sub-Accounts," beginning on page 9 "Variable Investment Options," beginning on page 42. TRANSFERS BETWEEN AND AMONG INVESTMENT OPTIONS You may transfer between the fixed and variable investment options, subject to conditions. You may transfer among the Sub-Account portfolios of the variable investment option within limits. For more information, see "Sub-Account Portfolio Transfers," beginning on page 31. We also offer dollar cost averaging, an automated investment strategy that spreads out transfers over time to try to reduce the investment risks of market fluctuations. For more information, see "Dollar Cost Averaging," beginning on page 44. TAXES Unless you make a withdrawal, you will generally not be taxed on any earnings. This is known as tax deferral. For more information, see "The Minimum Required Death Benefit," beginning on page 46. Also, your beneficiary generally will not have to account for the Death Benefit Proceeds as taxable income. For more information, see "Taxes," beginning on page 53. ASSIGNMENT You may assign the policy as collateral for a loan or another obligation while the Insured is alive. For more information, see "To Assign," beginning on page 34. 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 30. RIDERS You may purchase any of the available Riders. Availability will vary by state, and there may be an additional charge for the Additional (insurance) Protection Rider. |X| Change Of Insured Rider (There is no charge for this Rider.) |X| Additional (insurance) Protection Rider For more information, see "Riders," beginning on page 35. 2 IN SUMMARY: POLICY RISKS IMPROPER USE Variable universal life insurance is not suitable as an investment vehicle for short-term savings. It is designed for long-term financial planning. You will incur fees at the time of purchase that may than more than offset any favorable Investment Experience. As this may be particularly true early on, you should not purchase the policy if you expect that you will need to access its Cash Value in the near future. UNFAVORABLE INVESTMENT RETURN 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. Investment Experience will impact the cash value, and poor Investment Experience (in conjunction with your flexibility to make changes to the policy and deviate from your chosen premium payment plan) could cause the Cash Value of your policy to decrease, resulting in a Lapse of insurance coverage sooner than might have been foreseen. EFFECT OF PARTIAL SURRENDERS AND LOANS ON INVESTMENT RETURNS Partial surrenders or policy loans may accelerate a Lapse because these amounts 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 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 an investment return sufficient to cover policy and Sub-Account portfolio charges and keep the policy In Force, at least until you repay the loan or make another Premium payment. There will always be a Grace Period, and the opportunity to reinstate insurance coverage. Under certain circumstances, however, the policy could terminate without value, and insurance coverage would cease. REDUCTION OF THE DEATH BENEFIT A partial surrender or a policy loan would decrease the policy's Death Benefit, depending on how the Death Benefit relates to the policy's Cash Value. ADVERSE TAX CONSEQUENCES Existing federal tax laws that benefit this policy may change at any time. These changes could alter the favorable federal income tax treatment the policy enjoys, such as the deferral of taxation on the gains in the policy's cash value and the exclusion from taxable income of the Proceeds we pay to the policy's beneficiaries. Also, not all policies are afforded the same tax treatment. For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 55. 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, of which you should be aware. You should consult a qualified tax advisor on all tax matters involving your policy. 3 FIXED ACCOUNT TRANSFER RESTRICTIONS AND LIMITATIONS You may transfer Cash Value to or from the fixed account so long as you make the request after the first year from the Policy Date. Then, we will 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 INVESTMENT Frequent trading among the Sub-Accounts may dilute the value of your Sub-Account units, RISK cause the Sub-Account to incur higher transaction costs, and interfere with the Sub-Accounts' ability to pursue its stated investment objective. This disruption to the Sub-Account may result in lower Investment Experience and Cash Value. We have instituted procedures to minimize disruptive transfers. For more information, see " Sub-Account Portfolio Transfers," beginning on page 31 and "Modes To Make A Transfer," beginning on page 32. While we expect these procedures to reduce the adverse effect of disruptive transfers, we cannot assure you that we have eliminated these risks. A comprehensive discussion of the risks of the mutual funds held by each Sub-Account portfolio may be found in that mutual fund's prospectus. You should read the mutual fund's prospectus carefully before investing. IN SUMMARY: VARIABLE UNIVERSAL LIFE INSURANCE AND THE POLICY VARIABLE UNIVERSAL LIFE INSURANCE, IN GENERAL, MAY BE IMPORTANT TO YOU IN TWO WAYS. |X| It will provide economic protection to a beneficiary. |X| It may build Cash Value. Why would you want to purchase this type of life insurance? How will you allocate the Net Premium among the variable investment options and the fixed investment options? Your reasons and decisions will affect the insurance and Cash Value aspects. While variable universal life insurance is designed primarily to provide life insurance protection, the Cash Value of a policy will be important to you in that it may impair (with poor investment results) or enhance (with favorable investment results) your ability to pay the costs of keeping the insurance In Force. Apart from the life insurance protection features, you will have an interest in maximizing the value of the policy as a financial asset. IT IS SIMILAR TO, BUT ALSO DIFFERENT FROM, UNIVERSAL LIFE INSURANCE. |X| You will pay Premiums for life insurance coverage on the Insured. |X| The policy will provide for the accumulation of a Cash Surrender Value if you were to surrender it at any time while the Insured is alive. |X| The Cash Surrender Value could be substantially lower than the Premiums you have paid. What makes the policy different from universal life insurance is your opportunity to allocate Premiums after charges to the Sub-Account portfolios you have chosen. Also, this policy's 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 INSURED'S DEATH, FOLLOWING IS A BASIC OVERVIEW. ( PLEASE READ THE REMAINDER OF THIS PROSPECTUS FOR THE DETAILS.) |X| At issue, the policy will require a minimum initial Premium payment. Among other considerations, this amount will be based on: the Insured's age; the underwriting class; any substandard ratings; the Specified Amount; and the choice of a Rider. 4 |X| At the time of a Premium payment, we will deduct 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. We call these charges periodic charges other than Sub-Account portfolio operating expenses. |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 policy year, 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 Insured's death you may withdraw all, or a portion (after the first policy year), of the policy's Cash Surrender Value. Or you may borrow against the Cash Surrender Value. Withdrawals and loans are subject to restrictions, may reduce the Death Benefit and increase the likelihood of the policy lapsing. There also could be adverse tax consequences. 5 IN SUMMARY: FEE TABLES THE FOLLOWING TABLES DESCRIBE THE 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 37.
==================================================================================================================================== TRANSACTION FEES (CHARGE) ==================================================================================================================================== ===================================== ============================= ================================================================ CHARGE WHEN CHARGE IS DEDUCTED AMOUNT (DEDUCTED FROM EACH PREMIUM PAYMENT) - ------------------------------------- ----------------------------- ---------------------------------------------------------------- PREMIUM LOAD Upon Making A Premium Maximum Guaranteed Charge (Charge) (1), (2) Payment 9.00% Of Premium Payments - ------------------------------------- ----------------------------- ---------------------------------------------------------------- PARTIAL SURRENDER FEE(3) Upon Partial Surrender Maximum Guaranteed Charge $25 - ------------------------------------- ----------------------------- ---------------------------------------------------------------- Current Charge 0 - ------------------------------------- ----------------------------- ----------------------------------------------------------------
(1) We deduct one charge upon purchase composed of a charge intended to partially recoup costs associated with the sale of the policy as well as Premium taxes. The actual amount a taxing authority assesses may not equal the Premium taxes charged. We may profit from this charge. (2) The maximum guaranteed charge is reduced to 5.5% of Premium payment starting with the eighth policy year. Currently, the charges for policies vary according to the time of purchase, the amount of the Additional Protection Rider, and amount of annual Premium. For more information, see "Premium Load (Charge)," beginning on page 38. (3) The charge is the lesser of $25 or 2% of the dollar amount of a partial surrender amount. 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 - ------------------------------------- ----------------------------- ---------------------------------------------------------------- COST OF INSURANCE(4), (5) Monthly Minimum Maximum Representative (6) Representative - For An Issue Age -------------------- -------------------- -------------------- 40, Non-tobacco, in the tenth $0.03 per month $83.33 per month $0.31 per month policy year, issued on a -------------------------------------------------------------- short-form, non-medical basis and Per $1,000 Of Net Amount at Risk - Death Benefit Option One Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- ---------------------------------------------------------------- MORTALITY AND Daily Based on Annual Maximum Guaranteed Currently EXPENSE RISK(7) Percentages - ------------------------------------- ----------------------------- -------------------------------- ------------------------------- 0.75% of Cash Value 0.40% of Cash Value - ------------------------------------- ----------------------------- -------------------------------- ------------------------------- Proportionately From Your Chosen Variable Investment Options - ------------------------------------- ----------------------------- ----------------------------------------------------------------
6
- ------------------------------------- ----------------------------- ---------------------------------------------------------------- POLICY LOAN INTEREST (8) Annually (Accrues Daily) Maximum Guaranteed - ------------------------------------- ----------------------------- ---------------------------------------------------------------- 3.75% Of The Policy Loan Balance - ------------------------------------- ----------------------------- ---------------------------------------------------------------- Current Rates - ------------------------------------- ----------------------------- ---------------------------------------------------------------- 3.70% Of The Policy Loan Balance - ------------------------------------- ----------------------------- ---------------------------------------------------------------- On Balance of Policy Indebtedness - ------------------------------------- ----------------------------- ---------------------------------------------------------------- - ------------------------------------- ----------------------------- ---------------------------------------------------------------- ADMINISTRATIVE Monthly Maximum Guaranteed Currently - ------------------------------------- ----------------------------- ------------------------------- -------------------------------- $10 per month $5 per month - ------------------------------------- ----------------------------- ------------------------------- -------------------------------- Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- --------------------- -------------------- --------------------- - ------------------------------------- ----------------------------- ---------------------------------------------------------------- ADDITIONAL (INSURANCE) PROTECTION Monthly Minimum Maximum Representative(12) RIDER (9), (10), (11) Representative - For An Issue Age 40 Non-tobacco, in the tenth policy year, issued on a short-form, non-medical basis. - ------------------------------------- ----------------------------- --------------------- -------------------- --------------------- $0.01 per month $83.33 per month $0.22 per month - ------------------------------------- ----------------------------- --------------------- -------------------- --------------------- Per $1,000 Of Additional Protection Proportionately From Your Chosen Variable And Fixed Investment Options - ------------------------------------- ----------------------------- ----------------------------------------------------------------
- --------------------------------------- (4) The charge varies by: the Insured's age; underwriting class; the year from the Policy Date; and Specified Amount. (5) The cost of insurance rate will increase over time, so ask for a policy illustration, or see the Policy Data Page, for more information on your cost. (6) This amount may not be representative of your cost. (7) Currently, during the first through fourth years from the Policy Date, this charge is 0.40% of Cash Value and during the fifth through twentieth years from the Policy Date, it is 0.25% of Cash Value. Thereafter, it is currently 0.10% of Cash Value. (8) We charge interest on the amount of an outstanding policy loan, at the rate of no more than 3.75% per annum, which accrues daily and becomes due and payable at the end of the year from the Policy Date or at the time you take an additional loan. Currently, for policies issued on or after September 9, 2002, we expect to charge an effective annual interest rate of 3.70% on the outstanding balance of your policy loan for the first fifteen policy years, 3.45% for policy years 16 through 30, and 3.00% thereafter. Currently, for policies issued prior to September 9, 2002, we expect to charge an effective annual interest rate of 3.40% on the outstanding balance of your policy loan for the first four policy years, 3.25% for policy years 5 through 20, and 3.10% thereafter. If left unpaid, we will add it to the loan account. As collateral or security for repayment, we transfer an equal amount of Cash Value to the policy loan account, on which interest accrues and is credited daily. The minimum guaranteed interest crediting rate is stated on your Policy Data Page. The effect of the crediting will be a net cost of a policy loan that is less than the loan amount interest charge. For more information, see "Policy Loans," beginning on page 51. (9) The charge varies by: the Insured's age; underwriting class; the year from the Policy Date; and Specified Amount. (10) Ask for a policy illustration, or see the Policy Data Page, for more information your cost. (11) The continuation of the rider is contingent on the policy being In Force. (12) This amount may not be representative of your cost. (10) Ask for a policy illustration, or see the Policy Data Page, for more information your cost. (11) The continuation of the rider is contingent on the policy being In Force. (12) This amount may not be representative of your cost. 7 THE NEXT ITEM SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE SUB-ACCOUNT PORTFOLIOS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY. MORE DETAIL CONCERNING EACH SUB-ACCOUNT PORTFOLIO'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR THE MUTUAL FUND THAT CORRESPONDS TO THE EACH 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 0.26% 2.57% management fees, distribution (12b-1) fees, and other expenses) - ---------------------------------------------------------------------------------------- --------------------- -------------------
The following section lists the Sub-Accounts and identifies their expenses, investment types, and advisers. 8 - -------------------------------------------------------------------------------- AVAILABLE SUB-ACCOUNTS - -------------------------------------------------------------------------------- We identify Sub-Accounts by the name of the underlying mutual funds. The sub-account portfolio operating expenses shown are deducted by the underlying mutual fund before it provides us with daily net asset value. We then deduct applicable charges from the net asset value in calculating the unit value of the corresponding sub-account. The underlying mutual funds provided us with the expense information. We have not independently verified it. Expenses of the underlying mutual funds are subject to change. The current management fees and other expenses, including any fee waivers and expense reimbursements, are more fully described in the prospectus for each underlying mutual fund. ANNUAL EXPENSES OF THE UNDERLYING MUTUAL FUNDS HELD BY THE SUB-ACCOUNT PORTFOLIOS (as a percentage of underlying mutual fund net assets)
- ------------------------------------------------------------------------------------------------------------ FUND MANAGEMENT OTHER 12B-1 TOTAL UNDERLYING FEES EXPENSES FEES MUTUAL FUND EXPENSES BEFORE ANY FEE WAIVER OR EXPENSE REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - AIM V.I. 0.72% 0.30% 0.00% 1.02% Basic Value Fund: Series I Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - AIM V.I. 0.61% 0.30% 0.00% 0.91% Capital Development Fund: Series I Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds - AIM V.I. 0.74% 0.40% 0.00% 1.14% International Growth Fund: Series I Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ AllianceBernstein Variable Products 0.47% 0.25% 0.28% 1.00% Series Fund, Inc. - AllianceBernstein Growth and Income Portfolio: Class A - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, 0.90% 0.00% 0.00% 0.90% Inc. - American Century VP Balanced Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, 1.00% 0.00% 0.00% 1.00% Inc. - American Century VP Capital Appreciation Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, 0.70% 0.00% 0.00% 0.70% Inc. - American Century VP Income & Growth Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, 1.27% 0.00% 0.00% 1.27% Inc. - American Century VP International Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, 1.00% 0.00% 0.00% 1.00% Inc. - American Century VP Ultra Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, 0.93% 0.00% 0.00% 0.93% Inc. - American Century VP Value Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ American Century Variable Portfolios, 1.00% 0.00% 0.00% 1.00% Inc. - American Century VP Vista Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Baron Capital Funds Trust - Baron 1.00% 0.11% 0.25% 1.36% Capital Asset Fund: Insurance Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Calvert Variable Series, Inc. - CVS 0.70% 0.65% 0.00% 1.35% Social Equity Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Credit Suisse Trust - Global Small Cap 1.25% 0.32% 0.00% 1.57% Portfolio - ------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------ FUND MANAGEMENT OTHER 12B-1 TOTAL UNDERLYING FEES EXPENSES FEES MUTUAL FUND EXPENSES BEFORE ANY FEE WAIVER OR EXPENSE REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------ Credit Suisse Trust - International 1.00% 0.37% 0.00% 1.37% Focus Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Credit Suisse Trust - Large Cap Value 0.75% 0.39% 0.00% 1.14% Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Credit Suisse Trust - Small Cap Growth 0.90% 0.20% 0.00% 1.10% Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios - Mid Cap 0.75% 0.03% 0.00% 0.78% Stock Portfolio: Initial Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Dreyfus Investment Portfolios - Small 0.35% 0.00% 0.25% 0.60% Cap Stock Index Portfolio: Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Dreyfus Socially Responsible Growth 0.75% 0.07% 0.00% 0.82% Fund, Inc.: Initial Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Dreyfus Stock Index Fund, Inc.: Initial 0.25% 0.01% 0.00% 0.26% Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund - 0.75% 0.04% 0.00% 0.79% Appreciation Portfolio: Initial Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund - 0.75% 0.07% 0.00% 0.82% Growth and Income Portfolio: Initial Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Dreyfus Variable Investment Fund - 1.00% 0.25% 0.00% 1.25% International Value Portfolio: Initial Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Federated Insurance Series - Federated 0.60% 0.37% 0.25% 1.22% Quality Bond Fund II: Primary Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.47% 0.11% 0.00% 0.58% Fund - VIP Equity-Income Portfolio: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.47% 0.11% 0.10% 0.68% Fund - VIP Equity-Income Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.58% 0.10% 0.00% 0.68% Fund - VIP Growth Portfolio: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.58% 0.10% 0.10% 0.78% Fund - VIP Growth Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.58% 0.13% 0.00% 0.71% Fund - VIP High Income Portfolio: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.58% 0.13% 0.10% 0.81% Fund - VIP High Income Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.72% 0.19% 0.00% 0.91% Fund - VIP Overseas Portfolio: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.72% 0.19% 0.10% 1.01% Fund - VIP Overseas Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.53% 0.12% 0.00% 0.65% Fund II - VIP Asset Manager Portfolio: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.57% 0.11% 0.00% 0.68% Fund II - VIP Contrafund(R) Portfolio: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.57% 0.11% 0.10% 0.78% Fund II - VIP Contrafund(R) Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.43% 0.13% 0.10% 0.66% Fund II - VIP Investment Grade Bond Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.58% 0.14% 0.10% 0.82% Fund III - VIP Growth Opportunities Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------ FUND MANAGEMENT OTHER 12B-1 TOTAL UNDERLYING FEES EXPENSES FEES MUTUAL FUND EXPENSES BEFORE ANY FEE WAIVER OR EXPENSE REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.57% 0.14% 0.10% 0.81% Fund III - VIP Mid Cap Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.57% 0.14% 0.10% 0.81% Fund III - VIP Value Strategies Portfolio: Service Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Franklin Templeton Variable Insurance 0.53% 0.18% 0.25% 0.96% Products Trust - Franklin Small Cap Value Securities Fund: Class 2 - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Franklin Templeton Variable Insurance 0.79% 0.07% 0.25% 1.11% Products Trust - Templeton Foreign Securities Fund: Class 2 - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.30% 0.27% 0.00% 0.57% Dreyfus GVIT Mid Cap Index Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.70% 0.24% 0.00% 0.94% Federated GVIT High Income Bond Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 1.15% 0.25% 0.00% 1.40% Gartmore GVIT Emerging Markets Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products 0.58% 0.14% 0.00% 0.72% Fund III - VIP Growth Opportunities Portfolio: Initial Class
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- ------------------------------------------------------------------------------------------------------------ FUND MANAGEMENT OTHER 12B-1 TOTAL UNDERLYING FEES EXPENSES FEES MUTUAL FUND EXPENSES BEFORE ANY FEE WAIVER OR EXPENSE REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 1.00% 0.27% 0.00% 1.27% Gartmore GVIT Global Financial Services Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 1.00% 0.26% 0.00% 1.26% Gartmore GVIT Global Health Sciences Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.98% 0.30% 0.00% 1.28% Gartmore GVIT Global Technology and Communications Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.80% 0.28% 0.00% 1.08% Gartmore GVIT Global Utilities Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.49% 0.24% 0.00% 0.73% Gartmore GVIT Government Bond Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.60% 0.25% 0.00% 0.85% Gartmore GVIT Growth Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 1.00% 0.33% 0.00% 1.33% Gartmore GVIT International Growth Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.13% 0.18% 0.25% 0.56% Gartmore GVIT Investor Destinations Conservative Fund: Class II* - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.13% 0.18% 0.25% 0.56% Gartmore GVIT Investor Destinations Moderately Conservative Fund: Class II* - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.13% 0.18% 0.25% 0.56% Gartmore GVIT Investor Destinations Moderate Fund: Class II* - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.13% 0.18% 0.25% 0.56% Gartmore GVIT Investor Destinations Moderately Aggressive Fund: Class II* - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.13% 0.18% 0.25% 0.56% Gartmore GVIT Investor Destinations Aggressive Fund: Class II* - ------------------------------------------------------------------------------------------------------------
*The Gartmore Variable Insurance Trust - 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 expense of the GVIT Investor Destinations Funds, a contract owner will be indirectly paying a proportionate share of the applicable fees and expenses of the underlying fund expenses. These expenses are not included in the expenses shown above. They are as follows: Gartmore GVIT Investor Destinations Conservative Fund: Class II 0.33% Gartmore GVIT Investor Destinations Moderately Conservative Fund: Class II 0.31% Gartmore GVIT Investor Destinations Moderate Fund: Class II 0.30% Gartmore GVIT Investor Destinations Moderately Aggressive Fund: Class II 0.31% Gartmore GVIT Investor Destinations Aggressive Fund: Class II 0.30% 12
- ----------------------------------------------------------------------------------------------------------- FUND MANAGEMENT OTHER 12B-1 TOTAL UNDERLYING FEES EXPENSES FEES MUTUAL FUND EXPENSES BEFORE ANY FEE WAIVER OR EXPENSE REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.75% 0.23% 0.00% 0.98% Gartmore GVIT Mid Cap Growth Fund - Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.37% 0.25% 0.00% 0.82% Gartmore GVIT Money Market Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.37% 0.18% 0.00% 0.55% Gartmore GVIT Money Market Fund: Class V - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.59% 0.24% 0.00% 0.83% Gartmore GVIT Nationwide(R) Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.90% 0.29% 0.00% 1.19% Gartmore GVIT Nationwide(R) Leaders Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 0.90% 0.33% 0.00% 1.23% Gartmore GVIT U.S. Growth Leaders Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - 1.00% 0.25% 0.00% 1.25% Gartmore GVIT Worldwide Leaders Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - GVIT 0.95% 0.26% 0.00% 1.21% Small Cap Growth Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - GVIT 0.87% 0.24% 0.00% 1.11% Small Cap Value Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - GVIT 0.93% 0.26% 0.00% 1.19% Small Company Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - J.P. 0.73% 0.25% 0.00% 0.98% Morgan GVIT Balanced Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - Van 0.75% 0.19% 0.00% 0.94% Kampen GVIT Comstock Value Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Gartmore Variable Insurance Trust - Van 0.75% 0.26% 0.00% 1.01% Kampen GVIT Multi Sector Bond Fund: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Goldman Sachs Variable Insurance Trust - 0.80% 0.08% 0.00% 0.88% Goldman Sachs VIT Mid Cap Value Fund - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Janus Aspen Series - Balanced Portfolio: 0.55% 0.01% 0.25% 0.81% Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Janus Aspen Series - Forty Portfolio: 0.64% 0.02% 0.25% 0.91% Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Janus Aspen Series - Global Technology 0.64% 0.07% 0.25% 0.96% Portfolio: Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Janus Aspen Series - International 0.64% 0.04% 0.25% 0.93% Growth Portfolio: Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ JPMorgan Investment Trust - JPMorgan 0.65% 0.21% 0.00% 0.86% Investment Trust Mid Cap Growth Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ JPMorgan Investment Trust - JPMorgan 0.74% 0.19% 0.00% 0.93% Investment Trust Mid Cap Value Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Lord Abbett Series Fund, Inc. - Mid-Cap 0.75% 0.42% 0.00% 1.17% Value Portfolio: Class VC - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Merrill Lynch Variable Series Funds, 0.75% 0.11% 0.15% 1.01% Inc. -International Index V.I. Fund: Class II - ------------------------------------------------------------------------------------------------------------
13
- ----------------------------------------------------------------------------------------------------------- FUND MANAGEMENT OTHER 12B-1 TOTAL UNDERLYING FEES EXPENSES FEES MUTUAL FUND EXPENSES BEFORE ANY FEE WAIVER OR EXPENSE REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------ Merrill Lynch Variable Series Funds, 0.46% 0.07% 0.15% 0.68% Inc. -Large Cap Core V.I. Fund: Class II - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Neuberger Berman Advisers Management 1.15% 1.17% 0.25% 2.57% Trust - AMT Fasciano Portfolio: Class S - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Neuberger Berman Advisers Management 0.85% 0.11% 0.00% 0.96% Trust - AMT Growth Portfolio: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Neuberger Berman Advisers Management 0.85% 0.13% 0.00% 0.98% Trust - AMT Guardian Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Neuberger Berman Advisers Management 0.65% 0.08% 0.00% 0.73% Trust - AMT Limited Maturity Bond Portfolio: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Neuberger Berman Advisers Management 0.84% 0.08% 0.00% 0.92% Trust - AMT Mid-Cap Growth Portfolio: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Neuberger Berman Advisers Management 0.83% 0.08% 0.00% 0.91% Trust - AMT Partners Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - 0.67% 0.02% 0.00% 0.69% Oppenheimer Aggressive Growth Fund/VA: Non-Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - 0.72% 0.02% 0.00% 0.74% Oppenheimer Balanced Fund/VA: Non-Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - 0.64% 0.02% 0.00% 0.66% Oppenheimer Capital Appreciation Fund/VA: Non-Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - 0.72% 0.03% 0.00% 0.75% Oppenheimer Core Bond Fund/VA: Non-Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - 0.63% 0.03% 0.00% 0.66% Oppenheimer Global Securities Fund/VA: Non-Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Oppenheimer Variable Account Funds - 0.75% 0.06% 0.25% 1.06% Oppenheimer Main Street(R) Fund/VA: Non-Service Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ PIMCO Variable Insurance Trust - All 0.80% 0.25% 0.00% 1.05% Asset Portfolio: Administrative Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ PIMCO Variable Insurance Trust - Low 0.25% 0.25% 0.00% 0.50% Duration Portfolio: Administrative Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ PIMCO Variable Insurance Trust - Real 0.25% 0.25% 0.00% 0.50% Return Portfolio: Administrative Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ PIMCO Variable Insurance Trust - Total 0.25% 0.25% 0.00% 0.50% Return Portfolio: Administrative Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Pioneer Variable Contracts Trust - 0.65% 0.13% 0.00% 0.78% Pioneer High Yield VCT Portfolio: Class I Shares - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Royce Capital Fund - Royce Micro-Cap 1.25% 0.09% 0.00% 1.34% Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ T. Rowe Price Equity Series, Inc. - T. 0.85% 0.00% 0.25% 1.10% Rowe Price Equity Income Portfolio: Class II - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ T. Rowe Price Equity Series, Inc. - T. 0.85% 0.00% 0.25% 1.10% Rowe Price Mid-Cap Growth Portfolio: Class II - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ T. Rowe Price Equity Series, Inc. - T. 0.85% 0.00% 0.00% 0.85% Rowe Price New America Growth Portfolio - ------------------------------------------------------------------------------------------------------------
14
- ------------------------------------------------------------------------------------------------------------ FUND MANAGEMENT OTHER 12B-1 TOTAL UNDERLYING FEES EXPENSES FEES MUTUAL FUND EXPENSES BEFORE ANY FEE WAIVER OR EXPENSE REIMBURSEMENT - ------------------------------------------------------------------------------------------------------------ Van Eck Worldwide Insurance Trust - 1.00% 0.27% 0.00% 1.27% Worldwide Bond Fund: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Van Eck Worldwide Insurance Trust - 1.00% 0.39% 0.00% 1.39% Worldwide Emerging Markets Fund: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Van Eck Worldwide Insurance Trust - 1.00% 0.20% 0.00% 1.20% Worldwide Hard Assets Fund: Initial Class - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ The Universal Institutional Funds, Inc. 0.75% 0.35% 0.00% 1.10% - - Emerging Markets Debt Portfolio: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ The Universal Institutional Funds, Inc. 0.75% 0.38% 0.00% 1.13% - - Mid Cap Growth Portfolio: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ The Universal Institutional Funds, Inc. 0.76% 0.26% 0.00% 1.02% - - U.S. Real Estate Portfolio: Class I - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ W&R Target Funds, Inc. - Growth Portfolio 0.69% 0.06% 0.25% 1.00% - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ W&R Target Funds, Inc. - Real Estate 0.90% 0.39% 0.25% 1.55% Securities Portfolio - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Wells Fargo Variable Trust Funds - Wells 0.72% 0.20% 0.25% 1.17% Fargo Advantage Opportunity Fund VT - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ Wells Fargo Variable Trust Funds - Wells 0.75% 0.22% 0.25% 1.22% Fargo Advantage Discovery Fund VT - ------------------------------------------------------------------------------------------------------------
15 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 DEVELOPMENT FUND: SERIES I SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: AIM Advisors, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS - AIM V.I. INTERNATIONAL GROWTH FUND: SERIES I SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: AIM Advisors, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. - ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO: CLASS A - ------------------------------------------------ ----------------------------------------------------------------------------------- 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP BALANCED FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth and current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP CAPITAL APPRECIATION FUND: CLASS I This sub-account is only available in policies issued before September 27, 1999. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP INCOME & GROWTH FUND: CLASS I This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - AMERICAN CENTURY VP ULTRA FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: American Century Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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. - ------------------------------------------------ -----------------------------------------------------------------------------------
16
BARON CAPITAL FUNDS TRUST - BARON CAPITAL ASSET FUND: INSURANCE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: BAMCO, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- Calvert Variable Series, Inc. - CVS Social Equity Portfolio This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Calvert Asset Management Company, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- CREDIT SUISSE TRUST - GLOBAL SMALL CAP PORTFOLIO (FORMERLY, CREDIT SUISSE TRUST - - GLOBAL POST-VENTURE CAPITAL PORTFOLIO) This sub-account is only available in policies issued before September 27, 1999. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Credit Suisse Asset Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- Credit Suisse Trust - International Focus Portfolio This sub-account is only available in policies issued before September 27, 1999. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Credit Suisse Asset Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- Credit Suisse Trust - Large Cap Value Portfolio This sub-account is only available in policies issued before May 1, 2000. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Credit Suisse Asset Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Total return. - ------------------------------------------------ ----------------------------------------------------------------------------------- CREDIT SUISSE TRUST - SMALL CAP GROWTH PORTFOLIO - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Credit Suisse Asset Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- Dreyfus Investment Portfolios - MidCap Stock Portfolio: Initial Shares This sub-account is only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Results that exceed total return performance of S&P 400. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 Socially Responsible Growth Fund, Inc.: Initial Shares This sub-account is only available in policies issued before February 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 VARIABLE INVESTMENT FUND - APPRECIATION PORTFOLIO: INITIAL SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ -----------------------------------------------------------------------------------
17
DREYFUS VARIABLE INVESTMENT FUND - GROWTH AND INCOME PORTFOLIO: INITIAL SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth, current income and growth of income. - ------------------------------------------------ ----------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND - INTERNATIONAL VALUE PORTFOLIO: INITIAL SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES - FEDERATED QUALITY BOND FUND II: PRIMARY SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Federated Investment Management Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP EQUITY-INCOME PORTFOLIO: INITIAL CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Reasonable income. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP EQUITY-INCOME PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Reasonable income. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP GROWTH PORTFOLIO: INITIAL CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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: INITIAL CLASS This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund - VIP High Income Portfolio: Service Class This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP OVERSEAS PORTFOLIO: INITIAL CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND - VIP OVERSEAS PORTFOLIO: SERVICE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management and Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP ASSET MANAGER PORTFOLIO: INITIAL CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. - ------------------------------------------------ ----------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - VIP CONTRAFUND(R) PORTFOLIO: INITIAL CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ -----------------------------------------------------------------------------------
18
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: INITIAL CLASS This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Fidelity Management & Research Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - FRANKLIN SMALL CAP VALUE SECURITIES FUND: CLASS 2 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Franklin Advisory Services, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term total return. - ------------------------------------------------ ----------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST - TEMPLETON FOREIGN SECURITIES FUND: CLASS 2 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Templeton Investment Counsel, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - DREYFUS GVIT MID CAP INDEX FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: The Dreyfus Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - FEDERATED GVIT HIGH INCOME BOND FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Federated Investment Management Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT EMERGING MARKETS FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Gartmore Global Partners, an indirect subsidiary of Nationwide Mutual Insurance Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth by investing primarily in equity securities of companies located in emerging market countries.. - ------------------------------------------------ -----------------------------------------------------------------------------------
19
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 - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- GARTMORE VARIABLE INSURANCE TRUST - GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Gartmore Mutual Fund Capital Trust, an affiliate of Nationwide Financial Services, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- Gartmore Variable Insurance Trust - Gartmore GVIT Global Utilities Fund: Class I 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 February 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 February 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.. - ------------------------------------------------ -----------------------------------------------------------------------------------
20
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 - --------------------------- ----------------------------------- -------------------------------------------------------------------- Gartmore Variable Insurance Trust - Gartmore GVIT Mid Cap Growth Fund: Class I This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 This sub-account is no longer available to receive transfers or new premium payments effective October 21, 2002. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 MONEY MARKET FUND: CLASS V - ------------------------------------------------ ----------------------------------------------------------------------------------- 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. - ------------------------------------------------ -----------------------------------------------------------------------------------
21
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. - ------------------------------------------------ ----------------------------------------------------------------------------------- Gartmore Variable Insurance Trust - Gartmore GVIT Nationwide(R) Leaders Fund: Class I This sub-account is only available in policies issued before February 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 This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 February 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. - ------------------------------------------------ -----------------------------------------------------------------------------------
22
Gartmore Variable Insurance Trust - J.P. Morgan GVIT Balanced Fund: Class I This sub-account is only available in policies issued before February 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- Gartmore Variable Insurance Trust - Van Kampen GVIT Comstock Value Fund: Class I (formerly, Gartmore Variable Insurance Trust - Comstock GVIT Value Fund: Class I) This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- GOLDMAN SACHS VARIABLE INSURANCE TRUST - GOLDMAN SACHS VIT MID CAP VALUE FUND - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Goldman Sachs Asset Management, L.P. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- JANUS ASPEN SERIES - BALANCED PORTFOLIO: SERVICE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 February 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- JPMorgan Investment Trust - JPMorgan Investment Trust Mid Cap Growth Portfolio (formerly, One Group(R) Investment Trust - One Group Investment Trust Mid Cap Growth Portfolio) This sub-account is only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: JPMorgan Investment Advisors Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Growth of capital and secondarily, current income by investing primarily in equity securities. - ------------------------------------------------ ----------------------------------------------------------------------------------- JPMorgan Investment Trust - JPMorgan Investment Trust Mid Cap Value Portfolio (formerly, One Group(R) Investment Trust - One Group Investment Trust Mid Cap Value Portfolio) This sub-account is only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: JPMorgan Investment Advisors Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation with the secondary goal of achieving current income by investing primarily in equity securities. - ------------------------------------------------ -----------------------------------------------------------------------------------
23
LORD ABBETT SERIES FUND, INC. - MID-CAP VALUE PORTFOLIO: CLASS VC - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Lord Abbett & Co. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- MERRILL LYNCH VARIABLE SERIES FUND, INC. - INTERNATIONAL INDEX V.I. FUND: CLASS II - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Merrill Lynch Investment Managers, L.P. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Current income and long-term growth of income accompanied by growth of capital. - ------------------------------------------------ ----------------------------------------------------------------------------------- MERRILL LYNCH VARIABLE SERIES FUND, INC. - LARGE CAP CORE V.I. FUND: CLASS II - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Merrill Lynch Investment Managers, L.P. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total investment return. - ------------------------------------------------ ----------------------------------------------------------------------------------- Neuberger Berman Advisers Management Trust - AMT Fasciano Portfolio: Class S This sub-account is only available in policies issued before May 1, 2005. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT GROWTH PORTFOLIO - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- Neuberger Berman Advisers Management Trust - AMT Guardian Portfolio: CLass I This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - AMT LIMITED MATURITY BOND PORTFOLIO: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Highest available current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- Neuberger Berman Advisers Management Trust - AMT Mid-Cap Growth Portfolio: Class I 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 February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Neuberger Berman Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - Oppenheimer Aggressive Growth Fund/VA: Non-Service Shares This sub-account is only available in policies issued before February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital appreciation. - ------------------------------------------------ -----------------------------------------------------------------------------------
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Oppenheimer Variable Account Funds - Oppenheimer Balanced Fund/VA: Non-Service Shares This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Total investment return: current income and 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 Core Bond Fund/VA: Non-Service Shares (formerly, Oppenheimer Variable Account Funds - Oppenheimer Bond Fund/VA: Non-Service Shares) - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High level of current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS - OPPENHEIMER GLOBAL SECURITIES FUND/VA: NON-SERVICE SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - Oppenheimer Main Street(R) Fund/VA: Non-Service Shares This sub-account is only available in policies issued before May 1, 2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: OppenheimerFunds, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. - ------------------------------------------------ ----------------------------------------------------------------------------------- PIMCO VARIABLE INSURANCE TRUST -ALL ASSET PORTFOLIO: ADMINISTRATIVE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Pacific Investment Management Company LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Maximize real return consistent with preservation of capital and prudent investment management. - ------------------------------------------------ ----------------------------------------------------------------------------------- PIMCO VARIABLE INSURANCE TRUST -LOW DURATION PORTFOLIO: ADMINISTRATIVE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Pacific Investment Management Company LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Maximize real return consistent with preservation of capital and prudent investment management. - ------------------------------------------------ ----------------------------------------------------------------------------------- PIMCO VARIABLE INSURANCE TRUST -REAL RETURN PORTFOLIO: ADMINISTRATIVE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Pacific Investment Management Company LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Maximize real return consistent with preservation of capital and prudent investment management. - ------------------------------------------------ ----------------------------------------------------------------------------------- PIMCO VARIABLE INSURANCE TRUST -TOTAL RETURN PORTFOLIO: ADMINISTRATIVE CLASS - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Pacific Investment Management Company LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Maximize real return consistent with preservation of capital and prudent investment management. - ------------------------------------------------ ----------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST - PIONEER HIGH YIELD VCT PORTFOLIO: CLASS I SHARES - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Pioneer Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Maximize total return. - ------------------------------------------------ ----------------------------------------------------------------------------------- ROYCE CAPITAL FUND - ROYCE MICRO-CAP PORTFOLIO - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Royce & Associates, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth. - ------------------------------------------------ -----------------------------------------------------------------------------------
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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 Mid-Cap Growth Portfolio: Class II This sub-account is only available in policies issued before May 1,2004. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: T. Rowe Price Investment Services - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term growth of capital by investing primarily in the common stocks of medium-sized companies with the potential for above-average growth. - ------------------------------------------------ ----------------------------------------------------------------------------------- T. ROWE PRICE EQUITY SERIES, INC. - T. ROWE PRICE NEW AMERICA GROWTH PORTFOLIO - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: T. Rowe Price Investment Services - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation by investing in companies believed to be in the fast-growing sectors that define the "new America." - ------------------------------------------------ ----------------------------------------------------------------------------------- Van Eck Worldwide Insurance Trust - Worldwide Bond Fund: Initial Class This sub-account is only available in policies issued before May 1, 2002. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Van Eck Associates Corporation - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return - income plus capital appreciation - by investing globally, primarily in a variety of debt securities. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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. - ------------------------------------------------ ----------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - EMERGING MARKETS DEBT PORTFOLIO: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: High total return. - ------------------------------------------------ ----------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - MID CAP GROWTH PORTFOLIO: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital growth - ------------------------------------------------ ----------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - U.S. REAL ESTATE PORTFOLIO: CLASS I - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Morgan Stanley Investment Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Above average current income and long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- W&R TARGET FUNDS, INC. - GROWTH PORTFOLIO - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Waddell & Reed Investment Management Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Capital growth with a secondary goal of current income. - ------------------------------------------------ -----------------------------------------------------------------------------------
