-----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, KtC8sokfvUIrkiuQNVYcQYT8pZsmNlGQyS9yaZ7aeM/Tn4JARpNxA7NYi2hQcVt3 GyxAPEiOOsADBxi/mlmbIA== 0000950152-01-501144.txt : 20010430 0000950152-01-501144.hdr.sgml : 20010430 ACCESSION NUMBER: 0000950152-01-501144 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20010427 EFFECTIVENESS DATE: 20010427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE VLI SEPARATE ACCOUNT 2 CENTRAL INDEX KEY: 0000820914 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 314156830 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-63179 FILM NUMBER: 1612878 BUSINESS ADDRESS: STREET 1: ONE NATIONWIDE PLZ STREET 2: C/O NATIONWIDE LIFE INSURANCE CO CITY: COLUMBUS STATE: OH ZIP: 43216 BUSINESS PHONE: 614-249-7111 MAIL ADDRESS: STREET 1: NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43216 485BPOS 1 l87598ae485bpos.txt NATIONWIDE VLI SEPARATE ACCOUNT - 3 FORM 485BPOS 1 Registration No. 033-63179 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 10 TO FORM S-6 FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 ------------------------ NATIONWIDE VLI SEPARATE ACCOUNT-2 (EXACT NAME OF TRUST) ------------------------ NATIONWIDE LIFE INSURANCE COMPANY ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215 (EXACT NAME AND ADDRESS OF DEPOSITOR AND REGISTRANT) PATRICIA R. HATLER SECRETARY ONE NATIONWIDE PLAZA COLUMBUS, OHIO 43215 (NAME AND ADDRESS OF AGENT FOR SERVICE) ------------------------ This Post-Effective Amendment amends the Registration Statement with respect to the Prospectus, the Financial Statements and Part II. It is proposed that this filing will become effective (check appropriate box): [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 [X] on May 1, 2001 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on (date) pursuant to paragraph (a)(1) of Rule 485 If appropriate check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment Title of Securities being registered: Last Survivor Flexible Premium Variable Universal Life Insurance Policies Approximate date of proposed public offering: Continuously on and after May 1, 2001 [ ] Check box if it is proposed that this filing will become effective on (date) at (time) pursuant to Rule 487. ================================================================================ 2 CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2 N-8B-2 ITEM CAPTION IN PROSPECTUS 1..........................................Nationwide Life Insurance Company The Variable Account 2..........................................Nationwide Life Insurance Company 3..........................................Custodian of Assets 4..........................................Distribution of The Policies 5..........................................The Variable Account 6..........................................Not Applicable 7..........................................Not Applicable 8..........................................Not Applicable 9..........................................Legal Proceedings 10..........................................Information About The Policies; How The Cash Value Varies; Right to Exchange for a Fixed Benefit Policy; Reinstatement; Other Policy Provisions 11..........................................Investments of The Variable Account 12..........................................The Variable Account 13..........................................Policy Charges Reinstatement 14..........................................Underwriting and Issuance - Premium Payments Minimum Requirements for Issuance of a Policy 15..........................................Investments of the Variable Account; Premium Payments 16..........................................Underwriting and Issuance - Allocation of Cash Value 17..........................................Surrendering The Policy for Cash 18..........................................Reinvestment 19..........................................Not Applicable 20..........................................Not Applicable 21..........................................Policy Loans 22..........................................Not Applicable 23..........................................Not Applicable 24..........................................Not Applicable 25..........................................Nationwide Life Insurance Company 26..........................................Not Applicable 27..........................................Nationwide Life Insurance Company 28..........................................Company Management 29..........................................Company Management 30..........................................Not Applicable 31..........................................Not Applicable 32..........................................Not Applicable 33..........................................Not Applicable 34..........................................Not Applicable 35..........................................Nationwide Life Insurance Company 36..........................................Not Applicable 37..........................................Not Applicable 3 N-8B-2 ITEM CAPTION IN PROSPECTUS 38..........................................Distribution of The Policies 39..........................................Distribution of The Policies 40..........................................Not Applicable 41(a).......................................Distribution of The Policies 42..........................................Not Applicable 43..........................................Not Applicable 44..........................................How The Cash Value Varies 45..........................................Not Applicable 46..........................................How The Cash Value Varies 47..........................................Not Applicable 48..........................................Custodian of Assets 49..........................................Not Applicable 50..........................................Not Applicable 51..........................................Summary of The Policies; Information About The Policies 52..........................................Substitution of Securities 53..........................................Taxation of The Company 54..........................................Not Applicable 55..........................................Not Applicable 56..........................................Not Applicable 57..........................................Not Applicable 58..........................................Not Applicable 59..........................................Financial Statements 4 NATIONWIDE LIFE INSURANCE COMPANY Last Survivor Flexible Premium Variable Universal Life Insurance Policies Issued by Nationwide Life Insurance Company through its Nationwide VLI Separate Account-2 The date of this prospectus is May 1, 2001. This prospectus contains basic information you should know about the policies before investing. Please read it and keep it for future reference THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE UNDER THE POLICIES: AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. A MEMBER OF THE AMERICAN CENTURY(SM) FAMILY OF INVESTMENTS - - American Century VP Balanced - - American Century VP Income & Growth - - American Century VP International - - American Century VP Value CREDIT SUISSE WARBURG PINCUS TRUST (FORMERLY, WARBURG PINCUS TRUST) - - Small Company Growth Portfolio DREYFUS - - Dreyfus Investment Portfolios - European Equity Portfolio: - Initial Shares - - The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares - - Dreyfus Stock Index Fund, Inc. - Initial Shares DREYFUS VARIABLE INVESTMENT FUND - - Appreciation Portfolio - Initial Shares(formerly, Dreyfus Variable Investment Fund - Capital Appreciation Portfolio) - - Growth & Income Portfolio - Initial Shares* FIDELITY VARIABLE INSURANCE PRODUCTS FUND - - VIP Equity-Income Portfolio - - VIP Growth Portfolio - - VIP High Income Portfolio* - - VIP Overseas Portfolio FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - - VIP II Asset Manager Portfolio - - VIP II Contrafund(R) Portfolio FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - - VIP III Growth Opportunities Portfolio JANUS ASPEN SERIES - - Capital Appreciation Portfolio: Service Shares - - Global Technology Portfolio: Service Shares - - International Growth Portfolio: Service Shares MORGAN STANLEY THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.) - - Emerging Markets Debt Portfolio - - U.S. Real Estate Portfolio NATIONWIDE SEPARATE ACCOUNT TRUST - - Capital Appreciation Fund - - Dreyfus NSAT Mid Cap Index Fund (formerly, Nationwide Mid Cap Index Fund) - - Gartmore NSAT Emerging Markets Fund - - Gartmore NSAT Global Technology and Communications Fund - - Gartmore NSAT International Growth Fund - - Government Bond Fund - - MAS NSAT Multi Sector Bond Fund* (formerly, Nationwide(R) Multi Sector Bond Fund) - - Money Market Fund - - Nationwide(R) Small Cap Growth Fund (subadvisers: Miller, Anderson & Sherrerd, LLP, Neuberger Berman, LLC, and Waddell & Reed Investment Management Company)* - - Nationwide(R) Small Cap Value Fund (subadvisers: The Dreyfus Corporation) - - Nationwide(R) Small Company Fund (subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC, Lazard Asset Management, Strong Capital Management, Inc. and Waddell & Reed Investment Management Company) - - Strong NSAT Mid Cap Growth Fund (formerly, Nationwide(R) Strategic Growth Fund) - - Total Return Fund - - Turner NSAT Growth Focus Fund NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - - AMT Growth Portfolio - - AMT Guardian Portfolio - - AMT Limited Maturity Bond Portfolio - - AMT Partners Portfolio OPPENHEIMER VARIABLE ACCOUNTS FUNDS - - Oppenheimer Aggressive Growth Fund/VA (formerly, Oppenheimer Variable Account Funds - Oppenheimer Capital Appreciation) - - Oppenheimer Bond Fund/VA 1 5 - - Oppenheimer Capital Appreciation Fund/VA (formerly, Oppenheimer Growth Fund) - - Oppenheimer Global Securities Fund/VA - - Oppenheimer Main Street Growth & Income Fund/VA - - Oppenheimer Multiple Strategies Fund/VA STRONG OPPORTUNITY FUND II, INC. (FORMERLY, STRONG SPECIAL FUND II, INC.) VAN ECK WORLDWIDE INSURANCE TRUST - - Worldwide Bond Fund - - Worldwide Emerging Markets Fund - - Worldwide Hard Assets Fund NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER SEPTEMBER 27, 1999: AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. - - American Century VP Capital Appreciation CREDIT SUISSE WARBURG PINCUS TRUST (FORMERLY, WARBURG PINCUS TRUST) - - Global Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) - - International Equity Portfolio STRONG VARIABLE INSURANCE FUNDS, INC. - - International Stock Fund II - - Strong Discovery Fund II, Inc. *These underlying mutual funds invest in lower quality debt securities commonly referred to as junk bonds. For general information or to obtain FREE copies of the: - prospectus, annual report or semi-annual report for any underlying mutual fund; and - required Nationwide forms, call: 1-800-547-7548 TDD 1-800-238-3035 or write: NATIONWIDE LIFE INSURANCE COMPANY P.O. BOX 182150 COLUMBUS, OHIO 43218-2150 Material incorporated by reference to this prospectus can be found on the SEC website at: www.sec.gov Information about this and other Best of America Products can be found on the world-wide web at: www.bestofamerica.com THIS POLICY: - - IS NOT A BANK DEPOSIT - - IS NOT FDIC INSURED - - IS NOT INSURED OR ENDORSED BY A BANK OR ANY FEDERAL GOVERNMENT AGENCY - - IS NOT AVAILABLE IN EVERY STATE - - MAY GO DOWN IN VALUE The life insurance policies offered by this prospectus last survivor are flexible premium variable universal life insurance policies (flexible premium variable adjustable life insurance policies in Puerto Rico). They provide life insurance coverage on two insureds named in the policy. The death benefit is paid on the death of the last surviving insured. A cash surrender value may be offered if the policy is terminated during the lifetime of the insured. No claim is made that the policy is in any way similar or comparable to a systematic investment plan of a mutual fund. The death benefit and cash value of this policy may vary to reflect the experience of the Nationwide VLI Separate Account-2 or the fixed account, depending on how premium payments are invested. Investors assume certain risks when investing in the policies, including the risk of losing of money. Nationwide guarantees the death benefit for as long as the policy is in force. Nationwide guarantees to keep the policy in force so long as requirements described in this prospectus are met. The cash surrender value is not guaranteed. The policy will lapse if the cash surrender value is insufficient to cover policy charges. Benefits described in this prospectus may not be available in every jurisdiction - - refer to your policy for specific benefit information. THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY NOT LAWFULLY BE MADE. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 2 6 GLOSSARY OF SPECIAL TERMS ACCUMULATION UNIT- An accounting unit of measure used to calculate the cash value of the variable account. ATTAINED AGE- The insured's age on the policy date, plus the number of full years since the policy date. AVERAGE ISSUE AGE- Arithmetic average of the ages of the two insureds at policy issuance. FIXED ACCOUNT- An investment option which is funded by the general account of Nationwide. GENERAL ACCOUNT- All assets of Nationwide other than those of the variable account or in other separate accounts that have been or may be established by Nationwide. IRS GUIDELINE LEVEL PREMIUM- The level annual premium, calculated in accordance with the provisions of the Internal Revenue Code of 1986, as amended, guaranteed mortality and expense charges, and an interest rate of 4%. LIFETIME DEATH BENEFIT GUARANTEE PERIOD- The period running from the policy date to the policy anniversary on or next following the younger insured's 75th birthday. LIFETIME DEATH BENEFIT GUARANTEE PREMIUM- The IRS Guideline Level Premium as set forth in the "Grace Period" section of this prospectus. MATURITY DATE- The policy anniversary on or next following the insured's 95th birthday. MINIMUM MONTHLY PREMIUM- The amount of premium that must be paid during the first 3 years of the Limited Death Benefit Guaranteed Period to keep the policy in force. NATIONWIDE- Nationwide Life Insurance Company. NET AMOUNT AT RISK- The difference between the death benefit and the cash value, each calculated at the beginning of the month. NET PREMIUMS- The actual premiums minus the percent of premium charges. The percent of premium charges are shown on the policy data page. SEC GUIDELINE LEVEL PREMIUM- The level annual premiums required to mature the policy under reasonable mortality and expense charges with an annual effective interest rate of 5%. It is calculated pursuant to Rule 6e-3(T) of the Investment Company Act of 1940. SPECIFIED AMOUNT- The dollar amount used to determine the death benefit under a policy. SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund shares are allocated and for which accumulation units are separately maintained. VALUATION PERIOD- Each day the New York Stock Exchange is open for business. VARIABLE ACCOUNT- Nationwide VLI Separate Account-2, a separate account of Nationwide that contains variable account allocations. The variable account is divided into sub-accounts, each of which invests in shares of a separate underlying mutual fund. 3 7 TABLE OF CONTENTS GLOSSARY OF SPECIAL TERMS.......................... SUMMARY OF POLICY EXPENSES......................... UNDERLYING MUTUAL FUND ANNUAL EXPENSES...................................... SYNOPSIS OF THE POLICIES........................... NATIONWIDE LIFE INSURANCE COMPANY.................. NATIONWIDE INVESTMENT SERVICES CORPORATION................................... INVESTING IN THE POLICY............................ The Variable Account and Underlying Mutual Funds Changes of Investment Policy Voting Rights Substitution of Securities Material Conflicts The Fixed Account INFORMATION ABOUT THE POLICIES..................... Minimum Requirements for Policy Issuance Premium Payments Pricing POLICY CHARGES..................................... Sales Load Tax Expense Charge Surrender Charges Reductions to Surrender Charges Monthly Cost of Insurance Monthly Administrative Expense Charge Mortality and Expense Risk Charge Income Tax Reduction of Charges SURRENDERING THE POLICY FOR CASH................... Surrender (Redemption) Cash Surrender Value Partial Surrenders Income Tax Withholding VARIATION IN CASH VALUE............................ Error in Age or Sex POLICY PROVISIONS.................................. Policy Owner Beneficiary Changes in Existing Insurance Coverage OPERATION OF THE POLICY............................ Allocation of Net Premium and Cash Value How the Investment Experience is Determined Net Investment Factor Determining the Cash Value Transfers RIGHT TO REVOKE.................................... POLICY LOANS....................................... Taking a Policy Loan Effect on Investment Performance Interest Effect on Death Benefit and Cash Value Repayment ASSIGNMENT......................................... POLICY OWNER SERVICES.............................. Dollar Cost Averaging DEATH BENEFIT INFORMATION.......................... Calculation of the Death Benefit The Cash Value Accumulation Test DEATH BENEFIT GUARANTEES........................... Lifetime Death Benefit Guarantee Limited Death Benefit Guarantee Proceeds Payable on Death Incontestability Suicide Maturity Proceeds RIGHT OF CONVERSION................................ GRACE PERIOD....................................... Without Death Benefit Guarantees Lifetime Death Benefit Guarantee Limited Death Benefit Guarantee Reinstatement TAX MATTERS........................................ Policy Proceeds Taxation of the Policy Description of Cash Value Accumulation Test and Guideline Premium/Cash Value Corridor Test Withholding Federal Estate and Generation-Skipping Transfers Taxes Non-Resident Aliens Taxation of Policy Split Option Rider Taxation of Nationwide Tax Changes LEGAL CONSIDERATIONS............................... STATE REGULATION................................... REPORTS TO POLICY OWNERS........................... ADVERTISING........................................ LEGAL PROCEEDINGS.................................. EXPERTS............................................ REGISTRATION STATEMENT............................. DISTRIBUTION OF THE POLICIES....................... 4 8 ADDITIONAL INFORMATION ABOUT NATIONWIDE.................................... APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS......................................... APPENDIX B: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES, AND DEATH BENEFITS ..................................... 5 9 SUMMARY OF POLICY EXPENSES Nationwide deducts certain charges from the policy. Charges are made for administrative and sales expenses, tax expenses, providing life insurance protection and assuming the mortality and expense risks. Nationwide deducts a sales load and a tax expense charge from premium payments. The sales load is guaranteed not to exceed 5.0% during the first 10 policy years (and 1.5% thereafter), of each premium payment. For policies issued in the State of New York, the sales load is guaranteed not to exceed 9.5% for policy years 1-10 and 6% thereafter. The total sales load deduction will include any portion of increase charges attributable to distribution expenses for increases in the specified amount. Currently, the sales load is reduced to 1.5% on any portion of the annual premium paid in excess of the annual break point premium (see "Sales Load"). The tax expense charge is 3.5% from all premium payments. It consists of a premium tax deduction of 2.25% and a federal tax deduction of 1.25% (see "Tax Expense Charge"). In addition, Nationwide deducts the following charges: - - a monthly cost of insurance charge; - - a monthly cost of any additional benefits provided by riders to the policy; - - a monthly administrative expense charge; - - a daily mortality and expense risk charge; and - - a surrender charges. Currently, the monthly administrative expense charge is the sum of the "per policy" charge and the "per $1,000 basic coverage" charge as follows:
- -------------------------------------------------------------------------------- POLICY YEAR(S) PER POLICY PER $1,000 BASIC COVERAGE - -------------------------------------------------------------------------------- 1-10 $10.00 $0.04 but not less than $20.00 or more than $80 per policy - -------------------------------------------------------------------------------- 11 and After $ 5.00 $0.02 but not less than $10.00 or more than $40 per policy - --------------------------------------------------------------------------------
For policies issued in the State of New York, the "per policy" charge is guaranteed not to exceed $7.50 per month in all years. The monthly "per $1,000 basic coverage" charge is $0.04 per $1,000 in the first year and $0.00 thereafter. Nationwide deducts a Mortality and Expense Rick Charge equal to an annualized rate of 0.80% for policy years 1-10. This charge varies at the beginning of policy year 11, depending on the amount of cash value. For policies issued in the State of New York Nationwide deducts a charge equal to an annualized rate of 0.80% in policy years 1-10 and 0.50% thereafter, regardless of cash value (see "Mortality and Expense Risk Charge"). A surrender charge is assessed for policies surrendered during the first 9 policy years (see "Surrender Charges"). For more information about any policy charge, see "Policy Charges" in this prospectus. 6 10 UNDERLYING MUTUAL FUND ANNUAL EXPENSES (as a percentage of underlying mutual fund net assets, after expense reimbursement)
- ------------------------------------------------------------------------------------------------------------------- MANAGEMENT OTHER 12B-1 TOTAL MUTUAL FEES EXPENSES FEES FUND EXPENSES - ------------------------------------------------------------------------------------------------------------------- American Century Variable Portfolios, 0.90% 0.00% 0.00% 0.90% Inc. - American Century VP Balanced - ------------------------------------------------------------------------------------------------------------------- American Century Variable Portfolios, 0.98% 0.00% 0.00% 0.98% Inc. - American Century VP Capital Appreciation - ------------------------------------------------------------------------------------------------------------------- American Century Variable Portfolios, 0.70% 0.00% 0.00% 0.70% Inc. - American Century VP Income & Growth - ------------------------------------------------------------------------------------------------------------------- American Century Variable Portfolios, 1.23% 0.00% 0.00% 1.23% Inc. - American Century VP International - ------------------------------------------------------------------------------------------------------------------- American Century Variable Portfolios, 1.00% 0.00% 0.00% 1.00% Inc. - American Century VP Value - ------------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Trust - 1.14% 0.26% 0.00% 1.40% Global Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) - ------------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Trust - 1.00% 0.30% 0.00% 1.30% International Equity Portfolio (formerly, Warburg Pincus Trust - International Equity Portfolio) - ------------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Trust - 0.90% 0.21% 0.00% 1.11% Small Company Growth Portfolio (formerly, Warburg Pincus Trust - Small Company Growth Portfolio) - ------------------------------------------------------------------------------------------------------------------- Dreyfus Investment Portfolios - European 1.00% 0.25% 0.00% 1.25% Equity Portfolio - Initial Shares - ------------------------------------------------------------------------------------------------------------------- The Dreyfus Socially Responsible Growth 0.75% 0.03% 0.00% 0.78% 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% 0.03% 0.00% 0.78% Appreciation Portfolio - Initial Shares (formerly, Dreyfus Variable Investment Fund - Capital Appreciation Portfolio) - ------------------------------------------------------------------------------------------------------------------- Dreyfus Variable Investment Fund - Growth 0.75% 0.03% 0.00% 0.78% & Income Portfolio - Initial Shares - ------------------------------------------------------------------------------------------------------------------- Fidelity VIP Equity-Income Portfolio(1) 0.48% 0.08% 0.00% 0.56% - ------------------------------------------------------------------------------------------------------------------- Fidelity VIP Growth Portfolio(1) 0.57% 0.08% 0.00% 0.65% - ------------------------------------------------------------------------------------------------------------------- Fidelity VIP High Income Portfolio 0.58% 0.10% 0.00% 0.68% - ------------------------------------------------------------------------------------------------------------------- Fidelity VIP Overseas Portfolio(1) 0.72% 0.17% 0.00% 0.89% - ------------------------------------------------------------------------------------------------------------------- Fidelity VIP II Asset Manager Portfolio 0.53% 0.08% 0.00% 0.61% - ------------------------------------------------------------------------------------------------------------------- Fidelity VIP II Contrafund(R) 0.57% 0.09% 0.00% 0.66% Portfolio(1) - ------------------------------------------------------------------------------------------------------------------- Fidelity VIP III Growth Opportunities 0.58% 0.10% 0.00% 0.68% Portfolio - ------------------------------------------------------------------------------------------------------------------- Janus Aspen Series - Capital Appreciation 0.65% 0.02% 0.25% 0.92% Portfolio: Service Shares - ------------------------------------------------------------------------------------------------------------------- Janus Aspen Series - Global Technology 0.65% 0.04% 0.25% 0.94% Portfolio: Service Shares - ------------------------------------------------------------------------------------------------------------------- Janus Aspen Series - International Growth 0.65% 0.06% 0.25% 0.96% Portfolio: Service Shares - ------------------------------------------------------------------------------------------------------------------- NSAT Capital Appreciation Fund 0.60% 0.20% 0.00% 0.80% - ------------------------------------------------------------------------------------------------------------------- NSAT Dreyfus NSAT Mid Cap Index Fund 0.50% 0.15% 0.00% 0.65% (formerly NSAT Nationwide Mid Cap Index Fund) - -------------------------------------------------------------------------------------------------------------------
7 11
- ------------------------------------------------------------------------------------------------------------------- MANAGEMENT OTHER 12b-1 TOTAL MUTUAL FEES EXPENSES FEES FUND EXPENSES - ------------------------------------------------------------------------------------------------------------------- NSAT Gartmore NSAT Emerging Markets Fund 1.15% 0.60% 0.00% 1.75% - ------------------------------------------------------------------------------------------------------------------- NSAT Gartmore NSAT Global Technology and 0.98% 0.37% 0.00% 1.35% Communications Fund - ------------------------------------------------------------------------------------------------------------------- NSAT Gartmore NSAT International Growth 1.00% 0.60% 0.00% 1.60% Fund - ------------------------------------------------------------------------------------------------------------------- NSAT Government Bond Fund 0.50% 0.16% 0.00% 0.66% - ------------------------------------------------------------------------------------------------------------------- NSAT MAS NSAT Multi Sector Bond Fund 0.75% 0.15% 0.00% 0.90% (formerly, NSAT Nationwide Multi Sector Bond Fund) - ------------------------------------------------------------------------------------------------------------------- NSAT Money Market Fund 0.39% 0.16% 0.00% 0.55% - ------------------------------------------------------------------------------------------------------------------- NSAT Nationwide Small Cap Growth Fund 1.10% 0.20% 0.00% 1.30% - ------------------------------------------------------------------------------------------------------------------- NSAT Nationwide Small Cap Value Fund 0.90% 0.15% 0.00% 1.05% - ------------------------------------------------------------------------------------------------------------------- NSAT Nationwide Small Company Fund 0.93% 0.28% 0.00% 1.21% - ------------------------------------------------------------------------------------------------------------------- NSAT Strong NSAT Mid Cap Growth Fund 0.90% 0.10% 0.00% 1.00% (formerly, NSAT Nationwide Strategic Growth Fund) - ------------------------------------------------------------------------------------------------------------------- NSAT Total Return Fund 0.58% 0.20% 0.00% 0.78% - ------------------------------------------------------------------------------------------------------------------- NSAT Turner NSAT Growth Focus Fund 0.90% 0.45% 0.00% 1.35% - ------------------------------------------------------------------------------------------------------------------- Neuberger Berman AMT Growth Portfolio 0.82% 0.08% 0.00% 0.90% - ------------------------------------------------------------------------------------------------------------------- Neuberger Berman AMT Guardian Portfolio 0.85% 0.15% 0.00% 1.00% - ------------------------------------------------------------------------------------------------------------------- Neuberger Berman AMT Limited Maturity 0.65% 0.11% 0.00% 0.76% Bond Portfolio - ------------------------------------------------------------------------------------------------------------------- Neuberger Berman AMT Partners Portfolio 0.82% 0.10% 0.00% 0.92% - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - 0.62% 0.02% 0.00% 0.64% Oppenheimer Aggressive Growth Fund/VA - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - 0.72% 0.04% 0.00% 0.76% Oppenheimer Bond Fund/VA - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - 0.64% 0.03% 0.00% 0.67% Oppenheimer Capital Appreciation Fund/VA (formerly, Oppenheimer Variable Account Funds - Oppenheimer Growth Fund) - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - 0.64% 0.04% 0.00% 0.68% Oppenheimer Global Securities Fund/VA - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - 0.70% 0.03% 0.00% 0.73% Oppenheimer Main Street Growth & Income Fund/VA - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Variable Account Funds - 0.72% 0.04% 0.00% 0.76% Oppenheimer Multiple Strategies Fund/VA - ------------------------------------------------------------------------------------------------------------------- Strong Opportunity Fund II, Inc. 1.00% 0.11% 0.00% 1.11% (formerly, Strong Special Fund II, Inc.) - ------------------------------------------------------------------------------------------------------------------- Strong Variable Insurance Funds, Inc. - 1.00% 0.16% 0.00% 1.16% International Stock Fund II - ------------------------------------------------------------------------------------------------------------------- Strong Variable Insurance Funds, Inc. - 1.00% 0.22% 0.00% 1.22% Strong Discovery Fund II, Inc. - ------------------------------------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. - 0.59% 0.81% 0.00% 1.40% Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio) - ------------------------------------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. 0.74% 0.36% 0.00% 1.10% U. S. Real Estate Portfolio - -------------------------------------------------------------------------------------------------------------------
8 12
- ------------------------------------------------------------------------------------------------------------------- MANAGEMENT OTHER 12b-1 TOTAL MUTUAL FEES EXPENSES FEES FUND EXPENSES - ------------------------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance Trust - 1.00% 0.15% 0.00% 1.15% Worldwide Bond Fund - ------------------------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance Trust - 1.00% 0.26% 0.00% 1.26% Worldwide Emerging Markets Fund - ------------------------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance Trust - 1.00% 0.14% 0.00% 1.14% Worldwide Hard Assets Fund - -------------------------------------------------------------------------------------------------------------------
(1)Actual Annual Class Operating expenses were lower because a portion of the brokerage commissions that the Fund paid was used to reduce the Fund's expenses, and/or because through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's custodian expenses. The expenses shown above are deducted by the underlying mutual fund before it provides Nationwide with the daily net asset value. Nationwide then deducts applicable variable account charges from the net asset value in calculating the unit value of the corresponding sub-account. The management fees and other expenses are more fully described in the prospectus for each underlying mutual fund. Information relating to the underlying mutual funds was provided by the underlying mutual funds and not independently verified by Nationwide. Some underlying mutual funds are subject to fee waivers and expense reimbursements. The following chart shows what the expenses would have been for such funds without fee waivers and expense reimbursements.
- ----------------------------------------------------------------------------------------------------------------------- Management Other 12b-1 Total Underlying Fees Expenses Fees Mutual Fund Expenses - ----------------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Trust - Global 1.25% 0.28% 0.00% 1.53% Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Global Post-Venture Capital Portfolio) (formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio) - ----------------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Trust - International 1.00% 0.32% 0.00% 1.32% Equity Portfolio (formerly, Warburg Pincus Trust - International Equity Portfolio) - ----------------------------------------------------------------------------------------------------------------------- Credit Suisse Warburg Pincus Trust - Small Company 0.90% 0.23% 0.00% 1.13% Growth Portfolio (formerly, Warburg Pincus Trust - Small Company Growth Portfolio) - ----------------------------------------------------------------------------------------------------------------------- Dreyfus Investment Portfolios - European Equity 1.00% 0.60% 0.00% 1.60% Portfolio - Initial Shares - ----------------------------------------------------------------------------------------------------------------------- NSAT Capital Appreciation Fund 0.60% 0.23% 0.00% 0.83% - ----------------------------------------------------------------------------------------------------------------------- NSAT Dreyfus NSAT Mid Cap Index Fund (formerly, 0.50% 0.40% 0.00% 0.90% NSAT Nationwide Mid Cap Index Fund) - ----------------------------------------------------------------------------------------------------------------------- NSAT Gartmore NSAT Emerging Markets Fund 1.15% 2.94% 0.00% 4.09% - ----------------------------------------------------------------------------------------------------------------------- NSAT Gartmore NSAT Global Technology and 0.98% 1.59% 0.00% 2.57% Communications Fund - ----------------------------------------------------------------------------------------------------------------------- NSAT Gartmore NSAT International Growth Fund 1.00% 1.88% 0.00% 2.88% - ----------------------------------------------------------------------------------------------------------------------- NSAT Government Bond Fund 0.50% 0.23% 0.00% 0.73% - ----------------------------------------------------------------------------------------------------------------------- NSAT MAS NSAT Multi Sector Bond Fund (formerly, 0.75% 0.34% 0.00% 1.09% NSAT Nationwide Multi Sector Bond Fund) - ----------------------------------------------------------------------------------------------------------------------- NSAT Money Market Fund 0.39% 0.22% 0.00% 0.61% - ----------------------------------------------------------------------------------------------------------------------- NSAT Nationwide Small Cap Growth Fund 1.10% 0.50% 0.00% 1.60% - ----------------------------------------------------------------------------------------------------------------------- NSAT Nationwide Small Cap Value Fund 0.90% 0.30% 0.00% 1.20% - ----------------------------------------------------------------------------------------------------------------------- NSAT Strong NSAT Mid Cap Growth Fund (formerly, 0.90% 0.27% 0.00% 1.17% NSAT Nationwide Strategic Growth Fund) - ----------------------------------------------------------------------------------------------------------------------- NSAT Total Return Fund 0.58% 0.23% 0.00% 0.81% - ----------------------------------------------------------------------------------------------------------------------- NSAT Turner NSAT Growth Focus Fund 0.90% 4.13% 0.00% 5.03% - -----------------------------------------------------------------------------------------------------------------------
9 13
- ----------------------------------------------------------------------------------------------------------------------- Management Other 12b-1 Total Underlying Fees Expenses Fees Mutual Fund Expenses - ----------------------------------------------------------------------------------------------------------------------- Strong Opportunity Fund II, Inc. (formerly, Strong 1.00% 0.18% 0.00% 1.18% Special Fund II, Inc.) - ----------------------------------------------------------------------------------------------------------------------- Strong Variable Insurance Funds, Inc. - 1.00% 0.58% 0.00% 1.58% International Stock Fund II - ----------------------------------------------------------------------------------------------------------------------- Strong Variable Insurance Funds, Inc. - Strong 1.00% 0.25% 0.00% 1.25% Discovery Fund II, Inc. - ----------------------------------------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. - Emerging 0.80% 0.81% 0.00% 1.61% Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt Portfolio) - ----------------------------------------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. - U. S. 0.80% 0.36% 0.00% 1.16% Real Estate Portfolio - ----------------------------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance Trust - Worldwide Bond 1.00% 0.21% 0.00% 1.21% Fund - ----------------------------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.33% 0.00% 1.33% Emerging Markets Fund - ----------------------------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance Trust - Worldwide Hard 1.00% 0.16% 0.00% 1.16% Assets Fund - -----------------------------------------------------------------------------------------------------------------------
10 14 SYNOPSIS OF THE POLICIES The policy offered by this prospectus provides for life insurance coverage on two insureds. The death benefit and cash value of the policy may increase or decrease to reflect the performance of the investment options chosen by the policy owner. The death benefit is paid on the death of the last surviving insured (see "Death Benefit Information"). CASH SURRENDER VALUE If the policy is terminated during the insured's lifetime, a cash surrender value may be payable under the policy. However, there is no guaranteed cash surrender value (see "Variation in Cash Value "). The policy will lapse without value if the cash surrender value falls below what is needed to cover policy charges, and neither death benefit guarantee is in effect (see "Grace Period"). PREMIUMS The minimum initial premium for which a policy may be issued is shown on the policy data page. Each premium payment must be at least $50. Additional premium payments may be made at any time while the policy is in force, subject to certain restrictions (see "Premium Payments"). TAXATION The policies described in this prospectus meet the definition of "life insurance" under Section 7702 of the Internal Revenue Code. Nationwide will monitor compliance with the tests provided by Section 7702 to insure the policies continue to receive this favored tax treatment (see "Tax Matters"). NONPARTICIPATING POLICIES The policies are nonparticipating policies on which no dividends are payable. The policies do not share in the profits or surplus earnings of Nationwide. RIDERS A rider may be added to the policy (availability varies by state). Riders currently include: - - a Maturity Extension Endorsement; - - a Policy Split Option (see "Taxation of Policy Split Option Rider"); and - - a Estate Protection. POLICY CANCELLATION Policy owners may return the policy for any reason within certain time periods and Nationwide will refund the policy value or the amount required by law (see "Right to Revoke"). NATIONWIDE LIFE INSURANCE COMPANY Nationwide is a stock life insurance company organized under the laws of the State of Ohio in March 1929 with its home office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide is a provider of life insurance, annuities and retirement products. It is admitted to do business in all states, the District of Columbia and Puerto Rico. CUSTODIAN OF ASSETS Nationwide serves as the custodian of the assets of the variable account. OTHER CONTRACTS ISSUED BY NATIONWIDE Nationwide offers variable contracts and policies with benefits which vary in accordance with the investment experience of a separate account of Nationwide. NATIONWIDE INVESTMENT SERVICES CORPORATION The policies are distributed by Nationwide Investment Services Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio 43215. (For policies issued in the State of Michigan, all references to NISC will mean Nationwide Investment Svcs. Corporation.) NISC is a wholly owned subsidiary of Nationwide. INVESTING IN THE POLICY THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS Nationwide VLI Separate Account-2 is a separate account that invests in the underlying mutual fund options listed in Appendix A. Nationwide established the separate account on May 7, 1987, pursuant to Ohio law. Although the separate account is registered with the SEC as a unit investment trust pursuant to the Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise the management of Nationwide or the variable account. Income, gains, and losses credited to, or charged against the variable account reflect the variable account's own investment experience and not the investment experience of Nationwide's other assets. The variable account's assets are held separately from Nationwide's assets and are not chargeable with liabilities incurred in any other business of Nationwide. Nationwide is obligated to pay all amounts promised to policy owners under the policies. 11 15 The variable account is divided into sub-accounts. Policy owners elect to have net premiums allocated among the sub-accounts and the fixed account at the time of application. Nationwide uses the assets of each sub-account to buy shares of the underlying mutual funds based on policy owner instructions. A policy's investment performance depends upon the performance of the underlying mutual fund options chosen by the policy owner. Each underlying mutual fund's prospectus contains more detailed information about that fund. Prospectuses for the underlying mutual funds should be read in conjunction with this prospectus. Underlying mutual funds in the variable account are NOT publicly traded mutual funds. The underlying mutual fund options 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. The investment advisers of the underlying mutual funds may manage publicly traded mutual funds with similar names and investment objectives. However, the underlying mutual funds are NOT directly related to any publicly traded mutual fund. Policy owners should not compare the performance of a publicly traded fund with the performance of underlying mutual funds participating in the variable account. The performance of the underlying mutual funds could differ substantially from that of any publicly traded funds. CHANGES OF INVESTMENT POLICY Nationwide may materially change the investment policy of the variable account. Nationwide must inform policy owners and obtain all necessary regulatory approvals. Any change must be submitted to the various state insurance departments which may disapprove it if deemed detrimental to the interests of the policy owners or if it renders Nationwide's operations hazardous to the public. If a policy owner objects, the policy may be converted to a substantially comparable general account life insurance policy offered by Nationwide. The policy owner has the later of 60 days (6 months in Pennsylvania) from the date of the investment policy change or 60 days (6 months in Pennsylvania) from being informed of the change to make the conversion. Nationwide will not require evidence of insurability for this conversion. The new policy will not be affected by the investment experience of any separate account. The new policy will be for an amount of insurance not exceeding the death benefit of the policy converted on the date of the conversion. VOTING RIGHTS Policy owners who have allocated assets to the underlying mutual funds are entitled to certain voting rights. Nationwide will vote policy owner shares at special shareholder meetings based on policy owner instructions. However, if the law changes allowing Nationwide to vote in its own right, it may elect to do so. Policy owners with voting interests in an underlying mutual fund will be notified of issues requiring the shareholder's vote as soon as possible before the shareholder meeting. Notification will contain proxy materials, and a form to return to Nationwide with voting instructions. Nationwide will vote shares for which no instructions are received in the same proportion as those that are received. The number of shares which a policy owner may vote is determined by dividing the cash value of the amount they have allocated to an underlying mutual fund by the net asset value of that underlying mutual fund. Nationwide will designate a date for this determination not more than 90 days before the shareholder meeting. SUBSTITUTION OF SECURITIES Nationwide may substitute, eliminate and/or combine shares of another underlying mutual fund for shares already purchased or to be purchased in the future if either of the following occur: 1) shares of a current underlying mutual fund option are no longer available for investment; or 2) further investment in an underlying mutual fund option is inappropriate. No substitution, elimination, and/or combination of shares may take place without the prior approval of the SEC and state insurance departments. MATERIAL CONFLICTS The underlying mutual funds may be offered through separate accounts of other insurance companies, as well as through other separate accounts of Nationwide. Nationwide does not anticipate any disadvantages to this. However, it is possible that a conflict may arise between the interests of the variable account and one or more of the other separate accounts in which these underlying mutual funds participate. Material conflicts may occur due to a change in law affecting the operations of variable life insurance policies and variable annuity contracts, or differences in the voting instructions of the policy owners and those of other companies. If a material conflict occurs, 12 16 Nationwide will take whatever steps are necessary to protect policy owners, including withdrawal of the variable account from participation in the underlying mutual fund(s) involved in the conflict. THE FIXED ACCOUNT The fixed account is an investment option that is funded by assets of Nationwide's general account. The general account contains all of Nationwide's assets other than those in this and other Nationwide separate accounts. The general account is used to support Nationwide's annuity and insurance obligations and may contain compensation for mortality and expense risks. The investment income earned by the fixed account will be allocated to the policy at varying rate(s) set by Nationwide. Under exemptive and exclusionary provisions, Nationwide's general account has not been registered under the Securities Act of 1933 and has not been registered as an investment company under the Investment Company Act of 1940. Accordingly, neither the general account nor any interest therein is subject to the provisions of these Acts. Nationwide has been advised that the staff of the SEC has not reviewed the disclosures in this prospectus relating to the fixed account. Disclosures regarding the general account may, however, be subject to certain general applicable provisions of the federal securities law concerning the accuracy and completeness of statements made in prospectuses. Premiums will be allocated to the fixed account by election of the policy owner. The guaranteed rate for any premiums will be effective for not less than twelve months. Nationwide guarantees that the rate will not be less than 4.0% per year. Any interest in excess of 4.0% will be credited to fixed account allocations at Nationwide's sole discretion. The policy owner assumes the risk that interest credited to fixed account allocations may not exceed the minimum guarantee of 4.0% for any given year. New premiums deposited to the policy and allocated to the fixed account may receive a different rate of interest than amounts transferred from the sub-accounts to the fixed account and amounts maturing in the fixed account. INFORMATION ABOUT THE POLICIES MINIMUM REQUIREMENTS FOR POLICY ISSUANCE This policy provides life insurance coverage with the flexibility to vary the amount and frequency of premium payments. At policy issuance, the policy owner selects the premium and specified amount. The minimum specified amount is $100,000. The specified amount consists of basic coverage and any supplemental coverage chosen by the policy owner. Supplemental coverage is irrevocable once elected. Supplemental coverage cannot exceed 90% of the specified amount. Supplemental coverage differs from basic coverage in several ways: 1) supplemental coverage has lower cost of insurance rates on a current basis; 2) supplemental coverage has no surrender charges; and 3) supplemental coverage has no monthly per unit charge on a current basis. Supplemental coverage is not available in New York. PREMIUM PAYMENTS Each premium payment must be at least, $50. The initial premium is payable in full at Nationwide's home office or to an authorized agent of Nationwide. Upon payment of the initial premium, temporary insurance may be provided. Issuance of the continuing insurance coverage is dependent upon completion of all underwriting requirements, payment of initial premium, and delivery of the policy while the insured is still living. Additional premium payments may be made at any time while the policy is in force, subject to the following conditions: - Nationwide may require satisfactory evidence of insurability before accepting any additional premium payment which results in an increase in the net amount at risk; - premium payments in excess of the premium limit established by the IRS to qualify the policy as a contract for life insurance will be refunded; and - Nationwide may require policy indebtedness be repaid prior to accepting any additional premium payments. Additional premium payments or other changes to the policy may jeopardize the policy's non-modified endowment status. Nationwide will monitor premiums paid and other policy transactions and will notify the policy owner when non-modified endowment contract status is in jeopardy. PRICING Premiums will not be priced when the New York Stock Exchange is closed or on the following nationally recognized holidays: 13 17 - - New Year's Day - - Martin Luther King, Jr. Day - - Presidents' Day - - Good Friday - - Memorial Day - - Independence Day - - Labor Day - - Thanksgiving - - Christmas Nationwide also will not price premium payments if: 1) trading on the New York Stock Exchange is restricted; 2) an emergency exists making disposal or valuation of securities held in the variable account impracticable; or 3) the SEC, by order, permits a suspension or postponement for the protection of security holders. Rules and regulations of the SEC will govern as to when the conditions described in (2) and (3) exist. If Nationwide is closed on days when the New York Stock Exchange is open, contract value may be affected since the policy owner would not have access to their account. POLICY CHARGES SALES LOAD Nationwide deducts a sales load from each premium payment received. The sales load is guaranteed not to exceed 5.0% of each premium payment during the first 10 years or 1.5% of premium payments thereafter. Currently, the sales load is 5.0% during the first 10 years and 0% thereafter. For policies issued in the State of New York, the sales load is currently 9.5% and guaranteed not to exceed 9.5% in policy years 1-10. Beginning in year 11, the sales load is currently 4.5% and guaranteed not to exceed 6% currently. The total sales load actually deducted from any policy will be equal to the sum of this front-end sales load plus any sales surrender charge. The sales load will include the portion of increase charges related to distribution expenses for increases in specified amount. TAX EXPENSE CHARGE A charge equal to 3.5% is deducted from each premium payment, when each premium payment is received, in order to compensate Nationwide for certain administrative expenses which are incurred by Nationwide for taxes, which include premium or other taxes imposed by various state and local jurisdictions, as well as and for federal taxes imposed under Section 848 of the Internal Revenue Code. These expenses consist of two components: 1) a tax rate of 2.25% for state and local premium or other taxes; and 2) a tax rate of 1.25% for federal taxes. The amount charged may be more or less than the amount actually assessed by the state in which a particular policy owner lives. Nationwide does not expect to make a profit from these charges. SURRENDER CHARGES Nationwide deducts a surrender charge from the cash value in each sub-account and the fixed account of any policy surrendered during the first 14 years. If the average issue age is 75 or older, the surrender charge only applies for the first 9 years. The maximum initial surrender charge varies by issue age, sex, specified amount and underwriting classification. The surrender charge is calculated based on the initial basic coverage. The following table illustrates the maximum surrender charge per $1,000 of initial basic coverage for policies based on: - - $1 million specified amount; - - male non-tobacco preferred; and - - female non-tobacco other than preferred basis.
- -------------------------------------------------------------------------------- AVERAGE ISSUE AGE SURRENDER CHARGE PER $1,000 OF INITIAL BASIC COVERAGE - -------------------------------------------------------------------------------- 35/35 $ 5.54 - -------------------------------------------------------------------------------- 45/45 $ 8.51 - -------------------------------------------------------------------------------- 55/55 $11.30 - -------------------------------------------------------------------------------- 65/65 $15.82 - -------------------------------------------------------------------------------- 75/75 $23.34 - --------------------------------------------------------------------------------
See Appendix B for specific examples. The surrender charge is comprised of two components: - - an underwriting component; and - - sales component. The underwriting component varies by average issue age in the following manner: $1,000 OF INITIAL BASIC COVERAGE
- -------------------------------------------------------------------------------- UNDERWRITING SURRENDER AVERAGE ISSUE AGE CHARGE PER $1,000 OF INITIAL BASIC COVERAGE - -------------------------------------------------------------------------------- 0-39 $4.00 - -------------------------------------------------------------------------------- 40-49 $6.00 - -------------------------------------------------------------------------------- 50-59 $7.00 - -------------------------------------------------------------------------------- 60-85 $8.00 - --------------------------------------------------------------------------------
The underwriting component is designed to cover the administrative expenses associated with underwriting and issuing policies, including the costs of: - processing applications; 14 18 - conducting medical exams; - determining insurability and the insured's underwriting class; and - establishing policy records. The remainder of the surrender charge that is not attributable to the underwriting component represents the sales component. In no event will this component exceed 23.75% of the lesser of the SEC Guideline Level Premium in the first year or the premiums actually paid in the first year. The purpose of the sales component is to reimburse Nationwide for expenses incurred in the distribution of the policies. The following table illustrates the maximum surrender charge per $1,000 of initial basic coverage for policies based on: - - male non-tobacco preferred; and - - female non-tobacco other than preferred basis.
- -------------------------------------------------------------------------------- SURRENDER CHARGE PER AVERAGE ISSUE AGE $1,000 OF INITIAL BASIC COVERAGE - -------------------------------------------------------------------------------- 35/35 $ 1.54 - -------------------------------------------------------------------------------- 45/45 $ 2.51 - -------------------------------------------------------------------------------- 55/55 $ 4.30 - -------------------------------------------------------------------------------- 65/65 $ 7.82 - -------------------------------------------------------------------------------- 75/75 $15.34 - --------------------------------------------------------------------------------
Nationwide does not expect to profit from these charges. The surrender charge may be insufficient to recover certain expenses related to the sale of the policies. Unrecovered expenses are borne by Nationwide's general assets which may include profits, if any, from mortality and expense risk charges. Additional premiums and/or income earned on assets in the variable account have no effect on these charge. REDUCTIONS TO SURRENDER CHARGES The surrender charge is reduced in subsequent policy years in the following manner:
- -------------------------------------------------------------------------------- POLICY YEAR SURRENDER CHARGE AS A % OF INITIAL SURRENDER CHARGE - -------------------------------------------------------------------------------- 1 100% - -------------------------------------------------------------------------------- 2 100% - -------------------------------------------------------------------------------- 3 90% - -------------------------------------------------------------------------------- 4 80% - -------------------------------------------------------------------------------- 5 70% - -------------------------------------------------------------------------------- 6 60% - -------------------------------------------------------------------------------- 7 45% - -------------------------------------------------------------------------------- 8 30% - -------------------------------------------------------------------------------- 9 15% - -------------------------------------------------------------------------------- 10+ 0% - --------------------------------------------------------------------------------
Note: The surrender charge period is 14 years in Pennsylvania and 10 years in Florida. MONTHLY COST OF INSURANCE The monthly cost of insurance charge is determined in a manner that reflects the anticipated mortality of the two insureds and the fact that the death benefit is not payable until the death of the second insured to die. The monthly cost of insurance charge for each policy month is determined by multiplying the monthly cost of insurance rate by the net amount at risk. The net amount at risk is the difference between the death benefit and the policy's cash value, each calculated at the beginning of the policy month. This deduction is charged proportionately to the cash value in each sub-account and the fixed account. Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates are based on the 1980 Commissioner's Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO). Rates for policies issued on a substandard basis are based on appropriate multiples of the 1980 CSO. These mortality tables are sex distinct. Separate mortality tables are used for tobacco and non-tobacco. The rate class of an insured may affect the cost of insurance rate. Nationwide currently places insureds into both standard rate classes and substandard rate classes that involve a higher mortality risk. In an otherwise identical policy, an insured in the standard rate class will have a lower cost of insurance than an insured in a rate class with higher mortality risks. MONTHLY ADMINISTRATIVE EXPENSE CHARGE Nationwide deducts a monthly administrative expense charge proportionately to the cash value in each sub-account and the fixed. This charge reimburses Nationwide for certain actual expenses related to maintenance of the policies including accounting and record keeping, and periodic reporting to policy owners. Nationwide does not expect to recover any amount in excess of aggregate maintenance expenses from this charge. Currently, this charge is the sum of the per policy charge and the per $1,000 basic coverage charge as set forth below:
- -------------------------------------------------------------------------------- POLICY YEAR(S) PER PER $1,000 POLICY BASIC COVERAGE - -------------------------------------------------------------------------------- 1-10 $10.00 $0.04 but not less than $20.00 or more than $80 per policy - -------------------------------------------------------------------------------- 11 and After $ 5.00 $0.02 but not less than $10.00 or more than $40 per policy - --------------------------------------------------------------------------------
15 19 The charge for year 11 and after may be increased at the sole discretion of Nationwide but may not exceed the charge for years 1-10. After a change in specified amount, the per $1,000 portion of the monthly administrative expense charge is based on the new basic coverage in effect. For policies issued in the State of New York, this per policy charge is equal to $7.50 per month in all years, both currently and guaranteed. The monthly per $1,000 basic coverage charge in the State of New York is $0.04 per $1,000 in the first year only, subject to a minimum of $20 and a maximum of $80 per policy, currently and guaranteed and $0 thereafter. MORTALITY AND EXPENSE RISK CHARGE Nationwide assumes certain risks for guaranteeing the mortality and expense charges. The mortality risk assumed under the policies is that the insured may not live as long as expected. The expense risk is that the actual expenses incurred in issuing and administering the policies may be greater than expected. In addition, Nationwide assumes risks associated with the non-recovery of policy issue, underwriting and other administrative expenses due to policies that lapse or are surrendered in the early policy years. Nationwide deducts the daily mortality and expense risk charge proportionately from the cash value in each sub-account. The charge is equivalent to an annualized rate of 0.80% for policy years 1-10. This charge varies starting at the beginning of policy year 11 depending upon the amount of the cash value. If cash value is less than $25,000, the mortality and expense risk charge will remain at 0.80%. If cash value is between $25,000 and $99,999, the charge will be reduced to an equivalent to an annualized rate of 0.50%. If cash value equals or exceeds $100,000, then the charge will be an equivalent to an annualized rate of 0.30%. Policy owners receive quarterly and annual statements, advising policy owners of the cancellation of accumulation units for mortality and expense risk charges. In New York the annualized rate is 0.80% in years 1-10 and 0.50% beginning in year 11, regardless of cash value. All charges are guaranteed. Nationwide may realize a profit from policy charges. INCOME TAX No charge is assessed to policy owners for income taxes incurred by Nationwide as a result of the operations of the sub-accounts. However, Nationwide reserves the right to assess a charge for income taxes against the variable account if income taxes are incurred. REDUCTION OF CHARGES The policy is available for purchase by individuals, corporations and other groups. Nationwide may reduce or eliminate certain charges (sales load, surrender charge, monthly administrative charge, monthly cost of insurance charge, or other charges), where the size or nature of the group results in savings in sales, underwriting, administrative or other costs, to Nationwide. These charges may be reduced in certain group or sponsored arrangements made available by Nationwide, (including employees of Nationwide and their families). Eligibility for reduction in charges and the amount of any reduction is determined by a number of factors, including: - the number of insureds; - the total premium expected to be paid; - total assets under management for the policy owner; - the nature of the relationship among individual insureds; - the purpose for which the policies are being purchased; - the expected persistency of individual policies; and - any other circumstances which are rationally related to the expected reduction in expenses. The extent and nature of reductions may change from time to time. The charge structure may vary. Variations are determined in a manner not unfairly discriminatory to policy owners which reflect differences in costs of services. SURRENDERING THE POLICY FOR CASH SURRENDER (REDEMPTION) Policies may be surrendered for the cash surrender value any time while the insured is living. The cancellation will be effective as of the date Nationwide receives the policy accompanied by a signed, written request for cancellation. Nationwide may require the policy owner's signature to be guaranteed by a member firm of the New York, American, Boston, Midwest, Philadelphia or Pacific Stock Exchanges, or by a commercial bank or a savings and loan, which is a member of the Federal Deposit Insurance Corporation. In some cases, Nationwide may require additional documentation of a customary nature. Nationwide is required by state law to reserve the right to postpone payment of assets in the fixed account for a 16 20 period of up to 6 months from the date of the surrender request. CASH SURRENDER VALUE The cash surrender value increases or decreases daily to reflect the investment experience of the variable account and the daily crediting of interest in the fixed account and the policy loan account. The cash surrender value equals the policy's cash value, next computed after the date Nationwide receives a proper written request for surrender and the policy, minus any charges, indebtedness or other deductions due on that date, which may also include a surrender charge. PARTIAL SURRENDERS After the policy has been in force for one year, the policy owner may request a partial surrender. Partial surrenders are permitted if they satisfy the following requirements: 1) the minimum partial surrender is $500; 2) partial surrenders may not reduce the specified amount to less than $100,000 (the minimum issue amount); 3) the maximum partial surrender is equal to the available cash surrender value less the greater of $500 and three monthly deductions; 4) after the partial surrender, the policy continues to qualify as life insurance. When a partial surrender is made, the cash value will be reduced by the amount of the partial surrender. Under Death Benefit Option 1, the specified amount is reduced by the amount of the partial surrender. Basic and supplemental specified amounts are reduced proportionally. Partial surrender amount are deducted from the sub-accounts. Partial surrender amounts will only be deducted from the fixed account if the values of the variable account are less than the requested surrender amount. Nationwide reserves the right to limit the number of partial surrenders each policy year. Currently Nationwide does not charge a fee for partial surrenders but reserves the right to charge a fee for each partial surrender. The fee would be no more than the lesser of $25 or 2% of the amount of the partial surrender. Certain partial surrenders may result in currently taxable income and tax penalties. INCOME TAX WITHHOLDING Federal law requires Nationwide to withhold income tax from any portion of surrender proceeds subject to tax. Nationwide will withhold income tax unless the policy owner advises Nationwide, in writing, of his or her request not to withhold. If a policy owner requests that taxes not be withheld, or if the taxes withheld are insufficient, the policy owner may be liable for payment of an estimated tax. Policy owners should consult a tax adviser. VARIATION IN CASH VALUE On any date during the policy year, the cash value equals; 1) the cash value on the preceding valuation period; plus 2) any net premium applied since the previous valuation period; minus 3) any partial surrenders; plus or minus 4) any investment results, minus 5) any surrender charge for decreases in specified amount, less 6) any policy charges. There is no guaranteed cash value. The cash value will vary with the investment experience of the variable account and/or the daily crediting of interest in the fixed account and policy loan account depending on the allocation of cash value by the policy owner. ERROR IN AGE OR SEX If the age or sex of either insured is misstated, the affected benefits will be adjusted by the ratio of the last deduction for cost of insurance to the deduction for cost of insurance based on the correct age and sex. POLICY PROVISIONS POLICY OWNER While the insured is living, all rights in this policy are vested in the policy owner named in the application or as subsequently changed, subject to assignment, if any. The policy owner may name a contingent policy owner or a new policy owner while the insured is living. Any change must be in a written form satisfactory to Nationwide and recorded at Nationwide's home office. Once recorded, the change will be effective when signed. The change will not affect any payment made or action taken by Nationwide before it was recorded. Nationwide may require that the policy be submitted for endorsement before making a change. If the policy owner dies before both insureds have died, and there is no contingent policy owner, the policy 17 21 owner's rights in this policy will belong to the policy owner's estate. BENEFICIARY The beneficiary(ies) will be as named in the application or as subsequently changed, subject to assignment, if any. The policy owner may name a new beneficiary while the insured is living. Any change must be in a written form satisfactory to Nationwide and recorded at Nationwide's home office. Once recorded, the change will be effective when signed. The change will not affect any payment made or action taken by Nationwide before it was recorded. If any beneficiary predeceases the insured, that beneficiary's interest passes to any surviving beneficiary(ies), unless otherwise provided. Multiple beneficiaries will be paid in equal shares, unless otherwise provided. If no named beneficiary survives the insured, the death proceeds will be paid to the policy owner or the policy owner's estate. CHANGES IN EXISTING INSURANCE COVERAGE The policy owner may request certain changes in the insurance coverage under the policy. Requests must be in writing and received by Nationwide. No change will take effect unless the cash surrender value after the change is sufficient to keep the policy in force for at least 3 months. The effective date for approved changes is the monthly anniversary date next following the approval. Basic and supplemental coverage will change proportionally. Nationwide reserves the right to limit specified amount changes to one each policy year. Specified Amount Increases After the first policy year, the policy owner may request an increase to the specified amount. Any increase will be subject to the following conditions: 1) satisfactory evidence of insurability of both insureds must be provided; 2) the increase must be for a minimum of $10,000; and 3) age limits are the same as for a new issue. Specified Amount Decreases After the first policy year, the policy owner may also request a decrease to the specified amount. Any decrease will reduce insurance in the following order: 1) against insurance provided by the most recent increase; 2) against the next most recent increases successively; and 3) against insurance provided under the original application. Nationwide will refuse a request for a decrease which would: 1) reduce the specified amount to less than the minimum issue amount; or 2) disqualify the policy as a contract for life insurance. OPERATION OF THE POLICY ALLOCATION OF NET PREMIUM AND CASH VALUE Nationwide allocates premium payments to sub-accounts or the fixed account, as instructed by policy owners. Shares of the underlying mutual funds allocated to the sub-accounts are purchased at net asset value, then converted into accumulation units. All percentage allocations must be in whole numbers, and must be at least 1%. The sum of allocations must equal 100%. Future premium allocations may be changed by giving written notice to Nationwide. Premiums allocated to sub-accounts on the application will be allocated to the NSAT Money Market Fund during the period that a policy owner can cancel the policy, unless a specific state requires premiums to be allocated to the fixed account. At the expiration of this cancellation period, these premiums are used to purchase shares of the underlying mutual funds specified by the policy owner at net asset value for the respective sub-account(s). The policy owner may change the allocation of net premiums or may transfer cash value from one sub-account to another. Changes are subject to the terms and conditions imposed by each underlying mutual fund and those found in this prospectus. Net premiums allocated to the fixed account at the time of application may not be transferred from the fixed account prior to the first policy anniversary (see "Transfers"). HOW THE INVESTMENT EXPERIENCE IS DETERMINED The accumulation unit value for a valuation period is determined by multiplying the accumulation unit value for each sub-account for the immediately preceding valuation period by the net investment factor for the sub-account for the subsequent valuation period. NET INVESTMENT FACTOR Net investment factor is determined by dividing (a) by (b) and subtracting (c) from the result where: 18 22 (a) is the sum of: (1) the net asset value of the underlying mutual fund held in the sub-account as of the end of the current valuation period; and (2) the per share amount of any dividend or capital gain distributions made by the underlying mutual fund (if the date of the dividend income distribution occurs during the current valuation period). (b) is the net asset value per share of the underlying mutual fund determined as of the end of the immediately preceding valuation period. (c) is a factor representing the daily mortality and expense risk charge. This charge varies starting at the beginning of policy year 11 depending upon the amount of the cash value (see "Mortality and Expense Risk Charge"). Based on the net investment factor, the value of an accumulation unit may increase or decrease. Charges in the net investment factor may not be directly proportional to changes in the net asset value of underlying mutual fund shares, because of the deduction for the mortality and expense risk charge or credit for tax reserves. Though the number of accumulation units will not change as a result of investment experience, the value of an accumulation unit may increase or decrease from valuation period to valuation period. DETERMINING THE CASH VALUE The cash value is the sum of the value of all variable account accumulation units attributable to the policy plus amounts credited to the fixed account and the policy loan account. The number of accumulation units credited to each sub-account is determined by dividing the net amount allocated to the sub-account by the accumulation unit value for the sub-account for the valuation period during which the premium is received by Nationwide. In the event part or all of the cash value is surrendered or charges or deductions are made against the cash value, an appropriate number of accumulation units from the variable account and an appropriate amount from the fixed account will be deducted in the same proportion that the policy owner's interest in the variable account and the fixed account bears to the total cash value. The cash value in the fixed account and the policy loan account is credited with interest daily at an effective annual rate which Nationwide periodically declares. The annual effective rate will never be less than 4%. (For a description of the annual effective credited rates, see "The Fixed Account" and "Policy Loans.") Upon request, Nationwide will inform the policy owner of the then applicable rates for each account. TRANSFERS Policy owners can transfer 100% of allocations without penalty or adjustment subject to the following conditions: - - Nationwide reserves the right to restrict transfers between the fixed account and the sub-accounts to one per policy year; - - transfers made to the fixed account may not be made in the first policy year; - - Nationwide reserves the right to restrict transfers from the fixed account to 25% of the cash value attributable to the fixed account; and - - Nationwide reserves the right to restrict transfers to the fixed account to 25% of cash value. Transfer Requests Nationwide will accept transfer requests in writing, over the telephone or via the internet. Nationwide will use reasonable procedures to confirm that instructions are genuine and will not be liable for following instructions it reasonably determined to be genuine. Nationwide may withdraw the telephone and/or internet exchange privilege upon 30 days written notice to policy owners. Market-Timing Firms Some policy owners may use market-timing firms or other third parties to make transfers on their behalf. Generally, in order to take advantage of perceived market trends, market-timing firms will submit transfer requests on behalf of multiple policy owners at the same time. Sometimes this can result in unusually large transfers of funds. These large transfers might interfere with the ability of Nationwide or the underlying mutual fund to process transactions. This can potentially disadvantage policy owners not using market-timing firms. To avoid this, Nationwide may modify the transfer rights of policy owners who use market-timing firms (or other third parties) to initiate transfers on their behalf. The transfer rights of individual policy owners will not be modified in any way when instructions are submitted directly by the policy owner, or by the policy owner's representative (as authorized by the execution of a valid Nationwide Limited Power of Attorney Form). 19 23 To protect policy owners, Nationwide may refuse transfer requests: - submitted by any agent acting under a power of attorney on behalf of more than one policy owner; or - submitted on behalf of individual policy owners who have executed pre-authorized exchange forms which are submitted by market-timing firms (or other third parties) on behalf of more than one policy owner at the same time. Nationwide will not restrict transfer rights unless Nationwide believes it to be necessary for the protection of all policy owners. RIGHT TO REVOKE A policy owner may cancel the policy by returning it by the latest of: - 10 days after receiving the policy; - 45 days after signing the application; or - 10 days after Nationwide delivers a Notice of Right of Withdrawal. The policy can be mailed to the registered representative who sold it, or directly to Nationwide. Returned policies are deemed void from the beginning. Nationwide will refund the amount prescribed by the state in which the policy was issued within 7 days after it receives the policy. This right varies by state. POLICY LOANS TAKING A POLICY LOAN The policy owner may take a policy loan at any time after the first policy anniversary using the policy as security. Maximum policy indebtedness is limited to 90% of the cash value of the variable account, less any surrender charges, less interest due on the next policy anniversary. The cash value less surrender charge is determined as of the loan date. Nationwide will not grant a loan for an amount less than $1,000. Policy indebtedness will be deducted from the death benefit, cash surrender value upon surrender, or the maturity proceeds. Any request for a policy loan must be in written form. The request must be signed and, where permitted, the signature guaranteed by a member firm of the New York, American, Boston, Midwest, Philadelphia or Pacific Stock Exchanges, or by a commercial bank or a savings and loan which is a member of the Federal Deposit Insurance Corporation. Certain policy loans may result in currently taxable income and tax penalties. A policy owner considering the use of policy loans in connection with his or her retirement income plan should consult his or her personal tax adviser regarding potential tax consequences that may arise if necessary payments are not made to keep the policy from lapsing. The amount of the payments necessary to prevent the policy from lapsing will increase with age. EFFECT ON INVESTMENT PERFORMANCE When a loan is made, an amount equal to the amount of the loan is transferred from the variable account to the policy loan account. If the assets relating to a policy are held in more than one sub-account, withdrawals from sub-accounts will be made in proportion to the assets in each sub-account at the time of the loan. Policy loans will be transferred from the fixed account only when sufficient amounts are not available in the sub-accounts. The amount taken out of the variable account will not be affected by the variable account's investment experience while the loan is outstanding. INTEREST Currently, policy loans are credited with an annual effective rate of 5.1% during policy years 2 through 14 and an annual effective rate of 6% during the 14th and subsequent policy years. Nationwide guarantees the rate will never be lower than 5.1%. Nationwide may change the current interest crediting rate on policy loans at any time at its sole discretion. The loan interest rate is 6% per year for all policy loans. If it is determined that such loans will be treated, as a result of the differential between the interest crediting rate and the loan interest rate, as taxable distributions under any applicable ruling, regulation, or court decision, Nationwide retains the right to increase the net cost (by decreasing the interest crediting rate) on all subsequent policy loans to an amount that would result in the transaction being treated as a loan under federal tax law. Amounts transferred to the policy loan account will earn interest daily from the date of transfer. The earned interest is transferred from the policy loan account to a variable account or the fixed account on each policy anniversary, at the time a new loan is requested or at the time of loan repayment. The earned interest will be allocated according to the fund allocation factors in effect at the time of the transfer. Interest is charged daily and is payable at the end of each policy year or at the time of loan repayment. Unpaid interest will be added to the existing policy indebtedness 20 24 as of the due date and will be charged interest at the same rate as the rest of the indebtedness. Whenever the total policy indebtedness exceeds the cash value less any surrender charges, Nationwide will send a notice to the policy owner and the assignee, if any. The policy will terminate without value 61 days after the mailing of the notice unless a sufficient repayment is made during that period. A repayment is sufficient if it is large enough to reduce the total policy indebtedness to an amount equal to the total cash value less any surrender charges plus an amount sufficient to continue the policy in force for 3 years. EFFECT ON DEATH BENEFIT AND CASH VALUE A policy loan, whether or not repaid, will have a permanent effect on the death benefit and cash value because the investment results of the variable account or the fixed account will apply only to the non-loaned portion of the cash value. The longer the loan is outstanding, the greater the effect is likely to be. Depending on the investment results of the variable account or the fixed account while the loan is outstanding, the effect could be favorable or unfavorable. REPAYMENT All or part of the indebtedness may be repaid at any time while the policy is in force during the insured's lifetime. Any payment intended as a loan repayment, rather than a premium payment, must be identified as such. Loan repayments will be credited to the sub-accounts and the fixed account in proportion to the policy owner's underlying mutual fund allocation factors in effect at the time of the repayment. Each repayment may not be less than $50. Nationwide reserves the right to require that any loan repayments resulting from policy loans transferred from the fixed account must be first allocated to the fixed account. ASSIGNMENT While the insured is living, the policy owner may assign his or her rights in the policy. The assignment must be in writing, signed by the policy owner and recorded at Nationwide's home office. Prior to being recorded, assignments will not affect any payments made or actions taken by Nationwide. Nationwide is not responsible for any assignment not submitted for recording, nor is Nationwide responsible for the sufficiency or validity of any assignment. Assignments are subject to any indebtedness owed to Nationwide before being recorded. POLICY OWNER SERVICES DOLLAR COST AVERAGING Dollar Cost Averaging is a long-term transfer program that allows you to make regular, level investments over time. It involves the automatic transfer of a specified amount from certain sub-accounts and the fixed account into other sub-accounts. Nationwide does not guarantee that this program will result in profit or protect policy owners from loss. Policy owners direct Nationwide to automatically transfer specified amounts from the fixed account, the Fidelity VIP High Income Portfolio, the NSAT Government Bond Fund, the NSAT Money Market Fund, and the Neuberger Berman AMT Limited Maturity Bond Portfolio. Transfers from the fixed account must be equal to or less than 1/30(th) of the fixed account value at the time the program is requested. Transfers occur monthly or on another frequency if permitted by Nationwide. Nationwide will process transfers until either the value in the originating investment option is exhausted, or the policy owner instructs Nationwide in writing to stop the transfers. Nationwide reserves the right to stop establishing new dollar cost averaging programs. Nationwide reserves the right to assess a processing fee for this service. DEATH BENEFIT INFORMATION CALCULATION OF THE DEATH BENEFIT At issue, the policy owner selects the premium and the specified amount which consists of the basic coverage and the supplemental coverage, if any (see "Underwriting and Insurance"). While the policy is in force, the death benefit will never be less than the specified amount. The death benefit may vary with the cash value of the policy, which depends on investment performance. The policy owner can choose one of two death benefit options: OPTION 1. The death benefit will be the greater of the specified amount or the Applicable Percentage of cash value (see below). Under Option 1, the amount of the death benefit will ordinarily not change for several years to reflect the investment performance and may not change at all. If investment performance is favorable, the amount of death benefit may increase. To see how and when investment performance will begin to affect death benefits, please see the illustrations. 21 25 OPTION 2. The death benefit will be the greater of the specified amount plus the cash value, or the Applicable Percentage of cash value. Under Option 2, the amount of the death benefit will vary directly with the investment performance. The term "Applicable Percentage" means the percentage shown in the "Applicable Percentage of Cash Value Table." The applicable percentage depends on whether the policy owner elected the Guideline Premium/Cash Value Corridor Test or the Cash Value Accumulation Test (see "Taxation of the Policy"). The following tables illustrate applicable percentages: APPLICABLE PERCENTAGES OF CASH VALUE-GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST
- ----------------------------------------------------------------------------------------------------------------- ATTAINED AGE PERCENTAGE ATTAINED AGE PERCENTAGE ATTAINED AGE PERCENTAGE OF YOUNGER OF CASH OF YOUNGER OF CASH OF YOUNGER OF CASH INSURED VALUE INSURED VALUE INSURED VALUE - ----------------------------------------------------------------------------------------------------------------- 0-40 250% 60 130% 80 105% - ----------------------------------------------------------------------------------------------------------------- 41 243% 61 128% 81 105% - ----------------------------------------------------------------------------------------------------------------- 42 236% 62 126% 82 105% - ----------------------------------------------------------------------------------------------------------------- 43 229% 63 124% 83 105% - ----------------------------------------------------------------------------------------------------------------- 44 222% 64 122% 84 105% - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- 45 215% 65 120% 85 105% - ----------------------------------------------------------------------------------------------------------------- 46 209% 66 119% 86 105% - ----------------------------------------------------------------------------------------------------------------- 47 203% 67 118% 87 105% - ----------------------------------------------------------------------------------------------------------------- 48 197% 68 117% 88 105% - ----------------------------------------------------------------------------------------------------------------- 49 191% 69 116% 89 105% - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- 50 185% 70 115% 90 105% - ----------------------------------------------------------------------------------------------------------------- 51 178% 71 113% 91 104% - ----------------------------------------------------------------------------------------------------------------- 52 171% 72 111% 92 103% - ----------------------------------------------------------------------------------------------------------------- 53 164% 73 109% 93 102% - ----------------------------------------------------------------------------------------------------------------- 54 157% 74 107% 94 101% - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- 55 150% 75 105% 95 101% - ----------------------------------------------------------------------------------------------------------------- 56 146% 76 105% 96 101% - ----------------------------------------------------------------------------------------------------------------- 57 142% 77 105% 97 101% - ----------------------------------------------------------------------------------------------------------------- 58 138% 78 105% 98 101% - ----------------------------------------------------------------------------------------------------------------- 59 134% 79 105% 99 101% - ----------------------------------------------------------------------------------------------------------------- 100 100% - -----------------------------------------------------------------------------------------------------------------
22 26 THE CASH VALUE ACCUMULATION TEST This test also requires the death benefit to exceed an applicable percentage of the cash value. These applicable percentages are the net inverses of net single premiums based on an interest rate of 4% and 1980 CSO guaranteed mortality as prescribed in Internal Revenue Code Section 7702 for the cash value Accumulation Test. These premiums vary with the ages, sexes, and risk classifications of the insureds. The table below provides an example of applicable percentages for the Cash Value Accumulation Test. This example is for a male non-tobacco preferred issue age 55 and a female non-tobacco preferred issue age 55.
