-----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, WUJXEd3lw82xxFquXPBjoYr2QoapUMbutH5kY474RDKV0z2qxbvjhsbGnplVAM6F 414Trl58Y7DkClomRk/HaA== 0000950152-02-003368.txt : 20020426 0000950152-02-003368.hdr.sgml : 20020426 ACCESSION NUMBER: 0000950152-02-003368 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20020426 EFFECTIVENESS DATE: 20020426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE VLI SEPARATE ACCOUNT 2 CENTRAL INDEX KEY: 0000820914 IRS NUMBER: 314156830 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-35783 FILM NUMBER: 02622007 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 l93663ae485bpos.txt NATIONWIDE VLI SEPARATE ACCOUNT-2 485BPOS Registration Statement No. 033-35783 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 15 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 in respect to the Prospectus, 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, 2002 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: Multiple Payment Variable Life Insurance Policies Approximate date of proposed offering: Continuously on and after May 1, 2002 [ ] Check box if it is proposed that this filing will become effective on (date) at (time) pursuant to Rule 487. ================================================================================ 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
N-8B-2 ITEM CAPTION IN PROSPECTUS 37.............................................. Not Applicable 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
NATIONWIDE LIFE INSURANCE COMPANY Multiple Payment Variable Life Insurance Policies Issued by Nationwide Life Insurance Company through its Nationwide VLI Separate Account-2 The date of this prospectus is May 1, 2002 - -------------------------------------------------------------------------------- THIS PROSPECTUS CONTAINS BASIC INFORMATION YOU SHOULD UNDERSTAND ABOUT THE POLICIES BEFORE INVESTING - THE INSURANCE POLICY IS THE LEGALLY BINDING INSTRUMENT GOVERNING THE RELATIONSHIP BETWEEN YOU AND NATIONWIDE SHOULD YOU CHOOSE TO INVEST. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. NOT ALL BENEFITS, PROGRAMS, FEATURES AND INVESTMENT OPTIONS DESCRIBED IN THIS PROSPECTUS ARE AVAILABLE OR APPROVED FOR USE IN EVERY STATE. 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 Fund: Class I - - American Century VP Income & Growth Fund: Class I - - American Century VP Ultra Fund: Class I DREYFUS - - Dreyfus Investment Portfolios - Small Cap Stock Index Portfolio: Service Shares FEDERATED INSURANCE SERIES - - Federated Quality Bond Fund II: Primary Shares FIDELITY VARIABLE INSURANCE PRODUCTS FUND - - VIP Equity-Income Portfolio: Initial Class - - VIP Growth Portfolio: Initial Class - - VIP High Income Portfolio: Initial Class * - - VIP Overseas Portfolio: Initial Class FIDELITY VARIABLE INSURANCE PRODUCTS FUND II - - VIP II Asset Manager Portfolio: Initial Class FIDELITY VARIABLE INSURANCE PRODUCTS FUND III - - VIP III Value Strategies Portfolio: Service Class GARTMORE VARIABLE INSURANCE TRUST ("GVIT") (FORMERLY, NATIONWIDE SEPARATE ACCOUNT TRUST) - - Gartmore GVIT Emerging Markets Fund: Class I (formerly, Gartmore NSAT Emerging Markets Fund) - - Gartmore GVIT Global Financial Services Fund: Class I - - Gartmore GVIT Global Health Sciences Fund: Class I - - Gartmore GVIT Global Technology and Communications Fund: Class I (formerly, Gartmore NSAT Global Technology and Communications Fund) - - Gartmore GVIT Global Utilities Fund: Class I - - Gartmore GVIT Government Bond Fund: Class I (formerly, Government Bond Fund) - - Gartmore GVIT Growth Fund: Class I (formerly, Capital Appreciation Fund) - - Gartmore GVIT International Growth Fund: Class I (formerly, Gartmore NSAT International Growth Fund) - - Gartmore GVIT Investor Destinations Funds -- Gartmore GVIT Investor Destinations Conservative Fund -- Gartmore GVIT Investor Destinations Moderately Conservative Fund -- Gartmore GVIT Investor Destinations Moderate Fund -- Gartmore GVIT Investor Destinations Moderately Aggressive Fund -- Gartmore GVIT Investor Destinations Aggressive Fund - - Gartmore GVIT Money Market Fund: Class I (formerly, Money Market Fund) - - Gartmore GVIT Nationwide Leaders Fund: Class I - - Gartmore GVIT Total Return Fund: Class I (formerly, Total Return Fund) - - Gartmore GVIT U.S. Growth Leaders Fund: Class I - - GVIT Small Cap Value Fund: Class I (formerly, Nationwide(R) Small Cap Value Fund) (subadviser: The Dreyfus Corporation) NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST - - AMT Growth Portfolio - - AMT Guardian Portfolio - - AMT Limited Maturity Bond Portfolio OPPENHEIMER VARIABLE ACCOUNTS FUNDS - - Oppenheimer Bond Fund/VA: Initial Class - - Oppenheimer Multiple Strategies Fund/VA: Initial Class STRONG OPPORTUNITY FUND II, INC. (FORMERLY, STRONG SPECIAL FUND II, INC.) 1 THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER JANUARY 25, 2002: GARTMORE VARIABLE INSURANCE TRUST ("GVIT") (FORMERLY, NATIONWIDE SEPARATE ACCOUNT TRUST) - - Turner GVIT Growth Focus Fund: Class I (formerly, Turner NSAT Growth Focus Fund) THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2002: VAN ECK WORLDWIDE INSURANCE TRUST - - Worldwide Bond Fund - - Worldwide Hard Assets Fund *The Fidelity VIP High Income Portfolio: Initial Class may invest in lower quality debt securities commonly called junk bonds. For general information or to obtain FREE copies of the: - - prospectus, annual report or semi-annual report for any underlying mutual fund; - - any required Nationwide forms; and - - Nationwide's privacy statement, call: 1-800-547-7548 TDD 1-800-238-3035 or write: NATIONWIDE LIFE INSURANCE COMPANY ONE NATIONWIDE PLAZA, RR1-04-D4 COLUMBUS, OHIO 43215 Material incorporated by reference to this prospectus can be found on the SEC website at: www.sec.gov Information about this product and other Best of America products can be found 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 are multiple payment variable life insurance policies. The purpose of this policy is to provide life insurance protection for the beneficiary(ies) named in the policy. 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 (the "variable account") or the fixed account, depending on how premium payments are invested. DECLINING VALUES OR NEGATIVE INVESTMENT RESULTS MAY RESULT IN REDUCTIONS IN DEATH BENEFITS, CASH VALUES, AND THE LOSS OF INSURANCE COVERAGE IF ADDITIONAL PREMIUMS ARE NOT PAID. Investors assume certain risks when investing in the policies, including the risk of losing money. Nationwide guarantees the death benefit for as long as the policy is in force. The cash surrender value is not guaranteed. The policy will lapse if the cash surrender value is insufficient to cover policy charges. During the first 5 policy years, the total premiums less any policy indebtedness must be greater than or equal to the minimum premium requirement in order to keep the policy in force. 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 GLOSSARY OF SPECIAL TERMS ATTAINED AGE- The insured's age on the policy date, plus the number of full years since the policy date. ACCUMULATION UNIT- An accounting unit of measure used to calculate the cash value of the variable account. 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. GUIDELINE LEVEL PREMIUM- The level annual premiums required to mature the policy under guaranteed mortality and expense charges with an interest rate of 4%. It is calculated pursuant to the Internal Revenue Code. GUIDELINE SINGLE PREMIUM- The single premium amount required to mature the policy under guaranteed mortality and expense charges, and an interest rate of 6%. It is calculated pursuant to the Internal Revenue Code. MATURITY DATE- The policy anniversary on or next following the insured's 95th birthday. MINIMUM PREMIUM- The Minimum Premium is shown on the policy data page. It is used to measure the total amount that must be paid during the first 5 policy years to continue the policy in force. MONTHLY ANNIVERSARY DAY- The same day as the policy date for each succeeding month. NATIONWIDE- Nationwide Life Insurance Company. NET AMOUNT AT RISK- Net amount at risk is the death benefit minus the cash value. On the monthly anniversary date, the net amount at risk is the death benefit minus the cash value prior to subtraction of the base policy cost of insurance charge. NET PREMIUMS- Net premiums are equal to the actual premiums minus the percent of premium charges. The percent of premium charges are shown on the policy data page. SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund shares are allocated and for which accumulation units are separately maintained. UNSCHEDULED PREMIUM- Additional premium payments which may be allowed under certain conditions. VALUATION PERIOD- Each day the New York Stock Exchange is open. VARIABLE ACCOUNT- Nationwide VLI Separate Account-2, a separate account of Nationwide Life Insurance Company 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 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 The Fixed Account INFORMATION ABOUT THE POLICIES..... Minimum Requirements for Policy Issuance Premium Payments Pricing POLICY CHARGES..................... Sales Load Tax Load Surrender Charges Monthly Cost of Insurance Monthly Administrative Charge Mortality and Expense Risk Charge Income Tax SURRENDERING THE POLICY FOR CASH... Surrender (Redemption) Cash Surrender Value Partial Surrenders Income Tax Withholding VARIATION IN CASH VALUE............ 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 Changes in the Death Benefit Option Proceeds Payable on Death Incontestability Error in Age or Sex Maturity Proceeds RIGHT OF CONVERSION................ GRACE PERIOD ...................... First Five Policy Years Policy Years Six and After All Policy Years Reinstatement TAX MATTERS........................ Policy Proceeds Withholding Estate and Generation-Skipping Transfers Taxes Non-Resident Aliens Taxation of Nationwide Tax Changes LEGAL CONSIDERATIONS............... STATE REGULATION................... REPORTS TO POLICY OWNERS........... ADVERTISING........................ LEGAL PROCEEDINGS.................. INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS........................ REGISTRATION STATEMENT............. DISTRIBUTION OF THE POLICIES....... ADDITIONAL INFORMATION ABOUT NATIONWIDE...................... APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES 4 SUMMARY OF POLICY EXPENSES Nationwide deducts certain charges from the policy. Charges are made for administrative, tax and sales expenses, providing life insurance protection and assuming the mortality and expense risks. Nationwide deducts a sales load and a tax load from premium payments. The sales load is guaranteed never to exceed 3.5% of each premium payment. The tax load is 2.5% of premiums for all states (see "Sales Load" and "Tax Expense Charge"). Nationwide deducts the following charges from the cash value of the policy: - monthly cost of insurance - monthly cost of any additional benefits provided by riders to the policy - monthly administrative expense charge - daily mortality and expense risk charge For policies which are surrendered during the first 9 policy years, Nationwide deducts a surrender charge (see "Surrender Charges"). Currently, the administrative expense charge is $5 per month. The administrative expense charge is guaranteed not to exceed $7.50 per month. Nationwide deducts a mortality and expense risk charge from the sub-accounts of the variable account. The mortality and expense risk charge is deducted daily and is equal to an annualized rate of 0.80% of the daily net assets of the variable account. For more information about any policy charge, see "Policy Charges" in this prospectus. 5 UNDERLYING MUTUAL FUND ANNUAL EXPENSES (as a percentage of underlying mutual fund net assets, after expense reimbursements and waivers)
Total Underlying Management Other Mutual Fund Fees Expenses 12b-1 Fees Expenses ---- -------- -------- -------- American Century Variable 0.90% 0.00% 0.00% 0.90% Portfolios, Inc. - American Century VP Balanced Fund: Class I - ---------------------------------------------------------------------------------------------------- American Century Variable 0.70% 0.00% 0.00% 0.70% Portfolios, Inc. - American Century VP Income & Growth Fund: Class I - ---------------------------------------------------------------------------------------------------- American Century Variable 1.00% 0.00% 0.00% 1.00% Portfolios, Inc. - American Century VP Ultra Fund: Class I - ---------------------------------------------------------------------------------------------------- Dreyfus Investment Portfolios - 0.35% 0.00% 0.25% 0.60% Small Cap Stock Index Portfolio: Service Shares - ---------------------------------------------------------------------------------------------------- Federated Insurance Series - 0.55% 0.15% 0.00% 0.70% Federated Quality Bond Fund II: Primary Shares - ---------------------------------------------------------------------------------------------------- Fidelity VIP Equity-Income 0.48% 0.10% 0.00% 0.58% Portfolio: Initial Class - ---------------------------------------------------------------------------------------------------- Fidelity VIP Growth Portfolio: 0.58% 0.10% 0.00% 0.68% Initial Class - ---------------------------------------------------------------------------------------------------- Fidelity VIP High Income 0.58% 0.13% 0.00% 0.71% Portfolio: Initial Class - ---------------------------------------------------------------------------------------------------- Fidelity VIP Overseas 0.73% 0.19% 0.00% 0.92% Portfolio: Initial Class - ---------------------------------------------------------------------------------------------------- Fidelity VIP II Asset Manager 0.53% 0.11% 0.00% 0.64% Portfolio: Initial Class - ---------------------------------------------------------------------------------------------------- Fidelity VIP III Value 0.58% 0.26% 0.10% 0.94% Strategies Portfolio: Service Class - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Emerging 1.15% 0.21% 0.00% 1.36% Markets Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Global 1.00% 0.26% 0.00% 1.26% Financial Services Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Global 1.00% 0.32% 0.00% 1.32% Health Sciences Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Global 0.98% 0.26% 0.00% 1.24% Technology and Communications Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Global 0.80% 0.28% 0.00% 1.08% Utilities Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Government 0.50% 0.25% 0.00% 0.75% Bond Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Growth Fund: 0.59% 0.25% 0.00% 0.84% Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT 1.00% 0.33% 0.00% 1.33% International Growth Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.00% 0.36% 0.25% 0.61% Destinations Conservative Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.00% 0.36% 0.25% 0.61% Destinations Moderately Conservative Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.13% 0.20% 0.25% 0.58% Destinations Moderate Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.10% 0.26% 0.25% 0.61% Destinations Moderately Aggressive Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.07% 0.29% 0.25% 0.61% Destinations Aggressive Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Money Market 0.38% 0.25% 0.00% 0.63% Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Nationwide 0.84% 0.41% 0.00% 1.25% Leaders Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Total Return 0.59% 0.25% 0.00% 0.84% Fund: Class I - ----------------------------------------------------------------------------------------------------
6
Total Underlying Management Other Mutual Fund Fees Expenses 12b-1 Fees Expenses ---- -------- -------- -------- GVIT Gartmore GVIT U.S. Growth 0.90% 0.22% 0.00% 1.12% Leaders Fund: Class I - ---------------------------------------------------------------------------------------------------- GVIT GVIT Small Cap Value Fund: 0.86% 0.22% 0.00% 1.08% Class I - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Turner 0.85% 0.43% 0.00% 1.28% Growth Focus Fund: Class I - ---------------------------------------------------------------------------------------------------- Neuberger Berman AMT Growth 0.84% 0.05% 0.00% 0.89% Portfolio - ---------------------------------------------------------------------------------------------------- Neuberger Berman AMT Guardian 0.85% 0.14% 0.00% 0.99% Portfolio - ---------------------------------------------------------------------------------------------------- Neuberger Berman AMT Limited 0.65% 0.08% 0.00% 0.73% Maturity Bond Portfolio - ---------------------------------------------------------------------------------------------------- Oppenheimer Variable Account 0.72% 0.05% 0.00% 0.77% Funds - Oppenheimer Bond Fund/VA: Initial Class - ---------------------------------------------------------------------------------------------------- Oppenheimer Variable Account 0.72% 0.04% 0.00% 0.76% Funds - Oppenheimer Multiple Strategies Fund/VA: Initial Class - ---------------------------------------------------------------------------------------------------- Strong Opportunity Fund II, Inc. 0.75% 0.35% 0.00% 1.10% - ---------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance 1.00% 0.19% 0.00% 1.19% Trust -Worldwide Bond Fund - ---------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance 1.00% 0.15% 0.00% 1.15% Trust-Worldwide Hard Assets Fund - ----------------------------------------------------------------------------------------------------
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. UNDERLYING MUTUAL FUND ANNUAL EXPENSES (as a percentage of underlying mutual fund net assets before expense reimbursements and waivers) 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.
Total Underlying Management Other Mutual Fund Fees Expenses 12b-1 Fees Expenses ---- -------- -------- -------- Federated Insurance Series - 0.60% 0.40% 0.25% 1.25% Federated Quality Bond Fund II: Primary Shares - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.13% 0.43% 0.25% 0.81% Destinations Conservative Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.13% 0.42% 0.25% 0.80% Destinations Moderately Conservative Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.13% 0.26% 0.25% 0.64% Destinations Moderately Aggressive Fund - ---------------------------------------------------------------------------------------------------- GVIT Gartmore GVIT Investor 0.13% 0.29% 0.25% 0.67% Destinations Aggressive Fund - ---------------------------------------------------------------------------------------------------- Strong Opportunity Fund II, Inc. 0.75% 0.65% 0.00% 1.40% - ---------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance 1.00% 0.24% 0.00% 1.24% Trust - Worldwide Bond Fund - ---------------------------------------------------------------------------------------------------- Van Eck Worldwide Insurance 1.00% 0.18% 0.00% 1.18% Trust - Worldwide Hard Assets Fund - ----------------------------------------------------------------------------------------------------
7 SYNOPSIS OF THE POLICIES The policy offered by this prospectus provides for life insurance coverage on the insured. 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 (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. During the first 5 policy years, the total premium payments less any policy indebtedness must be greater than or equal to the minimum premium requirement in order to keep the policy in force. The minimum premium is equal to the monthly minimum premium multiplied by the number of completed policy months. The minimum monthly premium is shown on the policy data page. PREMIUMS The minimum initial premium for which a policy may be issued is $2,000. The policies are designed to generally permit the payment of the Guideline Single Premium in five annual installments for death benefit Option 1, and five annual Guideline Level Premiums under death benefit Option 2 (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. 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 a wide array of investment products, including variable annuity and variable life insurance products. Each of these products has different charges, benefit features and underlying investment options. Investors are encouraged to compare and contrast the costs and benefits of the policies against those of other investment products, especially other variable annuity and variable life insurance products offered by Nationwide and its affiliates. This process of comparison and analysis should aid in determining whether the purchase of the policy described in this prospectus is consistent with the investor's particular investment objectives, risk tolerance, investment time horizon, marital status, tax situation and other personal characteristics and needs. 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, references to NISC shall 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 in general chargeable with liabilities incurred in any other business of Nationwide. Nationwide is 8 obligated to pay all amounts promised to policy owners under the policies. 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. They are only 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 owner has an unconditional right to transfer all of the cash value in the variable account to the fixed account. 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 prior to 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 contract owners and those of other companies. If a material conflict occurs, Nationwide will take whatever steps are necessary to 9 protect contract owners and variable annuity payees, 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. Premium payments will be allocated to the fixed account by election of the policy owner. The general account is not subject to the same laws as the variable account and the staff of the SEC has not reviewed the disclosures in this prospectus relating to the fixed account. However, information relating to the fixed account is subject to federal securities laws relating to accuracy and completeness of prospectus disclosure. The investment income earned by the fixed account will be allocated to the policies at varying rate(s) set by Nationwide. The guaranteed rate for any premium payment will be effective for not less than twelve months. Nationwide guarantees that the rate will not be less than an annual effective rate of 4.0%. Any interest in excess of an annual effective rate 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 an annual effective rate of 4.0% for any given year. New premium payments deposited to the contract which are 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. Nationwide may be required by state law to reserve the right to postpone payment of assets in the fixed account for a period of up to 6 months from the date of the surrender request. INFORMATION ABOUT THE POLICIES MINIMUM REQUIREMENTS FOR POLICY ISSUANCE The policies are designed to generally permit the payment of the Guideline Single Premium in five annual installments under death benefit Option 1 and five annual Guideline Level Premiums under death benefit Option 2. At issue, the policy owner selects a scheduled premium level. This scheduled premium is used to determine the initial specified amount. The minimum scheduled premium is $2,000. Policies may be issued to insureds with issue ages 75 or younger. Before issuing any policy, Nationwide requires satisfactory evidence of insurability which may include a medical examination. PREMIUM PAYMENTS Each premium payment must be at least equal to the monthly minimum premium. 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; - during the first 5 policy years, the total premium payments less any policy indebtedness must be greater than or equal to the minimum premium requirement in order to keep the policy in force. (The monthly minimum premium is shown in the policy data page); - 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. Nationwide will send scheduled premium payment reminder notices to policy owners according to the premium mode shown on the policy data page. PRICING Premium payments will not be priced when the New York Stock Exchange is closed on the following nationally recognized holidays: 10 - - New Year's Day - Independence Day - - Martin Luther King, Jr. Day - Labor Day - - Presidents' Day - Thanksgiving - - Good Friday - Christmas - - Memorial Day
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, policy 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 never to exceed 3.5% of each premium payment and may be reduced by Nationwide at its sole discretion. 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. TAX LOAD A charge equal to 2.5% is deducted from all premium payments when the premium payments are received in order to compensate Nationwide for certain administrative expenses which are incurred by Nationwide for taxes. Such taxes include premium or other taxes imposed by various state and local jurisdictions, as well as federal taxes imposed under Section 848 of the Internal Revenue Code. 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 this charge. SURRENDER CHARGES Nationwide deducts a surrender charge from the cash value of any policy surrendered during the first 9 years. The deduction is taken proportionally from the cash value in each sub-account and the fixed account. The initial surrender charge varies by issue age, sex, and underwriting classification. The surrender charge is calculated based on the initial specified amount. The following table illustrates the initial surrender charge per $1,000 of initial specified amount for policies which are issued on a standard basis (see Appendix B for specific examples). Special guaranteed maximum surrender charges apply in Pennsylvania (see Appendix B).
ISSUE MALE FEMALE MALE FEMALE AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD --- ----------- ----------- -------- -------- 25 $ 5.878 $ 5.537 $ 6.680 $ 5.945 35 7.260 6.712 8.559 7.373 45 11.159 10.160 13.244 11.151 55 15.275 13.375 18.373 14.686 65 23.821 20.553 27.943 22.165
The surrender charge is comprised of two components: - an underwriting component; and - sales component. The underwriting component varies by issue age in the following manner:
CHARGE PER $1,000 OF ISSUE INITIAL SPECIFIED AGE AMOUNT --- ------ 0-39 $3.50 40-59 $5.00 60-75 $6.50
The underwriting component is designed to cover the administrative expenses associated with underwriting and issuing policies, including the costs of: - processing applications; - 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. The purpose of the sales component is to reimburse Nationwide for some of the expenses incurred in the distribution of the policies. 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 charges. Reductions to Surrender Charges Surrender charges are reduced in subsequent policy years as follows: 11
SURRENDER CHARGE AS COMPLETED A % OF INITIAL POLICY YEARS SURRENDER CHARGES ------------ ----------------- 0 100% 1 100% 2 100% 3 95% 4 90% 5 85% 6 80% 7 75% 8 50% 9 and After 0%
Special guaranteed maximum surrender charges apply in Pennsylvania (see Appendix B). MONTHLY COST OF INSURANCE 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. This deduction is charged proportionately to the cash value in each sub-account and the fixed account. If death benefit Option 1 is in effect and there have been increases in the specified amount, then the cash value will first be considered a part of the initial specified amount. If the cash value exceeds the initial specified amount, it will then be considered a part of the additional increases in specified amount resulting from the increases in the order of the increases. Monthly cost of insurance rates will not exceed those guaranteed in the policy. Guaranteed cost of insurance rates for policies issued on a simplified basis are based on the 1980 Commissioners Extended Term Mortality Table, Age Last Birthday (1980 CET). Guaranteed cost of insurance rates for policies issued on a preferred basis are based on the 1980 Commissioners Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO). Guaranteed cost of insurance rates for policies issued on a substandard basis are based on appropriate percentage multiples of the 1980 CSO. These mortality tables are sex distinct. In addition, separate mortality tables will be used for standard and non-tobacco. For policies issued in Texas, guaranteed cost of insurance rates for standard-simplified issues ("special class-simplified" in Texas) are based on 130% of the 1980 Commissioners Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO). The rates for policies issued on a simplified or preferred basis will not exceed the rates in the appropriate table. The cost of insurance rate per $1,000 of net amount at risk is less for policies issued on a preferred basis as compared to a simplified basis. 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. Nationwide may also issue certain policies on a "simplified issue" basis to certain categories of individuals. Due to the underwriting criteria established for policies issued on a simplified issue basis, actual rates for healthy individuals will be higher than the current cost of insurance rates being charged under otherwise identical policies that are issued on a preferred basis. MONTHLY ADMINISTRATIVE CHARGE Nationwide deducts an administrative expense charge proportionately from the cash value in each sub-account and the fixed account on a monthly basis. This charge reimburses Nationwide for certain actual administrative expenses. Nationwide does not expect to recover any amount in excess of aggregate maintenance expenses from this charge. Currently, this charge is $5 per month. Nationwide may, at its sole discretion, increase this charge. However, Nationwide guarantees that this charge will never exceed $7.50 per month. 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 assumed 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 mortality and expense risk charge from the variable account on a daily basis. Mortality and expense risk deductions will be charged proportionally to the cash value in each sub-account. The mortality and expense risk charge compensates Nationwide for assuming risks associated with mortality and administrative costs. The charge is equivalent to an annualized rate of 0.80% of the daily net assets of the variable account. These charges are all guaranteed. Nationwide may realize a profit from these charges. Unrecovered expenses are borne by Nationwide's general assets, which may include profits, if any, from mortality and expense risk charges. Policy owners receive quarterly and annual statement advising policy owners of the cancellation of accumulation units for mortality and expense risk charges. 12 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. 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 may be required by state law to reserve the right to postpone payment of assets in the fixed account for a 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 5 years, 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) the maximum partial surrender in any policy year is limited to 10% of the total premium payments; and (3) after the partial surrender, the policy continues to qualify as life insurance. When a partial surrender is made, the cash value is 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, unless the death benefit is based on the applicable percentage of cash value. In such a case, a partial surrender will decrease the specified amount by the amount by which the partial surrender exceeds the difference between the death benefit and specified amount. Partial surrender amounts must be first deducted from the values in the sub-accounts. Partial surrenders will be deducted from the fixed account only to the extent that insufficient values are available in the sub-accounts. Surrender charges will be waived for any partial surrenders which satisfy the above conditions. Certain partial surrenders may result in currently taxable income and tax penalties (see "Tax Matters"). 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 advisor. In certain employer-sponsored life insurance arrangements, including equity split dollar arrangements, participants may be required to report for income tax purposes, one or more of the following: (1) the value each year of the life insurance protection provided; (2) an amount equal to any employer-paid premiums; or (3) some or all of the amount by which the current value exceeds the employer's interest in the policy. Participants should consult with the sponsor or the administrator of the plan, and/or with their personal tax or legal advisor, to determine the tax consequences, if any, of their employer-sponsored life insurance arrangements. VARIATION IN CASH VALUE On any date during the policy year, the cash value equals the cash value on the preceding valuation period, plus any net premiums applied since the previous valuation period, minus any partial surrenders, plus or minus any investment results, and less 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 13 account and policy loan account depending on the allocation of cash value by the policy owner. 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 is other than the insured, names no contingent policy owner, and dies before the insured, the policy owner's rights in this policy 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. Specified Amount Increases After the fifth policy year, the policy owner may request an increase to the specified amount. Any increase will be subject to the following conditions: (1) the request must be made in writing; (2) satisfactory evidence of insurability must be provided; (3) the increase must be for a minimum of $10,000; (4) the cash surrender value is sufficient to keep the policy in force for at least 3 months; and (5) age limits are the same as for a new issue. Any approved increase will have an effective date of the monthly anniversary date on or next following the date Nationwide approves the supplemental application. Nationwide reserves the right to limit the number of specified amount increases to one each policy year. Specified Amount Decreases After the fifth policy year, the policy owner may also request a decrease to the specified amount. Any approved decrease will be effective on the monthly anniversary date on or next following the date Nationwide receives the request. Any such 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 reserves the right to limit the number of specified amount decreases to one each policy year. Nationwide will refuse a request for a decrease which would: (1) reduce the specified amount to less than $10,000; or (2) disqualify the policy as a contract for life insurance. Changes in the death benefit option may have an effect on the specified amount. 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. 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 a sub-account on the application are allocated to the GVIT Gartmore GVIT Money Market Fund: Class I during the period a policy owner 14 may cancel the policy, unless specific states require premiums to be allocated to the fixed account. At the expiration of the 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: (a) is the sum of: (1) the net asset value per share 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 income distributions made by the underlying mutual fund (if the date of the dividend 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; and (c) is a factor representing the daily mortality and expense risk charge. Based on the change in the net investment factor, the value of an accumulation unit may increase or decrease. It should be noted that changes 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. 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. The number of accumulation units will not change as a result of investment experience. 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. Nationwide will determine the value of the assets in a variable account at the end of each valuation period. The cash value will be determined at least monthly. 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 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 the amount transferred from the fixed account each policy year (subject to state restrictions). Policy owners who have entered into Dollar Cost Averaging agreements with Nationwide may transfer under the terms of that agreement; 15 - Nationwide reserves the right to restrict the amount transferred to the fixed account to 25% of the cash value; - Transfers from the fixed account must be made within 30 days after the end of an interest rate guarantee period; and - transfers among the sub-accounts are limited to once per valuation period. 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 received are genuine and will not be liable for following telephone instructions that it reasonably determined to be genuine. Nationwide may withdraw the telephone and/or internet exchange privilege upon 30 days written notice to contract owners. Market-Timing Firms Nationwide reserves the right to refuse or limit transfer requests (or take any other action it deems necessary) in order to protect policy owners and beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices that are employed by some policy owners (or third parties acting on their behalf). If Nationwide determines that a policy owner (or a third party acting on the policy owner's behalf) is engaging in harmful short-term trading, Nationwide reserves the right to take actions to protect investors, including exercising its right to terminate the ability of specified policy owners to submit transfer requests via telephone, facsimile, or over the internet. If Nationwide exercises this right, affected policy owners would be limited to submitting transfer requests via U.S. mail. Any action taken by Nationwide pursuant to this provision will be preceded by a 30 day written notice to the affected policy owner. 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 seven days after it receives the policy. The refunded policy value will reflect the deduction of any policy charges, unless otherwise required by law. This right varies by state. POLICY LOANS TAKING A POLICY LOAN After the first policy year, the policy owner may take a policy loan using the policy as security. Maximum policy indebtedness is limited to 90% of the cash surrender value in the sub-accounts and 100% of the cash surrender value in the fixed account less interest due on the next policy anniversary. Nationwide will not grant a loan for an amount less than $1,000 ($200 in Connecticut). 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. 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 The loan interest rate is 6.0% per year for all policy loans. On a current basis, the cash value in the policy loan account is credited with an annual effective rate of 4%. The interest rate credited is guaranteed to never be lower than 4.0%. Nationwide may change the current interest crediting rate on the policy loans at any time at its sole discretion. 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 16 anniversary, or at the time of loan repayment. 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 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 months. 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 premium payment, rather than a loan repayment, 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 $1,000 ($50 in Connecticut and New York). 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 the fixed account and/or certain sub-accounts into other sub-accounts. Nationwide does not guarantee that this program will result in profit or protect policy owners from loss. Policy owners participating in Dollar Cost Averaging may direct Nationwide to automatically transfer specified amounts from the fixed account or one of the following underlying mutual fund options: Fidelity VIP-High Income Portfolio: Initial Class, Neuberger Berman AMT Limited Maturity Bond Portfolio, GVIT Gartmore GVIT Government Bond Fund: Class I and the GVIT Gartmore GVIT Money Market Fund: Class I. Transfers from the fixed account must be equal to or less than 1/30th 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 a desired scheduled premium level. The scheduled premium is used to determine the initial specified amount. Under death benefit Option 1, the initial specified amount is determined by treating the scheduled premium as 20% of the Guideline Single Premium. Under death benefit Option 2, the initial specified amount is determined by treating the scheduled premium as the Guideline Level Premium. For either death benefit option, the initial specified amount will be set at a level such that payment of the scheduled premiums will not result in the policy being classified as a modified endowment contract (see "Tax Matters"). 17 The following tables illustrate the initial specified amount that results from a $2,000 scheduled premium payment.