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W&R TARGET FUNDS, INC. - REAL ESTATE SECURITIES PORTFOLIO - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Waddell & Reed Investment Management Company - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Total return through a combination of capital appreciation and current income. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 February 1, 2003. - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Adviser: Wells Fargo Funds Management, LLC - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Sub-adviser: Wells Capital Management, Inc. - ------------------------------------------------ ----------------------------------------------------------------------------------- - ------------------------------------------------ ----------------------------------------------------------------------------------- Investment Objective: Long-term capital appreciation. - ------------------------------------------------ ----------------------------------------------------------------------------------- Wells Fargo Variable Trust Funds - Wells Fargo Advantage Discovery Fund VT (formerly, Strong Variable Insurance Funds, Inc. - Strong Discovery Fund II, Inc.) This sub-account is only available in policies issued before September 27,1999. - ------------------------------------------------ ----------------------------------------------------------------------------------- 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 subadviser to one or more of the underlying funds that are offered under the policy. PLEASE REFER TO THE PROSPECTUS FOR EACH UNDERLYING MUTUAL FUND FOR MORE DETAILED INFORMATION. 27 - -------------------------------------------------------------------------------- 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 the Insured is alive. You may also change the policy, but only in accordance with its terms. Generally, the policy is available for an Insured between the ages of 18-79 (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 RIGHTS The policy belongs to the owner named in the application, or the person to whom the policy or any ownership rights in the policy have been validly assigned. You may also name a contingent policy owner. While the Insured is alive, the owner may exercise all policy rights and options. 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). The Insured is the person named in the application. You may change the Insured by submitting a change request to us in writing. If approved by us, the change will become effective when it was signed, rather than the date we received it. The policy charges after the change will be based upon the new Insured's characteristics. For more information, see "Change Of Insured Rider," on page 35. - -------------------------------------------------------------------------------- THE BENEFICIARY The beneficiary, or beneficiaries, is first in line to receive the Death Benefit Proceeds from the policy. You name the beneficiary in the application for the policy. You may name more than one beneficiary. The policy permits you to designate primary and contingent beneficiaries. If a primary beneficiary dies before the Insured, that beneficiary's interest will be paid to any surviving beneficiary. We will pay multiple primary beneficiaries in equal shares, unless you provide for another distribution. You may name a contingent beneficiary, or beneficiaries, in the application for the policy. The contingent beneficiary will become the primary beneficiary if all primary beneficiaries die before the Insured, and before any Proceeds become payable. You may name more than one contingent beneficiary. We will also pay multiple contingent beneficiaries in equal shares, unless you provide for another distribution. You may also change or add beneficiaries or contingent beneficiaries while the Insured is living. Any change must be in writing and satisfactory to us. We must receive the change at our Home Office, and we may require that you send us your policy for endorsement to the address on the cover page of this prospectus before we record the change. Once we record the change, the change will be effective as of the date it was signed rather than the date we received it. The change will not affect any payment we made or action we took before we recorded the change. - -------------------------------------------------------------------------------- TO PURCHASE To purchase the policy, you must submit to us a completed application and an initial Premium payment. 28 We must receive evidence of insurability that satisfies our underwriting standards (this may require a medical evidence) 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. Specifically, if we have previously issued you policies with an aggregate scheduled annual premium(s) that exceed $15 million, we reserve the right to refuse to issue an additional policy to you. Also, we reserve the right to modify our underwriting standards at any time. The minimum initial Specified Amount in most states is $50,000. We reserve the right to modify our minimum Specified Amount for new applicants at any time. - -------------------------------------------------------------------------------- COVERAGE We will issue the policy only if the underwriting process has been completed, we have approved the application and the proposed Insured is alive and in the same condition of health as described in the application. However, full insurance coverage will take effect only after you have paid the minimum initial Premium. We begin to deduct monthly charges from your policy Cash Value on the Policy Date. - -------------------------------------------------------------------------------- COVERAGE EFFECTIVE DATE Insurance coverage begins and is In Force on the later of (i) the Policy Date shown on the Policy Data Page and (ii) the date the initial Premium is paid. It will end when the policy Lapses, or when we pay all the Proceeds from the policy. We may provide temporary insurance coverage before full insurance coverage takes effect, subject to our underwriting standards and the policy conditions. - ------------------------------------------------------------------------------- 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 law. If you decide to cancel during the free look period, return the policy to the sales representative who sold it to you, or to us at our Home Office, along with your written cancellation request. Within seven days, we will refund the amount prescribed by the law of the state in which we issued the policy. We will treat the policy as if we never issued it. Because of the free look period, when we actually allocate Net Premium to the Sub-Account portfolios based on your choices depends on the right to examine law of the state in which you live. For more information, see "To Allocate Premium And Sub-Account Valuation," beginning on page 41. - -------------------------------------------------------------------------------- TO CHANGE COVERAGE After the first policy year, you may request to change the Specified Amount. Changes may result in additional charges; however, no change will take effect unless the new Cash Surrender Value is 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 46. If you decide to increase the Specified Amount, you must provide us with evidence of insurability that satisfies our underwriting standards. The Insured must be within the required issue ages of 18 to 79. The increase must be for at least $10,000 and the amount of insurance after increase may not exceed the maximum amount that is generally no more than the policy's Cash Value plus $8,000,000. For more information, see "Calculation Of The Death Benefit Proceeds," beginning on page 44. 29 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. Also, we will deny a request that would disqualify the policy as a contract for life insurance. To change the Specified Amount, you must submit your written request to us at our Home Office. Changes will become effective on the next monthly anniversary from the Policy Date after we approve the request. We reserve the right to limit the number of changes to one each year. - -------------------------------------------------------------------------------- SUB-ACCOUNT PORTFOLIO We will determine the amount you have available for transfers among the Sub-Account TRANSFERS portfolios in Units based on the Net Asset Value (NAV) per share of the mutual fund in which a Sub-Account portfolio invests. The mutual fund will determine its NAV once daily as of the close of the regular business session of the New York Stock Exchange (usually 4:00 p.m. Eastern time). A Unit will not equal the NAV of the mutual fund in which the Sub-Account portfolio invests, however, because the Unit value will reflect the deduction for any 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 42. Disruptive trading practices, which hamper the orderly pursuit of stated investment objectives by underlying mutual fund managers, may adversely affect the performance of the Sub-Accounts. Prior to the policy's Maturity Date, you may transfer among the available Sub-Account portfolios; however, in instances of disruptive trading that we may determine, or may have already determined to be harmful to policy owners, we will, through the use of appropriate means available to us, attempt to curtail or limit the disruptive trading. If your trading activities, or those of a third party acting on your behalf, constitute disruptive trading, we will not limit your ability to initiate the trades as provided in your policy; however, we may limit your means for making a transfer or take other action we deem necessary to protect the interests of those investing in the affected Sub-Accounts. If you intend to use an active trading strategy, you should consult your registered representative and request information on our other policy that offers Sub-Accounts designed specifically to support active trading. We may add new underlying mutual funds, or new share classes of currently available underlying mutual funds, that assess short-term trading fees. In the case of new share class additions, your subsequent allocations may be limited to that new share class. Short-term trading fees are a charge assessed by an underlying mutual fund when you transfer out of a Sub-Account before the end of a stated period. These fees will only apply to Sub-Accounts corresponding to underlying mutual funds that impose such a charge. The underlying mutual fund intends short-term trading fees to compensate the fund and its shareholders for the negative impact on fund performance that may result from disruptive trading practices, including frequent trading and short-term trading (market timing) strategies. The fees are not intended to adversely impact policy owners not engaged in such strategies. The separate account will collect the short-term trading fees at the time of the transfer by reducing the policy owner's Sub-Account value. We will remit all such fees to the underlying mutual fund. 30 - -------------------------------------------------------------------------------- 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 make more than one transfer every 12 months. However, during the first 24 months following the initial Policy Date you may irrevocably elect to transfer all of the Cash Value to the fixed account. For more information, see "To Irrevocably Transfer Cash Value Or Exchange The Policy," on page 32. On transfers to the fixed account, we may not permit you to transfer over 20% of the Cash Value allocated to the Sub-Account portfolios as of the close of business of the prior Valuation Period. We reserve the right to refuse any transfer to the fixed account if the fixed account's Cash Value comprises more than 30% of the policy's Cash Value. You may not request a transfer to the fixed account before the end of the first year from the Policy Date. On transfers from the fixed account, we may permit you transfers of no more than 20% of the Cash Value of the fixed account as of the end of the previous policy year (subject to state restrictions). Any transfers you make from the fixed account must be within 45 days of the end of a interest rate guaranteed period. An interest rate guaranteed period is the time that a stated interest rate is guaranteed to remain in effect. Currently, interest crediting rates are reset at the beginning of each calendar quarter. - -------------------------------------------------------------------------------- MODES TO MAKE A TRANSFER To make a transfer, send your written request to us at our Home Office via first class U.S. mail. Upon receipt, we will process a transfer request at the end of the current Valuation Period. We may also permit you to use other modes of communication, subject to limitations. OUR CONTACT INFORMATION IS ON THE COVER PAGE OF THIS PROSPECTUS. With respect to any telephonic or electronic mode of communication, including the Internet, we monitor transfer activity for potentially harmful investment practices. For policies owned by a natural person, you are limited to 20 "transfer events" per calendar year. If you initiate transfer events within a lesser time interval at a pace that is equivalent to 20 within a year, you may be required to submit all subsequent transfers via U.S. mail. To calculate transfer events, at the end of each Valuation Period, we will group together all of your transfer requests for the day. We will count this grouping as a "transfer event," regardless of the number of Sub-Accounts involved. Once 20 transfer events or the equivalent occur, you may continue to make transfers, but only by sending your written request to us at our Home Office via first class U.S. mail until the end of the year. Then, we begin to count transfer events over again. For policies owned by a corporation or another entity, we monitor transfer activity for potentially harmful investment practices, however, we do not systematically monitor the transfer instructions of individual persons. Our procedures include the review of aggregate entity-level transfers, not individual transfer instructions. It is our intention to protect the interests of all contract owners; it is possible, however, for some harmful trading to go on undetected by us. For example, in some instances, an entity may make transfers based on the instruction of multiple parties such as employees, partners, or other affiliated persons based on those persons participation in entity sponsored programs. We do not systematically monitor the transfer instructions of these individual persons. We monitor aggregate trades among the Sub-Accounts for frequency, pattern, and size. If two or more transfer events are submitted in a 30 day period, we may impose conditions on your ability to submit trades. These restrictions include revoking your privilege to make trades 31 by any means other than written communication submitted via U.S. mail for a twelve-month period. We have the right to restrict transfer requests, or take any other action we deem necessary, in order to protect policy owners and beneficiaries from the negative investment results that may result from harmful investment practices employed by some policy owners (or third parties acting on their behalf). In particular, we may restrict trading strategies designed to avoid or take advantage of our monitoring procedures and other measures aimed at curbing harmful trading practices. Some investment advisers/representatives manage the assets of multiple Nationwide policies pursuant to trading authority granted or conveyed by multiple policy owners. We generally will require multi-policy advisers to submit all transfer requests via U.S. mail. We will consider each request by any means as a single transfer regardless of the number of Sub-Accounts involved. We will employ reasonable procedures to confirm that instructions are genuine, especially with respect to communication via the internet or telephone, including: o requiring forms of personal identification before acting upon instructions; o providing you with written confirmation of completed transactions; and/or o recording telephone instructions. If we follow these procedures, we will not be liable for any loss, damage, cost or expense from complying with what we reasonably believe to be genuine instructions. Rather, you will bear the risk of loss. Any computer system or telephone, whether it is yours, your service provider's, your representative's, or ours, can experience slowdowns or outages for a variety of reasons. These slowdowns or outages may delay or prevent our ability to process your request. Although we have taken precautions to help our system handle heavy usage, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request in writing. - -------------------------------------------------------------------------------- TO IRREVOCABLY TRANSFER CASH VALUE OR EXCHANGE THE POLICY During the first 24 months of coverage, you have a right to irrevocably elect to transfer 100% of the policy's Cash Value to the fixed account, irrespective of our right to limit transfers to the fixed account. After this election, you no longer will be able to participate in the Investment Experience of the Sub-Account portfolios. Rather, the policy's Cash Value will be credited with the fixed account's interest rate. You must make your request on our official forms to the Home Office. After the first 24 months of coverage, you may make a request to exchange the policy for a different policy so long as we receive evidence that the Insured meets our underwriting standards of insurability. The new policy may be one of our available flexible premium adjustable life insurance policies that does not have a greater Death Benefit than this policy immediately prior to the exchange date. For more information, see "In Summary: Fee Tables," beginning on page 6. The exchange may have tax consequences. For more information, see "Exchanging The Policy For Another Life Insurance Policy," beginning on page 56. This policy will terminate when the new policy takes effect. - -------------------------------------------------------------------------------- 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 Insured dies, the policy matures, or the Grace Period ends. For more information, see "Grace Period," beginning on page 51. 32 Normally, we will pay the surrender proceeds within thirty days after we receive your written request in good order at our Home Office. We reserve the right to delay payment of the cash surrender value arising from the Fixed Account for six months. 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 income tax purposes. For more information, see "Taxes-Surrender Of The Policy," beginning on page 55. The cash surrender value will be reduced by the outstanding amount of a policy loan. For more information, see "Policy Loans," beginning on page 50. - ------------------------------------------------------------------------------- TO ASSIGN You may assign any rights under the policy while the Insured is alive. If you make an assignment, 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 50. - -------------------------------------------------------------------------------- PROCEEDS UPON MATURITY If the policy is In Force on the Maturity Date, we will pay you the maturity Proceeds. Normally, we will pay the maturity Proceeds within seven days of the Maturity Date. However, the payment will be postponed 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 maturity Proceeds will equal the policy's Cash Value minus any Indebtedness. After we pay the maturity Proceeds, the policy is terminated. We may offer to extend the Maturity Date to coincide with the Insured's death, after which we will pay the Proceeds to your beneficiary. If you accept this offer the policy will be endorsed so that: o no additional Premium payments will be allowed; o no changes to the amount of the Specified Amount will be allowed; o if you elected Death Benefit Option 2, the Death Benefit will be changed to Option 1. For more information, see "Death Benefit Options," beginning on page 45; o the Death Benefit will equal either 101.97% of the Cash Value if the Death Benefit is Option 1 or the Specified Amount plus the greater of accumulated Premiums and Cash Value if the Death Benefit is Option 3; o 100% of the Cash Value (for policies with Death Benefit Option 1) or the accumulated Premium payments (for policies with Death Benefit Option 3) will be allocated to the policy's fixed account; o the Proceeds payable at the Insured's death will be the greater of the Death Benefit or the Cash Value; o the Mortality and Expense charge and the Administrative charges will no longer be assessed and since the Death Benefit will be equal to the Cash Value if the Death Benefit is Option One or to the accumulated Premium payments if the Death Benefit is Option 3 the cost of insurance will become zero; and 33 o the Maturity Date will not be extended where the policy will fail the definition of life insurance. - -------------------------------------------------------------------------------- REPORTS AND ILLUSTRATIONS We will send you transaction confirmations. We will also send you semi-annual and annual reports that show: o the specified coverage amount o the current Cash Value o Premiums paid o the Cash Surrender Value o all charges since the last report o outstanding policy indebtedness We will send 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. We do not charge for illustrations. - ------------------------------------------------------------------------------- ERRORS OR MISSTATEMENTS If an error or misstatement of age was made in completing the application, then we will adjust the Death Benefit and Cash Value accordingly. To determine the adjusted Death Benefit, we will multiply the Net Amount at Risk at the time of the Insured's death by the ratio of the monthly cost of insurance actually applied in the policy month of death to the monthly cost of insurance that should have been applied at the true age in the policy month of death. We will then add this adjusted amount that reflects the true age to the Cash Value of the policy at the Insured's death. The Cash Value will be adjusted to reflect the cost of insurance charges on the correct age from the Policy Date. INCONTESTABILITY Except for intentional material misrepresentations, we will not contest payment of the Death Benefit Proceeds based on the initial Specified Amount after the policy has been In Force for two years from the Policy Date. For any change in Specified Amount requiring evidence of insurability, we will not contest payment of the Death Benefit Proceeds based on such an increase after two years from the effective date of the increase. 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 design the policy to meet your specific needs. You may elect one or both of them. However, once the policy is In Force, we may require further evidence of insurability to add a Rider. Availability varies by state. You will incur an additional charge for the Additional Protection (insurance) Rider so long as: the policy remains in effect and the Rider's term has not expired; until we have paid the Rider's benefit; or you decide to terminate the Rider in a written request to our Home Office. For more information on the costs of the Additional Protection (insurance) Rider, see "In Summary: Fee Tables," beginning on page 6 and "Charges," beginning on page 36. 34 - --------------------------- ---------------------------------------------------- CHANGE OF INSURED RIDER You may exchange the Insured for a new Insured, subject to insurability and other conditions. We do not charge for this Rider, but we base future policy charges on the characteristics of the new Insured. You may elect this Rider at any time. - -------------------------------------------------------------------------------- ADDITIONAL (INSURANCE) PROTECTION RIDER This Rider is only available to purchase when you purchase the policy. The benefit is supplemental life insurance on the Insured. The policy pays a benefit, in addition to the base (non-rider) Death Benefit, to the beneficiary upon the Insured's death. The benefit amount varies monthly and is based on the Death Benefit option you have chosen. For more information, see "Death Benefit Options," on page 45. The Rider's cost is determined by multiplying a monthly cost of insurance by the Rider's Death Benefit amount. For more information, see "In Summary: Fee Tables," beginning on page 6. You may renew coverage annually until the policy Maturity Date. Certain terms and conditions apply to the Rider including that two years after the Rider's effective date we will not contest the payment of the benefit for any reason other than you failing to pay enough Premium to cover the cost of insurance for the Rider. Also, if the Insured dies of suicide within two years of the Rider taking effect, we will pay the cost of insurance we deducted for the Rider, but not the Rider's Death Benefit. If the age of the Insured is misstated or erroneous, we will adjust the Rider's Death Benefit to reflect the true age. - ------------------------------------------------------------------------------- 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. - --------------------------- ---------------------------------------------------- INITIAL PREMIUM The amount of the initial Premium required for us to issue this policy will depend on the initial Specified Amount of insurance you request, the Death Benefit option you select, 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 Premiums. Also, the age, health, and activities of the Insured will affect our determination of the risk of issuing the policy. In general, the greater this risk, the higher the initial Premium will be. Whether we will issue full insurance coverage depends on the Insured meeting all underwriting requirements, you paying the initial Premium, and our delivery of the policy while the Insured is alive. We will not delay delivery of the policy to increase the likelihood that the Insured is not still living. Depending on the outcome of our underwriting process, more or less Premium may be necessary for us to issue the policy. We also retain the right to not issue the policy. If we exercise this right, we will return your payment within two business days. You may pay the initial Premium to our Home Office or to our authorized representative. The initial Premium payment must be at least $50 per policy. - -------------------------------------------------------------------------------- SUBSEQUENT PREMIUMS You may make additional Premium payments at any time while the policy is In Force, subject to the following: o We may require satisfactory evidence of insurability before accepting any 35 additional Premium payment that results in an increase in the policy's Net Amount at Risk. Whether we exercise this right depends on: the length time since the Policy Date; the standard underwriting criteria for the amount of insurance after the requested increase; the number of policies owned by the policy owner; and the degree of uniformity with respect to the requested increases across the policies owned by the policy owner. The longer the period, the greater the difference between the underwriting class at the time of issue and at the time of the increase, and the less uniform the changes across all policies you own, the more likely we will be to exercise this right. If we do not exercise our right to refuse a Premium payment which increases our Net Amount at Risk, we do not waive our right to refuse subsequent Premium payments which increase our Net Amount at Risk. o We will refund 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; and o We may require that policy indebtedness be repaid prior to accepting any additional Premium payments. Some, but not all, of the situations when we might exercise this right include when your policy loans exceed 90% of the cash value, when the Premium payment would result in an increase in the Net Amount at Risk, or when a Premium payment may alter the character of the policy for tax purposes. We will tell you that we intend to apply the money you have sent us to loan repayment rather than as a Premium payment before processing the transaction. If you decide to make a subsequent Premium payment, you must send it to our Home Office. Each Premium payment must be at least $50 per policy. - -------------------------------------------------------------------------------- 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. We will deduct all other charges from the policy's cash value (rather than a Premium payment), except for mortality and expense risk . We will only deduct the mortality and expense risk charge from the Cash Value of the Sub-Account portfolios, and we will only deduct the loan amount interest charge from the Cash Value of the loan account. There are also charges associated with the Sub-Account portfolios. While you will not pay them directly, they will affect the value of the assets in the Sub-Account portfolios. On a daily basis, the manager of each mutual fund that comprises the policy's available variable investment options deducts operating charges from that mutual fund's assets before calculating the NAV. (We use NAV to calculate the value of your corresponding Sub-Account portfolio allocation in Units.) More detail about these charges is contained in the prospectus for the mutual fund. 36 - -------------------------------------------------------------------------------- PREMIUM LOAD (CHARGE) This charge amounts to no more than 9.0% of Premium and is reduced to 5.5% of Premium payment starting with the eighth policy year. The charge partially recoups sales expenses and premium taxes. After this charge is deducted, the remaining premium is invested in the investment options you elect. We calculate the Premium load charge using a "target premium." Federal tax law limits the amount of Premium you can pay and have the policy continue to be life insurance for tax purposes. For more information, see "The Minimum Required Death Benefit," beginning on page 45. Target premium is 28.57% of the maximum annual Premium allowed under the Internal Revenue Code assuming that: the policy is not a "modified endowment contract" as defined in the Code. For more information see, "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 54. The policy's death benefit is equal to the base (non-rider) portion of the Specified Amount; and you are paying seven level, annual Premiums. Currently, the charges for policies vary according to the time of purchase and amount of annual Premium as follows: For Policies Issued On or After September 9, 2002 With $500,000 Or More Of Annual Premium Per Owner For the first five policy years: 9.00% of Premium payments for the base (non-rider) portion of the Specified Amount up to "target Premium", plus 6.50% of Premium payments in the excess of the target premium for the base (non-rider) portion of the Specified Amount, plus 3.29% minus (1.29% of the Premium times the proportion of additional protection rider to the total Specified Amount) of the Premium payments for the additional protection rider portion of the Specified Amount; For policy years six through ten: 3.50% of Premium payments; For policy years eleven and after: 2.00 % of Premium payments. For Policies Issued On or After September 9, 2002 With Less Than $500,000 Of Annual Premium Per Owner For the first seven policy years: 9.00% of Premium payments up to target premium; plus 7.00% of Premium payments over the target premium; For policy years eight through ten: 5.50% of Premium payments; and then For policy years eleven and after: 3.50% of Premium payments. For Policies Issued Prior To September 9, 2002 For the first seven policy years: 9.00% of Premium payments for the base (non-rider) portion of the Specified Amount up to target Premium; plus 6.50% of Premium payments in the excess of the target premium for the base (non-rider) portion of the Specified Amount, plus 6.50% of Premium Payments for the additional protection rider portion of the Specified Amount. For years eight and after: 3.50% Premium payments. ------------------------------------------------------------------------------- 37 - -------------------------------------------------------------------------------- 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 surrendered amount to compensate us for the administrative costs in calculating and generating the surrender amount. Currently we do not assess this charge. - -------------------------------------------------------------------------------- COST OF INSURANCE We will determine this charge by multiplying the current (non-rider) monthly cost of insurance rate by the Net Amount at Risk for the base portion of the Specified Amount. This charge compensates us for providing insurance protection under the policy. We base the cost of insurance rates on our expectancies of future mortality and expense. The current cost of insurance rate will vary by demographic factors such as: age; tobacco use; duration since issue; Specified Amount; underwriting class; and any substandard ratings. The current cost of insurance charges are based on future expectations for factors such as: mortality; investment earnings; persistency; expenses; and taxes. Any changes in these expectations may result in increased cost of insurance charges for your policy. If so, your policy's Cash Value will be adversely affected in future years. We may underwrite your policy on a non-medical basis that may result in a higher cost of insurance charge. Non-medical underwriting means that a physical examination to obtain medical information on the proposed Insured is not required to issue the policy. The higher cost of insurance charge would compensate us for assuming additional mortality risk as a result of issuing without the information that results from medical underwriting. We may use a separate cost of insurance rate for the initial Specified Amount and any increase. Periodically, we will reevaluate the current base (non-rider) cost of insurance rates based on our expectations about future experience. Any changes in the current cost of insurance rates will be uniformly applied to Insureds of the same underwriting rate class. ------------------------------------------------------------------------------- MORTALITY AND EXPENSE RISK This charge is guaranteed not to exceed 0.75% of the policy's Cash Value on an annualized basis. Currently, during the first through fourth years from the Policy Date, this charge is 0.40% per annum of Cash Value and during the fifth through twentieth years from the Policy Date, it is 0.25% per annum of Cash Value. Thereafter, this charge currently is 0.10% per annum of Cash Value. The charge compensates us for assuming risks associated with mortality and expense costs and we may profit from it. The mortality risk is that the Insured does not live as long as expected. The expense risk is that the costs of issuing and administering the policy are more than expected. The charge is guaranteed not to exceed a stipulated maximum. For more information, see "In Summary: Fee Tables," beginning on page 6. 38 - -------------------------------------------------------------------------------- POLICY LOAN INTEREST We charge interest on the amount of an outstanding policy loan, at a rate no greater than 3.75% per annum, which will accrue daily and become due and payable at the end of each year from the Policy Date or at the time you take an additional loan. If left unpaid, we will add it to the policy's outstanding indebtedness. As collateral or security for repayment, we will transfer an equal amount of Cash Value to the policy loan account on which interest will accrue and be credited daily. The minimum guaranteed interest crediting rate is stated on the Policy Data Page. - -------------------------------------------------------------------------------- ADMINISTRATIVE The maximum guaranteed administrative charge is $10, but we currently are charging $5. This charge reimburses us for the costs of maintaining the policy, including for accounting and record keeping. - ------------------------------------------------------------------------------- ADDITIONAL (INSURANCE)PROTECTION RIDER This charge compensates us for providing supplemental life insurance on the Insured. We will determine this charge by multiplying the Rider's current cost of insurance rate by the Net Amount at Risk for the Rider portion of the Specified Amount. We base the additional protection cost of insurance rate on our expectation as to the Insured's mortality. The additional protection cost of insurance rate will vary by: the Insured's age; tobacco use; duration since issue; underwriting class; any substandard ratings; and the Specified Amount of the Rider. Periodically, we will reevaluate the Rider's current cost of insurance rates based on our expectations about future experience. Any changes in the current cost of insurance rates will be uniformly applied to Insureds of the same underwriting rate class. Any changes in these expectations may result in increased cost of insurance charges for the Rider. - -------------------------------------------------------------------------------- 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 section, the deductions we make under the policy are designed to compensate us for the services and benefits we provide, the distribution and operational expenses we incur, and the risks we assume. Our initial expenses in distributing and establishing the contract exceed the deductions we make during the early stages of policy ownership. Nevertheless, we expect to make a profit over time because variable life insurance is intended to be a long term financial product. Accordingly, we have designed the policy with features and underlying investment options that we believe support and encourage long-term ownership. The "In Summary: Fee Tables," section sets out the costs you incur when you purchase this policy. The following two paragraphs 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. 39 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." We pay commission of up to 28% of first year premiums and up to 10% for renewal premiums after the first year. Other compensation may total up to 13% of first year premium. 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 maximums discussed above. Commission may be paid as an asset-based amount instead of a premium based amount. If an asset-based commission is paid, it will not exceed 0.70% of the non-loaned cash value per year. The payment of such total compensation to the brokerage firms is contingent on the long-term persistency of each Policy and all Policies sold on our behalf by such firms in the aggregate. The actual amount of total compensation we pay depends on factors such as the aggregate amount of premiums we receive from all Policies sold on our behalf by the respective brokerage firms, the revenues we receive from the investment options included within the Policies, and the scope of services brokerage firms provide. Individual registered representatives typically receive a portion of the total compensation we pay, depending on their arrangement with their brokerage firm. If you would like to know the exact compensation arrangement associated with this product, you should consult your registered representative or Nationwide's Corporate Insurance Unit. 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 paragraphs. 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 that, in performing these functions and incurring these costs, we provide substantial value to the funds. Accordingly, the underlying mutual funds pay us (or our affiliates) a fee for some of the distribution and operational services we provide and the related costs we incur. These payments may be made pursuant to a fund's 12b-1 plan, in which case they are deducted from fund assets, or service/administration agreements often between the fund adviser and us or our affiliates with no direct deduction from fund assets. 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. 40 - -------------------------------------------------------------------------------- TO ALLOCATE PREMIUM AND SUB-ACCOUNT VALUATION - -------------------------------------------------------------------------------- You may choose to allocate all or a portion of your Net Premium to any Sub-Account. When this actually 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 when 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 at the time of the transfer. After your right to cancel the policy expires, all Premium payments will be allocated to the Sub-Account choices in effect when we received the Premium payment. - -------------------------------------------------------------------------------- VARIABLE INVESTMENT OPTIONS The separate account invests in shares of the available Sub-Account portfolios. Each Sub-Account portfolio invests in a mutual fund that is registered with the SEC. This registration does not involve supervision of the management or investment practices or policies of the portfolios or mutual funds by the SEC. Each Sub-Account portfolio's assets are held separately from the assets of the other Sub-Account portfolios, and each Sub-Account portfolio has investment objectives and policies that are different from those of the other Sub-Account portfolios. Thus, each Sub-Account portfolio operates as a separate investment fund, and the income or losses of one Sub-Account portfolio generally have no effect on the investment performance of any other Sub-Account portfolio. The "Available Sub-Accounts" section identifies the available mutual funds, by name, investment type and adviser, and includes expense information for each. - -------------------------------------------------------------------------------- THE FIXED INVESTMENT OPTION The Premium you allocate to the fixed investment option is held in the fixed account, which is part of our general account. The general account contains all of our assets other than those in the separate accounts. 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 at least 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 interest we credit to the amounts you allocate to the fixed investment option may not exceed the minimum guarantee of the guaranteed interest crediting rate for any given year. The amounts you allocate to the fixed investment option will not share in the investment performance of our general account. Rather, the investment income you earn on your allocations will be based on varying rates we set. Currently, the rates are set at the beginning of each calendar quarter and will be effective for at least three months. 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 41 securities laws relating to the accuracy and completeness of statements made by prospectus disclosure. - -------------------------------------------------------------------------------- ALLOCATION OF PREMIUM AND CASH VALUE We allocate your Premium payments to Sub-Accounts or the fixed account per your instructions. You must specify your Premium payments in whole percentages. The sum of allocations must equal 100%. - -------------------------------------------------------------------------------- WHEN SUB-ACCOUNT UNITS ARE VALUED We will price Sub-Account Units on any day the New York Stock Exchange (NYSE) is open for business, unless we are closed We will not price Sub-Account Units on these recognized holidays. o New Year's Day o Independence Day o Martin Luther King, Jr. Day o Labor Day o Presidents' Day o Thanksgiving o Good Friday o Christmas o Memorial Day In addition, we will not price Sub-Account Units if: o trading on the New York Stock Exchange is restricted; o an emergency exists making disposal or valuation of securities held in the separate account impracticable; or o the SEC, by order, permits a suspension or postponement for the protection of security holders. SEC rules and regulations govern when the conditions described above exist. Any transaction you try to effect when we are closed will not happen until the next day we and the NYSE are both open for business. - -------------------------------------------------------------------------------- HOW INVESTMENT EXPERIENCE IS DETERMINED Though the number of Sub-Account Units will not change as a result of Investment Experience, changes in the net investment factor may cause the value of a Sub-Account Unit to increase or decrease from Valuation Period to Valuation Period. Changes in the net investment factor may not be directly proportional to changes in the Net Asset Value of the mutual fund shares, because of the deduction for mortality and expense risk charge, and any charge or credit for tax reserves. We determine the change in Sub-Account values at the end of a Valuation Period. The Sub-Account Unit value for a Valuation Period is determined by multiplying the Sub-Account Unit value as of the prior Valuation Period by 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) and then subtracting (c) where: (a) is the sum of: o the Net Asset Value per share of the mutual fund held in the Sub-Account as of the end of the current Valuation Period after taxes or tax credits; and o the per share amount of any dividend or income distributions made by the mutual fund (if the date of the dividend or income distribution occurs during the current Valuation Period). (b) is the Net Asset Value per share of the mutual fund determined as of the end of the immediately preceding Valuation Period after taxes or tax credits; and (c) is a charge for Mortality and Expense Risk. 42 - --------------------------- ---------------------------------------------------- CASH VALUE The policy has a Cash Value. There is no guaranteed Cash Value. The Cash Value will vary depending on where you allocate your Net Premium. Amounts allocated to the fixed account and policy loan account vary based on the daily crediting of interest to those accounts. Amounts allocated to the Sub-Account portfolios vary daily based on the Investment Experience of the Sub-Account portfolios. It will also vary because we deduct the policy's periodic charges from the cash value. So, if the policy's cash value is part of the Death Benefit option you have chosen, then your Death Benefit will fluctuate. We compute the Cash Value of your policy by adding the Sub-Account portfolio Unit values to the money you have allocated to the fixed investment option and adding the amount in the policy loan account. We will determine the value of the assets in the separate account at the end of each Valuation Period. We will determine the Cash Value at least monthly. To determine the number of Sub-Account Units credited to each Sub-Account, we divide the net amount you allocate to the Sub-Account by the Sub-Account Unit value for the Sub-Account (using the next Valuation Period following when we receive the Premium). If you surrender part or all of the policy, we will deduct a number of Sub-Account Units from the separate account and an amount from the fixed account that corresponds to the surrendered amount. Thus, your policy's Cash Value will be reduced by the surrendered amount. If we assess a partial surrender charge, we will subtract the charge from the proceeds before delivering the net amount to you. Similarly, when we assess charges or deductions, a number of Sub-Account Units from the separate account and an amount from the fixed account that corresponds with the charge or deduction will be deducted from the policy's Cash Value. Unless you direct otherwise, 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 fixed account and the policy loan account is credited with interest daily at the guaranteed minimum annual effective rate stated on the Policy Data Page. We may decide to credit interest in excess of the guaranteed minimum annual effective rate. For the fixed account, we will guarantee the current rate in effect through the end of the calendar quarter. Upon request, we will inform you of the current applicable rates for each account. For more information, see "The Fixed Investment Option," beginning on page 41 and "Loan Amount And Interest," beginning on page 50. On any date during the policy year, the Cash Value equals the Cash Value on the preceding Valuation Period, plus any Net Premium applied since the previous Valuation Period, minus any policy charges, plus or minus any investment results, and minus any partial surrenders. - -------------------------------------------------------------------------------- DOLLAR COST AVERAGING You may elect to participate in a dollar cost averaging program. Dollar cost averaging is an investment strategy designed to reduce the investment risks associated with market fluctuations. 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 additional charge for dollar cost averaging. 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 43 consider your financial ability to continue these programs over a long enough period of time to purchase Units when their value is low, as well as when it is high. We may modify, suspend or discontinue these programs at any time. We will notify you in writing 30 days before we do this. 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. With dollar cost averaging, you may also have Premium transferred from the GVIT Gartmore GVIT Money Market Fund: Class I. With dollar cost averaging, 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. - -------------------------------------------------------------------------------- THE DEATH BENEFIT - -------------------------------------------------------------------------------- CALCULATION OF THE DEATH BENEFIT PROCEEDS We will calculate the Death Benefit and pay it to the beneficiary when we receive at our Home Office proof that the Insured has died, as well as other customary information. The Death Benefit may be subject to an adjustment if death occurs within the contestability period or at any time if there has been a material misstatement. 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 (as described in the following "Minimum Required Death Benefit" section) you have elected. Also, the Death Benefit may vary with the Cash Value of the policy, which depends on investment performance. You may choose one of three Death Benefit options. Not all Death Benefit options are available in all states. If you do not elect a Death Benefit, the policy's Death Benefit will be Option One. For policies issued after the later of May 1, 2002 or the date we are authorized to issue policies with a maximum Death Benefit within your state, we reserve the right to limit the amount of insurance under any policy to the maximum Death Benefit. Currently, the maximum Death Benefit is equal to the sum of the Cash Value and the lesser of (i) 200% of the Specified Amount on the policy issue date and (ii) $8,000,000. We may increase the maximum Death Benefit at our sole discretion. We will calculate the Death Benefit on the monthly anniversary and upon the death of the Insured. If the calculation exceeds the maximum Death Benefit, we reserve the right to pay to you a pre-death distribution to reduce the Cash Value so that the Death Benefit will not exceed the sum of the Cash Value and the lesser of (i) 180% of the Specified Amount on the policy issue date and (ii) $7,200,000. If Death Benefit Option 3 is applicable and the accumulated Premium account is greater than the Cash Value, we reserve the right to reduce the amount previously credited to the accumulated Premium account to an amount equal to 90% of the Cash Value immediately before the distribution. For example, if at the time of the pre-death distribution, your Cash Value is $100 and your accumulated Premium account is $102, we would reduce your accumulated Premium account by $12 to $90 (i.e., 90% of the Cash Value). The accumulated Premium account will not become less than zero because of a pre-death distribution. 44 The maximum Death Benefit may, under certain circumstances, curtail the flexibility that the policy affords you. For example, the policy's Cash Value may increase at a rate that outpaces the ratio of Cash Value to life insurance permitted under the Internal Revenue Code. In some instances, you and we may address this situation by increasing the Specified Amount of insurance so that the policy's ratio of Cash Value to life insurance is readjusted to comply with the tax code definition. If, however, an increase in the Specified Amount would cause the Death Benefit to exceed the maximum Death Benefit, then this method of achieving compliance with the tax code definition of life insurance may not be available. We will notify you that a pre-death distribution and/or a reduction in the accumulated Premium account has been generated. We will send this notice no later than thirty days after we become aware that the maximum Death Benefit has been exceeded. Taxes arising from the pre-death distribution, if any, are your responsibility. We urge you to confer with your tax adviser regarding tax implications of receiving a pre-death distribution prior to the purchase of this policy. - ------------------------------------------------------------------------------- DEATH BENEFIT OPTIONS There are the 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 (which will vary with the investment performance), or the minimum required Death Benefit. OPTION THREE The Death Benefit will be the greater of the sum of the Specified Amount on the date of death and the accumulated Premium account (which consists of all Premium payments accumulated to the date of the death less partial surrenders accumulated to the date of death) or the minimum required Death Benefit. The Proceeds payable upon the death of the Insured are equal to Death Benefit reduced by policy indebtedness and unpaid charges and increased by any insurance provided by riders. Also, for policies to which an "other amount paid at surrender" is available as of the time the Proceeds become payable may receive an additional payment. For more information, see "Other Amounts Paid At Surrender," beginning on page 47. This additional payment will be based on the other amount paid at surrender at the time the Proceeds become payable. - -------------------------------------------------------------------------------- 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 have a significant element of life insurance and not be primarily an investment vehicle. 45 At the time we issue the policy, you irrevocably elect one of the following tests to qualify the policy as life insurance under Section 7702 of the Code: o the cash value accumulation test; or o the guideline premium/cash value corridor test. The cash value accumulation test determines the minimum required Death Benefit by multiplying the account value by a percentage set out in the federal tax regulations to the Code. The percentages depend upon the Insured's age, sex and underwriting classification. 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, but the percentage varies only by the Attained Age of the Insured. 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 death Proceeds payable under a policy should be excludable from gross income of the beneficiary for federal income tax purposes. If you do not elect a test, we will assume that you intended to elect the cash value accumulation 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, or from Option Two to Option One. You may not change from or 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 difference between the Death Benefit and the Cash Value (i.e., the Net Amount at Risk) remains constant before and after the Death Benefit option change. Because your Net Amount at Risk is the same before and after the reduction, reducing the Specified Amount by itself does not alter the policy's cost of insurance. The policy's charges going forward, however, will be based on a new Specified Amount that will change the calculation of those charges. Depending on changes in factors such as the 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 results in the total Premiums paid exceeding the maximum Premium limitations under Section 7702 of the Code. 46 - -------------------------- ----------------------------------------------------- SUICIDE If the Insured dies by suicide, while sane or insane, within two years from the Policy Date, we will pay no more than the sum of the Premiums paid, less any indebtedness, and less any partial surrenders. If the Insured dies by suicide, while sane or insane, within two years from the date we accept an application for an increase in the Specified Amount, we will pay no more than the Death Benefit associated with the initial Specified Amount, plus the cost of insurance charges associated with the increase in Specified Amount. - -------------------------------------------------------------------------------- SURRENDERS - -------------------------- ----------------------------------------------------- FULL SURRENDER You may surrender the policy for the cash surrender value at any time while the Insured is alive. We calculate the cash surrender value based on the policy's cash value. For more information, see "Cash Value," beginning on page 43. To derive the cash surrender value, we will deduct from the cash value, any due and payable periodic charges and Indebtedness. 