<PAGE> 1
NATIONWIDE LIFE INSURANCE COMPANY
Home Office
P. O. Box 16766
One Nationwide Plaza
Columbus, Ohio 43216
1-800-545-4730 (TTY: 1-800-848-0833)
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED BY NATIONWIDE DCVA-II OF
NATIONWIDE LIFE INSURANCE COMPANY
The Group Flexible Fund Retirement Contracts (the "Contract" or
"Contracts") described in this prospectus are designed for use in connection
with supplemental deferred compensation plans for employees of tax exempt
entities. Such Plans will generally qualify for favorable tax treatment under
Sections 401, 403(b) or 457 of the Internal Revenue Code ("Code"), but may also
include other nonqualified deferred compensation plans. Contracts will be issued
only to fund deferred compensation plans to employers who are exempt from
taxation. The employees generally are not subject to tax until Distributions are
received from the Plan. Purchase Payments made at any time by or on behalf of
any Participant must be at least $20 per month. Rights and privileges under the
Contracts may be exercised by the Owner to the extent such rights are not
specifically reserved in the Plan for Participants as a group or as individuals.
The Owner may not take any action inconsistent with the rights of the Plan's
Participants. The Participants in such Plans have a contractual claim against
the Owner for the benefits promised by such Plans.
Purchase Payments are allocated to Nationwide DCVA-II (the "Variable
Account"). The Variable Account is a unit investment trust with 41 Sub-Accounts
of unit values, each reflecting investment results of a different management
investment company. Amounts equivalent to the obligations of Nationwide Life
Insurance Company (the "Company") under each Sub-Account will be invested in the
specified management investment company (see "Appendix of Participating
Underlying Mutual Funds").
This prospectus provides you with the basic information you should know
about the Group Flexible Fund Retirement Contracts issued by the Variable
Account before investing. You should read it and keep it for future reference. A
Statement of Additional Information dated May 1, 1997 containing further
information about the Contracts and the Variable Account has been filed with the
Securities and Exchange Commission. You can obtain a copy without charge from
the Company by calling the number listed above, or writing P. O. Box 16766, One
Nationwide Plaza, Columbus, Ohio 43216.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1997, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 27 OF THIS PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
1
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<PAGE> 2
GLOSSARY OF TERMS
ACCUMULATION UNIT- A statistical index measuring the net investment results of
each Sub-Account of the Variable Account. It is the unit of measurement used to
determine Contract Value and each Participant Account Value.
ACTUARIAL RISK FEE- A charge made for mortality and expense risk and
administration of the Variable Account. It is computed on a daily basis at a
maximum annual rate of Up to 1.50% of the average Variable Account value.
BENEFICIARY- The person named in the application to receive certain benefits
under the Contract upon the death of the designated annuitant. The Beneficiary
can be changed by the Owner as set forth in the Contract.
CODE- The Internal Revenue Code of 1986, as amended.
COMPANY- Nationwide Life Insurance Company.
CONTINGENT BENEFICIARY- The person named on the application to be the alternate
Beneficiary if the Beneficiary is not living at the time of the death of the
designated annuitant.
CONTRACT- The group flexible fund retirement contract issued by the Company to
the Owner under which the Company invests Purchase Payments made by the Owner
and assists the Owner in making Retirement Income Payments at specified dates.
CONTRACT ANNIVERSARY- An anniversary of the date of issue of the Contract.
CONTRACT DATE- The date shown as the Contract Date in the Contract.
CONTRACT MAINTENANCE CHARGE- The maximum Contract Maintenance Charge is $15 per
Participant per year to reimburse the Company for certain administrative
expenses relating to the maintenance of individual Participant records and the
mailing of periodic statements to Participants.
CONTRACT VALUE- The sum of the value of all Variable Account Accumulation Units
attributable to the Contract plus any amount held under the Contract in the
General Account.
CONTRACT YEAR- Each period starting with either (1) the Contract Date or (2) a
Contract Anniversary. The Contract Year ends immediately prior to the next
Contract Anniversary.
DISTRIBUTION- Any payment by the Company of part or all of the Contract Value
under the Contract.
DISTRIBUTION PERIOD- The period during which payments are distributed from a
Participant Account.
GENERAL ACCOUNT- This is an account comprised of all assets of the Company other
than those in any segregated asset account.
GROUP FIXED CONTRACT- The Company's Group Fixed Fund Retirement Contract or
Group Fixed Tax Deferred Annuity Contract.
HOME OFFICE-The main office of the Company located in Columbus, Ohio.
INITIAL TRANSFER AMOUNT- The initial amount transferred by the Owner from
another investment vehicle which is the initial Purchase Payment under the
Contract.
OPTIONAL RETIREMENT INCOME FORMS- The method for making annuity payments.
Several forms are available under the Contract.
OWNER- The employer or other entity to which the Contract is issued.
PARTICIPANT- An eligible employee, member, or other person who is entitled to
benefits under the Plan. Such persons are determined and reported to the Company
by the Owner.
PARTICIPANT ACCOUNT- An account established by the Company for each Participant
in which all financial transactions occurring with respect to a Participant,
under this Contract, other than the purchase and payment of an annuity made from
the Company's General Account, are recorded.
PARTICIPANT ACCOUNT YEAR- For each Participant, the Participant Account Year is
each one year period starting with either the Participant Effective Date or a
Participant Anniversary.
2
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<PAGE> 3
PARTICIPANT ANNIVERSARY- An anniversary of the Participant Effective Date.
PARTICIPANT EFFECTIVE DATE- For each Participant, the Participant Effective Date
is the first date Accumulation Units are credited to the Participant's Account
on behalf of such Participant under the Contract.
PLAN- A retirement plan which receives favorable tax treatment under the
provisions of the Code. The Plan document is referred to in the Contract as the
Plan.
PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers among the Sub-Accounts.
RETIREMENT COMMENCEMENT DATE- The date upon which Retirement Income Payments
commence.
RETIREMENT INCOME PAYMENTS- Periodic distributions from a Participant Account
made by the Company to the Owner during the Distribution Period.
RETIRED PARTICIPANT- A Participant for whom payments under an Optional
Retirement Income Form are being made.
SUB-ACCOUNT- A separate and distinct division of the Variable Account, to which
specific Underlying Mutual Fund shares are allocated and for which Accumulation
Units are separately maintained.
UNDERLYING MUTUAL FUND- The registered management investment company, specified
in the Contract application, in which the assets of a Sub-Account of the
Variable Account will be invested.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's Underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
VARIABLE ACCOUNT- Nationwide DCVA-II, a segregated investment account
established by the Company in which amounts equivalent to the Company's
obligations under the Contract are held for all Participants, and for those
Participants during retirement who have annuitized.
3
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<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF TERMS...............................................................................2
SUMMARY OF CONTRACT EXPENSES....................................................................5
UNDERLYING MUTUAL FUND ANNUAL EXPENSES..........................................................6
SYNOPSIS.......................................................................................13
CONDENSED FINANCIAL INFORMATION...............................................................N/A
NATIONWIDE LIFE INSURANCE COMPANY..............................................................14
NATIONWIDE DCVA-II.............................................................................14
Voting Rights.........................................................................14
PERIODIC REPORTS...............................................................................14
VARIABLE ACCOUNT CHARGES AND OTHER DEDUCTIONS..................................................15
Contingent Deferred Sales Charge......................................................15
Contract Maintenance Charge...........................................................15
Mortality Risk Charge, Expense Risk And Administration Charge.........................16
Premium Taxes and Other Expenses......................................................16
Experience Credits....................................................................16
DESCRIPTION OF THE CONTRACTS...................................................................17
A. General..........................................................................17
Purpose of the Contracts.........................................................17
Modification of the Contract.....................................................17
Contract Rights and Privileges and Assignments...................................17
Exchange Privilege...............................................................17
Suspension and Termination.......................................................18
B. Participant Account Values.......................................................18
Application of Purchase Payments.................................................18
Variable Account Accumulation Units..............................................19
Crediting Accumulation Units.....................................................19
Allocation of Purchase Payments..................................................19
Valuation of an Account..........................................................19
C. Redemption of Participant Accounts (Termination).................................20
D. Distribution of Participant Accounts (Retirement Period).........................20
Retirement Income Payments.......................................................20
Election of Income Form and Date.................................................20
Allocation of Retirement Income..................................................21
Fixed Dollar Annuity.............................................................21
Minimum Payment..................................................................21
Death Benefit Before Retirement..................................................21
Optional Retirement Income Forms.................................................21
Death of Retired Participant.....................................................22
Withdrawal.......................................................................22
Frequency of Payment.............................................................22
Determinations of Payouts Under Options A1 and A2................................22
Determinations of Payouts Under Options B1 and B2................................22
Determination of Amount of Variable Monthly Payments for the First Year..........23
Determination of Amount of Variable Monthly Payments for the Second
and Subsequent Years.........................................................23
Alternate Assumed Investment Rate................................................23
GENERAL INFORMATION............................................................................24
Substitution of Securities............................................................24
Performance Advertising...............................................................24
Contract Owner Inquiries..............................................................25
Net Investment Factor.................................................................25
Valuation of Assets...................................................................26
Federal Tax Status....................................................................26
Contracts Issued Under the New York Model Plan........................................26
LEGAL PROCEEDINGS..............................................................................27
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.......................................27
APPENDIX.......................................................................................28
</TABLE>
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<PAGE> 5
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<CAPTION>
<S> <C>
PARTICIPANT TRANSACTION EXPENSES
Maximum Deferred Sales Charge(1) ............................... 9%
----
(as a percentage of Purchase Payments)
CONTRACT MAINTENANCE CHARGE(2) ........................................ $15
----
(per Participant per Participant Anniversary)
MAXIMUM VARIABLE ACCOUNT ANNUAL EXPENSES(3)
(as a percentage of average account value)
Mortality and Expense Risk Fees .............................. 0.50%
----
Administration Charge......................................... 1.00%
----
Total Variable Account Annual Expenses (Actuarial Risk Fee)... 1.50%
----
<FN>
1 Imposed only when it is applicable (see "Contingent Deferred Sales Charge").
2 The Contract Maintenance Charge also will be assessed on the date that amounts
held with respect to a Participant are fully withdrawn from the Contract on a
prorated monthly basis (see "Contract Maintenance Charge").
3 The Administration and Expense Risk portion of the Actuarial Risk Fee is
subject to negotiation (see "Mortality Risk Charge, Expense Risk Charge and
Administration Charge").