MALE NON-TOBACCO ISSUE AGE OPTION 1 OPTION 2 --------- -------- -------- 30 $85,779 $75,378 35 $68,165 $61,559 40 $54,111 $50,082 45 $43,165 $40,605 50 $34,675 $32,791 55 $28,136 $26,852 60 $23,176 $22,867 65 $19,474 $19,474
FEMALE NON-TOBACCO ISSUE AGE OPTION 1 OPTION 2 --------- -------- -------- 30 $99,541 $93,577 35 $79,212 $76,497 40 $63,070 $62,320 45 $50,599 $50,633 50 $40,824 $40,958 55 $33,171 $32,949 60 $27,141 $26,301 65 $22,369 $22,168
Generally, for a given scheduled premium, the initial specified amount is greater for non-tobacco than standard and females than males. The specified amount is shown in the policy. 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 may 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. 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 in Appendix C. OPTION 2. The death benefit will be the greater of the specified amount plus the cash value, or the applicable percentage of cash value and will vary directly with the investment performance. The term "applicable percentage" means: (1) 250% when the insured is attained age 40 or less at the beginning of a policy year; and (2) when the insured is above attained age 40, the percentage shown in the "Applicable Percentage of Cash Value" table. 18 APPLICABLE PERCENTAGE OF CASH VALUE
Attained Percentage Attained Percentage Attained Percentage Age of Cash Age of Cash Age of Cash Value Value 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% 95 100% 56 146% 76 105% 57 142% 77 105% 58 138% 78 105% 59 134% 79 105% - -----------------------------------------------------------------------
19 CHANGES IN THE DEATH BENEFIT OPTION After the fifth policy year, the policy owner may change the death benefit option under the policy. If the change is from Option 1 to Option 2, the specified amount will be decreased by the amount of the cash value. If the change is from Option 2 to Option 1, the specified amount will be increased by the amount of the cash value. Nationwide reserves the right to require evidence of insurability for either change. The effective date of the change will be the monthly anniversary date on or next following the date Nationwide approves the request for change. Only one change of option is permitted per policy year. A change in death benefit option will not be permitted if it results in the total premiums paid exceeding the then current maximum premium limitations prescribed by the IRS to qualify the policy as a life insurance contract. 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 insured's lifetime 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. ERROR IN AGE OR SEX If the age or sex of the insured has been misstated, the affected benefits will be adjusted. The amount of the death benefit will be (1) multiplied by (2) and then the result added to (3), where: (1) is the amount of the death benefit at the time of the insured's death reduced by the amount of the cash value at the time of the insured's death; (2) is the ratio of the monthly cost of insurance applied in the policy month of death and the monthly cost of insurance that should have been applied at the true age and sex in the policy month of death; and (3) is the cash value at the time of the insured's death. SUICIDE If the 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 the insured dies by suicide, while sane or insane, within 2 years from the date Nationwide accepts an application for an increase in the specified amount, Nationwide will pay no more than the death benefit associated with the initial specified amount, plus the Cost of Insurance Charges associated with the increase in specified amount. MATURITY PROCEEDS The maturity date is the policy anniversary on or next following the insured's 95th 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, within 24 months of the policy date, make an irrevocable election to transfer all sub-account cash value to the fixed account. This election must be in writing and received at Nationwide's home office. This right of conversion may not be available in every state. GRACE PERIOD FIRST FIVE POLICY YEARS This policy will not lapse during the first 5 policy years provided that on each monthly anniversary date (1) is greater than or equal to (2) where: (1) is the sum of all premiums paid to date minus any policy indebtedness; and (2) is the sum of monthly minimum premiums since the policy date including the monthly minimum premium for the current monthly anniversary date. If (1) is less than (2), a grace period of 61 days from the monthly anniversary day will be allowed for the payment of sufficient premium to satisfy the minimum premium requirement. If sufficient premium is not paid by the end of the grace period, the policy will lapse. The policy will be terminated with the return of any available cash surrender value. The cash surrender value will be calculated as of the beginning of the grace period. The policy owner may also elect in writing to have the policy placed on Extended Term Insurance. 20 POLICY YEARS SIX AND AFTER If the cash surrender value on a monthly anniversary date is not sufficient to cover the current monthly deduction for insurance costs, administrative expenses and other benefits, a grace period of 61 days from the monthly anniversary date will be allowed for the payment of sufficient premium to cover the current monthly deduction plus an amount equal to 3 times the current monthly deduction. ALL POLICY YEARS Nationwide will send a notice at the start of the grace period to the policy owner's last known address. If the insured dies during the grace period, Nationwide will pay the death proceeds. 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 owner may reinstate the policy 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; (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 (2) the surrender charge for the policy year in which the policy was reinstated. Unless the policy owner has provided otherwise, all amounts will be allocated based on the underlying mutual fund allocation factors in effect at the start of the grace period. 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. 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 (see "Information about the Policies"). 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 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, disabled, or the distribution is part of a series of substantially equal periodic payments as defined in the Internal Revenue Code. Under certain circumstances, certain distributions made under a policy 21 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 premiums paid and will notify the policy owner when the policy is in jeopardy of becoming a modified endowment contract. If a policy is not a modified endowment contract, a cash distribution during the first 15 years after a policy is issued which causes a reduction in death benefits may still become fully or partially taxable to the policy owner pursuant to Section 7702(f)(7) of the 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 contract, or may become subject to a new 7 year testing period as a result of a material change or a reduction in benefits as defined by Section 7702A(c) of the Internal Revenue Code. In addition to meeting 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. If the failure to diversify is not corrected in this manner, the policy owner will be deemed to be the 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 U.S. Secretary of the Treasury issue additional rules or regulations limiting the number of underlying mutual funds, transfers between underlying mutual funds, exchanges of underlying mutual funds or changes in investment objectives of underlying mutual funds such that the policy would no longer qualify as life insurance under Section 7702 of the 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. WITHHOLDING Distributions of income from a life insurance policy (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 from a contract may be subject to mandatory back-up withholding (which cannot be waived). The mandatory back-up withholding rate is established by Section 3406 of the Internal Revenue Code and is applied against the income that is distributed. The mandatory backup withholding may arise if no taxpayer identification number is provided to Nationwide, or if the IRS notifies Nationwide that back-up withholding is required. ESTATE AND GENERATION-SKIPPING TRANSFER TAXES State and local estate, inheritance, income and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary. The federal estate tax is integrated with the federal gift tax under a unified tax rate schedule. In general, in 2002, an estate of less than $1,000,000 (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 such insured's federal gross estate if: (1) the proceeds were payable to or for the benefit of the insured's estate; or (2) the insured held any "incident of ownership" in the policy at death or at any time within three years of death. An incident of ownership is, in general, any right that may be exercised by the policy owner, such as the right to borrow on the policy, or the right to name a new beneficiary. If the 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. 22 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. Secretary of the Treasury, 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 advisers 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 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 includable 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 if no taxpayer identification number, or an incorrect taxpayer identification number, is provided. 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 23 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 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, you should consult your independent legal, tax and/or financial adviser. 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 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 Insurance Department includes periodic examination to determine Nationwide's contract liabilities and reserves so that the Insurance Department may certify the items are correct. Nationwide's books and accounts are subject to review by the 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 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., Nationwide Life Insurance Company and Nationwide 24 Life and Annuity Insurance Company). On May 3, 1999, the complaint was amended to, among other things, add Marcus Shore as a second plaintiff. The amended complaint is brought as a class action on behalf of all persons who purchased individual deferred annuity contracts or participated in group annuity contracts sold by Nationwide and the other named Nationwide affiliates which were used to fund certain tax-deferred retirement plans. The amended complaint seeks unspecified compensatory and punitive damages. On June 11, 1999, Nationwide and the other named defendants filed a motion to dismiss the amended complaint. On March 8, 2000, the court denied the motion to dismiss the amended complaint filed by Nationwide and the other named defendants. On January 25, 2002, the plaintiffs filed a motion for leave to amend their complaint to add three new named plaintiffs. On February 9, 2002, the plaintiffs filed a motion for class certification. The class has not been certified. Nationwide intends to defend this lawsuit vigorously. On August 15, 2001, Nationwide was named in a lawsuit filed in Connecticut federal court titled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. On September 5, 2001, the plaintiffs amended their complaint to include class action allegations. The plaintiffs seek to represent a class of plan trustees who purchased variable annuities to fund qualified ERISA retirement plans. The amended complaint alleges that the retirement plans purchased variable annuity contracts from Nationwide which invested in mutual funds that were offered by separate mutual fund companies; that Nationwide was a fiduciary under ERISA and that Nationwide breached its fiduciary duty when it accepted certain fees from the mutual fund companies that purportedly were never disclosed by Nationwide; and that Nationwide violated ERISA by replacing many of the mutual funds originally included in the plaintiffs' annuities with "inferior" funds because the new funds purportedly paid more in revenue sharing. The amended complaint seeks disgourgement of fees by Nationwide and other unspecified compensatory damages. On November 15, 2001, Nationwide filed a motion to dismiss the amended complaint, which has not been decided. On December 3, 2001, the plaintiffs filed a motion for class certification. On January 15, 2002, the plaintiffs filed a response to Nationwide's motion to dismiss the amended complaint. On February 22, 2002, Nationwide filed a reply in support of its motion to dismiss. The class has not been certified. Nationwide intends to defend this lawsuit vigorously. There can be no assurance that any such litigation 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. INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The financial statements of Nationwide VLI Separate Account-2 and Nationwide Life Insurance Company for the periods indicated have been included herein in reliance upon the reports of KPMG LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. REGISTRATION STATEMENT Nationwide has filed a registration statement with the SEC under the Securities Act of 1933, as amended, for the policies discussed in this prospectus. However, the prospectus does not contain all the information included in the registration statement. The registration statement may also contain amendments and exhibits that are not included in the prospectus. The prospectus is meant to be a summary and explanation of the policy, which is the legal binding instrument for the policies. Please refer to the policy for additional information. 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 VLI Separate Account-2; - Nationwide VLI Separate Account-3; - Nationwide VLI Separate Account-4; - Nationwide VLI Separate Account-5; - Nationwide Multi-Flex Variable Account; - Nationwide Variable Account; - Nationwide Variable Account-II; - Nationwide Variable Account-4; - Nationwide Variable Account-5; 25 - Nationwide Variable Account-6; - Nationwide Variable Account-7; - 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-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 are not more than 26% of the scheduled premium plus 5% of any excess premium payments. Gross renewal commissions paid by Nationwide will not exceed 5% of actual premium payments. No underwriting commissions have been paid by Nationwide to NISC. NATIONWIDE INVESTMENT SERVICES CORPORATION DIRECTORS AND OFFICERS The following is a list of Directors and Officers of NISC. Joseph J. Gasper, Director and Chairman of the Board Richard A. Karas, Director and Vice Chairman Mark A. Thresher, Director and Senior Vice President and Treasurer Duane C. Meek, President Robert A. Oakley, Executive Vice President-Chief Financial Officer Robert J. Woodward, Jr., Executive Vice President-Chief Investment Officer Barbara J. Shane, Vice President-Compliance Officer Alan A. Todryk, Vice President-Taxation Carol L. Dove, Associate Vice President-Treasury Services and Assistant Treasurer Glenn W. Soden, Associate Vice President and Secretary John F. Delaloye, Assistant Secretary E. Gary Berndt, Assistant Treasurer Terry C. Smetzer, Assistant Treasurer The business address of the Directors and Officers listed above is One Nationwide Plaza, Columbus, Ohio 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 Variable Account-7; - Nationwide Variable Account-8; - Nationwide Variable Account-9; - Nationwide Variable Account-10; - Nationwide Variable Account-11; - 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, 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. 26 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. The business address of the directors and officers listed below is One Nationwide Plaza, Columbus, Ohio 43215. W. G. JURGENSEN has been Chief Executive Officer of Nationwide since August 2000, Chief Executive Officer-Elect from May to August 2000 and a Director of Nationwide since May 2000. Previously, he was Executive Vice President of Bank One Corporation from 1998 to 2000. Mr. Jurgensen was Executive Vice President of First Chicago NBD Corporation and Chairman of FCC National Bank from 1996 to 1998. Mr. Jurgensen has been with Nationwide for 2 years. JOSEPH J. GASPER has been President and Chief Operating Officer and a Director of Nationwide since April 1996. Previously, he was Executive Vice President-Property and Casualty Operations of Nationwide from April 1995 to April 1996. He was Senior Vice President-Property and Casualty Operations of Nationwide from September 1993 to April 1995. Prior to that time, Mr. Gasper held various management positions with the Nationwide companies. Mr. Gasper has been with Nationwide for 35 years. GALEN R. BARNES has been a Director of Nationwide since May 2001. He served as President of Nationwide Insurance Enterprise from April 1996 to April 1999. He was Director and Vice Chairman of the Wausau Insurance Companies, a Nationwide affiliate, from September 1996 to December 1998; and Director, President and Chief Operating Officer from May 1993 to September 1996. Mr. Barnes was Senior Vice President of Nationwide from May 1993 to April 1996. Prior to that time, Mr. Barnes held several positions within Nationwide. Mr. Barnes has been with Nationwide for 25 years. RICHARD D. HEADLEY has been Executive Vice President of Nationwide since July 2000. Previously, he was Executive Vice President-Chief Information Technology Officer of Nationwide from August 1999 to August 2000, and Senior Vice President-Chief Information Technology Officer of Nationwide from October 1997 to May 1999. Prior to that time, Mr. Headley was Chairman and Chief Executive Officer of Banc One Services Corporation from 1992 to October 1997. Mr. Headley has been with Nationwide for 4 years. MICHAEL S. HELFER has been Executive Vice President-Corporate Strategy of Nationwide since August 2000. He has been a Director of Nationwide since May 2001. Prior to that time, Mr. Helfer was a partner with Wilmer, Cutler and Pickering from 1978 to October 2000. Mr. Helfer has been with Nationwide for 2 years. DONNA A. JAMES has been Executive Vice President-Chief Administrative Officer of Nationwide since July 2000 and a Director of Nationwide since May 2001. Ms. James was Senior Vice President-Chief Human Resources Officer from May 1999 to July 2000 and Senior Vice President-Human Resources of Nationwide from December 1997 to May 1999. Previously, she was Vice President-Human Resources of Nationwide from July 1996 to December 1997. Previously, Ms. James was Vice President-Assistant to the CEO of Nationwide from March 1996 to July 1996 and Associate Vice President-Assistant to the CEO from May 1994 to March 1996. Prior to that time, Ms. James held several positions within Nationwide. Ms. James has been with Nationwide for 20 years. MICHAEL C. KELLER has been Executive Vice President-Chief Information Officer of Nationwide since June 2001. Prior to that time, Mr. Keller was Senior Vice President of Bank One from January 1998 to June 2001, and held various management positions with IBM from July 1982 to December 1997. Mr. Keller has been with Nationwide for 1 year. ROBERT A. OAKLEY has been Executive Vice President-Chief Financial Officer of Nationwide since April 1995 and a Director of Nationwide since May 2001. Previously, he was Senior Vice President-Chief Financial Officer of Nationwide from October 1993 to April 1995. Prior to that time, Mr. Oakley held several positions within Nationwide. Mr. Oakley has been with Nationwide for 26 years. ROBERT J. WOODWARD, JR. has been Executive Vice President-Chief Investment Officer of Nationwide since August 1995 and a Director of Nationwide since May 2001. Previously, he was Senior Vice President-Fixed Income Investments of Nationwide from March 1991 to August 1995. Prior to that time, Mr. Woodward held several positions within Nationwide. Mr. Woodward has been with Nationwide for 37 years. 27 JOHN R. COOK, JR. has been Senior Vice President-Chief Communications Officer of Nationwide 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 5 years. DAVID A. DIAMOND has been Senior Vice President-Corporate Strategy since December 2000. Previously, he was Senior Vice President-Corporate Controller of Nationwide from August 1999 to December 2000. He was Vice President-Controller of Nationwide from October 1993 to August 1996. Prior to that time, Mr. Diamond held several positions within Nationwide. Mr. Diamond has been with Nationwide for 13 years. PHILIP C. GATH has been Senior Vice President-Chief Actuary-Nationwide Financial since May 1998. Previously, Mr. Gath was Vice President-Product Manager-Individual Variable Annuity from July 1997 to May 1998, and 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 33 years. PATRICIA R. HATLER has been Senior Vice President, General Counsel and Secretary of Nationwide since April 2000, and 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. Ms. Hatler has been with Nationwide for 3 years. DAVID K. HOLLINGSWORTH has been Senior Vice President-President Nationwide Insurance Sales since August 2001. Mr. Hollingsworth has been with Nationwide for 12 years. DAVID R. JAHN has been Senior Vice President-Product Management since November 2000. Mr. Jahn has been with Nationwide for 30 years. RICHARD A. KARAS has been Senior Vice President-Sales-Financial Services of Nationwide since March 1993. Previously, he was Vice President-Sales-Financial Services of Nationwide from February 1989 to March 1993. Prior to that time, Mr. Karas held several positions within Nationwide. Mr. Karas has been with Nationwide for 37 years. GREGORY S. LASHUTKA has been Senior Vice President-Corporate Relations of Nationwide since January 2000. Prior to that time, he was Mayor of the City of Columbus (Ohio) from January 1992 to December 1999. Mr. Lashutka has been with Nationwide for 2 years. EDWIN P. MCCAUSLAND, JR. has been Senior Vice President-Fixed Income Securities since April 1998. Prior to joining Nationwide, he was Vice President-Managing Director of Massachusetts Life Insurance Company. Mr. McCausland has been with Nationwide for 5 years. ROBERT H. MCNAGHTEN has been Senior Vice President-Real Estate Investments since November 2001. Prior to joining Nationwide in 1987 he was Executive Vice President with Buckeye Federal Savings & Loan. Mr. McNaghten has been with Nationwide for 15 years. MICHAEL D. MILLER has been Senior Vice President-NI Finance since May 2001. Prior to joining Nationwide in 1985 he was P/C Accounting Manager with Celina Group. Mr. Miller has been with Nationwide for 17 years. BRIAN W. NOCCO has been Senior Vice President and Treasurer of Nationwide since April 2001. Prior to that time, he was Executive Vice President of Imperial Bank and subsidiaries from May 1998 to June 2001. He was Senior Vice President-Chief Compliance Officer with The Chubb Corporation from 1994 to 1998 and Treasurer and Vice President-Finance of Continental Bank Corporation from 1986 to 1994. From 1974 to 1986 he held management positions in several companies. Mr. Nocco has been with Nationwide for 1 year. MARK D. PHELAN has been Senior Vice President-Technology and Operations of Nationwide since December 2000. Prior to that time, he was Executive Vice President of Check Free Corporation from October 1992 to November 1997, Sales Vice President of AT&T Corporation from February 1982 to November 1992, and Operations Manager with IBM Corporation from April 1977 to February 1982. Mr. Phelan has been with Nationwide for 2 years. DOUGLAS C. ROBINETTE has been Senior Vice President-Claims since November 2000. Prior to joining Nationwide, he was a CPA with KPMG LLP. Mr. Robinette has been with Nationwide for 15 years. JOHN S. SKUBIK has been Senior Vice President-Strategic Initiatives since November 2001. Prior to joining Nationwide in 2001, Mr. Skubik was an Executive Vice President with Bank One. MARK R. THRESHER has been Senior Vice President-Finance-Nationwide Financial since May 1999. Previously, he was Vice President-Controller of Nationwide from August 1996 to May 1999. He was Vice President and Treasurer of Nationwide from June 1996 to August 1996. Prior to that time, Mr. Thresher served as a partner with KPMG LLP from July 1988 to May 1996. Mr. Thresher has been with Nationwide for 6 years. RICHARD M. WAGGONER has been Senior Vice President-Operations since August 1999. Mr. Waggoner has been with Nationwide for 18 years. 28 SUSAN A. WOLKEN has been Senior Vice President-Product Management and Nationwide Financial Marketing since May 1999. Previously, she was Senior Vice President-Life Company Operations of Nationwide from June 1997 to May 1999. She was Senior Vice President-Enterprise Administration of Nationwide from July 1996 to June 1997. Prior to that time, she was Senior Vice President-Human Resources of Nationwide from April 1995 to July 1996, Vice President-Human Resources of Nationwide from September 1993 to April 1995, and Vice President-Individual Life and Health Operations from September 1993 to April 1995. Ms. Wolken has been with Nationwide for 27 years. 29 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. A member of the American Century(SM) Family of Investments, the Fund is managed by American Century Investment Management, Inc. AMERICAN CENTURY VP BALANCED FUND: CLASS I 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 the remainder in fixed income securities. AMERICAN CENTURY VP INCOME & GROWTH FUND: CLASS I Investment Objective: Capital growth. The Fund seeks to achieve its investment objective by investing in common stocks. Income is a secondary objective. 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. 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 ULTRA FUND: CLASS I Investment Objective: Capital growth by investing in common stocks of growing companies. The basis of the strategy used by the Fund is that, over the long term, stocks of companies with earnings and revenue growth have a greater than average chance to increase in value over time. This strategy looks for stocks of large companies with earnings and revenues that are not only growing, but growing at a successively faster or accelerating pace. Although most of the Fund's assets will be invested in U.S. companies, there is no limit on the amount of assets the Fund can invest in foreign companies. Most of the Fund's foreign investments are in companies located and doing business in developed countries. 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. SMALL CAP STOCK INDEX PORTFOLIO: SERVICE SHARES Investment Objective: Seeks to match the performance of the Standard & Poor's SmallCap 600 Index. To pursue this goal, the Portfolio invests in a representative sample of stocks included in the S&P SmallCap 600 Index, and in futures whose performance is related to the Index, rather than attempt to replicate the Index. The Portfolio attempts to have a correlation between its performance and that of the Index of at least .95, before expenses. The Portfolio's investments are selected by a "sampling" process based on market capitalization, industry representation and other means. By using this sampling process, the Portfolio typically will not invest in all 600 stocks in the S&P SmallCap 600 Index. FEDERATED INSURANCE SERIES Federated Insurance Series (the "Trust"), an open-end management investment company, was established as a Massachusetts business trust, under a Declaration of Trust dated September 15, 1993. The Trust offers its shares only as investment vehicles for variable annuity and variable life insurance products of insurance companies. Federated Investment Management Company serves as the investment adviser. FEDERATED QUALITY BOND FUND II: PRIMARY SHARES Investment Objective: Current income by investing in investment grade fixed income securities. FIDELITY VARIABLE INSURANCE PRODUCTS FUND The Fidelity Variable Insurance Products Fund ("VIP") is an open-end, diversified, management investment company organized as a Massachusetts business trust on November 13, 1981. Shares of VIP are purchased by insurance companies to fund benefits under variable life insurance policies and variable annuity contracts. 30 Fidelity Management & Research Company ("FMR") is the manager for VIP and its portfolios. VIP EQUITY-INCOME PORTFOLIO: INITIAL CLASS Investment Objective: Reasonable income. Also considers the potential for capital appreciation. Seeks to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor's 500 Composite Stock Price Index. Normally invests at least 65% of total assets in income-producing equity securities, which tends to lead to investments in large cap "value" stocks. VIP GROWTH PORTFOLIO: INITIAL CLASS Investment Objective: Capital appreciation. Normally invests primarily in common stocks of companies the investment adviser believes have above-average growth potential (often called "growth" stocks). VIP HIGH INCOME PORTFOLIO: INITIAL CLASS Investment Objective: A high level of current income while also considering growth of capital. Normally invests at least 65% of total assets in income-producing debt securities, preferred stocks and convertible securities, with an emphasis on lower-quality debt securities. VIP OVERSEAS PORTFOLIO: INITIAL CLASS Investment Objective: Long-term capital growth. Normally invests at least 65% of total assets in foreign securities, primarily in common stocks. FIDELITY VARIABLE INSURANCE PRODUCTS FUND II The 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 life insurance policies and variable annuity contracts. FMR is the manager of VIP II and its portfolios. VIP II ASSET MANAGER PORTFOLIO: INITIAL CLASS Investment Objective: High total return with reduced risk over the long term by allocating its assets among stocks, bonds and short-term instruments. Assets are allocated among stocks, bonds, and short-term money market instruments, maintaining a neutral mix over time of 50% of assets in stock, 40% of assets in bonds, and 10% of assets in short-term and money market instruments. 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 policies and variable annuity contracts. FMR is the manager of VIP III and it's portfolios. VIP III VALUE STRATEGIES PORTFOLIO: SERVICE CLASS Investment Objective: Capital appreciation. The Portfolio pursues its objective by investing primarily in common stocks. GARTMORE VARIABLE INSURANCE TRUST Gartmore Variable Insurance Trust (formerly, Nationwide Separate Account Trust) ("GVIT") is an open-end management investment company created under the laws of Massachusetts. GVIT offers shares in the mutual funds listed below, each with its own investment objectives. Shares of GVIT 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. Gartmore Global Asset Management Trust, an indirect subsidiary of Nationwide Mutual Insurance Company, manages the assets of the Gartmore GVIT Emerging Markets Fund and Gartmore GVIT International Growth Fund. The remaining assets of GVIT are managed by Gartmore Mutual Fund Capital Trust ("GMF"), an indirect subsidiary of Nationwide Financial Services, Inc. GARTMORE GVIT EMERGING MARKETS FUND: CLASS I Subadviser: Gartmore Global Partners Investment Objective: Long term capital growth. Under normal conditions, the Fund invests at least 80% of its net assets in equity securities of companies located in emerging market or developing countries or that derive a significant portion of their earnings or revenue from emerging market countries. GARTMORE GVIT GLOBAL FINANCIAL SERVICES FUND: CLASS I Subadviser: Gartmore Global Partners Investment Objective: Long-term capital growth. To achieve its objective, the Fund normally invests at least 80% of its net assets in equity securities issued by U.S. and foreign companies with business operations in the financial services sector. These companies will be economically tied to a number of countries throughout the world, including the United States. GARTMORE GVIT GLOBAL HEALTH SCIENCES FUND: CLASS I Investment Objective: Long-term capital appreciation. To achieve its objective, the Fund normally invests at least 80% of its assets in equity securities issued by U.S. and foreign companies engaged in the development, production, or distribution of products and services that have a health sciences orientation (those that focus on 31 maintaining or improving one's quality of life). These companies will be economically tied to a number of countries throughout the world, including the United States. GARTMORE GVIT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND: CLASS I Investment Objective: Long term capital appreciation by investing under normal conditions at least 80% of its net assets in equity securities issued by companies with business operations in technology and communications and/or technology and communication related industries. These companies will be tied economically to a number of countries throughout the world, including the United States. GARTMORE GVIT GLOBAL UTILITIES FUND: CLASS I Subadviser: Gartmore Global Partners Investment Objective: Long-term capital growth. To achieve its objective, the Fund normally invests at least 80% of its net assets in equity securities issued by U.S. and foreign companies with business operations in the utilities sector. These companies will be economically tied to a number of countries throughout the world, including the United States. GARTMORE GVIT GOVERNMENT BOND FUND: CLASS I Investment Objective: Seeks as high a level of income as is consistent with the preservation of capital. Under normal conditions, the Fund invests at least 80% of its net assets in U.S. government and agency bonds, bills and notes. The duration of the Fund will typically be four to six years. GARTMORE GVIT GROWTH FUND: CLASS I Investment Objective: Long-term capital appreciation. The Fund invests primarily in large capitalization companies. The Fund looks for companies whose earnings are expected to grow faster than other companies in the market. GARTMORE GVIT INTERNATIONAL GROWTH FUND: CLASS I 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. GARTMORE GVIT INVESTOR DESTINATIONS FUNDS GARTMORE GVIT INVESTOR DESTINATIONS CONSERVATIVE FUND Investment Objective: To maximize total investment return by seeking income and, secondarily, long term growth of capital. The Fund invests in a target allocation mix of 10% large cap U.S. stocks, 5% mid cap U.S. stocks, 5% international stocks, 35% bonds, and 45% short-term investments. GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND Investment Objective: To maximize total investment return by seeking income and, secondarily, growth of capital. The Fund invests in a target allocation mix of 20% large cap U.S. stocks, 10% mid cap U.S. stocks, 10% international stocks, 35% bonds, and 25% short-term investments. GARTMORE GVIT INVESTOR DESTINATIONS MODERATE FUND Investment Objective: To maximize total investment return by seeking growth of capital and income. The Fund invests in a target allocation mix of 30% large cap U.S. stocks, 10% mid cap U.S. stocks, 5% small cap U.S. stocks, 15% international stocks, 25% bonds, and 15% short-term investments. GARTMORE GVIT INVESTOR DESTINATIONS MODERATELY AGGRESSIVE FUND Investment Objective: To maximize total investment return primarily by seeking growth of capital, but also income. The Fund invests in a target allocation mix of 35% large cap U.S. stocks, 15% mid cap U.S. stocks, 5% small cap U.S. stocks, 25% international stocks, 15% bonds, and 5% short-term investments. GARTMORE GVIT INVESTOR DESTINATIONS AGGRESSIVE FUND Investment Objective: To maximize total investment return primarily by seeking growth of capital. The Fund invests in a target allocation mix of 40% large cap U.S. stocks, 15% mid cap U.S. stocks, 10% small cap U.S. stocks, 30% international funds, and 5% bonds. GARTMORE GVIT MONEY MARKET FUND: CLASS I Investment Objective: As high a level of current income as is consistent with the preservation of capital and maintenance of liquidity. The Fund invests in high-quality money market obligations maturing in 397 days or less. GARTMORE GVIT NATIONWIDE LEADERS FUND: CLASS I Investment Objective: High total return from a concentrated portfolio of U.S. securities. To achieve its objective, the Fund typically invests at least 80% of its net assets in equity securities, primarily in common stocks and convertible securities of U.S. leaders. A U.S. leader is a company with a strong and improving franchise that is well positioned to 32 take advantage of opportunities in the marketplace. The Fund typically invests in a core group of 20 to 30 common stocks of large capitalization companies. GARTMORE GVIT TOTAL RETURN FUND: CLASS I Investment Objective: Seeks total return through a flexible combination of capital appreciation and current income. The Fund invests primarily in common stocks and convertible securities. GARTMORE GVIT U.S. GROWTH LEADERS FUND: CLASS I Investment Objective: Long-term capital growth. To achieve its objective, the Fund normally invests at least 80% of its net assets in equity securities of U.S. growth leaders. The Fund will invest in companies whose earnings are expected to grow faster than other companies in the market. The Fund typically invests in a core group of 20 to 30 common stocks of large capitalization companies. GVIT SMALL CAP VALUE FUND: CLASS I Subadviser: The Dreyfus Corporation Investment Objective: Capital appreciation. Under normal conditions, the Fund invests at least 80% of its net assets in equity securities of small capitalization companies. These are companies whose equity market capitalizations at the time of investment are similar to the market capitalizations of companies in the Russell 2000 Index. The Fund will invest in stocks of U.S. and foreign companies which the portfolio managers believe qualify as "value" companies. TURNER GVIT GROWTH FOCUS FUND: CLASS I (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER JANUARY 25, 2002) 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 15 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. 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. OPPENHEIMER VARIABLE ACCOUNT FUNDS The Oppenheimer Variable Account Funds is an open-ended, 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 Funds' investment advisor. OPPENHEIMER BOND FUND/VA: INITIAL CLASS Investment Objective: 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 MULTIPLE STRATEGIES FUND/VA: INITIAL CLASS Investment Objective: Total investment return (which includes current income and capital appreciation in the value of its shares) from investments in common stocks and other equity 33 securities, bonds and other debt securities, and "money market" securities. STRONG OPPORTUNITY 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 advisor for the Fund. Investment Objective: Capital appreciation through investments in a diversified portfolio of equity securities. 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 Van Eck Trust are offered only to separate accounts of various insurance companies to fund the benefits of life insurance policies and variable annuity contracts. The investment advisor and manager is Van Eck Associates Corporation. WORLDWIDE BOND FUND (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2002) Investment Objective: High total return through a flexible policy of investing globally, primarily in debt securities. WORLDWIDE HARD ASSETS FUND (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER MAY 1, 2002) Investment Description: Long-term capital appreciation by investing, 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. 34 APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES EXAMPLE 1: A female non-tobacco, age 45, purchases a policy with a scheduled premium of $2,000 yielding a specified amount of $50,599. She now wishes to surrender the policy during the first policy year. By using the initial surrender charge table reproduced below (also see "Surrender Charges"), the total surrender charge per thousand multiplied by the specified amount expressed in thousands equals the total surrender charge of $514.09 ($10.160 x 50.599 = $514.09). EXAMPLE 2: A male non-tobacco, age 35, purchases a policy with a scheduled premium of $2,000 yielding a specified amount of $68,165. He now wants to surrender the policy in the sixth policy year. The total initial surrender value is calculated using the method illustrated above. (Specified amount in thousands is $68.165 x 7.260 = $494.88 total first year surrender charge.) Because the fifth policy year has been completed, the total initial surrender charge is reduced by multiplying it by the applicable percentage factor from the "Reductions to Surrender Charges" table below (also see "Reductions to Surrender Charges"). In this case, $494.88 x 85% = $420.65, which is the amount Nationwide deducts as a total surrender charge. Initial surrender charge per $1,000 of initial specified amount for policies which are issued on a standard basis.
ISSUE MALE FEMALE MALE FEMALE AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD --- ----------- ----------- -------- -------- 25 $ 5.878 $ 5.537 $ 6.680 $ 5.945 35 7.260 6.712 8.559 7.373 45 11.159 10.160 13.244 11.151 55 15.275 13.375 18.373 14.686 65 23.821 20.553 27.943 22.165
Reductions to surrender charges.
SURRENDER CHARGE SURRENDER CHARGE COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES ------------ ----------------- ------------ ----------------- 0 100% 5 85% 1 100% 6 80% 2 100% 7 75% 3 95% 8 50% 4 90% 9+ 0%
35 The current surrender charges are the same for all states. However, in Pennsylvania the guaranteed maximum surrender charges are 8% higher than those shown. In addition, the guaranteed maximum surrender charge in subsequent years in Pennsylvania are reduced in the following manner:
SURRENDER SURRENDER SURRENDER CHARGE CHARGE CHARGE AS A % OF AS A % OF AS A % OF COMPLETED INITIAL COMPLETED INITIAL COMPLETED INITIAL POLICY SURRENDER POLICY SURRENDER POLICY SURRENDER YEARS CHARGES YEARS CHARGES YEARS CHARGES ----- ------- ----- ------- ----- ------- 0 100% 5 83% 10 46% 1 98% 6 75% 11 37% 2 95% 7 70% 12 28% 3 92% 8 65% 13 14% 4 88% 9 55% 14+ 0%
The illustrations of current values are the same for Pennsylvania. However, the guaranteed maximum surrender charges are slightly higher in Pennsylvania. If this policy is issued in Pennsylvania, please contact Nationwide's home office for an illustration. Nationwide has no plans to change the current surrender charges. 36 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, 2001, and the related statements of operations and changes in contract owners' equity, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2001, 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, 2001, and the results of its operations, changes in contract owners' equity, and financial highlights for each of the periods indicated herein, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Columbus, Ohio February 20, 2002 NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY DECEMBER 31, 2001 ASSETS: Investments at fair value: American Century VP - American Century VP Balanced (ACVPBal) 781,490 shares (cost $5,821,077) .................................................. $ 5,150,017 American Century VP - American Century VP Capital Appreciation (ACVPCapAp) 2,173,271 shares (cost $24,043,046) ............................................... 16,299,534 American Century VP - American Century VP Income & Growth (ACVPIncGr) 662,065 shares (cost $4,752,168) .................................................. 4,276,937 American Century VP - American Century VP International (ACVPInt) 2,220,164 shares (cost $18,974,637) ............................................... 14,630,883 American Century VP - American Century VP Value (ACVPValue) 1,653,746 shares (cost $11,583,135) ............................................... 12,303,870 Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSWPGPV) 177,315 shares (cost $2,145,061) .................................................. 1,723,501 Credit Suisse Trust - International Equity Portfolio (CSWPIntEq) 811,829 shares (cost $6,619,592) .................................................. 6,770,656 Credit Suisse Trust - Small Cap Growth Portfolio (CSWPSmCo) 1,301,131 shares (cost $21,273,729) ............................................... 18,228,846 Dreyfus IP - European Equity Portfolio (DryEuroEq) 7,666 shares (cost $81,306) ....................................................... 81,944 The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro) 510,423 shares (cost $18,276,231) ................................................. 13,612,983 Dreyfus Stock Index Fund (DryStkIx) 3,025,332 shares (cost $97,823,554) ............................................... 88,823,754 Dreyfus VIF - Appreciation Portfolio (DryAp) 192,936 shares (cost $7,293,541) .................................................. 6,748,906 Dreyfus VIF - Growth and Income Portfolio (DryGrInc) 133,404 shares (cost $3,193,858) .................................................. 2,888,194 Fidelity(R) VIP - Equity-Income Portfolio: Initial Class (FidVIPEI) 3,385,841 shares (cost $81,987,638) ............................................... 77,027,880 Fidelity(R) VIP - Growth Portfolio: Initial Class (FidVIPGr) 3,551,766 shares (cost $159,626,892) .............................................. 119,374,842 Fidelity(R) VIP - High Income Portfolio: Initial Class (FidVIPHI) 2,596,303 shares (cost $22,319,658) ............................................... 16,642,300 Fidelity(R) VIP - Overseas Portfolio: Initial Class (FidVIPOv) 1,245,436 shares (cost $25,570,260) ............................................... 17,286,658 Fidelity(R) VIP II - Asset Manager Portfolio: Initial Class (FidVIPAM) 1,834,323 shares (cost $29,818,675) ............................................... 26,616,026
Fidelity(R) VIP II - Contrafund Portfolio: Initial Class (FidVIPCon) 2,612,730 shares (cost $63,463,282) ............................................... 52,594,255 Fidelity(R) VIP III - Growth Opportunities Portfolio: Initial Class (FidVIPGrOp) 272,910 shares (cost $5,244,133) .................................................. 4,129,133 Janus AS - Capital Appreciation Portfolio - Service Shares (JanCapAp) 127,773 shares (cost $2,893,416) .................................................. 2,628,288 Janus AS - Global Technology Portfolio - Service Shares (JanGlTech) 461,980 shares (cost $1,907,991) .................................................. 1,884,877 Janus AS - International Growth Portfolio - Service Shares (JanIntGro) 83,743 shares (cost $1,859,200) ................................................... 1,951,218 Nationwide(R) SAT - Capital Appreciation Fund Class I (NSATCapAp) 1,770,510 shares (cost $37,635,429) ............................................... 18,678,881 Nationwide(R) SAT - Dreyfus Mid Cap Index Fund Class I (NSATMidCapIx) 253,656 shares (cost $3,293,702) .................................................. 3,340,652 Nationwide(R) SAT - Gartmore Emerging Markets Fund Class I (NSATEmMkt) 60,392 shares (cost $394,939) ..................................................... 427,574 Nationwide(R) SAT - Gartmore Global Technology & Communications Fund Class I (NSATGlobTC) 83,133 shares (cost $367,567) ..................................................... 349,990 Nationwide(R) SAT - Gartmore International Growth Fund Class I (NSATIntGr) 8,999 shares (cost $54,414) ....................................................... 55,252 Nationwide(R) SAT - Government Bond Fund Class I (NSATGvtBd) 1,602,637 shares (cost $18,941,535) ............................................... 18,686,753 Nationwide(R) SAT - MAS Multi Sector Bond Fund Class I (NSATMSecBd) 68,346 shares (cost $625,323) ..................................................... 624,683 Nationwide(R) SAT - Money Market Fund Class I (NSATMyMkt) 51,651,981 shares (cost $51,651,981) .............................................. 51,651,981 Nationwide(R) SAT - Small Cap Growth Fund Class I (NSATSmCapG) 92,044 shares (cost $1,322,196) ................................................... 1,332,790 Nationwide(R) SAT - Small Cap Value Fund Class I (NSATSmCapV) 1,523,366 shares (cost $15,782,867) ............................................... 15,782,072 Nationwide(R) SAT - Small Company Fund Class I (NSATSmCo) 1,373,785 shares (cost $28,912,245) ............................................... 25,607,361 Nationwide(R) SAT - Strong Mid Cap Growth Fund Class I (NSATStMCap) 79,823 shares (cost $915,284) ..................................................... 925,153 Nationwide(R) SAT - Total Return Fund Class I (NSATTotRe) 7,808,043 shares (cost $114,619,147) .............................................. 77,221,541 Nationwide(R) SAT - Turner Growth Focus Fund Class I (NSATGrFoc) 55,997 shares (cost $201,411) ..................................................... 203,829 Neuberger Berman AMT - Balanced Portfolio (NBAMTBal) 1,476 shares (cost $14,135) ....................................................... 14,260 Neuberger Berman AMT - Growth Portfolio (NBAMTGro) 2,059,243 shares (cost $27,220,898) ............................................... 23,722,484 Neuberger Berman AMT - Guardian Portfolio (NBAMTGuard) 176,527 shares (cost $2,801,821) .................................................. 2,584,354
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, CONTINUED Neuberger Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat) 367,681 shares (cost $4,848,302) .................................................. 4,952,667 Neuberger Berman AMT - Partners Portfolio (NBAMTPart) 1,566,122 shares (cost $26,356,552) ............................................... 23,648,440 Oppenheimer Aggressive Growth Fund/VA (OppAggGro) 44,046 shares (cost $1,921,533) ................................................... 1,793,534 Oppenheimer Bond Fund/VA (OppBdFd) 1,168,321 shares (cost $13,301,583) ............................................... 13,096,874 Oppenheimer Capital Appreciation Fund/VA (OppCapAp) 456,413 shares (cost $21,761,302) ................................................. 16,695,583 Oppenheimer Global Securities Fund/VA (OppGlSec) 1,459,363 shares (cost $37,422,502) ............................................... 33,331,862 Oppenheimer Main Street Growth & Income Fund/VA (OppMSGrInc) 45,030 shares (cost $891,831) ..................................................... 855,117 Oppenheimer Multiple Strategies Fund/VA (OppMult) 947,213 shares (cost $15,452,114) ................................................. 14,587,088 Strong Opportunity Fund II, Inc. (StOpp2) 2,217,437 shares (cost $48,190,456) ............................................... 43,129,141 Strong VIF - Strong Discovery Fund II (StDisc2) 666,299 shares (cost $6,698,848) .................................................. 6,876,204 Strong VIF - Strong International Stock Fund II (StIntStk2) 308,039 shares (cost $2,462,548) .................................................. 2,291,811 UIF - Emerging Markets Debt Portfolio (UIFEmMkt) 183,848 shares (cost $1,327,245) .................................................. 1,275,905 UIF - U.S. Real Estate Portfolio (UIFUSRE) 734,078 shares (cost $8,923,116) .................................................. 8,867,664 Van Eck WIT - Worldwide Bond Fund (VEWrldBd) 238,713 shares (cost $2,297,143) .................................................. 2,248,680 Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) 444,033 shares (cost $3,491,190) .................................................. 3,614,431 Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs) 308,515 shares (cost $3,310,810) .................................................. 3,298,022 ------------ Total investments ............................................................... 933,448,135 Accounts receivable ................................................................... -- ------------ Total assets .................................................................... 933,448,135 ACCOUNTS PAYABLE ........................................................................ 43,158 ------------ CONTRACT OWNERS' EQUITY (NOTE 7) ........................................................ $933,404,977 ============
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
TOTAL ----------------------------------------------- 2001 2000 1999 ------------- ------------- ------------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 14,498,694 14,156,269 14,098,293 Mortality and expense risk charges (note 3) .... (7,447,011) (8,863,841) (7,660,149) ------------- ------------- ------------- Net investment income ........................ 7,051,683 5,292,428 6,438,144 ------------- ------------- ------------- Proceeds from mutual funds shares sold ......... 667,653,990 891,657,787 955,670,735 Cost of mutual fund shares sold ................ (763,360,903) (830,522,167) (897,919,980) ------------- ------------- ------------- Realized gain (loss) on investments .......... (95,706,913) 61,135,620 57,750,755 Change in unrealized gain (loss) on investments ............................... (102,443,273) (263,179,099) 93,482,590 ------------- ------------- ------------- Net gain (loss) on investments ............... (198,150,186) (202,043,479) 151,233,345 ------------- ------------- ------------- Reinvested capital gains ....................... 59,973,994 117,294,274 39,898,769 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........... $(131,124,509) (79,456,777) 197,570,258 ============= ============= =============
ACVPBAL ----------------------------------------------- 2001 2000 1999 ------------- ------------- ------------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 149,365 142,768 104,861 Mortality and expense risk charges (note 3) .... (39,398) (43,349) (43,480) ------------- ------------- ------------- Net investment income ........................ 109,967 99,419 61,381 ------------- ------------- ------------- Proceeds from mutual funds shares sold ......... 707,642 1,172,289 971,140 Cost of mutual fund shares sold ................ (856,776) (1,257,855) (1,022,836) ------------- ------------- ------------- Realized gain (loss) on investments .......... (149,134) (85,566) (51,696) Change in unrealized gain (loss) on investments ............................... (374,866) (306,371) (209,153) ------------- ------------- ------------- Net gain (loss) on investments ............... (524,000) (391,937) (260,849) ------------- ------------- ------------- Reinvested capital gains ....................... 177,314 89,903 723,542 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........... (236,719) (202,615) 524,074 ============= ============= =============
ACVPCAPAP ----------------------------------------------- 2001 2000 1999 ------------- ------------- ------------- INVESTMENT ACTIVITY: Reinvested dividends ........................... -- -- -- Mortality and expense risk charges (note 3) .... (157,084) (225,875) (108,580) ------------- ------------- ------------- Net investment income ........................ (157,084) (225,875) (108,580) ------------- ------------- ------------- Proceeds from mutual funds shares sold ......... 10,422,004 25,900,893 22,591,735 Cost of mutual fund shares sold ................ (19,980,200) (17,223,897) (21,828,544) ------------- ------------- ------------- Realized gain (loss) on investments .......... (9,558,196) 8,676,996 763,191 Change in unrealized gain (loss) on investments ............................... (5,254,647) (7,733,755) 6,761,369 ------------- ------------- ------------- Net gain (loss) on investments ............... (14,812,843) 943,241 7,524,560 ------------- ------------- ------------- Reinvested capital gains ....................... 7,598,012 750,781 -- ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations ........... (7,371,915) 1,468,147 7,415,980 ============= ============= =============
ACVPINCGR ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 35,914 25,931 655 Mortality and expense risk charges (note 3) .... (31,543) (33,212) (27,101) ----------- ----------- ----------- Net investment income ........................ 4,371 (7,281) (26,446) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 1,306,804 6,896,325 4,520,179 Cost of mutual fund shares sold ................ (1,674,238) (6,623,978) (4,059,023) ----------- ----------- ----------- Realized gain (loss) on investments .......... (367,434) 272,347 461,156 Change in unrealized gain (loss) on investments ............................... (36,896) (817,445) 247,602 ----------- ----------- ----------- Net gain (loss) on investments ............... (404,330) (545,098) 708,758 ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $ (399,959) (552,379) 682,312 =========== =========== ===========
ACVPINT ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 16,208 31,996 -- Mortality and expense risk charges (note 3) .... (131,716) (192,630) (123,973) ----------- ----------- ----------- Net investment income ........................ (115,508) (160,634) (123,973) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 18,165,796 28,784,239 25,003,227 Cost of mutual fund shares sold ................ (24,504,893) (24,108,086) (22,517,439) ----------- ----------- ----------- Realized gain (loss) on investments .......... (6,339,097) 4,676,153 2,485,788 Change in unrealized gain (loss) on investments ............................... (1,840,599) (9,830,737) 6,850,984 ----------- ----------- ----------- Net gain (loss) on investments ............... (8,179,696) (5,154,584) 9,336,772 ----------- ----------- ----------- Reinvested capital gains ....................... 1,789,528 478,387 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (6,505,676) (4,836,831) 9,212,799 =========== =========== ===========
ACVPVALUE ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 89,617 34,989 26,285 Mortality and expense risk charges (note 3) .... (66,662) (27,164) (20,993) ----------- ----------- ----------- Net investment income ........................ 22,955 7,825 5,292 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 33,073,002 53,718,428 10,125,505 Cost of mutual fund shares sold ................ (32,800,437) (53,369,596) (10,140,086) ----------- ----------- ----------- Realized gain (loss) on investments .......... 272,565 348,832 (14,581) Change in unrealized gain (loss) on investments ............................... 549,875 414,821 (279,501) ----------- ----------- ----------- Net gain (loss) on investments ............... 822,440 763,653 (294,082) ----------- ----------- ----------- Reinvested capital gains ....................... -- 89,531 249,026 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... 845,395 861,009 (39,764) =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
