<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act File No. 2-58043
'40 Act File No. 811-2716
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 29 [x]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 30 [x]
NATIONWIDE VARIABLE ACCOUNT
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. MCCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in
respect of the Prospectus, Statement of Additional Information and Financial
Statements.
It is proposed that this filing will become effective (check
appropriate space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[X] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of securities by a
prior registration statement in accordance with Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed its Rule 24f-2 Notice for the fiscal year
ended December 31, 1995, on February 15, 1996.
================================================================================
1 of 114
<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM PAGE
<S> <C> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover page............................................................................... 8
Item 2. Definitions.............................................................................. 10
Item 3. Synopsis or Highlights................................................................... 19
Item 4. Condensed Financial Information.......................................................... 20
Item 5. General Description of Registrant, Depositor, and Portfolio Companies.................... 26
Item 6. Deductions and Expenses.................................................................. 27
Item 7. General Description of Variable Annuity Contracts........................................ 29
Item 8. Annuity Period........................................................................... 32
Item 9. Death Benefit and Distributions.......................................................... 34
Item 10. Purchases and Contract Value............................................................. 37
Item 11. Redemptions.............................................................................. 38
Item 12. Taxes.................................................................................... 38
Item 13. Legal Proceedings........................................................................ 41
Item 14. Table of Contents of the Statement of Additional Information............................. 41
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page............................................................................... 50
Item 16. Table of Contents........................................................................ 50
Item 17. General Information and History.......................................................... 50
Item 18. Services................................................................................. 50
Item 19. Purchase of Securities Being Offered..................................................... 50
Item 20. Underwriters............................................................................. 51
Item 21. Calculation of Yield Quotations of Money Market Sub-Accounts............................. 51
Item 22. Annuity Payments......................................................................... 51
Item 23. Financial Statements..................................................................... 52
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits........................................................ 94
Item 25. Directors and Officers of the Depositor.................................................. 96
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant.................................................................. 98
Item 27. Number of Contract Owners................................................................ 107
Item 28. Indemnification.......................................................................... 107
Item 29. Principal Underwriter.................................................................... 107
Item 30. Location of Accounts and Records......................................................... 108
Item 31. Management Services...................................................................... 108
Item 32. Undertakings............................................................................. 108
</TABLE>
2 of 114
<PAGE> 3
SUPPLEMENT DATED DECEMBER 31, 1996 TO
PROSPECTUS DATED MAY 1, 1996
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANY
THROUGH ITS
NATIONWIDE VARIABLE ACCOUNT
This Supplement updates certain information contained in your Prospectus. Please
read it and keep it with your Prospectus for future reference.
1. Effective January 1, 1997, the underlying Mutual Fund options TWENTIETH
CENTURY GROWTH INVESTORS, TWENTIETH CENTURY INTERNATIONAL EQUITY FUND,
TWENTIETH CENTURY ULTRA INVESTORS AND TWENTIETH CENTURY U.S.
GOVERNMENTS SHORT-TERM will change their names to AMERICAN CENTURY:
TWENTIETH CENTURY GROWTH, AMERICAN CENTURY: TWENTIETH CENTURY
INTERNATIONAL GROWTH, AMERICAN CENTURY: TWENTIETH CENTURY ULTRA AND
AMERICAN CENTURY: BENHAM SHORT-TERM GOVERNMENT, respectively.
Accordingly, any and all references to Twentieth Century Growth
Investors, Twentieth Century International Equity Fund, Twentieth
Century Ultra Investors and Twentieth Century U.S. Governments
Short-Term located in the Prospectus are hereby amended to reflect this
name change.
2. Additionally, effective January 1, 1997, the underlying Mutual Fund
option BENHAM INCOME & GROWTH FUND will change its name to AMERICAN
CENTURY: INCOME & GROWTH. Accordingly, any and all references to the
Benham Income & Growth Fund contained in the previous Supplement dated
November 1, 1996 are hereby amended to reflect this name change.
3. Effective January 1, 1997, the section entitled "Transfers" located on
page 23 of the Prospectus is hereby amended by adding the following
information as the fourth and fifth paragraphs:
Contracts described in this prospectus may in some cases be sold to
individuals who independently utilize the services of a firm or
individual engaged in market timing. Generally, such firms or
individuals obtain authorization from multiple Contract Owners to make
transfers and exchanges among the Sub-Accounts (the underlying Mutual
Funds) on the basis of perceived market trends. Because of the
unusually large transfers of funds associated with some of these
transactions, the ability of the Company or underlying Mutual Funds to
process such transactions may be compromised, and the execution of such
transactions may possibly disadvantage or work to the detriment of
other Contract Owners not utilizing market timing services.
3 of 114
<PAGE> 4
Accordingly, the right to exchange Contract Values among the
Sub-Accounts may be subject to modification if such rights are
exercised by a market timing firm or any other third party authorized
to initiate transfer or exchange transactions on behalf of multiple
Contract Owners. THE RIGHTS OF INDIVIDUAL CONTRACT OWNERS TO EXCHANGE
CONTRACT VALUES, WHEN INSTRUCTIONS ARE SUBMITTED DIRECTLY BY THE
CONTRACT OWNER, OR BY THE CONTRACT OWNER'S REPRESENTATIVE OF RECORD AS
AUTHORIZED BY THE EXECUTION OF A VALID NATIONWIDE LIMITED POWER OF
ATTORNEY FORM, WILL NOT BE MODIFIED IN ANY WAY. In modifying such
rights, the Company may, among other things, not accept (1) the
transfer or exchange instructions of any agent acting under a power of
attorney on behalf of more than one Contract Owner, or (2) the transfer
or exchange instructions of individual contract owners who have
executed pre-authorized transfer or 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. The Company will not impose any
such restrictions or otherwise modify exchange rights unless such
action is reasonably intended to prevent the use of such rights in a
manner that will disadvantage or potentially impair the contract rights
of other Contract Owners.
4 of 114
<PAGE> 5
SUPPLEMENT DATED NOVEMBER 1, 1996 TO
PROSPECTUS DATED MAY 1, 1996 FOR
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANY
THROUGH ITS
NATIONWIDE VARIABLE ACCOUNT
This Supplement updates certain information contained in your Prospectus. Please
read it and keep it with your Prospectus for future reference.
1. Effective October 17, 1996, Nationwide Financial Services, Inc. has
changed its name to Nationwide Advisory Services, Inc. Accordingly, any
and all references to Nationwide Financial Services, Inc. in this
Prospectus are hereby amended to reflect this name change.
2. On page 1 of the Prospectus, the list of underlying Mutual Fund options
under the section entitled "FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1,
1993", is hereby amended to include the following underlying Mutual
Fund options:
Benham Income & Growth Fund
Dreyfus Third Century Fund, Inc.
Federated Bond Fund
Janus Worldwide Fund
3. The UNDERLYING MUTUAL FUND ANNUAL EXPENSES table located on page 7 of
the Prospectus is hereby amended to reflect the addition of the
above-mentioned underlying Mutual Fund options:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Portfolio
Management Other Company
Fees Expenses Expenses
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benham Income & Growth Fund 0.31% 0.36% 0.67%
- -----------------------------------------------------------------------------------------------------------
Federated Bond Fund 0.50% 0.59% 1.09%
- -----------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 0.68% 0.56% 1.24%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Additionally, the UNDERLYING MUTUAL FUND ANNUAL EXPENSES table is
further amended to reflect the following updates:
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Fidelity Puritan Fund 0.52% 0.25% 0.77%
- -----------------------------------------------------------------------------------------------------------
MFS(R) World Governments Fund(4) 0.90% 0.71% 1.61%
- -----------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 0.63% 0.52% 1.15%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(4) A 12b-1 fee is included in the calculation of "Other Expenses".
5 of 114
<PAGE> 6
4. The Example table located on pages 8 and 9 of the Prospectus is hereby
amended to reflect example information for the addition of the
above-mentioned underlying Mutual Fund options:
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
EXAMPLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- -------------------------------------------------------------------------------------------------------------
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>
Benham Income & 92 112 142 247 22 67 115 247 * 67 115 247
Growth Fund
- -------------------------------------------------------------------------------------------------------------
Federated Bond Fund 96 125 164 291 26 80 137 291 * 80 137 291
- -------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 98 130 172 307 28 85 145 307 * 85 145 307
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Additionally, the Example table is further amended to reflect the
following updates:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Puritan Fund 93 115 147 258 23 70 120 258 * 70 120 258
- -------------------------------------------------------------------------------------------------------------
Templeton Foreign
Fund - Class I 97 127 167 298 27 82 140 298 * 82 140 298
- -------------------------------------------------------------------------------------------------------------
</TABLE>
5. The Condensed Financial Information table located on pages 13-18 of the
Prospectus is amended to reflect the following updates:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Puritan Fund-Q 12.020413 14.410892 19.89% 301,466 1995
------------------------------------------------------------------------------
11.972512 12.020413 0.40% 161,179 1994
------------------------------------------------------------------------------
10.000000 11.972512 19.73% 44,320 1993
- -------------------------------------------------------------------------------------------------------
Templeton Foreign Fund 10.000000 11.097523 10.98% 69,083 1995
- - Class I - Q
- -------------------------------------------------------------------------------------------------------
</TABLE>
Additionally, footnote number 1 to the Condensed Financial Information
table is hereby deleted in its entirety and replaced with the following
footnote:
(1) Unit value information is not provided for the Benham Income & Growth
Fund, the Federated Bond Fund and the Janus Worldwide Fund, as said
underlying Mutual Funds were added to the Variable Account effective
October 31, 1996, and therefore have no unit value histories prior to
that time.