- ------------------------------------------------------------------------------------------------------------------ PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF POLICY YEAR CASH VALUE POLICY YEAR CASH VALUE POLICY YEAR CASH VALUE - ------------------------------------------------------------------------------------------------------------------ 1 302% 16 174% 31 121% - ------------------------------------------------------------------------------------------------------------------ 2 290% 17 169% 32 119% - ------------------------------------------------------------------------------------------------------------------ 3 279% 18 164% 33 118% - ------------------------------------------------------------------------------------------------------------------ 4 269% 19 159% 34 116% - ------------------------------------------------------------------------------------------------------------------ 5 259% 20 154% 35 115% - ------------------------------------------------------------------------------------------------------------------ 6 249% 21 150% 36 113% - ------------------------------------------------------------------------------------------------------------------ 7 240% 22 146% 37 112% - ------------------------------------------------------------------------------------------------------------------ 8 231% 23 142% 38 111% - ------------------------------------------------------------------------------------------------------------------ 9 223% 24 139% 39 110% - ------------------------------------------------------------------------------------------------------------------ 10 215% 25 136% 40 108% - ------------------------------------------------------------------------------------------------------------------ 11 207% 26 133% 41 107% - ------------------------------------------------------------------------------------------------------------------ 12 200% 27 130% 42 106% - ------------------------------------------------------------------------------------------------------------------ 13 193% 28 127% 43 104% - ------------------------------------------------------------------------------------------------------------------ 14 186% 29 125% 44 103% - ------------------------------------------------------------------------------------------------------------------ 15 180% 30 123% 45 102% - ------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT GUARANTEES LIFETIME DEATH BENEFIT GUARANTEE The policy will not lapse if cumulative premiums, less any indebtedness and partial withdrawals are greater than or equal to cumulative Lifetime Death Benefit Guarantee Premiums (see "Grace Period"). LIMITED DEATH BENEFIT GUARANTEE The policy will not lapse during the Limited Death Benefit Guarantee Period if cumulative premiums, less any indebtedness and partial withdrawals, are greater than or equal to cumulative Limited Death Benefit Guarantee Premiums. The Limited Death Benefit Guarantee Period runs from the policy date to the policy anniversary on or next following the younger insured's 75th birthday (see "Grace Period"). PROCEEDS PAYABLE ON DEATH The actual death proceeds payable on the insured's death will be the death benefit as described above, less any policy indebtedness and less any unpaid policy charges. Under certain circumstances, the death proceeds may be adjusted (see "Incontestability," "Error in Age or Sex," and "Suicide"). INCONTESTABILITY Nationwide will not contest payment of the death proceeds based on the initial specified amount after the policy has been in force during the life time of both insureds for 2 years from the policy date. For any increase in specified amount requiring evidence of insurability, Nationwide will not contest payment of the death proceeds based on such an increase after it has been in force during the insured's lifetime for 2 years from its effective date. SUICIDE If an insured dies by suicide, while sane or insane, within 2 years from the policy date, Nationwide will pay no more than the sum of the premiums paid, less any indebtedness and less any partial surrenders. If an insured dies by suicide, while sane or insane, within 2 years from the date an application is accepted for an increase in the specified amount, Nationwide will pay no more than the amount paid for the additional benefit. MATURITY PROCEEDS The maturity date is the policy anniversary on or next following the younger insured's 100th birthday. If the policy is still in force, maturity proceeds are payable to the policy owner on the maturity date. Maturity proceeds are equal to the amount of the policy's cash value, less any indebtedness. RIGHT OF CONVERSION The policy owner may make an irrevocable election to transfer all sub-account cash values to the fixed account. 23 27 This election must be made within 2 years of the policy date. The right of conversion is subject to state availability. GRACE PERIOD WITHOUT DEATH BENEFIT GUARANTEES If the surrender value on a monthly anniversary date is not sufficient to cover the current monthly deduction, and no Death Benefit Guarantee is in effect, a grace period will be allowed for the payment of a premium of at least 4 times the current monthly deduction. Nationwide will send you a notice at the start of the grace period at the last known address stating the amount of premium required. The grace period will end 61 days after the later of the day Nationwide mails the notice and the monthly anniversary date when the surrender value was insufficient. If the required amount is not paid by the end of the grace period, this policy will terminate without value. Nationwide will pay the death proceeds if the death proceeds become payable during the grace period. LIFETIME DEATH BENEFIT GUARANTEE The policy will not lapse if on each monthly anniversary date, (1) is greater than or equal to (2), where: 1) is the sum of all premiums paid to date less any indebtedness and less any previous partial surrenders; and 2) is the sum of the Lifetime Death Benefit Guarantee Premiums due since the policy date including such premium for the current monthly anniversary date. The Lifetime Death Benefit Guarantee is not permanently lost when premium payments fall below those required to maintain this benefit. Payment of enough premium to make (1) greater than or equal to (2) restores the benefit. Any increase or decrease in specified amount would increase or decrease the minimum guaranteed amount, respectively. The Lifetime Death Benefit Guarantee Premium is shown on the policy data page. The Lifetime Death Benefit Guarantee Premium is the same as the IRS Guideline Level Premium. LIMITED DEATH BENEFIT GUARANTEE During the Limited Death Benefit Guarantee Period, the policy will not lapse if on each monthly anniversary date (1) is greater than or equal to (2), where: 1) is the sum of all premiums paid to date less any indebtedness and less any previous partial surrenders; and 2) is the sum of the Limited Death Benefit Guarantee Premiums due since the policy date including such premium for the current monthly anniversary date. The Limited Death Benefit Guarantee is not permanently lost when premium payments fall below those required to maintain this benefit. Payment of enough premium to make (1) greater than or equal to (2) restores the benefit. Any increase or decrease in specified amount would increase or decrease the minimum guaranteed amount, respectively. The Limited Death Benefit Guarantee Period runs from the policy date to the policy anniversary on or next following the younger insured's 75th birthday. The Limited Death Benefit Guarantee Premium is shown on the policy data page. For the first 3 policy years, the required premium is calculated from the minimum monthly premium associated with the actual issue age, sex and underwriting class. For policy years four and over, the required premium is the percentage of the IRS Guideline Level Premium shown below. REINSTATEMENT If the grace period ends and the policy owner has neither paid the required premium nor surrendered the policy for its cash surrender value, the policy lapses. The policy owner may reinstate the policy provided both insureds are alive on the date of reinstatement by: 1) submitting a written request at any time within 3 years after the end of the grace period and prior to the maturity date; 2) providing evidence of insurability satisfactory to Nationwide; 3) paying sufficient premium to cover all policy charges that were due and unpaid during the grace period if the policy terminated in the fourth or later policy year; 4) paying sufficient premium to keep the policy in force for 3 months from the date of reinstatement; and 5) paying or reinstating any indebtedness against the policy which existed at the end of the grace period. The effective date of a reinstated policy will be the monthly anniversary date on or next following the date the application for reinstatement is approved by Nationwide. If the policy is reinstated, the cash value on the date of reinstatement, but prior to applying any premiums or loan repayments received, will be set equal to the lesser of: 1) the cash value at the end of the grace period; or 24 28 2) the surrender charge for the policy year in which the policy was reinstated. Amounts allocated to underlying mutual funds at the start of the grace period will be reinstated, unless the policy owner provides otherwise. TAX MATTERS POLICY PROCEEDS Section 7702 of the Internal Revenue Code provides that if certain tests are met, a policy will be treated as a life insurance policy for federal tax purposes. Nationwide will monitor compliance with these tests. The policy should thus receive the same federal income tax treatment as fixed benefit life insurance. As a result, the death proceeds payable under a policy are generally excludable from gross income of the beneficiary under Section 101 of the Internal Revenue Code. However, if the policy is transferred for valuable consideration, then a portion of the death proceeds may be includable in the beneficiary's gross income. The manner in which Section 7702 of the Internal Revenue Code applies to certain features of a last survivor variable life insurance policy is not addressed in Section 7702. Although Nationwide believes the policies are in compliance with Section 7702, absent any final regulation or other guidance issued under 7702, some uncertainty remains whether the policies satisfy the Section 7702 definition of a life insurance contract. Section 7702A of the Internal Revenue Code defines modified endowment contracts as those life insurance policies issued or materially changed on or after June 21, 1988 on which the total premiums paid during the first seven years exceed the amount that would have been paid if the policy provided for paid up benefits after seven level annual premiums. As a general rule, distributions from a life insurance policy (other than a modified endowment contract) during the life of the insured are treated as the non-taxable return of premium, to the extent of premiums previously paid. For this purpose, dividends that are used to purchase riders are treated as distributions; dividends that are used to purchase paid-up additions or to reduce premiums are not treated as distributions. Aggregate amounts distributed in excess of aggregate premiums paid are generally treated as taxable ordinary income. A loan from a life insurance policy that is not a modified endowment contract generally is not treated as a taxable distribution. However, if the total loan is not repaid and is forgiven (such as if the life insurance policy lapses or is surrendered), then the amount of the outstanding loan balance is treated as a distribution to the policy owner and may be treated as ordinary income in whole or in part. The Internal Revenue Code provides special rules for the that taxation of surrenders, partial surrenders, loans, collateral assignments and other pre-death distributions from modified endowment contracts (other than certain distributions to terminally ill individuals). Under these special rules, such transactions are taxable to the extent the cash value of the policy exceeds, at the time of distribution, the premiums paid into the policy. In addition, a 10% tax penalty generally applies to the taxable portion of such distributions unless the policy owner is over age 59-1/2 or disabled or the distribution is part of series of substantially equal periodic payments as defined in the Internal Revenue Code. Under certain circumstances, certain distributions made under a policy on the life of a "terminally ill individual", as that term is defined in the Internal Revenue Code, are treated as death proceeds and are subject to the death benefit rules of Section 101 of the Internal Revenue Code described above. The policies offered by this prospectus may or may not be issued as modified endowment contracts. If the policy is not issued as a modified endowment contract, Nationwide will monitor the premium payments paid and will notify the policy owner when the policy's non-modified endowment status is in jeopardy. If a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued which causes a reduction in death benefits may still become fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the Internal Revenue Code. The policy owner should carefully consider this potential effect and seek further information before initiating any changes in the terms of the policy. Under certain conditions, a policy may become a modified endowment or may become subject to a new seven year testing period as a result of a material change or a reduction in benefits as defined by Section 7702A(c) of the Internal Revenue Code. In addition to the tests required under Section 7702, Section 817(h) of the Internal Revenue Code requires that the investments of separate accounts such as the variable account be adequately diversified. Regulations under 817(h) provide that a variable life policy that fails to satisfy the diversification standards will not be treated as life insurance unless such failure was inadvertent, is corrected, and the policy owner or the issuer pays an amount to the IRS. The amount will be based on the tax that would have been paid by the policy owner if the income, for the period the policy was not diversified, had been received by the policy owner. 25 29 If the failure to diversify is not corrected in this manner, the policy owner will be deemed to be owner of the underlying securities and taxed on the earnings of his or her account. Representatives of the IRS have suggested, from time to time, that the number of underlying mutual funds available or the number of transfer opportunities available under a variable product may be relevant in determining whether the product qualifies for the desired tax treatment. No formal guidance has been issued in this area. Should the Secretary of the Treasury issue additional rules or regulations limiting the number of underlying mutual funds, transfers between underlying mutual funds, exchanges of underlying mutual funds or changes in investment objectives of underlying mutual funds such that the policy would no longer qualify as life insurance under Section 7702 of the Internal Revenue Code, Nationwide will take whatever steps are available to remain in compliance. Nationwide will monitor compliance with these regulations and, to the extent necessary, will change the objectives or assets of the sub-account investments to remain in compliance. A total surrender or cancellation of the policy by lapse or the maturity of the policy on its maturity date may have adverse tax consequences. If the amount received by the policy owner plus total policy indebtedness exceeds the premiums paid into the policy, then the excess generally will be treated as taxable income, regardless of whether or not the policy is a modified endowment contract. TAXATION OF THE POLICY Section 7702 of the Internal Revenue Code provides that, if one of two alternative qualification 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. Under the Cash Value Accumulation Test, the terms of the policy must, generally, provide that the cash surrender value of the policy, as defined in Section 7702 of the Internal Revenue Code, cannot at any time exceed the net single premium required to fund the future benefits under the policy. The net single premium under the policy will vary according to the age, sex and underwriting classification of the insureds. Under this test, premiums may be paid as long as the death benefits is at least equal to the benefit that could be purchased with a net single premium equal to the cash value. A table showing an example of the relationship between the cash value and death benefit under this test is found in the "Death Benefit Information" section. Under the Guideline Premium/Cash Value Corridor Test, the sum of the premiums paid into the policy cannot, at any time, exceed the guideline premium limitation described in Section 7702 of the Internal Revenue Code. Additionally, a minimum death benefit must be provided, based on the cash value. A table showing the required relationship between the cash value and the death benefit under this test is found in the "Death Benefit Information" section. Policy owners selecting this test may also select either an Option 1 or Option 2 death benefit. A detailed explanation of the two options is found under the heading "Death Benefit Information." The policy owners must choose one of these two qualifications tests on the application. Once elected, the qualification test cannot be changed for the duration of the policy. If neither test is designated on the application, the Guideline Premium/Cash Value Corridor Test and Option 1 Death Benefit will be assumed by Nationwide to have been selected. The policy should receive the same federal tax treatment as a fixed benefit life insurance policy. The death benefit paid under the policy that satisfies the statutory definition of life insurance is excludable from the gross income of the beneficiary under Section 101 of the Internal Revenue Code. Regardless of which test is selected, Nationwide will monitor compliance with statutory definition of life insurance for federal tax purposes. DESCRIPTION OF CASH VALUE ACCUMULATION TEST AND GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST Section 7702(b)(1) of the Internal Revenue Code provides that if one of two alternate tests are met, a policy will be treated as a 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 Cash Value Accumulation Test generally requires that under the terms of a life insurance Policy, the death benefit must be sufficient so that the cash surrender value, as defined in Section 7702(f)(2) of the Internal Revenue Code, does not at any time exceed the net single premium required to fund the future benefits under the policy. The net single premium under the policy will vary according to the age, sex and underwriting classification of the insureds. 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. A table containing the 26 30 applicable percentage of cash value can be found in the "Death Benefit Information" section. The Guideline Premium/Cash Value Corridor Test requires that the sum of the premiums paid into the policy does not at any time exceed the guideline premium limitation. Additionally, a minimum corridor of death benefit in relation to account value must be maintained. Policy owners who elect this test are given the option of electing either an Option 1 or Option 2 death benefit. Please refer to "Death Benefit Information" for a detailed explanation. The policy owners must make the election of death benefit qualification tests on the application. Once elected, the death benefit qualification test cannot be changed for the duration of the policy. If no option is designated, the guideline premium test Option 1 will be assumed to have been selected. Regardless of which test is selected, Nationwide will monitor compliance to assure that the policy meets the statutory definition of life insurance for federal tax purposes. The policy should thus receive the same federal income tax treatment as fixed benefit life insurance. As a result, the death proceeds payable under a policy are excludable from gross income of the beneficiary under Section 101 of the Internal Revenue Code. The policy owner elects either the Cash Value Accumulation Test or the Guideline Premium/Cash Value Corridor Test in the application. This election is irrevocable. WITHHOLDING Distributions of income from a life insurance contract (including a modified endowment contract) are subject to federal income tax withholding; however, the recipient may elect not to have the withholding taken from the distribution. A distribution of income may be subject to mandatory back-up withholding (which cannot be waived). The mandatory back-up withholding rate is 31% of the income that is distributed and will arise if no taxpayer identification number is provided to Nationwide, or if the IRS notifies Nationwide that back-up withholding is required. FEDERAL ESTATE AND GENERATION-SKIPPING TRANSFER TAXES The federal estate tax is integrated with the federal gift tax under a unified tax rate schedule. In general, in 2001, an estate of less than $675,000 (inclusive of certain pre-death gifts) will not incur a federal estate tax liability. In addition, an unlimited marital deduction may be available for federal estate tax purposes, for certain amounts that pass to the surviving spouse. When the insured dies, the death benefit will generally be included in the insured's federal gross estate if: 1) the proceeds were payable to or for the benefit of the insured's estate; or 2) the insured held any "incident of ownership" in the policy at death or at any time within three years of death. An incident of ownership is, in general, any right that may be exercised by the policy owner, such as the right to borrow on the policy, or the right to name a new beneficiary. If the policy owner (whether or not he or she is the insured) transfers ownership of the policy to another person, such transfer may be subject to a federal gift tax. In addition, if such policy owner transfers the policy to someone two or more generations younger than the policy owner, the transfer may be subject to the federal generation-skipping transfer tax ("GSTT"), the taxable amount being the value of the policy. Similarly, if the beneficiary is two or more generations younger than the insured, the payment of the death proceeds at the death of the insured may be subject to the GSTT. Pursuant to regulations recently promulgated by the U.S. Treasury Department, Nationwide may be required to withhold a portion of the death proceeds and pay them directly to the IRS as the GSTT liability. The GSTT provisions generally apply to the same transfers that are subject to estate or gift taxes. The tax rate is a flat rate equal to the maximum estate tax rate (currently 55%), and there is a provision for an aggregate $1 million exemption. Due to the complexity of these rules, the policy owner should consult with counsel and other competent advisors regarding these taxes. NON-RESIDENT ALIENS Pre-death distributions from modified endowment contracts to nonresident aliens ("NRAs") are generally subject to federal income tax and tax withholding, at a statutory rate of 30% of the amount of income that is distributed. Nationwide is required to withhold such amount from the distribution and remit it to the IRS. Distributions to certain NRAs may be subject to lower, or in certain instances zero, tax and withholding rates, if the United States has entered into an applicable treaty. However, in order to obtain the benefits of such treaty provisions, the NRA must give to Nationwide sufficient proof of his or her residency and citizenship in the form and manner prescribed by the IRS. In addition, the NRA 27 31 must obtain an individual taxpayer identification number from the IRS, and furnish that number to Nationwide prior to the distribution. If Nationwide does not have the proper proof of citizenship or residency and a proper individual taxpayer identification number prior to any distribution, Nationwide will be required to withhold 30% of the income, regardless of any treaty provision. A pre-death distribution may not be subject to withholding where the recipient sufficiently establishes to Nationwide that such payment is effectively connected to the recipient's conduct of a trade or business in the United States and that such payment is includible in the recipient's gross income for United States federal income tax purposes. Any such distributions may be subject to back-up withholding at the statutory rate (currently 31%) if no individual taxpayer identification number, or an incorrect individual taxpayer identification number, is provided. State and local estate, inheritance, income and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary. TAXATION OF POLICY SPLIT OPTION RIDER The Policy Split Option Rider permits a policy to be split into two other single life insurance contracts upon the occurrence of a divorce of the joint insureds or certain other changes in federal estate tax. A policy split could have adverse tax consequences. It is not clear whether a policy split will be treated as a nontaxable exchange under Section 1035 of the Internal Revenue Code. If a policy split is not treated as a nontaxable exchange, a split could result in the recognition of taxable income in an amount up to any gain in the policy at the time of the split. Additionally, it is not clear whether, in all circumstances, the resulting individual contracts would be treated as life insurance contracts for federal income tax purposes and, if so treated, whether the individual contracts would be classified as Modified Endowment Contracts. Before the policy owner exercises rights provided by the Policy Split Option Rider, it is important that a tax adviser be consulted regarding the possible consequences of a policy split. TAXATION OF NATIONWIDE Nationwide is taxed as a life insurance company under the Internal Revenue Code. Since the variable account is not a separate entity from Nationwide and its operations form a part of Nationwide, it will not be taxed separately as a "regulated investment company" under Sub-chapter M of the Internal Revenue Code. Investment income and realized capital gains on the assets of the variable account are reinvested and taken into account in determining the value of accumulation units. As a result, such investment income and realized capital gains are automatically applied to increase reserves under the policies. Nationwide does not initially expect to incur any federal income tax liability that would be chargeable to the variable account. Based upon these expectations, no charge is currently being made against the variable account for federal income taxes. If, however, Nationwide determines that on a separate company basis such taxes may be incurred, it reserves the right to assess a charge for such taxes against the variable account. Nationwide may also incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant. If they increase, however, charges for such taxes may be made. TAX CHANGES The foregoing discussion, which is based on Nationwide's understanding of federal tax laws as they are currently interpreted by the IRS, is general and is not intended as tax advice. The Internal Revenue Code has been subjected to numerous amendments and changes, and it is reasonable to believe that it will continue to be revised. The United States Congress has, in the past, considered numerous legislative proposals that, if enacted, could change the tax treatment of the policies. It is reasonable to believe that such proposals, and future proposals, may be enacted into law. The U.S. Treasury Department may amend existing regulations, issue new regulations, or adopt new interpretations of existing law that may be at variance with its current positions on these matters. In addition, current state law (which is not discussed herein), and future amendments to state law, may affect the tax consequences of the policy. If the policy owner, insured, or beneficiary or other person receiving any benefit or interest in or from the policy is not both a resident and citizen of the United States, there may be a tax imposed by a foreign country, in addition to any tax imposed by the United States. The foreign law (including regulations, rulings, and case law) may change and impose additional taxes on the policy, the death proceeds, or other distributions and/or ownership of the policy, or a treaty may be amended and all or part of the favorable treatment may be eliminated. Any or all of the foregoing may change from time to time without any notice, and the tax consequences arising out of a policy may be changed retroactively. There is no way of predicting if, when, or to what extent any such change may take place. No representation is 28 32 made as to the likelihood of the continuation of these current laws, interpretations, and policies. The foregoing is a general explanation as to certain tax matters pertaining to insurance policies. It is not intended to be legal or tax advice, and should not take the place of your independent legal, tax and/or financial advisor. LEGAL CONSIDERATIONS On July 6, 1983, the U.S. Supreme Court held in Arizona Governing Committee v. Norris that certain annuity benefits provided by employers' retirement and fringe benefit programs may not vary between men and women on the basis of sex. This decision applies only to benefits derived from premiums made on or after August 1, 1983. The policies offered by this prospectus are based upon actuarial tables which distinguish between men and women. Thus the policies provide different benefits to men and women of the same age. Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of Norris on any employment related insurance or benefit program before purchasing this policy. STATE REGULATION Nationwide is subject to the laws of Ohio governing insurance companies and to regulation by the Ohio Insurance Department. An annual statement in a prescribed form is filed with the Ohio Insurance Department each year covering the operation of Nationwide for the preceding year and its financial condition as of the end of such year. Regulation by the Ohio Insurance Department includes periodic examination to determine Nationwide's contract liabilities and reserves so that the Ohio Insurance Department may certify the items are correct. Nationwide's books and accounts are subject to review by the Ohio Insurance Department at all times and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners. Such regulation does not, however, involve any supervision of management or investment practices or policies. In addition, Nationwide is subject to regulation under the insurance laws of other jurisdictions in which it may operate. REPORTS TO POLICY OWNERS Nationwide will mail to the policy owner at the last known address of record: - - an annual statement containing: the amount of the current death benefit, cash value, cash surrender value, premiums paid, monthly charges deducted, amounts invested in the fixed account and the sub-accounts, and policy indebtedness; - - annual and semi-annual reports containing all applicable information and financial statements or their equivalent, which must be sent to the underlying mutual fund beneficial shareholders as required by the rules under the Investment Company Act of 1940 for the variable account; and - - statements of significant transactions, such as changes in specified amount, changes in death benefit options, changes in future premium allocations, transfers among sub-accounts, premium payments, loans, loan repayments, reinstatement and termination. ADVERTISING Nationwide is ranked and rated by independent financial rating services, including Moody's, Standard & Poor's and A.M. Best Company. The purpose of these ratings is to reflect the financial strength or claims-paying ability of Nationwide. The ratings are not intended to reflect the investment experience or financial strength of the variable account. Nationwide may advertise these ratings from time to time. In addition, Nationwide may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend Nationwide or the policies. Furthermore, Nationwide may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions. LEGAL PROCEEDINGS Nationwide is a party to litigation and arbitration proceedings in the ordinary course of its business, none of which is expected to have a material adverse effect on Nationwide. In recent years, life insurance companies have been named as defendants in lawsuits, including class action lawsuits relating to life insurance and annuity pricing and sales practices. A number of these lawsuits have resulted in substantial jury awards or settlements. On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court related to the sale of deferred annuity products for use as investments in tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide Financial Services, Inc., 29 33 Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company). On May 3, 1999, the complaint was amended to, among other things, add Marcus Shore as a second plaintiff. The amended complaint is brought as a class action on behalf of all persons who purchased individual deferred annuity contracts or participated in group annuity contracts sold by Nationwide and the other named Nationwide affiliates which were used to fund certain tax-deferred retirement plans. The amended complaint seeks unspecified compensatory and punitive damages. No class has been certified. On June 11, 1999, Nationwide and the other named defendants filed a motion to dismiss the amended complaint. On March 8, 2000, the Court denied the motion to dismiss the amended complaint filed by Nationwide and the other named defendants. Nationwide intends to defend this lawsuit vigorously. There can be no assurance that any litigation relating to pricing or sales practices will not have a material adverse effect on Nationwide in the future. The general distributor, NISC, is not engaged in any litigation of any material nature. EXPERTS The financial statements of Nationwide and the variable account have been included herein in reliance upon the reports of KPMG LLP, independent certified public accountants appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. REGISTRATION STATEMENT A Registration Statement has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to the policies offered hereby. This prospectus does not contain all the information set forth in the Registration Statement and amendments thereto including exhibits filed as a part thereof, to all of which reference is hereby made. Statements contained in this prospectus as to the content of policies and other legal instruments are summaries. For a complete statement of the terms thereof, reference is made to such instruments as filed. DISTRIBUTION OF THE POLICIES The policies will be sold by licensed insurance agents in those states where the policies may lawfully be sold. Agents are registered representatives of broker dealers registered under the Securities Exchange Act of 1934 who are member firms of the National Association of Securities Dealers, Inc. ("NASD"). The policies will be distributed by the general distributor, NISC. NISC was organized as an Oklahoma corporation on March 19, 1974. NISC is a wholly owned subsidiary of Nationwide and a member of the NASD. NISC acts as general distributor for the following separate accounts, all of which are separate investment accounts of Nationwide or its affiliates: - - Nationwide Multi-Flex Variable Account; - - Nationwide VLI Separate Account-2; - - Nationwide VLI Separate Account-3; - - Nationwide VLI Separate Account-4; - - Nationwide Variable Account; - - Nationwide Variable Account-II; - - Nationwide Variable Account-5; - - Nationwide Variable Account-6; - - Nationwide Variable Account-8; - - Nationwide Variable Account-9; - - Nationwide Variable Account-10; - - Nationwide VA Separate Account-A; - - Nationwide VA Separate Account-B; - - Nationwide VA Separate Account-C; - - Nationwide VL Separate Account-A; - - Nationwide VL Separate Account-B; - - Nationwide VL Separate Account-C; and - - Nationwide VL Separate Account-D. Gross first year commissions plus any expense allowance payments paid by Nationwide on the sale of these policies provided by NISC will not exceed 80% of the target premium plus 4% of any excess premium payments. Gross renewal commissions in years 2 through 10 paid by Nationwide will not exceed 4% of actual premium payment, and will not exceed 1% in policy years 11 and thereafter. No underwriting commissions have been paid by Nationwide to NISC. 30 34 NATIONWIDE INVESTMENT SERVICES CORPORATION DIRECTORS AND OFFICERS
- -------------------------------------------------------------------------------- POSITIONS AND OFFICES NAME AND BUSINESS ADDRESS WITH UNDERWRITER - -------------------------------------------------------------------------------- W.G. Jurgensen Chief Executive Officer and One Nationwide Plaza Director Columbus, OH 43215 Joseph J. Gasper Chairman of the Board and Director One Nationwide Plaza Columbus, OH 43215 Richard A. Karas Vice Chairman and Director One Nationwide Plaza Columbus, OH 43215 Duane C. Meek President One Nationwide Plaza Columbus, OH 43215 Philip C. Gath Director One Nationwide Plaza Columbus, OH 43215 Susan A. Wolken Director One Nationwide Plaza Columbus, OH 43215 Robert A. Oakley Executive Vice President - Chief Financial One Nationwide Plaza Officer Columbus, OH 43215 Robert J. Woodward, Jr. Executive Vice President - Chief Investment One Nationwide Plaza Officer Columbus, OH 43215 Mark R. Thresher Senior Vice President and Treasurer One Nationwide Plaza Columbus, OH 43215 Barbara J. Shane Vice President - Compliance Officer Two Nationwide Plaza Columbus, OH 43215 Alan A. Todryk Vice President - Taxation One Nationwide Plaza Columbus, OH 43215 John F. Delaloye Assistant Secretary One Nationwide Plaza Columbus, OH 43215 Glenn W. Soden Associate Vice President and Secretary One Nationwide Plaza Columbus, OH 43215 E. Gary Berndt Assistant Treasurer One Nationwide Plaza Columbus, OH 43215 Carol L. Dove Associate Vice President-Treasury Services One Nationwide Plaza and Assistant Treasurer Columbus, OH 43215 Terry C. Smetzer Assistant Treasurer One Nationwide Plaza Columbus, OH 43215
31 35
- -------------------------------------------------------------------------------- POSITIONS AND OFFICES NAME AND BUSINESS ADDRESS WITH UNDERWRITER - -------------------------------------------------------------------------------- Mark R. Thresher Senior Vice President and Treasurer One Nationwide Plaza Columbus, OH 43215 Barbara J. Shane Vice President - Compliance Officer Two Nationwide Plaza Columbus, OH 43215 Alan A. Todryk Vice President - Taxation One Nationwide Plaza Columbus, OH 43215 John F. Delaloye Assistant Secretary One Nationwide Plaza Columbus, OH 43215 Glenn W. Soden Assistant Secretary One Nationwide Plaza Columbus, OH 43215 E. Gary Berndt Assistant Treasurer One Nationwide Plaza Columbus, OH 43215 Duane M. Campbell Assistant Treasurer One Nationwide Plaza Columbus, OH 43215 Terry C. Smetzer Assistant Treasurer One Nationwide Plaza Columbus, OH 43215
ADDITIONAL INFORMATION ABOUT NATIONWIDE The life insurance business, including annuities, is the only business in which Nationwide is engaged. Nationwide markets its policies through independent insurance brokers, general agents, and registered representatives of registered NASD broker/dealer firms. Nationwide serves as depositor for the following separate investment accounts, each of which is a registered investment company: - - Nationwide Variable Account; - - Nationwide Variable Account-II; - - Nationwide Variable Account-3; - - Nationwide Variable Account-4; - - Nationwide Variable Account-5; - - Nationwide Variable Account-6; - - Nationwide Fidelity Advisor Variable Account; - - Nationwide Variable Account-8; - - Nationwide Variable Account-9; - - Nationwide Variable Account-10; - - MFS Variable Account; - - Nationwide Multi-Flex Variable Account; - - Nationwide VLI Separate Account; - - Nationwide VLI Separate Account-2; - - Nationwide VLI Separate Account-3; - - Nationwide VLI Separate Account-4; and - - Nationwide VLI Separate Account-5. Nationwide, in common with other insurance companies, is subject to regulation and supervision by the regulatory authorities of the states in which it is licensed to do business. A license from the state insurance department is a prerequisite to the transaction of insurance business in that state. In general, all states have statutory administrative powers. Such regulation relates, among other things, to licensing of insurers and their agents, the approval of policy forms, the methods of computing reserves, the form and content of statutory financial statements, the amount of policyholders' and stockholders' dividends, and the type of distribution of investments permitted. Nationwide operates in the highly competitive field of life insurance. There are approximately 2,300 stock, 32 36 mutual and other types of insurers in the life insurance business in the United States, and a large number of them compete with the registrant in the sale of insurance policies. As is customary in insurance company groups, employees are shared with the other insurance companies in the group. In addition to its direct salaried employees, Nationwide shares employees with Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company. Nationwide does not presently own or lease any materially important physical properties when its property holdings are viewed in relation to its total assets. Nationwide shares its home office, other facilities and equipment with Nationwide Mutual Insurance Company. Company Management Nationwide and Nationwide Life and Annuity Insurance Company, together with Nationwide Mutual Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide Property and Casualty Insurance Company and Nationwide General Insurance Company and their affiliated companies comprise the Nationwide group of companies. The companies listed above have substantially common boards of directors and officers. Nationwide Financial Services, Inc. ("NFS") is the sole shareholder of Nationwide. NFS serves as a holding company for other financial institutions. Nationwide is the sole owner of Nationwide Life and Annuity Insurance Company. Each of the directors and officers listed below is a director or officer respectively of at least one or more of the other major insurance affiliates of the Nationwide group of companies. Messrs. Gasper and Woodward are also trustees of one or more of the registered investment companies distributed by Nationwide Investment Services Corporation, a registered broker-dealer affiliated with the Nationwide group of companies. 33 37 DIRECTORS OF NATIONWIDE
- -------------------------------------------------------------------------------- DIRECTORS OF THE DEPOSITOR POSITIONS AND NAME AND PRINCIPAL OFFICES WITH BUSINESS ADDRESS DEPOSITOR PRINCIPAL OCCUPATION - -------------------------------------------------------------------------------- Lewis J. Alphin Director Farm Owner and Operator, Bell 519 Bethel Church Road Farms (1) Mount Olive, NC 28365-6107 A. I. Bell Director Farm Owner and Operator (1) 4121 North River Road West Zanesville, OH 43701 Yvonne M. Curl Director Vice President, Chief Marketing Avaya Inc. Officer Avaya Inc.(2) Room 3C322 211 Mt. Airy Road Basing Ridge, NJ 07920 Kenneth D. Davis Director Farm Owner and Operator (1) 7229 Woodmansee Road Leesburg, OH 45135 Keith W. Eckel Director Partner, Fred W. Eckel Sons; 1647 Falls Road President, Eckel Farms, Inc. (1) Clarks Summit, PA 18411 Willard J. Engel Director Retired General Manager, Lyon 301 East Marshall Street County Co-operative Oil Company (1) Marshall, MN 56258 Fred C. Finney Director Owner and Operator, Moreland Fruit 1558 West Moreland Road Farm; Operator, Melrose Orchard (1) Wooster, OH 44691 Joseph J. Gasper President and President and Chief Operating One Nationwide Plaza Chief Operating Officer, Nationwide Life Insurance Columbus, OH 43215 Officer and Company and Nationwide Life and Director Annuity Insurance Company (1) W.G. Jurgensen Chief Executive Chairman and Chief Executive One Nationwide Plaza Officer and Officer (3) Columbus, OH 43215 Director David O. Miller Chairman of President, Owen Potato Farm, Inc.; 115 Sprague Drive the Board and Partner, M&M Enterprises (1) Hebron, OH 43025 Director Ralph M. Paige Director Executive Director Federation of Federation of Southern Southern Cooperatives/Land Cooperatives/Land Assistance Fund (1) Assistance Fund 2769 Church Street East Point, GA 30344 James F. Patterson Director Vice President, Pattersons, Inc.; 8765 Mulberry Road President, Patterson Farms, Inc. (1) Chesterland, OH 44026
34 38
- -------------------------------------------------------------------------------- DIRECTORS OF THE DEPOSITOR POSITIONS AND NAME AND PRINCIPAL OFFICES WITH BUSINESS ADDRESS DEPOSITOR PRINCIPAL OCCUPATION - -------------------------------------------------------------------------------- Arden L. Shisler Director President and Chief Executive 1356 North Wenger Road Officer, K&B Transport, Inc. (1) Dalton, OH 44618 Robert L. Stewart Director Owner and Operator Sunnydale Farms 88740 Fairview Road and Mining (1) Jewett, OH 43986
(1) Principal occupation for last 5 years. (2) Prior to assuming this current position, Ms. Curl held other executive management positions with the Xerox Corporation. (3) Prior to assuming this current position, Mr. Jurgensen was Executive Vice President of Bank One Corporation. Prior to that, Mr. Jurgensen was Executive Vice President of First Chicago NBD. Each of the directors is a director of the other major insurance affiliates of the Nationwide group of companies except Mr. Gasper who is a director only of Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. Mr. Gasper is a director of NISC, a registered broker-dealer. Messrs. Miller, Patterson, and Shisler are directors of Nationwide Financial Services, Inc. Messrs. Gasper and Woodward are trustees of Nationwide Separate Account Trust and Nationwide Asset Allocation Trust, registered investment companies. EXECUTIVE OFFICERS OF NATIONWIDE
- -------------------------------------------------------------------------------- OFFICERS OF THE DEPOSITOR NAME AND PRINCIPAL OFFICES OF THE DEPOSITOR BUSINESS ADDRESS - -------------------------------------------------------------------------------- Richard D. Headley Executive Vice President One Nationwide Plaza Columbus, OH 43215 Michael S. Helfer Executive Vice President -Corporate Strategy One Nationwide Plaza Columbus, OH 43215 Donna A. James Executive Vice President - Chief Administrative One Nationwide Plaza Officer Columbus, OH 43215 Robert A. Oakley Executive Vice President - Chief Financial One Nationwide Plaza Officer and Treasurer Columbus, OH 43215 Robert J. Woodward, Jr. Executive Vice President - Chief Investment One Nationwide Plaza Officer Columbus, OH 43215 John R. Cook, Jr. Senior Vice President - Chief Communications One Nationwide Plaza Officer Columbus, OH 43215 Thomas L. Crumrine Senior Vice President One Nationwide Plaza Columbus, OH 43215 David A. Diamond Senior Vice President - Corporate Strategy One Nationwide Plaza Columbus, OH 43215
35 39 EXECUTIVE OFFICERS OF NATIONWIDE
- -------------------------------------------------------------------------------- OFFICERS OF THE DEPOSITOR NAME AND PRINCIPAL OFFICES OF THE DEPOSITOR BUSINESS ADDRESS - -------------------------------------------------------------------------------- Philip C. Gath Senior Vice President - Chief Actuary - One Nationwide Plaza Nationwide Financial Columbus, OH 43215 Patricia R. Hatler Senior Vice President, General Counsel and One Nationwide Plaza Secretary Columbus, OH 43215 David K. Hollingsworth Senior Vice President - Business One Nationwide Plaza Development and Sponsor Relations Columbus, OH 43215 David R. Jahn Senior Vice President - Product Management One Nationwide Plaza Columbus, OH 43215 Richard A. Karas Senior Vice President - Sales - Financial Services One Nationwide Plaza Columbus, OH 43215 Gregory S. Lashutka Senior Vice President - Corporate Relations One Nationwide Plaza Columbus, OH 43215 Edwin P. McCausland, Jr. Senior Vice President - Fixed Income Securities One Nationwide Plaza Columbus, OH 43215 Mark D. Phelan Senior Vice President - Technology and Operations One Nationwide Plaza Columbus, OH 43215 Douglas C. Robinette Senior Vice President - Claims One Nationwide Plaza Columbus, OH 43215 Mark R. Thresher Senior Vice President - Finance - One Nationwide Plaza Nationwide Financial Columbus, OH 43215 Richard M. Waggoner Senior Vice President - Operations One Nationwide Plaza Columbus, OH 43215 Susan A. Wolken Senior Vice President - Product Management and One Nationwide Plaza Nationwide Financial Marketing Columbus, OH 43215
W.G. JURGENSEN has been a Director and Chief Executive Officer since 2000. Previously, he was Executive Vice President of Bank One Corporation from 1998 to May 2000. Prior to Bank One's merger with First Chicago NBD, Mr. Jurgensen served from 1990 to 1998 as Executive Vice President with First Chicago, leading various business units. For 17 years, Mr. Jurgensen was with Norwest Corporation, beginning as a corporate banking officer and serving in increasingly responsible roles including president and CEO of Norwest Investment Services and management of the treasury function. Mr. Jurgensen's final post was Executive Vice President - Corporate Banking. JOSEPH J. GASPER has been President and Chief Operating Officer and Director of Nationwide since April 1996. Previously, he was Executive Vice President - Property/Casualty Operations of Nationwide Mutual Insurance Company from April 1995 to April 1996. He was Senior Vice President - Property/Casualty Operations of Nationwide Mutual Insurance Company from September 1993 to April 1995. Prior to that time, Mr. Gasper held numerous positions within Nationwide. Mr. Gasper has been with Nationwide for 34 years. LEWIS J. ALPHIN has been a Director of Nationwide since 1993. Mr. Alphin owns and operates an 800-acre 36 40 farm in Mt. Olive, NC. He taught agriculture business at James Sprunt Community College in Kenansville, NC for more than 22 years before retiring in 1994. He is the former board chairman of the Cape Fear Farm Credit Association, a member and former vice president, secretary/treasurer, and director of the Duplin County Agribusiness Council, and a former board member of the Southern States Cooperative (1986 to 1993). Mr. Alphin is a member of the Duplin County Farm Bureau, the North Carolina Farm Bureau, ad the Farm Credit Council. He is a member and former director of the Oak Wolfe Fire Department. A. I. BELL has been a Director of Nationwide since April, 1998. Mr. Bell has served as a state trustee of the Ohio Farm Bureau Federation from 1991 to 1998 and as president that last four years. He oversees the Bell family farm in Zanesville, Ohio. The farm is the hub of a multi-family swine network, in addition to grain and beef operations. Mr. Bell has represented the Ohio Farm Bureau at state and national level activities, and has traveled internationally representing Ohio agriculture. In 1995, he was introduced into The Ohio State University Department of Animal Sciences Hall of Fame. YVONNE M. CURL has been a Director of Nationwide since April 1998. Ms. Curl is Vice President - Chief Marketing Officer for Avaya Inc. located in Basking Ridge, NJ. Prior to joining Avaya Inc. in November 2000, she was employed by the Xerox Corporation. She joined Xerox in 1976 as a sales representative and progressed through management positions, including vice president - field operations; executive assistant to the chairman and CEO; and as corporate vice president serving as senior vice president and general manager, public sector worldwide/global solutions group. JOHN R. COOK, JR. has been Senior Vice President - Chief Communications Officer since May 1997. Previously, Mr. Cook was Senior Vice President - Chief Communications Officer of USAA from July 1989 to May 1997. Mr. Cook has been with Nationwide for 3 years. THOMAS L. CRUMRINE has been Senior Vice President of Nationwide since September 1997. Previously he was Senior Vice President - Property/Casualty from March 1996 to September 1997. Prior to that time, he was Senior Vice President - Claims from April 1995 to March 1996, Vice President - Claims from 1993 to March 1996, Vice President - Agency Sales from 1991 to 1993 and Vice President - Agency Services from 1989 to 1991. Prior to 1991, Mr. Crumrine held several other positions within Nationwide. KENNETH D. DAVIS has been a Director of Nationwide since April 1999. Mr. Davis is the immediate past president of the Ohio Farm Bureau Federation. He served as a member of the Ohio Farm Bureau Federation's board of trustees from 1989 until 1999. He served as first vice president of the board from 1994 until 1998. Mr. Davis serves on the board of directors of his local rural electric cooperatives and is a member of many agriculture organizations including the Ohio Corn Growers, Ohio Cattlemen's and Ohio Soybean associations. DAVID A. DIAMOND has been Senior Vice President - Corporate Controller since December 11, 2000. Previously, Mr. Diamond was Senior Vice President - Corporate Controller from August 1999 to December 2000. He was Vice President - Controller from October 1993 to August 1999. Prior to that time, Mr. Diamond held several positions within Nationwide. Mr. Diamond has been with Nationwide for 12 years. KEITH W. ECKEL has been a Director of Nationwide since April 1996. Mr. Eckel is a partner of Fred W. Eckel Sons and president of Eckel Farms, Inc. in northeast Pennsylvania. He received the Master Farmer award from Penn State University in 1982. Mr. Eckel is a member of the Pennsylvania Agricultural Land Preservation Board. He is a former president of the Pennsylvania Farm Bureau, a position he held for 15 years, and the Lackawanna County Cooperative Extension Association. He has served as a board member and executive committee member of the American Farm Bureau Federation. He is a former vice president of the Pennsylvania Council of Cooperative Extension Associations and former board member of the Pennsylvania Vegetable Growers Association. WILLARD J. ENGEL has been a Director of Nationwide since 1994. Mr. Engel served as general manager of Lyon County Co-Operative Oil Co. in Marshall, MN from 1975 to 1997, and occasionally serves on a consulting basis. He previously was a division manager of the Truman Farmers Elevator. He is a former director of the Western Co-op Transport in Montevideo, MN, a former director and legislative committee chairman of the Northwest Petroleum Association in St. Paul, and a former director of Farmland Industries in Kansas City. FRED C. FINNEY has been a Director of Nationwide since 1992. Mr. Finney is the owner and operator of the Moreland Fruit Farm and operator of Melrose Orchard in Wooster, OH. He is past president of the Ohio Farm Bureau Federation, the Ohio Fruit Growers Society, Wayne County Farm Bureau, and the Westwood Ruritan Club. He is a member of the American Berry Cooperative. PHILIP C. GATH has been Senior Vice President - Chief Actuary - Nationwide Financial since May 1998. 37 41 Previously, Mr. Gath was Vice President - Product Manager - Individual Variable Annuity from July 1997 to May 1998. Mr. Gath was Vice President - Individual Life Actuary from August 1989 to July 1997. Prior to that time, Mr. Gath held several positions within Nationwide. Mr. Gath has been with Nationwide for 32 years. PATRICIA R. HATLER has been Senior Vice President, General Counsel and Secretary since April 2000. Previously, she was Senior Vice President and General Counsel from July 1999 to April 2000. Prior to that time, she was General Counsel and Corporate Secretary of Independence Blue Cross from 1983 to July 1999. MICHAEL S. HELFER has been Executive Vice President - Corporate Strategy since August 2000. He is a former partner and head of the financial institutions group at Wilmer, Cutler and Pickering, a 350-lawyer international law firm headquartered in Washington, D.C. He served as that firm's Chairman and Chief Executive Officer from 1995 to 1998. DAVID K. HOLLINGSWORTH has been Senior Vice President - Business Development and Sponsor Relations since April 2000. Previously, he was Senior Vice President - Multi Channel and Sponsor relations from August 1999 until April 2000. Previously, he was Senior Vice President - Marketing from June 1999 to August 1999. Prior to that time, Mr. Hollingsworth held numerous positions within Nationwide. Mr. Hollingsworth has been with Nationwide for 26 years. DAVID R. JAHN has been Senior Vice President - Product Management since November 2000. Previously, he was Senior Vice President - Commercial Insurance from March 1998 to November 2000. Previously, he was Vice President - Property/Casualty Operations and Vice President - Resource Management from March 1996 to January 1998. Prior to that time, Mr. Jahn has held numerous positions within Nationwide. Mr. Jahn has been with Nationwide for 29 years. DONNA A. JAMES has been Executive Vice President - Chief Administrative Officer since July 2000. Previously, she was Senior Vice President - Chief Human Resources Officer from May 1999 to July 2000. She was Senior Vice President - Human Resources from December 1997 to May 1999. Previously, she was Vice President - Human Resources from July 1996 to December 1997. Prior to that time, Ms. James was Vice President - Assistant to the CEO of Nationwide from March 1996 to July 1996. From May 1994 to March 1996, she was Associate Vice President - - Assistant to the CEO of Nationwide. Previously, Ms. James held several positions within Nationwide. Ms. James has been with Nationwide for 19 years. RICHARD D. HEADLEY has been Executive Vice President for Nationwide since July 2000. Previously, he was Executive Vice President - Chief Information Technology Officer from May 1999 to July 2000. He was Senior Vice President - Chief Information Technology Officer from October 1997 to May 1999. Previously, Mr. Headley was Chairman and Chief Executive Officer of Banc One Services Corporation from 1992 to October 1997. From January 1975 until 1992, Mr. Headley held several positions with Banc One Corporation. Mr. Headley has been with Nationwide for 3 years. RICHARD A. KARAS has been Senior Vice President - Sales - Financial Services since March 1993. Previously, he was Vice President - Sales - Financial Services from February 1989 to March 1993. Prior to that time, Mr. Karas held several positions within Nationwide. Mr. Karas has been with Nationwide for 36 years. GREGORY S. LASHUTKA has been Senior Vice President - Corporate Relations since January 2000. Previously, he was the Mayor of the City of Columbus (Ohio) from January 1992 to December 1999. From January 1986 to December 1991, Mr. Lashutka was a Partner with Squire, Sanders & Dempsey. From January 1978 to December 1985, he was City Attorney for the City of Columbus (Ohio). EDWIN P. MCCAUSLAND, JR. has been Senior Vice President - Fixed Income Securities since 1999. Mr. McCausland has 29 years of experience in insurance investments beginning his career in 1970 with Connecticut Mutual Life Insurance Company. He joined Phoenix Mutual Life Insurance Company in 1981 as second Vice President of Bond Investments and rising to Vice President of Pension Operations. He was Vice President and Managing Director of Mass Mutual Life Insurance Company prior to joining Nationwide. DAVID O. MILLER has been a Director of Nationwide since November 1996. Mr. Miller has been Chairman of the Board since 1998. Mr. Miller is president of Owen Potato Farm, Inc. and a partner of M&M Enterprises in Licking County, OH. He is a director and board chairman of the National Cooperative Business Association, director of Cooperative Business International and the International Cooperative Alliance, and serves on the educational executive committee of the National Council of Farmer Cooperatives. He was president of the Ohio Farm Bureau Federation from 1981 to 1985 and was vice president for six years. Mr. Miller served a two year term on the board of the American Farm Bureau Association. He is past president of the Ohio Vegetable and Potato Growers Association, and was a director of Landmark, Inc., a 38 42 farm supply cooperative which is now part of Indianapolis-based Countrymark. ROBERT A. OAKLEY has been Executive Vice President - Chief Financial Officer and Treasurer since December 2000. Previously, Mr. Oakley was Executive Vice President - Chief Financial Officer from April 1995 to December 2000. Prior to that, Mr. Oakley was Senior Vice President - Chief Financial Officer from October 1993 to April 1995. Prior to that time, Mr. Oakley held several positions within Nationwide. Mr. Oakley has been with Nationwide for 25 years. RALPH M. PAIGE has been a Director of Nationwide since April 1999. Mr. Paige has been the Executive Director of the Federation of Southern Cooperatives/Land Assistance Fund since 1969. Mr. Paige also served as the National Field Director/Georgia State Director from 1981 to 1984. JAMES F. PATTERSON has been a Director of Nationwide since April 1989. Mr. Patterson is president of Patterson Farms, Inc. and has operated Patterson Fruit Farm in Chesterland, OH since 1964. Mr. Patterson is on the boards of The Ohio State University Hospitals Health System in Cleveland, Geauga Hospital, Inc. and the National Cooperative Business Association. He is past president of the Ohio Farm Bureau Federation and former member of Cleveland Foundation's Lake and Geauga Advisory Committees. MARK D. PHELAN has been Senior Vice President - Technology and Operations since December 2000. Previously, he was Senior Vice President - Technology Services from 1998 to December 2000. His previous management experience includes five years (1977 - 1982) with the data processing division's sales group at IBM Corporation. From 1982 through 1990, Mr. Phelan served as Director of AT&T's Consumer Communications Services Group and he was subsequently promoted to Sales Vice President for the Eastern Region of the Business Communications Services Division. In 1992, he became Executive Vice President - Sales and Marketing for the Electronic Commerce Division of Checkfree Corporation, a position he held for five years. From 1997 until 1998, he was in private consulting. DOUGLAS C. ROBINETTE has been Senior Vice President - Claims since November 2000. Previously he was Senior Vice President - Claims and Financial Services from 1999 to November 2000. Prior to that time, Mr. Robinette was Senior Vice President - Marketing and Product Management from May 1998 to 1999. Mr. Robinette was Executive Vice President, Customer Services of Employers Insurance of Wausau, and a member of the Nationwide group until 1998, from September 1996 to May 1998. Prior to that time, he was Executive Vice President, Finance and Insurance Services of Wausau from May 1995 to September 1996. From November 1994 to May 1995, Mr. Robinette was Senior Vice President, Finance and Insurance Services of Wausau. From May 1993 to November 1994, he was Senior Vice President, Finance of Wausau. Prior to that time, Mr. Robinette held several positions within the Nationwide group. Mr. Robinette has been with Nationwide for 14 years. ARDEN L. SHISLER has been a Director of Nationwide since 1984. Mr. Shisler is president and chief executive officer of K&B Transport, Inc., a trucking firm in Dalton, OH. He is a director of the National Cooperative Business Association in Washington, DC. He is a former board member and vice president of the Ohio Farm Bureau Federation and past president of the Ohio Agricultural Marketing Association, an Ohio Farm Bureau Federation subsidiary. He is a member of the Ohio Trucking Association, the Ohio Trucking Safety Council, the Wayne County Farm Bureau, Cornerstone Community Church, the Advisory Committee of The Ohio State University Agriculture Technical Institute and a board member of the Wilderness Center. ROBERT L. STEWART has been a Director of Nationwide since 1989. Mr. Stewart is the owner and operator of Sunnydale Farms and Mining in Jewett, OH. He served on the board of the Ohio Farm Bureau Federation and as president of the Ohio Holstein Association board. Mr. Stewart was a director of the Ohio Agricultural Stabilization and Conservation Service board and Landmark, Inc. a farm supply cooperative which is now part of Indianapolis-based Countrymark. MARK R. THRESHER has been Senior Vice President - Finance - Nationwide Financial since May 1999. He was Vice President - Controller from August 1996 to May 1999. He was Vice President and Treasurer from November 1996 to February 1997. Previously, he was Vice President and Treasurer from June 1996 to November 1996. Prior to joining Nationwide, Mr. Thresher served as a partner with KPMG LLP from July 1988 to June 1996. RICHARD M. WAGGONER has been Senior Vice President - Operations since May 1999. Previously, he was President of Nationwide Services from May 1997 to May 1999. Prior to that time, Mr. Waggoner has held numerous positions within the Nationwide group of companies. Mr. Waggoner has been with Nationwide for 24 years. SUSAN A. WOLKEN has been Senior Vice President - Product Management and Nationwide Financial Marketing since May 1999. Previously, Ms. Wolken 39 43 was Senior Vice President - Life Company Operations from June 1997 to May 1999. She was Senior Vice President - Enterprise Administration from July 1996 to June 1997. Prior to that time, she was Senior Vice President - Human Resources from April 1995 to July 1996. From September 1993 to April 1995, Ms. Wolken was Vice President - Human Resources. From October 1989 to September 1993 she was Vice President - Individual Life and Health Operations. Ms. Wolken has been with Nationwide for 26 years. ROBERT J. WOODWARD, JR. has been Executive Vice President - Chief Investment Officer since August 1995. Previously, he was Senior Vice President - Fixed Income Investments from March 1991 to August 1995. Prior to that time, Mr. Woodward held several positions within Nationwide. Mr. Woodward has been with Nationwide for 36 years. 40 44 APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS The underlying mutual funds listed below are designed primarily as investment vehicles for variable annuity contracts and variable life insurance policies issued by insurance companies. There is no guarantee that the investment objectives will be met. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM) FAMILY OF INVESTMENTS American Century Variable Portfolios, Inc. was organized as a Maryland corporation in 1987. It is a diversified, open-end management company, designed only to provide investment vehicles for variable annuity and variable life insurance products of insurance companies. American Century Variable Portfolios, Inc. is managed by American Century Investment Management, Inc. AMERICAN CENTURY VP BALANCED Investment Objective: Capital growth and current income. The Fund will seek to achieve its objective by maintaining approximately 60% of the assets of the Fund in common stocks (including securities convertible into common stocks and other equity equivalents) that are considered by management to have better-than-average prospects for appreciation and approximately 40% in fixed income securities. A minimum of 25% of the fixed income portion of the Fund will be invested in fixed income senior securities. AMERICAN CENTURY VP INCOME & GROWTH Investment Objective: Dividend growth, current income and capital appreciation. The Fund seeks to achieve its investment objective by investing in common stocks. The investment manager constructs the portfolio to match the risk characteristics of the S & P 500 Stock Index and then optimizes each portfolio to achieve the desired balance of risk and return potential. This includes targeting a dividend yield that exceeds that of the S & P 500 Stock Index. Such a management technique known as "portfolio optimization" may cause the Fund to be more heavily invested in some industries than in others. However, the Fund may not invest more than 25% of its total assets in companies whose principal business activities are in the same industry. AMERICAN CENTURY VP INTERNATIONAL Investment Objective: Capital growth. The Fund will seek to achieve its investment objective by investing primarily in securities of foreign companies that meet certain fundamental and technical standards of selection and, in the opinion of the investment manager, have potential for appreciation. Under normal conditions, the Fund will invest at least 65% of its assets in common stocks or other equity securities of issuers from at least three countries outside the United States. Securities of United States issuers may be included in the portfolio from time to time. Although the primary investment of the Fund will be common stocks (defined to include depository receipts for common stocks), the Fund may also invest in other types of securities consistent with the Fund's objective. When the manager believes that the total return potential of other securities equals or exceeds the potential return of common stocks, the Fund may invest up to 35% of its assets in such other securities. AMERICAN CENTURY VP VALUE Investment Objective: Long-term capital growth; income is a secondary objective. Under normal market conditions, the Fund expects to invest at least 80% of the value of its total asset in equity securities, including common and preferred stock, convertible preferred stock and convertible debt obligations. The equity securities in which the Fund will invest will be primarily securities of well-established companies with intermediate-to-large market capitalizations that are believed by management to be undervalued at the time of purchase. CREDIT SUISSE WARBURG PINCUS TRUST (FORMERLY, WARBURG PINCUS TRUST) The Credit Suisse Warburg Pincus Trust is an open-end management investment company organized in March 1995 as a business trust under the laws of The Commonwealth of Massachusetts. The Trust offers its shares to insurance companies for allocation to separate accounts for the purpose of funding variable annuity and variable life contracts. The Portfolios are managed by Credit Suisse Asset Management, LLC. ("Credit Suisse"). SMALL COMPANY GROWTH PORTFOLIO Investment Objective: Capital growth by investing in a portfolio of equity securities of small-sized domestic companies. The Portfolio ordinarily will invest at least 65% of its total assets in common stocks or warrants of small-sized companies (i.e., companies having stock market capitalizations of between $25 million and $1 billion at the time of purchase) that represent attractive opportunities for capital growth. The Portfolio intends to invest 41 45 primarily in companies whose securities are traded on domestic stock exchanges or in the over-the-counter market. The Portfolio's investments will be made on the basis of their equity characteristics and securities ratings generally will not be a factor in the selection process. DREYFUS INVESTMENT PORTFOLIOS Dreyfus Investment Portfolios (the "Fund") is an open-end, management investment company known as a mutual fund. Shares are offered only to variable annuity and variable life insurance separate accounts established by insurance companies to fund variable annuity contracts and variable life insurance policies and to qualified pension and retirement plans. Individuals may not purchase shares directly from the Fund. The Dreyfus Corporation serves as the Fund's investment adviser. EUROPEAN EQUITY PORTFOLIO - INITIAL SHARES Investment Objective: Long-term capital growth. To pursue this goal, the Portfolio generally invests at least 80% of its total assets in stocks included within the universe of the 300 largest European companies. The Portfolio may invest up to 10% of its total assets in the stocks of non-European companies. The Portfolio's stock investments may include common stocks, preferred stocks and convertible securities. THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. - INITIAL SHARES The Dreyfus Socially Responsible Growth Fund is an open-end, diversified, management investment company incorporated under Maryland law on July 20, 1992, and commenced operations on October 7, 1993. The Fund offers its shares only as investment vehicles for variable annuity and variable life insurance companies. The Dreyfus Corporation serves as the Fund's investment advisor. NCM Capital Management Group, Inc. serves as the Fund's sub-investment adviser and provides day-to-day management of the Fund's portfolio. Investment Objective: Capital growth through equity investment in companies that, in the opinion of the Fund's advisers, not only meet traditional investment standards, but which also show evidence that they conduct their business in a manner that contributes to the enhancement of the quality of life in America. Current income is secondary to the primary goal. DREYFUS STOCK INDEX FUND, INC. - INITIAL SHARES Dreyfus Stock Index Fund, Inc. ("Fund") is an open-end, non-diversified, management investment company. It was incorporated under Maryland law on January 24, 1989, and commenced operations on September 29, 1989. The Fund offers its shares only as investment vehicles for variable annuity and variable life insurance products of insurance companies. The Dreyfus Corporation ("Dreyfus") serves as the Fund's manager, while Mellon Equity Associates, an affiliate of Dreyfus serves as the Fund's index manager. Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation. Investment Objective: To provide investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price Index. The Fund is neither sponsored by nor affiliated with Standard & Poor's Corporation. DREYFUS VARIABLE INVESTMENT FUND Dreyfus Variable Investment Fund (the "Fund") is an open-end, management investment company. It was organized as an unincorporated business trust under the laws of the Commonwealth of Massachusetts on October 29,1986 and commenced operations August 31, 1990. The Fund offers its shares only as investment vehicles for variable annuity and variable life insurance products of insurance companies. Dreyfus serves as the Fund's manager. Fayez Sarofim & Company serves as the sub-adviser and provides day-to-day management of the Portfolio. APPRECIATION PORTFOLIO - INITIAL SHARES (FORMERLY, CAPITAL APPRECIATION PORTFOLIO) Investment Objective: Primarily to provide long-term capital growth consistent with the preservation of capital; current income is a secondary investment objective. This Portfolio invests primarily in the common stocks of domestic and foreign issuers. GROWTH AND INCOME PORTFOLIO Investment Objective: To provide long-term capital growth, current income and growth of income, consistent with reasonable investment risk. The Portfolio invests in equity securities, debt securities and money market instruments of domestic and foreign issuers. The proportion of the Portfolio's assets invested in each type of security will vary from time to time in accordance with Dreyfus' assessment of economic conditions and investment opportunities. In purchasing equity securities, Dreyfus will invest in common stocks, preferred stocks and securities convertible into common stocks, particularly those which offer opportunities for capital appreciation and growth of earnings, while paying current dividends. The Portfolio will generally invest in investment-grade debt obligations, except that it may invest up to 35% of the value of its net assets in convertible debt securities rated not lower than Caa by Moody's Investor Service, Inc. or CCC by Standard & Poor's Ratings Group, Fitch Investors Service, L.P. or Duff 42 46 & Phelps Credit Rating Co., or if unrated, deemed to be of comparable quality by Dreyfus. These securities are considered to have predominantly speculative characteristics with respect to capacity to pay interest and repay principal and are considered to be of poor standing. See "Investment Considerations and Risks-Lower Rated Securities" in the Portfolio's prospectuses. FIDELITY VARIABLE INSURANCE PRODUCTS FUND Fidelity Variable Insurance Products Fund ("VIP") is an open-end, diversified, management investment company organized as a Massachusetts business trust on November 13, 1981. VIP's shares are purchased by insurance companies to fund benefits under variable insurance and annuity policies. Fidelity Management & Research Company ("FMR") is the manager for VIP and its portfolios. VIP EQUITY-INCOME PORTFOLIO Investment Objective: Reasonable income by investing primarily in income-producing equity securities. In choosing these securities FMR also will consider the potential for capital appreciation. The Portfolio's goal is to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor's 500 Composite Stock Price Index. VIP GROWTH PORTFOLIO Investment Objective: Capital appreciation. This Portfolio will invest in the securities of both well-known and established companies, and smaller, less well-known companies which may have a narrow product line or whose securities are thinly traded. These latter securities will often involve greater risk than may be found in the ordinary investment security. FMR's analysis and expertise plays an integral role in the selection of securities and, therefore, the performance of the Portfolio. Many securities which FMR believes would have the greatest potential may be regarded as speculative, and investment in the Portfolio may involve greater risk than is inherent in other underlying mutual funds. It is also important to point out that the Portfolio makes most sense for you if you can afford to ride out changes in the stock market, because it invests primarily in common stocks. FMR also can make temporary investments in common stocks. VIP HIGH INCOME PORTFOLIO Investment Objective: High level of current income by investing primarily in high-risk, high-yielding, lower-rated, fixed-income securities, while also considering growth of capital. FMR will seek high current income normally by investing the Portfolio's assets as follows: -at least 65% in income-producing debt securities and preferred stocks, including convertible securities, zero coupon securities, and mortgage-backed and asset-backed securities. -up to 20% in common stocks and other equity securities when consistent with the Portfolio's primary objective or acquired as part of a unit combining fixed-income and equity securities. Higher yields are usually available on securities that are lower-rated or that are unrated. Lower-rated securities are usually defined as Ba or lower by Moody's; BB or lower by Standard & Poor's and may be deemed to be of a speculative nature. The Portfolio may also purchase lower-quality bonds such as those rated Ca3 by Moody's or C- by Standard & Poor's which provide poor protection for payment of principal and interest (commonly referred to as "junk bonds"). For a further discussion of lower-rated securities, please see the "Risks of Lower-Rated Debt Securities" section of the Portfolio's prospectus. VIP OVERSEAS PORTFOLIO Investment Objective: Long-term growth of capital primarily through investments in foreign securities. The Portfolio provides a means for investors to diversify their own portfolios by participating in companies and economies outside of the United States. FIDELITY VARIABLE INSURANCE PRODUCTS FUND II Fidelity Variable Insurance Products Fund II ("VIP II") is an open-end, diversified, management investment company organized as a Massachusetts business trust on March 21, 1988. VIP II's shares are purchased by insurance companies to fund benefits under variable insurance and annuity policies. FMR is the manager of VIP II and its portfolios. VIP II ASSET MANAGER PORTFOLIO Investment Objective: Obtain high total return with reduced risk over the long-term by allocating its assets among domestic and foreign stocks, bonds and short-term fixed income instruments. VIP II CONTRAFUND(R) PORTFOLIO Investment Objective: Capital appreciation by investing primarily in companies that FMR believes to be undervalued due to an overly pessimistic appraisal by the public. This strategy can lead to investments in domestic or foreign companies, small and large, many of which may not be well known. The Portfolio primarily invests in common stock and securities convertible into common stock, but it has 43 47 the flexibility to invest in any type of security that may produce capital appreciation. FIDELITY VARIABLE INSURANCE PRODUCTS FUND III The Fidelity Variable Insurance Products Fund III ("VIP III") is an open-end, diversified, management investment company organized as a Massachusetts business trust on July 14, 1994. VIP III's shares are purchased by insurance companies to fund benefits under variable life insurance and annuity contracts. FMR is the manager of VIP III and its portfolios. VIP III GROWTH OPPORTUNITIES PORTFOLIO Investment Objective: Capital growth by investing primarily in common stocks and securities convertible into common stocks. The Portfolio, under normal conditions, will invest at least 65% of its total assets in securities of companies that FMR believes have long-term growth potential. Although the Portfolio invests primarily in common stock and securities convertible into common stock, it has the ability to purchase other securities, such as preferred stock and bonds, that may produce capital growth. The Portfolio may invest in foreign securities without limitation. JANUS ASPEN SERIES The Janus Aspen Series is an open-end management investment company whose shares are offered in connection with investment in and payments under variable annuity contracts and variable life insurance policies, as well as certain qualified retirement plans. Janus Capital Corporation serves as investment adviser to each Portfolio. CAPITAL APPRECIATION PORTFOLIO: SERVICE SHARES Investment Objective: Long-term growth of capital by investing primarily in common stocks selected for their growth potential. The Portfolio may invest in companies of any size, from larger, well-established companies to smaller, emerging growth companies. GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES Investment Objective: Long-term growth of capital by investing primarily in equity securities of U.S. and foreign companies selected for their growth potential. Under normal circumstances, the portfolio invests at least 65% of its total assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology. INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES Investment Objective: Long-term growth of capital by investing at least 65% of its total assets in securities of issuers from at least five different countries, excluding the United States. Although the Portfolio intends to invest substantially all of its assets in issuers located outside the United States, it may invest in U.S. issuers and it may at times invest all of its assets in fewer than five countries, or even a single country. NATIONWIDE SEPARATE ACCOUNT TRUST Nationwide Separate Account Trust ("NSAT") is a diversified open-end management investment company created under the laws of Massachusetts. NSAT offers shares in the mutual funds listed below, each with its own investment objectives. Shares of NSAT will be sold primarily to separate accounts to fund the benefits under variable life insurance policies and variable annuity contracts issued by life insurance companies. Villanova Global Asset Management Trust, an indirect subsidiary of Nationwide Mutual Insurance Company, manages the assets of the Gartmore NSAT Emerging Markets Fund and Gartmore NSAT International Growth Fund. The assets of NSAT are managed by Villanova Mutual Fund Capital Trust ("VMF"), an indirect subsidiary of Nationwide Financial Services, Inc. CAPITAL APPRECIATION FUND Investment Objective: Long-term capital appreciation. DREYFUS NSAT MID CAP INDEX FUND (FORMERLY, NSAT NATIONWIDE MID CAP INDEX FUND) Subadviser: The Dreyfus Corporation Investment Objective: Capital appreciation. The Fund seeks to match the performance of the Standard & Poor's MidCap 400 Index. To pursue this goal, the Fund generally is fully invested in all 400 stocks included in this index in proportion to their weighting in the index, and in futures whose performance is tied to the index. The Fund is neither sponsored by nor affiliated with Standard & Poor's Corporation. GARTMORE NSAT EMERGING MARKETS FUND (subadviser: Gartmore Global Partners) Investment Objective: Long-term capital growth by investing primarily in equity securities of companies located in emerging market countries. GARTMORE NSAT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND Investment Objective: Long-term capital appreciation by investing primarily and at least 65% of its total assets in equity securities issued by U.S. and foreign companies with business operations in technology and communications and/or technology and communication related industries. 44 48 GARTMORE NSAT INTERNATIONAL GROWTH FUND (subadviser: Gartmore Global Partners) Investment Objective: Long-term capital growth by investing primarily in equity securities of companies in Europe, Australia, the Far East and other regions, including developing countries. The Fund invests at least 65% of its assets in established companies located in at least three countries other than the U.S. GOVERNMENT BOND FUND Investment Objective: As high a level of income as is consistent with the preservation of capital by investing at least 65% of its total assets in U.S. government and agency bonds, bills and notes. MAS NSAT MULTI SECTOR BOND FUND (FORMERLY, NSAT NATIONWIDE MULTI SECTOR BOND FUND) Subadviser: Miller, Anderson & Sherrerd, LLP Investment Objective: Primarily seeks above average total return over a market cycle of three to five years. The Fund invests in a diversified portfolio of U.S. and foreign fixed income securities, including high yield securities (commonly referred to as "junk bonds") and emerging markets securities. The subadviser will use futures, swaps and other derivatives in managing the Fund. MONEY MARKET FUND Investment Objective: As high a level of current income as is consistent with the preservation of capital and maintenance of liquidity. NATIONWIDE SMALL CAP GROWTH FUND Subadvisers: Miller Anderson & Sherrerd, LLP, Neuberger Berman, LLC and Waddell & Reed Investment Management Company Investment Objective: Capital growth by investing in a broadly diversified portfolio of equity securities issued by U.S. and foreign companies with market capitalizations in the range of companies represented by the Russell 2000, known has small cap companies. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of small cap companies. The balance of the Fund's assets may be invested in equity securities of larger cap companies. NATIONWIDE SMALL CAP VALUE FUND Subadviser:The Dreyfus Corporation Investment Objective: Capital appreciation through investment in a diversified portfolio of equity securities of companies with a medial market capitalization of approximately $1 billion. Under normal market conditions, at least 75% of the Fund's total assets in equity securities of companies whose equity market capitalizations at the time of investment are similar to the market capitalizations of companies in the Russell 2000 Index. NATIONWIDE SMALL COMPANY FUND Subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC, Lazard Asset Management, Strong Capital Management Inc. and Waddell & Reed Investment Management Company. Investment Objective: Long-term growth of capital. Under normal market conditions, the Fund will invest at least 65% of its total assets in equity securities of investment are similar to the market capitalizations of companies in the Russell 2000 Index. STRONG NSAT MID CAP GROWTH FUND (FORMERLY, NSAT NATIONWIDE STRATEGIC GROWTH FUND) Subadviser: Strong Capital Management Inc. Investment Objective: Capital growth by focusing on common stocks of U.S. and foreign companies that the subadviser believes are reasonably priced and have above-average growth potential. The Fund invests primarily in stocks of medium sized companies but its portfolio can include stocks of companies of any size. TOTAL RETURN FUND Investment Objective: Reasonable, long-term total return on invested capital. TURNER NSAT GROWTH FOCUS FUND (subadviser: Turner Investment Partners, Inc.) Investment Objective: Long-term capital appreciation by investing primarily in U.S. common stocks, ADRs and foreign companies that demonstrate strong earnings growth potential. The Fund is non-diversified and typically focuses its investments in a core group of 20 to 30 common stocks. NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST ("AMT") Neuberger Berman AMT is an open-end, diversified management investment company that offers its Portfolios in connection with variable annuity contracts and variable life insurance policies, and certain qualified plans. Prior to May 1, 2000, the portfolios invested through a two-tier master/feeder structure, whereby each Portfolio invested its assets in another fund that served as a corresponding "master series;" the master series invested in securities. Effective May 1, 2000, the portfolios converted to a conventional one-tier structure, whereby each portfolio holds its securities directly. Neuberger Berman Management Inc. is the investment adviser. 45 49 AMT GROWTH PORTFOLIO Investment Objective: Capital growth. The Portfolio pursues this goal by investing mainly in the common stocks of mid-capitalization companies. The managers look for fast-growing companies that are in new or rapidly evolving industries and seek to reduce risk by diversifying among many companies, industries and sectors. AMT GUARDIAN PORTFOLIO Investment Objective: Long-term capital growth, with current income as a secondary objective. The Portfolio pursues these goals by investing mainly in common stocks of large-capitalization companies. AMT LIMITED MATURITY BOND PORTFOLIO Investment Objective: The highest available current income consistent with liquidity and low risk to principal; total return is a secondary objective. The Portfolio pursues these goals by investing mainly in investment-grade bonds and other debt securities from U.S. government and corporate issuers. AMT PARTNERS PORTFOLIO Investment Objective: Capital growth. The Portfolio pursues its goal by investing mainly in common stocks of mid- to large-capitalization companies. OPPENHEIMER VARIABLE ACCOUNT FUNDS The Oppenheimer Variable Account Funds are an open-end, diversified management investment company organized as a Massachusetts business trust in 1984. Shares of the Funds are sold only to provide benefits under variable life insurance policies and variable annuity contracts. OppenheimerFunds, Inc. is the investment adviser. OPPENHEIMER AGGRESSIVE GROWTH FUND/VA Investment Objective: Capital appreciation by investing in "growth type" companies. Such companies are believed to have relatively favorable long-term prospects for increasing demand for their goods or services, or to be developing new products, services or markets and normally retain a relatively larger portion of their earnings for research, development and investment in capital assets. The Fund may also invest in cyclical industries in "special situations" that OppenheimerFunds, Inc. believes present opportunities for capital growth. OPPENHEIMER BOND FUND/VA Investment Objective: Primarily seeks a high level of current income by investing at least 65% of its total assets in investment grade debt securities, U.S. government securities and money market instruments. Investment grade debt securities would include those rated in one of the four highest ranking categories by any nationally-recognized rating organization or if unrated or split-rated (rated investment grade and below investment grade by different rating organizations), determined by OppenheimerFunds, Inc. to be of comparable quality. The Fund may invest up to 35% of its total assets in debt securities rated less than investment grade when consistent with the Fund's investment objectives. The Fund seeks capital growth as a secondary objective when consistent with its primary objective. OPPENHEIMER CAPITAL APPRECIATION FUND/VA (FORMERLY, OPPENHEIMER GROWTH FUND) Investment Objective: Capital appreciation by investing in securities of well-known established companies. Such securities generally have a history of earnings and dividends and are issued by seasoned companies (having an operating history of at least five years including predecessors). Current income is a secondary consideration in the selection of the Fund's portfolio securities. OPPENHEIMER GLOBAL SECURITIES FUND/VA Investment Objective: Long-term capital appreciation by investing a substantial portion of assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations which are considered to have appreciation possibilities. Current income is not an objective. These securities may be considered to be speculative. OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Investment Objective: High total return, which stocks, preferred stocks, convertible securities and warrants. Debt investments will include bonds, participation includes growth in the value of its shares as well as current income from quality and debt securities. In seeking its investment objectives, the Fund may invest in equity and debt securities. Equity investments will include common interests, asset-backed securities, private-label mortgage-backed securities and CMOs, zero coupon securities and U.S. debt obligations, and cash and cash equivalents. From time to time, the Fund may focus on small to medium capitalization issuers, the securities of which may be subject to greater price volatility than those of larger capitalized issuers. OPPENHEIMER MULTIPLE STRATEGIES FUND/VA Investment Objective: To seek a total investment return (which includes current income and capital appreciation in the value of its shares) from investments in common stocks and other equity 46 50 securities, bonds and other debt securities, and "money market" securities. STRONG OPPORTUNITY FUND II, INC. (FORMERLY, STRONG SPECIAL FUND II, INC.) Strong Opportunity Fund II, Inc. is a diversified, open-end management company commonly called a mutual fund. Strong Opportunity Fund II, Inc. was incorporated in Wisconsin and may only be purchased by the separate accounts of insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Strong Capital Management Inc. is the investment adviser for the Fund. Investment Objective: Capital appreciation through investments in a diversified portfolio of equity securities. THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.) The Universal Institutional Funds, Inc. is a mutual fund designed to provide investment vehicles for variable annuity contracts and variable life insurance policies and for certain tax-qualified investors. EMERGING MARKETS DEBT PORTFOLIO Investment Objective: High total return by investing primarily in dollar- and non-dollar denominated fixed income securities of government and government related issuers located in emerging market countries, which securities provide a high level of current income, while at the same time holding the potential for capital appreciation if the perceived creditworthiness of the issuer improves due to improving economic, financial, political, social or other conditions in the country in which the issuer is located. Morgan Stanley Dean Witter Investment Management Inc. serves as the Fund's investment adviser. U. S. REAL ESTATE PORTFOLIO Investment Objective: Long-term capital growth by investing principally in a diversified portfolio of securities of companies operating in the real estate industry ("Real Estate Securities"). Current income is a secondary consideration. Real Estate Securities include equity securities, including common stocks and convertible securities, as well as non-convertible preferred stocks and debt securities of real estate industry companies. A "real estate industry company" is a company that derives at least 50% of its assets (marked to market), gross income or net profits from the ownership, construction, management or sale of residential, commercial or industrial real estate. Under normal market conditions, at least 65% of the Fund's total assets will be invested in Real Estate Securities, primarily equity securities of real estate investment trusts. The Portfolio may invest up to 25% of its total assets in securities issued by foreign issuers, some or all of which may also be Real Estate Securities. Morgan Stanley Asset Management, Inc. serves as the Fund's investment adviser. VAN ECK WORLDWIDE INSURANCE TRUST Van Eck Worldwide Insurance Trust ("Van Eck Trust") is an open-end management investment company organized as a business trust under the laws of the Commonwealth of Massachusetts on January 7, 1987. Shares of the Van Eck Trust are offered only to separate accounts of various insurance companies to fund benefits of variable insurance and annuity policies. The investment adviser and manager is Van Eck Associates Corporation. WORLDWIDE BOND FUND Investment Objective: High total return through a flexible policy of investing globally, primarily in debt securities. WORLDWIDE EMERGING MARKETS FUND Investment Objective: Long-term capital appreciation by investing primarily in equity securities in emerging markets around the world. The Fund specifically emphasizes investment in countries that, compared to the world's major economies, exhibit relatively low gross national product per capita, as well as the potential for rapid economic growth. WORLDWIDE HARD ASSETS FUND Investment Objective: Long-term capital appreciation by investing globally, primarily in "Hard Assets Securities." For the Fund's purpose Hard assets are real estate, energy, timber, and industrial and precious metals. Income is a secondary consideration. THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NO LONGER AVAILABLE AS INVESTMENT OPTIONS FOR POLICIES ISSUED ON OR AFTER SEPTEMBER 27, 1999: AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., MEMBER OF THE AMERICAN CENTURY(SM) FAMILY OF INVESTMENTS. American Century Variable Portfolios, Inc. was organized as a Maryland corporation in 1987. It is a diversified, open-end investment management company which offers its shares only to provide investment vehicles for variable annuity and variable life insurance products of insurance companies. American Century Variable Portfolios, Inc. is managed by American Century Investment Management, Inc. 47 51 AMERICAN CENTURY VP CAPITAL APPRECIATION Investment Objective: Capital growth. The Fund will seek to achieve its objective by investing in common stocks (including securities convertible into common stocks and other equity equivalents) that meet certain fundamental and technical standards of selection and have, in the opinion of the Fund's investment manager, better than average potential for appreciation. The Fund tries to stay fully invested in such securities, regardless of the movement of stock prices generally. The Fund may invest in cash and cash equivalents temporarily or when it is unable to find common stocks meeting its criteria of selection. It may purchase securities only of companies that have a record of at least three years continuous operation. There can be no assurance that the Fund will achieve its investment objective. CREDIT SUISSE WARBURG PINCUS TRUST (FORMERLY, WARBURG PINCUS TRUST) The Credit Suisse Warburg Pincus Trust is an open-end management investment company organized in March 1995 as a business trust under the laws of The Commonwealth of Massachusetts. The Trust offers its shares to insurance companies for allocation to separate accounts for the purpose of funding variable annuity and variable life contracts. The Portfolios are managed by Credit Suisse Asset Management, LLC ("Credit Suisse"). GLOBAL POST-VENTURE CAPITAL PORTFOLIO (FORMERLY, POST-VENTURE CAPITAL PORTFOLIO) Investment Objective: Long-term growth of capital by investing primarily in equity securities of U.S. and foreign companies considered to be in their post-venture capital stage of development. Under normal conditions, the Portfolio will invest at least 65% of its total assets in equity securities of "post-venture capital companies." A post-venture capital company is on that has received venture capital financing either: (a) during the early stages of the company's existence or the early stages of the development of a new product or service; or (b) as part of the restructuring or recapitalization of the company. The Portfolio will invest in at least three countries, including the United States. INTERNATIONAL EQUITY PORTFOLIO Investment Objective: Long-term capital appreciation by investing primarily in a broadly diversified portfolio of equity securities of companies, wherever organized, that in the judgment of Credit Suisse have their principal business activities and interests outside the United States. The Portfolio will ordinarily invest substantially all of its assets, but no less than 65% of its total assets, in common stocks, warrants and securities convertible into or exchangeable for common stocks. The Portfolio intends to invest principally in the securities of financially strong companies with opportunities for growth within growing international economies and markets through increased earning power and improved utilization or recognition of assets. STRONG VARIABLE INSURANCE FUNDS, INC. Strong Variable Insurance Funds, Inc. ("Corporation") is an open-end management investment company commonly referred to as a mutual fund. Incorporated in the State of Wisconsin, the Corporation has been authorized to issue shares of common stock and series and classes of series of common stock. The International Stock Fund II and The Strong Discovery Fund II, Inc. ("Funds") are offered by the Corporation to insurance company separate accounts for the purpose of funding variable life insurance policies and variable annuity contracts. Strong Capital Management, Inc. is the investment advisor to the Funds. STRONG DISCOVERY FUND II, INC. Investment Objective: Maximum capital appreciation through investments in a diversified portfolio of securities. The Fund normally emphasizes investment in equity securities and may invest up to 100% of its total assets in equity securities including common stocks, preferred stocks and securities convertible into common or preferred stocks. Although the Fund normally emphasizes investment in equity securities, the Fund has the flexibility to invest in any type of security that the Advisor believes has the potential for capital appreciation including up to 100% of its total assets in debt obligations, including intermediate to long-term corporate or U.S. government debt securities. INTERNATIONAL STOCK FUND II Investment Objective: Capital growth by investing primarily in the equity securities of issuers located outside the United States. 48 52 APPENDIX B: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES, AND DEATH BENEFITS The illustrations in this prospectus have been prepared to help show how values under the polices change with investment performance. The illustrations demonstrate how cash values, cash surrender values and death benefits under a policy would vary over time if the hypothetical gross investment rates of return were a uniform annual effective rate of either 0%, 6% or 12%. If the hypothetical gross investment rate of return averages 0%, 6% or 12% over a period of years, but fluctuates above or below those averages for individual years, the cash values,, cash surrender values and death benefits may be different. For hypothetical returns of 0% and 6%, the illustrations also illustrate when the policies would go into default, at which time additional premium payments would be required to continue the policy in force. The illustrations also assume there is not policy indebtedness, no additional premium payments are made, no cash values are allocated to the fixed account, and there are no changes in the specified amount or death benefit option. The amounts shown for the cash value, cash surrender value and death benefit as of each policy anniversary reflect the fact that the net investment return on the assets held in the variable account sub-accounts is lower than the gross return. This is due to the daily charges made against the assets of the sub-accounts for assuming mortality and expense risks. The mortality and expense risk charges are equivalent to an annualized rate of 0.80% for policy years 1-10. This charge varies starting at the beginning of policy year 11 depending upon the amount of the cash value. If the cash value is less than $25,000, the mortality and expense risk charge will remain at 0.80%. If the cash value is between $25,000 and $99,999, the charge will be reduced to an equivalent of an annualized rate of 0.50%. If the cash value equals or exceeds $100,000, then the charge will be the equivalent of 0.30%. This is due to the deduction of underlying mutual fund investment advisory fees and other expenses which are equivalent to an annualized rate of 0.90%. This effective rate is based on the average of the fund expenses, after expense reimbursement, for the preceding year for all mutual fund options available under the policy as of December 31, 2000. Some underlying mutual fund options are subject to expense reimbursements and fee waivers. Absent expense reimbursements and fee waivers, the annualized rate would have been 0.94%. Nationwide anticipates that the expense reimbursement and fee waiver arrangements will continue past the current year. Should there be an increase or decrease in the expense reimbursements and fee waivers of these underlying mutual funds, such change will be reflected in the net asset value of the corresponding underlying mutual fund. Taking into account the underlying mutual fund expenses, gross annual rates of return of 0%, 6% and 12% correspond to net investment experience at constant annual rates of -0.90%, 5.10% and 11.10%, respectively. The illustrations also reflect the fact that Nationwide makes monthly charges for providing insurance protection. Current values reflect current cost of insurance charges and guaranteed values reflect the maximum cost of insurance charges guaranteed in the policy. The values shown are for policies which are issued as standard. Policies issued on a substandard basis would result in lower cash values and death benefits than those illustrated. Death benefit Option 1 has been assumed in all the illustrations. The illustrations reflect that Nationwide deducts a sales load from each premium payment. Charges for state premium and federal taxes are also deducted from each premium payment. The illustrations reflect the fact that no charges for federal or state income taxes are currently made against the variable account. If such a charge is made in the future, it will require a higher gross investment return than illustrated in order to produce the net after-tax returns shown in the illustrations. In addition, the illustrations reflect the fact that Nationwide deducts a monthly administrative charge at the beginning of each policy month. The illustrations also reflect that Nationwide deducts a monthly charge to assume mortality and expense risks. This mortality and expense risk charge is assessed at the beginning of each policy month and is calculated as a percentage of the assets of the variable account only. The cash surrender values shown in the illustrations reflect that Nationwide will deduct a surrender charge from the policy's cash value for any policy surrendered in the first fourteen years. Upon request, Nationwide will furnish a comparable illustration based on the proposed insured's age, sex, smoking classification, rating classification and premium payment requested. 49 53 $12,150 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 1 CURRENT VALUES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST AT CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 12,758 10,523 637 1,000,000 11,172 1,286 1,000,000 11,821 1,936 1,000,000 2 26,153 20,760 10,874 1,000,000 22,703 12,817 1,000,000 24,723 14,837 1,000,000 3 40,218 30,700 21,803 1,000,000 34,591 25,694 1,000,000 38,797 29,900 1,000,000 4 54,986 40,332 32,423 1,000,000 46,835 38,926 1,000,000 54,144 46,235 1,000,000 5 70,493 49,637 42,717 1,000,000 59,427 52,507 1,000,000 70,872 63,952 1,000,000 6 86,775 58,602 52,671 1,000,000 72,363 66,431 1,000,000 89,103 83,172 1,000,000 7 103,872 67,203 62,754 1,000,000 85,628 81,180 1,000,000 108,963 104,514 1,000,000 8 121,823 75,404 72,439 1,000,000 99,200 96,235 1,000,000 130,583 127,617 1,000,000 9 140,671 83,166 81,683 1,000,000 113,047 111,564 1,000,000 154,103 152,620 1,000,000 10 160,462 90,444 90,444 1,000,000 127,134 127,134 1,000,000 179,681 179,681 1,000,000 11 181,243 98,291 98,291 1,000,000 142,859 142,859 1,000,000 209,291 209,291 1,000,000 12 203,063 105,712 105,712 1,000,000 158,943 158,943 1,000,000 241,730 241,730 1,000,000 13 225,973 112,601 112,601 1,000,000 175,385 175,385 1,000,000 277,310 277,310 1,000,000 14 250,030 118,934 118,934 1,000,000 192,187 192,187 1,000,000 316,386 316,386 1,000,000 15 275,289 124,673 124,673 1,000,000 209,341 209,341 1,000,000 359,351 359,351 1,000,000 16 301,810 130,011 130,011 1,000,000 227,052 227,052 1,000,000 406,832 406,832 1,000,000 17 329,658 134,977 134,977 1,000,000 245,387 245,387 1,000,000 459,390 459,390 1,000,000 18 358,899 139,609 139,609 1,000,000 264,421 264,421 1,000,000 517,658 517,658 1,000,000 19 389,601 143,980 143,980 1,000,000 284,262 284,262 1,000,000 582,359 582,359 1,000,000 20 421,839 148,210 148,210 1,000,000 305,064 305,064 1,000,000 654,313 654,313 1,000,000 21 455,688 151,453 151,453 1,000,000 326,181 326,181 1,000,000 734,035 734,035 1,000,000 22 491,230 153,572 153,572 1,000,000 347,557 347,557 1,000,000 822,565 822,565 1,000,000 23 528,549 154,413 154,413 1,000,000 369,138 369,138 1,000,000 921,142 921,142 1,000,000 24 567,734 153,792 153,792 1,000,000 390,859 390,859 1,000,000 1,030,905 1,030,905 1,082,450 25 608,878 151,465 151,465 1,000,000 412,631 412,631 1,000,000 1,152,169 1,152,169 1,209,778 26 652,080 147,110 147,110 1,000,000 434,330 434,330 1,000,000 1,286,056 1,286,056 1,350,359 27 697,441 140,303 140,303 1,000,000 455,796 455,796 1,000,000 1,433,827 1,433,827 1,505,518 28 745,071 130,507 130,507 1,000,000 476,834 476,834 1,000,000 1,596,852 1,596,852 1,676,694 29 795,082 117,087 117,087 1,000,000 497,239 497,239 1,000,000 1,776,616 1,776,616 1,865,447 30 847,594 99,315 99,315 1,000,000 516,812 516,812 1,000,000 1,974,734 1,974,734 2,073,470
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 50 54 $12,150 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 1 GUARANTEED VALUES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST AT CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 12,758 10,279 393 1,000,000 10,914 1,028 1,000,000 11,549 1,663 1,000,000 2 26,153 20,262 10,377 1,000,000 22,161 12,275 1,000,000 24,135 14,249 1,000,000 3 40,218 29,932 21,035 1,000,000 33,732 24,835 1,000,000 37,839 28,942 1,000,000 4 54,986 39,267 31,359 1,000,000 45,614 37,705 1,000,000 52,748 44,840 1,000,000 5 70,493 48,241 41,321 1,000,000 57,788 50,868 1,000,000 68,952 62,032 1,000,000 6 86,775 56,819 50,888 1,000,000 70,226 64,295 1,000,000 86,543 80,612 1,000,000 7 103,872 64,957 60,508 1,000,000 82,891 78,442 1,000,000 105,616 101,167 1,000,000 8 121,823 72,591 69,625 1,000,000 95,724 92,758 1,000,000 126,258 123,292 1,000,000 9 140,671 79,642 78,159 1,000,000 108,648 107,165 1,000,000 148,555 147,072 1,000,000 10 160,462 86,019 86,019 1,000,000 121,577 121,577 1,000,000 172,598 172,598 1,000,000 11 181,243 92,326 92,326 1,000,000 135,542 135,542 1,000,000 199,967 199,967 1,000,000 12 203,063 97,899 97,899 1,000,000 149,431 149,431 1,000,000 229,610 229,610 1,000,000 13 225,973 102,565 102,565 1,000,000 163,137 163,137 1,000,000 261,718 261,718 1,000,000 14 250,030 106,126 106,126 1,000,000 176,539 176,539 1,000,000 296,512 296,512 1,000,000 15 275,289 108,407 108,407 1,000,000 189,475 189,475 1,000,000 334,232 334,232 1,000,000 16 301,810 109,171 109,171 1,000,000 201,724 201,724 1,000,000 375,135 375,135 1,000,000 17 329,658 108,094 108,094 1,000,000 212,987 212,987 1,000,000 419,506 419,506 1,000,000 18 358,899 104,746 104,746 1,000,000 222,869 222,869 1,000,000 467,670 467,670 1,000,000 19 389,601 98,600 98,600 1,000,000 230,887 230,887 1,000,000 520,052 520,052 1,000,000 20 421,839 88,955 88,955 1,000,000 236,489 236,489 1,000,000 577,237 577,237 1,000,000 21 455,688 75,162 75,162 1,000,000 239,058 239,058 1,000,000 640,044 640,044 1,000,000 22 491,230 56,540 56,540 1,000,000 237,900 237,900 1,000,000 709,600 709,600 1,000,000 23 528,549 32,235 32,235 1,000,000 232,206 232,206 1,000,000 787,429 787,429 1,000,000 24 567,734 1,142 1,142 1,000,000 220,968 220,968 1,000,000 875,565 875,565 1,000,000 25 608,878 (*) (*) (*) 202,830 202,830 1,000,000 976,620 976,620 1,025,451 26 652,080 (*) (*) (*) 175,916 175,916 1,000,000 1,089,238 1,089,238 1,143,700 27 697,441 (*) (*) (*) 137,633 137,633 1,000,000 1,212,865 1,212,865 1,273,509 28 745,071 (*) (*) (*) 84,347 84,347 1,000,000 1,348,400 1,348,400 1,415,819 29 795,082 (*) (*) (*) 11,100 11,100 1,000,000 1,496,771 1,496,771 1,571,610 30 847,594 (*) (*) (*) (*) (*) (*) 1,658,950 1,658,950 1,741,897
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. (*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 51 55 $14,000 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 2 CURRENT VALUES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST AT CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 14,700 12,222 1,897 1,012,222 12,973 2,648 1,012,973 13,725 3,400 1,013,725 2 30,135 24,126 13,801 1,024,126 26,377 16,052 1,026,377 28,718 18,393 1,028,718 3 46,342 35,700 26,407 1,035,700 40,211 30,918 1,040,211 45,086 35,794 1,045,086 4 63,359 46,927 38,667 1,046,927 54,470 46,210 1,054,470 62,946 54,686 1,062,946 5 81,227 57,788 50,561 1,057,788 69,146 61,918 1,069,146 82,421 75,194 1,082,421 6 99,988 68,264 62,069 1,068,264 84,230 78,035 1,084,230 103,646 97,451 1,103,646 7 119,688 78,327 73,681 1,078,327 99,702 95,056 1,099,702 126,760 122,113 1,126,760 8 140,372 87,936 84,838 1,087,936 115,531 112,433 1,115,531 151,901 148,804 1,151,901 9 162,090 97,041 95,492 1,097,041 131,670 130,122 1,131,670 179,214 177,665 1,179,214 10 184,895 105,589 105,589 1,105,589 148,070 148,070 1,148,070 208,850 208,850 1,208,850 11 208,840 114,845 114,845 1,114,845 166,286 166,286 1,166,286 243,004 243,004 1,243,004 12 233,982 123,505 123,505 1,123,505 184,859 184,859 1,184,859 280,271 280,271 1,280,271 13 260,381 131,535 131,535 1,131,535 203,763 203,763 1,203,763 320,938 320,938 1,320,938 14 288,100 138,904 138,904 1,138,904 222,973 222,973 1,222,973 365,322 365,322 1,365,322 15 317,205 145,563 145,563 1,145,563 242,446 242,446 1,242,446 413,761 413,761 1,413,761 16 347,765 151,727 151,727 1,151,727 262,406 262,406 1,262,406 466,902 466,902 1,466,902 17 379,853 157,430 157,430 1,157,430 282,904 282,904 1,282,904 525,273 525,273 1,525,273 18 413,546 162,715 162,715 1,162,715 304,005 304,005 1,304,005 589,471 589,471 1,589,471 19 448,923 167,663 167,663 1,167,663 325,814 325,814 1,325,814 660,194 660,194 1,660,194 20 486,070 172,417 172,417 1,172,417 348,509 348,509 1,348,509 738,281 738,281 1,738,281 21 525,073 175,978 175,978 1,175,978 371,097 371,097 1,371,097 823,451 823,451 1,823,451 22 566,027 178,182 178,182 1,178,182 393,389 393,389 1,393,389 916,263 916,263 1,916,263 23 609,028 178,851 178,851 1,178,851 415,170 415,170 1,415,170 1,017,324 1,017,324 2,017,324 24 654,179 177,782 177,782 1,177,782 436,186 436,186 1,436,186 1,127,270 1,127,270 2,127,270 25 701,588 174,709 174,709 1,174,709 456,107 456,107 1,456,107 1,246,740 1,246,740 2,246,740 26 751,368 169,290 169,290 1,169,290 474,500 474,500 1,474,500 1,376,355 1,376,355 2,376,355 27 803,636 161,096 161,096 1,161,096 490,821 490,821 1,490,821 1,516,703 1,516,703 2,516,703 28 858,518 149,602 149,602 1,149,602 504,397 504,397 1,504,397 1,668,331 1,668,331 2,668,331 29 916,144 134,239 134,239 1,134,239 514,469 514,469 1,514,469 1,831,784 1,831,784 2,831,784 30 976,651 114,421 114,421 1,114,421 520,220 520,220 1,520,220 2,007,645 2,007,645 3,007,645
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. (*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 52 56 $14,000 ANNUAL PREMIUM: $1,000,000 SPECIFIED AMOUNT MALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 FEMALE: NON-TOBACCO PREFERRED, ISSUE AGE 55 OPTION 2 GUARANTEED VALUES
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN PREMIUMS PAID PLUS CASH CASH CASH POLICY INTEREST AT CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH YEAR 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 14,700 11,942 1,617 1,011,942 12,676 2,351 1,012,676 13,411 3,086 1,013,411 2 30,135 23,556 13,231 1,023,556 25,756 15,431 1,025,756 28,044 17,719 1,028,044 3 46,342 34,823 25,530 1,034,823 39,229 29,937 1,039,229 43,992 34,700 1,043,992 4 63,359 45,717 37,457 1,045,717 53,080 44,820 1,053,080 61,356 53,096 1,061,356 5 81,227 56,207 48,980 1,056,207 67,287 60,059 1,067,287 80,239 73,012 1,080,239 6 99,988 66,255 60,060 1,066,255 81,815 75,620 1,081,815 100,744 94,549 1,100,744 7 119,688 75,806 71,160 1,075,806 96,615 91,969 1,096,615 122,969 118,322 1,122,969 8 140,372 84,790 81,692 1,084,790 111,617 108,520 1,111,617 147,002 143,904 1,147,002 9 162,090 93,113 91,564 1,093,113 126,723 125,174 1,126,723 172,916 171,367 1,172,916 10 184,895 100,670 100,670 1,100,670 141,816 141,816 1,141,816 200,777 200,777 1,200,777 11 208,840 108,380 108,380 1,108,380 158,074 158,074 1,158,074 232,353 232,353 1,232,353 12 233,982 115,104 115,104 1,115,104 174,175 174,175 1,174,175 266,333 266,333 1,266,333 13 260,381 120,707 120,707 1,120,707 189,961 189,961 1,189,961 302,817 302,817 1,302,817 14 288,100 125,039 125,039 1,125,039 205,245 205,245 1,205,245 341,893 341,893 1,341,893 15 317,205 127,900 127,900 1,127,900 219,784 219,784 1,219,784 383,611 383,611 1,383,611 16 347,765 129,029 129,029 1,129,029 233,252 233,252 1,233,252 427,951 427,951 1,427,951 17 379,853 128,076 128,076 1,128,076 245,218 245,218 1,245,218 474,797 474,797 1,474,797 18 413,546 124,589 124,589 1,124,589 255,117 255,117 1,255,117 523,907 523,907 1,523,907 19 448,923 118,035 118,035 1,118,035 262,270 262,270 1,262,270 574,923 574,923 1,574,923 20 486,070 107,847 107,847 1,107,847 265,923 265,923 1,265,923 627,400 627,400 1,627,400 21 525,073 93,409 93,409 1,093,409 265,265 265,265 1,265,265 680,827 680,827 1,680,827 22 566,027 74,085 74,085 1,074,085 259,450 259,450 1,259,450 734,641 734,641 1,734,641 23 609,028 49,395 49,395 1,049,395 247,585 247,585 1,247,585 788,214 788,214 1,788,214 24 654,179 18,775 18,775 1,018,775 228,677 228,677 1,228,677 840,787 840,787 1,840,787 25 701,588 (*) (*) (*) 201,525 201,525 1,201,525 891,357 891,357 1,891,357 26 751,368 (*) (*) (*) 164,631 164,631 1,164,631 938,567 938,567 1,938,567 27 803,636 (*) (*) (*) 116,183 116,183 1,116,183 980,662 980,662 1,980,662 28 858,518 (*) (*) (*) 53,934 53,934 1,053,934 1,015,439 1,015,439 2,015,439 29 916,144 (*) (*) (*) (*) (*) (*) 1,040,397 1,040,397 2,040,397 30 976,651 (*) (*) (*) (*) (*) (*) 1,052,844 1,052,844 2,052,844
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE. (2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES. (3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX. (*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 53 57 1 Independent Auditors'Report --------------------------- The Board of Directors of Nationwide Life Insurance Company and Contract Owners of Nationwide VLI Separate Account-2: We have audited the accompanying statement of assets, liabilities and contract owners' equity of Nationwide VLI Separate Account-2 (comprised of the sub-accounts listed in note 1(b)) (collectively, "the Account") as of December 31, 2000, and the related statements of operations and changes in contract owners' equity for each of the years in the three year period then ended, and the financial highlights for each of the years in the five year period then ended. These financial statements and financial highlights are the responsi- bility of the Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000, by correspondence with the transfer agents of the underlying mutual funds. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Account as of December 31, 2000, the results of its operations and its changes in contract owners' equity for each of the years in the three year period then ended, and the financial highlights for each of the years in the five year period then ended, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Columbus, Ohio February 16, 2001 2 - -------------------------------------------------------------------------------- NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY DECEMBER 31, 2000
ASSETS: Investments at fair value: American Century VP - American Century VP Balanced (ACVPBal) 751,698 shares (cost $5,761,038) ............................................ $ 5,464,844 American Century VP - American Century VP Capital Appreciation (ACVPCapAp) 1,719,456 shares (cost $29,621,878) ......................................... 27,133,012 American Century VP - American Century VP Income & Growth (ACVPIncGr) 641,402 shares (cost $4,998,702) ............................................ 4,560,367 American Century VP - American Century VP International (ACVPInt) 2,195,234 shares (cost $24,960,400) ......................................... 22,457,244 American Century VP - American Century VP Value (ACVPValue) 993,474 shares (cost $6,455,614) ............................................ 6,626,474 The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGr) 560,893 shares (cost $20,057,295) ........................................... 19,333,980 Dreyfus Stock Index Fund (DryStkIx) 2,916,220 shares (cost $94,463,397) ......................................... 99,151,469 Dreyfus IP - European Equity Portfolio (DryEuroEq) 7,423 shares (cost $109,681) ................................................ 111,198 Dreyfus VIF - Appreciation Portfolio (DryVApp) 186,359 shares (cost $7,178,021) ............................................ 7,251,216 Dreyfus VIF - Growth and Income Portfolio (DryVGrInc) 133,445 shares (cost $3,180,423) ............................................ 3,133,294 Gartmore NSAT - Emerging Markets Fund (NSATEmMGM) 1,240 shares (cost $10,023) ................................................. 9,312 Gartmore NSAT - Global Technology & Communications Fund (NSATGTecGM) 55,706 shares (cost $642,516) ............................................... 409,438 Gartmore NSAT - International Growth Fund (NSATIntGGM) 485 shares (cost $4,351) .................................................... 4,184 Fidelity VIP - Equity-Income Portfolio (FidVEqIn) 3,203,060 shares (cost $77,342,410) ......................................... 81,742,098 Fidelity VIP - Growth Portfolio (FidVGr) 3,594,723 shares (cost $163,738,671) ........................................ 156,909,663 Fidelity VIP - High Income Portfolio (FidVHiIn) 2,227,615 shares (cost $23,871,326) ......................................... 18,221,892 Fidelity VIP - Overseas Portfolio (FidVOvSe) 1,186,006 shares (cost $27,088,931) ......................................... 23,708,262
3
Fidelity VIP-II - Asset Manager Portfolio (FidVAM) 1,842,797 shares (cost $30,030,427) ......................................... 29,484,752 Fidelity VIP-II - Contrafund Portfolio (FidVCon) 2,700,005 shares (cost $65,228,997) ......................................... 64,098,123 Fidelity VIP-III - Growth Opportunities Portfolio (FidVGrOp) 291,466 shares (cost $6,158,772) ............................................ 5,170,603 Janus Aspen Series - Capital Appreciation Portfolio (JanACapApS) 111,260 shares (cost $3,462,403) ............................................ 2,952,853 Janus Aspen Series - Global Technology Portfolio (JanAGlTchS) 374,368 shares (cost $3,600,552) ............................................ 2,452,108 Janus Aspen Series - International Growth Portfolio (JanAIntGrS) 71,251 shares (cost $2,532,430) ............................................. 2,183,137 Nationwide SAT - Capital Appreciation Fund (NSATCapAp) 1,835,880 shares (cost $42,704,496) ......................................... 26,950,721 Nationwide SAT - Government Bond Fund (NSATGvtBd) 1,136,266 shares (cost $12,686,423) ......................................... 12,998,880 Nationwide SAT - Mid Cap Growth Fund - Strong (NSATMCpSTR) 49,353 shares (cost $929,737) ............................................... 820,734 Nationwide SAT - Mid Cap Index Fund - Dreyfus (NSATMCIxDR) 132,751 shares (cost $1,867,711) ............................................ 1,798,770 Nationwide SAT - Money Market Fund (NSATMMkt) 54,566,630 shares (cost $54,566,630) ........................................ 54,566,630 Nationwide SAT - Multi Sector Bond Fund - MAS (NSATMBdMAS) 9,385 shares (cost $86,633) ................................................. 87,089 Nationwide SAT - Small Cap Growth Fund (NSATSmCapG) 46,812 shares (cost $928,079) ............................................... 760,226 Nationwide SAT - Small Cap Value Fund (NSATSmCapV) 839,098 shares (cost $8,529,493) ............................................ 7,300,151 Nationwide SAT - Small Company Fund (NSATSmCo) 1,570,191 shares (cost $36,915,526) ......................................... 31,403,817 Nationwide SAT - Total Return Fund (NSATTotRtn) 7,823,938 shares (cost $116,638,842) ........................................ 91,070,643 Neuberger &Berman AMT - Growth Portfolio (NBAMTGro) 1,087,482 shares (cost $43,263,600) ......................................... 33,331,338 Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard) 123,921 shares (cost $1,975,004) ............................................ 1,974,054 Neuberger &Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat) 294,611 shares (cost $3,793,412) ............................................ 3,885,923 Neuberger &Berman AMT - Partners Portfolio (NBAMTPart) 1,523,389 shares (cost $26,468,582) ......................................... 24,633,198 Oppenheimer Aggressive Growth Fund/VA (OppAggGrVA) 40,589 shares (cost $3,308,006) ............................................. 2,872,508 Oppenheimer Bond Fund/VA (OppBdVA) 1,019,194 shares (cost $12,141,711) ......................................... 11,465,932
(Continued) 4 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, CONTINUED
Oppenheimer Capital Appreciation Fund/VA (OppCapApVA) 388,141 shares (cost $19,916,210) ........................................... 18,099,009 Oppenheimer Global Securities Fund/VA (OppGlSecVA) 1,300,496 shares (cost $33,198,103) ......................................... 39,444,056 Oppenheimer Main Street Growth & Income Fund/VA (OppMGrInVA) 20,034 shares (cost $466,548) ............................................... 425,931 Oppenheimer Multiple Strategies Fund/VA (OppMltStVA) 907,218 shares (cost $15,090,613) ........................................... 15,014,458 Strong Opportunity Fund II, Inc. (StOpp2) 1,828,378 shares (cost $39,617,828) ......................................... 43,771,379 Strong VIF - Strong Discovery Fund II (StDisc2) 555,963 shares (cost $6,750,960) ............................................ 6,604,837 Strong VIF - Strong International Stock Fund II (StIntStk2) 341,487 shares (cost $3,538,899) ............................................ 3,380,723 Turner NSAT - Growth Focus Fund (NSATGFocTU) 8,319 shares (cost $73,860) ................................................. 49,664 The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio (MSUEmMkt) (formerly Morgan Stanley - Emerging Markets Debt Portfolio) 154,037 shares (cost $1,104,959) ............................................ 1,064,394 The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio (MSUUSRealE) (formerly Van Kampen American Capital - Morgan Stanley U.S. Real Estate Portfolio) 644,110 shares (cost $7,317,681) ............................................. 7,413,700 Van Eck WIT - Worldwide Bond Fund (VEWwBd) 230,967 shares (cost $2,314,784) ............................................ 2,395,125 Van Eck WIT - Worldwide Emerging Markets Fund (VEWwEmgMkt) 459,359 shares (cost $4,375,000) ............................................ 3,808,090 Van Eck WIT - Worldwide Hard Assets Fund (VEWwHrdAst) 345,139 shares (cost $4,161,481) ............................................ 4,165,827 Warburg Pincus Trust - Global Post Venture Capital Portfolio (WPTGloPVC) 204,119 shares (cost $3,673,010) ............................................ 2,780,098 Warburg Pincus Trust - International Equity Portfolio (WPTIntEq) 856,689 shares (cost $11,140,471) ........................................... 9,192,268 Warburg Pincus Trust - Small Company Growth Portfolio (WPTSmCoGr) 1,539,449 shares (cost $35,827,802) ......................................... 25,678,016 ------------- Total investments ........................................................ 1,071,777,712 Accounts receivable ............................................................... 106,585 ------------- Total assets ............................................................. 1,071,884,297 Accounts payable ..................................................................... - ------------- Contract owners' equity (note 7) ..................................................... $ 1,071,884,297 =============
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 5 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
Total 2000 1999 1998 Investment activity: Reinvested dividends......................... $ 14,156,269 14,098,293 11,649,564 Mortality and expense risk charges (note 3).. (8,863,841) (7,660,149) (6,238,523) ------------ ------------- ------------- Net investment income...................... 5,292,428 6,438,144 5,411,041 ------------ ------------- ------------- Proceeds from mutual funds shares sold ...... 891,657,787 955,670,735 760,513,313 Cost of mutual fund shares sold.............. (830,522,167) (897,919,980) (729,684,314) ------------ ------------- ------------- Realized gain (loss) on investments ....... 61,135,620 57,750,755 30,828,999 Change in unrealized gain (loss) on investments............................. (263,179,099) 93,482,590 26,818,372 ------------ ------------- ------------- Net gain (loss) on investments............. (202,043,479) 151,233,345 57,647,371 ------------ ------------- ------------- Reinvested capital gains..................... 117,294,274 39,898,769 43,742,310 ------------ ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (79,456,777) 197,570,258 106,800,722 ============ ============= =============
ACVPBal 2000 1999 1998 Investment activity: Reinvested dividends......................... $ 142,768 104,861 73,602 Mortality and expense risk charges (note 3).. (43,349) (43,480) (38,972) ------------- ------------- ------------- Net investment income...................... 99,419 61,381 34,630 ------------- ------------- ------------- Proceeds from mutual funds shares sold ...... 1,172,289 971,140 1,247,480 Cost of mutual fund shares sold.............. (1,257,855) (1,022,836) (1,152,261) ------------- ------------- ------------- Realized gain (loss) on investments ....... (85,566) (51,696) 95,219 Change in unrealized gain (loss) on investments............................. (306,371) (209,153) 37,264 ------------- ------------- ------------- Net gain (loss) on investments............. (391,937) (260,849) 132,483 ------------- ------------- ------------- Reinvested capital gains..................... 89,903 723,542 456,397 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ (202,615) 524,074 623,510 ============= ============= =============
ACVPCapAp 2000 1999 1998 Investment activity: Reinvested dividends......................... -- -- -- Mortality and expense risk charges (note 3).. $ (225,875) (108,580) (82,384) ------------- ------------- ------------- Net investment income...................... (225,875) (108,580) (82,384) ------------- ------------- ------------- Proceeds from mutual funds shares sold ...... 25,900,893 22,591,735 5,476,348 Cost of mutual fund shares sold.............. (17,223,897) (21,828,544) (6,203,432) ------------- ------------- ------------- Realized gain (loss) on investments ....... 8,676,996 763,191 (727,084) Change in unrealized gain (loss) on investments............................. (7,733,755) 6,761,369 (95,403) ------------- ------------- ------------- Net gain (loss) on investments............. 943,241 7,524,560 (822,487) ------------- ------------- ------------- Reinvested capital gains..................... 750,781 -- 626,545 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........ $ 1,468,147 7,415,980 (278,326) ============= ============= ============
ACVPincGr 2000 1999 1998 Investment activity: Reinvested dividends......................... $ 25,931 655 7,293 Mortality and expense risk charges (note 3).. (33,212) (27,101) (7,590) ------------ ------------- ------------- Net investment income...................... (7,281) (26,446) (297) ------------ ------------- ------------- Proceeds from mutual funds shares sold....... 6,896,325 4,520,179 579,403 Cost of mutual fund shares sold.............. (6,623,978) (4,059,023) (585,659) ------------ ------------- ------------- Realized gain (loss) on investments........ 272,347 461,156 (6,256) Change in unrealized gain (loss) on investments............................. (817,445) 247,602 131,508 ------------ ------------- ------------- Net gain (loss) on investments............. (545,098) 708,758 125,252 ------------ ------------- ------------- Reinvested capital gains..................... -- -- -- ------------ ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations......... $ (552,379) 682,312 124,955 ============ ============= =============
