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NATIONWIDE LIFE INSURANCE COMPANY
Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its MFS Variable Account
The date of this prospectus is May 1, 2000.
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Variable annuities are complex investment products with unique benefits and
advantages that may be particularly useful to many investors in meeting
long-term savings and retirement needs. There are, however, costs and charges
associated with some of these unique benefits - costs and charges that do not
exist or are not present with other investment products. With help from
financial consultants or advisers, investors are encouraged to compare and
contrast the costs and benefits of the variable annuity described in this
prospectus with those of other investment products, including other variable
annuity or variable life insurance products offered by Nationwide Life Insurance
Company and its affiliates. This process will aid in determining whether the
purchase of the contract described in this prospectus is consistent with an
individual's goals, risk tolerance, time horizon, marital status, tax situation,
and other personal characteristics and needs.
THIS PROSPECTUS CONTAINS BASIC INFORMATION YOU SHOULD KNOW ABOUT THE CONTRACTS
BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE.
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The following underlying mutual funds are available under the contracts:
o Massachusetts Investors Growth Stock Fund - Class A
o Massachusetts Investors Trust - Class A
o MFS(R) Bond Fund - Class A
o MFS(R) Emerging Growth Fund - Class A
o MFS(R) Global Governments Fund - Class A
o MFS(R) Growth Opportunities Fund - Class A
o MFS(R) High Income Fund - Class A*
o MFS(R) Research Fund - Class A
o MFS(R) Series Trust IV - MFS(R) Money Market Fund
o MFS(R) Total Return Fund - Class A
o Nationwide Separate Account Trust - Money Market Fund
*This underlying mutual fund may invest in lower quality debt securities
commonly call junk bonds.
Purchase payments not invested in the underlying mutual fund options of the MFS
Variable Account ("variable account") may be allocated to the fixed account.
The Statement of Additional Information (May 1, 2000) which contains additional
information about the contracts and the variable account, is filed with the
Securities and Exchange Commission ("SEC") and is incorporated herein by
reference. The table of contents for the Statement of Additional Information is
on page 36.
For general information or to obtain FREE copies of the:
o Statement of Additional Information;
o prospectus, annual or semi-annual report for any underlying mutual
fund; or
o required Nationwide forms,
call: 1-800-243-6295
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 182356
COLUMBUS, OHIO 43218-2356
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The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
www.sec.gov
THIS ANNUITY IS NOT:
o A BANK DEPOSIT o FEDERALLY INSURED
o ENDORSED BY A BANK o AVAILABLE IN EVERY
OR GOVERNMENT STATE
AGENCY
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
These contracts are offered to customers of various financial institutions and
brokerage firms. No financial institution or brokerage firm is responsible for
the guarantees under the contracts. Guarantees under the contracts are the sole
responsibility of Nationwide.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the contract
value allocated to the variable account before the annuitization date.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit of measure used to calculate the variable
annuity payments.
CONTRACT VALUE- The total value of all accumulation units in a contract plus any
amount held in the fixed account.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- An investment option that is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
INDIVIDUAL RETIREMENT ACCOUNT- An account that qualifies for favorable tax
treatment under Section 408(a) of the Internal Revenue Code, but does not
include Roth IRAs.
INDIVIDUAL RETIREMENT ANNUITY- An annuity contract that qualifies for favorable
tax treatment under Section 408(b) of the Internal Revenue Code, but does not
include Roth IRAs.
NATIONWIDE- Nationwide Life Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as a Qualified Plan, Individual Retirement Annuity, SEP IRA, or Tax
Sheltered Annuity.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Internal Revenue Code.
SEP IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408(k) of the Internal Revenue Code.
SUB-ACCOUNTS- Divisions of the variable account and for which accumulation units
and annuity units are separately maintained - each sub-account corresponds to a
single underlying mutual fund.
TAX SHELTERED ANNUITY- An annuity that qualifies for favorable tax treatment
under Section 403(b) of the Internal Revenue Code.
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- MFS Variable Account, a separate account of Nationwide that
contains variable account allocations. The variable account is divided into
sub-accounts, each of which invests in shares of a separate underlying mutual
fund.
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TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.........................3
SUMMARY OF CONTRACT EXPENSES......................6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES............7
EXAMPLE...........................................8
SYNOPSIS OF THE CONTRACTS.........................9
FINANCIAL STATEMENTS..............................9
CONDENSED FINANCIAL INFORMATION...................9
NATIONWIDE LIFE INSURANCE COMPANY................10
GENERAL DISTRIBUTOR..............................10
TYPES OF CONTRACTS...............................10
Non-Qualified Contracts
Individual Retirement Annuities (IRAs)
Simplified Employee Pension IRAs (SEP
IRAs)
Tax Sheltered Annuities
Qualified Plans
INVESTING IN THE CONTRACT........................12
The Variable Account and Underlying
Mutual Funds
The Fixed Account
CHARGES AND DEDUCTIONS...........................14
Contract Maintenance Charge
Mortality and Expense Risk Charges
Contingent Deferred Sales Charge
Premium Taxes
CONTRACT OWNERSHIP...............................15
Joint Ownership
Contingent Ownership
Annuitant
Beneficiary and Contingent Beneficiary
OPERATION OF THE CONTRACT........................17
Minimum Initial and Subsequent Purchase
Payments
Pricing
Allocation of Purchase Payments
Value of an Accumulation Unit
Net Investment Factor
Determining the Contract Value
Transfers
RIGHT TO REVOKE..................................20
SURRENDER (REDEMPTION)...........................20
Surrenders Under a Qualified Plan or Tax
Sheltered Annuity
LOAN PRIVILEGE...................................21
Minimum & Maximum Loan Amounts
Loan Processing Fee
How Loan Requests are Processed
Interest
Loan Repayment
Distributions & Annuity Payments
Transferring the Contract
Grace Period & Loan Default
ASSIGNMENT.......................................22
CONTRACT OWNER SERVICES..........................23
Asset Rebalancing
Dollar Cost Averaging
Systematic Withdrawals
ANNUITY COMMENCEMENT DATE........................24
ANNUITIZING THE CONTRACT.........................24
Annuitization Date
Annuitization
Fixed Payment Annuity - First and
Subsequent Payments
Variable Payment Annuity - First and
Subsequent Payments
Variable Payment Annuity - Assumed
Investment Rate
Variable Payment Annuity - Value of an
Annuity Unit
Variable Payment Annuity - Exchanges
among Underlying Mutual Funds
Frequency and Amount of Annuity
Payments
Annuity Payment Options
DEATH BENEFITS...................................26
Death of Contract Owner - Non-Qualified
Contracts
Death of Annuitant - Non-Qualified
Contracts
Death of Contract Owner/Annuitant
Death Benefit Payment
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REQUIRED DISTRIBUTIONS...........................27
Required Distributions for Non-Qualified
Contracts
Required Distributions for Qualified Plans
and Tax Sheltered Annuities
Required Distributions for Individual
Retirement Annuities and SEP IRAs
FEDERAL TAX CONSIDERATIONS.......................30
Federal Income Taxes
Qualified Plans, IRAs, SEP IRAs, and Tax
Sheltered Annuities
Withholding
Non-Resident Aliens
Federal Estate, Gift, and Generation
Skipping Transfer Taxes
Charge for Tax
Diversification
Tax Changes
STATEMENTS AND REPORTS...........................34
LEGAL PROCEEDINGS................................35
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION......................36
APPENDIX A: OBJECTIVES FOR UNDERLYING
MUTUAL FUNDS................................37
APPENDIX B: CONDENSED FINANCIAL INFORMATION......39
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SUMMARY OF CONTRACT EXPENSES
The expenses listed below are charged to all contracts unless the contract owner
meets an available exception under the contract.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
the lesser of purchase payments or
amount surrendered).............................5%(1)
(1) Starting with the second contract year, the contract owner may withdraw
without a CDSC the greater of:
a) 10% of all purchase payments made to the contract; or
b) any amount withdrawn to meet minimum distribution requirements under
the Internal Revenue Code.
This free withdrawal privilege is non-cumulative. Free amounts not taken
during any given contract year cannot be taken as free amounts in a
subsequent contract year (see "Contingent Deferred Sales Charge").
Withdrawals may be restricted for contracts issued as Tax Sheltered
Annuities.
ANNUAL CONTRACT
MAINTENANCE CHARGE.............................$30(2)
VARIABLE ACCOUNT CHARGES(3)
(as a percentage of daily net assets of the variable account.)
Mortality and Expense Risk Charges..............1.30%
Total Variable Account Charges.............1.30%
(2) The Contract Maintenance Charge is deducted on each contract anniversary
and on the date of surrender upon full surrender of the contract.
(3) These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account. They are charged on a daily basis at
the annual rate period noted above.
LOAN PROCESSING FEE
Nationwide may assess a loan processing fee at the time each new loan is
processed. Loans are only available for contracts issued as Tax Sheltered
Annuities. Loans are not available in all states. In addition, some states may
not permit Nationwide to assess a loan processing fee (see "Loan Privilege").
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UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS,
AFTER EXPENSE REIMBURSEMENT)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Investors Growth Stock Fund - Class A 0.33% 0.00% 0.35% 0.68%
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Massachusetts Investors Trust - Class A 0.33% 0.00% 0.35% 0.68%
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MFS(R) Bond Fund - Class A 0.38% 0.00% 0.30% 0.68%
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MFS(R) Emerging Growth Fund - Class A 0.69% 0.00% 0.25% 0.94%
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MFS(R) Global Governments Fund - Class A 0.75% 0.00% 0.23% 0.98%
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MFS(R) Growth Opportunities Fund - Class A 0.42% 0.00% 0.19% 0.61%
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MFS(R) High Income Fund - Class A 0.44% 0.00% 0.30% 0.74%
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MFS(R) Research Fund - Class A 0.42% 0.00% 0.35% 0.77%
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MFS(R) Series Trust IV - MFS(R) Money Market Fund 0.45% 0.00% 0.00% 0.45%
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MFS(R) Total Return Fund - Class A 0.35% 0.00% 0.35% 0.70%
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Nationwide Separate Account Trust - Money Market Fund 0.39% 0.15% 0.00% 0.54%
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</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
The Management Fees and Other Expenses are not currently subject to fee waivers
or expense reimbursements.
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EXAMPLE
The following chart shows the amount of expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual return, and
no change in expenses. These dollar figures are illustrative only and should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects a 5% CDSC charge and variable account charges
of 1.30% of the daily net assets of the variable account. The example reflects
the Contract Maintenance In addition Charge, expressed as a percentage of
average account value. Since the average contract value is greater than $1,000,
the expense effect of the Contract Maintenance Charge is reduced accordingly.
Deductions for premium taxes are not reflected but may apply.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
If you surrender your Contract If you do not surrender your If you annuitize your Contract
at the end of the applicable Contract at the end of the at the end of the applicable
time period applicable time period time period
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1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Massachusetts Investors 71 110 152 242 21 65 112 242 * 65 112 242
Growth Stock Fund - Class A
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Massachusetts Investors Trust 71 110 152 242 21 65 112 242 * 65 112 242
- - Class A
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MFS(R) Bond Fund - Class A 71 110 152 242 21 65 112 242 * 65 112 242
- ---------------------------------------------------------------------------------------------------------------------------
MFS(R) Emerging Growth Fund 74 119 166 270 24 74 126 270 * 74 126 270
- - Class A
- ---------------------------------------------------------------------------------------------------------------------------
MFS(R) Global Governments Fund 74 120 168 274 24 75 128 274 * 75 128 274
- - Class A
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MFS(R) Growth Opportunities 70 108 149 234 20 63 109 234 * 63 109 234
Fund - Class A
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MFS(R) High Income Fund - 72 112 156 248 22 67 116 248 * 67 116 248
Class A
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MFS(R) Research Fund - 72 113 157 251 22 68 117 251 * 68 117 251
Class A
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MFS(R) Series Trust IV - MFS(R) 69 103 140 217 19 58 100 217 * 58 100 217
Money Market Fund
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MFS(R) Total Return Fund - 71 111 153 244 21 66 113 244 * 66 113 244
Class A
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Nationwide Separate Account 70 106 145 227 20 61 105 227 * 61 105 227
Trust - Money Market Fund
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</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
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SYNOPSIS OF THE CONTRACTS
The contracts described in this prospectus are flexible purchase payment
contracts.
The contracts can be categorized as:
o Non-Qualified Contracts;
o Individual Retirement Annuities;
o SEP IRAs;
o Tax Sheltered Annuities; or
o Qualified Plans.
For more detailed information with regard to the differences in contract types,
please see "Types of Contracts" later in this prospectus.
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE PAYMENT SUBSEQUENT
TYPE PAYMENTS
- ---------------------------------------------------------
<S> <C> <C>
Non-Qualified $1,500 $0
- ---------------------------------------------------------
IRA $0 $0
- ---------------------------------------------------------
SEP IRA $0 $0
- ---------------------------------------------------------
Tax Sheltered $0 $0
Annuity
- ---------------------------------------------------------
Qualified $0 $0
- ---------------------------------------------------------
</TABLE>
CHARGES AND EXPENSES
Nationwide deducts a mortality and expense risk charge equal to an annual rate
of 1.30% of the daily net assets of the variable account. Nationwide assesses
these charges in return for bearing certain mortality and administrative risks.
Nationwide assesses a $30 Contract Maintenance Charge for each contract on every
contract anniversary and on the date of surrender upon full surrender of the
contract (see "Contract Maintenance Charge").
Nationwide does not deduct a sales charge from purchase payments upon deposit
into the contract. However, Nationwide may deduct a CDSC if any amount is
withdrawn from the contract. This CDSC reimburses Nationwide for sales expenses.
The amount of the CDSC will not exceed the lesser of:
(1) 5% of the amount surrendered; or
(2) 5% of the total of all purchase payments made within 8 years of the
surrender date.
ANNUITY PAYMENTS
Annuity payments begin on the annuitization date. The payments will be based on
the annuity payment option chosen at the time of application (see "Annuity
Payment Options").
TAXATION
How a contract is taxed depends on the type of contract issued and the purpose
for which the contract is purchased. Nationwide will charge against the contract
any premium taxes levied by any governmental authority (see "Federal Tax
Considerations" and "Premium Taxes").
TEN DAY FREE LOOK
Contract owners may return the contract for any reason within ten days of
receipt and Nationwide will refund the contract value or other amounts required
by law (see "Right to Revoke").
FINANCIAL STATEMENTS
Financial statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained, without charge, by contacting Nationwide's home
office at the telephone number listed on page 1 of this prospectus.
CONDENSED FINANCIAL INFORMATION
The value of an accumulation unit is determined on the basis of changes in the
per share value of the underlying mutual funds and the assessment of a variable
account charge which may vary from contract to contract (for more information on
the calculation of accumulation unit values, see "Determining Variable Account
Value - Valuing an Accumulation Unit"). Please refer to Appendix B for
information regarding each class of accumulation units.
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NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in March,
1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in all states, the District of Columbia and Puerto
Rico.
GENERAL DISTRIBUTOR
The contracts are distributed by the general distributor, Clarendon Insurance
Agency, Inc., 200 Berkeley Street, Boston, Massachusetts, 02116, an affiliate of
Massachusetts Financial Services Company.
TYPES OF CONTRACTS
The following is a general description of the types of annuity contracts, and is
intended to provide only general information of the various types of contracts;
it is not intended to be comprehensive. The eligibility requirements, tax
benefits, limitations, and other features of these contracts differ one from the
other.
NON-QUALIFIED ANNUITY CONTRACTS
A Non-Qualified Annuity Contract is a contract that does not qualify for certain
tax benefits under the Internal Revenue Code, and which is not an IRA, a Roth
IRA, a SEP IRA or a Tax Sheltered Annuity.
Upon the death of the owner of a Non-Qualified Annuity Contract, mandatory
distribution requirements are imposed to ensure distribution of the entire
balance in the contract within the statutory period.