6 of 114
<PAGE> 7
6. APPENDIX B located on pages 37-42 of the Prospectus is hereby amended
to include the following investment objectives:
BENHAM INCOME & GROWTH FUND:
Investment Objective- Seeks dividend growth, current income and capital
appreciation by investing in common stocks. The Fund may buy securities
convertible into common stock, such as convertible bonds, convertible
preferred stocks or warrants. The Fund may also, for liquidity
purposes, invest in high-quality money market instruments with
remaining maturities of one year or less. The Fund may also enter into
repurchase agreements, collateralized by U.S. government securities,
with banks or broker-dealers deemed to present minimal credit risk.
FEDERATED BOND FUND:
Investment Objective - To provide as high a level of current income as
is consistent with the preservation of capital. The Fund invests
primarily in a professionally managed, diversified portfolio of bonds.
Under normal circumstances, at least 65% of the Fund's net assets will
be invested in investment grade securities, including repurchase
agreements collateralized by investment grade securities. The Fund may
invest in corporate debt obligations, U.S. Government obligations,
municipal securities, asset-backed securities, adjustable rate mortgage
securities, collateralized mortgage obligations, and other securities
which are deemed to be consistent with the Fund's investment objective.
JANUS WORLDWIDE FUND:
Investment Objective - To seek long-term growth of capital in a manner
consistent with the preservation of capital. The objective is pursued
primarily through investments in common stocks of foreign and domestic
issuers. The Fund may invest on a worldwide basis in companies and
organizations of any size, regardless of country of organization or
place of principal business activity. The Fund normally invests in
issuers from at least five different countries.
7 of 114
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY
Home Office
P.O. Box 16609
Columbus, Ohio 43216-6609, 1-800-848-6331, TDD 1-800-238-3035
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE NATIONWIDE VARIABLE ACCOUNT OF
NATIONWIDE LIFE INSURANCE COMPANY
The Individual Deferred Variable Annuity Contracts described in this
prospectus are Flexible Purchase Payment Contracts (collectively referred to as
the "Contracts"). Contracts issued on or after December 25, 1982 and before
January 1, 1993 were issued to the trustees of Qualified Plans as Qualified
Contracts. Contracts issued prior to December 25, 1982 were issued to
individuals on Non-Qualified Contracts. Contracts issued after January 1, 1993
may only be issued to custodians of Individual Retirement Accounts ("IRAs").
These Contracts (issued after January 1, 1993) do not qualify for tax-deferral
under federal tax rules governing Non-Qualified Annuities or Individual
Retirement Annuities. Such Contracts are, however, issued to custodians of
Individual Retirement Accounts ("IRAs") for the benefit of individual IRA
account holders. Such account holders shall be the Annuitant under these
Contracts. Annuity payments under the Contracts are deferred until a selected
later date.
Purchase Payments are allocated to the Nationwide Variable Account
("Variable Account"), a separate account of Nationwide Life Insurance Company
(the "Company"). The Variable Account is divided into Sub-Accounts, each of
which invests in shares of the following underlying Mutual Fund options:
FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993
<TABLE>
<S> <C>
- -Delchester Fund-Institutional Class -Nationwide(R) Fund
- -Dreyfus A Bonds Plus, Inc. -Nationwide(R) Growth Fund
- -Dreyfus S & P 500 Index Fund (Formerly Peoples -Nationwide(R) Money Market Fund
Index Fund, Inc.)
- -The Evergreen Total Return Fund -Nationwide(R) U.S. Government Income Fund
- -Fidelity Advisor Equity Income Fund -Neuberger & Berman Guardian Fund, Inc.
- -Fidelity Advisor Growth Opportunities Fund -Neuberger & Berman Limited Maturity Bond Fund
- -Fidelity Advisor High Yield Fund -Neuberger & Berman Partners Fund, Inc.
- -Fidelity Advisor Income & Growth Fund -Oppenheimer Global Fund
- -Fidelity Asset Manager(TM)
- -Fidelity Equity-Income Fund -Phoenix Balanced Fund Series
- -Fidelity Magellan(R) Fund -Strong Total Return Fund, Inc.
- -Fidelity Puritan Fund -Templeton Foreign Fund
- -Fidelity VIP High Income Portfolio* (additional Purchase -Twentieth Century Growth Investors
Payments or exchanges may not be made to this
Fund on or after December 1, 1993).
- -Janus Fund -Twentieth Century International Equity Fund
- -Janus Twenty Fund -Twentieth Century Ultra Investors
- -MFS(R) World Governments Fund -Twentieth Century U.S. Governments Short-Term
- -Nationwide(R) Bond Fund -Warburg Pincus Emerging Growth Fund
</TABLE>
*The High Income Portfolio may invest in lower quality debt securities commonly
referred to as junk bonds.
FOR CONTRACTS ISSUED ON OR AFTER DECEMBER 25, 1982 AND BEFORE JANUARY 1, 1993
<TABLE>
<S> <C>
- -Fidelity Capital & Income Fund -MFS(R) World Governments Fund
(additional Purchase Payments or -Nationwide(R) Money Market Fund
exchanges may not be made to this Fund on -Twentieth Century Growth Investors
or after May 1, 1991. Not available for -Twentieth Century U.S. Governments Short-
Contracts issued on or after May 1, 1987). Term
- -Fidelity VIP High Income Portfolio (additional Purchase
Payments or exchanges may not be made to this Fund
on or after December 1, 1993).
</TABLE>
3
8 of 114
<PAGE> 9
FOR CONTRACTS ISSUED BEFORE DECEMBER 25, 1982
<TABLE>
<S> <C>
- -Nationwide(R) Bond Fund -Nationwide(R) Growth Fund
- -Nationwide(R) Fund -Nationwide(R) Money Market Fund
</TABLE>
This prospectus provides you with the basic information you should know
about the Individual Deferred Variable Annuity Contracts issued by the
Nationwide Variable Account before investing. You should read it and keep it for
future reference. A Statement of Additional Information dated May 1, 1996,
containing further information about the Contracts and the Nationwide Variable
Account has been filed with the Securities and Exchange Commission. You can
obtain a copy without charge from Nationwide Life Insurance Company by calling
the number listed above or writing P.O. Box 16609, Columbus, Ohio 43216-6609.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1996, IS
INCORPORATED HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF
ADDITIONAL INFORMATION APPEARS ON PAGE 34 OF THE PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
4
9 of 114
<PAGE> 10
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Contract Value prior to the Annuitization Date.
ANNUITANT- The person actually receiving 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. Although
not the Owner of the Contract, the Annuitant may exercise rights of ownership in
the Contract if so authorized by the holder of the Contract (an IRA custodian or
Qualified Plan trustee(s)).
ANNUITIZATION- The period during which annuity payments are actually received.
ANNUITIZATION DATE- The date on which annuity payments actually commence.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
commence. The Annuity Commencement Date is shown on the Data Page of the
Contract, and is subject to change by the Owner.
ANNUITY PAYMENT OPTION- The chosen form of making annuity payments. Several
options are available under this Contract.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY- The Beneficiary is the person designated to receive certain
benefits under the Contract upon the death of the Annuitant prior to the
Annuitization Date. The Beneficiary can be changed by the Contract Owner as set
forth in the Contract.
CODE- The Internal Revenue Code of 1986, as amended.
COMPANY- Nationwide Life Insurance Company.
CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Annuitant.
CONTINGENT DESIGNATED ANNUITANT- The Contingent Designated Annuitant may be the
recipient of certain rights or benefits under this Contract when the Annuitant
dies before the Annuitization Date. If a Contingent Designated Annuitant is
named on the application, all provisions of the Contract which are based on the
death of the Annuitant will be based on the death of the last survivor of the
Annuitant and the Contingent Designated Annuitant. The Owner's right to name a
Contingent Designated Annuitant may be restricted under the provisions of any
retirement or deferred compensation plan for which this Contract is issued.
CONTRACT- The Individual Deferred Variable Annuity Contract described in this
prospectus.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER (OWNER)- The Contract Owner is the person (an individual, a
Qualified Plan trustee(s), or an IRA custodian) who possesses all rights under
the Contract. In most cases, IRA custodians and Qualified Plan trustees will
authorize the exercise of ownership rights in the Contract by the Annuitant,
including the right to designate and change any designations of the Beneficiary,
Contingent Beneficiary, Annuity Payment Option, the Annuity Commencement Date
and the right to make exchanges and reallocations among the investment options
available under the Contract. The Contract Owner is the person named on the
application, unless changed.
CONTRACT VALUE- The sum of the value of all Variable Account Accumulation Units
attributable to the Contract plus any amount held under the Contract in the
Fixed Account.
CONTRACT YEAR- Each year the Contract remains in force commencing with the Date
of Issue.
DATE OF ISSUE- The date shown as the Date of Issue on the Contract Data Page of
the Contract.
DEATH BENEFIT- The benefit payable upon the death of the Designated Annuitant
prior to the Annuitization Date. If the Annuitant dies after the Annuitization
Date, any benefit that may be payable shall be as specified in the Annuity
Payment Option elected.
DISTRIBUTION- Any payment of part or all of the Contract Value.
FIXED ACCOUNT- The Fixed Account is made up of all assets of the Company other
than those in the Variable Account or any other segregated asset account of the
Company.