</TABLE>
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<PAGE> 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AFTER EXPENSE REIMBURSEMENT)
(As a percentage of Underlying Mutual Fund average net assets)
<TABLE>
<CAPTION>
-------------------------------------------------------
Management Other 12b-1 Total Fund
Fees Expenses Fees Annual
Expenses
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Constellation Fund - Institutional Class 0.61% 0.05% 0.00% 0.66%
- -------------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 0.61% 0.04% 0.00% 0.65%
- -------------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Growth 1.00% 0.00% 0.00% 1.00%
- -------------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Select 1.00% 0.00% 0.00% 1.00%
- -------------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Ultra 1.00% 0.00% 0.00% 1.00%
- -------------------------------------------------------------------------------------------------------------------
Davis New York Venture Fund, Inc. 0.59% 0.14% 0.14% 0.87%
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management - Class A 0.20% 0.00% 0.00% 0.20%
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Third Century Fund, Inc. 0.75% 0.36% 0.00% 1.11%
- -------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 0.98% 0.21% 0.00% 1.19%
- -------------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 0.40% 0.20% 0.00% 0.60%
- -------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities: 2-5 Years - 0.40% 0.14% 0.00% 0.54%
Institutional Shares
- -------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 0.68% 0.27% 0.00% 0.95%
- -------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 0.63% 0.27% 0.00% 0.90%
- -------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.45% 0.23% 0.00% 0.68%
- -------------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 0.51% 0.24% 0.00% 0.75%
- -------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 0.47% 0.21% 0.00% 0.68%
- -------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 0.53% 0.30% 0.00% 0.83%
- -------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 0.46% 0.28% 0.00% 0.74%
- -------------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 0.51% 0.36% 0.25% 1.12%
- -------------------------------------------------------------------------------------------------------------------
Janus Fund 0.65% 0.22% 0.00% 0.87%
- -------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 0.66% 0.22% 0.00% 0.87%
- -------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 0.38% 0.11% 0.00% 0.49%
- -------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 0.31% 0.23% 0.19% 0.73%
- -------------------------------------------------------------------------------------------------------------------
MFS(R) Growth Opportunities Fund - Class A 0.90% 0.36% 0.25% 1.51%
- -------------------------------------------------------------------------------------------------------------------
MFS(R) High Income Fund - Class A 0.45% 0.34% 0.26% 1.05%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 7
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
AFTER EXPENSE REIMBURSEMENT
(CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Fund
Fees Expenses Fees Annual
Expenses
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nationwide(R)Bond Fund 0.50% 0.20% 0.00% 0.70%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 0.50% 0.11% 0.00% 0.61%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 0.50% 0.14% 0.00% 0.64%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 0.45% 0.15% 0.00% 0.60%
- -----------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Guardian Fund, Inc. 0.70% 0.00% 0.12% 0.82%
- -----------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Manhattan Fund, Inc. 0.79% 0.19% 0.00% 0.98%
- -----------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Partners Fund, Inc. 0.74% 0.10% 0.00% 0.84%
- -----------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 0.59% 0.19% 0.25% 1.03%
- -----------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 0.51% 0.27% 0.25% 1.03%
- -----------------------------------------------------------------------------------------------------------------
SEI Index Funds -S&P 500 Index Portfolio 0.19% 0.06% 0.00% 0.25%
- -----------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 0.70% 0.27% 0.23% 1.20%
- -----------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust-Treasury Portfolio -
Institutional Class 0.06% 0.04% 0.00% 0.10%
- -----------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 1.00% 0.12% 0.00% 1.12%
- -----------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 0.68% 0.20% 0.00% 0.88%
- -----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund- Class I 0.61% 0.26% 0.25% 1.12%
- -----------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund, Inc. - Class I 0.75% 0.20% 0.32% 1.27%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The Mutual Fund expenses shown above are assessed at the Underlying
Mutual Fund level and are not direct charges against Variable Account assets
or reductions from Contract Values. These Underlying Mutual Fund expenses are
taken into consideration in computing each Underlying Mutual Fund's net asset
value, which is the share price used to calculate the Variable Account's unit
value. There are no front-end load fees (sales charges) at the Underlying
Mutual Fund level. The following funds are subject to fee waiver or expense
reimbursement arrangements:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FUND EXPENSES WITHOUT
REIMBURSEMENT OR WAIVER
- ------------------------------------------------------------------------------------------------------------
<S> <C>
AIM Constellation Fund - Institutional Class The Fund is currently waiving a portion of its fees.
Had there been no fee waivers during the year,
management fees would have been 0.63% of average net
assets.
- ------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class The Fund is currently waiving a portion of its fees.
Had there been no fee waivers during the year,
management fees would have been 0.63% of average net
assets.
- ------------------------------------------------------------------------------------------------------------
Federated GNMA Trust - Institutional Shares The total operating expenses would have been 0.80%
absent the voluntary waiver of a portion of the
shareholder service fee.
- ------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years The total operating expenses would have been 0.79%
- - Institutional Shares absent the voluntary waiver of a portion of the
shareholder service fee. Fidelity Equity-Income Fund
The Fund has entered into arrangements with its
custodian and transfer agent whereby interest earned
on uninvested cash balances is used to reduce
custodian and transfer agent expenses. Including
these reductions, the total operating expenses
presented in the table would have been 0.68%.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FUND EXPENSES WITHOUT
REIMBURSEMENT OR WAIVER
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Fidelity Growth & Income Portfolio The Fund has entered into arrangements with its
custodian and transfer agent whereby interest earned
on uninvested cash balances is used to reduce
custodian and transfer agent expenses. Including
these reductions, the total operating expenses
presented in the table would have been 0.75%.
- -----------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund The Fund has entered into arrangements with its
custodian and transfer agent whereby interest earned
on uninvested cash balances is used to reduce
custodian and transfer agent expenses. Including
these reductions, the total operating expenses
presented in the table would have been 0.95%.
- -----------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio The Fund has entered into arrangements with its
custodian and transfer agent whereby interest earned
on uninvested cash balances is used to reduce
custodian and transfer agent expenses. Including
these reductions, the total operating expenses
presented in the table would have been 0.83%.
- -----------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund The Fund has entered into arrangements with its
custodian and transfer agent whereby interest earned
on uninvested cash balances is used to reduce
custodian and transfer agent expenses. Including
these reductions, the total operating expenses
presented in the table would have been 0.69%.
- -----------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. The management fee paid by the Fund has been reduced
to an annual rate of 0.45% on daily net assets over
$2 billion, and to an annual rate of 0.40% on daily
net assets over $4 billion. In the absence of the
voluntary expense limitation, the Fund's "Management
Fee" and "Total Fund Operating Expenses" would have
been 0.51% and 0.96% respectively.
- -----------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund The Fund will waive 0.05% of the total 0.50%
management fee until further notice.
- -----------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index Portfolio The Fund's Manager has waived, on a voluntary basis,
a portion of its fee, and the management/advisory
fees shown above reflect said waiver. Absent such
waiver, the management/advisory fees would be .25%.
The Distributor has waived, on a voluntary basis,
all or a portion of its shareholder servicing fee.
Absent such waiver, the shareholder servicing fee
would be .25%. Absent these fee waivers, total
operating expenses would be .56%.
- -----------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - The Fund's Advisor has currently agreed to
Institutional Class voluntarily waive a portion of its advisory fee
and/or assume certain expenses of the Portfolio.
Absent such waiver, total operating fees would have
been 0.14%.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The information relating to the Underlying Mutual Fund expenses was provided by
the Underlying Mutual Fund and was not independently verified by the Company.
8
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<PAGE> 9
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under the Contract assuming a $1000 initial Purchase Payment and a 5% annual
return on assets.
<TABLE>
<CAPTION>
------------------------------------------------
If you surrender your Contract
at the end of the applicable time period
------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Constellation Fund - Institutional Class 113 160 210 348
- -------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 113 160 210 347
- -------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Growth 116 171 228 383
- -------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Select 116 171 228 383
- -------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Ultra 116 171 228 383
- -------------------------------------------------------------------------------------------------------------
Davis New York Venture Fund, Inc. 115 167 221 370
- -------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management - Class A 108 146 186 298
- -------------------------------------------------------------------------------------------------------------
Dreyfus Third Century Fund, Inc. 118 174 234 395
- -------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 118 177 238 403
- -------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 112 158 207 341
- -------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 112 156 204 335
Institutional Shares
- -------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 116 169 226 378
- -------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 115 168 223 373
- -------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 113 161 211 350
- -------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 114 163 215 357
- -------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 113 161 211 350
- -------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 115 166 219 366
- -------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 114 163 215 356
- -------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 118 175 234 396
- -------------------------------------------------------------------------------------------------------------
Janus Fund 115 167 221 370
- -------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 115 168 223 373
- -------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 111 155 201 330
- -------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 114 162 214 355
- -------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 115 167 221 370
- -------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 117 173 231 389
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund 113 161 212 352
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund 112 159 208 343
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 113 160 209 346
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund 106 141 178 281
- -------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Guardian Fund, Inc. 109 148 189 306
- -------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Manhattan Fund, Inc. 110 153 198 323
- -------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Partners Fund, Inc. 109 148 191 308
- -------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 111 155 201 329
- -------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 111 155 201 329
- -------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 106 130 158 241
- -------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 113 160 210 347
- -------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 101 124 150 222
Institutional Class
- -------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 112 157 206 338
- -------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 109 150 193 312
- -------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 112 157 206 338
- -------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund, Inc. - Class I 113 162 213 354
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
9
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<PAGE> 10
EXAMPLE (CONTINUED)
The following chart depicts the dollar amount of expenses that would be incurred
under the Contract assuming a $1000 initial Purchase Payment and a 5% annual
return on assets.
<TABLE>
<CAPTION>
--------------------------------------------------
If you do not surrender your Contract
at the end of the applicable time period
--------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Constellation Fund - Institutional Class 23 70 120 258
- ------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 23 70 120 257
- ------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Growth 26 81 138 293
- ------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Select 26 81 138 293
- ------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Ultra 26 81 138 293
- ------------------------------------------------------------------------------------------------------------
Davis New York Venture Fund, Inc. 25 77 131 280
- ------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management - Class A 18 56 96 208
- ------------------------------------------------------------------------------------------------------------
Dreyfus Third Century Fund, Inc. 28 84 144 305
- ------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 28 87 148 313
- ------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 22 68 117 251
- ------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 22 66 114 245
Institutional Shares
- ------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 26 79 136 288
- ------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 25 78 133 283
- ------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 23 71 121 260
- ------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 24 73 125 267
- ------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 23 71 121 260
- ------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 25 76 129 276
- ------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 24 73 125 266
- ------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 28 85 144 306
- ------------------------------------------------------------------------------------------------------------
Janus Fund 25 77 131 280
- ------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 25 78 133 283
- ------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 21 65 111 240
- ------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 24 72 124 265
- ------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 25 77 131 280
- ------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 27 83 141 299
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund 23 71 122 262
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund 22 69 118 253
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 23 70 119 256
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund 16 51 88 191
- ------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Guardian Fund, Inc. 19 58 99 216
- ------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Manhattan Fund, Inc. 20 63 108 233
- ------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Partners Fund, Inc. 19 58 101 218
- ------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 21 65 111 239
- ------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 21 65 111 239
- ------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 13 40 68 151
- ------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 23 70 120 257
- ------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 11 34 60 132
Institutional Class
- ------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 22 67 116 248
- ------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 19 60 103 222
- ------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 22 67 116 248
- ------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund, Inc. - Class I 23 72 123 264
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
10
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<PAGE> 11
EXAMPLE (CONTINUED)
The following chart depicts the dollar amount of expenses that would be incurred
under the Contract assuming a $1000 initial Purchase Payment and a 5% annual
return on assets.