Non-Qualified Annuity contracts that are owned by natural persons can defer the
incidence of taxation on the income earned in the contract until it is
distributed or deemed to be distributed.
INDIVIDUAL RETIREMENT ANNUITIES (IRAs)
IRAs are contracts that are issued by insurance companies and satisfy the
following requirements:
o the contract is not transferable by the owner;
o the premiums are not fixed;
o the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from qualified plans, tax-sheltered annuities and other IRAs can be
received);
o certain minimum distribution requirements must be satisfied after the owner
attains the age of 70 1/2;
o the entire interest of the owner in the contract is nonforfeitable; and
o after the death of the owner, additional distribution requirements may be
imposed to ensure distribution of the entire balance in the contract within
the statutory period of time.
Depending on the circumstance of the owner, all or a portion of the
contributions made to the account may be deducted for federal income tax
purposes.
Failure to make the mandatory distributions can result in an additional penalty
tax of 50% of the excess of the amount required to be distributed over the
amount that was actually distributed.
IRAs may receive rollover contribution from other IRAs, from Tax Sheltered
Annuities, and from qualified retirement plans, including 401(k) plans.
For further details regarding IRAs, please refer to the disclosure statement
that should have been received when the IRA was established.
SIMPLIFIED EMPLOYEE PENSION IRAS (SEP IRAs)
A SEP IRA is a written plan established by an employer for the benefit of
employees, which permits the employer to make contributions to
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an IRA established for the benefit of each employee.
An employee may make deductible contributions to a SEP IRA in the same way, and
with the same restrictions and limitations, as for an IRA. In addition, the
employer may make contributions to the SEP IRA, subject to dollar and percentage
limitations imposed by both the Internal Revenue Code and the written plan.
A SEP IRA plan must satisfy the following requirements:
o minimum participation rules;
o top-heavy contribution rules;
o nondiscriminatory allocation rules; and
o requirements regarding a written allocation formula.
In addition, the plan cannot restrict withdrawals of non-elective contributions,
and must restrict withdrawals of elective contributions before March 15th of the
following year.
TAX SHELTERED ANNUITIES
Certain tax-exempt organizations (described in section 501(c)(3) of the Internal
Revenue Code) and public school systems may establish a plan under which annuity
contracts can be purchased for their employees. These annuity contracts are
often referred to as Tax Sheltered Annuities.
Purchase payments made to Tax Sheltered Annuities are excludible from the income
of the employee, up to statutory maximum amounts. These amounts should be set
forth in the plan adopted by the employer.
The owner's interest in the contract is nonforfeitable (except for failure to
pay premiums) and cannot be transferred. Certain minimum distribution
requirements must be satisfied after the owner attains the age of 70 1/2, and
after the death of the owner, additional distribution requirements may be
imposed to ensure distribution of the entire balance in the contract within the
statutory period of time.
QUALIFIED PLANS
Contracts that are owned by Qualified Plans are not intended to confer tax
benefits on the beneficiaries of the plan; they are used as investment vehicles
for the plan. The income tax consequences to the beneficiary of a Qualified Plan
are controlled by the operation of the plan, not by operation of the assets in
which the plan invests.
Beneficiaries of Qualified Plans should contact their employer and/or trustee of
the plan to obtain and review the plan, trust, summary plan description and
other documents for the tax and
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other consequences of being a participant in a qualified plan.
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
MFS Variable Account is a variable account that invests in the underlying mutual
funds listed in Appendix A. Nationwide established the variable account on March
3, 1976, pursuant to Ohio law. Although the variable account is registered with
the SEC as a unit investment trust pursuant to the Investment Company Act of
1940 ("1940 Act"), the SEC does not supervise the management of Nationwide or
the variable account.
Income, gains, and losses credited to, or charged against, the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and are not chargeable with liabilities
incurred in any other business of Nationwide. Nationwide is obligated to pay all
amounts promised to contract owners under the contracts.
The variable account is divided into sub-accounts, each corresponds to a single
underlying mutual fund. Nationwide uses the assets of each sub-account to buy
shares of the underlying mutual funds based on contract owner instructions.
There are two sub-accounts for each underlying mutual fund. One sub-account
contains shares attributable to accumulation units under Non-Qualified
Contracts. The other contains shares attributable to accumulation units under
Individual Retirement Accounts, SEP IRAs, Tax Sheltered Annuities, and Qualified
Contracts.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. They are only available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance companies, or in
some cases, through participation in certain qualified pension or retirement
plans.
The investment advisers of the underlying mutual funds may manage publicly
traded mutual funds with similar names and investment objectives. However, the
underlying mutual funds are NOT directly related to any publicly traded mutual
fund. Contract owners should not compare the performance of a publicly traded
fund with the performance of underlying mutual funds participating in the
variable account. The performance of the underlying mutual funds could differ
substantially from that of any publicly traded funds.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote contract owner shares at
special shareholder meetings based on contract owner instructions. However, if
the law changes and Nationwide is allowed to vote in its own right, it may elect
to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholders' vote as soon as possible before
the shareholder meeting. Notification will contain proxy materials and a form
with which to give Nationwide voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a contract owner may vote is determined by dividing
the cash value of the amount they have allocated to an underlying mutual fund by
the net asset value of that underlying mutual fund. Nationwide will designate a
date for this determination not more than 90 days before the shareholder
meeting.
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<PAGE> 13
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
1) shares of a current underlying mutual fund are no longer available for
investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. The general account is not subject
to the same laws as the variable account and the SEC has not reviewed material
in this prospectus relating to the fixed account. However, information relating
to the fixed account is subject to federal securities laws relating to accuracy
and completeness of prospectus disclosure.
Purchase payments will be allocated to the fixed account by election of the
contract owner.
The investment income earned by the fixed account will be allocated to the
contracts at varying guaranteed interest rate(s) depending on the following
categories of fixed account allocations:
o New Money Rate - The rate credited on the fixed account allocation when the
contract is purchased or when subsequent purchase payments are made.
Subsequent purchase payments may receive different New Money Rates than the
rate when the contract was issued, since the New Money Rate is subject to
change based on market conditions.
o Variable Account to Fixed Rate - Allocations transferred from any of the
underlying investment options in the variable account to the fixed account
may receive a different rate. The rate may be lower than the New Money
Rate. There may be limits on the amount and frequency of movements from the
variable account to the fixed account.
o Renewal Rate - The rate available for maturing fixed account allocations
which are entering a new guarantee period. The contract owner will be
notified of this rate in a letter issued with the quarterly statements when
any of the money in the contract owner's fixed account matures. At that
time, the contract owner will have an opportunity to leave the money in the
fixed account and receive the Renewal Rate or the contract owner can move
the money to any of the other underlying mutual fund options.
o Dollar Cost Averaging Rate - From time to time, Nationwide may offer a more
favorable rate for an initial purchase
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<PAGE> 14
payment into a new contract when used in conjunction with a Dollar Cost
Averaging program.
All of these rates are subject to change on a daily basis; however, once applied
to the fixed account, the interest rates are guaranteed until the end of the
calendar quarter during which the 12 month anniversary of the fixed account
allocation occurs.
Credited interest rates are annualized rates - the effective yield of interest
over a one-year period. Interest is credited to each contract on a daily basis.
As a result, the credited interest rate is compounded daily to achieve the
stated effective yield.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The contract owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
3.0% for any given year.
Nationwide guarantees that the fixed account contract value will not be less
than the amount of the purchase payments allocated to the fixed account, plus
interest credited as described above, less any applicable charges including
CDSC.
CHARGES AND DEDUCTIONS
CONTRACT MAINTENANCE CHARGE
On each contract anniversary (and upon a full surrender of the contract),
Nationwide deducts a $30 Contract Maintenance Charge. This charge reimburses
Nationwide for administrative expenses relating to the issuance and maintenance
of the contract.
The deduction of the Contract Maintenance Charge will be taken proportionately
from each sub-account and the fixed account based on the value in each option at
the time of the withdrawal as compared to the total contract value.
Nationwide will not increase the Contract Maintenance Charge. Nationwide will
not reduce or eliminate the Contract Maintenance Charge where it would be
discriminatory or unlawful.
MORTALITY AND EXPENSE RISK CHARGE
Nationwide deducts a Mortality and Expense Risk Charge from the variable
account. This amount is computed on a daily basis, and is equal to an annual
rate of 1.30% of the daily net assets of the variable account.
The mortality risk charge compensates Nationwide for guaranteeing the annuity
purchase rates of the contracts. This guarantee ensures that the annuity
purchase rates will not change regardless of the death rates of annuity payees
or the general population. The mortality risk charges also compensate Nationwide
for risks assumed in connection with the death benefit.
The expense risk charge compensates Nationwide for guaranteeing that
administration charges will not increase regardless of actual expenses.
If these charges are insufficient to cover actual expenses, the loss is borne by
Nationwide.
CONTINGENT DEFERRED SALES CHARGE
No sales charge deduction is made from the purchase payments when amounts are
deposited into the contracts. However, if any part of the contract is
surrendered, Nationwide will deduct a CDSC, as described below.
The CDSC will not exceed the lesser of:
(1) 5% of the amount surrendered; or
(2) 5% of the total of all purchase payments made within 8 years of the
surrender date.
The CDSC is calculated by multiplying the applicable CDSC percentage by the
lesser of the amount surrendered or the total of all purchase payments made
within 8 years of the surrender request.
For purposes of calculating the CDSC, surrenders are considered to come first
from the oldest purchase payment made to the contract, then the next oldest
purchase payment, and so forth. Earnings are not subject to the CDSC, but
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<PAGE> 15
may not be distributed prior to the distribution of all purchase payments. (For
tax purposes, a surrender is usually treated as a withdrawal of earnings first.)
The CDSC is used to cover sales expenses, including commissions (maximum of
5.11% of purchase payments), production of sales material, and other promotional
expenses. If expenses are greater than the CDSC, the shortfall will be made up
from Nationwide's general account, which may indirectly include portions of the
Contract Maintenance Charge and other variable account charges, since Nationwide
may generate a profit from these charges.
All or a portion of any withdrawal may be subject to federal income taxes.
Contract owners taking withdrawals before age 59 1/2 may be subject to a 10% tax
penalty.
Waiver of Contingent Deferred Sales Charge
Starting with the second contract year, the contract owner may withdraw without
a CDSC the greater of:
(a) 10% of all purchase payments; or
(b) any amount withdrawn to meet minimum distribution requirements under
the Internal Revenue Code.
This CDSC-free privilege is non-cumulative. Free amounts not taken during any
given contract year cannot be taken as free amounts in a subsequent contract
year.
In addition, no CDSC will be deducted:
(1) upon the annuitization of contracts which have been in force for at
least two years;
(2) upon payment of a death benefit; or
(3) from any values which have been held under a contract for at least 8
years.
No CDSC applies to transfers among sub-accounts or between or among the fixed
account or the variable account. Nationwide may waive the CDSC if a contract
described in this prospectus is exchanged for another Nationwide contract (or a
contract of any of its affiliated insurance companies). A CDSC may apply to the
contract received in the exchange.
Additionally, Nationwide will waive the CDSC on contracts purchased by:
o an officer, director, partner or employee of the general distributor,
Clarendon Insurance Agency, Inc. (an affiliate of Massachusetts Financial
Services Company); or
o an officer, director, partner or employee of any firm affiliated with
Clarendon Insurance Agency, Inc.
PREMIUM TAXES
Nationwide will charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
5%. This range is subject to change. The method used to assess premium tax will
be determined by Nationwide at its sole discretion in compliance with state law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such earlier date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
CONTRACT OWNERSHIP
The contract owner has all rights under the contract. Purchasers who name
someone other than themselves as the contract owner will have no rights under
the contract.
Contract owners of Non-Qualified Contracts may name a new contract owner at any
time before the annuitization date. Any change of contract owner automatically
revokes any prior contract owner designation. Changes in contract ownership may
result in federal income taxation and may be subject to state and federal gift
taxes.
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<PAGE> 16
A change in contract ownership must be submitted in writing and recorded at
Nationwide's home office. Once recorded, the change will be effective as of the
date signed. However, the change will not affect any payments made or actions
taken by Nationwide before it was recorded.
The contract owner may also request a change in the annuitant, contingent
annuitant, contingent owner, beneficiary, or contingent beneficiary before the
annuitization date. These changes must be:
o on a Nationwide form;
o signed by the contract owner; and
o received at Nationwide's home office before the annuitization date.
Nationwide must review and approve any change requests. If the contract owner is
not a natural person and there is a change of the annuitant, distributions will
be made as if the contract owner died at the time of the change.
On the annuitization date, the annuitant will become the contract owner.
JOINT OWNERSHIP
Joint owners each own an undivided interest in the contract.
Contract owners can name a joint owner at any time before annuitization subject
to the following conditions:
o joint owners can only be named for Non-Qualified Contracts;
o joint owners must be spouses at the time joint ownership is requested,
unless state law requires Nationwide to allow non-spousal joint
owners;
o the exercise of any ownership right in the contract will generally
require a written request signed by both joint owners;
o Nationwide will not be liable for any loss, liability, cost, or
expense for acting in accordance with the instructions of either joint
owner; and
o an election in writing signed by both contract owners must be made to
authorize Nationwide to allow the exercise of ownership rights
independently by either joint owner.
CONTINGENT OWNERSHIP
The contingent owner is entitled to certain benefits under the contract, if a
contract owner who is NOT the annuitant dies before the annuitization date, and
there is no surviving joint owner.
The contract owner may name or change a contingent owner at any time before the
annuitization date. To change the contingent owner, a written request must be
submitted to Nationwide. Once Nationwide has recorded the change, it will be
effective as of the date it was signed, whether or not the contract owner was
living at the time it was recorded. The change will not affect any action taken
by Nationwide before the change was recorded.
ANNUITANT
The annuitant is the person who will receive annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
This person must be age 78 or younger at the time of contract issuance, unless
Nationwide approves a request for an annuitant of greater age. The annuitant may
be changed before the annuitization date with Nationwide's consent.
BENEFICIARY AND CONTINGENT BENEFICIARY
The beneficiary is the person who is entitled to the death benefit if the
annuitant dies before the annuitization date and there is no joint owner. The
contract owner can name more than one beneficiary. Multiple beneficiaries will
share the death benefit equally, unless otherwise specified.
The contract owner may change the beneficiary or contingent beneficiary during
the annuitant's lifetime by submitting a written request to Nationwide. Once
recorded, the change will be effective as of the date it was signed, whether or
not the annuitant was living at the time it was
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<PAGE> 17
recorded. The change will not affect any action taken by Nationwide before the
change was recorded.
OPERATION OF THE CONTRACT
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE PAYMENT SUBSEQUENT
TYPE PAYMENTS
- ---------------------------------------------------------
<S> <C> <C>
Non-Qualified $1,500 $0
- ---------------------------------------------------------
IRA $0 $0
- ---------------------------------------------------------
SEP IRA $0 $0
- ---------------------------------------------------------
Tax Sheltered $0 $0
Annuity
- ---------------------------------------------------------
Qualified $0 $0
- ---------------------------------------------------------
</TABLE>
PRICING
Initial purchase payments allocated to sub-accounts will be priced at the
accumulation unit value determined no later than 2 business days after receipt
of an order to purchase if the application and all necessary information are
complete. If the application is not complete, Nationwide may retain a purchase
payment for up to 5 business days while attempting to complete it. If the
application is not completed within 5 business days, the prospective purchaser
will be informed of the reason for the delay. The purchase payment will be
returned unless the prospective purchaser specifically allows Nationwide to hold
the purchase payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received. The cumulative total of
all purchase payments under contracts on the life of any one annuitant cannot
exceed $1,000,000 without Nationwide's prior consent.