CSWPGPV ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ -- -- -- Mortality and expense risk charges (note 3) .... (15,488) (26,477) (13,686) ----------- ----------- ----------- Net investment income ........................ (15,488) (26,477) (13,686) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 3,317,543 21,730,640 11,451,361 Cost of mutual fund shares sold ................ (4,552,542) (21,573,716) (10,619,693) ----------- ----------- ----------- Realized gain (loss) on investments .......... (1,234,999) 156,924 831,668 Change in unrealized gain (loss) on investments ............................... 471,352 (1,447,278) 489,466 ----------- ----------- ----------- Net gain (loss) on investments ............... (763,647) (1,290,354) 1,321,134 ----------- ----------- ----------- Reinvested capital gains ....................... -- 359,529 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $ (779,135) (957,302) 1,307,448 =========== =========== ===========
CSWPINTEQ ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... -- 51,283 106,392 Mortality and expense risk charges (note 3) .... (56,285) (81,674) (70,225) ----------- ----------- ----------- Net investment income ........................ (56,285) (30,391) 36,167 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 29,337,215 11,655,731 19,261,615 Cost of mutual fund shares sold ................ (33,297,876) (11,306,949) (18,047,381) ----------- ----------- ----------- Realized gain (loss) on investments .......... (3,960,661) 348,782 1,214,234 Change in unrealized gain (loss) on investments ............................... 2,099,268 (4,794,748) 3,271,039 ----------- ----------- ----------- Net gain (loss) on investments ............... (1,861,393) (4,445,966) 4,485,273 ----------- ----------- ----------- Reinvested capital gains ....................... -- 1,233,063 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (1,917,678) (3,243,294) 4,521,440 =========== =========== ===========
CSWPSMCO ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... -- -- -- Mortality and expense risk charges (note 3) .... (138,697) (216,538) (114,737) ----------- ----------- ----------- Net investment income ........................ (138,697) (216,538) (114,737) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 12,518,866 42,618,463 12,560,036 Cost of mutual fund shares sold ................ (23,848,090) (37,312,904) (11,995,881) ----------- ----------- ----------- Realized gain (loss) on investments .......... (11,329,224) 5,305,559 564,155 Change in unrealized gain (loss) on investments ............................... 7,104,902 (18,360,336) 8,391,845 ----------- ----------- ----------- Net gain (loss) on investments ............... (4,224,322) (13,054,777) 8,956,000 ----------- ----------- ----------- Reinvested capital gains ....................... -- 5,714,137 709,970 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (4,363,019) (7,557,178) 9,551,233 =========== =========== ===========
DRYEUROEQ ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 809 234 -- Mortality and expense risk charges (note 3) .... (1,545) (527) -- ----------- ----------- ----------- Net investment income ........................ (736) (293) -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 4,515,612 633,945 -- Cost of mutual fund shares sold ................ (4,512,771) (640,858) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... 2,841 (6,913) -- Change in unrealized gain (loss) on investments ............................... (878) 1,517 -- ----------- ----------- ----------- Net gain (loss) on investments ............... 1,963 (5,396) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- 1,253 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $ 1,227 (4,436) -- =========== =========== ===========
DRYSRGRO ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 9,820 157,148 2,403 Mortality and expense risk charges (note 3) .... (119,024) (157,030) (114,846) ----------- ----------- ----------- Net investment income ........................ (109,204) 118 (112,443) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 4,586,357 4,108,551 17,180,969 Cost of mutual fund shares sold ................ (4,955,722) (3,386,569) (15,391,528) ----------- ----------- ----------- Realized gain (loss) on investments .......... (369,365) 721,982 1,789,441 Change in unrealized gain (loss) on investments ............................... (3,939,932) (3,257,761) 1,688,692 ----------- ----------- ----------- Net gain (loss) on investments ............... (4,309,297) (2,535,779) 3,478,133 ----------- ----------- ----------- Reinvested capital gains ....................... -- -- 646,972 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (4,418,501) (2,535,661) 4,012,662 =========== =========== ===========
DRYSTKIX ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 997,440 1,011,600 1,066,045 Mortality and expense risk charges (note 3) .... (664,865) (797,960) (719,164) ----------- ----------- ----------- Net investment income ........................ 332,575 213,640 346,881 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 18,098,585 16,033,223 20,339,759 Cost of mutual fund shares sold ................ (18,088,650) (11,951,284) (15,264,747) ----------- ----------- ----------- Realized gain (loss) on investments .......... 9,935 4,081,939 5,075,012 Change in unrealized gain (loss) on investments ............................... (13,687,873) (16,940,040) 11,113,462 ----------- ----------- ----------- Net gain (loss) on investments ............... (13,677,938) (12,858,101) 16,188,474 ----------- ----------- ----------- Reinvested capital gains ....................... 467,526 1,618,261 920,361 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (12,877,837) (11,026,200) 17,455,716 =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
DRYAP -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 58,719 47,656 43,739 Mortality and expense risk charges (note 3) .... (50,539) (58,150) (57,406) ------------ ------------ ------------ Net investment income ........................ 8,180 (10,494) (13,667) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 1,565,000 3,065,559 6,550,844 Cost of mutual fund shares sold ................ (1,658,890) (2,858,894) (6,135,399) ------------ ------------ ------------ Realized gain (loss) on investments .......... (93,890) 206,665 415,445 Change in unrealized gain (loss) on investments ............................... (617,829) (365,322) 269,060 ------------ ------------ ------------ Net gain (loss) on investments ............... (711,719) (158,657) 684,505 ------------ ------------ ------------ Reinvested capital gains ....................... -- 80,911 29,215 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ (703,539) (88,240) 700,053 ============ ============ ============
DRYGRINC -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 15,122 18,343 16,508 Mortality and expense risk charges (note 3) .... (20,036) (19,919) (15,950) ------------ ------------ ------------ Net investment income ........................ (4,914) (1,576) 558 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 744,456 319,148 1,753,038 Cost of mutual fund shares sold ................ (752,434) (251,568) (1,678,061) ------------ ------------ ------------ Realized gain (loss) on investments .......... (7,978) 67,580 74,977 Change in unrealized gain (loss) on investments ............................... (258,534) (314,432) 230,049 ------------ ------------ ------------ Net gain (loss) on investments ............... (266,512) (246,852) 305,026 ------------ ------------ ------------ Reinvested capital gains ....................... 45,863 113,207 87,323 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (225,563) (135,221) 392,907 ============ ============ ============
FIDVIPEI -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 1,346,217 1,394,973 1,233,625 Mortality and expense risk charges (note 3) .... (625,985) (630,229) (714,035) ------------ ------------ ------------ Net investment income ........................ 720,232 764,744 519,590 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 6,533,958 29,031,941 21,969,547 Cost of mutual fund shares sold ................ (6,478,110) (24,700,721) (15,562,997) ------------ ------------ ------------ Realized gain (loss) on investments .......... 55,848 4,331,220 6,406,550 Change in unrealized gain (loss) on investments ............................... (9,359,446) (5,231,085) (5,267,170) ------------ ------------ ------------ Net gain (loss) on investments ............... (9,303,598) (899,865) 1,139,380 ------------ ------------ ------------ Reinvested capital gains ....................... 3,782,228 5,255,479 2,726,961 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (4,801,138) 5,120,358 4,385,931 ============ ============ ============
FIDVIPGR -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 107,526 196,483 215,538 Mortality and expense risk charges (note 3) .... (1,036,867) (1,438,136) (1,145,435) ------------ ------------ ------------ Net investment income ........................ (929,341) (1,241,653) (929,897) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 14,172,289 20,493,336 91,394,903 Cost of mutual fund shares sold ................ (18,446,053) (16,880,509) (75,684,409) ------------ ------------ ------------ Realized gain (loss) on investments .......... (4,273,764) 3,612,827 15,710,494 Change in unrealized gain (loss) on investments ............................... (33,423,042) (42,932,678) 17,198,414 ------------ ------------ ------------ Net gain (loss) on investments ............... (37,696,806) (39,319,851) 32,908,908 ------------ ------------ ------------ Reinvested capital gains ....................... 10,107,480 19,550,081 13,551,946 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $(28,518,667) (21,011,423) 45,530,957 ============ ============ ============
FIDVIPHI -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 2,383,612 1,693,393 2,570,090 Mortality and expense risk charges (note 3) .... (136,475) (168,596) (197,828) ------------ ------------ ------------ Net investment income ........................ 2,247,137 1,524,797 2,372,262 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 8,880,061 9,968,353 29,571,691 Cost of mutual fund shares sold ................ (13,585,088) (10,903,346) (32,450,313) ------------ ------------ ------------ Realized gain (loss) on investments .......... (4,705,027) (934,993) (2,878,622) Change in unrealized gain (loss) on investments ............................... (27,924) (6,237,391) 2,437,032 ------------ ------------ ------------ Net gain (loss) on investments ............... (4,732,951) (7,172,384) (441,590) ------------ ------------ ------------ Reinvested capital gains ....................... -- -- 96,078 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (2,485,814) (5,647,587) 2,026,750 ============ ============ ============
FIDVIPOV -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 1,100,964 425,125 332,184 Mortality and expense risk charges (note 3) .... (162,010) (230,607) (199,894) ------------ ------------ ------------ Net investment income ........................ 938,954 194,518 132,290 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 7,182,379 10,777,638 34,092,869 Cost of mutual fund shares sold ................ (10,030,666) (9,504,431) (31,976,653) ------------ ------------ ------------ Realized gain (loss) on investments .......... (2,848,287) 1,273,207 2,116,216 Change in unrealized gain (loss) on investments ............................... (4,902,933) (10,130,820) 6,394,423 ------------ ------------ ------------ Net gain (loss) on investments ............... (7,751,220) (8,857,613) 8,510,639 ------------ ------------ ------------ Reinvested capital gains ....................... 1,740,234 2,677,139 535,780 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (5,072,032) (5,985,956) 9,178,709 ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
FIDVIPAM ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 1,179,485 1,031,299 1,040,155 Mortality and expense risk charges (note 3) .... (233,118) (267,155) (270,444) ----------- ----------- ----------- Net investment income ........................ 946,367 764,144 769,711 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 2,948,969 4,375,902 4,829,331 Cost of mutual fund shares sold ................ (3,146,043) (3,632,011) (3,813,802) ----------- ----------- ----------- Realized gain (loss) on investments .......... (197,074) 743,891 1,015,529 Change in unrealized gain (loss) on investments ............................... (2,656,974) (5,439,784) 26,818 ----------- ----------- ----------- Net gain (loss) on investments ............... (2,854,048) (4,695,893) 1,042,347 ----------- ----------- ----------- Reinvested capital gains ....................... 442,307 2,429,670 1,317,530 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $(1,465,374) (1,502,079) 3,129,588 =========== =========== ===========
FIDVIPCON ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 456,978 244,158 261,343 Mortality and expense risk charges (note 3) .... (413,391) (521,700) (460,248) ----------- ----------- ----------- Net investment income ........................ 43,587 (277,542) (198,905) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 7,291,690 7,260,544 25,340,625 Cost of mutual fund shares sold ................ (7,489,134) (5,658,545) (16,733,032) ----------- ----------- ----------- Realized gain (loss) on investments .......... (197,444) 1,601,999 8,607,593 Change in unrealized gain (loss) on investments ............................... (9,738,153) (15,273,672) 2,632,252 ----------- ----------- ----------- Net gain (loss) on investments ............... (9,935,597) (13,671,673) 11,239,845 ----------- ----------- ----------- Reinvested capital gains ....................... 1,612,865 8,862,945 1,916,516 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (8,279,145) (5,086,270) 12,957,456 =========== =========== ===========
FIDVIPGROP ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 17,465 77,263 58,964 Mortality and expense risk charges (note 3) .... (31,285) (40,980) (47,088) ----------- ----------- ----------- Net investment income ........................ (13,820) 36,283 11,876 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 1,573,054 5,312,933 3,165,507 Cost of mutual fund shares sold ................ (2,207,850) (5,576,382) (2,711,647) ----------- ----------- ----------- Realized gain (loss) on investments .......... (634,796) (263,449) 453,860 Change in unrealized gain (loss) on investments ............................... (126,832) (1,250,959) (343,328) ----------- ----------- ----------- Net gain (loss) on investments ............... (761,628) (1,514,408) 110,532 ----------- ----------- ----------- Reinvested capital gains ....................... -- 391,834 110,237 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (775,448) (1,086,291) 232,645 =========== =========== ===========
JANCAPAP ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 25,263 19,570 -- Mortality and expense risk charges (note 3) .... (21,001) (10,464) -- ----------- ----------- ----------- Net investment income ........................ 4,262 9,106 -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 5,487,669 1,441,203 -- Cost of mutual fund shares sold ................ (6,621,307) (1,508,835) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (1,133,638) (67,632) -- Change in unrealized gain (loss) on investments ............................... 244,422 (509,550) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (889,216) (577,182) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $ (884,954) (568,076) -- =========== =========== ===========
JANGLTECH ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 12,133 14,871 -- Mortality and expense risk charges (note 3) .... (15,286) (10,447) -- ----------- ----------- ----------- Net investment income ........................ (3,153) 4,424 -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 10,060,090 733,862 -- Cost of mutual fund shares sold ................ (12,182,785) (720,686) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (2,122,695) 13,176 -- Change in unrealized gain (loss) on investments ............................... 1,125,331 (1,148,444) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (997,364) (1,135,268) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (1,000,517) (1,130,844) -- =========== =========== ===========
JANINTGRO ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 14,370 68,254 -- Mortality and expense risk charges (note 3) .... (16,892) (8,795) -- ----------- ----------- ----------- Net investment income ........................ (2,522) 59,459 -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 3,309,639 1,279,606 -- Cost of mutual fund shares sold ................ (4,315,738) (1,460,939) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (1,006,099) (181,333) -- Change in unrealized gain (loss) on investments ............................... 441,311 (349,293) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (564,788) (530,626) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (567,310) (471,167) -- =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATCAPAP ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ -- 64,829 277,922 Mortality and expense risk charges (note 3) .... (149,321) (262,581) (323,069) ----------- ----------- ----------- Net investment income ........................ (149,321) (197,752) (45,147) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 3,987,142 9,898,396 14,859,491 Cost of mutual fund shares sold ................ (8,267,452) (9,942,866) (13,314,168) ----------- ----------- ----------- Realized gain (loss) on investments .......... (4,280,310) (44,470) 1,545,323 Change in unrealized gain (loss) on investments ............................... (3,202,773) (16,033,473) (2,937,651) ----------- ----------- ----------- Net gain (loss) on investments ............... (7,483,083) (16,077,943) (1,392,328) ----------- ----------- ----------- Reinvested capital gains ....................... -- 6,018,129 2,820,485 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $(7,632,404) (10,257,566) 1,383,010 =========== =========== ===========
NSATMIDCAPIX ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 13,844 5,044 -- Mortality and expense risk charges (note 3) .... (17,915) (4,225) -- ----------- ----------- ----------- Net investment income ........................ (4,071) 819 -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 5,810,245 5,847,137 -- Cost of mutual fund shares sold ................ (6,065,948) (5,829,612) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (255,703) 17,525 -- Change in unrealized gain (loss) on investments ............................... 115,892 (68,941) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (139,811) (51,416) -- ----------- ----------- ----------- Reinvested capital gains ....................... 25,776 59,565 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (118,106) 8,968 -- =========== =========== ===========
NSATEMMKT ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 1,129 -- -- Mortality and expense risk charges (note 3) .... (1,054) (21) -- ----------- ----------- ----------- Net investment income ........................ 75 (21) -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 925,621 21,742 -- Cost of mutual fund shares sold ................ (950,127) (22,889) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (24,506) (1,147) -- Change in unrealized gain (loss) on investments ............................... 33,345 (711) -- ----------- ----------- ----------- Net gain (loss) on investments ............... 8,839 (1,858) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... 8,914 (1,879) -- =========== =========== ===========
NSATGLOBTC ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ -- -- -- Mortality and expense risk charges (note 3) .... (2,955) (918) -- ----------- ----------- ----------- Net investment income ........................ (2,955) (918) -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 410,266 16,330 -- Cost of mutual fund shares sold ................ (835,201) (22,265) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (424,935) (5,935) -- Change in unrealized gain (loss) on investments ............................... 215,502 (233,078) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (209,433) (239,013) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- 8,554 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $ (212,388) (231,377) -- =========== =========== ===========
NSATINTGR ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 28 -- -- Mortality and expense risk charges (note 3) .... (193) (14) -- ----------- ----------- ----------- Net investment income ........................ (165) (14) -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 427,289 23,858 -- Cost of mutual fund shares sold ................ (430,379) (24,091) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (3,090) (233) -- Change in unrealized gain (loss) on investments ............................... 1,005 (168) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (2,085) (401) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (2,250) (415) -- =========== =========== ===========
NSATGVTBD ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 811,537 692,626 787,049 Mortality and expense risk charges (note 3) .... (128,835) (99,480) (121,678) ----------- ----------- ----------- Net investment income ........................ 682,702 593,146 665,371 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 21,314,906 10,368,266 29,946,083 Cost of mutual fund shares sold ................ (20,624,557) (10,500,566) (30,797,415) ----------- ----------- ----------- Realized gain (loss) on investments .......... 690,349 (132,300) (851,332) Change in unrealized gain (loss) on investments ............................... (567,238) 822,785 (301,600) ----------- ----------- ----------- Net gain (loss) on investments ............... 123,111 690,485 (1,152,932) ----------- ----------- ----------- Reinvested capital gains ....................... 25,190 -- 25,753 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... 831,003 1,283,631 (461,808) =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATMSECBD -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 29,490 3,708 -- Mortality and expense risk charges (note 3) .... (2,786) (220) -- ------------ ------------ ------------ Net investment income ........................ 26,704 3,488 -- ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 1,985,743 237,528 -- Cost of mutual fund shares sold ................ (2,002,292) (238,314) -- ------------ ------------ ------------ Realized gain (loss) on investments .......... (16,549) (786) -- Change in unrealized gain (loss) on investments ............................... (1,097) 457 -- ------------ ------------ ------------ Net gain (loss) on investments ............... (17,646) (329) -- ------------ ------------ ------------ Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ 9,058 3,159 -- ============ ============ ============
NSATMYMKT -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 1,894,859 3,057,620 2,607,883 Mortality and expense risk charges (note 3) .... (423,551) (413,875) (415,133) ------------ ------------ ------------ Net investment income ........................ 1,471,308 2,643,745 2,192,750 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 207,472,704 292,342,512 257,299,024 Cost of mutual fund shares sold ................ (207,472,704) (292,342,512) (257,299,024) ------------ ------------ ------------ 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 ........... 1,471,308 2,643,745 2,192,750 ============ ============ ============
NSATSMCAPG -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... -- -- -- Mortality and expense risk charges (note 3) .... (8,611) (2,514) -- ------------ ------------ ------------ Net investment income ........................ (8,611) (2,514) -- ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 11,138,422 1,286,406 -- Cost of mutual fund shares sold ................ (11,361,555) (1,360,619) -- ------------ ------------ ------------ Realized gain (loss) on investments .......... (223,133) (74,213) -- Change in unrealized gain (loss) on investments ............................... 178,447 (167,853) -- ------------ ------------ ------------ Net gain (loss) on investments ............... (44,686) (242,066) -- ------------ ------------ ------------ Reinvested capital gains ....................... -- 2,683 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (53,297) (241,897) -- ============ ============ ============
NSATSMCAPV -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 3,877 -- -- Mortality and expense risk charges (note 3) .... (97,351) (51,635) (12,857) ------------ ------------ ------------ Net investment income ........................ (93,474) (51,635) (12,857) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 41,798,997 9,626,402 38,165,993 Cost of mutual fund shares sold ................ (41,688,579) (9,463,196) (37,730,603) ------------ ------------ ------------ Realized gain (loss) on investments .......... 110,418 163,206 435,390 Change in unrealized gain (loss) on investments ............................... 1,228,548 (1,082,758) (178,227) ------------ ------------ ------------ Net gain (loss) on investments ............... 1,338,966 (919,552) 257,163 ------------ ------------ ------------ Reinvested capital gains ....................... 1,026,030 1,418,043 463,979 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ 2,271,522 446,856 708,285 ============ ============ ============
NSATSMCO -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 29,451 8,275 -- Mortality and expense risk charges (note 3) .... (195,239) (220,692) (133,984) ------------ ------------ ------------ Net investment income ........................ (165,788) (212,417) (133,984) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 12,888,373 34,607,733 12,258,303 Cost of mutual fund shares sold ................ (17,290,472) (25,554,105) (11,935,965) ------------ ------------ ------------ Realized gain (loss) on investments .......... (4,402,099) 9,053,628 322,338 Change in unrealized gain (loss) on investments ............................... 2,206,825 (12,312,627) 6,521,648 ------------ ------------ ------------ Net gain (loss) on investments ............... (2,195,274) (3,258,999) 6,843,986 ------------ ------------ ------------ Reinvested capital gains ....................... -- 5,338,437 1,017,362 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (2,361,062) 1,867,021 7,727,364 ============ ============ ============
NSATSTMCAP -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... -- -- -- Mortality and expense risk charges (note 3) .... (6,440) (2,791) -- ------------ ------------ ------------ Net investment income ........................ (6,440) (2,791) -- ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 6,243,931 1,977,764 -- Cost of mutual fund shares sold ................ (6,691,865) (2,065,729) -- ------------ ------------ ------------ Realized gain (loss) on investments .......... (447,934) (87,965) -- Change in unrealized gain (loss) on investments ............................... 118,872 (109,003) -- ------------ ------------ ------------ Net gain (loss) on investments ............... (329,062) (196,968) -- ------------ ------------ ------------ Reinvested capital gains ....................... -- 14,918 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (335,502) (184,841) -- ============ ============ ============
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATTOTRE -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 622,347 612,176 663,979 Mortality and expense risk charges (note 3) .... (612,246) (736,850) (774,887) ------------ ------------ ------------ Net investment income ........................ 10,101 (124,674) (110,908) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 5,229,380 13,544,946 7,683,042 Cost of mutual fund shares sold ................ (6,985,175) (9,201,670) (4,796,181) ------------ ------------ ------------ Realized gain (loss) on investments .......... (1,755,795) 4,343,276 2,886,861 Change in unrealized gain (loss) on investments ............................... (11,829,407) (40,766,537) (615,625) ------------ ------------ ------------ Net gain (loss) on investments ............... (13,585,202) (36,423,261) 2,271,236 ------------ ------------ ------------ Reinvested capital gains ....................... 2,194,987 33,726,301 3,857,973 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $(11,380,114) (2,821,634) 6,018,301 ============ ============ ============
NSATGRFOC -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... -- -- -- Mortality and expense risk charges (note 3) .... (1,295) (100) -- ------------ ------------ ------------ Net investment income ........................ (1,295) (100) -- ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 5,355,883 7,483 -- Cost of mutual fund shares sold ................ (5,498,348) (10,247) -- ------------ ------------ ------------ Realized gain (loss) on investments .......... (142,465) (2,764) -- Change in unrealized gain (loss) on investments ............................... 26,613 (24,195) -- ------------ ------------ ------------ Net gain (loss) on investments ............... (115,852) (26,959) -- ------------ ------------ ------------ Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (117,147) (27,059) -- ============ ============ ============
NBAMTBAL -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... -- -- -- Mortality and expense risk charges (note 3) .... (43) -- -- ------------ ------------ ------------ Net investment income ........................ (43) -- -- ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 357 -- -- Cost of mutual fund shares sold ................ (373) -- -- ------------ ------------ ------------ Realized gain (loss) on investments .......... (16) -- -- Change in unrealized gain (loss) on investments ............................... 125 -- -- ------------ ------------ ------------ Net gain (loss) on investments ............... 109 -- -- ------------ ------------ ------------ Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... 66 -- -- ============ ============ ============
NBAMTGRO -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ -- -- -- Mortality and expense risk charges (note 3) .... (193,586) (326,947) (183,268) ------------ ------------ ------------ Net investment income ........................ (193,586) (326,947) (183,268) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 15,400,054 29,136,062 90,781,328 Cost of mutual fund shares sold ................ (44,397,183) (19,441,919) (88,544,143) ------------ ------------ ------------ Realized gain (loss) on investments .......... (28,997,129) 9,694,143 2,237,185 Change in unrealized gain (loss) on investments ............................... 6,433,848 (18,572,555) 7,073,105 ------------ ------------ ------------ Net gain (loss) on investments ............... (22,563,281) (8,878,412) 9,310,290 ------------ ------------ ------------ Reinvested capital gains ....................... 12,536,350 3,211,533 1,124,154 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $(10,220,517) (5,993,826) 10,251,176 ============ ============ ============
NBAMTGUARD -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 10,656 12,425 4,569 Mortality and expense risk charges (note 3) .... (16,691) (14,688) (12,787) ------------ ------------ ------------ Net investment income ........................ (6,035) (2,263) (8,218) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 1,068,268 2,733,360 8,197,327 Cost of mutual fund shares sold ................ (1,061,536) (2,651,491) (8,110,096) ------------ ------------ ------------ Realized gain (loss) on investments .......... 6,732 81,869 87,231 Change in unrealized gain (loss) on investments ............................... (216,517) (98,383) 43,771 ------------ ------------ ------------ Net gain (loss) on investments ............... (209,785) (16,514) 131,002 ------------ ------------ ------------ Reinvested capital gains ....................... 152,227 -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (63,593) (18,777) 122,784 ============ ============ ============
NBAMTLMAT -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 255,613 306,913 277,113 Mortality and expense risk charges (note 3) .... (35,234) (32,093) (35,738) ------------ ------------ ------------ Net investment income ........................ 220,379 274,820 241,375 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 3,377,140 9,275,328 1,296,663 Cost of mutual fund shares sold ................ (3,287,910) (9,541,403) (1,370,958) ------------ ------------ ------------ Realized gain (loss) on investments .......... 89,230 (266,075) (74,295) Change in unrealized gain (loss) on investments ............................... 11,853 223,548 (128,665) ------------ ------------ ------------ Net gain (loss) on investments ............... 101,083 (42,527) (202,960) ------------ ------------ ------------ Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... 321,462 232,293 38,415 ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NBAMTPART ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 90,620 217,800 395,343 Mortality and expense risk charges (note 3) .... (165,930) (194,093) (234,549) ----------- ----------- ----------- Net investment income ........................ (75,310) 23,707 160,794 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 2,321,375 11,982,768 10,213,406 Cost of mutual fund shares sold ................ (3,124,641) (14,409,112) (10,762,285) ----------- ----------- ----------- Realized gain (loss) on investments .......... (803,266) (2,426,344) (548,879) Change in unrealized gain (loss) on investments ............................... (872,728) (2,383,122) 1,854,882 ----------- ----------- ----------- Net gain (loss) on investments ............... (1,675,994) (4,809,466) 1,306,003 ----------- ----------- ----------- Reinvested capital gains ....................... 860,887 4,631,886 687,554 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $ (890,417) (153,873) 2,154,351 =========== =========== ===========
OPPAGGGRO ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 20,230 -- -- Mortality and expense risk charges (note 3) .... (16,032) (9,718) -- ----------- ----------- ----------- Net investment income ........................ 4,198 (9,718) -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 4,586,812 8,805,282 -- Cost of mutual fund shares sold ................ (6,129,642) (9,294,608) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (1,542,830) (489,326) -- Change in unrealized gain (loss) on investments ............................... 307,499 (435,498) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (1,235,331) (924,824) -- ----------- ----------- ----------- Reinvested capital gains ....................... 315,653 -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (915,480) (934,542) -- =========== =========== ===========
OPPBDFD ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 864,092 888,727 563,814 Mortality and expense risk charges (note 3) .... (92,640) (84,563) (91,553) ----------- ----------- ----------- Net investment income ........................ 771,452 804,164 472,261 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 6,081,563 2,331,159 3,691,017 Cost of mutual fund shares sold ................ (6,575,644) (2,569,226) (3,697,719) ----------- ----------- ----------- Realized gain (loss) on investments .......... (494,081) (238,067) (6,702) Change in unrealized gain (loss) on investments ............................... 471,071 16,219 (794,086) ----------- ----------- ----------- Net gain (loss) on investments ............... (23,010) (221,848) (800,788) ----------- ----------- ----------- Reinvested capital gains ....................... -- -- 54,146 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... 748,442 582,316 (274,381) =========== =========== ===========
OPPCAPAP ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 110,415 18,905 16,006 Mortality and expense risk charges (note 3) .... (129,492) (129,760) (48,619) ----------- ----------- ----------- Net investment income ........................ (19,077) (110,855) (32,613) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 3,376,810 10,473,722 25,212,861 Cost of mutual fund shares sold ................ (4,406,616) (8,613,035) (24,502,814) ----------- ----------- ----------- Realized gain (loss) on investments .......... (1,029,806) 1,860,687 710,047 Change in unrealized gain (loss) on investments ............................... (3,248,518) (3,665,305) 1,735,399 ----------- ----------- ----------- Net gain (loss) on investments ............... (4,278,324) (1,804,618) 2,445,446 ----------- ----------- ----------- Reinvested capital gains ....................... 1,656,912 1,008,850 175,824 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $(2,640,489) (906,623) 2,588,657 =========== =========== ===========
OPPGLSEC ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 250,956 99,579 255,944 Mortality and expense risk charges (note 3) .... (268,070) (313,312) (190,529) ----------- ----------- ----------- Net investment income ........................ (17,114) (213,733) 65,415 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 8,061,340 4,035,642 6,535,136 Cost of mutual fund shares sold ................ (7,350,064) (2,393,689) (4,397,501) ----------- ----------- ----------- Realized gain (loss) on investments .......... 711,276 1,641,953 2,137,635 Change in unrealized gain (loss) on investments ............................... (10,336,593) (5,708,731) 9,595,322 ----------- ----------- ----------- Net gain (loss) on investments ............... (9,625,317) (4,066,778) 11,732,957 ----------- ----------- ----------- Reinvested capital gains ....................... 4,652,673 5,565,874 717,222 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (4,989,758) 1,285,363 12,515,594 =========== =========== ===========
OPPMSGRINC ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 2,647 -- -- Mortality and expense risk charges (note 3) .... (4,216) (965) -- ----------- ----------- ----------- Net investment income ........................ (1,569) (965) -- ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 271,972 100,863 -- Cost of mutual fund shares sold ................ (340,552) (98,302) -- ----------- ----------- ----------- Realized gain (loss) on investments .......... (68,580) 2,561 -- Change in unrealized gain (loss) on investments ............................... 3,903 (40,617) -- ----------- ----------- ----------- Net gain (loss) on investments ............... (64,677) (38,056) -- ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (66,246) (39,021) -- =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
OPPMULT -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 585,774 684,260 480,400 Mortality and expense risk charges (note 3) .... (122,655) (125,117) (115,579) ------------ ------------ ------------ Net investment income ........................ 463,119 559,143 364,821 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 2,496,202 4,981,698 2,796,637 Cost of mutual fund shares sold ................ (2,749,417) (4,584,087) (2,391,468) ------------ ------------ ------------ Realized gain (loss) on investments .......... (253,215) 397,611 405,169 Change in unrealized gain (loss) on investments ............................... (788,871) (1,160,185) 10,270 ------------ ------------ ------------ Net gain (loss) on investments ............... (1,042,086) (762,574) 415,439 ------------ ------------ ------------ Reinvested capital gains ....................... 782,407 993,822 694,901 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ 203,440 790,391 1,475,161 ============ ============ ============
STOPP2 -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 254,345 -- -- Mortality and expense risk charges (note 3) .... (345,200) (355,887) (283,101) ------------ ------------ ------------ Net investment income ........................ (90,855) (355,887) (283,101) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 4,912,670 5,753,763 6,031,119 Cost of mutual fund shares sold ................ (4,102,002) (3,771,596) (4,291,744) ------------ ------------ ------------ Realized gain (loss) on investments .......... 810,668 1,982,167 1,739,375 Change in unrealized gain (loss) on investments ............................... (9,214,867) (4,879,451) 5,430,662 ------------ ------------ ------------ Net gain (loss) on investments ............... (8,404,199) (2,897,284) 7,170,037 ------------ ------------ ------------ Reinvested capital gains ....................... 6,568,447 5,562,609 3,541,869 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... (1,926,607) 2,309,438 10,428,805 ============ ============ ============
STDISC2 -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 48,229 -- -- Mortality and expense risk charges (note 3) .... (56,087) (58,904) (53,820) ------------ ------------ ------------ Net investment income ........................ (7,858) (58,904) (53,820) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 8,810,961 6,435,185 8,370,593 Cost of mutual fund shares sold ................ (10,205,721) (5,682,290) (9,362,894) ------------ ------------ ------------ Realized gain (loss) on investments .......... (1,394,760) 752,895 (992,301) Change in unrealized gain (loss) on investments ............................... 323,479 (482,257) 125,370 ------------ ------------ ------------ Net gain (loss) on investments ............... (1,071,281) 270,638 (866,931) ------------ ------------ ------------ Reinvested capital gains ....................... 1,246,478 -- 1,035,670 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... 167,339 211,734 114,919 ============ ============ ============
STINTSTK2 -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... $ -- -- 7,958 Mortality and expense risk charges (note 3) .... (19,820) (49,525) (22,468) ------------ ------------ ------------ Net investment income ........................ (19,820) (49,525) (14,510) ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 19,473,590 45,151,810 12,615,085 Cost of mutual fund shares sold ................ (20,141,787) (45,538,936) (11,285,141) ------------ ------------ ------------ Realized gain (loss) on investments .......... (668,197) (387,126) 1,329,944 Change in unrealized gain (loss) on investments ............................... (12,561) (1,546,991) 1,572,604 ------------ ------------ ------------ Net gain (loss) on investments ............... (680,758) (1,934,117) 2,902,548 ------------ ------------ ------------ Reinvested capital gains ....................... 94,952 -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... $ (605,626) (1,983,642) 2,888,038 ============ ============ ============
UIFEMMKT -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 109,934 108,788 84,322 Mortality and expense risk charges (note 3) .... (6,381) (6,391) (3,195) ------------ ------------ ------------ Net investment income ........................ 103,553 102,397 81,127 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 1,558,402 696,248 1,067,995 Cost of mutual fund shares sold ................ (1,555,432) (669,859) (1,041,803) ------------ ------------ ------------ Realized gain (loss) on investments .......... 2,970 26,389 26,192 Change in unrealized gain (loss) on investments ............................... (10,775) (38,552) 29,379 ------------ ------------ ------------ Net gain (loss) on investments ............... (7,805) (12,163) 55,571 ------------ ------------ ------------ Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... 95,748 90,234 136,698 ============ ============ ============
UIFUSRE -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Reinvested dividends ........................... 324,384 514,484 400,217 Mortality and expense risk charges (note 3) .... (63,716) (46,629) (44,010) ------------ ------------ ------------ Net investment income ........................ 260,668 467,855 356,207 ------------ ------------ ------------ Proceeds from mutual funds shares sold ......... 9,726,902 11,404,275 6,089,310 Cost of mutual fund shares sold ................ (9,227,767) (10,957,678) (7,139,977) ------------ ------------ ------------ Realized gain (loss) on investments .......... 499,135 446,597 (1,050,667) Change in unrealized gain (loss) on investments ............................... (151,471) 443,730 478,383 ------------ ------------ ------------ Net gain (loss) on investments ............... 347,664 890,327 (572,284) ------------ ------------ ------------ Reinvested capital gains ....................... 71,668 36,959 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations ........... 680,000 1,395,141 (216,077) ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF OPERATIONS, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
VEWRLDBD ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... $ 101,924 125,433 135,225 Mortality and expense risk charges (note 3) .... (19,527) (21,681) (25,601) ----------- ----------- ----------- Net investment income ........................ 82,397 103,752 109,624 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 6,609,847 11,085,379 4,442,114 Cost of mutual fund shares sold ................ (6,708,322) (11,357,847) (4,822,035) ----------- ----------- ----------- Realized gain (loss) on investments .......... (98,475) (272,468) (379,921) Change in unrealized gain (loss) on investments ............................... (128,804) 148,290 (74,747) ----------- ----------- ----------- Net gain (loss) on investments ............... (227,279) (124,178) (454,668) ----------- ----------- ----------- Reinvested capital gains ....................... -- -- 60,420 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... $ (144,882) (20,426) (284,624) =========== =========== ===========
VEWRLDEMKT ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... -- -- -- Mortality and expense risk charges (note 3) .... (26,750) (53,777) (32,044) ----------- ----------- ----------- Net investment income ........................ (26,750) (53,777) (32,044) ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 27,874,002 22,197,969 26,145,515 Cost of mutual fund shares sold ................ (28,521,629) (22,523,533) (24,002,878) ----------- ----------- ----------- Realized gain (loss) on investments .......... (647,627) (325,564) 2,142,637 Change in unrealized gain (loss) on investments ............................... 690,151 (2,614,711) 1,939,640 ----------- ----------- ----------- Net gain (loss) on investments ............... 42,524 (2,940,275) 4,082,277 ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... 15,774 (2,994,052) 4,050,233 =========== =========== ===========
VEWRLDHAS ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Reinvested dividends ........................... 45,286 47,340 61,762 Mortality and expense risk charges (note 3) .... (31,957) (36,261) (36,567) ----------- ----------- ----------- Net investment income ........................ 13,329 11,079 25,195 ----------- ----------- ----------- Proceeds from mutual funds shares sold ......... 10,858,141 17,958,019 19,298,812 Cost of mutual fund shares sold ................ (11,323,718) (17,432,316) (18,689,697) ----------- ----------- ----------- Realized gain (loss) on investments .......... (465,577) 525,703 609,115 Change in unrealized gain (loss) on investments ............................... (17,134) (152,863) 199,401 ----------- ----------- ----------- Net gain (loss) on investments ............... (482,711) 372,840 808,516 ----------- ----------- ----------- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations ........... (469,382) 383,919 833,711 =========== =========== ===========
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
TOTAL ----------------------------------------------------- 2001 2000 1999 --------------- --------------- --------------- INVESTMENT ACTIVITY: Net investment income .......................... $ 7,051,683 5,292,428 6,438,144 Realized gain (loss) on investments ............ (95,706,913) 61,135,620 57,750,755 Change in unrealized gain (loss) on investments ............................... (102,443,273) (263,179,099) 93,482,590 Reinvested capital gains ....................... 59,973,994 117,294,274 39,898,769 --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations .................. (131,124,509) (79,456,777) 197,570,258 --------------- --------------- --------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 103,755,686 120,946,341 155,876,754 Transfers between funds ........................ -- -- -- Surrenders ..................................... (47,591,030) (41,340,894) (29,241,082) Death benefits (note 4) ........................ (3,310,640) (2,753,264) (5,189,106) Policy loans (net of repayments) (note 5) ...... (8,284,301) (18,700,994) (16,840,767) Deductions for surrender charges (note 2d) ..... (4,259,124) (3,783,229) (4,371,271) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (46,802,944) (46,656,142) (46,509,797) Asset charges (note 3): MSP contracts ................................ (487,482) (600,986) (560,395) LSFP contracts ............................... (374,976) (385,150) (275,681) --------------- --------------- --------------- Net equity transactions .................... (7,354,811) 6,725,682 52,888,655 --------------- --------------- --------------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (138,479,320) (72,731,095) 250,458,913 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 1,071,884,297 1,144,615,392 894,156,479 --------------- --------------- --------------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 933,404,977 1,071,884,297 1,144,615,392 =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 44,184,383 42,923,800 39,766,962 --------------- --------------- --------------- Units purchased ................................ 8,105,043 9,659,168 12,461,932 Units redeemed ................................. (7,779,263) (8,398,585) (9,305,094) --------------- --------------- --------------- Ending units ................................... 44,510,163 44,184,383 42,923,800 =============== =============== ===============
ACVPBAL ----------------------------------------------------- 2001 2000 1999 --------------- --------------- --------------- INVESTMENT ACTIVITY: Net investment income .......................... 109,967 99,419 61,381 Realized gain (loss) on investments ............ (149,134) (85,566) (51,696) Change in unrealized gain (loss) on investments ............................... (374,866) (306,371) (209,153) Reinvested capital gains ....................... 177,314 89,903 723,542 --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations .................. (236,719) (202,615) 524,074 --------------- --------------- --------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 537,559 657,944 765,352 Transfers between funds ........................ (18,553) (516,182) (71,304) Surrenders ..................................... (274,881) (287,549) (170,759) Death benefits (note 4) ........................ (19,851) (2,238) (3,696) Policy loans (net of repayments) (note 5) ...... (7,043) (90,905) (109,266) Deductions for surrender charges (note 2d) ..... (24,600) (26,315) (25,527) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (264,440) (253,169) (273,361) Asset charges (note 3): MSP contracts ................................ (4,877) (5,232) (4,829) LSFP contracts ............................... (1,571) (1,420) (912) --------------- --------------- --------------- Net equity transactions .................... (78,257) (525,066) 105,698 --------------- --------------- --------------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (314,976) (727,681) 629,772 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 5,464,950 6,192,631 5,562,859 --------------- --------------- --------------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 5,149,974 5,464,950 6,192,631 =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 280,165 306,093 299,058 --------------- --------------- --------------- Units purchased ................................ 32,188 35,007 51,610 Units redeemed ................................. (36,385) (60,935) (44,575) --------------- --------------- --------------- Ending units ................................... 275,968 280,165 306,093 =============== =============== ===============
ACVPCAPAP ----------------------------------------------------- 2001 2000 1999 --------------- --------------- --------------- INVESTMENT ACTIVITY: Net investment income .......................... (157,084) (225,875) (108,580) Realized gain (loss) on investments ............ (9,558,196) 8,676,996 763,191 Change in unrealized gain (loss) on investments ............................... (5,254,647) (7,733,755) 6,761,369 Reinvested capital gains ....................... 7,598,012 750,781 -- --------------- --------------- --------------- Net increase (decrease) in contract owners' equity resulting from operations .................. (7,371,915) 1,468,147 7,415,980 --------------- --------------- --------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,922,090 2,321,398 1,955,940 Transfers between funds ........................ (3,106,083) 6,725,158 261,755 Surrenders ..................................... (994,264) (1,026,955) (723,035) Death benefits (note 4) ........................ (26,610) (20,053) (23,318) Policy loans (net of repayments) (note 5) ...... (266,547) (635,720) (241,323) Deductions for surrender charges (note 2d) ..... (88,981) (93,980) (108,087) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (917,212) (1,000,118) (687,205) Asset charges (note 3): MSP contracts ................................ (8,721) (12,135) (3,806) LSFP contracts ............................... (4,237) (4,320) (1,392) --------------- --------------- --------------- Net equity transactions .................... (3,490,565) 6,253,275 429,529 --------------- --------------- --------------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (10,862,480) 7,721,422 7,845,509 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 27,161,584 19,440,162 11,594,653 --------------- --------------- --------------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 16,299,104 27,161,584 19,440,162 =============== =============== =============== CHANGES IN UNITS: Beginning units ................................ 1,120,543 851,973 825,873 --------------- --------------- --------------- Units purchased ................................ 114,186 379,881 175,114 Units redeemed ................................. (289,549) (111,311) (149,014) --------------- --------------- --------------- Ending units ................................... 945,180 1,120,543 851,973 =============== =============== ===============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
ACVPINCGR ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ 4,371 (7,281) (26,446) Realized gain (loss) on investments ............ (367,434) 272,347 461,156 Change in unrealized gain (loss) on investments ............................... (36,896) (817,445) 247,602 Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (399,959) (552,379) 682,312 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 463,372 588,512 482,154 Transfers between funds ........................ (30,266) 51,206 2,244,545 Surrenders ..................................... (128,813) (103,924) (56,332) Death benefits (note 4) ........................ -- (25,723) -- Policy loans (net of repayments) (note 5) ...... (177) (54,872) 49,802 Deductions for surrender charges (note 2d) ..... (11,528) (9,510) (8,421) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (171,662) (149,381) (109,013) Asset charges (note 3): MSP contracts ................................ (2,384) (3,446) (3,326) LSFP contracts ............................... (2,139) (3,118) (4,278) ----------- ----------- ----------- Net equity transactions .................... 116,403 289,744 2,595,131 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (283,556) (262,635) 3,277,443 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 4,560,448 4,823,083 1,545,640 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 4,276,892 4,560,448 4,823,083 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 403,910 378,466 142,086 ----------- ----------- ----------- Units purchased ................................ 56,641 100,713 256,957 Units redeemed ................................. (44,262) (75,269) (20,577) ----------- ----------- ----------- Ending units ................................... 416,289 403,910 378,466 =========== =========== ===========
ACVPINT ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (115,508) (160,634) (123,973) Realized gain (loss) on investments ............ (6,339,097) 4,676,153 2,485,788 Change in unrealized gain (loss) on investments ............................... (1,840,599) (9,830,737) 6,850,984 Reinvested capital gains ....................... 1,789,528 478,387 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (6,505,676) (4,836,831) 9,212,799 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,563,930 1,859,782 1,793,620 Transfers between funds ........................ (1,610,440) 2,472,737 1,521,029 Surrenders ..................................... (411,527) (699,631) (363,715) Death benefits (note 4) ........................ (16,220) (56,581) (15,489) Policy loans (net of repayments) (note 5) ...... (123,790) (164,750) (508,785) Deductions for surrender charges (note 2d) ..... (36,829) (64,025) (54,372) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (668,820) (777,200) (578,192) Asset charges (note 3): MSP contracts ................................ (7,104) (13,908) (9,808) LSFP contracts ............................... (10,541) (14,309) (5,962) ----------- ----------- ----------- Net equity transactions .................... (1,321,341) 2,542,115 1,778,326 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (7,827,017) (2,294,716) 10,991,125 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 22,457,622 24,752,338 13,761,213 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 14,630,605 22,457,622 24,752,338 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 1,027,636 935,555 847,041 ----------- ----------- ----------- Units purchased ................................ 97,198 201,426 177,900 Units redeemed ................................. (174,047) (109,345) (89,386) ----------- ----------- ----------- Ending units ................................... 950,787 1,027,636 935,555 =========== =========== ===========