<TABLE>
<CAPTION>
-------------------------------------------------
If you annuitize your Contract
at the end of the applicable time period
-------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Constellation Fund - Institutional Class 23 70 120 258
- -------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 23 70 120 257
- -------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Growth 26 81 138 293
- -------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Select 26 81 138 293
- -------------------------------------------------------------------------------------------------------------
American Century: Twentieth Century Ultra 26 81 138 293
- -------------------------------------------------------------------------------------------------------------
Davis New York Venture Fund, Inc. 25 77 131 280
- -------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management - Class A 18 56 96 208
- -------------------------------------------------------------------------------------------------------------
Dreyfus Third Century Fund, Inc. 28 84 144 305
- -------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 28 87 148 313
- -------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 22 68 117 251
- -------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 22 66 114 245
Institutional Shares
- -------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 26 79 136 288
- -------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 25 78 133 283
- -------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 23 71 121 260
- -------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund 24 73 125 267
- -------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 23 71 121 260
- -------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 25 76 129 276
- -------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 24 73 125 266
- -------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 28 85 144 306
- -------------------------------------------------------------------------------------------------------------
Janus Fund 25 77 131 280
- -------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 25 78 133 283
- -------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 21 65 111 240
- -------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 24 72 124 265
- -------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 25 77 131 280
- -------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 27 83 141 299
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund 23 71 122 262
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund 22 69 118 253
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 23 70 119 256
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund 16 51 88 191
- -------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Guardian Fund, Inc. 19 58 99 216
- -------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Manhattan Fund, Inc. 20 63 108 233
- -------------------------------------------------------------------------------------------------------------
Neuberger&Berman - Partner's Fund, Inc. 19 58 101 218
- -------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 21 65 111 239
- -------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 21 65 111 239
- -------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 13 40 68 151
- -------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 23 70 120 257
- -------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 11 34 60 132
Institutional Class
- -------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 22 67 116 248
- -------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 19 60 103 222
- -------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 22 67 116 248
- -------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund, Inc. - Class I 23 72 123 264
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
11
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<PAGE> 12
The purpose of the Summary of Contract Expenses and Example is to
assist the Participant in understanding the various costs and expenses that a
Participant will bear directly or indirectly when investing in the Contract. The
Example reflects expenses of the Variable Account as well as the Underlying
Mutual Fund investment options. For a more detailed explanation of these
expenses, see "Charges and Other Deductions." For more and complete information
regarding expenses paid out of the assets of a particular Underlying Mutual
Fund, see the Underlying Mutual Fund's prospectus. In addition to the expenses
shown above, deductions for premium taxes also may be applicable, depending upon
the jurisdiction in which the Contract is sold (see "Premium Taxes").
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<PAGE> 13
SYNOPSIS
The Contracts described in this prospectus are designed for use in
connection with supplemental deferred compensation plans for employees of tax
exempt entities. Such Plans generally will qualify for favorable tax treatment
under Section 401, 403(b), or 457 of the Code, but may also include other
nonqualified deferred compensation plans. Contracts will be issued only to
employers who are exempt from taxation to fund deferred compensation plans. The
employees are generally not subject to federal income tax on amounts deferred
under such plans until Distributions are received from the Plan. Purchase
Payments made at any time by or on behalf of any Participant must be at least
$20 per month.
Purchase Payments under the Contracts are placed in the Variable Account.
The Variable Account is a unit investment trust with 41 Sub-Accounts of unit
values, each reflecting investment results of a different management investment
company. Amounts equivalent to the obligations of the Company under each
Sub-Account will be invested in the specified management investment company (see
"Appendix of Participating Underlying Mutual Funds").
The Company does not deduct a sales charge from Purchase Payments made to
these Contracts. However, if any part of such Contracts is withdrawn, the
Company will, with certain exceptions, deduct from the Contract Value a
Contingent Deferred Sales Charge equal to not more than 9% of the lesser of the
total of all Purchase Payments made prior to the date of the request for
surrender, or the amount surrendered. This charge, when applicable, is imposed
to permit the Company to recover sales expenses which have been advanced by the
Company (see "Contingent Deferred Sales Charge").
A Contract Maintenance Charge may be deducted each year from a Participant
Account (see "Contract Maintenance Charge"). Any applicable premium taxes can be
deducted and will be charged against the Contracts. If any such premium taxes
are payable at the time Purchase Payments are made, the premium tax deduction
will be made from the Contract prior to allocation to any Underlying Mutual Fund
option (see "Premium Taxes".)
A daily deduction is made from the Variable Account in an amount equivalent
to a maximum of 1.50% per year for the Company's contractual promises to accept
the mortality and expense risks and for administration of the Variable Account
(see "Expense Risk Charge, Mortality Risk Charge and Administration Charge"). In
addition, the investment companies whose shares are purchased by the Variable
Account make certain deductions from their assets.
The Contracts provide that the deductions made from Purchase Payments,
Participants' Accounts, the Contingent Deferred Sales Charges, Contract
Maintenance Charges, Expense Risk Charges, Mortality Risk Charges, and
Administration Charges may be decreased by the Company upon notice to the Owner
(see "Modification of the Contract").
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<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws of
the State of Ohio in March, 1929. The Company is a member of the Nationwide
Insurance Enterprise, with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43215. The Company offers a complete line of life insurance, including
annuities and accident and health insurance. It is admitted to do business in
all states, the District of Columbia, the Virgin Islands, and Puerto Rico.
NATIONWIDE DCVA-II
Nationwide DCVA-II (the "Variable Account") was established by the Company
on November 1, 1995, pursuant to the provisions of Ohio law. The Variable
Account is also registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940. Such registration does not involve supervision of the management of the
Variable Account or the Company by the Securities and Exchange Commission.
The net Purchase Payments applied to the Variable Account are invested in
shares of the Underlying Mutual Funds available pursuant to the terms of the
Contract. The Variable Account is divided into 41 Sub-Accounts, each of which
represents a separate Underlying Mutual Fund (see "Participating Underlying
Mutual Funds in the Appendix" for a description of the investment objective of
each Underlying Mutual Fund).
Each Sub-Account in the Variable Account is administered and accounted for
as a part of the separate account, but the income, capital gains or losses of
each Sub-Account are credited to or charged against the assets held for that
Sub-Account in accordance with the terms of each Contract, without regard to
other income, capital gains or losses of any other Sub-Account, or arising out
of any other business the Company may conduct. The assets within each
Sub-Account are not chargeable with liabilities arising out of the business
conducted by any other Sub-Account, nor will the Variable Account as a whole be
chargeable with liabilities arising out of any other business the Company may
conduct.
VOTING RIGHTS
The Variable Account will be owner of record of all Underlying Mutual Fund
shares purchased by the respective account until such Underlying Mutual Fund
shares are sold, but all securities will be held for the benefit of the Owners
of the Contracts. In accordance with its view of present applicable law, the
Company will vote the shares of the Underlying Mutual Funds held in the Variable
Account at regular and special meetings of the shareholders of Underlying Mutual
Funds in accordance with instructions received from the Owners. The Company will
mail to each Owner at its last known address all periodic reports and proxy
material of the applicable Underlying Mutual Fund(s), and a form with which to
give voting instructions. Any Underlying Mutual Fund shares as to which no
timely instructions are received will be voted by the Company in the same
proportion as the instructions received from all persons furnishing timely
instructions. An Owner's voting rights may decrease with the cancellation of
Accumulation Units to make annuity payments.
PERIODIC REPORTS
The Company will, semi-annually, provide to each person covered by a
Contract, a Statement of Assets, Liabilities and Contract Owners' Equity and a
Statement of Operations and Changes in Contract Owners' Equity of the Variable
Account. Each Participant and Retired Participant will also be informed,
periodically, of the number of Accumulation Units credited to his or her account
as well as the total account value.
The current prospectus of the Variable Account will be made available to
Participants through the Owner. In addition, the Owner may, under the terms of
the Plan, have an obligation to furnish additional information to Participants,
such as a notice of any changes in the Plan, or tax status of the Plan and the
financial condition of the Owner as it relates to obligations under the Plan.
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<PAGE> 15
VARIABLE ACCOUNT CHARGES AND OTHER DEDUCTIONS
CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for
these Contracts. However, the Contingent Deferred Sales Charge, when it is
applicable, will be used to cover expenses relating to the sale of the
Contracts, including commissions paid to sales personnel, the costs of
preparation of sales literature and other promotional activity. Gross
commissions paid on the sale of these Contracts vary depending upon the Contract
of the general agent performing the marketing and enrollment function in
connection with a particular Contract.
If part or all of the Contract Value representing Participant Accounts that
have been established under the Contract and held in the Variable Account for
less than 16 years is surrendered, a Contingent Deferred Sales Charge will, when
it is applicable, be made by the Company. This charge will not exceed 9% of the
lesser of: (1) the total of all Purchase Payments received on behalf of the
surrendering Participant or the withdrawing Owner prior to the date of the
request for surrender; or (2) the amount surrendered. The cumulative sum of all
such charges, per Participant, will never exceed 9% (or such lesser percentage,
if applicable) of the total Purchase Payments made on behalf of such Participant
during the period of up to 16 years prior to the date on which the surrender is
requested. When a Contingent Deferred Sales Charge of less than 9% is negotiated
and assessed, the reduced charge will reflect actual variations in expenses,
usually resulting from reduced agent's commissions.
No Contingent Deferred Sales Charge will be imposed on Contract Value that
is paid under:
- any life income payment option;
- Designated Period payment options of 5 or more years for a
Participant who has a minimum of 5 Participant Account Years prior
to the time the benefit payments are to commence;
- a one-sum or periodic payment payable because of a Participant's
death.
CONTRACT MAINTENANCE CHARGE
The Company will assess each Participant Account a maximum of $15 at the
beginning of each Participant Account Year for the preceding Participant Account
year, during both the accumulation and annuity periods, as reimbursement for
certain administrative expenses relating to the maintenance of individual
Participant records and the mailing of periodic statements to Participants. The
Contract Maintenance Charges are designed only to help the Company offset such
administrative expenses, and such charges will not exceed the Company's actual
administration expenses under the Contracts.
The Contract Maintenance Charge is made by canceling a number of
Accumulation Units at the beginning of each Participant Account Year during both
the accumulation and annuity periods, equal in value to the applicable Contract
Maintenance Charge. If a Participant Account includes more than one Sub-Account,
the deduction will be allocated among Sub-Accounts on the basis of relative
values at the time the deduction is made. For those Contracts where the Owner
has so elected, there will be no charge for the transfers among Sub-Accounts.
The Company will assess a Contract Maintenance Charge on the date (other
than a Participant Anniversary) that amounts held in respect of a Participant
are fully withdrawn from the Variable Account. In such case, the amount of the
Contract Maintenance Charge will be 1/12 of the applicable Contract Maintenance
Charge, multiplied by the number of whole or partial calendar months which have
elapsed between the Participant Anniversary (or the Participant Effective Date
during the first Participant Account Year) and the date of full withdrawal.
For those Plans which provide this Contract and certain other investment
options (such as the Company's Group Fixed Fund Retirement Contract), the
Contract Maintenance Charge under this Contract may be reduced so that the total
of the Contract Maintenance Charges and any similar administrative charges
imposed under other investment options available under the Plan shall not exceed
the Contract Maintenance Charge assessed under this Contract. In this event,
such charge will be allocated among Sub-Accounts of the Variable Account and
amounts held in such other investment options available under the Plan on the
basis of the relative values of the Participant's Accounts at the time the
deduction is made. When a Contract Maintenance Charge of less than $15 is
otherwise negotiated and assessed, the reduced charge will reflect actual
variations in administrative expenses incurred by the Company, usually resulting
from an Owner or Plan administrator assuming certain administrative functions
otherwise required to be performed by the Company.
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<PAGE> 16
MORTALITY RISK CHARGE, EXPENSE RISK AND ADMINISTRATION CHARGE
The Contracts contain purchase rates applicable at and after retirement.
These purchase rates may be used to determine the Retirement Income Payments to
be made by the Owner, to Participants, in accordance with the terms of the Plan.
However, the Owners have contracted with the Company to provide Retirement
Income Payments.
Under the terms of the Contracts, the Company assumes the risk that: (i)
the actuarial estimate of mortality rates among Retired Participants may prove
erroneous and amounts set aside for retirement income benefits on the basis of
such estimate may prove inadequate; and (ii) deductions for sales and
Administrative Charges may be insufficient to cover the actual cost of these
items.