FIXED ANNUITY- An annuity providing for payments which are guaranteed by the
Company as to dollar amount during Annuitization.
5
10 of 114
<PAGE> 11
HOME OFFICE- The main office of the Company located in Columbus, Ohio.
INDIVIDUAL RETIREMENT ACCOUNT/IRA- A custodial account which qualifies for
favorable tax treatment under Section 408 of the Code, and may hold this
Contract as an investment asset. Other than Contracts sold prior to December 25,
1982, no Contracts described in this prospectus were or shall be sold as
Individual Retirement Annuities.
INTEREST RATE GUARANTEE PERIOD- An Interest Rate Guarantee Period is the
interval of time during which an interest rate credited to the Fixed Account
under the Contract is guaranteed to remain the same. For new Purchase Payments
to the Fixed Account or transfers from the Variable Account, this period begins
upon the date of deposit or transfer and ends at the end of the calendar quarter
at least one year (but not more than 15 months) from deposit or transfer. At the
end of an Interest Rate Guarantee Period, a new interest rate is declared with
an Interest Rate Guarantee Period starting at the end of the prior period and
ending at the end of the calendar quarter one year later.
MUTUAL FUND (FUND) - A registered management investment company in which the
assets of the Sub-Accounts of the Variable Account will be invested.
NON-QUALIFIED CONTRACT- A Contract which does not qualify for favorable tax
treatment under Sections 401 (Qualified Plans), 408 (IRAs), or 403(b) (Tax
Sheltered Annuities) of the Code. Only Contracts described in this prospectus
that were issued prior to December 25, 1982 were issued as Non-Qualified
Annuities.
PLAN PARTICIPANT-A Plan Participant is a person for whom contributions are being
made to a Qualified Plan either through employer contributions or employee
salary reduction contributions.
PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers between the Variable Account and Fixed
Account, or among the Sub-Accounts.
QUALIFIED CONTRACT- A Contract which receives favorable tax treatment under the
provisions of the Code, including those described in Section 401 and 403(a).
SUB-ACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Mutual Fund shares are allocated and for which Accumulation
Units and Annuity Units are separately maintained.
TAX SHELTERED ANNUITY- An annuity which qualifies for favorable tax treatment
under Section 403(b) of the Code.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
VARIABLE ACCOUNT- The Nationwide Separate Account, a separate investment account
of the Company into which Variable Account Purchase Payments are allocated. The
Variable Account is divided into Sub-Accounts, each of which invests in shares
of a separate underlying Mutual Fund.
VARIABLE ANNUITY- An annuity providing for payments which vary in amount with
the investment experience of the Variable Account.
6
11 of 114
<PAGE> 12
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS................................................................................... 3
SUMMARY OF CONTRACT EXPENSES................................................................................ 6
SYNOPSIS.................................................................................................... 12
CONDENSED FINANCIAL INFORMATION............................................................................. 13
NATIONWIDE LIFE INSURANCE COMPANY........................................................................... 19
THE VARIABLE ACCOUNT........................................................................................ 19
Underlying Mutual Fund Options..................................................................... 19
Voting Rights...................................................................................... 20
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS........................................... 20
Mortality Risk Charge.............................................................................. 20
Expense Risk Charge................................................................................ 20
Contingent Deferred Sales Charge................................................................... 20
Elimination of Contingent Deferred Sales Charge.................................................... 21
Contract Maintenance and Administration Charge..................................................... 22
Premium Taxes...................................................................................... 22
Expenses of Variable Account....................................................................... 22
Investments of the Variable Account................................................................ 22
Right to Revoke.................................................................................... 22
Transfers.......................................................................................... 23
Assignment......................................................................................... 23
Loan Privilege..................................................................................... 23
Beneficiary Provisions............................................................................. 24
Ownership Provisions............................................................................... 25
Substitution of Securities......................................................................... 25
Inquiries.......................................................................................... 25
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT..................................................................... 25
Value of an Annuity Unit........................................................................... 25
Assumed Investment Rate............................................................................ 26
Frequency and Amount of Annuity Payments........................................................... 26
Annuity Commencement Date.......................................................................... 26
Change in Annuity Commencement Date................................................................ 26
Change in Form of Annuity.......................................................................... 26
Annuity Payment Option............................................................................. 26
Death of Annuitant Prior to the Annuitization Date (For Contracts Issued Prior
to December 25, 1982)......................................................................... 27
Death Benefit After the Annuitization Date......................................................... 27
Required Distributions for Qualified Plans......................................................... 27
Required Distributions for Individual Retirement Annuities and
Individual Retirement Accounts................................................................ 28
Generation-Skipping Transfers...................................................................... 28
GENERAL INFORMATION......................................................................................... 29
Contract Owner Services............................................................................ 29
Statements and Reports............................................................................. 29
Allocation of Purchase Payments and Contract Value................................................. 30
Value of a Variable Account Accumulation Unit...................................................... 30
Net Investment Factor.............................................................................. 30
Valuation of Assets................................................................................ 31
Determining the Contract Value..................................................................... 31
Surrender (Redemption)............................................................................. 31
Surrenders Under a Qualified Plan.................................................................. 31
Taxes.............................................................................................. 31
Non-Qualified Contracts............................................................................ 32
Charge for Tax Provisions.......................................................................... 33
Qualified Plans, Individual Retirement Annuities and Individual Retirement Accounts................ 33
Individual Retirement Accounts..................................................................... 34
LEGAL PROCEEDINGS........................................................................................... 34
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.................................................... 34
APPENDIX A.................................................................................................. 35
</TABLE>
7
12 of 114
<PAGE> 13
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
CONTRACT TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Contingent Deferred Sales Charge(1).................................................. 7%
-----
MAXIMUM ANNUAL CONTRACT MAINTENANCE CHARGES(2)...................................................... $ 30
-----
VARIABLE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge............................................................ 1.25%
------
Administration Charge........................................................................ 0.05%
------
Total Variable Account Annual Expenses.................................................... 1.30%
------
</TABLE>
(1) For Contracts issued on or after January 1, 1993 the maximum Contingent
Deferred Sales Charge is 7%. Starting with the second year after a Purchase
Payment has been made, 10% of that Purchase Payment may be withdrawn
without imposition of a Contingent Deferred Sales Charge. The Contingent
Deferred Sales Charge is waived for first-year withdrawals of up to 10% of
premium or for Distributions required for the Contract to meet minimum
Distribution requirements under the Code. This free withdrawal privilege is
non-cumulative and must be used in the year available. The Contingent
Deferred Sales Charge is imposed only against Purchase Payments.
(2) The annual Contract Maintenance Charge is deducted on each Contract
Anniversary and in any year in which the entire Contract Value is
surrendered on the date of Surrender (see "Contract Maintenance and
Administration Charges").
8
13 of 114
<PAGE> 14
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(3)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Portfolio
Management Other Company
Fees Expenses Expenses
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delchester Fund-Institutional Class 0.58% 0.25% 0.83%
- ----------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 0.65% 0.34% 0.99%
- ----------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 Index Fund (Formerly Peoples Index Fund(R), 0.10% 0.45% 0.55%
Inc.)
- ----------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 0.75% 0.37% 1.12%
- ----------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund 0.98% 0.21% 1.19%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund 0.50% 0.97% 1.47%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund 0.69% 0.90% 1.59%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund 0.60% 0.55% 1.15%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor Income & Growth Fund 0.52% 0.95% 1.47%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager 0.72% 0.25% 0.97%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.44% 0.24% 0.68%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 0.75% 0.22% 0.97%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 0.52% 0.77% 1.29%
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.60% 0.11% 0.71%
- ----------------------------------------------------------------------------------------------------------------
Janus Fund 0.66% 0.25% 0.91%
- ----------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 0.67% 0.35% 1.02%
- ----------------------------------------------------------------------------------------------------------------
MFS(R) World Governments Fund 0.90% 0.71% 1.61%
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund 0.50% 0.21% 0.71%
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund 0.50% 0.13% 0.63%
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 0.50% 0.16% 0.66%
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market 0.45% 0.17% 0.62%
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) U.S. Government Income Fund 0.65% 0.43% 1.08%
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund, Inc. 0.72% 0.13% 0.85%
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Limited Maturity Bond Fund 0.51% 0.19% 0.70%
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Partners Fund, Inc. 0.76% 0.11% 0.87%
- ----------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund 0.72% 0.48% 1.20%
- ----------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series 0.50% 0.52% 1.02%
- ----------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 0.80% 0.34% 1.14%
- ----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund 0.63% 0.52% 1.15%
- ----------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 1.00% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------
Twentieth Century International Equity Fund 1.77% 0.00% 1.77&
- ----------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 1.00% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------
Twentieth Century U.S. Governments Short Term 0.70% 0.00% 0.70%
- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 0.90% 0.36% 1.26%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(3) The Mutual Fund expenses shown above are assessed at the underlying Mutual
Fund level and are not direct charges against Variable Account assets or
reductions from Contract Values. These underlying Mutual Fund expenses are
taken into consideration in computing each underlying Mutual Fund's net
asset value, which is the share price used to calculate the unit values of
the Variable Account. The management fees and other expenses, some of which
are subject to fee waivers or expense reimbursements, are more fully
described in prospectuses for each underlying Mutual Fund. The information
relating to the underlying Mutual Fund expenses was provided by the
underlying Mutual Fund and was not independently verified by the Company.