ACVPVALUE ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... 22,955 7,825 5,292 Realized gain (loss) on investments ............ 272,565 348,832 (14,581) Change in unrealized gain (loss) on investments ............................... 549,875 414,821 (279,501) Reinvested capital gains ....................... -- 89,531 249,026 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. 845,395 861,009 (39,764) ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 582,884 396,314 536,794 Transfers between funds ........................ 4,815,841 2,843,992 (10,220) Surrenders ..................................... (424,152) (139,365) (44,773) Death benefits (note 4) ........................ (32,416) -- (18,972) Policy loans (net of repayments) (note 5) ...... 258,803 (132,570) (46,175) Deductions for surrender charges (note 2d) ..... (37,959) (12,754) (6,693) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (320,328) (122,278) (138,847) Asset charges (note 3): MSP contracts ................................ (5,886) (2,874) (3,246) LSFP contracts ............................... (4,940) (4,255) (1,972) ----------- ----------- ----------- Net equity transactions .................... 4,831,847 2,826,210 265,896 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 5,677,242 3,687,219 226,132 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 6,626,601 2,939,382 2,713,250 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 12,303,843 6,626,601 2,939,382 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 435,109 225,895 205,278 ----------- ----------- ----------- Units purchased ................................ 340,692 242,795 49,493 Units redeemed ................................. (53,917) (33,581) (28,876) ----------- ----------- ----------- Ending units ................................... 721,884 435,109 225,895 =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
CSWPGPV ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ (15,488) (26,477) (13,686) Realized gain (loss) on investments ............ (1,234,999) 156,924 831,668 Change in unrealized gain (loss) on investments ............................... 471,352 (1,447,278) 489,466 Reinvested capital gains ....................... -- 359,529 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (779,135) (957,302) 1,307,448 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 175,113 246,696 139,661 Transfers between funds ........................ (290,162) (728,042) 2,043,854 Surrenders ..................................... (95,856) (35,654) (28,894) Death benefits (note 4) ........................ (2,390) -- -- Policy loans (net of repayments) (note 5) ...... 36,298 (69,160) (72,651) Deductions for surrender charges (note 2d) ..... (8,579) (3,263) (4,319) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (90,037) (103,357) (50,521) Asset charges (note 3): MSP contracts ................................ (952) (1,735) (847) LSFP contracts ............................... (980) (1,618) (855) ----------- ----------- ----------- Net equity transactions .................... (277,545) (696,133) 2,025,428 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (1,056,680) (1,653,435) 3,332,876 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 2,780,103 4,433,538 1,100,662 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 1,723,423 2,780,103 4,433,538 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 176,075 227,326 91,311 ----------- ----------- ----------- Units purchased ................................ 20,442 37,149 157,184 Units redeemed ................................. (42,279) (88,400) (21,169) ----------- ----------- ----------- Ending units ................................... 154,238 176,075 227,326 =========== =========== ===========
CSWPINTEQ ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (56,285) (30,391) 36,167 Realized gain (loss) on investments ............ (3,960,661) 348,782 1,214,234 Change in unrealized gain (loss) on investments ............................... 2,099,268 (4,794,748) 3,271,039 Reinvested capital gains ....................... -- 1,233,063 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (1,917,678) (3,243,294) 4,521,440 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,047,183 1,203,310 1,411,984 Transfers between funds ........................ (704,029) (1,618,161) (167,066) Surrenders ..................................... (368,264) (182,801) (642,724) Death benefits (note 4) ........................ (7,251) (17,201) (124,597) Policy loans (net of repayments) (note 5) ...... (66,856) (160,238) (83,407) Deductions for surrender charges (note 2d) ..... (32,958) (16,729) (96,081) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (361,742) (426,399) (427,942) Asset charges (note 3): MSP contracts ................................ (5,243) (8,051) (8,596) LSFP contracts ............................... (4,614) (6,243) (3,905) ----------- ----------- ----------- Net equity transactions .................... (503,774) (1,232,513) (142,334) ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (2,421,452) (4,475,807) 4,379,106 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 9,192,407 13,668,214 9,289,108 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 6,770,955 9,192,407 13,668,214 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 711,440 779,846 805,473 ----------- ----------- ----------- Units purchased ................................ 110,791 83,704 160,398 Units redeemed ................................. (142,631) (152,110) (186,025) ----------- ----------- ----------- Ending units ................................... 679,600 711,440 779,846 =========== =========== ===========
CSWPSMCO ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (138,697) (216,538) (114,737) Realized gain (loss) on investments ............ (11,329,224) 5,305,559 564,155 Change in unrealized gain (loss) on investments ............................... 7,104,902 (18,360,336) 8,391,845 Reinvested capital gains ....................... -- 5,714,137 709,970 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (4,363,019) (7,557,178) 9,551,233 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,168,671 3,205,250 2,658,532 Transfers between funds ........................ (3,347,967) 7,227,152 (248,812) Surrenders ..................................... (805,855) (818,535) (301,023) Death benefits (note 4) ........................ (86,645) (46,924) (60,498) Policy loans (net of repayments) (note 5) ...... (1,349) (406,035) (288,744) Deductions for surrender charges (note 2d) ..... (72,120) (74,907) (45,000) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (922,151) (1,346,935) (902,731) Asset charges (note 3): MSP contracts ................................ (9,810) (17,598) (9,685) LSFP contracts ............................... (8,705) (12,620) (5,597) ----------- ----------- ----------- Net equity transactions .................... (3,085,931) 7,708,848 796,442 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (7,448,950) 151,670 10,347,675 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 25,677,975 25,526,305 15,178,630 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 18,229,025 25,677,975 25,526,305 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 1,272,956 1,024,167 1,015,805 ----------- ----------- ----------- Units purchased ................................ 137,229 353,977 183,941 Units redeemed ................................. (325,463) (105,188) (175,579) ----------- ----------- ----------- Ending units ................................... 1,084,722 1,272,956 1,024,167 =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
DRYEUROEQ -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ (736) (293) -- Realized gain (loss) on investments ............ 2,841 (6,913) -- Change in unrealized gain (loss) on investments ............................... (878) 1,517 -- Reinvested capital gains ....................... -- 1,253 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 1,227 (4,436) -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 12,657 5,122 -- Transfers between funds ........................ (35,400) 113,027 -- Surrenders ..................................... (1,022) -- -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (300) 2 -- Deductions for surrender charges (note 2d) ..... (91) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (6,296) (2,481) -- Asset charges (note 3): MSP contracts ................................ (46) (27) -- LSFP contracts ............................... (3) (6) -- ------------ ------------ ------------ Net equity transactions .................... (30,501) 115,637 -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (29,274) 111,201 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 111,201 -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 81,927 111,201 -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 11,957 -- -- ------------ ------------ ------------ Units purchased ................................ 6,654 12,230 -- Units redeemed ................................. (6,237) (273) -- ------------ ------------ ------------ Ending units ................................... 12,374 11,957 -- ============ ============ ============
DRYSRGRO -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (109,204) 118 (112,443) Realized gain (loss) on investments ............ (369,365) 721,982 1,789,441 Change in unrealized gain (loss) on investments ............................... (3,939,932) (3,257,761) 1,688,692 Reinvested capital gains ....................... -- -- 646,972 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (4,418,501) (2,535,661) 4,012,662 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,143,427 2,490,032 2,602,017 Transfers between funds ........................ (1,098,629) 2,460,935 2,581,796 Surrenders ..................................... (891,852) (724,497) (387,508) Death benefits (note 4) ........................ (23,643) (47,303) (31,507) Policy loans (net of repayments) (note 5) ...... (372,581) (577,113) (488,829) Deductions for surrender charges (note 2d) ..... (79,816) (66,301) (57,929) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (968,162) (1,048,030) (879,312) Asset charges (note 3): MSP contracts ................................ (6,768) (9,779) (7,129) LSFP contracts ............................... (5,485) (7,247) (5,332) ------------ ------------ ------------ Net equity transactions .................... (1,303,509) 2,470,697 3,326,267 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (5,722,010) (64,964) 7,338,929 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 19,334,340 19,399,304 12,060,375 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 13,612,330 19,334,340 19,399,304 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 629,857 556,165 446,957 ------------ ------------ ------------ Units purchased ................................ 83,928 149,111 173,727 Units redeemed ................................. (139,814) (75,419) (64,519) ------------ ------------ ------------ Ending units ................................... 573,971 629,857 556,165 ============ ============ ============
DRYSTKIX -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... 332,575 213,640 346,881 Realized gain (loss) on investments ............ 9,935 4,081,939 5,075,012 Change in unrealized gain (loss) on investments ............................... (13,687,873) (16,940,040) 11,113,462 Reinvested capital gains ....................... 467,526 1,618,261 920,361 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (12,877,837) (11,026,200) 17,455,716 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 10,603,012 12,374,808 13,344,420 Transfers between funds ........................ 1,384,992 (5,097,368) 11,928,413 Surrenders ..................................... (4,146,012) (3,029,913) (2,827,148) Death benefits (note 4) ........................ (431,669) (407,101) (157,295) Policy loans (net of repayments) (note 5) ...... (379,222) (1,621,944) (1,610,756) Deductions for surrender charges (note 2d) ..... (371,045) (277,277) (422,632) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (4,015,363) (4,198,947) (4,097,507) Asset charges (note 3): MSP contracts ................................ (40,868) (52,991) (54,699) LSFP contracts ............................... (56,827) (60,980) (48,577) ------------ ------------ ------------ Net equity transactions .................... 2,546,998 (2,371,713) 16,054,219 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (10,330,839) (13,397,913) 33,509,935 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 99,153,528 112,551,441 79,041,506 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 88,822,689 99,153,528 112,551,441 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 3,460,355 3,543,874 2,959,968 ------------ ------------ ------------ Units purchased ................................ 525,479 448,057 907,973 Units redeemed ................................. (433,865) (531,576) (324,067) ------------ ------------ ------------ Ending units ................................... 3,551,969 3,460,355 3,543,874 ============ ============ ============
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
DRYAP ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ 8,180 (10,494) (13,667) Realized gain (loss) on investments ............ (93,890) 206,665 415,445 Change in unrealized gain (loss) on investments ............................... (617,829) (365,322) 269,060 Reinvested capital gains ....................... -- 80,911 29,215 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (703,539) (88,240) 700,053 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 775,908 980,051 1,147,358 Transfers between funds ........................ 107,630 (1,176,921) 2,166,937 Surrenders ..................................... (233,967) 101,300 (296,009) Death benefits (note 4) ........................ (642) (8,995) (13,006) Policy loans (net of repayments) (note 5) ...... (93,305) (150,408) (134,352) Deductions for surrender charges (note 2d) ..... (20,939) 9,270 (44,251) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (325,049) (296,841) (299,558) Asset charges (note 3): MSP contracts ................................ (2,606) (2,821) (3,070) LSFP contracts ............................... (6,023) (5,196) (2,988) ----------- ----------- ----------- Net equity transactions .................... 201,007 (550,561) 2,521,061 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (502,532) (638,801) 3,221,114 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 7,251,397 7,890,198 4,669,084 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 6,748,865 7,251,397 7,890,198 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 503,469 540,642 353,868 ----------- ----------- ----------- Units purchased ................................ 85,636 100,075 246,230 Units redeemed ................................. (68,687) (137,248) (59,456) ----------- ----------- ----------- Ending units ................................... 520,418 503,469 540,642 =========== =========== ===========
DRYGRINC ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (4,914) (1,576) 558 Realized gain (loss) on investments ............ (7,978) 67,580 74,977 Change in unrealized gain (loss) on investments ............................... (258,534) (314,432) 230,049 Reinvested capital gains ....................... 45,863 113,207 87,323 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (225,563) (135,221) 392,907 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 293,388 350,148 430,878 Transfers between funds ........................ 103,859 289,849 18,919 Surrenders ..................................... (217,868) (36,572) (34,300) Death benefits (note 4) ........................ (317) -- (18,064) Policy loans (net of repayments) (note 5) ...... (34,479) (40,935) (18,736) Deductions for surrender charges (note 2d) ..... (19,498) (3,347) (5,128) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (138,857) (130,262) (129,582) Asset charges (note 3): MSP contracts ................................ (3,439) (3,923) (3,346) LSFP contracts ............................... (2,419) (2,236) (1,645) ----------- ----------- ----------- Net equity transactions .................... (19,630) 422,722 238,996 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (245,193) 287,501 631,903 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 3,133,370 2,845,869 2,213,966 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 2,888,177 3,133,370 2,845,869 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 220,323 191,266 172,937 ----------- ----------- ----------- Units purchased ................................ 34,265 44,176 59,773 Units redeemed ................................. (37,315) (15,119) (41,444) ----------- ----------- ----------- Ending units ................................... 217,273 220,323 191,266 =========== =========== ===========
FIDVIPEI ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... 720,232 764,744 519,590 Realized gain (loss) on investments ............ 55,848 4,331,220 6,406,550 Change in unrealized gain (loss) on investments ............................... (9,359,446) (5,231,085) (5,267,170) Reinvested capital gains ....................... 3,782,228 5,255,479 2,726,961 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (4,801,138) 5,120,358 4,385,931 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 7,191,894 8,138,570 10,203,955 Transfers between funds ........................ 1,446,582 (10,789,250) (3,247,107) Surrenders ..................................... (3,544,539) (3,122,051) (2,431,139) Death benefits (note 4) ........................ (225,553) (189,944) (137,938) Policy loans (net of repayments) (note 5) ...... (805,494) (1,035,827) (1,117,875) Deductions for surrender charges (note 2d) ..... (317,216) (285,708) (363,433) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (3,630,378) (3,073,309) (3,725,075) Asset charges (note 3): MSP contracts ................................ (39,422) (38,789) (46,610) LSFP contracts ............................... (22,617) (19,695) (17,059) ----------- ----------- ----------- Net equity transactions .................... 53,257 (10,416,003) (882,281) ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (4,747,881) (5,295,645) 3,503,650 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 81,772,283 87,067,928 83,564,278 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 77,024,402 81,772,283 87,067,928 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 2,276,206 2,594,139 2,614,531 ----------- ----------- ----------- Units purchased ................................ 280,800 259,043 349,328 Units redeemed ................................. (271,444) (576,976) (369,720) ----------- ----------- ----------- Ending units ................................... 2,285,562 2,276,206 2,594,139 =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
FIDVIPGR ----------------------------------------------- 2001 2000 1999 ------------- ------------- ------------- INVESTMENT ACTIVITY: Net investment income .......................... $ (929,341) (1,241,653) (929,897) Realized gain (loss) on investments ............ (4,273,764) 3,612,827 15,710,494 Change in unrealized gain (loss) on investments ............................... (33,423,042) (42,932,678) 17,198,414 Reinvested capital gains ....................... 10,107,480 19,550,081 13,551,946 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .................. (28,518,667) (21,011,423) 45,530,957 ------------- ------------- ------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 13,007,093 15,063,048 15,418,413 Transfers between funds ........................ (8,018,175) 2,949,689 13,284,488 Surrenders ..................................... (5,631,639) (5,630,898) (3,962,266) Death benefits (note 4) ........................ (304,251) (464,693) (299,356) Policy loans (net of repayments) (note 5) ...... (1,189,965) (3,566,377) (3,173,351) Deductions for surrender charges (note 2d) ..... (504,000) (515,300) (592,322) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (6,302,082) (6,864,591) (6,220,078) Asset charges (note 3): MSP contracts ................................ (46,539) (69,249) (50,059) LSFP contracts ............................... (31,178) (34,365) (23,234) ------------- ------------- ------------- Net equity transactions .................... (9,020,736) 867,264 14,382,235 ------------- ------------- ------------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (37,539,403) (20,144,159) 59,913,192 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 156,911,792 177,055,951 117,142,759 ------------- ------------- ------------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 119,372,389 156,911,792 177,055,951 ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 3,462,746 3,435,387 3,041,033 ------------- ------------- ------------- Units purchased ................................ 354,493 378,450 730,961 Units redeemed ................................. (591,126) (351,091) (336,607) ------------- ------------- ------------- Ending units ................................... 3,226,113 3,462,746 3,435,387 ============= ============= =============
FIDVIPHI ----------------------------------------------- 2001 2000 1999 ------------- ------------- ------------- INVESTMENT ACTIVITY: Net investment income .......................... 2,247,137 1,524,797 2,372,262 Realized gain (loss) on investments ............ (4,705,027) (934,993) (2,878,622) Change in unrealized gain (loss) on investments ............................... (27,924) (6,237,391) 2,437,032 Reinvested capital gains ....................... -- -- 96,078 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .................. (2,485,814) (5,647,587) 2,026,750 ------------- ------------- ------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,363,311 2,816,915 3,767,754 Transfers between funds ........................ 603,870 (2,585,935) (4,726,508) Surrenders ..................................... (908,331) (1,009,915) (711,931) Death benefits (note 4) ........................ (56,917) (215,967) (83,542) Policy loans (net of repayments) (note 5) ...... (38,801) (36,510) (257,597) Deductions for surrender charges (note 2d) ..... (81,290) (92,420) (106,427) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (953,764) (982,080) (1,219,918) Asset charges (note 3): MSP contracts ................................ (14,190) (22,334) (29,175) LSFP contracts ............................... (8,038) (7,947) (7,937) ------------- ------------- ------------- Net equity transactions .................... 905,850 (2,136,193) (3,375,281) ------------- ------------- ------------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (1,579,964) (7,783,780) (1,348,531) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 18,222,153 26,005,933 27,354,464 ------------- ------------- ------------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 16,642,189 18,222,153 26,005,933 ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 972,429 1,081,513 1,213,502 ------------- ------------- ------------- Units purchased ................................ 170,800 140,914 174,332 Units redeemed ................................. (125,490) (249,998) (306,321) ------------- ------------- ------------- Ending units ................................... 1,017,739 972,429 1,081,513 ============= ============= =============
FIDVIPOV ----------------------------------------------- 2001 2000 1999 ------------- ------------- ------------- INVESTMENT ACTIVITY: Net investment income .......................... 938,954 194,518 132,290 Realized gain (loss) on investments ............ (2,848,287) 1,273,207 2,116,216 Change in unrealized gain (loss) on investments ............................... (4,902,933) (10,130,820) 6,394,423 Reinvested capital gains ....................... 1,740,234 2,677,139 535,780 ------------- ------------- ------------- Net increase (decrease) in contract owners' equity resulting from operations .................. (5,072,032) (5,985,956) 9,178,709 ------------- ------------- ------------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,097,571 2,338,549 2,603,811 Transfers between funds ........................ (1,327,939) (191,092) (1,140,865) Surrenders ..................................... (1,006,514) (1,476,671) (511,027) Death benefits (note 4) ........................ (101,240) (31,249) (42,803) Policy loans (net of repayments) (note 5) ...... (85,860) (709,130) (436,230) Deductions for surrender charges (note 2d) ..... (90,077) (135,135) (76,394) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (832,760) (931,867) (936,056) Asset charges (note 3): MSP contracts ................................ (5,818) (9,547) (9,310) LSFP contracts ............................... (6,533) (8,001) (4,398) ------------- ------------- ------------- Net equity transactions .................... (1,359,170) (1,154,143) (553,272) ------------- ------------- ------------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (6,431,202) (7,140,099) 8,625,437 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 23,708,747 30,848,846 22,223,409 ------------- ------------- ------------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 17,277,545 23,708,747 30,848,846 ============= ============= ============= CHANGES IN UNITS: Beginning units ................................ 1,146,574 1,202,196 1,218,999 ------------- ------------- ------------- Units purchased ................................ 129,935 139,166 165,048 Units redeemed ................................. (208,734) (194,788) (181,851) ------------- ------------- ------------- Ending units ................................... 1,067,775 1,146,574 1,202,196 ============= ============= =============
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
FIDVIPAM -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ 946,367 764,144 769,711 Realized gain (loss) on investments ............ (197,074) 743,891 1,015,529 Change in unrealized gain (loss) on investments ............................... (2,656,974) (5,439,784) 26,818 Reinvested capital gains ....................... 442,307 2,429,670 1,317,530 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (1,465,374) (1,502,079) 3,129,588 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,952,879 2,378,371 2,909,351 Transfers between funds ........................ (924,825) (1,984,742) (2,311,042) Surrenders ..................................... (1,051,266) (944,977) (832,733) Death benefits (note 4) ........................ (24,025) (13,747) (42,640) Policy loans (net of repayments) (note 5) ...... (139,132) (368,885) (659,859) Deductions for surrender charges (note 2d) ..... (94,082) (86,478) (124,486) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,110,503) (1,085,359) (1,199,744) Asset charges (note 3): MSP contracts ................................ (10,168) (11,244) (11,668) LSFP contracts ............................... (3,155) (3,046) (2,332) ------------ ------------ ------------ Net equity transactions .................... (1,404,277) (2,120,107) (2,275,153) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (2,869,651) (3,622,186) 854,435 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 29,485,536 33,107,722 32,253,287 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 26,615,885 29,485,536 33,107,722 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,150,637 1,229,226 1,312,905 ------------ ------------ ------------ Units purchased ................................ 95,668 102,304 133,092 Units redeemed ................................. (151,886) (180,893) (216,771) ------------ ------------ ------------ Ending units ................................... 1,094,419 1,150,637 1,229,226 ============ ============ ============
FIDVIPCON -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... 43,587 (277,542) (198,905) Realized gain (loss) on investments ............ (197,444) 1,601,999 8,607,593 Change in unrealized gain (loss) on investments ............................... (9,738,153) (15,273,672) 2,632,252 Reinvested capital gains ....................... 1,612,865 8,862,945 1,916,516 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (8,279,145) (5,086,270) 12,957,456 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 5,795,249 7,336,354 8,483,644 Transfers between funds ........................ (3,613,770) (2,948,975) 5,291,011 Surrenders ..................................... (2,048,334) (2,212,824) (1,395,137) Death benefits (note 4) ........................ (148,293) (73,090) (199,019) Policy loans (net of repayments) (note 5) ...... (442,265) (1,259,765) (834,500) Deductions for surrender charges (note 2d) ..... (183,314) (202,502) (208,560) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (2,534,714) (2,638,799) (2,643,787) Asset charges (note 3): MSP contracts ................................ (28,667) (38,581) (36,244) LSFP contracts ............................... (22,235) (23,285) (18,084) ------------ ------------ ------------ Net equity transactions .................... (3,226,343) (2,061,467) 8,439,324 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (11,505,488) (7,147,737) 21,396,780 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 64,099,278 71,247,015 49,850,235 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 52,593,790 64,099,278 71,247,015 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 2,697,733 2,777,590 2,397,557 ------------ ------------ ------------ Units purchased ................................ 300,960 337,798 636,459 Units redeemed ................................. (458,872) (417,655) (256,426) ------------ ------------ ------------ Ending units ................................... 2,539,821 2,697,733 2,777,590 ============ ============ ============
FIDVIPGROP -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (13,820) 36,283 11,876 Realized gain (loss) on investments ............ (634,796) (263,449) 453,860 Change in unrealized gain (loss) on investments ............................... (126,832) (1,250,959) (343,328) Reinvested capital gains ....................... -- 391,834 110,237 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (775,448) (1,086,291) 232,645 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 793,729 917,497 1,132,717 Transfers between funds ........................ (496,644) (800,042) 12,561 Surrenders ..................................... (258,771) (161,720) (135,968) Death benefits (note 4) ........................ (237) (20,814) (53,293) Policy loans (net of repayments) (note 5) ...... (39,475) (58,980) (44,200) Deductions for surrender charges (note 2d) ..... (23,158) (14,800) (20,326) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (236,312) (280,822) (320,411) Asset charges (note 3): MSP contracts ................................ (2,717) (3,949) (5,191) LSFP contracts ............................... (2,557) (3,318) (2,905) ------------ ------------ ------------ Net equity transactions .................... (266,142) (426,948) 562,984 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (1,041,590) (1,513,239) 795,629 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 5,170,670 6,683,909 5,888,280 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 4,129,080 5,170,670 6,683,909 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 446,913 475,926 434,495 ------------ ------------ ------------ Units purchased ................................ 82,751 80,319 135,244 Units redeemed ................................. (109,553) (109,332) (93,813) ------------ ------------ ------------ Ending units ................................... 420,111 446,913 475,926 ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
JANCAPAP ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ 4,262 9,106 -- Realized gain (loss) on investments ............ (1,133,638) (67,632) -- Change in unrealized gain (loss) on investments ............................... 244,422 (509,550) -- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (884,954) (568,076) -- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 395,668 163,374 -- Transfers between funds ........................ 497,060 3,483,176 -- Surrenders ..................................... (98,492) (18,995) -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (63,185) (36,245) -- Deductions for surrender charges (note 2d) ..... (8,814) (1,738) -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (158,392) (66,641) -- Asset charges (note 3): MSP contracts ................................ (2,325) (1,552) -- LSFP contracts ............................... (1,195) (436) -- ----------- ----------- ----------- Net equity transactions .................... 560,325 3,520,943 -- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (324,629) 2,952,867 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 2,952,867 -- -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 2,628,238 2,952,867 -- =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 373,970 -- -- ----------- ----------- ----------- Units purchased ................................ 118,903 387,744 -- Units redeemed ................................. (64,088) (13,774) -- ----------- ----------- ----------- Ending units ................................... 428,785 373,970 -- =========== =========== ===========
JANGLTECH ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (3,153) 4,424 -- Realized gain (loss) on investments ............ (2,122,695) 13,176 -- Change in unrealized gain (loss) on investments ............................... 1,125,331 (1,148,444) -- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (1,000,517) (1,130,844) -- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 364,127 200,047 -- Transfers between funds ........................ 478,283 3,477,054 -- Surrenders ..................................... (146,539) (16,070) -- Death benefits (note 4) ........................ (98,999) -- -- Policy loans (net of repayments) (note 5) ...... (41,135) (15,097) -- Deductions for surrender charges (note 2d) ..... (13,114) (1,471) -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (106,881) (59,588) -- Asset charges (note 3): MSP contracts ................................ (1,712) (1,521) -- LSFP contracts ............................... (802) (407) -- ----------- ----------- ----------- Net equity transactions .................... 433,228 3,582,947 -- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (567,289) 2,452,103 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 2,452,103 -- -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 1,884,814 2,452,103 -- =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 363,557 -- -- ----------- ----------- ----------- Units purchased ................................ 180,547 375,042 -- Units redeemed ................................. (94,989) (11,485) -- ----------- ----------- ----------- Ending units ................................... 449,115 363,557 -- =========== =========== ===========
JANINTGRO ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (2,522) 59,459 -- Realized gain (loss) on investments ............ (1,006,099) (181,333) -- Change in unrealized gain (loss) on investments ............................... 441,311 (349,293) -- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (567,310) (471,167) -- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 286,461 121,443 -- Transfers between funds ........................ 263,144 2,598,237 -- Surrenders ..................................... (60,603) (16,540) -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (50,849) (11,714) -- Deductions for surrender charges (note 2d) ..... (5,424) (1,514) -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (95,431) (34,493) -- Asset charges (note 3): MSP contracts ................................ (1,219) (1,038) -- LSFP contracts ............................... (668) (146) -- ----------- ----------- ----------- Net equity transactions .................... 335,411 2,654,235 -- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (231,899) 2,183,068 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 2,183,068 -- -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 1,951,169 2,183,068 -- =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 276,083 -- -- ----------- ----------- ----------- Units purchased ................................ 104,433 284,504 -- Units redeemed ................................. (55,767) (8,421) -- ----------- ----------- ----------- Ending units ................................... 324,749 276,083 -- =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATCAPAP -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ (149,321) (197,752) (45,147) Realized gain (loss) on investments ............ (4,280,310) (44,470) 1,545,323 Change in unrealized gain (loss) on investments ............................... (3,202,773) (16,033,473) (2,937,651) Reinvested capital gains ....................... -- 6,018,129 2,820,485 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (7,632,404) (10,257,566) 1,383,010 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 4,054,677 5,307,598 6,414,922 Transfers between funds ........................ (1,301,931) (7,322,445) (902,464) Surrenders ..................................... (1,215,938) (1,101,685) (1,464,698) Death benefits (note 4) ........................ (94,201) (67,374) (26,646) Policy loans (net of repayments) (note 5) ...... (469,940) (651,768) (839,186) Deductions for surrender charges (note 2d) ..... (108,820) (100,818) (218,959) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,486,232) (1,990,000) (2,416,248) Asset charges (note 3): MSP contracts ................................ (8,664) (20,853) (26,238) LSFP contracts ............................... (9,001) (15,363) (15,764) ------------ ------------ ------------ Net equity transactions .................... (640,050) (5,962,708) 504,719 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (8,272,454) (16,220,274) 1,887,729 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 26,950,799 43,171,073 41,283,344 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 18,678,345 26,950,799 43,171,073 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,201,390 1,403,197 1,381,944 ------------ ------------ ------------ Units purchased ................................ 245,018 187,771 272,423 Units redeemed ................................. (289,101) (389,578) (251,170) ------------ ------------ ------------ Ending units ................................... 1,157,307 1,201,390 1,403,197 ============ ============ ============
NSATMIDCAPIX -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (4,071) 819 -- Realized gain (loss) on investments ............ (255,703) 17,525 -- Change in unrealized gain (loss) on investments ............................... 115,892 (68,941) -- Reinvested capital gains ....................... 25,776 59,565 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (118,106) 8,968 -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 190,528 32,770 -- Transfers between funds ........................ 1,669,130 1,786,882 -- Surrenders ..................................... (44,557) (2,384) -- Death benefits (note 4) ........................ (7,174) -- -- Policy loans (net of repayments) (note 5) ...... (24,551) (7,462) -- Deductions for surrender charges (note 2d) ..... (3,988) (218) -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (116,906) (19,481) -- Asset charges (note 3): MSP contracts ................................ (1,953) (199) -- LSFP contracts ............................... (578) (87) -- ------------ ------------ ------------ Net equity transactions .................... 1,659,951 1,789,821 -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 1,541,845 1,798,789 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 1,798,789 -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 3,340,634 1,798,789 -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 171,893 -- -- ------------ ------------ ------------ Units purchased ................................ 173,353 174,796 -- Units redeemed ................................. (19,255) (2,903) -- ------------ ------------ ------------ Ending units ................................... 325,991 171,893 -- ============ ============ ============
NSATEMMKT -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... 75 (21) -- Realized gain (loss) on investments ............ (24,506) (1,147) -- Change in unrealized gain (loss) on investments ............................... 33,345 (711) -- Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 8,914 (1,879) -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 5,169 541 -- Transfers between funds ........................ 413,987 10,816 -- Surrenders ..................................... (2,213) -- -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... 198 -- -- Deductions for surrender charges (note 2d) ..... (198) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (7,221) (235) -- Asset charges (note 3): MSP contracts ................................ (295) -- -- LSFP contracts ............................... (7) -- -- ------------ ------------ ------------ Net equity transactions .................... 409,420 11,122 -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 418,334 9,243 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 9,243 -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 427,577 9,243 -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,063 -- -- ------------ ------------ ------------ Units purchased ................................ 52,164 1,081 -- Units redeemed ................................. (1,215) (18) -- ------------ ------------ ------------ Ending units ................................... 52,012 1,063 -- ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATGLOBTC ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ (2,955) (918) -- Realized gain (loss) on investments ............ (424,935) (5,935) -- Change in unrealized gain (loss) on investments ............................... 215,502 (233,078) -- Reinvested capital gains ....................... -- 8,554 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (212,388) (231,377) -- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 75,992 13,606 -- Transfers between funds ........................ 172,244 634,363 -- Surrenders ..................................... (3,862) -- -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (58,752) (641) -- Deductions for surrender charges (note 2d) ..... (346) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (29,002) (9,740) -- Asset charges (note 3): MSP contracts ................................ (90) (34) -- LSFP contracts ............................... -- -- -- ----------- ----------- ----------- Net equity transactions .................... 156,184 637,554 -- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (56,204) 406,177 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 406,177 -- -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 349,973 406,177 -- =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 67,646 -- -- ----------- ----------- ----------- Units purchased ................................ 65,702 68,793 -- Units redeemed ................................. (30,732) (1,147) -- ----------- ----------- ----------- Ending units ................................... 102,616 67,646 -- =========== =========== ===========
NSATINTGR ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (165) (14) -- Realized gain (loss) on investments ............ (3,090) (233) -- Change in unrealized gain (loss) on investments ............................... 1,005 (168) -- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (2,250) (415) -- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,587 2 -- Transfers between funds ........................ 52,127 4,696 -- Surrenders ..................................... (14) -- -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (105) (1) -- Deductions for surrender charges (note 2d) ..... (1) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,273) (100) -- Asset charges (note 3): MSP contracts ................................ -- -- -- LSFP contracts ............................... -- -- -- ----------- ----------- ----------- Net equity transactions .................... 53,321 4,597 -- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 51,071 4,182 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 4,182 -- -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 55,253 4,182 -- =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 453 -- -- ----------- ----------- ----------- Units purchased ................................ 8,228 464 -- Units redeemed ................................. (225) (11) -- ----------- ----------- ----------- Ending units ................................... 8,456 453 -- =========== =========== ===========
NSATGVTBD ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... 682,702 593,146 665,371 Realized gain (loss) on investments ............ 690,349 (132,300) (851,332) Change in unrealized gain (loss) on investments ............................... (567,238) 822,785 (301,600) Reinvested capital gains ....................... 25,190 -- 25,753 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. 831,003 1,283,631 (461,808) ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,047,084 943,979 755,607 Transfers between funds ........................ 6,329,761 (1,337,392) 381,498 Surrenders ..................................... (497,629) (403,544) (310,304) Death benefits (note 4) ........................ (69,873) (5,619) (3,017) Policy loans (net of repayments) (note 5) ...... (1,259,271) (161,143) (495,291) Deductions for surrender charges (note 2d) ..... (44,535) (36,929) (46,387) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (627,606) (631,603) (500,735) Asset charges (note 3): MSP contracts ................................ (13,288) (9,707) (13,045) LSFP contracts ............................... (8,008) (4,392) (2,382) ----------- ----------- ----------- Net equity transactions .................... 4,856,635 (1,646,350) (234,056) ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 5,687,638 (362,719) (695,864) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 12,999,190 13,361,909 14,057,773 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 18,686,828 12,999,190 13,361,909 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 696,947 791,927 790,689 ----------- ----------- ----------- Units purchased ................................ 377,562 74,451 135,050 Units redeemed ................................. (134,347) (169,431) (133,812) ----------- ----------- ----------- Ending units ................................... 940,162 696,947 791,927 =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATMSECBD ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ 26,704 3,488 -- Realized gain (loss) on investments ............ (16,549) (786) -- Change in unrealized gain (loss) on investments ............................... (1,097) 457 -- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. 9,058 3,159 -- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 22,300 2,289 -- Transfers between funds ........................ 526,721 82,990 -- Surrenders ..................................... (4,013) -- -- Death benefits (note 4) ........................ (954) -- -- Policy loans (net of repayments) (note 5) ...... (829) (190) -- Deductions for surrender charges (note 2d) ..... (359) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (13,528) (1,041) -- Asset charges (note 3): MSP contracts ................................ (733) (115) -- LSFP contracts ............................... (60) (4) -- ----------- ----------- ----------- Net equity transactions .................... 528,545 83,929 -- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 537,603 87,088 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 87,088 -- -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 624,691 87,088 -- =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 8,333 -- -- ----------- ----------- ----------- Units purchased ................................ 54,885 8,485 -- Units redeemed ................................. (5,339) (152) -- ----------- ----------- ----------- Ending units ................................... 57,879 8,333 -- =========== =========== ===========
NSATMYMKT ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... 1,471,308 2,643,745 2,192,750 Realized gain (loss) on investments ............ -- -- -- Change in unrealized gain (loss) on investments ............................... -- -- -- Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. 1,471,308 2,643,745 2,192,750 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 7,038,540 9,251,495 33,970,462 Transfers between funds ........................ (1,799,877) (7,781,365) (20,060,327) Surrenders ..................................... (6,733,123) (3,720,656) (2,949,962) Death benefits (note 4) ........................ (323,940) (45,052) (1,748,315) Policy loans (net of repayments) (note 5) ...... 312,202 335,834 257,119 Deductions for surrender charges (note 2d) ..... (602,577) (340,488) (440,992) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (2,220,627) (1,615,471) (2,710,844) Asset charges (note 3): MSP contracts ................................ (44,176) (45,443) (55,122) LSFP contracts ............................... (38,727) (27,847) (32,642) ----------- ----------- ----------- Net equity transactions .................... (4,412,305) (3,988,993) 6,229,377 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (2,940,997) (1,345,248) 8,422,127 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 54,591,864 55,937,112 47,514,985 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 51,650,867 54,591,864 55,937,112 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 3,829,526 4,122,003 3,682,600 ----------- ----------- ----------- Units purchased ................................ 732,398 935,006 3,648,845 Units redeemed ................................. (1,021,909) (1,227,483) (3,209,442) ----------- ----------- ----------- Ending units ................................... 3,540,015 3,829,526 4,122,003 =========== =========== ===========
NSATSMCAPG ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (8,611) (2,514) -- Realized gain (loss) on investments ............ (223,133) (74,213) -- Change in unrealized gain (loss) on investments ............................... 178,447 (167,853) -- Reinvested capital gains ....................... -- 2,683 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (53,297) (241,897) -- ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 104,712 34,629 -- Transfers between funds ........................ 646,697 992,140 -- Surrenders ..................................... (30,141) (8,200) -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (30,450) (923) -- Deductions for surrender charges (note 2d) ..... (2,697) (750) -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (61,379) (14,507) -- Asset charges (note 3): MSP contracts ................................ (635) (255) -- LSFP contracts ............................... (264) (8) -- ----------- ----------- ----------- Net equity transactions .................... 625,843 1,002,126 -- ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 572,546 760,229 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 760,229 -- -- ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 1,332,775 760,229 -- =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 94,113 -- -- ----------- ----------- ----------- Units purchased ................................ 113,449 96,894 -- Units redeemed ................................. (21,282) (2,781) -- ----------- ----------- ----------- Ending units ................................... 186,280 94,113 -- =========== =========== ===========
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATSMCAPV -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ (93,474) (51,635) (12,857) Realized gain (loss) on investments ............ 110,418 163,206 435,390 Change in unrealized gain (loss) on investments ............................... 1,228,548 (1,082,758) (178,227) Reinvested capital gains ....................... 1,026,030 1,418,043 463,979 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 2,271,522 446,856 708,285 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 856,736 441,523 205,584 Transfers between funds ........................ 6,194,722 4,096,956 1,364,159 Surrenders ..................................... (349,290) (460,458) (9,301) Death benefits (note 4) ........................ (3,924) (1,053) -- Policy loans (net of repayments) (note 5) ...... (53,992) (43,917) (17,764) Deductions for surrender charges (note 2d) ..... (31,259) (42,138) (1,390) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (387,192) (151,631) (60,914) Asset charges (note 3): MSP contracts ................................ (5,500) (2,859) (3,844) LSFP contracts ............................... (8,972) (7,330) (2,270) ------------ ------------ ------------ Net equity transactions .................... 6,211,329 3,829,093 1,474,260 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 8,482,851 4,275,949 2,182,545 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 7,299,116 3,023,167 840,622 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 15,781,967 7,299,116 3,023,167 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 610,738 277,593 98,226 ------------ ------------ ------------ Units purchased ................................ 520,517 411,148 195,544 Units redeemed ................................. (96,353) (78,003) (16,177) ------------ ------------ ------------ Ending units ................................... 1,034,902 610,738 277,593 ============ ============ ============
NSATSMCO -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (165,788) (212,417) (133,984) Realized gain (loss) on investments ............ (4,402,099) 9,053,628 322,338 Change in unrealized gain (loss) on investments ............................... 2,206,825 (12,312,627) 6,521,648 Reinvested capital gains ....................... -- 5,338,437 1,017,362 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (2,361,062) 1,867,021 7,727,364 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,441,354 2,677,792 3,047,229 Transfers between funds ........................ (3,075,492) 2,990,395 108,189 Surrenders ..................................... (849,541) (609,371) (506,958) Death benefits (note 4) ........................ (69,847) (168,776) (58,447) Policy loans (net of repayments) (note 5) ...... (474,171) (467,147) (304,105) Deductions for surrender charges (note 2d) ..... (76,029) (55,765) (75,786) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,301,720) (1,160,409) (1,042,927) Asset charges (note 3): MSP contracts ................................ (17,316) (21,930) (14,377) LSFP contracts ............................... (13,625) (16,087) (6,706) ------------ ------------ ------------ Net equity transactions .................... (3,436,387) 3,168,702 1,146,112 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (5,797,449) 5,035,723 8,873,476 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 31,404,476 26,368,753 17,495,277 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 25,607,027 31,404,476 26,368,753 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,306,261 1,185,688 1,118,367 ------------ ------------ ------------ Units purchased ................................ 116,845 234,167 222,497 Units redeemed ................................. (281,130) (113,594) (155,176) ------------ ------------ ------------ Ending units ................................... 1,141,976 1,306,261 1,185,688 ============ ============ ============
NSATSTMCAP -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (6,440) (2,791) -- Realized gain (loss) on investments ............ (447,934) (87,965) -- Change in unrealized gain (loss) on investments ............................... 118,872 (109,003) -- Reinvested capital gains ....................... -- 14,918 -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (335,502) (184,841) -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 128,618 52,824 -- Transfers between funds ........................ 407,630 989,506 -- Surrenders ..................................... (17,647) (1,135) -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (28,387) (20,424) -- Deductions for surrender charges (note 2d) ..... (1,579) (104) -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (47,737) (14,396) -- Asset charges (note 3): MSP contracts ................................ (769) (656) -- LSFP contracts ............................... (240) (36) -- ------------ ------------ ------------ Net equity transactions .................... 439,889 1,005,579 -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 104,387 820,738 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 820,738 -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 925,125 820,738 -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 101,174 -- -- ------------ ------------ ------------ Units purchased ................................ 87,445 105,044 -- Units redeemed ................................. (23,747) (3,870) -- ------------ ------------ ------------ Ending units ................................... 164,872 101,174 -- ============ ============ ============