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. - -------------------------------------------------------------------------------- OTHER AMOUNTS PAID AT SURRENDER For a policy purchased by a corporation or another entity, an amount may be paid by us in addition to the policy's Cash Surrender Value if, during a limited, specified time period, the policy is completely surrendered and the surrender Proceeds are paid directly to the policy owner as of the date of issue. We will inform you of the availability of this arrangement at the time you apply for the policy. This payment will not be made from the policy, but is a separate obligation of Nationwide. This additional payment does not apply to a partial surrender, to a policy loan, or to a complete surrender for which you instruct us to pay the Proceeds to a party other than the policy owner as of the date of issue. An additional surrender payment may also be available to an individually owned policy if the Premiums are paid by a corporate sponsor to whom the individual has assigned rights under the policy. The amount, duration, and availability of additional surrender payments may vary based on a number of factors, including: o the number of Insureds; o the nature of the relationship among individual Insureds; o the purpose for which the policies are being purchased; o the expected persistency of the policies; and o any other circumstances which are rationally related to an expected reduction in acquisition or administrative costs. We will pay surrender payments that are in addition to the policy's Cash Surrender Value from our general account. WE URGE YOU TO CONSULT WITH YOUR TAX ADVISER ABOUT THE TAX TREATMENT OF ADDITIONAL SURRENDER PAYMENTS. The criteria for additional surrender payments may change from time to time. Additional surrender payments will be determined in a manner that is not unfairly discriminatory to policy owners. 47 - -------------------------------------------------------------------------------- PARTIAL SURRENDER After the policy has been In Force for one year, you may request a partial surrender by sending a written request to the address on the first page of this prospectus. We reserve the right to limit partial surrenders to one per year. We permit partial surrenders if the partial surrender satisfies the following requirements: o the minimum partial surrender is $500; o a partial surrender may not cause the total Specified Amount to be reduced below the minimum Specified Amount shown on the Policy Data Page; o themaximum amount of a partial surrender is the Cash Surrender Value less the greater of $500 or three monthly deductions; and o after the partial surrender, the policy continues to qualify as life insurance. - ------------------------------------------------------------------------------- REDUCTION OF SPECIFIED AMOUNT ON A PARTIAL SURRENDER When a partial surrender is made, we reduce the Cash Value by the amount of the partial surrender. If the policy assets are held in more than one Sub-Account, we effect the partial surrender proportionately from the assets in each Sub-Account at the time of the partial surrender. We will distribute amounts from the fixed account only when there are insufficient amounts in the Sub-Accounts. When you take a partial surrender, ordinarily we will reduce the Specified Amount so 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, however, will be based on a new Specified Amount that will change the calculation of those charges. Depending on changes in factors such as the fluctuation in the policy's Cash Value, these charges may increase or decrease after the reduction in Specified Amount. However, we will not decrease the Specified Amount by more than the partial surrender amount reduced by any preferred partial surrenders. A preferred partial surrender is a partial surrender that: o occurs before the 15th policy anniversary; and --- o when added to any prior preferred policy surrenders in that same policy year, it does not exceed 10% of the Cash Surrender Value as of the beginning of the policy year. Any reduction we make to the Specified Amount will be made in the following order: o against the most recent increase in the Specified Amount; o against the next most recent increases in the Specified Amount in succession; and o against the Specified Amount under the original application. While we reserve the right to deduct a partial surrender fee, we currently deduct none. Certain partial surrenders may result in currently taxable income and tax penalties. Also, partial surrenders could cause your policy to become a "modified endowment contract" under the Code, which would change the income tax treatment of any distributions from the policy. For more information, see "Periodic Withdrawals, Non-Periodic Withdrawals And Loans," beginning on page 54. 48 - -------------------------------------------------------------------------------- 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 Insured dies, the beneficiary may do so. If the beneficiary does not make an election, we will pay the Proceeds in a lump sum. Normally, we will make the lump sum payment within seven days (30 days if the Proceeds are paid because of the Insured's death) after we receive your written request at our Home Office. We reserve the right to delay for six months from the date of your request the payment of any surrender Proceeds allocated to the fixed account. Also, we will postpone any payment of Proceeds on the days we are unable to price Sub-Account Units. For more information, see "When Sub-Account Units Are Valued," beginning on page 42. 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 to our Home Office. At any time before the Proceeds become payable, you may request to change your payout option in writing to our Home Office. Changing the beneficiary of the policy will revoke the settlement options in effect at that time. Proceeds are neither assignable nor subject to claims of creditors or legal process. Please note that for the remainder of "The Payout Options" section only, "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 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 consists of a portion of the Proceeds plus interest at a guaranteed rate. The Proceeds can be paid at the beginning of twelve-, six-, three- or one-month intervals. You may withdraw any outstanding balance by making a written request of us to our Home Office. We will pay interest at an annually determined rate of at least 2.5% per year. We will determine annually if we will pay any interest in excess of 2.5%. Upon your death, we will pay any outstanding balance to your estate. - -------------------------------------------------------------------------------- LIFE INCOME WITH PAYMENTS GUARANTEED We pay you the Proceeds at specified intervals for a guaranteed period (10, 15 or 20 years), and, then, for the rest of your life. The Proceeds can be paid at the beginning of twelve-, six-, three- or one-month intervals. As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin and if you live longer than the guaranteed period, payments will cease upon your death. 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%. 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. 49 - -------------------------------------------------------------------------------- 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 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. - -------------------------------------------------------------------------------- JOINT AND SURVIVOR LIFE We pay you the Proceeds in equal payments at specified intervals for the life of the payee who lives longer. The Proceeds can be paid at the beginning of twelve-, six-, three- or one-month intervals. As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin and, payments will cease upon the death of the payee who lives longer. 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 twelve-, six-, three- or one-month intervals. As the payments are based on your lifetime, you cannot withdraw any amount you designate to this option after payments begin and payments will cease upon your death. - -------------------------------------------------------------------------------- POLICY LOANS - -------------------------------------------------------------------------------- While the policy is In Force, you may take an advance of money from the Cash Value otherwise only available upon surrender or maturity, or upon payment of the Death Benefit. We call this advance a policy loan. You may increase your risk of Lapse if you take a policy loan. There also may be adverse tax consequences. You should obtain competent tax advice before you decide to take a policy loan. - -------------------------------------------------------------------------------- LOAN AMOUNT AND INTEREST The minimum policy loan you may take is $500. You may take no more than the maximum loan value which equals (1) plus (2) plus (3), where: (1) is 90% of the Sub-Account portfolios; (2) is 100% of the fixed account; and (3) is 100% of the loan account. We guarantee the effective annual interest rate will not exceed 3.75%. Interest will accrue daily and is due and payable at the end of each policy year or at the time of an additional loan. If left unpaid, it will be added to the outstanding balance of your policy loan. For policies issued on or after September 9, 2002, we expect to charge an effective annual interest rate of 3.70% on the outstanding balance of your policy loan for the first fifteen policy years, 3.45% for policy years 16 through 30, and 3.00% thereafter. For policies issued prior to September 9, 2002, we expect to charge an effective annual interest rate of 3.40% on the outstanding balance of your policy loan for the first four policy years, 3.25% for policy years 5 through 20, and 3.10% thereafter. 50 - -------------------------------------------------------------------------------- COLLATERAL As collateral or security, we will transfer to our loan account an amount equal to the amount of the policy loan. We will only make a transfer from the fixed investment option if the loan amount exceeds 90% of the Cash Value you have allocated to Sub-Account portfolios. We will credit interest to the collateral at an annual effective rate no less than the stated interest crediting rate on the Policy Data Page. We will credit interest to the collateral at an annual effective rate no less than the stated interest crediting rate on the Policy Data Page. - --------------------------- ---------------------------------------------------- REPAYMENT You may repay all or part of a policy loan at any time while your policy is In Force during the Insured's lifetime. The minimum repayment is $50. While your policy loan is outstanding, we will credit all payments you make as Premium payments, unless you provide written notice that they are to be applied as loan repayments. If you do not specify any Sub-Account portfolios to allocate loan repayments, we will transfer the amount from the policy loan account to the Sub-Account portfolios and fixed investment option based on your allocations as of the date of repayment. - -------------------------------------------------------------------------------- NET EFFECT OF LOANS The amount we transfer to our loan account as collateral for a policy loan will neither be affected by the investment performance of the Sub-Accounts, nor credited with the interest rates accruing on the fixed account. For more information, see "In Summary: Fee Tables," in particular, the footnotes, beginning on page 6. Whether repaid, a policy loan affects the policy, the loan account value, the net Cash Surrender Value and the Death Benefit. Repaying a policy loan causes the Death Benefit and net Cash Surrender Value to increase by the repayment amount. A policy loan will affect the policy account value even if repaid because we credit these amounts with an interest rate we declare rather than with a rate of return that reflects the investment performance of the separate account. - -------------------------------------------------------------------------------- LAPSE - -------------------------------------------------------------------------------- So long as your policy's Cash Surrender Value is enough to cover the monthly deduction of charges on each monthly anniversary date, the policy will remain In Force. The Cash Surrender Value could be below the amount of a monthly deduction because you have not paid enough Premium into the policy or because Investment Experience has decreased the Cash Surrender Value, or both. The policy will remain In Force during the Grace Period. Stated another way, this policy will Lapse when the Grace Period ends before you make a required Premium payment as stated in a notice. - -------------------------------------------------------------------------------- GRACE PERIOD If the Cash Surrender Value on a monthly anniversary date is not sufficient to cover the current monthly deduction, then a Grace Period begins. We will send you a notice at the start of the Grace Period to the address on the application or another address you have specified. The notice will state the amount of Premium required to avoid lapsing the policy. The amount of Premium specified in the notice will equal the lesser of at least 3 times the current monthly deduction. The Grace Period will end 61 days after the day the notice is mailed. If we do not receive sufficient Premium by the end of the Grace Period, the policy including all Riders you have selected will Lapse without value. The Grace Period will not alter the operation of the policy or the payment of Proceeds. - -------------------------------------------------------------------------------- REINSTATEMENT If the Grace Period ends and you have neither paid the required Premium nor surrendered the policy for its Cash Surrender Value, you may reinstate the policy by: o submitting a written request at any time within three years after the end of the 51 Grace Period and prior to the Maturity Date; o providing evidence of insurability satisfactory to us; o paying sufficient Premium to cover all policy charges that were due and unpaid during the Grace Period; o paying sufficient Premium to keep the policy In Force for three months from the date of reinstatement; and o paying or reinstating any indebtedness against the policy which existed at the end of the Grace Period. The effective date of a reinstated policy will be the monthly anniversary date on or next following the date we approve the application for reinstatement. If the policy is reinstated, the Cash Value on the date of reinstatement, will be set to the Cash Value at the end of the Grace Period. 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 - -------------------------------------------------------------------------------- TYPES OF TAXES OF WHICH TO BE AWARE Federal Income Tax. Generally, the United States assesses a tax on income which is broadly defined to include all items of income from whatever source, unless the item is specifically excluded. Certain expenditures can reduce income for tax purposes and correspondingly the amount of tax payable. These expenditures are called deductions. While there are many more income tax concepts under the Code, the concepts of "income" and "deduction" are the most fundamental to the federal income tax treatment that pertains to this policy. Federal Transfer Tax. In addition to the income tax, the United States also assesses a tax on some or all of the value of certain transfers of wealth made by gift while a person is living (the federal gift tax), and by bequest or otherwise at the time of a person's death (the federal estate tax). The 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. 52 In addition, if the transfer is made to someone two or more generations younger than the transferor, the transfer may be subject to the federal generation-skipping transfer tax ("GSTT"). The GSTT provisions generally apply to the same transfers that are subject to estate or gift taxes. The tax is imposed at a flat rate equal to the maximum estate tax rate (for 2004, 48%, decreasing by 1 percentage point each year until 2007, when it will be 45%), and there is a provision for an aggregate $1 million exemption. The GSTT estate tax is scheduled to be repealed effective after 2009; however, unless Congress acts to make that repeal permanent, the GSTT tax is scheduled to be reinstated on January 1, 2011 at a rate of 55%. State and Local Taxes. State and local estate, inheritance, income and other tax consequences of ownership or receipt of Policy Proceeds depend on the circumstances of each policy owner or beneficiary. While these taxes may or may not be substantial in your case, the specific nature of these taxes preclude a useful description of them in this prospectus. - -------------------------------------------------------------------------------- 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 Proceeds, or other distributions and/or ownership of the policy. If you are a non-resident alien, you should confer with a competent tax professional with respect to the tax treatment of this policy. Federal Income Tax. Generally, the Code treats life insurance Premiums as a personal expense. This means that under the general rule you cannot deduct from your taxable income the Premiums paid to purchase the policy. Federal Transfer Tax. Generally, the Code treats the payment of Premiums on a life insurance policy as a gift when the Premium payment benefits someone else (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 45. 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 53 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 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 45. 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 the Premiums paid into the policy at the time of the transaction. 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. 54 When the Policy is Life Insurance that is NOT a Modified Endowment Contract. If the policy is not issued as a modified endowment contract, Nationwide will monitor Premiums paid and will notify the policy owner when the policy is in jeopardy of becoming a modified endowment contract. If a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued which causes a reduction in Death Benefits may still become fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Code. You should carefully consider this potential tax ramification and seek further information before initiating any changes in the terms of the policy. Distributions from life insurance contracts that are not modified endowment contracts are treated as being (a) from the Premiums paid into the contract, and then (b) from the income in the contract. Because Premium payments are generally nondeductible, distributions not in excess of aggregate Premium payments are generally not includible in income; instead, they reduce the owner's "cost basis" in the contract. In addition, a loan from life insurance contracts that are not modified endowment contracts are not taxable when made, although it can be treated as a distribution if it is forgiven during the owner's lifetime. Contracts that are not modified endowment contracts are not subject to the 10% early distribution penalty tax. - -------------------------------------------------------------------------------- SURRENDER OF THE POLICY A total surrender or cancellation of the policy by Lapse or the maturity of the policy on its Maturity Date may have adverse tax consequences. If the amount you receive plus total policy indebtedness exceeds the Premiums paid into the policy, then the excess generally will be treated as taxable income, regardless of whether or not the policy is a modified endowment contract. - -------------------------------------------------------------------------------- WITHHOLDING Distributions of income from a life insurance policy, including a life insurance policy that is a modified endowment contract, are subject to federal income tax withholding. Generally, the recipient may elect not to have the withholding taken from the distribution. We will withhold income tax unless you advise us, in writing, of your request not to withhold. If you request that taxes not be withheld, or if the taxes withheld are insufficient, you may be liable for payment of an estimated tax. A distribution of income from a contract may be subject to mandatory back-up withholding. Mandatory back-up withholding means we are required to withhold taxes on a distribution at a rate established by Section 3406 of the Code and the recipient cannot elect to receive the entire distribution. Mandatory backup withholding may arise if we have not been provided a taxpayer identification number, or if the IRS notifies us that back-up withholding is required. In certain employer-sponsored life insurance arrangements, participants may be required to report for income tax purposes, one or more of the following: o the value each year of the life insurance protection provided; o an amount equal to any employer-paid Premiums; o some or all of the amount by which the current value exceeds the employer's interest in the policy; or o interest that is deemed to have been forgiven on a loan that was deemed to have been made by the employer. 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. 55 - -------------------------------------------------------------------------------- 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. However, if you exchange the policy for another life insurance policy, a modified endowment contract or an annuity contract, you will not be taxed on the excess amount if the exchange meets the requirements of Code Section 1035. To meet Section 1035 requirements, the Insured named in the policy must be the Insured for the new policy or contract. Also, the new policy or contract cannot extend the Maturity Date of the policy or otherwise delay a distribution that would extend when tax would be payable under the policy. Generally, the new policy or contract will be treated as having the same date of issue and tax basis as the old contract. - -------------------------------------------------------------------------------- TAXATION OF DEATH BENEFITS Federal Income Tax. The death Proceeds payable under a policy generally are 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 death 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 death Proceeds and pay them directly to the IRS as the GSTT 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. - -------------------------------------------------------------------------------- SPECIAL CONSIDERATIONS FOR CORPORATIONS Section 264 of the Code imposes numerous limitations on the interest and other business deductions that may otherwise be available to businesses that own life insurance policies. In addition, the Premium paid by a business for a life insurance policy is not deductible as a business expense or otherwise if the business is directly or indirectly a beneficiary of the policy. For purposes of the alternative minimum tax ("AMT") that may be imposed on corporations, the Death Benefit from a life insurance policy, even though excluded from gross income for normal tax purposes, is included in "adjusted current earnings" for AMT purposes. In addition, although increases to the Cash Surrender Value of a life insurance policy are generally excluded from gross income for normal income tax purposes, such increases are included in adjusted current earnings for income tax purposes. Due to the complexity of these rules, and because the application of these rules is affected by your facts and circumstances, you should consult with legal and tax counsel and other competent advisers regarding these matters. 56 Federal appellate and trial courts have examined the economic substance of transactions involving life insurance policies owned by corporations. These cases involved relatively large loans against the policy's Cash Value as well as tax deductions for the interest paid on the policy loans by the corporate policy owner to the insurance company. Under the particular factual circumstances in these cases, the courts determined that the corporate policy owners should not have taken tax deductions for the interest paid. Accordingly, the court determined that the corporations should have paid taxes on the amounts deducted. These cases are in various stages of the appellate process. Corporations should consider, in consultation with tax professionals familiar with these matters, the impact of these decisions on the corporation's intended use of the policy. - -------------------------------------------------------------------------------- TAXES AND THE VALUE OF YOUR POLICY A Premium load is assessed on each Premium payment, and their remainder is invested in accordance with your investment allocations. The Premium load partially recovers certain taxes assessed by federal and state taxing authorities. For more information, see "Premium Load (Charge)," at page 37. For federal income tax purposes, the separate account is not a separate entity from Nationwide Life and Annuity 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 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 Units you hold in the separate account. Based upon this expectations, no charge is currently being made against your Units in the separate account for federal income taxes. If, however, we determine that taxes may be incurred, we reserve the right to assess a charge for taxes. We may also incur state and local taxes (in addition to those described in the discussion of the Premium Taxes) in several states. At present, these taxes are not significant. If they increase, however, charges for such taxes may be made that would decrease the value of your Units in the separate account. - -------------------------------------------------------------------------------- TAX CHANGES The foregoing discussion, which is based on our understanding of federal tax laws as currently interpreted by the IRS, is general and is not intended as tax advice. The Code has been subjected to numerous amendments and changes, and it is reasonable to believe that it will continue to be revised. The United States Congress has, in the past, considered numerous legislative proposals that, if enacted, could change the tax treatment of the policies. It is reasonable to believe that such proposals, and future proposals, may be enacted into law. The U.S. Treasury Department may amend existing regulations, issue new regulations, or adopt new interpretations of existing law that may be at variance with its current positions on these matters. In addition, current state law (which is not discussed herein), and future amendments to state law, may affect the tax consequences of the policy. If you, the Insured, the beneficiary or other person receiving any benefit or interest in or from the policy is not both a resident and citizen of the United States, there may be a tax imposed by a foreign country, in addition to any tax imposed by the United States. The foreign law (including regulations, rulings, and case law) may change and impose additional taxes on the policy, the death Proceeds, or other distributions and/or ownership of the policy, or a treaty may be amended and all or part of the favorable treatment may be eliminated. 57 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 AND ANNUITY INSURANCE COMPANY - -------------------------------------------------------------------------------- We are a stock life insurance company organized under Ohio law. We were established in 1981 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 VL SEPARATE ACCOUNT-C - -------------------------------------------------------------------------------- ORGANIZATION, REGISTRATION AND OPERATION Nationwide VL Separate Account-C 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 Net Asset Value. Any dividends and distributions from a Sub-Account portfolio are reinvested at Net Asset Value in shares of that Sub-Account portfolio. Income, gains, and losses, whether or not realized, from the assets in the account will be credited to, or charged against, the account without regard to our other income, gains, or losses. Income, gains, and losses credited to, or charged against, a Sub-Account reflect the Sub-Account's own Investment Experience and not the Investment Experience of our other assets. Its assets are held separately from our other assets and are not part of our general account. We may not use the separate account's assets to pay any of our liabilities other than those arising from the policies. If the separate account's assets exceed the required reserves and its other liabilities, we may transfer the excess to our general account. The separate account may include other Sub-Accounts that are not available under the policies, and are not discussed in this prospectus. 58 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 at 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 at our sole discretion. The mutual funds, which sell their shares to the Sub-Accounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the Sub-Accounts. In addition, we reserve the right to make other structural and operational changes affecting this separate account. WE DO NOT GUARANTEE ANY MONEY YOU PLACE IN THIS SEPARATE ACCOUNT. THE VALUE OF EACH SUB-ACCOUNT WILL INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE CORRESPONDING PORTFOLIO. YOU COULD LOSE SOME OR ALL OF YOUR MONEY. - -------------------------------------------------------------------------------- ADDITION, DELETION, OR SUBSTITUTION OF MUTUAL FUNDS Where permitted by applicable law, we reserve the right to: o remove, combine, or add Sub-Accounts and make new Sub-Accounts available to you; o substitute shares of another mutual fund, which may have different fees and expenses, for shares of an existing mutual fund; o substitute or close Sub-Accounts to allocations; o transfer assets supporting the policies from one Sub-Account to another or from the separate account to another separate account; o combine the separate account with other separate accounts, and/or create new separate accounts; o deregister the separate account under the 1940 Act, or operate the separate account as a management investment company under the 1940 Act, or as any other form permitted by the law; and o modify the policy provisions to reflect changes in the Sub-Accounts and the separate account to comply with applicable law. - ------------------------------------------------------------------------------- VOTING RIGHTS Unless there is a change in existing law, on all matters submitted to shareholders we will vote our portfolio shares attributable to your allocations in a Sub-Account only as you instruct. Before a vote of a portfolio's shareholders occurs, you will have the right to instruct us based on the number of portfolio shares that corresponds to the amount of policy account value you have in the portfolio (as of a date set by the portfolio). We will vote shares for which no instructions are received in the same proportion as those that are received. The number of shares which a policy owner may vote is determined by dividing the Cash Value of the amount they have allocated to an underlying mutual fund by the Net Asset Value of that underlying mutual fund. We will designate a date for this determination not more than 90 days before the shareholder meeting. 59 - -------------------------------------------------------------------------------- LEGAL PROCEEDINGS - -------------------------------------------------------------------------------- NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY Nationwide and its parent company, Nationwide Life Insurance Company ("NLIC"), are parties to litigation and arbitration proceedings in the ordinary course of their 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 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 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 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 60 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 January 21, 2004, Nationwide 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 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 NLIC 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. The following cases relate specifically to NLIC (Nationwide's parent): 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 NLIC annuity or insurance product, held units of any NLIC sub-account invested in mutual funds which included foreign securities in their portfolios and which allegedly experienced market timing trading activity. The complaint contains 61 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 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. NLIC intends to defend this lawsuit vigorously. On August 15, 2001, NLIC 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 NLIC 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 NLIC, 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. NLIC opposed that motion on December 24, 2003. On July 6, 2004, NLIC filed a Revised Memorandum in Support of 62 Summary Judgment. The plaintiffs have opposed that motion. NLIC intends to defend this lawsuit vigorously. - -------------------------------------------------------------------------------- NATIONWIDE INVESTMENT SERVICES The general distributor, Nationwide Investment Services Corporation, is not engaged CORPORATION in litigation of a material nature. - -------------------------------------------------------------------------------- FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Statement of Additional Information contains financial statements for Nationwide Life and Annuity Insurance Company and for Nationwide VL Separate Account - C. You may obtain the Statement of Additional Information FREE OF CHARGE by contacting us at the address or telephone number on the first page of this prospectus. You should distinguish the financial statements of the company and subsidiaries from the financial statements of the separate account. Please consider the financial statements of the company only as bearing on our ability to meet the obligations under the policy. You should not consider the financial statements of the company and subsidiaries as affecting the investment performance of the assets of the separate account. 63 - -------------------------------------------------------------------------------- APPENDIX A: DEFINITIONS - -------------------------------------------------------------------------------- ATTAINED AGE - The Insured's Issue Age plus the number of full years since the Policy Date. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CASH SURRENDER VALUE - The policy's Cash Value minus the amount of any loans and minus any outstanding charges. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CASH VALUE - The amount equal to the Premiums you pay, minus policy charges and any indebtedness, plus the Investment Experience of your policy's investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CODE - The Internal Revenue Code of 1986, as amended. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEATH BENEFIT - The amount we pay to the beneficiary upon the Insured's death, before payment of any unpaid outstanding loan balances or charges. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GRACE PERIOD - The period in which the Policy is In Force even though a Premium payment is past due. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOME OFFICE - Our Home Offices are located at One Nationwide Plaza, Columbus, Ohio 43215. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- IN FORCE - The insurance coverage is in effect. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INSURED - The person whose life we insure under the policy, and whose death triggers the Death Benefit. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INVESTMENT EXPERIENCE - The rate of return or performance for investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LAPSE - The policy terminates without value. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MATURITY DATE - The policy anniversary on or next following the Insured's 100th birthday. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET AMOUNT AT RISK - The policy's Death Benefit (consisting of base and Additional Protection Rider 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 Units. NAV does not reflect deductions we make for charges we take from Sub-Accounts. Unit values do reflect these deductions. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET PREMIUM - Premium after transaction charges, but before any allocation to an investment option. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- POLICY DATA PAGE - The part of the policy that contains more detailed information about the policy; some of which is particular to the owner, the Insured, and the beneficiary. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- POLICY DATE - The date the policy takes effect as shown on the Policy Data Page. Policy years and months are measured from this date. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- POLICY PROCEEDS OR PROCEEDS - Policy Proceeds may constitute the Death Benefit, or the amount payable if the policy matures or you choose to surrender the policy. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PREMIUM - The amount of money you pay to begin and continue the policy. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- RIDER - An optional benefit you may purchase under the policy. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SEC - The Securities and Exchange Commission. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SPECIFIED AMOUNT - The dollar amount of insurance the owner selects. The Specified Amount consists of the insurance provided under the base portion of the policy and the coverage under the Additional (insurance) Protection Rider. This amount is used in determining the Death Benefit we will pay the beneficiary. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUB-ACCOUNTS - The record-keeping tool we use to track the investment performance of the mutual funds that are investment options, and the value of your allocations to the investment options, after we deduct transaction fees and periodic charges. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNIT - Determines the variable investment part of your policy's Cash Value. It represents your interest in the Sub-Accounts. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- US, WE, OUR or the COMPANY - Nationwide Life and Annuity Insurance Company. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- VALUATION PERIOD - The period during which we determine the change in the value of the Sub-Accounts. One Valuation Period ends and another begins with the close of normal trading on the New York Stock Exchange. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- YOU, YOUR or the POLICY OWNER OR OWNER - the person named as the owner in the application, or the person assigned ownership rights. - -------------------------------------------------------------------------------- [OUTSIDE COVER] 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 or write to our Service Center at 1-877-351-8808 (TDD: 1-800-238-3035) or write to us at Nationwide Life and Annuity Insurance Company, Corporate Insurance Markets, One Nationwide Plaza, 1-11-08, 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. 811-8351. Nationwide Life Insurance Company: Nationwide Life and Annuity Insurance Company Nationwide VLI Separate Account-4 Nationwide VL Separate Account-C Supplement dated November 7, 2005 to Statement of Additional Information dated May 1, 2005 - -------------------------------------------------------------------------------- This supplement updates certain information contained in the Statement of Additional Information (SAI). Please read it and keep it for future reference. - -------------------------------------------------------------------------------- 1. The "Underwriting Procedure" provision of your SAI is replaced with the following: Underwriting Procedure We underwrite the policies issued through Nationwide VLI Separate Account-4 and Nationwide VL Separate Account - C. The policy's cost of insurance depends upon the Insured's issue age, underwriting 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 for policies are based on the 1980 Commissioners Standard Ordinary Male Mortality Table, Age Last Birthday aggregated as to tobacco status. Guaranteed cost of insurance rates for substandard risks will equal the guaranteed cost of insurance rates for standard risks times a percentage greater than 100%. The underwriting class of an Insured may affect the cost of insurance rate. There are three underwriting classes into which Insureds are placed, depending on the Insureds' mortality characteristics: Guaranteed Issue, Simplified Issue, and Regular Issue. For policies with applications signed on or after January 1, 2006, within each of these mortality risk classes, there are three sub-classifications based on other risk factors of the case and the associated employee benefit plan. The most favorable is Class A, followed by Class B, and then Class C. For policies issued before January 1, 2006, there are no sub-classifications. In an otherwise identical policy, an Insured in the Regular Issue underwriting class will have a lower cost of insurance than an Insured in a rate class with higher mortality risks. The rating class is determined using questionnaires, medical records, and physical exams, depending on the amount of insurance and the attributes of the Insured. On groups, we may underwrite using short-form questionnaires or abbreviated medical evaluations. 2. The following provisions are added immediately after the "Underwriting Procedure" provision: Net Amount at Risk The policy's cost of insurance is also dependent on the policy's Net Amount At Risk, which equals the policy's Death Benefit minus the policy's Cash Value. For policies with applications signed before January 1, 2006, the policy's Net Amount At Risk is allocated to the Additional (insurance) Protection Rider first (if applicable) and any remaining excess is allocated to the base policy coverage. For policies with applications signed on or after January 1, 2006, the policy's Net Amount At Risk is allocated between base coverage and Additional (insurance) Protection Rider coverage proportionately, using the ratio (at the time of issuance) of each to the total Specified Amount. This new allocation of Net Amount At Risk results in the charges for the base policy coverage and the Rider coverage being more directly linked to the amount coverage received, as compared to the total Specified Amount. If you did not elect the Additional (insurance) Protection Rider, this distinction is irrelevant. Target Premium We use "target premium" to calculate the premium load charge. For all policies, target premium is calculated according to established SEC rules and regulations. For policies with applications signed before January 1, 2006, the target premium is equal to 28.57% of the maximum annual Premium allowed under the Code. For policies with applications signed on or after January 1, 2006, the target premium is equal to 100% of the maximum annual Premium allowed under the Code for the policy to be treated as life insurance. Additionally, in determining the target premium, we assume: the policy is not a modified endowment contract (as defined in the Code); the policy's death benefit is equal to the base (non-rider) portion of the Specified Amount; and you pay seven level Annual Premiums. NATIONWIDE VL SEPARATE ACCOUNT-C (REGISTRANT) NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (DEPOSITOR) One Nationwide Plaza, 1-11-08 Columbus, OH 43215-2220 1-877-351-8808 TDD: 1-800-238-3035 STATEMENT OF ADDITIONAL INFORMATION CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES This Statement of Additional Information ("SAI") contains additional information regarding the corporate flexible premium variable universal life insurance policy offered by us, Nationwide Life and Annuity Insurance Company. This SAI is not a prospectus and should be read together with the policy prospectus dated May 1, 2005 and the prospectuses for the variable investment options available under the policy. 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. TABLE OF CONTENTS NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY NATIONWIDE VL SEPARATE ACCOUNT-C NATIONWIDE INVESTMENT SERVICES CORPORATION (NISC) SERVICES UNDERWRITING PROCEDURE ILLUSTRATIONS ADVERTISING TAX DEFINITION OF LIFE INSURANCE FINANCIAL STATEMENTS NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY We are a stock life insurance company organized under the laws of the State of Ohio in 1981 with its 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 Life Insurance Company. All of Nationwide Life Insurance Company's 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 VL SEPARATE ACCOUNT-C Nationwide VL Separate Account-C 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 July 22, 1997 pursuant to Ohio law. Although the separate account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 the SEC does not supervise our management or the management of the variable account. We serve as the custodian of the assets of the variable account. NATIONWIDE INVESTMENT SERVICES CORPORATION (NISC) The policies are distributed by NISC, located at One Nationwide Plaza, Columbus, Ohio 43215, a wholly owned subsidiary of Nationwide Life Insurance Company. For policies issued in Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation. NISC was organized as an Oklahoma corporation in 1981. The policies will be sold on a continuous basis by licensed insurance agents in those states where the policies may lawfully be sold. Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 who are member firms of the National Association of Securities Dealers, Inc. ("NASD"). We paid no underwriting commissions to NISC for each of the separate account's last three fiscal years. SERVICES We have responsibility for administration of the policies and the variable account. We also maintain the records of the name, address, taxpayer identification number, and other pertinent information for each policy owner and the number and type of policy issued to each policy owner and records with respect to the policy value of each policy. We are the custodian of the assets of the variable account. We will maintain a record of all purchases and redemption of shares of the mutual funds. We or our affiliates may have entered into agreements with either the investment adviser or distributor for the mutual funds. The agreements relate to administrative services we or our affiliate furnish. 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 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 VL Separate Account-C and Nationwide Life and Annuity Insurance Company 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 financial statements of Nationwide Life and Annuity Insurance Company contains an explanatory paragraph that states that Nationwide Life and Annuity Insurance 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. KPMG LLP is located at 191 West Nationwide Blvd., Columbus, Ohio 43215. UNDERWRITING PROCEDURE We underwrite the policies issued through Nationwide VL Separate Account-C. The policy's cost of insurance depends upon the Insured's 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 for policies are based on the 1980 Commissioners' Standard Ordinary Male Mortality Table, Age Last Birthday aggregated as to tobacco status. Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate percentage multiples of the guaranteed cost of insurance rate on a standard basis. That is, guaranteed cost of insurance rates for substandard risks are guaranteed cost of insurance rates for standard risks times a percentage greater than 100%. 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. The rating class is determined using questionnaires, medical records, and physical exams, depending on the amount of insurance and the attributes of the Insured. On groups, we may underwrite using short-form questionnaires or abbreviated medical evaluations. If there is an increase in the Specified Amount, the cost of insurance charges for the increased amount will reflect the duration since the increase, rather than the duration since the certificate was originally issued. If Death Benefit Option 1 is in effect and there have been increases in the Specified Amount, then the Cash Value will first be considered a part of the initial Specified Amount. If the Cash Value exceeds the initial Specified Amount, it will then be considered a part of the additional increase in Specified Amount resulting from the increase, in the order of the increase. ILLUSTRATIONS Before you purchase the policy and upon request thereafter, we will provide illustrations of future benefits under the policy based upon the proposed Insured's age and Premium class, the Death Benefits option, face amount, planned periodic Premiums, and Riders requested. 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% - ----------------------------------------- - ----------------------------------------- 51 178% - ----------------------------------------- - ----------------------------------------- 52 171% - ----------------------------------------- - ----------------------------------------- 53 164% - ----------------------------------------- - ----------------------------------------- 54 157% - ----------------------------------------- - ----------------------------------------- 55 150% - ----------------------------------------- - ----------------------------------------- 56 146% - ----------------------------------------- - ----------------------------------------- 57 142% - ----------------------------------------- - ----------------------------------------- 58 138% - ----------------------------------------- - ----------------------------------------- 59 134% - ----------------------------------------- - ----------------------------------------- 60 130% - ----------------------------------------- - ----------------------------------------- 61 128% - ----------------------------------------- - ----------------------------------------- 62 126% - ----------------------------------------- - ----------------------------------------- 63 124% - ----------------------------------------- - ----------------------------------------- 64 122% - ----------------------------------------- - ----------------------------------------- 65 120% - ----------------------------------------- - ----------------------------------------- 66 119% - ----------------------------------------- - ----------------------------------------- 67 118% - ----------------------------------------- - ----------------------------------------- 68 117% - ----------------------------------------- - ----------------------------------------- 69 116% - ----------------------------------------- - ----------------------------------------- 70 115% - ----------------------------------------- - ----------------------------------------- 71 113% - ----------------------------------------- - ----------------------------------------- 72 111% - ----------------------------------------- - ----------------------------------------- 73 109% - ----------------------------------------- - ----------------------------------------- 74 107% - ----------------------------------------- - ----------------------------------------- 75 105% - ----------------------------------------- - ----------------------------------------- 76 105% - ----------------------------------------- - ----------------------------------------- 77 105% - ----------------------------------------- - ----------------------------------------- 78 105% - ----------------------------------------- - ----------------------------------------- 79 105% - ----------------------------------------- - ----------------------------------------- 80 105% - ----------------------------------------- - ----------------------------------------- 81 105% - ----------------------------------------- - ----------------------------------------- 82 105% - ----------------------------------------- - ----------------------------------------- 83 105% - ----------------------------------------- - ----------------------------------------- 84 105% - ----------------------------------------- - ----------------------------------------- 85 105% - ----------------------------------------- - ----------------------------------------- 86 105% - ----------------------------------------- - ----------------------------------------- 87 105% - ----------------------------------------- - ----------------------------------------- 88 105% - ----------------------------------------- - ----------------------------------------- 89 105% - ----------------------------------------- - ----------------------------------------- 90 105% - ----------------------------------------- - ----------------------------------------- 91 104% - ----------------------------------------- - ----------------------------------------- 92 103% - ----------------------------------------- - ----------------------------------------- 93 102% - ----------------------------------------- - ----------------------------------------- 94 101% - ----------------------------------------- - ----------------------------------------- 95 101% - ----------------------------------------- - ----------------------------------------- 96 101% - ----------------------------------------- - ----------------------------------------- 97 101% - ----------------------------------------- - ----------------------------------------- 98 101% - ----------------------------------------- - ----------------------------------------- 99 101% - ----------------------------------------- - ----------------------------------------- 100 100% - ----------------------------------------- Cash Value Accumulation Test The Cash Value Accumulation Test also requires the Death Benefit to exceed an applicable percentage of the Cash Value. These applicable percentages are calculated by determining net single Premiums 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, 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. - ---------------------------------------- POLICY PERCENTAGE OF YEAR CASH VALUE - ---------------------------------------- - ---------------------------------------- 1 302% - ---------------------------------------- - ---------------------------------------- 2 290% - ---------------------------------------- - ---------------------------------------- 3 279% - ---------------------------------------- - ---------------------------------------- 4 269% - ---------------------------------------- - ---------------------------------------- 5 259% - ---------------------------------------- - ---------------------------------------- 6 249% - ---------------------------------------- - ---------------------------------------- 7 240% - ---------------------------------------- - ---------------------------------------- 8 231% - ---------------------------------------- - ---------------------------------------- 9 223% - ---------------------------------------- - ---------------------------------------- 10 215% - ---------------------------------------- - ---------------------------------------- 11 207% - ---------------------------------------- - ---------------------------------------- 12 200% - ---------------------------------------- - ---------------------------------------- 13 193% - ---------------------------------------- - ---------------------------------------- 14 186% - ---------------------------------------- - ---------------------------------------- 15 180% - ---------------------------------------- - ---------------------------------------- 16 174% - ---------------------------------------- - ---------------------------------------- 17 169% - ---------------------------------------- - ---------------------------------------- 18 164% - ---------------------------------------- - ---------------------------------------- 19 159% - ---------------------------------------- - ---------------------------------------- 20 154% - ---------------------------------------- - ---------------------------------------- 21 150% - ---------------------------------------- - ---------------------------------------- 22 146% - ---------------------------------------- - ---------------------------------------- 23 142% - ---------------------------------------- - ---------------------------------------- 24 139% - ---------------------------------------- - ---------------------------------------- 25 136% - ---------------------------------------- - ---------------------------------------- 26 133% - ---------------------------------------- - ---------------------------------------- 27 130% - ---------------------------------------- - ---------------------------------------- 28 127% - ---------------------------------------- - ---------------------------------------- 29 125% - ---------------------------------------- - ---------------------------------------- 30 123% - ---------------------------------------- - ---------------------------------------- 31 121% - ---------------------------------------- - ---------------------------------------- 32 119% - ---------------------------------------- - ---------------------------------------- 33 118% - ---------------------------------------- - ---------------------------------------- 34 116% - ---------------------------------------- - ---------------------------------------- 35 115% - ---------------------------------------- - ---------------------------------------- 36 113% - ---------------------------------------- - ---------------------------------------- 37 112% - ---------------------------------------- - ---------------------------------------- 38 111% - ---------------------------------------- - ---------------------------------------- 39 110% - ---------------------------------------- - ---------------------------------------- 40 108% - ---------------------------------------- - ---------------------------------------- 41 107% - ---------------------------------------- - ---------------------------------------- 42 106% - ---------------------------------------- - ---------------------------------------- 43 104% - ---------------------------------------- - ---------------------------------------- 44 103% - ---------------------------------------- - ---------------------------------------- 45 102% - ---------------------------------------- FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm The Board of Directors of Nationwide Life and Annuity Insurance Company and Contract Owners of Nationwide VL Separate Account-C: We have audited the accompanying statement of assets, liabilities and contract owners' equity of Nationwide VL Separate Account-C (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 VL SEPARATE ACCOUNT-C 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) 580 shares (cost $6,159) ............................................................... $ 6,869 Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A (AlVPGrIncA) 41,154 shares (cost $949,417) .......................................................... 990,982 American Century VP - Balanced Fund - Class I (ACVPBal) 58,563 shares (cost $372,969) .......................................................... 426,340 American Century VP - Capital Appreciation Fund - Class I (ACVPCapAp) 158,851 shares (cost $1,118,150) ....................................................... 1,216,796 American Century VP - Income & Growth Fund - Class I (ACVPIncGr) 1,329,758 shares (cost $8,179,323) ..................................................... 9,733,831 American Century VP - International Fund - Class I (ACVPInt) 963,707 shares (cost $6,159,183) ....................................................... 7,083,248 American Century VP - Ultra/(R)/ Fund - Class I (ACVPUltra) 1,631 shares (cost $15,251) ............................................................ 16,570 American Century VP - Value Fund - Class I (ACVPVal) 559,274 shares (cost $4,111,166) ....................................................... 4,893,649 Baron Capital Funds Trust - Baron Capital Asset Fund: Insurance Shares (BCFTCpAsset) 14,182 shares (cost $326,553) .......................................................... 383,620 Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSGPVen) 20,308 shares (cost $200,419) .......................................................... 226,438 Credit Suisse Trust - International Focus Portfolio (CSIntFoc) 2,848 shares (cost $24,705) ............................................................ 28,621 Credit Suisse Trust - Large Cap Value Portfolio (CSLCapV) 10,241 shares (cost $125,456) .......................................................... 137,227 Credit Suisse Trust - Small Cap Growth Portfolio (CSSmCapGr) 76,113 shares (cost $1,058,769) ........................................................ 1,164,523 Dreyfus IP - Small Cap Stock Index Portfolio - Service Class (DrySmCapIxS) 138,999 shares (cost $1,787,068) ....................................................... 2,166,997 Dreyfus Socially Responsible Growth Fund, Inc. The (DrySRGro) 7,257 shares (cost $175,130) ........................................................... 182,663 Dreyfus Stock Index Fund, Inc. - Initial Shares (DryStkIx) 1,344,656 shares (cost $35,237,209) .................................................... 41,536,435 Dreyfus VIF - Appreciation Portfolio - Initial Shares (DryVIFApp) 50,428 shares (cost $1,652,531) ........................................................ 1,793,217 Dreyfus VIF - Growth and Income Portfolio - Initial Shares (DryVIFGrInc) 26,246 shares (cost $489,548) .......................................................... 561,668 Dreyfus VIF - International Value Portfolio - Initial Shares (DryVIFIntVal) 30,101 shares (cost $420,356) .......................................................... 477,105 Federated IS - Quality Bond Fund II - Primary Shares (FedQualBd) 147,945 shares (cost $1,752,669) ....................................................... 1,726,522 Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class (FidVIPEIS) 173,674 shares (cost $4,014,426) ....................................................... 4,390,471 Fidelity/(R)/ VIP - Growth Portfolio - Initial Class (FidVIPGr) 17,734 shares (cost $558,359) .......................................................... 567,656