9
14 of 114
<PAGE> 15
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 investment and 5% annual return. These
dollar figures are illustrative only and should not be considered a
representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below. The expense amounts presented are derived from a
formula which allows the $30 Contract Maintenance Charge to be expressed as a
percentage of the average Contract account size for existing Contracts. Since
the average Contract account size for Contracts issued under this prospectus is
greater than $1000, the expense effect of the Contract Maintenance Charge is
reduced accordingly.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------
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>
Delchester 96 117 150 264 23 72 123 264 * 72 123 264
Fund-Inst'l
- ---------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus 95 122 153 281 25 77 132 281 * 77 132 281
- ---------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500
Index Fund (Formerly 90 108 136 234 20 63 109 234 * 63 109 234
Peoples Index Fund,
Inc.)
- ---------------------------------------------------------------------------------------------------------------
The Dreyfus Third
Century Fund, Inc. 96 126 166 294 26 81 139 294 * 81 139 294
- ---------------------------------------------------------------------------------------------------------------
The Evergreen Total
Return Fund 97 128 169 302 27 83 142 302 * 83 142 302
- ---------------------------------------------------------------------------------------------------------------
Fidelity Advisor 100 137 184 330 30 92 157 330 * 92 157 330
Fund Equity Income
Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity Advisor 101 141 190 342 31 96 163 342 * 96 163 342
Fund Growth
Opportunities Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity Advisor 97 127 167 298 27 82 140 298 * 82 140 298
High Yield Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity Advisor 100 137 184 330 30 92 157 330 * 92 157 330
Income & Growth Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity Asset
ManagerTM 95 122 158 279 25 77 131 279 * 77 131 279
- ---------------------------------------------------------------------------------------------------------------
Fidelity
Equity-Income 92 112 143 248 22 67 116 248 * 67 116 248
Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity Magellan 95 122 158 279 25 77 131 279 * 77 131 279
Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 98 132 175 312 28 87 148 312 * 87 142 312
- ---------------------------------------------------------------------------------------------------------------
Fidelity VIP High
Income Portfolio 92 113 144 251 22 68 117 251 * 68 117 251
- ---------------------------------------------------------------------------------------------------------------
Janus Fund 94 120 155 273 24 75 128 273 * 75 128 273
- ---------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 95 123 160 284 25 78 133 284 * 78 133 284
- ---------------------------------------------------------------------------------------------------------------
MFS(R) World
Governments Fund 102 142 191 344 32 97 164 344 * 97 164 344
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond
Fund 92 113 144 251 22 68 117 251 * 68 117 251
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund 91 111 140 243 21 66 113 243 * 66 113 243
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth
Fund 92 112 141 246 22 67 114 246 * 67 114 246
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Money
Market Fund 91 110 139 242 21 65 112 242 * 65 112 242
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
10
15 of 114
<PAGE> 16
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Nationwide(R) U.S. 96 125 164 290 26 80 137 290 * 80 137 290
Government Income
Fund
- ---------------------------------------------------------------------------------------------------------------
Neuberger & Berman
Guardian Fund, Inc. 94 118 152 266 24 73 125 266 * 73 125 266
- ---------------------------------------------------------------------------------------------------------------
Neuberger & Berman
Limited Maturity 92 113 144 250 22 68 117 250 * 68 117 250
Bond Fund
- ---------------------------------------------------------------------------------------------------------------
Neuberger & Berman
Partners Fund, Inc. 94 118 153 268 24 73 126 268 * 73 126 268
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Global
Fund 97 129 170 303 27 84 143 323 * 84 143 303
- ---------------------------------------------------------------------------------------------------------------
Phoenix Balanced
Fund Series 95 123 160 284 25 78 133 284 * 78 133 284
- ---------------------------------------------------------------------------------------------------------------
Strong Total Return
Fund, Inc. 97 127 167 297 27 82 140 297 * 82 140 297
- ---------------------------------------------------------------------------------------------------------------
Templeton Foreign
Fund 97 127 167 298 27 82 140 298 * 82 140 298
- ---------------------------------------------------------------------------------------------------------------
Twentieth Century
Growth Investors 95 122 159 282 25 77 132 282 * 77 132 282
- ---------------------------------------------------------------------------------------------------------------
Twentieth Century
International Equity 103 147 199 359 33 102 172 359 * 102 172 359
Fund
- ---------------------------------------------------------------------------------------------------------------
Twentieth Century
U.S. Governments 92 113 144 250 22 68 117 250 * 68 117 250
Short-Term
- ---------------------------------------------------------------------------------------------------------------
Twentieth Century
Ultra Investors 95 122 159 282 25 77 132 282 * 77 132 282
- ---------------------------------------------------------------------------------------------------------------
Warburg Pincus
Emerging Growth Fund 98 131 173 309 28 86 146 309 * 86 146 309
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* The Contracts sold under this prospectus do not permit annuitizations during
the first two Contract years. The purpose of the Summary of Contract Expenses
and Example is to assist the Contract Owner in understanding the various costs
and expenses that will be borne directly or indirectly. The expenses of the
Nationwide Variable Account as well as those of the underlying Mutual Funds
are reflected in the table. For more complete descriptions of the expenses of
the Nationwide Variable Account, see "Variable Account Charges, Purchase
Payments, and Other Deductions." For more complete information regarding
expenses paid out of the assets of a particular underlying Mutual Fund, see
the underlying Mutual Fund's prospectus. Deductions for premium taxes may also
apply but are not reflected in the Example shown above (see "Premium Taxes").
11
16 of 114
<PAGE> 17
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
<TABLE>
<S> <C>
CONTRACT TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge(1)................................................... 5%
-----
MAXIMUM ANNUAL CONTRACT MAINTENANCE CHARGES(2)....................................................... $ 30
-----
VARIABLE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge............................................................. 1.30%
------
Total Variable Account Annual Expenses.................................................... 1.30%
------
</TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(3)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL PORTFOLIO
MANAGEMENT OTHER COMPANY
FEES EXPENSES EXPENSES
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIDELITY CAPITAL & INCOME FUND 0.70% 0.30% 1.00%
- ------------------------------------------------------------------------------------------------------------
FIDELITY VIP HIGH INCOME PORTFOLIO 0.60% 0.11% 0.71%
- ------------------------------------------------------------------------------------------------------------
MFS WORLD GOVERNMENTS FUND 0.90% 0.71% 1.61%
- ------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) MONEY MARKET FUND 0.45% 0.17% 0.62%
- ------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY GROWTH INVESTORS 1.00% 0.00% 1.00%
- ------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY U.S. GOVERNMENTS SHORT-TERM 0.70% 0.00% 0.70%
- ------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) BOND FUND* 0.50% 0.21% 0.71%
- ------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) FUND* 0.50% 0.13% 0.63%
- ------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) GROWTH FUND* 0.50% 0.16% 0.66%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Available only for Contracts issued Prior to December 25, 1982.
(1) For Purchase Payments made after January 30, 1981 the Contract Owner may,
after the first year from the date of such Purchase Payment, withdraw 5% of
that Purchase Payment without imposition of a Contingent Deferred Sales
Charge. For Contracts issued prior to August 4, 1981 starting with the third
Contract Year, the Company will waive Contingent Deferred Sales Charge on
surrendered amounts equal on a cumulative basis to 10% of Purchase Payments
(see "Contingent Deferred Sales Charge").
(2) The annual Contract Maintenance Charge is deducted on each Contract
Anniversary and in any year in which the entire Contract Value is
surrendered on the date of Surrender (see "Contract Maintenance and
Administration Charges").
(3) The Mutual Fund expenses shown above are assessed at the underlying Mutual
Fund level and are not direct charges against separate account assets or
reductions from Contract Values. These underlying Mutual Fund expenses are
taken into consideration in computing each underlying Mutual Fund's net
asset value, which is the share price used to calculate the unit values of
the Variable Account. The management fees and other expenses, some of which
are subject to fee waivers or expense reimbursements, are more fully
described in prospectuses for each underlying Mutual Fund. The information
relating to the underlying Mutual Fund expenses was provided by the
underlying Mutual Fund and was not independently verified by the Company.
12
17 of 114
<PAGE> 18
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 initial Purchase Payment and 5% annual
return. These dollar figures are illustrative only and should not be considered
a representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below. The expense amounts presented are derived from a
formula which allows the $30 Contract Maintenance Charge to be expressed as a
percentage of the average contract account size for existing Contracts. Since
the average contract account size for Contracts issued under this prospectus is
greater than $1000, the expense effect of the Contract Maintenance Charge is
reduced accordingly.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER YOUR IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- --------------------------------------------------------------------------------------------------------------
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>
Fidelity Capital & 75 122 172 282 25 77 132 282 ** 77 132 282
Income Fund
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP High 72 113 157 251 22 68 117 251 ** 68 117 251
Income Portfolio
- --------------------------------------------------------------------------------------------------------------
MFS(R) World 82 142 204 344 32 97 164 344 ** 97 164 344
Governments Fund
- --------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 71 110 152 242 21 65 112 242 ** 65 112 242
Market Fund
- --------------------------------------------------------------------------------------------------------------
Twentieth Century 75 122 172 282 25 77 132 282 ** 77 132 282
Growth Investors.
- --------------------------------------------------------------------------------------------------------------
Twentieth Century 72 113 157 250 22 68 117 250 ** 68 117 250
U.S. Governments
Short-Term
- --------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond 72 113 157 251 22 68 117 251 ** 68 117 251
Fund*
- --------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund* 71 111 153 243 21 66 113 243 ** 66 113 243
- --------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 72 112 154 246 22 67 114 246 ** 67 114 246
Fund*
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Available only for Contracts issued Prior to December 25, 1982.