For charges of the Variable Account, and for the Company's contractual
promise to accept these risks, the Contracts provide for the daily deduction of
an Actuarial Risk Fee during the accumulation and annuity periods (see "Glossary
of Terms"). This charge is calculated on a percentage of assets and is deducted
on each Valuation Date from amounts held in the Variable Account. On an annual
basis, this charge is equivalent to a maximum of 1.50% of the average Variable
Account value (1.00% for the Administration Charge, 0.10% for the Mortality Risk
Charge, and 0.40% for the Expense Risk Charge). There is no necessary
relationship between the amount of Administrative charge imposed on a given
Contract and the amount of expenses that may be attributable to that Contract.
The Mortality Risk portion of said Actuarial Risk Fee is to compensate
the Company for its guarantee to provide Retirement Income Payments pursuant to
the terms of the Contract, regardless of the duration of the Participant's life,
as well as for the Company's guarantee to provide the death benefit in the event
a Participant should die prior to the Retirement Commencement Date. Because
charges cannot be increased during the duration of the Contract, the purpose of
the Expense Risk portion of the Actuarial Risk Fee is to compensate the Company
in the event such charges are insufficient to cover the actual costs. If the
Actuarial Risk Fee is insufficient to cover the actual cost of the mortality
risk, expense risk, the administration or Contract maintenance, the loss will be
borne by the Company. Conversely, if the Actuarial Risk Fee proves more than
sufficient to cover such expenses, the excess will be a profit to the Company.
The Administration and the Expense Risk portions of the Actuarial Risk
Fee are subject to negotiation and as such, the Actuarial Risk Fee may vary from
one plan to the next reflecting the unique characteristics of different plans
when considered as a whole. In determining the level of such charge, the Company
may consider factors which may reduce expenses of the Plan and which might
include, but are not limited to, the size of the Plan, the number of eligible
employees, the number of Plan Participants, demographics of Plan Participants,
general economic conditions, and any other factors which the Company deems
relevant. This Contract design allows the Company maximum flexibility, within
the limitations imposed by law, to "custom design" a charge structure for an
Owner.
PREMIUM TAXES AND OTHER EXPENSES
The Company may charge against Purchase Payments or the Contract Value the
amount of any premium taxes levied by a state or any other governmental entity
upon annuity considerations received by the Company. Premium tax rates currently
in effect in certain states range from 0% to 3.5%. This range is subject to
change. The Company is currently not deducting such taxes but reserves the right
to do so when such taxes are incurred. The method used to recoup premium tax
expenses will be determined by the Company at its sole discretion and in
compliance with applicable state law. The Company currently deducts such charges
from a Contract Owner's Contract Value either: (1) at the time the Contract is
surrendered, (2) at Annuitization, or (3) at such earlier date as the Company
may become subject to such taxes.
There are deductions and expenses paid out of the assets of the Underlying
Mutual Funds (see "Underlying Mutual Fund Annual Expenses") that are more fully
described in the Prospectus for the Underlying Mutual Funds.
EXPERIENCE CREDITS
The Contracts described herein may be participating or non-participating,
except for Contracts issued in New York which are non-participating. A
participating Contract provides the right to participate in the distribution of
surplus of the Company. In the event that Contract Maintenance Charges and
Actuarial Risk Fees collected under this Contract accrue to the Company in
excess of an amount deemed necessary at the sole discretion of the Company's
Board of Directors, such excess may be allocated to the Contract by purchasing
additional Accumulation Units and crediting such additional units of the
Participant Accounts. There have not been any
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<PAGE> 17
Experience Credits to date. The Company cannot offer any assurance that there
will be Experience Credits in the future.
DESCRIPTION OF THE CONTRACTS
A. GENERAL
PURPOSE OF THE CONTRACTS
The Contracts described in this prospectus are Group Flexible Fund
Retirement Contracts designed to fund certain deferred compensation plans
generally established under either Section 401, 403(b) or 457, of the Code
(although they may include certain other nonqualified deferred compensation
plans) for employees of states and their political subdivisions thereof and
certain other organizations exempt from taxation.
For Section 457 Plans established for the benefit of any organization
that is exempt from the federal income tax, other than a governmental unit,
all amounts of compensation deferred under the Plan, all property and
rights purchased with such amounts, and all income attributable to such
amounts, property, or rights, remain (until made available to a Participant
or other Beneficiary) solely the property and the rights of the Owner
(without being restricted to the provision of benefits under the plan),
subject only to the claims of the Owner's general creditors.
For Section 457 Plans established by a state, a political subdivision
of a state, or any agency or instrumentality of a state or political
subdivision of a state after August 20, 1996, the assets and income of the
Plan must be held in trust for the exclusive benefit of the Participants
and the Beneficiaries of the Plan. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. Section 457 Plans that
were in existence on August 20, 1996 may be amended to satisfy the trust
and exclusive benefit requirements any time prior to January 1, 1999, and
must be amended not later than that date to continue to receive favorable
tax treatment. Until the effective date of such amendment, such Plans may
continue to qualify for favorable tax treatment by satisfying the
requirements set forth above for other tax exempt organizations.
A single group Contract is issued to the Owner, covering all present
and future participating employees. The Company will issue a certificate to
the Owner for delivery to each Retired Participant or other person for whom
an Optional Retirement Income Form is purchased, setting forth in substance
the benefits to which such person is entitled. In addition, if any
applicable law requires, the Company will issue a descriptive Certificate
to the Owner for delivery to any such person required by law to receive
such Certificate, setting forth in substance the benefits to which such
person is entitled. For purposes of determining benefits payable under the
Plan, an individual accumulation account is established for each
Participant. The frequency of Purchase Payments is normally monthly but can
be adjusted to fit the payroll practices of the Owner. Purchase Payments
made at any time by or on behalf of any Participant must be at least $20
per month.
The basic objectives of the Contracts are to provide each Participant
with an initial Retirement Income Payment, which will tend to reflect the
changes which have occurred in the cost of living during pre-retirement
years (without the necessity of increased Purchase Payments to keep pace
with any increase in the cost of living which might occur during those
years), and to provide subsequent Retirement Income Payments which will
tend to vary with the cost of living changes during his retired lifetime.
The Company seeks to accomplish these objectives by applying purchase rates
contained in the Contract to the amounts accumulated through investment in
Underlying Mutual Funds. Notwithstanding the foregoing, there is no
assurance that these objectives will be attained. Historically, the value
of a diversified portfolio of common stocks held for an extended period of
time has tended to rise during periods of inflation. There has, however,
been no exact correlation, and for some periods, the prices of securities
have declined while the cost of living was rising.
MODIFICATION OF THE CONTRACT
Contract provisions with respect to the deductions made from Purchase
Payments, Participant Accounts, Contingent Deferred Sales Charges, if
applicable, Contract Maintenance Charges and Actuarial Risk Fees may be
decreased upon notice to the Owner.
The Company may modify the Contract at any time without consent of the
Owner or Participants, if such modification is considered necessary to
obtain the benefit of federal or state statutes or regulations or to
maintain qualification of the Plan.
CONTRACT RIGHTS AND PRIVILEGES AND ASSIGNMENTS
The Contract belongs to the Owner, provided however that under Code
Section 457 Plans, the Owner must hold the Contract for the exclusive
benefit of the Plan's Participants and Beneficiaries. All contractual
rights and privileges may be exercised by the Owner, subject to any rights
specifically reserved in the Plan for Participants as a group or as
individuals. With respect to 457 Plans, the Owner may not take any action
inconsistent with the rights of such 457 Plan's Participants. The Contract
may not be assigned.
EXCHANGE PRIVILEGE
The Company will permit the Owner or the Participant, if the Plan so
provides, to exchange amounts among the Sub-Accounts as frequently as
permitted by the Plan, subject to the limits and rules set by each
Underlying Mutual Fund. For those Contracts where the Owner has elected an
exchange privilege, there will be no charge for exchanges among the
Sub-Accounts.
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<PAGE> 18
The Company will also permit the Participant to utilize the Telephone
Exchange Privilege, for exchanging amounts among Sub-Accounts, if forms are
executed by the Owner and Participant agreeing with certain restrictions
applicable to such privilege. Telephone exchange requests must be received
by the Company prior to the close of the New York Stock Exchange in order
to receive that day's closing Sub-Account price. A telephone exchange
request may not be revoked once instructions have been recorded and
accepted. The Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may
include any or all of the following, or such other procedures as the
Company may, from time to time, deem reasonable: requesting identifying
information, such as name, contract number, Social Security Number, and/or
personal identification number; tape recording all telephone transactions;
and providing written confirmation thereof to the Owner or Participant and
any agent of record, at the last address of record. Failure to follow
reasonable procedures may result in the Company's liability for any losses
due to unauthorized or fraudulent telephone transfers. However, any losses
incurred pursuant to actions taken by the Company in reliance on telephone
instructions reasonably believed to be genuine shall be borne by the
Participant. If the Participant is unable to execute an exchange request by
telephone (for example, during times of unusual market activity), the
Participant might consider placing the exchange order by mail. The Company
may determine to withdraw the Telephone Exchange Privilege, upon 30 days
written notice to Owners and Participants.
On the date the Company receives an exchange request in good order,
which includes all of the information necessary for processing the request,
the Company will transfer the amount to be converted. Such transfers will
be based on the Accumulation Unit Values of the affected Sub-Accounts if
received at the Company's Home Office prior to the close of the New York
Stock Exchange on a day on which the New York Stock Exchange is open for
business. If the exchange request is received after the close of the New
York Stock Exchange on any day, or on a day the New York Stock Exchange is
closed for business, the transfer will be based on the next business day on
which the New York Stock Exchange is open.
For those Plans which provide this Contract and the Company's Group
Fixed Fund Retirement Contract, the Owner, or the Participant if the Plan
so provides, may exchange Accumulation Units between any Sub-Account of the
Variable Account and the Group Fixed Fund Retirement Contract. Exchanges
from the deposit fund to any Sub-Account of the Variable Account will be
subject to the limitations of the Group Fixed Fund Retirement Contract.
Exchanges will be effected when received in good order by the Company at
its Home Office.
SUSPENSION AND TERMINATION
The Contract may be suspended at the option of the Company on written
notice to the Owner if: (a) the Owner has failed to remit to the Company
any Purchase Payment specified in the Plan; or (b) if the Company does not
accept an amendment to the Plan, filed with the Company by the Owner, which
in the Company's opinion would adversely affect its administrative
procedures or financial experience, or both, with respect to the Contract.
The Owner may suspend the Contract upon 90 days written notice to the
Company. Suspension of the Contract will become effective as of the
ninety-first (91st) day following receipt of written notice by the Company.
Suspension of the Contract shall mean that no further Purchase Payments
will be accepted by the Company except by mutual consent, and all other
terms of the Contract shall continue to apply. After suspension of the
Contract has become effective, the Owner may, upon 30 days written notice,
terminate the Contract. Upon termination of the Contract, the Company will
pay to the Owner the value of the Contract, subject to applicable charges,
in accordance with the terms of the Contract (see "Redemption of
Participant Accounts"). Upon such termination by the Owner, payment of
Contract Values will be subject to any applicable Contingent Deferred Sales
Charge.