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NSATTOTRE -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ 10,101 (124,674) (110,908) Realized gain (loss) on investments ............ (1,755,795) 4,343,276 2,886,861 Change in unrealized gain (loss) on investments ............................... (11,829,407) (40,766,537) (615,625) Reinvested capital gains ....................... 2,194,987 33,726,301 3,857,973 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (11,380,114) (2,821,634) 6,018,301 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 10,570,297 12,173,163 14,477,695 Transfers between funds ........................ (1,415,297) (9,625,991) (3,544,992) Surrenders ..................................... (4,543,745) (3,857,717) (2,714,451) Death benefits (note 4) ........................ (691,160) (355,642) (233,861) Policy loans (net of repayments) (note 5) ...... (338,342) (2,458,440) (2,351,544) Deductions for surrender charges (note 2d) ..... (406,639) (353,031) (405,785) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (5,593,239) (5,594,595) (6,266,041) Asset charges (note 3): MSP contracts ................................ (34,275) (42,471) (46,751) LSFP contracts ............................... (19,473) (21,288) (17,691) ------------ ------------ ------------ Net equity transactions .................... (2,471,873) (10,136,012) (1,103,421) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (13,851,987) (12,957,646) 4,914,880 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 91,072,596 104,030,242 99,115,362 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 77,220,609 91,072,596 104,030,242 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 2,847,611 3,151,278 3,169,018 ------------ ------------ ------------ Units purchased ................................ 387,748 376,602 505,511 Units redeemed ................................. (476,855) (680,269) (523,251) ------------ ------------ ------------ Ending units ................................... 2,758,504 2,847,611 3,151,278 ============ ============ ============
NSATGRFOC -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (1,295) (100) -- Realized gain (loss) on investments ............ (142,465) (2,764) -- Change in unrealized gain (loss) on investments ............................... 26,613 (24,195) -- Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (117,147) (27,059) -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 17,433 2,062 -- Transfers between funds ........................ 263,212 75,866 -- Surrenders ..................................... (397) -- -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (5) (160) -- Deductions for surrender charges (note 2d) ..... (35) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (8,497) (1,281) -- Asset charges (note 3): MSP contracts ................................ (166) -- -- LSFP contracts ............................... -- -- -- ------------ ------------ ------------ Net equity transactions .................... 271,545 76,487 -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 154,398 49,428 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 49,428 -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 203,826 49,428 -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 7,806 -- -- ------------ ------------ ------------ Units purchased ................................ 47,788 7,989 -- Units redeemed ................................. (2,354) (183) -- ------------ ------------ ------------ Ending units ................................... 53,240 7,806 -- ============ ============ ============
NBAMTBAL ------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (43) -- -- Realized gain (loss) on investments ............ (16) -- -- Change in unrealized gain (loss) on investments ............................... 125 -- -- Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 66 -- -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 469 -- -- Transfers between funds ........................ 14,107 -- -- Surrenders ..................................... -- -- -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... -- -- -- Deductions for surrender charges (note 2d) ..... -- -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (374) -- -- Asset charges (note 3): MSP contracts ................................ -- -- -- LSFP contracts ............................... -- -- -- ------------ ------------ ------------ Net equity transactions .................... 14,202 -- -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 14,268 -- -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... -- -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 14,268 -- -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ -- -- -- ------------ ------------ ------------ Units purchased ................................ 654 -- -- Units redeemed ................................. (18) -- -- ------------ ------------ ------------ Ending units ................................... 636 -- -- ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NBAMTGRO -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ (193,586) (326,947) (183,268) Realized gain (loss) on investments ............ (28,997,129) 9,694,143 2,237,185 Change in unrealized gain (loss) on investments ............................... 6,433,848 (18,572,555) 7,073,105 Reinvested capital gains ....................... 12,536,350 3,211,533 1,124,154 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (10,220,517) (5,993,826) 10,251,176 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,731,498 3,061,931 2,741,841 Transfers between funds ........................ 444,727 9,518,532 (2,585,171) Surrenders ..................................... (974,018) (1,565,105) (733,093) Death benefits (note 4) ........................ (42,216) (35,426) (1,410,172) Policy loans (net of repayments) (note 5) ...... (212,223) (903,203) (530,684) Deductions for surrender charges (note 2d) ..... (87,169) (143,228) (109,591) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,244,333) (1,638,100) (1,049,294) Asset charges (note 3): MSP contracts ................................ (12,841) (20,766) (9,624) LSFP contracts ............................... (9,710) (11,928) (4,427) ------------ ------------ ------------ Net equity transactions .................... 593,715 8,262,707 (3,690,215) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (9,626,802) 2,268,881 6,560,961 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 33,341,564 31,072,683 24,511,722 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 23,714,762 33,341,564 31,072,683 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,073,053 862,532 1,004,418 ------------ ------------ ------------ Units purchased ................................ 180,511 320,777 172,219 Units redeemed ................................. (138,923) (110,256) (314,105) ------------ ------------ ------------ Ending units ................................... 1,114,641 1,073,053 862,532 ============ ============ ============
NBAMTGUARD -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (6,035) (2,263) (8,218) Realized gain (loss) on investments ............ 6,732 81,869 87,231 Change in unrealized gain (loss) on investments ............................... (216,517) (98,383) 43,771 Reinvested capital gains ....................... 152,227 -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (63,593) (18,777) 122,784 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 222,976 236,546 241,772 Transfers between funds ........................ 726,698 (205,049) 1,149,560 Surrenders ..................................... (143,079) (207,025) (18,129) Death benefits (note 4) ........................ -- (13,947) (281) Policy loans (net of repayments) (note 5) ...... (25,903) (1,956) (19,356) Deductions for surrender charges (note 2d) ..... (12,805) (18,946) (2,710) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (90,460) (64,600) (59,481) Asset charges (note 3): MSP contracts ................................ (1,858) (1,487) (1,168) LSFP contracts ............................... (1,559) (1,145) (701) ------------ ------------ ------------ Net equity transactions .................... 674,010 (277,609) 1,289,506 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 610,417 (296,386) 1,412,290 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 1,974,105 2,270,491 858,201 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 2,584,522 1,974,105 2,270,491 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 184,667 213,441 92,073 ------------ ------------ ------------ Units purchased ................................ 88,493 29,781 134,132 Units redeemed ................................. (26,023) (58,555) (12,764) ------------ ------------ ------------ Ending units ................................... 247,137 184,667 213,441 ============ ============ ============
NBAMTLMAT -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... 220,379 274,820 241,375 Realized gain (loss) on investments ............ 89,230 (266,075) (74,295) Change in unrealized gain (loss) on investments ............................... 11,853 223,548 (128,665) Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 321,462 232,293 38,415 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 299,644 124,829 418,414 Transfers between funds ........................ 1,321,934 (907,154) (166,249) Surrenders ..................................... (773,410) (310,740) (82,093) Death benefits (note 4) ........................ (14,103) -- (50,646) Policy loans (net of repayments) (note 5) ...... 159,958 (7,769) (66,552) Deductions for surrender charges (note 2d) ..... (69,216) (28,437) (12,272) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (172,678) (139,082) (161,822) Asset charges (note 3): MSP contracts ................................ (5,349) (5,836) (7,656) LSFP contracts ............................... (1,030) (720) (487) ------------ ------------ ------------ Net equity transactions .................... 745,750 (1,274,909) (129,363) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 1,067,212 (1,042,616) (90,948) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 3,885,764 4,928,380 5,019,328 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 4,952,976 3,885,764 4,928,380 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 252,610 342,163 349,795 ------------ ------------ ------------ Units purchased ................................ 105,369 23,235 62,199 Units redeemed ................................. (59,489) (112,788) (69,831) ------------ ------------ ------------ Ending units ................................... 298,490 252,610 342,163 ============ ============ ============
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
NBAMTPART -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ (75,310) 23,707 160,794 Realized gain (loss) on investments ............ (803,266) (2,426,344) (548,879) Change in unrealized gain (loss) on investments ............................... (872,728) (2,383,122) 1,854,882 Reinvested capital gains ....................... 860,887 4,631,886 687,554 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (890,417) (153,873) 2,154,351 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 2,895,052 3,997,213 5,441,082 Transfers between funds ........................ (551,168) (6,757,477) (8,211,478) Surrenders ..................................... (900,324) (1,477,559) (949,302) Death benefits (note 4) ........................ (80,967) (143,800) (94,956) Policy loans (net of repayments) (note 5) ...... (121,221) (176,640) (473,894) Deductions for surrender charges (note 2d) ..... (80,574) (135,216) (141,912) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,226,475) (1,294,898) (1,823,914) Asset charges (note 3): MSP contracts ................................ (16,055) (19,393) (23,724) LSFP contracts ............................... (13,840) (12,402) (10,391) ------------ ------------ ------------ Net equity transactions .................... (95,572) (6,020,172) (6,288,489) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (985,989) (6,174,045) (4,134,138) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 24,634,148 30,808,193 34,942,331 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 23,648,159 24,634,148 30,808,193 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,056,621 1,307,010 1,570,249 ------------ ------------ ------------ Units purchased ................................ 143,261 184,798 257,385 Units redeemed ................................. (149,545) (435,187) (520,624) ------------ ------------ ------------ Ending units ................................... 1,050,337 1,056,621 1,307,010 ============ ============ ============
OPPAGGGRO -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... 4,198 (9,718) -- Realized gain (loss) on investments ............ (1,542,830) (489,326) -- Change in unrealized gain (loss) on investments ............................... 307,499 (435,498) -- Reinvested capital gains ....................... 315,653 -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (915,480) (934,542) -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 414,251 238,305 -- Transfers between funds ........................ (327,543) 3,670,423 -- Surrenders ..................................... (70,469) (19,423) -- Death benefits (note 4) ........................ -- -- -- Policy loans (net of repayments) (note 5) ...... (30,433) (15,499) -- Deductions for surrender charges (note 2d) ..... (6,307) (1,778) -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (140,549) (63,844) -- Asset charges (note 3): MSP contracts ................................ (1,861) (1,077) -- LSFP contracts ............................... (353) (72) -- ------------ ------------ ------------ Net equity transactions .................... (163,264) 3,807,035 -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (1,078,744) 2,872,493 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 2,872,493 -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 1,793,749 2,872,493 -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 369,008 -- -- ------------ ------------ ------------ Units purchased ................................ 71,698 379,813 -- Units redeemed ................................. (102,937) (10,805) -- ------------ ------------ ------------ Ending units ................................... 337,769 369,008 -- ============ ============ ============
OPPBDFD -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... 771,452 804,164 472,261 Realized gain (loss) on investments ............ (494,081) (238,067) (6,702) Change in unrealized gain (loss) on investments ............................... 471,071 16,219 (794,086) Reinvested capital gains ....................... -- -- 54,146 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 748,442 582,316 (274,381) ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,078,932 1,288,550 1,530,602 Transfers between funds ........................ 1,213,664 (1,146,061) (747,631) Surrenders ..................................... (744,342) (429,249) (352,928) Death benefits (note 4) ........................ (21,063) (4,850) (9,225) Policy loans (net of repayments) (note 5) ...... (35,391) (75,839) (214,389) Deductions for surrender charges (note 2d) ..... (66,614) (39,282) (52,759) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (528,090) (431,185) (496,721) Asset charges (note 3): MSP contracts ................................ (10,865) (9,970) (9,861) LSFP contracts ............................... (3,915) (2,013) (1,060) ------------ ------------ ------------ Net equity transactions .................... 882,316 (849,899) (353,972) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 1,630,758 (267,583) (628,353) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 11,466,171 11,733,754 12,362,107 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 13,096,929 11,466,171 11,733,754 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 647,048 692,055 707,690 ------------ ------------ ------------ Units purchased ................................ 120,657 89,307 108,517 Units redeemed ................................. (75,805) (134,314) (124,152) ------------ ------------ ------------ Ending units ................................... 691,900 647,048 692,055 ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
OPPCAPAP -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ (19,077) (110,855) (32,613) Realized gain (loss) on investments ............ (1,029,806) 1,860,687 710,047 Change in unrealized gain (loss) on investments ............................... (3,248,518) (3,665,305) 1,735,399 Reinvested capital gains ....................... 1,656,912 1,008,850 175,824 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (2,640,489) (906,623) 2,588,657 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,908,054 2,157,034 1,214,511 Transfers between funds ........................ 1,333,450 6,354,660 3,004,317 Surrenders ..................................... (730,423) (726,427) (60,102) Death benefits (note 4) ........................ (20,947) (6,975) (6,703) Policy loans (net of repayments) (note 5) ...... (312,079) (235,392) (111,846) Deductions for surrender charges (note 2d) ..... (65,369) (66,477) (8,985) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (860,437) (739,986) (351,903) Asset charges (note 3): MSP contracts ................................ (9,111) (9,840) (4,217) LSFP contracts ............................... (7,689) (7,653) (3,718) ------------ ------------ ------------ Net equity transactions .................... 1,235,449 6,718,944 3,671,354 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (1,405,040) 5,812,321 6,260,011 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 18,099,350 12,287,029 6,027,018 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 16,694,310 18,099,350 12,287,029 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,010,305 679,081 467,763 ------------ ------------ ------------ Units purchased ................................ 199,382 432,286 284,637 Units redeemed ................................. (135,693) (101,062) (73,319) ------------ ------------ ------------ Ending units ................................... 1,073,994 1,010,305 679,081 ============ ============ ============
OPPGLSEC -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (17,114) (213,733) 65,415 Realized gain (loss) on investments ............ 711,276 1,641,953 2,137,635 Change in unrealized gain (loss) on investments ............................... (10,336,593) (5,708,731) 9,595,322 Reinvested capital gains ....................... 4,652,673 5,565,874 717,222 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (4,989,758) 1,285,363 12,515,594 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 3,040,269 3,586,290 3,377,203 Transfers between funds ........................ (700,733) 3,670,519 127,319 Surrenders ..................................... (1,165,344) (1,335,643) (755,080) Death benefits (note 4) ........................ (59,812) (106,833) (44,903) Policy loans (net of repayments) (note 5) ...... (641,888) (736,228) (343,214) Deductions for surrender charges (note 2d) ..... (104,292) (122,229) (112,877) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,470,276) (1,541,228) (1,110,398) Asset charges (note 3): MSP contracts ................................ (14,321) (17,080) (9,874) LSFP contracts ............................... (7,414) (8,237) (4,111) ------------ ------------ ------------ Net equity transactions .................... (1,123,811) 3,389,331 1,124,065 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (6,113,569) 4,674,694 13,639,659 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 39,444,895 34,770,201 21,130,542 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 33,331,326 39,444,895 34,770,201 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,321,836 1,212,506 1,158,329 ------------ ------------ ------------ Units purchased ................................ 124,911 237,815 196,187 Units redeemed ................................. (168,042) (128,485) (142,010) ------------ ------------ ------------ Ending units ................................... 1,278,705 1,321,836 1,212,506 ============ ============ ============
OPPMSGRINC -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (1,569) (965) -- Realized gain (loss) on investments ............ (68,580) 2,561 -- Change in unrealized gain (loss) on investments ............................... 3,903 (40,617) -- Reinvested capital gains ....................... -- -- -- ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (66,246) (39,021) -- ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 73,457 18,231 -- Transfers between funds ........................ 478,473 465,697 -- Surrenders ..................................... (13,868) -- -- Death benefits (note 4) ........................ (5,572) -- -- Policy loans (net of repayments) (note 5) ...... (6,462) (13,064) -- Deductions for surrender charges (note 2d) ..... (1,241) -- -- Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (28,125) (5,465) -- Asset charges (note 3): MSP contracts ................................ (846) (407) -- LSFP contracts ............................... (396) (32) -- ------------ ------------ ------------ Net equity transactions .................... 495,420 464,960 -- ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 429,174 425,939 -- CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 425,939 -- -- ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 855,113 425,939 -- ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 47,244 -- -- ------------ ------------ ------------ Units purchased ................................ 67,246 49,163 -- Units redeemed ................................. (8,150) (1,919) -- ------------ ------------ ------------ Ending units ................................... 106,340 47,244 -- ============ ============ ============
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
OPPMULT -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... $ 463,119 559,143 364,821 Realized gain (loss) on investments ............ (253,215) 397,611 405,169 Change in unrealized gain (loss) on investments ............................... (788,871) (1,160,185) 10,270 Reinvested capital gains ....................... 782,407 993,822 694,901 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 203,440 790,391 1,475,161 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 1,340,866 1,409,025 1,717,678 Transfers between funds ........................ 73,937 (593,747) (1,101,933) Surrenders ..................................... (1,108,678) (532,389) (382,853) Death benefits (note 4) ........................ (15,941) (31,040) (36,757) Policy loans (net of repayments) (note 5) ...... (124,435) (299,399) (234,710) Deductions for surrender charges (note 2d) ..... (99,220) (48,720) (57,233) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (685,803) (598,149) (646,532) Asset charges (note 3): MSP contracts ................................ (8,884) (8,633) (8,700) LSFP contracts ............................... (3,101) (2,652) (1,730) ------------ ------------ ------------ Net equity transactions .................... (631,259) (705,704) (752,770) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (427,819) 84,687 722,391 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 15,014,837 14,930,150 14,207,759 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 14,587,018 15,014,837 14,930,150 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 597,489 625,008 661,584 ------------ ------------ ------------ Units purchased ................................ 62,920 66,207 80,794 Units redeemed ................................. (85,593) (93,726) (117,370) ------------ ------------ ------------ Ending units ................................... 574,816 597,489 625,008 ============ ============ ============
STOPP2 -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (90,855) (355,887) (283,101) Realized gain (loss) on investments ............ 810,668 1,982,167 1,739,375 Change in unrealized gain (loss) on investments ............................... (9,214,867) (4,879,451) 5,430,662 Reinvested capital gains ....................... 6,568,447 5,562,609 3,541,869 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. (1,926,607) 2,309,438 10,428,805 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 3,747,736 3,997,729 4,448,212 Transfers between funds ........................ 1,868,557 46,907 (12,621) Surrenders ..................................... (1,628,712) (1,864,450) (1,148,838) Death benefits (note 4) ........................ (138,099) (68,640) (104,927) Policy loans (net of repayments) (note 5) ...... (509,235) (890,076) (753,805) Deductions for surrender charges (note 2d) ..... (145,760) (170,621) (171,741) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (1,891,585) (1,687,865) (1,589,094) Asset charges (note 3): MSP contracts ................................ (10,652) (11,771) (9,653) LSFP contracts ............................... (7,189) (6,074) (4,177) ------------ ------------ ------------ Net equity transactions .................... 1,285,061 (654,861) 653,356 ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (641,546) 1,654,577 11,082,161 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 43,772,522 42,117,945 31,035,784 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 43,130,976 43,772,522 42,117,945 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 1,075,957 1,086,172 1,071,986 ------------ ------------ ------------ Units purchased ................................ 153,470 130,217 143,914 Units redeemed ................................. (120,020) (140,432) (129,728) ------------ ------------ ------------ Ending units ................................... 1,109,407 1,075,957 1,086,172 ============ ============ ============
STDISC2 -------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ INVESTMENT ACTIVITY: Net investment income .......................... (7,858) (58,904) (53,820) Realized gain (loss) on investments ............ (1,394,760) 752,895 (992,301) Change in unrealized gain (loss) on investments ............................... 323,479 (482,257) 125,370 Reinvested capital gains ....................... 1,246,478 -- 1,035,670 ------------ ------------ ------------ Net increase (decrease) in contract owners' equity resulting from operations .................. 167,339 211,734 114,919 ------------ ------------ ------------ EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 677,166 954,266 1,126,745 Transfers between funds ........................ 331,868 (570,553) (2,017,437) Surrenders ..................................... (500,137) (235,086) (201,408) Death benefits (note 4) ........................ (9,601) (21,678) (1,033) Policy loans (net of repayments) (note 5) ...... 1,236 (266,090) (115,906) Deductions for surrender charges (note 2d) ..... (44,759) (21,513) (30,109) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (360,160) (329,564) (340,295) Asset charges (note 3): MSP contracts ................................ (1,879) (1,697) (1,300) LSFP contracts ............................... (1,043) (903) (513) ------------ ------------ ------------ Net equity transactions .................... 92,691 (492,818) (1,581,256) ------------ ------------ ------------ NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 260,030 (281,084) (1,466,337) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 6,604,411 6,885,495 8,351,832 ------------ ------------ ------------ CONTRACT OWNERS' EQUITY END OF PERIOD ............ 6,864,441 6,604,411 6,885,495 ============ ============ ============ CHANGES IN UNITS: Beginning units ................................ 325,876 349,019 440,162 ------------ ------------ ------------ Units purchased ................................ 54,515 53,248 70,498 Units redeemed ................................. (53,274) (76,391) (161,641) ------------ ------------ ------------ Ending units ................................... 327,117 325,876 349,019 ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
STINTSTK2 ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ (19,820) (49,525) (14,510) Realized gain (loss) on investments ............ (668,197) (387,126) 1,329,944 Change in unrealized gain (loss) on investments ............................... (12,561) (1,546,991) 1,572,604 Reinvested capital gains ....................... 94,952 -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (605,626) (1,983,642) 2,888,038 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 379,003 580,207 428,882 Transfers between funds ........................ (626,846) (2,282,869) 2,309,650 Surrenders ..................................... (73,457) (136,421) (56,239) Death benefits (note 4) ........................ (8,282) (8,738) (4,048) Policy loans (net of repayments) (note 5) ...... (5,357) (28,642) 52,892 Deductions for surrender charges (note 2d) ..... (6,574) (12,484) (8,407) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (138,425) (207,957) (125,810) Asset charges (note 3): MSP contracts ................................ (1,205) (2,758) (2,085) LSFP contracts ............................... (2,203) (4,055) (1,753) ----------- ----------- ----------- Net equity transactions .................... (483,346) (2,103,717) 2,593,082 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (1,088,972) (4,087,359) 5,481,120 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 3,380,757 7,468,116 1,986,996 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 2,291,785 3,380,757 7,468,116 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 339,841 453,067 222,590 ----------- ----------- ----------- Units purchased ................................ 48,269 53,645 255,086 Units redeemed ................................. (90,356) (166,871) (24,609) ----------- ----------- ----------- Ending units ................................... 297,754 339,841 453,067 =========== =========== ===========
UIFEMMKT ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... 103,553 102,397 81,127 Realized gain (loss) on investments ............ 2,970 26,389 26,192 Change in unrealized gain (loss) on investments ............................... (10,775) (38,552) 29,379 Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. 95,748 90,234 136,698 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 115,651 106,585 106,804 Transfers between funds ........................ 58,296 219,001 158,219 Surrenders ..................................... (10,839) (10,363) (6,693) Death benefits (note 4) ........................ (558) (3,364) -- Policy loans (net of repayments) (note 5) ...... (2,643) (4,279) (7,238) Deductions for surrender charges (note 2d) ..... (970) (948) (1,001) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (40,159) (31,590) (24,247) Asset charges (note 3): MSP contracts ................................ (898) (542) (425) LSFP contracts ............................... (2,146) (1,706) (885) ----------- ----------- ----------- Net equity transactions .................... 115,734 272,794 224,534 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 211,482 363,028 361,232 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 1,064,426 701,398 340,166 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 1,275,908 1,064,426 701,398 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 106,632 77,785 48,664 ----------- ----------- ----------- Units purchased ................................ 22,094 35,031 35,161 Units redeemed ................................. (11,905) (6,184) (6,040) ----------- ----------- ----------- Ending units ................................... 116,821 106,632 77,785 =========== =========== ===========
UIFUSRE ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... 260,668 467,855 356,207 Realized gain (loss) on investments ............ 499,135 446,597 (1,050,667) Change in unrealized gain (loss) on investments ............................... (151,471) 443,730 478,383 Reinvested capital gains ....................... 71,668 36,959 -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. 680,000 1,395,141 (216,077) ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 771,202 743,161 1,006,759 Transfers between funds ........................ 801,119 623,498 (1,435,388) Surrenders ..................................... (221,091) (117,484) (187,346) Death benefits (note 4) ........................ (6,563) (3,388) (2,653) Policy loans (net of repayments) (note 5) ...... (125,377) (37,568) (131,155) Deductions for surrender charges (note 2d) ..... (19,786) (10,751) (28,007) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (419,054) (274,253) (432,919) Asset charges (note 3): MSP contracts ................................ (5,645) (4,297) (4,975) LSFP contracts ............................... (3,546) (2,747) (2,459) ----------- ----------- ----------- Net equity transactions .................... 771,259 916,171 (1,218,143) ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 1,451,259 2,311,312 (1,434,220) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 7,416,383 5,105,071 6,539,291 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 8,867,642 7,416,383 5,105,071 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 388,011 339,591 417,073 ----------- ----------- ----------- Units purchased ................................ 83,489 81,265 63,982 Units redeemed ................................. (46,231) (32,845) (141,464) ----------- ----------- ----------- Ending units ................................... 425,269 388,011 339,591 =========== =========== ===========
NATIONWIDE VLI SEPARATE ACCOUNT-2 STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
VEWRLDBD ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... $ 82,397 103,752 109,624 Realized gain (loss) on investments ............ (98,475) (272,468) (379,921) Change in unrealized gain (loss) on investments ............................... (128,804) 148,290 (74,747) Reinvested capital gains ....................... -- -- 60,420 ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (144,882) (20,426) (284,624) ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 148,351 195,128 232,837 Transfers between funds ........................ (16,738) (244,098) (449,720) Surrenders ..................................... (89,552) (111,418) (98,243) Death benefits (note 4) ........................ (911) (594) (25,665) Policy loans (net of repayments) (note 5) ...... 58,063 (49,056) (70,184) Deductions for surrender charges (note 2d) ..... (8,014) (10,196) (14,686) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (94,179) (83,862) (113,947) Asset charges (note 3): MSP contracts ................................ (1,268) (1,432) (1,809) LSFP contracts ............................... (221) (159) (145) ----------- ----------- ----------- Net equity transactions .................... (4,469) (305,687) (541,562) ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (149,351) (326,113) (826,186) CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 2,394,922 2,721,035 3,547,221 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 2,245,571 2,394,922 2,721,035 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 170,727 195,887 233,069 ----------- ----------- ----------- Units purchased ................................ 17,591 16,793 18,613 Units redeemed ................................. (18,125) (41,953) (55,795) ----------- ----------- ----------- Ending units ................................... 170,193 170,727 195,887 =========== =========== ===========
VEWRLDEMKT ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... (26,750) (53,777) (32,044) Realized gain (loss) on investments ............ (647,627) (325,564) 2,142,637 Change in unrealized gain (loss) on investments ............................... 690,151 (2,614,711) 1,939,640 Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. 15,774 (2,994,052) 4,050,233 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 490,507 797,659 580,564 Transfers between funds ........................ (331,274) (3,479,128) 4,022,991 Surrenders ..................................... (180,526) (194,407) (107,435) Death benefits (note 4) ........................ (8,562) (13,706) -- Policy loans (net of repayments) (note 5) ...... 28,266 (160,319) (70,361) Deductions for surrender charges (note 2d) ..... (16,156) (17,791) (16,061) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (186,521) (270,107) (157,046) Asset charges (note 3): MSP contracts ................................ (2,672) (4,809) (3,494) LSFP contracts ............................... (2,560) (4,221) (1,983) ----------- ----------- ----------- Net equity transactions .................... (209,498) (3,346,829) 4,247,175 ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (193,724) (6,340,881) 8,297,408 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 3,808,102 10,148,983 1,851,575 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 3,614,378 3,808,102 10,148,983 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 573,188 882,045 320,168 ----------- ----------- ----------- Units purchased ................................ 86,484 89,672 609,978 Units redeemed ................................. (101,379) (398,529) (48,101) ----------- ----------- ----------- Ending units ................................... 558,293 573,188 882,045 =========== =========== ===========
VEWRLDHAS ----------------------------------------- 2001 2000 1999 ----------- ----------- ----------- INVESTMENT ACTIVITY: Net investment income .......................... 13,329 11,079 25,195 Realized gain (loss) on investments ............ (465,577) 525,703 609,115 Change in unrealized gain (loss) on investments ............................... (17,134) (152,863) 199,401 Reinvested capital gains ....................... -- -- -- ----------- ----------- ----------- Net increase (decrease) in contract owners' equity resulting from operations .................. (469,382) 383,919 833,711 ----------- ----------- ----------- EQUITY TRANSACTIONS: Purchase payments received from contract owners .............................. 327,399 365,844 602,994 Transfers between funds ........................ (274,541) (236,020) (822,875) Surrenders ..................................... (221,290) (307,798) (289,205) Death benefits (note 4) ........................ (9,201) (5,146) (1,818) Policy loans (net of repayments) (note 5) ...... (6,073) (120,415) 77,240 Deductions for surrender charges (note 2d) ..... (19,804) (28,167) (43,233) Redemptions to pay cost of insurance charges and administration charges (notes 2b and 2c) ............................ (191,766) (176,970) (189,825) Asset charges (note 3): MSP contracts ................................ (1,931) (2,345) (1,809) LSFP contracts ............................... (644) (1,775) (322) ----------- ----------- ----------- Net equity transactions .................... (397,851) (512,792) (668,853) ----------- ----------- ----------- NET CHANGE IN CONTRACT OWNERS' EQUITY ............ (867,233) (128,873) 164,858 CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...................................... 4,165,570 4,294,443 4,129,585 ----------- ----------- ----------- CONTRACT OWNERS' EQUITY END OF PERIOD ............ 3,298,337 4,165,570 4,294,443 =========== =========== =========== CHANGES IN UNITS: Beginning units ................................ 278,673 317,507 361,828 ----------- ----------- ----------- Units purchased ................................ 26,308 29,839 63,996 Units redeemed ................................. (57,511) (68,673) (108,317) ----------- ----------- ----------- Ending units ................................... 247,470 278,673 317,507 =========== =========== ===========
See accompanying notes to financial statements. NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001, 2000 AND 1999 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Organization and Nature of Operations The Nationwide VLI Separate 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 is 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) Portfolios of the Credit Suisse Trust; Credit Suisse Trust - Global Post-Venture Capital Portfolio (CSWPGPV) Credit Suisse Trust - International Equity Portfolio (CSWPIntEq) Credit Suisse Trust - Small Cap Growth Portfolio (CSWPSmCo) Portfolio of the Dreyfus Investment Portfolios (Dreyfus IP); Dreyfus IP - European Equity Portfolio (DryEuroEq) The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro) Dreyfus Stock Index Fund (DryStkIx) Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF); Dreyfus VIF - Appreciation Portfolio (DryAp) Dreyfus VIF - Growth and Income Portfolio (DryGrInc) Portfolios of the Fidelity(R) Variable Insurance Products Fund (Fidelity(R) VIP); Fidelity(R) VIP - Equity-Income Portfolio: Initial Class (FidVIPEI) Fidelity(R) VIP - Growth Portfolio: Initial Class (FidVIPGr) Fidelity(R) VIP - High Income Portfolio: Initial Class (FidVIPHI) Fidelity(R) VIP - Overseas Portfolio: Initial Class (FidVIPOv) Portfolios of the Fidelity(R) Variable Insurance Products Fund II (Fidelity(R) VIP-II); Fidelity(R) VIP-II - Asset Manager Portfolio: Initial Class (FidVIPAM) Fidelity(R) VIP-II - Contrafund Portfolio: Initial Class (FidVIPCon) Portfolio of the Fidelity(R) Variable Insurance Products Fund III (Fidelity(R) VIP-III); Fidelity(R) VIP-III - Growth Opportunities Portfolio: Initial Class (FidVIPGrOp) Portfolios of the Janus Aspen Series (Janus AS); Janus AS - Capital Appreciation Portfolio - Service Shares (JanCapAp) Janus AS - Global Technology Portfolio - Service Shares (JanGlTech) Janus AS - International Growth Portfolio - Service Shares (JanIntGro) Funds of the Nationwide(R) Separate Account Trust (Nationwide(R) SAT); Nationwide(R) SAT - Capital Appreciation Fund Class I (NSATCapAp) Nationwide(R) SAT - Dreyfus Mid Cap Index Fund Class I (NSATMidCapIx) Nationwide(R) SAT - Gartmore Emerging Markets Fund Class I (NSATEmMkt) Nationwide(R) SAT - Gartmore Global Technology & Communications Fund Class I (NSATGlobTC) Nationwide(R) SAT - Gartmore International Growth Fund Class I (NSATIntGr) Nationwide(R) SAT - Government Bond Fund Class I (NSATGvtBd) Nationwide(R) SAT - MAS Multi Sector Bond Fund Class I (NSATMSecBd) Nationwide(R) SAT - Money Market Fund Class I (NSATMyMkt) Nationwide(R) SAT - Small Cap Growth Fund Class I (NSATSmCapG) Nationwide(R) SAT - Small Cap Value Fund Class I (NSATSmCapV) Nationwide(R) SAT - Small Company Fund Class I (NSATSmCo) Nationwide(R) SAT - Strong Mid Cap Growth Fund Class I (NSATStMCap) Nationwide(R) SAT - Total Return Fund Class I (NSATTotRe) Nationwide(R) SAT - Turner Growth Focus Fund Class I (NSATGrFoc) Portfolios of the Neuberger Berman Advisers Management Trust (Neuberger Berman AMT); Neuberger Berman AMT - Balanced Portfolio (NBAMTBal) 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 (OppAggGro) Oppenheimer Bond Fund/VA (OppBdFd) Oppenheimer Capital Appreciation Fund/VA (OppCapAp) Oppenheimer Global Securities Fund/VA (OppGlSec) Oppenheimer Main Street Growth & Income Fund/VA (OppMSGrInc) Oppenheimer Multiple Strategies Fund/VA (OppMult) 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 Universal Institutional Funds, Inc. (UIF); UIF - Emerging Markets Debt Portfolio (UIFEmMkt) (formerly Morgan Stanley - Emerging Markets Debt Portfolio) UIF - U.S. Real Estate Portfolio (UIFUSRE) (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 (VEWrldBd) Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs) (Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED At December 31, 2001, 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, 2001. 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 of America may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) POLICY CHARGES (a) Deductions from Premiums For single premium contracts, no deduction is made from any premium at the time of payment. On multiple payment contracts, flexible premium contracts and modified single 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. (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 (not to exceed $7.50 per month). For flexible premium contracts, the Company currently deducts a monthly administrative charge of $12.50 during the first policy year. For all subsequent years, a monthly administrative charge is deducted (currently $5 per month not to exceed $7.50). 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 $1,000 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 $1,000 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 $1,000 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 $1,000 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) 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. The above charges are assessed through the daily unit value calculation and are reflected in the table below. 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%. The following table provides mortality and expense risk charges by contract type for the period ended December 31, 2001:
TOTAL ACVPBAL ACVPCAPAP ACVPINCGR ACVPINT ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 9,945 -- 1,018 -- 73 Single Premium contracts issued on or after April 16, 1990 .... 1,353,580 7,447 31,357 5,783 25,817 Multiple Payment contracts and Flexible Premium contracts .... 6,083,486 31,951 124,709 25,760 105,826 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 7,447,011 39,398 157,084 31,543 131,716 ============ ============ ============ ============ ============ ACVPVALUE CSWPGPV CSWPINTEQ CSWPSMCO DRYEUROEQ ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 5 94 -- -- -- Single Premium contracts issued on or after April 16, 1990 .... 17,208 1,626 9,068 17,489 452 Multiple Payment contracts and Flexible Premium contracts .... 49,449 13,768 47,217 121,208 1,093 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 66,662 15,488 56,285 138,697 1,545 ============ ============ ============ ============ ============
DRYSRGRO DRYSTKIX DRYAP DRYGRINC FIDVIPEI ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ -- 376 -- -- 954 Single Premium contracts issued on or after April 16, 1990 .... 10,745 80,334 12,577 2,918 142,241 Multiple Payment contracts and Flexible Premium contracts .... 108,279 584,155 37,962 17,118 482,790 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 119,024 664,865 50,539 20,036 625,985 ============ ============ ============ ============ ============
FIDVIPGR FIDVIPHI FIDVIPOV FIDVIPAM FIDVIPCON ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 1,155 199 283 166 -- Single Premium contracts issued on or after April 16, 1990 .... 165,229 27,672 35,278 67,334 62,048 Multiple Payment contracts and Flexible Premium contracts .... 870,483 108,604 126,449 165,618 351,343 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 1,036,867 136,475 162,010 233,118 413,391 ============ ============ ============ ============ ============
FIDVIPGROP JANCAPAP JANGLTECH JANINTGRO NSATCAPAP ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 65 -- -- 1 3 Single Premium contracts issued on or after April 16, 1990 .... 3,098 2,039 3,286 5,738 9,520 Multiple Payment contracts and Flexible Premium contracts .... 28,122 18,962 12,000 11,153 139,798 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 31,285 21,001 15,286 16,892 149,321 ============ ============ ============ ============ ============
NSATMIDCAPIX NSATEMMKT NSATGLOBTC NSATINTGR NSATGVTBD ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ -- -- -- -- 188 Single Premium contracts issued on or after April 16, 1990 .... 3,038 40 847 18 59,091 Multiple Payment contracts and Flexible Premium contracts .... 14,877 1,014 2,108 175 69,556 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 17,915 1,054 2,955 193 128,835 ============ ============ ============ ============ ============
NSATMSECBD NSATMYMKT NSATSMCAPG NSATSMCAPV NSATSMCO ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 1 1,003 -- 1,152 91 Single Premium contracts issued on or after April 16, 1990 .... 355 171,623 1,121 40,521 16,666 Multiple Payment contracts and Flexible Premium contracts .... 2,430 250,925 7,490 55,678 178,482 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 2,786 423,551 8,611 97,351 195,239 ============ ============ ============ ============ ============
NSATSTMCAP NSATTOTRE NSATGRFOC NBAMTBAL NBAMTGRO ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ -- 232 -- -- 572 Single Premium contracts issued on or after April 16, 1990 .... 1,051 40,397 97 -- 34,690 Multiple Payment contracts and Flexible Premium contracts .... 5,389 571,617 1,198 43 158,324 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 6,440 612,246 1,295 43 193,586 ============ ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
NBAMTGUARD NBAMTLMAT NBAMTPART OPPAGGGRO OPPBDFD ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 1 537 2 1 4 Single Premium contracts issued on or after April 16, 1990 .... 884 14,129 16,958 1,776 18,350 Multiple Payment contracts and Flexible Premium contracts .... 15,806 20,568 148,970 14,255 74,286 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 16,691 35,234 165,930 16,032 92,640 ============ ============ ============ ============ ============
OPPCAPAP OPPGLSEC OPPMSGRINC OPPMULT STOPP2 ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 661 84 -- -- 581 Single Premium contracts issued on or after April 16, 1990 .... 19,634 33,610 588 33,772 51,199 Multiple Payment contracts and Flexible Premium contracts .... 109,197 234,376 3,628 88,883 293,420 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 129,492 268,070 4,216 122,655 345,200 ============ ============ ============ ============ ============
STDISC2 STINTSTK2 UIFEMMKT UIFUSRE VEWRLDBD ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ -- -- 65 293 83 Single Premium contracts issued on or after April 16, 1990 .... 9,142 4,397 652 14,648 5,690 Multiple Payment contracts and Flexible Premium contracts .... 46,945 15,423 5,664 48,775 13,754 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 56,087 19,820 6,381 63,716 19,527 ============ ============ ============ ============ ============
VEWRLDEMKT VEWRLDHAS ------------ ------------ Single Premium contracts issued prior to April 16, 1990 ....... $ 2 -- Single Premium contracts issued on or after April 16, 1990 .... 3,098 9,194 Multiple Payment contracts and Flexible Premium contracts .... 23,650 22,763 ------------ ------------ Total ....................... $ 26,750 31,957 ============ ============
The following table provides mortality and expense risk charges by contract type for the period ended December 31, 2000:
TOTAL ACVPBAL ACVCAPAP ACVPINCGR ACVPINT ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 24,586 -- 2,924 -- 575 Single Premium contracts issued on or after April 16, 1990 .... 1,668,100 8,312 50,858 7,821 39,191 Multiple Payment and Flexible Premium contracts ............. 7,171,155 35,037 172,093 25,391 152,864 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 8,863,841 43,349 225,875 33,212 192,630 ============ ============ ============ ============ ============
ACVPVALUE CSWPGPV CSWPINTEQ CSWPSMCO DRYEUROEQ ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 9 794 -- -- -- Single Premium contracts issued on or after April 16, 1990 .... 7,369 2,662 12,244 35,097 469 Multiple Payment and Flexible Premium contracts ............. 19,786 23,021 69,430 181,441 58 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 27,164 26,477 81,674 216,538 527 ============ ============ ============ ============ ============
DRYSRGRO DRYSTKIX DRYAP DRYGRINC FIDVIPEI ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ -- 2,043 -- -- 2,573 Single Premium contracts issued on or after April 16, 1990 .... 14,818 104,574 14,211 3,646 167,821 Multiple Payment and Flexible Premium contracts ............. 142,212 691,343 43,939 16,273 459,835 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 157,030 797,960 58,150 19,919 630,229 ============ ============ ============ ============ ============
FIDVIPGR FIDVIPHI FIDVIPOV FIDVIPAM FIDVIPCON ------------ ------------ ------------ ------------ ------------ 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 ============ ============ ============ ============ ============
FIDVIPGROP JANCAPAP JANGLTECH JANINTGRO 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 ============ ============ ============ ============ ============
NSATMIDCAPIX NSATEMMKT NSATGLOBTC NSATINTGR NSATGVTBD ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ -- -- -- -- 458 Single Premium contracts issued on or after April 16, 1990 .... 1,586 -- 789 -- 55,609 Multiple Payment and Flexible Premium contracts ............. 2,639 21 129 14 43,413 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 4,225 21 918 14 99,480 ============ ============ ============ ============ ============
NSATMSECBD NSATMYMKT NSATSMCAPG NSATSMCAPV NSATSMCO ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 15 2,426 -- 737 203 Single Premium contracts issued on or after April 16, 1990 .... 109 180,399 362 40,313 26,301 Multiple Payment and Flexible Premium contracts ............. 96 231,050 2,152 10,585 194,188 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 220 413,875 2,514 51,635 220,692 ============ ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
NSATSTMCAP NSATTOTRE NSATGRFOC NBAMTGRO NBAMTGUARD ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ -- 581 -- 1,617 -- Single Premium contracts issued on or after April 16, 1990 .... 1,065 52,162 -- 52,458 654 Multiple Payment and Flexible Premium contracts ............. 1,726 684,107 100 272,872 14,034 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 2,791 736,850 100 326,947 14,688 ============ ============ ============ ============ ============
NBAMTLMAT NBAMTPART OPPAGGGRO OPPBDFD OPPCAPAP ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 1,243 9 -- 11 1,316 Single Premium contracts issued on or after April 16, 1990 .... 13,012 16,642 2,875 15,964 23,233 Multiple Payment and Flexible Premium contracts ............. 17,838 177,442 6,843 68,588 105,211 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 32,093 194,093 9,718 84,563 129,760 ============ ============ ============ ============ ============
OPPGLSEC OPPMSGRINC OPPMULT STOPP2 STDISC2 ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 681 -- -- 202 -- Single Premium contracts issued on or after April 16, 1990 .... 43,763 390 38,900 59,630 8,552 Multiple Payment and Flexible Premium contracts ............. 268,868 575 86,217 296,055 50,352 ------------ ------------ ------------ ------------ ------------ Total ....................... $313,312 965 125,117 355,887 58,904 ============ ============ ============ ============ ============
STINTSTK2 UIFEMMKT UIFUSRE VEWRLDBD VEWRLDEMKT ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ -- 133 631 181 29 Single Premium contracts issued on or after April 16, 1990 .... 11,016 1,340 13,596 6,649 3,523 Multiple Payment and Flexible Premium contracts ............. 38,509 4,918 32,402 14,851 50,225 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 49,525 6,391 46,629 21,681 53,777 ============ ============ ============ ============ ============
VEWRLDHAS ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 1 Single Premium contracts issued on or after April 16, 1990 .... 11,858 Multiple Payment and Flexible Premium contracts ............. 24,402 ------------ Total ....................... $ 36,261 ============
The following table provides mortality and expense risk charges by contract type 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 ============ ============ ============ ============ ============
ACVPVALUE CSWPGPV CSWPINTEQ CSWPSMCO DRYSRGRO ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 61 40 204 333 333 Single Premium contracts issued on or after April 16, 1990 .... 4,379 2,855 14,649 23,934 23,957 Multiple Payment and Flexible Premium contracts ............. 16,553 10,791 55,372 90,470 90,556 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 20,993 13,686 70,225 114,737 114,846 ============ ============ ============ ============ ============
DRYSTKIX DRYAP DRYGRINC FIDVIPEI FIDVIPGR ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 2,086 166 46 2,071 3,322 Single Premium contracts issued on or after April 16, 1990 .... 150,018 11,975 3,327 148,948 238,938 Multiple Payment and Flexible Premium contracts ............. 567,060 45,265 12,577 563,016 903,175 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 719,164 57,406 15,950 714,035 1,145,435 ============ ============ ============ ============ ============
FIDVIPHI FIDVIPOV FIDVIPAM FIDVIPCON FIDVIPGROP ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 574 580 784 1,335 137 Single Premium contracts issued on or after April 16, 1990 .... 41,267 41,698 56,415 96,008 9,823 Multiple Payment and Flexible Premium contracts ............. 155,987 157,616 213,245 362,905 37,128 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 197,828 199,894 270,444 460,248 47,088 ============ ============ ============ ============ ============
NSATCAPAP NSATGVTBD NSATMYMKT NSATSMCAPV NSATSMCO ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 937 352 1,204 37 389 Single Premium contracts issued on or after April 16, 1990 .... 67,386 25,386 86,597 2,682 27,949 Multiple Payment and Flexible Premium contracts ............. 254,746 95,940 327,332 10,138 105,646 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 323,069 121,678 415,133 12,857 133,984 ============ ============ ============ ============ ============
NSATTOTRE NBAMTGRO NBAMTGUARD NBAMTLMAT NBAMTPART ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 2,247 531 37 104 680 Single Premium contracts issued on or after April 16, 1990 .... 161,641 38,230 2,667 7,455 48,927 Multiple Payment and Flexible Premium contracts ............. 610,999 144,507 10,083 28,179 184,942 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 774,887 183,268 12,787 35,738 234,549 ============ ============ ============ ============ ============
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
OPPBDFD OPPCAPAP OPPGLSEC OPPMULT STOPP2 ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 266 141 553 335 821 Single Premium contracts issued on or after April 16, 1990 .... 19,098 10,142 39,744 24,110 59,055 Multiple Payment and Flexible Premium contracts ............. 72,189 38,336 150,232 91,134 223,225 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 91,553 48,619 190,529 115,579 283,101 ============ ============ ============ ============ ============
STDISC2 STINTSTK2 UIFEMMKT UIFUSRE VEWRLDBD ------------ ------------ ------------ ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 156 65 9 128 74 Single Premium contracts issued on or after April 16, 1990 .... 11,227 4,687 666 9,180 5,340 Multiple Payment and Flexible Premium contracts ............. 42,437 17,716 2,520 34,702 20,187 ------------ ------------ ------------ ------------ ------------ Total ....................... $ 53,820 22,468 3,195 44,010 25,601 ============ ============ ============ ============ ============
VEWRLDEMKT VEWRLDHAS ------------ ------------ Single Premium contracts issued prior to April 16,1990 ........ $ 93 106 Single Premium contracts issued on or after April 16, 1990 .... 6,684 7,628 Multiple Payment and Flexible Premium contracts ............. 25,267 28,833 ------------ ------------ Total ....................... $ 32,044 36,567 ============ ============
(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. (7) FINANCIAL HIGHLIGHTS The following is a summary of units, unit fair values and contract owners' equity outstanding for variable life and annuity contracts as of the end of the period indicated, and the contract expense rate and total return for each of the five years in the period ended December 31, 2001.