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued Fidelity/(R)/ VIP - Growth Portfolio - Service Class (FidVIPGrS) 546,005 shares (cost $18,498,989) ...................................................... $ 17,406,642 Fidelity/(R)/ VIP - High Income Portfolio - Initial Class (FidVIPHI) 19,592 shares (cost $135,187) .......................................................... 137,146 Fidelity/(R)/ VIP - High Income Portfolio - Service Class (FidVIPHIS) 284,569 shares (cost $1,879,560) ....................................................... 1,983,442 Fidelity/(R)/ VIP - Overseas Portfolio - Initial Class (FidVIPOv) 32,218 shares (cost $533,847) .......................................................... 564,454 Fidelity/(R)/ VIP - Overseas Portfolio - Service Class (FidVIPOvS) 183,892 shares (cost $2,474,170) ....................................................... 3,207,075 Fidelity/(R)/ VIP II - Asset Manager Portfolio - Initial Class (FidVIPAM) 632,611 shares (cost $8,910,166) ....................................................... 9,394,280 Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Initial Class (FidVIPCon) 13,673 shares (cost $274,621) .......................................................... 363,979 Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class (FidVIPConS) 149,952 shares (cost $3,247,213) ....................................................... 3,978,239 Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class (FidVIPGrOpS) 101,116 shares (cost $1,385,906) ....................................................... 1,622,912 Fidelity/(R)/ VIP III - Value Strategies Portfolio - Service Class (FidVIPValS) 14,545 shares (cost $179,576) .......................................................... 204,940 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 (FrVIPForSec2) 203,098 shares (cost $2,496,305) ....................................................... 2,914,453 Gartmore GVIT Comstock Value Fund - Class I (GVITCVal) 6,471 shares (cost $67,244) ............................................................ 74,614 Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I (GVITDMidCapI) 194,546 shares (cost $2,926,703) ....................................................... 3,229,470 Gartmore GVIT Emerging Markets Fund - Class I (GVITEmMrkts) 7,792 shares (cost $80,250) ............................................................ 84,390 Gartmore GVIT Federated High Income Bond Fund - Class I (GVITFHiInc) 117,583 shares (cost $945,596) ......................................................... 964,182 Gartmore GVIT Global Financial Services Fund - Class I (GVITGlFin1) 445 shares (cost $5,485) ............................................................... 5,705 Gartmore GVIT Global Health Sciences Fund - Class I (GVITGlHlth) 266 shares (cost $2,763) ............................................................... 2,843 Gartmore GVIT Global Technology and Communications Fund - Class I (GVITGlTech) 6,799 shares (cost $23,458) ............................................................ 26,314 Gartmore GVIT Government Bond Fund - Class I (GVITGvtBd) 1,310,287 shares (cost $15,920,737) .................................................... 15,225,531 Gartmore GVIT Growth Fund - Class I (GVITGrowth) 18,017 shares (cost $175,543) .......................................................... 193,867 Gartmore GVIT ID Conservative Fund - Class II (GVITIDCon) 30,462 shares (cost $299,352) .......................................................... 318,324 Gartmore GVIT ID Moderate Fund - Class II (GVITIDMod) 92,150 shares (cost $992,414) .......................................................... 1,037,604 Gartmore GVIT J.P. Morgan Balanced Fund - Class I (GVITJPBal) 807,842 shares (cost $7,375,668) ....................................................... 8,062,265 Gartmore GVIT Mid Cap Growth Fund - Class I (GVITSMdCpGr) 35,139 shares (cost $801,152) .......................................................... 869,334 Gartmore GVIT Money Market Fund - Class I (GVITMyMkt) 23,658,259 shares (cost $23,658,259) ................................................... 23,658,259
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued Gartmore GVIT Money Market Fund: Class V (GVITMyMkt5) 46,253,283 shares (cost $46,253,283) ................................................... $ 46,253,283 Gartmore GVIT Nationwide/(R)/ Fund: Class I (GVITNWFund) 167,327 shares (cost $1,527,045) ....................................................... 1,862,353 Gartmore GVIT Small Cap Growth Fund - Class I (GVITSmCapGr) 285,454 shares (cost $3,128,002) ....................................................... 4,199,022 Gartmore GVIT Small Cap Value Fund - Class I (GVITSmCapVal) 471,292 shares (cost $5,706,951) ....................................................... 5,947,706 Gartmore GVIT Small Company Fund - Class I (GVITSmComp) 367,744 shares (cost $7,720,366) ....................................................... 8,443,407 Gartmore GVIT U.S. Growth Leaders Fund - Class I (GVITUSGro) 486 shares (cost $5,177) ............................................................... 5,624 Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I (GVITVKMultiSec) 230,785 shares (cost $2,300,131) ....................................................... 2,307,851 Gartmore GVIT Worldwide Leaders Fund - Class I (GVITWLead) 8,951 shares (cost $80,536) ............................................................ 96,496 Goldman Sachs VIT - Mid Cap Value Fund (GSVITMidCap) 172,532 shares (cost $2,190,466) ....................................................... 2,636,286 Janus AS - Balanced Portfolio - Service Shares (JanBal) 45,413 shares (cost $981,160) .......................................................... 1,146,213 Janus AS - Capital Appreciation Portfolio - Service Shares (JanCapAp) 11,131 shares (cost $238,061) .......................................................... 271,496 Janus AS - Global Technology Portfolio - Service Shares (JanGlTech) 197,715 shares (cost $623,762) ......................................................... 701,889 Janus AS - International Growth Portfolio - Service Shares (JanIntGro) 24,058 shares (cost $564,448) .......................................................... 648,134 Neuberger Berman AMT - Fasciano Portfolio - S Class Shares (NBAMTFasc) 169 shares (cost $2,143) ............................................................... 2,335 Neuberger Berman AMT - Growth Portfolio (NBAMTGro) 30,360 shares (cost $317,945) .......................................................... 368,877 Neuberger Berman AMT - Guardian Portfolio - I Class Shares (NBAMTGuard) 143,051 shares (cost $1,921,248) ....................................................... 2,313,136 Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/ - I Class (NBAMTMCGr) 72,733 shares (cost $1,127,076) ........................................................ 1,296,838 Neuberger Berman AMT - Partners Portfolio (NBAMTPart) 89,725 shares (cost $1,558,042) ........................................................ 1,643,760 One Group/(R)/ IT Mid Cap Growth Portfolio (OGMidCapGr) 43,834 shares (cost $612,712) .......................................................... 774,546 Oppenheimer Aggressive Growth Fund/VA - Initial Class (OppAggGro) 192,204 shares (cost $7,387,127) ....................................................... 8,451,219 Oppenheimer Bond Fund/VA - Initial Class (OppBdFd) 130,375 shares (cost $1,489,393) ....................................................... 1,499,312 Oppenheimer Capital Appreciation Fund/VA - Initial Class (OppCapAp) 300,672 shares (cost $9,841,182) ....................................................... 11,121,849 Oppenheimer Global Securities Fund/VA - Initial Class (OppGlSec) 25,000 shares (cost $615,637) .......................................................... 737,762 Oppenheimer Main Street/(R)/ Fund/VA - Initial Class (OppMSFund) 14,035 shares (cost $272,058) .......................................................... 292,499 Oppenheimer Multiple Strategies Fund/VA - Initial Class (OppMultStr) 67,364 shares (cost $1,097,586) ........................................................ 1,168,758
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued PIMCO VIT - Low Duration Portfolio - Administrative Shares (PIMLowDur) 389,633 shares (cost $4,007,139) ....................................................... $ 4,013,223 PIMCO VIT - Real Return Portfolio - Administrative Shares (PIMRealRet) 97,978 shares (cost $1,274,937) ........................................................ 1,265,871 PIMCO VIT - Total Return Portfolio - Administrative Shares (PIMTotRet) 1,588,483 shares (cost $16,527,586) .................................................... 16,694,955 Pioneer High Yield VCT Portfolio - Class I Shares (PVCTHiYield) 15,802 shares (cost $180,222) .......................................................... 184,408 Royce Capital Fund - Royce Micro-Cap Portfolio (RCFMicroCap) 384,739 shares (cost $4,000,732) ....................................................... 4,424,503 Strong Opportunity Fund II, Inc. (StOpp2) 260,703 shares (cost $5,075,504) ....................................................... 5,852,785 Strong VIF - Strong Discovery Fund II (StDisc2) 12,468 shares (cost $156,498) .......................................................... 182,650 T. Rowe Price Equity Income Portfolio II (TRowEqInc2) 192,175 shares (cost $3,824,744) ....................................................... 4,287,418 T. Rowe Price Mid Cap Growth Fund II (TRowMidCap2) 267,627 shares (cost $4,853,260) ....................................................... 6,265,139 Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) 18,521 shares (cost $233,650) .......................................................... 281,708 Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs) 4,337 shares (cost $67,329) ............................................................ 79,623 Van Kampen UIF - Emerging Markets Debt Portfolio (VKEmMkt) 14,565 shares (cost $128,905) .......................................................... 129,480 Van Kampen UIF - Mid Cap Growth Portfolio (VKMidCapG) 113,226 shares (cost $1,074,513) ....................................................... 1,173,019 Van Kampen UIF - U.S. Real Estate Portfolio - Class A (VKUSRealEst) 150,439 shares (cost $2,364,216) ....................................................... 3,080,982 -------------- Total Investments .................................................................... 327,348,127 Accounts Receivable ........................................................................ - -------------- Total Assets ......................................................................... 327,348,127 Accounts Payable ............................................................................. 15,555 -------------- Contract Owners Equity (note 7) .............................................................. $ 327,332,572 ==============
See accompanying notes to financial statements. NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF OPERATIONS Year Ended December 31, 2004
Total AIMBValue AlVPGrIncA ACVPBal --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 4,728,458 - 33,818 3,958 Mortality and expense risk charges (note 3) ......... (881,718) (14) (9,392) (866) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 3,846,740 (14) 24,426 3,092 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 289,727,457 2,954 6,593,177 149,793 Cost of mutual fund shares sold ..................... (274,543,388) (2,469) (6,025,117) (119,605) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 15,184,069 485 568,060 30,188 Change in unrealized gain (loss) on investments ..................................... 5,129,892 134 (194,909) 4,859 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 20,313,961 619 373,151 35,047 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 2,952,444 - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 27,113,145 605 397,577 38,139 =============== =============== =============== =============== ACVPCapAp ACVPIncGr ACVPInt ACVPUltra --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ - 128,036 34,256 - Mortality and expense risk charges (note 3) ......... (2,082) (16,390) (18,074) (38) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... (2,082) 111,646 16,182 (38) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 852,703 969,824 7,024,627 13,763 Cost of mutual fund shares sold ..................... (737,004) (987,473) (5,959,740) (12,388) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 115,699 (17,649) 1,064,887 1,375 Change in unrealized gain (loss) on investments ..................................... 14,885 1,015,223 178,163 146 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 130,584 997,574 1,243,050 1,521 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 128,502 1,109,220 1,259,232 1,483 =============== =============== =============== =============== ACVPVal BCFTCpAsset CSGPVen CSIntFoc --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 55,316 - - 262 Mortality and expense risk charges (note 3) ......... (13,246) (520) (612) (96) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 42,070 (520) (612) 166 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 2,554,356 109,304 338,808 75,334 Cost of mutual fund shares sold ..................... (1,879,514) (104,513) (276,092) (62,506) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 674,842 4,791 62,716 12,828 Change in unrealized gain (loss) on investments ..................................... (56,048) 56,356 (19,608) (8,128) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 618,794 61,147 43,108 4,700 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 42,908 - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 703,772 60,627 42,496 4,866 =============== =============== =============== =============== CSLCapV CSSmCapGr DryMidCapStS DrySmCapIxS --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ 992 - - 7,712 Mortality and expense risk charges (note 3) ......... (422) (6,090) (96) (2,076) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 570 (6,090) (96) 5,636 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 206,463 3,445,643 460,856 1,534,199 Cost of mutual fund shares sold ..................... (179,223) (3,119,698) (450,352) (1,467,168) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 27,240 325,945 10,504 67,031 Change in unrealized gain (loss) on investments ..................................... (11,152) (162,631) (844) 378,967 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 16,088 163,314 9,660 445,998 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - 41,602 --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 16,658 157,224 9,564 493,236 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
DrySRGro DryStkIx DryVIFApp DryVIFGrInc --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 702 692,324 29,728 6,362 Mortality and expense risk charges (note 3) ......... (444) (93,284) (5,104) (1,216) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 258 599,040 24,624 5,146 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 428,802 18,377,377 1,709,725 390,072 Cost of mutual fund shares sold ..................... (350,303) (19,176,478) (1,427,490) (304,189) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 78,499 (799,101) 282,235 85,883 Change in unrealized gain (loss) on investments ..................................... (62,145) 4,330,297 (191,169) (46,341) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 16,354 3,531,196 91,066 39,542 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... $ 16,612 4,130,236 115,690 44,688 =============== =============== =============== =============== DryVIFIntVal FedQualBd FidVIPEI FidVIPEIS --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ 4,718 97,384 2,984 112,242 Mortality and expense risk charges (note 3) ......... (1,386) (5,788) (618) (20,032) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 3,332 91,596 2,366 92,210 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 403,329 2,780,382 418,541 6,597,032 Cost of mutual fund shares sold ..................... (337,947) (2,759,192) (329,165) (5,704,696) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 65,382 21,190 89,376 892,336 Change in unrealized gain (loss) on investments ..................................... 11,378 (59,817) (62,841) (705,476) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 76,760 (38,627) 26,535 186,860 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 6,656 21,374 712 28,390 --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 86,748 74,343 29,613 307,460 =============== =============== =============== =============== FidVIPGr FidVIPGrS FidVIPHI FidVIPHIS --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 15,386 28,550 226,632 215,240 Mortality and expense risk charges (note 3) ......... (15,210) (31,324) (6,416) (6,034) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 176 (2,774) 220,216 209,206 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 11,571,094 2,144,436 4,509,015 1,593,101 Cost of mutual fund shares sold ..................... (11,130,235) (3,219,819) (4,220,641) (1,457,166) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 440,859 (1,075,383) 288,374 135,935 Change in unrealized gain (loss) on investments ..................................... (435,907) 1,623,442 (290,366) (172,397) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 4,952 548,059 (1,992) (36,462) --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... $ 5,128 545,285 218,224 172,744 =============== =============== =============== =============== FidVIPOv FidVIPOvS FidVIPAM FidVIPCon --------------- --------------- --------------- --------------- Reinvested dividends ................................ 27,854 33,486 110,504 1,158 Mortality and expense risk charges (note 3) ......... (6,530) (7,954) (17,822) (872) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 21,324 25,532 92,682 286 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 4,828,755 1,079,239 2,588,410 224,412 Cost of mutual fund shares sold ..................... (4,596,754) (932,877) (2,403,088) (173,464) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 232,001 146,362 185,322 50,948 Change in unrealized gain (loss) on investments ..................................... (134,066) 182,463 156,715 266 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 97,935 328,825 342,037 51,214 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... 119,259 354,357 434,719 51,500 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
FidVIPConS FidVIPGrOp FidVIPGrOpS FidVIPValS --------------- ---------------- -------------- --------------- Investment activity: Reinvested dividends ................................ $ 20,146 - 5,118 - Mortality and expense risk charges (note 3) ......... (14,260) (214) (3,734) (458) --------------- ---------------- -------------- --------------- Net investment income (loss) ...................... 5,886 (214) 1,384 (458) --------------- ---------------- -------------- --------------- Proceeds from mutual fund shares sold ............... 5,140,889 2,507,370 230,438 116,925 Cost of mutual fund shares sold ..................... (4,178,106) (2,413,846) (233,816) (127,727) --------------- ---------------- -------------- --------------- Realized gain (loss) on investments ............... 962,783 93,524 (3,378) (10,802) Change in unrealized gain (loss) on investments ..................................... (421,437) (80,972) 110,963 25,365 --------------- ---------------- -------------- --------------- Net gain (loss) on investments .................... 541,346 12,552 107,585 14,563 --------------- ---------------- -------------- --------------- Reinvested capital gains ............................ - - - 334 --------------- ---------------- -------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............... $ 547,232 12,338 108,969 14,439 =============== ================ ============== =============== FrVIPForSec2 GVITCVal GVITDMidCapl GVITEmMrkts --------------- ---------------- -------------- --------------- Investment activity: Reinvested dividends ................................ 13,532 748 12,052 804 Mortality and expense risk charges (note 3) ......... (4,758) (140) (3,402) (414) --------------- ---------------- -------------- --------------- Net investment income (loss) ...................... 8,774 608 8,650 390 --------------- ---------------- -------------- --------------- Proceeds from mutual fund shares sold ............... 691,126 58,071 2,680,167 1,002,192 Cost of mutual fund shares sold ..................... (539,556) (43,495) (2,404,143) (1,032,688) --------------- ---------------- -------------- --------------- Realized gain (loss) on investments ............... 151,570 14,576 276,024 (30,496) Change in unrealized gain (loss) on investments ..................................... 266,049 (5,573) 171,216 4,080 --------------- ---------------- -------------- --------------- Net gain (loss) on investments .................... 417,619 9,003 447,240 (26,416) --------------- ---------------- -------------- --------------- Reinvested capital gains ............................ - - 76,202 7,038 --------------- ---------------- -------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ......... 426,393 9,611 532,092 (18,988) =============== ================ ============== =============== GVITFHiInc GVITGlFin1 GVITGlHlth GVITGlTech --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 83,616 52 - - Mortality and expense risk charges (note 3) ......... (3,154) (8) (36) (30) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 80,462 44 (36) (30) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 1,478,352 1,116 140,488 19,164 Cost of mutual fund shares sold ..................... (1,374,652) (1,090) (136,000) (20,037) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 103,700 26 4,488 (873) Change in unrealized gain (loss) on investments ..................................... (93,053) 243 80 3,664 --------------- --------------- --------------- --------------- Net gain (loss) on investments ..................... 10,647 269 4,568 2,791 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - 300 - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ......... $ 91,109 613 4,532 2,761 =============== =============== =============== =============== Investment activity: GVITGvtBd GVITGrowth GVITIDAgg GVITIDCon --------------- --------------- --------------- --------------- Reinvested dividends ................................ 928,278 2,316 - 7,224 Mortality and expense risk charges (note 3) ......... (38,628) (6,608) - (782) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 889,650 (4,292) - 6,442 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 12,839,722 4,754,386 1,785 7,326 Cost of mutual fund shares sold ..................... (13,255,895) (4,404,602) (1,294) (6,927) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... (416,173) 349,784 491 399 Change in unrealized gain (loss) on investments ..................................... (405,713) (535,921) (437) 3,553 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... (821,886) (186,137) 54 3,952 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 374,338 - - 3,066 --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 442,102 (190,429) 54 13,460 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
GVITIDMod GVITIDModAgg GVITIDModCon GVITJPBal --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 11,220 - - 110,308 Mortality and expense risk charges (note 3) ......... (596) - - (11,252) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 10,624 - - 99,056 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 7,661 1,771 1,735 908,944 Cost of mutual fund shares sold ..................... (7,178) (1,336) (1,522) (805,841) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 483 435 213 103,103 Change in unrealized gain (loss) on investments ..................................... 44,901 (388) (183) 459,132 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 45,384 47 30 562,235 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 1,678 - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 57,686 47 30 661,291 =============== =============== =============== =============== Investment activity: GVITSMdCpGr GVITMyMkt GVITMyMkt5 GVITNWFund --------------- --------------- --------------- --------------- Reinvested dividends ................................ - 209,014 487,868 24,570 Mortality and expense risk charges (note 3) ......... (2,278) (48,554) (138,122) (5,926) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... (2,278) 160,460 349,746 18,644 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 3,420,718 15,765,259 50,824,421 1,163,821 Cost of mutual fund shares sold ..................... (3,355,518) (15,765,259) (50,824,421) (913,908) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 65,200 - - 249,913 Change in unrealized gain (loss) on investments ..................................... (36,074) - - (109,041) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 29,126 - - 140,872 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 26,848 160,460 349,746 159,516 =============== =============== =============== =============== Investment activity: GVITNStrVal GVITSmCapGr GVITSmCapVal GVITSmComp --------------- --------------- --------------- --------------- Reinvested dividends ................................ $ - - 12 - Mortality and expense risk charges (note 3) ......... (252) (9,228) (12,108) (19,672) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... (252) (9,228) (12,096) (19,672) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 603,060 453,482 4,899,028 4,213,036 Cost of mutual fund shares sold ..................... (484,491) (332,211) (3,851,486) (3,331,554) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 118,569 121,271 1,047,542 881,482 Change in unrealized gain (loss) on investments ..................................... (89,666) 376,912 (677,615) (606,293) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 28,903 498,183 369,927 275,189 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - 412,490 948,294 --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 28,651 488,955 770,321 1,203,811 =============== =============== =============== =============== Investment activity: GVITTGroFoc GVITUSGro GVITVKMultiSec GVITWLead --------------- --------------- --------------- --------------- Reinvested dividends ................................ - - 126,752 - Mortality and expense risk charges (note 3) ......... (2) (10) (6,396) (190) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... (2) (10) 120,356 (190) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 2,917 1,748 2,062,279 25,247 Cost of mutual fund shares sold ..................... (2,866) (1,696) (1,945,920) (17,378) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 51 52 116,359 7,869 Change in unrealized gain (loss) on investments ..................................... (36) 413 (127,817) 3,892 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 15 465 (11,458) 11,761 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - 186 - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 13 641 108,898 11,571 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
GSVITMidCap JanBal JanCapAp JanGlTech --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 14,066 24,396 62 - Mortality and expense risk charges (note 3) ......... (8,124) (2,732) (2,424) (1,740) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 5,942 21,664 (2,362) (1,740) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 1,060,821 81,953 3,086,516 376,198 Cost of mutual fund shares sold ..................... (790,774) (74,659) (2,899,300) (287,662) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 270,047 7,294 187,216 88,536 Change in unrealized gain (loss) on investments ..................................... 45,472 55,745 (123,140) (79,340) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 315,519 63,039 64,076 9,196 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 225,846 - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 547,307 84,703 61,714 7,456 =============== =============== =============== =============== Investment activity: JanIntGro NBAMTFasc NBAMTGro NBAMTGuard --------------- --------------- --------------- --------------- Reinvested dividends ................................ 5,390 - - 2,666 Mortality and expense risk charges (note 3) ......... (1,802) (352) (1,366) (3,660) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 3,588 (352) (1,366) (994) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 516,244 193,573 589,648 381,275 Cost of mutual fund shares sold ..................... (393,804) (165,345) (469,639) (392,689) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 122,440 28,228 120,009 (11,414) Change in unrealized gain (loss) on investments ..................................... (34,387) (21,671) (41,377) 346,803 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 88,053 6,557 78,632 335,389 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - 530 - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 91,641 6,735 77,266 334,395 =============== =============== =============== =============== Investment activity: NBAMTLMat NBAMTMCGr NBAMTPart OGMidCapGr --------------- --------------- --------------- --------------- Reinvested dividends ................................ $ - - 1,002 - Mortality and expense risk charges (note 3) ......... (2) (11,886) (17,226) (2,550) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... (2) (11,886) (16,224) (2,550) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 8,581 6,399,495 11,915,420 261,469 Cost of mutual fund shares sold ..................... (8,526) (6,035,237) (10,470,252) (200,285) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 55 364,258 1,445,168 61,184 Change in unrealized gain (loss) on investments ..................................... (35) (399,506) (364,948) 31,988 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 20 (35,248) 1,080,220 93,172 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 18 (47,134) 1,063,996 90,622 =============== =============== =============== =============== Investment activity: OGMidCapV OppAggGro OppBdFd OppCapAp --------------- --------------- --------------- --------------- Reinvested dividends ................................ 3,196 - 68,328 27,410 Mortality and expense risk charges (note 3) ......... (614) (12,802) (3,514) (20,066) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 2,582 (12,802) 64,814 7,344 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 1,489,596 797,805 677,884 1,663,219 Cost of mutual fund shares sold ..................... (1,485,625) (894,765) (672,895) (1,906,954) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 3,971 (96,960) 4,989 (243,735) Change in unrealized gain (loss) on investments ..................................... - 1,410,064 (15,441) 1,090,484 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 3,971 1,313,104 (10,452) 846,749 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 6,553 1,300,302 54,362 854,093 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
OppGlSec OppMSFund OppMultStr PIMLowDur --------------- --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 31,532 3,064 14,924 151,738 Mortality and expense risk charges (note 3) ......... (5,644) (846) (3,078) (35,810) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 25,888 2,218 11,846 115,928 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 3,432,924 279,646 916,646 22,565,102 Cost of mutual fund shares sold ..................... (3,120,515) (238,327) (829,813) (22,498,752) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 312,409 41,319 86,833 66,350 Change in unrealized gain (loss) on investments ..................................... (323,285) (17,352) (36,638) 16,663 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... (10,876) 23,967 50,195 83,013 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - 12,206 --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 15,012 26,185 62,041 211,147 =============== =============== =============== =============== Investment activity: PIMRealRet PIMTotRet PVCTHiYield RCFMicroCap --------------- --------------- --------------- --------------- Reinvested dividends ................................ 8,508 338,208 17,366 - Mortality and expense risk charges (note 3) ......... (2,006) (56,194) (788) (8,604) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... 6,502 282,014 16,578 (8,604) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 2,244,217 13,665,275 785,056 1,669,969 Cost of mutual fund shares sold ..................... (2,200,177) (13,591,141) (765,442) (1,095,931) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 44,040 74,134 19,614 574,038 Change in unrealized gain (loss) on investments ..................................... (6,679) 287,399 (10,706) (219,893) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 37,361 361,533 8,908 354,145 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ 38,830 241,082 1,124 326,168 --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... 82,693 884,629 26,610 671,709 =============== =============== =============== =============== Investment activity: StOpp2 StDisc2 TRowEqInc2 TRowMidCap2 --------------- --------------- --------------- --------------- Reinvested dividends ................................ $ - - 41,102 - Mortality and expense risk charges (note 3) ......... (28,794) (1,102) (8,190) (8,860) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... (28,794) (1,102) 32,912 (8,860) --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 8,322,291 634,710 988,432 814,574 Cost of mutual fund shares sold ..................... (6,220,894) (654,146) (807,084) (562,851) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... 2,101,397 (19,436) 181,348 251,723 Change in unrealized gain (loss) on investments ..................................... (1,325,754) (6,901) 183,125 897,741 --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... 775,643 (26,337) 364,473 1,149,464 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - 85,082 - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 746,849 (27,439) 482,467 1,140,604 =============== =============== =============== =============== Investment activity: TRowNewAmG VEWrldBd VEWrldEMkt VEWrldHAs --------------- --------------- --------------- --------------- Reinvested dividends ................................ - - 4,442 1,562 Mortality and expense risk charges (note 3) ......... - (2) (1,364) (342) --------------- --------------- --------------- --------------- Net investment income (loss) ...................... - (2) 3,078 1,220 --------------- --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 298 18,960 781,382 410,437 Cost of mutual fund shares sold ..................... (312) (17,279) (659,636) (353,086) --------------- --------------- --------------- --------------- Realized gain (loss) on investments ............... (14) 1,681 121,746 57,351 Change in unrealized gain (loss) on investments ..................................... 1 (1,248) (45,427) (47,484) --------------- --------------- --------------- --------------- Net gain (loss) on investments .................... (13) 433 76,319 9,867 --------------- --------------- --------------- --------------- Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... (13) 431 79,397 11,087 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF OPERATIONS, Continued Year Ended December 31, 2004
VKEmMkt VKMidCapG VKUSRealEst --------------- --------------- --------------- Investment activity: Reinvested dividends ................................ $ 13,620 - 42,642 Mortality and expense risk charges (note 3) ......... (452) (560) (6,962) --------------- --------------- --------------- Net investment income (loss) ...................... 13,168 (560) 35,680 --------------- --------------- --------------- Proceeds from mutual fund shares sold ............... 560,505 170,199 1,966,967 Cost of mutual fund shares sold ..................... (522,806) (145,440) (1,388,520) --------------- --------------- --------------- Realized gain (loss) on investments ............... 37,699 24,759 578,447 Change in unrealized gain (loss) on investments ..................................... (47,889) 82,106 231,709 --------------- --------------- --------------- Net gain (loss) on investments .................... (10,190) 106,865 810,156 --------------- --------------- --------------- Reinvested capital gains ............................ 6,366 - 49,642 --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 9,344 106,305 895,478 =============== =============== ===============
See accompanying notes to financial statements. NATIONWIDE VL SEPARATE ACCOUNT- C STATEMENTS OF CHANGES IN CONTRACT OWNER'S EQUITY Year Ended December 31, 2004 and 2003
Total AIMBValue ---------------------------------- ---------------------------------- Investment activity: 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ $ 3,846,740 3,566,018 (14) (3) Realized gain (loss) on investments ................. 15,184,069 (12,493,479) 485 40 Change in unrealized gain (loss) on investments ..................................... 5,129,892 60,899,618 134 577 Reinvested capital gains ............................ 2,952,444 387,027 - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ........................ 27,113,145 52,359,184 605 614 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 12,125,820 23,342,950 9,702 2,165 Transfers between funds ............................. - - (4,638) 1,471 Surrenders (note 6) ................................. (87,587,776) (38,769,687) (2,642) (67) Death benefits (note 4) ............................. (335,216) (552,052) - - Net policy repayments (loans) (note 5) .............. (22) (849) - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................................ (7,183,508) (7,805,652) (246) (96) Adjustments to maintain reserves .................... (8,515) (41,326) 23 (8) --------------- --------------- --------------- --------------- Net equity transactions ......................... (82,989,217) (23,826,616) 2,199 3,465 --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. (55,876,072) 28,532,568 2,804 4,079 Contract owners' equity beginning of period ............................................ 383,208,644 354,676,076 4,079 - --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. $ 327,332,572 383,208,644 6,883 4,079 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... 36,010,506 36,867,893 311 - --------------- --------------- --------------- --------------- Units purchased ..................................... 15,679,094 22,247,075 766 383 Units redeemed ...................................... (23,575,008) (23,104,462) (603) (72) --------------- --------------- --------------- --------------- Ending units ........................................ 28,114,592 36,010,506 474 311 =============== =============== =============== =============== AlVPGrIncA ACVPBal ---------------------------------- ---------------------------------- Investment activity: 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ 24,426 (1,870) 3,092 5,788 Realized gain (loss) on investments ................. 568,060 10,242 30,188 879 Change in unrealized gain (loss) on investments ..................................... (194,909) 236,542 4,859 39,911 Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ........................ 397,577 244,914 38,139 46,578 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 15,290 188 4 (78) Transfers between funds ............................. 1,159,974 3,479,771 76,764 92,670 Surrenders (note 6) ................................. (4,231,210) - (33,518) - Death benefits (note 4) ............................. - (1,306) - - Net policy repayments (loans) (note 5) .............. - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................................ (66,044) (10,090) (12,234) (10,544) Adjustments to maintain reserves .................... 53 3 11 (9) --------------- --------------- --------------- --------------- Net equity transactions ......................... (3,121,937) 3,468,566 31,027 82,039 --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. (2,724,360) 3,713,480 69,166 128,617 Contract owners' equity beginning of period ............................................ 3,715,373 1,893 357,178 228,561 --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. 991,013 3,715,373 426,344 357,178 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... 280,678 189 33,960 25,913 --------------- --------------- --------------- --------------- Units purchased ..................................... 106,522 281,409 7,365 15,557 Units redeemed ...................................... (319,924) (920) (4,307) (7,510) --------------- --------------- --------------- --------------- Ending units ........................................ 67,276 280,678 37,018 33,960 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
ACVPCapAp ACVPIncGr ---------------------------------- ---------------------------------- Investment activity: 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ $ (2,082) (1,092) 111,646 86,556 Realized gain (loss) on investments ................. 115,699 (8,358) (17,649) (437,670) Change in unrealized gain (loss) on investments ..................................... 14,885 88,760 1,015,223 2,351,299 Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ........................ 128,502 79,310 1,109,220 2,000,185 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 34 (72) 188,114 276,644 Transfers between funds ............................. 583,764 88,018 (294,220) (131,550) Surrenders (note 6) ................................. - - (82,952) (515,138) Death benefits (note 4) ............................. - - (24,922) (14,016) Net policy repayments (loans) (note 5) .............. - - 4 - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................................ (24,006) (13,243) (135,054) (124,250) Adjustments to maintain reserves .................... 28 (5) 92 (69) --------------- --------------- --------------- --------------- Net equity transactions ......................... 559,820 74,698 (348,938) (508,379) --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. 688,322 154,008 760,282 1,491,806 Contract owners' equity beginning of period ............................................ 528,500 374,492 8,973,628 7,481,822 --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. $ 1,216,822 528,500 9,733,910 8,973,628 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... 48,415 42,060 867,106 933,307 --------------- --------------- --------------- --------------- Units purchased ..................................... 57,686 24,759 22,144 357,333 Units redeemed ...................................... (2,229) (18,404) (54,362) (423,534) --------------- --------------- --------------- --------------- Ending units ........................................ 103,872 48,415 834,888 867,106 =============== =============== =============== =============== ACVPInt ACVPUltra ---------------------------------- ---------------------------------- Investment activity: 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ 16,182 39,073 (38) (15) Realized gain (loss) on investments ................. 1,064,887 (1,536,974) 1,375 193 Change in unrealized gain (loss) on investments ..................................... 178,163 3,330,374 146 1,174 Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ........................ 1,259,232 1,832,473 1,483 1,352 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 85,788 236,844 10,878 3,802 Transfers between funds ............................. 2,149,580 (5,418,950) (2,338) 6,716 Surrenders (note 6) ................................. (3,115,972) (193,479) (4,392) (231) Death benefits (note 4) ............................. (11,610) (18,142) - - Net policy repayments (loans) (note 5) .............. (4) - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................................ (110,994) (145,132) (478) (223) Adjustments to maintain reserves .................... 105 (1,936) 20 (4) --------------- --------------- --------------- --------------- Net equity transactions ......................... (1,003,107) (5,540,795) 3,690 10,060 --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. 256,125 (3,708,322) 5,173 11,412 Contract owners' equity beginning of period ............................................ 6,827,190 10,535,512 11,412 - --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. 7,083,315 6,827,190 16,585 11,412 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... 740,358 1,419,968 1,142 - --------------- --------------- --------------- --------------- Units purchased ..................................... 661,345 287,800 1,286 1,415 Units redeemed ...................................... (695,481) (967,410) (924) (273) --------------- --------------- --------------- --------------- Ending units ........................................ 706,222 740,358 1,504 1,142 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
ACVPVal BCFTCpAsset ---------------------------------- ---------------------------------- Investment activity: 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ $ 42,070 59,530 (520) (13) Realized gain (loss) on investments ................. 674,842 (259,166) 4,791 - Change in unrealized gain (loss) on investments ..................................... (56,048) 1,788,027 56,356 712 Reinvested capital gains ............................ 42,908 - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....................... 703,772 1,588,391 60,627 699 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 319,546 195,237 44,198 - Transfers between funds ............................. 515,792 (4,381,462) 219,080 65,999 Surrenders (note 6) ................................. (1,164,208) (998,714) (1,014) (97) Death benefits (note 4) ............................. (5,864) - - - Net policy repayments (loans) (note 5) .............. - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................................. (132,058) (177,462) (5,874) - Adjustments to maintain reserves .................... 47 (1,910) 22 2 --------------- --------------- --------------- --------------- Net equity transactions ......................... (466,745) (5,364,311) 256,412 65,904 --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. 237,027 (3,775,920) 317,039 66,603 Contract owners' equity beginning of period ............................................ 4,656,661 8,432,581 66,603 - --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. $ 4,893,688 4,656,661 383,642 66,603 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... 337,516 787,711 5,295 - --------------- --------------- --------------- --------------- Units purchased ..................................... 106,374 154,781 21,603 5,305 Units redeemed ...................................... (132,968) (604,976) (2,560) (10) --------------- --------------- --------------- --------------- Ending units ........................................ 310,922 337,516 24,338 5,295 =============== =============== =============== =============== CVSSoEq CSGPVen ---------------------------------- ---------------------------------- Investment activity: 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ - (1,154) (612) (1,061) Realized gain (loss) on investments ................. - (227,817) 62,716 112,396 Change in unrealized gain (loss) on investments ..................................... - 78,830 (19,608) 69,511 Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ....................... - (150,141) 42,496 180,846 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... - 236,508 23,300 (5,005) Transfers between funds ............................. - (3,088,584) (135,876) (132,271) Surrenders (note 6) ................................. - - - (29,330) Death benefits (note 4) ............................. - - - - Net policy repayments (loans) (note 5) .............. - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................................ - (242) (6,000) (11,445) Adjustments to maintain reserves .................... - (27) 14 (2) --------------- --------------- --------------- --------------- Net equity transactions ......................... - (2,852,345) (118,562) (178,053) --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. - (3,002,486) (76,066) 2,793 Contract owners' equity beginning of period ............................................ - 3,002,486 302,513 299,720 --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. - - 226,447 302,513 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... - 292,051 36,710 53,748 --------------- --------------- --------------- --------------- Units purchased ..................................... - 749 2,675 23,297 Units redeemed ...................................... - (292,800) (16,037) (40,335) --------------- --------------- --------------- --------------- Ending units ........................................ - - 23,348 36,710 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