** The Contracts sold under this prospectus do not permit annuitizations during
the first two Contract years. The purpose of the Summary of Contract Expenses
and Example are to assist the Contract Owner in understanding the various costs
and expenses that will be borne directly or indirectly. The expenses of the
Nationwide Variable Account as well as those of the underlying Mutual Fund
Company are reflected in the table. For more complete descriptions of the
expenses of the Nationwide Variable Account, see "Variable Account Charges,
Purchase Payments, and Other Deductions." For more complete information
regarding expenses paid out of the assets of a particular underlying Mutual
Fund, see the underlying Mutual Fund's prospectus. Deductions for premium taxes
may also apply but are not reflected in the Example shown above (see "Premium
Taxes").
13
18 of 114
<PAGE> 19
SYNOPSIS
The Company does not deduct a sales charge from Purchase Payments made
for these Contracts. However, if any part of the Contract Value of such
Contracts is surrendered, the Company will, with certain exceptions, deduct a
Contingent Deferred Sales Charge not to exceed 7% of the lesser of the total of
all Purchase Payments made within 84 months prior to the date of the request to
surrender, or the amount surrendered. For Contracts issued before January 1,
1993 the Company will deduct a Contingent Deferred Sales Charge not to exceed 5%
of the lesser of the total of all Purchase Payments made within 96 months prior
to the date of the request to surrender, or the amount surrendered. This charge,
when applicable, is imposed to permit the Company to recover sales expenses
which have been advanced by the Company (see "Contingent Deferred Sales
Charge").
In addition, on each Contract Anniversary the Company will deduct an
annual Contract Maintenance Charge of $30 from the Contract Value of such
Contracts. The Company will also assess for Contracts issued on or after January
1, 1993 an Administration Charge equal to an annual rate of 0.05% of the daily
net asset value of the Variable Account. These charges are to reimburse the
Company for administrative expenses related to the issuance and maintenance of
the Contracts. The Company does not expect to recover from these charges an
amount in excess of accumulated administrative expenses (see "Contract
Maintenance and Administration Charges").
The Company deducts a Mortality Risk Charge equal to an annual rate of
0.80% of the daily net asset value of the Variable Account for mortality risk
assumed by the Company (see "Mortality Risk Charge").
The Company deducts an Expense Risk Charge equal to an annual rate of
0.45% (0.50% for Contracts issued prior to January 1, 1993) of the daily net
asset value of the Variable Account as compensation for the Company's risk in
undertaking not to increase administrative charges on the Contracts regardless
of the actual administrative costs (see "Expense Risk Charge").
The cumulative total of all Purchase Payments under Contracts issued on
the life of any one Designated Annuitant may not exceed $1,000,000 without the
prior consent of the Company (see "Allocations of Purchase Payments and Contract
Value").
If the Contract Value at the Annuitization Date is less than $500, the
Contract Value may be distributed in one lump sum in lieu of annuity payments.
If any annuity payment would be less than $20, the Company shall have the right
to change the frequency of payments to such intervals as will result in payments
of at least $20. In no event, however, will annuity payments be made less
frequently than annually (see "Frequency and Amount of Annuity Payments").
Premium taxes payable to any governmental entity will be charged against
the Contracts. If any such premium taxes are payable by the Company at the time
Purchase Payments are made, an equal premium tax deduction may be made from the
Contract prior to the allocation of any Purchase Payment to any underlying
Mutual Fund option (see "Premium Taxes").
To be sure that the Contract Owner (or Annuitant if the Annuitant has
been authorized to exercise ownership rights under the Contract) is satisfied
with the Contract, the Contract Owner (or Annuitant, if so authorized) has a ten
day free look. Within ten days of the day the Contract is received, it may be
returned to the Home Office of the Company, at the address shown on page 1 of
this prospectus. When the Contract is received by the Company, the Company will
void the Contract and refund the Contract Value in full unless otherwise
required by state and/or federal law. All Individual Retirement Annuity refunds
will be return of Purchase Payments (see "Right To Revoke").
14
19 of 114
<PAGE> 20
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period(1).
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delchester Fund Inst'l-Q 10.867271 12.257125 12.79% 65,214 1995
------------------------------------------------------------------------------------
11.511092 10.867271 -5.59% 43,997 1994
------------------------------------------------------------------------------------
10.000000 11.511092 15.11% 15,953 1993
- -------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, 9.110600 10.819193 18.75% 53,005 1995
Inc.-Q ------------------------------------------------------------------------------------
10.000000 9.110600 -8.89% 15,283 1994
- -------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 Index 10.749166 14.505515 34.95% 33,323 1995
------------------------------------------------------------------------------------
Fund (Formerly Peoples 10.819026 10.749166 -0.65% 12,668 1994
------------------------------------------------------------------------------------
Index Fund-Q) 10.000000 10.819026 8.19% 585 1993
- -------------------------------------------------------------------------------------------------------------
The Dreyfus Third 9.570659 12.829548 34.05% 12,292 1995
Century Fund, Inc.-Q -----------------------------------------------------------------------------------
10.477293 9.570659 -8.65% 7,325 1994
-----------------------------------------------------------------------------------
10.000000 10.477293 4.77% 2,583 1993
- -------------------------------------------------------------------------------------------------------------
The Evergreen Total 10.301799 12.594984 22.26% 60,789 1995
------------------------------------------------------------------------------------
Return Fund-Q 11.153183 10.301799 -7.63% 51,305 1994
------------------------------------------------------------------------------------
10.000000 11.153183 11.53% 32,321 1993
- -------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity 10.000000 10.213719 2.14% 0 1995
------------------------------------------------------------------------------------
Income Fund-Q
- -------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 10.000000 10.325686 3.26% 0 1995
Opportunities Fund-Q
- -------------------------------------------------------------------------------------------------------------
Fidelity Advisor High 10.000000 10.057673 0.58% 0 1995
Yield
Fund-Q
- -------------------------------------------------------------------------------------------------------------
Fidelity Advisor Income 10.000000 10.177458 1.77% 0 1995
& Growth Fund-Q
- -------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager-Q 9.589367 11.183603 16.63% 198,546 1995
------------------------------------------------------------------------------------
10.415849 9.589367 -7.93% 150,536 1994
------------------------------------------------------------------------------------
10.000000 10.415849 4.16% 3,292 1993
- -------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) 11.964387 16.158074 35.05% 563,859 1995
Fund-Q ------------------------------------------------------------------------------------
12.346838 11.964387 -3.10% 307,064 1994
------------------------------------------------------------------------------------
10.000000 12.346838 23.47% 59,100 1993
- -------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund-Q 12.020413 14.410892 19.89% 301,466 1995
------------------------------------------------------------------------------------
11.972512 12.020413 0.40% 161,179 1994
------------------------------------------------------------------------------------
10.000000 11.972512 19.73% 44,320 1993
- -------------------------------------------------------------------------------------------------------------
Janus Fund-Q 10.000000 10.239338 2.39% 0 1995
------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Janus Twenty Fund-Q 8.701036 11.699046 34.46% 96,594 1995
------------------------------------------------------------------------------------
9.451097 8.701036 -7.94% 56,135 1994
------------------------------------------------------------------------------------
10.000000 9.451097 -5.49% 1,020 1993
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman 9.640402 12.571028 30.40% 139,046 1995
------------------------------------------------------------------------------------
Guardian Fund-Q 10.000000 9.640402 -3.60% 25,549 1994
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman 9.833352 10.73507 9.17% 91,976 1995
------------------------------------------------------------------------------------
Limited Maturity Bond 9.995028 9.833352 -1.62% 89,231 1994
------------------------------------------------------------------------------------
Fund-Q 10.000000 9.995028 -0.05% 423 1993
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman 11.183371 14.924653 33.45% 73,504 1995
------------------------------------------------------------------------------------
Partners Fund-Q 11.548721 11.183371 -3.16% 38,329 1994
------------------------------------------------------------------------------------
10.000000 11.548721 15.49% 9,926 1993
- -------------------------------------------------------------------------------------------------------------
Oppenheimer Global 13.503390 15.53885 15.07% 160,871 1995
Fund-Q ------------------------------------------------------------------------------------
14.119303 13.503390 -4.36% 87,590 1994
------------------------------------------------------------------------------------
10.000000 14.119303 41.19% 5,128 1993
- -------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund 9.338434 11.373217 21.79% 23,786 1995
------------------------------------------------------------------------------------
Series-Q 10.000000 9.338434 -6.62% 9,028 1994
- -------------------------------------------------------------------------------------------------------------
Strong Total Return 11.881033 14.893186 25.35% 41,291 1995
Fund, Inc.-Q ------------------------------------------------------------------------------------
12.205201 11.881033 -2.66% 19,727 1994
------------------------------------------------------------------------------------
10.000000 12.205201 22.05% 3,939 1993
- -------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra 9.043121 12.289075 35.89% 266,570 1995
------------------------------------------------------------------------------------
Investors-Q 9.505758 9.043121 -4.87% 116,020 1994
------------------------------------------------------------------------------------
10.000000 9.505758 -4.94% 2,713 1993
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The unit value information is not provided for the Templeton Foreign Fund
and the TCI International Equity Fund because those underlying Mutual Funds
were only added to the Variable Account on February 1, 1995 and therefore
have no unit value histories prior to that time.