Purchase payments will not be priced when the New York Stock Exchange is closed
on the following nationally recognized holidays:
o New Year's Day o Independence Day
o Martin Luther King, Jr. Day o Labor Day
o Presidents' Day o Thanksgiving
o Good Friday o Christmas
o Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, contract value may be affected since the contract owner will
not have access to their account.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to sub-accounts and/or the fixed account
as instructed by the contract owner. Shares of the sub-accounts are purchased at
net asset value, then converted into accumulation units. Contract owners can
change allocations or make exchanges among the sub-accounts and the fixed
account. Certain transactions may be subject to conditions imposed by the
underlying mutual funds, as well as those set forth in the contract.
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<PAGE> 18
DETERMINING THE CONTRACT VALUE
The contract value is the sum of:
(1) the value of amounts allocated to the sub-accounts of the variable
account; and
(2) amounts allocated to the fixed account.
If part or all of the contract value is surrendered, or charges are assessed
against the contract value, Nationwide will deduct a proportionate amount from
each sub-account and the fixed account based on current cash values.
Determining Variable Account Value - Valuing an Accumulation Unit
Purchase payments or transfers allocated to sub-accounts are accounted for in
accumulation units. Accumulation unit values (for each sub-account) are
determined by calculating the net investment factor for the underlying mutual
funds for the current valuation period and multiplying that result with the
accumulation unit values determined on the previous valuation period.
Nationwide uses the net investment factor as a way to calculate the investment
performance of a sub-account from valuation period to valuation period. For each
sub-account, the net investment factor shows the investment performance of the
underlying mutual fund in which a particular sub-account invests, including the
charges assessed against that sub-account for a valuation period.
The net investment factor for any particular sub-account is determined by
dividing (a) by (b), and then subtracting (c) from the result, where:
(a) is:
(1) the net asset value of the underlying mutual fund as of the end of
the current valuation period; and
(2) the per share amount of any dividend or income distributions made
by the underlying mutual fund (if the ex-dividend date occurs
during the current valuation period);
(b) is the net asset value of the underlying mutual fund determined as of
the end of the preceding valuation period; and
(c) is a factor representing the daily variable account charges. The factor
is equal to an annual rate of 1.30% of the daily net assets of the
variable account.
Based on the change in the net investment factor, the value of an accumulation
unit may increase or decrease. Changes in the net investment factor may not be
directly proportional to changes in the net asset value of the underlying mutual
fund shares because of the deduction of variable account charges.
Though the number of accumulation units will not change as a result of
investment experience, the value of an accumulation unit may increase or
decrease from valuation period to valuation period.
Determining Fixed Account Value
Nationwide determines the value of the fixed account by:
(1) adding all amounts allocated to the fixed account, minus amounts
previously transferred or withdrawn; and
(2) adding any interest earned on the amounts allocated.
TRANSFERS PRIOR TO ANNUITIZATION
Transfers from the Fixed Account to the Variable Account
Fixed account allocations may be transferred to the variable account only upon
reaching the end of an Interest Rate Guarantee Period. Normally, Nationwide will
permit 100% of such fixed account allocations to be transferred to the variable
account; however, Nationwide may, under certain economic conditions and at its
discretion, limit the maximum transferable amount. Under no circumstances will
the maximum transferable amount be less than 10% of the fixed account
allocations reaching the end of an Interest Rate Guarantee Period. Transfers of
the fixed account allocations must be made
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<PAGE> 19
within 45 days after reaching the end of an Interest Rate Guarantee Period.
Contract owners who use Dollar Cost Averaging may transfer from the fixed
account to the variable account under the terms of that program (see "Dollar
Cost Averaging").
Transfers from the Variable Account to the Fixed Account
Variable account allocations may be transferred to the fixed account at any
time. Normally, Nationwide will not restrict transfers from the variable account
to the fixed account; however, Nationwide may establish a maximum transfer limit
from the variable account to the fixed account.
Except as noted below, under no circumstances will the transfer limit be less
than 10% of the current value of the variable account, less any transfers made
in the 12 months preceding the date the transfer is requested, but not including
transfers made prior to the imposition of the transfer limit. However, where
permitted by state law, Nationwide reserves the right to refuse transfers or
purchase payments to the fixed account when the fixed account value is greater
than or equal to 30% of the contract value at the time the purchase payment is
made or the transfer is requested.
Transfers Among the Sub-Accounts
Allocations may be transferred among the sub-accounts once per valuation period.
TRANSFERS AFTER ANNUITIZATION
After annuitization, transfers may only be made on the anniversary of the
annuitization date.
TRANSFER REQUESTS
Nationwide will accept transfer requests in writing or, in those states that
allow them, over the telephone. Nationwide will use reasonable procedures to
confirm that telephone instructions are genuine and will not be liable for
following telephone instructions that it reasonably determined to be genuine.
Nationwide may withdraw the telephone exchange privilege upon 30 days written
notice to contract owners.
Amounts transferred to the variable account will receive the accumulation unit
value next determined after the request is received.
Interest Rate Guarantee Period
The interest rate guarantee period is the period of time that the fixed account
interest rate is guaranteed to remain the same. Within 45 days of the end of an
interest rate guarantee period, transfers may be made from the fixed account to
the variable account. Nationwide will determine the amount that may be
transferred and will declare this amount at the end of the guarantee period.
This amount will not be less than 10% of the amount in the fixed account that is
maturing.
For new purchase payments allocated to the fixed account, or transfers to the
fixed account from the variable account, this period begins on the date of
deposit or transfer and ends on the one year anniversary of the deposit or
transfer. The guaranteed interest rate period may last for up to 3 months beyond
the 1 year anniversary because guaranteed terms end on the last day of a
calendar quarter.
During an interest rate guarantee period, transfers cannot be made from the
fixed account, and amounts transferred to the fixed account must remain on
deposit.
Market Timing Firms
Some contract owners may use market timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market timing firms will submit transfer or exchange requests on
behalf of multiple contract owners at the same time. Sometimes this can result
in unusually large transfers of funds. These large transfers might interfere
with the ability of Nationwide or the underlying mutual fund to process
transactions. This can potentially disadvantage contract owners not using market
timing firms. To avoid this, Nationwide may modify transfer and exchange rights
of contract
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<PAGE> 20
owners who use market timing firms (or other third parties) to transfer or
exchange funds on their behalf.
The exchange and transfer rights of individual contract owners will not be
modified in any way when instructions are submitted directly by the contract
owner, or by the contract owner's representative (as authorized by the execution
of a valid Nationwide Limited Power of Attorney Form).
To protect contract owners, Nationwide may refuse exchange and transfer
requests:
o submitted by any agent acting under a power of attorney on behalf of more
than one contract owner; or
o submitted on behalf of individual contract owners who have executed
pre-authorized exchange forms which are submitted by market timing firms
(or other third parties) on behalf of more than one contract owner at the
same time.
Nationwide will not restrict exchange rights unless Nationwide believes it to be
necessary for the protection of all contract owners.
RIGHT TO REVOKE
Contract owners have a ten day "free look" to examine the contract. The contract
may be returned to Nationwide's home office for any reason within ten days of
receipt and Nationwide will refund the contract value or another amount required
by law. All IRA refunds will be a return of purchase payments. State and/or
federal law may provide additional free look privileges.
Liability of the variable account under this provision is limited to the
contract value in each sub-account on the date of revocation. Any additional
amounts refunded to the contract owner will be paid by Nationwide.
SURRENDER (REDEMPTION)
Contract owners may surrender some or all of their contract value before the
earlier of the annuitization date or the annuitant's death. Surrender requests
must be in writing and Nationwide may require additional information. When
taking a full surrender, the contract must accompany the written request.
Nationwide may require a signature guarantee.
Nationwide will pay any amounts surrendered from the sub-accounts within 7 days.
However, Nationwide may suspend or postpone payment when it is unable to price a
purchase payment or transfer.
PARTIAL SURRENDERS (PARTIAL REDEMPTIONS)
Nationwide will surrender accumulation units from the sub-accounts and an amount
from the fixed account. The amount withdrawn from each investment option will be
in proportion to the value in each option at the time of the surrender request.
A CDSC may apply. The contract owner may direct Nationwide to deduct the CDSC
from either:
a) the amount requested; or
b) the remaining contract value.
If the contract owner does not make a specific election, any applicable CDSC
will be taken from the remaining contract value.
FULL SURRENDERS (FULL REDEMPTIONS)
The contract value upon full surrender may be more or less than the total of all
purchase payments made to the contract. The contract value will reflect variable
account charges, underlying mutual fund charges and the investment performance
of the underlying mutual funds. A CDSC may apply.
SURRENDERS UNDER A QUALIFIED PLAN OR TAX SHELTERED ANNUITY
Contract owners of a Qualified Plan or Tax Sheltered Annuity may surrender part
or all of their contract value before the earlier of the annuitization date or
the annuitant's death, except as provided below:
A. Contract value attributable to contributions made under a qualified cash or
deferred
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<PAGE> 21
arrangement (within the meaning of Internal Revenue Code Section
402(g)(3)(A)), a salary reduction agreement (within the meaning of Internal
Revenue Code Section 402(g)(3)(C)), or transfers from a Custodial Account
(described in Section 403(b)(7) of the Internal Revenue Code), may be
surrendered only:
1. when the contract owner reaches age 59 1/2, separates from service,
dies, or becomes disabled (within the meaning of Internal Revenue Code
Section 72(m)(7)); or
2. in the case of hardship (as defined for purposes of Internal Revenue
Code Section 401(k)), provided that any such hardship surrender may
NOT include any income earned on salary reduction contributions.
B. The surrender limitations described in Section A also apply to:
1. salary reduction contributions to Tax Sheltered Annuities made for
plan years beginning after December 31, 1988;
2. earnings credited to such contracts after the last plan year beginning
before January 1, 1989, on amounts attributable to salary reduction
contributions; and
3. all amounts transferred from 403(b)(7) Custodial Accounts (except that
earnings and employer contributions as of December 31, 1988 in such
Custodial Accounts may be withdrawn in the case of hardship).
C. Any distribution other than the above, including a ten day free look
cancellation of the contract (when available) may result in taxes,
penalties, and/or retroactive disqualification of a Qualified Contract or
Tax Sheltered Annuity.
In order to prevent disqualification of a Tax Sheltered Annuity after a ten day
free look cancellation, Nationwide will transfer the proceeds to another Tax
Sheltered Annuity upon proper direction by the contract owner.
These provisions explain Nationwide's understanding of current withdrawal
restrictions. These restrictions may change.
Distributions pursuant to Qualified Domestic Relations Orders will not violate
the restrictions stated above.
Plan terms and the Internal Revenue Code may modify surrender provisions when
the contract is issued to fund a Qualified Plan.
LOAN PRIVILEGE
The loan privilege is ONLY available to owners of Qualified Contracts and Tax
Sheltered Annuities. These contract owners can take loans from the contract
value beginning 30 days after the contract is issued up to the annuitization
date. Loans are subject to the terms of the contract, the plan, and the Internal
Revenue Code. Nationwide may modify the terms of a loan to comply with changes
in applicable law.
MINIMUM & MAXIMUM LOAN AMOUNTS
Contract owners may borrow a minimum of $1,000, unless Nationwide is required by
law to allow a lesser minimum amount. Each loan must individually satisfy the
contract minimum amount.
Nationwide will calculate the maximum nontaxable loan amount based upon
information provided by the participant or the employer. Loans may be taxable if
a participant has additional loans from other plans. The total of all
outstanding loans must not exceed the following limits:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
CONTRACT MAXIMUM OUTSTANDING
VALUES LOAN BALANCE ALLOWED
- ---------------------------------------------------------
<S> <C> <C>
NON-ERISA PLANS up to up to 80% of contract
$20,000 value (not more than
$10,000)
- ---------------------------------------------------------
$20,000 up to 50% of contract
and over value (not more than
$50,000*)
- ---------------------------------------------------------
- ---------------------------------------------------------
ERISA PLANS All up to 50% of contract
value (not more than
$50,000*)
- ---------------------------------------------------------
</TABLE>
*The $50,000 limits will be reduced by the highest outstanding balance owed
during the previous 12 months.
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<PAGE> 22
For salary reduction Tax Sheltered Annuities, loans may be secured only by the
contract value.
LOAN PROCESSING FEE
Nationwide may charge a loan processing fee at the time each new loan is
processed. If assessed, this fee will compensate Nationwide for expenses related
to administering and processing loans.
The fee is taken from the sub-accounts and the fixed account in proportion to
the contract value at the time the loan is processed.
HOW LOAN REQUESTS ARE PROCESSED
All loans are made from the collateral fixed account. Nationwide transfers
accumulation units in proportion to the assets in each sub-account to the
collateral fixed account until the requested amount is reached. If there are not
enough accumulation units available in the contract to reach the requested loan
amount, Nationwide next transfers contract value from the fixed account. No CDSC
will be deducted on transfers related to loan processing.
INTEREST
The outstanding loan balance in the collateral fixed account is credited with
interest until the loan is repaid in full. The credited interest rate will be
2.25% less than the loan interest rate fixed by Nationwide. The credited
interest rate is guaranteed never to fall below 3.0%.
Specific loan terms are disclosed at the time of loan application or issuance.
LOAN REPAYMENT
Loans must be repaid in five years. However, if the loan is used to purchase the
contract owner's principal residence, the contract owner has 15 years to repay
the loan.
Contract owners must identify loan repayments as loan repayments or they will be
treated as purchase payments and will not reduce the outstanding loan. Payments
must be substantially level and made at least quarterly.
Loan repayments will consist of principal and interest in amounts set forth in
the loan agreement. Repayments are allocated to the sub-accounts in accordance
with the contract, unless Nationwide and the contract owner have agreed to amend
the contract at a later date on a case by case basis.
DISTRIBUTIONS & ANNUITY PAYMENTS
Distributions made from the contract while a loan is outstanding will be reduced
by the amount of the outstanding loan plus accrued interest if:
o the contract is surrendered;
o the contract owner/annuitant dies;
o the contract owner who is not the annuitant dies prior to
annuitization; or
o annuity payments begin.
TRANSFERRING THE CONTRACT
Nationwide reserves the right to restrict any transfer of the contract while the
loan is outstanding.
GRACE PERIOD & LOAN DEFAULT
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available (please refer to the terms of the loan agreement).
If a loan payment is not made by the end of the applicable grace period, the
entire loan will be treated as a deemed distribution and will be taxable to the
borrower. This deemed distribution may also be subject to an early withdrawal
tax penalty by the Internal Revenue Service.
After default, interest will continue to accrue on the loan. Defaulted amounts,
plus interest, are deducted from the contract value when the participant is
eligible for a distribution of at least that amount. Additional loans are not
available while a previous loan is in default.
ASSIGNMENT
Contract rights are personal to the contract owner and may not be assigned
without Nationwide's written consent. Qualified Contracts, IRAs, SEP IRAs, and
Tax Sheltered Annuities may not be assigned, pledged or
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<PAGE> 23
otherwise transferred except where allowed by law.
A Non-Qualified Contract owner may assign some or all rights under the contract.
An assignment must occur before annuitization while the annuitant is alive. Once
proper notice of assignment is recorded by Nationwide's home office, the
assignment will become effective as of the date the written request was signed.
Nationwide is not responsible for the validity or tax consequences of any
assignment. Nationwide is not liable for any payment or settlement made before
the assignment is recorded. Assignments will not be recorded until Nationwide
receives sufficient direction from the contract owner and the assignee regarding
the proper allocation of contract rights.
Amounts pledged or assigned will be treated as distributions and will be
included in gross income to the extent that the cash value exceeds the
investment in the contract for the taxable year in which it was pledged or
assigned. Amounts assigned may be subject to a tax penalty equal to 10% of the
amount included in gross income.
Assignment of the entire contract value may cause the portion of the contract
value exceeding the total investment in the contract and previously taxed
amounts to be included in gross income for federal income tax purposes each year
that the assignment is in effect.
CONTRACT OWNER SERVICES
ASSET REBALANCING
Asset rebalancing is the automatic reallocation of contract values to the
sub-accounts on a predetermined percentage basis. Asset rebalancing is not
available for assets held in the fixed account. Requests for asset rebalancing
must be on a Nationwide form.