ACVPint 2000 1999 1998 Investment activity: Reinvested dividends......................... $ 31,996 -- 48,574 Mortality and expense risk charges (note 3).. (192,630) (123,973) (100,304) ------------- ------------- ------------- Net investment income...................... (160,634) (123,973) (51,730) ------------- ------------- ------------- Proceeds from mutual funds shares sold....... 28,784,239 25,003,227 26,953,998 Cost of mutual fund shares sold.............. (24,108,086) (22,517,439) (26,717,868) ------------ ------------- ------------- Realized gain (loss) on investments........ 4,676,153 2,485,788 236,130 Change in unrealized gain (loss) on investments............................. (9,830,737) 6,850,984 538,699 ------------- ------------- ------------- Net gain (loss) on investments............. (5,154,584) 9,336,772 774,829 ------------- ------------- ------------- Reinvested capital gains..................... 478,387 -- 498,647 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations......... $ (4,836,831) 9,212,799 1,221,746 ============= ============= =============
ACVPValue 2000 1999 1998 Investment activity: Reinvested dividends......................... $ 34,989 26,285 14,238 Mortality and expense risk charges (note 3).. (27,164) (20,993) (19,998) ------------- ------------- ------------- Net investment income...................... 7,825 5,292 (5,760) ------------- ------------- ------------- Proceeds from mutual funds shares sold....... 53,718,428 10,125,505 3,978,821 Cost of mutual fund shares sold.............. (53,369,596) (10,140,086) (4,072,379) ------------- ------------- ------------- Realized gain (loss) on investments........ 348,832 (14,581) (93,558) Change in unrealized gain (loss) on investments............................. 414,821 (279,501) 7,367 ------------- ------------- ------------- Net gain (loss) on investments............. 763,653 (294,082) (86,191) ------------- ------------- ------------- Reinvested capital gains..................... 89,531 249,026 169,984 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations......... $ 861,009 (39,764) 78,033 ============= ============= =============
(Continued) 6 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
DrySRGr ---------------------------------------- 2000 1999 1998 ----------- ----------- ---------- Investment activity: Reinvested dividends .......................................... $ 157,148 2,403 18,491 Mortality and expense risk charges (note 3) ............................................ (157,030) (114,846) (76,955) ----------- ----------- ----------- Net investment income ....................................... 118 (112,443) (58,464) ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 4,108,551 17,180,969 30,530,607 Cost of mutual fund shares sold ............................... (3,386,569) (15,391,528) (29,068,944) ----------- ----------- ----------- Realized gain (loss) on investments ......................... 721,982 1,789,441 1,461,663 Change in unrealized gain (loss) on investments .............................................. (3,257,761) 1,688,692 619,023 ----------- ----------- ----------- Net gain (loss) on investments .............................. (2,535,779) 3,478,133 2,080,686 ----------- ----------- ----------- Reinvested capital gains ...................................... -- 646,972 429,304 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .......................... $(2,535,661) 4,012,662 2,451,526 =========== =========== ===========
DryStklx ---------------------------------------- 2000 1999 1998 ----------- ----------- ---------- Investment activity: Reinvested dividends .......................................... 1,011,600 1,066,045 840,788 Mortality and expense risk charges (note 3) ............................................ (797,960) (719,164) (508,329) ----------- ----------- ----------- Net investment income ....................................... 213,640 346,881 332,459 ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 16,033,223 20,339,759 34,044,658 Cost of mutual fund shares sold ............................... (11,951,284) (15,264,747) (26,882,152) ----------- ----------- ----------- Realized gain (loss) on investments ......................... 4,081,939 5,075,012 7,162,506 Change in unrealized gain (loss) on investments .............................................. (16,940,040) 11,113,462 6,892,116 ----------- ----------- ----------- Net gain (loss) on investments .............................. (12,858,101) 16,188,474 14,054,622 ----------- ----------- ----------- Reinvested capital gains ...................................... 1,618,261 920,361 156,109 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .......................... (11,026,200) 17,455,716 14,543,190 =========== =========== ===========
DryEuroEq ---------------------------------------- 2000 1999 1998 ----------- ----------- ---------- Investment activity: Reinvested dividends .......................................... 234 -- -- Mortality and expense risk charges (note 3) ............................................ (527) ----------- ----------- ----------- Net investment income ....................................... (293) -- -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 633,945 -- -- Cost of mutual fund shares sold ............................... (640,858) -- -- ----------- ----------- ----------- Realized gain (loss) on investments ......................... (6,913) -- -- Change in unrealized gain (loss) on investments .............................................. 1,517 -- -- ----------- ----------- ----------- Net gain (loss) on investments .............................. (5,396) -- -- ----------- ----------- ----------- Reinvested capital gains ...................................... 1,253 -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .......................... (4,436) -- -- =========== =========== ===========
7 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
FidVGr --------------------------------------------- 2000 1999 1998 ------------ ------------ ------------- Investment activity: Reinvested dividends ................................. $ 196,483 215,538 398,089 Mortality and expense risk charges (note 3) .......... (1,438,136) (1,145,435) (759,610) ------------ ------------ ------------ Net investment income .............................. (1,241,653) (929,897) (361,521) ------------ ------------ ------------ Proceeds from mutual funds shares sold ............... 20,493,336 91,394,903 85,473,779 Cost of mutual fund shares sold ...................... (16,880,509) (75,684,409) (75,903,979) ------------ ------------ ------------ Realized gain (loss) on investments ................ 3,612,827 15,710,494 9,569,800 Change in unrealized gain (loss) on investments ..................................... (42,932,678) 17,198,414 10,952,975 ------------ ------------ ------------ Net gain (loss) on investments ..................... (39,319,851) 32,908,908 20,522,775 ------------ ------------ ------------ Reinvested capital gains ............................. 19,550,081 13,551,946 10,413,177 ------------ ------------ ------------ Net increase (decrease) in contract owners equity resulting from operations ............... $(21,011,423) 45,530,957 30,574,431 ============ ============ ============
FidVHiln -------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ Investment activity: Reinvested dividends ................................. 1,693,393 2,570,090 1,930,736 Mortality and expense risk charges (note 3) .......... (168,596) (197,828) (211,621) ------------ ------------ ------------ Net investment income .............................. 1,524,797 2,372,262 1,719,115 ------------ ------------ ------------ Proceeds from mutual funds shares sold ............... 9,968,353 29,571,691 16,168,581 Cost of mutual fund shares sold ...................... (10,903,346) (32,450,313) (16,734,695) ------------ ------------ ------------ Realized gain (loss) on investments ................ (934,993) (2,878,622) (566,114) Change in unrealized gain (loss) on investments ..................................... (6,237,391) 2,437,032 (3,958,695) ------------ ------------ ------------ Net gain (loss) on investments ..................... (7,172,384) (441,590) (4,524,809) ------------ ------------ ------------ Reinvested capital gains ............................. -- 96,078 1,226,822 ------------ ------------ ------------ Net increase (decrease) in contract owners equity resulting from operations ............... (5,647,587) 2,026,750 (1,578,872) ============ ============ ============
FidVOvSe -------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ Investment activity: Reinvested dividends ................................. 425,125 332,184 372,727 Mortality and expense risk charges (note 3) .......... (230,607) (199,894) (167,806) ------------ ------------ ------------ Net investment income .............................. 194,518 132,290 204,921 ------------ ------------ ------------ Proceeds from mutual funds shares sold ............... 10,777,638 34,092,869 23,614,905 Cost of mutual fund shares sold ...................... (9,504,431) (31,976,653) (22,518,443) ------------ ------------ ------------ Realized gain (loss) on investments ................ 1,273,207 2,116,216 1,096,462 Change in unrealized gain (loss) on investments ..................................... (10,130,820) 6,394,423 2,343 ------------ ------------ ------------ Net gain (loss) on investments ..................... (8,857,613) 8,510,639 1,098,805 ------------ ------------ ------------ Reinvested capital gains ............................. 2,677,139 535,780 1,098,564 ------------ ------------ ------------ Net increase (decrease) in contract owners equity resulting from operations ............... (5,985,956) 9,178,709 2,402,290 ============ ============ ============
FidVAM --------------------------------------------- 2000 1999 1998 ------------ ------------ ------------- Investment activity: Reinvested dividends ................................. $ 1,031,299 1,040,155 894,977 Mortality and expense risk charges (note 3) .......... (267,155) (270,444) (239,207) ------------ ------------ ------------ Net investment income .............................. 764,144 769,711 655,770 ------------ ------------ ------------ Proceeds from mutual funds shares sold ............... 4,375,902 4,829,331 3,554,904 Cost of mutual fund shares sold ...................... (3,632,011) (3,813,802) (2,948,897) ------------ ------------ ------------ Realized gain (loss) on investments ................ 743,891 1,015,529 606,007 Change in unrealized gain (loss) on investments ..................................... (5,439,784) 26,818 28,492 ------------ ------------ ------------ Net gain (loss) on investments ..................... (4,695,893) 1,042,347 634,499 ------------ ------------ ------------ Reinvested capital gains ............................. 2,429,670 1,317,530 2,684,931 ------------ ------------ ------------ Net increase (decrease) in contract owners ....... equity resulting from operations ............... $ (1,502,079) 3,129,588 3,975,200 ============ ============ ============
FidVCon --------------------------------------------- 2000 1999 1998 ------------ ------------ ------------- Investment activity: Reinvested dividends ................................. 244,158 261,343 208,958 Mortality and expense risk charges (note 3) .......... (521,700) (460,248) (316,241) ------------ ------------ ------------ Net investment income .............................. (277,542) (198,905) (107,283) ------------ ------------ ------------ Proceeds from mutual funds shares sold ............... 7,260,544 25,340,625 5,270,262 Cost of mutual fund shares sold ...................... (5,658,545) (16,733,032) (3,518,595) ------------ ------------ ------------ Realized gain (loss) on investments ................ 1,601,999 8,607,593 1,751,667 Change in unrealized gain (loss) on investments ..................................... (15,273,672) 2,632,252 6,821,820 ------------ ------------ ------------ Net gain (loss) on investments ..................... (13,671,673) 11,239,845 8,573,487 ------------ ------------ ------------ Reinvested capital gains ............................. 8,862,945 1,916,516 1,537,336 ------------ ------------ ------------ Net increase (decrease) in contract owners ....... equity resulting from operations ............... (5,086,270) 12,957,456 10,003,540 ============ ============ ============
FidVGrOp --------------------------------------------- 2000 1999 1998 ------------ ------------ ------------- Investment activity: Reinvested dividends ................................. 77,263 58,964 20,203 Mortality and expense risk charges (note 3) .......... (40,980) (47,088) (35,749) ------------ ------------ ------------ Net investment income .............................. 36,283 11,876 (15,546) ------------ ------------ ------------ Proceeds from mutual funds shares sold ............... 5,312,933 3,165,507 6,596,939 Cost of mutual fund shares sold ...................... (5,576,382) (2,711,647) (6,370,749) ------------ ------------ ------------ Realized gain (loss) on investments ................ (263,449) 453,860 226,190 Change in unrealized gain (loss) on investments ..................................... (1,250,959) (343,328) 577,416 ------------ ------------ ------------ Net gain (loss) on investments ..................... (1,514,408) 110,532 803,606 ------------ ------------ ------------ Reinvested capital gains ............................. 391,834 110,237 70,230 ------------ ------------ ------------ Net increase (decrease) in contract owners ....... ' equity resulting from operations ............... (1,086,291) 232,645 858,290 ============ ============ ============
(Continued) 8 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATEmMGM ---------------------------------------------- 2000 1999 1998 ---------- -------------- --------------- Investment activity: Reinvested dividends......................... $ -- -- -- Mortality and expense risk charges (note 3).. (21) -- -- ---------- -------------- -------------- Net investment income...................... (21) -- -- ---------- -------------- -------------- Proceeds from mutual funds shares sold 21,742 -- -- Cost of mutual fund shares sold.............. (22,889) -- -- ---------- -------------- -------------- Realized gain (loss) on investments........ (1,147) -- -- Change in unrealized gain (loss) on investments............................. (711) -- -- ---------- -------------- -------------- Net gain (loss) on investments............. (1,858) -- -- ---------- -------------- -------------- Reinvested capital gains..................... -- -- -- ---------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations....... $ (1,879) -- -- ========== ============== ==============
NSATGTecGM -------------------------------------------------- 2000 1999 1998 ---------- -------------- --------------- Investment activity: Reinvested dividends......................... -- -- Mortality and expense risk charges (note 3).. $ (918) -- -- ---------- -------------- -------------- Net investment income...................... (918) -- -- ---------- -------------- -------------- Proceeds from mutual funds shares sold...... 16,330 -- -- Cost of mutual fund shares sold............. (22,265) -- -- ---------- -------------- -------------- Realized gain (loss) on investments....... (5,935) -- -- Change in unrealized gain (loss) on investments............................ (233,078) -- -- ---------- -------------- -------------- Net gain (loss) on investments............ (239,013) -- -- ---------- -------------- -------------- Reinvested capital gains.................... 8,554 -- -- ---------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations...... $ (231,377) -- -- ========== ============== ==============
NSATIntGGM ------------------------------------------------ 2000 1999 1998 ---------- ------------- ------------------ Investment activity: Reinvested dividends......................... $ -- -- -- Mortality and expense risk charges (note 3).. (14) -- -- ---------- ------------- -------------- Net investment income...................... (14) -- -- ---------- ------------- -------------- Proceeds from mutual funds shares sold....... 23,858 -- -- Cost of mutual fund shares sold.............. (24,091) -- -- ---------- ------------- -------------- Realized gain (loss) on investments........ (233) -- -- Change in unrealized gain (loss) on investments............................. (168) -- -- ---------- ------------- -------------- Net gain (loss) on investments............. (401) -- -- ---------- ------------- -------------- Reinvested capital gains..................... -- -- -- ---------- ------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations....... $ (415) -- -- ========== ============= ==============
JanACapApS ------------------------------------------- 2000 1999 1998 ---------- -------------- ------------ Investment activity: Reinvested dividends......................... $ 19,570 -- -- Mortality and expense risk charges (note 3) (10,464) -- -- ----------- -------------- -------------- Net investment income...................... 9,106 -- -- ----------- -------------- -------------- Proceeds from mutual funds shares sold....... 1,441,203 -- -- Cost of mutual fund shares sold.............. (1,508,835) -- -- ----------- -------------- -------------- Realized gain (loss) on investments........ (67,632) -- -- Change in unrealized gain (loss) on investments............................. (509,550) -- -- ----------- -------------- -------------- Net gain (loss) on investments............. (577,182) -- -- ----------- -------------- -------------- Reinvested capital gains..................... -- -- -- ----------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations....... $ (568,076) -- -- =========== ============== ==============
JanAGITchS -------------------------------------------- 2000 1999 1998 ---------- -------------- ------------- Investment activity: Reinvested dividends......................... $ 14,871 -- -- Mortality and expense risk charges (note 3).. (10,447) -- -- ----------- -------------- -------------- Net investment income...................... 4,424 -- -- ----------- -------------- -------------- Proceeds from mutual funds shares sold....... 733,862 -- -- Cost of mutual fund shares sold.............. (720,686) -- -- ----------- -------------- -------------- Realized gain (loss) on investments........ 13,176 -- -- Change in unrealized gain (loss) on investments............................. (1,148,444) -- -- ----------- -------------- -------------- Net gain (loss) on investments............. (1,135,268) -- -- ----------- -------------- -------------- Reinvested capital gains..................... -- -- ----------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations....... $(1,130,844) -- -- =========== ============== ==============
JanAintGrS ------------------------------------------------ 2000 1999 1998 ---------- --------------- ---------------- Investment activity: Reinvested dividends......................... $ 68,254 -- -- Mortality and expense risk charges (note 3).. (8,795) -- -- ----------- ------------- -------------- Net investment income...................... 59,459 -- -- ----------- ------------- -------------- Proceeds from mutual funds shares sold....... 1,279,606 -- -- Cost of mutual fund shares sold.............. (1,460,939) -- -- ----------- ------------- -------------- Realized gain (loss) on investments........ (181,333) -- -- Change in unrealized gain (loss) on investments............................. (349,293) -- -- ----------- ------------- -------------- Net gain (loss) on investments............. (530,626) -- -- ----------- ------------- -------------- Reinvested capital gains..................... -- -- -- ----------- ------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations....... $ (471,167) -- -- =========== ============= ==============
9 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATCapAp ---------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ Investment activity: Reinvested dividends........................... $ 64,829 277,922 246,198 Mortality and expense risk charges (note 3) ... (262,581) (323,069) (258,178) ------------ ------------ ------------ Net investment income....................... (197,752) (45,147) (11,980) ------------ ------------ ------------ Proceeds from mutual funds shares sold 9,898,396 14,859,491 41,145,976 Cost of mutual fund shares sold............... (9,942,866) (13,314,168) (37,562,739) ------------ ------------ ------------ Realized gain (loss) on investments (44,470) 1,545,323 3,583,237 Change in unrealized gain (loss) on investments.............................. (16,033,473) (2,937,651) 2,897,785 ------------ ------------ ------------ Net gain (loss) on investments.............. (16,077,943) (1,392,328) 6,481,022 ------------ ------------ ------------ Reinvested capital gains...................... 6,018,129 2,820,485 1,139,693 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ....... $(10,257,566) 1,383,010 7,608,735 ============ ============ ============
NSATGvtBd ---------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ Investment activity: Reinvested dividends........................... $ 692,626 787,049 635,908 Mortality and expense risk charges (note 3) ... (99,480) (121,678) (111,282) ------------ ------------ ------------ Net investment income....................... 593,146 665,371 524,626 ------------ ------------ ------------ Proceeds from mutual funds shares sold 10,368,266 29,946,083 43,945,372 Cost of mutual fund shares sold............... (10,500,566) (30,797,415) (43,540,184) ------------ ------------ ------------ Realized gain (loss) on investments (132,300) (851,332) 405,188 Change in unrealized gain (loss) on investments.............................. 822,785 (301,600) (159,490) ------------ ------------ ------------ Net gain (loss) on investments.............. 690,485 (1,152,932) 245,698 ------------ ------------ ------------ Reinvested capital gains...................... -- 25,753 67,018 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ....... $ 1,283,631 (461,808) 837,342 ============ ============ ============
NSATMCpSTR ------------------------------------------------- 2000 1999 1998 ------------ --------------- ------------- Investment activity: Reinvested dividends........................... $ -- -- -- Mortality and expense risk charges (note 3) ... (2,791) -- -- ------------ --------------- ------------ Net investment income....................... (2,791) -- -- ------------ --------------- ------------ Proceeds from mutual funds shares sold 1,977,764 -- -- Cost of mutual fund shares sold............... (2,065,729) -- -- ------------ --------------- ------------ Realized gain (loss) on investments (87,965) -- -- Change in unrealized gain (loss) on investments.............................. (109,003) -- -- ------------ --------------- ------------ Net gain (loss) on investments.............. (196,968) -- -- ------------ --------------- ------------ Reinvested capital gains...................... 14,918 -- -- ------------ --------------- ------------ Net increase (decrease) in contract owners' equity resulting from operations ....... $ (184,841) -- -- ============ =============== ============
NSATMCIxDR ---------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ Investment activity: Reinvested dividends.......................... $ 5,044 -- -- Mortality and expense risk charges (note 3) .. (4,225) -- -- ------------ ------------ ------------ Net investment income....................... 819 -- -- ------------ ------------ ------------ Proceeds from mutual funds shares sold ....... 5,847,137 -- -- Cost of mutual fund shares sold... ........... (5,829,612) -- -- ------------ ------------ ------------ Realized gain (loss) on investments ........ 17,525 -- -- Change in unrealized gain (loss) on investments.............................. (68,941) -- -- ------------ ------------ ------------ Net gain (loss) on investments.............. (51,416) -- -- ------------ ------------ ------------ Reinvested capital gains...................... 59,565 -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ....... $ 8,968 -- -- ============ ============ ============
NSATMMkt ---------------------------------------------- 2000 1999 1998 ------------- ---------------- ------------ Investment activity: Reinvested dividends.......................... $ 3,057,620 2,607,883 2,517,296 Mortality and expense risk charges (note 3) .. (413,875) (415,133) (414,977) ------------- ------------- ------------ Net investment income....................... 2,643,745 2,192,750 2,102,319 ------------- ------------- ------------ Proceeds from mutual funds shares sold ....... 292,342,512 257,299,024 213,040,345 Cost of mutual fund shares sold... ........... (292,342,512) (257,299,024) (213,040,345) ------------- ------------- ------------ Realized gain (loss) on investments ........ -- -- -- Change in unrealized gain (loss) on investments.............................. -- -- -- ------------- ------------- ------------ Net gain (loss) on investments.............. -- -- -- ------------- ------------- ------------ Reinvested capital gains...................... -- -- -- ------------- ------------- ------------ Net increase (decrease) in contract owners' equity resulting from operations ....... $ 2,643,745 2,192,750 2,102,319 ============= ============= ============
NSATMBdMAS ------------------------------------------------- 2000 1999 1998 ------------ --------------- ----------- Investment activity: Reinvested dividends.......................... $ 3,708 -- -- Mortality and expense risk charges (note 3) .. (220) -- -- ------------ --------------- ------------ Net investment income....................... 3,488 -- -- ------------ --------------- ------------ Proceeds from mutual funds shares sold ....... 237,528 -- -- Cost of mutual fund shares sold... ........... (238,314) -- -- ------------ --------------- ------------ Realized gain (loss) on investments ........ (786) -- -- Change in unrealized gain (loss) on investments.............................. 457 -- -- ------------ --------------- ------------ Net gain (loss) on investments.............. (329) -- -- ------------ --------------- ------------ Reinvested capital gains...................... -- -- -- ------------ --------------- ------------ Net increase (decrease) in contract owners' equity resulting from operations ....... $ 3,159 -- -- ============ =============== ============
(Continued) 10 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATSmCapG -------------------------------------------- 2000 1999 1998 ------------- ------------- ------------- Investment activity: Reinvested dividends ............................. $ -- -- -- Mortality and expense risk charges (note 3) ...... (2,514) -- -- ------------ ------------ ------------ Net investment income .......................... (2,514) -- -- ------------ ------------ ------------ Proceeds from mutual funds shares sold ........... 1,286,406 -- -- Cost of mutual fund shares sold .................. (1,360,619) -- -- ------------ ------------ ------------ Realized gain (loss) on investments ............ (74,213) -- -- Change in unrealized gain (loss) on investments ................................. (167,853) -- -- ------------ ------------ ------------ Net gain (loss) on investments ................. (242,066) -- -- ------------ ------------ ------------ Reinvested capital gains ......................... 2,683 -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ (241,897) -- -- ============ ============ ============
NSATSmCapV -------------------------------------------- 2000 1999 1998 ------------- ------------- ------------- Investment activity: Reinvested dividends ............................. $ -- -- -- Mortality and expense risk charges (note 3) ...... (51,635) (12,857) (3,508) ------------ ------------ ------------ Net investment income .......................... (51,635) (12,857) (3,508) ------------ ------------ ------------ Proceeds from mutual funds shares sold ........... 9,626,402 38,165,993 1,549,129 Cost of mutual fund shares sold .................. (9,463,196) (37,730,603) (1,489,413) ------------ ------------ ------------ Realized gain (loss) on investments ............ 163,206 435,390 59,716 Change in unrealized gain (loss) on investments ................................. (1,082,758) (178,227) 31,642 ------------ ------------ ------------ Net gain (loss) on investments ................. (919,552) 257,163 91,358 ------------ ------------ ------------ Reinvested capital gains ......................... 1,418,043 463,979 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ 446,856 708,285 87,850 ============ ============ ============
NSATSmCo -------------------------------------------- 2000 1999 1998 ------------- ------------- ------------- Investment activity: Reinvested dividends ............................. $ 8,275 -- -- Mortality and expense risk charges (note 3) ...... (220,692) (133,984) (115,584) ----------- ------------ ------------ Net investment income .......................... (212,417) (133,984) (115,584) ----------- ------------ ------------ Proceeds from mutual funds shares sold ........... 34,607,733 12,258,303 12,262,712 Cost of mutual fund shares sold .................. (25,554,105) (11,935,965) (13,098,101) ----------- ------------ ------------ Realized gain (loss) on investments ............ 9,053,628 322,338 (835,389) Change in unrealized gain (loss) on investments ................................. (12,312,627) 6,521,648 1,062,670 ----------- ------------ ------------ Net gain (loss) on investments ................. (3,258,999) 6,843,986 227,281 ----------- ------------ ------------ Reinvested capital gains ......................... 5,338,437 1,017,362 -- ----------- ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ 1,867,021 7,727,364 111,697 =========== ============ ============
NSATTotRtn -------------------------------------------- 2000 1999 1998 ------------- ------------- ------------- Investment activity: Reinvested dividends ............................. $ 612,176 663,979 923,892 Mortality and expense risk charges (note 3) ...... (736,850) (774,887) (673,496) ------------ ------------ ------------ Net investment income .......................... (124,674) (110,908) 250,396 ------------ ------------ ------------ Proceeds from mutual funds shares sold ........... 13,544,946 7,683,042 17,758,523 Cost of mutual fund shares sold .................. (9,201,670) (4,796,181) (10,907,631) ------------ ------------ ------------ Realized gain (loss) on investments ............ 4,343,276 2,886,861 6,850,892 Change in unrealized gain (loss) on investments ................................. (40,766,537) (615,625) 2,647,189 ------------ ------------ ------------ Net gain (loss) on investments ................. (36,423,261) 2,271,236 9,498,081 ------------ ------------ ------------ Reinvested capital gains ......................... 33,726,301 3,857,973 3,859,922 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ (2,821,634) 6,018,301 13,608,399 ============ ============ ============
NBAMTGro -------------------------------------------- 2000 1999 1998 ------------- ------------- ------------- Investment activity: Reinvested dividends ............................. $ -- -- -- Mortality and expense risk charges (note 3) ...... (326,947) (183,268) (153,887) ------------ ------------ ------------ Net investment income .......................... (326,947) (183,268) (153,887) ------------ ------------ ------------ Proceeds from mutual funds shares sold ........... 29,136,062 90,781,328 28,296,554 Cost of mutual fund shares sold .................. (19,441,919) (88,544,143) (30,054,251) ------------ ------------ ------------ Realized gain (loss) on investments ............ 9,694,143 2,237,185 (1,757,697) Change in unrealized gain (loss) on investments ................................. (18,572,555) 7,073,105 273,491 ------------ ------------ ------------ Net gain (loss) on investments ................. (8,878,412) 9,310,290 (1,484,206) ------------ ------------ ------------ Reinvested capital gains ......................... 3,211,533 1,124,154 4,778,935 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ (5,993,826) 10,251,176 3,140,842 ============ ============ ============
NBAMTGuard --------------------------------------------- 2000 1999 1998 ------------- ------------- -------------- Investment activity: Reinvested dividends ............................. $ 12,425 4,569 -- Mortality and expense risk charges (note 3) ...... (14,688) (12,787) (4,780) ------------ ------------ ------------ Net investment income .......................... (2,263) (8,218) (4,780) ------------ ------------ ------------ Proceeds from mutual funds shares sold ........... 2,733,360 8,197,327 1,186,919 Cost of mutual fund shares sold .................. (2,651,491) (8,110,096) (1,243,303) ------------ ------------ ------------ Realized gain (loss) on investments ............ 81,869 87,231 (56,384) Change in unrealized gain (loss) on investments ................................. (98,383) 43,771 53,662 ------------ ------------ ------------ Net gain (loss) on investments ................. (16,514) 131,002 (2,722) ------------ ------------ ------------ Reinvested capital gains ......................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ (18,777) 122,784 (7,502) ============ ============ ============
11 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NBAMTLMat ------------------------------------------ 2000 1999 1998 ------------- ------------- ----------- Investment activity: Reinvested dividends .......................................... $ 306,913 277,113 365,591 Mortality and expense risk charges (note 3) ................... (32,093) (35,738) (42,729) ----------- ----------- ----------- Net investment income ....................................... 274,820 241,375 322,862 ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 9,275,328 1,296,663 3,525,682 Cost of mutual fund shares sold ............................... (9,541,403) (1,370,958) (3,557,763) ----------- ----------- ----------- Realized gain (loss) on investments ......................... (266,075) (74,295) (32,081) Change in unrealized gain (loss) on investments .............................................. 223,548 (128,665) (88,989) ----------- ----------- ----------- Net gain (loss) on investments .............................. (42,527) (202,960) (121,070) ----------- ----------- ----------- Reinvested capital gains ...................................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................ $ 232,293 38,415 201,792 =========== =========== ===========
NBAMTPart ----------------------------------------- 2000 1999 1998 ------------- ------------- ---------- Investment activity: Reinvested dividends .......................................... $ 217,800 395,343 123,869 Mortality and expense risk charges (note 3) ................... (194,093) (234,549) (254,428) ----------- ----------- ----------- Net investment income ....................................... 23,707 160,794 (130,559) ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 11,982,768 10,213,406 16,262,946 Cost of mutual fund shares sold ............................... (14,409,112) (10,762,285) (15,129,583) ----------- ----------- ----------- Realized gain (loss) on investments ......................... (2,426,344) (548,879) 1,133,363 Change in unrealized gain (loss) on investments .............................................. (2,383,122) 1,854,882 (3,917,798) ----------- ----------- ----------- Net gain (loss) on investments .............................. (4,809,466) 1,306,003 (2,784,435) ----------- ----------- ----------- Reinvested capital gains ...................................... 4,631,886 687,554 3,901,869 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................ $ (153,873) 2,154,351 986,875 =========== =========== ===========
OppAggGrVA ------------------------------------------ 2000 1999 1998 ------------- ------------- ----------- Investment activity: Reinvested dividends .......................................... $ -- -- -- Mortality and expense risk charges (note 3) ................... (9,718) -- -- ----------- ----------- ----------- Net investment income ....................................... (9,718) -- -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 8,805,282 -- -- Cost of mutual fund shares sold ............................... (9,294,608) -- -- ----------- ----------- ----------- Realized gain (loss) on investments ......................... (489,326) -- -- Change in unrealized gain (loss) on investments .............................................. (435,498) -- -- ----------- ----------- ----------- Net gain (loss) on investments .............................. (924,824) -- -- ----------- ----------- ----------- Reinvested capital gains ...................................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................ $ (934,542) -- -- =========== =========== ===========
OppBdVA ------------------------------------------ 2000 1999 1998 ------------- ------------- ----------- Investment activity: Reinvested dividends .......................................... $ 888,727 563,814 177,251 Mortality and expense risk charges (note 3) ................... (84,563) (91,553) (91,564) ----------- ----------- ----------- Net investment income ....................................... 804,164 472,261 85,687 ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 2,331,159 3,691,017 25,959,216 Cost of mutual fund shares sold ............................... (2,569,226) (3,697,719) (25,616,936) ----------- ----------- ----------- Realized gain (loss) on investments ......................... (238,067) (6,702) 342,280 Change in unrealized gain (loss) on investments .............................................. 16,219 (794,086) 13,809 ----------- ----------- ----------- Net gain (loss) on investments .............................. (221,848) (800,788) 356,089 ----------- ----------- ----------- Reinvested capital gains ...................................... -- 54,146 160,413 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................ $ 582,316 (274,381) 602,189 =========== =========== ===========
OppCapApVA ----------------------------------------- 2000 1999 1998 ------------- ------------- ---------- Investment activity: Reinvested dividends .......................................... $ 18,905 16,006 9,433 Mortality and expense risk charges (note 3) ................... (129,760) (48,619) (26,246) ----------- ----------- ----------- Net investment income ....................................... (110,855) (32,613) (16,813) ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 10,473,722 25,212,861 5,173,603 Cost of mutual fund shares sold ............................... (8,613,035) (24,502,814) (4,835,421) ----------- ----------- ----------- Realized gain (loss) on investments ......................... 1,860,687 710,047 338,182 Change in unrealized gain (loss) on investments .............................................. (3,665,305) 1,735,399 109,336 ----------- ----------- ----------- Net gain (loss) on investments .............................. (1,804,618) 2,445,446 447,518 ----------- ----------- ----------- Reinvested capital gains ...................................... 1,008,850 175,824 113,813 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................ $ (906,623) 2,588,657 544,518 =========== =========== ===========
OppGISecVA ------------------------------------------ 2000 1999 1998 ------------- ------------- ----------- Investment activity: Reinvested dividends .......................................... $ 99,579 255,944 389,267 Mortality and expense risk charges (note 3) ................... (313,312) (190,529) (147,592) ----------- ----------- ----------- Net investment income ....................................... (213,733) 65,415 241,675 ----------- ----------- ----------- Proceeds from mutual funds shares sold ........................ 4,035,642 6,535,136 4,690,056 Cost of mutual fund shares sold ............................... (2,393,689) (4,397,501) (3,335,880) ----------- ----------- ----------- Realized gain (loss) on investments ......................... 1,641,953 2,137,635 1,354,176 Change in unrealized gain (loss) on investments .............................................. (5,708,731) 9,595,322 (702,629) ----------- ----------- ----------- Net gain (loss) on investments .............................. (4,066,778) 11,732,957 651,547 ----------- ----------- ----------- Reinvested capital gains ...................................... 5,565,874 717,222 1,465,275 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........................ $ 1,285,363 12,515,594 2,358,497 =========== =========== ===========
12 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
OppMGrinVA ------------------------------------------------------- 2000 1999 1998 ----------- ----------- ------------- Investment activity: Reinvested dividends............................... $ -- -- -- Mortality and expense risk charges (note 3)........ (965) -- -- ----------- ----------- ----------- Net investment income............................ (965) -- -- ----------- ----------- ----------- Proceeds from mutual funds shares sold............. 100,863 -- -- Cost of mutual fund shares sold.................... (98,302) -- -- ----------- ----------- ----------- Realized gain (loss) on investments.............. 2,561 -- -- Change in unrealized gain (loss) on investments................................... (40,617) -- -- ----------- ----------- ----------- Net gain (loss) on investments................... (38,056) -- -- ----------- ----------- ----------- Reinvested capital gains........................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations............. $ (39,021) -- -- =========== =========== ===========
OppMltStVA ----------------------------------------------------- 2000 1999 1998 ----------- ----------- ------------ Investment activity: Reinvested dividends............................. $ 684,260 480,400 116,421 Mortality and expense risk charges (note 3)...... (125,117) (115,579) (104,971) ----------- ----------- ----------- Net investment income.......................... 559,143 364,821 11,450 ----------- ----------- ----------- Proceeds from mutual funds shares sold........... 4,981,698 2,796,637 1,906,489 Cost of mutual fund shares sold.................. (4,584,087) (2,391,468) (1,502,365) ----------- ----------- ----------- Realized gain (loss) on investments............ 397,611 405,169 404,124 Change in unrealized gain (loss) on investments................................. (1,160,185) 10,270 (366,305) ----------- ----------- ----------- Net gain (loss) on investments................. (762,574) 415,439 37,819 ----------- ----------- ----------- Reinvested capital gains......................... 993,822 694,901 675,242 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations........... $ 790,391 1,475,161 724,511 =========== =========== ===========
StOpp2 -------------------------------------------------------- 2000 1999 1998 ------------- ----------- ----------- Investment activity: Reinvested dividends........................... -- -- 71,635 Mortality and expense risk charges (note 3).... $ (355,887) (283,101) (220,760) ----------- ----------- ----------- Net investment income........................ (355,887) (283,101) (149,125) ----------- ----------- ----------- Proceeds from mutual funds shares sold......... 5,753,763 6,031,119 3,215,306 Cost of mutual fund shares sold................ (3,771,596) (4,291,744) (2,191,788) ----------- ----------- ----------- Realized gain (loss) on investments.......... 1,982,167 1,739,375 1,023,518 Change in unrealized gain (loss) on investments............................... (4,879,451) 5,430,662 (1,078,872) ----------- ----------- ----------- Net gain (loss) on investments............... (2,897,284) 7,170,037 (55,354) ----------- ----------- ----------- Reinvested capital gains....................... 5,562,609 3,541,869 3,488,003 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations......... $ 2,309,438 10,428,805 3,283,524 =========== =========== ===========
StDisc2 ----------------------------------------------------- 2000 1999 1998 ----------- ----------- ------------ Investment activity: Reinvested dividends........................... $ -- -- -- Mortality and expense risk charges (note 3).... (58,904) (53,820) (58,150) ----------- ----------- ----------- Net investment income........................ (58,904) (53,820) (58,150) ----------- ----------- ----------- Proceeds from mutual funds shares sold......... 6,435,185 6,370,593 4,234,899 Cost of mutual fund shares sold................ (5,882,290) (9,362,884) (3,682,201) ----------- ----------- ----------- Realized gain (loss) on investments.......... 752,995 (982,901) 552,698 Change in unrealized gain (loss) on investments............................... (482,257) 125,370 (128,321) ----------- ----------- ----------- Net gain (loss) on investments............... 270,638 (866,931) 424,377 ----------- ----------- ----------- Reinvested capital gains....................... -- 1,095,870 120,028 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations......... $ (211,734) 114,919 466,265 =========== =========== ===========
StIntStk2 ----------------------------------------------------- 2000 1999 1998 ----------- ----------- ------------ Investment activity: Reinvested dividends............................ $ -- 7,958 22,725 Mortality and expense risk charges (note 3)..... (49,525) (22,468) (15,028) ----------- ----------- ----------- Net investment income......................... (49,525) (14,510) 7,697 ----------- ----------- ----------- Proceeds from mutual funds shares sold.......... 45,151,810 12,615,085 4,328,033 Cost of mutual fund shares sold... (45,538,936) (11,285,141) (4,573,810) ----------- ----------- ----------- Realized gain (loss) on investments........... (387,126) 1,329,944 (245,777) Change in unrealized gain (loss) on investments................................ (1,546,991) 1,572,604 138,162 ----------- ----------- ----------- Net gain (loss) on investments................ (1,934,117) 2,902,548 (107,615) ----------- ----------- ----------- Reinvested capital gains........................ -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations.......... $ (1,983,642) 2,888,038 (99,918) =========== =========== ===========
NSATGFocTU --------------------------------------------------------- 2000 1999 1998 ------------- ----------- ------------ Investment activity: Reinvested dividends........................... $ -- -- -- Mortality and expense risk charges (note 3).... (100) -- -- ----------- ----------- ----------- Net investment income........................ (100) -- -- ----------- ----------- ----------- Proceeds from mutual funds shares sold......... 7,483 -- -- Cost of mutual fund shares sold................ (10,247) -- -- ----------- ----------- ----------- Realized gain (loss) on investments.......... (2,764) -- -- Change in unrealized gain (loss) on investments............................... (24,195) -- -- ----------- ----------- ----------- Net gain (loss) on investments............... (26,959) -- -- ----------- ----------- ----------- Reinvested capital gains....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations......... $ (27,059) -- -- =========== =========== ===========
13 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
MSUEmMkt --------------------------------------------------------- 2000 1999 1998 --------------- ------------- ------------------ Investment activity: Reinvested dividends.......................... $ 108,788 84,322 37,885 Mortality and expense risk charges (note 3) .. (6,391) (3,195) (2,400) ------------- ----------- ----------- Net investment income....................... 102,397 81,127 35,485 ------------- ----------- ----------- Proceeds from mutual funds shares sold ....... 696,248 1,067,995 2,208,004 Cost of mutual fund shares sold............... (669,859) (1,041,803) (2,302,818) ------------- ----------- ----------- Realized gain (loss) on investments 26,389 26,192 (94,814) Change in unrealized gain (loss) on investments.............................. (38,552) 29,379 (33,784) ------------- ----------- ----------- Net gain (loss) on investments.............. (12,163) 55,571 (128,598) ------------- ----------- ----------- Reinvested capital gains...................... -- -- -- ------------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 90,234 136,698 (93,113) ============= =========== ===========
MSUUSRealE -------------------------------------------------------- 2000 1999 1998 --------------- ------------- ------------- Investment activity: Reinvested dividends.......................... $ 514,484 400,217 12,298 Mortality and expense risk charges (note 3) .. (46,629) (44,010) (52,029) ----------- ----------- ----------- Net investment income....................... 467,855 356,207 (39,731) ----------- ----------- ----------- Proceeds from mutual funds shares sold ....... 11,404,275 6,089,310 4,635,925 Cost of mutual fund shares sold............... (10,957,678) (7,139,977) (5,200,298) ----------- ----------- ----------- Realized gain (loss) on investments 446,597 (1,050,667) (564,373) Change in unrealized gain (loss) on investments.............................. 443,730 478,383 (513,939) ----------- ----------- ----------- Net gain (loss) on investments.............. 890,327 (572,284) (1,078,312) ----------- ----------- ----------- Reinvested capital gains...................... 36,959 -- 121,016 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 1,395,141 (216,077) (997,027) =========== =========== ===========
VEWwBd ------------------------------------------------------ 2000 1999 1998 ------------- ------------- ----------- Investment activity: Reinvested dividends.......................... $ 125,433 135,225 24,030 Mortality and expense risk charges (note 3) .. (21,681) (25,601) (26,599) ----------- ----------- ----------- Net investment income....................... 103,752 109,624 (2,569) ----------- ----------- ----------- Proceeds from mutual funds shares sold ....... 11,085,379 4,442,114 7,510,962 Cost of mutual fund shares sold............... (11,357,847) (4,822,035) (7,101,791) ----------- ----------- ----------- Realized gain (loss) on investments (272,468) (379,921) 409,171 Change in unrealized gain (loss) on investments.............................. 148,290 (74,747) (35,624) ----------- ----------- ----------- Net gain (loss) on investments.............. (124,178) (454,668) 373,547 ----------- ----------- ----------- Reinvested capital gains...................... -- 60,420 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (20,426) (284,624) 370,978 =========== =========== ===========
VEWwEmgMkt --------------------------------------------------------- 2000 1999 1998 --------------- ------------- ------------------ Investment activity: Reinvested dividends.......................... $ -- -- 20,182 Mortality and expense risk charges (note 3) .. (53,777) (32,044) (14,186) ------------- ----------- ----------- Net investment income....................... (53,777) (32,044) 5,996 ------------- ----------- ----------- Proceeds from mutual funds shares sold ....... 22,197,969 26,145,515 4,758,410 Cost of mutual fund shares sold............... (22,523,533) (24,002,878) (6,579,731) ------------- ----------- ----------- Realized gain (loss) on investments (325,564) 2,142,637 (1,821,321) Change in unrealized gain (loss) on investments.............................. (2,614,711) 1,939,640 923,464 ------------- ----------- ----------- Net gain (loss) on investments.............. (2,940,275) 4,082,277 (897,857) ------------- ----------- ----------- Reinvested capital gains...................... -- -- 17,939 ------------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (2,994,052) 4,050,233 (873,922) ============= =========== ===========
VEWwHrdAst -------------------------------------------------------- 2000 1999 1998 --------------- ------------- ------------- Investment activity: Reinvested dividends.......................... $ 47,340 61,762 35,945 Mortality and expense risk charges (note 3) .. (36,261) (36,567) (38,345) ----------- ----------- ----------- Net investment income....................... 11,079 25,195 (2,400) ----------- ----------- ----------- Proceeds from mutual funds shares sold ....... 17,958,019 19,298,812 13,571,199 Cost of mutual fund shares sold............... (17,432,316) (18,689,697) (17,132,731) ----------- ----------- ----------- Realized gain (loss) on investments 525,703 609,115 (3,561,532) Change in unrealized gain (loss) on investments.............................. (152,863) 199,401 644,209 ----------- ----------- ----------- Net gain (loss) on investments.............. 372,840 808,516 (2,917,323) ----------- ----------- ----------- Reinvested capital gains...................... -- -- 882,647 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ 383,919 833,711 (2,037,076) =========== =========== ===========
WPTGloPVC ------------------------------------------------------ 2000 1999 1998 ------------- ------------- ----------- Investment activity: Reinvested dividends.......................... -- -- -- Mortality and expense risk charges (note 3) .. $ (26,477) (13,686) (6,193) ----------- ----------- ----------- Net investment income....................... (26,477) (13,686) (6,193) ----------- ----------- ----------- Proceeds from mutual funds shares sold ....... 21,730,640 11,451,361 4,879,898 Cost of mutual fund shares sold............... (21,573,716) (10,619,693) (4,873,755) ----------- ----------- ----------- Realized gain (loss) on investments 156,924 831,668 6,143 Change in unrealized gain (loss) on investments.............................. (1,447,278) 489,466 66,492 ----------- ----------- ----------- Net gain (loss) on investments.............. (1,290,354) 1,321,134 72,635 ----------- ----------- ----------- Reinvested capital gains...................... 359,529 -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ....... $ (957,302) 1,307,448 66,442 =========== =========== ===========
(Continued) 14 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
WPTIntEq --------------------------------------------- 2000 1999 1998 ------------- ------------- -------------- Investment activity: Reinvested dividends .......................... $ 51,283 106,392 50,333 Mortality and expense risk charges (note 3) ... (81,674) (70,225) (72,995) ------------ ------------ ------------ Net investment income ....................... (30,391) 36,167 (22,662) ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 11,655,731 19,261,615 9,538,799 Cost of mutual fund shares sold ............... (11,306,949) (18,047,381) (9,941,358) ------------ ------------ ------------ Realized gain (loss) on investments ......... 348,782 1,214,234 (402,559) Change in unrealized gain (loss) on investments .............................. (4,794,748) 3,271,039 929,287 ------------ ------------ ------------ Net gain (loss) on investments .............. (4,445,966) 4,485,273 526,728 ------------ ------------ ------------ Reinvested capital gains ...................... 1,233,063 -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ (3,243,294) 4,521,440 504,066 ============ ============ ============
WPTSmCoGr --------------------------------------------- 2000 1999 1998 ------------- ------------- -------------- Investment activity: Reinvested dividends .......................... -- -- -- Mortality and expense risk charges (note 3) ... $ (216,538) (114,737) (106,735) ------------ ------------ ------------ Net investment income ....................... (216,538) (114,737) (106,735) ------------ ------------ ------------ Proceeds from mutual funds shares sold ........ 42,618,463 12,560,036 11,652,539 Cost of mutual fund shares sold ............... (37,312,904) (11,995,881) (11,657,359) ------------ ------------ ------------ Realized gain (loss) on investments ......... 5,305,559 564,155 (4,820) Change in unrealized gain (loss) on investments .............................. (18,360,336) 8,391,845 (287,723) ------------ ------------ ------------ Net gain (loss) on investments .............. (13,054,777) 8,956,000 (292,543) ------------ ------------ ------------ Reinvested capital gains ...................... 5,714,137 709,970 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........ $ (7,557,178) 9,551,233 (399,278) ============ ============ ============
See accompanying notes to financial statements. 15 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
Total ACVPBal ----------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ------------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ......................$ 5,292,428 6,438,144 5,411,041 99,419 61,381 34,630 Realized gain (loss) on investments ........ 61,135,620 57,750,755 30,828,999 (85,566) (51,696) 95,219 Change in unrealized gain (loss) on investments ........................... (263,179,099) 93,482,590 26,818,372 (306,371) (209,153) 37,264 Reinvested capital gains ................... 117,294,274 39,898,769 43,742,310 89,903 723,542 456,397 ------------- ------------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .............. (79,456,777) 197,570,258 106,800,722 (202,615) 524,074 623,510 ------------- ------------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .......................... 120,946,341 155,876,754 213,764,519 657,944 765,352 617,960 Transfers between funds .................... -- -- -- (516,182) (71,304) 1,045,491 Surrenders ................................. (41,340,894) (29,241,082) (20,881,099) (287,549) (170,759) (139,847) Death benefits (note 4) .................... (2,753,264) (5,189,106) (1,636,729) (2,238) (3,696) (12,665) Policy loans (net of repayments) (note 5) ................................. (18,700,994) (16,840,767) (15,272,227) (90,905) (109,266) (97,880) Deductions for surrender charges (note 2d) ................................ (3,783,229) (4,371,271) (2,374,941) (26,315) (25,527) (16,788) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ........................ (46,656,142) (46,509,797) (44,274,845) (253,169) (273,361) (164,907) Asset charges (note 3): MSP contracts ............................ (600,986) (560,395) (433,211) (5,232) (4,829) (2,706) LSFP contracts ........................... (385,150) (275,681) (123,032) (1,420) (912) (769) ------------- ------------- ---------- ---------- ---------- ---------- Net equity transactions ................ 6,725,682 52,888,655 128,768,435 (525,066) 105,698 1,227,889 ------------- ------------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............................ (72,731,095) 250,458,913 235,569,157 (727,681) 629,772 1,851,399 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................. 1,144,615,392 894,156,479 658,587,322 6,192,631 5,562,859 3,711,460 ------------- ------------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ................................. $1,071,884,297 1,144,615,392 894,156,479 5,464,950 6,192,631 5,562,859 ============== ============= ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 42,923,800 39,766,962 32,822,084 306,093 299,058 228,431 ---------- ------------- ---------- ---------- ---------- ---------- Units purchased ............................. 9,658,988 12,461,932 19,664,342 35,007 51,610 98,536 Units redeemed .............................. (8,398,585) (9,305,094) (12,719,464) (60,935) (44,575) (27,909) ---------- ------------- ---------- ---------- ---------- ---------- Ending units ............................... 44,184,203 42,923,800 39,766,962 280,165 306,093 299,058 ========== ============= ========== ========== ========== ========== ACVPCapAp -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ......................$ (225,875) (108,580) (82,384) Realized gain (loss) on investments ........ 8,676,996 763,191 (727,084) Change in unrealized gain (loss) on investments ........................... (7,733,755) 6,761,369 (95,403) Reinvested capital gains ................... 750,781 -- 626,545 ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations .............. 1,468,147 7,415,980 (278,326) ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .......................... 2,321,398 1,955,940 2,567,119 Transfers between funds .................... 6,725,158 261,755 (1,460,314) Surrenders ................................. (1,026,955) (723,035) (537,440) Death benefits (note 4) .................... (20,053) (23,318) (1,791) Policy loans (net of repayments) (note 5) ................................. (635,720) (241,323) (208,014) Deductions for surrender charges (note 2d) ................................ (93,980) (108,087) (63,643) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ........................ (1,000,118) (687,205) (533,669) Asset charges (note 3): MSP contracts ............................ (12,135) (3,806) (5,721) LSFP contracts ........................... (4,320) (1,392) (1,625) ---------- ---------- ---------- Net equity transactions ................ 6,253,275 429,529 (245,098) ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............................. 7,721,422 7,845,509 (523,424) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .................................. 19,440,162 11,594,653 12,118,077 ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD .................................. $27,161,584 19,440,162 11,594,653 =========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 851,973 825,873 825,721 ---------- ---------- ---------- Units purchased ............................. 379,881 175,114 217,853 Units redeemed .............................. (111,311) (149,014) (217,701) ---------- ---------- ---------- Ending units ................................ 1,120,543 851,973 825,873 ========== ========== ==========
(Continued) 16 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
ACVPIncGr ACVPInt -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... $ (7,281) (26,446) (297) (160,634) (123,973) (51,730) Realized gain (loss) on investments ......... 272,347 461,156 (6,256) 4,676,153 2,485,788 236,130 Change in unrealized gain (loss) on investments ............................ (817,445) 247,602 131,508 (9,830,737) 6,850,984 538,699 Reinvested capital gains .................... -- -- -- 478,387 -- 498,647 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (552,379) 682,312 124,955 (4,836,831) 9,212,799 1,221,746 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 588,512 482,154 115,227 1,859,782 1,793,620 1,075,296 Transfers between funds ..................... 51,206 2,244,545 1,333,797 2,472,737 1,521,029 5,394,451 Surrenders .................................. (103,924) (56,332) (9,343) (699,631) (363,715) (91,333) Death benefits (note 4) ..................... (25,723) -- (1) (56,581) (15,489) (11,988) Policy loans (net of repayments) (note 5) .................................. (54,872) 49,802 (3,122) (164,750) (508,785) (25,253) Deductions for surrender charges (note 2d) ................................. (9,510) (8,421) (970) (64,025) (54,372) (7,357) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (149,381) (109,013) (14,226) (777,200) (578,192) (371,602) Asset charges (note 3): MSP contracts ............................. (3,446) (3,326) (527) (13,908) (9,808) (6,965) LSFP contracts ............................ (3,118) (4,278) (150) (14,309) (5,962) (1,978) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. 289,744 2,595,131 1,420,685 2,542,115 1,778,326 5,953,271 ---------- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. (262,635) 3,277,443 1,545,640 (2,294,716) 10,991,125 7,175,017 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... 4,823,083 1,545,640 -- 24,752,338 13,761,213 6,586,196 ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ................................... $4,560,448 4,823,083 1,545,640 22,457,622 24,752,338 13,761,213 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 378,466 142,086 -- 935,555 847,041 475,299 ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 100,713 256,957 144,048 201,426 177,900 444,811 Units redeemed .............................. (75,269) (20,577) (1,962) (109,345) (89,386) (73,069) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 403,910 378,466 142,086 1,027,636 935,555 847,041 ========== ========== ========== ========== ========== ========== ACVPValue -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... 7,825 5,292 (5,760) Realized gain (loss) on investments ......... 348,832 (14,581) (93,558) Change in unrealized gain (loss) on investments ............................ 414,821 (279,501) 7,367 Reinvested capital gains .................... 89,531 249,026 169,984 ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... 861,009 (39,764) 78,033 ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 396,314 536,794 402,104 Transfers between funds ..................... 2,843,992 (10,220) 705,143 Surrenders .................................. (139,365) (44,773) (64,948) Death benefits (note 4) ..................... -- (18,972) (2) Policy loans (net of repayments) (note 5) .................................. (132,570) (46,175) (39,222) Deductions for surrender charges (note 2d) ................................. (12,754) (6,693) (5,005) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (122,278) (138,847) (76,187) Asset charges (note 3): MSP contracts ............................. (2,874) (3,246) (1,389) LSFP contracts ............................ (4,255) (1,972) (394) ---------- ---------- ---------- Net equity transactions ................. 2,826,210 265,896 920,100 ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 3,687,219 226,132 998,133 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... 2,939,382 2,713,250 1,715,117 ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ................................... $6,626,601 2,939,382 2,713,250 ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 225,895 205,278 135,221 ---------- ---------- ---------- Units purchased ............................. 242,795 49,493 95,366 Units redeemed .............................. (33,581) (28,876) (25,309) ---------- ---------- ---------- Ending units ................................ 435,109 225,895 205,278 ========== ========== ==========
17 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