CSIntFoc CSLCapV ---------------------------------- ---------------------------------- Investment activity: 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ $ 166 8 570 691 Realized gain (loss) on investments ................. 12,828 29,378 27,240 (46,585) Change in unrealized gain (loss) on investments ..................................... (8,128) 9,837 (11,152) 75,199 Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ........................ 4,866 39,223 16,658 29,305 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 844 5,243 12,072 26,208 Transfers between funds ............................. (62,672) 4,011 (51,046) (50,777) Surrenders (note 6) ................................. - (33,953) (2,174) (66,516) Death benefits (note 4) ............................. - - - - Net policy repayments (loans) (note 5) .............. - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) .................................. (1,386) (3,056) (4,012) (3,913) Adjustments to maintain reserves .................... 16 (8,665) 26 (2) --------------- --------------- --------------- --------------- Net equity transactions ......................... (63,198) (36,420) (45,134) (95,000) --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. (58,332) 2,803 (28,476) (65,695) Contract owners' equity beginning of period ............................................ 86,967 84,164 165,728 231,423 --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. $ 28,635 86,967 137,252 165,728 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... 10,498 13,536 14,999 26,190 --------------- --------------- --------------- --------------- Units purchased ..................................... 100 13,131 1,097 8,743 Units redeemed ...................................... (7,578) (16,169) (4,912) (19,934) --------------- --------------- --------------- --------------- Ending units ........................................ 3,020 10,498 11,184 14,999 =============== =============== =============== =============== CSSmCapGr DryMidCapStS ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net investment income (loss) ........................ (6,090) (2,143) (96) 948 Realized gain (loss) on investments ................. 325,945 89,817 10,504 6,704 Change in unrealized gain (loss) on investments ..................................... (162,631) 244,757 (844) 844 Reinvested capital gains ............................ - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ........................ 157,224 332,431 9,564 8,496 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................... 49,442 63,048 - (6,420) Transfers between funds ............................. 1,288,072 883,755 (458,872) 449,258 Surrenders (note 6) ................................. - - - (98) Death benefits (note 4) ............................. - - - - Net policy repayments (loans) (note 5) .............. - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) .................................. (69,288) (36,967) (1,890) (15,634) Adjustments to maintain reserves .................... 22 (5) (3) 15,599 --------------- --------------- --------------- --------------- Net equity transactions ........................... (712,346) 909,831 (460,765) 442,705 --------------- --------------- --------------- --------------- Net change in contract owners' equity ................. (555,122) 1,242,262 (451,201) 451,201 Contract owners' equity beginning of period ............................................ 1,719,660 477,398 451,201 - --------------- --------------- --------------- --------------- Contract owners' equity end of period ................. 1,164,538 1,719,660 - 451,201 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ..................................... 194,729 80,161 34,437 - --------------- --------------- --------------- --------------- Units purchased ..................................... 147,230 139,865 - 34,450 Units redeemed ...................................... (222,721) (25,297) (34,437) (13) --------------- --------------- --------------- --------------- Ending units ........................................ 119,238 194,729 - 34,437 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
DrySmCapIxS DrySRGro ------------------------------ ------------------------------ 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ............ $ 5,636 (106) 258 (434) Realized gain (loss) on investments ..... 67,031 (12,801) 78,499 (3,281) Change in unrealized gain (loss) On investments ............................ 378,967 963 (62,145) 74,901 Reinvested capital gains ................ 41,602 46 - - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........................... 493,236 (11,898) 16,612 71,186 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................ 8,860 (157) 12,964 13,910 Transfers between funds ................. 1,672,218 23,230 28,604 (2,950) Surrenders (note 6) ..................... (6,582) - (212,382) (21,435) Death benefits (note 4) ................. - - - - Net policy repayments (loans) (note 5) .. - - 8 - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ...................... (9,974) (1,939) (5,302) (7,776) Adjustments to maintain reserves ........ 65 (3) 7 6 ------------- ------------- ------------- ------------- Net equity transactions ............... 1,664,587 21,131 (176,101) (18,245) ------------- ------------- ------------- ------------- Net change in contract owners' equity ..... 2,157,823 9,233 (159,489) 52,941 Contract owners' equity beginning of period 9,233 - 342,163 289,222 ------------- ------------- ------------- ------------- Contract owners' equity end of period ..... $ 2,167,056 9,233 182,674 342,163 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ......................... 879 - 38,714 41,194 ------------- ------------- ------------- ------------- Units purchased ......................... 170,921 8,699 5,126 11,494 Units redeemed .......................... (2,764) (7,820) (24,332) (13,974) ------------- ------------- ------------- ------------- Ending units ............................ 169,036 879 19,508 38,714 ============= ============= ============= ============= DryStkIx DryVIFApp ------------------------------ ------------------------------ 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Investment activity: Net investment income (loss) ............ 599,040 422,135 24,624 22,127 Realized gain (loss) on investments ..... (799,101) (2,606,489) 282,235 (442,297) Change in unrealized gain (loss) On investments ............................ 4,330,297 10,819,143 (191,169) 1,213,972 Reinvested capital gains ................ - - - - ------------- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........................... 4,130,236 8,634,789 115,690 793,802 ------------- ------------- ------------- ------------- Equity transactions: Purchase payments received from contract owners (note 6) ........................ 710,716 2,766,689 197,856 502,673 Transfers between funds ................. 3,018,944 4,944,020 (4,946) (3,460,833) Surrenders (note 6) ..................... (7,878,454) (1,890,428) (1,158,998) (592,692) Death benefits (note 4) ................. (39,094) (22,462) (6,038) (1,499) Net policy repayments (loans) (note 5) .. (280) 183,582 - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ...................... (804,960) (823,829) (49,430) (117,442) Adjustments to maintain reserves ........ 555 4,833 53 (2,148) ------------- ------------- ------------- ------------- Net equity transactions ............... (4,992,573) 5,162,405 (1,021,503) (3,671,941) ------------- ------------- ------------- ------------- Net change in contract owners' equity ..... (862,337) 13,797,194 (905,813) (2,878,139) Contract owners' equity beginning of period 42,399,239 28,602,045 2,699,069 5,577,208 ------------- ------------- ------------- ------------- Contract owners' equity end of period ..... 41,536,902 42,399,239 1,793,256 2,699,069 ============= ============= ============= ============= CHANGES IN UNITS: Beginning units ......................... 4,213,692 3,662,912 244,521 611,476 ------------- ------------- ------------- ------------- Units purchased ......................... 1,510,287 1,865,324 65,052 156,383 Units redeemed .......................... (1,933,213) (1,314,544) (149,491) (523,338) ------------- ------------- ------------- ------------- Ending units ............................ 3,790,766 4,213,692 160,082 244,521 ============= ============= ============= =============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
DryVIFGrInc DryVIFIntVal ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ $ 5,146 3,029 3,332 1,762 Realized gain (loss) on investments ......................... 85,883 1,252 65,382 635 Change in unrealized gain (loss) on investments ................................................ (46,341) 108,111 11,378 45,372 Reinvested capital gains .................................... - - 6,656 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 44,688 112,392 86,748 47,769 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 6 (951) 92 41 Transfers between funds ..................................... 15,228 156,717 412,134 216,383 Surrenders (note 6) ......................................... (201,480) - (276,826) - Death benefits (note 4) ..................................... - - - - Net policy repayments (loans) (note 5) ...................... - 183,582 - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (22,466) (16,067) (7,438) - Adjustments to maintain reserves ............................ 8 1 25 (1,801) ------------ ------------ ------------ ------------ Net equity transactions ................................. (208,704) 323,282 127,987 214,623 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... (164,016) 435,674 214,735 262,392 Contract owners' equity beginning of period ................... 725,693 290,019 262,392 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... $ 561,677 725,693 477,127 262,392 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 80,448 40,612 20,453 - ------------ ------------ ------------ ------------ Units purchased ............................................. 2,210 51,438 53,873 40,914 Units redeemed .............................................. (24,574) (11,602) (43,266) (20,461) ------------ ------------ ------------ ------------ Ending units ................................................ 58,084 80,448 31,060 20,453 ============ ============ ============ ============ FedQualBd FidVIPEI ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ 91,596 95,133 2,366 1,656 Realized gain (loss) on investments ......................... 21,190 59,717 89,376 8,402 Change in unrealized gain (loss) on investments ................................................ (59,817) (26,158) (62,841) 52,780 Reinvested capital gains .................................... 21,374 - 712 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 74,343 128,692 29,613 62,838 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 98,256 215,633 (2) 28,918 Transfers between funds ..................................... (1,641,578) 1,353,803 112,570 78,787 Surrenders (note 6) ......................................... (20,456) (219,125) (394,010) (10,255) Death benefits (note 4) ..................................... - (1,788) - - Net policy repayments (loans) (note 5) ...................... 98 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (54,578) (83,903) (4,894) (3,852) Adjustments to maintain reserves ............................ 27 (4) 8 (2) ------------ ------------ ------------ ------------ Net equity transactions ................................. (1,618,231) 1,264,616 (286,328) 93,596 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... (1,543,888) 1,393,308 (256,715) 156,434 Contract owners' equity beginning of period ................... 3,270,428 1,877,120 256,715 100,281 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... 1,726,540 3,270,428 - 256,715 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 245,866 147,567 24,845 12,619 ------------ ------------ ------------ ------------ Units purchased ............................................. 35,925 173,220 10,866 14,781 Units redeemed .............................................. (156,287) (74,921) (35,711) (2,555) ------------ ------------ ------------ ------------ Ending units ................................................ 125,504 245,866 - 24,845 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
FidVIPEIS FidVIPGr ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ $ 92,210 41,906 176 587 Realized gain (loss) on investments ......................... 892,336 (292,422) 440,859 (728,865) Change in unrealized gain (loss) on investments ............................................. (705,476) 1,686,703 (435,907) 2,021,527 Reinvested capital gains .................................... 28,390 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 307,460 1,436,187 5,128 1,293,249 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 124,746 268,388 197,962 87,161 Transfers between funds ..................................... (1,517,404) 1,189,281 3,393,512 (754,585) Surrenders (note 6) ......................................... (816,622) (143,559) (7,516,486) (83,468) Death benefits (note 4) ..................................... (758) (8,548) - - Net policy repayments (loans) (note 5) ...................... 126 - (2) 183,582 Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (153,072) (129,730) (134,854) (110,732) Adjustments to maintain reserves ............................ 101 528 48 3 ------------ ------------ ------------ ------------ Net equity transactions ................................. (2,362,883) 1,176,360 (4,059,820) (678,039) ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... (2,055,423) 2,612,547 (4,054,692) 615,210 Contract owners' equity beginning of period ................... 6,445,977 3,833,430 4,622,364 4,007,154 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... $ 4,390,554 6,445,977 567,672 4,622,364 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 560,297 432,799 583,926 670,852 ------------ ------------ ------------ ------------ Units purchased ............................................. 814,629 236,910 454,987 45,919 Units redeemed .............................................. (1,021,576) (109,412) (969,371) (132,845) ------------ ------------ ------------ ------------ Ending units ................................................ 353,350 560,297 69,542 583,926 ============ ============ ============ ============ FidVIPGrS FidVIPHI ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ (2,774) (301) 220,216 99,977 Realized gain (loss) on investments ......................... (1,075,383) (1,859,398) 288,374 73,394 Change in unrealized gain (loss) on investments ............................................. 1,623,442 6,205,534 (290,366) 228,450 Reinvested capital gains .................................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 545,285 4,345,835 218,224 401,821 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 195,312 314,212 - 361 Transfers between funds ..................................... 63,688 41,352 468,560 629,499 Surrenders (note 6) ......................................... (787,564) (955,955) (3,019,360) - Death benefits (note 4) ..................................... (64,436) (8,685) (1,306) - Net policy repayments (loans) (note 5) ...................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (260,374) (262,218) (47,484) (34,340) Adjustments to maintain reserves ............................ 99 (165) 29 (462) ------------ ------------ ------------ ------------ Net equity transactions ................................. (853,275) (871,459) (2,599,561) 595,058 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... (307,990) 3,474,376 (2,381,337) 996,879 Contract owners' equity beginning of period ................... 17,714,706 14,240,330 2,518,483 1,521,604 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... 17,406,716 17,714,706 137,146 2,518,483 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 1,838,297 1,951,492 218,094 167,303 ------------ ------------ ------------ ------------ Units purchased ............................................. 85,772 693,111 40,069 63,730 Units redeemed .............................................. (163,885) (806,306) (247,299) (12,939) ------------ ------------ ------------ ------------ Ending units ................................................ 1,760,184 1,838,297 10,864 218,094 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
FidVIPHIS FidVIPOv ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ $ 209,206 197,164 21,324 1,897 Realized gain (loss) on investments ......................... 135,935 92,550 232,001 (12,413) Change in unrealized gain (loss) on investments ................................................ (172,397) 274,223 (134,066) 250,477 Reinvested capital gains .................................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 172,744 563,937 119,259 239,961 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 140,732 306,510 40,136 35,428 Transfers between funds ..................................... (301,596) (199,985) 1,007,816 999,283 Surrenders (note 6) ......................................... (277,706) (993,747) (2,174,298) (28,727) Death benefits (note 4) ..................................... - (4,595) - - Net policy repayments (loans) (note 5) ...................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (60,994) (91,014) (49,332) (12,362) Adjustments to maintain reserves ............................ 36 3 27 4 ------------ ------------ ------------ ------------ Net equity transactions ................................. (499,528) (982,828) (1,175,651) 993,626 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... (326,784) (418,891) (1,056,392) 1,233,587 Contract owners' equity beginning of period ................... 2,310,255 2,729,146 1,620,869 387,282 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... $ 1,983,471 2,310,255 564,477 1,620,869 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 268,110 401,989 180,429 61,653 ------------ ------------ ------------ ------------ Units purchased ............................................. 23,981 115,224 105,778 125,345 Units redeemed .............................................. (81,549) (249,103) (230,773) (6,569) ------------ ------------ ------------ ------------ Ending units ................................................ 210,542 268,110 55,434 180,429 ============ ============ ============ ============ FidVIPOvS FidVIPAM ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ 25,532 13,850 92,682 98,226 Realized gain (loss) on investments ......................... 146,362 (736,566) 185,322 (20,996) Change in unrealized gain (loss) on investments ................................................ 182,463 1,627,578 156,715 433,269 Reinvested capital gains .................................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 354,357 904,862 434,719 510,499 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 182,944 336,075 522 12,049 Transfers between funds ..................................... 223,452 (555,854) 5,708,986 459,568 Surrenders (note 6) ......................................... (198,880) (957,734) (12,552) - Death benefits (note 4) ..................................... - (2,049) - - Net policy repayments (loans) (note 5) ...................... (8) - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (74,696) (85,708) (191,492) (95,957) Adjustments to maintain reserves ............................ 59 (20) 73 (4) ------------ ------------ ------------ ------------ Net equity transactions ................................. 132,871 (1,265,290) 5,505,537 375,656 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... 487,228 (360,428) 5,940,256 886,155 Contract owners' equity beginning of period ................... 2,719,891 3,080,319 3,454,090 2,567,935 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... 3,207,119 2,719,891 9,394,346 3,454,090 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 280,162 454,474 331,284 289,913 ------------ ------------ ------------ ------------ Units purchased ............................................. 85,399 222,524 544,572 78,753 Units redeemed .............................................. (73,841) (396,836) (19,420) (37,382) ------------ ------------ ------------ ------------ Ending units ................................................ 291,720 280,162 856,436 331,284 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
FidVIPCon FidVIPConS ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ $ 286 334 5,886 3,456 Realized gain (loss) on investments ......................... 50,948 11,261 962,783 (756,647) Change in unrealized gain (loss) on investments ............................................. 266 88,176 (421,437) 2,197,581 Reinvested capital gains .................................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 51,500 99,771 547,232 1,444,390 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 514 12,179 288,932 1,140,655 Transfers between funds ..................................... (123,264) (34,160) (48,704) 755,522 Surrenders (note 6) ......................................... (77,842) - (4,346,040) (1,160,274) Death benefits (note 4) ..................................... - - - (4,605) Net policy repayments (loans) (note 5) ...................... (2) 183,582 - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (22,944) (19,023) (82,644) (135,387) Adjustments to maintain reserves ............................ 21 (3) 65 13 ------------ ------------ ------------ ------------ Net equity transactions ................................. (223,517) 142,575 (4,188,391) 595,924 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... (172,017) 242,346 (3,641,159) 2,040,314 Contract owners' equity beginning of period ................... 536,009 293,663 7,619,443 5,579,129 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... $ 363,992 536,009 3,978,284 7,619,443 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 51,152 35,930 576,339 542,502 ------------ ------------ ------------ ------------ Units purchased ............................................. 54 26,496 36,318 490,187 Units redeemed .............................................. (21,050) (11,274) (351,173) (456,350) ------------ ------------ ------------ ------------ Ending units ................................................ 30,156 51,152 261,484 576,339 ============ ============ ============ ============ FidVIPGrOp FidVIPGrOpS ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ (214) 6,141 1,384 3,857 Realized gain (loss) on investments ......................... 93,524 (27,208) (3,378) (133,773) Change in unrealized gain (loss) on investments ............................................. (80,972) 252,689 110,963 374,378 Reinvested capital gains .................................... - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 12,338 231,622 108,969 244,462 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 7,242 17,478 12,794 16,818 Transfers between funds ..................................... (857,598) (231,580) 536,428 (178,650) Surrenders (note 6) ......................................... (1,464) - (73,508) (71,456) Death benefits (note 4) ..................................... - - - - Net policy repayments (loans) (note 5) ...................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (2,082) (30,856) (54,802) (43,915) Adjustments to maintain reserves ............................ 4 (2) 39 (31) ------------ ------------ ------------ ------------ Net equity transactions ................................. (853,898) (244,960) 420,951 (277,234) ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... (841,560) (13,338) 529,920 (32,772) Contract owners' equity beginning of period ................... 841,560 854,898 1,093,022 1,125,794 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... - 841,560 1,622,942 1,093,022 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 94,088 123,821 131,702 176,094 ------------ ------------ ------------ ------------ Units purchased ............................................. - - 110,071 100,135 Units redeemed .............................................. (94,088) (29,733) (58,877) (144,527) ------------ ------------ ------------ ------------ Ending units ................................................ - 94,088 182,896 131,702 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
FidVIPValS FrVIPForSec2 ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ $ (458) (135) 8,774 4,213 Realized gain (loss) on investments ......................... (10,802) (20,120) 151,570 2,067 Change in unrealized gain (loss) on investments ............. 25,365 (1,822) 266,049 152,100 Reinvested capital gains .................................... 334 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 14,439 (22,077) 426,393 158,380 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 10,520 - 78,272 1,846 Transfers between funds ..................................... 184,446 35,327 1,671,454 975,631 Surrenders (note 6) ......................................... (826) (39,100) (367,662) (1,023) Death benefits (note 4) ..................................... - - - - Net policy repayments (loans) (note 5) ...................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (3,640) (2,371) (21,548) - Adjustments to maintain reserves ............................ 32 1 51 (7,291) ------------ ------------ ------------ ------------ Net equity transactions ................................. 190,532 (6,143) 1,360,567 969,163 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... 204,971 (28,220) 1,786,960 1,127,543 Contract owners' equity beginning of period ................... - 28,220 1,127,543 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... $ 204,971 - 2,914,503 1,127,543 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. - 3,768 90,293 - ------------ ------------ ------------ ------------ Units purchased ............................................. 16,330 19,439 190,389 109,276 Units redeemed .............................................. (1,052) (23,207) (83,600) (18,983) ------------ ------------ ------------ ------------ Ending units ................................................ 15,278 - 197,082 90,293 ============ ============ ============ ============ GVITCVal GVITDMidCapl ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ 608 516 8,650 1,296 Realized gain (loss) on investments ......................... 14,576 592 276,024 (19,488) Change in unrealized gain (loss) on investments ............. (5,573) 12,724 171,216 255,804 Reinvested capital gains .................................... - - 76,202 4 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 9,611 13,832 532,092 237,616 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ............................................ 3,466 2,645 36,556 135,989 Transfers between funds ..................................... 13,644 10,015 2,161,708 (353,438) Surrenders (note 6) ......................................... (10,442) - (108,566) (51,607) Death benefits (note 4) ..................................... - - - (399) Net policy repayments (loans) (note 5) ...................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............... (1,762) (1,705) (17,140) - Adjustments to maintain reserves ............................ 16 - 45 (15,631) ------------ ------------ ------------ ------------ Net equity transactions ................................. 4,922 10,955 2,072,603 (285,086) ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... 14,533 24,787 2,604,695 (47,470) Contract owners' equity beginning of period ................... 60,095 35,308 624,821 672,291 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... 74,628 60,095 3,229,516 624,821 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 6,284 4,863 41,047 59,532 ------------ ------------ ------------ ------------ Units purchased ............................................. 2,514 5,731 178,667 33,258 Units redeemed .............................................. (2,148) (4,310) (9,144) (51,743) ------------ ------------ ------------ ------------ Ending units ................................................ 6,650 6,284 210,570 41,047 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C 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) ................................ $ 390 (19) 80,462 114,326 Realized gain (loss) on investments ......................... (30,496) 2,650 103,700 27,545 Change in unrealized gain (loss) on investments ............. 4,080 60 (93,053) 162,510 Reinvested capital gains .................................... 7,038 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ......................... (18,988) 2,691 91,109 304,381 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ................................................... - - 238,116 188,261 Transfers between funds ..................................... 105,680 (1,130) (868,264) 396,251 Surrenders (note 6) ......................................... - (101) (187,412) (86,402) Death benefits (note 4) ..................................... - - - (1,143) Net policy repayments (loans) (note 5) ...................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................... (3,510) (253) (26,954) (38,624) Adjustments to maintain reserves ............................ (1,197) 1,203 16 18 ------------ ------------ ------------ ------------ Net equity transactions ................................. 100,973 (281) (844,498) 458,361 ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... 81,985 2,410 (753,389) 762,742 Contract owners' equity beginning of period ................... 2,410 - 1,717,590 954,848 ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... $ 84,395 2,410 964,201 1,717,590 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 210 - 139,039 94,589 ------------ ------------ ------------ ------------ Units purchased ............................................. 6,594 284 41,555 126,940 Units redeemed .............................................. (700) (74) (109,594) (82,490) ------------ ------------ ------------ ------------ Ending units ................................................ 6,104 210 71,000 139,039 ============ ============ ============ ============ GVITGlFin1 GVITGlHlth ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ................................ 44 2 (36) - Realized gain (loss) on investments ......................... 26 - 4,488 - Change in unrealized gain (loss) on investments ............. 243 (22) 80 - Reinvested capital gains .................................... 300 54 - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ......................... 613 34 4,532 - ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ................................................... 8 - - - Transfers between funds ..................................... 4,726 567 (1,332) - Surrenders (note 6) ......................................... (208) - - - Death benefits (note 4) ..................................... - - - - Net policy repayments (loans) (note 5) ...................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ................... (38) - (360) - Adjustments to maintain reserves ............................ 16 (3) 18 - ------------ ------------ ------------ ------------ Net equity transactions ................................. 4,504 564 (1,674) - ------------ ------------ ------------ ------------ Net change in contract owners' equity ......................... 5,117 598 2,858 - Contract owners' equity beginning of period ................... 598 - - - ------------ ------------ ------------ ------------ Contract owners' equity end of period ......................... 5,715 598 2,858 - ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ............................................. 49 - - - ------------ ------------ ------------ ------------ Units purchased ............................................. 374 49 271 - Units redeemed .............................................. (35) - (37) - ------------ ------------ ------------ ------------ Ending units ................................................ 388 49 234 - ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C 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) ............................. $ (30) (600) - - Realized gain (loss) on investments ...................... (873) 92,928 - 1 Change in unrealized gain (loss) on investments ............................................. 3,664 39,269 - - Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...................... 2,761 131,597 - 1 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... - (682) - - Transfers between funds .................................. 7,666 (317,280) - 97 Surrenders (note 6) ...................................... - - - (98) Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (258) (5,707) - - Adjustments to maintain reserves ......................... - (5) - - ------------ ------------ ------------ ------------ Net equity transactions .............................. 7,408 (323,674) - (1) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 10,169 (192,077) - - Contract owners' equity beginning of period ................ 16,145 208,222 - - ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ 26,314 16,145 - - ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 5,317 106,277 - - ------------ ------------ ------------ ------------ Units purchased .......................................... 3,141 26,053 - 11 Units redeemed ........................................... (130) (127,013) - (11) ------------ ------------ ------------ ------------ Ending units ............................................. 8,328 5,317 - - ============ ============ ============ ============ GVITGvtBd GVITGrowth ---------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. 889,650 1,188,713 (4,292) (6,225) Realized gain (loss) on investments ...................... (416,173) 1,103,807 349,784 (78,953) Change in unrealized gain (loss) on investments ............................................. (405,713) (1,480,356) (535,921) 731,053 Reinvested capital gains ................................. 374,338 64,400 - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...................... 442,102 876,564 (190,429) 645,875 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 1,662,026 1,650,107 60,756 175,148 Transfers between funds .................................. (5,065,888) (35,490,377) (1,669,382) 1,274,964 Surrenders (note 6) ...................................... (3,175,720) (20,809,450) (703,494) (52,314) Death benefits (note 4) .................................. (30,848) (52,931) - (6,258) Net policy repayments (loans) (note 5) ................... 194 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (447,392) (930,284) (34,164) (38,750) Adjustments to maintain reserves ......................... 219 (2,376) 29 (5) ------------ ------------ ------------ ------------ Net equity transactions .............................. (7,057,409) (55,635,311) (2,346,255) 1,352,785 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (6,615,307) (54,758,747) (2,536,684) 1,998,660 Contract owners' equity beginning of period ................ 21,841,028 76,599,775 2,730,574 731,914 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 15,225,721 21,841,028 193,890 2,730,574 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 1,564,347 5,570,936 476,666 168,510 ------------ ------------ ------------ ------------ Units purchased .......................................... 274,764 965,811 307,117 412,787 Units redeemed ........................................... (759,357) (4,972,400) (752,575) (104,631) ------------ ------------ ------------ ------------ Ending units ............................................. 1,079,754 1,564,347 31,208 476,666 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C 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) ............................. $ - 18 6,442 6,551 Realized gain (loss) on investments ...................... 491 21 399 125 Change in unrealized gain (loss) on investments .......... (437) 437 3,553 15,420 Reinvested capital gains ................................. - 19 3,066 1,172 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...................... 54 495 13,460 23,268 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... - - - - Transfers between funds .................................. (1,776) 1,278 (1,700) 291,981 Surrenders (note 6) ...................................... - - - - Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (8) (42) (4,828) (3,861) Adjustments to maintain reserves ......................... 2 (3) 15 (5) ------------ ------------ ------------ ------------ Net equity transactions .............................. (1,782) 1,233 (6,513) 288,115 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (1,728) 1,728 6,947 311,383 Contract owners' equity beginning of period ................ 1,728 - 311,383 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ - 1,728 318,330 311,383 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 158 - 28,851 - ------------ ------------ ------------ ------------ Units purchased .......................................... - 163 - 29,224 Units redeemed ........................................... (158) (5) (597) (373) ------------ ------------ ------------ ------------ Ending units ............................................. - 158 28,254 28,851 ============ ============ ============ ============ GVITIDMod GVITIDModAgg ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. 10,624 25 - 19 Realized gain (loss) on investments ...................... 483 5 435 11 Change in unrealized gain (loss) on investments .......... 44,901 290 (388) 388 Reinvested capital gains ................................. 1,678 1 - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...................... 57,686 321 47 418 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 8 - - - Transfers between funds .................................. 983,528 1,434 (1,762) 1,347 Surrenders (note 6) ...................................... - - - - Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (5,334) (42) (8) (42) Adjustments to maintain reserves ......................... 11 1 4 (4) ------------ ------------ ------------ ------------ Net equity transactions .............................. 978,213 1,393 (1,766) 1,301 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 1,035,899 1,714 (1,719) 1,719 Contract owners' equity beginning of period ................ 1,714 - 1,719 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 1,037,613 1,714 - 1,719 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 157 - 157 - ------------ ------------ ------------ ------------ Units purchased .......................................... 87,274 161 - 162 Units redeemed ........................................... (467) (4) (157) (5) ------------ ------------ ------------ ------------ Ending units ............................................. 86,964 157 - 157 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C 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) ............................. $ - 30 - (105) Realized gain (loss) on investments ...................... 213 8 - 18,858 Change in unrealized gain (loss) on investments ............................................. (183) 183 - - Reinvested capital gains ................................. - 3 - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...................... 30 224 - 18,753 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... - - - 727 Transfers between funds .................................. (1,722) 1,618 - (18,477) Surrenders (note 6) ...................................... - (98) - - Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (8) (42) - (1,004) Adjustments to maintain reserves ......................... (2) - - 1 ------------ ------------ ------------ ------------ Net equity transactions .............................. (1,732) 1,478 - (18,753) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (1,702) 1,702 - - Contract owners' equity beginning of period ................ 1,702 - - - ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ - 1,702 - - ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 156 - - - ------------ ------------ ------------ ------------ Units purchased .......................................... - 170 - 910 Units redeemed ........................................... (156) (14) - (910) ------------ ------------ ------------ ------------ Ending units ............................................. - 156 - - ============ ============ ============ ============ GVITJPBal GVITSMdCpGr ---------------------------- --------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. 99,056 29,389 (2,278) (1,503) Realized gain (loss) on investments ...................... 103,103 (86,473) 65,200 (73,878) Change in unrealized gain (loss) on investments ............................................. 459,132 342,500 (36,074) 251,221 Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...................... 661,291 285,416 26,848 175,840 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 37,630 152,613 19,526 24,787 Transfers between funds .................................. 4,688,812 1,521,861 277,914 201,313 Surrenders (note 6) ...................................... (345,244) (116,612) (220,656) (61,831) Death benefits (note 4) .................................. - (374) - - Net policy repayments (loans) (note 5) ................... 44 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (84,114) (40,377) (26,664) (20,252) Adjustments to maintain reserves ......................... 83 (12) 41 (8) ------------ ------------ ------------ ------------ Net equity transactions .............................. 4,297,211 1,517,099 50,161 144,009 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 4,958,502 1,802,515 77,009 319,849 Contract owners' equity beginning of period ................ 3,103,834 1,301,319 792,359 472,510 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 8,062,336 3,103,834 869,368 792,359 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 312,090 154,992 79,276 66,164 ------------ ------------ ------------ ------------ Units purchased .......................................... 478,746 241,482 28,298 35,950 Units redeemed ........................................... (50,360) (84,384) (32,034) (22,838) ------------ ------------ ------------ ------------ Ending units ............................................. 740,476 312,090 75,540 79,276 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C 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) ............................. $ 160,460 154,944 349,746 244,666 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 ...................... 160,460 154,944 349,746 244,666 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... - (576) 4,037,598 9,758,317 Transfers between funds .................................. (2,445,158) (7,016,759) (350,048) 237,302 Surrenders (note 6) ...................................... (12,813,468) - (13,440,090) (4,970,039) Death benefits (note 4) .................................. (78,850) (252,523) - (38,566) Net policy repayments (loans) (note 5) ................... 96 - (12) (918,759) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (379,208) (630,945) (1,374,784) (1,519,032) Adjustments to maintain reserves ......................... 66 (3,415) 229 (104) ------------ ------------ ------------ ------------ Net equity transactions .............................. (15,716,522) (7,904,218) (11,127,107) 2,549,119 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (15,556,062) (7,749,274) (10,777,361) 2,793,785 Contract owners' equity beginning of period ................ 39,214,424 46,963,698 57,030,803 54,237,018 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ 23,658,362 39,214,424 46,253,442 57,030,803 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 3,484,073 4,001,994 5,667,692 5,414,758 ------------ ------------ ------------ ------------ Units purchased .......................................... 165,857 2,351,718 1,315,003 3,476,011 Units redeemed ........................................... (1,644,284) (2,869,639) (2,416,129) (3,223,077) ------------ ------------ ------------ ------------ Ending units ............................................. 2,005,646 3,484,073 4,566,566 5,667,692 ============ ============ ============ ============ GVITNWFund GVITNStrVal ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. 18,644 8,676 (252) (1,026) Realized gain (loss) on investments ...................... 249,913 (814) 118,569 (18,139) Change in unrealized gain (loss) on investments ............................................. (109,041) 867,733 (89,666) 176,351 Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ...................... 159,516 875,595 28,651 157,186 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 15,734 88,949 - 411 Transfers between funds .................................. (225,572) (4,142,455) (593,970) 15,042 Surrenders (note 6) ...................................... (161,234) (95,010) - (10,305) Death benefits (note 4) .................................. - (10,069) - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (72,390) (79,714) (2,810) (10,417) Adjustments to maintain reserves ......................... 51 (1) 6 (7) ------------ ------------ ------------ ------------ Net equity transactions .............................. (443,411) (4,238,300) (596,774) (5,276) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (283,895) (3,362,705) (568,123) 151,910 Contract owners' equity beginning of period ................ 2,146,285 5,508,990 568,123 416,213 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 1,862,390 2,146,285 - 568,123 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 221,051 722,741 60,495 61,483 ------------ ------------ ------------ ------------ Units purchased .......................................... 199,189 42,230 12 18,573 Units redeemed ........................................... (246,954) (543,920) (60,507) (19,561) ------------ ------------ ------------ ------------ Ending units ............................................. 173,286 221,051 - 60,495 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
GVITSmCapGr GVITSmCapVal ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. $ (9,228) (6,895) (12,096) (12,387) Realized gain (loss) on investments ...................... 121,271 (42,014) 1,047,542 (391,562) Change in unrealized gain (loss) on investments ............................................. 376,912 855,697 (677,615) 2,488,398 Reinvested capital gains ................................. - - 412,490 - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 488,955 806,788 770,321 2,084,449 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 21,078 250,420 576,948 332,884 Transfers between funds .................................. 521,006 30,840 2,951,044 (2,677,197) Surrenders (note 6) ...................................... - (786) (2,210,994) (685,950) Death benefits (note 4) .................................. - - (7,720) (419) Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (76,442) (62,921) (96,262) (114,701) Adjustments to maintain reserves ......................... 70 1 85 (2,283) ------------ ------------ ------------ ------------ Net equity transactions .............................. 465,712 217,554 1,213,101 (3,147,666) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 954,667 1,024,342 1,983,422 (1,063,217) Contract owners' equity beginning of period ................ 3,244,411 2,220,069 3,964,353 5,027,570 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ 4,199,078 3,244,411 5,947,775 3,964,353 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 239,174 219,283 224,477 446,135 ------------ ------------ ------------ ------------ Units purchased .......................................... 53,401 44,254 223,918 173,391 Units redeemed ........................................... (18,985) (24,363) (160,747) (395,049) ------------ ------------ ------------ ------------ Ending units ............................................. 273,590 239,174 287,648 224,477 ============ ============ ============ ============ GVITSmComp GVITTGroFoc ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. (19,672) (22,437) (2) - Realized gain (loss) on investments ...................... 881,482 (224,501) 51 1 Change in unrealized gain (loss) on investments ............................................. (606,293) 2,796,515 (36) 37 Reinvested capital gains ................................. 948,294 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 1,203,811 2,549,577 13 38 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 293,654 408,230 10 - Transfers between funds .................................. 812,368 (1,964,023) (418) 568 Surrenders (note 6) ...................................... (868,028) (807,963) (204) - Death benefits (note 4) .................................. (3,250) (5,205) - - Net policy repayments (loans) (note 5) ................... 30 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (241,706) (258,343) (6) (4) Adjustments to maintain reserves ......................... 122 (1,029) 6 (3) ------------ ------------ ------------ ------------ Net equity transactions .............................. (6,810) (2,628,333) (612) 561 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 1,197,001 (78,756) (599) 599 Contract owners' equity beginning of period ................ 7,246,498 7,325,254 599 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 8,443,499 7,246,498 - 599 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 475,779 676,905 181 - ------------ ------------ ------------ ------------ Units purchased .......................................... 230,662 150,313 431 183 Units redeemed ........................................... (210,745) (351,439) (612) (2) ------------ ------------ ------------ ------------ Ending units ............................................. 495,696 475,779 - 181 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
GVITUSGro GVITVKMultiSec ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. $ (10) (1) 120,356 117,442 Realized gain (loss) on investments ...................... 52 1 116,359 19,611 Change in unrealized gain (loss) on investments ............................................. 413 34 (127,817) 117,271 Reinvested capital gains ................................. 186 79 - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 641 113 108,898 254,324 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 12 - 8,544 90,037 Transfers between funds .................................. 4,238 1,089 35,600 (220,921) Surrenders (note 6) ...................................... (408) - (46,886) (42,457) Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (58) (7) (46,380) (45,720) Adjustments to maintain reserves ......................... 25 1 54 13 ------------ ------------ ------------ ------------ Net equity transactions .............................. 3,809 1,083 (49,068) (219,048) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 4,450 1,196 59,830 35,276 Contract owners' equity beginning of period ................ 1,196 - 2,248,079 2,212,803 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ 5,646 1,196 2,307,909 2,248,079 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 96 - 169,327 187,462 ------------ ------------ ------------ ------------ Units purchased .......................................... 370 97 1,221 155,202 Units redeemed ........................................... (62) (1) (6,978) (173,337) ------------ ------------ ------------ ------------ Ending units ............................................. 404 96 163,570 169,327 ============ ============ ============ ============ GVITWLead GSVITMidCap ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. (190) (135) 5,942 11,723 Realized gain (loss) on investments ...................... 7,869 (750) 270,047 3,154 Change in unrealized gain (loss) on investments ............................................. 3,892 15,082 45,472 400,349 Reinvested capital gains ................................. - - 225,846 23,524 ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 11,571 14,197 547,307 438,750 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 10,736 8,122 - (17) Transfers between funds .................................. 45,262 (11,242) 26,850 1,923,226 Surrenders (note 6) ...................................... (11,644) - (230,202) (98) Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... (14) - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (2,456) (1,904) (35,244) (34,282) Adjustments to maintain reserves ......................... 5 (5) 56 (14) ------------ ------------ ------------ ------------ Net equity transactions .............................. 41,889 (5,029) (238,540) 1,888,815 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 53,460 9,168 308,767 2,327,565 Contract owners' equity beginning of period ................ 43,038 33,870 2,327,565 - ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 96,498 43,038 2,636,332 2,327,565 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 4,724 5,059 184,248 - ------------ ------------ ------------ ------------ Units purchased .......................................... 5,992 2,548 168,664 203,810 Units redeemed ........................................... (1,536) (2,883) (187,020) (19,562) ------------ ------------ ------------ ------------ Ending units ............................................. 9,180 4,724 165,892 184,248 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
JanBal JanCapAp ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. $ 21,664 16,069 (2,362) (633) Realized gain (loss) on investments ...................... 7,294 795 187,216 (327,857) Change in unrealized gain (loss) on investments ............................................. 55,745 113,758 (123,140) 446,779 Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 84,703 130,622 61,714 118,289 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 4,932 77,038 8,332 34,615 Transfers between funds .................................. (98) 291,794 (681,538) (422,939) Surrenders (note 6) ...................................... (1,614) (262) (547,656) (28,038) Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (20,748) (20,693) (24,024) (59,392) Adjustments to maintain reserves ......................... 38 (2) 21 (19) ------------ ------------ ------------ ------------ Net equity transactions .............................. (17,490) 347,875 (1,244,865) (475,773) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 67,213 478,497 (1,183,151) (357,484) Contract owners' equity beginning of period ................ 1,079,038 600,541 1,454,661 1,812,145 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ 1,146,251 1,079,038 271,510 1,454,661 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 94,753 59,831 225,914 337,673 ------------ ------------ ------------ ------------ Units purchased .......................................... 389 58,965 31,565 143,254 Units redeemed ........................................... (1,962) (24,043) (221,667) (255,013) ------------ ------------ ------------ ------------ Ending units ............................................. 93,180 94,753 35,812 225,914 ============ ============ ============ ============ JanGlTech JanIntGro ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. (1,740) (2,190) 3,588 5,112 Realized gain (loss) on investments ...................... 88,536 (91,863) 122,440 (114,640) Change in unrealized gain (loss) on investments ............................................. (79,340) 419,523 (34,387) 299,723 Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 7,456 325,470 91,641 190,195 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 22,124 19,793 205,222 121,679 Transfers between funds .................................. (166,764) (200,670) 87,384 (490,714) Surrenders (note 6) ...................................... (5,360) (6,847) (339,622) (199,605) Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... 6 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (15,574) (19,127) (20,940) (29,506) Adjustments to maintain reserves ......................... 3 (7) 25 13 ------------ ------------ ------------ ------------ Net equity transactions .............................. (165,565) (206,858) (67,931) (598,133) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (158,109) 118,612 23,710 (407,938) Contract owners' equity beginning of period ................ 860,002 741,390 624,447 1,032,385 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 701,893 860,002 648,157 624,447 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 243,320 306,909 99,920 221,735 ------------ ------------ ------------ ------------ Units purchased .......................................... 12,168 102,145 77,741 55,055 Units redeemed ........................................... (57,558) (165,734) (90,269) (176,870) ------------ ------------ ------------ ------------ Ending units ............................................. 197,930 243,320 87,392 99,920 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