B. PARTICIPANT ACCOUNT VALUES
APPLICATION OF PURCHASE PAYMENTS
The Company shall receive Purchase Payments from the Owner in
accordance with the requirements of the Plan. Net Purchase Payments
received on behalf of Participants will be applied by the Company to
purchase Accumulation Units of Sub-Accounts in the Variable Account in
accordance with the instructions of the Owner. Purchase Payments made at
any time by or on behalf of each Participant must be at least $20 per
month. Purchase Payments must be no less than monthly, unless agreed to by
the Company.
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<PAGE> 19
An initial Purchase Payment will be priced not later than 2 business
days after receipt of an order to purchase, if the application of the
Participant and all information necessary for processing the purchase order
are complete upon receipt by the Company. The Company may retain the
Purchase Payment for up to 5 business days while attempting to complete an
incomplete application. If the application cannot be made complete within 5
business days, the Owner will be informed of the reasons for the delay and
the Purchase Payment will be returned immediately unless the Owner consents
to the Company retaining the Purchase Payment until the application of the
Participant is made complete. Upon completion of such incomplete
application, the Purchase Payment will be priced within 2 business days.
Purchase Payments will not be priced on days when the New York Stock
Exchange is not open for business.
Under specific conditions, when authorized by state insurance law, the
Company may credit up to 8% of the Initial Transfer Amount into this
Contract. This credit will reimburse for any exit penalty associated with
the other investment vehicle provider. The Company will recover said credit
by reducing servicing agent or broker compensation and through increased
Administration Charges.
VARIABLE ACCOUNT ACCUMULATION UNIT VALUE
The value of an Accumulation Unit for each Sub-Account was established
at $1.00 as of the date Underlying Mutual Fund shares were available for
purchase for that Sub-Account. The value of Accumulation Units for any
Sub-Account for any subsequent business day is determined by multiplying
the value for the preceding business day by the Net Investment Factor for
that Sub-Account for the period since that day (See the section entitled
"Net Investment Factor"). A business day is any day on which the New York
Stock Exchange is open for trading or any other day during which there is a
sufficient degree of trading of the Underlying Mutual Fund shares that the
current net asset value of their Accumulation Units might be materially
affected. Accumulation Units are calculated on a daily basis.
CREDITING ACCUMULATION UNITS
When a Purchase Payment is received by the Company, the net Purchase
Payment for each Sub-Account is applied separately to provide Accumulation
Units (calculated daily) which are credited to a Participant Account in
accordance with the instructions of the Owner. The number of Accumulation
Units credited to each Participant Account for each Sub-Account is
determined by dividing the net Purchase Payment allocated to that
Sub-Account for that Participant by the value of the Accumulation Unit for
that Sub-Account next computed following receipt of the Purchase Payment by
the Company. The net Purchase Payment for each Participant is the total
Purchase Payment for that Participant less any taxes then payable.
ALLOCATION OF PURCHASE PAYMENTS
The Owner or Participant must specify the proportion of the Purchase
Payments to be applied to provide benefits under any Sub-Account of the
Variable Account. The Company will permit the Owner, or the Participant if
the Plan so permits, to change the allocation percentages among
Sub-Accounts for subsequent Purchase Payments, provided that no change may
be made which would result in an amount less than 1% of the payment being
allocated to any Sub-Account for any Participant. The Company will permit
such allocation changes as frequently as permitted by the Plan. A change in
allocation percentages will not affect Accumulation Units of any
Sub-Account resulting from Purchase Payments made before the change.
VALUATION OF AN ACCOUNT
The sum of the value of all Accumulation Units credited to the
Participant Account in respect of the Participant is the Participant
Account Value. Purchase Payments are allocated among the Sub-Accounts of
the Variable Account in accordance with the instructions of the Owner.
The value of a Participant's Account on any day can be determined by
multiplying the total number of Accumulation Units credited to the account
for each Sub-Account by the current Accumulation Unit Value for that
Sub-Account in respect of the Participant. Each Participant (or the Owner)
will be advised periodically of the number of Accumulation Units credited
to his or her account for each Sub-Account, the current Accumulation Unit
Values, and the total value of his or her account. Such reports to
Participants are for informational purposes only and should not be
interpreted to mean that a Participant has any rights with respect to his
or her account beyond that provided by the Owner in accordance with the
terms of the Plan.
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The Participant and Owner should review the information in these
reports carefully. All errors or corrections must be reported to the
Company immediately to assure proper crediting to the Contract and
appropriate Sub-Account. The Company will assume all transactions are
accurate unless the Participant or the Owner notifies the Company otherwise
within 30 days after receipt of the report.
The principal underwriter and distributor of the Contracts is
Nationwide Investment Services Corporation ("NISC"), One Nationwide Plaza,
Columbus, Ohio 43215.
C. REDEMPTION OF PARTICIPANT ACCOUNTS
The Owner's right to redeem Participant Accounts, either fully or
partially, will be governed by the terms of the Plan which the Contract is
issued to fund. It should be recognized that the value of the investment on
redemption can be more or less than its cost. All such payments will be
made by the Company to the Owner, after the assessment of any applicable
Contingent Deferred Sales Charge. It is the Owner's obligation to
distribute such payments to a Participant. The Company may undertake the
obligation on behalf of the Owner to distribute such payments, less the
Contingent Deferred Sales Charge, if any, directly to a Participant by
agreement with the Owner. To the extent permitted by the Plan, a
Participant Account may be redeemed fully or partially at any time prior to
the date Retirement Income Payments commence for the Participant under
either Option B1 or B2, subject to the Contingent Deferred Sales Charge. No
partial redemption will directly affect future requirements to make
Purchase Payments. If the Contract is terminated by the Owner, all
Participant Accounts in the Variable Account will be redeemed to the extent
permitted by the Plan.
A request for a partial redemption of a Participant Account containing
more than one Sub-Account of Accumulation Units must specify the allocation
of the partial redemption among the Sub-Accounts of Accumulation Units.
However, if no such direction is contained in the request for a redemption,
the Company may pro-rate the redemption among the applicable Sub-Accounts
of Accumulation Units. Upon receipt at the Company's home office of a
written request for a full or partial redemption of a Participant Account,
the Company will determine the value of the number of Accumulation Units
redeemed, less any applicable Contingent Deferred Sales Charge, at the
Accumulation Unit Value next computed following receipt of such written
request by the Company. Payment of any such amount will be made to the
Owner within 7 days of the date the request is received by the Company.
Payment of redemption values may be suspended when redemption of the
Underlying Mutual Fund shares is suspended (i) during any period in which
the New York Stock Exchange is closed, or (ii) in the event that the
Securities and Exchange Commission may by order direct for the protection
of Owners or Participants. Instead of a lump sum Distribution of a full or
partial redemption, the Owner, or Participant if permitted by the Plan, may
elect to have that amount paid out in installments under Option A1 or A2,
subject to the minimums applicable to these options.
D. DISTRIBUTION OF PARTICIPANT ACCOUNTS (RETIREMENT PERIOD)
RETIREMENT INCOME PAYMENTS
The period during which a Participant Account is paid out in periodic
installments is known as the Distribution Period. Because periodic
Distributions will normally be made after the Participant retires, the
Distribution Period is also called the retirement period. All such periodic
Distributions will be made by the Company to the Owner. It is the Owner's
obligation to pay such amounts to a Participant. The Company may undertake
the obligation on behalf of the Owner to pay such amounts directly to a
Participant by agreement with the Owner. Retirement Income Payments under
Options B1 and B2 are determined on the basis of: (i) the mortality tables
specified in the Contract; (ii) the adjusted age of the Retired
Participants; (iii) the type of Retirement Income Payment option(s)
selected; and (iv) in the case of variable payments, the investment
performance of the specific Sub-Accounts elected. While the Company may be
obligated to make variable Retirement Income Payments under the Contract,
the amount of each such payment is not guaranteed. The dollar amount of
variable payments will reflect investment gains and losses, and investment
income of the Sub-Accounts on which they are based, but they will not be
affected by adverse mortality experience or by an increase in the Company's
expenses above the amount provided for in the Contracts. Retirement Income
Payments may be reduced or accumulation units cancelled in order to provide
premium taxes assessed.
ELECTION OF INCOME FORM AND DATE
The Contracts provide for Retirement Income Payments to begin on the
date and under the retirement options elected in accordance with the Plan.
At least one month prior to a Participant's Retirement Commencement Date
(see "Glossary of Terms"), the Contract Owner may by written election to
the
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Company at its home office, elect any one of the retirement income
options described in the "Optional Retirement Income Forms" section. The
Plan may restrict changes in election of retirement income options.
ALLOCATION OF RETIREMENT INCOME
At retirement, Accumulation Units in a Participant's Account may be
used to purchase a Fixed Dollar Annuity for the Participant. For
Participants electing Options A1 or A2 as described in the "Optional
Retirement Income Forms" section, Accumulation Units in a Participant's
Account of any Sub-Account in the Variable Account will be used to provide
variable Retirement Income Payments as described further in this
prospectus.
FIXED DOLLAR ANNUITY
A Fixed Dollar Annuity is an annuity with payments which are guaranteed
as to dollar amount during the retirement period. The first fixed dollar
payment will be determined by applying the General Account Contract Value
to the applicable Annuity Table in accordance with the Optional Retirement
Income Form elected. This will be done at the retirement date. Fixed Dollar
Annuity payments after the first will not be less than the First Fixed
Dollar Annuity payment. The availability of Fixed Dollar Annuity Contracts
under a particular Plan is subject to the election of the Owner.
MINIMUM PAYMENT
If the present value of the Participant's accrued benefit at the time
of retirement is less than $3,500, the Company shall have the right to make
a lump sum Distribution to such Retired Participant.
DEATH BENEFIT BEFORE RETIREMENT
In the event a Participant dies before his or her retirement income
commences, a death benefit equal to the value of such Participant Account
will be paid as provided by the Plan upon: 1) the Company's receipt of
verification and proof of death; and 2) the Company's verification of
beneficiary designations. If the Plan so provides, a Beneficiary may elect
either to receive the value in a lump sum or to apply it under any of the
Optional Retirement Income Forms contained in this Contract, (subject to
the minimums applicable to such optional forms). Monthly payments due under
such options may be fixed, variable, or a combination of fixed and
variable.
OPTIONAL RETIREMENT INCOME FORMS
The availability of the following Optional Retirement Income Forms is
subject to the election of the Owner.
OPTION A1-Payments for a Designated Period. Payments will be
made monthly for any specified number of years not to exceed
30. The amount of each variable payment will be determined by
multiplying (a) by (b) where (a) is the Accumulation Unit
Value for the date the payment is made and (b) is the number
of Accumulation Units applied under this option, divided by
the number of payments selected. Exchanges between the
investment options are permitted subject to limitations
outlined in the Company's Group Fixed Fund Retirement
Contract. A period certain payment period of less than 5 years
for a Participant who has less than a minimum of 5 Participant
Account Years would result in imposition of the applicable
Contingent Deferred Sales Charge.
OPTION A2-Payments of a Designated Amount. Payments will be
made monthly in equal installments until the amount applied,
adjusted each Valuation Date for investment results, is
exhausted. The final installment will be the sum remaining
with the Company. Payments under this option which result in a
payment period of less than 5 years for a Participant who has
less than 5 Participant Account Years would result in
imposition of the applicable Contingent Deferred Sales Charge.
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OPTION B1-Life Income with Payment Certain. Payments will be
made monthly during the lifetime of a Participant. A period
certain of 60, 120, 180, 240, 300 or 360 months may be chosen.
If the Participant dies prior to the end of such period
certain, payments will continue to the designated Beneficiary
for the remainder of the selected period certain.