Asset rebalancing occurs every three months or on another frequency if permitted
by Nationwide. If the last day of the three-month period falls on a Saturday,
Sunday, recognized holiday, or any other day when the New York Stock Exchange is
closed, asset rebalancing will occur on the next business day.
Asset rebalancing may be subject to employer limitations or restrictions for
contracts issued to a Qualified Plan or Tax Sheltered Annuity plan. Contract
owners should consult a financial adviser to discuss the use of asset
rebalancing.
Nationwide reserves the right to stop establishing new asset rebalancing
programs. Nationwide also reserves the right to assess a processing fee for this
service.
DOLLAR COST AVERAGING
Dollar cost averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from the fixed account and/or certain sub-accounts into other
sub-accounts. Nationwide does not guarantee that this program will result in
profit or protect contract owners from loss.
Contract owners direct Nationwide to automatically transfer specified amounts
from the fixed account and the NSAT Money Market Fund to any other underlying
mutual fund. Transfers from the fixed account must be equal to 1/30th of the
fixed account value at the time the program is requested.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the contract owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new dollar cost averaging
programs. Nationwide also reserves the right to assess a processing fee for this
service.
SYSTEMATIC WITHDRAWALS
Systematic withdrawals allow contract owners to receive a specified amount (of
at least $100) on a monthly, quarterly, semi-annual, or annual basis. Requests
for systematic withdrawals and
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requests to discontinue systematic withdrawals must be in writing.
The withdrawals will be taken from the sub-accounts and the fixed account
proportionately unless Nationwide is instructed otherwise.
A CDSC may apply to amounts taken through systematic withdrawals.
If a CDSC applies, the maximum amount that can be withdrawn annually without a
CDSC is the greatest of:
1) 10% of all purchase payments made to the contract as of the withdrawal
date; or
2) any amount withdrawn to meet minimum distribution requirements under
the Internal Revenue Code.
The CDSC-free withdrawal privilege for systematic withdrawals is non-cumulative.
Free amounts not taken during any contract year cannot be taken as free amounts
in a subsequent contract year.
Nationwide will withhold federal income taxes from systematic withdrawals unless
otherwise instructed by the contract owner. The Internal Revenue Service may
impose a 10% penalty tax if the contract owner is under age 59 1/2 unless the
contract owner has made an irrevocable election of distributions of
substantially equal payments.
Nationwide reserves the right to stop establishing new systematic withdrawal
programs. Nationwide also reserves the right to assess a processing fee for this
service. Systematic withdrawals are not available before the end of the ten-day
free look period (see "Right to Revoke").
ANNUITY COMMENCEMENT DATE
The annuity commencement date is the date on which annuity payments are
scheduled to begin. The contract owner may change the annuity commencement date
before annuitization. This change must be in writing and approved by Nationwide.
ANNUITIZING THE CONTRACT
ANNUITIZATION DATE
The annuitization date is the date that annuity payments begin. It will be the
first day of a calendar month unless otherwise agreed, and must be at least 2
years after the contract is issued. If the contract is issued to fund a Tax
Sheltered Annuity, annuitization may occur during the first 2 years subject to
Nationwide's approval.
ANNUITIZATION
Annuitization is the period during which annuity payments are received. It is
irrevocable once payments have begun. Upon arrival of the annuitization date,
the annuitant must choose:
(1) an annuity payment option; and
(2) either a fixed payment annuity, variable payment annuity, or an
available combination.
Nationwide guarantees that each payment under a fixed payment annuity will be
the same throughout annuitization. Under a variable payment annuity, the amount
of each payment will vary with the performance of the underlying mutual funds
chosen by the contract owner.
FIXED PAYMENT ANNUITY
A fixed payment annuity is an annuity where the amount of the annuity payments
remains level.
The first payment under a fixed payment annuity is determined on the
annuitization date on an age last birthday basis by:
1) deducting applicable premium taxes from the total contract value; then
2) applying the contract value amount specified by the contract owner to
the fixed payment annuity table for the annuity payment option
elected.
Subsequent payments will remain level unless the annuity payment option elected
provides otherwise. Nationwide does not credit discretionary interest during
annuitization.
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VARIABLE PAYMENT ANNUITY
A variable payment annuity is an annuity where the amount of the annuity
payments will vary depending on the performance of the underlying mutual funds
selected.
The first payment under a variable payment annuity is determined on the
annuitization date on an age last birthday basis by:
(1) deducting applicable premium taxes from the total contract value; then
(2) applying the contract value amount specified by the contract owner to
the variable payment annuity table for the annuity payment option
elected.
The dollar amount of the first payment is converted into a set number of annuity
units that will represent each monthly payment. This is done by dividing the
dollar amount of the first payment by the value of an annuity unit as of the
annuitization date. This number of annuity units remains fixed during
annuitization.
The second and subsequent payments are determined by multiplying the fixed
number of annuity units by the annuity unit value for the valuation period in
which the payment is due. The amount of the second and subsequent payments will
vary with the performance of the selected underlying mutual funds. Nationwide
guarantees that variations in mortality experience from assumptions used to
calculate the first payment will not affect the dollar amount of the second and
subsequent payments.
Assumed Investment Rate
An assumed investment rate is the percentage rate of return assumed to determine
the amount of the first payment under a variable payment annuity. Nationwide
uses the assumed investment rate of 3.5% to calculate the first annuity payment
and to calculate the investment performance of an underlying mutual fund in
order to determine subsequent payments under a variable payment annuity. An
assumed investment rate is the percentage rate of return required to maintain
level variable annuity payments. Subsequent variable annuity payments may be
more or less than the first payment based on whether actual investment
performance is higher or lower than the assumed investment rate of 3.5%.
Value of an Annuity Unit
Annuity unit values for sub-accounts are determined by multiplying the net
investment factor for the valuation period for which the annuity unit is being
calculated by the immediately preceding valuation period's annuity unit value,
and multiplying the result by an interest factor to neutralize the assumed
investment rate of 3.5% per annum built into the variable payment annuity
purchase rate basis in the contracts.
Exchanges among Underlying Mutual Funds
Exchanges among underlying mutual funds during annuitization must be in writing.
Exchanges will occur on each anniversary of the annuitization date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Payments are made based on the annuity payment option selected, unless:
o the amount to be distributed is less than $500, in which case
Nationwide may make one lump sum payment of the contract value; or
o an annuity payment would be less than $20, in which case Nationwide
can change the frequency of payments to intervals that will result in
payments of at least $20. Payments will be made at least annually.
ANNUITY PAYMENT OPTIONS
Contract owners must elect an annuity payment option before the annuitization
date. The annuity payment options are:
(1) LIFE ANNUITY - An annuity payable periodically, but at least annually, for
the lifetime of the annuitant. Payments will end upon the annuitant's
death. For example, if the annuitant dies before the second annuity payment
date, the annuitant will receive only one annuity payment. The annuitant
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will only receive two annuity payments if he or she dies before the third
annuity payment date, and so on.
(2) JOINT AND LAST SURVIVOR ANNUITY - An annuity payable periodically, but at
least annually, during the joint lifetimes of the annuitant and a
designated second individual. If one of these parties dies, payments will
continue for the lifetime of the survivor. As is the case under option 1,
there is no guaranteed number of payments. Payments end upon the death of
the last surviving party, regardless of the number of payments received.
(3) LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED - An annuity
payable monthly during the lifetime of the annuitant. If the annuitant dies
before all of the guaranteed payments have been made, payments will
continue to the end of the guaranteed period and will be paid to a designee
chosen by the annuitant at the time the annuity payment option was elected.
The designee may elect to receive the present value of the remaining
guaranteed payments in a lump sum. The present value will be computed as of
the date Nationwide receives the notice of the annuitant's death.
Not all of the annuity payment options may be available in all states. Contract
owners may request other options before the annuitization date. These options
are subject to Nationwide's approval.
No distribution for Non-Qualified Contracts will be made until an annuity
payment option has been elected. Qualified Contracts, IRAs, SEP IRAs, and Tax
Sheltered Annuities are subject to the "minimum distribution" requirements set
forth in the plan, contract, and the Internal Revenue Code.
DEATH BENEFITS
DEATH OF CONTRACT OWNER - NON-QUALIFIED CONTRACTS
If the contract owner who is not the annuitant dies before the annuitization
date, the joint owner becomes the contract owner. If no joint owner is named,
the contingent owner becomes the contract owner. If no contingent owner is
named, the last surviving contract owner's estate becomes the contract owner.
If the contract owner and annuitant are the same, and the contact
owner/annuitant dies before the annuitization date, the contingent owner will
not have any rights in the contract unless the contingent owner is also the
beneficiary.
For contracts issued on or after January 19, 1985, distributions under
Non-Qualified Contracts will be made pursuant to the "Required Distributions for
Non-Qualified Contracts" provision.
DEATH OF ANNUITANT - NON-QUALIFIED CONTRACTS
If the annuitant who is not the contract owner dies before the annuitization
date, a death benefit is payable to the beneficiary unless a contingent
annuitant is named. If a contingent annuitant is named, the contingent annuitant
becomes the annuitant and no death benefit is payable.
The beneficiary may elect to receive the death benefit:
(1) in a lump sum;
(2) as an annuity; or
(3) in any other manner permitted by law and approved by Nationwide.
The beneficiary must notify Nationwide of this election within 60 days of the
annuitant's death.
If no beneficiaries survive the annuitant, the contingent beneficiary(ies)
receives the death benefit. Contingent beneficiaries will share the death
benefit equally, unless otherwise specified.
If no beneficiaries or contingent beneficiaries survive the annuitant, the
contract owner or the last surviving contract owner's estate will receive the
death benefit.
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If the annuitant dies after the annuitization date, any benefit that may be
payable will be paid according to the selected annuity payment option.
DEATH OF CONTRACT OWNER/ANNUITANT
If a contract owner who is also the annuitant dies before the annuitization
date, a death benefit is payable according to the "Death of the Annuitant -
Non-Qualified Contracts" provision.
If the contract owner/annuitant dies after the annuitization date, any benefit
that may be payable will be paid according to the selected annuity payment
option.
DEATH BENEFIT PAYMENT
The death benefit value is determined as of the date Nationwide receives:
(1) proper proof of the annuitant's death;
(2) an election specifying the distribution method; and
(3) any state required form(s).
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
1) the total of all purchase payments, less any amounts surrendered; or
2) the contract value.
However, if the annuitization date is deferred beyond the annuitant's 75th
birthday, the death benefit will be the contract value.
REQUIRED DISTRIBUTIONS
REQUIRED DISTRIBUTIONS FOR NON-QUALIFIED CONTRACTS
Internal Revenue Code Section 72(s) requires Nationwide to make certain
distributions when a contract owner dies. The following distributions will be
made according to those requirements:
1) If any contract owner dies on or after the annuitization date and
before the entire interest in the contract has been distributed, then
the remaining interest must be distributed at least as rapidly as the
distribution method in effect on the contract owner's death.
2) If any contract owner dies before the annuitization date, then the
entire interest in the contract (consisting of either the death
benefit or the contract value reduced by charges set forth elsewhere
in the contract) will be distributed within 5 years of the contract
owner's death, provided however:
a) any interest payable to or for the benefit of a natural person
(referred to herein as a "designated beneficiary"), may be
distributed over the life of the designated beneficiary or over a
period not longer than the life expectancy of the designated
beneficiary.
Payments must begin within one year of the contract owner's death
unless otherwise permitted by federal income tax regulations;
b) if the designated beneficiary is the surviving spouse of the
deceased contract owner, the spouse can choose to become the
contract owner instead of receiving a death benefit. Any
distributions required under these distribution rules will be
made upon that spouse's death.
In the event that the contract owner is NOT a natural person (e.g., a trust or
corporation), then, for purposes of these distribution provisions:
a) the death of the annuitant will be treated as the death of a contract
owner;
b) any change of annuitant will be treated as the death of a contract
owner; and
c) in either case, the appropriate distribution will be made upon the
death or change, as the case may be. The annuitant is the primary
annuitant as defined in Section 72(s)(6)(B) of the Internal Revenue
Code.
These distribution provisions do not apply to any contract exempt from Section
72(s) of the
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Internal Revenue Code by reason of Section 72(s)(5) or any other law or rule.
The designated beneficiary must elect a method of distribution and notify
Nationwide of this election within 60 days of the contract owner's death.
REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS AND TAX SHELTERED ANNUITIES
Distributions from Qualified Plans or Tax Sheltered Annuities will be made
according to the Minimum Distribution and Incidental Benefit provisions of
Section 401(a)(9) of the Internal Revenue Code. Distributions will be made to
the annuitant according to the selected annuity payment option over a period not
longer than
a) the life of the annuitant or the joint lives of the annuitant and the
annuitant's designated beneficiary; or
b) a period not longer than the life expectancy of the annuitant or the
joint life expectancies of the annuitant and the annuitant's
designated beneficiary.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Tax Sheltered Annuity of the annuitant.
If the annuitant's entire interest in a Qualified Plan or Tax Sheltered Annuity
will be distributed in equal or substantially equal payments over a period
described in a) or b), the payments will begin on the required beginning date.
The required beginning date is the later of:
a) April 1 of the calendar year following the calendar year in which the
annuitant reaches age 70 1/2; or
b) the annuitant's retirement date.
Provision b) does not apply to any employee who is a 5% owner (as defined in
Section 416 of the Internal Revenue Code) with respect to the plan year ending
in the calendar year when the employee attains the age of 70 1/2.
Payments beginning on the required beginning date will not be less than the
lesser of the quotient obtained by dividing the entire interest of the annuitant
by the annuitant's life expectancy or the joint life expectancies of the
annuitant and the annuitant's designated beneficiary (if the annuitant dies
before the required beginning date) or the beneficiary under the selected
annuity payment option (if the annuitant dies after the required beginning
date), whichever is applicable under the applicable minimum distribution or MDIB
provisions. Life expectancy and joint life expectancies are computed by using
return multiples contained in Section 1.72-9 of the Treasury Regulations.
If the annuitant dies before distributions begin, the interest in the Qualified
Plan or Tax Sheltered Annuity must be distributed by December 31 of the calendar
year in which the fifth anniversary of the annuitant's death occurs unless:
a) the annuitant names his or her surviving spouse as the beneficiary and
the spouse chooses to receive distribution of the contract in
substantially equal payments over his or her life (or a period not
longer than his or her life expectancy) and beginning no later than
December 31 of the year in which the annuitant would have attained age
70 1/2; or
b) the annuitant names a beneficiary other than his or her surviving
spouse and the beneficiary elects to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year in which the annuitant
dies.
If the annuitant dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule used before the annuitant's
death.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference
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between the amount that should have been distributed for that year and the
amount that actually was distributed for that year.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES AND SEP IRAs
Distributions from an Individual Retirement Annuity or a SEP IRA must begin no
later than April 1 of the calendar year following the calendar year in which the
contract owner reaches age 70 1/2. Distribution may be paid in a lump sum or in
substantially equal payments over:
a) the contract owner's life or the lives of the contract owner and his
or her spouse or designated beneficiary; or
b) a period not longer than the life expectancy of the contract owner or
the joint life expectancy of the contract owner and the contract
owner's designated beneficiary.
If the contract owner dies before distributions begin, the interest in the
Individual Retirement Annuity must be distributed by December 31 of the calendar
year in which the fifth anniversary of the contract owner's death occurs,
unless:
a) the contract owner names his or her surviving spouse as the
beneficiary and such spouse chooses to:
1) treat the contract as an Individual Retirement Annuity or SEP IRA
established for his or her benefit; or
2) receive distribution of the contract in substantially equal
payments over his or her life (or a period not longer than his or
her life expectancy) and beginning no later than December 31 of
the year in which the contract owner would have reached age
70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and such beneficiary elects to receive a distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year of the contract
owner's death.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Individual Retirement Annuity, SEP IRA, or
Individual Retirement Account of the contract owner.