NBAMTFasc NBAMTGro ------------------------------ ----------------------------- Investment activity: 2004 2003 2004 2003 ------------- ------------- ----------- -------------- Net investment income (loss) .............. $ (352) (381) (1,366) (840) Realized gain (loss) on investments ....... 28,228 6,175 120,009 8,180 Change in unrealized gain (loss) on investments ............................ (21,671) 21,863 (41,377) 81,810 Reinvested capital gains .................. 530 87 - - ------------- ------------- ----------- -------------- Net increase (decrease) in contract owners' equity resulting from operations 6,735 27,744 77,266 89,150 ------------- ------------- ----------- -------------- Equity transactions: Purchase payments received from contract owners (note 6) ................. 1,984 7,439 49,428 65,670 Transfers between funds ................... (19,262) 160,221 (68,232) 287,360 Surrenders (note 6) ....................... (171,312) (5,655) (324,798) - Death benefits (note 4) ................... - - - - Net policy repayments (loans) (note 5) .... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) .............................. (2,232) (3,323) (24,716) (22,155) Adjustments to maintain reserves .......... 60 (17) 11 (1,486) ------------- ------------- ----------- -------------- Net equity transactions ................. (190,762) 158,665 (368,307) 329,389 ------------- ------------- ----------- -------------- Net change in contract owners' equity ....... (184,027) 186,409 (291,041) 418,539 Contract owners' equity beginning of period . 186,409 - 659,929 241,390 ------------- ------------- ----------- -------------- Contract owners' equity end of period ....... $ 2,382 186,409 368,888 659,929 ============= ============= =========== ============= CHANGES IN UNITS: Beginning units ........................... 14,850 - 96,290 46,182 ------------- ------------- ----------- ------------- Units purchased ........................... 162 29,243 7,277 60,132 Units redeemed ............................ (14,842) (14,393) (57,291) (10,024) ------------- ------------- ----------- -------------- Ending units .............................. 170 14,850 46,276 96,290 ============= ============= =========== ============= NBAMTGuard NBAMTLMat ------------------------------ ---------------------------- 2004 2003 2004 2003 ------------- ------------- ----------- ------------- Investment activity: Net investment income (loss) .............. (994) 10,505 (2) 11,154 Realized gain (loss) on investments ....... (11,414) (105,726) 55 51 Change in unrealized gain (loss) on investments ........................... 346,803 566,224 (35) (4,668) Reinvested capital gains .................. - - - - ------------- ------------- ----------- -------------- Net increase (decrease) in contract owners' equity resulting from operations 334,395 471,003 18 6,537 ------------- ------------- ----------- -------------- Equity transactions: Purchase payments received from contract owners (note 6) ................. 2,672 61,094 386 9,255 Transfers between funds ................... 86,756 (125,755) - (388,658) Surrenders (note 6) ....................... - (7,868) (8,580) - Death benefits (note 4) ................... (7,424) (423) - - Net policy repayments (loans) (note 5) .... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) (29,280) (26,801) (14) (10,179) Adjustments to maintain reserves .......... 54 (17) 3 (8) ------------- ------------- ----------- -------------- Net equity transactions ................. 52,778 (99,770) (8,205) (389,590) ------------- ------------- ----------- -------------- Net change in contract owners' equity ....... 387,173 371,233 (8,187) (383,053) Contract owners' equity beginning of period . 1,926,004 1,554,771 8,187 391,240 ------------- ------------- ----------- -------------- Contract owners' equity end of period ....... 2,313,177 1,926,004 - 8,187 ============= ============= =========== ============== CHANGES IN UNITS: Beginning units ........................... 185,567 197,760 706 34,509 ------------- ------------- ----------- -------------- Units purchased ........................... 21,394 89,107 34 15,698 Units redeemed ............................ (12,643) (101,300) (740) (49,501) ------------- ------------- ----------- -------------- Ending units .............................. 194,318 185,567 - 706 ============= ============= =========== ==============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C 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) ............................. $ (11,886) (7,344) (16,224) (9,352) Realized gain (loss) on investments ...................... 364,258 (189,211) 1,445,168 (75,658) Change in unrealized gain (loss) on investments ............................................. (399,506) 771,579 (364,948) 1,167,877 Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. (47,134) 575,024 1,063,996 1,082,867 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 74,676 131,297 61,068 69,805 Transfers between funds .................................. (3,605,114) 3,501,104 2,911,876 1,687,998 Surrenders (note 6) ...................................... (271,394) (93,012) (7,769,058) (50,757) Death benefits (note 4) .................................. - (4,360) (4,224) (377) Net policy repayments (loans) (note 5) ................... (360) - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (40,916) (36,389) (128,236) (70,807) Adjustments to maintain reserves ......................... 47 (5) 91 (1,401) ------------ ------------ ------------ ------------ Net equity transactions .............................. (3,843,061) 3,498,635 (4,928,483) 1,634,461 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (3,890,195) 4,073,659 (3,864,487) 2,717,328 Contract owners' equity beginning of period ................ 5,187,067 1,113,408 5,508,303 2,790,975 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ 1,296,872 5,187,067 1,643,816 5,508,303 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 481,436 131,620 554,316 378,874 ------------ ------------ ------------ ------------ Units purchased .......................................... 460,082 424,574 296,407 249,673 Units redeemed ........................................... (838,446) (74,758) (711,345) (74,231) ------------ ------------ ------------ ------------ Ending units ............................................. 103,072 481,436 139,378 554,316 ============ ============ ============ ============ OGMidCapGr OGMidCapV ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. (2,550) (2,064) 2,582 - Realized gain (loss) on investments ...................... 61,184 1,415 3,971 - Change in unrealized gain (loss) on investments ............................................. 31,988 129,846 - - Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 90,622 129,197 6,553 - ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... - (72) - - Transfers between funds .................................. (5,190) 582,290 1,078 - Surrenders (note 6) ...................................... - - - - Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (10,800) (11,503) (7,636) - Adjustments to maintain reserves ......................... 27 3 5 - ------------ ------------ ------------ ------------ Net equity transactions .............................. (15,963) 570,718 (6,553) - ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 74,659 699,915 - - Contract owners' equity beginning of period ................ 699,915 - - - ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 774,574 699,915 - - ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 54,174 - - - ------------ ------------ ------------ ------------ Units purchased .......................................... 59,578 55,198 573 - Units redeemed ........................................... (60,490) (1,024) (573) - ------------ ------------ ------------ ------------ Ending units ............................................. 53,262 54,174 - - ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
OppAggGro OppBdFd ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. $ (12,802) (12,256) 64,814 67,218 Realized gain (loss) on investments ...................... (96,960) (699,750) 4,989 10,755 Change in unrealized gain (loss) on investments ............................................. 1,410,064 2,021,578 (15,441) (4,539) Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 1,300,302 1,309,572 54,362 73,434 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 188,082 289,809 (2) (19) Transfers between funds .................................. 1,218,504 (1,036,315) 636,442 (240,431) Surrenders (note 6) ...................................... (277,456) (309,189) (90,274) - Death benefits (note 4) .................................. (17,506) (11,861) - - Net policy repayments (loans) (note 5) ................... 4 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (114,472) (113,184) (46,566) (44,790) Adjustments to maintain reserves ......................... 76 (63) 23 205 ------------ ------------ ------------ ------------ Net equity transactions .............................. 997,232 (1,180,803) 499,623 (285,035) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 2,297,534 128,769 553,985 (211,601) Contract owners' equity beginning of period ................ 6,153,752 6,024,983 945,350 1,156,951 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ 8,451,286 6,153,752 1,499,335 945,350 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 650,400 796,603 76,473 99,772 ------------ ------------ ------------ ------------ Units purchased .......................................... 159,580 345,863 49,803 32,263 Units redeemed ........................................... (61,944) (492,066) (11,016) (55,562) ------------ ------------ ------------ ------------ Ending units ............................................. 748,036 650,400 115,260 76,473 ============ ============ ============ ============ OppCapAp OppGlSec ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. 7,344 14,034 25,888 7,567 Realized gain (loss) on investments ...................... (243,735) (1,389,505) 312,409 182,139 Change in unrealized gain (loss) on investments ............................................. 1,090,484 3,798,618 (323,285) 488,131 Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 854,093 2,423,147 15,012 677,837 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 117,816 244,421 2,590 21,803 Transfers between funds .................................. 1,854,208 (2,159,802) (898,966) 463,116 Surrenders (note 6) ...................................... (434,404) (336,678) (5,810) (55,463) Death benefits (note 4) .................................. (24,784) (5,012) - (7,620) Net policy repayments (loans) (note 5) ................... 4 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (159,010) (197,362) (14,390) (15,515) Adjustments to maintain reserves ......................... 120 (1,426) 40 10 ------------ ------------ ------------ ------------ Net equity transactions .............................. 1,353,950 (2,455,859) (916,536) 406,331 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... 2,208,043 (32,712) (901,524) 1,084,168 Contract owners' equity beginning of period ................ 8,913,900 8,946,612 1,639,317 555,149 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 11,121,943 8,913,900 737,793 1,639,317 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 747,984 972,587 176,907 85,244 ------------ ------------ ------------ ------------ Units purchased .......................................... 412,266 278,761 254,357 141,931 Units redeemed ........................................... (207,382) (503,364) (364,640) (50,268) ------------ ------------ ------------ ------------ Ending units ............................................. 952,868 747,984 66,624 176,907 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31,2004 and 2003
OppMSFund OppMultStr ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... $ 2,218 1,281 11,846 11,488 Realized gain (loss) on investments ............ 41,319 (43,448) 86,833 8,085 Change in unrealized gain (loss) on investments ................................ (17,352) 93,699 (36,638) 86,162 Reinvested capital gains ....................... - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............ 26,185 51,532 62,041 105,735 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 2,422 11,115 10 (108) Transfers between funds ........................ (11,870) 12,020 430,968 182,279 Surrenders (note 6) ............................ (23,522) (121,431) - - Death benefits (note 4) ........................ - - - - Net policy repayments (loans) (note 5) ......... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................. (8,276) (7,672) (36,198) (14,022) Adjustments to maintain reserves ............... 18 (3) 38 (11) --------------- --------------- --------------- --------------- Net equity transactions ...................... (41,228) (105,971) 394,818 168,138 --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ (15,043) (54,439) 456,859 273,873 Contract owners' equity beginning of period ....................................... 307,559 361,998 711,930 438,057 --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ $ 292,516 307,559 1,168,789 711,930 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 33,917 50,679 62,221 47,775 --------------- --------------- --------------- --------------- Units purchased ............................... 1,271 32,210 33,906 34,037 Units redeemed ................................ (5,650) (48,972) (3,117) (19,591) --------------- --------------- --------------- --------------- Ending units .................................. 29,538 33,917 93,010 62,221 =============== =============== =============== =============== PIMLowDur PIMRealRet ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... 115,928 89,214 6,502 18,200 Realized gain (loss) on investments ............ 66,350 716 44,040 18,535 Change in unrealized gain (loss) on investments ................................ 16,663 (13,411) (6,679) (2,386) Reinvested capital gains ....................... 12,206 29,389 38,830 25,140 --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............ 211,147 105,908 82,693 59,489 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 7,296 649,467 35,620 6,202 Transfers between funds ........................ (21,642,376) 22,179,953 241,774 903,099 Surrenders (note 6) ............................ (218) - - (19,422) Death benefits (note 4) ........................ - - - - Net policy repayments (loans) (note 5) ......... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................. (271,622) (142,490) (16,586) (20,289) Adjustments to maintain reserves ............... 276 (128) (587) (6,351) --------------- --------------- --------------- --------------- Net equity transactions ...................... (21,906,644) 22,686,802 260,221 863,239 --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ (21,695,497) 22,792,710 342,914 922,728 Contract owners' equity beginning of period ....................................... 25,708,398 2,915,688 922,728 - --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ 4,012,901 25,708,398 1,265,642 922,728 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ............................... 2,471,858 286,221 82,090 - --------------- --------------- --------------- --------------- Units purchased ............................... 53,274 2,250,036 133,413 87,021 Units redeemed ................................ (2,145,310) (64,399) (111,959) (4,931) --------------- --------------- --------------- --------------- Ending units .................................. 379,822 2,471,858 103,544 82,090 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
PIMTotRet PVCTHiYield ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... $ 282,014 304,763 16,578 35,797 Realized gain (loss) on investments ............ 74,134 18,488 19,614 128,580 Change in unrealized gain (loss) on investments ................................ 287,399 (120,029) (10,706) 14,892 Reinvested capital gains ....................... 241,082 135,468 1,124 - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ................... 884,629 338,690 26,610 179,269 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 6,744 374,665 (36) 90 Transfers between funds ........................ (1,455,640) 17,357,146 (241,462) 377,250 Surrenders (note 6) ............................ (569,100) (587) (136,506) (197) Death benefits (note 4) ........................ - (40,141) - - Net policy repayments (loans) (note 5) ......... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................. (123,506) (77,544) (6,402) (14,326) Adjustments to maintain reserves ............... (881) (1,344) 60 50 --------------- --------------- --------------- --------------- Net equity transactions ...................... (2,142,383) 17,612,195 (384,346) 362,867 --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ (1,257,754) 17,950,885 (357,736) 542,136 Contract owners' equity beginning of period ....................................... 17,950,885 - 542,136 - --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ $ 16,693,131 17,950,885 184,400 542,136 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 1,661,391 - 39,501 - --------------- --------------- --------------- --------------- Units purchased ................................ 2,147,417 1,723,841 10,000 60,465 Units redeemed ................................. (2,336,178) (62,450) (37,037) (20,964) --------------- --------------- --------------- --------------- Ending units ................................... 1,472,630 1,661,391 12,464 39,501 =============== =============== =============== =============== RCFMicroCap StOpp2 ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... (8,604) (4,756) (28,794) (19,529) Realized gain (loss) on investments ............ 574,038 30,265 2,101,397 (831,868) Change in unrealized gain (loss) on investments ................................ (219,893) 637,808 (1,325,754) 3,711,990 Reinvested capital gains ....................... 326,168 107,641 - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ................... 671,709 770,958 746,849 2,860,593 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 198,666 67,077 42,936 101,905 Transfers between funds ........................ 932,184 1,215,428 (4,683,904) 2,387,529 Surrenders (note 6) ............................ (217,412) (2,606) (163,064) (125,243) Death benefits (note 4) ........................ - - (6,582) (25,897) Net policy repayments (loans) (note 5) ......... - - (2) 183,582 Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................. (60,854) (40,828) (125,054) (129,779) Adjustments to maintain reserves ............... (9,555) - 133 (2,028) --------------- --------------- --------------- --------------- Net equity transactions ...................... 843,029 1,239,071 (4,935,537) 2,390,069 --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ 1,514,738 2,010,029 (4,188,688) 5,250,662 Contract owners' equity beginning of period ....................................... 2,900,198 890,169 10,041,575 4,790,913 --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ 4,414,936 2,900,198 5,852,887 10,041,575 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 192,842 88,080 1,067,462 693,897 --------------- --------------- --------------- --------------- Units purchased ................................ 174,946 178,323 1,286,827 855,806 Units redeemed ................................. (109,436) (73,561) (1,829,805) (482,241) --------------- --------------- --------------- --------------- Ending units ................................... 258,352 192,842 524,484 1,067,462 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
StDisc2 StIntStk2 ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... $ (1,102) (291) - 68 Realized gain (loss) on investments ............ (19,436) 4,974 - (53) Change in unrealized gain (loss) on investments ................................ (6,901) 32,539 - (192) Reinvested capital gains ....................... - - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............ (27,439) 37,222 - (177) --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 4 (65) - 4 Transfers between funds ........................ 6 133,103 - (4,034) Surrenders (note 6) ............................ - - - - Death benefits (note 4) ........................ - - - - Net policy repayments (loans) (note 5) ......... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................. (13,468) (3,245) - (17) Adjustments to maintain reserves ............... 4 (4) - (4) --------------- --------------- --------------- --------------- Net equity transactions ...................... (13,454) 129,789 - (4,051) --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ (40,893) 167,011 - (4,228) Contract owners' equity beginning of period ....................................... 223,548 56,537 - 4,228 --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ $ 182,655 223,548 - - =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 16,721 5,771 - 779 --------------- --------------- --------------- --------------- Units purchased ................................ - 13,740 - 2 Units redeemed ................................. (4,885) (2,790) - (781) --------------- --------------- --------------- --------------- Ending units ................................... 11,836 16,721 - - =============== =============== =============== =============== TRowEqInc2 TRowMidCap2 ---------------------------------- ---------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Investment activity: Net investment income (loss) ................... 32,912 16,839 (8,860) (5,156) Realized gain (loss) on investments ............ 181,348 33,743 251,723 180,412 Change in unrealized gain (loss) on investments ................................ 183,125 279,549 897,741 511,011 Reinvested capital gains ....................... 85,082 - - - --------------- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations ............ 482,467 330,131 1,140,604 686,267 --------------- --------------- --------------- --------------- Equity transactions: Purchase payments received from contract owners (note 6) ...................... 228,374 80,177 39,250 53,365 Transfers between funds ........................ 1,578,672 1,479,562 3,041,042 149,998 Surrenders (note 6) ............................ (170,194) (3,718) (220,822) (20,937) Death benefits (note 4) ........................ - - - - Net policy repayments (loans) (note 5) ......... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................. (42,212) (31,201) (53,500) (47,793) Adjustments to maintain reserves ............... 67 (3) 94 6 --------------- --------------- --------------- --------------- Net equity transactions ...................... 1,594,707 1,524,817 2,806,064 134,639 --------------- --------------- --------------- --------------- Net change in contract owners' equity ............ 2,077,174 1,854,948 3,946,668 820,906 Contract owners' equity beginning of period ....................................... 2,210,301 355,353 2,318,560 1,497,654 --------------- --------------- --------------- --------------- Contract owners' equity end of period ............ 4,287,475 2,210,301 6,265,228 2,318,560 =============== =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 175,121 35,117 164,235 146,130 --------------- --------------- --------------- --------------- Units purchased ................................ 258,674 163,839 235,769 40,115 Units redeemed ................................. (137,181) (23,835) (23,396) (22,010) --------------- --------------- --------------- --------------- Ending units ................................... 296,614 175,121 376,608 164,235 =============== =============== =============== ===============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
TRowNewAmG VEWrldBd ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. $ - - (2) 438 Realized gain (loss) on investments ...................... (14) - 1,681 2,916 Change in unrealized gain (loss) on investments ............................................. 1 - (1,248) (314) Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. (13) - 431 3,040 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 392 - 772 16,903 Transfers between funds .................................. (372) - - (28,970) Surrenders (note 6) ...................................... - - (18,966) - Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (6) - (30) (1,171) Adjustments to maintain reserves ......................... (1) - (1) 14 ------------ ------------ ------------ ------------ Net equity transactions .............................. 13 - (18,225) (13,224) ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... - - (17,794) (10,184) Contract owners' equity beginning of period ................ - - 17,794 27,978 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... $ - - - 17,794 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... - - 1,328 2,464 ------------ ------------ ------------ ------------ Units purchased .......................................... 41 - 58 2,374 Units redeemed ........................................... (41) - (1,386) (3,510) ------------ ------------ ------------ ------------ Ending units ............................................. - - - 1,328 ============ ============ ============ ============ VEWrldEMkt VEWrldHAs ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ............................. 3,078 (533) 1,220 403 Realized gain (loss) on investments ...................... 121,746 32,353 57,351 7,827 Change in unrealized gain (loss) on investments ............................................. (45,427) 97,555 (47,484) 55,668 Reinvested capital gains ................................. - - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .............. 79,397 129,375 11,087 63,898 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) ......................................... 353,782 78,249 69,996 74,640 Transfers between funds .................................. (150,708) (129,299) (333,196) 200,203 Surrenders (note 6) ...................................... (286,338) (54,535) (19,964) (185,920) Death benefits (note 4) .................................. - - - - Net policy repayments (loans) (note 5) ................... - - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............ (10,482) (7,237) (3,000) (6,538) Adjustments to maintain reserves ......................... (687) 11 (241) 13 ------------ ------------ ------------ ------------ Net equity transactions .............................. (94,433) (112,811) (286,405) 82,398 ------------ ------------ ------------ ------------ Net change in contract owners' equity ...................... (15,036) 16,564 (275,318) 146,296 Contract owners' equity beginning of period ................ 291,488 274,924 353,097 206,801 ------------ ------------ ------------ ------------ Contract owners' equity end of period ...................... 276,452 291,488 77,779 353,097 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units .......................................... 27,273 39,671 30,681 26,033 ------------ ------------ ------------ ------------ Units purchased .......................................... 31,128 30,301 7,021 39,448 Units redeemed ........................................... (37,825) (42,699) (32,238) (34,800) ------------ ------------ ------------ ------------ Ending units ............................................. 20,576 27,273 5,464 30,681 ============ ============ ============ ============
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued Years Ended December 31, 2004 and 2003
VKEmMkt VKMidCapG ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Investment activity: Net investment income (loss) ........................ $ 13,168 (1,597) (560) (212) Realized gain (loss) on investments ................. 37,699 81,133 24,759 7,699 Change in unrealized gain (loss) on investments ........................................ (47,889) 55,823 82,106 29,885 Reinvested capital gains ............................ 6,366 - - - ------------ ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 9,344 135,359 106,305 37,372 ------------ ------------ ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) .................................... 64,734 67,787 - 80 Transfers between funds ............................. (303,682) (77,379) 963,004 (358,906) Surrenders (note 6) ................................. (19,526) (27,843) - (1,644) Death benefits (note 4) ............................. - - - - Net policy repayments (loans) (note 5) .............. 48 - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ....... (5,880) (16,259) (3,334) (2,141) Adjustments to maintain reserves .................... 25 (5) 10 (18) ------------ ------------ ------------ ------------ Net equity transactions ......................... (264,281) (53,699) 959,680 (362,629) ------------ ------------ ------------ ------------ Net change in contract owners' equity ................. (254,937) 81,660 1,065,985 (325,257) Contract owners' equity beginning of period ........... 384,441 302,781 107,046 432,303 ------------ ------------ ------------ ------------ Contract owners' equity end of period ................. $ 129,504 384,441 1,173,031 107,046 ============ ============ ============ ============ CHANGES IN UNITS: Beginning units ..................................... 25,946 26,187 18,022 103,307 ------------ ------------ ------------ ------------ Units purchased ..................................... 4,781 25,451 153,759 11,847 Units redeemed ...................................... (22,767) (25,692) (8,961) (97,132) ------------ ------------ ------------ ------------ Ending units ........................................ 7,960 25,946 162,820 18,022 ============ ============ ============ ============ VKUSRealEst ---------------------------- 2004 2003 ------------ ------------ Investment activity: Net investment income (loss) ........................ 35,680 (5,718) Realized gain (loss) on investments ................. 578,447 (50,963) Change in unrealized gain (loss) on investments ........................................ 231,709 666,018 Reinvested capital gains ............................ 49,642 - ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ................. 895,478 609,337 ------------ ------------ Equity transactions: Purchase payments received from contract owners (note 6) .................................... 244,554 231,170 Transfers between funds ............................. (134,892) 107,044 Surrenders (note 6) ................................. (521,232) (314,508) Death benefits (note 4) ............................. - (779) Net policy repayments (loans) (note 5) .............. - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ....... (74,692) (62,681) Adjustments to maintain reserves .................... 70 (44) ------------ ------------ Net equity transactions ......................... (486,192) (39,798) ------------ ------------ Net change in contract owners' equity ................. 409,286 569,539 Contract owners' equity beginning of period ........... 2,671,768 2,102,229 ------------ ------------ Contract owners' equity end of period ................. 3,081,054 2,671,768 ============ ============ CHANGES IN UNITS: Beginning units ..................................... 172,021 180,996 ------------ ------------ Units purchased ..................................... 30,596 120,602 Units redeemed ...................................... (56,585) (129,577) ------------ ------------ Ending units ........................................ 146,032 172,021 ============ ============
See accompanying notes to financial statements. NATIONWIDE VL SEPARATE ACCOUNT-C 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 VL Separate Account-C (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life and Annuity 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 Gartmore GVIT Small Cap Growth Fund - Class I for which the Account was credited with 100,000 units of Gartmore GVIT Small Cap Growth Fund - Class I. The value of the units purchased by the Company on May 3, 1999 was $1,000,000. The Company offers Corporate Flexible Premium Variable Life Insurance Policies through the Account. The primary distribution for the contracts is through wholesalers and brokers. (b) The Contracts Only contracts with a front-end 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 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) Portfolios of the American Century Variable Portfolios, Inc. (American Century VP); American Century VP - Balanced Fund - Class I (ACVPBal) American Century VP - Capital Appreciation Fund - Class I (ACVPCapAp) American Century VP - Income & Growth Fund - Class I (ACVPIncGr) 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) Credit Suisse Trust - Small Cap Growth Portfolio (CSSmCapGr) 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 Socially Responsible Growth Fund, Inc., The (DrySRGro) Dreyfus Stock Index Fund, Inc. - Initial Shares (DryStkIx)
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued) Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF); Dreyfus VIF - Appreciation Portfolio - Initial Shares (DryVIFApp) Dreyfus VIF - Growth and Income Portfolio - Initial Shares (DryVIFGrInc) Dreyfus VIF - International Value Portfolio - Initial Shares (DryVIFIntVal) Portfolios of Federated Insurance Series (Federated IS); 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 - Initial Class (FidVIPEI)* Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class (FidVIPEIS) Fidelity/(R)/ VIP - Growth Portfolio - Initial Class (FidVIPGr) Fidelity/(R)/ VIP - Growth Portfolio - Service Class (FidVIPGrS) Fidelity/(R)/ VIP - High Income Portfolio - Initial Class (FidVIPHI) Fidelity/(R)/ VIP - High Income Portfolio - Service Class (FidVIPHIS) Fidelity/(R)/ VIP - Overseas Portfolio - Initial Class (FidVIPOv) Fidelity/(R)/ VIP - Overseas Portfolio - Service Class (FidVIPOvS) Portfolios of the Fidelity/(R)/ Variable Insurance Products (Fidelity/(R)/ VIP II); Fidelity/(R)/ VIP II - Asset Manager Portfolio - Initial Class (FidVIPAM) Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Initial Class (FidVIPCon) Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class (FidVIPConS) Portfolios of the Fidelity/(R)/ Variable Insurance Products (Fidelity/(R)/ VIP III); Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Initial Class (FidVIPGrOp)* Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class (FidVIPGrOpS) 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 - Templeton Foreign Securities Fund - Class 2 (FrVIPForSec2) 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 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) 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)
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued) 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) Portfolios of the Neuberger Berman Advisers Management Trust (Neuberger Berman AMT); Neuberger Berman AMT - Balanced Portfolio (NBAMTBal)* Neuberger Berman AMT - Fasciano Portfolio - S Class Shares (NBAMTFasc) Neuberger Berman AMT - Growth Portfolio (NBAMTGro) 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) Portfolios of One Group/(R)/ Investment Trust (One Group/(R)/ IT); 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 Bond Fund/VA - Initial Class (OppBdFd) Oppenheimer Capital Appreciation Fund/VA - Initial Class (OppCapAp) Oppenheimer Global Securities Fund/VA - Initial Class (OppGlSec) Oppenheimer Main Street/(R)/ Fund/VA - Initial Class (OppMSFund) Oppenheimer Multiple Strategies Fund/VA - Initial Class (OppMultStr) 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) Portfolios of Royce Capital Funds; Royce Capital Fund - Royce Micro-Cap Portfolio (RCFMicroCap) Strong Funds, Inc.; Strong Opportunity Fund II, Inc. (StOpp2) Funds of the Strong Variable Insurance Funds, Inc. (Strong VIF); Strong VIF - Strong Discovery Fund II (StDisc2) 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 Mid Cap 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 Bond Fund (VEWrldBd)* 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 - 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 for those indicated 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). (Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued) 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. (2) POLICY CHARGES (a) Deductions from Premium The Company deducts a charge not to exceed 9.0% (reduced to 5.5% starting in the seventh policy year) on all premiums received to cover the payment of premium taxes and some sale expenses. 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 by liquidating units. 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). (Continued) NATIONWIDE VL SEPARATE ACCOUNT- C (NOTES TO FINANCIAL STATEMENTS, Continued) (c) Administrative Charges The Company deducts a monthly administrative expense charge to recover policy maintenance, accounting, record keeping and other administrative expenses and it is assessed against each contract by liquidating units. Currently, this charge is $5.00 per month in all policy years (not to exceed $10.00 per month). (3) Asset Charges For corporate flexible premium contracts, the Company deducts a charge from the contract to cover mortality and expense risk charges related to operations. This charge is guaranteed not to exceed an annualized rate of 0.75% of the policy's cash value. 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. A reduced fee tier rate for corporate flexible premium contracts may apply as either 0.10%, 0.20% or 0.25% for all policy years. These charges are assessed through the daily unit value calculation. The Company may reduce or eliminate certain charges, where the size or nature of the group results in savings in sales, underwriting, administrative or other costs, to the Company. These charges may be reduced in certain group, sponsored arrangements or special exchange programs made available by the Company. (4) Death Benefits Death benefit proceeds result in a redemption of the contract value from the Account and payment of those proceeds, less any outstanding policy loans (and policy charges), to the legal beneficiary. 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 non-loaned sub-account cash value. Interest is charged on the outstanding loan and is due and payable in advance on the policy anniversary, or when the loan is repaid or a new loan is effective. The interest rate is guaranteed not to exceed 3.75%. 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. 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 $1,384,477 and $1,176,997, respectively, and total transfers from the Account to the fixed account were $204 and $17,578,681, respectively. (Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued) (7) Financial Highlights The following is a summary of units, unit fair values and contract owners' equity outstanding for variable life and annuity contracts as of the end of the period indicated, and the contract expense rate, 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*** -------- --------- ----------- -------------- ---------- ----------- Initial Funding by Depositor (see note 1a) Gartmore GVIT Small Cap Growth Fund - Class I 2000 0.00% 100,000 $ 17.186295 $ 1,718,630 0.00% -16.17% The BEST of AMERICA/(R)/ America's FUTURE Life Series/SM/ Reduced Fee Tier - (0.10%) American Century VP - Income & Growth Fund - Class I 2004 .............. 0.10% 411,278 11.064552 4,550,607 1.42% 12.88% 2003 .............. 0.10% 416,830 9.802103 4,085,811 1.33% 29.22% 2002 .............. 0.10% 423,478 7.585400 3,212,250 0.92% -19.45% 2001 .............. 0.10% 249,128 9.417116 2,346,067 0.80% -8.44% 2000 .............. 0.10% 229,332 10.285709 2,358,842 0.52% -10.70% American Century VP - International Fund - Class I 2004 .............. 0.10% 97,792 10.681395 1,044,555 0.49% 14.81% 2003 .............. 0.10% 99,202 9.303615 922,937 0.75% 24.39% 2002 .............. 0.10% 100,938 7.479659 754,982 0.85% -20.45% 2001 .............. 0.10% 91,670 9.402604 861,937 0.08% -29.24% 2000 .............. 0.10% 79,522 13.288939 1,056,763 0.08% -16.91% Dreyfus Stock Index Fund, Inc. - Initial Shares 2004 .............. 0.10% 649,438 9.989249 6,487,398 1.79% 10.53% 2003 .............. 0.10% 659,883 9.037627 5,963,776 1.53% 28.23% 2002 .............. 0.10% 658,445 7.047709 4,640,529 1.31% -22.44% 2001 .............. 0.10% 322,825 9.086757 2,933,432 1.15% -12.27% 2000 .............. 0.10% 415,946 10.357445 4,308,138 1.01% -9.37% Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class 2004 .............. 0.10% 19,522 12.792683 249,739 1.66% 11.27% 2003 .............. 0.10% 19,757 11.496883 227,144 1.24% 30.09% 2002 .............. 0.10% 20,224 8.837687 178,733 1.64% -17.08% Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004 .............. 0.10% 1,004,222 8.745297 8,782,220 0.16% 3.16% 2003 .............. 0.10% 1,019,800 8.477377 8,645,229 0.20% 32.65% 2002 .............. 0.10% 1,034,993 6.390869 6,614,505 0.13% -30.27% 2001 .............. 0.10% 769,450 9.164946 7,051,968 0.00% -17.81% 2000 .............. 0.10% 677,472 11.150661 7,554,261 0.06% -11.16% Gartmore GVIT Government Bond Fund - Class I 2004 .............. 0.10% 213,496 13.886189 2,964,646 5.44% 3.16% 2003 .............. 0.10% 216,645 13.460973 2,916,252 2.97% 1.90% 2002 .............. 0.10% 219,638 13.210181 2,901,458 4.39% 10.87% 2001 .............. 0.10% 701,232 11.914756 8,355,008 5.64% 7.15% 2000 .............. 0.10% 418,843 11.120055 4,657,557 6.46% 12.43% Gartmore GVIT Money Market Fund - Class I 2004 .............. 0.10% 1,161,966 11.623489 13,506,099 0.76% 0.71% 2003 .............. 0.10% 1,177,112 11.541477 13,585,611 0.62% 0.52% 2002 .............. 0.10% 1,201,994 11.481201 13,800,335 1.67% 1.11% 2001 .............. 0.10% 650,549 11.355131 7,387,069 3.90% 3.50% 2000 .............. 0.10% 385,575 10.971228 4,230,231 6.02% 5.92% Gartmore GVIT Money Market Fund: Class V 2004 .............. 0.10% 197,354 10.160839 2,005,282 0.88% 0.79% 2003 .............. 0.10% 199,733 10.081195 2,013,547 0.71% 0.61% 2002 .............. 0.10% 204,291 10.020530 2,047,104 0.29% 0.21% 10/21/02 Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2004 .............. 0.10% 6,132 14.262059 87,455 5.20% 6.43% 2003 .............. 0.10% 6,204 13.400762 83,138 5.42% 12.00% 2002 .............. 0.10% 6,306 11.964522 75,448 5.16% 7.10% 2001 .............. 0.10% 6,853 11.171361 76,557 3.64% 4.08% 2000 .............. 0.10% 8,206 10.733031 88,075 9.71% 5.55%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ----------- -------------- ---------- ----------- Janus AS - International Growth Portfolio - Service Shares 2002 .............. 0.10% 19,156 $ 4.689573 $ 89,833 0.65% -25.83% 2001 .............. 0.10% 19,353 6.322889 122,367 0.69% -23.51% 2000 .............. 0.10% 19,437 8.265856 160,663 5.07% -17.34% 01/27/00 Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004 .............. 0.10% 84,814 12.192566 1,034,100 0.13% 15.70% 2003 .............. 0.10% 86,143 10.538218 907,794 0.83% 31.63% 2002 .............. 0.10% 87,360 8.005967 699,401 0.68% -26.52% 2001 .............. 0.10% 85,302 10.895640 929,420 0.33% -1.61% 2000 .............. 0.10% 42,555 11.073505 471,233 0.76% 1.03% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004 .............. 0.10% 290,464 10.949589 3,180,461 0.00% 19.66% 2003 .............. 0.10% 294,600 9.150815 2,695,830 0.00% 25.46% 2002 .............. 0.10% 299,938 7.293537 2,187,609 0.63% -27.86% 2001 .............. 0.10% 316,324 10.110661 3,198,245 1.18% -31.34% 2000 .............. 0.10% 129,500 14.724854 1,906,869 0.00% -11.33% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2004 .............. 0.10% 267,980 11.760631 3,151,614 0.29% 6.83% 2003 .............. 0.10% 272,222 11.008811 2,996,841 0.40% 30.81% 2002 .............. 0.10% 276,368 8.415727 2,325,838 0.60% -26.93% 2001 .............. 0.10% 228,318 11.517595 2,629,674 0.62% -12.66% 2000 .............. 0.10% 146,936 13.187632 1,937,738 0.09% -0.33% The BEST of AMERICA/(R)/ America's FUTURE Life Series/SM/ Reduced Fee Tier - (0.20%) Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004 .............. 0.20% 47,746 14.735953 703,583 0.93% 11.24% American Century VP - International Fund - Class I 2004 .............. 0.20% 238,398 8.870661 2,114,748 0.49% 14.69% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004 .............. 0.20% 165,324 12.820499 2,119,536 0.79% 21.64% Dreyfus Stock Index Fund, Inc. - Initial Shares 2004 .............. 0.20% 871,294 10.206598 8,892,948 1.79% 10.42% 2003 .............. 0.20% 485,834 9.243500 4,490,807 1.53% 28.11% 2002 .............. 0.20% 495,647 7.215457 3,576,320 1.31% -22.52% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2004 .............. 0.20% 35,860 9.936435 356,321 1.46% 4.84% Dreyfus VIF - International Value Portfolio - Initial Shares 2004 .............. 0.20% 3,798 15.377151 58,402 0.97% 19.78% Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class 2004 .............. 0.20% 116,278 11.579043 1,346,388 1.66% 11.16% Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004 .............. 0.20% 3,528 8.629025 30,443 0.16% 3.06% Fidelity/(R)/ VIP - Overseas Portfolio - Service Class 2004 .............. 0.20% 19,072 10.840230 206,745 1.10% 13.26% Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 2004 .............. 0.20% 101,744 14.797053 1,505,511 0.77% 18.29% Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I 2004 .............. 0.20% 114,906 13.473852 1,548,226 0.84% 15.50% Gartmore GVIT Government Bond Fund - Class I 2004 .............. 0.20% 123,652 12.144574 1,501,701 5.44% 3.06% Gartmore GVIT J.P. Morgan Balanced Fund - Class I 2004 .............. 0.20% 407,572 10.988290 4,478,519 2.29% 8.27% Gartmore GVIT Money Market Fund - Class I 2003 .............. 0.20% 1,237,228 10.399136 12,866,102 0.62% 0.42% Gartmore GVIT Nationwide/(R)/ Fund: Class I 2004 .............. 0.20% 85,042 10.818197 920,001 1.21% 9.53% Gartmore GVIT Small Company Fund - Class I 2004 .............. 0.20% 120,128 13.615456 1,635,597 0.00% 18.78% Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004 .............. 0.20% 18,614 10.936423 203,571 0.13% 15.58%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ----------- -------------- ---------- ----------- Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004 .............. 0.20% 15,354 $ 8.669461 $ 133,111 0.00% 19.54% Oppenheimer Capital Appreciation Fund/VA - Initial Class 2004 .............. 0.20% 284,034 9.289705 2,638,592 0.29% 6.72% PIMCO VIT - Total Return Portfolio - Administrative Shares 2004 .............. 0.20% 1,073,616 11.339186 12,173,932 1.88% 4.67% Royce Capital Fund - Royce Micro-Cap Portfolio 2004 .............. 0.20% 98,604 17.101898 1,686,316 0.00% 13.62% Strong Opportunity Fund II, Inc. 2004 .............. 0.20% 332,596 11.168856 3,714,717 0.00% 17.98% T. Rowe Price Equity Income Portfolio II 2004 .............. 0.20% 104,780 14.465784 1,515,725 1.43% 14.39% T. Rowe Price Mid Cap Growth Fund II 2004 .............. 0.20% 224,428 16.643864 3,735,349 0.00% 17.82% The BEST of AMERICA/(R)/ America's FUTURE Life Series/SM/ Reduced Fee Tier - (0.25%) AIM VIF - Basic Value Fund - Series I Shares 2004 .............. 0.25% 312 14.537319 4,536 0.00% 10.79% 2003 .............. 0.25% 237 13.121262 3,110 0.07% 33.29% Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004 .............. 0.25% 18,980 14.718823 279,363 0.93% 11.18% 2003 .............. 0.25% 268,363 13.238290 3,552,667 0.00% 32.17% 2002 .............. 0.25% 189 10.015954 1,893 0.00% 0.16% 09/03/02 American Century VP - Balanced Fund - Class I 2004 .............. 0.25% 37,018 11.517200 426,344 1.14% 9.50% 2003 .............. 0.25% 33,960 10.517618 357,178 2.44% 19.16% 2002 .............. 0.25% 19,978 8.826373 176,333 4.06% -9.78% American Century VP - Capital Appreciation Fund - Class I 2004 .............. 0.25% 103,872 11.714626 1,216,822 0.00% 7.32% 2003 .............. 0.25% 48,415 10.916046 528,500 0.00% 20.17% 2002 .............. 0.25% 25,544 9.083587 232,031 0.00% -21.40% American Century VP - Income & Growth Fund - Class I 2004 .............. 0.25% 420,484 12.236925 5,145,431 1.42% 12.71% 2003 .............. 0.25% 441,398 10.856971 4,792,245 1.33% 29.03% 2002 .............. 0.25% 164,402 8.414316 1,383,330 0.92% -19.57% American Century VP - International Fund - Class I 2004 .............. 0.25% 364,388 10.606131 3,864,747 0.49% 14.64% 2003 .............. 0.25% 287,903 9.251932 2,663,659 0.75% 24.20% 2002 .............. 0.25% 448,747 7.449257 3,342,832 0.85% -20.57% 2001 .............. 0.25% 99,643 9.378457 934,498 0.08% -29.35% American Century VP - Ultra/(R)/ Fund - Class I 2004 .............. 0.25% 1,144 11.037791 12,627 0.00% 10.40% 2003 .............. 0.25% 921 9.998079 9,208 0.00% 24.59% American Century VP - Value Fund - Class I 2004 .............. 0.25% 310,922 15.739280 4,893,688 1.05% 14.05% 2003 .............. 0.25% 326,659 13.800619 4,508,096 1.15% 28.64% 2002 .............. 0.25% 543,488 10.728386 5,830,749 0.89% -12.84% 2001 .............. 0.25% 61,779 12.308603 760,413 2.06% 12.54% Baron Capital Funds Trust - Baron Capital Asset Fund: Insurance Shares 2004 .............. 0.25% 23,960 15.763932 377,704 0.00% 25.33% 2003 .............. 0.25% 5,295 12.578424 66,603 0.00% 29.69% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2004 .............. 0.25% 23,348 9.698794 226,447 0.00% 17.69% 2003 .............. 0.25% 36,710 8.240624 302,513 0.00% 47.29% 2002 .............. 0.25% 28,304 5.594896 158,358 0.00% -34.32% Credit Suisse Trust - International Focus Portfolio 2004 .............. 0.25% 3,020 9.481681 28,635 0.65% 14.46% 2003 .............. 0.25% 10,498 8.284148 86,967 0.26% 32.76% 2002 .............. 0.25% 6,627 6.240010 41,353 0.00% -20.10%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (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 .............. 0.25% 11,184 $ 12.272183 $ 137,252 0.58% 11.07% 2003 .............. 0.25% 14,955 11.049535 165,246 0.68% 24.85% 2002 .............. 0.25% 20,320 8.850153 179,835 1.58% -23.29% Credit Suisse Trust - Small Cap Growth Portfolio 2004 .............. 0.25% 119,238 9.766503 1,164,538 0.00% 10.59% 2003 .............. 0.25% 194,729 8.831040 1,719,660 0.00% 48.18% 2002 .............. 0.25% 60,738 5.959804 361,987 0.00% -33.86% Dreyfus IP - Mid Cap Stock Portfolio - Service Shares 2003 .............. 0.25% 34,437 13.102225 451,201 2.38% 31.39% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004 .............. 0.25% 3,590 12.803427 45,964 0.79% 21.58% Dreyfus Socially Responsible Growth Fund, Inc., The 2004 .............. 0.25% 19,508 9.364044 182,674 0.38% 5.95% 2003 .............. 0.25% 38,530 8.838565 340,550 0.11% 25.69% 2002 .............. 0.25% 31,863 7.032114 224,064 0.20% -29.12% Dreyfus Stock Index Fund, Inc. - Initial Shares 2004 .............. 0.25% 2,256,426 11.523227 26,001,309 1.79% 10.36% 2003 .............. 0.25% 2,068,013 10.441111 21,592,353 1.53% 28.04% 2002 .............. 0.25% 1,232,421 8.154376 10,049,624 1.31% -22.56% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2004 .............. 0.25% 117,040 11.574140 1,354,637 1.46% 4.78% 2003 .............. 0.25% 224,737 11.045756 2,482,390 0.76% 20.87% 2002 .............. 0.25% 439,969 9.138785 4,020,782 0.68% -16.92% 2001 .............. 0.25% 81,810 11.000259 899,931 1.41% -9.54% Dreyfus VIF - Growth and Income Portfolio - Initial Shares 2004 .............. 0.25% 58,084 9.670082 561,677 1.28% 7.20% 2003 .............. 0.25% 80,448 9.020649 725,693 0.90% 26.25% 2002 .............. 0.25% 33,735 7.144829 241,031 0.79% -25.51% Dreyfus VIF - International Value Portfolio - Initial Shares 2004 .............. 0.25% 27,262 15.359280 418,725 0.97% 19.72% 2003 .............. 0.25% 20,411 12.829044 261,854 1.91% 36.02% Federated IS - Quality Bond Fund II - Primary Shares 2004 .............. 0.25% 123,254 13.758938 1,695,844 4.32% 3.36% 2003 .............. 0.25% 219,801 13.311504 2,925,882 3.73% 4.38% 2002 .............. 0.25% 80,161 12.752372 1,022,243 3.08% 9.03% Fidelity/(R)/ VIP - Equity-Income Portfolio - Initial Class 2003 .............. 0.25% 24,845 10.332655 256,715 1.09% 30.00% 2002 .............. 0.25% 12,039 7.947917 95,685 1.59% -17.15% Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class 2004 .............. 0.25% 216,278 12.845734 2,778,250 1.66% 11.10% 2003 .............. 0.25% 225,660 11.561882 2,609,054 1.24% 29.89% 2002 .............. 0.25% 128,998 8.900967 1,148,207 1.64% -17.20% Fidelity/(R)/ VIP - Growth Portfolio - Initial Class 2004 .............. 0.25% 69,542 8.163013 567,672 0.26% 3.12% 2003 .............. 0.25% 583,926 7.916010 4,622,364 0.27% 32.52% 2002 .............. 0.25% 657,216 5.973595 3,925,942 0.27% -30.28% Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004 .............. 0.25% 747,488 11.422418 8,538,120 0.16% 3.01% 2003 .............. 0.25% 744,778 11.089106 8,258,922 0.20% 32.45% 2002 .............. 0.25% 105,881 8.372313 886,469 0.13% -30.37% Fidelity/(R)/ VIP - High Income Portfolio - Initial Class 2004 .............. 0.25% 10,864 12.623850 137,146 9.22% 9.32% 2003 .............. 0.25% 218,094 11.547696 2,518,483 5.94% 26.95% 2002 .............. 0.25% 157,634 9.096470 1,433,913 11.84% 3.19% 2001 .............. 0.25% 17,011 8.815683 149,964 0.00% -11.84% 01/02/01 Fidelity/(R)/ VIP - High Income Portfolio - Service Class 2004 .............. 0.25% 208,098 9.421875 1,960,673 9.51% 9.19% 2003 .............. 0.25% 225,045 8.628552 1,941,812 8.69% 26.65% 2002 .............. 0.25% 202,059 6.812756 1,376,579 8.16% 3.36%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ----------- -------------- ---------- ----------- Fidelity/(R)/ VIP - Overseas Portfolio - Initial Class 2004 .............. 0.25% 55,434 $ 10.182861 $ 564,477 1.12% 13.35% 2003 .............. 0.25% 180,429 8.983417 1,620,869 0.53% 43.01% 2002 .............. 0.25% 61,653 6.281639 387,282 1.22% -20.48% Fidelity/(R)/ VIP - Overseas Portfolio - Service Class 2004 .............. 0.25% 267,844 11.006499 2,948,025 1.10% 13.20% 2003 .............. 0.25% 231,142 9.722686 2,247,321 0.85% 42.85% 2002 .............. 0.25% 180,948 6.806371 1,231,599 0.80% -20.54% Fidelity/(R)/ VIP II - Asset Manager Portfolio - Initial Class 2004 .............. 0.25% 856,436 10.969116 9,394,346 1.56% 5.21% 2003 .............. 0.25% 331,284 10.426372 3,454,090 3.44% 17.68% 2002 .............. 0.25% 264,838 8.859897 2,346,437 6.02% -8.96% Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Initial Class 2004 .............. 0.25% 30,156 12.070285 363,992 0.32% 15.19% 2003 .............. 0.25% 51,152 10.478748 536,009 0.34% 28.14% 2002 .............. 0.25% 29,791 8.177385 243,612 1.05% -9.58% Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class 2004 .............. 0.25% 257,976 15.216289 3,925,437 0.36% 15.05% 2003 .............. 0.25% 549,404 13.225654 7,266,227 0.35% 28.03% 2002 .............. 0.25% 197,400 10.329955 2,039,133 0.78% -9.65% Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Initial Class 2003 .............. 0.25% 94,088 8.944397 841,560 0.88% 29.55% 2002 .............. 0.25% 123,821 6.904305 854,898 1.09% -22.04% Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class 2004 .............. 0.25% 178,546 8.875680 1,584,717 0.37% 6.79% 2003 .............. 