OPTION B2-Joint and Survivor Life Income. Payments will be
made monthly during the joint lifetime of a Participant and a
designated Beneficiary. Upon the Participant's death, periodic
payments will be made in percentages of 50%, 66 2/3%, 75% or
100% (as elected by the Participant) of the periodic payments
payable to the Participant, and will be continued to the
designated Beneficiary, if living. Payments will continue to
be made as long as either is living. Payments will stop with
the last payment made prior to the death of the designated
Beneficiary. In the event that any payments are made
thereafter, such payments must be reimbursed to Nationwide. If
the designated Beneficiary predeceases the Participant, the
payments will continue at 100% to the Participant. These
payments will stop with the last payment made prior to the
death of the Participant. In the event that any payments are
made thereafter, such payments must be reimbursed to the
Company.
OTHER FORMS AND BENEFIT PAYMENTS- With the consent of the
Company, the amount due on Distribution may be applied on any
other mutually agreeable basis.
Exchanges processed while Participants are receiving payments under
Option A1 may change the number of Accumulation Units remaining. In this
event, the payment amount must be recalculated.
DEATH OF RETIRED PARTICIPANT
If any Retired Participant dies while receiving payments, any death
benefit payable will be determined in accordance with the retirement income
form elected. Calculation of the present value of any remaining payments
certain for purposes of making a lump sum payment will be based on the same
assumed investment rate used by the Company in determining the payments
certain prior to the death of the Retired Participant.
WITHDRAWAL
If permitted by the Plan, any amount remaining under Option A1 or A2
may be withdrawn, or if that amount is at least $5,000, it may be applied
under either Option B1 or B2, subject to the minimum payment requirements
described previously. Unless prohibited by the Plan, a Beneficiary
receiving payments certain under Option B1 after the death of a Retired
Participant may elect at any time to receive the present value at the
current dollar amount of the remaining number of payments certain in a
single payment, calculated on the basis of the assumed investment rate used
in computing the amount of the previous payments.
FREQUENCY OF PAYMENT
At the election of the Retired Participant, and with the consent of the
Owner, payments made under any option may be made annually, semi-annually,
or quarterly rather than monthly. Any change in frequency of payments must
be on the anniversary of the commencement of Retirement Income Payments.
DETERMINATION OF PAYMENTS UNDER OPTIONS A1 AND A2
Monthly payments under Options A1 and A2 will be determined in the
manner set forth in the description of the options. As each payment is made
under either of these options, a number of Accumulation Units equal in
value to the payment will be canceled.
DETERMINATION OF PAYMENTS UNDER OPTIONS B1 AND B2
Variable monthly payments under Options B1 and B2 will be determined
annually and will remain level throughout the year. Each year, as of the
anniversary of the commencement of Retirement Income Payments, a new
variable monthly payment will be determined and that new payment will
remain level for
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that year. An adjusted age is used to determine the amount of monthly
payment for each year. Such adjusted age may not be the same as the actual
age of the Retired Participant.
DETERMINATION OF AMOUNT OF VARIABLE MONTHLY PAYMENTS FOR THE FIRST YEAR
In determining the amount of Retirement Income Payments under Options
B1 and B2, the value held on behalf of a Participant is determined by
multiplying the number of Accumulation Units in each Sub-Account for that
account by the Accumulation Unit value for that Sub-Account on the last
business day of the second calendar week immediately preceding the date on
which the first payment is due.
The first year variable monthly payment for each Sub-Account is
determined by dividing the value of the Accumulation Units of that
Sub-Account in the Participant Account by the amount required to provide $1
per month (the purchase rate).
Once the first year's variable monthly payment amount has been
determined for a Participant, the Company will deduct the annual premium
from the Participant Account. This deduction is made by canceling a number
of Accumulation Units in the Participant Account equal in value to the
annual premium. The allocation of the annual premium between Sub-Accounts
will be in such relationship as the monthly payments from each Sub-Accounts
have to each other.
The annual premium is calculated so that if there are no partial
redemption's (and therefore no Underlying Mutual Fund dividends have been
taken in cash) the payee will receive level annual payments if the net
investment factor, on an annual basis, is equal to the Assumed Investment
Rate plus an amount equal to the annual Contract Maintenance Charge.
Payments for subsequent years will be smaller than, equal to or greater
than the payments received during the initial year, depending on whether
the actual net investment result on an annual basis of a Sub-Account is
smaller than, equal to or greater than the Assumed Investment Rate.
DETERMINATION OF AMOUNT OF VARIABLE MONTHLY PAYMENTS FOR THE SECOND AND
SUBSEQUENT YEARS
As of the first anniversary of the commencement of Retirement Income
Payments, the second year variable monthly payments will be determined in
exactly the same manner as for the first year, using the purchase rates in
the Contract for the Retired Participant's age as then determined under the
terms of the Contract. As in the first year, an annual premium will be
deducted and transferred to the General Account from which Account the
Company will make the Retirement Income Payments. Subsequent annual
determinations will be made in the same manner.
Upon the death of any Retired Participant, the Participant Account will
be reduced by the number of Accumulation Units not required to provide
further payments during the remainder of a period certain, if any, or to a
contingent Retired Participant. Any Accumulation Units so canceled will
either remain in the Variable Account or be transferred to the Company's
General Account, depending on the Company's obligation.
ALTERNATE ASSUMED INVESTMENT RATE
The Contracts include purchase rates based on a 3.5% rate per annum. If
not prohibited by the laws and regulations of the states in which this
Contract is issued, an Owner may elect on the Contract Date to have all
variable benefits payable for all Participants determined on an Assumed
Investment Rate of 5% per annum. The Assumed Investment Rate basis in the
Contract is used merely to determine each year's monthly payment from
investment experience of any of the Sub-Accounts. The choice of the Assumed
Investment Rate affects the pattern of Retirement Income Payments. A higher
Assumed Investment Rate will produce a higher initial payment, but a more
slowly rising Sub-Account of subsequent payments (or a more rapidly falling
Sub-Account of subsequent payments) than a lower Assumed Investment Rate.
Although a higher initial payment would be received under a higher Assumed
Investment Rate, there is a point in time after which payments under a
lower Assumed Investment Rate would be greater, assuming payment continues
after that point in time.
The objective of a variable retirement contract is to provide level
payments during periods when the economy is relatively stable and to
reflect as increased payments only the excess of investment results
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flowing from inflation or an increase in productivity. The achievement of
this objective will depend in part upon the validity of the assumption that
the net investment result, on an annual basis, of a Sub-Account equals the
Assumed Investment Rate during periods of stable prices.
GENERAL INFORMATION
SUBSTITUTION OF SECURITIES
If the shares of any Underlying Mutual Fund should no longer be
available for investment by the Variable Account or, if in the judgment of
the Company's management, further investment in such Underlying Mutual Fund
shares should become inappropriate in view of the purposes of the Contract,
the Company may substitute shares of another Underlying Mutual Fund for
Underlying Mutual Fund shares already purchased or to be purchased in the
future by Purchase Payments under the Contract. No substitution of
securities in any Sub-Accounts may take place without prior approval of the
Securities and Exchange Commission, and under such requirements as it may
impose.
PERFORMANCE ADVERTISING
The Company may from time to time advertise several types of historical
performance for the Sub-Accounts of the Variable Account. A "yield" and
"effective yield" may be advertised for the Nationwide Money Market Fund
Sub-Account, the Dreyfus Cash Management - Class A Fund Sub-Account and the
Nationwide Separate Account Trust Money Market Fund Sub-Account. "Yield" is
a measure of the net dividend and interest income earned over a specific
seven-day period (which period will be stated in the advertisement)
expressed as a percentage of the offering price of the Sub-Account units.
Yield is an annualized figure, which means that it is assumed that the
Sub-Account generates the same level of net income each week over a 52-week
period. The "effective yield" is calculated similarly but includes the
effect of assumed compounding calculated under rules prescribed by the
Securities and Exchange Commission. The effective yield will be slightly
higher than yield due to this compounding effect.
The Company may also advertise for the Sub-Account's standardized
"average annual total return", calculated in a manner prescribed by the
Securities and Exchange Commission, and non-standardized "total return."
"Average annual total return" will show the percentage rate of return of a
hypothetical initial investment of $1,000 for rolling calendar quarters and
will cover, at least, the most recent one, five and ten year periods, or
for a period from inception to date if the Underlying Mutual Fund held in
the Sub-Account has not been in existence for one of the prescribed
periods. This calculation reflects the deduction of all applicable charges
made to the Contracts except for premium taxes, which may be imposed by
certain states. Non-standardized "total return" will be calculated in a
similar manner as will average annual total return except total return will
not reflect the deduction of any applicable Contract Maintenance Charge or
Contingent Deferred Sales Charge, which, if reflected, would decrease the
level of performance shown.
The Company may also from time to time advertise the performance of the
Sub-Accounts of the Variable Account relative to the performance of other
variable annuity sub-accounts or mutual funds with similar or different
objectives, or the investment industry as a whole.
The Sub-Accounts of the Variable Account may also be compared to
certain market indexes, which may include, but are not limited to: S&P 500;
Shearson/Lehman Intermediate Government/Corporate Bond Index;
Shearson/Lehman Long-Term Government/Corporate Bond Index; Donoghue Money
Fund Average; U.S. Treasury Note Index; and Dow Jones Industrial Average.
Normally these rankings and ratings are published by independent
tracking services and publications of general interest including, but not
limited to: Lipper Analytical Services, Inc., CDA/Wiesenberger,
Morningstar, Donoghue's, magazines such as MONEY, FORBES, KIPLINGER'S
PERSONAL FINANCE MAGAZINE, FINANCIAL WORLD, CONSUMER REPORTS, BUSINESS
WEEK, TIME, NEWSWEEK, U.S. NEWS AND WORLD REPORT, NATIONAL UNDERWRITER;
rating services such as LIMRA, Value, Best's Agent Guide, Western Annuity
Guide,
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Comparative Annuity Reports; and other publications such as the WALL
STREET JOURNAL, BARRON'S, INVESTOR'S DAILY, and Standard & Poor's OUTLOOK.
In addition, Variable Annuity Research & Data Service (The VARDS Report) is
an independent rating service that ranks over 500 variable annuity funds
based upon total return performance. These rating services and publications
rank the performance of the Underlying Mutual Funds against all mutual
funds over specified periods and against mutual funds in specified
categories. The rankings may or may not include the effects of sales or
other charges.
The Company is also ranked and rated by independent financial rating
services, among which are 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 the Company. The ratings are not intended to
reflect the investment experience or financial strength of the Variable
Account. The Company may advertise these ratings from time to time. In
addition, the Company may include in certain advertisements, endorsements
in the form of a list of organizations, individuals or other parties which
recommend the Company or the Contract. Furthermore, the Company 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.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE
COMPANY IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR
GUARANTEE FUTURE RESULTS. THE OWNER'S OR PARTICIPANT'S ACCOUNT VALUE AT
REDEMPTION MAY BE MORE OR LESS THAN ORIGINAL COST.
The Statement of Additional Information contains more detailed
information about the performance calculations, including actual examples
for each type of performance advertised.
CONTRACT OWNER INQUIRIES
Owner and Participant inquiries may be directed to Nationwide Life
Insurance Company by writing P.O. Box 16766, One Nationwide Plaza,
Columbus, Ohio 43216, or calling 1-800-545-4730 (TTY: 1-800-848-0833).