If the contract owner dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule being used before the
contract owner's death. However, a surviving spouse who is the beneficiary under
the annuity payment option may treat the contract as his or her own, in the same
manner as is described in section (a)(i) of this provision.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
A portion of each distribution will be included in the recipient's gross income
and taxed at ordinary income tax rates. The portion of a distribution which is
taxable is based on the ratio between the amount by which non-deductible
purchase payments exceed prior nontaxable distributions and total account
balances at the time of the distribution. The owner of an Individual Retirement
Annuity must annually report the amount of non-deductible purchase payments, the
amount of any distribution, the amount by which non-deductible purchase payments
for all years exceed nontaxable distributions for all years, and the total
balance of all Individual Retirement Annuities.
Individual Retirement Annuity and SEP IRA distributions will not receive the
favorable tax treatment of a lump sum distribution from a Qualified Plan. If the
contract owner dies before the entire interest in the contract has been
distributed, the balance will also be included in his or her gross estate.
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FEDERAL TAX CONSIDERATIONS
FEDERAL INCOME TAXES
The tax consequences of purchasing a contract described in this prospectus will
depend on:
o the type of contract purchased;
o the purposes for which the contract is purchased; and
o the personal circumstances of individual investors having interests in
the contracts.
See "Synopsis of the Contracts" for a brief description of the various types of
contracts and the different purposes for which the contracts may be purchased.
Existing tax rules are subject to change, and may affect individuals differently
depending on their situation. Nationwide does not guarantee the tax status of
any contracts or any transactions involving the contracts.
Annuity contracts are often purchased with the expectation that investment
earnings will be taxable only upon withdrawal from the contract (tax-deferral).
In some cases, tax-deferral may apply as a result of the type of contract
purchased. In other cases, tax-deferral may apply, but only as a result of the
contract being purchased by certain tax qualified or tax advantaged plans - such
plans are typically permitted to purchase other investments besides annuities
and retain tax-deferred status.
The following is a brief summary of some of the federal income tax
considerations related to the contracts. In addition to the federal income tax,
distributions from annuity contracts may be subject to state and local income
taxes. The tax rules across all states and localities are not uniform and
therefore will not be discussed in this prospectus. Tax rules that may apply to
contracts issued in U.S. territories such as Puerto Rico and Guam are also not
discussed. Nothing in this prospectus should be considered to be tax advice.
Contract owners and prospective contract owners are encouraged to consult a
financial consultant, tax advisor or legal counsel to discuss the taxation and
use of the contracts.
The Internal Revenue Code sets forth different income tax rules for the
following types of annuity contracts:
o IRAs;
o SEP IRAs;
o Tax Sheltered Annuities; and
o "Non-Qualified Annuities."
IRAs and SEP IRAs
Distributions from IRAs and SEP IRAs are generally taxed when received. If any
of the amount contributed to the IRA was nondeductible for federal income tax
purposes, then a portion of each distribution is excludable from income.
If distributions of income from an IRA are made prior to the date that the owner
attains the age of 59 1/2 years, the income is subject to both the regular
income tax and an additional penalty tax of 10%. The penalty tax can be avoided
if the distribution is:
o made to a beneficiary on or after the death of the owner;
o attributable to the owner becoming disabled (as defined in the Internal
Revenue Code;
o part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and his
or her designated beneficiary;
o used for qualified higher education expenses; or
o used for expenses attributable to the purchase of a home for a qualified
first-time buyer.
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Tax Sheltered Annuities
Distributions from Tax Sheltered Annuities are generally taxed when received. A
portion of each distribution is excludable from income based on a formula
established pursuant to the Internal Revenue Code. The formula excludes from
income the amount invested in the contract divided by the number of anticipated
payments until the full investment in the contract is recovered. Thereafter all
distributions are fully taxable.
If a distribution of income is made from a Tax Sheltered Annuity prior to the
date that the owner attains the age of 59 1/2 years, the income is subject to
both the regular income tax and an additional penalty tax of 10%. The penalty
tax can be avoided if the distribution is:
o made to a beneficiary on or after the death of the owner;
o attributable to the owner becoming disabled as defined in the Internal
Revenue Code;
o part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and his
or her designated beneficiary;
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o for qualified higher education expenses;
o used for expenses attributable to the purchase of a home for a qualified
first-time buyer; or
o made to the owner after separation from service with his or her employer
after age 55.
Non-Qualified Contracts - Natural Persons as Contract Owners
Generally, the income earned inside a Non-Qualified Annuity Contract that is
owned by a natural person is not taxable until it is distributed from the
contract.
Distributions before the annuitization date are taxable to the contract owner to
the extent that the cash value of the contract exceeds the contract owner's
investment at the time of the distribution. Distributions, for this purpose,
include partial surrenders, any portion of the contract that is assigned or
pledged; or any portion of the contract that is transferred by gift. For these
purposes, a transfer by gift may occur upon annuitization if the contract owner
and the annuitant are not the same individual.
With respect to annuity distributions on or after the annuitization date, a
portion of each annuity payment is excludable from taxable income. The amount
excludable is based on the ratio between the contract owner's investment in the
contract and the expected return on the contract. Once the entire investment in
the contract is recovered, all distributions are fully includable in income. The
maximum amount excludable from income is the investment in the contract. If the
annuitant dies before the entire investment in the contract has been excluded
from income, and as a result of the annuitant's death no more payments are due
under the contract, then the unrecovered investment in the contract may be
deducted on his or her final tax return.
In determining the taxable amount of a distribution, all annuity contracts
issued after October 21, 1988 by the same company to the same contract owner
during the same calendar year will be treated as one annuity contract.
A special rule applies to distributions from contracts that have investments
that were made prior to August 14, 1982. For those contracts, distributions that
are made prior to the annuitization date are treated first as a recovery of the
investment in the contract as of that date. A distribution in excess of the
amount of the investment in the contract as of August 14, 1982, will be treated
as taxable income.
The Internal Revenue Code imposes a penalty tax if a distribution is made before
the contract owner reaches age 59 1/2. The amount of the penalty is 10% of the
portion of any distribution that is includible in gross income. The penalty tax
does not apply if the distribution is:
o the result of a contract owner's death;
o the result of a contract owner's disability, as defined in the Internal
Revenue Code;
o one of a series of substantially equal periodic payments made over the life
(or life expectancy) of the contract owner or the joint lives (or joint
life expectancies) of the contract owner and the beneficiary selected by
the contract owner to receive payment under the annuity payment option
selected by the contract owner; or
o is allocable to an investment in the contract before August 14, 1982.
Non-Qualified Contracts - Non-Natural Persons as Contract Owners
The previous discussion related to the taxation of Non-Qualified Contracts owned
by individuals. Different rules (the so-called "non-natural persons" rules)
apply if the contract owner is not a natural person.
Generally, contracts owned by corporations, partnerships, trusts, and similar
entities are not treated as annuity contracts under the Internal Revenue Code.
Therefore, income earned under a Non-Qualified Contract that is owned by a
non-natural person is taxed as ordinary income during the taxable year that it
is earned. Taxation is not deferred, even if the income is
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not distributed out of the contract. The income is taxable as ordinary income,
not capital gain.
The non-natural persons rules do not apply to all entity-owned contracts. A
contract that is owned by a non-natural person as an agent of an individual is
treated as owned by the individual. This would cause the contract to be treated
as an annuity under the Internal Revenue Code, allowing tax deferral. However,
this exception does not apply when the non-natural person is an employer that
holds the contract under a non-qualified deferred compensation arrangement for
one or more employees.
The non-natural persons rules also do not apply to contracts that are:
o acquired by the estate of a decedent by reason of the death of the
decedent;
o issued in connection with certain qualified retirement plans and individual
retirement plans;
o purchased by an employer upon the termination of certain qualified
retirement plans.
WITHHOLDING
Pre-death distributions from the contracts are subject to federal income tax.
Nationwide will withhold the tax from the distributions unless the contract
owner requests otherwise. If the distribution is from a Tax Sheltered Annuity,
it will be subject to mandatory 20% withholding that cannot be waived, unless:
o the distribution is made directly to another Tax Sheltered Annuity or an
IRA; or
o the distribution satisfies the minimum distribution requirements imposed by
the Internal Revenue Code.
In addition, contract owners may not waive withholding if the distribution is
subject to mandatory back-up withholding (if no taxpayer identification number
is given or if the Internal Revenue Service notifies Nationwide that mandatory
back-up withholding is required). Mandatory back-up withholding rates are 31% of
income that is distributed.
NON-RESIDENT ALIENS
Generally, a pre-death distribution from a contract to a non-resident alien is
subject to federal income tax at a rate of 30% of the amount of income that is
distributed. Nationwide is required to withhold this amount and send it to the
Internal Revenue Service. Some distributions to non-resident aliens may be
subject to a lower (or no) tax if a treaty applies. In order to obtain the
benefits of such a treaty, the non-resident alien must:
1) provide Nationwide with proof of residency and citizenship (in
accordance with Internal Revenue Service requirements); and
2) provide Nationwide with an individual taxpayer identification number.
If the non-resident alien does not meet the above conditions, Nationwide will
withhold 30% of income from the distribution.
Another way to avoid the 30% withholding is for the non-resident alien to
provide Nationwide with sufficient evidence that:
1) the distribution is connected to the non-resident alien's conduct of
business in the United States; and
2) the distribution is includible in the non-resident alien's gross
income for United States federal income tax purposes.
Note that these distributions may be subject to back-up withholding, currently
31%, if a correct taxpayer identification number is not provided.
FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES
The following transfers may be considered a gift for federal gift tax purposes:
o a transfer of the contract from one contract owner to another; or
o a distribution to someone other than a contract owner.
Upon the contract owner's death, the value of the contract may subject to estate
taxes, even if
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all or a portion of the value is also subject to federal income taxes.
Section 2612 of the Internal Revenue Code may require Nationwide to determine
whether a death benefit or other distribution is a "direct skip" and the amount
of the resulting generation skipping transfer tax, if any. A direct skip is when
property is transferred to, or a death benefit or other distribution is made to:
a) an individual who is two or more generations younger than the contract
owner; or
b) certain trusts, as described in Section 2613 of the Internal Revenue
Code (generally, trusts that have no beneficiaries who are not 2 or
more generations younger than the contract owner).
If the contract owner is not an individual, then for this purpose ONLY,
"contract owner" refers to any person:
o who would be required to include the contract, death benefit,
distribution, or other payment in his or her federal gross estate at
his or her death; or
o who is required to report the transfer of the contract, death benefit,
distribution, or other payment for federal gift tax purposes.
If a transfer is a direct skip, Nationwide will deduct the amount of the
transfer tax from the death benefit, distribution or other payment, and remit it
directly to the Internal Revenue Service.
CHARGE FOR TAX
Nationwide is not required to maintain a capital gain reserve liability on
Non-Qualified Contracts. If tax laws change requiring a reserve, Nationwide may
implement and adjust a tax charge.
DIVERSIFICATION
Internal Revenue Code Section 817(h) contains rules on diversification
requirements for variable annuity contracts. A variable annuity contract that
does not meet these diversification requirements will not be treated as an
annuity, unless
o the failure to diversify was accidental;
o the failure is corrected; and
o a fine is paid to the Internal Revenue Service.
The amount of the fine will be the amount of tax that would have been paid by
the contract owner if the income, for the period the contract was not
diversified, had been received by the contract owner.
If the violation is not corrected, the contract owner will be considered the
owner of the underlying securities and will be taxed on the earnings of his or
her contract. Nationwide believes that the investments underlying this contract
meet these diversification requirements.
TAX CHANGES
The foregoing tax information is based on Nationwide's understanding of federal
tax laws. It is NOT intended as tax advice. All information is subject to change
without notice. For more details, contact your personal tax and/or financial
advisor.
STATEMENTS AND REPORTS
Nationwide will mail contract owners statements and reports. Therefore, contract
owners should promptly notify Nationwide of any address change.
These mailings will contain:
o statements showing the contract's quarterly activity;
o confirmation statements showing transactions that affect the
contract's value. Confirmation statements will not be sent for
recurring transactions (i.e., dollar cost averaging or salary
reduction programs). Instead, confirmation of recurring transactions
will appear in the contract's quarterly statements;
34
<PAGE> 35
o semi-annual reports as of June 30 containing financial statements for
the variable account; and
o annual reports as of December 31 containing financial statements for
the variable account.
Contract owners should review statements and confirmations carefully. All errors
or corrections must be reported to Nationwide immediately to assure proper
crediting to the contract. Unless Nationwide is notified within 30 days of
receipt of the statement, Nationwide will assume statements and confirmation
statements are correct.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits relating to life insurance and annuity
pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance contract and the other who was the owner of a variable annuity
contract, commenced a lawsuit in a federal court in Texas against Nationwide and
the American Century group of defendants (Robert Young and David D. Distad v.
Nationwide Life Insurance Company et al.). In this lawsuit, plaintiffs sought to
represent a class of variable life insurance contract owners and variable
annuity contract owners whom they claim were allegedly misled when purchasing
these variable contracts into believing that the performance of their underlying
mutual fund option managed by American Century, whose shares may only be
purchased by insurance companies, would track the performance of a mutual fund,
also managed by American Century, whose shares are publicly traded. The amended
complaint seeks unspecified compensatory and punitive damages. On April 27,
1998, the District Court denied, in part, and granted, in part, motions to
dismiss the complaint filed by Nationwide and American Century. The remaining
claims against Nationwide allege securities fraud, common law fraud, civil
conspiracy, and breach of contract. The District Court, on December 2, 1998,
issued an order denying plaintiffs' motion for class certification and the
appeals court declined to review the order denying class certification upon
interlocutory appeal. On June 11, 1999, the District Court denied the
plaintiffs' motion to amend their complaint and reconsider class certification.
In January 2000 Nationwide and American Century settled this lawsuit now limited
to the claims of the two named plaintiffs. On February 9, 2000 the court
dismissed this lawsuit with prejudice.
On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court
related to the sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide
Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life
and Annuity Insurance Company). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as a class action on behalf of all persons who purchased
individual deferred annuity contracts or participated in group annuity contracts
sold by Nationwide and the other named Nationwide affiliates which were used to
fund certain tax-deferred retirement plans. The amended complaint seeks
unspecified compensatory and punitive damages. No class has been certified. On
June 11, 1999, Nationwide and the other named defendants filed a motion to
dismiss the amended complaint. On March 8, 2000, the Court denied the motion to
dismiss the amended complaint filed by Nationwide and other named defendants.
Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, Clarendon Insurance Agency, Inc., is not engaged in any
litigation of any material nature.
35
<PAGE> 36
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History...............................................1
Services......................................................................1
Purchase of Securities Being Offered..........................................1
Underwriters..................................................................2
Calculations of Yield Quotations of Money Market Sub-Accounts.................2
Annuity Payments..............................................................2
Financial Statements..........................................................3
36
<PAGE> 37
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investments
for variable annuity contracts and variable life insurance policies issued by
insurance companies.
There is no guarantee that the investment objectives will be met.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A
Investment Objective: To provide long-term growth of capital and future income
rather than current income return. To achieve this objective, it is the policy
of the Fund to keep its assets invested, except for working cash balances, in
the common stocks, or securities convertible into common stocks, of companies
believed by the management to possess better-than-average prospects for
long-term growth. Emphasis is placed on the selection of progressive,
well-managed companies. The Fund's investment adviser is Massachusetts Financial
Service Company.
MASSACHUSETTS INVESTORS TRUST - CLASS A
Investment Objective: To provide reasonable current income and long-term growth
of capital and income. The Fund is believed to constitute a conservative medium
for that portion of an investor's capital which he wishes to have invested in
common stocks considered to be high or improving investment quality. The Fund's
investment adviser is Massachusetts Financial Service Company.