DrySRGr DryStkIx -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ................ $ 118 (112,443) (58,464) 213,640 346,881 332,459 Realized gain (loss) on investments .. 721,982 1,789,441 1,461,663 4,081,939 5,075,012 7,162,506 Change in unrealized gain (loss) on investments ..................... (3,257,761) 1,688,692 619,023 (16,940,040) 11,113,462 6,892,116 Reinvested capital gains ............. -- 646,972 429,304 1,618,261 920,361 156,109 ----------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........ (2,535,661) 4,012,662 2,451,526 (11,026,200) 17,455,716 14,543,190 ----------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................... 2,490,032 2,602,017 2,646,682 12,374,808 13,344,420 8,792,308 Transfers between funds .............. 2,460,935 2,581,796 1,547,337 (5,097,368) 11,928,413 15,454,943 Surrenders ........................... (724,497) (387,508) (808,738) (3,029,913) (2,827,148) (489,388) Death benefits (note 4) .............. (47,303) (31,507) (3,645) (407,101) (157,295) (395,851) Policy loans (net of repayments) (note 5) ........................... (577,113) (488,829) (431,011) (1,621,944) (1,610,756) (500,204) Deductions for surrender charges (note 2d) .......................... (66,301) (57,929) (101,807) (277,277) (422,632) (44,357) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) .................. (1,048,030) (879,312) (448,348) (4,198,947) (4,097,507) (2,263,707) Asset charges (note 3): MSP contracts ...................... (9,779) (7,129) (5,343) (52,991) (54,699) (35,299) LSFP contracts ..................... (7,247) (5,332) (1,518) (60,980) (48,577) (10,025) ----------- ---------- ---------- ---------- ---------- ---------- Net equity transactions .......... 2,470,697 3,326,267 2,393,609 (2,371,713) 16,054,219 20,508,420 ----------- ---------- ---------- ---------- ---------- ---------- Net change in contract owners' equity ....................... (64,964) 7,338,929 4,845,135 (13,397,913) 33,509,935 35,051,610 Contract owners' equity beginning of period ............................ 19,399,304 12,060,375 7,215,240 112,551,441 79,041,506 43,989,896 ----------- ---------- ---------- ---------- ---------- ---------- Contract owners' equity end of period ............................ $19,334,340 19,399,304 12,060,375 99,153,528 112,551,441 79,041,506 =========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ...................... 556,165 446,957 340,755 3,543,874 2,959,968 2,067,906 ----------- ---------- ---------- ---------- ---------- ---------- Units purchased ...................... 149,111 173,727 166,034 448,057 907,973 1,147,227 Units redeemed ....................... (75,419) (64,519) (59,832) (531,576) (324,067) (255,165) ----------- ---------- ---------- ---------- ---------- ---------- Ending units ......................... 629,857 556,165 446,957 3,460,355 3,543,874 2,959,968 =========== ========== ========== ========== ========== ========== DryEuroEq -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ................ $ (293) -- -- Realized gain (loss) on investments .. (6,913) -- -- Change in unrealized gain (loss) on investments ..................... 1,517 -- -- Reinvested capital gains ............. 1,253 -- -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ........ (4,436) -- -- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .................... 5,122 -- -- Transfers between funds .............. 113,027 -- -- Surrenders ........................... -- -- -- Death benefits (note 4) .............. -- -- -- Policy loans (net of repayments) (note 5) ........................... 2 -- -- Deductions for surrender charges (note 2d) .......................... -- -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) .................. (2,481) -- -- Asset charges (note 3): MSP contracts ...................... (27) -- -- LSFP contracts ..................... (6) -- -- ---------- ---------- ---------- Net equity transactions .......... 115,637 -- -- ---------- ---------- ---------- Net change in contract owners' equity ....................... 111,201 -- -- Contract owners' equity beginning of period ............................ -- -- -- ---------- ---------- ---------- Contract owners' equity end of period ............................ $ 111,201 -- -- ========== ========== ========== CHANGES IN UNITS: Beginning units ...................... -- -- -- ---------- ---------- ---------- Units purchased ...................... 12,230 -- -- Units redeemed ....................... (273) -- -- ---------- ---------- ---------- Ending units ......................... 11,957 -- -- ========== ========== ==========
(Continued) 18 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
DryVApp DryVGrInc -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... $ (10,494) (13,667) (2,278) (1,576) 558 2,926 Realized gain (loss) on investments ......... 206,665 415,445 652,731 67,580 74,977 31,398 Change in unrealized gain (loss) on investments ............................ (365,322) 269,060 173,020 (314,432) 230,049 115,375 Reinvested capital gains .................... 80,911 29,215 1,151 113,207 87,323 29,897 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (88,240) 700,053 824,624 (135,221) 392,907 179,596 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 980,051 1,147,358 502,552 350,148 430,878 1,960,370 Transfers between funds ..................... (1,176,921) 2,166,937 3,058,005 289,849 18,919 533,213 Surrenders .................................. 101,300 (296,009) (44,456) (36,572) (34,300) (701,730) Death benefits (note 4) ..................... (8,995) (13,006) (4) -- (18,064) (2) Policy loans (net of repayments) (note 5) .................................. (150,408) (134,352) (18,317) (40,935) (18,736) (801,908) Deductions for surrender charges (note 2d) ................................. 9,270 (44,251) (5,020) (3,347) (5,128) (90,325) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (296,841) (299,558) (77,478) (130,262) (129,582) (66,760) Asset charges (note 3): MSP contracts ............................. (2,821) (3,070) (1,883) (3,923) (3,346) (1,044) LSFP contracts ............................ (5,196) (2,988) (535) (2,236) (1,645) (297) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. (550,561) 2,521,061 3,412,864 422,722 238,996 831,517 ---------- ---------- ---------- ---------- ---------- ---------- Net change in contract owners' equity .............................. (638,801) 3,221,114 4,237,488 287,501 631,903 1,011,113 Contract owners' equity beginning of period ................................... 7,890,198 4,669,084 431,596 2,845,869 2,213,966 1,202,853 ---------- ---------- ---------- ---------- ---------- ---------- Contract owners' equity end of period ................................... $7,251,397 7,890,198 4,669,084 3,133,370 2,845,869 2,213,966 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 540,642 353,868 42,264 191,266 172,937 104,366 ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 100,075 246,230 334,723 44,176 59,773 85,459 Units redeemed .............................. (137,248) (59,456) (23,119) (15,119) (41,444) (16,888) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 503,469 540,642 353,868 220,323 191,266 172,937 ========== ========== ========== ========== ========== ========== FidVEqIn -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... $ 764,744 519,590 382,966 Realized gain (loss) on investments ......... 4,331,220 6,406,550 2,246,297 Change in unrealized gain (loss) on investments ............................ (5,231,085) (5,267,170) 1,497,328 Reinvested capital gains .................... 5,255,479 2,726,961 3,551,403 ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... 5,120,358 4,385,931 7,677,994 ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 8,138,570 10,203,955 10,207,531 Transfers between funds ..................... (10,789,250) (3,247,107) 2,383,113 Surrenders .................................. (3,122,051) (2,431,139) (904,020) Death benefits (note 4) ..................... (189,944) (137,938) (80,375) Policy loans (net of repayments) (note 5) .................................. (1,035,827) (1,117,875) (597,978) Deductions for surrender charges (note 2d) ................................. (285,708) (363,433) (83,892) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (3,073,309) (3,725,075) (4,711,838) Asset charges (note 3): MSP contracts ............................. (38,789) (46,610) (42,703) LSFP contracts ............................ (19,695) (17,059) (12,127) ---------- ---------- ---------- Net equity transactions ................. (10,416,003) (882,281) 6,157,711 ---------- ---------- ---------- Net change in contract owners' equity .............................. (5,295,645) 3,503,650 13,835,705 Contract owners' equity beginning of period ................................... 87,067,928 83,564,278 69,728,573 ---------- ---------- ---------- Contract owners' equity end of period ................................... $81,772,283 87,067,928 83,564,278 ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 2,594,139 2,614,531 2,365,945 ---------- ---------- ---------- Units purchased ............................. 259,043 349,328 567,736 Units redeemed .............................. (576,976) (369,720) (319,150) ---------- ---------- ---------- Ending units ................................ 2,276,206 2,594,139 2,614,531 ========== ========== ==========
19 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
FidVGr FidVHiIn -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ..................... $ (1,241,653) (929,897) (361,521) 1,524,797 2,372,262 1,719,115 Realized gain (loss) on investments ....... 3,612,827 15,710,494 9,569,800 (934,993) (2,878,622) (566,114) Change in unrealized gain (loss) on investments .......................... (42,932,678) 17,198,414 10,952,975 (6,237,391) 2,437,032 (3,958,695) Reinvested capital gains .................. 19,550,081 13,551,946 10,413,177 -- 96,078 1,226,822 ------------ ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............. (21,011,423) 45,530,957 30,574,431 (5,647,587) 2,026,750 (1,578,872) ------------ ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ......................... 15,063,048 15,418,413 11,800,595 2,816,915 3,767,754 5,333,328 Transfers between funds ................... 2,949,689 13,284,488 6,611,922 (2,585,935) (4,726,508) 1,830,834 Surrenders ................................ (5,630,898) (3,962,266) (1,541,170) (1,009,915) (711,931) (481,342) Death benefits (note 4) ................... (464,693) (299,356) (54,733) (215,967) (83,542) (9,509) Policy loans (net of repayments) (note 5) ................................ (3,566,377) (3,173,351) (593,726) (36,510) (257,597) (379,699) Deductions for surrender charges (note 2d) ............................... (515,300) (592,322) (161,482) (92,420) (106,427) (54,547) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ....................... (6,864,591) (6,220,078) (4,387,847) (982,080) (1,219,918) (2,449,174) Asset charges (note 3): MSP contracts ........................... (69,249) (50,059) (52,749) (22,334) (29,175) (14,696) LSFP contracts .......................... (34,365) (23,234) (14,980) (7,947) (7,937) (4,173) ------------ ---------- ---------- ---------- ---------- ---------- Net equity transactions ............... 867,264 14,382,235 11,605,830 (2,136,193) (3,375,281) 3,771,022 ------------ ---------- ---------- ---------- ---------- ---------- Net change in contract owners' equity ............................ (20,144,159) 59,913,192 42,180,261 (7,783,780) (1,348,531) 2,192,150 Contract owners' equity beginning of period ................................. 177,055,951 117,142,759 74,962,498 26,005,933 27,354,464 25,162,314 ------------ ---------- ---------- ---------- ---------- ---------- Contract owners' equity end of period ................................. $156,911,792 177,055,951 117,142,759 18,222,153 26,005,933 27,354,464 ============ ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ........................... 3,435,387 3,041,033 2,626,715 1,081,513 1,213,502 995,908 ------------ ---------- ---------- ---------- ---------- ---------- Units purchased ........................... 378,450 730,961 739,051 140,914 174,332 371,192 Units redeemed ............................ (351,091) (336,607) (324,733) (249,998) (306,321) (153,598) ------------ ---------- ---------- ---------- ---------- ---------- Ending units ............................. 3,462,746 3,435,387 3,041,033 972,429 1,081,513 1,213,502 ============ ========== ========== ========== ========== ========== FidVOvSe -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ..................... $ 194,518 132,290 204,921 Realized gain (loss) on investments ....... 1,273,207 2,116,216 1,096,462 Change in unrealized gain (loss) on investments .......................... (10,130,820) 6,394,423 2,343 Reinvested capital gains .................. 2,677,139 535,780 1,098,564 ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............. (5,985,956) 9,178,709 2,402,290 ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ......................... 2,338,549 2,603,811 3,170,855 Transfers between funds ................... (191,092) (1,140,865) (323,986) Surrenders ................................ (1,476,671) (511,027) (367,369) Death benefits (note 4) ................... (31,249) (42,803) (33,198) Policy loans (net of repayments) (note 5) ................................ (709,130) (436,230) (393,533) Deductions for surrender charges (note 2d) ............................... (135,135) (76,394) (41,687) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ....................... (931,867) (936,056) (1,268,155) Asset charges (note 3): MSP contracts ........................... (9,547) (9,310) (11,653) LSFP contracts .......................... (8,001) (4,398) (3,309) ---------- ---------- ---------- Net equity transactions ............... (1,154,143) (553,272) 727,965 ---------- ---------- ---------- Net change in contract owners' equity ............................ (7,140,099) 8,625,437 3,130,255 Contract owners' equity beginning of period ................................. 30,848,846 22,223,409 19,093,154 ---------- ---------- ---------- Contract owners' equity end of period ................................. $23,708,747 30,848,846 22,223,409 ========== ========== ========== CHANGES IN UNITS: Beginning units ........................... 1,202,196 1,218,999 1,163,140 ---------- ---------- ---------- Units purchased ........................... 139,166 165,048 239,485 Units redeemed ............................ (194,788) (181,851) (183,626) ---------- ---------- ---------- Ending units .............................. 1,146,574 1,202,196 1,218,999 ========== ========== ==========
(Continued) 20 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
FidVAM FidVCon -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... $ 764,144 769,711 655,770 (277,542) (198,905) (107,283) Realized gain (loss) on investments ......... 743,891 1,015,529 606,007 1,601,999 8,607,593 1,751,667 Change in unrealized gain (loss) on investments ............................ (5,439,784) 26,818 28,492 (15,273,672) 2,632,252 6,821,820 Reinvested capital gains .................... 2,429,670 1,317,530 2,684,931 8,862,945 1,916,516 1,537,336 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (1,502,079) 3,129,588 3,975,200 (5,086,270) 12,957,456 10,003,540 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 2,378,371 2,909,351 2,483,246 7,336,354 8,483,644 7,814,633 Transfers between funds ..................... (1,984,742) (2,311,042) 115,769 (2,948,975) 5,291,011 7,442,220 Surrenders .................................. (944,977) (832,733) (1,327,378) (2,212,824) (1,395,137) (1,418,496) Death benefits (note 4) ..................... (13,747) (42,640) (17,947) (73,090) (199,019) (122,001) Policy loans (net of repayments) (note 5) .................................. (368,885) (659,859) (195,419) (1,259,765) (834,500) (1,095,851) Deductions for surrender charges (note 2d) ................................. (86,478) (124,486) (149,118) (202,502) (208,560) (175,050) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (1,085,359) (1,199,744) (874,287) (2,638,799) (2,643,787) (1,378,370) Asset charges (note 3): MSP contracts ............................. (11,244) (11,668) (16,611) (38,581) (36,244) (21,960) LSFP contracts ............................ (3,046) (2,332) (4,717) (23,285) (18,084) (6,237) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. (2,120,107) (2,275,153) 13,538 (2,061,467) 8,439,324 11,038,888 ---------- ---------- ---------- ---------- ---------- ---------- Net change in contract owners' equity .............................. (3,622,186) 854,435 3,988,738 (7,147,737) 21,396,780 21,042,428 Contract owners' equity beginning of period ................................... 33,107,722 32,253,287 28,264,549 71,247,015 49,850,235 28,807,807 ---------- ---------- ---------- ---------- ---------- ---------- Contract owners' equity end of period ................................... $29,485,536 33,107,722 32,253,287 64,099,278 71,247,015 49,850,235 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 1,229,226 1,312,905 1,299,236 2,777,590 2,397,557 1,779,871 ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 102,304 133,092 205,167 337,798 636,459 831,534 Units redeemed .............................. (180,893) (216,771) (191,498) (417,655) (256,426) (213,848) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 1,150,637 1,229,226 1,312,905 2,697,733 2,777,590 2,397,557 ========== ========== ========== ========== ========== ========== FidVGrOp -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... 36,283 11,876 (15,546) Realized gain (loss) on investments ......... (263,449) 453,860 226,190 Change in unrealized gain (loss) on investments ............................ (1,250,959) (343,328) 577,416 Reinvested capital gains .................... 391,834 110,237 70,230 ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (1,086,291) 232,645 858,290 ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 917,497 1,132,717 3,299,608 Transfers between funds ..................... (800,042) 12,561 3,732,648 Surrenders .................................. (161,720) (135,968) (1,598,688) Death benefits (note 4) ..................... (20,814) (53,293) (9,225) Policy loans (net of repayments) (note 5) .................................. (58,980) (44,200) (1,157,827) Deductions for surrender charges (note 2d) ................................. (14,800) (20,326) (205,666) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (280,822) (320,411) (136,692) Asset charges (note 3): MSP contracts ............................. (3,949) (5,191) (2,482) LSFP contracts ............................ (3,318) (2,905) (705) ---------- ---------- ---------- Net equity transactions ................. (426,948) 562,984 3,920,971 ---------- ---------- ---------- Net change in contract owners' equity .............................. (1,513,239) 795,629 4,779,261 Contract owners' equity beginning of period ................................... 6,683,909 5,888,280 1,109,019 ---------- ---------- ---------- Contract owners' equity end of period ................................... $ 5,170,670 6,683,909 5,888,280 ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 475,926 434,495 101,228 ---------- ---------- ---------- Units purchased ............................. 80,319 135,244 383,242 Units redeemed .............................. (109,332) (93,813) (49,975) ---------- ---------- ---------- Ending units ................................ 446,913 475,926 434,495 ========== ========== ==========
21 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATEmMGM NSATGTecGM -------------------------------------- ------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (21) -- -- (918) -- -- Realized gain (loss) on investments ......... (1,147) -- -- (5,935) -- -- Change in unrealized gain (loss) on investments ............................ (711) -- -- (233,078) -- -- Reinvested capital gains .................... -- -- -- 8,554 -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (1,879) -- -- (231,377) -- -- ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 541 -- -- 13,606 -- -- Transfers between funds ..................... 10,816 -- -- 634,363 -- -- Surrenders .................................. -- -- -- -- -- -- Death benefits (note 4) ..................... -- -- -- -- -- -- Policy loans (net of repayments) (note 5) .................................. -- -- -- (641) -- -- Deductions for surrender charges (note 2d) ................................. -- -- -- -- -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (235) -- -- (9,740) -- -- Asset charges (note 3): MSP contracts ............................. -- -- -- (34) -- -- LSFP contracts ............................ -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. 11,122 -- -- 637,554 -- -- ---------- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 9,243 -- -- 406,177 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 9,243 -- -- 406,177 -- -- ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 1,081 -- -- 68,793 -- -- Units redeemed .............................. (18) -- -- (1,147) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 1,063 -- -- 67,646 -- -- ========== ========== ========== ========== ========== ========== NSATIntGGM ------------------------------------ 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (14) -- -- Realized gain (loss) on investments ......... (233) -- -- Change in unrealized gain (loss) on investments ............................ (168) -- -- Reinvested capital gains .................... -- -- -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (415) -- -- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 2 -- -- Transfers between funds ..................... 4,696 -- -- Surrenders .................................. -- -- -- Death benefits (note 4) ..................... -- -- -- Policy loans (net of repayments) (note 5) .................................. (1) -- -- Deductions for surrender charges (note 2d) ................................. -- -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (100) -- -- Asset charges (note 3): MSP contracts ............................. -- -- -- LSFP contracts ............................ -- -- -- ---------- ---------- ---------- Net equity transactions ................. 4,597 -- -- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY ..............................$ 4,182 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ................................... 4,182 -- -- ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- ---------- ---------- ---------- Units purchased ............................. 464 -- -- Units redeemed .............................. (11) -- -- ---------- ---------- ---------- Ending units ................................ 453 -- -- ========== ========== ========== (Continued)
22 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
JanACapApS JanAGlTchS -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ 9,106 -- -- 4,424 -- -- Realized gain (loss) on investments ......... (67,632) -- -- 13,176 -- -- Change in unrealized gain (loss) on investments ............................ (509,550) -- -- (1,148,444) -- -- Reinvested capital gains .................... -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (568,076) -- -- (1,130,844) -- -- ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 163,374 -- -- 200,047 -- -- Transfers between funds ..................... 3,483,176 -- -- 3,477,054 -- -- Surrenders .................................. (18,995) -- -- (16,070) -- -- Death benefits (note 4) ..................... -- -- -- -- -- -- Policy loans (net of repayments) (note 5) .................................. (36,245) -- -- (15,097) -- -- Deductions for surrender charges (note 2d) ................................. (1,738) -- -- (1,471) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (66,641) -- -- (59,588) -- -- Asset charges (note 3): MSP contracts ............................. (1,552) -- -- (1,521) -- -- LSFP contracts ............................ (436) -- -- (407) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. 3,520,943 -- -- 3,582,947 -- -- ---------- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 2,952,867 -- -- 2,452,103 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 2,952,867 -- -- 2,452,103 -- -- ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 387,744 -- -- 375,042 -- -- Units redeemed .............................. (13,774) -- -- (11,485) -- -- ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 373,970 -- -- 363,557 -- -- ========== ========== ========== ========== ========== ========== JanAIntGrS ------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ 59,459 -- -- Realized gain (loss) on investments ......... (181,333) -- -- Change in unrealized gain (loss) on investments ............................ (349,293) -- -- Reinvested capital gains .................... -- -- -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (471,167) -- -- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 121,443 -- -- Transfers between funds ..................... 2,598,237 -- -- Surrenders .................................. (16,540) -- -- Death benefits (note 4) ..................... -- -- -- Policy loans (net of repayments) (note 5) .................................. (11,714) -- -- Deductions for surrender charges (note 2d) ................................. (1,514) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (34,493) -- -- Asset charges (note 3): MSP contracts ............................. (1,038) -- -- LSFP contracts ............................ (146) -- -- ---------- ---------- ---------- Net equity transactions ................. 2,654,235 -- -- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 2,183,068 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ................................... $2,183,068 -- -- ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- ---------- ---------- ---------- Units purchased ............................. 284,504 -- -- Units redeemed .............................. (8,421) -- -- ---------- ---------- ---------- Ending units ................................ 276,083 -- -- ========== ========== ==========
23 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATCapAp NSATGvtBd -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (197,752) (45,147) (11,980) 593,146 665,371 524,626 Realized gain (loss) on investments ......... (44,470) 1,545,323 3,583,237 (132,300) (851,332) 405,188 Change in unrealized gain (loss) on investments ............................ (16,033,473) (2,937,651) 2,897,785 822,785 (301,600) (159,490) Reinvested capital gains .................... 6,018,129 2,820,485 1,139,693 -- 25,753 67,018 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (10,257,566) 1,383,010 7,608,735 1,283,631 (461,808) 837,342 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 5,307,598 6,414,922 4,921,929 943,979 755,607 1,866,413 Transfers between funds ..................... (7,322,445) (902,464) 9,212,515 (1,337,392) 381,498 3,757,206 Surrenders .................................. (1,101,685) (1,464,698) (339,981) (403,544) (310,304) (140,551) Death benefits (note 4) ..................... (67,374) (26,646) (12,217) (5,619) (3,017) (50,211) Policy loans (net of repayments) (note 5) .................................. (651,768) (839,186) (247,383) (161,143) (495,291) (220,482) Deductions for surrender charges (note 2d) ................................. (100,818) (218,959) (30,979) (36,929) (46,387) (15,200) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (1,990,000) (2,416,248) (1,558,711) (631,603) (500,735) (989,812) Asset charges (note 3): MSP contracts ............................. (20,853) (26,238) (17,928) (9,707) (13,045) (7,727) LSFP contracts ............................ (15,363) (15,764) (5,092) (4,392) (2,382) (2,195) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. (5,962,708) 504,719 11,922,153 (1,646,350) (234,056) 4,197,441 ---------- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. (16,220,274) 1,887,729 19,530,888 (362,719) (695,864) 5,034,783 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... 43,171,073 41,283,344 21,752,456 13,361,909 14,057,773 9,022,990 ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 26,950,799 43,171,073 41,283,344 12,999,190 13,361,909 14,057,773 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 1,403,197 1,381,944 921,237 791,927 790,689 533,745 ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 187,771 272,423 596,887 74,451 135,050 337,324 Units redeemed .............................. (389,578) (251,170) (136,180) (169,431) (133,812) (80,380) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 1,201,390 1,403,197 1,381,944 696,947 791,927 790,689 ========== ========== ========== ========== ========== ========== NSATMCpSTR -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (2,791) -- -- Realized gain (loss) on investments ......... (87,965) -- -- Change in unrealized gain (loss) on investments ............................ (109,003) -- -- Reinvested capital gains .................... 14,918 -- -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (184,841) -- -- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 52,824 -- -- Transfers between funds ..................... 989,506 -- -- Surrenders .................................. (1,135) -- -- Death benefits (note 4) ..................... -- -- -- Policy loans (net of repayments) (note 5) .................................. (20,424) -- -- Deductions for surrender charges (note 2d) ................................. (104) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (14,396) -- -- Asset charges (note 3): MSP contracts ............................. (656) -- -- LSFP contracts ............................ (36) -- -- ---------- ---------- ---------- Net equity transactions ................. 1,005,579 -- -- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 820,738 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 820,738 -- -- ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- ---------- ---------- ---------- Units purchased ............................. 105,044 -- -- Units redeemed .............................. (3,870) -- -- ---------- ---------- ---------- Ending units ................................ 101,174 -- -- ========== ========== ==========
(Continued) 24 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATMCIxDR NSATMMkt ------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ 819 -- -- 2,643,745 2,192,750 2,102,319 Realized gain (loss) on investments ......... 17,525 -- -- -- -- -- Change in unrealized gain (loss) on investments ............................ (68,941) -- -- -- -- -- Reinvested capital gains .................... 59,565 -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... 8,968 -- -- 2,643,745 2,192,750 2,102,319 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 32,770 -- -- 9,251,495 33,970,462 87,844,599 Transfers between funds ..................... 1,786,882 -- -- (7,781,365) (20,060,327) (81,357,019) Surrenders .................................. (2,384) -- -- (3,720,656) (2,949,962) (1,151,432) Death benefits (note 4) ..................... -- -- -- (45,052) (1,748,315) (5,841) Policy loans (net of repayments) (note 5) .................................. (7,462) -- -- 335,834 257,119 (233,125) Deductions for surrender charges (note 2d) ................................. (218) -- -- (340,488) (440,992) (117,086) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (19,481) -- -- (1,615,471) (2,710,844) (3,968,229) Asset charges (note 3): MSP contracts ............................. (199) -- -- (45,443) (55,122) (28,816) LSFP contracts ............................ (87) -- -- (27,847) (32,642) (8,184) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. 1,789,821 -- -- (3,988,993) 6,229,377 974,867 ---------- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 1,798,789 -- -- (1,345,248) 8,422,127 3,077,186 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- 55,937,112 47,514,985 44,437,799 ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 1,798,789 -- -- 54,591,864 55,937,112 47,514,985 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- 4,122,003 3,682,600 3,564,656 ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 174,796 -- -- 935,006 3,648,845 7,770,157 Units redeemed .............................. (2,903) -- -- (1,227,483) (3,209,442) (7,652,213) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 171,893 -- -- 3,829,526 4,122,003 3,682,600 ========== ========== ========== ========== ========== ========== NSATMBdMAS ------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ 3,488 -- -- Realized gain (loss) on investments ......... (786) -- -- Change in unrealized gain (loss) on investments ............................ 457 -- -- Reinvested capital gains .................... -- -- -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... 3,159 -- -- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 2,289 -- -- Transfers between funds ..................... 82,990 -- -- Surrenders .................................. -- -- -- Death benefits (note 4) ..................... -- -- -- Policy loans (net of repayments) (note 5) .................................. (190) -- -- Deductions for surrender charges (note 2d) ................................. -- -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (1,041) -- -- Asset charges (note 3): MSP contracts ............................. (115) -- -- LSFP contracts ............................ (4) -- -- ---------- ---------- ---------- Net equity transactions ................. 83,929 -- -- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 87,088 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 87,088 -- -- ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- ---------- ---------- ---------- Units purchased ............................. 8,485 -- -- Units redeemed .............................. (152) -- -- ---------- ---------- ---------- Ending units ................................ 8,333 -- -- ========== ========== ==========
25 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATSmCapG NSATSmCapV -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (2,514) -- -- (51,635) (12,857) (3,508) Realized gain (loss) on investments ......... (74,213) -- -- 163,206 435,390 59,716 Change in unrealized gain (loss) on investments ............................ (167,853) -- -- (1,082,758) (178,227) 31,642 Reinvested capital gains .................... 2,683 -- -- 1,418,043 463,979 -- ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (241,897) -- -- 446,856 708,285 87,850 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 34,629 -- -- 441,523 205,584 495,836 Transfers between funds ..................... 992,140 -- -- 4,096,956 1,364,159 742,114 Surrenders .................................. (8,200) -- -- (460,458) (9,301) (342,834) Death benefits (note 4) ..................... -- -- -- (1,053) -- (1) Policy loans (net of repayments) (note 5) .................................. (923) -- -- (43,917) (17,764) (92,219) Deductions for surrender charges (note 2d) ................................. (750) -- -- (42,138) (1,390) (44,169) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (14,507) -- -- (151,631) (60,914) (5,642) Asset charges (note 3): MSP contracts ............................. (255) -- -- (2,859) (3,844) (244) LSFP contracts ............................ (8) -- -- (7,330) (2,270) (69) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. 1,002,126 -- -- 3,829,093 1,474,260 752,772 ---------- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 760,229 -- -- 4,275,949 2,182,545 840,622 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... -- -- -- 3,023,167 840,622 -- ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 760,229 -- -- 7,299,116 3,023,167 840,622 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- 277,593 98,226 -- ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 96,894 -- -- 411,148 195,544 103,305 Units redeemed .............................. (2,781) -- -- (78,003) (16,177) (5,079) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 94,113 -- -- 610,738 277,593 98,226 ========== ========== ========== ========== ========== ========== NSATSmCo -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (212,417) (133,984) (115,584) Realized gain (loss) on investments ......... 9,053,628 322,338 (835,389) Change in unrealized gain (loss) on investments ............................ (12,312,627) 6,521,648 1,062,670 Reinvested capital gains .................... 5,338,437 1,017,362 -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... 1,867,021 7,727,364 111,697 ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 2,677,792 3,047,229 2,534,601 Transfers between funds ..................... 2,990,395 108,189 2,008,259 Surrenders .................................. (609,371) (506,958) (175,480) Death benefits (note 4) ..................... (168,776) (58,447) (24,329) Policy loans (net of repayments) (note 5) .................................. (467,147) (304,105) (112,094) Deductions for surrender charges (note 2d) ................................. (55,765) (75,786) (19,078) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (1,160,409) (1,042,927) (497,764) Asset charges (note 3): MSP contracts ............................. (21,930) (14,377) (8,027) LSFP contracts ............................ (16,087) (6,706) (2,279) ---------- ---------- ---------- Net equity transactions ................. 3,168,702 1,146,112 3,703,809 ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 5,035,723 8,873,476 3,815,506 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... 26,368,753 17,495,277 13,679,771 ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 31,404,476 26,368,753 17,495,277 ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 1,185,688 1,118,367 868,843 ---------- ---------- ---------- Units purchased ............................. 234,167 222,497 385,824 Units redeemed .............................. (113,594) (155,176) (136,300) ---------- ---------- ---------- Ending units ................................ 1,306,261 1,185,688 1,118,367 ========== ========== ==========
(Continued) 26 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NSATTotRtn NBAMTGro -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (124,674) (110,908) 250,396 (326,947) (183,268) (153,887) Realized gain (loss) on investments ......... 4,343,276 2,886,861 6,850,892 9,694,143 2,237,185 (1,757,697) Change in unrealized gain (loss) on investments ............................ (40,766,537) (615,625) 2,647,189 (18,572,555) 7,073,105 273,491 Reinvested capital gains .................... 33,726,301 3,857,973 3,859,922 3,211,533 1,124,154 4,778,935 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (2,821,634) 6,018,301 13,608,399 (5,993,826) 10,251,176 3,140,842 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 12,173,163 14,477,695 18,994,728 3,061,931 2,741,841 3,124,257 Transfers between funds ..................... (9,625,991) (3,544,992) 6,079,393 9,518,532 (2,585,171) 3,739,437 Surrenders .................................. (3,857,717) (2,714,451) (1,330,528) (1,565,105) (733,093) (1,015,843) Death benefits (note 4) ..................... (355,642) (233,861) (120,757) (35,426) (1,410,172) (13,565) Policy loans (net of repayments) (note 5) .................................. (2,458,440) (2,351,544) (809,785) (903,203) (530,684) (1,132,396) Deductions for surrender charges (note 2d) ................................. (353,031) (405,785) (122,860) (143,228) (109,591) (120,721) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (5,594,595) (6,266,041) (11,763,303) (1,638,100) (1,049,294) (741,732) Asset charges (note 3): MSP contracts ............................. (42,471) (46,751) (46,769) (20,766) (9,624) (10,686) LSFP contracts ............................ (21,288) (17,691) (13,282) (11,928) (4,427) (3,035) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. (10,136,012) (1,103,421) 10,866,837 8,262,707 (3,690,215) 3,825,716 ---------- ---------- ---------- ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. (12,957,646) 4,914,880 24,475,236 2,268,881 6,560,961 6,966,558 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... 104,030,242 99,115,362 74,640,126 31,072,683 24,511,722 17,545,164 ---------- ---------- ---------- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 91,072,596 104,030,242 99,115,362 33,341,564 31,072,683 24,511,722 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 3,151,278 3,169,018 2,765,509 862,532 1,004,418 804,751 ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 376,602 505,511 788,836 320,777 172,219 324,798 Units redeemed .............................. (680,269) (523,251) (385,327) (110,256) (314,105) (125,131) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 2,847,611 3,151,278 3,169,018 1,073,053 862,532 1,004,418 ========== ========== ========== ========== ========== ========== NBAMTGuard -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income .......................$ (2,263) (8,218) (4,780) Realized gain (loss) on investments ......... 81,869 87,231 (56,384) Change in unrealized gain (loss) on investments ............................ (98,383) 43,771 53,662 Reinvested capital gains .................... -- -- -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (18,777) 122,784 (7,502) ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 236,546 241,772 149,649 Transfers between funds ..................... (205,049) 1,149,560 831,617 Surrenders .................................. (207,025) (18,129) (64,538) Death benefits (note 4) ..................... (13,947) (281) (1) Policy loans (net of repayments) (note 5) .................................. (1,956) (19,356) (25,325) Deductions for surrender charges (note 2d) ................................. (18,946) (2,710) (8,207) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (64,600) (59,481) (17,066) Asset charges (note 3): MSP contracts ............................. (1,487) (1,168) (332) LSFP contracts ............................ (1,145) (701) (94) ---------- ---------- ---------- Net equity transactions ................. (277,609) 1,289,506 865,703 ---------- ---------- ---------- NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. (296,386) 1,412,290 858,201 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................................... 2,270,491 858,201 -- ---------- ---------- ---------- CONTRACT OWNERS' EQUITY END OF PERIOD ...................................$ 1,974,105 2,270,491 858,201 ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 213,441 92,073 -- ---------- ---------- ---------- Units purchased ............................. 29,601 134,132 96,790 Units redeemed .............................. (58,555) (12,764) (4,717) ---------- ---------- ---------- Ending units ................................ 184,487 213,441 92,073 ========== ========== ==========
27 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
NBAMTLMat NBAMTPart -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... $ 274,820 241,375 322,862 23,707 160,794 (130,559) Realized gain (loss) on investments ......... (266,075) (74,295) (32,081) (2,426,344) (548,879) 1,133,363 Change in unrealized gain (loss) on investments ............................ 223,548 (128,665) (88,989) (2,383,122) 1,854,882 (3,917,798) Reinvested capital gains .................... -- -- -- 4,631,886 687,554 3,901,869 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... 232,293 38,415 201,792 (153,873) 2,154,351 986,875 ---------- ---------- ---------- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 124,829 418,414 1,227,568 3,997,213 5,441,082 5,722,483 Transfers between funds ..................... (907,154) (166,249) (1,104,263) (6,757,477) (8,211,478) 2,646,725 Surrenders .................................. (310,740) (82,093) (340,366) (1,477,559) (949,302) (676,703) Death benefits (note 4) ..................... -- (50,646) (168,478) (143,800) (94,956) (11,051) Policy loans (net of repayments) (note 5) .................................. (7,769) (66,552) (490,348) (176,640) (473,894) (1,178,884) Deductions for surrender charges (note 2d) ................................. (28,437) (12,272) (43,208) (135,216) (141,912) (78,170) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (139,082) (161,822) (151,014) (1,294,898) (1,823,914) (1,174,585) Asset charges (note 3): MSP contracts ............................. (5,836) (7,656) (2,967) (19,393) (23,724) (17,668) LSFP contracts ............................ (720) (487) (843) (12,402) (10,391) (5,018) ---------- ---------- ---------- ---------- ---------- ---------- Net equity transactions ................. (1,274,909) (129,363) (1,073,919) (6,020,172) (6,288,489) 5,227,129 ---------- ---------- ---------- ---------- ---------- ---------- Net change in contract owners' equity .............................. (1,042,616) (90,948) (872,127) (6,174,045) (4,134,138) 6,214,004 Contract owners' equity beginning of period ................................... 4,928,380 5,019,328 5,891,455 30,808,193 34,942,331 28,728,327 ---------- ---------- ---------- ---------- ---------- ---------- Contract owners' equity end of period ................................... $ 3,885,764 4,928,380 5,019,328 24,634,148 30,808,193 34,942,331 ========== ========== ========== ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. 342,163 349,795 417,620 1,307,010 1,570,249 1,319,239 ---------- ---------- ---------- ---------- ---------- ---------- Units purchased ............................. 23,235 62,199 108,255 184,798 257,385 514,393 Units redeemed .............................. (112,788) (69,831) (176,080) (435,187) (520,624) (263,383) ---------- ---------- ---------- ---------- ---------- ---------- Ending units ................................ 252,610 342,163 349,795 1,056,621 1,307,010 1,570,249 ========== ========== ========== ========== ========== ========== OppAggGrVA -------------------------------------- 2000 1999 1998 ---------- ---------- ---------- INVESTMENT ACTIVITY: Net investment income ....................... $ (9,718) -- -- Realized gain (loss) on investments ......... (489,326) -- -- Change in unrealized gain (loss) on investments ............................ (435,498) -- -- Reinvested capital gains .................... -- -- -- ---------- ---------- ---------- Net increase (decrease) in contract owners' equity resulting from operations ............... (934,542) -- -- ---------- ---------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners ........................... 238,305 -- -- Transfers between funds ..................... 3,670,423 -- -- Surrenders .................................. (19,423) -- -- Death benefits (note 4) ..................... -- -- -- Policy loans (net of repayments) (note 5) .................................. (15,499) -- -- Deductions for surrender charges (note 2d) ................................. (1,778) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ......................... (63,844) -- -- Asset charges (note 3): MSP contracts ............................. (1,077) -- -- LSFP contracts ............................ (72) -- -- ---------- ---------- ---------- Net equity transactions ................. 3,807,035 -- -- ---------- ---------- ---------- Net change in contract owners' equity .............................. 2,872,493 -- -- Contract owners' equity beginning of period ................................... -- -- -- ---------- ---------- ---------- Contract owners' equity end of period ................................... $2,872,493 -- -- ========== ========== ========== CHANGES IN UNITS: Beginning units ............................. -- -- -- ---------- ---------- ---------- Units purchased ............................. 379,813 -- -- Units redeemed .............................. (10,805) -- -- ---------- ---------- ---------- Ending units ................................ 369,008 -- -- ========== ========== ==========
(Continued) 28 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
OppBdVA OppCapApVA --------------------------------------------- --------------------------------- 2000 1999 1998 2000 1999 ------------- --------------- -------------- -------------- --------------- INVESTMENT ACTIVITY: Net investment income........ $ 804,164 472,261 85,687 (110,855) (32,613) Realized gain (loss) on investments (238,067) (6,702) 342,280 1,860,687 710,047 Change in unrealized gain (loss) on investments............. 16,219 (794,086) 13,809 (3,665,305) 1,735,399 Reinvested capital gains..... - 54,146 160,413 1,008,850 175,824 -------------- -------------- -------------- -------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations.. 582,316 (274,381) 602,189 (906,623) 2,588,657 -------------- -------------- -------------- -------------- ------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 1,288,550 1,530,602 1,446,313 2,157,034 1,214,511 Transfers between funds...... (1,146,061) (747,631) 2,081,829 6,354,660 3,004,317 Surrenders................... (429,249) (352,928) (168,318) (726,427) (60,102) Death benefits (note 4)...... (4,850) (9,225) (24,489) (6,975) (6,703) Policy loans (net of repayments) (note 5)................... (75,839) (214,389) (23,153) (235,392) (111,846) Deductions for surrender charges (note 2d).................. (39,282) (52,759) (19,765) (66,477) (8,985) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (431,185) (496,721) (348,809) (739,986) (351,903) Asset charges (note 3): MSP contracts ............. (9,970) (9,861) (6,358) (9,840) (4,217) LSFP contracts ............ (2,013) (1,060) (1,806) (7,653) (3,718) -------------- -------------- -------------- -------------- ------------- Net equity transactions.. (849,899) (353,972) 2,935,444 6,718,944 3,671,354 -------------- -------------- -------------- -------------- ------------- Net change in contract owners' equity............... (267,583) (628,353) 3,537,633 5,812,321 6,260,011 Contract owners' equity beginning of period.................... 11,733,754 12,362,107 8,824,474 12,287,029 6,027,018 -------------- -------------- -------------- -------------- ------------- Contract owners' equity end of period.................... $11,466,171 11,733,754 12,362,107 18,099,350 12,287,029 ============== ============== ============== ============== ============= CHANGES IN UNITS: 692,055 707,690 531,344 679,081 467,763 Beginning units.............. -------------- -------------- -------------- -------------- ------------- 89,307 108,517 258,067 432,286 284,637 Units purchased.............. (134,314) (124,152) (81,721) (101,062) (73,319) Units redeemed............... -------------- -------------- -------------- -------------- ------------- 647,048 692,055 707,690 1,010,305 679,081 Ending units................. ============== ============== ============== ============== =============
OppGLSecVA --------------- --------------------------------------------- 1998 2000 1999 1998 -------------- -------------- -------------- ------------- INVESTMENT ACTIVITY: Net investment income........ $ (16,813) (213,733) 65,415 241,675 Realized gain (loss) on investments 338,182 1,641,953 2,137,635 1,354,176 Change in unrealized gain (loss) on investments............. 109,336 (5,708,731) 9,595,322 (702,629) Reinvested capital gains..... 113,813 5,565,874 717,222 1,465,275 -------------- -------------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations 544,518 1,285,363 12,515,594 2,358,497 -------------- -------------- -------------- -------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 1,452,830 3,586,290 3,377,203 2,591,457 Transfers between funds...... 4,492,087 3,670,519 127,319 1,052,407 Surrenders................... (576,151) (1,335,643) (755,080) (390,303) Death benefits (note 4)...... (5) (106,833) (44,903) (12,688) Policy loans (net of repayments) (note 5)................... (312,911) (736,228) (343,214) (265,465) Deductions for surrender charges (note 2d).................. (73,520) (122,229) (112,877) (46,476) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (116,339) (1,541,228) (1,110,398) (696,092) Asset charges (note 3): MSP contracts ............. (1,822) (17,080) (9,874) (10,249) LSFP contracts ............ (518) (8,237) (4,111) (2,911) -------------- -------------- -------------- -------------- Net equity transactions.. 4,863,651 3,389,331 1,124,065 2,219,680 -------------- -------------- -------------- -------------- Net change in contract owners' equity............... 5,408,169 4,674,694 13,639,659 4,578,177 Contract owners' equity beginning of period.................... 618,849 34,770,201 21,130,542 16,552,365 -------------- -------------- -------------- -------------- Contract owners' equity end of period.................... $6,027,018 39,444,895 34,770,201 21,130,542 ============== ============== ============== ============== CHANGES IN UNITS: 59,202 1,212,506 1,158,329 1,023,094 Beginning units.............. -------------- -------------- -------------- -------------- 433,046 237,815 196,187 317,444 Units purchased.............. (24,485) (128,485) (142,010) (182,209) Units redeemed............... -------------- -------------- -------------- -------------- 467,763 1,321,836 1,212,506 1,158,329 Ending units................. ============== ============== ============== ==============
29 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
OppMGrinVA OppMltStVA ---------------------------------------------- --------------------------------- 2000 1999 1998 2000 1999 --------------- -------------- -------------- -------------- ------------- INVESTMENT ACTIVITY: Net investment income........ $ (965) - - 559,143 364,821 Realized gain (loss) on investments 2,561 - - 397,611 405,169 Change in unrealized gain (loss) on investments............. (40,617) - - (1,160,185) 10,270 Reinvested capital gains..... - - - 993,822 694,901 -------------- -------------- -------------- -------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations (39,021) - - 790,391 1,475,161 -------------- -------------- -------------- -------------- ------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 18,231 - - 1,409,025 1,717,678 Transfers between funds...... 465,697 - - (593,747) (1,101,933) Surrenders................... - - - (532,389) (382,853) Death benefits (note 4)...... - - - (31,040) (36,757) Policy loans (net of repayments) (note 5)................... (13,064) - - (299,399) (234,710) Deductions for surrender charges (note 2d).................. - - - (48,720) (57,233) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (5,465) - - (598,149) (646,532) Asset charges (note 3): MSP contracts ............. (407) - - (8,633) (8,700) LSFP contracts ............ (32) - - (2,652) (1,730) -------------- -------------- -------------- -------------- ------------- Net equity transactions.. 464,960 - - (705,704) (752,770) -------------- -------------- -------------- -------------- ------------- Net change in contract owners' equity............... 425,939 - - 84,687 722,391 Contract owners' equity beginning of period.................... - - - 14,930,150 14,207,759 -------------- -------------- -------------- -------------- ------------- Contract owners' equity end of period.................... $ 425,939 - - 15,014,837 14,930,150 ============== ============== ============== ============== ============= CHANGES IN UNITS: - - - 625,008 661,584 Beginning units.............. -------------- -------------- -------------- -------------- ------------- Units purchased.............. 49,163 - - 66,207 80,794 Units redeemed............... (1,919) - - (93,726) (117,370) -------------- -------------- -------------- -------------- ------------- Ending units................. 47,244 - - 597,489 625,008 ============== ============== ============== ============== =============
OppMltStVA StOpp2 -------------- ---------------------------------------------- 1998 2000 1999 1998 -------------- -------------- -------------- -------------- INVESTMENT ACTIVITY: Net investment income........ $ 11,450 (355,887) (283,101) (149,125) Realized gain (loss) on investments 404,124 1,982,167 1,739,375 1,023,518 Change in unrealized gain (loss) on investments............. (366,305) (4,879,451) 5,430,662 (1,078,872) Reinvested capital gains..... 675,242 5,562,609 3,541,869 3,488,003 -------------- -------------- -------------- -------------- Net increase (decrease) in contract owners' equity resulting from operations 724,511 2,309,438 10,428,805 3,283,524 -------------- -------------- -------------- -------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 3,243,119 3,997,729 4,448,212 5,452,015 Transfers between funds...... 706,703 46,907 (12,621) 470,365 Surrenders................... (1,061,880) (1,864,450) (1,148,838) (1,037,130) Death benefits (note 4)...... (182,084) (68,640) (104,927) (143,979) Policy loans (net of repayments) (note 5)................... (1,005,743) (890,076) (753,805) (1,307,454) Deductions for surrender charges (note 2d).................. (126,681) (170,621) (171,741) (121,009) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (435,809) (1,687,865) (1,589,094) (946,709) Asset charges (note 3): MSP contracts ............. (7,289) (11,771) (9,653) (15,330) LSFP contracts ............ (2,070) (6,074) (4,177) (4,354) -------------- -------------- -------------- -------------- Net equity transactions.. 1,128,266 (654,861) 653,356 2,346,415 -------------- -------------- -------------- -------------- Net change in contract owners' equity............... 1,852,777 1,654,577 11,082,161 5,629,939 Contract owners' equity beginning of period.................... 12,354,982 42,117,945 31,035,784 25,405,845 -------------- -------------- -------------- -------------- Contract owners' equity end of period.................... $14,207,759 43,772,522 42,117,945 31,035,784 ============== ============== ============== ============== CHANGES IN UNITS: 598,181 1,086,172 1,071,986 974,778 Beginning units.............. -------------- -------------- -------------- -------------- Units purchased.............. 166,005 130,217 143,914 229,776 Units redeemed............... (102,602) (140,432) (129,728) (132,568) -------------- -------------- -------------- -------------- Ending units................. 661,584 1,075,957 1,086,172 1,071,986 ============== ============== ============== ==============
(Continued) 30 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
StDisc2 StintStk2 ------------------------------------------- ---------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income........ $ (58,904) (53,820) (58,150) (49,525) (14,510) Realized gain (loss) on investments 752,895 (992,301) 552,698 (387,126) 1,329,944 Change in unrealized gain (loss) on investments............. (482,257) 125,370 (128,321) (1,546,991) 1,572,604 Reinvested capital gains..... - 1,035,670 120,028 - - ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations 211,734 114,919 486,255 (1,983,642) 2,888,038 ----------- ----------- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 954,266 1,126,745 686,440 580,207 428,882 Transfers between funds...... (570,553) (2,017,437) 154,482 (2,282,869) 2,309,650 Surrenders................... (235,086) (201,408) (128,257) (136,421) (56,239) Death benefits (note 4)...... (21,678) (1,033) (23,649) (8,738) (4,048) Policy loans (net of repayments) (note 5)................... (266,090) (115,906) (104,497) (28,642) 52,892 Deductions for surrender charges (note 2d).................. (21,513) (30,109) (15,109) (12,484) (8,407) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (329,564) (340,295) (244,196) (207,957) (125,810) Asset charges (note 3): MSP contracts ............. (1,697) (1,300) (4,038) (2,758) (2,085) LSFP contracts ............ (903) (513) (1,147) (4,055) (1,753) ----------- ----------- ----------- ----------- ----------- Net equity transactions.. (492,818) (1,581,256) 320,029 (2,103,717) 2,593,082 ----------- ----------- ----------- ----------- ----------- Net change in contract owners' equity............... (281,084) (1,466,337) 806,284 (4,087,359) 5,481,120 Contract owners' equity beginning of period.................... 6,885,495 8,351,832 7,545,548 7,468,116 1,986,996 ----------- ----------- ----------- ----------- ----------- Contract owners' equity end of period.................... $ 6,604,411 6,885,495 8,351,832 3,380,757 7,468,116 =========== =========== =========== =========== =========== CHANGES IN UNITS: Beginning units.............. 349,019 440,162 421,534 453,067 222,590 ----------- ----------- ----------- ----------- ----------- Units purchased.............. 53,248 70,498 95,961 53,645 255,086 Units redeemed............... (76,391) (161,641) (77,333) (166,871) (24,609) ----------- ----------- ----------- ----------- ----------- Ending units................. 325,876 349,019 440,162 339,841 453,067 =========== =========== =========== =========== ===========
StintStk2 NSATGFocTU ----------- -------------------------------------------- 1998 2000 1999 1998 ----------- ----------- ----------- ---------- INVESTMENT ACTIVITY: Net investment income........ $ 7,697 (100) - - Realized gain (loss) on investments (245,777) (2,764) - - Change in unrealized gain (loss) on investments............. 138,162 (24,195) - - Reinvested capital gains..... - - - - ----------- ----------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations (99,918) (27,059) - - ----------- ----------- ----------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 1,319,108 2,062 - - Transfers between funds...... (186,236) 75,866 - - Surrenders................... (444,664) - - - Death benefits (note 4)...... (5,993) - - - Policy loans (net of repayments) (note 5)................... (462,567) (160) - - Deductions for surrender charges (note 2d).................. (56,530) - - - Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (61,036) (1,281) - - Asset charges (note 3): MSP contracts ............. (1,044) - - - LSFP contracts ............ (296) - - - ----------- ----------- ----------- ---------- Net equity transactions.. 100,742 76,487 - - ----------- ----------- ----------- ---------- Net change in contract owners' equity............... 824 49,428 - - Contract owners' equity beginning of period.................... 1,986,172 - - - ----------- ----------- ----------- ---------- Contract owners' equity end of period.................... $1,986,996 49,428 - - =========== =========== =========== ========== CHANGES IN UNITS: Beginning units.............. 209,767 - - - ----------- ----------- ----------- ---------- Units purchased.............. 64,933 7,989 - - Units redeemed............... (52,110) (183) - - ----------- ----------- ----------- ---------- Ending units................. 222,590 7,806 - - =========== =========== =========== ==========
31 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
MSUEmMkt MSUUSReaLE -------------------------------------- -------------------------------------------- 2000 1999 1998 2000 1999 1998 --------- --------- ---------- ----------- ---------- ----------- INVESTMENT ACTIVITY: Net investment income........ $ 102,397 81,127 35,485 467,855 356,207 (39,731) Realized gain (loss) on investments 26,389 26,192 (94,814) 446,597 (1,050,667) (564,373) Change in unrealized gain (loss) on investments............. (38,552) 29,379 (33,784) 443,730 478,383 (513,939) Reinvested capital gains..... - - - 36,959 - 121,016 --------- --------- ---------- ----------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations 90,234 136,698 (93,113) 1,395,141 (216,077) (997,027) --------- --------- ---------- ----------- ---------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 106,585 106,804 398,199 743,161 1,006,759 1,337,143 Transfers between funds...... 219,001 158,219 133,381 623,498 (1,435,388) (908,402) Surrenders................... (10,363) (6,693) (214,691) (117,484) (187,346) (163,286) Death benefits (note 4)...... (3,364) - (9) (3,388) (2,653) (22,389) Policy loans (net of repayments) (note 5)................... (4,279) (7,238) (92,787) (37,568) (131,155) (78,704) Deductions for surrender charges (note 2d).................. (948) (1,001) (27,689) (10,751) (28,007) (19,126) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (31,590) (24,247) (14,797) (274,253) (432,919) (232,710) Asset charges (note 3): MSP contracts ............. (542) (425) (167) (4,297) (4,975) (3,613) LSFP contracts ............ (1,706) (885) (47) (2,747) (2,459) (1,026) --------- --------- ---------- ----------- ---------- ----------- Net equity transactions.. 272,794 224,534 181,393 916,171 (1,218,143) (92,113) --------- --------- ---------- ----------- ---------- ----------- Net change in contract owners' equity............... 363,028 361,232 88,280 2,311,312 (1,434,220) (1,089,140) Contract owners' equity beginning of period.................... 701,398 340,166 251,886 5,105,071 6,539,291 7,628,431 --------- --------- ---------- ----------- ---------- ----------- Contract owners' equity end of period.................... $1,064,426 701,398 340,166 7,416,383 5,105,071 6,539,291 ========= ========= ========== =========== ========== =========== CHANGES IN UNITS: Beginning units.............. 77,785 48,664 25,614 339,591 417,073 425,994 --------- --------- ---------- ----------- ---------- ----------- Units purchased.............. 35,031 35,161 30,195 81,265 63,982 122,745 Units redeemed............... (6,184) (6,040) (7,145) (32,845) (141,464) (131,666) --------- --------- ---------- ----------- ---------- ----------- Ending units................. 106,632 77,785 48,664 388,011 339,591 417,073 ========= ========= ========== =========== ========== ===========
VEWwBD ------------------------------------------- 2000 1999 1998 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income........ $ 103,752 109,624 (2,569) Realized gain (loss) on investments (272,468) (379,921) 409,171 Change in unrealized gain (loss) on investments............. 148,290 (74,747) (35,624) Reinvested capital gains..... - 60,420 - ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations (20,426) (284,624) 370,978 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners............ 195,128 232,837 173,889 Transfers between funds...... (244,098) (449,720) 663,078 Surrenders................... (111,418) (98,243) (47,678) Death benefits (note 4)...... (594) (25,665) (35,715) Policy loans (net of repayments) (note 5)................... (49,056) (70,184) (21,466) Deductions for surrender charges (note 2d).................. (10,196) (14,686) (5,615) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... (83,862) (113,947) (77,084) Asset charges (note 3): MSP contracts ............. (1,432) (1,809) (1,847) LSFP contracts ............ (159) (145) (525) ----------- ----------- ----------- Net equity transactions.. (305,687) (541,562) 647,037 ----------- ----------- ----------- Net change in contract owners' equity............... (326,113) (826,186) 1,018,015 Contract owners' equity beginning of period.................... 2,721,035 3,547,221 2,529,206 ----------- ----------- ----------- Contract owners' equity end of period.................... $2,394,922 2,721,035 3,547,221 =========== =========== =========== CHANGES IN UNITS: Beginning units.............. 195,887 233,069 186,153 ----------- ----------- ----------- Units purchased.............. 16,793 18,613 71,292 Units redeemed............... (41,953) (55,795) (24,376) ----------- ----------- ----------- Ending units................. 170,727 195,887 233,069 =========== =========== ===========
(Continued) 32 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