15
20 of 114
<PAGE> 21
CONDENSED FINANCIAL INFORMATION, CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TCI-International Equity 10.000000 11.748911 17.49% 25,477 1995
------------------------------------------------------------------------------------
Fund-Q
- -------------------------------------------------------------------------------------------------------------
Templeton Foreign 10.000000 11.097523 10.98% 69,083 1995
Fund-Q
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund-Q 45.095466 57.857937 28.30% 30,473 1995
------------------------------------------------------------------------------------
45.422888 45.095466 -0.72% 32,311 1994
------------------------------------------------------------------------------------
43.104048 45.422888 5.38% 32,770 1993
------------------------------------------------------------------------------------
42.418147 43.104048 1.62% 30,648 1992
------------------------------------------------------------------------------------
33.001868 42.418147 28.53% 28,864 1991
------------------------------------------------------------------------------------
33.337339 33.001868 -1.01% 27,869 1990
------------------------------------------------------------------------------------
25.242361 33.337339 32.07% 26,210 1989
------------------------------------------------------------------------------------
21.904484 25.242361 15.24% 34,078 1988
------------------------------------------------------------------------------------
21.753896 21.904484 0.69% 29,853 1987
------------------------------------------------------------------------------------
18.738993 21.753896 16.09% 30,428 1986
------------------------------------------------------------------------------------
13.914957 18.738993 34.67% 23,160 1985
------------------------------------------------------------------------------------
13.283383 13.914957 4.75% 26,218 1984
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund-NQ 46.971513 60.264917 28.30% 258 1995
------------------------------------------------------------------------------------
47.312558 46.971513 -0.72% 259 1994
------------------------------------------------------------------------------------
44.897247 47.312558 5.38% 260 1993
------------------------------------------------------------------------------------
44.182806 44.897247 1.62% 261 1992
------------------------------------------------------------------------------------
34.374796 44.182806 28.53% 753 1991
------------------------------------------------------------------------------------
34.724214 34.374796 -1.01% 1,169 1990
------------------------------------------------------------------------------------
26.292480 34.724214 32.07% 3,791 1989
------------------------------------------------------------------------------------
22.815734 26.292480 15.24% 4,689 1988
------------------------------------------------------------------------------------
22.658886 22.815734 0.69% 4,939 1987
------------------------------------------------------------------------------------
19.518552 22.658886 16.09% 5,238 1986
------------------------------------------------------------------------------------
14.493830 19.518552 34.67% 5,139 1985
------------------------------------------------------------------------------------
13.835981 14.493830 4.75% 5,141 1984
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) 51.535806 65.471148 27.04% 48,841 1995
------------------------------------------------------------------------------------
Growth Fund-Q 51.458079 51.535806 0.15% 48,009 1994
------------------------------------------------------------------------------------
46.832151 51.458079 9.88% 48,190 1993
------------------------------------------------------------------------------------
44.639577 46.832151 4.91% 48,853 1992
------------------------------------------------------------------------------------
33.241418 44.639577 34.29% 42,168 1991
------------------------------------------------------------------------------------
36.439953 33.241418 -8.78% 43,789 1990
------------------------------------------------------------------------------------
32.118373 36.439953 13.46% 53,223 1989
------------------------------------------------------------------------------------
26.557068 32.118373 20.94% 58,604 1988
------------------------------------------------------------------------------------
26.282362 26.557068 1.05% 61,931 1987
------------------------------------------------------------------------------------
22.485465 26.282362 16.89% 61,795 1986
------------------------------------------------------------------------------------
17.090851 22.485465 31.56% 51,773 1985
------------------------------------------------------------------------------------
15.974526 17.090851 6.99% 33,021 1984
- -------------------------------------------------------------------------------------------------------------
</TABLE>
16
21 of 114
<PAGE> 22
CONDENSED FINANCIAL INFORMATION, CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R) 54.415339 69.129314 27.04% 120 1995
----------------------------------------------------------------------------------
Growth Fund-NQ 54.333269 54.415339 0.15% 121 1994
----------------------------------------------------------------------------------
49.448867 54.333269 9.88% 126 1993
----------------------------------------------------------------------------------
47.133788 49.448867 4.91% 397 1992
----------------------------------------------------------------------------------
35.098768 47.133788 34.29% 568 1991
----------------------------------------------------------------------------------
38.476025 35.098768 -8.78% 580 1990
----------------------------------------------------------------------------------
33.912975 38.476025 13.46% 2,019 1989
----------------------------------------------------------------------------------
28.040930 33.912975 20.94% 2,498 1988
----------------------------------------------------------------------------------
27.750867 28.040930 1.05% 2,757 1987
----------------------------------------------------------------------------------
23.741823 27.750867 16.89% 2,270 1986
----------------------------------------------------------------------------------
18.045792 23.741823 31.56% 2,246 1985
----------------------------------------------------------------------------------
16.867093 18.045792 6.99% 2,249 1984
- --------------------------------------------------------------------------------------------------------------
Nationwide(R) 30.832258 37.782872 22.54% 38,843 1995
----------------------------------------------------------------------------------
Bond Fund-Q 33.991130 30.832258 -9.29% 35,282 1994
----------------------------------------------------------------------------------
31.104546 33.991130 9.28% 35,392 1993
----------------------------------------------------------------------------------
29.186916 31.104546 6.57% 21,409 1992
----------------------------------------------------------------------------------
25.300143 29.186916 15.36% 18,724 1991
----------------------------------------------------------------------------------
23.686756 25.300143 6.81% 16,600 1990
----------------------------------------------------------------------------------
21.674206 23.686756 9.29% 20,519 1989
----------------------------------------------------------------------------------
20.301575 21.674206 6.76% 21,508 1988
----------------------------------------------------------------------------------
20.512400 20.301575 -1.03% 21,175 1987
----------------------------------------------------------------------------------
18.406923 20.512400 11.44% 19,962 1986
----------------------------------------------------------------------------------
15.655621 18.406923 17.57% 10,849 1985
----------------------------------------------------------------------------------
13.906483 15.655621 12.58% 7,239 1984
- --------------------------------------------------------------------------------------------------------------
Nationwide(R) 30.700082 37.620900 22.54% 622 1995
----------------------------------------------------------------------------------
Bond Fund-NQ 33.845410 30.700082 -9.29% 657 1994
----------------------------------------------------------------------------------
30.971200 33.845410 9.28% 676 1993
----------------------------------------------------------------------------------
29.061793 30.971200 6.57% 836 1992
----------------------------------------------------------------------------------
25.191682 29.061793 15.36% 1,030 1991
----------------------------------------------------------------------------------
23.585215 25.191682 6.81% 1,070 1990
----------------------------------------------------------------------------------
21.581298 23.585215 9.29% 1,061 1989
----------------------------------------------------------------------------------
20.214557 21.581298 6.76% 1,063 1988
----------------------------------------------------------------------------------
20.424489 20.214557 -1.03% 1,340 1987
----------------------------------------------------------------------------------
18.328041 20.424489 11.44% 717 1986
----------------------------------------------------------------------------------
15.588540 18.328041 17.57% 304 1985
----------------------------------------------------------------------------------
13.846897 15.588540 12.58% 304 1984
- --------------------------------------------------------------------------------------------------------------
Nationwide(R) U.S. 10.000000 10.124709 1.25% 0 1995
----------------------------------------------------------------------------------
Government Income Fund-Q
- --------------------------------------------------------------------------------------------------------------
</TABLE>
17
22 of 114
<PAGE> 23
CONDENSED FINANCIAL INFORMATION, CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R) 22.850271 23.797066 4.14% 49,996 1995
------------------------------------------------------------------------------------
Money Market Fund-Q* 22.315407 22.850271 2.40% 56,127 1994
------------------------------------------------------------------------------------
- -Contracts issued before 22.042019 22.315407 1.24% 68,074 1993
------------------------------------------------------------------------------------
December 25, 1982 21.636991 22.042019 1.87% 92,318 1992
------------------------------------------------------------------------------------
20.752553 21.636991 4.26% 118,625 1991
------------------------------------------------------------------------------------
19.490217 20.752553 6.48% 139,482 1990
------------------------------------------------------------------------------------
18.134311 19.490217 7.48% 143,367 1989
------------------------------------------------------------------------------------
17.153896 18.134311 5.72% 141,139 1988
------------------------------------------------------------------------------------
16.365495 17.153896 4.82% 167,178 1987
------------------------------------------------------------------------------------
15.592616 16.365495 4.96% 170,053 1986
------------------------------------------------------------------------------------
14.634154 15.592616 6.55% 195,495 1985
------------------------------------------------------------------------------------
13.434102 14.634154 8.93% 213,440 1984
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) 22.994681 23.947460 4.14% 1,323 1995
------------------------------------------------------------------------------------
Money Market Fund-NQ* 22.456439 22.994681 2.40% 1,329 1994
------------------------------------------------------------------------------------
- -Contracts issued before 22.181323 22.456439 1.24% 1,335 1993
------------------------------------------------------------------------------------
December 25, 1982 21.773734 22.181323 1.87% 2,211 1992
------------------------------------------------------------------------------------
20.883706 21.773734 4.26% 3,526 1991
------------------------------------------------------------------------------------
19.613392 20.883706 6.48% 3,539 1990
------------------------------------------------------------------------------------
18.248916 19.613392 7.48% 4,681 1989
------------------------------------------------------------------------------------
17.262304 18.248916 5.72% 4,923 1988
------------------------------------------------------------------------------------
16.468923 17.262304 4.82% 5,697 1987
------------------------------------------------------------------------------------
15.691157 16.468923 4.96% 6,392 1986
------------------------------------------------------------------------------------
14.726641 15.691157 6.55% 9,046 1985
------------------------------------------------------------------------------------
13.519005 14.726641 8.93% 15,764 1984
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* The 7-day yield on the Nationwide Money Market Fund as of December 31, 1995,
was 3.88%.