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Modified Single Premium contracts and Last Survivor Flexible Premium contracts: American Century VP - American Century VP Balanced 2001 ............................................ 0.00% 46,974 $15.146118 $ 711,474 -3.54% 2000 ............................................ 0.00% 46,479 15.701900 729,809 -2.65% 1999 ............................................ 0.00% 47,439 16.129489 765,167 10.06% 1998 ............................................ 0.00% 40,224 14.655512 589,503 15.77% 1997 ............................................ 0.00% 27,206 12.659036 344,402 15.81% American Century VP - American Century VP Capital Appreciation 2001 ............................................ 0.00% 113,954 11.137742 1,269,190 -28.07% 2000 ............................................ 0.00% 136,380 15.483078 2,111,582 9.03% 1999 ............................................ 0.00% 67,671 14.200282 960,947 64.52% 1998 ............................................ 0.00% 56,709 8.631172 489,465 -2.16% 1997 ............................................ 0.00% 32,542 8.821378 287,065 -3.26% American Century VP - American Century VP Income & Growth 2001 ............................................ 0.00% 53,217 10.558315 561,882 -8.35% 2000 ............................................ 0.00% 51,494 11.520561 593,240 -10.62% 1999 ............................................ 0.00% 90,023 12.888778 1,160,286 18.02% 1998 ............................................ 0.00% 49,568 10.920877 541,326 9.21% 5/1/98 American Century VP - American Century VP International 2001 ............................................ 0.00% 111,542 14.668200 1,636,120 -29.17% 2000 ............................................ 0.00% 143,626 20.710054 2,974,502 -16.83% 1999 ............................................ 0.00% 120,278 24.899615 2,994,876 64.04% 1998 ............................................ 0.00% 109,633 15.178805 1,664,098 18.76% 1997 ............................................ 0.00% 32,515 12.781185 415,580 18.63% American Century VP - American Century VP Value 2001 ............................................ 0.00% 98,909 17.718442 1,752,513 12.82% 2000 ............................................ 0.00% 53,790 15.704757 844,759 18.14% 1999 ............................................ 0.00% 42,323 13.293167 562,607 -0.85% 1998 ............................................ 0.00% 39,670 13.407134 531,861 4.81% 1997 ............................................ 0.00% 17,691 12.791587 226,296 26.08% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2001 ............................................ 0.00% 12,080 11.607891 140,223 -28.63% 2000 ............................................ 0.00% 19,402 16.265390 315,581 -18.94% 1999 ............................................ 0.00% 14,680 20.065541 294,562 63.50% 1998 ............................................ 0.00% 4,122 12.272697 50,588 6.51% 1997 ............................................ 0.00% 2,527 11.522579 29,118 13.34% Credit Suisse Trust - International Equity Portfolio 2001 ............................................ 0.00% 120,573 9.040640 1,090,057 -22.27% 2000 ............................................ 0.00% 119,996 11.631433 1,395,725 -25.90% 1999 ............................................ 0.00% 142,042 15.696053 2,229,499 53.43% 1998 ............................................ 0.00% 132,142 10.230064 1,351,821 5.35% 1997 ............................................ 0.00% 112,574 9.710827 1,093,187 -2.26%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Credit Suisse Trust - Small Cap Growth Portfolio 2001 ............................................ 0.00% 185,522 12.840185 2,382,137 -16.01% 2000 ............................................ 0.00% 212,377 15.287247 3,246,660 -18.11% 1999 ............................................ 0.00% 154,684 18.668523 2,887,722 69.08% 1998 ............................................ 0.00% 131,376 11.041376 1,450,572 -2.85% 1997 ............................................ 0.00% 116,237 11.365509 1,321,093 15.65% Dreyfus IP - European Equity Portfolio 2001 ............................................ 0.00% 133 6.722485 894 -28.13% 2000 ............................................ 0.00% 2,553 9.353456 23,879 -9.65% The Dreyfus Socially Responsible Growth Fund, Inc. 2001 ............................................ 0.00% 72,096 16.646416 1,200,140 -22.57% 2000 ............................................ 0.00% 87,987 21.499776 1,891,701 -11.03% 1999 ............................................ 0.00% 72,077 24.166067 1,741,818 30.08% 1998 ............................................ 0.00% 59,391 18.577940 1,103,362 29.38% 1997 ............................................ 0.00% 37,804 14.359114 542,832 28.43% Dreyfus Stock Index Fund 2001 ............................................ 0.00% 599,693 18.770165 11,256,337 -12.18% 2000 ............................................ 0.00% 591,538 21.373424 12,643,192 -9.28% 1999 ............................................ 0.00% 619,532 23.560156 14,596,271 20.60% 1998 ............................................ 0.00% 451,985 19.535151 8,829,595 28.21% 1997 ............................................ 0.00% 228,273 15.236658 3,478,118 32.96% Dreyfus VIF - Appreciation Portfolio 2001 ............................................ 0.00% 81,387 13.409044 1,091,322 -9.31% 2000 ............................................ 0.00% 68,662 14.785375 1,015,193 -0.65% 1999 ............................................ 0.00% 54,118 14.882433 805,408 11.46% 1998 ............................................ 0.00% 32,649 13.352746 435,954 30.22% 1997 ............................................ 0.00% 450 10.254291 4,614 2.54% 7/14/97 Dreyfus VIF - Growth and Income Portfolio 2001 ............................................ 0.00% 42,969 13.745232 590,619 -5.85% 2000 ............................................ 0.00% 50,580 14.598583 738,396 -3.78% 1999 ............................................ 0.00% 42,510 15.172345 644,976 16.88% 1998 ............................................ 0.00% 33,423 12.980656 433,852 11.81% 1997 ............................................ 0.00% 18,834 11.609215 218,648 16.21% Fidelity(R) VIP - Equity-Income Portfolio: Initial Class 2001 ............................................ 0.00% 431,008 16.906669 7,286,910 -4.96% 2000 ............................................ 0.00% 410,082 17.788146 7,294,598 8.42% 1999 ............................................ 0.00% 442,948 16.406894 7,267,401 6.33% 1998 ............................................ 0.00% 424,796 15.430209 6,554,691 11.63% 1997 ............................................ 0.00% 299,539 13.822981 4,140,522 28.11% Fidelity(R) VIP - Growth Portfolio: Initial Class 2001 ............................................ 0.00% 464,650 18.128151 8,423,245 -17.65% 2000 ............................................ 0.00% 494,090 22.013206 10,876,505 -10.98% 1999 ............................................ 0.00% 462,592 24.728511 11,439,211 37.44% 1998 ............................................ 0.00% 312,967 17.992701 5,631,122 39.49% 1997 ............................................ 0.00% 162,254 12.898986 2,092,912 23.48%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Fidelity(R) VIP - High Income Portfolio: Initial Class 2001 ............................................ 0.00% 268,872 9.023656 2,426,208 -11.73% 2000 ............................................ 0.00% 251,453 10.222956 2,570,593 -22.47% 1999 ............................................ 0.00% 301,341 13.186454 3,973,619 8.15% 1998 ............................................ 0.00% 328,441 12.192188 4,004,414 -4.33% 1997 ............................................ 0.00% 171,832 12.743794 2,189,792 17.67% Fidelity(R) VIP - Overseas Portfolio: Initial Class 2001 ............................................ 0.00% 100,976 12.204145 1,232,326 -21.17% 2000 ............................................ 0.00% 109,074 15.480896 1,688,563 -19.11% 1999 ............................................ 0.00% 121,065 19.137888 2,316,928 42.63% 1998 ............................................ 0.00% 94,348 13.418281 1,265,988 12.75% 1997 ............................................ 0.00% 45,600 11.900892 542,681 11.56% Fidelity(R) VIP II - Asset Manager Portfolio: Initial Class 2001 ............................................ 0.00% 97,209 15.661062 1,522,396 -4.09% 2000 ............................................ 0.00% 97,054 16.328861 1,584,781 -3.93% 1999 ............................................ 0.00% 98,987 16.996678 1,682,450 11.09% 1998 ............................................ 0.00% 96,546 15.299714 1,477,126 15.05% 1997 ............................................ 0.00% 73,280 13.298253 974,496 20.65% Fidelity(R) VIP II - Contrafund Portfolio: Initial Class 2001 ............................................ 0.00% 310,919 18.482808 5,746,656 -12.24% 2000 ............................................ 0.00% 339,730 21.061590 7,155,254 -6.62% 1999 ............................................ 0.00% 334,798 22.555449 7,551,519 24.25% 1998 ............................................ 0.00% 294,323 18.152724 5,342,764 29.98% 1997 ............................................ 0.00% 167,595 13.965921 2,340,619 24.14% Fidelity(R) VIP III - Growth Opportunities Portfolio: Initial Class 2001 ............................................ 0.00% 59,212 10.143319 600,606 -14.42% 2000 ............................................ 0.00% 67,837 11.852480 804,037 -17.07% 1999 ............................................ 0.00% 67,209 14.291602 960,524 4.27% 1998 ............................................ 0.00% 54,891 13.706120 752,343 24.61% 1997 ............................................ 0.00% 13,840 10.998857 152,224 9.99% 7/14/97 Janus AS - Capital Appreciation Portfolio - Service Shares 2001 ............................................ 0.00% 62,604 6.201616 388,246 -21.83% 2000 ............................................ 0.00% 54,056 7.933369 428,846 -30.82% 5/1/00 Janus AS - Global Technology Portfolio - Service Shares 2001 ............................................ 0.00% 58,616 4.249300 249,077 -37.31% 2000 ............................................ 0.00% 51,067 6.778794 346,173 -20.67% 5/1/00 Janus AS - International Growth Portfolio - Service Shares 2001 ............................................ 0.00% 37,721 6.088787 229,675 -23.43% 2000 ............................................ 0.00% 28,662 7.951801 227,915 -20.48% 5/1/00 Nationwide(R) SAT - Capital Appreciation Fund Class I 2001 ............................................ 0.00% 169,484 11.173143 1,893,669 -28.13% 2000 ............................................ 0.00% 202,780 15.547089 3,152,639 -26.53% 1999 ............................................ 0.00% 234,699 21.161942 4,966,687 4.28% 1998 ............................................ 0.00% 207,778 20.293858 4,216,617 29.96% 1997 ............................................ 0.00% 92,414 15.614947 1,443,040 34.49% Nationwide(R) SAT - Dreyfus Mid Cap Index Fund Class I 2001 ............................................ 0.00% 37,983 10.379883 394,259 -1.30% 2000 ............................................ 0.00% 15,903 10.517026 167,252 5.17% 5/1/00 Nationwide(R) SAT - Gartmore Emerging Markets Fund Class I 2001 ............................................ 0.00% 27,272 8.260926 225,292 -5.18%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Nationwide(R) SAT - Gartmore Global Technology & Communications Fund Class I 2001 ............................................ 0.00% 2,536 3.446837 8,741 -42.72% 2000 ............................................ 0.00% 2,596 6.017639 15,622 -39.82% 10/2/00 Nationwide(R) SAT - Government Bond Fund Class I 2001 ............................................ 0.00% 192,314 15.033937 2,891,237 7.25% 2000 ............................................ 0.00% 147,694 14.017108 2,070,243 12.54% 1999 ............................................ 0.00% 146,891 12.455412 1,829,588 -2.35% 1998 ............................................ 0.00% 100,956 12.754801 1,287,674 8.91% 1997 ............................................ 0.00% 38,575 11.711522 451,772 9.67% Nationwide(R) SAT - MAS Multi Sector Bond Fund Class I 2001 ............................................ 0.00% 2,363 10.932334 25,833 4.19% 2000 ............................................ 0.00% 3,146 10.492823 33,010 4.93% 5/1/00 Nationwide(R) SAT - Money Market Fund Class I 2001 ............................................ 0.00% 752,971 13.194770 9,935,279 3.60% 2000 ............................................ 0.00% 690,357 12.735851 8,792,284 6.03% 1999 ............................................ 0.00% 710,620 12.011954 8,535,935 4.85% 1998 ............................................ 0.00% 904,630 11.456534 10,363,924 5.27% 1997 ............................................ 0.00% 680,581 10.882768 7,406,605 5.26% Nationwide(R) SAT - Small Cap Growth Fund Class I 2001 ............................................ 0.00% 28,981 7.239237 209,800 -10.84% 2000 ............................................ 0.00% 5,428 8.119138 44,071 -18.81% 5/1/00 Nationwide(R) SAT - Small Cap Value Fund Class I 2001 ............................................ 0.00% 145,093 15.689204 2,276,394 28.28% 2000 ............................................ 0.00% 92,343 12.230652 1,129,415 11.20% 1999 ............................................ 0.00% 86,677 10.998838 953,346 27.84% 1998 ............................................ 0.00% 18,425 8.603810 158,525 -13.96% 5/1/98 Nationwide(R) SAT - Small Company Fund Class I 2001 ............................................ 0.00% 171,105 18.253468 3,123,260 -6.70% 2000 ............................................ 0.00% 232,635 19.565011 4,551,506 8.90% 1999 ............................................ 0.00% 210,131 17.966399 3,775,297 44.02% 1998 ............................................ 0.00% 170,740 12.475012 2,129,984 1.01% 1997 ............................................ 0.00% 99,062 12.350345 1,223,450 17.35% Nationwide(R) SAT - Strong Mid Cap Growth Fund Class I 2001 ............................................ 0.00% 15,083 5.680754 85,683 -30.31% 2000 ............................................ 0.00% 15,341 8.151094 125,046 -18.49% 5/1/00 Nationwide(R) SAT - Total Return Fund Class I 2001 ............................................ 0.00% 370,050 16.144226 5,974,171 -11.82% 2000 ............................................ 0.00% 383,717 18.308017 7,025,097 -2.12% 1999 ............................................ 0.00% 408,867 18.704720 7,647,743 6.94% 1998 ............................................ 0.00% 377,762 17.490359 6,607,193 18.07% 1997 ............................................ 0.00% 270,928 14.813042 4,013,268 29.43% Neuberger Berman AMT - Growth Portfolio 2001 ............................................ 0.00% 194,831 13.610476 2,651,743 -30.36% 2000 ............................................ 0.00% 165,377 19.543829 3,232,100 -11.66% 1999 ............................................ 0.00% 101,415 22.122463 2,243,550 50.40% 1998 ............................................ 0.00% 95,390 14.709510 1,403,140 15.53% 1997 ............................................ 0.00% 35,081 12.732630 446,673 29.01%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Neuberger Berman AMT - Guardian Portfolio 2001 ............................................ 0.00% 42,795 10.719948 458,760 -1.51% 2000 ............................................ 0.00% 31,192 10.883981 339,493 1.13% 1999 ............................................ 0.00% 28,718 10.762335 309,073 14.93% 1998 ............................................ 0.00% 15,552 9.364011 145,629 -6.36% 5/1/98 Neuberger Berman AMT - Limited Maturity Bond Portfolio 2001 ............................................ 0.00% 53,267 13.761786 733,049 8.78% 2000 ............................................ 0.00% 48,744 12.650873 616,654 6.78% 1999 ............................................ 0.00% 73,941 11.847132 875,989 1.48% 1998 ............................................ 0.00% 72,201 11.674617 842,919 4.39% 1997 ............................................ 0.00% 63,831 11.183579 713,859 6.74% Neuberger Berman AMT - Partners Portfolio 2001 ............................................ 0.00% 214,234 16.491924 3,533,131 -2.83% 2000 ............................................ 0.00% 218,683 16.971642 3,711,410 0.07% 1999 ............................................ 0.00% 229,651 16.853460 3,870,414 7.37% 1998 ............................................ 0.00% 241,826 15.696640 3,795,856 4.21% 1997 ............................................ 0.00% 154,752 15.062681 2,330,980 31.25% Oppenheimer Aggressive Growth Fund/VA 2001 ............................................ 0.00% 27,049 5.377832 145,465 -31.27% 2000 ............................................ 0.00% 29,380 7.824211 229,875 -21.76% 5/1/00 Oppenheimer Bond Fund/VA 2001 ............................................ 0.00% 120,742 13.988352 1,688,982 7.79% 2000 ............................................ 0.00% 108,962 12.977817 1,414,089 6.10% 1999 ............................................ 0.00% 101,438 12.232154 1,240,805 -1.52% 1998 ............................................ 0.00% 90,724 12.420731 1,126,858 6.80% 1997 ............................................ 0.00% 60,188 11.629634 699,964 9.25% Oppenheimer Capital Appreciation Fund/VA 2001 ............................................ 0.00% 116,791 16.074008 1,877,299 -12.58% 2000 ............................................ 0.00% 115,080 18.386180 2,115,882 -0.23% 1999 ............................................ 0.00% 83,414 18.428739 1,537,215 41.66% 1998 ............................................ 0.00% 98,891 13.009524 1,286,525 24.00% 1997 ............................................ 0.00% 7,635 10.491590 80,103 4.92% 7/14/97 Oppenheimer Global Securities Fund/VA 2001 ............................................ 0.00% 111,537 22.171331 2,472,924 -12.04% 2000 ............................................ 0.00% 119,169 25.205074 3,003,663 5.09% 1999 ............................................ 0.00% 94,622 23.984739 2,269,484 58.48% 1998 ............................................ 0.00% 89,467 15.133929 1,353,987 14.10% 1997 ............................................ 0.00% 53,741 13.263226 712,779 22.42% Oppenheimer Main Street Growth & Income Fund/VA 2001 ............................................ 0.00% 21,240 8.134641 172,780 -10.16% 2000 ............................................ 0.00% 10,745 9.054521 97,291 -9.45% 5/1/00 Oppenheimer Multiple Strategies Fund/VA 2001 ............................................ 0.00% 84,920 16.632670 1,412,446 2.22% 2000 ............................................ 0.00% 82,390 16.271709 1,340,626 6.44% 1999 ............................................ 0.00% 80,822 15.287602 1,235,575 11.80% 1998 ............................................ 0.00% 90,548 13.674340 1,238,184 6.65% 1997 ............................................ 0.00% 58,544 12.821215 750,605 17.22%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Strong Opportunity Fund II, Inc. ................... 2001 ............................................ 0.00% 103,859 21.238327 2,205,791 -3.70% 2000 ............................................ 0.00% 96,471 22.004768 2,122,822 6.60% 1999 ............................................ 0.00% 85,543 20.690172 1,769,899 34.91% 1998 ............................................ 0.00% 85,559 15.336685 1,312,191 13.54% 1997 ............................................ 0.00% 50,153 13.507426 677,438 25.45% Strong VIF - Strong Discovery Fund II 2001 ............................................ 0.00% 22,035 13.485135 297,145 4.08% 2000 ............................................ 0.00% 25,155 12.955970 325,907 4.39% 1999 ............................................ 0.00% 19,763 12.410693 245,273 5.09% 1998 ............................................ 0.00% 20,724 11.809640 244,743 7.26% 1997 ............................................ 0.00% 15,515 11.010302 170,825 11.39% Strong VIF - Strong International Stock Fund II 2001 ............................................ 0.00% 55,640 7.298468 406,087 -22.14% 2000 ............................................ 0.00% 51,648 9.373600 484,128 -39.52% 1999 ............................................ 0.00% 91,170 15.499580 1,413,097 87.20% 1998 ............................................ 0.00% 36,980 8.279751 306,185 -4.78% 1997 ............................................ 0.00% 28,984 8.695226 252,022 -13.52% UIF - Emerging Markets Debt Portfolio 2001 ............................................ 0.00% 33,534 11.216363 376,130 10.10% 2000 ............................................ 0.00% 33,493 10.187412 341,207 11.39% 1999 ............................................ 0.00% 25,999 9.146001 237,787 29.37% 1998 ............................................ 0.00% 6,444 7.069376 45,555 -28.38% 1997 ............................................ 0.00% 3,497 9.870449 34,517 -1.30% 7/14/97 UIF - U.S. Real Estate Portfolio 2001 ............................................ 0.00% 58,299 19.952330 1,163,201 9.84% 2000 ............................................ 0.00% 57,529 18.164582 1,044,990 28.06% 1999 ............................................ 0.00% 53,125 14.184757 753,565 -3.37% 1998 ............................................ 0.00% 58,853 14.679798 863,950 -11.62% 1997 ............................................ 0.00% 47,746 16.610019 793,062 21.47% Van Eck WIT - Worldwide Bond Fund 2001 ............................................ 0.00% 15,977 10.819530 172,864 -5.10% 2000 ............................................ 0.00% 15,146 11.400381 172,670 1.87% 1999 ............................................ 0.00% 16,613 11.191476 185,924 -7.82% 1998 ............................................ 0.00% 21,531 12.141253 261,413 12.75% 1997 ............................................ 0.00% 19,142 10.767851 206,118 2.39% Van Eck WIT - Worldwide Emerging Markets Fund 2001 ............................................ 0.00% 79,757 6.710492 535,209 -1.81% 2000 ............................................ 0.00% 91,301 6.834145 623,964 -41.87% 1999 ............................................ 0.00% 175,122 11.755719 2,058,685 100.28% 1998 ............................................ 0.00% 41,962 5.869611 246,301 -34.13% 1997 ............................................ 0.00% 13,242 8.910909 117,998 -11.60% Van Eck WIT - Worldwide Hard Assets Fund 2001 ............................................ 0.00% 32,526 8.239575 268,000 -10.44% 2000 ............................................ 0.00% 35,253 9.200485 324,345 11.40% 1999 ............................................ 0.00% 38,783 8.258894 320,305 21.00% 1998 ............................................ 0.00% 21,804 6.825397 148,821 -30.97% 1997 ............................................ 0.00% 14,793 9.887286 146,263 -1.68%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Single Premium contracts issued prior to April 16, 1990 (policy years 11 and thereafter): American Century VP - American Century VP Capital Appreciation 2001 ............................................ 0.50% 2,922 28.500613 83,279 -28.43% 2000 ............................................ 0.50% 7,428 39.820221 295,785 8.49% 1999 ............................................ 0.50% 6,108 36.406768 222,373 63.70% 1998 ............................................ 0.50% 6,437 22.339504 143,799 -2.73% 1997 ............................................ 0.50% 8,329 23.049846 191,982 -4.17% American Century VP - American Century VP International 2000 ............................................ 0.50% 2,453 22.205291 54,470 -17.24% 1999 ............................................ 0.50% 2,459 26.614141 65,444 63.23% American Century VP - American Century VP Value 2000 ............................................ 0.50% 118 15.308543 1,806 17.56% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2000 ............................................ 0.50% 4,740 15.854894 75,152 -19.34% Credit Suisse Trust - International Equity Portfolio 1998 ............................................ 0.50% 1,777 11.754581 20,888 4.73% 1997 ............................................ 0.50% 1,792 11.264405 20,186 -3.18% Credit Suisse Trust - Small Cap Growth Portfolio 1997 ............................................ 0.50% 134 16.093971 2,157 14.56% The Dreyfus Socially Responsible Growth Fund, Inc. 1999 ............................................ 0.50% 1,699 36.209915 61,521 29.43% Dreyfus Stock Index Fund 2001 ............................................ 0.50% 1,122 26.476528 29,707 -12.62% 2000 ............................................ 0.50% 6,384 30.300792 193,440 -9.73% 1999 ............................................ 0.50% 16,208 33.296352 539,667 20.00% 1998 ............................................ 0.50% 14,798 27.871347 412,440 27.46% 1997 ............................................ 0.50% 9,956 21.945853 218,493 31.70% Dreyfus VIF - Appreciation Portfolio 1999 ............................................ 0.50% 868 14.538186 12,619 10.90% 1998 ............................................ 0.50% 876 13.168334 11,535 28.99% Fidelity(R) VIP - Equity-Income Portfolio: Initial Class 2001 ............................................ 0.50% 3,200 45.378727 145,212 -5.43% 2000 ............................................ 0.50% 5,076 47.985530 243,575 7.88% 1999 ............................................ 0.50% 5,082 44.120448 224,220 5.80% 1998 ............................................ 0.50% 6,566 41.890019 275,050 10.97% 1997 ............................................ 0.50% 6,812 37.884780 258,071 26.90% Fidelity(R) VIP - Growth Portfolio: Initial Class 2001 ............................................ 0.50% 3,370 57.875878 195,042 -18.06% 2000 ............................................ 0.50% 4,686 70.634432 330,993 -11.42% 1999 ............................................ 0.50% 3,009 79.099308 238,010 36.75% 1998 ............................................ 0.50% 4,551 58.102055 264,422 38.67% 1997 ............................................ 0.50% 5,177 42.050483 217,695 22.31% Fidelity(R) VIP - High Income Portfolio: Initial Class 2001 ............................................ 0.50% 1,784 19.796324 35,317 -12.17% 2000 ............................................ 0.50% 1,862 22.540543 41,970 -22.86% 1999 ............................................ 0.50% 2,115 28.983767 61,301 7.62% 1998 ............................................ 0.50% 3,510 27.054068 94,960 -4.89% 1997 ............................................ 0.50% 3,493 28.548032 99,718 16.55%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Fidelity(R) VIP - Overseas Portfolio: Initial Class 2001 ............................................ 0.50% 2,274 21.810922 49,598 -21.56% 2000 ............................................ 0.50% 2,500 27.806776 69,517 -19.51% 1999 ............................................ 0.50% 4,084 34.268141 139,951 41.92% 1998 ............................................ 0.50% 4,966 24.255551 120,453 12.09% 1997 ............................................ 0.50% 5,108 21.717871 110,935 10.50% Fidelity(R) VIP II - Asset Manager Portfolio: Initial Class 2001 ............................................ 0.50% 1,169 28.291882 33,073 -4.57% 2000 ............................................ 0.50% 1,178 29.647039 34,924 -4.41% 1999 ............................................ 0.50% 1,185 30.762893 36,454 10.54% 1998 ............................................ 0.50% 1,193 27.955691 33,351 14.38% 1997 ............................................ 0.50% 1,203 24.530415 29,510 19.51% Fidelity(R) VIP II - Contrafund Portfolio: Initial Class 1999 ............................................ 0.50% 677 25.968332 17,581 23.63% 1998 ............................................ 0.50% 684 21.098746 14,432 29.22% 1997 ............................................ 0.50% 3,331 16.387248 54,586 22.97% Fidelity(R) VIP III - Growth Opportunities Portfolio: Initial Class 2001 ............................................ 0.50% 1,210 9.889817 11,967 -14.85% 2000 ............................................ 0.50% 1,231 11.614608 14,298 -17.48% 1999 ............................................ 0.50% 1,477 13.960952 20,620 3.75% Nationwide(R) SAT - Capital Appreciation Fund Class I 1999 ............................................ 0.50% 1,979 32.388538 64,097 3.76% 1998 ............................................ 0.50% 2,354 31.356408 73,813 29.20% 1997 ............................................ 0.50% 2,373 24.356996 57,799 33.22% Nationwide(R) SAT - Government Bond Fund Class I 2001 ............................................ 0.50% 1,291 27.097613 34,983 6.72% 2000 ............................................ 0.50% 1,707 25.392104 43,344 11.98% 1999 ............................................ 0.50% 1,747 22.492327 39,294 -2.83% 1998 ............................................ 0.50% 1,481 23.252862 34,437 8.27% 1997 ............................................ 0.50% 2,159 21.554629 46,536 8.63% Nationwide(R) SAT - MAS Multi Sector Bond Fund Class I 2000 ............................................ 0.50% 259 10.458203 2,709 4.58% 5/1/00 Nationwide(R) SAT - Money Market Fund Class I 2001 ............................................ 0.50% 7,295 18.417013 134,352 3.08% 2000 ............................................ 0.50% 12,856 17.866283 229,689 5.50% 1999 ............................................ 0.50% 16,350 16.794246 274,586 4.32% 1998 ............................................ 0.50% 9,477 16.171326 153,256 4.67% 1997 ............................................ 0.50% 9,301 15.508767 144,247 4.26% Nationwide(R) SAT - Small Cap Value Fund Class I 2001 ............................................ 0.50% 16,203 15.403979 249,591 27.63% 2000 ............................................ 0.50% 5,781 12.068870 69,770 10.65% 1999 ............................................ 0.50% 2,201 10.825871 23,828 27.20% Nationwide(R) SAT - Small Company Fund Class I 2001 ............................................ 0.50% 749 23.371178 17,505 -7.17% 2000 ............................................ 0.50% 762 25.176901 19,185 8.36% 1999 ............................................ 0.50% 913 23.047417 21,042 43.30% 1997 ............................................ 0.50% 124 16.146794 2,002 16.24%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Nationwide(R) SAT - Total Return Fund Class I 2001 ............................................ 0.50% 1,162 36.560512 42,483 -12.26% 2000 ............................................ 0.50% 1,319 41.669957 54,963 -2.61% 1999 ............................................ 0.50% 4,738 42.439374 201,078 6.41% 1998 ............................................ 0.50% 4,462 40.062865 178,761 17.38% 1997 ............................................ 0.50% 2,904 34.253930 99,473 28.21% Neuberger Berman AMT - Growth Portfolio 2001 ............................................ 0.50% 3,126 33.226236 103,865 -30.71% 2000 ............................................ 0.50% 3,192 47.952407 153,064 -12.09% 1999 ............................................ 0.50% 3,041 54.109841 164,548 49.65% 1998 ............................................ 0.50% 4,910 36.321304 178,338 14.85% 1997 ............................................ 0.50% 5,113 31.739871 162,286 27.79% Neuberger Berman AMT - Guardian Portfolio 1999 ............................................ 0.50% 561 10.593122 5,943 14.36% Neuberger Berman AMT - Limited Maturity Bond Portfolio 2001 ............................................ 0.50% 2,817 20.939856 58,988 8.24% 2000 ............................................ 0.50% 6,082 19.346478 117,665 6.25% 1999 ............................................ 0.50% 5,986 18.060558 108,111 0.97% 1998 ............................................ 0.50% 5,842 17.967444 104,966 3.78% 1997 ............................................ 0.50% 5,557 17.375997 96,558 5.73% Neuberger Berman AMT - Partners Portfolio 2000 ............................................ 0.50% 72 25.096849 1,807 0.20% 1997 ............................................ 0.50% 2,379 22.629887 53,837 30.01% Oppenheimer Bond Fund/VA 2001 ............................................ 0.50% 47 21.678723 1,019 7.25% 2000 ............................................ 0.50% 51 20.213946 1,031 5.57% Oppenheimer Capital Appreciation Fund/VA 2001 ............................................ 0.50% 8,487 15.672302 133,011 -13.02% 2000 ............................................ 0.50% 6,917 18.017261 124,625 -0.73% Oppenheimer Global Securities Fund/VA 2000 ............................................ 0.50% 2,118 30.445645 64,484 4.57% Strong Opportunity Fund II, Inc. ................... 2001 ............................................ 0.50% 3,831 41.000669 157,074 -4.19% 2000 ............................................ 0.50% 447 42.694690 19,085 6.07% 1999 ............................................ 0.50% 450 40.018322 18,008 34.23% 1998 ............................................ 0.50% 452 29.946506 13,536 12.88% 1997 ............................................ 0.50% 456 26.626359 12,142 24.27% UIF - Emerging Markets Debt Portfolio 2001 ............................................ 0.50% 1,244 10.935992 13,604 9.55% 2000 ............................................ 0.50% 1,265 9.982829 12,628 10.83% 1999 ............................................ 0.50% 1,518 8.934183 13,562 28.73% UIF - U.S. Real Estate Portfolio 2000 ............................................ 0.50% 3,074 19.442286 59,766 27.42% 1998 ............................................ 0.50% 4,103 15.812545 64,879 -12.14% 1997 ............................................ 0.50% 4,138 18.062622 74,743 20.33%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Van Eck WIT - Worldwide Bond Fund 2001 ............................................ 0.50% 1,086 14.653212 15,913 -5.57% 2000 ............................................ 0.50% 1,105 15.517699 17,147 1.36% 1999 ............................................ 0.50% 1,325 15.185599 20,121 -8.28% 1998 ............................................ 0.50% 264 16.631673 4,391 12.09% 1997 ............................................ 0.50% 22 14.891060 328 1.42% Van Eck WIT - Worldwide Emerging Markets Fund 2000 ............................................ 0.50% 407 6.661531 2,711 -42.15% 1999 ............................................ 0.50% 6,267 11.423096 71,589 99.29% Van Eck WIT - Worldwide Hard Assets Fund 2001 ............................................ 0.50% 4 11.933986 48 -10.89% 2000 ............................................ 0.50% 5 13.393001 67 10.85% 1999 ............................................ 0.50% 10 11.984540 120 20.40% 1998 ............................................ 0.50% 5,479 9.998900 54,784 -31.37% 1997 ............................................ 0.50% 5,526 14.622970 80,807 -2.61% Multiple Payment contracts and Flexible Premium contracts: American Century VP - American Century VP Balanced 2001 ............................................ 0.80% 201,384 19.493759 3,925,731 -4.31% 2000 ............................................ 0.80% 204,099 20.372425 4,157,992 -3.42% 1999 ............................................ 0.80% 222,611 21.094348 4,695,834 9.18% 1998 ............................................ 0.80% 215,629 19.320541 4,166,069 14.85% 1997 ............................................ 0.80% 162,980 16.822481 2,741,728 14.88% American Century VP - American Century VP Capital Appreciation 2001 ............................................ 0.80% 735,263 17.987270 13,225,374 -28.64% 2000 ............................................ 0.80% 819,897 25.207415 20,667,484 8.17% 1999 ............................................ 0.80% 643,372 23.303640 14,992,909 63.21% 1998 ............................................ 0.80% 649,478 14.277913 9,273,190 -2.94% 1997 ............................................ 0.80% 655,176 14.709822 9,637,522 -4.03% American Century VP - American Century VP Income & Growth 2001 ............................................ 0.80% 322,604 10.252927 3,307,635 -9.09% 2000 ............................................ 0.80% 303,622 11.277817 3,424,193 -11.32% 1999 ............................................ 0.80% 235,223 12.717991 2,991,564 17.08% 1998 ............................................ 0.80% 73,815 10.862660 801,827 8.63% 5/1/98 American Century VP - American Century VP International 2001 ............................................ 0.80% 733,730 15.554724 11,412,968 -29.74% 2000 ............................................ 0.80% 754,646 22.139513 16,707,495 -17.49% 1999 ............................................ 0.80% 649,836 26.831062 17,435,790 62.74% 1998 ............................................ 0.80% 568,779 16.487231 9,377,591 17.81% 1997 ............................................ 0.80% 333,719 13.994328 4,670,173 17.69% American Century VP - American Century VP Value 2001 ............................................ 0.80% 499,070 17.020923 8,494,632 11.92% 2000 ............................................ 0.80% 323,587 15.208380 4,921,234 17.21% 1999 ............................................ 0.80% 156,791 12.975752 2,034,481 -1.64% 1998 ............................................ 0.80% 140,522 13.192098 1,853,780 3.98% 1997 ............................................ 0.80% 81,237 12.687534 1,030,697 25.08%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Credit Suisse Trust - Global Post-Venture Capital Portfolio 2001 ............................................ 0.80% 135,156 11.150533 1,507,061 -29.21% 2000 ............................................ 0.80% 139,959 15.751152 2,204,515 -19.58% 1999 ............................................ 0.80% 123,907 19.586645 2,426,922 62.20% 1998 ............................................ 0.80% 64,081 12.075838 773,832 5.66% 1997 ............................................ 0.80% 44,199 11.428806 505,142 12.43% Credit Suisse Trust - International Equity Portfolio 2001 ............................................ 0.80% 503,048 10.194751 5,128,449 -22.90% 2000 ............................................ 0.80% 525,361 13.222451 6,946,560 -26.48% 1999 ............................................ 0.80% 555,966 17.985801 9,999,494 52.21% 1998 ............................................ 0.80% 579,078 11.816371 6,842,600 4.51% 1997 ............................................ 0.80% 651,598 11.306660 7,367,397 -3.04% Credit Suisse Trust - Small Cap Growth Portfolio 2001 ............................................ 0.80% 816,970 17.675000 14,439,945 -16.68% 2000 ............................................ 0.80% 942,509 21.214019 19,994,404 -18.76% 1999 ............................................ 0.80% 754,487 26.113570 19,702,349 67.73% 1998 ............................................ 0.80% 731,702 15.568525 11,391,521 -3.63% 1997 ............................................ 0.80% 712,489 16.154327 11,509,780 14.73% Dreyfus IP - European Equity Portfolio 2001 ............................................ 0.80% 9,248 6.633319 61,345 -28.71% 2000 ............................................ 0.80% 3,721 9.304097 34,621 -6.96% 5/1/00 The Dreyfus Socially Responsible Growth Fund, Inc. 2001 ............................................ 0.80% 479,262 24.776659 11,874,511 -23.20% 2000 ............................................ 0.80% 508,803 32.259560 16,413,761 -11.74% 1999 ............................................ 0.80% 450,901 36.549891 16,480,382 29.04% 1998 ............................................ 0.80% 359,871 28.323603 10,192,843 28.35% 1997 ............................................ 0.80% 275,028 22.067304 6,069,126 27.41% Dreyfus Stock Index Fund 2001 ............................................ 0.80% 2,735,378 26.351146 72,080,345 -12.88% 2000 ............................................ 0.80% 2,613,545 30.248565 79,055,986 -10.00% 1999 ............................................ 0.80% 2,592,791 33.609618 87,142,715 19.64% 1998 ............................................ 0.80% 2,166,290 28.091438 60,854,201 27.19% 1997 ............................................ 0.80% 1,577,410 22.086039 34,838,739 31.90% Dreyfus VIF - Appreciation Portfolio 2001 ............................................ 0.80% 358,763 12.938645 4,641,907 -10.04% 2000 ............................................ 0.80% 365,003 14.382034 5,249,486 -1.44% 1999 ............................................ 0.80% 404,377 14.591996 5,900,668 10.57% 1998 ............................................ 0.80% 257,361 13.197284 3,396,466 29.18% 1997 ............................................ 0.80% 33,449 10.216196 341,722 2.16% 7/14/97 Dreyfus VIF - Growth and Income Portfolio 2001 ............................................ 0.80% 162,195 13.204070 2,141,634 -6.60% 2000 ............................................ 0.80% 152,925 14.137245 2,161,938 -4.54% 1999 ............................................ 0.80% 138,815 14.810164 2,055,873 15.95% 1998 ............................................ 0.80% 125,274 12.772496 1,600,062 10.92% 1997 ............................................ 0.80% 74,022 11.514756 852,345 15.29%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Fidelity(R) VIP - Equity-Income Portfolio: Initial Class 2001 ............................................ 0.80% 1,558,719 37.915521 59,099,643 -5.72% 2000 ............................................ 0.80% 1,556,185 40.214814 62,581,690 7.56% 1999 ............................................ 0.80% 1,750,754 37.388084 65,457,338 5.48% 1998 ............................................ 0.80% 1,726,955 35.444796 61,211,568 10.74% 1997 ............................................ 0.80% 1,533,661 32.007773 49,089,073 27.09% Fidelity(R) VIP - Growth Portfolio: Initial Class 2001 ............................................ 0.80% 2,474,278 40.327380 99,781,149 -18.31% 2000 ............................................ 0.80% 2,621,312 49.366480 129,404,946 -11.69% 1999 ............................................ 0.80% 2,613,902 55.899014 146,114,544 36.34% 1998 ............................................ 0.80% 2,346,630 40.998916 96,209,286 38.38% 1997 ............................................ 0.80% 2,133,432 29.627929 63,209,172 22.5% Fidelity(R) VIP - High Income Portfolio: Initial Class 2001 ............................................ 0.80% 653,854 18.882734 12,346,551 -12.44% 2000 ............................................ 0.80% 619,065 21.565326 13,350,339 -23.09% 1999 ............................................ 0.80% 672,537 28.039263 18,857,442 7.29% 1998 ............................................ 0.80% 737,225 26.133234 19,266,073 -5.09% 1997 ............................................ 0.80% 660,090 27.535006 18,175,582 16.73% Fidelity(R) VIP - Overseas Portfolio: Initial Class 2001 ............................................ 0.80% 814,381 16.843777 13,717,252 -21.80% 2000 ............................................ 0.80% 866,875 21.539183 18,671,779 -19.75% 1999 ............................................ 0.80% 863,446 26.840170 23,175,037 41.49% 1998 ............................................ 0.80% 871,214 18.969496 16,526,490 11.85% 1997 ............................................ 0.80% 801,447 16.959418 13,592,075 10.67% Fidelity(R) VIP II - Asset Manager Portfolio: Initial Class 2001 ............................................ 0.80% 808,651 24.805237 20,058,780 -4.86% 2000 ............................................ 0.80% 851,071 26.071970 22,189,098 -4.69% 1999 ............................................ 0.80% 917,098 27.355020 25,087,234 10.21% 1998 ............................................ 0.80% 961,754 24.821550 23,872,225 14.13% 1997 ............................................ 0.80% 930,767 21.747656 20,242,001 19.69% Fidelity(R) VIP II - Contrafund Portfolio: Initial Class 2001 ............................................ 0.80% 2,013,717 21.083066 42,455,328 -12.95% 2000 ............................................ 0.80% 2,107,468 24.218904 51,040,565 -7.36% 1999 ............................................ 0.80% 2,151,780 26.143948 56,256,024 23.26% 1998 ............................................ 0.80% 1,826,890 21.209617 38,747,637 28.94% 1997 ............................................ 0.80% 1,351,683 16.448700 22,233,428 23.15% Fidelity(R) VIP III - Growth Opportunities Portfolio: Initial Class 2001 ............................................ 0.80% 341,765 9.787292 3,344,954 -15.11% 2000 ............................................ 0.80% 358,453 11.528985 4,132,599 -17.72% 1999 ............................................ 0.80% 385,372 14.012663 5,400,088 3.44% 1998 ............................................ 0.80% 315,036 13.546531 4,267,645 23.62% 1997 ............................................ 0.80% 55,769 10.958018 611,118 9.58% 7/14/97 Janus AS - Capital Appreciation Portfolio - Service Shares 2001 ............................................ 0.80% 350,620 6.119334 2,145,561 -22.46% 2000 ............................................ 0.80% 297,781 7.891490 2,349,936 -21.09% 5/1/00 Janus AS - Global Technology Portfolio - Service Shares 2001 ............................................ 0.80% 346,031 4.192814 1,450,844 -37.82% 2000 ............................................ 0.80% 259,751 6.742955 1,751,489 -32.57% 5/1/00
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Janus AS - International Growth Portfolio - Service Shares 2001 ............................................ 0.80% 227,552 6.008001 1,367,133 -24.04% 2000 ............................................ 0.80% 174,672 7.909816 1,381,623 -20.90% 5/1/00 Nationwide(R) SAT - Capital Appreciation Fund Class I 2001 ............................................ 0.80% 950,129 17.022307 16,173,388 -28.71% 2000 ............................................ 0.80% 952,662 23.877962 22,747,627 -27.12% 1999 ............................................ 0.80% 1,104,444 32.761545 36,183,292 3.45% 1998 ............................................ 0.80% 1,058,148 31.669989 33,511,536 28.93% 1997 ............................................ 0.80% 755,171 24.563746 18,549,829 33.42% Nationwide(R) SAT - Dreyfus Mid Cap Index Fund Class I 2001 ............................................ 0.80% 246,977 10.242303 2,529,613 -2.10% 2000 ............................................ 0.80% 145,426 10.461575 1,521,385 4.62% 5/1/00 Nationwide(R) SAT - Gartmore Emerging Markets Fund Class I 2001 ............................................ 0.80% 23,612 8.178748 193,117 -5.94% 2000 ............................................ 0.80% 1,063 8.695491 9,243 -13.05% 10/2/00 Nationwide(R) SAT - Gartmore Global Technology & Communications Fund Class I 2001 ............................................ 0.80% 86,686 3.412440 295,811 -43.18% 2000 ............................................ 0.80% 46,652 6.005978 280,191 -39.94% 10/2/00 Nationwide(R) SAT - Gartmore International Growth Fund Class I 2001 ............................................ 0.80% 8,456 6.534130 55,253 -29.22% 2000 ............................................ 0.80% 453 9.231934 4,182 -7.68% 10/2/00 Nationwide(R) SAT - Government Bond Fund Class I 2001 ............................................ 0.80% 492,674 20.807253 10,251,193 6.40% 2000 ............................................ 0.80% 359,189 19.556523 7,024,488 11.65% 1999 ............................................ 0.80% 402,906 17.516435 7,057,477 -3.13% 1998 ............................................ 0.80% 414,068 18.081576 7,487,002 8.04% 1997 ............................................ 0.80% 237,476 16.735906 3,974,376 8.79% Nationwide(R) SAT - MAS Multi Sector Bond Fund Class I 2001 ............................................ 0.80% 55,247 10.787560 595,980 3.35% 2000 ............................................ 0.80% 3,000 10.437484 31,312 4.37% 5/1/00 Nationwide(R) SAT - Money Market Fund Class I 2001 ............................................ 0.80% 1,991,692 14.974957 29,825,502 2.77% 2000 ............................................ 0.80% 2,268,467 14.571330 33,054,581 5.18% 1999 ............................................ 0.80% 2,312,418 13.853330 32,034,690 4.01% 1998 ............................................ 0.80% 1,953,963 13.319323 26,025,464 4.43% 1997 ............................................ 0.80% 1,823,184 12.754301 23,253,438 4.42% Nationwide(R) SAT - Small Cap Growth Fund Class I 2001 ............................................ 0.80% 146,635 7.143137 1,047,434 -11.55% 2000 ............................................ 0.80% 85,563 8.076240 691,027 -19.24% 5/1/00 Nationwide(R) SAT - Small Cap Value Fund Class I 2001 ............................................ 0.80% 679,631 15.235359 10,354,422 27.25% 2000 ............................................ 0.80% 275,697 11.972833 3,300,874 10.32% 1999 ............................................ 0.80% 165,130 10.852975 1,792,152 26.82% 1998 ............................................ 0.80% 50,840 8.557853 435,081 -14.42% 5/1/98 Nationwide(R) SAT - Small Company Fund Class I 2001 ............................................ 0.80% 928,089 23.188796 21,521,266 -7.45% 2000 ............................................ 0.80% 998,068 25.056031 25,007,623 8.03% 1999 ............................................ 0.80% 907,754 23.192622 21,053,195 42.87% 1998 ............................................ 0.80% 879,309 16.233001 14,273,824 0.02% 1997 ............................................ 0.80% 690,077 16.199871 11,179,158 16.41%
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Nationwide(R) SAT - Strong Mid Cap Growth Fund Class I 2001 ............................................ 0.80% 146,210 5.605279 819,548 -30.87% 2000 ............................................ 0.80% 76,685 8.108035 621,765 -18.92% 5/1/00 Nationwide(R) SAT - Total Return Fund Class I 2001 ............................................ 0.80% 2,295,929 29.801440 68,421,990 -12.53% 2000 ............................................ 0.80% 2,359,054 34.069071 80,370,778 -2.90% 1999 ............................................ 0.80% 2,622,351 35.085217 92,005,754 6.09% 1998 ............................................ 0.80% 2,650,483 33.070880 87,653,805 17.13% 1997 ............................................ 0.80% 2,342,232 28.233403 66,129,180 28.40% Nationwide(R) SAT - Turner Growth Focus Fund Class I 2001 ............................................ 0.80% 50,607 3.829622 193,806 -39.52% 2000 ............................................ 0.80% 7,806 6.332010 49,428 -36.68% Neuberger Berman AMT - Balanced Portfolio 2001 ............................................ 0.80% 636 22.433930 14,268 -3.34% 6/15/01 Neuberger Berman AMT - Growth Portfolio 2001 ............................................ 0.80% 800,152 22.896752 18,320,882 -30.92% 2000 ............................................ 0.80% 793,907 33.145055 26,314,091 -12.36% 1999 ............................................ 0.80% 660,524 37.818375 24,979,944 49.20% 1998 ............................................ 0.80% 767,489 25.347646 19,454,039 14.61% 1997 ............................................ 0.80% 628,860 22.117203 13,908,624 27.98% Neuberger Berman AMT - Guardian Portfolio 2001 ............................................ 0.80% 196,852 10.409898 2,049,209 -2.30% 2000 ............................................ 0.80% 149,159 10.654639 1,589,235 0.33% 1999 ............................................ 0.80% 181,217 10.619652 1,924,461 14.02% 1998 ............................................ 0.80% 71,761 9.314041 668,385 -6.86% 5/1/98 Neuberger Berman AMT - Limited Maturity Bond Portfolio 2001 ............................................ 0.80% 178,198 17.101800 3,047,507 7.91% 2000 ............................................ 0.80% 141,846 15.848178 2,248,001 5.94% 1999 ............................................ 0.80% 203,409 14.959827 3,042,963 0.67% 1998 ............................................ 0.80% 195,748 14.860392 2,908,892 3.56% 1997 ............................................ 0.80% 178,356 14.349688 2,559,353 5.89% Neuberger Berman AMT - Partners Portfolio 2001 ............................................ 0.80% 777,174 24.119941 18,745,391 -3.61% 2000 ............................................ 0.80% 781,588 25.022294 19,557,125 -0.01% 1999 ............................................ 0.80% 1,008,241 25.046437 25,252,845 6.51% 1998 ............................................ 0.80% 1,151,452 23.514569 27,075,898 3.38% 1997 ............................................ 0.80% 928,663 22.746051 21,123,416 30.21% Oppenheimer Aggressive Growth Fund/VA 2001 ............................................ 0.80% 298,688 5.306432 1,584,968 -31.82% 2000 ............................................ 0.80% 313,898 7.782869 2,443,027 -22.17% 5/1/00 Oppenheimer Bond Fund/VA 2001 ............................................ 0.80% 499,632 19.904727 9,945,039 6.92% 2000 ............................................ 0.80% 480,377 18.615856 8,942,629 5.26% 1999 ............................................ 0.80% 520,266 17.686402 9,201,634 -2.30% 1998 ............................................ 0.80% 532,098 18.103341 9,632,752 5.95% 1997 ............................................ 0.80% 381,236 17.086434 6,513,964 8.38%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Oppenheimer Capital Appreciation Fund/VA 2001 ............................................ 0.80% 859,711 15.509895 13,334,027 -13.28% 2000 ............................................ 0.80% 796,536 17.884539 14,245,679 -1.02% 1999 ............................................ 0.80% 535,283 18.069110 9,672,087 40.53% 1998 ............................................ 0.80% 342,717 12.857977 4,406,647 23.01% 1997 ............................................ 0.80% 40,779 10.452595 426,246 4.53% 7/14/97 Oppenheimer Global Securities Fund/VA 2001 ............................................ 0.80% 1,078,042 26.520512 28,590,226 -12.74% 2000 ............................................ 0.80% 1,096,887 30.393395 33,338,120 4.26% 1999 ............................................ 0.80% 1,018,848 29.152831 29,702,304 57.22% 1998 ............................................ 0.80% 980,014 18.542353 18,171,766 13.20% 1997 ............................................ 0.80% 855,620 16.380762 14,015,708 21.45% Oppenheimer Main Street Growth & Income Fund/VA 2001 ............................................ 0.80% 73,856 8.026816 592,829 -10.88% 2000 ............................................ 0.80% 33,482 9.006749 301,564 -9.93% 5/1/00 Oppenheimer Multiple Strategies Fund/VA 2001 ............................................ 0.80% 394,571 26.951432 10,634,253 1.40% 2000 ............................................ 0.80% 412,843 26.579650 10,973,222 5.59% 1999 ............................................ 0.80% 437,927 25.171538 11,023,296 10.91% 1998 ............................................ 0.80% 460,679 22.696024 10,455,582 5.80% 1997 ............................................ 0.80% 387,094 21.450954 8,303,536 16.29% Strong Opportunity Fund II, Inc. ................... 2001 ............................................ 0.80% 901,762 40.890795 36,873,765 -4.48% 2000 ............................................ 0.80% 877,807 42.709091 37,490,339 5.75% 1999 ............................................ 0.80% 898,106 40.478200 36,353,714 33.83% 1998 ............................................ 0.80% 874,006 30.245312 26,434,584 12.64% 1997 ............................................ 0.80% 791,884 26.851737 21,263,461 24.46% Strong VIF - Strong Discovery Fund II 2001 ............................................ 0.80% 269,121 21.646818 5,825,613 3.25% 2000 ............................................ 0.80% 271,144 20.965624 5,684,703 3.57% 1999 ............................................ 0.80% 296,260 20.243703 5,997,399 4.25% 1998 ............................................ 0.80% 360,468 19.418031 6,999,579 6.41% 1997 ............................................ 0.80% 337,867 18.249145 6,165,784 10.50% Strong VIF - Strong International Stock Fund II 2001 ............................................ 0.80% 213,256 7.816872 1,666,995 -22.76% 2000 ............................................ 0.80% 210,636 10.120684 2,131,780 -40.00% 1999 ............................................ 0.80% 219,407 16.868902 3,701,155 85.71% 1998 ............................................ 0.80% 149,776 9.083353 1,360,468 -5.54% 1997 ............................................ 0.80% 140,532 9.615755 1,351,321 -14.21% UIF - Emerging Markets Debt Portfolio 2001 ............................................ 0.80% 74,719 10.822665 808,659 9.22% 2000 ............................................ 0.80% 62,323 9.909218 617,572 10.50% 1999 ............................................ 0.80% 43,728 8.967304 392,122 28.35% 1998 ............................................ 0.80% 34,905 6.986851 243,876 -28.95% 1997 ............................................ 0.80% 16,674 9.833749 163,968 -1.66% 7/14/97