MFS(R) BOND FUND - CLASS A
Investment Objective: To provide a high level of current income for distribution
to investors as is believed to be consistent with prudent investment risk. An
additional objective is to seek protection of investor's capital. The Fund's
investment adviser is Massachusetts Financial Service Company.
MFS(R) EMERGING GROWTH FUND - CLASS A
Investment Objective: To seek long-term growth of capital. The selection of
securities is made solely on the basis of potential for growth of capital.
Dividend and interest income from portfolio securities, if any, is incidental to
the investment objective of long-term growth of capital. The Fund's investment
adviser is Massachusetts Financial Service Company.
The contract owner may allocate to the Fund purchase payments (or contract value
attributable to purchase payments) made on or after January 1, 1981.
MFS(R) GLOBAL GOVERNMENTS FUND - CLASS A
Investment Objective: To seek not only preservation, but also growth of capital,
together with moderate current income through a professionally managed
internationally diversified portfolio consisting primarily of debt securities
and, to a lesser extent, equity securities. The Fund is designed for investors
who wish to diversify their investments beyond the United States and who are
prepared to accept the risks entailed in such investments which may be higher
than those associated with certain U.S. investments. See "Special
Considerations" section in the MFI-B Prospectus. The Fund's investment adviser
is Massachusetts Financial Service Company.
MFS(R) GROWTH OPPORTUNITIES FUND - CLASS A
Investment Objective: To seek growth of capital. The selection of securities is
made solely on the basis of potential for capital appreciation. Dividend income,
if any, is incidental to the objective of growth capital. The Fund's investment
adviser is Massachusetts Financial Service Company.
37
<PAGE> 38
MFS(R) HIGH INCOME FUND - CLASS A
Investment Objective: To seek 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 the 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 higher rating
categories. Capital growth is a consideration incidental to the investment
objective of high current income. The Fund's investment adviser is Massachusetts
Financial Service Company.
MFS(R) RESEARCH FUND - CLASS A
Investment Objective: To provide long-term growth of capital and future income.
As a secondary objective the Fund will attempt to provide more current dividend
income than is normally obtainable from a portfolio of growth stocks only. The
Fund's investment adviser is Massachusetts Financial Service Company.
MFS SERIES TRUST IV - MFS(R) MONEY MARKET FUND
Investment Objective: To seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity. The Fund intends to
invest in money market instruments, including United States government
securities, obligations of the larger banks, prime commercial paper and
high-grade, short-term corporate obligations. The Fund's investment adviser is
Massachusetts Financial Service Company.
MFS(R) TOTAL RETURN FUND - CLASS A
Investment Objective: To obtain above-average income consistent with what
management believes to be prudent employment of capital. While current income is
the primary objective, the Fund believes that there also should be a reasonable
opportunity for growth of capital and income, since many securities offering a
better-than-average yield may possess growth potential. The Fund's investment
adviser is Massachusetts Financial Service Company.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company created under the laws of Massachusetts. NSAT offers shares
in the funds listed below, each with its own investment objectives. Shares of
NSAT will be sold primarily to life insurance company separate accounts to fund
the benefits under variable life insurance policies and variable annuity
contracts issued by life insurance companies. The assets of NSAT are managed by
Villanova Mutual Fund Capital Trust ("VMF") an indirect subsidiary of Nationwide
Financial Services, Inc.
MONEY MARKET FUND
Investment Objective: As high a level of current income as is considered
consistent with the preservation of capital and maintenance of liquidity.
38
<PAGE> 39
APPENDIX B: CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Massachusetts 251.811030 345.910511 37.37% 0 1999
Investors Growth --------------------------------------------------------------------------------------------
Stock Fund - Class A - 181.683346 251.811030 38.60% 0 1998
Q --------------------------------------------------------------------------------------------
123.869113 181.683346 46.65% 0 1997
--------------------------------------------------------------------------------------------
101.860531 123.869113 21.61% 0 1996
--------------------------------------------------------------------------------------------
80.166185 101.860531 27.06% 0 1995
--------------------------------------------------------------------------------------------
86.815888 80.166185 -7.66% 0 1994
--------------------------------------------------------------------------------------------
76.611479 86.815888 13.32% 0 1993
--------------------------------------------------------------------------------------------
72.701980 76.611479 5.38% 582 1992
--------------------------------------------------------------------------------------------
49.712553 72.701980 46.24% 583 1991
--------------------------------------------------------------------------------------------
52.714394 49.712553 -5.69% 584 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Massachusetts 192.429178 264.338201 37.37% 706 1999
Investors Growth --------------------------------------------------------------------------------------------
Stock Fund - Class A - 138.838952 192.429178 38.60% 825 1998
NQ --------------------------------------------------------------------------------------------
94.658415 138.838952 46.67% 850 1997
--------------------------------------------------------------------------------------------
77.839871 94.658415 21.61% 498 1996
--------------------------------------------------------------------------------------------
61.261465 77.839871 27.06% 1,043 1995
--------------------------------------------------------------------------------------------
66.343035 61.261465 -7.66% 1,043 1994
--------------------------------------------------------------------------------------------
58.545028 66.343035 13.32% 2,615 1993
--------------------------------------------------------------------------------------------
55.557463 58.545028 5.38% 2,874 1992
--------------------------------------------------------------------------------------------
37.989389 55.557463 46.24% 3,000 1991
--------------------------------------------------------------------------------------------
40.283347 37.989389 -5.69% 2,248 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Massachusetts 202.414393 277.213327 36.95% 281,457 1999
Investors Growth --------------------------------------------------------------------------------------------
Stock Fund - Class A - 146.486721 202.414393 38.18% 280,157 1998
QS --------------------------------------------------------------------------------------------
100.175691 146.486721 46.23% 289,531 1997
--------------------------------------------------------------------------------------------
82.628565 100.175691 21.24% 297,134 1996
--------------------------------------------------------------------------------------------
65.227303 82.628565 26.68% 333,893 1995
--------------------------------------------------------------------------------------------
70.852048 65.227303 -7.94% 375,617 1994
--------------------------------------------------------------------------------------------
62.713932 70.852048 12.98% 411,227 1993
--------------------------------------------------------------------------------------------
59.694705 62.713932 5.06% 450,956 1992
--------------------------------------------------------------------------------------------
40.942088 59.694705 45.80% 472,708 1991
--------------------------------------------------------------------------------------------
43.546733 40.942088 -5.98% 457,230 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 40
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Massachusetts 171.758959 235.229678 36.95% 98,328 1999
Investors Growth --------------------------------------------------------------------------------------------
Stock Fund - Class A - 124.301472 171.758959 38.18% 95,701 1998
NQS --------------------------------------------------------------------------------------------
85.004193 124.301472 46.23% 88,204 1997
--------------------------------------------------------------------------------------------
70.114570 85.004193 21.24% 86,801 1996
--------------------------------------------------------------------------------------------
55.348697 70.114570 26.68% 102,114 1995
--------------------------------------------------------------------------------------------
60.121583 55.348697 -7.94% 116,628 1994
--------------------------------------------------------------------------------------------
53.215976 60.121583 12.98% 132,123 1993
--------------------------------------------------------------------------------------------
50.654002 53.215976 5.06% 154,986 1992
--------------------------------------------------------------------------------------------
34.741451 50.654002 45.80% 119,500 1991
--------------------------------------------------------------------------------------------
36.951616 34.741451 -5.98% 124,361 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Massachusetts 187.109241 256.252391 36.95% 3,994 1999
Investors Growth --------------------------------------------------------------------------------------------
Stock Fund - Class A - 135.410415 187.109241 38.18% 3,999 1998
NQS --------------------------------------------------------------------------------------------
(81-225) 92.601102 135.410415 46.23% 4,090 1997
--------------------------------------------------------------------------------------------
76.380777 92.601102 21.24% 5,470 1996
--------------------------------------------------------------------------------------------
60.295273 76.380777 26.68% 5,945 1995
--------------------------------------------------------------------------------------------
65.494712 60.295273 -7.94% 2,505 1994
--------------------------------------------------------------------------------------------
57.971950 65.494712 12.98% 3,382 1993
--------------------------------------------------------------------------------------------
55.181022 57.971950 5.06% 7,430 1992
--------------------------------------------------------------------------------------------
37.846336 55.181022 45.80% 6,225 1991
--------------------------------------------------------------------------------------------
40.254029 37.846336 -5.98% 6,677 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Massachusetts 199.782164 211.541786 5.89% 0 1999
Investors Trust - Class --------------------------------------------------------------------------------------------
A - Q 164.129808 199.782164 21.72% 0 1998
--------------------------------------------------------------------------------------------
125.889283 164.129808 30.38% 16 1997
--------------------------------------------------------------------------------------------
101.007177 125.889283 24.63% 16 1996
--------------------------------------------------------------------------------------------
73.217470 101.007177 37.96% 16 1995
--------------------------------------------------------------------------------------------
74.716077 73.217470 -2.01% 17 1994
--------------------------------------------------------------------------------------------
68.591640 74.716077 8.93% 17 1993
--------------------------------------------------------------------------------------------
64.520969 68.591640 6.31% 17 1992
--------------------------------------------------------------------------------------------
51.047405 64.520969 26.39% 17 1991
--------------------------------------------------------------------------------------------
51.615906 51.047405 -6.53% 17 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Massachusetts 188.520679 199.617423 5.89% 289 1999
Investors Trust - Class --------------------------------------------------------------------------------------------
A - NQ 154.878002 188.520679 21.72% 289 1998
--------------------------------------------------------------------------------------------
118.793035 154.878002 30.38% 289 1997
--------------------------------------------------------------------------------------------
95.313498 118.793035 24.63% 0 1996
--------------------------------------------------------------------------------------------
69.090265 95.313498 37.96% 0 1995
--------------------------------------------------------------------------------------------
70.504398 69.090265 -2.01% 0 1994
--------------------------------------------------------------------------------------------
64.725197 70.504398 8.93% 33 1993
--------------------------------------------------------------------------------------------
60.883987 64.725197 6.31% 33 1992
--------------------------------------------------------------------------------------------
48.169920 60.883987 26.39% 0 1991
--------------------------------------------------------------------------------------------
48.706376 48.169920 -1.10% 0 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Massachusetts 159.361559 168.230713 5.57% 235,642 1999
Investors Trust - Class --------------------------------------------------------------------------------------------
A - QS 131.320106 159.361559 21.35% 278,446 1998
--------------------------------------------------------------------------------------------
101.029680 131.320106 29.98% 312,848 1997
--------------------------------------------------------------------------------------------
81.308640 101.029680 24.25% 331,572 1996
--------------------------------------------------------------------------------------------
59.116939 81.308640 37.54% 350,277 1995
--------------------------------------------------------------------------------------------
60.509797 59.116939 -2.30% 373,587 1994
--------------------------------------------------------------------------------------------
55.718475 60.509797 8.60% 402,085 1993
--------------------------------------------------------------------------------------------
52.571200 55.718475 5.99% 438,578 1992
--------------------------------------------------------------------------------------------
41.719131 52.571200 26.01% 470,627 1991
--------------------------------------------------------------------------------------------
42.312382 41.719131 -1.40% 447,641 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Massachusetts 142.985600 150.943364 5.57% 63,779 1999
Investors Trust - Class --------------------------------------------------------------------------------------------
A - NQS 117.825672 142.985600 21.35% 83,119 1998
--------------------------------------------------------------------------------------------
90.647891 117.825672 29.98% 103,123 1997
--------------------------------------------------------------------------------------------
72.953374 90.647891 24.25% 96,073 1996
--------------------------------------------------------------------------------------------
53.042089 72.953374 37.54% 100,239 1995
--------------------------------------------------------------------------------------------
54.291825 53.042089 -2.30% 87,519 1994
--------------------------------------------------------------------------------------------
49.992851 54.291825 8.60% 95,048 1993
--------------------------------------------------------------------------------------------
47.168983 49.992851 5.99% 107,558 1992
--------------------------------------------------------------------------------------------
37.432067 47.168983 26.01% 390,819 1991
--------------------------------------------------------------------------------------------
37.964354 37.432067 -1.40% 388,337 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 42
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Massachusetts 151.908034 160.362369 5.57% 982 1999
Investors Trust - Class --------------------------------------------------------------------------------------------
A - NQS 125.178102 151.908034 21.35% 1,004 1998
(81-225) --------------------------------------------------------------------------------------------
96.304396 125.178102 29.98% 1,827 1997
--------------------------------------------------------------------------------------------
77.505736 96.304396 24.25% 2,037 1996
--------------------------------------------------------------------------------------------
56.351973 77.505736 37.54% 2,696 1995
--------------------------------------------------------------------------------------------
57.679687 56.351973 -2.30% 4,013 1994
--------------------------------------------------------------------------------------------
53.112457 57.679687 8.60% 7,320 1993
--------------------------------------------------------------------------------------------
50.112374 53.112457 5.99% 8,418 1992
--------------------------------------------------------------------------------------------
39.767862 50.112374 26.01% 8,657 1991
--------------------------------------------------------------------------------------------
40.333366 39.767862 -1.40% 8,698 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Bond Fund - 56.075022 54.419210 -2.95% 0 1999
Class A - Q --------------------------------------------------------------------------------------------
54.216028 56.075022 3.43% 0 1998
--------------------------------------------------------------------------------------------
49.627094 54.216028 9.25% 0 1997
--------------------------------------------------------------------------------------------
48.229836 49.627094 2.90% 0 1996
--------------------------------------------------------------------------------------------
40.103391 48.229836 20.26% 0 1995
--------------------------------------------------------------------------------------------
42.399834 40.103391 -5.42% 254 1994
--------------------------------------------------------------------------------------------
37.614804 42.399834 12.72% 255 1993
--------------------------------------------------------------------------------------------
35.745806 37.614804 5.23% 255 1992
--------------------------------------------------------------------------------------------
30.588668 35.745806 16.86% 256 1991
--------------------------------------------------------------------------------------------
28.810284 30.588668 6.17% 261 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Bond Fund - 59.205904 57.457644 -2.95% 56 1999
Class A - NQ --------------------------------------------------------------------------------------------
57.243116 59.205904 3.43% 342 1998
--------------------------------------------------------------------------------------------
52.397975 57.243116 9.25% 595 1997
--------------------------------------------------------------------------------------------
50.922705 52.397975 2.90% 3,321 1996
--------------------------------------------------------------------------------------------
42.342529 50.922705 20.26% 596 1995
--------------------------------------------------------------------------------------------
44.767184 42.342529 -5.42% 450 1994
--------------------------------------------------------------------------------------------
39.714988 44.767184 12.72% 1,068 1993
--------------------------------------------------------------------------------------------
37.741633 39.714988 5.23% 1,400 1992
--------------------------------------------------------------------------------------------
32.296567 37.741633 16.86% 2,161 1991
--------------------------------------------------------------------------------------------
30.418889 32.296567 6.17% 2,290 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Bond Fund - 50.471558 48.832757 -3.25% 296,161 1999
Class A - QS --------------------------------------------------------------------------------------------
48.946623 50.471558 3.12% 402,734 1998
--------------------------------------------------------------------------------------------
44.939826 48.946623 8.92% 453,678 1997
--------------------------------------------------------------------------------------------
43.808005 44.939826 2.58% 509,516 1996
--------------------------------------------------------------------------------------------
36.536936 43.808005 19.90% 613,426 1995
--------------------------------------------------------------------------------------------
38.746280 36.536936 -5.70% 715,452 1994
--------------------------------------------------------------------------------------------
34.477915 38.746280 12.38% 873,520 1993
--------------------------------------------------------------------------------------------
32.864457 34.477915 4.91% 1,019,209 1992
--------------------------------------------------------------------------------------------
28.208302 32.864457 16.51% 1,231,635 1991
--------------------------------------------------------------------------------------------
26.649337 28.208302 5.85% 1,282,139 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Bond Fund - 50.430297 48.792845 -3.25% 124,805 1999
Class A - NQS --------------------------------------------------------------------------------------------
48.906597 50.430297 3.12% 144,138 1998
--------------------------------------------------------------------------------------------
44.903088 48.906597 8.92% 147,342 1997