VEWwEmgMkt VEWwHrdAst ------------------------------------------- ---------------------------- 2000 1999 1998 2000 1999 ----------- ----------- ----------- ----------- ---------- INVESTMENT ACTIVITY: Net investment income............. $ (53,777) (32,044) 5,996 11,079 25,195 Realized gain (loss) on investments..................... (325,564) 2,142,637 (1,821,321) 525,703 609,115 Change in unrealized gain (loss) on investments.................. (2,614,711) 1,939,640 923,464 (152,863) 199,401 Reinvested capital gains.......... - - 17,939 - - ----------- ----------- ----------- ----------- ---------- Net increase (decrease) in contract owners' equity resulting from operations................... (2,994,052) 4,050,233 (873,922) 383,919 833,711 ----------- ----------- ----------- ----------- ---------- EQUITY TRANSACTIONS: Purchase payments received from contract owners................. 797,659 580,564 701,612 365,844 602,994 Transfers between funds........... (3,479,128) 4,022,991 (173,962) (236,020) (822,875) Surrenders........................ (194,407) (107,435) (41,678) (307,798) (289,205) Death benefits (note 4)........... (13,706) - (4,922) (5,146) (1,818) Policy loans (net of repayments) (note 5)........................ (160,319) (70,361) (80,091) (120,415) 77,240 Deductions for surrender charges (note 2d)....................... (17,791) (16,061) (5,094) (28,167) (43,233) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)............... (270,107) (157,046) (68,777) (176,970) (189,825) Asset charges (note 3): MSP contracts .................. (4,809) (3,494) (985) (2,345) (1,809) LSFP contracts ................. (4,221) (1,983) (280) (1,775) (322) ----------- ----------- ----------- ----------- ---------- Net equity transactions....... (3,346,829) 4,247,175 325,823 (512,792) (668,853) ----------- ----------- ----------- ----------- ---------- Net change in contract owners' equity.................... (6,340,881) 8,297,408 (548,099) (128,873) 164,858 Contract owners' equity beginning of period......................... 10,148,983 1,851,575 2,399,674 4,294,443 4,129,585 ----------- ----------- ----------- ----------- ---------- Contract owners' equity end of period......................... $ 3,808,102 10,148,983 1,851,575 4,165,570 4,294,443 =========== =========== =========== =========== ========== CHANGES IN UNITS: Beginning units................... 882,045 320,168 271,580 317,507 361,828 ----------- ----------- ----------- ----------- ---------- Units purchased................... 89,672 609,978 150,432 29,839 63,996 Units redeemed.................... (398,529) (48,101) (101,844) (68,673) (108,317) ----------- ----------- ----------- ----------- ---------- Ending units...................... 573,188 882,045 320,168 278,673 317,507 =========== =========== =========== =========== ==========
VEWwHrdAst WPTGloPVC ----------- ------------------------------------------- 1998 2000 1999 1998 ----------- ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income............. $ (2,400) (26,477) (13,686) (6,193) Realized gain (loss) on investments.................... (3,561,532) 156,924 831,668 6,143 Change in unrealized gain (loss) on investments.................. 644,209 (1,447,278) 489,466 66,492 Reinvested capital gains.......... 882,647 359,529 - - ----------- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations..... (2,037,076) (957,302) 1,307,448 66,442 ----------- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners................. 1,602,107 246,696 139,661 105,973 Transfers between funds........... (1,198,538) (728,042) 2,043,854 180,265 Surrenders........................ (132,778) (35,654) (28,894) (1,367) Death benefits (note 4)........... (3,026) - - (1) Policy loans (net of repayments) (note 5)........................ (200,964) (69,160) (72,651) 4,787 Deductions for surrender charges (note 2d)....................... (13,168) (3,263) (4,319) (7) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c)............... (199,756) (103,357) (50,521) (21,553) Asset charges (note 3): MSP contracts ............. .... (2,663) (1,735) (847) (430) LSFP contracts ............ .... (756) (1,618) (855) (122) ----------- ----------- ----------- ----------- Net equity transactions....... (149,542) (696,133) 2,025,428 267,545 ----------- ----------- ----------- ----------- Net change in contract owners' equity.................... (2,186,618) (1,653,435) 3,332,876 333,987 Contract owners' equity beginning of period......................... 6,316,203 4,433,538 1,100,662 766,675 ----------- ----------- ----------- ----------- Contract owners' equity end of period......................... $ 4,129,585 2,780,103 4,433,538 1,100,662 =========== =========== =========== =========== CHANGES IN UNITS: Beginning units................... 375,678 227,326 91,311 67,166 ----------- ----------- ----------- ----------- Units purchased................... 66,365 37,149 157,184 33,106 Units redeemed.................... (80,215) (88,400) (21,169) (8,961) ----------- ----------- ----------- ----------- Ending units...................... 361,828 176,075 227,326 91,311 =========== =========== =========== ===========
33 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
WPTIntEq WPTSmCoGRr ----------------------------------------- ----------------------------------------- 2000 1999 1998 2000 1999 1998 ----------- ----------- ----------- ----------- ---------- ----------- INVESTMENT ACTIVITY: Net investment income............. $ (30,391) 36,167 (22,662) (216,538) (114,737) (106,735) Realized gain (loss) on investments..................... 348,782 1,214,234 (402,559) 5,305,559 564,155 (4,820) Change in unrealized gain (loss) on investments.................. (4,794,748) 3,271,039 929,287 (18,360,336) 8,391,845 (287,723) Reinvested capital gains.......... 1,233,063 - - 5,714,137 709,970 - ----------- ----------- ----------- ----------- ---------- ----------- Net increase (decrease) in contract owners' equity resulting from operations..... (3,243,294) 4,521,440 504,066 (7,557,178) 9,551,233 (399,278) ----------- ----------- ----------- ----------- ---------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners................. 1,203,310 1,411,984 1,111,024 3,205,250 2,658,532 2,471,813 Transfers between funds........... (1,618,161) (167,066) (1,578,624) 7,227,152 (248,812) (1,849,405) Surrenders........................ (182,801) (642,724) (168,491) (818,535) (301,023) (200,485) Death benefits (note 4)........... (17,201) (124,597) (7,848) (46,924) (60,498) (10,544) Policy loans (net of repayments) (note 5)................... .... (160,238) (83,407) (259,475) (406,035) (288,744) 19,268 Deductions for surrender charges (note 2d)....................... (16,729) (96,081) (18,111) (74,907) (45,000) (20,649) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c).......... .... (426,399) (427,942) (265,303) (1,346,935) (902,731) (454,770) Asset charges (note 3): MSP contracts .................. (8,051) (8,596) (5,069) (17,598) (9,685) (7,412) LSFP contracts ................. (6,243) (3,905) (1,439) (12,620) (5,597) (2,105) ----------- ----------- ----------- ----------- ---------- ----------- Net equity transactions....... (1,232,513) (142,334) (1,193,336) 7,708,848 796,442 (54,289) ----------- ----------- ----------- ----------- ---------- ----------- Net change in contract owners' equity.................... (4,475,807) 4,379,106 (689,270) 151,670 10,347,675 (453,567) Contract owners' equity beginning of period......................... 13,668,214 9,289,108 9,978,378 25,526,305 15,178,630 15,632,197 ----------- ----------- ----------- ----------- ---------- ----------- Contract owners' equity end of period......................... $ 9,192,407 13,668,214 9,289,108 25,677,975 25,526,305 15,178,630 =========== =========== =========== =========== ========== =========== CHANGES IN UNITS: Beginning units................... 779,846 805,473 900,081 1,024,167 1,015,805 1,004,312 ----------- ----------- ----------- ----------- ---------- ----------- Units purchased................... 83,704 160,398 234,059 353,977 183,941 292,883 Units redeemed.................... (152,110) (186,025) (328,667) (105,188) (175,579) (281,390) ----------- ----------- ----------- ----------- ---------- ----------- Ending units...................... 711,440 779,846 805,473 1,272,956 1,024,167 1,015,805 =========== =========== =========== =========== ========== ===========
See accompanying notes to financial statements. 34 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Organization and Nature of Operations The Nationwide VLISeparate Account-2 (the Account) was established pursuant to a resolution of the Board of Directors of Nationwide Life Insurance Company (the Company) on May 7, 1987. The Account has been registered as a unit investment trust under the Investment Company Act of 1940. The Company offers Single Premium, Modified Single Premium, Flexible Premium and Last Survivor Flexible Premium Variable Life Insurance Policies through the Account. The primary distribution for the contracts is through the brokerage community; however, other distributors may be utilized. (b) The Contracts Prior to December 31, 1990, only contracts without a front-end sales charge, but with a contingent deferred sales charge and certain other fees, were offered for purchase. Beginning December 31, 1990, contracts with a front-end sales charge, a contingent deferred sales charge and certain other fees, are offered for purchase. See note 2 for a discussion of policy charges and note 3 for asset charges. Contract owners may invest in the following: Portfolios of the American Century Variable Portfolios, Inc. (American Century VP); American Century VP - American Century VP Balanced (ACVPBal) American Century VP - American Century VP Capital Appreciation (ACVPCapAp) American Century VP - American Century VP Income & Growth (ACVPIncGr) American Century VP - American Century VP International (ACVPInt) American Century VP - American Century VP Value (ACVPValue) The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGr) Dreyfus Stock Index Fund (DryStkIx) Portfolio of the Dreyfus Investment Portfolios (Dreyfus IP); Dreyfus IP - European Equity Portfolio (DryEuroEq) Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF); Dreyfus VIF - Appreciation Portfolio (DryVApp) Dreyfus VIF - Growth and Income Portfolio (DryVGrInc) Funds of the Gartmore NSAT; Gartmore NSAT - Emerging Markets Fund (NSATEmMGM) Gartmore NSAT - Global Technology & Communications Fund (NSATGTecGM) Gartmore NSAT - International Growth Fund (NSATIntGGM) Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity VIP); Fidelity VIP - Equity-Income Portfolio (FidVEqIn) Fidelity VIP - Growth Portfolio (FidVGr) Fidelity VIP - High Income Portfolio (FidVHiIn) Fidelity VIP - Overseas Portfolio (FidVOvSe) Portfolios of the Fidelity Variable Insurance Products Fund II (Fidelity VIP-II); Fidelity VIP-II - Asset Manager Portfolio (FidVAM) Fidelity VIP-II - Contrafund Portfolio (FidVCon) Portfolio of the Fidelity Variable Insurance Products Fund III (Fidelity VIP-III); Fidelity VIP-III - Growth Opportunities Portfolio (FidVGrOp)
35 Portfolios of the Janus Aspen Series; Janus Aspen - Capital Appreciation Portfolio - Service Shares (JanACapApS) Janus Aspen - Global Technology Portfolio - Service Shares (JanAGlTchS) Janus Aspen - International Growth Portfolio - Service Shares (JanAIntGrS) Funds of the Nationwide Separate Account Trust (Nationwide SAT) (managed for a fee by an affiliated investment advisor); Nationwide SAT - Capital Appreciation Fund (NSATCapAp) Nationwide SAT - Government Bond Fund (NSATGvtBd) Nationwide SAT - Mid Cap Growth Fund - Strong (NSATMCpSTR) Nationwide SAT - Mid Cap Index Fund - Dreyfus (NSATMCIxDR) Nationwide SAT - Money Market Fund (NSATMMkt) Nationwide SAT - Multi Sector Bond Fund - MAS (NSATMBdMAS) Nationwide SAT - Small Cap Growth Fund (NSATSmCapG) Nationwide SAT - Small Cap Value Fund (NSATSmCapV) Nationwide SAT - Small Company Fund (NSATSmCo) Nationwide SAT - Total Return Fund (NSATTotRtn) Portfolios of the Neuberger & Berman Advisers Management Trust (Neuberger & Berman AMT); Neuberger & Berman AMT - Growth Portfolio (NBAMTGro) Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard) Neuberger & Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat) Neuberger & Berman AMT - Partners Portfolio (NBAMTPart) Funds of the Oppenheimer Variable Account Funds; Oppenheimer Aggressive Growth Fund/VA (OppAggGrVA) Oppenheimer Bond Fund/VA (OppBdVA) Oppenheimer Capital Appreciation Fund/VA (OppCapApVA) Oppenheimer Global Securities Fund/VA (OppGlSecVA) Oppenheimer Main Street Growth & Income Fund/VA (OppMGrInVA) Oppenheimer Multiple Strategies Fund/VA (OppMltStVA) Strong Opportunity Fund II, Inc. (StOpp2) Funds of the Strong Variable Insurance Funds, Inc. (Strong VIF); Strong VIF - Strong Discovery Fund II (StDisc2) Strong VIF - Strong International Stock Fund II (StIntStk2) Funds of the Turner Funds; Turner NSAT - Growth Focus Fund (NSATGFocTU) Funds of The Universal Institutional Funds, Inc.; The Universal Institutional Funds, Inc. - Emerging Markets Debt Portfolio (MSUEmMkt) (formerly Morgan Stanley - Emerging Markets Debt Portfolio) The Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio (MSUUSRealE) (formerly Van Kampen American Capital - Morgan Stanley U.S. Real Estate Portfolio) Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT); Van Eck WIT - Worldwide Bond Fund (VEWwBd) Van Eck WIT - Worldwide Emerging Markets Fund (VEWwEmgMkt) Van Eck WIT - Worldwide Hard Assets Fund (VEWwHrdAst) Portfolios of the Warburg Pincus Trust; Warburg Pincus Trust - Global Post Venture Capital Portfolio (WPTGloPVC) Warburg Pincus Trust - International Equity Portfolio (WPTIntEq) Warburg Pincus Trust - Small Company Growth Portfolio (WPTSmCoGr)
(Continued) 36 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED At December 31, 2000, contract owners have invested in all of the above funds. The contract owners' equity is affected by the investment results of each fund, equity transactions by contract owners and certain contract expenses (see notes 2 and 3). The accompanying financial statements include only contract owners' purchase payments pertaining to the variable portions of their contracts and exclude any purchase payments for fixed dollar benefits, the latter being included in the accounts of the Company. A contract owner may choose from among a number of different underlying mutual fund options. The underlying mutual fund options are not available to the general public directly. The underlying mutual funds are available as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies or, in some cases, through participation in certain qualified pension or retirement plans. Some of the underlying mutual funds have been established by investment advisers which manage publicly traded mutual funds having similar names and investment objectives. While some of the underlying mutual funds may be similar to, and may in fact be modeled after, publicly traded mutual funds, the underlying mutual funds are not otherwise directly related to any publicly traded mutual fund. Consequently, the investment performance of publicly traded mutual funds and any corresponding underlying mutual funds may differ substantially. (c) Security Valuation, Transactions and Related Investment Income The fair value of the underlying mutual funds is based on the closing net asset value per share at December 31, 2000. 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. (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 accounting principles generally accepted in the United States may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) POLICY CHARGES (a) Deductions from Premiums For single premium contracts, no deduction is made from any premium at the time of payment. On multiple payment contracts and flexible premium contracts, the Company deducts a charge for state premium taxes equal to 2.5% of all premiums received to cover the payment of these premium taxes. The Company also deducts a sales load from each premium payment received not to exceed 3.5% of each premium payment. On last survivor flexible premium contracts, the Company deducts a charge for state premium taxes equal to 3.5% of all premiums received to cover the payment of these premium taxes. The Company also deducts a sales load from each premium payment received not to exceed 5% of each premium payment during the first ten years and 1.5% of each premium payment thereafter. The Company may at its sole discretion reduce this sales loading. 37 (b) Cost of Insurance A cost of insurance charge is assessed monthly against each contract by liquidating units. The amount of the charge is based upon age, sex, rate class and net amount at risk (death benefit less total contract value). For last survivor flexible premium contracts, the monthly cost of insurance is determined in a manner that reflects the anticipated mortality of the two insureds and the fact that the death benefit is not payable until the death of the second insured policyholder. (c) Administrative Charges An administrative charge is assessed against each contract to recover policy maintenance, accounting, record keeping and other administrative expenses and is assessed against each contract by liquidating units. For single premium contracts, the Company deducts an annual administrative charge which is determined as follows: Contracts issued prior to April 16, 1990: Purchase payments totalling less than $25,000 - $10/month Purchase payments totalling $25,000 or more - none Contracts issued on or after April 16, 1990: Purchase payments totalling less than $25,000 - $90/year ($65/year in New York) Purchase payments totalling $25,000 or more - $50/year For multiple payment contracts, the Company currently deducts a monthly administrative charge of $5 (may deduct up to $7.50, maximum). For flexible premium contracts, the Company currently deducts a monthly administrative charge of $12.50 during the first policy year and $5 per month thereafter (may deduct up to $7.50, maximum). Additionally, the Company deducts an increase charge of $2.04 per year per $1,000 applied to any increase in the specified amount during the first 12 months after the increase becomes effective. For modified single premium contracts, the monthly charge is equal to an annual rate of .30% multiplied by the policy's cash value. For policy years 11 and later, this monthly charge is reduced to an annual rate of 0.15% of the policy's cash value. The monthly charge is subject to a $10 minimum. For last survivor flexible premium contracts, the Company deducts a monthly administrative charge equal to the sum of the policy charge and the basic coverage charge. For policy years one through ten the policy charge is $10. Additionally, there is a $0.04 per $1000 basic coverage charge (not less than $20 or more than $80 per policy). For policy years eleven and after, the policy charge is $5. Additionally, there is a $0.02 per $1000 basic coverage charge (not less than $10 or more than $40 per policy). Additionally, the Company deducts a monthly increase charge of $2.40 per $1000 applied to any increase in the specified amount during the first 12 months after the increase becomes effective. The charge may be raised to $3.60 per $1000 of increase per year at the Company's discretion. (d) Surrender Charges Policy surrenders result in a redemption of the contract value from the Account and payment of the surrender proceeds to the contract owner or designee. The surrender proceeds consist of the contract value, less any outstanding policy loans, and less a surrender charge, if applicable. The charge is determined according to contract type. For single premium contracts, the charge is determined based upon a specified percentage of the original purchase payment. For single premium contracts issued prior to April 16, 1990, the charge is 8% in the first year and declines to 0% after the ninth year. For single premium contracts issued on or after April 16, 1990, the charge is 8.5% in the first year, and declines to 0% after the ninth year. For multiple payment contracts and flexible premium contracts, the amount charged is based upon a specified percentage of the initial surrender charge, which varies by issue age, sex and rate class. The charge is 100% of the initial surrender charge in the first year, declining to 0% after the ninth year. (Continued) 38 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED For modified single premium contracts, the amount charged is based on the original purchase payment. The charge is 10% in the first year, declining to 0% in the ninth year. For last survivor flexible premium contracts, the charge is 100% of the initial surrender charge, declining to 0% in the fourteenth year if the average issue age is 74 or less. The charge is 100% of the initial surrender charge, declining to 0% in the ninth year if the average issue age is 75 or greater. For last survivor flexible payment contracts, the initial surrender charge is comprised of two components, an underwriting surrender charge and a sales surrender charge. The Company may waive the surrender charge for certain contracts in which the sales expenses normally associated with the distribution of a contract are not incurred. (3) ASSET CHARGES For single premium contracts, the Company deducts a charge from the contract to cover mortality and expense risk charges related to operations, and to recover policy maintenance and premium tax charges. For contracts issued prior to April 16, 1990, the charge is equal to an annual rate of .95% during the first ten policy years, and .50% thereafter. A reduction of charges on these contracts is possible in policy years six through ten for those contracts achieving certain investment performance criteria. For single premium contracts issued on or after April 16, 1990, the charge is equal to an annual rate of 1.30% during the first ten policy years, and 1.00% thereafter. For multiple payment contracts and flexible premium contracts, the Company deducts a charge equal to an annual rate of .80%, with certain exceptions, to cover mortality and expense risk charges related to operations. The above charges are assessed through the daily unit value calculation and are reflected in the table below. For modified single premium contracts (MSP), the Company deducts an annual rate of .90% charged against the cash value of the contracts. This charge is assessed monthly against each contract by liquidating units. For last survivor flexible premium contracts (LSFP), the Company deducts an annual rate of .80% in policy years one through ten. This charge is assessed monthly by liquidating units. In policy years eleven and greater, the Company deducts an annual rate of .80% if the cash value of the contract is less than $100,000. If the cash value is greater than or equal to $100,000, the Company reduces the annual asset fee rate to .30%. This charge is assessed monthly against each contract by liquidating units. The following table provides mortality and expense risk charges for all single premium contracts and multiple payment and flexible payment contracts for the period ended December 31, 2000:
TOTAL ACVPBal ACVPCapAp ACVPIncGr ACVPint ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 24,820 - 2,924 - 575 Single Premium contracts issued on or after April 16, 1990.... 1,684,130 8,312 50,858 7,821 39,191 Multiple Payment and Flexible Premium contracts............. 7,154,891 35,037 172,093 25,391 152,864 ------------ ------------ ------------ ------------ ------------ Total....................... $ 8,863,841 43,349 225,875 33,212 192,630 ============ ============ ============ ============ ============ ACVPValue DrySRGr DryStkix DryEuroEq DryVapp ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 9 - 2,043 - - Single Premium contracts issued on or after April 16, 1990.... 7,369 14,818 104,574 469 14,211 Multiple Payment and Flexible Premium contracts............. 19,786 142,212 691,343 58 43,939 ------------ ------------ ------------ ------------ ------------ Total....................... $ 27,164 157,030 797,960 527 58,150 ============ ============ ============ ============ ============
39
DryVGrinc NSATEmMGM NSATGTecGM NSATIntGGM FidVEqin ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - - - - 2,573 Single Premium contracts issued on or after April 16, 1990.... 3,646 - 789 - 167,821 Multiple Payment and Flexible Premium contracts............. 16,273 21 129 14 459,835 ------------ ------------ ------------ ------------ ------------ Total....................... $ 19,919 21 918 14 630,229 ============ ============ ============ ============ ============ FidVGR FidVHiin FidVOvSe FidVAM FidVCon ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 3,497 443 734 369 - Single Premium contracts issued on or after April 16, 1990.... 234,747 32,538 47,224 81,758 85,023 Multiple Payment and Flexible Premium contracts............. 1,199,892 135,615 182,649 185,028 436,677 ------------ ------------ ------------ ------------ ------------ Total....................... $ 1,438,136 168,596 230,607 267,155 521,700 ============ ============ ============ ============ ============ FidVGrOP JanACapApS JanAGLTchS JanAIntGrS NSATCapAp ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 151 - - - - Single Premium contracts issued on or after April 16, 1990.... 3,965 2,507 5,105 8,260 15,130 Multiple Payment and Flexible Premium contracts............. 36,864 7,957 5,342 535 247,451 ------------ ------------ ------------ ------------ ------------ Total....................... $ 40,980 10,464 10,447 8,795 262,581 ============ ============ ============ ============ ============ NSATGvtBd NSATMCpSTR NSATMCixDR NSATMMkt NSATMBdMas ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 458 - - 2,426 15 Single Premium contracts issued on or after April 16, 1990.... 55,609 1,065 1,586 180,399 109 Multiple Payment and Flexible Premium contracts............. 43,413 1,726 2,639 231,050 96 ------------ ------------ ------------ ------------ ------------ Total....................... $ 99,480 2,791 4,225 413,875 220 ============ ============ ============ ============ ============ NSATSmCapG NSATSmCapV NSATSmCo NSATTotRtn NBAMTGro ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - 737 203 581 1,617 Single Premium contracts issued on or after April 16, 1990.... 362 40,313 26,301 52,162 52,458 Multiple Payment and Flexible Premium contracts............. 2,152 10,585 194,188 684,107 272,872 ------------ ------------ ------------ ------------ ------------ Total....................... $ 2,514 51,635 220,692 736,850 326,947 ============ ============ ============ ============ ============ NBAMTGuard NBAMTLMat NBAMTPart OppAggGrVA OppBdVA ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - 1,243 9 - 11 Single Premium contracts issued on or after April 16, 1990.... 654 13,012 16,642 2,875 15,964 Multiple Payment and Flexible Premium contracts............. 14,034 17,838 177,442 6,843 68,588 ------------ ------------ ------------ ------------ ------------ Total....................... $ 14,688 32,093 194,093 9,718 84,563 ============ ============ ============ ============ ============
(Continued) 40 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
OppCapApVA OppGLSecVA OppMGRinVA OppMltStVA StOpp2 ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 1,316 681 - - 202 Single Premium contracts issued on or after April 16, 1990.... 23,233 43,763 390 38,900 59,630 Multiple Payment and Flexible Premium contracts............. 105,211 268,868 575 86,217 296,055 ------------ ------------ ------------ ------------ ------------ Total....................... $ 129,760 313,312 965 125,117 355,887 ============ ============ ============ ============ ============ StDisc2 StintStk2 NSATGFocTU MSUEmMKT MSUUSRealE ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - - - 133 631 Single Premium contracts issued on or after April 16, 1990.... 8,552 11,016 - 1,340 13,596 Multiple Payment and Flexible Premium contracts............. 50,352 38,509 100 4,918 32,402 ------------ ------------ ------------ ------------ ------------ Total....................... $ 58,904 49,525 100 6,391 46,629 ============ ============ ============ ============ ============ VEWwBD VEWwEmgMkt VEWwHrdAst WPTGloPVC WPTIntEq ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 181 29 1 794 - Single Premium contracts issued on or after April 16, 1990.... 6,649 3,523 11,858 2,662 12,244 Multiple Payment and Flexible Premium contracts............. 14,851 50,225 24,402 23,021 69,430 ------------ ------------ ------------ ------------ ------------ Total....................... $ 21,681 53,777 36,261 26,477 81,674 ============ ============ ============ ============ ============ WPTSmCoGr ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - Single Premium contracts issued on or after April 16, 1990.... 35,097 Multiple Payment and Flexible Premium contracts............. 181,441 ------------ Total....................... $ 216,538 ============ The following table provides mortality and expense risk charges for all single premium contracts and multiple payment and flexible payment contracts for the period ended December 31, 1999: TOTAL ACVPBal ACVPCapAp ACVPincGr ACVPint ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 22,217 126 315 79 360 Single Premium contracts issued on or after April 16, 1990.... 1,597,906 9,070 22,650 5,653 25,861 Multiple Payment and Flexible Premium contracts............. 6,040,026 34,284 85,615 21,369 97,752 ------------ ------------ ------------ ------------ ------------ Total....................... $ 7,660,149 43,480 108,580 27,101 123,973 ============ ============ ============ ============ ============
41
ACVPValue DrySRGr DryStkix DryVApp DryVGrinc ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 61 333 2,086 166 46 Single Premium contracts issued on or after April 16, 1990.... 4,379 23,957 150,018 11,975 3,327 Multiple Payment and Flexible Premium contracts............. 16,553 90,556 567,060 45,265 12,577 ------------ ------------ ------------ ------------ ------------ Total....................... $ 20,993 114,846 719,164 57,406 15,950 ============ ============ ============ ============ ============ FidVEqin FidVGr FidVHiln FidVOvSe FidVAM ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 2,071 3,322 574 580 784 Single Premium contracts issued on or after April 16, 1990.... 148,948 238,938 41,267 41,698 56,415 Multiple Payment and Flexible Premium contracts............. 563,016 903,175 155,987 157,616 213,245 ------------ ------------ ------------ ------------ ------------ Total....................... $ 714,035 1,145,435 197,828 199,894 270,444 ============ ============ ============ ============ ============ FidVCon FidVGrOp NSATCapAp NSATGvtBd NSATMMkt ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 1,335 137 937 352 1,204 Single Premium contracts issued on or after April 16, 1990.... 96,008 9,823 67,386 25,386 86,597 Multiple Payment and Flexible Premium contracts............. 362,905 37,128 254,746 95,940 327,332 ------------ ------------ ------------ ------------ ------------ Total....................... $ 460,248 47,088 323,069 121,678 415,133 ============ ============ ============ ============ ============ NSATSmCapV NSATSmCo NSATTotRtn NBAMTGro NBAMTGuard ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 37 389 2,247 531 37 Single Premium contracts issued on or after April 16, 1990.... 2,682 27,949 161,641 38,230 2,667 Multiple Payment and Flexible Premium contracts............. 10,138 105,646 610,999 144,507 10,083 ------------ ------------ ------------ ------------ ------------ Total....................... $ 12,857 133,984 774,887 183,268 12,787 ============ ============ ============ ============ ============ NBAMTLMat NBAMTPart OppBdVA OppCapApVA OppGlSecVA ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 104 680 266 141 553 Single Premium contracts issued on or after April 16, 1990.... 7,455 48,927 19,098 10,142 39,744 Multiple Payment and Flexible Premium contracts............. 28,179 184,942 72,189 38,336 150,232 ------------ ------------ ------------ ------------ ------------ Total....................... $ 35,738 234,549 91,553 48,619 190,529 ============ ============ ============ ============ ============ OppMltStVA StOpp2 StDisc2 StintStk2 MSUEmMkt ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 335 821 156 65 9 Single Premium contracts issued on or after April 16, 1990.... 24,110 59,055 11,227 4,687 666 Multiple Payment and Flexible Premium contracts............. 91,134 223,225 42,437 17,716 2,520 ------------ ------------ ------------ ------------ ------------ Total....................... $ 115,579 283,101 53,820 22,468 3,195 ============ ============ ============ ============ ============
(Continued) 42
NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued MSUUSRealE VEWwBd VEWwEmgMkt VEWwHrdAst WPTGloPVC ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 128 74 93 106 40 Single Premium contracts issued. on or after April 16, 1990.... 9,180 5,340 6,684 7,628 2,855 Multiple Payment and Flexible Premium contracts............. 34,702 20,187 25,267 28,833 10,791 ------------ ------------ ------------ ------------ ------------ Total....................... $ 44,010 25,601 32,044 36,567 13,686 ============ ============ ============ ============ ============ WPTintEq WPTSmCoGr ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 204 333 Single Premium contracts issued on or after April 16, 1990.... 14,649 23,934 Multiple Payment and Flexible Premium contracts............. 55,372 90,470 ------------ ------------ Total....................... $ 70,225 114,737 ============ ============ The following table provides mortality and expense risk charges for all single premium contracts and multiple payment and flexible payment contracts for the period ended December 31, 1998: TOTAL ACVPBal ACVPCapAp ACVPLcincGr ACVPint ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 19,963 - 1,274 - - Single Premium contracts issued on or after April 16, 1990.... 1,519,080 10,112 21,146 2,536 34,065 Multiple Payment and Flexible Premium contracts............. 4,699,480 28,860 59,964 5,054 66,239 ------------ ------------ ------------ ------------ ------------ Total....................... $ 6,238,523 38,972 82,384 7,590 100,304 ============ ============ ============ ============ ============ ACVPValue DrySRGr DryStkix DryVApp DryVGrinc ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - - 3,655 102 - Single Premium contracts issued on or after April 16, 1990.... 4,104 9,572 112,048 10,336 2,255 Multiple Payment and Flexible Premium contracts............. 15,894 67,383 392,626 16,686 12,787 ------------ ------------ ------------ ------------ ------------ Total....................... $ 19,998 76,955 508,329 27,124 15,042 ============ ============ ============ ============ ============ FidVEqin FidVGr FidVHiln FidVOvSe FidVAM ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 2,438 2,343 842 1,068 296 Single Premium contracts issued on or after April 16, 1990.... 194,440 188,365 49,966 53,993 86,061 Multiple Payment and Flexible Premium contracts............. 418,071 568,902 160,813 112,745 152,850 ------------ ------------ ------------ ------------ ------------ Total....................... $ 614,949 759,610 211,621 167,806 239,207 ============ ============ ============ ============ ============
43
FidVCon FidVGrOp NSATCapAp NSATGvtBd NSATMMkt ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 128 - 654 305 1,358 Single Premium contracts issued on or after April 16, 1990.... 71,967 10,876 43,608 65,744 137,439 Multiple Payment and Flexible Premium contracts............. 244,146 24,873 213,916 45,233 276,180 ------------ ------------ ------------ ------------ ------------ Total....................... $ 316,241 35,749 258,178 111,282 414,977 ============ ============ ============ ============ ============ NSATSmCapV NSATSmCo NSATTotRtn NBAMTGro NBAMTGuard ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - - 1,584 1,581 - Single Premium contracts issued on or after April 16, 1990.... 3,094 13,672 58,566 43,543 553 Multiple Payment and Flexible Premium contracts............. 414 101,912 613,346 108,763 4,227 ------------ ------------ ------------ ------------ ------------ Total....................... $ 3,508 115,584 673,496 153,887 4,780 ============ ============ ============ ============ ============ NBAMTLMat NBAMTPart OppBdVA OppCapApVA OppGLSecVa ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 930 - - - - Single Premium contracts issued on or after April 16, 1990.... 14,562 50,988 20,073 4,182 20,102 Multiple Payment and Flexible Premium contracts............. 27,237 203,440 71,491 22,064 127,490 ------------ ------------ ------------ ------------ ------------ Total....................... $ 42,729 254,428 91,564 26,246 147,592 ============ ============ ============ ============ ============ OppMltStVA StOpp2 StVDisc2 StVintStk2 MSUEmMkt ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ - 120 - - - Single Premium contracts issued on or after April 16, 1990.... 31,490 41,028 13,873 4,013 635 Multiple Payment and Flexible Premium contracts............. 73,481 179,612 44,277 11,015 1,765 ------------ ------------ ------------ ------------ ------------ Total....................... $ 104,971 220,760 58,150 15,028 2,400 ============ ============ ============ ============ ============ MSUUSRealE VEWwBd VEWwEmgMkt VEWwHrdAst WPTGloPVC ------------ ------------ ------------ ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 575 39 - 486 - Single Premium contracts issued on or after April 16, 1990.... 13,117 11,374 1,792 17,613 3,460 Multiple Payment and Flexible Premium contracts............. 38,337 15,186 12,394 20,246 2,733 ------------ ------------ ------------ ------------ ------------ Total....................... $ 52,029 26,599 14,186 38,345 6,193 ============ ============ ============ ============ ============ WPTIntEq WPTSmCoGr ------------ ------------ Single Premium contracts Issued prior to April 16, 1990....... $ 185 - Single Premium contracts issued on or after April 16, 1990.... 13,450 29,267 Multiple Payment and Flexible Premium contracts............. 59,360 77,468 ------------ ------------ Total....................... $ 72,995 106,735 ============ ============
(Continued) 44 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS,Continued (4) Death Benefits Death benefit proceeds result in a redemption of the contract value from the Account and payment of those proceeds, less any outstanding policy loans (and policy charges), to the legal beneficiary. For last survivor flexible premium contracts, the proceeds are payable on the death of the last surviving insured. In the event that the guaranteed death benefit exceeds the contract value on the date of death, the excess is paid by the Company's general account. (5) Policy Loans (Net of Repayments) Contract provisions allow contract owners to borrow up to 90% (50% during first year of single and modified single premium contracts) of a policy's cash surrender value. For single premium contracts issued prior to April 16, 1990, 6.5% interest is due and payable annually in advance. For single premium contracts issued on or after April 16, 1990, multiple payment, flexible premium, modified single and last survivor flexible premium contracts, 6% interest is due and payable in advance on the policy anniversary when there is a loan outstanding on the policy. At the time the loan is granted, the amount of the loan is transferred from the Account to the Company's general account as collateral for the outstanding loan. Collateral amounts in the general account are credited with the stated rate of interest in effect at the time the loan is made, subject to a guaranteed minimum rate. 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. 45 (7) Financial Highlights The following is a summary of units, unit fair values and contract owners'equity outstanding for variable life and annuity contracts as of the end of the period indicated, and the expense ratios and total return for each of the five years in the period ended December 31, 2000. The following is a summary for 2000:
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Single Premium contracts issued prior to April 16, 1990: American Century VP - American Century VP Capital Appreciation ................ 7,428 $39.820221 $295,785 1.13% 8.49% American Century VP - American Century VP International ......................... 2,453 22.205291 54,470 0.96% (17.24)% American Century VP - American Century VP Value ................................. 118 15.308543 1,806 1.00% 17.56% Dreyfus Stock Index Fund .................................... 6,384 30.300792 193,440 0.56% (9.73)% Fidelity VIP - Equity-Income Portfolio ...................... 5,076 47.985530 243,575 1.10% 7.88% Fidelity VIP - Growth Portfolio ............................. 4,686 70.634432 330,993 1.23% (11.42)% Fidelity VIP - High Income Portfolio ........................ 1,862 22.540543 41,970 0.86% (22.86)% Fidelity VIP - Overseas Portfolio ........................... 2,500 27.806776 69,517 0.70% (19.51)% Fidelity VIP-II - Asset Manager Portfolio ................... 1,178 29.647039 34,924 1.03% (4.41)% Fidelity VIP-III - Growth Opportunities Portfolio ........... 1,231 11.614608 14,298 0.86% (17.48)% Nationwide SAT - Government Bond Fund ....................... 1,707 25.392104 43,344 1.11% 11.98% Nationwide SAT - Money Market Fund .......................... 12,856 17.866283 229,689 0.96% 5.50% Nationwide SAT - Multi Sector Bond Fund ..................... 259 10.458203 2,709 1.11%(***) 6.83%(***) Nationwide SAT - Small Cap Value Fund ....................... 5,781 12.068870 69,770 1.07% 10.65% Nationwide SAT - Small Company Fund ......................... 762 25.176901 19,185 1.01% 8.36% Nationwide SAT - Total Return Fund .......................... 1,319 41.669957 54,963 0.45% (2.61)% Neuberger & Berman AMT - Growth Portfolio ................... 3,192 47.952407 153,064 1.02% (12.09)% Neuberger & Berman AMT - Limited Maturity Bond Fund ................................ 6,082 19.346478 117,665 1.10% 6.25% Neuberger & Berman AMT - Partners Portfolio ................. 72 25.096849 1,807 1.00% 0.20% Oppenheimer Bond Fund / VA .................................. 51 20.213946 1,031 1.07% 5.57% Oppenheimer Capital Appreciation Fund / VA .................. 6,917 18.017261 124,625 1.06% (0.73)% Oppenheimer Global Securities Fund / VA ..................... 2,118 30.445645 64,484 1.06% 4.57% Strong Opportunities Fund II, Inc. .......................... 447 42.694690 19,085 1.09% 6.07% The Universal Institutional Funds, Inc.- Emerging Markets Debt Portfolio (formerly Morgan Stanley - Emerging Markets Debt Portfolio) .......................... 1,265 9.982829 12,628 1.02% 10.83% The Universal Institutional Funds, Inc.- U.S.Real Estate Portfolio (formerly Van Kampen American Capital - Morgan Stanley Real Estate Portfolio) ..................... 3,074 19.442286 59,766 1.06%(***) 14.93%(***) Van Eck WIT - Worldwide Bond Fund ........................... 1,105 15.517699 17,147 0.97% 1.36% Van Eck WIT - Worldwide Emerging Markets Fund ........................... 407 6.661531 2,711 0.96% (42.15)% Van Eck WIT - Worldwide Hard Assets Fund .................... 5 13.393001 67 0.80% 10.85% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ..................... 4,740 15.854894 75,152 0.92% (19.34)%
(Continued) 46 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Single Premium contracts issued on or after April 16, 1990: American Century VP - American Century VP Balanced . . . . . . . . . . 29,587 19.506844 577,149 1.27% (3.90)% American Century VP - American Century VP Capital Appreciation . . . . 156,838 26.057031 4,086,733 1.38% 7.63% American Century VP - American Century VP Income and Growth. . . . . . 48,794 11.128733 543,015 1.29% (11.76)% American Century VP - American Century VP International. . . . . . . . 126,911 21.441430 2,721,153 1.12% (17.90)% American Century VP - American Century VP Value. . . . . . . . . . . . 57,614 14.906133 858,802 1.23% 16.63% The Dreyfus Socially Responsible Growth Fund, Inc.. . . . . . . . . . . . . . . . 33,067 31.114958 1,028,878 1.38% (12.18)% Dreyfus Stock Index Fund . . . . . . . . . . . . . 248,888 29.173405 7,260,910 1.19% (10.45)% Dreyfus IP - European Equity Portfolio . . . . . . 5,683 9.273374 52,701 1.78%(***) (10.84)%(***) Dreyfus VIF - Appreciation Portfolio . . . . . . . 69,804 14.135555 986,718 1.32% (1.93)% Dreyfus VIF - Growth and Income Portfolio. . . . . 16,818 13.856323 233,036 1.93% (5.02)% Fidelity VIP - Equity-Income Portfolio . . . . . . 304,863 38.221825 11,652,420 1.30% 7.03% Fidelity VIP - Growth Portfolio. . . . . . . . . . 342,658 47.567395 16,299,348 1.32% (12.12)% Fidelity VIP - High Income Portfolio . . . . . . . 100,049 22.581448 2,259,251 1.21% (23.47)% Fidelity VIP - Overseas Portfolio. . . . . . . . . 168,125 19.502680 3,278,888 1.11% (20.15)% Fidelity VIP-II - Asset Manager Portfolio. . . . . 201,334 28.195602 5,676,733 1.37% (5.16)% Fidelity VIP-II - Contrafund Portfolio . . . . . . 250,535 23.563410 5,903,459 1.28% (7.82)% Fidelity VIP-III - Growth Opportunities Portfolio. 19,392 11.331281 219,736 1.52% (18.13)% Gartmore NSAT Global Technology & Communications Fund. . . . . . . . . . . . . . 18,398 5.998698 110,364 1.43%(***) (160.59)%(***) Janus Aspen Series - Capital Appreciation Portfolio . . . . . . . . . 22,133 7.865419 174,085 1.24%(***) (31.83)%(***) Janus Aspen Series - Global Technology Portfolio. . . . . . . . . . . 52,739 6.720656 354,441 1.57%(***) (48.88)%(***) Janus Aspen Series - International Growth Portfolio . . . . . . . . . 72,749 7.883682 573,530 1.63%(***) (31.55)%(***) Nationwide SAT - Capital Appreciation Fund . . . . 45,948 22.863519 1,050,533 1.01% (27.48)% Nationwide SAT - Government Bond Fund. . . . . . . 188,357 20.498919 3,861,115 1.34% 11.09% Nationwide SAT - Mid Cap Growth Fund . . . . . . . 9,148 8.081237 73,927 1.03%(***) (28.61)%(***) Nationwide SAT - Mid Cap Index Fund. . . . . . . . 10,564 10.427067 110,152 1.34%(***) 6.37%(***) Nationwide SAT - Money Market Fund . . . . . . . . 857,846 14.589227 12,515,310 1.31% 4.66% Nationwide SAT - Multi Sector Bond Fund. . . . . . 1,928 10.403041 20,057 1.09%(***) 6.01%(***) Nationwide SAT - Small Cap Growth Fund . . . . . . 3,122 8.049546 25,131 1.43%(***) (29.07)%(***) Nationwide SAT - Small Cap Value Fund. . . . . . . 236,917 11.814503 2,799,057 1.32% 9.77% Nationwide SAT - Small Company Fund. . . . . . . . 74,796 24.415235 1,826,162 1.57% 7.50% Nationwide SAT - Total Return Fund . . . . . . . . 103,521 34.985736 3,621,758 1.34% (3.38)% Neuberger & Berman AMT - Growth Portfolio. . . . . 110,577 32.939123 3,642,309 1.43% (12.79)% Neuberger & Berman AMT - Guardian Portfolio. . . . 4,316 10.513749 45,377 1.71% (0.17)% Neuberger & Berman AMT - Limited Maturity Bond Portfolio. . . . . . . . . 55,938 16.150810 903,444 1.44% 5.41% Neuberger & Berman AMT - Partners Portfolio. . . . 56,278 24.233377 1,363,806 1.09% (0.59)%
47
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Oppenheimer Aggressive Growth Fund / VA. . . . . . 25,730 7.757136 199,591 1.32%(***) (33.44)%(***) Oppenheimer Bond Fund / VA . . . . . . . . . . . . 57,658 19.224081 1,108,422 1.33% 4.73% Oppenheimer Capital Appreciation Fund / VA . . . . 91,772 17.577949 1,613,164 1.73% (1.51)% Oppenheimer Global Securities Fund / VA. . . . . . 103,662 29.312842 3,038,628 1.50% 3.74% Oppenheimer Main Street Growth and Income / VA . . . . . . . 3,017 8.977032 27,084 1.42%(***) (15.25)%(***) Oppenheimer Multiple Strategies Fund / VA. . . . . 102,256 26.413991 2,700,989 1.45% 5.07% Strong Opportunity Fund II, Inc. . . . . . . . . . 101,232 40.898881 4,140,276 1.47% 5.23% Strong VIF - Strong Discovery Fund II. . . . . . . 29,577 20.076460 593,801 1.38% 3.05% Strong VIF - Strong International Stock Fund II. . 77,557 9.861771 764,849 0.71% (40.30)% The Universal Institutional Funds, Inc.- Emerging Markets Debt Portfolio (formerly Morgan Stanley - Emerging Markets Debt Portfolio) . . . . . . . . 9,551 9.739230 93,019 1.78% 9.96% The Universal Institutional Funds, Inc.- U.S.Real Estate Portfolio (formerly Van Kampen American Capital - Morgan Stanley Real Estate Portfolio). . . . . . 50,123 18.833757 944,004 1.77%(***) 14.11%(***) Van Eck WIT - Worldwide Bond Fund. . . . . . . . . 31,281 14.757769 461,638 1.38% 0.56% Van Eck WIT - Worldwide Emerging Markets Fund. . . . . . . . . 37,709 6.486254 244,590 0.43% (42.61)% Van Eck WIT - Worldwide Hard Assets Fund . . . . . 57,160 14.404038 823,335 1.35% 9.97% Warburg Pincus Trust - Global Post-Venture Capital Portfolio. . . . . . 11,974 15.438040 184,855 0.78% (19.98)% Warburg Pincus Trust - International Equity Portfolio . . . . . . . . . 66,083 12.864457 850,122 1.07% (26.85)% Warburg Pincus Trust - Small Company Growth Portfolio . . . . . . . . . 118,070 20.639565 2,436,913 1.31% (19.17)% Multiple Payment contracts and Flexible Premium contracts: American Century VP - American Century VP Balanced . . . . . . . . . . 204,099 20.372425 4,157,992 0.79% (3.42)% American Century VP - American Century VP Capital Appreciation . . . . 819,897 25.207415 20,667,484 0.98% 8.17% American Century VP - American Century VP Income and Growth. . . . . . 303,622 11.277817 3,424,193 0.79% (11.32)% American Century VP - American Century VP International. . . . . . . . 754,646 22.139513 16,707,495 0.90% (17.49)% American Century VP - American Century VP Value. . . . . . . . . . . . 323,587 15.208380 4,921,234 0.57% 17.21% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . 508,803 32.259560 16,413,761 0.86% (11.74)% Dreyfus Stock Index Fund . . . . . . . . . . . . . 2,613,545 30.248565 79,055,986 0.83% (10.00)% Dreyfus IP - European Equity Portfolio . . . . . . 3,721 9.304097 34,621 0.34%(***) (10.38)%(***) Dreyfus VIF - Appreciation Portfolio . . . . . . . 365,003 14.382034 5,249,486 0.79% (1.44)% Dreyfus VIF - Growth and Income Portfolio. . . . . 152,925 14.137245 2,161,938 0.77% (4.54)% Fidelity VIP - Equity-Income Portfolio . . . . . . 1,556,185 40.214814 62,581,690 0.72% 7.56% Fidelity VIP - Growth Portfolio. . . . . . . . . . 2,621,312 49.366480 129,404,946 0.87% (11.69)% Fidelity VIP - High Income Portfolio . . . . . . . 619,065 21.565326 13,350,339 0.84% (23.09)% Fidelity VIP - Overseas Portfolio. . . . . . . . . 866,875 21.539183 18,671,779 0.87% (19.75)%
(Continued) 48 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Fidelity VIP-II - Asset Manager Portfolio ............. 851,071 26.071970 22,189,098 0.78% (4.69)% Fidelity VIP-II - Contrafund Portfolio ................ 2,107,468 24.218904 51,040,565 0.81% (7.36)% Fidelity VIP-III - Growth Opportunities Portfolio ..... 358,453 11.528985 4,132,599 0.77% (17.72)% Gartmore NSAT Emerging Markets Fund ................... 1,063 8.695491 9,243 0.82%(***) (52.38)%(***) Gartmore NSAT Global Technology & Communications Fund ................................ 46,652 6.005978 280,191 0.69%(***) (160.31)%(***) Gartmore NSAT International Growth Fund ............... 453 9.231934 4,182 0.67%(***) (30.83)%(***) Janus Aspen Series - Capital Appreciation Portfolio ....................... 297,781 7.891490 2,349,936 0.68%(***) (31.44)%(***) Janus Aspen Series - Global Technology Portfolio .......................... 259,751 6.742955 1,751,489 0.61%(***) (48.56)%(***) Janus Aspen Series - International Growth Portfolio ....................... 174,672 7.909816 1,381,623 0.63%(***) (31.16)%(***) Nationwide SAT - Capital Appreciation Fund ............ 952,662 23.877962 22,747,627 0.84% (27.12)% Nationwide SAT - Government Bond Fund ................. 359,189 19.556523 7,024,488 0.62% 11.65% Nationwide SAT - Mid Cap Growth Fund .................. 76,685 8.108035 621,765 0.83%(***) (28.21)%(***) Nationwide SAT - Mid Cap Index Fund ................... 145,426 10.461575 1,521,385 0.52%(***) 6.89%(***) Nationwide SAT - Money Market Fund .................... 2,268,467 14.571330 33,054,581 0.71% 5.18% Nationwide SAT - Multi Sector Bond Fund ............... 3,000 10.437484 31,312 0.91%(***) 6.51%(***) Nationwide SAT - Small Cap Growth Fund ................ 85,563 8.076240 691,027 0.63%(***) (28.68)%(***) Nationwide SAT - Small Cap Value Fund ................. 275,697 11.972833 3,300,874 0.42% 10.32% Nationwide SAT - Small Company Fund ................... 998,068 25.056031 25,007,623 0.84% 8.03% Nationwide SAT - Total Return Fund .................... 2,359,054 34.069071 80,370,778 0.79% (2.90)% Neuberger & Berman AMT - Growth Portfolio ............. 793,907 33.145055 26,314,091 1.06% (12.36)% Neuberger & Berman AMT - Guardian Portfolio ........... 149,159 10.654639 1,589,235 0.80% 0.33% Neuberger & Berman AMT - Limited Maturity Bond Portfolio ...................... 141,846 15.848178 2,248,001 0.67% 5.94% Neuberger & Berman AMT - Partners Portfolio ........... 781,588 25.022294 19,557,125 0.79% (0.01)% Oppenheimer Aggressive Growth Fund / VA ............... 313,898 7.782869 2,443,027 0.84%(***) (33.05)%(***) Oppenheimer Bond Fund / VA ............................ 480,377 18.615856 8,942,629 0.76% 5.26% Oppenheimer Capital Appreciation Fund / VA ............ 796,536 17.884539 14,245,679 0.88% (1.02)% Oppenheimer Global Securities Fund / VA ............... 1,096,887 30.393395 33,338,120 0.85% 4.26% Oppenheimer Main Street Growth and Income / VA ................... 33,482 9.006749 301,564 0.57%(***) (14.80)%(***) Oppenheimer Multiple Strategies Fund / VA ............. 412,843 26.579650 10,973,222 0.78% 5.59% Strong Opportunity Fund II, Inc. ...................... 877,807 42.709091 37,490,339 0.80% 5.75% Strong VIF - Strong Discovery Fund II ................. 271,144 20.965624 5,684,703 0.86% 3.57% Strong VIF - Strong International Stock Fund II ....... 210,636 10.120684 2,131,780 1.32% (40.00)% The Universal Institutional Funds, Inc.- Emerging Markets Debt Portfolio (formerly Morgan Stanley - Emerging Markets Debt Portfolio) ..................... 62,323 9.909218 617,572 0.97% 10.50% The Universal Institutional Funds, Inc.- U.S.Real Estate Portfolio (formerly Van Kampen American Capital - Morgan Stanley Real Estate Portfolio) ................ 277,285 19.357784 5,367,623 0.71%(***) 14.61%(***) Turner NSAT Growth Focus Fund ......................... 7,806 6.332010 49,428 0.70%(***) (147.22)%(***) Van Eck WIT - Worldwide Bond Fund ..................... 123,195 14.152095 1,743,467 0.79% 1.06%
49
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Van Eck WIT - Worldwide Emerging Markets Fund ...................... 443,771 6.617911 2,936,837 1.05% (42.33)% Van Eck WIT - Worldwide Hard Assets Fund ............... 186,255 16.202639 3,017,823 0.81% 10.52% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ................ 139,959 15.751152 2,204,515 0.99% (19.58)% Warburg Pincus Trust - International Equity Portfolio ....................... 525,361 13.222451 6,946,560 0.82% (26.48)% Warburg Pincus Trust - Small Company Growth Portfolio ....................... 942,509 21.214019 19,994,404 0.91% (18.76)% Modified Single Premium contracts and Last Survivor Flexible Premium Contracts: American Century VP - American Century VP Balanced ......................... 46,479 15.701900 729,809 0.00% (2.65)% American Century VP - American Century VP Capital Appreciation ............. 136,380 15.483078 2,111,582 0.00% 9.03% American Century VP - American Century VP Income and Growth ................ 51,494 11.520561 593,240 0.00% (10.62)% American Century VP - American Century VP International .................... 143,626 20.710054 2,974,502 0.00% (16.83)% American Century VP - American Century VP Value ............................ 53,790 15.704757 844,759 0.00% 18.14% The Dreyfus Socially Responsible Growth Fund, Inc. .................................... 87,987 21.499776 1,891,701 0.00% (11.03)% Dreyfus Stock Index Fund ............................... 591,538 21.373424 12,643,192 0.00% (9.28)% Dreyfus IP - European Equity Portfolio ................. 2,553 9.353456 23,879 0.00% (9.65)% Dreyfus VIF - Appreciation Portfolio ................... 68,662 14.785375 1,015,193 0.00% (0.65)%(***) Dreyfus VIF - Growth and Income Portfolio .............. 50,580 14.598583 738,396 0.00% (3.78)% Fidelity VIP - Equity-Income Portfolio ................ 410,082 17.788146 7,294,598 0.00% 8.42% Fidelity VIP - Growth Portfolio ........................ 494,090 22.013206 10,876,505 0.00% (10.98)% Fidelity VIP - High Income Portfolio ................... 251,453 10.222956 2,570,593 0.00% (22.47)% Fidelity VIP - Overseas Portfolio ...................... 109,074 15.480896 1,688,563 0.00% (19.11)% Fidelity VIP-II - Asset Manager Portfolio .............. 97,054 16.328861 1,584,781 0.00% (3.93)% Fidelity VIP-II - Contrafund Portfolio ................. 339,730 21.061590 7,155,254 0.00% (6.62)% Fidelity VIP-III - Growth Opportunities Portfolio ...... 67,837 11.852480 804,037 0.00% (17.07)% Gartmore NSAT Global Technology & Communications Fund ................................ 2,596 6.017639 15,622 0.00% (159.83)%(***) Janus Aspen Series - Capital Appreciation Portfolio ...................... 54,056 7.933369 428,846 0.00% (30.82)%(***) Janus Aspen Series - Global Technology Portfolio .......................... 51,067 6.778794 346,173 0.00% (48.02)%(***) Janus Aspen Series - International Growth Portfolio ....................... 28,662 7.951801 227,915 0.00% (30.53)%(***) Nationwide SAT - Capital Appreciation Fund ............. 202,780 15.547089 3,152,639 0.00% (26.53)% Nationwide SAT - Government Bond Fund .................. 147,694 14.017108 2,070,243 0.00% 12.54% Nationwide SAT - Mid Cap Growth Fund ................... 15,341 8.151094 125,046 0.00% (27.57)%(***) Nationwide SAT - Mid Cap Index Fund .................... 15,903 10.517026 167,252 0.00% 7.71%(***) Nationwide SAT - Money Market Fund ..................... 690,357 12.735851 8,792,284 0.00% 6.03% Nationwide SAT - Multi Sector Bond Fund ................ 3,146 10.492823 33,010 0.00% 7.35%(***) Nationwide SAT - Small Cap Growth Fund ................. 5,428 8.119138 44,071 0.00% (28.04)%(***) Nationwide SAT - Small Cap Value Fund .................. 92,343 12.230652 1,129,415 0.00% 11.20%
(Continued) 50 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Nationwide SAT - Small Company Fund .............. 232,635 19.565011 4,551,506 0.00% 8.90% Nationwide SAT - Total Return Fund ............... 383,717 18.308017 7,025,097 0.00% (2.12)% Neuberger & Berman AMT - Growth Portfolio ........ 165,377 19.543829 3,232,100 0.00% (11.66)% Neuberger & Berman AMT - Guardian Portfolio ...... 31,192 10.883981 339,493 0.00% 1.13% Neuberger & Berman AMT - Limited Maturity Bond Portfolio ................. 48,744 12.650873 616,654 0.00% 6.78% Neuberger & Berman AMT - Partners Portfolio ...... 218,683 16.971642 3,711,410 0.00% 0.07% Oppenheimer Aggressive Growth Fund / VA .......... 29,380 7.824211 229,875 0.00% (32.44)%(***) Oppenheimer Bond Fund / VA ....................... 108,962 12.977817 1,414,089 0.00% 6.10% Oppenheimer Capital Appreciation Fund / VA ....... 115,080 18.386180 2,115,882 0.00% (0.23)% Oppenheimer Global Securities Fund / VA .......... 119,169 25.205074 3,003,663 0.00% 5.09% Oppenheimer Main Street Growth and Income / VA .............. 10,745 9.054521 97,291 0.00% (14.09)%(***) Oppenheimer Multiple Strategies Fund / VA ........ 82,390 16.271709 1,340,626 0.00% 6.44% Strong Opportunity Fund II, Inc. ................. 96,471 22.004768 2,122,822 0.00% 6.60% Strong VIF - Strong Discovery Fund II ............ 25,155 12.955970 325,907 0.00% 4.39% Strong VIF - Strong International Stock Fund II .. 51,648 9.373600 484,128 0.00% (39.52)% The Universal Institutional Funds, Inc.- Emerging Markets Debt Portfolio (formerly Morgan Stanley - Emerging Markets Debt Portfolio) ................ 33,493 10.187412 341,207 0.00% 11.39% The Universal Institutional Funds, Inc.- U.S.Real Estate Portfolio (formerly Van Kampen American Capital - Morgan Stanley Real Estate Portfolio) ........... 57,529 18.164582 1,044,990 0.00% 15.43%(***) Van Eck WIT - Worldwide Bond Fund ................ 15,146 11.400381 172,670 0.00% 1.87% Van Eck WIT - Worldwide Emerging Markets Fund ................. 91,301 6.834145 623,964 0.00% (41.87)% Van Eck WIT - Worldwide Hard Assets Fund ......... 35,253 9.200485 324,345 0.00% 11.40% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ........... 19,402 16.265390 315,581 0.00% (18.94)% Warburg Pincus Trust - International Equity Portfolio .................. 119,996 11.631433 1,395,725 0.00% (25.90)% Warburg Pincus Trust - Small Company Growth Portfolio .................. 212,377 15.287247 3,246,660 0.00% (18.11)% ======= ========= ------------ $1,071,884,297 ============== The following is a summary for 1999: Single Premium contracts issued prior to April 16, 1990: American Century VP - American Century VP Capital Appreciation . . . . . 6,108 $ 36.406768 $ 222,373 0.87% 63.70% American Century VP - American Century VP International . . . . . . . . . 2,459 26.614141 65,444 1.10% 63.23% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . . 1,699 36.209915 61,521 1.08% 29.43% Dreyfus Stock Index Fund . . . . . . . . . . . . . . 16,208 33.296352 539,667 0.44% 20.00%
51
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Dreyfus VIF - Appreciation Portfolio ...................... 868 14.538186 12,619 1.37% 10.90% Fidelity VIP - Equity-Income Portfolio .................... 5,082 44.120448 224,220 0.83% 5.80% Fidelity VIP - Growth Portfolio ........................... 3,009 79.099308 238,010 1.32% 36.75% Fidelity VIP - High Income Portfolio ...................... 2,115 28.983767 61,301 0.73% 7.62% Fidelity VIP - Overseas Portfolio ......................... 4,084 34.268141 139,951 0.45% 41.92% Fidelity VIP-II - Asset Manager Portfolio ................. 1,185 30.762893 36,454 1.39% 10.54% Fidelity VIP-II - Contrafund Portfolio .................... 677 25.968332 17,581 1.37% 23.63% Fidelity VIP-III - Growth Opportunities Portfolio ......... 1,477 13.960952 20,620 1.33% 3.75% Morgan Stanley - Emerging Markets Debt Portfolio ......................... 1,518 8.934183 13,562 0.13% 28.73% Nationwide SAT - Capital Appreciation Fund ................ 1,979 32.388538 64,097 1.36% 3.76% Nationwide SAT - Government Bond Fund ..................... 1,747 22.492327 39,294 0.95% (2.83)% Nationwide SAT - Money Market Fund ........................ 16,350 16.794246 274,586 0.56% 4.32% Nationwide SAT - Small Cap Value Fund ..................... 2,201 10.825871 23,828 0.31% 27.20% Nationwide SAT - Small Company Fund ....................... 913 23.047417 21,042 1.32% 43.30% Nationwide SAT - Total Return Fund ........................ 4,738 42.439374 201,078 1.18% 6.41% Neuberger & Berman AMT - Growth Portfolio ................. 3,041 54.109841 164,548 0.31% 49.65% Neuberger & Berman AMT - Guardian Portfolio ............... 561 10.593122 5,943 1.25% 14.36% Neuberger & Berman AMT - Limited Maturity Bond Portfolio ......................... 5,986 18.060558 108,111 0.85% 0.97% Strong Opportunities Fund II, Inc. ........................ 450 40.018322 18,008 1.21% 34.23% Van Eck WIT - Worldwide Bond Fund ......................... 1,325 15.185599 20,121 0.60% (8.28)% Van Eck WIT - Worldwide Emerging Markets Fund ......................... 6,267 11.423096 71,589 0.86% 99.29% Van Eck WIT - Worldwide Hard Assets Fund .................. 10 11.984540 120 0.81% 20.40% Single Premium contracts issued on or after April 16, 1990: American Century VP - American Century VP Balanced ............................ 36,043 20.298769 731,629 1.18% 8.64% American Century VP - American Century VP Capital Appreciation ................ 134,822 24.209204 3,263,933 0.91% 62.40% American Century VP - American Century VP Income and Growth ................... 53,220 12.612413 671,233 1.29% 16.50% American Century VP - American Century VP International ....................... 162,982 26.114709 4,256,228 0.74% 61.93% American Century VP - American Century VP Value ............................... 26,781 12.781220 342,294 1.31% (2.13)% The Dreyfus Socially Responsible Growth Fund, Inc. ....................................... 31,488 35.428815 1,115,583 1.59% 28.40% Dreyfus Stock Index Fund .................................. 315,343 32.576553 10,272,788 1.56% 19.05% Dreyfus VIF - Appreciation Portfolio ...................... 81,279 14.413356 1,171,503 1.20% 10.02% Dreyfus VIF - Growth and Income Portfolio ................. 9,941 14.588194 145,021 1.43% 15.38% Fidelity VIP - Equity-Income Portfolio ................... 395,355 35.712129 14,118,969 1.00% 4.96% Fidelity VIP - Growth Portfolio ........................... 355,884 54.130524 19,264,187 1.39% 35.66% Fidelity VIP - High Income Portfolio ...................... 105,520 29.506936 3,113,572 1.16% 6.76% Fidelity VIP - Overseas Portfolio ......................... 213,601 24.423718 5,216,931 0.88% 40.79% Fidelity VIP-II - Asset Manager Portfolio ................. 211,956 29.730624 6,301,584 0.86% 9.66% Fidelity VIP-II - Contrafund Portfolio .................... 290,335 25.563198 7,421,891 1.46% 22.65%
(Continued) 52 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Fidelity VIP-III - Growth Opportunities Portfolio .. 21,868 13.841079 302,677 1.68% 2.93% Morgan Stanley - Emerging Markets Debt Portfolio .................. 6,540 8.857388 57,927 1.23% 27.71% Nationwide SAT - Capital Appreciation Fund ......... 62,075 31.526314 1,956,996 0.84% 2.93% Nationwide SAT - Government Bond Fund .............. 240,383 18.452016 4,435,551 0.52% (3.61)% Nationwide SAT - Money Market Fund ................. 1,082,615 13.940225 15,091,897 0.66% 3.49% Nationwide SAT - Small Cap Value Fund .............. 23,585 10.762831 253,841 1.07% 26.19% Nationwide SAT - Small Company Fund ................ 66,890 22.712185 1,519,218 1.60% 42.16% Nationwide SAT - Total Return Fund ................. 115,322 36.208762 4,175,667 1.62% 5.56% Neuberger & Berman AMT - Growth Portfolio .......... 97,552 37.771042 3,684,641 1.07% 48.46% Neuberger & Berman AMT - Guardian Portfolio ........ 2,945 10.531438 31,015 1.77% 13.45% Neuberger & Berman AMT - Limited Maturity Bond Portfolio .................. 58,827 15.321478 901,317 0.72% 0.17% Neuberger & Berman AMT - Partners Portfolio ........ 69,118 24.377639 1,684,934 1.70% 5.98% Oppenheimer Bond Fund / VA ......................... 70,351 18.355321 1,291,315 1.32% (2.79)% Oppenheimer Capital Appreciation Fund / VA ......... 60,384 17.847892 1,077,727 1.44% 39.83% Oppenheimer Global Securities Fund / VA ............ 99,036 28.256521 2,798,413 1.81% 56.44% Oppenheimer Multiple Strategies Fund / VA .......... 106,259 25.139330 2,671,280 0.93% 10.35% Strong Opportunity Fund II, Inc. ................... 102,073 38.955700 3,976,325 1.63% 33.17% Strong VIF - Strong Discovery Fund II .............. 32,996 19.481837 642,823 1.28% 3.73% Strong VIF - Strong International Stock Fund II .... 142,490 16.519505 2,353,864 0.35% 84.79% Van Eck WIT - Worldwide Bond Fund .................. 34,273 14.675886 502,987 0.76% (9.01)% Van Eck WIT - Worldwide Emerging Markets Fund .................. 123,914 11.302972 1,400,596 0.87% 97.70% Van Eck WIT Worldwide Hard Assets Fund ............. 71,735 13.098076 939,590 0.65% 19.44% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio ................. 39,678 14.898574 591,146 1.12% (4.62)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ............ 88,739 19.293144 1,712,054 0.29% 61.39% Warburg Pincus Trust - International Equity Portfolio ................... 81,838 17.586224 1,439,221 1.17% 51.45% Warburg Pincus Trust - Small Company Growth Portfolio ................... 114,996 25.533360 2,936,234 0.91% 66.90% Multiple Payment contracts and Flexible Premium contracts: American Century VP - Balanced ..................... 222,611 21.094348 4,695,834 0.77% 9.18% American Century VP - American Century VP Capital Appreciation ......... 643,372 23.303640 14,992,909 0.71% 63.21% American Century VP - American Century VP Income and Growth ............ 235,223 12.717991 2,991,564 1.13% 17.08% American Century VP - American Century VP International ................ 649,836 26.831062 17,435,790 0.73% 62.74% American Century VP - American Century VP Value ........................ 156,791 12.975752 2,034,481 0.85% (1.64)% The Dreyfus Socially Responsible Growth Fund, Inc. ................................ 450,901 36.549891 16,480,382 0.68% 29.04% Dreyfus Stock Index Fund ........................... 2,592,791 33.609618 87,142,715 0.77% 19.64% Dreyfus VIF - Appreciation Portfolio ............... 404,377 14.591996 5,900,668 0.97% 10.57%