0.25% 109,290 8.311178 908,329 0.68% 29.34% 2002 .............. 0.25% 47,312 6.425970 304,025 0.59% -22.11% Fidelity/(R)/ VIP III - Value Strategies Portfolio - Service Class 2004 .............. 0.25% 15,102 13.416717 202,619 0.00% 13.70% Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 2004 .............. 0.25% 93,558 14.779865 1,382,775 0.77% 18.23% 2003 .............. 0.25% 42,677 12.500683 533,492 1.42% 31.88% Gartmore GVIT Comstock Value Fund - Class I 2004 .............. 0.25% 6,650 11.222233 74,628 1.34% 17.21% 2003 .............. 0.25% 5,386 9.574848 51,570 1.37% 31.11% 2002 .............. 0.25% 795 7.303175 5,806 1.49% -25.33% Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I 2004 .............. 0.25% 95,542 17.575168 1,679,167 0.84% 15.44% 2003 .............. 0.25% 40,399 15.224120 615,039 0.48% 34.31% 2002 .............. 0.25% 28,162 11.334653 319,206 0.40% -15.51% Gartmore GVIT Emerging Markets Fund - Class I 2004 .............. 0.25% 6,104 13.826171 84,395 0.51% 20.44% 2003 .............. 0.25% 187 11.479519 2,147 0.00% 64.85% Gartmore GVIT Federated High Income Bond Fund - Class I 2004 .............. 0.25% 69,416 13.583306 942,899 6.72% 9.82% 2003 .............. 0.25% 118,799 12.368539 1,469,370 7.88% 21.97% 2002 .............. 0.25% 32,758 10.140967 332,198 6.71% 2.97% Gartmore GVIT Global Financial Services Fund - Class I 2004 .............. 0.25% 388 14.729262 5,715 1.89% 20.69% 2003 .............. 0.25% 44 12.204124 537 5.11% 41.10% Gartmore GVIT Global Health Sciences Fund - Class I 2004 .............. 0.25% 234 12.214711 2,858 0.00% 7.59% Gartmore GVIT Global Technology and Communications Fund - Class I 2004 .............. 0.25% 8,328 3.159750 26,314 0.00% 4.05% 2003 .............. 0.25% 5,272 3.036698 16,009 0.00% 54.84% 2002 .............. 0.25% 75,752 1.961141 148,560 0.00% -42.92% Gartmore GVIT Government Bond Fund - Class I 2004 .............. 0.25% 739,432 14.489288 10,713,843 5.44% 3.00% 2003 .............. 0.25% 1,071,165 14.066694 15,067,750 2.97% 1.75% 2002 .............. 0.25% 2,395,247 13.825336 33,115,095 4.39% 10.71% 2001 .............. 0.25% 109,436 12.488292 1,366,669 5.64% 6.99%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ----------- -------------- ---------- ----------- Gartmore GVIT Growth Fund - Class I 2004 .............. 0.25% 28,898 $ 6.217435 $ 179,671 0.11% 7.89% 2003 .............. 0.25% 140,404 5.762938 809,140 0.02% 32.41% 2002 .............. 0.25% 118,799 4.352418 517,063 0.00% -28.90% Gartmore GVIT ID Aggressive Fund - Class II 2003 .............. 0.25% 158 10.933839 1,728 1.49% 31.54% Gartmore GVIT ID Conservative Fund - Class II 2004 .............. 0.25% 28,254 11.266714 318,330 2.32% 4.39% 2003 .............. 0.25% 28,851 10.792806 311,383 3.07% 7.64% Gartmore GVIT ID Moderate Fund - Class II 2004 .............. 0.25% 86,964 11.931529 1,037,613 4.67% 9.26% 2003 .............. 0.25% 157 10.920096 1,714 2.03% 19.75% Gartmore GVIT ID Moderately Aggressive Fund - Class II 2003 .............. 0.25% 157 10.949354 1,719 1.63% 26.33% Gartmore GVIT ID Moderately Conservative Fund - Class II 2003 .............. 0.25% 156 10.910488 1,702 2.43% 13.41% Gartmore GVIT J.P. Morgan Balanced Fund - Class I 2004 .............. 0.25% 332,060 10.765587 3,574,821 2.29% 8.22% 2003 .............. 0.25% 302,735 9.947843 3,011,560 2.19% 18.12% 2002 .............. 0.25% 86,784 8.421910 730,887 1.80% -12.53% Gartmore GVIT Mid Cap Growth Fund - Class I 2004 .............. 0.25% 75,540 11.508706 869,368 0.00% 15.05% 2003 .............. 0.25% 71,540 10.003212 715,630 0.00% 39.79% 2002 .............. 0.25% 46,799 7.156130 334,900 0.00% -37.17% Gartmore GVIT Money Market Fund - Class I 2004 .............. 0.25% 843,680 12.033310 10,152,263 0.76% 0.56% 2003 .............. 0.25% 694,925 11.966375 8,315,733 0.62% 0.37% 2002 .............. 0.25% 194,096 11.921779 2,313,970 1.67% 0.96% Gartmore GVIT Money Market Fund: Class V 2004 .............. 0.25% 4,352,894 10.127388 44,083,446 0.88% 0.64% 2003 .............. 0.25% 5,055,493 10.063117 50,874,018 0.71% 0.45% 2002 .............. 0.25% 3,005,382 10.017601 30,106,718 0.29% 0.18% 10/21/02 Gartmore GVIT Nationwide/(R)/ Fund: Class I 2004 .............. 0.25% 88,244 10.679350 942,389 1.21% 9.48% 2003 .............. 0.25% 99,546 9.754873 971,059 0.58% 27.19% 2002 .............. 0.25% 89,572 7.669285 686,953 0.75% -17.56% Gartmore GVIT Nationwide/(R)/ Strategic Value Fund - Class I 2003 .............. 0.25% 60,484 9.391261 568,021 0.04% 38.46% 2002 .............. 0.25% 44,591 6.782590 302,442 0.03% -25.55% Gartmore GVIT Small Cap Growth Fund - Class I 2004 .............. 0.25% 273,266 15.348222 4,194,147 0.00% 13.13% 2003 .............. 0.25% 235,314 13.566592 3,192,409 0.00% 33.93% 2002 .............. 0.25% 198,097 10.129586 2,006,641 0.00% -33.45% Gartmore GVIT Small Cap Value Fund - Class I 2004 .............. 0.25% 287,112 20.677651 5,936,802 0.00% 17.01% 2003 .............. 0.25% 206,506 17.672379 3,649,452 0.00% 56.46% 2002 .............. 0.25% 300,189 11.294975 3,390,627 0.01% -27.34% 2001 .............. 0.25% 65,785 15.545961 1,022,691 0.04% 27.96% Gartmore GVIT Small Company Fund - Class I 2004 .............. 0.25% 365,202 18.131930 6,621,817 0.00% 18.73% 2003 .............. 0.25% 323,465 15.272205 4,940,024 0.00% 40.66% 2002 .............. 0.25% 357,379 10.857469 3,880,231 0.00% -17.54% 2001 .............. 0.25% 31,468 13.166162 414,313 0.15% -6.94% Gartmore GVIT Turner Growth Focus Fund - Class I 2003 .............. 0.25% 161 3.309832 533 0.00% 50.59% Gartmore GVIT U.S. Growth Leaders Fund - Class I 2004 .............. 0.25% 404 13.974657 5,646 0.00% 12.13% 2003 .............. 0.25% 85 12.463103 1,059 0.00% 51.76%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- --------- ----------- -------------- ---------- ----------- Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2004 .............. 0.25% 157,438 $ 14.103672 $ 2,220,454 5.20% 6.27% 2003 .............. 0.25% 163,122 13.271836 2,164,928 5.42% 11.84% 2002 .............. 0.25% 30,699 11.867197 364,311 5.16% 6.94% Gartmore GVIT Worldwide Leaders Fund - Class I 2004 .............. 0.25% 9,180 10.511783 96,498 0.00% 15.38% 2003 .............. 0.25% 4,702 9.110845 42,839 0.00% 35.72% 2002 .............. 0.25% 3,114 6.713015 20,904 1.98% -25.58% Goldman Sachs VIT - Mid Cap Value Fund 2004 .............. 0.25% 165,892 15.891856 2,636,332 0.58% 25.57% 2003 .............. 0.25% 16,236 12.655709 205,478 1.17% 28.07% Janus AS - Balanced Portfolio - Service Shares 2004 .............. 0.25% 93,022 12.301545 1,144,314 2.23% 8.02% 2003 .............. 0.25% 94,676 11.387925 1,078,163 2.00% 13.44% 2002 .............. 0.25% 40,005 10.038914 401,607 2.14% 0.39% 09/03/02 Janus AS - Capital Appreciation Portfolio - Service Shares 2004 .............. 0.25% 34,622 7.583386 262,552 0.01% 17.67% 2003 .............. 0.25% 193,417 6.444456 1,246,467 0.21% 19.93% 2002 .............. 0.25% 240,176 5.373376 1,290,556 0.32% -16.14% Janus AS - Global Technology Portfolio - Service Shares 2004 .............. 0.25% 197,930 3.546168 701,893 0.00% 0.32% 2003 .............. 0.25% 236,572 3.535026 836,288 0.00% 46.11% 2002 .............. 0.25% 197,466 2.419456 477,760 0.00% -41.08% Janus AS - International Growth Portfolio - Service Shares 2004 .............. 0.25% 85,384 7.417926 633,372 0.81% 18.39% 2003 .............. 0.25% 56,008 6.265664 350,927 1.04% 34.20% 2002 .............. 0.25% 42,104 4.668998 196,583 0.65% -25.94% Neuberger Berman AMT - Fasciano Portfolio - S Class Shares 2004 .............. 0.25% 162 14.009370 2,270 0.00% 11.60% 2003 .............. 0.25% 14,408 12.553503 180,871 0.00% 24.75% Neuberger Berman AMT - Growth Portfolio 2004 .............. 0.25% 46,276 7.971477 368,888 0.00% 16.31% 2003 .............. 0.25% 96,290 6.853558 659,929 0.00% 31.07% 2002 .............. 0.25% 40,557 5.228846 212,066 0.00% -31.34% Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2004 .............. 0.25% 90,890 11.833049 1,075,506 0.13% 15.53% 2003 .............. 0.25% 97,420 10.242831 997,857 0.83% 31.43% 2002 .............. 0.25% 18,457 7.793221 143,839 0.68% -26.63% Neuberger Berman AMT - Limited Maturity Bond Portfolio 2003 .............. 0.25% 706 11.596366 8,187 3.97% 2.17% 2002 .............. 0.25% 21,357 11.350244 242,407 9.00% 5.08% Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/ - I Class 2004 .............. 0.25% 103,072 12.582197 1,296,872 0.00% 16.02% 2003 .............. 0.25% 109,829 10.845085 1,191,105 0.00% 27.75% 2002 .............. 0.25% 65,076 8.489245 552,446 0.00% -29.52% Neuberger Berman AMT - Partners Portfolio 2004 .............. 0.25% 139,126 11.794154 1,640,873 0.02% 18.68% 2003 .............. 0.25% 548,969 9.937929 5,455,615 0.00% 34.75% 2002 .............. 0.25% 316,104 7.375034 2,331,278 0.67% -24.33% 2001 .............. 0.25% 62,408 9.746550 608,263 0.66% -3.07% One Group/(R)/ IT Mid Cap Growth Portfolio 2004 .............. 0.25% 53,262 14.542707 774,574 0.00% 12.34% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004 .............. 0.25% 429,564 11.621370 4,992,122 0.00% 19.48% 2003 .............. 0.25% 320,894 9.726809 3,121,275 0.00% 25.28% 2002 .............. 0.25% 149,104 7.764240 1,157,679 0.63% -27.97% Oppenheimer Bond Fund/VA - Initial Class 2004 .............. 0.25% 115,260 13.008289 1,499,335 4.96% 5.23% 2003 .............. 0.25% 76,473 12.361877 945,350 5.96% 6.51% 2002 .............. 0.25% 70,841 11.605998 822,181 6.25% 8.81%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** -------- -------- ----------- -------------- ---------- ------------ Oppenheimer Capital Appreciation Fund/VA - Initial Class 2004 ............................. 0.25% 400,854 $ 13.300944 $ 5,331,737 0.29% 6.67% 2003 ............................. 0.25% 330,090 12.469347 4,116,007 0.40% 30.62% 2002 ............................. 0.25% 310,569 9.546535 2,964,858 0.60% -27.04% 2001 ............................. 0.25% 49,259 13.084853 644,547 0.62% -12.80% Oppenheimer Global Securities Fund/VA - Initial Class 2004 ............................. 0.25% 66,624 11.073978 737,793 1.96% 18.87% 2003 ............................. 0.25% 4,381 9.316393 40,815 0.99% 42.66% 2002 ............................. 0.25% 26,889 6.530337 175,594 0.59% -22.33% Oppenheimer Main Street/(R)/ Fund/VA - Initial Class 2004 ............................. 0.25% 29,538 9.903052 292,516 0.93% 9.19% 2003 ............................. 0.25% 33,073 9.069907 299,969 0.75% 26.40% 2002 ............................. 0.25% 17,824 7.175431 127,895 0.69% -19.00% Oppenheimer Multiple Strategies Fund/VA - Initial Class 2004 ............................. 0.25% 93,010 12.566277 1,168,789 1.25% 9.83% 2003 ............................. 0.25% 62,221 11.441957 711,930 2.69% 24.65% 2002 ............................. 0.25% 29,567 9.179615 271,414 3.42% -10.63% PIMCO VIT - Low Duration Portfolio - Administrative Shares 2004 ............................. 0.25% 379,246 10.565271 4,006,837 1.06% 1.58% 2003 ............................. 0.25% 2,471,858 10.400435 25,708,398 1.31% 2.09% 2002 ............................. 0.25% 241,735 10.187617 2,462,704 0.17% 1.88% 09/03/02 PIMCO VIT - Real Return Portfolio - Administrative Shares 2004 ............................. 0.25% 103,544 12.223233 1,265,642 1.02% 8.62% 2003 ............................. 0.25% 34,984 11.253423 393,690 2.65% 8.58% PIMCO VIT - Total Return Portfolio - Administrative Shares 2004 ............................. 0.25% 398,986 11.325918 4,518,883 1.88% 4.62% 2003 ............................. 0.25% 50,980 10.825824 551,901 2.81% 4.78% Pioneer High Yield VCT Portfolio - Class I Shares 2004 ............................. 0.25% 12,464 14.794578 184,400 5.52% 7.79% 2003 ............................. 0.25% 38,913 13.725038 534,082 7.87% 32.45% Royce Capital Fund - Royce Micro-Cap Portfolio 2004 ............................. 0.25% 156,340 17.082044 2,670,607 0.00% 13.56% 2003 ............................. 0.25% 174,290 15.042113 2,621,690 0.00% 48.79% 2002 ............................. 0.25% 31,864 10.109520 322,130 0.00% 1.10% 09/03/02 Strong Opportunity Fund II, Inc. 2004 ............................. 0.25% 191,888 11.142802 2,138,170 0.00% 17.93% 2003 ............................. 0.25% 200,633 9.449055 1,895,792 0.09% 36.66% 2002 ............................. 0.25% 449,933 6.914071 3,110,869 0.33% -27.00% 2001 ............................. 0.25% 98,866 9.471507 936,410 0.66% -3.94% Strong VIF - Strong Discovery Fund II 2004 ............................. 0.25% 11,836 15.432167 182,655 0.00% 15.43% 2003 ............................. 0.25% 16,721 13.369301 223,548 0.00% 39.08% 2002 ............................. 0.25% 3,644 9.612684 35,029 0.00% -12.24% Strong VIF - Strong International Stock Fund II 2002 ............................. 0.25% 779 5.427838 4,228 3.98% -26.73% T.Rowe Price Equity Income Portfolio II 2004 ............................. 0.25% 190,758 14.448971 2,756,257 1.43% 14.33% 2003 ............................. 0.25% 60,983 12.637920 770,698 1.61% 24.86% 2002 ............................. 0.25% 15,768 10.121829 159,601 0.00% 1.22% 09/03/02 T.Rowe Price Mid Cap Growth Fund II 2004 ............................. 0.25% 151,418 16.624542 2,517,255 0.00% 17.76% 2003 ............................. 0.25% 163,581 14.117448 2,309,346 0.00% 37.75% 2002 ............................. 0.25% 146,130 10.248778 1,497,654 0.00% 2.49% 09/03/02 Van Eck WIT - Worldwide Bond Fund 2003 ............................. 0.25% 1,328 13.398966 17,794 1.41% 17.87% 2002 ............................. 0.25% 1,525 11.367774 17,336 0.00% 21.35% Van Eck WIT - Worldwide Emerging Markets Fund 2004 ............................. 0.25% 20,576 13.435652 276,452 0.85% 25.58% 2003 ............................. 0.25% 23,844 10.699174 255,111 0.11% 53.80% 2002 ............................. 0.25% 18,192 6.956422 126,551 0.21% -3.14%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT- C (NOTES TO FINANCIAL STATEMENTS, Continued)
CONTRACT INVESTMENT EXPENSE UNIT CONTRACT INCOME TOTAL RATE* UNITS FAIR VALUE OWNERS' EQUITY RATIO** RETURN*** -------- --------- ----------- -------------- ---------- ------------ Van Eck WIT - Worldwide Hard Assets Fund 2004 ........................... 0.25% 5,464 $ 14.234866 $ 77,779 1.04% 23.92% 2003 ........................... 0.25% 30,097 11.510500 346,432 0.45% 44.72% 2002 ........................... 0.25% 21,336 7.953846 169,703 0.71% -3.08% Van Kampen UIF - Emerging Markets Debt Portfolio 2004 ........................... 0.25% 7,960 16.269408 129,504 7.05% 9.79% 2003 ........................... 0.25% 25,519 14.819043 378,167 0.00% 27.55% 2002 ........................... 0.25% 7,970 11.618658 92,601 11.04% 8.95% Van Kampen UIF - Mid Cap Growth Portfolio 2004 ........................... 0.25% 162,820 7.204463 1,173,031 0.00% 21.29% 2003 ........................... 0.25% 18,020 5.939719 107,034 0.00% 41.41% 2002 ........................... 0.25% 6,784 4.200344 28,495 0.00% -31.33% Van Kampen UIF - U.S. Real Estate Portfolio - Class A 2004 ........................... 0.25% 145,214 21.093147 3,063,020 1.54% 36.05% 2003 ........................... 0.25% 165,337 15.503467 2,563,297 0.00% 37.17% 2002 ........................... 0.25% 77,541 11.302528 876,409 3.37% -1.03% The BEST of AMERICA America's FUTURE Life Series Fee Tier - (0.40%) AIM VIF - Basic Value Fund - Series I Shares 2004 ........................... 0.40% 162 14.486704 2,347 0.00% 10.63% 2003 ........................... 0.40% 74 13.095200 969 0.07% 33.09% Alliance VPSF - Alliance Bernstein Growth & Income Portfolio - Class A 2004 ........................... 0.40% 550 14.667608 8,067 0.93% 11.02% 2003 ........................... 0.40% 12,315 13.212012 162,706 0.00% 31.97% American Century VP - Balanced Fund - Class I 2002 ........................... 0.40% 5,935 8.799999 52,228 4.06% -9.92% 2001 ........................... 0.40% 60,611 9.768970 592,107 4.81% -2.31% 01/02/01 American Century VP - Capital Appreciation Fund - Class I 2002 ........................... 0.40% 16,516 8.625662 142,461 0.00% -21.52% 2001 ........................... 0.40% 71,775 10.990234 788,824 0.00% -22.88% 01/02/01 American Century VP - Income & Growth Fund - Class I 2004 ........................... 0.40% 3,126 12.115153 37,872 1.42% 12.54% 2003 ........................... 0.40% 8,878 10.765053 95,572 1.33% 28.84% 2002 ........................... 0.40% 345,427 8.355578 2,886,242 0.92% -19.69% 2001 ........................... 0.40% 441,129 10.404509 4,589,731 0.80% -8.72% 2000 ........................... 0.40% 379,953 11.398555 4,330,915 0.52% -10.97% American Century VP - International Fund - Class I 2004 ........................... 0.40% 5,644 10.500552 59,265 0.49% 14.47% 2003 ........................... 0.40% 353,253 9.173579 3,240,594 0.75% 24.01% 2002 ........................... 0.40% 870,283 7.397247 6,437,698 0.85% -20.69% 2001 ........................... 0.40% 2,019,244 9.326990 18,833,469 0.08% -29.46% 2000 ........................... 0.40% 624,317 13.221985 8,254,710 0.08% -17.16% American Century VP - Ultra/(R)/ Fund - Class I 2004 ........................... 0.40% 360 10.993709 3,958 0.00% 10.23% 2003 ........................... 0.40% 221 9.973091 2,204 0.00% 24.40% American Century VP - Value Fund - Class I 2003 ........................... 0.40% 10,857 13.683795 148,565 1.15% 28.44% 2002 ........................... 0.40% 244,223 10.653510 2,601,832 0.89% -12.97% 2001 ........................... 0.40% 540,885 12.241061 6,621,006 2.06% 12.37% 2000 ........................... 0.40% 101,219 10.893612 1,102,641 0.08% 17.67% Baron Capital Funds Trust - Baron Capital Asset Fund: Insurance Shares 2004 ........................... 0.40% 378 15.709055 5,938 0.00% 25.14% Calvert VS - Social Equity Portfolio 2002 ........................... 0.40% 292,051 10.280692 3,002,486 0.00% 2.81% 09/03/02 Credit Suisse Trust - Global Post-Venture Capital Portfolio 2002 ........................... 0.40% 25,444 5.555805 141,362 0.00% -34.42% 2001 ........................... 0.40% 60,385 8.471776 511,568 0.00% -28.92% 2000 ........................... 0.40% 91,578 11.918959 1,091,514 0.00% -19.26% Credit Suisse Trust - International Focus Portfolio 2002 ........................... 0.40% 6,909 6.196425 42,811 0.00% -20.22% 2001 ........................... 0.40% 23,360 7.767318 181,445 0.00% -22.59% 2000 ........................... 0.40% 30,020 10.033586 301,208 0.44% -26.19%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (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 2003 .......................... 0.40% 44 $ 10.955988 $ 482 0.68% 24.66% 2002 .......................... 0.40% 5,870 8.788383 51,588 1.58% -23.40% 2001 .......................... 0.40% 9,126 11.473418 104,706 0.00% 0.54% 2000 .......................... 0.40% 24,581 11.411760 280,512 0.77% 8.48% Credit Suisse Trust - Small Cap Growth Portfolio 2002 .......................... 0.40% 19,423 5.941951 115,411 0.00% -33.96% 2001 .......................... 0.40% 623,977 8.996921 5,613,872 0.00% -10.03% 01/02/01 Dreyfus IP - European Equity Portfolio 2001 .......................... 0.40% 368 9.025727 3,321 0.96% -28.42% 2000 .......................... 0.40% 66 12.608842 832 0.00% -1.05% Dreyfus IP - Small Cap Stock Index Portfolio - Service Class 2004 .......................... 0.40% 122 12.752292 1,556 0.79% 21.40% 2003 .......................... 0.40% 879 10.504526 9,233 0.04% 37.23% Dreyfus Socially Responsible Growth Fund, Inc., The 2003 .......................... 0.40% 184 8.763701 1,613 0.11% 25.50% 2002 .......................... 0.40% 9,331 6.983004 65,158 0.20% -29.23% 2001 .......................... 0.40% 49,368 9.867078 487,118 0.08% -22.89% 2000 .......................... 0.40% 23,442 12.795380 299,949 1.21% -11.39% Dreyfus Stock Index Fund, Inc.- Initial Shares 2004 .......................... 0.40% 13,608 11.408542 155,247 1.79% 10.20% 2003 .......................... 0.40% 999,962 10.352696 10,352,303 1.53% 27.85% 2002 .......................... 0.40% 1,276,399 8.097446 10,335,572 1.31% -22.67% 2001 .......................... 0.40% 4,387,066 10.471621 45,939,692 1.15% -12.53% 2000 .......................... 0.40% 3,579,449 11.972080 42,853,450 1.01% -9.64% Dreyfus VIF - Appreciation Portfolio - Initial Shares 2004 .......................... 0.40% 7,182 11.458946 82,298 1.46% 4.63% 2003 .......................... 0.40% 19,784 10.952239 216,679 0.76% 20.69% 2002 .......................... 0.40% 171,507 9.074997 1,556,426 0.68% -17.05% 2001 .......................... 0.40% 1,262,700 10.939900 13,813,812 1.41% -9.67% 2000 .......................... 0.40% 259,664 12.111451 3,144,908 0.89% -2.39% Dreyfus VIF - Growth and Income Portfolio - Initial Shares 2002 .......................... 0.40% 6,877 7.123450 48,988 0.79% -25.63% 2001 .......................... 0.40% 67,090 9.577914 642,582 1.11% -4.22% 01/02/01 Dreyfus VIF - International Value Portfolio - Initial Shares 2003 .......................... 0.40% 42 12.803571 538 1.91% 35.81% Federated IS - Quality Bond Fund II - Primary Shares 2004 .......................... 0.40% 2,250 13.642560 30,696 4.32% 3.21% 2003 .......................... 0.40% 26,065 13.218733 344,546 3.73% 4.23% 2002 .......................... 0.40% 67,406 12.682507 854,877 3.08% 8.87% 2001 .......................... 0.40% 87,721 11.649181 1,021,878 1.06% 7.58% 2000 .......................... 0.40% 23,465 10.828312 254,086 0.15% 10.01% Fidelity/(R)/ VIP - Equity-Income Portfolio - Initial Class 2002 .......................... 0.40% 580 7.924138 4,596 1.59% -17.28% 2001 .......................... 0.40% 50,510 9.579298 483,850 0.00% -4.21% 01/02/01 Fidelity/(R)/ VIP - Equity-Income Portfolio - Service Class 2004 .......................... 0.40% 1,272 12.717880 16,177 1.66% 10.94% 2003 .......................... 0.40% 314,880 11.463982 3,609,779 1.24% 29.70% 2002 .......................... 0.40% 283,577 8.838834 2,506,490 1.64% -17.33% 2001 .......................... 0.40% 348,625 10.691577 3,727,351 1.83% -5.47% 2000 .......................... 0.40% 224,240 11.310203 2,536,200 0.52% 7.87% Fidelity/(R)/ VIP - Growth Portfolio - Initial Class 2002 .......................... 0.40% 13,636 5.955709 81,212 0.27% -30.38% 2001 .......................... 0.40% 782,177 8.555147 6,691,639 0.00% -14.45% 01/02/01 Fidelity/(R)/ VIP - Growth Portfolio - Service Class 2004 .......................... 0.40% 4,946 11.308717 55,933 0.16% 2.85% 2003 .......................... 0.40% 73,719 10.995198 810,555 0.20% 32.25% 2002 .......................... 0.40% 810,618 8.313850 6,739,356 0.13% -30.48% 2001 .......................... 0.40% 776,074 11.958538 9,280,710 0.00% -18.06% 2000 .......................... 0.40% 1,119,466 14.593603 16,337,042 0.06% -11.42%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (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 - Initial Class 2002 .......................... 0.40% 9,669 $ 9.069304 $ 87,691 11.84% 3.03% 2001 .......................... 0.40% 231,589 8.802536 2,038,571 0.00% -11.97% 01/02/01 Fidelity/(R)/ VIP - High Income Portfolio - Service Class 2004 .......................... 0.40% 2,444 9.328110 22,798 9.51% 9.03% 2003 .......................... 0.40% 43,065 8.555502 368,443 8.69% 26.46% 2002 .......................... 0.40% 199,930 6.765203 1,352,567 8.16% 3.20% 2001 .......................... 0.40% 165,596 6.555148 1,085,506 31.36% -12.25% 2000 .......................... 0.40% 266,741 7.470194 1,992,607 7.76% -22.92% Fidelity/(R)/ VIP - Overseas Portfolio - Initial Class 2001 .......................... 0.40% 329,072 7.887510 2,595,559 0.00% -21.12% 01/02/01 Fidelity/(R)/ VIP - Overseas Portfolio - Service Class 2004 .......................... 0.40% 4,804 10.896942 52,349 1.10% 13.03% 2003 .......................... 0.40% 49,020 9.640353 472,570 0.85% 42.63% 2002 .......................... 0.40% 273,526 6.758846 1,848,720 0.80% -20.66% 2001 .......................... 0.40% 396,195 8.518959 3,375,169 4.88% -21.59% 2000 .......................... 0.40% 314,294 10.864367 3,414,605 0.89% -19.47% Fidelity/(R)/ VIP II - Asset Manager Portfolio - Initial Class 2002 .......................... 0.40% 25,075 8.833425 221,498 6.02% -9.09% 2001 .......................... 0.40% 930,387 9.716913 9,040,490 0.00% -2.83% 01/02/01 Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Initial Class 2002 .......................... 0.40% 6,139 8.152920 50,051 1.05% -9.71% 2001 .......................... 0.40% 141,885 9.029797 1,281,193 0.00% -9.70% 01/02/01 Fidelity/(R)/ VIP II - Contrafund/(R)/ Portfolio - Service Class 2004 .......................... 0.40% 3,508 15.064815 52,847 0.36% 14.88% 2003 .......................... 0.40% 26,935 13.113640 353,216 0.35% 27.84% 2002 .......................... 0.40% 345,102 10.257824 3,539,996 0.78% -9.79% 2001 .......................... 0.40% 486,210 11.370566 5,528,483 0.64% -12.71% 2000 .......................... 0.40% 437,066 13.026647 5,693,504 0.30% -7.09% Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Initial Class 2001 .......................... 0.40% 103,589 8.842970 916,034 0.00% -11.57% 01/02/01 Fidelity/(R)/ VIP III - Growth Opportunities Portfolio - Service Class 2004 .......................... 0.40% 4,350 8.787333 38,225 0.37% 6.63% 2003 .......................... 0.40% 22,412 8.240791 184,693 0.68% 29.14% 2002 .......................... 0.40% 128,782 6.381088 821,769 0.59% -22.23% 2001 .......................... 0.40% 248,120 8.204875 2,035,794 0.35% -14.78% 2000 .......................... 0.40% 231,706 9.628054 2,230,878 1.33% -17.51% Fidelity/(R)/ VIP III - Value Strategies Portfolio - Service Class 2004 .......................... 0.40% 176 13.363171 2,352 0.00% 13.53% 2002 .......................... 0.40% 3,768 7.489405 28,220 0.00% -25.11% 05/01/02 Franklin Templeton VIP - Templeton Foreign Securities Fund - Class 2 2004 .......................... 0.40% 1,780 14.728417 26,217 0.77% 18.06% 2003 .......................... 0.40% 47,616 12.475864 594,051 1.42% 31.68% Gartmore GVIT Comstock Value Fund - Class I 2003 .......................... 0.40% 898 9.493770 8,525 1.37% 30.91% 2002 .......................... 0.40% 4,068 7.252185 29,502 1.49% -25.44% 2001 .......................... 0.40% 34,435 9.726929 334,947 13.29% -12.51% 2000 .......................... 0.40% 22,688 11.117142 252,226 1.45% -10.98% Gartmore GVIT Dreyfus Mid Cap Index Fund - Class I 2004 .......................... 0.40% 122 17.400194 2,123 0.84% 15.27% 2003 .......................... 0.40% 648 15.095175 9,782 0.48% 34.11% 2002 .......................... 0.40% 31,370 11.255500 353,085 0.40% -15.64% 2001 .......................... 0.40% 93,948 13.342471 1,253,498 0.80% -1.70% 2000 .......................... 0.40% 86,361 13.573326 1,172,206 0.79% 14.75% Gartmore GVIT Emerging Markets Fund - Class I 2003 .......................... 0.40% 23 11.423706 263 0.00% 64.60% Gartmore GVIT Federated High Income Bond Fund - Class I 2004 .......................... 0.40% 1,584 13.448117 21,302 6.72% 9.66% 2003 .......................... 0.40% 20,240 12.263819 248,220 7.88% 21.78% 2002 .......................... 0.40% 61,831 10.070195 622,650 6.71% 2.81% 2001 .......................... 0.40% 202,186 9.794650 1,980,341 12.12% 3.80% 2000 .......................... 0.40% 150,482 9.436226 1,419,982 17.24% -8.64%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Investment Expense Unit Contract Income Total Rate* Units Fair Value Owners' Equity Ratio** Return*** --------- --------- ----------- -------------- ---------- --------- Gartmore GVIT Global Financial Services Fund - Class I 2003 .......................... 0.40% 5 $ 12.173639 $ 61 5.11% 40.89% Gartmore GVIT Global Technology and Communications Fund - Class I 2003 .......................... 0.40% 45 3.021924 136 0.00% 54.61% 2002 .......................... 0.40% 30,525 1.954523 59,662 0.00% -43.01% Gartmore GVIT Government Bond Fund - Class I 2004 .......................... 0.40% 3,174 14.345081 45,531 5.44% 2.85% 2003 .......................... 0.40% 276,537 13.947593 3,857,026 2.97% 1.59% 2002 .......................... 0.40% 2,956,051 13.728864 40,583,222 4.39% 10.54% 2001 .......................... 0.40% 4,296,504 12.419760 53,361,549 5.64% 6.82% 2000 .......................... 0.40% 921,266 11.626380 10,710,989 6.46% 12.09% Gartmore GVIT Growth Fund - Class I 2004 .......................... 0.40% 2,310 6.155504 14,219 0.11% 7.72% 2003 .......................... 0.40% 336,262 5.714099 1,921,434 0.02% 32.21% 2002 .......................... 0.40% 49,711 4.322008 214,851 0.00% -29.01% 2001 .......................... 0.40% 388,409 6.087822 2,364,565 0.00% -28.42% 2000 .......................... 0.40% 252,079 8.505270 2,144,000 0.20% -26.82% Gartmore GVIT J.P. Morgan Balanced Fund - Class I 2004 .......................... 0.40% 844 10.658428 8,996 2.29% 8.06% 2003 .......................... 0.40% 9,355 9.863609 92,274 2.19% 17.94% 2002 .......................... 0.40% 68,208 8.363123 570,432 1.80% -12.66% 2001 .......................... 0.40% 270,829 9.575644 2,593,362 2.65% -4.06% 2000 0.40% 133,237 9.980967 1,329,834 2.82% -0.75% Gartmore GVIT Mid Cap Growth Fund - Class I 2003 .......................... 0.40% 7,736 9.918443 76,729 0.00% 39.58% 2002 .......................... 0.40% 19,365 7.106122 137,610 0.00% -37.27% 2001 .......................... 0.40% 77,229 11.327538 874,814 0.00% -30.59% 2000 .......................... 0.40% 71,051 16.319202 1,159,496 0.00% -15.72% Gartmore GVIT Money Market Fund - Class I 2003 .......................... 0.40% 374,808 11.864684 4,446,978 0.62% 0.22% 2002 .......................... 0.40% 2,605,904 11.838269 30,849,393 1.67% 0.81% 2001 .......................... 0.40% 7,088,786 11.743544 83,247,470 3.90% 3.19% 2000 .......................... 0.40% 5,519,307 11.380873 62,814,532 6.02% 5.60% Gartmore GVIT Money Market Fund: Class V 2004 .......................... 0.40% 16,318 10.093995 164,714 0.88% 0.49% 2003 .......................... 0.40% 412,466 10.045042 4,143,238 0.71% 0.30% 2002 .......................... 0.40% 2,205,085 10.014669 22,083,196 0.29% 0.15% 10/21/02 Gartmore GVIT Nationwide/(R)/ Fund: Class I 2003 .......................... 0.40% 121,505 9.672247 1,175,226 0.58% 27.00% 2002 .......................... 0.40% 633,169 7.615719 4,822,037 0.75% -17.68% 2001 .......................... 0.40% 205,773 9.251754 1,903,761 0.49% -12.17% 2000 .......................... 0.40% 18,361 10.534111 193,417 0.90% -2.51% Gartmore GVIT Nationwide/(R)/ Strategic Value Fund - Class I 2003 .......................... 0.40% 11 9.311693 102 0.04% 38.25% 2002 .......................... 0.40% 16,892 6.735208 113,771 0.03% -25.66% 2001 .......................... 0.40% 87,806 9.059635 795,490 0.78% -3.64% 2000 .......................... 0.40% 29 9.402302 273 0.26% 7.18% Gartmore GVIT Small Cap Growth Fund - Class I 2004 .......................... 0.40% 324 15.218321 4,931 0.00% 12.96% 2003 .......................... 0.40% 3,860 13.471955 52,002 0.00% 33.73% 2002 .......................... 0.40% 21,186 10.074004 213,428 0.00% -33.55% 2001 .......................... 0.40% 15,332 15.161271 232,453 0.00% -11.20% 2000 .......................... 0.40% 37,119 17.072794 633,725 0.00% -16.50% Gartmore GVIT Small Cap Value Fund - Class I 2004 .......................... 0.40% 536 20.471824 10,973 0.00% 16.83% 2003 .......................... 0.40% 17,971 17.522719 314,901 0.00% 56.23% 2002 .......................... 0.40% 145,946 11.216089 1,636,943 0.01% -27.45% 2001 .......................... 0.40% 436,136 15.460620 6,742,933 0.04% 27.76% 2000 .......................... 0.40% 203,318 12.101060 2,460,363 0.00% 10.76%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT- C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Contract Investment Expense Unit Owners' Income Total Rate* Units Fair Value Equity Ratio** Return*** ---------- --------- ------------ -------------- -------------- -------------- Gartmore GVIT Small Company Fund - Class I 2004 ...................... 0.40% 10,366 $ 17.951460 $ 186,085 0.00% 18.55% 2003 ...................... 0.40% 152,314 15.142892 2,306,474 0.00% 40.45% 2002 ...................... 0.40% 319,526 10.781666 3,445,023 0.00% -17.66% 2001 ...................... 0.40% 713,457 13.093906 9,341,939 0.15% -7.08% 2000 ...................... 0.40% 415,566 14.091380 5,855,898 0.03% 8.47% Gartmore GVIT Turner Growth Focus Fund - Class I 2003 ...................... 0.40% 20 3.293722 66 0.00% 50.36% Gartmore GVIT U.S. Growth Leaders Fund - Class I 2003 ...................... 0.40% 11 12.431976 137 0.00% 51.53% Gartmore GVIT Van Kampen Multi Sector Bond Fund - Class I 2003 ...................... 0.40% 1 13.159481 13 5.42% 11.67% 2002 ...................... 0.40% 150,457 11.784392 1,773,044 5.16% 6.78% 2001 ...................... 0.40% 125,046 11.036224 1,380,036 3.64% 3.77% 2000 ...................... 0.40% 305,925 10.635225 3,253,581 9.71% 5.23% Gartmore GVIT Worldwide Leaders Fund - Class I 2003 ...................... 0.40% 22 9.033664 199 0.00% 35.52% 2002 ...................... 0.40% 1,945 6.666122 12,966 1.98% -25.69% 2001 ...................... 0.40% 132,145 8.970354 1,185,387 1.71% -19.14% 2000 ...................... 0.40% 92,654 11.093053 1,027,816 0.65% -12.67% Goldman Sachs VIT - Mid Cap Value Fund 2003 ...................... 0.40% 168,012 12.630569 2,122,087 1.17% 27.88% Janus AS - Balanced Portfolio - Service Shares 2004 ...................... 0.40% 158 12.258707 1,937 2.23% 7.86% 2003 ...................... 0.40% 77 11.365300 875 2.00% 13.27% 2002 ...................... 0.40% 19,826 10.033996 198,934 2.14% 0.34% 09/03/02 Janus AS - Capital Appreciation Portfolio - Service Shares 2004 ...................... 0.40% 1,190 7.527514 8,958 0.01% 17.50% 2003 ...................... 0.40% 32,497 6.406568 208,194 0.21% 19.75% 2002 ...................... 0.40% 97,497 5.349794 521,589 0.32% -16.26% 2001 ...................... 0.40% 419,473 6.388873 2,679,960 0.54% -22.14% Janus AS - Global Technology Portfolio - Service Shares 2003 ...................... 0.40% 6,748 3.514240 23,714 0.00% 45.89% 2002 ...................... 0.40% 109,443 2.408830 263,630 0.00% -41.17% 2001 ...................... 0.40% 147,511 4.094407 603,970 0.76% -37.57% 2000 ...................... 0.40% 186,433 6.558143 1,222,654 1.21% -34.42% 01/27/00 Janus AS - International Growth Portfolio - Service Shares 2004 ...................... 0.40% 2,008 7.363272 14,785 0.81% 18.21% 2003 ...................... 0.40% 43,912 6.228826 273,520 1.04% 34.00% 2002 ...................... 0.40% 160,475 4.648509 745,969 0.65% -26.05% 2001 ...................... 0.40% 173,301 6.286392 1,089,438 0.69% -23.74% 2000 ...................... 0.40% 34,488 8.243024 284,285 5.07% -17.57% 01/27/00 Neuberger Berman AMT - Fasciano Portfolio - S Class Shares 2004 ...................... 0.40% 8 13.960609 112 0.00% 11.43% 2003 ...................... 0.40% 442 12.528578 5,538 0.00% 24.56% Neuberger Berman AMT - Growth Portfolio 2002 ...................... 0.40% 5,625 5.213178 29,324 0.00% -31.44% 2001 ...................... 0.40% 124,202 7.603675 944,392 0.00% -23.96% 01/02/01 Neuberger Berman AMT - Guardian Portfolio - I Class Shares 2003 ...................... 0.40% 2,004 10.156098 20,353 0.83% 31.24% 2002 ...................... 0.40% 91,943 7.738827 711,531 0.68% -26.74% 2001 ...................... 0.40% 135,015 10.563782 1,426,269 0.33% -1.90% 2000 ...................... 0.40% 70,872 10.768698 763,199 0.76% 0.73% Neuberger Berman AMT - Limited Maturity Bond Portfolio 2002 ...................... 0.40% 13,152 11.316350 148,833 9.00% 4.92% 2001 ...................... 0.40% 599,545 10.785897 6,466,631 7.59% 7.86% 01/02/01 Neuberger Berman AMT - Mid Cap Growth Portfolio/(R)/ - I Class 2003 ...................... 0.40% 371,607 10.753194 3,995,962 0.00% 27.56% 2002 ...................... 0.40% 66,544 8.429938 560,962 0.00% -29.62% 2001 ...................... 0.40% 80,698 11.978031 966,603 0.00% -24.95% 2000 ...................... 0.40% 110,315 15.959556 1,760,578 0.00% -7.83%
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Contract Investment Expense Unit Owners' Income Total Rate Units Fair Value Equity Ratio** Return*** ---------- --------- ------------ -------------- -------------- -------------- Neuberger Berman AMT - Partners Portfolio 2004 ...................... 0.40% 252 $ 11.676716 $ 2,943 0.02% 18.50% 2003 ...................... 0.40% 5,347 9.853739 52,688 0.00% 34.55% 2002 ...................... 0.40% 62,770 7.323519 459,697 0.67% -24.45% 2001 ...................... 0.40% 620,024 9.693032 6,009,912 0.66% -3.22% 2000 ...................... 0.40% 200,302 10.015242 2,006,073 0.46% 0.30% One Group(R)IT Mid Cap Growth Portfolio 2003 ...................... 0.40% 54,174 12.919754 699,915 0.00% 26.64% Oppenheimer Aggressive Growth Fund/VA - Initial Class 2004 ...................... 0.40% 12,654 11.505640 145,592 0.00% 19.30% 2003 ...................... 0.40% 34,906 9.644393 336,647 0.00% 25.09% 2002 ...................... 0.40% 347,561 7.709999 2,679,695 0.63% -28.08% 2001 ...................... 0.40% 466,261 10.720152 4,998,389 1.18% -31.54% 2000 ...................... 0.40% 315,802 15.659821 4,945,403 0.00% -11.59% Oppenheimer Bond Fund/VA - Initial Class 2002 ...................... 0.40% 28,931 11.571334 334,770 6.25% 8.64% 2001 ...................... 0.40% 193,237 10.650688 2,058,107 2.20% 6.51% 01/02/01 Oppenheimer Capital Appreciation Fund/VA - Initial Class 2003 ...................... 0.40% 145,672 12.363752 1,801,052 0.40% 30.42% 2002 ...................... 0.40% 385,650 9.479881 3,655,916 0.60% -27.15% 2001 ...................... 0.40% 660,576 13.013036 8,596,099 0.62% -12.93% 2000 ...................... 0.40% 260,790 14.945030 3,897,514 0.09% -0.63% Oppenheimer Global Securities Fund/VA - Initial Class 2003 ...................... 0.40% 172,526 9.265284 1,598,502 0.99% 42.45% 2002 ...................... 0.40% 58,355 6.504237 379,555 0.59% -22.45% 2001 ...................... 0.40% 258,325 8.386697 2,166,494 2.73% -12.39% Oppenheimer Main Street/(R)/ Fund/VA - Initial Class 2003 ...................... 0.40% 844 8.993106 7,590 0.75% 26.21% 2002 ...................... 0.40% 32,855 7.125335 234,103 0.69% -19.12% 2001 ...................... 0.40% 57,708 8.809927 508,403 0.52% -10.52% 2000 ...................... 0.40% 55,343 9.845729 544,892 0.30% -9.14% Oppenheimer Multiple Strategies Fund/VA - Initial Class 2002 ...................... 0.40% 18,208 9.152173 166,643 3.42% -10.76% 2001 ...................... 0.40% 92,958 10.255584 953,339 6.64% 2.56% 01/02/01 PIMCO VIT - Low Duration Portfolio - Administrative Shares 2004 ...................... 0.40% 576 10.528355 6,064 1.06% 1.43% 2002 ...................... 0.40% 44,486 10.182621 452,984 0.17% 1.83% 09/03/02 PIMCO VIT - Real Return Portfolio - Administrative Shares 2003 ...................... 0.40% 47,106 11.230805 529,038 2.65% 8.42% PIMCO VIT - Total Return Portfolio - Administrative Shares 2004 ...................... 0.40% 28 11.286156 316 1.88% 4.46% 2003 ...................... 0.40% 1,610,411 10.804064 17,398,984 2.81% 4.62% Pioneer High Yield VCT Portfolio - Class I Shares 2003 ...................... 0.40% 588 13.697677 8,054 7.87% 32.26% Royce Capital Fund - Royce Micro-Cap Portfolio 2004 ...................... 0.40% 3,408 17.022607 58,013 0.00% 13.39% 2003 ...................... 0.40% 18,552 15.012271 278,508 0.00% 48.57% 2002 ...................... 0.40% 56,216 10.104573 568,039 0.00% 1.05% 09/03/02 Strong Opportunity Fund II, Inc. 2003 ...................... 0.40% 866,829 9.397220 8,145,783 0.09% 36.46% 2002 ...................... 0.40% 243,964 6.886442 1,680,044 0.33% -27.11% 2001 ...................... 0.40% 776,389 9.447854 7,335,210 0.66% -4.09% 2000 ...................... 0.40% 48,820 9.828296 479,817 0.00% -1.49% 05/01/00 Strong VIF - Strong Discovery Fund II 2002 ...................... 0.40% 2,127 10.111953 21,508 0.00% -12.37% 2001 ...................... 0.40% 1,313 11.539004 15,151 0.00% 6.82% 01/02/01 Strong VIF - Strong International Stock Fund II 2001 ...................... 0.40% 38,838 7.139083 277,268 0.00% -21.09% 01/02/01
(Continued) NATIONWIDE VL SEPARATE ACCOUNT-C (NOTES TO FINANCIAL STATEMENTS, Continued)
Contract Contract Investment Expense Unit Owners' Income Total Rate* Units Fair Value Equity Ratio** Return*** ---------- --------- ------------ -------------- -------------- -------------- T. Rowe Price Equity Income Portfolio II 2004 ...................... 0.40% 1,076 $ 14.398668 $ 15,493 1.43% 14.16% 2003 ...................... 0.40% 114,138 12.612824 1,439,603 1.61% 24.67% 2002 ...................... 0.40% 19,349 10.116880 195,752 0.00% 1.17% 09/03/02 T. Rowe Price Mid Cap Growth Fund II 2004 ...................... 0.40% 762 16.566668 12,624 0.00% 17.58% 2003 ...................... 0.40% 654 14.089414 9,214 0.00% 37.54% Van Eck WIT - Worldwide Bond Fund 2002 ...................... 0.40% 939 11.333817 10,642 0.00% 21.17% Van Eck WIT - Worldwide Emerging Markets Fund 2003 ...................... 0.40% 3,429 10.608507 36,377 0.11% 53.57% 2002 ...................... 0.40% 21,479 6.907806 148,373 0.21% -3.29% 2001 ...................... 0.40% 56,168 7.142729 401,193 0.00% -2.20% 2000 ...................... 0.40% 124,869 7.303734 912,010 0.00% -42.10% Van Eck WIT - Worldwide Hard Assets Fund 2003 ...................... 0.40% 584 11.413041 6,665 0.45% 44.50% 2002 ...................... 0.40% 4,697 7.898317 37,098 0.71% -3.22% 2001 ...................... 0.40% 18,257 8.161281 149,001 1.95% -10.80% 2000 ...................... 0.40% 56,278 9.149843 514,935 0.87% 10.96% Van Kampen UIF - Emerging Markets Debt Portfolio 2003 ...................... 0.40% 427 14.693571 6,274 0.00% 27.35% 2002 ...................... 0.40% 18,217 11.537562 210,180 11.04% 8.79% 2001 ...................... 0.40% 6,255 10.605749 66,339 1.69% 9.66% 2000 ...................... 0.40% 64,183 9.671636 620,755 18.74% 10.94% Van Kampen UIF - Mid Cap Growth Portfolio 2003 ...................... 0.40% 2 5.907110 12 0.00% 41.20% 2002 ...................... 0.40% 96,523 4.183540 403,808 0.00% -31.43% 2001 ...................... 0.40% 27,935 6.101338 170,441 0.00% -29.60% Van Kampen UIF - U.S. Real Estate Portfolio - Class A 2004 ...................... 0.40% 818 22.046498 18,034 1.54% 35.85% 2003 ...................... 0.40% 6,684 16.228488 108,471 0.00% 36.96% 2002 ...................... 0.40% 103,455 11.848822 1,225,820 3.37% -1.18% 2001 ...................... 0.40% 152,921 11.990690 1,833,628 5.91% 9.40% 2000 ...................... 0.40% 39,041 10.960329 427,902 8.70% 15.00% -------------- 2004 ............................................................ $ 327,332,572 ============== 2003 ............................................................ $ 383,208,644 ============== 2002 ............................................................ $ 354,676,076 ============== 2001 ............................................................ $ 408,763,705 ============== 2000 ............................................................ $ 237,376,916 ==============
* 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 Shareholder Nationwide Life and Annuity Insurance Company: We have audited the accompanying balance sheets of Nationwide Life and Annuity Insurance Company (the Company), a wholly-owned subsidiary of Nationwide Life Insurance Company, as of December 31, 2004 and 2003, and the related statements of income, shareholder's equity and cash flows for each of the years in the three-year period ended December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life and Annuity Insurance Company as of December 31, 2004 and 2003, and the results of its operations and its 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 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 April 15, 2005 NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (a wholly-owned subsidiary of Nationwide Life Insurance Company) Balance Sheets (in thousands, except per share amounts)
DECEMBER 31, ------------------------------------------ 2004 2003 ==================================================================================================================================== ASSETS: Investments: Securities available-for-sale, at fair value: Fixed maturity securities (cost $4,638,800 in 2004; $4,508,435 in 2003) $ 4,786,899 $ 4,704,525 Equity securities (cost $6,607 in 2004; $6,462 in 2003) 7,611 6,424 Mortgage loans on real estate, net 1,232,003 1,125,962 Real estate, net 3,950 365 Policy loans 914 571 Short-term investments, including amounts managed by a related party 150,185 114,339 - --------------------------------------------------------------------------------------------------------------------------------- Total investments 6,181,562 5,952,186 Accrued investment income 62,004 61,338 Deferred policy acquisition costs 113,039 71,346 Reinsurance receivable from a related party 117,758 113,055 Other assets 738,781 539,333 Assets held in separate accounts 2,289,967 2,384,737 - --------------------------------------------------------------------------------------------------------------------------------- Total assets $ 9,503,111 $ 9,121,995 ================================================================================================================================= LIABILITIES AND SHAREHOLDER'S EQUITY: Liabilities: Future policy benefits and claims $ 6,532,259 $ 6,120,710 Other liabilities 236,261 192,668 Liabilities related to separate accounts 2,289,967 2,384,737 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities 9,058,487 8,698,115 - --------------------------------------------------------------------------------------------------------------------------------- Shareholder's equity: Common stock, $40 par value; authorized, issued and outstanding - 66 shares 2,640 2,640 Additional paid-in capital 247,960 247,960 Retained earnings 148,169 112,157 Accumulated other comprehensive income 45,855 61,123 - --------------------------------------------------------------------------------------------------------------------------------- Total shareholder's equity 444,624 423,880 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 9,503,111 $ 9,121,995 =================================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (a wholly-owned subsidiary of Nationwide Life Insurance Company) Statements of Income (in thousands)
YEARS ENDED DECEMBER 31, ---------------------------------------------------- 2004 2003 2002 ================================================================================================================================== REVENUES: Policy charges $ 58,848 $ 45,928 $ 52,586 Life insurance premiums 4,206 783 580 Net investment income 35,625 33,885 26,163 Net realized gains (losses) on investments, hedging instruments and 279 (13,659) (10,201) hedged items Other 478 597 711 - ---------------------------------------------------------------------------------------------------------------------------------- Total revenues 99,436 67,534 69,839 - ---------------------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES: Interest credited to policyholder account values 11,197 10,685 9,943 Other benefits and claims 9,246 3,769 9,543 Amortization of deferred policy acquisition costs 17,271 14,069 31,726 Other operating expenses 8,810 11,294 15,356 - ---------------------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 46,524 39,817 66,568 - ---------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before federal income 52,912 27,717 3,271 tax expense Federal income tax expense 16,986 8,505 352 - ---------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations 35,926 19,212 2,919 Cumulative effect of adoption of accounting principle, net of tax 86 - - - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 36,012 $ 19,212 $ 2,919 ==================================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (a wholly-owned subsidiary of Nationwide Life Insurance Company) Statements of Shareholder's Equity (in thousands)
ACCUMULATED ADDITIONAL OTHER TOTAL COMMON PAID-IN RETAINED COMPREHENSIVE SHAREHOLDER'S STOCK CAPITAL EARNINGS INCOME EQUITY ==================================================================================================================================== Balance as of December 31, 2001 $ 2,640 $ 152,960 $ 90,026 $ 11,538 $ 257,164 Comprehensive income: Net income - - 2,919 - 2,919 Net unrealized gains on securities available- - - - 48,077 48,077 for-sale arising during the period, net of tax Accumulated net gains on cash flow hedges, - - - 441 441 net of tax ---------------- Total comprehensive income 51,437 ---------------- Capital contributed - 95,000 - - 95,000 - ------------------------------------------------------------------------------------------------------------------------------------ Balance as of December 31, 2002 2,640 247,960 92,945 60,056 403,601 - ------------------------------------------------------------------------------------------------------------------------------------ Comprehensive income: Net income - - 19,212 - 19,212 Net unrealized gains on securities available- - - - 3,942 3,942 for-sale arising during the period, net of tax Accumulated net losses on cash flow hedges, - - - (2,875) (2,875) net of tax ---------------- Total comprehensive income 20,279 - ------------------------------------------------------------------------------------------------------------------------------------ Balance as of December 31, 2003 2,640 247,960 112,157 61,123 423,880 - ------------------------------------------------------------------------------------------------------------------------------------ Comprehensive income: Net income - - 36,012 - 36,012 Net unrealized losses on securities available- - - - (10,231) (10,231) for-sale arising during the period, net of tax Accumulated net losses on cash flow hedges, - - - (5,037) (5,037) net of tax ---------------- Total comprehensive income 20,744 - ------------------------------------------------------------------------------------------------------------------------------------ Balance as of December 31, 2004 $ 2,640 $ 247,960 # $ 148,169 # $ 45,855 $ 444,624 ====================================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (a wholly-owned subsidiary of Nationwide Life Insurance Company) Statements of Cash Flows (in thousands)
YEARS ENDED DECEMBER 31, -------------------------------------------------- 2004 2003 2002 ================================================================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 36,012 $ 19,212 $ 2,919 Adjustments to reconcile net income to net cash provided by operating activities: Interest credited to policyholder account values 11,197 10,685 9,943 Capitalization of deferred policy acquisition costs (28,448) (32,011) (34,174) Amortization of deferred policy acquisition costs 17,271 14,069 31,726 Amortization and depreciation 21,197 21,813 8,445 Net realized (gains) losses on investments, hedging instruments and (279) 13,659 10,201 hedged items Increase in accrued investment income (666) (11,094) (16,003) Increase in other assets (211,300) (292,977) (28,393) Increase (decrease) in other liabilities 29,671 28,490 (9,756) Other, net 623 944 641 - ---------------------------------------------------------------------------------------------------------------------------------- Net cash used in operating activities (124,722) (227,210) (24,451) - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturity of securities available-for-sale 567,537 655,420 424,693 Proceeds from sale of securities available-for-sale 237,034 131,195 84,129 Proceeds from repayments of mortgage loans on real estate 193,287 110,603 42,557 Cost of securities available-for-sale aquired (957,817) (1,474,356) (1,920,270) Cost of mortgage loans on real estate acquired (303,729) (314,299) (305,581) Cost of real estate acquired (3,608) - - Net change in short-term investments (35,845) 34,377 (73,254) Collateral received (paid) - securities lending, net 27,991 (25,908) 73,693 Other, net 4,170 (186) (2,697) - ---------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (270,980) (883,154) (1,676,730) - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Capital contributed - - 95,000 Investment and universal life insurance product deposits 660,502 1,324,328 1,897,550 Investment and universal life insurance product withdrawals (264,800) (214,817) (292,358) - ---------------------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 395,702 1,109,511 1,700,192 - ---------------------------------------------------------------------------------------------------------------------------------- Net decrease in cash - (853) (989) Cash, beginning of period - 853 1,842 - ---------------------------------------------------------------------------------------------------------------------------------- Cash, end of period $ - $ - $ 853 ==================================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004, 2003 AND 2002 (DOLLARS IN THOUSANDS) 7 (1) ORGANIZATION AND DESCRIPTION OF BUSINESS Nationwide Life and Annuity Insurance Company (the Company) provides life insurance and retirement savings products in the United States of America (U.S.) and is a wholly-owned subsidiary of Nationwide Life Insurance Company (NLIC), which is a wholly-owned subsidiary of Nationwide Financial Services, Inc. (NFS). (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies followed by the Company that materially affect financial reporting are summarized below. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), which differ from statutory accounting practices. The statutory financial statements of the Company, which are not presented here, are prepared 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. The Company has no statutory accounting practices that differ from NAIC SAP. See Note 11 for discussion of statutory capital requirements and dividend restrictions. In preparing the 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 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) 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. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 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, 71.8% of the fair values of fixed maturity securities were obtained from independent pricing services, 22.9% from the Company's pricing matrices and 5.3% 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. For mortgage-backed securities, the Company recognizes income using a constant effective yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income. All other investment income is recorded using the interest-method without anticipating the impact of prepayments. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 or 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. (b) 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. The Company enters into interest rate swaps and cross-currency swaps 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, attributable to the risk being hedged are also recorded in realized gains and losses on investments, hedging instruments and hedged items. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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. The Company periodically 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. (c) Revenues and Benefits Investment Products and Universal Life Insurance Products: Investment products consist primarily of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, corporate-owned life insurance (COLI) 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 charges 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. (d) 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 future gross profits from projected interest margins, asset fees, cost of insurance, policy administration and surrender charges, less policy benefits and policy maintenance expenses. The DAC asset related to investment products and universal life insurance products is adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale, as described in Note 2(a). NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 statements of income. (e) 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 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. (f) Future Policy Benefits The liability for future policy benefits for investment products in the accumulation phase, universal life insurance and variable universal life insurance policies is the policy account balance, which represents participants' net premiums and deposits plus investment performance and interest credited less applicable contract charges. The liability for future policy benefits for 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% for the substantial majority of the business. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED (g) 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 financial statements. Any such change could significantly affect the amounts reported in the 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 or the tax courts. 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. (h) 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 balance sheets on a gross basis, separately from the related balances of the Company. (i) Reclassification Certain items in the 2003 and 2002 financial statements and related footnotes 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. NLIC disclosed in its Quarterly Report on Form 10-Q for the period ended June 30, 2004 that this additional guidance would be applied during NLIC's 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 Financial Accounting Standards Board (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 AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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 to 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 13 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 an $86 credit, net of tax, as the cumulative effect of adoption of this accounting principle. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED The following table summarizes the components of cumulative effect adjustments recorded in the Company's 2004 statements of income:
JANUARY 1, 2004 ==================================================================================================================================== ==================================================================================================================================== (Increase) decrease in future policy benefits: Secondary guarantees - life insurance $ (15) GMDB claim reserves 771 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Subtotal 756 Adjustment to amortization of deferred policy acquisition costs related to above (623) Deferred federal income taxes (47) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Cumulative effect of adoption of accounting principle, net of tax $ 86 ==================================================================================================================================== ====================================================================================================================================
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. 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). The adoption of DIG B36 had no impact on the Company's financial position or results of operations. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED (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. Ratings Risk: The risk that rating agencies change their outlook or rating of the Company. The rating agencies generally utilize proprietary capital adequacy models in the process of establishing ratings for the Company. 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 balance sheets. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 mortgage 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 $29,194 extending into 2005 were outstanding as of December 31, 2004. The Company also had $18,500 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. As of December 31, 2004, the Company's credit risk from these derivative financial instruments was $2,300. 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 76% 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 the reported asset fee revenue. In addition, a decrease in separate account assets may decrease the Company's expectations of future profit margins due to a decrease in asset fee revenue and/or an increase in GMDB claims, which may require the Company to accelerate the amortization of DAC. 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 manages the risk of these benefits primarily by entering into reinsurance arrangements with third parties. As of December 31, 2004, the net amount at risk, defined as the excess of the death benefit over the account value, was $48,920 before reinsurance and $24,523 net of reinsurance. As of December 31, 2004 and 2003, the Company's reserve for GMDB claims was $456 and $1,661, respectively. See Note 3 for discussion of the impact of adopting a new accounting principle regarding GMDB reserves in 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 25.6% in any geographic region of the U.S. and no more than 2.6% with any one borrower. As of December 31, 2004, 25.3% of the carrying value of the Company's commercial mortgage loan portfolio financed industrial 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 region of the U.S. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region of the U.S. 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 AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED Reinsurance: The Company has entered into reinsurance contracts to cede a portion of its general account life and annuity business. Total amounts recoverable from unrelated parties and NLIC under these reinsurance contracts include ceded reserves, paid and unpaid claims, and certain other amounts and totaled $656,032 and $387,689 as of December 31, 2004 and 2003, respectively. The ceding of risk does not discharge the original insurer from its primary obligation to the contract holder. Under the terms of certain of the contracts, trusts have been established as collateral for the recoveries. The trust assets are invested in investment grade securities, the fair value of which must at all times be greater than or equal to 100% or 102% of the reinsured reserves, as outlined in the underlying contracts. The Company has also entered into a reinsurance contract with NLIC to cede a portion of its individual deferred fixed annuity contracts on a modified coinsurance basis. This agreement is described in more detail in Note 14. 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 of 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. 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. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 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, 71.8% of the fair values of fixed maturity securities were obtained from independent pricing services, 22.9% from the Company's pricing matrices and 5.3% from other sources. Mortgage loans on real estate, net: The fair values for 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 and short-term investments: The carrying amounts reported in the 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 value for 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, 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. Collateral received - securities lending and derivatives: The carrying amounts reported in the balance sheets for these instruments approximate their fair value. Commitments to extend credit: Commitments to extend credit have nominal fair values because of the short-term nature of such commitments and therefore are not included in the subsequent table. 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. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED Futures contracts: The fair values for futures contracts are based on quoted market prices. Other derivatives: The fair values of credit default swaps are calculated with pricing models using current spread assumptions for the underlying issuers. 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 AMOUNT FAIR VALUE amount fair value ==================================================================================================================================== ASSETS Investments: Securities available-for-sale: Fixed maturity securities $ 4,786,899 $ 4,786,899 $4,704,525 $4,704,525 Equity securities 7,611 7,611 6,424 6,424 Mortgage loans on real estate, net 1,232,003 1,264,390 1,125,962 1,190,962 Policy loans 914 914 571 571 Short-term investments 150,185 150,185 114,339 114,339 Assets held in separate accounts 2,289,967 2,289,967 2,384,737 2,384,737 LIABILITIES Investment contracts (6,266,303) (6,011,956) (5,906,376) (5,683,277) Policy reserves on life insurance contracts (265,956) (248,195) (214,334) (218,039) Collateral received - securities lending and derivatives (140,655) (140,655) (112,720) (112,720) Liabilities related to separate accounts (2,289,967) (2,240,289) (2,384,737) (2,323,505) DERIVATIVE FINANCIAL INSTRUMENTS Interest rate swaps hedging assets (388) (388) 1,043 1,043 Cross-currency interest rate swaps (12,233) (12,233) (6,242) (6,242) Futures contracts (283) (283) (731) (731) Other derivatives 1,403 1,403 1,258 1,258 - ------------------------------------------------------------------------------------------------------------------------------------
(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 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. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 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. The Company manages the risk of these benefits primarily by entering into reinsurance arrangements with third parties. See Note 4 for additional discussion. Other Non-Hedging Derivatives 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 instrument provides the duration and credit spread targeted by the Company. The credit default swaps do not qualify for hedge accounting treatment. The Company also has purchased credit default protection on selected debt instruments exposed to short-term credit concerns, or because the combination of the corporate bond and purchased default protection provides sufficient spread and duration targeted by the Company. The purchased credit default protection does not qualify for hedge accounting treatment. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED QUANTITATIVE DISCLOSURE Fair Value Hedges During the years ended December 31, 2004, 2003 and 2002, a net gain of $2,261, a net loss of $724 and a net gain of $1,689, 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 year ended December 31, 2004, the ineffective portion of cash flow hedges was a net loss of $2,572. The ineffective portion of cash flow hedges was immaterial for the years ended December 31, 2003 and 2002. There were no net gains or losses attributable to the portion of the derivative instruments' change in fair value excluded from the assessment of hedge effectiveness. The Company anticipates reclassifying less than $500 in net losses out of AOCI over the next 12-month period. Other Derivative Instruments 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 loss of $132, a net gain of $1,989 and a net loss of $667, respectively, related to other derivative instruments not designated in hedging relationships. The following tables summarizes the notional amount of derivative financial instruments outstanding as of December 31:
2004 2003 ==================================================================================================================================== Interest rate swaps: Pay fixed/receive variable rate swaps hedging investments $ - $ 9,000 Pay variable/receive fixed rate swaps hedging investments 28,112 30,512 Other contracts hedging investments 5,000 1,654 Cross-currency interest rate swaps: Hedging foreign currency denominated investments 45,128 37,476 Credit default swaps and other non-hedging instruments 189,500 119,500 Futures contracts 45,100 59,100 - ------------------------------------------------------------------------------------------------------------------------------------ Total $ 312,840 $ 257,242 ====================================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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 COST GAINS LOSSES =============================================================================================================================== December 31, 2004: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 14,532 $ 986 $ 37 Agencies not backed by the full faith and credit of the U.S. 155,455 2,986 45 Government 1 Obligations of states and political subdivisions 36,000 391 104 Corporate securities Public 1,866,999 78,167 4,520 Private 1,164,688 53,533 4,758 Mortgage-backed securities - U.S. Government-backed 787,732 10,953 2,025 Asset-backed securities 613,394 15,316 2,744 - ------------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 4,638,800 162,332 14,233 Equity securities 6,607 1,004 - - ------------------------------------------------------------------------------------------------------------------------------- Total securities available-for-sale $ 4,645,407 $ 163,336 $ 14,233 =============================================================================================================================== December 31, 2003: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 147,623 $ 5,392 $ 7 Obligations of states and political subdivisions 20,713 14 338 Corporate securities Public 1,749,121 99,734 5,148 Private 1,060,893 66,878 4,324 Mortgage-backed securities - U.S. Government-backed 864,722 16,565 2,350 Asset-backed securities 665,363 24,835 5,161 - ------------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 4,508,435 213,418 17,328 Equity securities 6,462 - 38 - ------------------------------------------------------------------------------------------------------------------------------- Total securities available-for-sale $ 4,514,897 $ 213,418 $ 17,366 =============================================================================================================================== ESTIMATED FAIR VALUE ====================================================================================== December 31, 2004: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 15,481 Agencies not backed by the full faith and credit of the U.S. 158,396 Government 1 Obligations of states and political subdivisions 36,287 Corporate securities Public 1,940,646 Private 1,213,463 Mortgage-backed securities - U.S. Government-backed 796,660 Asset-backed securities 625,966 - -------------------------------------------------------------------------------------- Total fixed maturity securities 4,786,899 Equity securities 7,611 - -------------------------------------------------------------------------------------- Total securities available-for-sale $ 4,794,510 ====================================================================================== December 31, 2003: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 153,008 Obligations of states and political subdivisions 20,389 Corporate securities Public 1,843,707 Private 1,123,447 Mortgage-backed securities - U.S. Government-backed 878,937 Asset-backed securities 685,037 - -------------------------------------------------------------------------------------- Total fixed maturity securities 4,704,525 Equity securities 6,424 - -------------------------------------------------------------------------------------- Total securities available-for-sale $ 4,710,949 ======================================================================================
- ----------------------- 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 AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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 COST FAIR VALUE =================================================================================================================================== Fixed maturity securities available-for-sale: Due in one year or less $ 118,824 $ 121,313 Due after one year through five years 1,455,287 1,509,009 Due after five years through ten years 1,408,160 1,464,929 Due after ten years 255,403 269,022 - ----------------------------------------------------------------------------------------------------------------------------------- Subtotal 3,237,674 3,364,273 Mortgage-backed securities - U.S. Government-backed 787,732 796,660 Asset-backed securities 613,394 625,966 - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 4,638,800 $ 4,786,899 ===================================================================================================================================
The following table presents the components of unrealized gains on securities available-for-sale, net, as of December 31:
2004 2003 ==================================================================================================================================== Net unrealized gains, before adjustments and taxes $ 149,103 $ 196,052 Adjustment to DAC (67,193) (98,401) Deferred federal income tax (28,668) (34,178) - ------------------------------------------------------------------------------------------------------------------------------------ Net unrealized gains $ 53,242 $ 63,473 ====================================================================================================================================
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:
2004 2003 2002 ==================================================================================================================================== Fixed maturity securities $ (47,991) $ 1,534 $ 157,573 Equity securities 1,042 (38) - - ------------------------------------------------------------------------------------------------------------------------------------ Net change $ (46,949) $ 1,496 $ 157,573 ====================================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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 ESTIMATED UNREALIZED ESTIMATED UNREALIZED ESTIMATED FAIR VALUE LOSSES FAIR VALUE LOSSES FAIR VALUE ============================================================================================================================== December 31, 2004: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations $ 2,284 $ 29 $ 220 $ 8 $ 2,504 Agencies not backed by the 16,214 45 - - 16,214 full faith and credit of the U.S. Government 1 Obligations of states and political subdivisions 22,019 104 - - 22,019 Corporate securities Public 227,459 2,478 61,554 2,042 289,013 Private 175,393 3,174 36,778 1,584 212,171 Mortgage-backed securities - U.S. Government-backed 176,025 1,451 25,087 574 201,112 Asset-backed securities 82,602 952 27,052 1,792 109,654 - ------------------------------------------------------------------------------------------------------------------------------ Total $701,996 $ 8,233 $150,691 $ 6,000 $852,687 ============================================================================================================================== % of gross unrealized losses 58% 42% December 31, 2003: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 222 $ 7 $ - $ - $ 222 Obligations of states and political subdivisions 17,679 338 - - 17,679 Corporate securities Public 200,888 4,967 1,967 181 202,855 Private 159,445 3,916 5,822 408 165,267 Mortgage-backed securities - U.S. Government-backed 166,124 2,339 1,224 11 167,348 Asset-backed securities 106,316 3,202 10,571 1,959 116,887 - ------------------------------------------------------------------------------------------------------------------------------ Total fixed maturity securities 650,674 14,769 19,584 2,559 670,258 Equity securities 641 38 - - 641 - ------------------------------------------------------------------------------------------------------------------------------ Total $651,315 $ 14,807 $ 19,584 $ 2,559 $670,899 ============================================================================================================================== % of gross unrealized losses 85% 15%
GROSS UNREALIZED LOSSES =============================================================== =============================================================== December 31, 2004: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations $ 37 Agencies not backed by the full faith and credit of the U.S. Government 1 45 Obligations of states and political subdivisions 104 Corporate securities Public 4,520 Private 4,758 Mortgage-backed securities - U.S. Government-backed 2,025 Asset-backed securities 2,744 - --------------------------------------------------------------- - --------------------------------------------------------------- Total $ 14,233 =============================================================== =============================================================== % of gross unrealized losses December 31, 2003: Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 7 Obligations of states and political subdivisions 338 Corporate securities Public 5,148 Private 4,324 Mortgage-backed securities - U.S. Government-backed 2,350 Asset-backed securities 5,161 - --------------------------------------------------------------- - --------------------------------------------------------------- Total fixed maturity securities 17,328 Equity securities 38 - --------------------------------------------------------------- - --------------------------------------------------------------- Total $ 17,366 =============================================================== =============================================================== % of gross unrealized losses - --------------- 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 AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED Proceeds from the sale of securities available-for-sale during 2004, 2003 and 2002 were $237,034, $131,195 and $84,129 respectively. During 2004, gross gains of $6,827 ($7,756 and $3,075 in 2003 and 2002, respectively) and gross losses of $1,213 ($2,203 and $1,534 in 2003 and 2002, respectively) were realized on those sales. The Company had $3,576 and $365 of real estate investments as of December 31, 2004 and 2003, respectively, that were non-income producing for the preceding twelve months. Real estate is presented at cost less accumulated depreciation of $36 as of December 31, 2004 ($13 as of December 31, 2003). The Company had no real estate held for disposal as of December 31, 2004 and 2003. As of December 31, 2004 and 2003, there were no mortgage loans on real estate considered to be impaired. The following table summarizes activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31:
2004 2003 2002 ==================================================================================================================================== Allowance, beginning of period $ 3,254 $ 67$ 750 Net additions (reductions) charged (credited) to allowance 257 2,581 (77) - ------------------------------------------------------------------------------------------------------------------------------------ Allowance, end of period $ 3,511 $ 3,254$ 673 ====================================================================================================================================
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 increased by $2,737. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED The following table summarizes net realized gains (losses) on investments, hedging instruments and hedged items by source for the years ended December 31:
2004 2003 2002 =================================================================================================================================== Realized gains on sales, net of hedging losses: Fixed maturity securities available-for-sale $ 6,644 $ 7,756 $ 3,075 Hedging losses on fixed maturity sales - - (132) Equity securities available-for-sale 183 - - Real estate - 40 340 Mortgage loans on real estate 501 196 90 Mortgage loan hedging losses - (29) - - ----------------------------------------------------------------------------------------------------------------------------------- Total realized gains on sales 7,328 7,963 3,373 - ----------------------------------------------------------------------------------------------------------------------------------- Realized losses on sales, net of hedging gains: Fixed maturity securities available-for-sale (1,213) (2,203) (1,534) Hedging gains on fixed maturity sales 133 499 579 Real estate - - (77) Mortgage loans on real estate (892) (735) (194) Mortgage loan hedging gains 439 - - Other (237) - (119) - ----------------------------------------------------------------------------------------------------------------------------------- Total realized losses on sales (1,770) (2,439) (1,345) - ----------------------------------------------------------------------------------------------------------------------------------- Other-than-temporary and other investment impairments: Fixed maturity securities available-for-sale (6,000) (18,809) (14,011) Mortgage loans on real estate, including valuation allowance adjustment - (2,581) 77 - ----------------------------------------------------------------------------------------------------------------------------------- Total other-than-temporary and other investment impairments (6,000) (21,390) (13,934) - ----------------------------------------------------------------------------------------------------------------------------------- Credit default swaps (133) 2,020 (665) Periodic net coupon settlements on non-qualifying derivatives 1,172 944 641 Other derivatives (318) (757) 1,729 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Net realized gains (losses) on investments, $ 279 $ (13,659) $ (10,201) hedging instruments and hedged items ===================================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED The following table summarizes net investment income by investment type for the years ended December 31:
2004 2003 2002 ======================================================================================================================= Securities available-for-sale: Fixed maturity securities $ 258,695 $ 243,517 $ 203,730 Equity securities 427 427 225 Mortgage loans on real estate 77,322 70,280 58,453 Real estate 194 102 186 Short-term investments 265 440 892 Derivatives 81 851 891 Other 655 924 253 - ----------------------------------------------------------------------------------------------------------------------- Gross investment income 337,639 316,541 264,630 Less: Investment expenses 7,110 6,106 5,145 Net investment income ceded (Note 14) 294,904 276,550 233,322 - ----------------------------------------------------------------------------------------------------------------------- Net investment income $ 35,625 $ 33,885 $ 26,163 =======================================================================================================================
Fixed maturity securities with an amortized cost of $16,114 and $4,278 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 $5,100 and $1,971, respectively, as collateral to various derivative counterparties. As of December 31, 2004 and 2003, the Company had received $140,655 and $112,720, respectively, of cash collateral on securities lending. As of December 31, 2004, the Company had received $56 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 $137,048 and $109,472, 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 $19,212, before tax, or $12,488, net of $6,724 of tax benefit, which was reported in the Individual Investments segment. 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 AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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 two primary guarantee types that are provided by the Company under its non-traditional variable annuity contracts: (1) GMDB and (2) 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 five 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 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 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. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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. VALUE AT RISK1 ATTAINED AGE value at risk1 attained age ========================================================================================================================= ========================================================================================================================= GMDB: Return of premium $ 218,509 $ 524 66 $ 203,939 $ 3,413 56 Reset 1,557,261 22,895 62 1,654,535 81,429 61 Ratchet 182,885 543 69 166,770 3,035 63 Rollup 70,820 561 59 81,881 1,239 68 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Subtotal 2,029,475 24,523 62 2,107,125 89,116 62 Earnings enhancement 11,612 529 58 9,583 249 59 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Total - GMDB $2,041,087 $ 25,052 62 2,116,708 $ 89,365 62 ========================================================================================================================= ========================================================================================================================= GMIB2: Ratchet $ 13,208 $ - N/A $ 3,375 $ - N/A Rollup 39,813 - N/A 14,013 - N/A - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Total - GMIB $ 53,021 $ - N/A $ 17,388 $ - 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. 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:
GMDB GMIB TOTAL ============================================================================================================================= Balance as of December 31, 2002 $ 2,025 $ - $ 2,025 Expense provision 1,939 - 1,939 Net claims paid (2,303) - (2,303) - ----------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2003 1,661 - 1,661 Expense provision 637 637 Net claims paid (1,842) - (1,842) - ----------------------------------------------------------------------------------------------------------------------------- Balance as of December 31, 2004 $ 456 $ - $ 456 =============================================================================================================================
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED The following summarizes account balances of contracts with guarantees that were invested in separate accounts as of the dates indicated:
DECEMBER 31, December 31, 2004 2003 ======================================================================================================================= Mutual funds: Bond $ 395,389 $ 408,954 Domestic equity 1,436,916 1,470,862 International equity 39,574 35,413 - ----------------------------------------------------------------------------------------------------------------------- Total mutual funds 1,871,879 1,915,229 Money market funds 24,131 32,862 - ----------------------------------------------------------------------------------------------------------------------- Total $ 1,896,010 $ 1,948,091 =======================================================================================================================
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% 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%
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) FEDERAL INCOME TAX Through September 30, 2002, the Company filed a consolidated federal income tax return with Nationwide Mutual Insurance Company (NMIC), the ultimate majority shareholder of NFS. Effective October 1, 2002, Nationwide Corporation's ownership in NFS decreased from 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. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED Under Internal Revenue Code regulations, NFS and its subsidiaries cannot file a life/non-life consolidated federal income tax return until five full years following NFS' departure from the NMIC consolidated federal income tax return group. Therefore, NFS and its direct non-life insurance company subsidiaries will file a consolidated federal income tax return; NLIC and the Company 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. 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:
2004 2003 ======================================================================================================================== DEFERRED TAX ASSETS: Future policy benefits $ 23,662 $ 13,467 Deferred policy acquisition costs 5,019 19,519 Other 5,000 3,996 - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Gross deferred tax assets 33,681 36,982 - ------------------------------------------------------------------------------------------------------------------------ DEFERRED TAX LIABILITIES: Fixed maturity securities 50,724 67,209 Equity securities and other investments 399 99 Derivatives 875 1,349 Other 1,390 1,562 - ------------------------------------------------------------------------------------------------------------------------ Gross deferred tax liabilities 53,388 70,219 - ------------------------------------------------------------------------------------------------------------------------ Net deferred tax liability $ 19,707 $ 33,237 ========================================================================================================================
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. There was no valuation allowance as of December 31, 2004 and 2003. The Company's current federal income tax liability was $21,537 and $16,606 as of December 31, 2004 and 2003, respectively. The following table summarizes federal income tax expense attributable to income before the cumulative effect of adoption of an accounting principle for the years ended December 31:
2004 2003 2002 =================================================================================================================================== Current $ 22,174 $ 11,402 $ 5,093 Deferred (5,188) (2,897) (4,741) - ----------------------------------------------------------------------------------------------------------------------------------- Federal income tax expense $ 16,986 $ 8,505 $ 352 ===================================================================================================================================
The customary relationship between federal income tax expense and pre-tax income from continuing operations did not exist in 2002. This was because of the impact of the $6,724 tax benefit associated with the $19,212 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 AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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 an accounting principle as follows:
2004 2003 2002 ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- AMOUNT % Amount % Amount % ==================================================================================================================================== ==================================================================================================================================== Computed (expected) tax expense $ 18,519 35.0 $ 9,701 35.0 $ 1,145 35.0 Tax exempt interest and dividends (1,627) (3.1) (1,294) (4.7) (882) (27.0) received deduction Other, net 94 0.2 98 0.4 89 2.7 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Total $ 16,986 32.1 $ 8,505 30.7 $ 352 10.7 ==================================================================================================================================== ====================================================================================================================================
Total federal income tax paid (refunded) was $17,243, $(996) and $9,368 during the years ended December 31, 2004, 2003 and 2002, respectively. See also Note 14. (11) SHAREHOLDER'S EQUITY, REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND RESTRICTIONS The State of Ohio, where the Company is 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. The Company exceeded the minimum risk-based capital requirements for all periods presented herein. The statutory capital and surplus of the Company as of December 31, 2004 and 2003 was $230,186 and $228,250, respectively. The statutory net income (loss) of the Company for the years ended December 31, 2004, 2003 and 2002 was $12,549, $16,077 and $(2,167), respectively. The Company is limited in the amount of shareholder dividends it may pay without prior approval by ODI. As of January 1, 2005, based on statutory financial results as of and for the year ended December 31, 2004, the Company could pay dividends totaling $23,019 without obtaining prior approval. The Company currently does not expect such regulatory requirements to impair its ability to pay future operating expenses, interest and shareholder dividends. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED (12) 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:
2004 2003 2002 ==================================================================================================================================== Net unrealized (losses) gains on securities available-for-sale arising during the period: Gross unrealized (losses) gains $ (47,335) $ (11,761) $ 145,104 Adjustment to deferred policy acquisition costs 31,208 4,569 (83,609) Related federal income tax benefit (expense) 5,645 2,517 (21,523) - ------------------------------------------------------------------------------------------------------------------------------------ Net unrealized (losses) gains (10,482) (4,675) 39,972 - ------------------------------------------------------------------------------------------------------------------------------------ Reclassification adjustment for net realized losses on securities available-for-sale realized during the period: Gross unrealized losses 386 13,257 12,469 Related federal income tax benefit (135) (4,640) (4,364) - ------------------------------------------------------------------------------------------------------------------------------------ Net reclassification adjustment 251 8,617 8,105 - ------------------------------------------------------------------------------------------------------------------------------------ Other comprehensive (loss) income on securities available-for-sale (10,231) 3,942 48,077 - ------------------------------------------------------------------------------------------------------------------------------------ Accumulated net holding (losses) gains on cash flow hedges: Gross unrealized holding (losses) gains (7,749) (4,422) 679 Related federal income tax benefit (expense) 2,712 1,547 (238) - ------------------------------------------------------------------------------------------------------------------------------------ Other comprehensive (loss) income on cash flow hedges (5,037) (2,875) 441 - ------------------------------------------------------------------------------------------------------------------------------------ Total other comprehensive (loss) income $ (15,268) $ 1,067 $ 48,518 ====================================================================================================================================
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. (13) PENSION PLAN AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company, together with other affiliated companies, is a participant in pension plans covering all employees who have completed at least one year of service and who have met certain age requirements. Plan contributions are invested in a group annuity contract 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 $887, $797 and $488, respectively. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 issued by NLIC. The Company's accrued postretirement benefit expense as of December 31, 2004 and 2003 was $1,061 and $1,129, respectively. The net periodic benefit cost for the Company's postretirement benefit plan as a whole was $65, $65 and $170 for 2004, 2003 and 2002, respectively. (14) 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 $3,122, $4,528 and $4,211, 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. Funds of Gartmore Global Investments, Inc. (GGI), an affiliate, are offered to the Company's customer as investment options in certain of the Company's products. As of December 31, 2004 and 2003, customer allocations to GGI funds totaled $208,408 and $246,261, respectively. For the year ended December 31, 2004 and 2003, GGI paid the Company $625 and $847, respectively, for the distribution and servicing of these funds. The Company is a party to an intercompany reinsurance agreement with NLIC whereby certain individual deferred fixed annuity contracts are ceded on a modified coinsurance basis. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of the Company's agreement, the investment risk associated with changes in interest rates is borne by NLIC. Risk of asset default is retained by the Company, although a fee is paid by NLIC to the Company for the Company's retention of such risk. The agreement will remain in force until all contract obligations are settled. Amounts ceded to NLIC in 2004 include premiums of $484,177 ($1,028,997 and $1,579,941 in 2003 and 2002, respectively); net investment income of $294,904 ($276,550 and $233,322 in 2003 and 2002, respectively); policy reserves of $5,383,449 ($5,179,989 in 2003); and benefits, claims and other expenses of $739,596 ($1,269,091 and $1,794,569 in 2003 and 2002, respectively). The Company is a party to an intercompany reinsurance agreement with NLIC whereby a certain life insurance contract is ceded on a 100% coinsurance basis. No premium amounts were ceded to NLIC in 2004, 2003 and 2002, and benefits of $228, $402 and $207 were ceded to NLIC during 2004, 2003 and 2002, respectively. Policy reserves ceded and amounts receivable from NLIC under this agreement totaled $117,758 and $113,055 as of December 31, 2004 and 2003, respectively. The Company believes that the terms of the reinsurance agreements with affiliates are consistent in all material respects with what the Company could have obtained with unaffiliated parties. 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 $295, $478 and $647, respectively. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO 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, the Company had no outstanding borrowings from affiliated entities under such agreements ($33,320 as of December 31, 2003). During 2004, 2003 and 2002, the most the Company had outstanding at any given time was $36,900, $67,335 and $70,897, respectively, and the Company incurred interest expense on intercompany repurchase agreements of $36, $107 and $143 for 2004, 2003 and 2002, respectively. The Company believes that the terms of the repurchase agreements are materially consistent with what the Company could have obtained with unaffiliated parties. The Company and various affiliates entered into agreements with Nationwide Cash Management Company (NCMC), an affiliate, under which NCMC acts as a common agent in handling the purchase and sale of short-term securities for the respective accounts of the participants. Amounts on deposit with NCMC for the benefit of the Company were $9,474 and $1,689 as of December 31, 2004 and 2003, respectively, and are included in short-term investments on the accompanying balance sheets. For the years ending December 31, 2004, 2003 and 2002, the Company paid NCMC fees totaling $5, $19 and $21, respectively. The Company received a capital contribution from NLIC in the amount of $95,000 in 2002. Through September 30, 2002, the Company filed a consolidated federal income tax return with NMIC, as discussed in more detail in Note 10. Beginning October 1, 2002, the Company files a consolidated federal income tax return with NLIC. Total payments to (from) NMIC were $852, ($1,655) and $9,368 in the years ended December 31, 2004, 2003 and 2002, respectively. Payments made in 2004 and 2003 relate to tax years prior to deconsolidation. (15) 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 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 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 National Association of Securities Dealers 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. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF NATIONWIDE LIFE INSURANCE COMPANY) NOTES TO FINANCIAL STATEMENTS, CONTINUED 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, the Company'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 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 also could affect the outcome of one or more of the Company's litigation matters. 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, the Company 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 the Company which were allegedly used to fund certain tax-deferred retirement plans. The amended class action complaint seeks unspecified compensatory damages. NLIC, on behalf of the defendants, 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. The Company intends to defend this lawsuit vigorously. PART C. OTHER INFORMATION Item 26. Exhibits (a) Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant - Filed previously with initial registration statement (333-59517) and hereby incorporated by reference. (b) Not Applicable (c) Underwriting or Distribution of contracts between the Depositor and Principal Underwriter - Filed previously with the registration statement (333-59517) and hereby incorporated by reference. (d) The form of the contract - Filed previously with initial registration statement (333-59517) and hereby incorporated by reference. (e) The form of the contract application - Filed previously with initial registration statement (333-59517) and hereby incorporated by reference. (f) Articles of Incorporation of Depositor - Filed previously with initial registration statement (333-59517) and hereby incorporated by reference. (g) Form of Reinsurance Contracts - Filed previously with Post-Effective Amendment No. 3 to registration statement (333-46338) and hereby incorporated by reference. (h) Form of Participation Agreements - Filed previously with Post-Effective Amendment No. 3 to registration statement (333-46338) and hereby incorporated by reference. (i) Not Applicable (j) Not Applicable (k) Opinion of Counsel - Filed previously with Pre-Effective Amendment No. 1 to the registration statement (333-59517) 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 Post-Effective Amendment No. 3 to registration statement (333-46338) and hereby incorporated by reference. Item 27. DIRECTORS AND OFFICERS OF THE DEPOSITOR
- ----------------------------------------------------------------------------- -------------------------------------------- Chairman of the Board and Director Arden L. Shisler - ----------------------------------------------------------------------------- -------------------------------------------- Chief Executive Officer and Director W. G. Jurgensen - ----------------------------------------------------------------------------- -------------------------------------------- President and Chief Operating Officer Mark R. Thresher - ----------------------------------------------------------------------------- -------------------------------------------- Executive Vice President and Chief Legal and Governance Officer Patricia R. Hatler - ----------------------------------------------------------------------------- -------------------------------------------- Executive Vice President-Chief Administrative Officer Terri L. Hill - ----------------------------------------------------------------------------- -------------------------------------------- Executive Vice President-Chief Financial and Investment Officer Robert A. Rosholt - ----------------------------------------------------------------------------- -------------------------------------------- Executive Vice President-Chief Information Officer Michael C. Keller - ----------------------------------------------------------------------------- -------------------------------------------- Executive Vice President-Chief Marketing Officer Kathleen D. Ricord - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President and Treasurer Brian W. Nocco - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Chief Financial Officer Timothy G. Frommeyer - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Chief Technology Officer Srinivas Koushik - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-CIO Strategic Investments Gary I. Siroko - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Consumer Finance John S. Skubik - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Corporate Relations Gregory S. Lashutka - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Corporate Strategy J. Stephen Baine - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Division General Counsel Thomas W. Dietrich - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Enterprise Portfolio & Strategy Management Gail G. Snyder - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Group Business Head Duane C. Meek - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-In Retirement Business Head Keith I. Millner - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Individual Investments Business Head Mark D. Phelan - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Individual Protection Business Head Peter A. Golato - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Information Technology Mark D. Torkos - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Internal Audits Kelly A. Hamilton - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-IT Strategy and Solutions Delivery Steven P Rothman - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Marketing, Strategy and Urban Operations Katherine A. Mabe - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-NF Systems R. Dennis Noice - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Non-Affiliated Sales Richard A. Karas - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-P/C Strategic Planning and Operations James R. Burke - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-PCIO Brokerage Operations & Sponsor Relations David K. Hollingsworth - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Property and Casualty Claims David R. Jahn - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Property and Casualty Commercial/Farm Product Pricing W. Kim Austen - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Property and Casualty Human Resources Gale V. King - ----------------------------------------------------------------------------- -------------------------------------------- Senior Vice President-Property and Casualty Personal Lines Product Pricing J. Lynn Greenstein - ----------------------------------------------------------------------------- -------------------------------------------- Director Joseph A. Alutto - ----------------------------------------------------------------------------- -------------------------------------------- Director James G. Brocksmith, Jr. - ----------------------------------------------------------------------------- -------------------------------------------- Director Keith W. Eckel - ----------------------------------------------------------------------------- -------------------------------------------- Director Lydia M. Marshall - ----------------------------------------------------------------------------- -------------------------------------------- Director Donald L. McWhorter - ----------------------------------------------------------------------------- -------------------------------------------- Director David O. Miller - ----------------------------------------------------------------------------- -------------------------------------------- Director Martha James Miller de Lombera - ----------------------------------------------------------------------------- -------------------------------------------- Director James F. Patterson - ----------------------------------------------------------------------------- -------------------------------------------- Director Gerald D. Prothro - ----------------------------------------------------------------------------- -------------------------------------------- Director Arden L. Shisler - ----------------------------------------------------------------------------- -------------------------------------------- Director Alex (nmn) Shumate - ----------------------------------------------------------------------------- --------------------------------------------
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 Provision is made in Nationwide's Amended and Restated Code of Regulations and expressly authorized by the General Corporation Law of the State of Ohio, for indemnification by Nationwide of any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person is or was a director, officer or employee of Nationwide, against expenses, including attorneys fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the General Corporation Law of the State of Ohio. Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("Act") may be permitted to directors, officers or persons controlling Nationwide pursuant to the foregoing provisions, Nationwide has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than 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 asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 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-6 Nationwide VLI Separate Account-4 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: Director and Chairman of the Board Mark D. Phelan President Rhodes B. Baker Senior Vice President William G. Goslee, Jr. Director and Senior Vice President and Treasurer M. Eileen Kennedy Vice President Trey Rouse Vice President and Assistant Secretary Thomas E. Barnes Vice President-Compliance Officer Barbara J. Shane Associate Vice President and Secretary Glenn W. Soden Assistant Treasurer E. Gary Berndt Director Keith I. Millner The business address of the Directors and Officers of Nationwide Investment Services Corporation is: One Nationwide Plaza, Columbus, Ohio 43215 (c)
------------------------------ ------------------------ ----------------------- ------------------ ------------------- NAME OF PRINCIPAL UNDERWRITER NET UNDERWRITING COMPENSATION ON BROKERAGE COMPENSATION DISCOUNTS AND REDEMPTION OR COMMISSIONS COMMISSIONS ANNUITIZATION ------------------------------ ------------------------ ----------------------- ------------------ ------------------- ------------------------------ ------------------------ ----------------------- ------------------ ------------------- Nationwide Investment N/A N/A N/A N/A Services Corporation ------------------------------ ------------------------ ----------------------- ------------------ -------------------
Item 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 VL SEPARATE ACCOUNT-C, certifies that it meets the requirements of the Securities Act Rule 485(b) 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 7th day of November, 2005. NATIONWIDE VL SEPARATE ACCOUNT-C ------------------------------------------------------------------------ (Registrant) NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY ------------------------------------------------------------------------ (Depositor) By: /s/ JAMIE RUFF CASTO ------------------------------------------------------------------------ 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 7th day of November, 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-99.2N 3 exhibitn.txt CONSENT OF IND REG PUBLIC ACCTG FIRM CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors of Nationwide Life and Annuity Insurance Company and Contract Owners of Nationwide VL Separate Account - C: We consent to the use of our reports for Nationwide VL Separate Account-C dated March 4, 2005 and for Nationwide Life and Annuity Insurance Company dated April 15, 2005, included herein, and to the reference to our firm under the heading "Services" in the Statement of Additional Information (File No. 333-43639). Our report for Nationwide Life and Annuity Insurance Company 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 25, 2005 -----END PRIVACY-ENHANCED MESSAGE-----