--------------------------------------------------------------------------------------------
43.772192 44.903088 2.58% 208,403 1996
--------------------------------------------------------------------------------------------
36.507070 43.772192 19.90% 267,129 1995
--------------------------------------------------------------------------------------------
38.714601 36.507070 -5.70% 278,445 1994
--------------------------------------------------------------------------------------------
34.449725 38.714601 12.38% 341,506 1993
--------------------------------------------------------------------------------------------
32.837584 34.449725 4.91% 395,096 1992
--------------------------------------------------------------------------------------------
28.185248 32.837584 16.51% 416,135 1991
--------------------------------------------------------------------------------------------
26.627561 28.185248 5.85% 423,448 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Bond Fund - 50.627514 48.983649 -3.25% 784 1999
Class A - NQS --------------------------------------------------------------------------------------------
(81-225) 49.097863 50.627514 3.12% 786 1998
--------------------------------------------------------------------------------------------
45.078692 49.097863 8.92% 789 1997
--------------------------------------------------------------------------------------------
43.943375 45.078692 2.58% 1,597 1996
--------------------------------------------------------------------------------------------
36.649839 43.943375 19.90% 4,145 1995
--------------------------------------------------------------------------------------------
38.865999 36.649839 -5.70% 4,892 1994
--------------------------------------------------------------------------------------------
34.584435 38.865999 12.38% 10,550 1993
--------------------------------------------------------------------------------------------
32.965982 34.584435 4.91% 10,644 1992
--------------------------------------------------------------------------------------------
28.295444 32.965982 16.51% 13,375 1991
--------------------------------------------------------------------------------------------
26.731671 28.295444 5.85% 13,709 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Emerging 50.131190 74.260820 48.13% 276,955 1999
Growth Fund - Class --------------------------------------------------------------------------------------------
A - QS 40.798757 50.131190 22.87% 320,469 1998
--------------------------------------------------------------------------------------------
34.264981 40.798757 19.07% 385,073 1997
--------------------------------------------------------------------------------------------
30.247061 34.264981 13.28% 437,204 1996
--------------------------------------------------------------------------------------------
21.706658 30.247061 39.34% 424,049 1995
--------------------------------------------------------------------------------------------
20.977470 21.706658 3.48% 400,564 1994
--------------------------------------------------------------------------------------------
16.755110 20.977490 25.20% 285,804 1993
--------------------------------------------------------------------------------------------
15.782125 16.755110 6.17% 288,500 1992
--------------------------------------------------------------------------------------------
9.396802 15.782125 67.95% 222,326 1991
--------------------------------------------------------------------------------------------
10.753988 9.396802 -12.62% 112,582 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Emerging 50.131190 74.260820 48.13% 0 1999
Growth Fund - Class --------------------------------------------------------------------------------------------
A - NQS 40.798757 50.131190 22.87% 779 1998
(81-225) --------------------------------------------------------------------------------------------
34.264981 40.798757 19.07% 674 1997
--------------------------------------------------------------------------------------------
30.247061 34.264981 13.28% 675 1996
--------------------------------------------------------------------------------------------
21.706658 30.247061 39.34% 474 1995
--------------------------------------------------------------------------------------------
20.977490 21.706658 3.48% 474 1994
--------------------------------------------------------------------------------------------
16.755110 20.977490 25.20% 1,237 1993
--------------------------------------------------------------------------------------------
15.782125 16.755110 6.17% 762 1992
--------------------------------------------------------------------------------------------
9.396802 15.782125 67.95% 1,140 1991
--------------------------------------------------------------------------------------------
10.753988 9.396802 -12.62% 0 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Global 51.773614 49.309941 -4.76% 63,386 1999
Governments Fund - --------------------------------------------------------------------------------------------
Class A - QS 50.368842 51.773614 2.79% 85,861 1998
--------------------------------------------------------------------------------------------
50.880072 50.368842 -1.00% 115,417 1997
--------------------------------------------------------------------------------------------
48.914346 50.880072 4.02% 143,438 1996
--------------------------------------------------------------------------------------------
42.911877 48.914346 13.99% 184,796 1995
--------------------------------------------------------------------------------------------
46.532702 42.911877 -7.78% 229,107 1994
--------------------------------------------------------------------------------------------
39.821939 46.532702 16.85% 272,388 1993
--------------------------------------------------------------------------------------------
39.811131 39.821939 0.03% 260,769 1992
--------------------------------------------------------------------------------------------
35.563134 39.811131 11.94% 271,803 1991
--------------------------------------------------------------------------------------------
30.561450 35.563134 16.37% 315,655 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE> 45
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Global 50.475906 48.073994 -4.76% 8,381 1999
Governments Fund - --------------------------------------------------------------------------------------------
Class A - NQS 49.106357 50.475906 2.79% 16,423 1998
--------------------------------------------------------------------------------------------
49.604787 49.106357 -1.00% 15,550 1997
--------------------------------------------------------------------------------------------
47.688325 49.604787 4.02% 22,367 1996
--------------------------------------------------------------------------------------------
41.836304 47.688325 13.99% 36,927 1995
--------------------------------------------------------------------------------------------
45.366368 41.836304 -7.78% 44,619 1994
--------------------------------------------------------------------------------------------
38.823817 45.366368 16.85% 57,120 1993
--------------------------------------------------------------------------------------------
38.813287 38.823817 0.03% 42,828 1992
--------------------------------------------------------------------------------------------
34.671762 38.813287 11.94% 35,166 1991
--------------------------------------------------------------------------------------------
29.795448 34.671762 16.37% 54,896 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Global 51.693122 49.233289 -4.76% 367 1999
Governments Fund - --------------------------------------------------------------------------------------------
Class A - NQS 50.290543 51.693122 2.79% 709 1998
(81-225) --------------------------------------------------------------------------------------------
50.800980 50.290543 -1.00% 666 1997
--------------------------------------------------------------------------------------------
48.838310 50.800980 4.02% 1,811 1996
--------------------------------------------------------------------------------------------
42.845163 48.838310 13.99% 2,763 1995
--------------------------------------------------------------------------------------------
46.460353 42.845163 -7.78% 3,284 1994
--------------------------------------------------------------------------------------------
39.760030 46.460353 16.85% 3,684 1993
--------------------------------------------------------------------------------------------
39.749239 39.760030 0.03% 4,274 1992
--------------------------------------------------------------------------------------------
35.507853 39.749239 11.94% 5,904 1991
--------------------------------------------------------------------------------------------
30.513949 35.507853 16.37% 7,450 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Growth 265.137821 348.647800 31.50% 0 1999
Opportunities Fund - --------------------------------------------------------------------------------------------
Class A - Q 207.334157 265.137821 27.88% 0 1998
--------------------------------------------------------------------------------------------
169.873726 207.334157 22.05% 0 1997
--------------------------------------------------------------------------------------------
140.810582 169.873726 20.64% 0 1996
--------------------------------------------------------------------------------------------
105.450698 140.810582 33.15% 0 1995
--------------------------------------------------------------------------------------------
111.450698 105.450698 -5.11% 0 1994
--------------------------------------------------------------------------------------------
96.886717 111.450698 15.03% 0 1993
--------------------------------------------------------------------------------------------
90.866062 96.886717 6.63% 59 1992
--------------------------------------------------------------------------------------------
74.980776 90.866062 21.19% 60 1991
--------------------------------------------------------------------------------------------
79.192602 74.980776 -5.32% 60 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Growth 194.984157 256.397950 31.50% 1,102 1999
Opportunities Fund - --------------------------------------------------------------------------------------------
Class A - NQ 152.474948 194.984157 27.88% 830 1998
--------------------------------------------------------------------------------------------
124.926291 152.474948 22.05% 1,008 1997
--------------------------------------------------------------------------------------------
103.553065 124.926291 20.64% 2,724 1996
--------------------------------------------------------------------------------------------
77.773322 103.553065 33.15% 2,642 1995
--------------------------------------------------------------------------------------------
81.961605 77.773322 -5.11% 2,807 1994
--------------------------------------------------------------------------------------------
71.251149 81.961605 15.03% 2,923 1993
--------------------------------------------------------------------------------------------
66.823526 71.251149 6.63% 3,217 1992
--------------------------------------------------------------------------------------------
55.141372 66.823526 21.19% 3,285 1991
--------------------------------------------------------------------------------------------
58.238773 55.141372 -5.32% 3,209 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Growth 180.233377 236.283783 31.10% 540,025 1999
Opportunities Fund - --------------------------------------------------------------------------------------------
Class A - QS 141.368069 180.233377 27.49% 633,469 1998
--------------------------------------------------------------------------------------------
116.177967 141.368069 21.68% 732,936 1997
--------------------------------------------------------------------------------------------
96.595726 116.177967 20.27% 822,246 1996
--------------------------------------------------------------------------------------------
72.767772 96.595725 32.75% 920,477 1995
--------------------------------------------------------------------------------------------
76.918993 72.767772 -5.40% 1,029,309 1994
--------------------------------------------------------------------------------------------
67.070484 76.918993 14.68% 1,187,377 1993
--------------------------------------------------------------------------------------------
63.094003 67.070484 6.30% 1,351,519 1992
--------------------------------------------------------------------------------------------
52.221717 63.094003 20.82% 1,533,160 1991
--------------------------------------------------------------------------------------------
55.323366 52.221717 -5.61% 1,718,069 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Growth 153.097965 200.709590 31.10% 114,789 1999
Opportunities Fund - --------------------------------------------------------------------------------------------
Class A - NQS 120.084102 153.097965 27.49% 152,136 1998
--------------------------------------------------------------------------------------------
98.686554 120.084102 21.68% 172,812 1997
--------------------------------------------------------------------------------------------
82.052560 98.686554 20.27% 182,479 1996
--------------------------------------------------------------------------------------------
61.812074 82.052560 32.75% 206,611 1995
--------------------------------------------------------------------------------------------
65.338300 61.812074 -5.40% 214,829 1994
--------------------------------------------------------------------------------------------
56.972537 65.338300 14.68% 241,558 1993
--------------------------------------------------------------------------------------------
53.594751 56.972537 6.30% 284,420 1992
--------------------------------------------------------------------------------------------
44.359372 53.594751 20.82% 319,081 1991
--------------------------------------------------------------------------------------------
46.994048 44.359372 -5.61% 322,668 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Growth 168.926385 221.460448 31.10% 9,598 1999
Opportunities Fund - --------------------------------------------------------------------------------------------
Class A - NQS 132.499304 168.926385 27.49% 11,929 1998
(81-225) --------------------------------------------------------------------------------------------
108.889502 132.499304 21.68% 12,840 1997
--------------------------------------------------------------------------------------------
90.535764 108.889502 20.27% 14,732 1996
--------------------------------------------------------------------------------------------
68.202665 90.535764 32.75% 15,064 1995
--------------------------------------------------------------------------------------------
72.093454 68.202665 -5.40% 16,083 1994
--------------------------------------------------------------------------------------------
62.862782 72.093454 14.68% 20,590 1993
--------------------------------------------------------------------------------------------
59.135771 62.862782 6.30% 23,039 1992
--------------------------------------------------------------------------------------------
48.945558 59.135771 20.82% 26,387 1991
--------------------------------------------------------------------------------------------
51.852634 48.945558 -5.61% 32,466 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) High Income 71.596334 75.842999 5.93% 0 1999
Fund - Class A - Q --------------------------------------------------------------------------------------------
71.581692 71.596334 0.02% 0 1998
--------------------------------------------------------------------------------------------
64.068571 71.581692 11.73% 0 1997
--------------------------------------------------------------------------------------------
57.498253 64.068571 11.43% 0 1996
--------------------------------------------------------------------------------------------
49.574586 57.498253 15.98% 0 1995
--------------------------------------------------------------------------------------------
51.425517 49.574586 -3.60% 0 1994
--------------------------------------------------------------------------------------------
43.507773 51.425517 18.20% 0 1993
--------------------------------------------------------------------------------------------
37.547955 43.507773 15.87% 0 1992
--------------------------------------------------------------------------------------------
25.471529 37.547955 47.41% 0 1991
--------------------------------------------------------------------------------------------
30.899937 25.471529 -17.57% 0 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) High Income 72.060325 76.334509 5.93% 217 1999
Fund - Class A - NQ --------------------------------------------------------------------------------------------
72.045586 72.060325 0.02% 217 1998
--------------------------------------------------------------------------------------------
64.483775 72.045586 11.73% 358 1997
--------------------------------------------------------------------------------------------
57.870879 64.483775 11.43% 358 1996
--------------------------------------------------------------------------------------------
49.895862 57.870879 15.98% 359 1995
--------------------------------------------------------------------------------------------
51.758789 49.895862 -3.60% 359 1994
--------------------------------------------------------------------------------------------
43.789729 51.758789 18.20% 721 1993
--------------------------------------------------------------------------------------------
37.791286 43.789729 15.87% 360 1992
--------------------------------------------------------------------------------------------
25.636591 37.791286 47.41% 360 1991
--------------------------------------------------------------------------------------------
31.100170 25.636591 -17.57% 697 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) High Income 62.788270 66.310941 5.61% 214,222 1999
Fund - Class A - QS --------------------------------------------------------------------------------------------
62.966234 62.788270 -0.28% 279,479 1998
--------------------------------------------------------------------------------------------
56.528677 62.966234 11.39% 332,136 1997
--------------------------------------------------------------------------------------------
50.886631 56.528677 11.09% 408,255 1996
--------------------------------------------------------------------------------------------
44.007083 50.886631 15.63% 488,470 1995
--------------------------------------------------------------------------------------------
45.788518 44.007083 -3.89% 561,209 1994
--------------------------------------------------------------------------------------------
38.856280 45.788518 17.84% 709,698 1993
--------------------------------------------------------------------------------------------
33.635599 38.856280 15.52% 764,118 1992
--------------------------------------------------------------------------------------------
22.886614 33.635599 46.97% 797,975 1991
--------------------------------------------------------------------------------------------
27.848883 22.886614 -17.82% 914,811 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) High Income 61.835712 65.304939 5.61% 91,528 1999
Fund - Class A - NQS --------------------------------------------------------------------------------------------
62.010978 61.835712 -0.28% 119,105 1998
--------------------------------------------------------------------------------------------
55.671087 62.010978 11.39% 154,453 1997
--------------------------------------------------------------------------------------------
50.114634 55.671087 11.09% 176,997 1996
--------------------------------------------------------------------------------------------
43.339456 50.114634 15.63% 188,820 1995
--------------------------------------------------------------------------------------------
45.093866 43.339456 -3.89% 200,368 1994
--------------------------------------------------------------------------------------------
38.266802 45.093866 17.84% 252,674 1993
--------------------------------------------------------------------------------------------
33.125330 38.266802 15.52% 263,452 1992
--------------------------------------------------------------------------------------------
22.539408 33.125330 46.97% 268,775 1991
--------------------------------------------------------------------------------------------
27.426394 22.539408 -17.82% 301,912 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) High Income 62.788270 66.310941 5.61% 4,190 1999
Fund - Class A - NQS --------------------------------------------------------------------------------------------
(81-225) 62.966234 62.788270 -0.28% 4,449 1998
--------------------------------------------------------------------------------------------
56.528677 62.966234 11.39% 4,996 1997
--------------------------------------------------------------------------------------------
50.886631 56.528677 11.09% 6,379 1996
--------------------------------------------------------------------------------------------
44.007083 50.886631 15.63% 6,442 1995
--------------------------------------------------------------------------------------------
45.788518 44.007083 -3.89% 6,622 1994
--------------------------------------------------------------------------------------------
38.856280 45.788518 17.84% 9,385 1993
--------------------------------------------------------------------------------------------
33.635599 38.856280 15.52% 9,545 1992
--------------------------------------------------------------------------------------------
22.886614 33.635599 46.97% 9,353 1991