53
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Dreyfus VIF - Growth and Income Portfolio ............ 138,815 14.810164 2,055,873 0.69% 15.95% Fidelity VIP - Equity-Income Portfolio .............. 1,750,754 37.388084 65,457,338 0.89% 5.48% Fidelity VIP - Growth Portfolio ...................... 2,613,902 55.899014 146,114,544 0.75% 36.34% Fidelity VIP - High Income Portfolio ................. 672,537 28.039263 18,857,442 0.82% 7.29% Fidelity VIP - Overseas Portfolio .................... 863,446 26.840170 23,175,037 0.79% 41.49% Fidelity VIP-II - Asset Manager Portfolio ............ 917,098 27.355020 25,087,234 0.87% 10.21% Fidelity VIP-II - Contrafund Portfolio ............... 2,151,780 26.143948 56,256,024 0.76% 23.26% Fidelity VIP-III - Growth Opportunities Portfolio .... 385,372 14.012663 5,400,088 0.77% 3.44% Morgan Stanley - Emerging Markets Debt Portfolio .................... 43,728 8.967304 392,122 0.79% 28.35% Nationwide SAT - Capital Appreciation Fund ........... 1,104,444 32.761545 36,183,292 0.73% 3.45% Nationwide SAT - Government Bond Fund ................ 402,906 17.516435 7,057,477 1.32% (3.13)% Nationwide SAT - Money Market Fund ................... 2,312,418 13.853330 32,034,690 1.13% 4.01% Nationwide SAT - Small Cap Value Fund ................ 165,130 10.852975 1,792,152 0.91% 26.82% Nationwide SAT - Small Company Fund .................. 907,754 23.192622 21,053,195 0.60% 42.87% Nationwide SAT - Total Return Fund ................... 2,622,351 35.085217 92,005,754 0.68% 6.09% Neuberger & Berman AMT - Growth Portfolio ............ 660,524 37.818375 24,979,944 0.65% 49.20% Neuberger & Berman AMT - Guardian Portfolio .......... 181,217 10.619652 1,924,461 0.78% 14.02% Neuberger & Berman AMT - Limited Maturity Bond Portfolio .................... 203,409 14.959827 3,042,963 0.95% 0.67% Neuberger & Berman AMT - Partners Portfolio .......... 1,008,241 25.046437 25,252,845 0.71% 6.51% Oppenheimer Bond Fund / VA ........................... 520,266 17.686402 9,201,634 0.77% (2.30)% Oppenheimer Capital Appreciation Fund / VA ........... 535,283 18.069110 9,672,087 0.54% 40.53% Oppenheimer Global Securities Fund / VA .............. 1,018,848 29.152831 29,702,304 0.63% 57.22% Oppenheimer Multiple Strategies Fund / VA ............ 437,927 25.171538 11,023,296 0.85% 10.91% Strong Opportunity Fund II, Inc. ..................... 898,106 40.478200 36,353,714 0.71% 33.83% Strong VIF - Strong Discovery Fund II ................ 296,260 20.243703 5,997,399 0.65% 4.25% Strong VIF - Strong International Stock Fund II ...... 219,407 16.868902 3,701,155 0.70% 85.71% Van Eck WIT - Worldwide Bond Fund .................... 143,676 14.003753 2,012,003 0.92% (8.56)% Van Eck WIT - Worldwide Emerging Markets Fund .................... 576,742 11.474995 6,618,112 0.63% 98.69% Van Eck - Worldwide Hard Assets Fund ................. 206,979 14.660562 3,034,428 1.04% 20.04% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio ................... 246,788 15.237208 3,760,360 0.83% (4.14)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio .............. 123,907 19.586645 2,426,922 0.67% 62.20% Warburg Pincus Trust - International Equity Portfolio ..................... 555,966 17.985801 9,999,494 0.66% 52.21% Warburg Pincus Trust - Small Company Growth Portfolio ..................... 754,487 26.113570 19,702,349 0.58% 67.73% Modified Single Premium contracts and Last Survivor Flexible Premium Contracts: American Century VP - Balanced ....................... 47,439 16.129489 765,167 0.00% 10.06% American Century VP - American Century VP Capital Appreciation ........... 67,671 14.200282 960,947 0.00% 64.52% American Century VP - American Century VP Income and Growth .............. 90,023 12.888778 1,160,286 0.00% 18.02% American Century VP - American Century VP International .................. 120,278 24.899615 2,994,876 0.00% 64.04%
(Continued) 54 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- American Century VP - American Century VP Value . . . . . . . . . . . . . . 42,323 13.293167 562,607 0.00% (0.85)% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . . . 72,077 24.166067 1,741,818 0.00% 30.08% Dreyfus Stock Index Fund . . . . . . . . . . . . . . . 619,532 23.560156 14,596,271 0.00% 20.60% Dreyfus VIF - Appreciation Portfolio . . . . . . . . . 54,118 14.882433 805,408 0.00% 11.46% Dreyfus VIF - Growth and Income Portfolio. . . . . . . 42,510 15.172345 644,976 0.00% 16.88% Fidelity VIP - Equity-Income Portfolio . . . . . . . . 442,948 16.406894 7,267,401 0.00% 6.33% Fidelity VIP - Growth Portfolio. . . . . . . . . . . . 462,592 24.728511 11,439,211 0.00% 37.44% Fidelity VIP - High Income Portfolio . . . . . . . . . 301,341 13.186454 3,973,619 0.00% 8.15% Fidelity VIP - Overseas Portfolio. . . . . . . . . . . 121,065 19.137888 2,316,928 0.00% 42.63% Fidelity VIP-II - Asset Manager Portfolio. . . . . . . 98,987 16.996678 1,682,450 0.00% 11.09% Fidelity VIP-II - Contrafund Portfolio . . . . . . . . 334,798 22.555449 7,551,519 0.00% 24.25% Fidelity VIP-III - Growth Opportunities Portfolio. . . 67,209 14.291602 960,524 0.00% 4.27% Morgan Stanley - Emerging Markets Debt Portfolio . . . . . . . . . . . 25,999 9.146001 237,787 0.00% 29.37% Nationwide SAT - Capital Appreciation Fund . . . . . . 234,699 21.161942 4,966,687 0.00% 4.28% Nationwide SAT - Government Bond Fund. . . . . . . . . 146,891 12.455412 1,829,588 0.00% (2.35)% Nationwide SAT - Money Market Fund . . . . . . . . . . 710,620 12.011954 8,535,935 0.00% 4.85% Nationwide SAT - Small Cap Value Fund. . . . . . . . . 86,677 10.998838 953,346 0.00% 27.84% Nationwide SAT - Small Company Fund. . . . . . . . . . 210,131 17.966399 3,775,297 0.00% 44.02% Nationwide SAT - Total Return Fund . . . . . . . . . . 408,867 18.704720 7,647,743 0.00% 6.94% Neuberger & Berman AMT - Growth Portfolio. . . . . . . 101,415 22.122463 2,243,550 0.00% 50.40% Neuberger & Berman AMT - Guardian Portfolio. . . . . . 28,718 10.762335 309,073 0.00% 14.93% Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . . . . 73,941 11.847132 875,989 0.00% 1.48% Neuberger & Berman AMT - Partners Portfolio. . . . . . 229,651 16.853460 3,870,414 0.00% 7.37% Oppenheimer Bond Fund / VA . . . . . . . . . . . . . . 101,438 12.232154 1,240,805 0.00% (1.52)% Oppenheimer Capital Appreciation Fund / VA . . . . . . 83,414 18.428739 1,537,215 0.00% 41.66% Oppenheimer Global Securities Fund / VA. . . . . . . . 94,622 23.984739 2,269,484 0.00% 58.48% Oppenheimer Multiple Strategies Fund / VA. . . . . . . 80,822 15.287602 1,235,575 0.00% 11.80% Strong Opportunity Fund II, Inc. . . . . . . . . . . . 85,543 20.690172 1,769,899 0.00% 34.91% Strong VIF - Strong Discovery Fund II. . . . . . . . . 19,763 12.410693 245,273 0.00% 5.09% Strong VIF - Strong International Stock Fund II. . . . 91,170 15.499580 1,413,097 0.00% 87.20% Van Eck WIT - Worldwide Bond Fund. . . . . . . . . . . 16,613 11.191476 185,924 0.00% (7.82)% Van Eck WIT - Worldwide Emerging Markets Fund . . . . . . . . . . . 175,122 11.755719 2,058,685 0.00% 100.28% Van Eck WIT - Worldwide Hard Assets Fund . . . . . . . 38,783 8.258894 320,305 0.00% 21.00% Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio. . . . . . . . . . . 53,125 14.184757 753,565 0.00% (3.37)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio . . . . . . . . 14,680 20.065541 294,562 0.00% 63.50% Warburg Pincus Trust - International Equity Portfolio. . . . . . . . . . . . 142,042 15.696053 2,229,499 0.00% 53.43% Warburg Pincus Trust - Small Company Growth Portfolio. . . . . . . . . . . . 154,684 18.668523 2,887,722 0.00% 69.08% ========= ========== -------------- $1,144,615,392 ==============
55
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- The following is a summary for 1998: Single Premium contracts issued prior to April 16, 1990: American Century VP - American Century VP Capital Appreciation. . . . . . . . . 6,437 $ 22.339504 $ 143,799 0.76% (2.73)% Dreyfus Stock Index Fund . . . . . . . . . . . . . . . . . 14,798 27.871347 412,440 1.16% 27.46% Dreyfus VIF - Appreciation Portfolio . . . . . . . . . . . 876 13.168334 11,535 1.77% 29.45% Fidelity VIP - Equity-Income Portfolio . . . . . . . . . . 6,566 41.890019 275,050 0.91% 10.97% Fidelity VIP - Growth Portfolio. . . . . . . . . . . . . . 4,551 58.102055 264,422 0.97% 38.67% Fidelity VIP - High Income Portfolio . . . . . . . . . . . 3,510 27.054068 94,960 0.87% (4.89)% Fidelity VIP - Overseas Portfolio. . . . . . . . . . . . . 4,966 24.255551 120,453 0.92% 12.09% Fidelity VIP-II - Asset Manager Portfolio. . . . . . . . . 1,193 27.955691 33,351 0.94% 14.38% Fidelity VIP-II - Contrafund Portfolio . . . . . . . . . . 684 21.098746 14,432 0.37% 29.22% Nationwide SAT - Capital Appreciation Fund . . . . . . . . 2,354 31.356408 73,813 0.99% 29.20% Nationwide SAT - Government Bond Fund. . . . . . . . . . . 1,481 23.252862 34,437 0.75% 8.27% Nationwide SAT - Money Market Fund . . . . . . . . . . . . 9,477 16.171326 153,256 0.91% 4.67% Nationwide SAT - Total Return Fund . . . . . . . . . . . . 4,462 40.062865 178,761 1.14% 17.38% Neuberger & Berman AMT - Growth Portfolio. . . . . . . . . 4,910 36.321304 178,338 0.93% 14.85% Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . . . . . . 5,842 17.967444 104,966 0.92% 3.78% Strong Opportunities Fund II, Inc. . . . . . . . . . . . . 452 29.946506 13,536 0.93% 12.88% Van Eck WIT - Worldwide Bond Fund. . . . . . . . . . . . . 264 16.631673 4,391 1.65% 12.09% Van Eck WIT - Worldwide Hard Assets Fund . . . . . . . . . 5,479 9.998900 54,784 0.72% (31.37)% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio. . . . . . . . . . . . . 4,103 15.812545 64,879 0.82% (12.14)% Warburg Pincus Trust - International Equity Portfolio. . . . . . . . . . . . . . 1,777 11.754581 20,888 0.90% 4.73% Single Premium contracts issued on or after April 16, 1990: American Century VP - American Century VP Balanced. . . . . . . . . . . . . . . 43,205 18.685028 807,287 1.41% 14.28% American Century VP - American Century VP Capital Appreciation. . . . . . . . . 113,249 14.906965 1,688,199 1.15% (3.42)% American Century VP - American Century VP Income and Growth . . . . . . . . . . 18,703 10.826437 202,487 1.25%(***) 12.31%(***) American Century VP - American Century VP International . . . . . . . . . . . . 168,629 16.127264 2,719,524 1.61% 17.23% American Century VP - American Century VP Value . . . . . . . . . . . . . . . . 25,086 13.059452 327,609 1.04% 3.46% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . . . . . 27,695 27.592332 764,170 1.40% 27.71% Dreyfus Stock Index Fund . . . . . . . . . . . . . . . . . 326,895 27.364353 8,945,270 1.56% 26.56% Dreyfus VIF - Appreciation Portfolio . . . . . . . . . . . 62,982 13.101026 825,129 1.14% 28.54% Dreyfus VIF - Growth and Income Portfolio. . . . . . . . . 14,240 12.644103 180,052 1.45% 10.37% Fidelity VIP - Equity-Income Portfolio . . . . . . . . . . 456,214 34.025630 15,522,969 1.22% 10.19% Fidelity VIP - Growth Portfolio. . . . . . . . . . . . . . 376,885 39.900577 15,037,929 1.54% 37.69% Fidelity VIP - High Income Portfolio . . . . . . . . . . . 144,326 27.638937 3,989,017 1.15% (5.56)% Fidelity VIP - Overseas Portfolio. . . . . . . . . . . . . 248,471 17.348011 4,310,478 1.18% 11.29%
(Continued) 56 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Fidelity VIP-II - Asset Manager Portfolio . . . . . . 253,412 27.112311 6,870,585 1.24% 13.57% Fidelity VIP-II - Contrafund Portfolio. . . . . . . . 275,660 20.842351 5,745,402 1.45% 28.30% Fidelity VIP-III - Growth Opportunities Portfolio . . 64,568 13.447707 868,292 1.79% 23.01% Morgan Stanley - Emerging Markets Debt Portfolio . . . . . . . . . . 7,315 6.935753 50,735 1.22% (29.31)% Nationwide SAT - Capital Appreciation Fund. . . . . . 113,664 30.628674 3,481,378 1.68% 28.29% Nationwide SAT - Government Bond Fund . . . . . . . . 274,184 19.142839 5,248,660 1.34% 7.50% Nationwide SAT - Money Market Fund. . . . . . . . . . 814,530 13.470763 10,972,341 1.12% 3.90% Nationwide SAT - Small Cap Value Fund . . . . . . . . 28,961 8.529271 247,016 1.19%(***) (21.93)%(***) Nationwide SAT - Small Company Fund . . . . . . . . . 68,318 15.976308 1,091,469 1.16% (0.30)% Nationwide SAT - Total Return Fund. . . . . . . . . . 136,311 34.300994 4,675,603 1.29% 16.55% Neuberger & Berman AMT - Growth Portfolio . . . . . . 136,629 25.442656 3,476,205 1.34% 14.03% Neuberger & Berman AMT - Guardian Portfolio . . . . . 4,760 9.282948 44,187 1.47%(***) (10.69)%(***) Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . . . 76,004 15.295923 1,162,551 0.79% 3.04% Neuberger & Berman AMT - Partners Portfolio . . . . . 176,971 23.001381 4,070,577 1.10% 2.86% Oppenheimer Bond Fund / VA. . . . . . . . . . . . . . 84,868 18.882225 1,602,497 1.25% 5.42% Oppenheimer Capital Appreciation Fund / VA. . . . . . 26,155 12.764150 333,846 1.87% 22.40% Oppenheimer Global Securities Fund / VA . . . . . . . 88,848 18.062180 1,604,789 1.17% 12.63% Oppenheimer Multiple Strategies Fund / VA . . . . . . 110,357 22.780548 2,513,993 1.08% 5.28% Strong Opportunity Fund II, Inc. . . . . . . . . . . 111,969 29.253391 3,275,473 1.22% 12.08% Strong VIF - Strong Discovery Fund II . . . . . . . . 58,970 18.780910 1,107,510 1.20% 5.87% Strong VIF - Strong International Stock Fund II . . . 35,834 8.939643 320,343 1.14% (6.01)% Van Eck WIT - Worldwide Bond Fund . . . . . . . . . . 56,294 16.129801 908,011 1.45% 11.30% Van Eck WIT - Worldwide Emerging Markets Fund . . . . . . . . . . 25,018 5.717162 143,032 0.79% (34.98)% Van Eck WIT - Worldwide Hard Assets Fund. . . . . . . 128,220 10.966233 1,406,090 0.95% (31.86)% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio. . . . . . . . . . 67,042 15.620311 1,047,217 0.93% (12.76)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio . . . . . . . 23,108 11.954408 276,242 0.13% 5.13% Warburg Pincus Trust - International Equity Portfolio. . . . . . . . . . . 92,476 11.611647 1,073,799 1.05% 3.99% Warburg Pincus Trust - Small Company Growth Portfolio. . . . . . . . . . . 152,727 15.298780 2,336,537 1.14% (4.11)% Multiple Payment contracts and Flexible Premium contracts: American Century VP - Balanced. . . . . . . . . . . . 215,629 19.320541 4,166,069 0.84% 14.85% American Century VP - American Century VP Capital Appreciation. . . . . . 649,478 14.277913 9,273,190 0.63% (2.94)% American Century VP - American Century VP Income and Growth . . . . . . . 73,815 10.862660 801,827 1.26%(***) 12.87%(***) American Century VP - American Century VP International . . . . . . . . . 568,779 16.487231 9,377,591 0.94% 17.81% American Century VP - American Century VP Value . . . . . . . . . . . . . 140,522 13.192098 1,853,780 1.10% 3.98% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . . 359,871 28.323603 10,192,843 0.83% 28.35%
57
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Dreyfus Stock Index Fund . . . . . . . . . . . . . . 2,166,290 28.091438 60,854,201 0.82% 27.19% Dreyfus VIF - Appreciation Portfolio . . . . . . . . 257,361 13.197284 3,396,466 0.89% 29.18% Dreyfus VIF - Growth and Income Portfolio. . . . . . 125,274 12.772496 1,600,062 1.04% 10.92% Fidelity VIP - Equity-Income Portfolio . . . . . . . 1,726,955 35.444796 61,211,568 0.76% 10.74% Fidelity VIP - Growth Portfolio. . . . . . . . . . . 2,346,630 40.998916 96,209,286 0.71% 38.38% Fidelity VIP - High Income Portfolio . . . . . . . . 737,225 26.133234 19,266,073 0.86% (5.09)% Fidelity VIP - Overseas Portfolio. . . . . . . . . . 871,214 18.969496 16,526,490 0.75% 11.85% Fidelity VIP-II - Asset Manager Portfolio. . . . . . 961,754 24.821550 23,872,225 0.69% 14.13% Fidelity VIP-II - Contrafund Portfolio . . . . . . . 1,826,890 21.209617 38,747,637 0.80% 28.94% Fidelity VIP-III - Growth Opportunities Portfolio. . 315,036 13.546531 4,267,645 1.02% 23.62% Morgan Stanley - Emerging Markets Debt Portfolio. . . . . . . . . . 34,905 6.986851 243,876 0.87% (28.95)% Nationwide SAT - Capital Appreciation Fund . . . . . 1,058,148 31.669989 33,511,536 0.82% 28.93% Nationwide SAT - Government Bond Fund. . . . . . . . 414,068 18.081576 7,487,002 0.79% 8.04% Nationwide SAT - Money Market Fund . . . . . . . . . 1,953,963 13.319323 26,025,464 0.84% 4.43% Nationwide SAT - Small Cap Value Fund. . . . . . . . 50,840 8.557853 435,081 0.79%(***) (21.50)%(***) Nationwide SAT - Small Company Fund. . . . . . . . . 879,309 16.233001 14,273,824 0.80% 0.02% Nationwide SAT - Total Return Fund . . . . . . . . . 2,650,483 33.070880 87,653,805 0.80% 17.13% Neuberger & Berman AMT - Growth Portfolio. . . . . . 767,489 25.347646 19,454,039 0.65% 14.61% Neuberger & Berman AMT - Guardian Portfolio. . . . . 71,761 9.314041 668,385 0.89%(***) (10.23)%(***) Neuberger & Berman AMT - Limited Maturity Bond Portfolio. . . . . . . . . . 195,748 14.860392 2,908,892 0.88% 3.56% Neuberger & Berman AMT - Partners Portfolio. . . . . 1,151,452 23.514569 27,075,898 0.84% 3.38% Oppenheimer Bond Fund / VA . . . . . . . . . . . . . 532,098 18.103341 9,632,752 0.89% 5.95% Oppenheimer Capital Appreciation Fund / VA . . . . . 342,717 12.857977 4,406,647 0.91% 23.01% Oppenheimer Global Securities Fund / VA. . . . . . . 980,014 18.542353 18,171,766 0.79% 13.20% Oppenheimer Multiple Strategies Fund / VA. . . . . . 460,679 22.696024 10,455,582 0.78% 5.80% Strong Opportunity Fund II, Inc. . . . . . . . . . . 874,006 30.245312 26,434,584 0.75% 12.64% Strong VIF - Strong Discovery Fund II. . . . . . . . 360,468 19.418031 6,999,579 0.67% 6.41% Strong VIF - Strong International Stock Fund II. . . 149,776 9.083353 1,360,468 0.81% (5.54)% Van Eck WIT - Worldwide Bond Fund. . . . . . . . . . 154,980 15.314274 2,373,406 0.75% 11.86% Van Eck WIT - Worldwide Emerging Markets Fund. . . . . . . . . . 253,188 5.775322 1,462,242 0.72% (34.66)% Van Eck WIT - Worldwide Hard Assets Fund . . . . . . 206,325 12.213208 2,519,890 0.64% (31.52)% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio . . . . . . . . . 287,075 15.895654 4,563,245 0.80% (12.33)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio. . . . . . . 64,081 12.075838 773,832 0.43% 5.66% Warburg Pincus Trust - International Equity Portfolio . . . . . . . . . . 579,078 11.816371 6,842,600 0.84% 4.51% Warburg Pincus Trust - Small Company Growth Portfolio . . . . . . . . . . 731,702 15.568525 11,391,521 0.68% (3.63)% Modified Single Premium contracts and Last Survivor Flexible Premium Contracts: American Century VP - Balanced . . . . . . . . . . . 40,224 14.655512 589,503 0.00% 27.35% American Century VP - American Century VP Capital Appreciation . . . . . 56,709 8.631172 489,465 0.00% (24.66)%
(Continued) 58 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- American Century VP - American Century VP Income and Growth .................. 49,568 10.920877 541,326 0.00% 13.73%(***) American Century VP - American Century VP International ...................... 109,633 15.178805 1,664,098 0.00% 37.59% American Century VP - American Century VP Value .............................. 39,670 13.407134 531,861 0.00% 30.78% The Dreyfus Socially Responsible Growth Fund, Inc........................................ 59,391 18.577940 1,103,362 0.00% 52.35% Dreyfus Stock Index Fund ................................ 451,985 19.535151 8,829,595 0.00% 59.21% Dreyfus VIF - Appreciation Portfolio .................... 32,649 13.352746 435,954 0.00% 30.22% Dreyfus VIF - Growth and Income Portfolio ............... 33,423 12.980656 433,852 0.00% 25.43% Fidelity VIP - Equity-Income Portfolio ................. 424,796 15.430209 6,554,691 0.00% 26.02% Fidelity VIP - Growth Portfolio ......................... 312,967 17.992701 5,631,122 0.00% 48.99% Fidelity VIP - High Income Portfolio .................... 328,441 12.192188 4,004,414 0.00% 5.76% Fidelity VIP - Overseas Portfolio ....................... 94,348 13.418281 1,265,988 0.00% 26.01% Fidelity VIP-II - Asset Manager Portfolio ............... 96,546 15.299714 1,477,126 0.00% 30.99% Fidelity VIP-II - Contrafund Portfolio .................. 294,323 18.152724 5,342,764 0.00% 47.21% Fidelity VIP-III - Growth Opportunities Portfolio ....... 54,891 13.706120 752,343 0.00% 24.61% Morgan Stanley - Emerging Markets Debt Portfolio ........................ 6,444 7.069376 45,555 0.00% (28.38)% Nationwide SAT - Capital Appreciation Fund .............. 207,778 20.293858 4,216,617 0.00% 62.64% Nationwide SAT - Government Bond Fund ................... 100,956 12.754801 1,287,674 0.00% 17.49% Nationwide SAT - Money Market Fund ...................... 904,630 11.456534 10,363,924 0.00% 10.65% Nationwide SAT - Small Cap Value Fund ................... 18,425 8.603810 158,525 0.00% (20.81)%(***) Nationwide SAT - Small Company Fund ..................... 170,740 12.475012 2,129,984 0.00% 1.71% Nationwide SAT - Total Return Fund ...................... 377,762 17.490359 6,607,193 0.00% 43.25% Neuberger & Berman AMT - Growth Portfolio ............... 95,390 14.709510 1,403,140 0.00% 20.17% Neuberger & Berman AMT - Guardian Portfolio ............. 15,552 9.364011 145,629 0.00% (9.48)%(***) Neuberger & Berman AMT - Limited Maturity Bond Portfolio ........................ 72,201 11.674617 842,919 0.00% 10.88% Neuberger & Berman AMT - Partners Portfolio ............. 241,826 15.696640 3,795,856 0.00% 25.42% Oppenheimer Bond Fund / VA .............................. 90,724 12.420731 1,126,858 0.00% 14.78% Oppenheimer Capital Appreciation Fund / VA .............. 98,891 13.009524 1,286,525 0.00% 24.00% Oppenheimer Global Securities Fund / VA ................. 89,467 15.133929 1,353,987 0.00% 32.36% Oppenheimer Multiple Strategies Fund / VA ............... 90,548 13.674340 1,238,184 0.00% 19.59% Strong Opportunity Fund II, Inc.......................... 85,559 15.336685 1,312,191 0.00% 23.54% Strong VIF - Strong Discovery Fund II ................... 20,724 11.809640 244,743 0.00% (2.62)% Strong VIF - Strong International Stock Fund II ......... 36,980 8.279751 306,185 0.00% (1.81)% Van Eck WIT - Worldwide Bond Fund ....................... 21,531 12.141253 261,413 0.00% 15.34% Van Eck WIT - Worldwide Emerging Markets Fund ........................ 41,962 5.869611 246,301 0.00% (43.65)% Van Eck WIT - Worldwide Hard Assets Fund ................ 21,804 6.825397 148,821 0.00% (35.35)% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio ....................... 58,853 14.679798 863,950 0.00% 17.79% Warburg Pincus Trust - Global Post-Venture Capital Portfolio .................. 4,122 12.272697 50,588 0.00% 16.40%
59
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Warburg Pincus Trust - International Equity Portfolio ........................ 132,142 10.230064 1,351,821 0.00% 8.86% Warburg Pincus Trust - Small Company Growth Portfolio ........................ 131,376 11.041376 1,450,572 0.00% (17.52)% ======== ========== ------------- $ 894,156,479 ============= The following is a summary for 1997: Single Premium contracts issued prior to April 16, 1990: American Century VP - American Century VP Capital Appreciation .............. 8,329 $ 23.049846 $ 191,982 0.20% (4.17)% Dreyfus Stock Index Fund ............................... 9,956 21.945853 218,493 0.89% 31.70% Fidelity VIP - Equity-Income Portfolio ................ 6,812 37.884780 258,071 0.73% 26.90% Fidelity VIP - Growth Portfolio ........................ 5,177 42.050483 217,695 1.06% 22.31% Fidelity VIP - High Income Portfolio ................... 3,493 28.548032 99,718 0.75% 16.55% Fidelity VIP - Overseas Portfolio ...................... 5,108 21.717871 110,935 0.54% 10.50% Fidelity VIP-II - Asset Manager Portfolio .............. 1,203 24.530415 29,510 1.62% 19.51% Fidelity VIP-II - Contrafund Portfolio ................. 3,331 16.387248 54,586 1.46% 22.97% Nationwide SAT - Capital Appreciation Fund ............. 2,373 24.356996 57,799 1.71% 33.22% Nationwide SAT - Government Bond Fund .................. 2,159 21.554629 46,536 0.50% 8.63% Nationwide SAT - Money Market Fund ..................... 9,301 15.508767 144,247 0.48% 4.26% Nationwide SAT - Small Company Fund .................... 124 16.146794 2,002 1.90% 16.24% Nationwide SAT - Total Return Fund ..................... 2,904 34.253930 99,473 1.67% 28.21% Neuberger & Berman AMT - Growth Portfolio .............. 5,113 31.739871 162,286 0.34% 27.79% Neuberger & Berman AMT - Limited Maturity Bond Portfolio ....................... 5,557 17.375997 96,558 0.66% 5.73% Neuberger & Berman AMT - Partners Portfolio ............ 2,379 22.629887 53,837 1.66% 30.01% Strong Opportunities Fund II, Inc....................... 456 26.626359 12,142 1.15% 24.27% Van Eck WIT - Worldwide Bond Fund ...................... 22 14.891060 328 1.50% 1.42% Van Eck WIT - Worldwide Hard Assets Fund ............... 5,526 14.622970 80,807 0.28% (2.61)% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio ...................... 4,138 18.062622 74,743 0.23% 20.33% Warburg Pincus Trust - International Equity Portfolio ........................ 1,792 11.264405 20,186 1.47% (3.18)% Warburg Pincus Trust - Small Company Growth Portfolio ........................ 134 16.093971 2,157 0.93% 14.56% Single Premium contracts issued on or after April 16, 1990: American Century VP - American Century VP Balanced .......................... 38,245 16.350628 625,330 1.01% 14.31% American Century VP - American Century VP Capital Appreciation .............. 129,674 15.434921 2,001,508 0.90% (4.51)% American Century VP - American Century VP International ..................... 109,065 13.757328 1,500,443 0.60% 17.10% American Century VP - American Century VP Value ............................. 36,293 12.622928 458,124 0.71% 24.45% The Dreyfus Socially Responsible Growth Fund, Inc. ..................................... 27,923 21.605205 603,282 2.15% 26.78%
(Continued) 60 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Dreyfus Stock Index Fund ............................ 252,267 21.622115 5,454,546 1.36% 31.24% Dreyfus VIF - Appreciation Portfolio ................ 8,365 10.192453 85,260 0.95%(***) 4.10%(***) Dreyfus VIF - Growth and Income Portfolio ........... 11,510 11.456116 131,860 1.71% 14.71% Fidelity VIP - Equity-Income Portfolio ............. 525,933 30.880183 16,240,907 0.72% 26.45% Fidelity VIP - Growth Portfolio ..................... 325,852 28.978553 9,442,719 1.22% 21.89% Fidelity VIP - High Income Portfolio ................ 160,493 29.267460 4,697,222 0.91% 16.15% Fidelity VIP - Overseas Portfolio ................... 310,985 15.587449 4,847,463 0.68% 10.11% Fidelity VIP-II - Asset Manager Portfolio ........... 293,986 23.873730 7,018,542 0.70% 19.09% Fidelity VIP-II - Contrafund Portfolio .............. 257,262 16.244815 4,179,174 1.06% 22.54% Fidelity VIP-III - Growth Opportunities Portfolio ... 31,619 10.932562 345,677 1.29%(***) 19.93%(***) Morgan Stanley - Emerging Markets Debt Portfolio ................... 5,443 9.810873 53,401 0.89%(***) (4.04)%(***) Nationwide SAT - Capital Appreciation Fund .......... 71,279 23.875030 1,701,788 1.91% 32.76% Nationwide SAT - Government Bond Fund ............... 255,535 17.806978 4,550,306 0.36% 8.25% Nationwide SAT - Money Market Fund .................. 1,051,590 12.964662 13,633,509 0.53% 3.89% Nationwide SAT - Small Company Fund ................. 79,580 16.023638 1,275,161 1.67% 15.83% Nationwide SAT - Total Return Fund .................. 149,445 29.430261 4,398,205 1.91% 27.76% Neuberger & Berman AMT - Growth Portfolio ........... 135,697 22.311330 3,027,581 0.94% 27.34% Neuberger & Berman AMT - Limited Maturity Bond Portfolio ................... 169,876 14.844266 2,521,685 0.46% 5.36% Neuberger & Berman AMT - Partners Portfolio ......... 233,445 22.361130 5,220,094 0.91% 29.56% Oppenheimer Bond Fund / VA .......................... 89,920 17.910876 1,610,546 0.82% 7.84% Oppenheimer Capital Appreciation Fund / VA .......... 10,788 10.428297 112,500 1.03%(***) 9.14%(***) Oppenheimer Global Securities Fund / VA ............. 113,733 16.036486 1,823,878 1.50% 20.84% Oppenheimer Multiple Strategies Fund / VA ........... 152,543 21.638756 3,300,841 0.65% 15.71% Strong Opportunity Fund II, Inc...................... 132,285 26.101254 3,452,804 1.07% 23.83% Strong VIF - Strong Discovery Fund II ............... 68,152 17.738866 1,208,939 0.97% 9.95% Strong VIF - Strong International Stock Fund II ..... 40,251 9.511045 382,829 0.75% (14.64)% Van Eck WIT - Worldwide Bond Fund ................... 45,566 14.492332 660,358 0.65% 1.07% Van Eck WIT - Worldwide Emerging Markets Fund ................... 35,382 8.793232 311,122 1.45% (12.75)% Van Eck WIT - Worldwide Hard Assets Fund ............ 142,782 16.093994 2,297,933 0.45% (2.95)% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio .................. 98,406 17.905659 1,762,024 0.70% 19.91% Warburg Pincus Trust - Global Post-Venture Capital Portfolio ............. 20,440 11.370593 232,415 0.62% 11.87% Warburg Pincus Trust - International Equity Portfolio .................... 134,117 11.166430 1,497,608 0.83% (3.52)% Warburg Pincus Trust - Small Company Growth Portfolio .................... 175,452 15.954033 2,799,167 1.02% 14.16% Multiple Payment contracts and Flexible Premium contracts: American Century VP - Balanced ...................... 162,980 16.822481 2,741,728 0.91% 14.88% American Century VP - American Century VP Capital Appreciation .......... 655,176 14.709822 9,637,522 0.89% (4.03)% American Century VP - American Century VP International ................. 333,719 13.994328 4,670,173 1.06% 17.69%
61
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- American Century VP - American Century VP Value . . . . . . . . . . . . 81,237 12.687534 1,030,697 1.13% 25.08% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . 275,028 22.067304 6,069,126 0.80% 27.41% Dreyfus Stock Index Fund . . . . . . . . . . . . . . 1,577,410 22.086039 34,838,739 0.85% 31.90% Dreyfus VIF - Appreciation Portfolio . . . . . . . . 33,449 10.216196 341,722 0.86%(***) 4.61%(***) Dreyfus VIF - Growth and Income Portfolio . . . . . 74,022 11.514756 852,345 0.96% 15.29% Fidelity VIP - Equity-Income Portfolio . . . . . . . 1,533,661 32.007773 49,089,073 0.98% 27.09% Fidelity VIP - Growth Portfolio . . . . . . . . . . 2,133,432 29.627929 63,209,172 0.82% 22.50% Fidelity VIP - High Income Portfolio . . . . . . . . 660,090 27.535006 18,175,582 0.94% 16.73% Fidelity VIP - Overseas Portfolio . . . . . . . . . 801,447 16.959418 13,592,075 0.97% 10.67% Fidelity VIP-II - Asset Manager Portfolio . . . . . 930,767 21.747656 20,242,001 0.96% 19.69% Fidelity VIP-II - Contrafund Portfolio . . . . . . . 1,351,683 16.448700 22,233,428 0.90% 23.15% Fidelity VIP-III - Growth Opportunities Portfolio. . 55,769 10.958018 611,118 1.23%(***) 20.46%(***) Morgan Stanley - Emerging Markets Debt Portfolio . . . . . . . . . 16,674 9.833749 163,968 1.04%(***) (3.55)%(***) Nationwide SAT - Capital Appreciation Fund . . . . . 755,171 24.563746 18,549,829 0.80% 33.42% Nationwide SAT - Government Bond Fund . . . . . . . 237,476 16.735906 3,974,376 1.52% 8.79% Nationwide SAT - Money Market Fund . . . . . . . . . 1,823,184 12.754301 23,253,438 1.33% 4.42% Nationwide SAT - Small Company Fund . . . . . . . . 690,077 16.199871 11,179,158 1.04% 16.41% Nationwide SAT - Total Return Fund . . . . . . . . . 2,342,232 28.233403 66,129,180 0.51% 28.40% Neuberger & Berman AMT - Growth Portfolio . . . . . 628,860 22.117203 13,908,624 0.88% 27.98% Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . . 178,356 14.349688 2,559,353 1.42% 5.89% Neuberger & Berman AMT - Partners Portfolio . . . . 928,663 22.746051 21,123,416 0.93% 30.21% Oppenheimer Bond Fund / VA . . . . . . . . . . . . . 381,236 17.086434 6,513,964 0.95% 8.38% Oppenheimer Capital Appreciation Fund / VA . . . . . 40,779 10.452595 426,246 0.98%(***) 9.68%(***) Oppenheimer Global Securities Fund / VA . . . . . . 855,620 16.380762 14,015,708 0.80% 21.45% Oppenheimer Multiple Strategies Fund / VA . . . . . 387,094 21.450954 8,303,536 1.01% 16.29% Strong Opportunity Fund II, Inc. . . . . . . . . . . 791,884 26.851737 21,263,461 0.85% 24.46% Strong VIF - Strong Discovery Fund II . . . . . . . 337,867 18.249145 6,165,784 0.86% 10.50% Strong VIF - Strong International Stock Fund II. . . 140,532 9.615755 1,351,321 1.03% (14.21)% Van Eck WIT - Worldwide Bond Fund . . . . . . . . . 121,423 13.690999 1,662,402 1.03% 1.57% Van Eck WIT - Worldwide Emerging Markets Fund . . . . . . . . . 222,956 8.838307 1,970,554 0.83% (12.31)% Van Eck WIT - Worldwide Hard Assets Fund . . . . . . 212,577 17.834480 3,791,200 1.23% (2.46)% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio . . . . . . . . . 275,704 18.130321 4,998,602 1.08% 20.51% Warburg Pincus Trust - Global Post-Venture Capital Portfolio . . . . . . 44,199 11.428806 505,142 1.03% 12.43% Warburg Pincus Trust - International Equity Portfolio . . . . . . . . . . 651,598 11.306660 7,367,397 0.97% (3.04)% Warburg Pincus Trust - Small Company Growth Portfolio . . . . . . . . . . 712,489 16.154327 11,509,780 0.91% 14.73% Modified Single Premium contracts and Last Survivor Flexible Premium Contracts: American Century VP - Balanced . . . . . . . . . . . 27,206 12.659036 344,402 0.00% 5.28% American Century VP - American Century VP Capital Appreciation . . . . . 32,542 8.821378 287,065 0.00% 25.63%
(Continued) 62 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- American Century VP - American Century VP International . . . . . . . . 32,515 12.781185 415,580 0.00% 2.40% American Century VP - American Century VP Value . . . . . . . . . . . . 17,691 12.791587 226,296 0.00% 1.05% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . 37,804 14.359114 542,832 0.00% 9.07% Dreyfus Stock Index Fund . . . . . . . . . . . . . 228,273 15.236658 3,478,118 0.00% 7.07% Dreyfus VIF - Capital Appreciation Fund. . . . . . 450 10.254291 4,614 0.00% 5.43%(***) Dreyfus VIF - Growth and Income Portfolio. . . . . 18,834 11.609215 218,648 0.00% 3.59% Fidelity VIP - Equity-Income Portfolio . . . . . . 299,539 13.822981 4,140,522 0.00% 13.47% Fidelity VIP - Growth Portfolio . . . . . . . . . 162,254 12.898986 2,092,912 0.00% 15.61% Fidelity VIP - High Income Portfolio . . . . . . . 171,832 12.743794 2,189,792 0.00% 6.44% Fidelity VIP - Overseas Portfolio . . . . . . . . 45,600 11.900892 542,681 0.00% (0.18)% Fidelity VIP-II - Asset Manager Portfolio. . . . . 73,280 13.298253 974,496 0.00% 5.97% Fidelity VIP-II - Contrafund Portfolio . . . . . . 167,595 13.965921 2,340,619 0.00% 9.61% Fidelity VIP-III - Growth Opportunities Portfolio. 13,840 10.998857 152,224 0.00% 21.34%(***) Morgan Stanley - Emerging Markets Debt Portfolio . . . . . . . . . 3,497 9.870449 34,517 0.00% (2.78)%(***) Nationwide SAT - Capital Appreciation Fund . . . . 92,414 15.614947 1,443,040 0.00% 7.47% Nationwide SAT - Government Bond Fund. . . . . . . 38,575 11.711522 451,772 0.00% 1.65% Nationwide SAT - Money Market Fund . . . . . . . . 680,581 10.882768 7,406,605 0.00% 0.14% Nationwide SAT - Small Company Fund. . . . . . . . 99,062 12.350345 1,223,450 0.00% 16.54% Nationwide SAT - Total Return Fund . . . . . . . . 270,928 14.813042 4,013,268 0.00% 6.68% Neuberger & Berman AMT - Growth Portfolio . . . . 35,081 12.732630 446,673 0.00% 24.02% Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . . 63,831 11.183579 713,859 0.00% 0.50% Neuberger & Berman AMT - Partners Portfolio . . . 154,752 15.062681 2,330,980 0.00% 9.05% Oppenheimer Bond Fund / VA . . . . . . . . . . . . 60,188 11.629634 699,964 0.00% 1.66% Oppenheimer Capital Appreciation Fund / VA . . . . 7,635 10.491590 80,103 0.00% 10.51%(***) Oppenheimer Global Securities Fund / VA . . . . . 53,741 13.263226 712,779 0.00% 5.54% Oppenheimer Multiple Strategies Fund / VA . . . . 58,544 12.821215 750,605 0.00% 4.54% Strong Opportunity Fund II, Inc. . . . . . . . . . 50,153 13.507426 677,438 0.00% 15.30% Strong VIF - Strong Discovery Fund II . . . . . . 15,515 11.010302 170,825 0.00% 22.69% Strong VIF - Strong International Stock Fund II. . 28,984 8.695226 252,022 0.00% (16.13)% Van Eck WIT - Worldwide Bond Fund . . . . . . . . 19,142 10.767851 206,118 0.00% 0.10% Van Eck WIT - Worldwide Emerging Markets Fund . . . . . . . . . 13,242 8.910909 117,998 0.00% 3.33% Van Eck WIT - Worldwide Hard Assets Fund . . . . . 14,793 9.887286 146,263 0.00% 4.99% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio . . . . . . . . 47,746 16.610019 793,062 0.00% (8.86)% Warburg Pincus Trust - Global Post-Venture Capital Portfolio . . . . . . 2,527 11.522579 29,118 0.00% 3.71% Warburg Pincus Trust - International Equity Portfolio . . . . . . . . . 112,574 9.710827 1,093,187 0.00% (5.41)% Warburg Pincus Trust - Small Company Growth Portfolio . . . . . . . . . 116,237 11.365509 1,321,093 0.00% 36.22% ========= =========== ------------- $ 658,587,322 =============
63
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- The following is a summary for 1996: Single Premium contracts issued prior to April 16, 1990: American Century VP - American Century VP Capital Appreciation . . . . . . . . 8,408 $ 24.053649 $ 202,243 0.84% (5.23)% Fidelity VIP - Equity-Income Portfolio . . . . . . . . . 8,709 29.854628 260,004 0.64% 13.20% Fidelity VIP - Growth Portfolio . . . . . . . . . . . . . 5,280 34.379126 181,522 0.60% 13.62% Fidelity VIP - High Income Portfolio. . . . . . . . . . . 3,462 24.493313 84,796 0.81% 12.95% Fidelity VIP - Overseas Portfolio . . . . . . . . . . . . 5,297 19.654083 104,108 0.63% 12.14% Fidelity VIP-II - Asset Manager Portfolio . . . . . . . . 1,158 20.525705 23,769 0.93% 13.52% Nationwide SAT - Government Bond Fund . . . . . . . . . . 2,831 19.842234 56,173 0.82% 2.50% Nationwide SAT - Money Market Fund. . . . . . . . . . . . 28,405 14.875178 422,529 1.26% 4.11% Nationwide SAT - Total Return Fund. . . . . . . . . . . . 1,189 26.717684 31,767 0.32% 20.68% Neuberger & Berman AMT - Growth Portfolio . . . . . . . . 5,398 24.838185 134,077 0.81% 8.10% Neuberger & Berman AMT - Limited Maturity Bond Portfolio. . . . . . . . . . . . . 5,192 16.433880 85,325 1.09% 3.31% Oppenheimer Global Securities Fund / VA . . . . . . . . . 1,616 13.422186 21,690 0.79% 16.68% Strong Opportunities Fund II, Inc. . . . . . . . . . . . 406 21.426416 8,699 0.93% 17.03% Van Eck WIT - Worldwide Bond Fund . . . . . . . . . . . . 23 14.682655 338 0.89% 15.50% Van Eck WIT - Worldwide Hard Assets Fund. . . . . . . . . 4,593 15.014547 68,962 0.78% 1.55% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio . . . . . . . . . . . . 5,134 15.011508 77,069 0.67% 39.20% Warburg Pincus Trust - International Equity Portfolio . . . . . . . . . . . . . 1,802 11.634515 20,965 1.14% 8.94% Single Premium contracts issued on or after April 16, 1990: American Century VP - American Century VP Balanced . . . . . . . . . . . . . . 38,880 14.303509 556,120 0.79% 10.75% American Century VP - American Century VP Capital Appreciation . . . . . . . . 187,431 16.163625 3,029,564 0.76% (5.56)% American Century VP - American Century VP International. . . . . . . . . . . . 140,670 11.748051 1,652,598 0.98% 12.92% The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . . . . 16,672 17.041821 284,121 0.86% 19.66% Dreyfus Stock Index Fund. . . . . . . . . . . . . . . . . 166,883 16.474993 2,749,396 0.95% 20.95% Fidelity VIP - Equity-Income Portfolio. . . . . . . . . . 556,249 24.419978 13,583,588 0.85% 12.80% Fidelity VIP - Growth Portfolio . . . . . . . . . . . . . 436,608 23.774932 10,380,326 0.80% 13.22% Fidelity VIP - High Income Portfolio. . . . . . . . . . . 160,710 25.198564 4,049,661 0.90% 12.55% Fidelity VIP - Overseas Portfolio . . . . . . . . . . . . 349,868 14.155666 4,952,615 0.90% 11.75% Fidelity VIP-II - Asset Manager Portfolio . . . . . . . . 328,224 20.046209 6,579,647 0.87% 13.12% Fidelity VIP-II - Contrafund Portfolio. . . . . . . . . . 253,591 13.256842 3,361,816 0.94% 19.73% Nationwide SAT - Capital Appreciation Fund. . . . . . . . 69,468 17.984058 1,249,317 1.06% 24.50% Nationwide SAT - Government Bond Fund . . . . . . . . . . 215,649 16.449774 3,547,377 0.83% 2.14% Nationwide SAT - Money Market Fund. . . . . . . . . . . . 1,264,987 12.479104 15,785,904 0.87% 3.74% Nationwide SAT - Small Company Fund . . . . . . . . . . . 84,265 13.833221 1,165,656 0.98% 21.23% Nationwide SAT - Total Return Fund. . . . . . . . . . . . 145,392 23.035683 3,349,204 0.33% 20.26% Neuberger & Berman AMT - Growth Portfolio . . . . . . . . 171,390 17.521012 3,002,926 0.84% 7.72%
(Continued) 64 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . 72,295 14.088625 1,018,537 0.97% 2.95% Neuberger & Berman AMT - Partners Portfolio . . . 166,759 17.259712 2,878,212 0.93% 27.89% Oppenheimer Bond Fund / VA. . . . . . . . . . . . 107,202 16.608318 1,780,445 0.86% 3.44% Oppenheimer Global Securities Fund / VA . . . . . 112,397 13.270426 1,491,556 0.83% 16.27% Oppenheimer Multiple Strategies Fund / VA . . . . 137,052 18.701076 2,563,020 0.85% 14.00% Strong Opportunity Fund II, Inc. . . . . . . . . 145,314 21.077454 3,062,849 0.79% 16.62% Strong VIF - Strong Discovery Fund II . . . . . . 96,856 16.133543 1,562,630 0.72% (0.50)% Strong VIF - Strong International Stock Fund II . 51,959 11.141803 578,917 0.97% 8.95% Van Eck WIT - Worldwide Bond Fund . . . . . . . . 51,233 14.339608 734,661 0.85% 1.19% Van Eck WIT - Worldwide Hard Assets Fund. . . . . 179,378 16.582948 2,974,616 0.93% 16.53% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio. . . . . . . . 77,060 14.933196 1,150,752 0.95% 38.71% Warburg Pincus Trust - International Equity Portfolio. . . . . . . . . 229,373 11.573771 2,654,711 0.89% 8.56% Warburg Pincus Trust - Small Company Growth Portfolio. . . . . . . . . 101,386 13.975650 1,416,935 0.77% 12.43% Multiple Payment contracts and Flexible Premium contracts: American Century VP - Balanced. . . . . . . . . . 137,856 14.642920 2,018,614 0.99% 11.31% American Century VP - American Century VP Capital Appreciation. . . . 564,722 15.327392 8,655,715 1.01% (5.09)% American Century VP - American Century VP International . . . . . . . 145,930 11.890858 1,735,233 0.89% 13.49% American Century VP - American Century VP Value . . . . . . . . . . . 900 10.143687 9,129 0.92%(***) 58.44%(***) The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . 149,312 17.319589 2,586,022 0.95% 20.26% Dreyfus Stock Index Fund. . . . . . . . . . . . . 743,163 16.744674 12,444,022 0.93% 21.56% Fidelity VIP - Equity-Income Portfolio . . . . . 1,203,661 25.185570 30,314,888 0.98% 13.37% Fidelity VIP - Growth Portfolio . . . . . . . . . 1,774,112 24.186560 42,909,666 0.97% 13.79% Fidelity VIP - High Income Portfolio. . . . . . . 519,177 23.588786 12,246,755 0.96% 13.12% Fidelity VIP - Overseas Portfolio . . . . . . . . 723,688 15.324813 11,090,383 0.94% 12.31% Fidelity VIP-II - Asset Manager Portfolio . . . . 858,375 18.169993 15,596,668 0.95% 13.69% Fidelity VIP-II - Contrafund Portfolio. . . . . . 741,153 13.356323 9,899,079 0.95% 20.34% Nationwide SAT - Capital Appreciation Fund. . . . 373,658 18.410667 6,879,293 0.91% 25.13% Nationwide SAT - Government Bond Fund . . . . . . 196,023 15.383251 3,015,471 1.07% 2.66% Nationwide SAT - Money Market Fund. . . . . . . . 1,548,800 12.214743 18,918,194 1.07% 4.27% Nationwide SAT - Small Company Fund . . . . . . . 325,390 13.915643 4,528,011 1.06% 21.85% Nationwide SAT - Total Return Fund. . . . . . . . 1,740,045 21.988773 38,261,455 0.39% 20.87% Neuberger & Berman AMT - Growth Portfolio . . . . 542,729 17.282005 9,379,445 0.97% 8.27% Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . 117,219 13.551318 1,588,472 0.91% 3.47% Neuberger & Berman AMT - Partners Portfolio . . . 434,744 17.469360 7,594,699 0.94% 28.53% Oppenheimer Bond Fund / VA. . . . . . . . . . . . 260,488 15.764821 4,106,547 0.97% 3.96% Oppenheimer Global Securities Fund / VA . . . . . 616,399 13.487753 8,313,837 0.95% 16.86% Oppenheimer Multiple Strategies Fund / VA . . . . 287,199 18.446363 5,297,777 0.97% 14.57%
65
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Strong Opportunity Fund II, Inc. . . . . . . . . . 649,651 21.575419 14,016,493 0.96% 17.20% Strong VIF - Strong Discovery Fund II . . . . . . . 305,653 16.514861 5,047,817 1.03% 0.00% Strong VIF - Strong International Stock Fund II . . 103,783 11.208230 1,163,224 0.96% 9.50% Van Eck WIT - Worldwide Bond Fund . . . . . . . . . 110,868 13.479157 1,494,407 0.97% 1.70% Van Eck WIT - Worldwide Emerging Markets Fund . . . . . . . . . 319 10.078948 3,215 0.93%(***) 32.06%(***) Van Eck WIT - Worldwide Hard Assets Fund. . . . . . 174,641 18.284590 3,193,239 0.93% 17.12% Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio. . . . . . . . . 120,572 15.045195 1,814,029 0.99% 39.41% Warburg Pincus Trust - International Equity Portfolio. . . . . . . . . . 469,367 11.660648 5,473,123 0.97% 9.10% Warburg Pincus Trust - Small Company Growth Portfolio. . . . . . . . . . 402,279 14.080553 5,664,311 1.00% 13.00% Modified Single Premium contracts and Last Survivor Flexible Premium Contracts: American Century VP - Balanced. . . . . . . . . . . 6,725 10.931147 73,512 0.00% 13.88%(***) American Century VP - American Century VP Capital Appreciation. . . . . 9,987 9.118427 91,066 0.00% (13.15)%(***) American Century VP - American Century VP International . . . . . . . . 4,661 10.773558 50,216 0.00% 11.54%(***) The Dreyfus Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . 7,118 11.180091 79,580 0.00% 17.59%(***) Dreyfus Stock Index Fund. . . . . . . . . . . . . . 25,438 11.459856 291,516 0.00% 21.77%(***) Fidelity VIP - Equity-Income Portfolio . . . . . . 61,195 10.790149 660,303 0.00% 11.78%(***) Fidelity VIP - Growth Portfolio . . . . . . . . . . 40,595 10.446167 424,062 0.00% 6.65%(***) Fidelity VIP - High Income Portfolio. . . . . . . . 62,142 10.830462 673,027 0.00% 12.37%(***) Fidelity VIP - Overseas Portfolio . . . . . . . . . 5,158 10.668178 55,026 0.00% 9.96%(***) Fidelity VIP-II - Asset Manager Portfolio . . . . . 10,453 11.022140 115,214 0.00% 15.24%(***) Fidelity VIP-II - Contrafund Portfolio. . . . . . . 35,353 11.249999 397,721 0.00% 18.64%(***) Nationwide SAT - Capital Appreciation Fund. . . . . 8,542 11.610340 99,176 0.00% 24.00%(***) Nationwide SAT - Government Bond Fund . . . . . . . 5,711 10.679205 60,989 0.00% 10.12%(***) Nationwide SAT - Money Market Fund. . . . . . . . . 304,482 10.339005 3,148,041 0.00% 5.03%(***) Nationwide SAT - Small Company Fund . . . . . . . . 20,576 10.524418 216,550 0.00% 7.81%(***) Nationwide SAT - Total Return Fund. . . . . . . . . 64,330 11.444877 736,249 0.00% 21.54%(***) Neuberger & Berman AMT - Growth Portfolio . . . . . 21,053 9.869834 207,790 0.00% (1.94)%(***) Neuberger & Berman AMT - Limited Maturity Bond Portfolio . . . . . . . . . 7,552 10.477247 79,124 0.00% 7.11%(***) Neuberger & Berman AMT - Partners Portfolio . . . . 15,462 11.476324 177,447 0.00% 22.00%(***) Oppenheimer Bond Fund/VA. . . . . . . . . . . . . . 7,727 10.644626 82,251 0.00% 9.62%(***) Oppenheimer Global Securities Fund/VA . . . . . . . 8,064 10.833847 87,364 0.00% 12.43%(***) Oppenheimer Multiple Strategies Fund/VA . . . . . . 9,746 10.937578 106,598 0.00% 13.98%(***) Strong Opportunity Fund II, Inc. . . . . . . . . . 9,106 10.766829 98,043 0.00% 11.43%(***) Strong VIF - Strong Discovery Fund II . . . . . . . 14,115 9.884557 139,521 0.00% (1.71)%(***) Strong VIF - Strong International Stock Fund II . . 8,692 10.054422 87,393 0.00% 0.81%(***) Van Eck WIT - Worldwide Bond Fund . . . . . . . . . 2,209 10.516764 23,232 0.00% 7.71%(***) Van Eck WIT - Worldwide Hard Assets Fund. . . . . . 7,974 10.056004 80,187 0.00% 0.83%(***) Van Kampen American Capital - Morgan Stanley Real Estate Securities Portfolio. . . . . . . . . 11,112 13.673840 151,944 0.00% 54.77%(***)
(Continued) 66 NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, Continued
Unit Contract Total Units Fair Value Owners' Equity Expenses(*) Return(**) ----- ---------- -------------- ----------- ---------- Warburg Pincus Trust - International Equity Portfolio . . . . . 24,290 9.935018 241,322 0.00% (0.97)%(***) Warburg Pincus Trust - Small Company Growth Portfolio . . . . . 24,804 9.827590 243,764 0.00% (2.56)%(***) ======= ========= ------------- $409,169,174 =============
(*)This represents expenses as a percentage of the average net assets of the variable account for the period indicated and includes only those expenses that are charged through a reduction in the unit values.Excluded are expenses of the underlying fund portfolios and charges made directly to contract owner accounts through the redemption of units. (**)This represents the annual total return for the one-year period indicated and includes a deduction only for expenses assessed through the daily unit value calculation. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction of the total return presented. (***)Annualized as this investment option was not utilized for the entire period indicated. 58 1 INDEPENDENT AUDITORS' REPORT The Board of Directors Nationwide Life Insurance Company: We have audited the accompanying consolidated balance sheets of Nationwide Life Insurance Company and subsidiaries (collectively the Company), a wholly owned subsidiary of Nationwide Financial Services, Inc., as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholder's equity and cash flows for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nationwide Life Insurance Company and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP January 26, 2001 2 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Balance Sheets (in millions, except per share amounts)
December 31, ------------------------------------ 2000 1999 ============================================================================================================================ ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity securities $ 15,443.0 $ 15,294.0 Equity securities 109.0 92.9 Mortgage loans on real estate, net 6,168.3 5,786.3 Real estate, net 310.7 254.8 Policy loans 562.6 519.6 Other long-term investments 101.8 73.8 Short-term investments 442.6 416.0 - ---------------------------------------------------------------------------------------------------------------------------- 23,138.0 22,437.4 - ---------------------------------------------------------------------------------------------------------------------------- Cash 18.4 4.8 Accrued investment income 251.4 238.6 Deferred policy acquisition costs 2,865.6 2,554.1 Other assets 396.7 305.9 Assets held in separate accounts 65,897.2 67,135.1 - ---------------------------------------------------------------------------------------------------------------------------- $ 92,567.3 $ 92,675.9 ============================================================================================================================ LIABILITIES AND SHAREHOLDER'S EQUITY Future policy benefits and claims $ 22,183.6 $ 21,861.6 Short-term borrowings 118.7 - Other liabilities 1,164.9 914.2 Liabilities related to separate accounts 65,897.2 67,135.1 - ---------------------------------------------------------------------------------------------------------------------------- 89,364.4 89,910.9 - ---------------------------------------------------------------------------------------------------------------------------- Commitments and contingencies (notes 9 and 14) Shareholder's equity: Common stock, $1 par value. Authorized 5.0 million shares; 3.8 million shares issued and outstanding 3.8 3.8 Additional paid-in capital 646.1 766.1 Retained earnings 2,436.3 2,011.0 Accumulated other comprehensive income (loss) 116.7 (15.9) - ---------------------------------------------------------------------------------------------------------------------------- 3,202.9 2,765.0 - ---------------------------------------------------------------------------------------------------------------------------- $ 92,567.3 $ 92,675.9 ============================================================================================================================
See accompanying notes to consolidated financial statements. 3 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Income (in millions)
Years ended December 31, --------------------------------------------- 2000 1999 1998 =========================================================================================================================== Revenues: Policy charges $ 1,091.4 $ 895.5 $ 698.9 Life insurance premiums 240.0 220.8 200.0 Net investment income 1,654.9 1,520.8 1,481.6 Realized (losses) gains on investments (19.4) (11.6) 28.4 Other 17.0 66.1 66.8 - --------------------------------------------------------------------------------------------------------------------------- 2,983.9 2,691.6 2,475.7 - --------------------------------------------------------------------------------------------------------------------------- Benefits and expenses: Interest credited to policyholder account balances 1,182.4 1,096.3 1,069.0 Other benefits and claims 241.6 210.4 175.8 Policyholder dividends on participating policies 44.5 42.4 39.6 Amortization of deferred policy acquisition costs 352.1 272.6 214.5 Interest expense on short-term borrowings 1.3 - - Other operating expenses 479.0 463.4 419.7 - --------------------------------------------------------------------------------------------------------------------------- 2,300.9 2,085.1 1,918.6 - --------------------------------------------------------------------------------------------------------------------------- Income before federal income tax expense 683.0 606.5 557.1 Federal income tax expense 207.7 201.4 190.4 - --------------------------------------------------------------------------------------------------------------------------- Net income $ 475.3 $ 405.1 $ 366.7 ===========================================================================================================================
See accompanying notes to consolidated financial statements. 4 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Shareholder's Equity Years ended December 31, 2000, 1999 and 1998 (in millions)
Accumulated Additional other Total Common paid-in Retained comprehensive shareholder's stock capital earnings income (loss) equity ========================================================================================================================= December 31, 1997 $ 3.8 $ 914.7 $ 1,312.3 $ 247.1 $ 2,477.9 Comprehensive income: Net income - - 366.7 - 366.7 Net unrealized gains on securities available-for-sale arising during the year - - - 28.5 28.5 --------------- Total comprehensive income 395.2 --------------- Dividend to shareholder - - (100.0) - (100.0) - ------------------------------------------------------------------------------------------------------------------------- December 31, 1998 3.8 914.7 1,579.0 275.6 2,773.1 ========================================================================================================================= Comprehensive income: Net income - - 405.1 - 405.1 Net unrealized losses on securities available-for-sale arising during the year - - - (315.0) (315.0) --------------- Total comprehensive income 90.1 --------------- Capital contribution - 26.4 87.9 23.5 137.8 Return of capital to shareholder - (175.0) - - (175.0) Dividends to shareholder - - (61.0) - (61.0) - ------------------------------------------------------------------------------------------------------------------------- December 31, 1999 3.8 766.1 2,011.0 (15.9) 2,765.0 ========================================================================================================================= Comprehensive income: Net income - - 475.3 - 475.3 Net unrealized gains on securities available-for-sale arising during the year - - - 132.6 132.6 --------------- Total comprehensive income 607.9 --------------- Return of capital to shareholder - (120.0) - - (120.0) Dividends to shareholder - - (50.0) - (50.0) - ------------------------------------------------------------------------------------------------------------------------- December 31, 2000 $ 3.8 $ 646.1 $ 2,436.3 $ 116.7 $ 3,202.9 =========================================================================================================================
See accompanying notes to consolidated financial statements. 5 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Cash Flows (in millions)
Years ended December 31, ---------------------------------------------- 2000 1999 1998 ============================================================================================================================== Cash flows from operating activities: Net income $ 475.3 $ 405.1 $ 366.7 Adjustments to reconcile net income to net cash provided by operating activities: Interest credited to policyholder account balances 1,182.4 1,096.3 1,069.0 Capitalization of deferred policy acquisition costs (778.9) (637.0) (584.2) Amortization of deferred policy acquisition costs 352.1 272.6 214.5 Amortization and depreciation (12.7) 2.4 (8.5) Realized losses (gains) on invested assets, net 19.4 11.6 (28.4) Increase in accrued investment income (12.8) (7.9) (8.2) (Increase) decrease in other assets (92.0) 122.9 16.4 Decrease in policy liabilities (0.3) (20.9) (8.3) Increase (decrease) in other liabilities 229.3 149.7 (34.8) Other, net 22.3 (8.6) (11.3) - ------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 1,384.1 1,386.2 982.9 - ------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Proceeds from maturity of securities available-for-sale 2,988.7 2,307.9 1,557.0 Proceeds from sale of securities available-for-sale 602.0 513.1 610.5 Proceeds from repayments of mortgage loans on real estate 911.7 696.7 678.2 Proceeds from sale of real estate 18.7 5.7 103.8 Proceeds from repayments of policy loans and sale of other invested assets 79.3 40.9 23.6 Cost of securities available-for-sale acquired (3,475.5) (3,724.9) (3,182.8) Cost of mortgage loans on real estate acquired (1,318.0) (971.4) (829.1) Cost of real estate acquired (7.1) (14.2) (0.8) Short-term investments, net (26.6) (27.5) 69.3 Other, net (182.3) (110.9) (88.4) - ------------------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (409.1) (1,284.6) (1,058.7) - ------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Capital returned to shareholder (120.0) (175.0) - Net proceeds from issuance of short-term borrowings (commercial paper) 118.7 - - Cash dividends paid (100.0) (13.5) (100.0) Increase in investment product and universal life insurance product account balances 4,517.0 3,799.4 2,682.1 Decrease in investment product and universal life insurance product account balances (5,377.1) (3,711.1) (2,678.5) - ------------------------------------------------------------------------------------------------------------------------------ Net cash used in financing activities (961.4) (100.2) (96.4) - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash 13.6 1.4 (172.2) Cash, beginning of year 4.8 3.4 175.6 - ------------------------------------------------------------------------------------------------------------------------------ Cash, end of year $ 18.4 $ 4.8 $ 3.4 ==============================================================================================================================
See accompanying notes to consolidated financial statements. 6 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements December 31, 2000, 1999 and 1998 (1) ORGANIZATION AND DESCRIPTION OF BUSINESS Nationwide Life Insurance Company (NLIC, or collectively with its subsidiaries, the Company) is a leading provider of long-term savings and retirement products in the United States and is a wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS). The Company develops and sells a diverse range of products including individual annuities, private and public sector pension plans and other investment products sold to institutions and life insurance. NLIC markets its products through a broad network of distribution channels, including independent broker/dealers, national and regional brokerage firms, financial institutions, pension plan administrators, life insurance specialists, Nationwide Retirement Solutions and Nationwide agents. Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity Insurance Company (NLAIC), Nationwide Advisory Services, Inc., and Nationwide Investment Services Corporation. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies followed by the Company that materially affect financial reporting are summarized below. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America which differ from statutory accounting practices prescribed or permitted by regulatory authorities. Annual Statements for NLIC and NLAIC, filed with the Department of Insurance of the State of Ohio (the Department), are prepared on the basis of accounting practices prescribed or permitted by the Department. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (NAIC), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The Company has no material permitted statutory accounting practices. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ significantly from those estimates. The most significant estimates include those used in determining deferred policy acquisition costs, valuation allowances for mortgage loans on real estate and real estate investments, the liability for future policy benefits and claims and federal income taxes. Although some variability is inherent in these estimates, management believes the amounts provided are adequate. (a) CONSOLIDATION POLICY The consolidated financial statements include the accounts of NLIC and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. 7 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (b) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES The Company is required to classify its fixed maturity securities and equity securities as either held-to-maturity, available-for-sale or trading. The Company classifies fixed maturity and equity securities as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of adjustments to deferred policy acquisition costs and deferred federal income tax, reported as a separate component of accumulated other comprehensive income in shareholder's equity. The adjustment to deferred policy acquisition costs represents the change in amortization of deferred policy acquisition costs that would have been required as a charge or credit to operations had such unrealized amounts been realized. Mortgage loans on real estate are carried at the unpaid principal balance less valuation allowances. The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. The measurement of impaired loans is based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the fair value of the collateral, if the loan is collateral dependent. Loans in foreclosure and loans considered to be impaired are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in interest income in the period received. Real estate is carried at cost less accumulated depreciation and valuation allowances. Other long-term investments are carried on the equity basis, adjusted for valuation allowances. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Estimates for valuation allowances and other than temporary declines are included in realized gains and losses on investments. (c) REVENUES AND BENEFITS INVESTMENT PRODUCTS AND UNIVERSAL LIFE INSURANCE PRODUCTS: Investment products consist primarily of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, corporate-owned life insurance and other interest-sensitive life insurance policies. Revenues for investment products and universal life insurance products consist of net investment income, asset fees, cost of insurance, policy administration and surrender charges that have been earned and assessed against policy account balances during the period. Policy benefits and claims that are charged to expense include interest credited to policy account balances and benefits and claims incurred in the period in excess of related policy account balances. TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance products include those products with fixed and guaranteed premiums and benefits and consist primarily of whole life insurance, limited-payment life insurance, term life insurance and certain annuities with life contingencies. Premiums for traditional life insurance products are recognized as revenue when due. Benefits and expenses are associated with earned premiums so as to result in recognition of profits over the life of the contract. This association is accomplished by the provision for future policy benefits and the deferral and amortization of policy acquisition costs. 8 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (d) DEFERRED POLICY ACQUISITION COSTS The costs of acquiring new business, principally commissions, certain expenses of the policy issue and underwriting department and certain variable sales expenses have been deferred. For investment products and universal life insurance products, deferred policy acquisition costs are being amortized with interest over the lives of the policies in relation to the present value of estimated future gross profits from projected interest margins, asset fees, cost of insurance, policy administration and surrender charges. For years in which gross profits are negative, deferred policy acquisition costs are amortized based on the present value of gross revenues. Deferred policy acquisition costs are adjusted to reflect the impact of unrealized gains and losses on fixed maturity securities available-for-sale as described in note 2(b). For traditional life insurance products, these deferred policy acquisition costs are predominantly being amortized with interest over the premium paying period of the related policies in proportion to the ratio of actual annual premium revenue to the anticipated total premium revenue. Such anticipated premium revenue was estimated using the same assumptions as were used for computing liabilities for future policy benefits. (e) SEPARATE ACCOUNTS Separate account assets and liabilities represent contractholders' funds which have been segregated into accounts with specific investment objectives. For all but $1.12 billion and $915.4 million of separate account assets at December 31, 2000 and 1999, respectively, the investment income and gains or losses of these accounts accrue directly to the contractholders. The activity of the separate accounts is not reflected in the consolidated statements of income and cash flows except for the fees the Company receives. (f) FUTURE POLICY BENEFITS Future policy benefits for investment products in the accumulation phase, universal life insurance and variable universal life insurance policies have been calculated based on participants' contributions plus interest credited less applicable contract charges. Future policy benefits for traditional life insurance policies have been calculated by the net level premium method using interest rates varying from 6.0% to 10.5% and estimates of mortality, morbidity, investment yields and withdrawals which were used or which were being experienced at the time the policies were issued. (g) PARTICIPATING BUSINESS Participating business represents approximately 21% in 2000 (29% in 1999 and 40% in 1998) of the Company's life insurance in force, 66% in 2000 (69% in 1999 and 74% in 1998) of the number of life insurance policies in force, and 8% in 2000 (13% in 1999 and 14% in 1998) of life insurance statutory premiums. The provision for policyholder dividends is based on current dividend scales and is included in "Future policy benefits and claims" in the accompanying consolidated balance sheets. (h) FEDERAL INCOME TAX The Company files a consolidated federal income tax return with Nationwide Mutual Insurance Company (NMIC), the majority shareholder of NFS. The members of the consolidated tax return group have a tax sharing arrangement which provides, in effect, for each member to bear essentially the same federal income tax liability as if separate tax returns were filed. 9 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The Company utilizes the asset and liability method of accounting for income tax. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce the deferred tax assets to the amounts expected to be realized. (i) REINSURANCE CEDED Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported on a gross basis. (j) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133, as amended by SFAS 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 and SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, is effective for the Company as of January 1, 2001. SFAS 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. As of January 1, 2001, the Company had $755.4 million notional amount of freestanding derivatives with a market value of ($7.0) million. All other derivatives qualified for hedge accounting under SFAS 133. Adoption of SFAS 133 will result in the Company recording a net transition adjustment loss of $4.8 million (net of related income tax of $2.6 million) in net income. In addition, a net transition adjustment loss of $3.6 million (net of related income tax of $2.0 million) will be recorded in accumulated other comprehensive income at January 1, 2001. The adoption of SFAS 133 will result in the Company derecognizing $17.0 million of deferred assets related to hedges, recognizing $10.9 million of additional derivative instrument liabilities and $1.3 million of additional firm commitment assets, while also decreasing hedged future policy benefits by $3.0 million and increasing the carrying amount of hedged investments by $10.6 million. Further, the adoption of SFAS 133 will result in the Company reporting total derivative instrument assets and liabilities of $44.8 million and $107.1 million, respectively. Also, the Company expects that the adoption of SFAS 133 will increase the volatility of reported earnings and other comprehensive income. The amount of volatility will vary with the level of derivative and hedging activities and fluctuations in market interest rates and foreign currency exchange rates during any period. (k) RECLASSIFICATION Certain items in the 1999 and 1998 consolidated financial statements have been reclassified to conform to the 2000 presentation. 10 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (3) INVESTMENTS The amortized cost, gross unrealized gains and losses and estimated fair value of securities available-for-sale as of December 31, 2000 and 1999 were:
Gross Gross Amortized unrealized unrealized Estimated (in millions) cost gains losses fair value ========================================================================================================================= December 31, 2000 Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 277.5 $ 33.4 $ 0.1 $ 310.8 Obligations of states and political subdivisions 8.6 0.2 - 8.8 Debt securities issued by foreign governments 94.1 1.5 0.1 95.5 Corporate securities 9,758.3 235.0 135.1 9,858.2 Mortgage-backed securities - U.S. Government backed 2,719.1 46.1 3.8 2,761.4 Asset-backed securities 2,388.2 36.3 16.2 2,408.3 ------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 15,245.8 352.5 155.3 15,443.0 Equity securities 103.5 9.5 4.0 109.0 ------------------------------------------------------------------------------------------------------------------------- $ 15,349.3 $ 362.0 $ 159.3 $ 15,552.0 ========================================================================================================================= December 31, 1999 Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 428.4 $ 23.4 $ 2.4 $ 449.4 Obligations of states and political subdivisions 0.8 - - 0.8 Debt securities issued by foreign governments 110.6 0.6 0.8 110.4 Corporate securities 9,390.4 110.3 179.9 9,320.8 Mortgage-backed securities - U.S. Government backed 3,423.1 25.8 30.3 3,418.6 Asset-backed securities 2,024.0 8.6 38.6 1,994.0 ------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 15,377.3 168.7 252.0 15,294.0 Equity securities 84.9 12.4 4.4 92.9 ------------------------------------------------------------------------------------------------------------------------- $ 15,462.2 $ 181.1 $ 256.4 $ 15,386.9 =========================================================================================================================
The amortized cost and estimated fair value of fixed maturity securities available-for-sale as of December 31, 2000, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 11 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued
Amortized Estimated (in millions) cost fair value =========================================================================================================== Fixed maturity securities available for sale: Due in one year or less $ 1,288.7 $ 1,287.0 Due after one year through five years 4,577.9 4,572.4 Due after five years through ten years 3,071.3 3,136.6 Due after ten years 1,200.6 1,277.3 ----------------------------------------------------------------------------------------------------------- 10,138.5 10,273.3 Mortgage-backed securities 2,719.1 2,761.4 Asset-backed securities 2,388.2 2,408.3 ----------------------------------------------------------------------------------------------------------- $ 15,245.8 $ 15,443.0 =========================================================================================================== The components of unrealized gains (losses) on securities available-for-sale, net, were as follows as of each December 31: (in millions) 2000 1999 =========================================================================================================== Gross unrealized gains (losses) $ 202.7 $ (75.3) Adjustment to deferred policy acquisition costs (23.2) 50.9 Deferred federal income tax (62.8) 8.5 ----------------------------------------------------------------------------------------------------------- $ 116.7 $ (15.9) =========================================================================================================== An analysis of the change in gross unrealized gains (losses) on securities available-for-sale for the years ended December 31: (in millions) 2000 1999 1998 =========================================================================================================== Securities available-for-sale: Fixed maturity securities $ 280.5 $ (607.1) $ 52.6 Equity securities (2.5) (8.8) 4.2 ----------------------------------------------------------------------------------------------------------- $ 278.0 $ (615.9) $ 56.8 ===========================================================================================================
Proceeds from the sale of securities available-for-sale during 2000, 1999 and 1998 were $602.0 million, $513.1 million and $610.5 million, respectively. During 2000, gross gains of $12.1 million ($10.4 million and $9.0 million in 1999 and 1998, respectively) and gross losses of $25.6 million ($28.0 million and $7.6 million in 1999 and 1998, respectively) were realized on those sales. The Company had $13.0 million and $15.6 million of real estate investments at December 31, 2000 and 1999, respectively, that were non-income producing the preceding twelve months. Real estate is presented at cost less accumulated depreciation of $25.7 million as of December 31, 2000 ($24.8 million as of December 31, 1999) and valuation allowances of $5.2 million as of December 31, 2000 ($5.5 million as of December 31, 1999). 12 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The recorded investment of mortgage loans on real estate considered to be impaired was $9.8 million as of December 31, 2000 ($3.7 million as of December 31, 1999), which includes $5.3 million (none as of December 31, 1999) of impaired mortgage loans on real estate for which the related valuation allowance was $1.6 million (none as of December 31, 1999) and $4.5 million ($3.7 million as of December 31, 1999) of impaired mortgage loans on real estate for which there was no valuation allowance. During 2000, the average recorded investment in impaired mortgage loans on real estate was $7.7 million ($3.7 million in 1999) and interest income recognized on those loans totaled $0.4 million in 2000 (none in 1999) which is equal to interest income recognized using a cash-basis method of income recognition. Activity in the valuation allowance account for mortgage loans on real estate is summarized for the years ended December 31:
(in millions) 2000 1999 1998 =========================================================================================================== Allowance, beginning of year $ 44.4 $ 42.4 $ 42.5 Additions (reductions) charged to operations 4.1 0.7 (0.1) Direct write-downs charged against the allowance (3.2) -- -- Allowance on acquired mortgage loans -- 1.3 -- ----------------------------------------------------------------------------------------------------------- Allowance, end of year $ 45.3 $ 44.4 $ 42.4 =========================================================================================================== An analysis of investment income by investment type follows for the years ended December 31: (in millions) 2000 1999 1998 =========================================================================================================== Gross investment income: Securities available-for-sale: Fixed maturity securities $ 1,095.5 $ 1,031.3 $ 982.5 Equity securities 2.6 2.5 0.8 Mortgage loans on real estate 494.5 460.4 458.9 Real estate 32.2 28.8 40.4 Short-term investments 27.0 18.6 17.8 Other 53.2 26.5 30.7 ----------------------------------------------------------------------------------------------------------- Total investment income 1,705.0 1,568.1 1,531.1 Less investment expenses 50.1 47.3 49.5 ----------------------------------------------------------------------------------------------------------- Net investment income $ 1,654.9 $ 1,520.8 $ 1,481.6 =========================================================================================================== An analysis of realized gains (losses) on investments, net of valuation allowances, by investment type follows for the years ended December 31: (in millions) 2000 1999 1998 =========================================================================================================== Securities available-for-sale: Fixed maturity securities $ (18.2) $ (25.0) $ (0.7) Equity securities 4.7 7.4 2.1 Mortgage loans on real estate (4.2) (0.6) 3.9 Real estate and other (1.7) 6.6 23.1 ----------------------------------------------------------------------------------------------------------- $ (19.4) $ (11.6) $ 28.4 ===========================================================================================================
Fixed maturity securities with an amortized cost of $12.8 million and $9.1 million were on deposit with various regulatory agencies as required by law as of December 31, 2000 and 1999, respectively. 13 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (4) SHORT-TERM BORROWINGS NLIC established a $300 million commercial paper program in October 2000. Borrowings under the commercial paper program are unsecured and are issued for terms of 364 days or less. As of December 31, 2000 the Company had $118.7 million of commercial paper outstanding at an average effective rate of 6.48%. See also note 13. (5) DERIVATIVE FINANCIAL INSTRUMENTS The Company uses derivative financial instruments, principally interest rate swaps, interest rate futures contracts and foreign currency swaps, to manage market risk exposures associated with changes in interest rates and foreign currency exchange rates. Provided they meet specific criteria, interest rate and foreign currency swaps and futures are considered hedges and are accounted for under the accrual method and deferral method, respectively. The Company has no significant derivative positions that are not considered hedges. See note 2 (j) regarding accounting for derivatives under SFAS 133 effective January 1, 2001. Interest rate swaps are primarily used to convert specific investment securities and interest bearing policy liabilities from a fixed-rate to a floating-rate basis. Amounts receivable or payable under these agreements are recognized as an adjustment to net investment income or interest credited to policyholder account balances consistent with the nature of the hedged item. Currently, changes in fair value of the interest rate swap agreements are not recognized on the balance sheet, except for interest rate swaps designated as hedges of fixed maturity securities available-for-sale and cross currency swaps hedging foreign denominated debt instruments, for which changes in fair values are reported in accumulated other comprehensive income. Interest rate futures contracts are primarily used to hedge the risk of adverse interest rate changes related to the Company's mortgage loan commitments and anticipated purchases of fixed rate investments. Gains and losses are deferred and, at the time of closing, reflected as an adjustment to the carrying value of the related mortgage loans or investments. The carrying value adjustments are amortized into net investment income over the life of the related mortgage loans or investments. Foreign currency swaps are used to convert cash flows from specific policy liabilities and investments denominated in foreign currencies into U.S. dollars at specified exchange rates. Amounts receivable or payable under these agreements are recognized as an adjustment to net investment income or interest credited to policyholder account balances consistent with the nature of the hedged item. Gains and losses on foreign currency swaps are recorded in earnings based on the related spot foreign exchange rate at the end of the reporting period. Gains and losses on these contracts offset those recorded as a result of translating the hedged foreign currency denominated liabilities and investments to U.S. dollars. 14 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The notional amount of derivative financial instruments outstanding as of December 31, 2000 and 1999 were as follows:
(in millions ) 2000 1999 =========================================================================================================== Interest rate swaps Pay fixed/receive variable rate swaps hedging investments $ 934.8 $ 362.7 Pay variable/receive fixed rate swaps hedging investments 98.8 28.5 Pay variable/receive variable rate swaps hedging investments 184.0 9.0 Other contracts hedging investments 20.4 10.1 Pay variable/receive fixed rate swaps hedging liabilities 965.3 577.2 Pay variable/receive variable rate swaps hedging liabilities 546.9 -- Foreign currency swaps Hedging foreign currency denominated investments $ 30.5 $ 14.8 Hedging foreign currency denominated liabilities 1,542.2 577.2 Interest rate futures contracts $ 5,659.8 $ 781.6 ----------------------------------------------------------------------------------------------------------- (6) FEDERAL INCOME TAX The tax effects of temporary differences that give rise to significant components of the net deferred tax liability as of December 31, 2000 and 1999 were as follows: (in millions) 2000 1999 =========================================================================================================== Deferred tax assets: Fixed maturity securities $ -- $ 5.3 Future policy benefits 34.7 149.5 Liabilities in separate accounts 462.7 373.6 Mortgage loans on real estate and real estate 18.8 18.5 Other assets and other liabilities 40.3 51.1 ----------------------------------------------------------------------------------------------------------- Total gross deferred tax assets 556.5 598.0 Valuation allowance (7.0) (7.0) ----------------------------------------------------------------------------------------------------------- Net deferred tax assets 549.5 591.0 ----------------------------------------------------------------------------------------------------------- Deferred tax liabilities: Fixed maturity securities 98.8 -- Equity securities and other long-term investments 6.4 10.8 Deferred policy acquisition costs 783.7 724.4 Deferred tax on realized investment gains 29.0 34.7 Other 38.1 26.5 ----------------------------------------------------------------------------------------------------------- Total gross deferred tax liabilities 956.0 796.4 ----------------------------------------------------------------------------------------------------------- Net deferred tax liability $ 406.5 $ 205.4 ===========================================================================================================
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Future taxable amounts or recovery of federal income tax paid within the statutory carryback period can offset nearly all future deductible amounts. The valuation allowance was unchanged for the years ended December 31, 2000, 1999 and 1998. 15 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The Company's current federal income tax liability was $108.9 million and $104.7 million as of December 31, 2000 and 1999, respectively. Federal income tax expense for the years ended December 31 was as follows:
(in millions) 2000 1999 1998 =========================================================================================================== Currently payable $ 78.0 $ 53.6 $ 186.1 Deferred tax expense 129.7 147.8 4.3 ----------------------------------------------------------------------------------------------------------- $ 207.7 $ 201.4 $ 190.4 ===========================================================================================================
Total federal income tax expense for the years ended December 31, 2000, 1999 and 1998 differs from the amount computed by applying the U.S. federal income tax rate to income before tax as follows:
2000 1999 1998 ---------------------- ---------------------- ---------------------- (in millions) Amount % Amount % Amount % ================================================================================================================== Computed (expected) tax expense $239.1 35.0 $212.3 35.0 $195.0 35.0 Tax exempt interest and dividends received deduction (24.7) (3.6) (7.3) (1.2) (4.9) (0.9) Income tax credits (8.0) (1.2) (4.3) (0.7) - - Other, net 1.3 0.2 0.7 0.1 0.3 0.1 ------------------------------------------------------------------------------------------------------------------ Total (effective rate of each year) $207.7 30.4 $201.4 33.2 $190.4 34.2 ==================================================================================================================
Total federal income tax paid was $74.6 million, $29.8 million and $173.4 million during the years ended December 31, 2000, 1999 and 1998, respectively. (7) COMPREHENSIVE INCOME Comprehensive Income includes net income as well as certain items that are reported directly within separate components of shareholder's equity that bypass net income. Currently, the Company's only component of Other Comprehensive Income is unrealized gains (losses) on securities available-for-sale. The related before and after federal tax amounts for the years ended December 31, 2000, 1999 and 1998 were as follows:
(in millions) 2000 1999 1998 =========================================================================================================== Unrealized gains (losses) on securities available-for-sale arising during the period: Gross $ 264.5 $ (665.3) $ 58.2 Adjustment to deferred policy acquisition costs (74.0) 167.5 (12.9) Related federal income tax (expense) benefit (66.7) 171.4 (15.9) ----------------------------------------------------------------------------------------------------------- Net 123.8 (326.4) 29.4 ----------------------------------------------------------------------------------------------------------- Reclassification adjustment for net (gains) losses on securities available-for-sale realized during the period: Gross 13.5 17.6 (1.4) Related federal income tax expense (benefit) (4.7) (6.2) 0.5 ----------------------------------------------------------------------------------------------------------- Net 8.8 11.4 (0.9) ----------------------------------------------------------------------------------------------------------- Total Other Comprehensive Income (Loss) $ 132.6 $ (315.0) $ 28.5 ===========================================================================================================
16 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (8) FAIR VALUE OF FINANCIAL INSTRUMENTS The following disclosures summarize the carrying amount and estimated fair value of the Company's financial instruments. Certain assets and liabilities are specifically excluded from the disclosure requirements of financial instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value of a financial instrument is defined as the amount at which the financial instrument could be exchanged in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is to be based on estimates using present value or other valuation techniques. Many of the Company's assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by management using present value or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments. Although insurance contracts, other than policies such as annuities that are classified as investment contracts, are specifically exempted from the disclosure requirements, estimated fair value of policy reserves on life insurance contracts is provided to make the fair value disclosures more meaningful. The tax ramifications of the related unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. The Company in estimating its fair value disclosures used the following methods and assumptions: FIXED MATURITY AND EQUITY SECURITIES: The fair value for fixed maturity securities is based on quoted market prices, where available. For fixed maturity securities not actively traded, fair value is estimated using values obtained from independent pricing services or, in the case of private placements, is estimated by discounting expected future cash flows using a current market rate applicable to the yield, credit quality and maturity of the investments. The fair value for equity securities is based on quoted market prices. The carrying amount and fair value for fixed maturity and equity securities exclude the fair value of derivatives contracts designated as hedges of fixed maturity and equity securities. MORTGAGE LOANS ON REAL ESTATE, NET: The fair value for mortgage loans on real estate is estimated using discounted cash flow analyses, using interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. Fair value for impaired mortgage loans is the estimated fair value of the underlying collateral. POLICY LOANS, SHORT-TERM INVESTMENTS AND CASH: The carrying amount reported in the consolidated balance sheets for these instruments approximates their fair value. SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of assets held in separate accounts is based on quoted market prices. The fair value of liabilities related to separate accounts is the amount payable on demand, which is net of certain surrender charges. INVESTMENT CONTRACTS: The fair value for the Company's liabilities under investment type contracts is based on one of two methods. For investment contracts without defined maturities, fair value is the amount payable on demand. For investment contracts with known or determined maturities, fair value is estimated using discounted cash flow analysis. Interest rates used are similar to currently offered contracts with maturities consistent with those remaining for the contracts being valued. 17 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued POLICY RESERVES ON LIFE INSURANCE CONTRACTS: Included are disclosures for individual life insurance, universal life insurance and supplementary contracts with life contingencies for which the estimated fair value is the amount payable on demand. Also included are disclosures for the Company's limited payment policies, which the Company has used discounted cash flow analyses similar to those used for investment contracts with known maturities to estimate fair value. SHORT-TERM BORROWINGS: The carrying amount reported in the consolidated balance sheets for these instruments approximates their fair value. COMMITMENTS TO EXTEND CREDIT: Commitments to extend credit have nominal fair value because of the short-term nature of such commitments. See note 9. FUTURES CONTRACTS: The fair value for futures contracts is based on quoted market prices. INTEREST RATE AND FOREIGN CURRENCY SWAPS: The fair value for interest rate and foreign currency swaps are calculated with pricing models using current rate assumptions. Carrying amount and estimated fair value of financial instruments subject to disclosure requirements and policy reserves on life insurance contracts were as follows as of December 31:
2000 1999 ------------------------------- ------------------------------- Carrying Estimated Carrying Estimated (in millions) amount fair value amount fair value ============================================================================================================== Assets: Investments: Securities available-for-sale: Fixed maturity securities $ 15,451.3 $ 15,451.3 $ 15,289.7 $ 15,289.7 Equity securities 109.0 109.0 92.9 92.9 Mortgage loans on real estate, net 6,168.3 6,327.8 5,786.3 5,745.5 Policy loans 562.6 562.6 519.6 519.6 Short-term investments 442.6 442.6 416.0 416.0 Cash 18.4 18.4 4.8 4.8 Assets held in separate accounts 65,897.2 65,897.2 67,135.1 67,135.1 Liabilities: Investment contracts (16,815.3) (15,979.8) (16,977.7) (16,428.6) Policy reserves on life insurance contracts (5,368.4) (5,128.5) (4,883.9) (4,607.9) Short-term borrowings (118.7) (118.7) -- -- Liabilities related to separate accounts (65,897.2) (64,237.6) (67,135.1) (66,318.7) Derivative financial instruments: Interest rate swaps hedging assets (8.3) (8.3) 4.3 4.3 Interest rate swaps hedging liabilities (26.2) (32.2) (11.5) (24.2) Foreign currency swaps (24.3) (30.9) (11.8) (11.8) Futures contracts (16.0) (16.0) 1.3 1.3 --------------------------------------------------------------------------------------------------------------
(9) RISK DISCLOSURES The following is a description of the most significant risks facing life insurers and how the Company mitigates those risks: 18 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued CREDIT RISK: The risk that issuers of securities owned by the Company or mortgagors on mortgage loans on real estate owned by the Company will default or that other parties, including reinsurers, which owe the Company money, will not pay. The Company minimizes this risk by adhering to a conservative investment strategy, by maintaining reinsurance and credit and collection policies and by providing for any amounts deemed uncollectible. INTEREST RATE RISK: The risk that interest rates will change and cause a decrease in the value of an insurer's investments. This change in rates may cause certain interest-sensitive products to become uncompetitive or may cause disintermediation. The Company mitigates this risk by charging fees for non-conformance with certain policy provisions, by offering products that transfer this risk to the purchaser and/or by attempting to match the maturity schedule of its assets with the expected payouts of its liabilities. To the extent that liabilities come due more quickly than assets mature, an insurer could potentially have to borrow funds or sell assets prior to maturity and potentially recognize a gain or loss. LEGAL/REGULATORY RISK: The risk that changes in the legal or regulatory environment in which an insurer operates will result in increased competition, reduced demand for a company's products, or create additional expenses not anticipated by the insurer in pricing its products. The Company mitigates this risk by offering a wide range of products and by operating throughout the United States, thus reducing its exposure to any single product or jurisdiction and also by employing underwriting practices which identify and minimize the adverse impact of this risk. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business through management of its investment portfolio. These financial instruments include commitments to extend credit in the form of loans and derivative financial instruments. These instruments involve, to varying degrees, elements of credit risk in excess of amounts recognized on the consolidated balance sheets. Commitments to fund fixed rate mortgage loans on real estate are agreements to lend to a borrower, and are subject to conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a deposit. Commitments extended by the Company are based on management's case-by-case credit evaluation of the borrower and the borrower's loan collateral. The underlying mortgage property represents the collateral if the commitment is funded. The Company's policy for new mortgage loans on real estate is to lend no more than 75% of collateral value. Should the commitment be funded, the Company's exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amounts of these commitments less the net realizable value of the collateral. The contractual amounts also represent the cash requirements for all unfunded commitments. Commitments on mortgage loans on real estate of $360.6 million extending into 2001 were outstanding as of December 31, 2000. The Company also had $55.6 million of commitments to purchase fixed maturity securities outstanding as of December 31, 2000. Notional amounts of derivative financial instruments, primarily interest rate swaps, interest rate futures contracts and foreign currency swaps, significantly exceed the credit risk associated with these instruments and represent contractual balances on which calculations of amounts to be exchanged are based. Credit exposure is limited to the sum of the aggregate fair value of positions that have become favorable to NLIC, including accrued interest receivable due from counterparties. Potential credit losses are minimized through careful evaluation of counterparty credit standing, selection of counterparties from a limited group of high quality institutions, collateral agreements and other contract provisions. As of December 31, 2000, NLIC's credit risk from these derivative financial instruments was $44.8 million. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK: The Company grants mainly commercial mortgage loans on real estate to customers throughout the United States. The Company has a diversified portfolio with no more than 22% (23% in 1999) in any geographic area and no more than 1% (2% in 1999) with any one borrower as of December 31, 2000. As of December 31, 2000, 36% (39% in 1999) of the remaining principal balance of the Company's commercial mortgage loan portfolio financed retail properties. 19 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued REINSURANCE: The Company has entered into reinsurance contracts to cede a portion of its individual annuity business to The Franklin Life Insurance Company (Franklin) and beginning in 2000 with Security Benefit Life Insurance Company (SBL). Total recoveries due from Franklin were $97.7 million and $143.6 million as of December 31, 2000 and 1999, respectively, while amounts due from SBL totaled $45.4 million at December 31, 2000. The contracts are immaterial to the Company's results of operations. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. Under the terms of the contract, Franklin and SBL have each established a trust as collateral for the recoveries. The trust assets are invested in investment grade securities, the market value of which must at all times be greater than or equal to 102% and 100% of the reinsured reserves for Franklin and SBL, respectively. (10) PENSION PLAN AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company is a participant, together with other affiliated companies, in a pension plan covering all employees who have completed at least one year of service and who have met certain age requirements. Plan contributions are invested in a group annuity contract of NLIC. Benefits are based upon the highest average annual salary of a specified number of consecutive years of the last ten years of service. The Company funds pension costs accrued for direct employees plus an allocation of pension costs accrued for employees of affiliates whose work efforts benefit the Company. Pension cost (benefit) charged to operations by the Company during the years ended December 31, 2000, 1999 and 1998 were $1.9 million, $(8.3) million and $2.0 million, respectively. The Company has recorded a prepaid pension asset of $13.6 million and $13.3 million as of December 31, 2000 and 1999, respectively. In addition to the defined benefit pension plan, the Company, together with other affiliated companies, participates in life and health care defined benefit plans for qualifying retirees. Postretirement life and health care benefits are contributory and generally available to full time employees who have attained age 55 and have accumulated 15 years of service with the Company after reaching age 40. Postretirement health care benefit contributions are adjusted annually and contain cost-sharing features such as deductibles and coinsurance. In addition, there are caps on the Company's portion of the per-participant cost of the postretirement health care benefits. These caps can increase annually, but not more than three percent. The Company's policy is to fund the cost of health care benefits in amounts determined at the discretion of management. Plan assets are invested primarily in group annuity contracts of NLIC. The Company elected to immediately recognize its estimated accumulated postretirement benefit obligation (APBO), however, certain affiliated companies elected to amortize their initial transition obligation over periods ranging from 10 to 20 years. The Company's accrued postretirement benefit expense as of December 31, 2000 and 1999 was $51.0 million and $49.6 million, respectively and the net periodic postretirement benefit cost (NPPBC) for 2000, 1999 and 1998 was $3.8 million, $4.9 million and $4.1 million, respectively. 20 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Information regarding the funded status of the pension plan as a whole and the postretirement life and health care benefit plan as a whole as of December 31, 2000 and 1999 follows:
Pension Benefits Postretirement Benefits ---------------------------- --------------------------- (in millions) 2000 1999 2000 1999 =================================================================================================================== Change in benefit obligation: Benefit obligation at beginning of year $ 1,811.4 $ 2,185.0 $ 239.8 $ 270.1 Service cost 81.4 80.0 12.2 14.2 Interest cost 125.3 109.9 18.7 17.6 Actuarial loss (gain) 34.8 (95.0) 16.1 (64.4) Plan settlement -- (396.1) -- -- Benefits paid (71.2) (72.4) (10.4) (11.0) Acquired companies -- -- -- 13.3 ------------------------------------------------------------------------------------------------------------------- Benefit obligation at end of year 1,981.7 1,811.4 276.4 239.8 ------------------------------------------------------------------------------------------------------------------- Change in plan assets: Fair value of plan assets at beginning of year 2,247.6 2,541.9 91.3 77.9 Actual return on plan assets 140.9 161.8 12.2 3.5 Employer contribution -- 12.4 26.3 20.9 Plan curtailment in 2000/settlement in 1999 19.8 (396.1) -- -- Benefits paid (71.2) (72.4) (10.4) (11.0) ------------------------------------------------------------------------------------------------------------------- Fair value of plan assets at end of year 2,337.1 2,247.6 119.4 91.3 ------------------------------------------------------------------------------------------------------------------- Funded status 355.4 436.2 (157.0) (148.5) Unrecognized prior service cost 25.0 28.2 -- -- Unrecognized net gains (311.7) (402.0) (34.1) (46.7) Unrecognized net (asset) obligation at transition (6.4) (7.7) 1.0 1.1 ------------------------------------------------------------------------------------------------------------------- Prepaid (accrued) benefit cost $ 62.3 $ 54.7 $ (190.1) $ (194.1) ===================================================================================================================
Assumptions used in calculating the funded status of the pension plan and postretirement life and health care benefit plan were as follows:
Pension Benefits Postretirement Benefits --------------------------- --------------------------- 2000 1999 2000 1999 =================================================================================================================== Weighted average discount rate 6.75% 7.00% 7.50% 7.80% Rate of increase in future compensation levels 5.00% 5.25% -- -- Assumed health care cost trend rate: Initial rate -- -- 15.00% 15.00% Ultimate rate -- -- 5.50% 5.50% Uniform declining period -- -- 5 Years 5 Years -------------------------------------------------------------------------------------------------------------------
21 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The components of net periodic pension cost for the pension plan as a whole for the years ended December 31, 2000, 1999 and 1998 were as follows:
(in millions) 2000 1999 1998 ========================================================================================================= Service cost (benefits earned during the period) $ 81.4 $ 80.0 $ 87.6 Interest cost on projected benefit obligation 125.3 109.9 123.4 Expected return on plan assets (184.5) (160.3) (159.0) Recognized gains (11.8) (9.1) (3.8) Amortization of prior service cost 3.2 3.2 3.2 Amortization of unrecognized transition obligation (asset) (1.3) (1.4) 4.2 --------------------------------------------------------------------------------------------------------- $ 12.3 $ 22.3 $ 55.6 =========================================================================================================
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its affiliation with Nationwide and employees of WSC ended participation in the plan resulting in a curtailment gain of $67.1 million. During 1999, the Plan transferred assets to settle its obligation related to WSC employees, resulting in a gain of $32.9 million. The spin-off of liabilities and assets was completed in the year 2000, resulting in an adjustment to the curtailment gain of $19.8 million. Assumptions used in calculating the net periodic pension cost for the pension plan were as follows:
2000 1999 1998 ================================================================================================================ Weighted average discount rate 7.00% 6.08% 6.00% Rate of increase in future compensation levels 5.25% 4.33% 4.25% Expected long-term rate of return on plan assets 8.25% 7.33% 7.25% ---------------------------------------------------------------------------------------------------------------- The components of NPPBC for the postretirement benefit plan as a whole for the years ended December 31, 2000, 1999 and 1998 were as follows: (in millions) 2000 1999 1998 ================================================================================================================ Service cost (benefits attributed to employee service during the year) $ 12.2 $ 14.2 $ 9.8 Interest cost on accumulated postretirement benefit obligation 18.7 17.6 15.4 Expected return on plan assets (7.9) (4.8) (4.4) Amortization of unrecognized transition obligation of affiliates 0.6 0.6 0.2 Net amortization and deferral (1.3) (0.5) 0.6 ---------------------------------------------------------------------------------------------------------------- $ 22.3 $ 27.1 $ 21.6 ================================================================================================================
Actuarial assumptions used for the measurement of the NPPBC for the postretirement benefit plan for 2000, 1999 and 1998 were as follows:
2000 1999 1998 ================================================================================================================ Discount rate 7.80% 6.65% 6.70% Long-term rate of return on plan assets, net of tax in 1999 and 1998 8.30% 7.15% 5.83% Assumed health care cost trend rate: Initial rate 15.00% 15.00% 12.00% Ultimate rate 5.50% 5.50% 6.00% Uniform declining period 5 Years 5 Years 12 Years ----------------------------------------------------------------------------------------------------------------
22 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Because current plan costs are very close to the employer dollar caps, the health care cost trend has an immaterial effect on plan obligations for the postretirement benefit plan as a whole. For this reason, the effect of a one percentage point increase or decrease in the assumed health care cost trend rate on the APBO as of December 31, 2000 and on the NPPBC for the year ended December 31, 2000 was not calculated. (11) SHAREHOLDER'S EQUITY, REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND RESTRICTIONS Ohio, NLIC's and NLAIC's state of domicile, imposes minimum risk-based capital requirements that were developed by the NAIC. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of the company's regulatory total adjusted capital, as defined by the NAIC, to its authorized control level risk-based capital, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. NLIC and NLAIC each exceed the minimum risk-based capital requirements. The statutory capital and surplus of NLIC as of December 31, 2000, 1999 and 1998 was $1.28 billion, $1.35 billion and $1.32 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2000, 1999 and 1998 was $158.7 million, $276.2 million and $171.0 million, respectively. The NAIC completed a project to codify statutory accounting principles (Codification), which is effective January 1, 2001 for NLIC and its insurance company subsidiary. The resulting change to NLIC's January 1, 2001 surplus was an increase of approximately $80.0 million. The significant change for NLIC, as a result of Codification, was the recording of deferred taxes, which were not recorded prior to the adoption of Codification. The Company is limited in the amount of shareholder dividends it may pay without prior approval by the Department. As of December 31, 2000 no dividends could be paid by NLIC without prior approval. In addition, the payment of dividends by NLIC may also be subject to restrictions set forth in the insurance laws of New York that limit the amount of statutory profits on NLIC's participating policies (measured before dividends to policyholders) that can inure to the benefit of the Company and its shareholders. The Company currently does not expect such regulatory requirements to impair its ability to pay operating expenses and shareholder dividends in the future. (12) TRANSACTIONS WITH AFFILIATES During second quarter 1999, the Company entered into a modified coinsurance arrangement to reinsure the 1999 operating results of an affiliated company, Employers Life Insurance Company of Wausau (ELOW) retroactive to January 1, 1999. In September 1999, NFS acquired ELOW for $120.8 million and immediately merged ELOW into NLIC terminating the modified coinsurance arrangement. Because ELOW was an affiliate, the Company accounted for the merger similar to poolings-of-interests; however, prior period financial statements were not restated due to immateriality. The reinsurance and merger combined contributed $1.46 million to net income in 1999. 23 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The Company has a reinsurance agreement with NMIC whereby all of the Company's accident and health business is ceded to NMIC on a modified coinsurance basis. The agreement covers individual accident and health business for all periods presented and group and franchise accident and health business since July 1, 1999. Either party may terminate the agreement on January 1 of any year with prior notice. Prior to July 1, 1999 group and franchise accident and health business and a block of group life insurance policies were ceded to ELOW under a modified coinsurance agreement. Under a modified coinsurance agreement, invested assets are retained by the ceding company and investment earnings are paid to the reinsurer. Under the terms of the Company's agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. Risk of asset default is retained by the Company, although a fee is paid to the Company for the retention of such risk. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. The Company believes that the terms of the modified coinsurance agreements are consistent in all material respects with what the Company could have obtained with unaffiliated parties. Revenues ceded to NMIC and ELOW for the years ended December 31, 2000, 1999 and 1998 were $170.1 million, $193.0 million, and $216.9 million, respectively, while benefits, claims and expenses ceded were $168.0 million, $197.3 million and $259.3 million, respectively. Pursuant to a cost sharing agreement among NMIC and certain of its direct and indirect subsidiaries, including the Company, NMIC provides certain operational and administrative services, such as sales support, advertising, personnel and general management services, to those subsidiaries. Expenses covered by such agreement are subject to allocation among NMIC and such subsidiaries. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, salary expense, commission expense and other methods agreed to by the participating companies that are within industry guidelines and practices. In addition, beginning in 1999 Nationwide Services Company, a subsidiary of NMIC, provides computer, telephone, mail, employee benefits administration, and other services to NMIC and certain of its direct and indirect subsidiaries, including the Company, based on specified rates for units of service consumed. For the years ended December 31, 2000, 1999 and 1998, the Company made payments to NMIC and Nationwide Services Company totaling $150.3 million, $124.1 million, and $95.0 million, respectively. The Company does not believe that expenses recognized under these agreements are materially different than expenses that would have been recognized had the Company operated on a stand-alone basis. The Company leases office space from NMIC and certain of its subsidiaries. For the years ended December 31, 2000, 1999 and 1998, the Company made lease payments to NMIC and its subsidiaries of $14.1 million, $9.9 million and $8.0 million, respectively. The Company also participates in intercompany repurchase agreements with affiliates whereby the seller will transfer securities to the buyer at a stated value. Upon demand or after a stated period, the seller will repurchase the securities at the original sales price plus a price differential. Transactions under the agreements during 2000, 1999 and 1998 were not material. The Company believes that the terms of the repurchase agreements are materially consistent with what the Company could have obtained with unaffiliated parties. The Company and various affiliates entered into agreements with Nationwide Cash Management Company (NCMC), an affiliate, under which NCMC acts as a common agent in handling the purchase and sale of short-term securities for the respective accounts of the participants. Amounts on deposit with NCMC were $321.1 million and $411.7 million as of December 31, 2000 and 1999, respectively, and are included in short-term investments on the accompanying consolidated balance sheets. Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates for the three years ended December 31, 2000 were $65.0 million, $79.7 million and $74.9 million, respectively. 24 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (13) BANK LINES OF CREDIT Also available as a source of funds to the Company is a $1 billion revolving credit facility entered into by NFS, NLIC and NMIC. The facility is comprised of a five year $700 million agreement and a 364 day $300 million agreement with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that NLIC maintain statutory surplus in excess of $935 million. The Company had no amounts outstanding under this agreement as of December 31, 2000. Of the total facility, $300 million is designated to back NLIC's $300 million commercial paper program. Therefore, borrowing capacity under this facility would be reduced by the amount of any commercial paper outstanding. (14) CONTINGENCIES On October 29, 1998, the Company was named in a lawsuit filed in Ohio state court related to the sale of deferred annuity products for use as investments in tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company). On May 3, 1999, the complaint was amended to, among other things, add Marcus Shore as a second plaintiff. The amended complaint is brought as a class action on behalf of all persons who purchased individual deferred annuity contracts or participated in group annuity contracts sold by the Company and the other named Company affiliates which were used to fund certain tax-deferred retirement plans. The amended complaint seeks unspecified compensatory and punitive damages. No class has been certified. On June 11, 1999, the Company and the other named defendants filed a motion to dismiss the amended complaint. On March 8, 2000, the court denied the motion to dismiss the amended complaint filed by the Company and other named defendants. The Company intends to defend this lawsuit vigorously. (15) SEGMENT INFORMATION The Company has redefined its business segments in order to align this disclosure with the way management currently views its core operations. This updated view better reflects the different economics of the Company's various businesses and also aligns well with the current market focus. As a result, the Company now reports three product segments: Individual Annuity, Institutional Products and Life Insurance. In addition, the Company reports certain other revenues and expenses in a Corporate segment. All 1999 and 1998 amounts have been restated to reflect the new business segments. The Individual Annuity segment consists of both variable and fixed annuity contracts. Individual annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, variable annuity contracts provide the customer with access to a wide range of investment options and asset protection in the event of an untimely death, while fixed annuity contracts generate a return for the customer at a specified interest rate fixed for a prescribed period. The Company's individual annuity products consist of single premium deferred annuities, flexible premium deferred annuities and single premium immediate annuities. The Institutional Products segment is comprised of the Company's group pension and payroll deduction business, both public and private sectors, and medium-term note program. The public sector includes the 457 business in the form of fixed and variable annuities. The private sector includes the 401(k) business generated through fixed and variable annuities. The Life Insurance segment consists of insurance products, including universal life insurance, corporate-owned life insurance and bank-owned life insurance products, which provide a death benefit and also allow the customer to build cash value on a tax-advantaged basis. 25 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued In addition to the product segments, the Company reports a Corporate segment. The Corporate segment includes net investment income not allocated to the three product segments, certain revenues and expenses of the Company's investment advisory and broker/dealer subsidiary, unallocated expenses and interest expense on short-term borrowings. In addition to these operating revenues and expenses, the Company also reports net realized gains and losses on investments in the Corporate segment. The following table summarizes the financial results of the Company's business segments for the years ended December 31, 2000, 1999 and 1998.
Individual Institutional Life (in millions) Annuity Products Insurance Corporate Total =================================================================================================================== 2000: Net investment income $ 483.2 $ 827.4 $ 289.2 $ 55.1 $ 1,654.9 Other operating revenue 625.9 251.6 453.9 17.0 1,348.4 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 1,109.1 1,079.0 743.1 72.1 3,003.3 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 396.4 628.8 157.2 -- 1,182.4 Amortization of deferred policy acquisition costs 238.7 49.2 64.2 -- 352.1 Interest expense on short-term borrowings -- -- -- 1.3 1.3 Other benefits and expenses 192.3 170.3 368.8 33.7 765.1 ------------------------------------------------------------------------------------------------------------------- Total expenses 827.4 848.3 590.2 35.0 2,300.9 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax 281.7 230.7 152.9 37.1 702.4 Realized losses on investments -- -- -- (19.4) (19.4) ------------------------------------------------------------------------------------------------------------------- Income before federal income tax $ 281.7 $ 230.7 $ 152.9 $ 17.7 $ 683.0 =================================================================================================================== Assets as of year end $45,422.5 $37,217.3 $ 8,103.3 $ 1,824.2 $92,567.3 ------------------------------------------------------------------------------------------------------------------- 1999: Net investment income $ 458.9 $ 771.2 $ 253.1 $ 37.6 $ 1,520.8 Other operating revenue 511.4 211.9 393.0 66.1 1,182.4 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 970.3 983.1 646.1 103.7 2,703.2 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 384.9 580.9 130.5 -- 1,096.3 Amortization of deferred policy acquisition costs 170.9 41.6 60.1 -- 272.6 Other benefits and expenses 155.3 142.8 334.7 83.4 716.2 ------------------------------------------------------------------------------------------------------------------- Total expenses 711.1 765.3 525.3 83.4 2,085.1 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax 259.2 217.8 120.8 20.3 618.1 Realized losses on investments -- -- -- (11.6) (11.6) ------------------------------------------------------------------------------------------------------------------- Income before federal income tax $ 259.2 $ 217.8 $ 120.8 $ 8.7 $ 606.5 =================================================================================================================== Assets as of year end $45,667.8 $39,045.1 $ 6,616.7 $ 1,346.3 $92,675.9 -------------------------------------------------------------------------------------------------------------------
26 NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued
Individual Institutional Life (in millions) Annuity Products Insurance Corporate Total =================================================================================================================== 1998: Net investment income $ 431.7 $ 784.7 $ 225.6 $ 39.6 $ 1,481.6 Other operating revenue 412.6 167.8 318.5 66.8 965.7 ------------------------------------------------------------------------------------------------------------------- Total operating revenue(1) 844.3 952.5 544.1 106.4 2,447.3 ------------------------------------------------------------------------------------------------------------------- Interest credited to policyholder account balances 357.9 595.7 115.4 -- 1,069.0 Amortization of deferred policy acquisition costs 129.2 38.9 46.4 -- 214.5 Other benefits and expenses 125.7 137.5 293.5 78.4 635.1 ------------------------------------------------------------------------------------------------------------------- Total expenses 612.8 772.1 455.3 78.4 1,918.6 ------------------------------------------------------------------------------------------------------------------- Operating income before federal income tax 231.5 180.4 88.8 28.0 528.7 Realized gains on investments -- -- -- 28.4 28.4 ------------------------------------------------------------------------------------------------------------------- Income before federal income tax $ 231.5 $ 180.4 $ 88.8 $ 56.4 $ 557.1 =================================================================================================================== Assets as of year end $36,641.8 $30,618.4 $ 5,187.6 $ 1,894.3 $74,342.1 -------------------------------------------------------------------------------------------------------------------
---------- 1 Excludes net realized gains and losses on investments. The Company has no significant revenue from customers located outside of the United States nor does the Company have any significant long-lived assets located outside the United States. 59 PART II - OTHER INFORMATION CONTENTS OF REGISTRATION STATEMENT This Post-Effective Amendment No. 10 to Form S-6 Registration Statement comprises the following papers and documents: The facing sheet. Cross-reference to items required by Form N-8B-2. The prospectus consisting of 145 pages. Representations and Undertakings. Signatures. Independent Auditors' Consent The following exhibits required by Forms N-8B-2 and S-6: 1. Power of Attorney dated April 4, 2001 Attached hereto. 2. Resolution of the Depositor's Board Included with the Registration Statement of Directors authorizing the on Form N-8B-2 for the Nationwide VLI establishment of the Registrant, Separate Account-2 (File No. 811-5311), adopted and hereby incorporated herein by reference. 3. Distribution Contracts Filed previously with Post-Effective Amendment - 8 (File No. 33-63179) and is hereby incorporated by reference. 4. Form of Security Filed previously with initial registration (File No. 33-63179) and is hereby incorporated by reference. 5. Articles of Incorporation of Included with the Registration Statement Depositor on Form N-8B-2 for the Nationwide VLI Separate Account-2 (File No. 811-5311), and hereby incorporated herein by reference. 6. Application form of Security Filed previously with initial registration (File No. 33-63179) and is hereby incorporated by reference. 7. Opinion of Counsel Filed previously with initial registration (File No. 33-63179) and is hereby incorporated by reference.
60 REPRESENTATIONS AND UNDERTAKINGS The Registrant and Nationwide hereby make the following representations and undertakings: (a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment Company Act of 1940 (the "Act"). The Registrant and Nationwide elect to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with respect to the policies described in the prospectus. The policies have been designed in a way as to qualify for the exemptive relief from various provisions of the Act afforded by Rule 6e-3(T). (b) Paragraph (b) (13) (iii) (F) of Rule 6e-3(T) is being relied on for the deduction of the mortality and expense risk charges ("risk charges") assumed by Nationwide under the policies. Nationwide represents that the risk charges are within the range of industry practice for comparable policies and reasonable in relation to all of the risks assumed by the issuer under the policies. Actuarial memoranda demonstrating the reasonableness of these charges are maintained by Nationwide, and will be made available to the Securities and Exchange Commission ("SEC") on request. (c) Nationwide has concluded that there is a reasonable likelihood that the distribution financing arrangement of the separate account will benefit the separate account and the contract holders and will keep and make available to the SEC on request a memorandum setting forth the basis for this representation. (d) Nationwide represents that the separate account will invest only in management investment companies which have undertaken to have a board of directors, a majority of whom are not interested persons of the company, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. (e) Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the Registrant hereby undertakes to file with the SEC such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the SEC heretofore or hereafter duly adopted pursuant to authority conferred in that section. (f) The fees and charges deducted under the policy in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Nationwide. 61 INDEPENDENT AUDITORS' CONSENT The Board of Directors of Nationwide Life Insurance Company and Contract Owners of Nationwide VLI Separate Account-2: We consent to the use of our reports included herein and to the reference to our firm under the heading "Experts" in the Prospectus. KPMG LLP Columbus, Ohio April 26, 2001 62 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant, NATIONWIDE VLI SEPARATE ACCOUNT-2, certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment-10 and has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the City of Columbus, and State of Ohio, on this 26th day of April, 2001. NATIONWIDE VLI SEPARATE ACCOUNT-2 ------------------------------------- (Registrant) (Seal) NATIONWIDE LIFE INSURANCE COMPANY ------------------------------------- Attest: (Depositor) By: /s/ GLENN W. SODEN By: /s/ STEVEN SAVINI ---------------------------- -------------------------------- Glenn W. Soden Steven Savini Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment has been signed below by the following persons in the capacities indicated on the 26th day of April, 2001.
SIGNATURE TITLE LEWIS J. ALPHIN Director - ------------------------- Lewis J. Alphin A. I. BELL Director - ------------------------- A. I. Bell YVONNE M. CURL Director - ------------------------- Yvonne M. Curl KENNETH D. DAVIS Director - ------------------------- Kenneth D. Davis KEITH W. ECKEL Director - ------------------------- Keith W. Eckel WILLARD J. ENGEL Director - ------------------------- Willard J. Engel FRED C. FINNEY Director - ------------------------- Fred C. Finney JOSEPH J. GASPER President and Chief Operating - ------------------------- Joseph J. Gasper Officer and Director W.G. JURGENSEN Chief Executive Officer - ------------------------- W.G. Jurgensen And Director DAVID O. MILLER Chairman of the Board and - ------------------------- Director David O. Miller RALPH M. PAIGE Director - ------------------------- Ralph M. Paige JAMES F. PATTERSON Director - ------------------------- James F. Patterson ARDEN L. SHISLER Director By /s/ STEVEN SAVINI - ------------------------- ------------------------------------ Arden L. Shisler Steven Savini Attorney-in-Fact ROBERT L. STEWART Director - ------------------------- Robert L. Stewart
EX-1 2 l87598aex1.txt EXHIBIT 1 1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENT, that each of the undersigned as directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY and NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY, both Ohio corporations, which have filed or will file with the U.S. Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended, the Investment Company Act of 1940, as amended, and if applicable, the Securities Exchange Act of 1934, various registration statements and amendments thereto for the registration of current, as well as any future separate accounts established by said corporation for the purpose of registering under said Act(s) immediate or deferred variable annuity contracts, fixed interest rate options subject to a market value adjustment, group flexible fund retirement annuity contracts and variable life insurance policies in connection with the separate accounts listed on Exhibit A. As such, the undersigned hereby constitute and appoint W. G. Jurgensen, Joseph J. Gasper, Robert J. Woodward, Jr., Philip C. Gath, Richard A. Karas, Edwin P. McCausland, Jr., Susan A. Wolken, Steven R. Savini and Mark R. Thresher, and each of them with power to act without the others, his/her attorney, with full power of substitution for and in his/her name, place and stead, in any and all capacities, to approve, and sign such Applications and Registration Statements, and any and all amendments thereto, with power to affix the corporate seal of said corporation thereto and to attest said seal and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, hereby granting unto said attorneys, and each of them, full power and authority to do and perform all and every act and thing requisite to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming that which said attorneys, or any of them, may lawfully do or cause to be done by virtue hereof. This instrument may be executed in one or more counterparts. 2 Page 2 April 4, 2001 IN WITNESS WHEREOF, the undersigned have herewith set their names and seals as of this 4th day of April, 2001. /s/ Lewis J. Alphin /s/ W. G. Jurgensen - ----------------------------------- --------------------------------- LEWIS J. ALPHIN, Director W. G. JURGENSEN, Chief Executive Officer and Director /s/ A. I. Bell /s/ David O. Miller - ----------------------------------- ---------------------------------- A. I. BELL, Director DAVID O. MILLER, Chairman of the Board and Director /s/ Nancy C. Breit /s/ Robert A. Oakley - ------------------------------------ --------------------------------- NANCY C. BREIT, Director ROBERT A. OAKLEY, Executive Vice President and Chief Financial Officer /s/ Yvonne M. Curl /s/ Ralph M. Paige - ------------------------------------ --------------------------------- YVONNE M. CURL, Director RALPH M. PAIGE, Director /s/ Kenneth D. Davis /s/ James F. Patterson - ------------------------------------ --------------------------------- KENNETH D. DAVIS, Director JAMES F. PATTERSON, Director /s/ Keith W. Eckel /s/ Arden L. Shisler - ------------------------------------ --------------------------------- KEITH W. ECKEL, Director ARDEN L. SHISLER, Director /s/ Willard J. Engel /s/ Robert L. Stewart - ------------------------------------ --------------------------------- WILLARD J. ENGEL, Director ROBERT L. STEWART, Director /s/ Fred C. Finney - ------------------------------------ FRED C. FINNEY, Director /s/ Joseph J. Gasper - ------------------------------------ JOSEPH J. GASPER, President and Chief Operating Officer and Director 3 EXHIBIT A - - MFS Variable Account; - - Multi-Flex Variable Account; - - Nationwide Variable Account; - - Nationwide Variable Account-II; - - Nationwide Variable Account-3; - - Nationwide Variable Account-4; - - Nationwide Variable Account-5; - - Nationwide Variable Account-6; - - Nationwide Fidelity Advisor Variable Account; - - Nationwide Variable Account-8; - - Nationwide Variable Account-9; - - Nationwide Variable Account-10; - - Nationwide Variable Account-11; - - Nationwide VA Separate Account-A; - - Nationwide VA Separate Account-B; - - Nationwide VA Separate Account-C; - - Nationwide VA Separate Account-D. - - Nationwide Multiple Maturity Separate Account; - - Nationwide Multiple Maturity Separate Account-2; - - Nationwide Multiple Maturity Separate Account-A - - Nationwide DC Variable Account; - - NACo Variable Account; - - Nationwide VLI Separate Account; - - Nationwide VLI Separate Account-2; - - Nationwide VLI Separate Account-3; - - Nationwide VLI Separate Account-4; - - Nationwide VLI Separate Account-5; - - Nationwide VL Separate Account-A; - - Nationwide VL Separate Account-B; - - Nationwide VL Separate Account-C; and - - Nationwide VL Separate Account-D. -----END PRIVACY-ENHANCED MESSAGE-----