NET INVESTMENT FACTOR
The Net Investment Factor for any Valuation Period is determined by
dividing (a) by (b) and subtracting (c) from the result where:
(a) is the net of:
(1) the net asset value per share of the Underlying Mutual Fund held
in the Sub-Account determined at the end of the current Valuation
Period, plus
(2) the per share amount of any dividend or capital gain distributions
made by the Underlying Mutual Fund held in the Sub-Account if the
"ex-dividend" date occurs during the current Valuation Period,
plus or minus
(3) a per share charge or credit for any taxes reserved for, which is
determined by the Company to have resulted from the investment
operations of the Sub-Account.
(b) is the net of:
(1) the net asset value per share of the Underlying Mutual Fund held
in the Sub-Account determined as of the end of the immediately
preceding Valuation Period, plus or minus
(2) the per share charge or credit, if any, for any taxes reserved for
in the immediately preceding Valuation Period.
(c)is a factor representing the daily actuarial Risk Fee deducted from the
Variable Account. Such factor cannot exceed a maximum annual rate of
1.50% of average Variable Account value.
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For Underlying Mutual Funds that credit dividends on a daily basis and
pay such dividends once each month or quarter, (such as money market funds
and certain bond funds), the Net Investment Factor allows for the monthly
or quarterly reinvestment of said daily dividends.
The Net Investment Factor may be greater or less than one; therefore,
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 Actuarial Risk Fee and the effect
of the various purchase and sale transactions on any particular day.
VALUATION OF ASSETS
Underlying Mutual Fund shares in the Variable Account will be
purchased and valued at their net asset value (daily bid price exclusive of
any sales charges). An Underlying Mutual Fund's net asset value per share
is determined by dividing the value of the total assets of the Underlying
Mutual Fund, less liabilities, by the number of shares outstanding, with no
charge for sales expense.
FEDERAL TAX STATUS
The following description of the federal tax status of these Contracts
is not exhaustive, and special rules are provided with respect to
situations not discussed herein. For complete information, consult a
qualified tax advisor. The Company does not make any guarantee regarding
the tax status of any Contract or any transaction involving the Contracts.
The Contracts are treated as a trust for purposes of the Code under rules
similar to the rules under Section 401(f) of the Code.
For federal income tax purposes, the operations of the Variable Account
form a part of the Company's operations. Under existing federal income tax
law, no taxes are payable by the Company on the investment income of the
Variable Account to the extent it is credited to the Owners under the
Contracts. The Company is taxed as a life insurance company under Part One,
Subchapter L of the Code.
Income and capital gains of the Variable Account would normally be
taxable to Owners whether or not taken by the Owners in cash. However, the
Contracts are issued only to organizations exempt from federal income tax.
The amounts received by the Participant under the Plan normally
represent the accumulation of Purchase Payments which were not previously
included in the Participant's gross income, and therefore any such amounts
should be included in gross income of a Participant or Beneficiary when
such amounts are received.
It is the responsibility of each Owner to determine that its Plan is
established and administered in accordance with the applicable provisions
of the Code.
CONTRACTS ISSUED UNDER THE NEW YORK MODEL PLAN
The following contract amendments are required by the Rules and
Regulations of the New York State Deferred Compensation Board in order to
market the Contracts to governmental employers for use in funding public
employee deferred compensation plans in the State of New York.
Throughout the prospectus, references to "annuity" payments are
modified to "benefit" payments.
The "Suspension and Termination" provisions are amended to permit a
Participant to "freeze" his or her account and maintain the account on
deposit with the Company notwithstanding the Owner's termination of its
contractual relationship with the Company. These accounts shall remain the
exclusive property of the Owner, subject to the claims of its general
creditors.
All references throughout the prospectus to Optional Retirement Income
Forms A1, A2, B1 and B2 shall mean Option 1, Option 2, Option 3 and Option
4, respectively. All references to "Contingent Deferred Sales Charge" are
deleted.
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LEGAL PROCEEDINGS
From time to time the Company 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 the Company.
In recent years, life insurance companies have been named as defendants
in lawsuits, including class action lawsuits, relating to life insurance
pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements. In October 1996, a policyholder of
Nationwide Life filed a complaint in Alabama state court against Nationwide
Life and an agent of Nationwide Life (Wayne M. King v. Nationwide Life
Insurance Company and Danny Nix), related to the sale of a whole life
policy on a "vanishing premium" basis and seeking unspecified compensatory
and punitive damages. In February 1997, Nationwide Life was named as a
defendant in a lawsuit filed in New York Supreme Court also related to the
sale of whole life policies on a "vanishing premium" basis (John H. Snyder
v. Nationwide Mutual Insurance Company, Nationwide Mutual Insurance Co. and
Nationwide Life Insurance Co.). The plaintiff in such lawsuit seeks to
represent a national class of Nationwide Life policyholders and claims
unspecified compensatory and punitive damages. This lawsuit is in an early
stage and has not been certified as a class action. Nationwide Life intends
to defend these cases vigorously. There can be no assurance that any future
litigation relating to pricing and sales practices will not have a material
adverse effect on the Company.
The General Distributor, Nationwide Investment Services Corporation is
not engaged in any litigation of any material nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History..........................................1
Services.................................................................1
Purchase of Securities Being Offered.....................................2
Underwriters.............................................................2
Calculation of Performance...............................................2
Annuity Payments.........................................................6
Financial Statements.....................................................7
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APPENDIX
PARTICIPATING UNDERLYING MUTUAL FUNDS
(THE COMPANY MAY LIMIT THE NUMBER OF UNDERLYING MUTUAL FUNDS SELECTED BY THE
OWNER, AND ALL UNDERLYING MUTUAL FUNDS MAY NOT BE AVAILABLE UNDER YOUR PLAN.)
A SUMMARY OF INVESTMENT OBJECTIVES IS CONTAINED IN THE DESCRIPTIONS OF EACH
UNDERLYING MUTUAL FUND BELOW. MORE DETAILED INFORMATION MAY BE FOUND IN THE
CURRENT PROSPECTUS FOR EACH UNDERLYING MUTUAL FUND. SUCH A PROSPECTUS FOR THE
UNDERLYING MUTUAL FUNDS BEING CONSIDERED SHOULD ACCOMPANY THE PROSPECTUS AND
SHOULD BE READ IN CONJUNCTION HEREWITH. A COPY OF EACH PROSPECTUS MAY BE
OBTAINED WITHOUT CHARGE FROM NATIONWIDE LIFE INSURANCE COMPANY.
AIM WEINGARTEN FUND - INSTITUTIONAL CLASS
The investment objective of the Fund is to provide growth of capital
through investments primarily in common stocks of leading U.S. companies
considered by management to have strong earnings momentum. AIM Advisors, Inc.
serves as the Fund's investment advisor.
AIM CONSTELLATION FUND - INSTITUTIONAL CLASS
The investment objective of the Fund is to provide capital appreciation
primarily through investments in common stocks with emphasis on medium-sized and
smaller emerging growth companies. AIM Advisors, Inc. serves as the Fund's
investment advisor.
AMERICAN CENTURY: TWENTIETH CENTURY GROWTH
The investment objective of the Fund is capital growth through
investment in securities which the management considers to have
better-than-average prospects for appreciation. It is management's intention
that the portfolio will generally consist of common stocks of large, established
companies. American Century Investment Services, Inc. services as the Fund's
investment advisor.
AMERICAN CENTURY: TWENTIETH CENTURY SELECT
The investment objective of the Fund is capital growth by investing
primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. Common stocks chosen must have a
record of paying or having committed themselves to the payment of regular cash
dividends, but growth is the primary consideration, and the dividends may not be
significant. American Century Investment Services, Inc. services as the Fund's
investment advisor.
AMERICAN CENTURY: TWENTIETH CENTURY ULTRA
The investment objective of the Fund is capital growth by investing
primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. It is management's intention
that the portfolio will generally consist of common stocks of medium-sized and
smaller companies. American Century Investment Services, Inc. services as the
Fund's investment advisor.
DAVIS NEW YORK VENTURE FUND, INC.
The investment objective of the Fund is growth of capital. It invests
primarily in common stocks, and securities convertible into common stocks. The
Fund invests in securities subject to the risk of price fluctuations reflecting
both market evaluations of the business involved and general changes in the
equity markets. It invests in securities of foreign issuers, which involve
special risk factors, and may hedge currency fluctuation risks related thereto.
Davis Selected Advisers, L.P., serves as the Fund's investment advisor.
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DREYFUS CASH MANAGEMENT - CLASS A
The investment objective of the Fund is to provide investor with as
high a level of current income as is consistent with the preservation of capital
and the maintenance of liquidity. The Dreyfus Corporation serves as the Fund's
investment advisor.
DREYFUS THIRD CENTURY FUND, INC.
The Fund's primary goal is to provide capital growth through equity
investment in companies that, in the opinion of the Fund's management, not only
meet traditional investment standards, but which also show evidence that they
conduct their business in a manner that contributes to the enhancement of the
quality of life in America. Current income is secondary to the primary goal. The
Dreyfus Corporation serves as the Fund's investment advisor.
EVERGREEN INCOME AND GROWTH FUND (FORMERLY THE EVERGREEN TOTAL RETURN FUND)
The investment objective of the Fund is current income and capital
appreciation. The Fund invests primarily in common and preferred stocks,
securities convertible into or exchangeable for common stocks, and fixed income
securities. The Fund's objective is to maximize the "total return" on its
portfolio of investments. Evergreen Asset Management Corp. serves as the Fund's
investment advisor.
FEDERATED GNMA TRUST-INSTITUTIONAL SHARES
The investment objective of the Fund is current income. The Fund
pursues this investment objective by investing primarily in instruments issued
or guaranteed by the Government National Mortgage Association ("GNMA").
Federated Management serves as the Fund's investment advisor.
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS - INSTITUTIONAL SHARES
The investment objective of the Fund is current income. The Fund
pursues this investment objective by investing in U.S. government securities
with remaining maturities of five years or less. Federated Management serves as
the Fund's investment advisor.
FIDELITY ASSET MANAGER(TM)
The investment objective of the Fund is a high total return with
reduced risk over the long term by allocating its assets among domestic and
foreign stocks, bonds, and short-term instruments. Fidelity Management &
Research Company serves as the Fund's investment advisor.
FIDELITY CONTRAFUND
The investment objective of the Fund is capital appreciation by
investing in securities that its manager believes are undervalued due to an
overly pessimistic appraisal by the public. Although the Fund will usually be
invested primarily in common stocks and securities convertible into common
stock, the percentage of its assets invested in other securities may vary.
Fidelity Management & Research Company serves as the Fund's investment advisor.
FIDELITY EQUITY-INCOME FUND
The investment objective of the Fund is to obtain reasonable income
from a portfolio consisting primarily of income-producing equity securities. The
Fund seeks a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's Composite Index of 500 Stocks. In pursuing this
objective, the Fund will also consider the potential for capital appreciation.
Fidelity Management & Research Company serves as the Fund's investment advisor.
FIDELITY GROWTH & INCOME PORTFOLIO
The investment objective of the Fund is long term capital growth,
current income, and growth of income consistent with reasonable investment risk.
Fidelity Management & Research Company serves as the Fund's investment advisor.
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FIDELITY MAGELLAN(R) FUND
The investment objective of the Fund is capital appreciation by
investing primarily in common stock and securities convertible into common
stock. The Fund may also invest in foreign securities, which involves additional
risks. The Fund may also invest in stock index futures and options both of which
can be volatile investments. Fidelity Management & Research Company serves as
the Fund's investment advisor.