18
23 of 114
<PAGE> 24
CONDENSED FINANCIAL INFORMATION, CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity 32.589111 37.550944 15.23% 37,608 1995
------------------------------------------------------------------------------------
Capital & Income 34.612981 32.589111 -5.85% 47,236 1994
------------------------------------------------------------------------------------
Fund-Q 28.076548 34.612981 23.28% 59,521 1993
------------------------------------------------------------------------------------
22.214568 28.076548 26.39% 67,342 1992
------------------------------------------------------------------------------------
17.337275 22.214568 28.13% 73,366 1991
------------------------------------------------------------------------------------
18.269034 17.337275 -5.10% 100,081 1990
------------------------------------------------------------------------------------
19.118217 18.269034 -4.44% 181,935 1989
------------------------------------------------------------------------------------
17.209582 19.118217 11.09% 209,084 1988
------------------------------------------------------------------------------------
17.219486 17.209582 -0.06% 222,142 1987
------------------------------------------------------------------------------------
14.790934 17.219486 16.42% 245,592 1986
------------------------------------------------------------------------------------
11.937295 14.790934 23.91% 186,458 1985
------------------------------------------------------------------------------------
10.941999 11.937295 9.10% 85,802 1984
- -------------------------------------------------------------------------------------------------------------
MFS(R) World 31.104159 35.454983 13.99% 34,015 1995
------------------------------------------------------------------------------------
Governments 33.728667 31.104159 -7.78% 39,642 1994
------------------------------------------------------------------------------------
Fund-Q 28.864451 33.728667 16.85% 45,016 1993
------------------------------------------------------------------------------------
28.856612 28.864451 0.03% 48,580 1992
------------------------------------------------------------------------------------
25.777493 28.856612 11.94% 39,397 1991
------------------------------------------------------------------------------------
22.152081 25.777493 16.37% 44,525 1990
------------------------------------------------------------------------------------
20.902197 22.152081 5.98% 44,572 1989
------------------------------------------------------------------------------------
20.287562 20.902197 3.03% 54,351 1988
------------------------------------------------------------------------------------
16.504183 20.287562 22.92% 69,736 1987
------------------------------------------------------------------------------------
12.845363 16.504183 28.48% 53,614 1986
------------------------------------------------------------------------------------
10.026547 12.845363 28.11% 21,316 1985
------------------------------------------------------------------------------------
9.926953 10.026547 1.00% 8,044 1984
- -------------------------------------------------------------------------------------------------------------
Fidelity Equity- 35.576037 46.285491 30.10% 263,736 1995
------------------------------------------------------------------------------------
Income Fund-Q 35.955883 35.576037 -1.06% 306,544 1994
------------------------------------------------------------------------------------
30.029661 35.955883 19.73% 305,774 1993
------------------------------------------------------------------------------------
26.531856 30.029661 13.18% 285,928 1992
------------------------------------------------------------------------------------
20.772673 26.531856 27.72% 294,858 1991
------------------------------------------------------------------------------------
24.479712 20.772673 -15.14% 330,860 1990
------------------------------------------------------------------------------------
20.898784 24.479712 17.13% 408,022 1989
------------------------------------------------------------------------------------
17.285651 20.898784 20.90% 399,082 1988
------------------------------------------------------------------------------------
17.804841 17.285651 -2.92% 434,996 1987
------------------------------------------------------------------------------------
15.408481 17.804841 15.55% 296,988 1986
------------------------------------------------------------------------------------
12.482893 15.408481 23.44% 167,305 1985
------------------------------------------------------------------------------------
11.442838 12.482893 9.09% 78,085 1984
- -------------------------------------------------------------------------------------------------------------
</TABLE>
19
24 of 114
<PAGE> 25
CONDENSED FINANCIAL INFORMATION, CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Twentieth Century 38.113717 45.274141 18.79% 231,124 1995
------------------------------------------------------------------------------------
Growth Investors-Q 39.197771 38.113717 -2.77% 324,141 1994
------------------------------------------------------------------------------------
38.275689 39.197771 2.41% 335,369 1993
------------------------------------------------------------------------------------
40.518750 38.275689 -5.54% 404,811 1992
------------------------------------------------------------------------------------
24.287059 40.518750 66.83% 410,440 1991
-----------------------------------------------------------------------------------
25.592676 24.287059 -5.10% 401,940 1990
------------------------------------------------------------------------------------
18.114515 25.592676 41.28% 428,017 1989
------------------------------------------------------------------------------------
17.866465 18.114515 1.39% 470,808 1988
------------------------------------------------------------------------------------
16.040713 17.866465 11.38% 564,503 1987
------------------------------------------------------------------------------------
13.641819 16.040713 17.58% 754,611 1986
------------------------------------------------------------------------------------
10.317997 13.641819 32.21% 880,137 1985
------------------------------------------------------------------------------------
11.776821 10.317997 -12.39% 938,102 1984
- -------------------------------------------------------------------------------------------------------------
Nationwide(R) 18.146709 18.898613 4.14% 424,693 1995
------------------------------------------------------------------------------------
Money Market Fund-Q* 17.721943 18.146709 2.40% 326,464 1994
------------------------------------------------------------------------------------
For Contracts issued 17.504831 17.721943 1.24% 294,859 1993
------------------------------------------------------------------------------------
on or after 17.183173 17.504831 1.87% 303,845 1992
------------------------------------------------------------------------------------
December 25, 1982 16.480790 17.183173 4.26% 450,748 1991
------------------------------------------------------------------------------------
15.478296 16.480790 6.48% 548,549 1990
------------------------------------------------------------------------------------
14.401492 15.478296 7.48% 568,349 1989
------------------------------------------------------------------------------------
13.622887 14.401492 5.72% 731,284 1988
------------------------------------------------------------------------------------
12.996777 13.622887 4.82% 798,771 1987
------------------------------------------------------------------------------------
12.382985 12.996777 4.96% 292,431 1986
------------------------------------------------------------------------------------
11.621822 12.382985 6.55% 188,214 1985
------------------------------------------------------------------------------------
10.668791 11.621822 8.93% 198,730 1984
- -------------------------------------------------------------------------------------------------------------
Twentieth Century 18.748399 20.449954 9.08% 216,620 1995
------------------------------------------------------------------------------------
U.S. Governments 19.087872 18.748399 -1.78% 183,649 1994
------------------------------------------------------------------------------------
Short-Term-Q 18.563845 19.087872 2.82% 182,484 1993
------------------------------------------------------------------------------------
18.018283 18.563845 3.03% 177,970 1992
------------------------------------------------------------------------------------
16.352445 18.018283 10.19% 191,264 1991
------------------------------------------------------------------------------------
15.400806 16.352445 6.18% 188,328 1990
------------------------------------------------------------------------------------
14.188398 15.400806 8.55% 224,117 1989
------------------------------------------------------------------------------------
13.608723 14.188398 4.26% 252,401 1988
------------------------------------------------------------------------------------
13.278840 13.608723 2.48% 215,842 1987
------------------------------------------------------------------------------------
12.240182 13.278840 8.49% 100,711 1986
------------------------------------------------------------------------------------
10.975550 12.240182 11.52% 26,196 1985
------------------------------------------------------------------------------------
10.000000 10.975550 9.76% 6,244 1984
- -------------------------------------------------------------------------------------------------------------
Fidelity VIP- 16.267014 19.364421 19.04% 22,970 1995
------------------------------------------------------------------------------------
High Income 16.739460 16.267014 -2.82% 34,151 1994
------------------------------------------------------------------------------------
Portfolio 14.073333 16.739460 18.94% 62,931 1993
------------------------------------------------------------------------------------
11.587552 14.073333 21.45% 42,842 1992
------------------------------------------------------------------------------------
10.000000 11.587552 15.88% 10,365 1991
- -------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 10.000000 10.895016 8.95% 0 1995
Growth Fund-Q
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* The 7-day yield on the Nationwide Money Market Fund as of December 31, 1995
was 3.88%.
20
25 of 114
<PAGE> 26
NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws of
the State of Ohio in March 1929. The Company is a member of the Nationwide
Insurance Enterprise, with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43216-6609. The Company offers a complete line of life insurance, including
annuities and accident and health INSURANCE. It is admitted to do business in
the District of Columbia, Puerto Rico, and in all states.
The Company is also ranked and rated by independent financial rating
services, among which are Moody's, Standard and Poor's, and A.M. Best Company.
The purpose of these ratings is to reflect the financial strength or
claims-paying ability of the Company. The ratings are not intended to reflect
the investment experience or financial strength of the Variable Account. The
Company may advertise these ratings in sales literature from time to time.
THE VARIABLE ACCOUNT
The Variable Account was established by the Company on March 3, 1976,
pursuant to the provisions of Ohio law. The Company has caused the Variable
Account to be registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940. Such registration does not involve supervision of the management of the
Variable Account or the Company by the Securities and Exchange Commission.