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- UIF - U.S. Real Estate Portfolio 2001 ............................................ 0.80% 313,717 21.092541 6,617,089 8.96% 2000 ............................................ 0.80% 277,285 19.357784 5,367,623 27.04% 1999 ............................................ 0.80% 246,788 15.237208 3,760,360 -4.14% 1998 ............................................ 0.80% 287,075 15.895654 4,563,245 -12.33% 1997 ............................................ 0.80% 275,704 18.130321 4,998,602 20.51% Van Eck WIT - Worldwide Bond Fund 2001 ............................................ 0.80% 120,008 13.323421 1,598,917 -5.86% 2000 ............................................ 0.80% 123,195 14.152095 1,743,467 1.06% 1999 ............................................ 0.80% 143,676 14.003753 2,012,003 -8.56% 1998 ............................................ 0.80% 154,980 15.314274 2,373,406 11.86% 1997 ............................................ 0.80% 121,423 13.690999 1,662,402 1.57% Van Eck WIT - Worldwide Emerging Markets Fund 2001 ............................................ 0.80% 444,368 6.445985 2,864,389 -2.60% 2000 ............................................ 0.80% 443,771 6.617911 2,936,837 -42.33% 1999 ............................................ 0.80% 576,742 11.474995 6,618,112 98.69% 1998 ............................................ 0.80% 253,188 5.775322 1,462,242 -34.66% 1997 ............................................ 0.80% 222,956 8.838307 1,970,554 -12.31% Van Eck WIT - Worldwide Hard Assets Fund 2001 ............................................ 0.80% 176,699 14.394010 2,543,407 -11.16% 2000 ............................................ 0.80% 186,255 16.202639 3,017,823 10.52% 1999 ............................................ 0.80% 206,979 14.660562 3,034,428 20.04% 1998 ............................................ 0.80% 206,325 12.213208 2,519,890 -31.52% 1997 ............................................ 0.80% 212,577 17.834480 3,791,200 -2.46% Single Premium contracts issued on or after April 16, 1990: American Century VP - American Century VP Balanced 2001 ............................................ 1.30% 27,610 18.571841 512,769 -4.79% 2000 ............................................ 1.30% 29,587 19.506844 577,149 -3.90% 1999 ............................................ 1.30% 36,043 20.298769 731,629 8.64% 1998 ............................................ 1.30% 43,205 18.685028 807,287 14.28% 1997 ............................................ 1.30% 38,245 16.350628 625,330 14.31% American Century VP - American Century VP Capital Appreciation 2001 ............................................ 1.30% 93,041 18.500029 1,721,261 -29.00% 2000 ............................................ 1.30% 156,838 26.057031 4,086,733 7.63% 1999 ............................................ 1.30% 134,822 24.209204 3,263,933 62.40% 1998 ............................................ 1.30% 113,249 14.906965 1,688,199 -3.42% 1997 ............................................ 1.30% 129,674 15.434921 2,001,508 -4.51% American Century VP - American Century VP Income & Growth 2001 ............................................ 1.30% 40,468 10.066594 407,375 -9.54% 2000 ............................................ 1.30% 48,794 11.128733 543,015 -11.76% 1999 ............................................ 1.30% 53,220 12.612413 671,233 16.50% 1998 ............................................ 1.30% 18,703 10.826437 202,487 8.26% 5/1/98 American Century VP - American Century VP International 2001 ............................................ 1.30% 105,515 14.988556 1,581,517 -30.10% 2000 ............................................ 1.30% 126,911 21.441430 2,721,153 -17.90% 1999 ............................................ 1.30% 162,982 26.114709 4,256,228 61.93% 1998 ............................................ 1.30% 168,629 16.127264 2,719,524 17.23% 1997 ............................................ 1.30% 109,065 13.757328 1,500,443 17.10%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- American Century VP - American Century VP Value 2001 ............................................ 1.30% 123,905 16.598988 2,056,698 11.36% 2000 ............................................ 1.30% 57,614 14.906133 858,802 16.63% 1999 ............................................ 1.30% 26,781 12.781220 342,294 -2.13% 1998 ............................................ 1.30% 25,086 13.059452 327,609 3.46% 1997 ............................................ 1.30% 36,293 12.622928 458,124 24.45% Credit Suisse Trust - Global Post-Venture Capital Portfolio 2001 ............................................ 1.30% 7,002 10.873870 76,139 -29.56% 2000 ............................................ 1.30% 11,974 15.438040 184,855 -19.98% 1999 ............................................ 1.30% 88,739 19.293144 1,712,054 61.39% 1998 ............................................ 1.30% 23,108 11.954408 276,242 5.13% 1997 ............................................ 1.30% 20,440 11.370593 232,415 11.87% Credit Suisse Trust - International Equity Portfolio 2001 ............................................ 1.30% 55,979 9.868857 552,449 -23.29% 2000 ............................................ 1.30% 66,083 12.864457 850,122 -26.85% 1999 ............................................ 1.30% 81,838 17.586224 1,439,221 51.45% 1998 ............................................ 1.30% 92,476 11.611647 1,073,799 3.99% 1997 ............................................ 1.30% 134,117 11.166430 1,497,608 -3.52% Credit Suisse Trust - Small Cap Growth Portfolio 2001 ............................................ 1.30% 82,230 17.109846 1,406,943 -17.10% 2000 ............................................ 1.30% 118,070 20.639565 2,436,913 -19.17% 1999 ............................................ 1.30% 114,996 25.533360 2,936,234 66.90% 1998 ............................................ 1.30% 152,727 15.298780 2,336,537 -4.11% 1997 ............................................ 1.30% 175,452 15.954033 2,799,167 14.16% Dreyfus IP - European Equity Portfolio 2001 ............................................ 1.30% 2,993 6.578172 19,688 -29.06% 2000 ............................................ 1.30% 5,683 9.273374 52,701 -7.27% 5/1/00 The Dreyfus Socially Responsible Growth Fund, Inc. . 2001 ............................................ 1.30% 22,613 23.777410 537,679 -23.58% 2000 ............................................ 1.30% 33,067 31.114958 1,028,878 -12.18% 1999 ............................................ 1.30% 31,488 35.428815 1,115,583 28.40% 1998 ............................................ 1.30% 27,695 27.592332 764,170 27.71% 1997 ............................................ 1.30% 27,923 21.605205 603,282 26.78% Dreyfus Stock Index Fund 2001 ............................................ 1.30% 215,776 25.286872 5,456,300 -13.32% 2000 ............................................ 1.30% 248,888 29.173405 7,260,910 -10.45% 1999 ............................................ 1.30% 315,343 32.576553 10,272,788 19.05% 1998 ............................................ 1.30% 326,895 27.364353 8,945,270 26.56% 1997 ............................................ 1.30% 252,267 21.622115 5,454,546 31.24% Dreyfus VIF - Appreciation Portfolio 2001 ............................................ 1.30% 80,268 12.653068 1,015,636 -10.49% 2000 ............................................ 1.30% 69,804 14.135555 986,718 -1.93% 1999 ............................................ 1.30% 81,279 14.413356 1,171,503 10.02% 1998 ............................................ 1.30% 62,982 13.101026 825,129 28.54% 1997 ............................................ 1.30% 8,365 10.192453 85,260 1.92% 7/14/97
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Dreyfus VIF - Growth and Income Portfolio 2001 ............................................ 1.30% 12,109 12.876695 155,924 -7.07% 2000 ............................................ 1.30% 16,818 13.856323 233,036 -5.02% 1999 ............................................ 1.30% 9,941 14.588194 145,021 15.38% 1998 ............................................ 1.30% 14,240 12.644103 180,052 10.37% 1997 ............................................ 1.30% 11,510 11.456116 131,860 14.71% Fidelity(R) VIP - Equity-Income Portfolio: Initial Class 2001 ............................................ 1.30% 292,636 35.855591 10,492,637 -6.19% 2000 ............................................ 1.30% 304,863 38.221825 11,652,420 7.03% 1999 ............................................ 1.30% 395,355 35.712129 14,118,969 4.96% 1998 ............................................ 1.30% 456,214 34.025630 15,522,969 10.19% 1997 ............................................ 1.30% 525,933 30.880183 16,240,907 26.45% Fidelity(R) VIP - Growth Portfolio: Initial Class 2001 ............................................ 1.30% 283,815 38.662344 10,972,953 -18.72% 2000 ............................................ 1.30% 342,658 47.567395 16,299,348 -12.12% 1999 ............................................ 1.30% 355,884 54.130524 19,264,187 35.66% 1998 ............................................ 1.30% 376,885 39.900577 15,037,929 37.69% 1997 ............................................ 1.30% 325,852 28.978553 9,442,719 21.89% Fidelity(R) VIP - High Income Portfolio: Initial Class 2001 ............................................ 1.30% 93,229 19.673202 1,834,113 -12.88% 2000 ............................................ 1.30% 100,049 22.581448 2,259,251 -23.47% 1999 ............................................ 1.30% 105,520 29.506936 3,113,572 6.76% 1998 ............................................ 1.30% 144,326 27.638937 3,989,017 -5.56% 1997 ............................................ 1.30% 160,493 29.267460 4,697,222 16.15% Fidelity(R) VIP - Overseas Portfolio: Initial Class 2001 ............................................ 1.30% 150,144 15.174561 2,278,369 -22.19% 2000 ............................................ 1.30% 168,125 19.502680 3,278,888 -20.15% 1999 ............................................ 1.30% 213,601 24.423718 5,216,931 40.79% 1998 ............................................ 1.30% 248,471 17.348011 4,310,478 11.29% 1997 ............................................ 1.30% 310,985 15.587449 4,847,463 10.11% Fidelity(R) VIP II - Asset Manager Portfolio: Initial Class 2001 ............................................ 1.30% 187,390 26.691052 5,001,636 -5.34% 2000 ............................................ 1.30% 201,334 28.195602 5,676,733 -5.16% 1999 ............................................ 1.30% 211,956 29.730624 6,301,584 9.66% 1998 ............................................ 1.30% 253,412 27.112311 6,870,585 13.57% 1997 ............................................ 1.30% 293,986 23.873730 7,018,542 19.09% Fidelity(R) VIP II - Contrafund Portfolio: Initial Class 2001 ............................................ 1.30% 215,185 20.409441 4,391,806 -13.39% 2000 ............................................ 1.30% 250,535 23.563410 5,903,459 -7.82% 1999 ............................................ 1.30% 290,335 25.563198 7,421,891 22.65% 1998 ............................................ 1.30% 275,660 20.842351 5,745,402 28.30% 1997 ............................................ 1.30% 257,262 16.244815 4,179,174 22.54% Fidelity(R) VIP III - Growth Opportunities Portfolio: Initial Class 2001 ............................................ 1.30% 17,924 9.571123 171,553 -15.53% 2000 ............................................ 1.30% 19,392 11.331281 219,736 -18.13% 1999 ............................................ 1.30% 21,868 13.841079 302,677 2.93% 1998 ............................................ 1.30% 64,568 13.447707 868,292 23.01% 1997 ............................................ 1.30% 31,619 10.932562 345,677 9.33% 7/14/97
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Janus AS - Capital Appreciation Portfolio - Service Shares 2001 ............................................ 1.30% 15,561 6.068452 94,431 -22.85% 2000 ............................................ 1.30% 22,133 7.865419 174,085 -21.35% 5/1/00 Janus AS - Global Technology Portfolio - Service Shares 2001 ............................................ 1.30% 44,468 4.157888 184,893 -38.13% 2000 ............................................ 1.30% 52,739 6.720656 354,441 -32.79% 5/1/00 Janus AS - International Growth Portfolio - Service Shares 2001 ............................................ 1.30% 59,476 5.958051 354,361 -24.43% 2000 ............................................ 1.30% 72,749 7.883682 573,530 -21.16% 5/1/00 Nationwide(R) SAT - Capital Appreciation Fund Class I 2001 ............................................ 1.30% 37,694 16.217110 611,288 -29.07% 2000 ............................................ 1.30% 45,948 22.863519 1,050,533 -27.48% 1999 ............................................ 1.30% 62,075 31.526314 1,956,996 2.93% 1998 ............................................ 1.30% 113,664 30.628674 3,481,378 28.29% 1997 ............................................ 1.30% 71,279 23.875030 1,701,788 32.76% Nationwide(R) SAT - Dreyfus Mid Cap Index Fund Class I 2001 ............................................ 1.30% 41,031 10.157238 416,762 -2.59% 2000 ............................................ 1.30% 10,564 10.427067 110,152 4.27% 5/1/00 Nationwide(R) SAT - Gartmore Emerging Markets Fund Class I 2001 ............................................ 1.30% 1,128 8.127810 9,168 -6.42% Nationwide(R) SAT - Gartmore Global Technology & Communications Fund Class I 2001 ............................................ 1.30% 13,394 3.391119 45,421 -43.47% 2000 ............................................ 1.30% 18,398 5.998698 110,364 -40.01% 10/2/00 Nationwide(R) SAT - Government Bond Fund Class I 2001 ............................................ 1.30% 253,883 21.700608 5,509,415 5.86% 2000 ............................................ 1.30% 188,357 20.498919 3,861,115 11.09% 1999 ............................................ 1.30% 240,383 18.452016 4,435,551 -3.61% 1998 ............................................ 1.30% 274,184 19.142839 5,248,660 7.50% 1997 ............................................ 1.30% 255,535 17.806978 4,550,306 8.25% Nationwide(R) SAT - MAS Multi Sector Bond Fund Class I 2001 ............................................ 1.30% 269 10.698042 2,878 2.84% 2000 ............................................ 1.30% 1,928 10.403041 20,057 4.03% 5/1/00 Nationwide(R) SAT - Money Market Fund Class I 2001 ............................................ 1.30% 788,057 14.917365 11,755,734 2.25% 2000 ............................................ 1.30% 857,846 14.589227 12,515,310 4.66% 1999 ............................................ 1.30% 1,082,615 13.940225 15,091,897 3.49% 1998 ............................................ 1.30% 814,530 13.470763 10,972,341 3.90% 1997 ............................................ 1.30% 1,051,590 12.964662 13,633,509 3.89% Nationwide(R) SAT - Small Cap Growth Fund Class I 2001 ............................................ 1.30% 10,664 7.083730 75,541 -12.00% 2000 ............................................ 1.30% 3,122 8.049546 25,131 -29.07% 5/1/00 Nationwide(R) SAT - Small Cap Value Fund Class I 2001 ............................................ 1.30% 193,975 14.958425 2,901,560 26.61% 2000 ............................................ 1.30% 236,917 11.814503 2,799,057 9.77% 1999 ............................................ 1.30% 23,585 10.762831 253,841 26.19% 1998 ............................................ 1.30% 28,961 8.529271 247,016 -14.71% 5/1/98
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Nationwide(R) SAT - Small Company Fund Class I 2001 ............................................ 1.30% 42,033 22.482240 944,996 -7.92% 2000 ............................................ 1.30% 74,796 24.415235 1,826,162 7.50% 1999 ............................................ 1.30% 66,890 22.712185 1,519,218 42.16% 1998 ............................................ 1.30% 68,318 15.976308 1,091,469 -0.30% 1997 ............................................ 1.30% 79,580 16.023638 1,275,161 15.83% Nationwide(R) SAT - Strong Mid Cap Growth Fund Class I 2001 ............................................ 1.30% 3,579 5.558609 19,894 -31.22% 2000 ............................................ 1.30% 9,148 8.081237 73,927 -19.19% 5/1/00 Nationwide(R) SAT - Total Return Fund Class I 2001 ............................................ 1.30% 91,363 30.449581 2,781,965 -12.97% 2000 ............................................ 1.30% 103,521 34.985736 3,621,758 -3.38% 1999 ............................................ 1.30% 115,322 36.208762 4,175,667 5.56% 1998 ............................................ 1.30% 136,311 34.300994 4,675,603 16.55% 1997 ............................................ 1.30% 149,445 29.430261 4,398,205 27.76% Nationwide(R) SAT - Turner Growth Focus Fund Class I 2001 ............................................ 1.30% 2,633 3.805692 10,020 -39.82% Neuberger Berman AMT - Growth Portfolio 2001 ............................................ 1.30% 116,532 22.639891 2,638,272 -31.27% 2000 ............................................ 1.30% 110,577 32.939123 3,642,309 -12.79% 1999 ............................................ 1.30% 97,552 37.771042 3,684,641 48.46% 1998 ............................................ 1.30% 136,629 25.442656 3,476,205 14.03% 1997 ............................................ 1.30% 135,697 22.311330 3,027,581 27.34% Neuberger Berman AMT - Guardian Portfolio 2001 ............................................ 1.30% 7,490 10.220670 76,553 -2.79% 2000 ............................................ 1.30% 4,316 10.513749 45,377 -0.17% 1999 ............................................ 1.30% 2,945 10.531438 31,015 13.45% 1998 ............................................ 1.30% 4,760 9.282948 44,187 -7.17% 5/1/98 Neuberger Berman AMT - Limited Maturity Bond Portfolio 2001 ............................................ 1.30% 64,208 17.341018 1,113,432 7.37% 2000 ............................................ 1.30% 55,938 16.150810 903,444 5.41% 1999 ............................................ 1.30% 58,827 15.321478 901,317 0.17% 1998 ............................................ 1.30% 76,004 15.295923 1,162,551 3.04% 1997 ............................................ 1.30% 169,876 14.844266 2,521,685 5.36% Neuberger Berman AMT - Partners Portfolio 2001 ............................................ 1.30% 58,929 23.242157 1,369,637 -4.09% 2000 ............................................ 1.30% 56,278 24.233377 1,363,806 -0.59% 1999 ............................................ 1.30% 69,118 24.377639 1,684,934 5.98% 1998 ............................................ 1.30% 176,971 23.001381 4,070,577 2.86% 1997 ............................................ 1.30% 233,445 22.361130 5,220,094 29.56% Oppenheimer Aggressive Growth Fund/VA 2001 ............................................ 1.30% 12,032 5.262277 63,316 -32.16% 2000 ............................................ 1.30% 25,730 7.757136 199,591 -22.43% 5/1/00 Oppenheimer Bond Fund/VA 2001 ............................................ 1.30% 71,479 20.452013 1,461,889 6.39% 2000 ............................................ 1.30% 57,658 19.224081 1,108,422 4.73% 1999 ............................................ 1.30% 70,351 18.355321 1,291,315 -2.79% 1998 ............................................ 1.30% 84,868 18.882225 1,602,497 5.42% 1997 ............................................ 1.30% 89,920 17.910876 1,610,546 7.84%
(Continued)
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- Oppenheimer Capital Appreciation Fund/VA 2001 ............................................ 1.30% 89,005 15.167382 1,349,973 -13.71% 2000 ............................................ 1.30% 91,772 17.577949 1,613,164 -1.51% 1999 ............................................ 1.30% 60,384 17.847892 1,077,727 39.83% 1998 ............................................ 1.30% 26,155 12.764150 333,846 22.40% 1997 ............................................ 1.30% 10,788 10.428297 112,500 4.28% 7/14/97 Oppenheimer Global Securities Fund/VA 2001 ............................................ 1.30% 89,126 25.449092 2,268,176 -13.18% 2000 ............................................ 1.30% 103,662 29.312842 3,038,628 3.74% 1999 ............................................ 1.30% 99,036 28.256521 2,798,413 56.44% 1998 ............................................ 1.30% 88,848 18.062180 1,604,789 12.63% 1997 ............................................ 1.30% 113,733 16.036486 1,823,878 20.84% Oppenheimer Main Street Growth & Income Fund/VA 2001 ............................................ 1.30% 11,244 7.960162 89,504 -11.33% 2000 ............................................ 1.30% 3,017 8.977032 27,084 -10.23% 5/1/00 Oppenheimer Multiple Strategies Fund/VA 2001 ............................................ 1.30% 95,325 26.649037 2,540,319 0.89% 2000 ............................................ 1.30% 102,256 26.413991 2,700,989 5.07% 1999 ............................................ 1.30% 106,259 25.139330 2,671,280 10.35% 1998 ............................................ 1.30% 110,357 22.780548 2,513,993 5.28% 1997 ............................................ 1.30% 152,543 21.638756 3,300,841 15.71% Strong Opportunity Fund II, Inc. 2001 ............................................ 1.30% 99,955 38.960989 3,894,346 -4.95% 2000 ............................................ 1.30% 101,232 40.898881 4,140,276 5.23% 1999 ............................................ 1.30% 102,073 38.955700 3,976,325 33.17% 1998 ............................................ 1.30% 111,969 29.253391 3,275,473 12.08% 1997 ............................................ 1.30% 132,285 26.101254 3,452,804 23.83% Strong VIF - Strong Discovery Fund II 2001 ............................................ 1.30% 35,961 20.624646 741,683 2.73% 2000 ............................................ 1.30% 29,577 20.076460 593,801 3.05% 1999 ............................................ 1.30% 32,996 19.481837 642,823 3.73% 1998 ............................................ 1.30% 58,970 18.780910 1,107,510 5.87% 1997 ............................................ 1.30% 68,152 17.738866 1,208,939 9.95% Strong VIF - Strong International Stock Fund II 2001 ............................................ 1.30% 28,858 7.578594 218,703 -23.15% 2000 ............................................ 1.30% 77,557 9.861771 764,849 -40.30% 1999 ............................................ 1.30% 142,490 16.519505 2,353,864 84.79% 1998 ............................................ 1.30% 35,834 8.939643 320,343 -6.01% 1997 ............................................ 1.30% 40,251 9.511045 382,829 -14.64% UIF - Emerging Markets Debt Portfolio 2001 ............................................ 1.30% 7,324 10.583651 77,515 8.67% 2000 ............................................ 1.30% 9,551 9.739230 93,019 9.96% 1999 ............................................ 1.30% 6,540 8.857388 57,927 27.71% 1998 ............................................ 1.30% 7,315 6.935753 50,735 -29.31% 1997 ............................................ 1.30% 5,443 9.810873 53,401 -1.89% 7/14/97
(Continued) NATIONWIDE VLI SEPARATE ACCOUNT-2 NOTES TO FINANCIAL STATEMENTS, CONTINUED
CONTRACT CONTRACT EXPENSE UNIT OWNERS' TOTAL RATE* UNITS FAIR VALUE EQUITY RETURN** -------- ----- ---------- -------- -------- UIF - U.S. Real Estate Portfolio 2001 ............................................ 1.30% 53,253 20.418602 1,087,352 8.41% 2000 ............................................ 1.30% 50,123 18.833757 944,004 26.41% 1999 ............................................ 1.30% 39,678 14.898574 591,146 -4.62% 1998 ............................................ 1.30% 67,042 15.620311 1,047,217 -12.76% 1997 ............................................ 1.30% 98,406 17.905659 1,762,024 19.91% Van Eck WIT - Worldwide Bond Fund 2001 ............................................ 1.30% 33,122 13.823940 457,877 -6.33% 2000 ............................................ 1.30% 31,281 14.757769 461,638 0.56% 1999 ............................................ 1.30% 34,273 14.675886 502,987 -9.01% 1998 ............................................ 1.30% 56,294 16.129801 908,011 11.30% 1997 ............................................ 1.30% 45,566 14.492332 660,358 1.07% Van Eck WIT - Worldwide Emerging Markets Fund 2001 ............................................ 1.30% 34,168 6.285993 214,780 -3.09% 2000 ............................................ 1.30% 37,709 6.486254 244,590 -42.61% 1999 ............................................ 1.30% 123,914 11.302972 1,400,596 97.70% 1998 ............................................ 1.30% 25,018 5.717162 143,032 -34.98% 1997 ............................................ 1.30% 35,382 8.793232 311,122 -12.75% Van Eck WIT - Worldwide Hard Assets Fund 2001 ............................................ 1.30% 38,241 12.731937 486,882 -11.61% 2000 ............................................ 1.30% 57,160 14.404038 823,335 9.97% 1999 ............................................ 1.30% 71,735 13.098076 939,590 19.44% 1998 ............................................ 1.30% 128,220 10.966233 1,406,090 -31.86% 1997 ............................................ 1.30% 142,782 16.093994 2,297,933 -2.95% -------------- Total Contract Owners' Equity by Year 2001..................................................................................... $ 933,404,977 ============== 2000..................................................................................... $1,071,884,297 ============== 1999..................................................................................... $1,144,615,392 ============== 1998..................................................................................... $ 894,156,479 ============== 1997..................................................................................... $ 658,587,322 ==============
* This represents the annualized contract expense rate of the variable account for the period indicated and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the underlying fund portfolios and charges made directly to contract owner accounts through the redemption of units. ** This represents the total return for the period indicated and includes a deduction only for expenses assessed through the daily unit value calculation. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction of the total return presented. Investment options with a date notation indicate the effective date of that investment option in the Account. The total return is calculated for the period indicated or from the effective date through the end of the period. INDEPENDENT AUDITORS' REPORT The Board of Directors Nationwide Life Insurance Company: We have audited the consolidated 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, 2001 and 2000, 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, 2001. 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, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. As discussed in note 2 to the consolidated financial statements, the Company changed its methods of accounting for derivative instruments and hedging activities, and for purchased or retained interests in securitized financial assets in 2001. KPMG LLP Columbus, Ohio January 29, 2002 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, ------------------------------ 2001 2000 ========= ========= ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity securities (cost $17,961.6 in 2001; $15,245.8 in 2000) $18,370.8 $15,443.0 Equity securities (cost $83.0 in 2001; $103.5 in 2000) 94.0 109.0 Mortgage loans on real estate, net 7,113.1 6,168.3 Real estate, net 172.0 310.7 Policy loans 591.1 562.6 Other long-term investments 125.0 101.8 Short-term investments, including amounts managed by a related party 1,011.3 442.6 --------- --------- 27,477.3 23,138.0 --------- --------- Cash 22.6 18.4 Accrued investment income 306.7 251.4 Deferred policy acquisition costs 3,189.0 2,865.6 Other assets 646.0 396.7 Assets held in separate accounts 59,513.0 65,897.2 --------- --------- $91,154.6 $92,567.3 ========= ========= LIABILITIES AND SHAREHOLDER'S EQUITY Future policy benefits and claims $25,216.0 $22,183.6 Short-term debt 100.0 118.7 Long-term debt, payable to NFS 300.0 -- Other liabilities 2,307.9 1,164.9 Liabilities related to separate accounts 59,513.0 65,897.2 --------- --------- 87,436.9 89,364.4 --------- --------- Commitments and contingencies (notes 10 and 15) 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 646.1 646.1 Retained earnings 2,863.1 2,436.3 Accumulated other comprehensive income 204.7 116.7 --------- --------- 3,717.7 3,202.9 --------- --------- $91,154.6 $92,567.3 ========= =========
See accompanying notes to consolidated financial statements, including note 13 which describes related party transactions. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Income (in millions)
Years ended December 31, ------------------------------------------ 2001 2000 1999 ======== ======== ======== Revenues: Policy charges $1,017.3 $1,091.4 $ 895.5 Life insurance premiums 251.1 240.0 220.8 Net investment income 1,725.0 1,654.9 1,520.8 Net realized (losses) gains on investments, hedging instruments and hedged items: Unrelated parties (62.7) (19.4) (11.6) Related party 44.4 -- -- Other 14.1 17.0 66.1 -------- -------- -------- 2,989.2 2,983.9 2,691.6 -------- -------- -------- Benefits and expenses: Interest credited to policyholder account balances 1,238.7 1,182.4 1,096.3 Other benefits and claims 280.3 241.6 210.4 Policyholder dividends on participating policies 41.7 44.5 42.4 Amortization of deferred policy acquisition costs 347.9 352.1 272.6 Interest expense on debt 6.2 1.3 -- Other operating expenses 444.1 479.0 463.4 -------- -------- -------- 2,358.9 2,300.9 2,085.1 -------- -------- -------- Income before federal income tax expense and cumulative effect of adoption of accounting principles 630.3 683.0 606.5 Federal income tax expense 161.4 207.7 201.4 -------- -------- -------- Income before cumulative effect of adoption of accounting principles 468.9 475.3 405.1 Cumulative effect of adoption of accounting principles, net of tax (7.1) -- -- -------- -------- -------- Net income $ 461.8 $ 475.3 $ 405.1 ======== ======== ========
See accompanying notes to consolidated financial statements, including note 13 which describes related party transactions. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Shareholder's Equity Years ended December 31, 2001, 2000 and 1999 (in millions)
Accumulated Additional other Total Common paid-in Retained comprehensive shareholder's stock capital earnings income (loss) equity ======== ========== ======== ============= ============= Balance as of 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, net of tax -- -- -- (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) -------- -------- -------- -------- -------- Balance as of December 31, 1999 3.8 766.1 2,011.0 (15.9) 2,765.0 ======== ======== ======== ======== ======== Comprehensive income: Net income -- -- 475.3 -- 475.3 Net unrealized gains on securities available-for-sale arising during the year, net of tax -- -- -- 132.6 132.6 -------- Total comprehensive income 607.9 -------- Return of capital to shareholder -- (120.0) -- -- (120.0) Dividends to shareholder -- -- (50.0) -- (50.0) -------- -------- -------- -------- -------- Balance as of December 31, 2000 $ 3.8 $ 646.1 $2,436.3 $ 116.7 $3,202.9 ======== ======== ======== ======== ======== Comprehensive income: Net income -- -- 461.8 -- 461.8 Net unrealized gains on securities available-for-sale arising during the year, net of tax -- -- -- 98.2 98.2 Cumulative effect of adoption of accounting principles, net of tax -- -- -- (1.4) (1.4) Accumulated net losses on cash flow hedges, net of tax -- -- -- (8.8) (8.8) -------- Total comprehensive income 549.8 -------- Dividends to shareholder -- -- (35.0) -- (35.0) -------- -------- -------- -------- -------- Balance as of December 31, 2001 $ 3.8 $ 646.1 $2,863.1 $ 204.7 $3,717.7 ======== ======== ======== ======== ========
See accompanying notes to consolidated financial statements, including note 13 which describes related party transactions. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Consolidated Statements of Cash Flows (in millions)
Years ended December 31, ------------------------------------------ 2001 2000 1999 ======== ======== ======== Cash flows from operating activities: Net income $ 461.8 $ 475.3 $ 405.1 Adjustments to reconcile net income to net cash provided by operating activities: Interest credited to policyholder account balances 1,238.7 1,182.4 1,096.3 Capitalization of deferred policy acquisition costs (743.0) (778.9) (637.0) Amortization of deferred policy acquisition costs 347.9 352.1 272.6 Amortization and depreciation (31.5) (12.7) 2.4 Realized losses (gains) on investments, hedging instruments and hedged items: Unrelated parties 62.7 19.4 11.6 Related parties (44.4) -- -- Cumulative effect of adoption of accounting principles 10.9 -- -- Increase in accrued investment income (55.3) (12.8) (7.9) (Increase) decrease in other assets (272.5) (92.0) 122.9 Increase (decrease) in policy liabilities 33.0 (0.3) (20.9) Increase in other liabilities 304.0 229.3 149.7 Other, net 8.3 22.3 (8.6) -------- -------- -------- Net cash provided by operating activities 1,320.6 1,384.1 1,386.2 -------- -------- -------- Cash flows from investing activities: Proceeds from maturity of securities available-for-sale 3,933.9 2,988.7 2,307.9 Proceeds from sale of securities available-for-sale 497.8 602.0 513.1 Proceeds from repayments of mortgage loans on real estate 1,204.4 911.7 696.7 Proceeds from sale of real estate 29.1 18.7 5.7 Proceeds from sale of limited partnership to related party 158.9 -- -- Proceeds from repayments of policy loans and sale of other invested assets 68.9 79.3 40.9 Cost of securities available-for-sale acquired (7,123.6) (3,475.5) (3,724.9) Cost of mortgage loans on real estate acquired (2,123.1) (1,318.0) (971.4) Cost of real estate acquired (0.4) (7.1) (14.2) Short-term investments, net (568.7) (26.6) (27.5) Collateral received - securities lending, net 791.6 -- -- Other, net (192.2) (182.3) (110.9) -------- -------- -------- Net cash used in investing activities (3,323.4) (409.1) (1,284.6) -------- -------- -------- Cash flows from financing activities: Net proceeds from issuance of long-term debt to NFS 300.0 -- -- Capital returned to shareholder -- (120.0) (175.0) Net change in short-term debt (18.7) 118.7 -- Cash dividends paid (35.0) (100.0) (13.5) Increase in investment and universal life insurance product account balances 5,976.7 4,517.0 3,799.4 Decrease in investment and universal life insurance product account balances (4,216.0) (5,377.1) (3,711.1) -------- -------- -------- Net cash provided by (used in) financing activities 2,007.0 (961.4) (100.2) -------- -------- -------- Net increase in cash 4.2 13.6 1.4 Cash, beginning of year 18.4 4.8 3.4 -------- -------- -------- Cash, end of year $ 22.6 $ 18.4 $ 4.8 ======== ======== ========
See accompanying notes to consolidated financial statements, including note 13 which describes related party transactions. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements December 31, 2001, 2000 and 1999 (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 of America and is a wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS). The Company develops and sells a diverse range of products including individual annuities, private and public sector pension plans and other investment products sold to institutions and life insurance. NLIC sells its products through a diverse network of distribution channels, including independent broker/dealers, 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 Securities, 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 (GAAP) which differ from statutory accounting practices. The statutory financial statements of NLIC and NLAIC are presented on the basis of accounting practices prescribed or permitted by the Ohio Department of Insurance (the Department). The State of Ohio has adopted the National Association of Insurance Commissioners (NAIC) statutory accounting practices (NAIC SAP) as the basis of its statutory accounting practices. NLIC and NLAIC have no statutory accounting practices that differ from NAIC SAP. See also note 12. 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 for investment products and universal life insurance products, valuation allowances for mortgage loans on real estate, impairment losses on other investments and federal income taxes. Although some variability is inherent in these estimates, management believes the amounts provided are appropriate. (a) Consolidation Policy The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling interest. All significant intercompany balances and transactions have been eliminated. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (b) Valuation of Investments, Investment Income and Related Gains and Losses The Company is required to classify its fixed maturity securities and equity securities as either held-to-maturity, available-for-sale or trading. The Company classifies fixed maturity and equity securities as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of adjustments to deferred policy acquisition costs and deferred federal income tax, reported as a separate component of accumulated other comprehensive income (AOCI) in shareholders' 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. Management regularly reviews its fixed maturity and equity securities portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of investments. A number of criteria are considered during this process including, but not limited to, the current fair value as compared to amortized cost or cost, as appropriate, of the security, the length of time the security's fair value has been below amortized cost/cost, and by how much, and specific credit issues related to the issuer. Impairment losses result in a reduction of the cost basis of the underlying investment. For mortgage-backed securities, the Company recognizes income using a constant effective yield method based on prepayment assumptions and the estimated economic life of the securities. When estimated prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and anticipated future payments, and any resulting adjustment is included in net investment income. All other investment income is recorded on the accrual basis. Mortgage loans on real estate are carried at the unpaid principal balance less valuation allowances. The Company provides valuation allowances for impairments of mortgage loans on real estate based on a review by portfolio managers. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When the Company determines that a loan is impaired, a provision for loss is established equal to the difference between the carrying value and the estimated value of the mortgage loan. Estimated value is based on the present value of expected future cash flows discounted at the loan's effective interest rate, or the fair value of the collateral, if the loan is collateral dependent. Loans in foreclosure and loans considered impaired are placed on non-accrual status. Interest received on non-accrual status mortgage loans on real estate is included in net investment income in the period received. The valuation allowance account for mortgage loans on real estate is maintained at a level believed adequate by the Company to absorb estimated probable credit losses. The Company's periodic evaluation of the adequacy of the allowance for losses is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. Real estate is carried at cost less accumulated depreciation. Real estate designated as held for disposal is carried at the lower of the carrying value at the time of such designation or fair value less cost to sell. Other long-term investments are carried on the equity method of accounting. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Realized gains and losses on the sale of investments are determined on the basis of specific security identification. Changes in valuation allowances and impairment losses for other-than-temporary declines in fair values are included in realized gains and losses on investments, hedging instruments and hedged items. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (c) Derivative Instruments Derivatives are carried at fair value. On the date the derivative contract is entered into, the Company designates the derivative as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), or a foreign currency fair value or cash flow hedge (foreign currency hedge) or a non-hedge transaction. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for entering into various hedge transactions. This process includes linking all derivatives that are designated as fair value, cash flow or foreign currency hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used for hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. The Company enters into interest rate swaps, cross-currency swaps or Eurodollar Futures to hedge the fair value of existing fixed rate assets and liabilities. In addition, the Company uses short treasury future positions to hedge the fair value of bond and mortgage loan commitments. Typically, the Company is hedging the risk of changes in fair value attributable to changes in benchmark interest rates. Derivative instruments classified as fair value hedges are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items. Changes in the fair value of the hedged item, attributable to the risk being hedged, are also recorded in realized gains and losses on investments, hedging instruments and hedged items. The adjustment of the carrying amount of hedged assets using Eurodollar Futures and firm commitments using Treasury Futures are accounted for in the same manner as other components of the carrying amount of that asset. The adjustment of the carrying amount is amortized to investment income over the life of the asset. The Company may enter into receive fixed/pay variable interest rate swaps to hedge existing floating rate assets or to hedge cash flows from the anticipated purchase of investments. These derivative instruments are classified as cash flow hedges and are carried at fair value, with the offset recorded in AOCI to the extent the hedging relationship is effective. The ineffective portion of the hedging relationship is recorded in realized gains and losses on investments, hedging instruments and hedged items. Gains and losses on cash flow derivative instruments are reclassified out of AOCI and recognized in earnings over the same period(s) that the hedged item affects earnings. Amounts receivable or payable under interest rate and foreign currency swaps are recognized as an adjustment to net investment income or interest credited to policyholder account balances consistent with the nature of the hedged item. From time to time, the Company may enter into a derivative transaction that will not qualify for hedge accounting. These include basis swaps (receive one variable rate, pay another variable rate) to hedge variable rate assets or foreign-denominated liabilities. These instruments are carried at fair value, with changes in fair value recorded in realized gains and losses on investments, hedging instruments and hedged items. The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative expires, or is sold, terminated or exercised, the derivative is dedesignated as a hedging instrument, because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair value hedge, the Company continues to carry the derivative on the consolidated balance sheet at its fair value, and no longer adjusts the hedged item for changes in fair value. The adjustment of the carrying amount of the hedged item is accounted for in the same manner as other components of the carrying amount of that item. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the Company continues to carry the derivative on the consolidated balance sheet at its fair value, removes any asset or liability that was recorded pursuant to recognition of the firm commitment from the consolidated balance sheet and recognizes any gain or loss in net realized gains and losses on investments, hedging instruments and hedged items. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the Company continues to carry the derivative on the consolidated balance sheet at fair value and gains and losses that were accumulated in AOCI are recognized immediately in realized gains and losses on investments, hedging instruments and hedged items. In all other situations in which hedge accounting is discontinued, the Company continues to carry the derivative at its fair value on the consolidated balance sheet, and recognizes any changes in fair value in net realized gains and losses on investments, hedging instruments and hedged items. Prior to the adoption of SFAS 133, defined in note 2 (k), provided they met specific criteria, interest rate and foreign currency swaps and futures were considered hedges and accounted for under the accrual and deferral method, respectively. Amounts receivable or payable under interest rate and foreign currency swaps were recognized as an adjustment to net investment income or interest credited to policyholder account balances consistent with the nature of the hedged item. Changes in the fair value of interest rate swaps were not recognized on the consolidated balance sheet, except for interest rate swaps designated as hedges of fixed maturity securities available-for-sale, for which changes in fair values were reported in AOCI. Gains and losses on foreign currency swaps were recorded in earnings based on the related spot foreign exchange rate at the end of the reporting period. Gains and losses on these contracts offset those recorded as a result of translating the hedged foreign currency denominated liabilities and investments to U.S. dollars. (d) Revenues and Benefits Investment Products and Universal Life Insurance Products: Investment products consist primarily of individual and group variable and fixed deferred annuities. Universal life insurance products include universal life insurance, variable universal life insurance, corporate-owned life insurance and other interest-sensitive life insurance policies. Revenues for investment products and universal life insurance products consist of net investment income, asset fees, cost of insurance, policy administration and surrender charges that have been earned and assessed against policy account balances during the period. The timing of revenue recognition as it relates to fees assessed on investment contracts and universal life contracts is determined based on the nature of such fees. Asset fees, cost of insurance and policy administration charges are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in income over the periods benefited. Surrender charges are recognized upon surrender of a contract in accordance with contractual terms. Policy benefits and claims that are charged to expense include interest credited to policy account 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (e) 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 that relate to and vary with the production of new or renewal business have been deferred. Deferred policy acquisition costs are subject to recoverability testing at the time of policy issuance and loss recognition testing at the end of each accounting period. 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. The Company regularly reviews the estimated future gross profits and revises such estimates when appropriate. The cumulative change in amortization as a result of changes in estimates to reflect current best estimates is recorded as a charge or credit to amortization expense. The most significant assumptions that are involved in the estimation of future gross profits include future market performance and surrender/lapse rates. In the event actual expense differs significantly from assumptions or assumptions are significantly revised, the Company may be required to record a significant charge or credit to amortization expense. 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. (f) Separate Accounts Separate account assets and liabilities represent contractholders' funds which have been segregated into accounts with specific investment objectives. Separate account assets are recorded at market value except for separate account contracts with guaranteed investment returns. For all but $1.39 billion and $1.12 billion of separate account assets as of December 31, 2001 and 2000, 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. Such fees are assessed on a daily or monthly basis and recognized as revenue when assessed and earned. (g) 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. (h) Participating Business Participating business represented approximately 17% in 2001 (21% in 2000 and 29% in 1999) of the Company's life insurance in force, 63% in 2001 (66% in 2000 and 69% in 1999) of the number of life insurance policies in force, and 9% in 2001 (8% in 2000 and 13% in 1999) of life insurance statutory premiums. The provision for policyholder dividends was based on then current dividend scales and has been included in "Future policy benefits and claims" in the accompanying consolidated balance sheets. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (i) Federal Income Tax The Company files a consolidated federal income tax return with Nationwide Mutual Insurance Company (NMIC), the ultimate 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. The Company provides for federal income taxes based on amounts the Company believes it will ultimately owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain expenses and the realization of certain tax credits. In the event the ultimate deductibility of certain expenses or the realization of certain tax credits differ from estimates, the Company may be required to significantly change the provision for federal income taxes recorded in the consolidated financial statements. The Company utilizes the asset and liability method of accounting for income tax. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce the deferred tax assets to the amounts expected to be realized. (j) Reinsurance Ceded Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported on a gross basis. (k) 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, was adopted by the Company effective January 1, 2001. Upon adoption, the provisions of SFAS 133 were applied prospectively. SFAS 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. 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. The adoption of SFAS 133 resulted in the Company recording a net transition adjustment loss of $4.8 million (net of related income tax of $2.6 million) in net income. In addition, a net transition adjustment loss of $3.6 million (net of related income tax of $2.0 million) was recorded in AOCI at January 1, 2001. The adoption of SFAS 133 resulted in the Company derecognizing $17.0 million of deferred assets related to hedges, recognizing $10.9 million of additional derivative instrument liabilities and $1.3 million of additional firm commitment assets, while also decreasing hedged future policy benefits by $3.0 million and increasing the carrying amount of hedged investments by $10.6 million. Further, the adoption of SFAS 133 resulted in the Company reporting total derivative instrument assets and liabilities of $44.8 million and $107.1 million, respectively, as of January 1, 2001. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The adoption of SFAS 133 may increase the volatility of reported earnings and other comprehensive income. The amount of volatility will vary with the level of derivative and hedging activities and fluctuations in market interest rates and foreign currency exchange rates during any period. In November 1999, the Emerging Issues Task Force (EITF) issued EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets (EITF 99-20). The Company adopted EITF 99-20 on April 1, 2001. EITF 99-20 establishes the method of recognizing interest income and impairment on asset-backed investment securities. EITF 99-20 requires the Company to update the estimate of cash flows over the life of certain retained beneficial interests in securitization transactions and purchased beneficial interests in securitized financial assets. Pursuant to EITF 99-20, based on current information and events, if the Company estimates that the fair value of its beneficial interests is not greater than or equal to its carrying value and if there has been a decrease in the estimated cash flows since the last revised estimate, considering both timing and amount, then an other-than-temporary impairment should be recognized. The cumulative effect, net of tax, upon adoption of EITF 99-20 on April 1, 2001 decreased net income by $2.3 million with a corresponding increase to AOCI. In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141) and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and the use of the pooling-of-interests method has been eliminated. SFAS 142 applies to all acquired intangible assets whether acquired singularly, as part of a group, or in a business combination. SFAS 142 supersedes APB Opinion No. 17, Intangible Assets, and will carry forward provisions in Opinion 17 related to internally developed intangible assets. SFAS 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization method to an impairment-only approach. The amortization of goodwill from past business combinations ceased upon adoption of this statement, which was January 1, 2002 for the Company. Companies are required to evaluate all existing goodwill and intangible assets with indefinite lives for impairment within six months of adoption. Any transitional impairment losses will be recognized in the first interim period in the year of adoption and will be recognized as the cumulative effect of a change in accounting principle. The Company does not expect any material impact of adopting SFAS 141 and SFAS 142 on the results of operations and financial position. In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and APB Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS 144 is effective for fiscal years beginning after December 15, 2001 (January 1, 2002 for the Company) and will carry forward many of the provisions of SFAS 121 and Opinion 30 for recognition and measurement of the impairment of long-lived assets to be held and used, and measurement of long-lived assets to be disposed of by sale. Under SFAS 144, if a long-lived asset is part of a group that includes other assets and liabilities, then the provisions of SFAS 144 apply to the entire group. In addition, SFAS 144 does not apply to goodwill and other intangible assets that are not amortized. Management does not expect the adoption of SFAS 144 to have a material impact on the results of operations or financial position of the Company. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued In 2001, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 01-5, Amendments to Specific AICPA Pronouncements for Changes Related to the NAIC Codification (SOP 01-5). In doing so, AICPA SOP 94-5, Disclosures of Certain Matters in the Financial Statements of Insurance Enterprises, was amended to reflect the results of the completion of the NAIC codification of statutory accounting practices for certain insurance enterprises (Codification). The adoption of SOP 01-5 did not have an impact on the results of operations or financial position of the Company. (l) Reclassification Certain items in the 2000 and 1999 consolidated financial statements and related footnotes have been reclassified to conform to the 2001 presentation. (3) Investments The amortized cost, gross unrealized gains and losses and estimated fair value of securities available-for-sale as of December 31, 2001 and 2000 were:
Gross Gross Amortized unrealized unrealized Estimated (in millions) cost gains losses fair value ========= ========== ========== ========== December 31, 2001 Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 263.2 $ 23.1 $ 0.5 $ 285.8 Obligations of states and political subdivisions 7.6 0.3 -- 7.9 Debt securities issued by foreign governments 41.8 2.6 -- 44.4 Corporate securities 11,769.8 470.6 176.5 12,063.9 Mortgage-backed securities - U.S. Government backed 2,012.3 67.8 3.7 2,076.4 Asset-backed securities 3,866.9 76.7 51.2 3,892.4 --------- --------- --------- --------- Total fixed maturity securities 17,961.6 641.1 231.9 18,370.8 Equity securities 83.0 11.0 -- 94.0 --------- --------- --------- --------- $18,044.6 $ 652.1 $ 231.9 $18,464.8 ========= ========= ========= ========= 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 ========= ========= ========= =========
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The amortized cost and estimated fair value of fixed maturity securities available-for-sale as of December 31, 2001, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized Estimated (in millions) cost fair value ========= ========== Fixed maturity securities available for sale: Due in one year or less $ 1,125.4 $ 1,141.7 Due after one year through five years 5,154.4 5,295.6 Due after five years through ten years 4,073.6 4,188.8 Due after ten years 1,729.0 1,775.9 --------- --------- 12,082.4 12,402.0 Mortgage-backed securities - U.S. Government backed 2,012.3 2,076.4 Asset-backed securities 3,866.9 3,892.4 --------- --------- $17,961.6 $18,370.8 ========= =========
The components of unrealized gains on securities available-for-sale, net, were as follows as of December 31:
(in millions) 2001 2000 ========= ========= Gross unrealized gains $ 420.2 $ 202.7 Adjustment to deferred policy acquisition costs (94.9) (23.2) Deferred federal income tax (113.9) (62.8) --------- --------- $ 211.4 $ 116.7 ========= =========
An analysis of the change in gross unrealized gains (losses) on securities available-for-sale for the years ended December 31:
(in millions) 2001 2000 1999 ====== ====== ======= Securities available-for-sale: Fixed maturity securities $212.0 $280.5 $(607.1) Equity securities 5.5 (2.5) (8.8) ------ ------ ------- $217.5 $278.0 $(615.9) ====== ====== =======
Proceeds from the sale of securities available-for-sale during 2001, 2000 and 1999 were $497.8 million, $602.0 million and $513.1 million, respectively. During 2001, gross gains of $31.3 million ($12.1 million and $10.4 million in 2000 and 1999, respectively) and gross losses of $10.1 million ($15.1 million and $35.5 million in 2000 and 1999, respectively) were realized on those sales. The Company had $25.2 million and $13.0 million of real estate investments as of December 31, 2001 and 2000, respectively, that were non-income producing the preceding twelve months. Real estate is presented at cost less accumulated depreciation of $22.0 million as of December 31, 2001 ($25.7 million as of December 31, 2000). The carrying value of real estate held for disposal totaled $33.4 million and $8.5 million as of December 31, 2001 and 2000, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The recorded investment of mortgage loans on real estate considered to be impaired was $29.9 million as of December 31, 2001 ($9.8 million as of December 31, 2000), which includes $5.3 million ($5.3 million as of December 31, 2000) of impaired mortgage loans on real estate for which the related valuation allowance was $1.0 million ($1.6 million as of December 31, 2000) and $24.6 million ($4.5 million as of December 31, 2000) of impaired mortgage loans on real estate for which there was no valuation allowance. Impaired mortgage loans with no valuation allowance are a result of collateral dependent loans where the fair value of the collateral is greater than the recorded investment of the loan. During 2001, the average recorded investment in impaired mortgage loans on real estate was $7.9 million ($7.7 million in 2000) and interest income recognized on those loans totaled $0.4 million in 2001 ($0.4 million in 2000) which is equal to interest income recognized using a cash-basis method of income recognition. Activity in the valuation allowance account for mortgage loans on real estate for the years ended December 31 was as follows:
(in millions) 2001 2000 1999 ======== ======== ======== Allowance, beginning of year $ 45.3 $ 44.4 $ 42.4 Additions (reductions) charged (credited) to operations (1.2) 4.1 0.7 Direct write-downs charged against the allowance (1.2) (3.2) -- Allowance on acquired mortgage loans -- -- 1.3 -------- -------- -------- Allowance, end of year $ 42.9 $ 45.3 $ 44.4 ======== ======== ========
An analysis of investment income (loss) by investment type follows for the years ended December 31:
(in millions) 2001 2000 1999 ======== ======== ======== Gross investment income: Securities available-for-sale: Fixed maturity securities $1,181.1 $1,095.5 $1,031.3 Equity securities 1.8 2.6 2.5 Mortgage loans on real estate 527.9 494.5 460.4 Real estate 33.1 32.2 28.8 Short-term investments 28.3 27.0 18.6 Derivatives (19.7) 3.9 (1.0) Other 20.9 49.3 27.5 -------- -------- -------- Total investment income 1,773.4 1,705.0 1,568.1 Less investment expenses 48.4 50.1 47.3 -------- -------- -------- Net investment income $1,725.0 $1,654.9 $1,520.8 ======== ======== ========
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued An analysis of net realized (losses) gains on investments, hedging instruments and hedged items, by investment type follows for the years ended December 31:
(in millions) 2001 2000 1999 ====== ====== ====== Unrelated parties: Realized gains (losses) on sale of securities available-for-sale: Fixed maturity securities $ 20.8 $ (7.7) $(32.5) Equity securities 0.4 4.7 7.4 Other-than-temporary impairments of securities available-for-sale: Fixed maturity securities (66.1) (10.5) 7.5 Equity securities (13.8) -- -- Real estate 1.9 (0.5) 0.9 Mortgage loans on real estate(1) 0.6 (4.2) (0.6) Derivatives -- (2.7) (1.6) Other (6.5) 1.5 7.3 ------ ------ ------ (62.7) (19.4) (11.6) Related party - gain on sale of limited partnership 44.4 -- -- ------ ------ ------ Net realized losses on investments, hedging instruments and hedged items $(18.3) $(19.4) $(11.6) ====== ====== ======
- ---------- (1) The 2001 amount is comprised of $9.9 million of net realized gains on the sale of mortgage loans on real estate, including those related to a securitization transaction, and $9.3 million of realized losses on derivatives hedging the sale of mortgage loans on real estate. Fixed maturity securities with an amortized cost of $6.6 million as of December 31, 2001 and $6.5 million as of December 31, 2000 were on deposit with various regulatory agencies as required by law. In addition, fixed maturity securities with an amortized cost of $6.3 million as of December 31, 2000 were placed in escrow under a contractual obligation and none as of December 31, 2001. As of December 31, 2001 the Company had pledged fixed maturity securities with a fair value of $112.3 million as collateral to various derivative counterparties. As of December 31, 2001 the Company held collateral of $18.0 million on derivative transactions. This amount is included in short-term investments with a corresponding liability recorded in other liabilities. As of December 31, 2001, the Company had loaned securities with a fair value of $775.5 million. As of December 31, 2001 the Company held collateral of $791.6 million. This amount is included in short-term investments with a corresponding liability recorded in other liabilities. (4) Short-term Debt NLIC has established a $300 million commercial paper program under which, borrowings are unsecured and are issued for terms of 364 days or less. As of December 31, 2001 and 2000 the Company had $100.0 million and $118.7 million, respectively, of commercial paper outstanding at an average effective rate of 1.90% and 6.53%, respectively. See also note 14. (5) Long-term Debt, payable to NFS On December 19, 2001 the Company sold a 7.50%, $300.0 million surplus note to NFS, maturing on December 17, 2031. The fair value of the surplus note as of December 31, 2001 was $300.0 million. Principal and interest payments are subject to prior approval by the superintendent of insurance of the State of Ohio. The Company is scheduled to pay interest semi-annually on June 17 and December 17 of each year commencing June 17, 2002. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (6) Derivative Financial Instruments QUALITATIVE DISCLOSURE Interest Rate Risk Management The Company is exposed to changes in the fair value of fixed rate investments (commercial mortgage loans and corporate bonds) due to changes in interest rates. To manage this risk, the Company enters into various types of derivative instruments to minimize fluctuations in fair values resulting from changes in interest rates. The Company principally uses interest rate swaps and short Eurodollar futures to manage this risk. Under interest rate swaps, the Company receives variable interest rate payments and makes fixed rate payments, thereby creating floating rate investments. Short Eurodollar futures change the fixed rate cash flow exposure to variable rate cash flows. With short Eurodollar futures, if interest rates rise (fall), the gains (losses) on the futures adjust the fixed rate income on the investments, thereby creating floating rate investments. As a result of entering into commercial mortgage loan and private placement commitments, the Company is exposed to changes in the fair value of the commitment due to changes in interest rates during the commitment period. To manage this risk, the Company enters into short Treasury futures. With short Treasury futures, if interest rates rise (fall), the gains (losses) on the futures will offset the change in fair value of the commitment. Floating rate investments (commercial mortgage loans and corporate bonds) expose the Company to fluctuations in cash flow and investment income due to changes in interest rates. To manage this risk, the Company enters into receive fixed, pay variable over-the-counter interest rate swaps or long Eurodollar futures strips to convert the variable rate investments to a fixed rate. In using interest rate swaps, the Company receives fixed interest rate payments and makes variable rate payments; thereby creating fixed rate assets. The long Eurodollar futures change the variable rate cash flow exposure to fixed rate cash flows. With long Eurodollar futures, if interest rates rise (fall), the losses (gains) on the futures are used to reduce the variable rate income on the investments, thereby creating fixed rate investments. Foreign Currency Risk Management In conjunction with the Company's medium-term note program, from time to time, the Company issues both fixed and variable rate liabilities denominated in foreign currencies. As a result, the Company is exposed to changes in fair value of the liabilities due to changes in foreign currency exchange rates and interest rates. To manage these risks, the Company enters into cross-currency interest rate swaps to convert these liabilities to a variable U.S. dollar rate. For a fixed rate liability, the cross-currency interest rate swap is structured to receive a fixed rate, in the foreign currency, and pay a variable U.S. dollar rate, generally 3-month libor. For a variable rate foreign liability, the cross-currency interest rate swap is structured to receive a variable rate, in the foreign currency, and pay a variable U.S. dollar rate, generally 3-month libor. The Company is exposed to changes in fair value of fixed rate investments denominated in a foreign currency due to changes in foreign currency exchange rates and interest rates. To manage this risk, the Company uses cross-currency interest rate swaps to convert these assets to variable U.S. dollar rate instruments. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Cross-currency interest rate swaps on assets are structured to pay a fixed rate, in the foreign currency, and receive a variable U.S. dollar rate, generally 3-month libor. Non-Hedging Derivatives From time-to-time, the Company enters into over-the-counter basis swaps (receive one variable rate, pay another variable rate) to change the rate characteristics of a specific investment to better match the variable rate paid on a liability. While the pay-side terms of the basis swap will line up with the terms of the asset, the Company is not able to match the receive-side terms of the derivative to a specific liability; therefore, basis swaps do not receive hedge accounting treatment. QUANTITATIVE DISCLOSURE Fair Value Hedges During the year ended December 31, 2001, gains of $2.1 million were recognized in net realized losses on investments, hedging instruments and hedged items. This represents the ineffective portion of the fair value hedging relationships. There were no gains or losses attributable to the portion of the derivative instruments' change in fair value excluded from the assessment of hedge effectiveness. There were also no gains or losses recognized in earnings as a result of hedged firm commitments no longer qualifying as fair value hedges. Cash Flow Hedges For the year ended December 31, 2001, the ineffective portion of cash flow hedges was immaterial. There were no gains or losses attributable to the portion of the derivative instruments' change in fair value excluded from the assessment of hedge effectiveness. The Company anticipates reclassifying less than $0.1 million in losses out of AOCI over the next 12-month period. As of December 31, 2001, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows associated with forecasted transactions is twelve months. The Company did not discontinue any cash flow hedges because the original forecasted transaction was no longer probable. Other Derivative Instruments, Including Embedded Derivatives Net realized gains and losses on investments, hedging instruments and hedged items for the year ended December 31, 2001 include a loss of $1.6 million related to other derivative instruments, including embedded derivatives. For the year ended December 31, 2001 a $27.7 million loss was recorded in net realized losses on investments, hedging instruments and hedged items reflecting the change in fair value of cross-currency interest rate swaps hedging variable rate medium-term notes denominated in foreign currencies. An offsetting gain of $26.3 million was recorded in net realized losses on investments, hedging instruments and hedged items to reflect the change in spot rates of these foreign currency denominated obligations during the year ended December 31, 2001. 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, 2001 and 2000 were as follows:
(in millions ) 2001 2000 ======== ======== Interest rate swaps Pay fixed/receive variable rate swaps hedging investments $1,952.3 $ 934.8 Pay variable/receive fixed rate swaps hedging investments 698.4 98.8 Pay variable/receive variable rate swaps hedging investments 197.8 184.0 Other contracts hedging investments 523.0 20.4 Cross currency interest rate swaps Hedging foreign currency denominated investments 56.1 30.5 Hedging foreign currency denominated liabilities 2,500.4 1,512.2 Interest rate futures contracts 6,019.4 5,659.8 -------- --------
(7) 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, 2001 and 2000 were as follows:
(in millions) 2001 2000 ======== ======== Deferred tax assets: Equity securities $ 6.5 $ -- Future policy benefits 8.2 34.7 Liabilities in separate accounts 482.5 462.7 Mortgage loans on real estate and real estate 7.5 18.8 Derivatives 93.0 -- Other assets and other liabilities 81.8 40.3 -------- -------- Total gross deferred tax assets 679.5 556.5 Less valuation allowance (7.0) (7.0) -------- -------- Net deferred tax assets 672.5 549.5 -------- -------- Deferred tax liabilities: Deferred policy acquisition costs 861.3 783.7 Derivatives 91.5 -- Fixed maturity securities 173.0 98.8 Deferred tax on realized investment gains 26.1 29.0 Equity securities and other long-term investments 31.7 6.4 Other 68.8 38.1 -------- -------- Total gross deferred tax liabilities 1,252.4 956.0 -------- -------- Net deferred tax liability $ 579.9 $ 406.5 ======== ========
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, 2001, 2000 and 1999. 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 $186.2 million and $108.9 million as of December 31, 2001 and 2000, respectively. Federal income tax expense attributable to income before cumulative effect of adoption of accounting principles for the years ended December 31 was as follows:
(in millions) 2001 2000 1999 ====== ====== ====== Currently payable $ 32.5 $ 78.0 $ 53.6 Deferred tax expense 128.9 129.7 147.8 ------ ------ ------ $161.4 $207.7 $201.4 ====== ====== ======
Total federal income tax expense for the years ended December 31, 2001, 2000 and 1999 differs from the amount computed by applying the U.S. federal income tax rate to income before federal income tax expense and cumulative effect of adoption of accounting principles as follows:
2001 2000 1999 ------------------- ------------------- ------------------- (in millions) Amount % Amount % Amount % ====== ====== ====== ====== ====== ====== Computed (expected) tax expense $220.6 35.0 $239.1 35.0 $212.3 35.0 Tax exempt interest and dividends received deduction (48.8) (7.7) (24.7) (3.6) (7.3) (1.2) Income tax credits (11.5) (1.8) (8.0) (1.2) (4.3) (0.7) Other, net 1.1 0.1 1.3 0.2 0.7 0.1 ------ ------ ------ ------ ------ ------ Total (effective rate of each year) $161.4 25.6 $207.7 30.4 $201.4 33.2 ====== ====== ====== ====== ====== ======
Total federal income tax (refunded) paid was $(45.4) million, $74.6 million and $29.8 million during the years ended December 31, 2001, 2000 and 1999, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (8) Comprehensive Income (Loss) Comprehensive income (loss) includes net income as well as certain items that are reported directly within separate components of shareholder's equity that bypass net income. Other comprehensive income (loss) is comprised of unrealized gains (losses) on securities available-for-sale and accumulated net losses on cash flow hedges. The related before and after federal income tax amounts for the years ended December 31, 2001, 2000 and 1999 were as follows:
(in millions) 2001 2000 1999 ====== ====== ======= Unrealized gains (losses) on securities available-for-sale arising during the period: Gross $164.0 $264.5 $(665.3) Adjustment to deferred policy acquisition costs (71.7) (74.0) 167.5 Related federal income tax (expense) benefit (32.3) (66.7) 171.4 ------ ------ ------- Net 60.0 123.8 (326.4) ------ ------ ------- Reclassification adjustment for net losses on securities available-for-sale realized during the period: Gross 58.7 13.5 17.6 Related federal income tax benefit (20.5) (4.7) (6.2) ------ ------ ------- Net 38.2 8.8 11.4 ------ ------ ------- Other comprehensive income (loss) on securities available-for-sale 98.2 132.6 (315.0) ------ ------ ------- Accumulated net loss on cash flow hedges: Gross (13.5) -- -- Related federal income tax benefit 4.7 -- -- ------ ------ ------- Other comprehensive loss on cash flow hedges (8.8) -- -- ------ ------ ------- Accumulated net loss on transition adjustments: Transition adjustment - SFAS 133 (5.6) -- -- Transition adjustment - EITF 99-20 3.5 -- -- Related federal income tax benefit 0.7 -- -- ------ ------ ------- Other comprehensive loss on transition adjustments (1.4) -- -- ------ ------ ------- Total other comprehensive income (loss) $ 88.0 $132.6 $(315.0) ====== ====== =======
Reclassification adjustments for net realized gains and losses on the ineffective portion of cash flow hedges were immaterial during 2001 and, therefore, are not reflected in the table above. (9) Fair Value of Financial Instruments The following disclosures summarize the carrying amount and estimated fair value of the Company's financial instruments. Certain assets and liabilities are specifically excluded from the disclosure requirements of financial instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The fair value of a financial instrument is defined as the amount at which the financial instrument could be exchanged in a current transaction between willing parties. In cases where quoted market prices are not available, fair value is to be based on estimates using present value or other valuation techniques. Many of the Company's assets and liabilities subject to the disclosure requirements are not actively traded, requiring fair values to be estimated by management using present value or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Although fair value estimates are calculated using assumptions that management believes are appropriate, changes in assumptions could cause these estimates to vary materially. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in the immediate settlement of the instruments. Although insurance contracts, other than policies such as annuities that are classified as investment contracts, are specifically exempted from the disclosure requirements, estimated fair value of policy reserves on life insurance contracts is provided to make the fair value disclosures more meaningful. The tax ramifications of the related unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. In estimating its fair value disclosures, the Company used the following methods and assumptions: Fixed maturity and equity securities: The fair value for fixed maturity securities is based on quoted market prices, where available. For fixed maturity securities not actively traded, fair value is estimated using values obtained from independent pricing services or, in the case of private placements, is estimated by discounting expected future cash flows using a current market rate applicable to the yield, credit quality and maturity of the investments. The fair value for equity securities is based on quoted market prices. The carrying amount and fair value for fixed maturity and equity securities exclude the fair value of derivatives contracts designated as hedges of fixed maturity and equity securities. Mortgage loans on real estate, net: The fair value for mortgage loans on real estate is estimated using discounted cash flow analyses, using interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. 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. Policy reserves on life insurance contracts: Included are disclosures for individual and corporate-owned life insurance, universal life insurance and supplementary contracts with life contingencies for which the estimated fair value is the amount payable on demand. Also included are disclosures for the Company's limited payment policies, which the Company has used discounted cash flow analyses similar to those used for investment contracts with known maturities to estimate fair value. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Collateral received - securities lending and derivatives: The carrying amount reported in the consolidated balance sheets for these instruments approximates their fair value. Short-term debt: The carrying amount reported in the consolidated balance sheets for these instruments approximates their fair value. Long-term debt, payable to NFS: The fair value for long-term debt is based on quoted market prices. Commitments to extend credit: Commitments to extend credit have nominal fair value because of the short-term nature of such commitments. See note 10. 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:
2001 2000 --------------------------- ---------------------------- Carrying Estimated Carrying Estimated (in millions) amount fair value amount fair value ========== ========== ========== ========== Assets: Investments: Securities available-for-sale: Fixed maturity securities $ 18,370.8 $ 18,370.8 $ 15,451.3 $ 15,451.3 Equity securities 94.0 94.0 109.0 109.0 Mortgage loans on real estate, net 7,113.1 7,293.3 6,168.3 6,327.8 Policy loans 591.1 591.1 562.6 562.6 Short-term investments 1,011.3 1,011.3 442.6 442.6 Cash 22.6 22.6 18.4 18.4 Assets held in separate accounts 59,513.0 59,513.0 65,897.2 65,897.2 Liabilities: Investment contracts (19,549.5) (18,421.0) (16,815.3) (15,979.8) Policy reserves on life insurance contracts (5,666.5) (5,524.4) (5,368.4) (5,128.5) Collateral received - securities lending and derivatives (809.6) (809.6) -- -- Short-term debt (100.0) (100.0) (118.7) (118.7) Long-term debt, payable to NFS (300.0) (300.0) -- -- Liabilities related to separate accounts (59,513.0) (58,387.3) (65,897.2) (64,237.6) Derivative financial instruments: Interest rate swaps hedging assets (5.6) (5.6) (8.3) (8.3) Cross currency interest rate swaps (66.0) (66.0) (24.3) (24.3) Futures contracts (33.0) (33.0) (16.0) (16.0) ---------- ---------- ---------- ----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (10) Risk Disclosures The following is a description of the most significant risks facing life insurers and how the Company mitigates those risks: Credit Risk: The risk that issuers of securities owned by the Company or mortgagors on mortgage loans on real estate owned by the Company will default or that other parties, including reinsurers, which owe the Company money, will not pay. The Company minimizes this risk by adhering to a conservative investment strategy, by maintaining reinsurance and credit and collection policies and by providing for any amounts deemed uncollectible. Interest Rate Risk: The risk that interest rates will change and cause a decrease in the value of an insurer's investments. This change in rates may cause certain interest-sensitive products to become uncompetitive or may cause disintermediation. The Company mitigates this risk by charging fees for non-conformance with certain policy provisions, by offering products that transfer this risk to the purchaser and/or by attempting to match the maturity schedule of its assets with the expected payouts of its liabilities. To the extent that liabilities come due more quickly than assets mature, an insurer could potentially have to borrow funds or sell assets prior to maturity and potentially recognize a gain or loss. Legal/Regulatory Risk: The risk that changes in the legal or regulatory environment in which an insurer operates will result in increased competition, reduced demand for a company's products, or create additional expenses not anticipated by the insurer in pricing its products. The Company mitigates this risk by offering a wide range of products and by operating throughout the U. S., thus reducing its exposure to any single product or jurisdiction and also by employing underwriting practices which identify and minimize the adverse impact of this risk. Financial Instruments with Off-Balance-Sheet Risk: The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business through management of its investment portfolio. These financial instruments include commitments to extend credit in the form of loans and derivative financial instruments. These instruments involve, to varying degrees, elements of credit risk in excess of amounts recognized on the consolidated balance sheets. Commitments to fund fixed rate mortgage loans on real estate are agreements to lend to a borrower and are subject to conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a deposit. Commitments extended by the Company are based on management's case-by-case credit evaluation of the borrower and the borrower's loan collateral. The underlying mortgage property represents the collateral if the commitment is funded. The Company's policy for new mortgage loans on real estate is to generally lend no more than 80% of collateral value. Should the commitment be funded, the Company's exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amounts of these commitments less the net realizable value of the collateral. The contractual amounts also represent the cash requirements for all unfunded commitments. Commitments on mortgage loans on real estate of $344.0 million extending into 2002 were outstanding as of December 31, 2001. The Company also had $81.5 million of commitments to purchase fixed maturity securities outstanding as of December 31, 2001. 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, 2001, NLIC's credit risk from these derivative financial instruments was $1.5 million net of $18.0 million of cash colleteral. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Equity Market Risk: Asset fees calculated as a percentage of the separate account assets are a significant source of revenue to the Company. As of December 31, 2001, 82% of separate account assets were invested in equity mutual funds. Gains and losses in the equity markets will result in corresponding increases and decreases in the Company's separate account assets and the reported asset fee revenue. In addition, a decrease in separate account assets may decrease the Company's expectations of future profit margins, which may require the Company to accelerate the amortization of deferred policy acquisition costs. Significant Concentrations of Credit Risk: The Company grants mainly commercial mortgage loans on real estate to customers throughout the U. S. The Company has a diversified portfolio with no more than 20% (22% in 2000) in any geographic area and no more than 2% (1% in 2000) with any one borrower as of December 31, 2001. As of December 31, 2001, 34% (36% in 2000) of the carrying value of the Company's commercial mortgage loan portfolio financed retail properties. Significant Business Concentrations: As of December 31, 2001, the Company did not have a material concentration of financial instruments in a single investee, industry or geographic location. Also, the Company did not have a concentration of business transactions with a particular customer, lender or distribution source, a market or geographic area in which business is conducted that makes it vulnerable to an event which could cause a severe impact to the Company's financial position. Reinsurance: The Company has entered into reinsurance contracts to cede a portion of its general account individual annuity business. Total recoveries due from these contracts were $161.2 million and $143.1 million as of December 31, 2001 and 2000, respectively. The contracts are immaterial to the Company's results of operations. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. Under the terms of the contracts, trusts have been established as collateral for the recoveries. The trust assets are invested in investment grade securities, the fair value of which must at all times be greater than or equal to 100% or 102% of the reinsured reserves, as outlined in the underlying contract. Collateral - Derivatives: The Company enters into agreements with various counterparties to execute over-the-counter derivative transactions. The Company's policy is to include a Credit Support Annex with each agreement to protect the Company for any exposure above the approved credit threshold. This also protects the counterparty against exposure to the Company. The Company generally posts securities as collateral and receives cash as collateral from counterparties. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest or dividends received during the loan term. Collateral - Securities Lending: The Company, through its agent, lends certain portfolio holdings and in turn receives cash collateral. The cash collateral is invested in high-quality short-term investments. The Company's policy requires a minimum of 102% of the fair value of the securities loaned be maintained as collateral. Net returns on the investments, after payment of a rebate to the borrower, are shared between the Company and its agent. Both the borrower and the Company can request or return the loaned securities at any time. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest or dividends received during the loan term. (11) Pension Plan, Postretirement Benefits Other than Pensions and Retirement Savings Plan 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. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Pension costs (benefits) charged to operations by the Company during the years ended December 31, 2001, 2000 and 1999 were $5.0 million, $1.9 million and $(8.3) million, respectively. The Company has recorded a prepaid pension asset of $9.4 million and $13.6 million as of December 31, 2001 and 2000, 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, 2001 and 2000 was $53.8 million and $51.0 million, respectively and the net periodic postretirement benefit cost (NPPBC) for 2001, 2000 and 1999 was $2.9 million, $3.8 million and $4.9 million, respectively. 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, 2001 and 2000 follows:
Pension Benefits Postretirement Benefits ------------------------- ----------------------- (in millions) 2001 2000 2001 2000 ======== ======== ======== ======== Change in benefit obligation Benefit obligation at beginning of year $1,981.7 $1,811.4 $ 276.4 $ 239.8 Service cost 89.3 81.4 12.6 12.2 Interest cost 129.1 125.3 21.4 18.7 Participant contributions -- -- 3.3 2.9 Plan amendment 27.7 -- 0.2 -- Actuarial (gain) loss (5.8) 34.8 20.2 16.1 Benefits paid (89.8) (71.2) (20.1) (13.3) -------- -------- -------- -------- Benefit obligation at end of year 2,132.2 1,981.7 314.0 276.4 ======== ======== ======== ======== Change in plan assets Fair value of plan assets at beginning of year 2,337.1 2,247.6 119.4 91.3 Actual return (loss) on plan assets (46.6) 140.9 (0.2) 12.2 Employer contribution -- -- 17.3 26.3 Participant contributions -- -- 3.3 2.9 Plan curtailment -- 19.8 -- -- Benefits paid (89.8) (71.2) (20.1) (13.3) -------- -------- -------- -------- Fair value of plan assets at end of year 2,200.7 2,337.1 119.7 119.4 -------- -------- -------- -------- Funded status 68.5 355.4 (194.3) (157.0) Unrecognized prior service cost 49.5 25.0 0.2 -- Unrecognized net gains (79.3) (311.7) (4.0) (34.1) Unrecognized net (asset) obligation at transition (5.1) (6.4) 0.8 1.0 -------- -------- -------- -------- Prepaid (accrued) benefit cost $ 33.6 $ 62.3 $ (197.3) $ (190.1) ======== ======== ======== ========
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Assumptions used in calculating the funded status of the pension plan and postretirement life and health care benefit plan were as follows:
Pension Benefits Postretirement Benefits ----------------------- ------------------------ 2001 2000 2001 2000 ======================= ======================== Weighted average discount rate 6.50% 6.75% 7.25% 7.50% Rate of increase in future compensation levels 4.75% 5.00% -- -- Assumed health care cost trend rate: Initial rate -- -- 11.00% 11.00% Ultimate rate -- -- 5.50% 5.50% Declining period -- -- 4 Years 4 Years ----- ----- ----- -----
The components of net periodic pension cost for the pension plan as a whole for the years ended December 31, 2001, 2000 and 1999 were as follows:
(in millions) 2001 2000 1999 ======================================================================================================================= Service cost (benefits earned during the period) $ 89.3 $ 81.4 $ 80.0 Interest cost on projected benefit obligation 129.1 125.3 109.9 Expected return on plan assets (183.8) (184.5) (160.3) Recognized gains (7.8) (11.8) (9.1) Amortization of prior service cost 3.2 3.2 3.2 Amortization of unrecognized transition asset (1.3) (1.3) (1.4) ------ ------ ------ $ 28.7 $ 12.3 $ 22.3 ====== ====== ======
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its affiliation with Nationwide and employees of WSC ended participation in the pension plan resulting in a curtailment gain of $67.1 million. During 1999, the pension 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:
2001 2000 1999 ==== ==== ==== Weighted average discount rate 6.75% 7.00% 6.08% Rate of increase in future compensation levels 5.00% 5.25% 4.33% Expected long-term rate of return on plan assets 8.00% 8.25% 7.33% ---- ---- ----
The components of NPPBC for the postretirement benefit plan as a whole for the years ended December 31, 2001, 2000 and 1999 were as follows:
(in millions) 2001 2000 1999 ===== ===== ===== Service cost (benefits attributed to employee service during the year) $12.6 $12.2 $14.2 Interest cost on accumulated postretirement benefit obligation 21.4 18.7 17.6 Expected return on plan assets (9.6) (7.9) (4.8) Amortization of unrecognized transition obligation of affiliates 0.6 0.6 0.6 Net amortization and deferral (0.4) (1.3) (0.5) ----- ----- ----- $24.6 $22.3 $27.1 ===== ===== =====
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Actuarial assumptions used for the measurement of the NPPBC for the postretirement benefit plan for 2001, 2000 and 1999 were as follows:
2001 2000 1999 ======= ======= ======= Discount rate 7.50% 7.80% 6.65% Long-term rate of return on plan assets, net of tax in 1999 8.00% 8.30% 7.15% Assumed health care cost trend rate: Initial rate 11.00% 13.00% 15.00% Ultimate rate 5.50% 5.50% 5.50% Declining period 4 Years 5 Years 6 Years ------- ------- -------
Because current plan costs are very close to the employer dollar caps, the health care cost trend has an immaterial effect on plan obligations for the postretirement benefit plan as a whole. For this reason, the effect of a one percentage point increase or decrease in the assumed health care cost trend rate on the APBO as of December 31, 2001 and on the NPPBC for the year ended December 31, 2001 was not calculated. The Company, together with other affiliated companies, sponsors a defined contribution retirement savings plan covering substantially all employees of the Company. Employees may make salary deferral contributions of up to 22%. Salary deferrals of up to 6% are subject to a 50% Company match. The Company match is funded on a bi-weekly basis and the expense of such contributions are allocated to the Company based on employee contributions. The Company's expense for contributions to this plan totaled $5.6 million, $4.4 million and $3.3 million for 2001, 2000 and 1999, respectively. Individuals are subject to a dollar limit on salary deferrals per Internal Revenue Service (IRS) Section 402(g) and other limits also apply. The Company has no legal obligation for benefits under this plan. (12) Shareholder's Equity, Regulatory Risk-Based Capital, Retained Earnings and Dividend Restrictions The State of Ohio, where NLIC and NLAIC are domiciled, imposes minimum risk-based capital requirements that were developed by the NAIC. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of the Company's insurance 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 for all periods presented herein. The statutory capital and surplus of NLIC as of December 31, 2001, 2000 and 1999 was $1.76 billion, $1.28 billion and $1.35 billion, respectively. The statutory net income of NLIC for the years ended December 31, 2001, 2000 and 1999 was $83.1 million, $158.7 million and $276.2 million, respectively. The NAIC completed a project to codify statutory accounting principles (Codification), which became effective January 1, 2001 for NLIC and NLAIC. The resulting change to NLIC's January 1, 2001 surplus was an increase of approximately $80.0 million. The significant change for NLIC, as a result of Codification, was the recording of deferred taxes, which were not recorded prior to the adoption of Codification. The Company is limited in the amount of shareholder dividends it may pay without prior approval by the Department. As of December 31, 2001 $141.0 million in dividends could be paid by NLIC without prior approval. In addition, the payment of dividends by NLIC may also be subject to restrictions set forth in the insurance laws of the State of New York that limit the amount of statutory profits on NLIC's participating policies (measured before dividends to policyholders) that can inure to the benefit of the Company and its shareholders. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The Company currently does not expect such regulatory requirements to impair its ability to pay operating expenses, interest and shareholder dividends in the future. (13) Related Party Transactions During 2001, the Company entered into a transaction with NMIC, whereby it sold 78% of its interest in a limited partnership (representing 49% of the limited partnership) to NMIC for $158.9 million. As a result of this sale, the Company recorded a realized gain of $44.4 million, and related tax expense of $15.5 million. The sale price, which was paid in cash, represented the fair value of the limited partnership interest and was based on a valuation of the limited partnership and its underlying investments. The valuation was completed by qualified management of the limited partnership and utilized a combination of internal and independent valuations of the underlying investments of the limited partnership. Additionally, senior financial officers and the Boards of Directors of the Company and NMIC separately reviewed and approved the valuation prior to the execution of this transaction. The Company continues to hold an economic and voting interest in the limited partnership of approximately 14%, with NMIC holding the remaining interests. NLIC has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $4.68 billion and $4.80 billion as of December 31, 2001 and 2000, respectively. Total revenues from these contracts were $150.7 million, $156.8 million, and $149.7 million for the years ended December 31, 2001, 2000, and 1999, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances were $118.4 million, $131.9 million, and $112.0 million for the years ended December 31, 2001, 2000, and 1999, respectively. The terms of these contracts are consistent in all material respects with what the Company offers to unaffiliated parties. The Company files a consolidated federal tax return with NMIC, as described in Note 2(i). Total payments (from) to NMIC were $(45.4) million, $74.6 million, and $29.8 million for the years ended December 31, 2001, 2000, and 1999, respectively. 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. 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, 2001, 2000 and 1999 were $200.7 million, $170.1 million, and $193.0 million, respectively, while benefits, claims and expenses ceded were $208.5 million, $168.0 million and $197.3 million, respectively. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued Pursuant to a cost sharing agreement among NMIC and certain of its direct and indirect subsidiaries, including the Company, NMIC provides certain operational and administrative services, such as investment management, advertising, personnel and general management services, to those subsidiaries. Expenses covered by such agreement are subject to allocation among NMIC and such subsidiaries. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, salary expense, commission expense and other methods agreed to by the participating companies that are within industry guidelines and practices. In addition, Nationwide Services Company, 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, 2001, 2000 and 1999, the Company made payments to NMIC and Nationwide Services Company totaling $139.8 million, $150.3 million, and $124.1 million, respectively. The Company does not believe that expenses recognized under these agreements are materially different than expenses that would have been recognized had the Company operated on a stand-alone basis. Under a marketing agreement with NMIC, NLIC makes payments to cover a portion of the agent marketing allowance that is paid to Nationwide agents. These costs cover product development and promotion, sales literature, rent and similar items. Payments under this agreement totaled $26.4 million, $31.4 million and $34.5 million for the years ended December 31, 2001, 2000 and 1999, respectively. The Company leases office space from NMIC and certain of its subsidiaries. For the years ended December 31, 2001, 2000 and 1999, the Company made lease payments to NMIC and its subsidiaries of $18.7 million, $14.1 million and $9.9 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. During 2001, the most the Company had outstanding at any given time was $368.5 million and the Company incurred interest expense on intercompany repurchase agreements of $0.2 million for 2001. Transactions under the agreements during 2000 and 1999 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 $54.8 million and $321.1 million as of December 31, 2001 and 2000, 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, 2001 were $52.9 million, $65.0 million and $79.7 million, respectively. On December 19, 2001 the Company sold a 7.50%, $300.0 million surplus note to NFS, maturing on December 17, 2031. The fair value of the surplus note as of December 31, 2001 was $300.0 million. Principal and interest payments are subject to prior approval by the superintendent of insurance of the State of Ohio. The Company is scheduled to pay interest semi-annually on June 17 and December 17 of each year commencing June 17, 2002. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued (14) Bank Lines of Credit The Company has available as a source of funds a $1 billion revolving credit facility entered into by NFS, NLIC and NMIC. The facility is comprised of a five year $700 million agreement and a 364 day $300 million agreement with a group of national financial institutions. The facility provides for several and not joint liability with respect to any amount drawn by any party. The facility provides covenants, including, but not limited to, requirements that the Company maintain consolidated tangible net worth, as defined, in excess of $1.69 billion and NLIC maintain statutory surplus in excess of $935 million. The Company had no amounts outstanding under this agreement as of December 31, 2001. Of the total facility, $300 million is designated to back NLIC's commercial paper program. Therefore, borrowing capacity under this facility is reduced by any amounts outstanding under the commercial paper program, which totaled $100.0 million as of December 31, 2001. (15) 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. On June 11, 1999, the Company and the other named defendants filed a motion to dismiss the amended complaint. On March 8, 2000, the court denied the motion to dismiss the amended complaint filed by the Company and the other named defendants. On January 25, 2002, the plaintiffs filed a motion for leave to amend their complaint to add three new named plaintiffs. On February 9, 2002, the plaintiffs filed a motion for class certification. The class has not been certified. The Company intends to defend this lawsuit vigorously. On August 15, 2001, the Company was named in a lawsuit filed in Connecticut federal court titled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company. On September 5, 2001, the plaintiffs amended their complaint to include class action allegations. The plaintiffs seek to represent a class of plan trustees who purchased variable annuities to fund qualified ERISA retirement plans. The amended complaint alleges that the retirement plans purchased variable annuity contracts from the Company which invested in mutual funds that were offered by separate mutual fund companies; that the Company was a fiduciary under ERISA and that the Company breached its fiduciary duty when it accepted certain fees from the mutual fund companies that purportedly were never disclosed by the Company; and that the Company violated ERISA by replacing many of the mutual funds originally included in the plaintiffs' annuities with "inferior" funds because the new funds purportedly paid more in revenue sharing. The amended complaint seeks disgourgement of fees by the Company and other unspecified compensatory damages. On November 15, 2001, the Company filed a motion to dismiss the amended complaint, which has not been decided. On December 3, 2001, the plaintiffs filed a motion for class certification. On January 15, 2002, the plaintiffs filed a response to the Company's motion to dismiss the amended complaint. On February 22, 2002, the Company filed a reply in support of its motion to dismiss. The class has not been certified. The Company intends to defend this lawsuit vigorously. There can be no assurance that any such litigation will not have a material adverse effect on the Company in the future. (16) Segment Information The Company uses differences in products as the basis for defining its reportable segments. The Company reports three product segments: Individual Annuity, Institutional Products and Life Insurance. NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly owned subsidiary of Nationwide Financial Services, Inc.) Notes to Consolidated Financial Statements, Continued The Individual Annuity segment consists of individual The BEST of AMERICA and private label deferred variable annuity products, deferred fixed annuity products and income products. Individual deferred annuity contracts provide the customer with tax-deferred accumulation of savings and flexible payout options including lump sum, systematic withdrawal or a stream of payments for life. In addition, variable annuity contracts provide the customer with access to a wide range of investment options and asset protection in the event of an untimely death, while fixed annuity contracts generate a return for the customer at a specified interest rate fixed for prescribed periods. The Institutional Products segment is comprised of the Company's private and public sector group retirement plans and medium-term note program. The private sector includes the 401(k) business generated through fixed and variable annuities. The public sector includes the IRC Section 457 business in the form of fixed and variable annuities. The Life Insurance segment consists of investment life products, including both individual variable life and COLI products, traditional life insurance products and universal life insurance. Life insurance products provide a death benefit and generally also allow the customer to build cash value on a tax-advantaged basis. In addition to the product segments, the Company reports a Corporate segment. The Corporate segment includes net investment income not allocated to the three product segments, certain revenues and expenses of the Company's broker/dealer subsidiary, unallocated expenses and interest expense on debt. In addition to these operating revenues and expenses, the Company also reports net realized gains and losses on investments, hedging instruments and hedged items in the Corporate segment. The following tables summarize the financial results of the Company's business segments for the years ended December 31, 2001, 2000 and 1999.
Individual Institutional Life (in millions) Annuity Products Insurance Corporate Total ========== ============ ========== ========= ========= 2001: Net investment income $ 534.7 $ 847.5 $ 323.3 $ 19.5 $ 1,725.0 Other operating revenue 556.0 205.9 506.5 16.0 1,284.4 --------- --------- --------- --------- --------- Total operating revenue (1) 1,090.7 1,053.4 829.8 35.5 3,009.4 --------- --------- --------- --------- --------- Interest credited to policyholder account balances 433.2 627.8 177.7 -- 1,238.7 Amortization of deferred policy acquisition costs 220.0 47.6 80.3 -- 347.9 Interest expense on debt -- -- -- 6.2 6.2 Other benefits and expenses 206.1 170.2 387.1 2.7 766.1 --------- --------- --------- --------- --------- Total benefits and expenses 859.3 845.6 645.1 8.9 2,358.9 --------- --------- --------- --------- --------- Operating income before federal income tax expense (1) 231.4 207.8 184.7 26.6 650.5 Net realized losses on investments, hedging instruments and hedged items (2) -- -- -- (20.2) (20.2) --------- --------- --------- --------- --------- Income before federal income tax expense and cumulative effect of adoption of accounting principles $ 231.4 $ 207.8 $ 184.7 $ 6.4 $ 630.3 ========= ========= ========= ========= ========= Assets as of year end $43,885.4 $34,130.1 $ 9,129.0 $ 4,010.1 $91,154.6 ========= ========= ========= ========= =========
- ---------- (1) Excludes net realized gains and losses on investments, hedging instruments and hedged items. (2) Realized gains related to securitization transactions are included in operating income. 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 ========= ============ ========= ========= ========= 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 debt -- -- -- 1.3 1.3 Other benefits and expenses 192.3 170.3 368.8 33.7 765.1 --------- --------- --------- --------- --------- Total benefits and expenses 827.4 848.3 590.2 35.0 2,300.9 --------- --------- --------- --------- --------- Operating income before federal income tax expense(1) 281.7 230.7 152.9 37.1 702.4 Net realized losses on investments, hedging instruments and hedged items -- -- -- (19.4) (19.4) --------- --------- --------- --------- --------- Income before federal income tax expense and cumulative effect of adoption of accounting principles $ 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 benefits and expenses 711.1 765.3 525.3 83.4 2,085.1 --------- --------- --------- --------- --------- Operating income before federal income tax expense (1) 259.2 217.8 120.8 20.3 618.1 Net realized losses on investments, hedging instruments and hedged items -- -- -- (11.6) (11.6) --------- --------- --------- --------- --------- Income before federal income tax expense and cumulative effect of adoption of accounting principles $ 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 ========= ========= ========= ========= =========
- ---------- (1) Excludes net realized gains and losses on investments, hedging instruments and hedged items. 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. PART II - OTHER INFORMATION CONTENTS OF REGISTRATION STATEMENT This Post-Effective Amendment No. 15 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 136 pages. Representations and Undertakings. Independent Auditors' Consent. The Signatures. The following exhibits required by Forms N-8B-2 and S-6: 1. Power of Attorney dated April 1, 2002. Attached hereto. 2. Resolution of the Depositor's Board of Included with the Registration Statement Directors authorizing the establishment on Form N-8B-2 for the Nationwide VL of the Registrant, adopted. Separate Account-A (File No. 811-6137), and hereby incorporated herein by reference. 3. Distribution Contracts Included with the Registration Statement on Form N-8B-2 for the Nationwide VL Separate Account-A (File No. 811-6137), and hereby incorporated herein by reference. 4. Form of Security Included with Pre-Effective Amendment No. 1 and hereby incorporated herein by reference. 5. Articles of Incorporation of Depositor Included with the Registration Statement on Form N-8B-2 for the Nationwide VL Separate Account-A (File No. 811-6137), and hereby incorporated herein by reference. 6. Application form of Security Included with Pre-Effective Amendment No. 1 and hereby incorporated herein by reference. 7. Opinion of Counsel Included with Pre-Effective Amendment No. 1 and hereby incorporated herein by reference.
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 "1940 Act"). The Registrant and Nationwide elect to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the 1940 Act with respect to the policies described in the prospectus. The policies have been designed in such a way as to qualify for the exemptive relief from various provisions of the 1940 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 (the "Commission") 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 contractholders and will keep and make available to the Commission 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 Nationwide, 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 Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. (f) Represent that the fees and charges deducted under the contract in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Nationwide. INDEPENDENT AUDITORS' CONSENT The Board of Directors of Nationwide Life Insurance Company and Contract Owners of Nationwide VLI Separate Account-2: We consent to use of our reports for Nationwide VLI Separate Account-2 dated February 20, 2002 and for Nationwide Life Insurance Company dated January 29, 2002 included herein, and to the reference to our firm under the heading "Independent Certified Public Accountants" in the Prospectus (File No. 033-35783). KPMG LLP Columbus, Ohio April 22, 2002 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 the Securities Act Rule 485(b) for effectiveness of the Post-Effective Amendment No. 15 and has duly caused this Post-Effective Amendment No. 15 to be signed on its behalf by the undersigned thereunto duly authorized and its seal to hereunto affixed and attested, all in the City of Columbus, and State of Ohio, on this 26th day of April, 2002. NATIONWIDE VLI SEPARATE ACCOUNT-2 --------------------------------------- (Registrant) (Seal) NATIONWIDE LIFE INSURANCE COMPANY --------------------------------------- Attest: (Depositor) By: /s/ GLENN W. SODEN By: STEVEN SAVINI, ESQ. - -------------------------------- --------------------------------------- Glenn W. Soden Steven Savini, Esq. Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 14 has been signed below by the following persons in the capacities indicated on the 26th day of April, 2002.
SIGNATURE TITLE W. G. JURGENSEN Director and Chief Executive - ---------------------- Officer W. G. Jurgensen JOSEPH J. GASPER Director and President and - ---------------------- Chief Operating Officer Joseph J. Gasper MICHAEL S. HELFER Director and Executive - ---------------------- Vice President-Corporate Michael S. Helfer Strategy DONNA A. JAMES Director and Executive Vice - ---------------------- President-Chief Donna A. James Administrative Officer ROBERT A. OAKLEY Director and Executive Vice - ---------------------- President-Chief Financial Robert A. Oakley Officer ROBERT A. WOODWARD, JR Director and Executive Vice - ---------------------- President-Chief Investment Robert A. Woodward, Jr. Officer Galen R. Barnes Director - ---------------------- Galen R. Barnes By /s/ STEVEN SAVINI ----------------------------- Steven Savini Attorney-in-Fact
EX-1 3 l93663aex1.txt EXHIBIT 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. IN WITNESS WHEREOF, the undersigned have herewith set their names and seals as of this 1st day of April, 2002. - ------------------------------------ ------------------------------------------- W. G. JURGENSEN, Director and Chief JOSEPH J. GASPER, Director and President Executive Officer and Chief Operating Officer - ------------------------------------ ------------------------------------------- MICHAEL S. HELFER, Director and DONNA A. JAMES, Director and Executive Executive Vice President-Corporate Vice President-Chief Administrative Officer Strategy - ------------------------------------ ------------------------------------------- ROBERT A. OAKLEY, Director and ROBERT J. WOODWARD, JR., Director and Executive Vice President-Chief Executive Vice President-Chief Investment Financial Officer Officer - ------------------------------------ GALEN R. BARNES, Director 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 Variable Account-7; - - Nationwide Variable Account-8; - - Nationwide Variable Account-9; - - Nationwide Variable Account-10; - - Nationwide Variable Account-11; - - Nationwide Variable Account-12; - - Nationwide Variable Account-13; - - 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 VLI Separate Account-6; - - 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-----