FIDELITY OTC PORTFOLIO
The investment objective of the Fund is to seek capital appreciation by
investing primarily in securities traded on the over-the counter (OTC)
securities market. Securities traded on the OTC include, among others,
industrial corporations, financial services institutions, public utilities, and
transportation companies, common and preferred stocks, securities convertible
into common stock, warrants and similar rights, and debt securities, and
obligations of the federal government. The fund does not place any weight on
dividend and interest income unless it believes this income will have a
favorable influence on the market value of a security. Fidelity Management &
Research Company serves as the Fund's investment advisor.
FIDELITY PURITAN FUND
The investment objective of the Fund seeks to obtain as much income as
possible, consistent with the preservation and conservation of capital, by
investing in a broadly diversified portfolio of securities, including common
stocks, preferred stocks, and bonds. While emphasis on income is an important
objective, this does not preclude growth in capital since some securities
offering a better than average yield may also possess some growth possibilities.
Fidelity Management & Research Company serves as the Fund's investment advisor.
INVESCO INDUSTRIAL INCOME FUND, INC. (FORMERLY "FINANCIAL INDUSTRIAL INCOME
FUND, INC.")
The investment objective of the Fund is to seek the best possible
current income while following sound investment practices by investing in
securities which will provide a relatively high yield and stable return and
which, over a period of years, may also provide capital appreciation. Capital
growth potential is a secondary factor in the selection of portfolio securities
of the Fund. The Fund invests in common stocks, as well as convertible bond and
preferred stocks. INVESCO Funds Group, Inc. serves as the Fund's investment
advisor.
JANUS FUND
The Janus Fund is a diversified fund that seeks long-term growth of
capital by investing primarily in common stocks of a large number of issuers of
any size. Janus Capital's fundamental analysis and selection process focuses on
stocks with earnings growth potential that may not be recognized by the market.
Such securities are selected solely for their capital growth potential;
investment income is not a consideration. Janus Capital Corporation serves as
the Fund's investment advisor.
JANUS TWENTY FUND
The investment objective of the Fund is growth of capital in a manner
consistent with the preservation of capital. Under normal conditions, the Fund
will concentrate its investments in a core position of 20-30 common stocks.
However, the percentage of the Fund's assets invested in common stocks will
vary, depending upon its investment adviser's opinion of prevailing market,
financial and economic conditions. Consequently, the Fund may at times hold
substantial positions in cash, or interest-bearing securities. Janus Capital
Corporation serves as the Fund's investment advisor.
MAS FUNDS FIXED INCOME PORTFOLIO
The investment objective of the Fund is to achieve above-average total
return over a market cycle of three to five years, consistent with reasonable
risk, by investing in a diversified portfolio of U.S. Government securities,
corporate bonds (including bonds rated below investment grade commonly referred
to as "junk bonds"), foreign fixed-income securities and mortgage-backed
securities of domestic issuers and other fixed-income securities. The
portfolio's average weighted maturity will ordinarily be greater than five
years. Miller Anderson & Sherrerd, L.L.P. serves as the Fund's investment
advisor.
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MFS(R) GROWTH OPPORTUNITIES FUND - CLASS A (FORMERLY "MFS(R) CAPITAL DEVELOPMENT
FUND")
The investment objective of the Fund is growth of capital. Dividend
income, if any, is incidental to the objective of capital growth. To achieve
this objective, a flexible approach toward types of companies as well as types
of securities is maintained by the Fund, depending upon the economic environment
and the relative attractiveness of the various securities markets. Massachusetts
Financial Services Company serves as the Fund's investment advisor.
MFS(R) HIGH INCOME FUND - CLASS A
The investment objective of the Fund is high current income by
investing primarily in a professionally managed diversified portfolio of fixed
income securities, some of which may involve equity features. Securities
offering the high current income sought by this Fund are ordinarily in the lower
rating categories of recognized rating agencies or are unrated and generally
involve greater volatility of price and risk of principal and income than
securities in the high rating categories. Capital growth, if any, is a
consideration incidental to the investment objective of high current income.
Massachusetts Financial Services Company serves as the Fund's investment
advisor.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A
The investment objective of the Fund is long-term growth of capital and
future income rather that current income. Massachusetts Financial Services
Company serves as the Fund's investment advisor.
NATIONWIDE(R) BOND FUND
The investment objective of the Fund is to generate a high level of
income, consistent with capital preservation, through investments in
high-quality bonds and other fixed income securities. Through investment in
long-term income obligations, including corporate debt securities, United States
and Canadian Government obligations and commercial paper, this Fund seeks to
serve those who are less willing to accept the risk associated with stocks.
Nationwide Advisory Services, Inc. serves as the Fund's investment advisor.
NATIONWIDE(R) FUND
The investment objective of the Fund is to obtain a total return from a
flexible combination of current income and capital appreciation. Primary
emphasis is given to common stocks, but investments may also include convertible
issues, bonds and money market instruments. Nationwide Advisory Services, Inc.
serves as the Fund's investment advisor.
NATIONWIDE(R) GROWTH FUND
The investment objective of the Fund is to achieve long-term capital
appreciation without emphasis on current return. Major emphasis in the selection
of securities is placed on companies which have capable management, and are in
fields where social and economic trends, technological developments, and new
processes or products indicate a potential for greater than average growth.
Nationwide Advisory Services, Inc. serves as the Fund's investment advisor.
NATIONWIDE(R) MONEY MARKET FUND
The investment objective of the Fund is to provide as high a level of
current income as is consistent with the preservation of capital and maintenance
of liquidity, through investment in a diversified portfolio of high quality
money market instruments maturing in 397 days or less. These instruments
include, but are not limited to, U.S. Government and Agency obligations,
obligations of large commercial and foreign banks, certificates of deposit of
large savings associations, taxable or partly taxable obligations of state,
county and local governments, highly rated commercial paper, highly rated
corporate obligations, and repurchase agreements in any of the above. Nationwide
Advisory Services, Inc. serves as the Fund's investment advisor.
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NEUBERGER&BERMAN - GUARDIAN FUND, INC.
The Fund seeks capital appreciation and, secondarily, current income.
It invests, through its Portfolio, principally in common stocks of
long-established, high-quality companies. The Portfolio uses the value-oriented
investment approach in selecting securities. Management looks for such factors
as low price-to-earnings ratios, strong balance sheets, solid management and
consistent earnings. Neuberger&Berman Management Incorporated serves as the
Fund's investment advisor.
NEUBERGER&BERMAN - MANHATTAN FUND, INC.
The Fund seeks capital appreciation without regard to income. It
invests, through its Portfolio, generally in securities believed to have the
maximum potential for long-term capital appreciation. It does not seek to invest
in securities that pay dividends or interest, and any such income is incidental.
The Portfolio focuses on companies with strong balance sheets and reasonable
valuations relative to their growth rates. It also diversifies its investment
among many companies and industries. Its aggressive growth investment program
involves greater risks and share price volatility than programs that invest in
more conservative investments. Neuberger&Berman Management Incorporated serves
as the Fund's investment advisor.
NEUBERGER&BERMAN - PARTNERS FUND, INC.
The Fund seeks capital growth. It invests, through its Portfolio,
principally in common stocks of established companies using the value-oriented
investment approach. Management looks for securities believed to be undervalued
based on strong fundamentals, including a low price-to-earnings ratio,
consistent cash flow, and the company's track record through all parts of the
market cycle. Neuberger&Berman Management Incorporated serves as the Fund's
investment advisor.
PUTNAM INVESTORS FUND - CLASS A
The investment objective of the Fund is long-term growth of capital and
any increased income resulting from such growth. The Fund is designed for
investors seeking long-term growth of capital from a portfolio consisting
primarily of common stocks. The Fund's management emphasizes investment in
quality growth stocks. Putnam Investment Management, Inc. serves as the Fund's
investment advisor.
PUTNAM VOYAGER FUND - CLASS A
The investment objective of the Fund is capital appreciation. The Fund
invests primarily in common stocks believed by the Fund's Investment Manager,
Putnam Management, to have potential for capital appreciation significantly
greater than the market average. The Fund is designed for investors willing to
assume above-average risk in return for above-average capital growth potential.
Putnam Investment Management, Inc. serves as the Fund's investment advisor.
SEI INDEX FUNDS-S&P 500 INDEX PORTFOLIO
The S&P 500 Index Portfolio seeks to provide investment results that
correspond to the aggregate price and dividend performance of the securities in
the Standard & Poor's 500 Composite Stock Price Index which is comprised of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
The investment objective is a fundamental policy of the portfolio. There can be
no assurance that the Portfolio will achieve its investment objective. SEI Fund
Management serves as the Fund's investment advisor.
SELIGMAN GROWTH FUND, INC. - CLASS A
The investment objective of the Fund is longer-term growth in capital
value and an increase in future income. Fund assets have been invested primarily
in common stocks with the inherent investment risks tempered by portfolio
diversification. J.&W. Seligman & Co., Incorporated serves as the Fund's
investment advisor.
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SHORT-TERM INVESTMENTS TRUST - TREASURY PORTFOLIO - INSTITUTIONAL CLASS
The investment objective of the Portfolio is the maximization of
current income to the extent consistent with the preservation of capital and
maintenance of liquidity. The Portfolio seeks to achieve its objective by
investing in a portfolio consisting of direct obligations of the U.S. Treasury
and repurchase agreements secured by such obligations. The instruments purchased
by the Portfolio will have maturities of 397 days or less. AIM Advisors, Inc.
serves as the Fund's investment advisor.
STRONG COMMON STOCK FUND, INC.
The Strong Common Stock Fund seeks capital growth. It seeks to attain
this objective by investing in a diversified portfolio of equity securities
which, in the opinion of the Fund's investment advisor, possess the potential
for price appreciation. Strong Capital Management, Inc. serves as the Fund's
investment advisor.
TEMPLETON FOREIGN FUND - CLASS I
The investment objective of the Fund is long-term capital growth
through a flexible policy of investing in stocks and debt obligations of
companies and governments outside the United States. Any income realized will be
incidental. Templeton Investment Counsel, Inc. serves as the Fund's investment
advisor.
TEMPLETON SMALLER COMPANIES GROWTH FUND, INC. - CLASS I
The investment objective of the Fund is long-term capital growth,
primarily through investment in common stocks and all types of common stock
equivalents, including rights, warrants and preferred stock, of companies of
various nations throughout the world. Templeton Investment Counsel, Inc. serves
as the Fund's investment advisor.
T. ROWE PRICE INTERNATIONAL STOCK FUND(R)
The Fund's objective is long-term growth of capital through investments
primarily in common stocks of established, non-U.S. companies. T. Rowe Price
Associates, Inc. serves as the Fund's investment advisor.
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NATIONWIDE LIFE INSURANCE COMPANY [NATIONWIDE LOGO]
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OH 43215-2220
May 7, 1997
VIA EDGAR
The United States Securities
and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Subject: Nationwide Life Insurance Company
Registration of Group Flexible Fund Retirement Contracts
For Issuance Through Nationwide DCVA-II on Form N-4
SEC File No.333-12369
CIK No. 811-07821
Ladies and Gentlemen:
Pursuant to Rule 497 under the Securities Act of 1933 and on behalf of the
Nationwide DCVA-II Account and Nationwide Life Insurance Company (the
"Company"), we hereby submit the form of the Prospectus which has been modified
to include clarifying disclosures.
If there are any questions in connection with the enclosed, please contact me
at (614) 249-7452.
Very truly yours,
NATIONWIDE LIFE INSURANCE COMPANY
/s/ BRIAN M. BACON
Brian M. Bacon
Counsel
cc: Mr. Kevin Kirchoff
Stop 10-6
Office of Insurance Products and Legal Compliance