--------------------------------------------------------------------------------------------
27.848883 22.886614 -17.82% 10,384 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Research Fund 225.478933 276.393850 22.58% 0 1999
- - Class A - Q --------------------------------------------------------------------------------------------
185.283325 225.478933 21.69% 0 1998
--------------------------------------------------------------------------------------------
155.285363 185.283325 19.32% 0 1997
--------------------------------------------------------------------------------------------
126.019031 155.285363 23.22% 0 1996
--------------------------------------------------------------------------------------------
91.844201 126.019031 37.21% 0 1995
--------------------------------------------------------------------------------------------
92.760008 91.844201 -0.99% 0 1994
--------------------------------------------------------------------------------------------
77.006871 92.760008 20.46% 0 1993
--------------------------------------------------------------------------------------------
69.993098 77.006871 32.53% 0 1992
--------------------------------------------------------------------------------------------
53.307836 69.993098 44.46% 0 1991
--------------------------------------------------------------------------------------------
57.290901 53.307836 -6.95% 0 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Research Fund 180.672640 221.469939 22.58% 434 1999
- - Class A - NQ --------------------------------------------------------------------------------------------
148.464541 180.672640 21.69% 390 1998
--------------------------------------------------------------------------------------------
124.427653 148.464541 19.32% 390 1997
--------------------------------------------------------------------------------------------
100.977005 124.427653 23.22% 110 1996
--------------------------------------------------------------------------------------------
73.593263 100.977005 37.21% 599 1995
--------------------------------------------------------------------------------------------
74.327082 73.593263 -0.99% 599 1994
--------------------------------------------------------------------------------------------
61.704356 74.327082 20.46% 807 1993
--------------------------------------------------------------------------------------------
56.084333 61.704356 32.53% 600 1992
--------------------------------------------------------------------------------------------
42.714695 56.084333 44.46% 660 1991
--------------------------------------------------------------------------------------------
45.906255 42.714695 -6.95% 663 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Research Fund 177.325237 216.708566 22.21% 186,365 1999
- - Class A - QS --------------------------------------------------------------------------------------------
146.156474 177.325237 21.33% 225,728 1998
--------------------------------------------------------------------------------------------
122.865333 146.156474 18.96% 265,836 1997
--------------------------------------------------------------------------------------------
100.013750 122.865333 22.85% 283,320 1996
--------------------------------------------------------------------------------------------
73.111959 100.013750 36.80% 270,229 1995
--------------------------------------------------------------------------------------------
74.064821 73.111959 -1.29% 285,624 1994
--------------------------------------------------------------------------------------------
61.673295 74.064821 20.09% 262,270 1993
--------------------------------------------------------------------------------------------
56.226647 61.673295 9.69% 278,528 1992
--------------------------------------------------------------------------------------------
42.952906 56.226647 30.90% 308,259 1991
--------------------------------------------------------------------------------------------
46.303111 42.952906 -7.24% 341,148 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE> 50
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Research Fund 154.941343 189.3532857 22.21% 62,991 1999
- - Class A - NQS --------------------------------------------------------------------------------------------
127.707031 154.941343 21.33% 81,260 1998
--------------------------------------------------------------------------------------------
107.355935 127.707031 18.96% 93,659 1997
--------------------------------------------------------------------------------------------
87.388917 107.355935 22.85% 105,263 1996
--------------------------------------------------------------------------------------------
63.882963 87.388917 36.80% 100,973 1995
--------------------------------------------------------------------------------------------
64.715547 63.882963 -1.29% 97,012 1994
--------------------------------------------------------------------------------------------
53.888228 64.715547 20.09% 87,152 1993
--------------------------------------------------------------------------------------------
49.129110 53.888228 9.69% 77,535 1992
--------------------------------------------------------------------------------------------
37.530937 49.129110 30.90% 81,372 1991
--------------------------------------------------------------------------------------------
40.458230 37.530937 -7.24% 87,510 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Research Fund 175.255390 214.179022 22.21% 1,216 1999
- - Class A - NQS --------------------------------------------------------------------------------------------
(81-225) 144.450450 175.255390 21.33% 1,280 1998
--------------------------------------------------------------------------------------------
121.431177 144.450450 18.96% 1,318 1997
--------------------------------------------------------------------------------------------
98.846334 121.431177 22.85% 1,676 1996
--------------------------------------------------------------------------------------------
72.258548 98.846334 36.80% 1,591 1995
--------------------------------------------------------------------------------------------
73.200301 72.258548 -1.29% 1,727 1994
--------------------------------------------------------------------------------------------
60.953415 73.200301 20.09% 1,975 1993
--------------------------------------------------------------------------------------------
55.570339 60.953415 9.69% 1,996 1992
--------------------------------------------------------------------------------------------
42.451540 55.570339 30.90% 2,041 1991
--------------------------------------------------------------------------------------------
45.762638 42.451540 -7.24% 5,210 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Series Trust IV 37.041140 38.386185 3.63% 0 1999
- - MFS(R) Money --------------------------------------------------------------------------------------------
Market Fund - Q* 35.649000 37.041140 3.91% 0 1998
--------------------------------------------------------------------------------------------
34.325389 35.649000 3.86% 0 1997
--------------------------------------------------------------------------------------------
33.101565 34.325389 3.70% 0 1996
--------------------------------------------------------------------------------------------
31.765828 33.101565 4.20% 0 1995
--------------------------------------------------------------------------------------------
30.994333 31.765828 2.49% 0 1994
--------------------------------------------------------------------------------------------
30.575287 30.994333 1.37% 0 1993
--------------------------------------------------------------------------------------------
29.974326 30.575287 2.00% 0 1992
--------------------------------------------------------------------------------------------
28.674122 29.974326 4.53% 0 1991
--------------------------------------------------------------------------------------------
26.882238 28.674122 6.67% 0 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE> 51
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Series Trust IV 38.008785 39.388969 3.63% 1,494 1999
- - MFS(R) Money --------------------------------------------------------------------------------------------
Market Fund - NQ* 36.580276 38.008785 3.91% 6,827 1998
--------------------------------------------------------------------------------------------
35.222087 36.580276 3.86% 6,828 1997
--------------------------------------------------------------------------------------------
33.966291 35.222087 3.70% 4,058 1996
--------------------------------------------------------------------------------------------
32.595660 33.966291 4.20% 5,703 1995
--------------------------------------------------------------------------------------------
31.804010 32.595660 2.49% 8,788 1994
--------------------------------------------------------------------------------------------
31.374016 31.804010 1.37% 10,894 1993
--------------------------------------------------------------------------------------------
30.757355 31.374016 2.00% 21,348 1992
--------------------------------------------------------------------------------------------
29.423184 30.757355 4.53% 22,044 1991
--------------------------------------------------------------------------------------------
27.584489 29.423184 6.67% 34,393 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Series Trust IV 32.218020 33.286752 3.32% 836,061 1999
- - MFS(R) Money --------------------------------------------------------------------------------------------
Market Fund - QS* 31.101395 32.218020 3.59% 1,006,298 1998
--------------------------------------------------------------------------------------------
30.037656 31.101395 3.54% 1,143,756 1997
--------------------------------------------------------------------------------------------
29.055232 30.037656 3.38% 1,343,440 1996
--------------------------------------------------------------------------------------------
27.967294 29.055232 3.89% 1,630,393 1995
--------------------------------------------------------------------------------------------
27.370768 27.967294 2.18% 2,012,165 1994
--------------------------------------------------------------------------------------------
27.082782 27.370768 1.06% 2,386,518 1993
--------------------------------------------------------------------------------------------
26.631168 27.082782 1.70% 3,346,894 1992
--------------------------------------------------------------------------------------------
25.553415 26.631168 4.22% 4,316,381 1991
--------------------------------------------------------------------------------------------
24.029764 25.553415 6.34% 5,619,586 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Series Trust IV 32.240409 33.309883 3.32% 499,340 1999
- - MFS(R) Money --------------------------------------------------------------------------------------------
Market Fund - NQS* 31.123008 32.240409 3.59% 568,052 1998
--------------------------------------------------------------------------------------------
30.058530 31.123008 3.54% 556,766 1997
--------------------------------------------------------------------------------------------
29.075421 30.058530 3.38% 615,505 1996
--------------------------------------------------------------------------------------------
27.986728 29.075421 3.89% 597,925 1995
--------------------------------------------------------------------------------------------
27.389788 27.986728 2.18% 823,383 1994
--------------------------------------------------------------------------------------------
27.101602 27.389788 1.06% 962,484 1993
--------------------------------------------------------------------------------------------
26.649674 27.101602 1.70% 1,251,049 1992
--------------------------------------------------------------------------------------------
25.571172 26.649674 4.22% 1,661,279 1991
--------------------------------------------------------------------------------------------
24.046461 25.571172 6.34% 2,007,134 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE> 52
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Total Return 119.502472 121.008100 1.26% 0 1999
Fund - Class A - Q --------------------------------------------------------------------------------------------
108.143295 119.502472 10.50% 0 1998
--------------------------------------------------------------------------------------------
90.602325 108.143295 19.36% 131 1997
--------------------------------------------------------------------------------------------
79.840336 90.602325 13.48% 131 1996
--------------------------------------------------------------------------------------------
63.581031 79.840336 25.57% 131 1995
--------------------------------------------------------------------------------------------
65.964662 63.581031 -3.61% 132 1994
--------------------------------------------------------------------------------------------
57.871052 65.964662 13.99% 132 1993
--------------------------------------------------------------------------------------------
53.108093 57.871052 8.97% 132 1992
--------------------------------------------------------------------------------------------
44.107591 53.108093 20.41% 132 1991
--------------------------------------------------------------------------------------------
45.615581 44.107591 -2.32% 133 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return 117.432831 118.912382 1.26% 0 1999
Fund - Class A - NQ --------------------------------------------------------------------------------------------
106.270381 117.432831 10.50% 146 1998
--------------------------------------------------------------------------------------------
89.033201 106.270381 19.36% 0 1997
--------------------------------------------------------------------------------------------
78.457598 89.033201 13.48% 0 1996
--------------------------------------------------------------------------------------------
62.479885 78.457598 25.57% 87 1995
--------------------------------------------------------------------------------------------
64.822235 62.479885 -3.61% 87 1994
--------------------------------------------------------------------------------------------
56.868802 64.822235 13.99% 317 1993
--------------------------------------------------------------------------------------------
52.188320 56.868802 8.97% 712 1992
--------------------------------------------------------------------------------------------
43.343699 52.188320 20.41% 534 1991
--------------------------------------------------------------------------------------------
44.825581 43.343699 -3.31% 535 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return 108.882919 109.920643 0.95% 359,370 1999
Fund - Class A - QS --------------------------------------------------------------------------------------------
98.832664 108.882919 10.17% 465,417 1998
--------------------------------------------------------------------------------------------
83.053566 98.832664 19.00% 570,631 1997
--------------------------------------------------------------------------------------------
73.411912 83.053566 13.13% 671,118 1996
--------------------------------------------------------------------------------------------
58.638949 73.411912 25.19% 782,272 1995
--------------------------------------------------------------------------------------------
61.021714 58.638949 -3.90% 902,191 1994
--------------------------------------------------------------------------------------------
53.697197 61.021714 13.64% 998,970 1993
--------------------------------------------------------------------------------------------
49.427627 53.697197 8.64% 977,013 1992
--------------------------------------------------------------------------------------------
41.175343 49.427627 20.04% 950,358 1991
--------------------------------------------------------------------------------------------
42.712979 41.175343 -3.60% 942,653 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE> 53
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R) Total Return 105.395033 106.399516 0.95% 109,211 1999
Fund - Class A - NQS --------------------------------------------------------------------------------------------
95.666722 105.395033 10.17% 127,066 1998
--------------------------------------------------------------------------------------------
80.393080 95.666722 19.00% 145,316 1997
--------------------------------------------------------------------------------------------
71.060281 80.393080 13.13% 167,776 1996
--------------------------------------------------------------------------------------------
56.760546 71.060281 25.19% 199,257 1995
--------------------------------------------------------------------------------------------
59.066983 56.760546 -3.90% 224,713 1994
--------------------------------------------------------------------------------------------
51.977095 59.066983 13.64% 272,164 1993
--------------------------------------------------------------------------------------------
47.844295 51.977095 8.64% 229,777 1992
--------------------------------------------------------------------------------------------
39.856354 47.844295 20.04% 216,586 1991
--------------------------------------------------------------------------------------------
41.344744 39.856354 -3.60% 234,543 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return 107.823630 108.851257 0.95% 1,014 1999
Fund - Class A - NQS --------------------------------------------------------------------------------------------
(81-225) 97.871152 107.823630 10.17% 1,118 1998
--------------------------------------------------------------------------------------------
82.245565 97.871152 19.00% 805 1997
--------------------------------------------------------------------------------------------
72.697711 82.245565 13.13% 1,979 1996
--------------------------------------------------------------------------------------------
58.068470 72.697711 25.19% 1,863 1995
--------------------------------------------------------------------------------------------
60.428053 58.068470 -3.90% 2,258 1994
--------------------------------------------------------------------------------------------
53.174791 60.428053 13.64% 3,580 1993
--------------------------------------------------------------------------------------------
48.946754 53.174791 8.64% 3,681 1992
--------------------------------------------------------------------------------------------
40.774760 48.946754 20.04% 2,990 1991
--------------------------------------------------------------------------------------------
42.297442 40.774760 -3.60% 3,950 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Nationwide Separate 24.593912 25.451018 3.49% 20,531 1999
Account Trust - --------------------------------------------------------------------------------------------
Money Market Fund - 23.669908 24.593912 3.90% 32,830 1998
QS** --------------------------------------------------------------------------------------------
22.783414 23.669908 3.89% 41,782 1997
--------------------------------------------------------------------------------------------
21.961256 22.783414 3.74% 55,730 1996
--------------------------------------------------------------------------------------------
21.058716 21.961256 4.29% 60,928 1995
--------------------------------------------------------------------------------------------
20.538004 21.058716 2.54% 72,621 1994
--------------------------------------------------------------------------------------------
20.250996 20.538004 1.42% 98,132 1993
--------------------------------------------------------------------------------------------
19.842272 20.250996 2.06% 126,024 1992
--------------------------------------------------------------------------------------------
18.996144 19.842272 4.45% 148,883 1991
--------------------------------------------------------------------------------------------
17.809654 18.996144 6.66% 178,554 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 54
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL ACCUMULATION ACCUMULATION PERCENT CHANGE IN NUMBER OF YEAR
FUND UNIT VALUE AT UNIT VALUE AT END ACCUMULATION ACCUMULATION
BEGINNING OF OF PERIOD UNIT VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide Separate 24.609906 25.467570 3.49% 22,201 1999
Account Trust - --------------------------------------------------------------------------------------------
Money Market Fund - 23.685302 24.609906 3.90% 22,624 1998
NQS** --------------------------------------------------------------------------------------------
22.798231 23.685302 3.89% 26,117 1997
--------------------------------------------------------------------------------------------
21.975540 22.798231 3.74% 32,499 1996
--------------------------------------------------------------------------------------------
21.072414 21.975540 4.29% 36,289 1995
--------------------------------------------------------------------------------------------
20.551361 21.072414 2.54% 41,143 1994
--------------------------------------------------------------------------------------------
20.264167 20.551361 -0.44% 57,208 1993
--------------------------------------------------------------------------------------------
19.855177 20.264167 3.96% 63,453 1992
--------------------------------------------------------------------------------------------
19.008499 19.855177 4.45% 71,910 1991
--------------------------------------------------------------------------------------------
17.821238 19.008499 6.66% 92,012 1990
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* The 7-day yield on the MFS(R) Series Trust IV - MFS(R) Money Market Fund as
of December 31, 1999 was 3.70%.
** The 7-day yield on the Nationwide Separate Account Trust - Money Market
Fund as of December 31, 1999, was 4.08%.
54