The Variable Account is a separate investment account of the Company and
as such, is not chargeable with liabilities arising out of any other business
the Company may conduct. The Company does not guarantee the investment
performance of the Variable Account. Obligations under the Contracts, however,
are obligations of the Company. Income, gains and losses, whether or not
realized, from the assets of the Variable Account are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard to
other income, gains, or losses of the Company.
Purchase Payments are allocated within the Variable Account among one or
more Sub-Accounts made up of shares in the underlying Mutual Fund option(s).
There are two Sub-Accounts within the Variable Account for each of the
underlying Mutual Fund options which may be designated by the Contract Owner
under Contracts issued prior to December 25, 1982. One such Sub-Account contains
the underlying Mutual Fund shares attributable to Accumulation Units under
Qualified Contracts and one such Sub-Account contains the underlying Mutual Fund
shares attributable to Accumulation Units under Non-Qualified Contracts. From
December 25, 1982 until December 31, 1992, only Qualified Contracts were issued
under the Variable Account. Currently (and at all times after January 1, 1993)
the Contracts are issued to IRA custodians for the benefit of IRA account
holders.
UNDERLYING MUTUAL FUND OPTIONS
Contract Owners (or Annuitants, if Annuitants have been authorized to
exercise ownership rights under the Contract) may choose from among a number of
different underlying Mutual Fund options (see Appendix B which contains a
summary of investment objectives for each underlying Mutual Fund option). More
detailed information may be found in the current prospectus for each underlying
Mutual Fund option offered. Such a prospectus for the underlying Mutual Fund
option(s) being considered must accompany this prospectus and should be read in
conjunction herewith. You can obtain a copy of each prospectus without charge
from Nationwide Life Insurance Company by calling 1-800-848-6331, TDD
1-800-238-3035 or writing P.O. Box 16609, Columbus, Ohio 43216-6609.
Some of the underlying Mutual Fund options may be available to registered
separate accounts offering variable annuity and variable life products of other
participating insurance companies, as well as to the Variable Account and other
separate accounts of the Company. Although the Company does not anticipate any
disadvantages to this, there is a possibility that a material conflict may arise
between the interest of the Variable Account and one or more of the other
separate accounts participating in the underlying Mutual Funds. A conflict may
occur due to a change in law affecting the operations of variable life and
variable annuity separate accounts, differences in the voting instructions of
the Contract Owners and those of other companies, or some other reason. In the
event of conflict, the Company will take any steps necessary to protect Contract
Owners and variable annuity payees, including withdrawal of the Variable Account
from participation in the underlying Mutual Fund or Mutual Funds which are
involved in the conflict.
For Contracts issued after January 1, 1993, the underlying Mutual Fund
options offered are also available to the general public. Based on the Company's
marketing plan for the Contracts (the Contracts will be exclusively marketed
through IRA custodial accounts), the Company does not anticipate any
disadvantages to this. There is, however, a possibility that a material conflict
may arise between those with interests in the Contracts, the Variable Account
and the various individuals and entities holding shares of the Mutual Funds. A
conflict may occur due to a change in law affecting the operations of variable
annuity separate accounts, differences in the voting instructions of the Owners
and others maintaining a voting interest in the underlying Mutual Funds, or some
other reason. In the event of conflict, the Company will take any steps
necessary to protect those with interests in the Contracts.
21
26 of 114
<PAGE> 27
VOTING RIGHTS
Voting rights under the Contracts apply ONLY with respect to Purchase
Payments or accumulated amounts allocated to the Variable Account.
In accordance with its view of present applicable law, the Company will
vote the shares of the underlying Mutual Funds held in the Variable Account at
regular and special meetings of the shareholders of the underlying Mutual Funds.
These shares will be voted in accordance with instruction received from Contract
Owners who have an interest in the Variable Account. If the Investment Company
Act of 1940 or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as result the Company determines that
it is permitted to vote the shares of the underlying Mutual Funds in its own
right, it may elect to do so.
The number of shares held in the Variable Account which are attributable
to each Contract Owner is determined by dividing the Contract Owner's interest
in the Variable Account by the net asset value of the applicable shares of the
underlying Mutual Funds. The number of shares which a Contract Owner has the
right to vote will be determined as of a date chosen by the Company not more
than 90 days prior to the meeting of the underlying Mutual Fund and voting
instructions will be solicited by written communication at least 21 days prior
to such meeting.
Underlying Mutual Fund shares held in the Variable Account as to which no
timely instructions are received will be voted by the Company in the same
proportion as the voting instructions which are received with respect to all
Contracts participating in the Variable Account.
Each person having a voting interest in the Variable Account will receive
periodic reports relating to the underlying Mutual Fund, proxy material and a
form with which to give such voting instructions.
In those cases in which the Annuitant has been authorized to exercise
ownership rights, the Company will accept voting instructions from the Annuitant
and provide all necessary information to the Annuitant as if he or she were the
Contract Owner.
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS
MORTALITY RISK CHARGE
The Company assumes a "mortality risk" by virtue of annuity rates
incorporated into the Contract which cannot be changed regardless of the death
rates of persons receiving annuity payments or of the general population.
For assuming this mortality risk, the Company deducts a Mortality Risk
Charge from the Variable Account. This amount is computed on a daily basis, and
is equal on an annual rate of 0.80% of the daily net asset value of the Variable
Account. The Company expects to generate a profit through assessing this charge.
EXPENSE RISK CHARGE
The Company will not increase charges for administration of the Contracts
regardless of its actual expenses. For assuming this expense risk, the Company
assesses an Expense Risk Charge from the Variable Account. This amount is
computed on a daily basis, and is equal on an annual rate of 0.45% (0.50% for
Contracts issued prior to January 1, 1993) of the daily net asset value of the
Variable Account. The Company expects to generate a profit through assessing
this charge.
CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for
these Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions (see "Elimination of
Contingent Deferred Sales Charge" section), deduct a Contingent Deferred Sales
Charge not to exceed 7% of the lesser of the total of all Purchase Payments made
within 84 months prior to the date of the request to surrender, or the amount
surrendered. The Contingent Deferred Sales Charge, when it is applicable, will
be used to cover expenses relating to the sale of the Contracts, including
commissions paid to sales personnel, the costs of preparation of sales
literature and other promotional activity. The Company attempts to recover its
distribution costs relating to the sale of the Contracts from the Contingent
Deferred Sales Charge. Any shortfall will be made up from the General Account of
the Company, which may indirectly include portions of the Mortality and Expense
Risk Charges since the Company expects to generate a profit through these
charges. Gross Distribution Allowances which may be paid on the sale of these
Contracts are not more than 5.25% of the Purchase Payments.
If part or all of the Contract Value is surrendered, a Contingent
Deferred Sales Charge will be deducted by the Company. For purposes of the
Contingent Deferred Sales Charge, surrenders under a Contract come first from
the Purchase Payments which have been on deposit under the Contract for the
longest time period. (For tax purposes, a surrender is usually treated as a
withdrawal of earnings first.)
22
27 of 114
<PAGE> 28
FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993
For Contracts issued on or after January 1, 1993, the Contingent Deferred
Sales Charge will apply in the amounts set forth below. In no event will any
Contingent Deferred Sales Charge be made against any values which have been held
under the Contract for at least 84 months, or to commencement of an annuity
payout under Contracts which have been in effect for at least two years or upon
the death of the Annuitant.
<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTINGENT DEFERRED NUMBER OF COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
PURCHASE PAYMENT PERCENTAGE PURCHASE PAYMENT PERCENTAGE
<S> <C> <C> <C> <C>
0 7% 4 3%
1 6% 5 2%
2 5% 6 1%
3 4% 7 0%
</TABLE>
Starting with the second year after a Purchase Payment has been made
under the Contract, 10% of that Purchase Payment may be withdrawn each year
without imposition of the Contingent Deferred Sales Charge. This free withdrawal
privilege is non-cumulative and will not exceed 10% of the Purchase Payment in
any year. The Contingent Deferred Sales Charge is waived for the first-year for
those Distributions required for the Contract to meet minimum distribution rules
under the Code. No sales charges are deducted on redemption proceeds that are
transferred to the Fixed Account option of this annuity. The Contract Owner may
be subject to a tax penalty if the Contract Owner takes withdrawals prior to age
59-1/2.
FOR CONTRACTS ISSUED BEFORE JANUARY 1, 1993
For Contracts issued before January 1, 1993 a Contingent Deferred Sales
Charge will be deducted by the Company equal to 5% of the lesser of the total of
all Purchase Payments made within 96 months prior to the date of the request for
surrender, or the amount surrendered. In no event will any Contingent Deferred
Sales Charge be made against any values which have been held under the Contract
for at least 96 months. Certain partial surrenders of Contract Values may be
requested for which no Contingent Deferred Sales Charge will be assessed, set
forth as follows:
(a) For all Purchase Payments made after January 30, 1981, the Contract Owner
(or Annuitant, if applicable) may, after the first year from the date of
each such Purchase Payment, withdraw without a Contingent Deferred Sales
Charge, up to 5% of that Purchase Payment for each year that the Purchase
Payment has remained on deposit (less the amount of such Purchase Payment
previously surrendered free of charge).
(b) For Contracts issued prior to August 4, 1981, starting with the third
Contract year, the Company will waive the Contingent Deferred Sales
Charge on surrendered amounts equal on a cumulative basis to 10% of
Purchase Payments made under the Contract within 96 months immediately
prior to the Valuation Period during which the request for surrender is
received by the Company. Once surrenders equal to 10% of cumulative
Purchase Payments made within such 96-month period have been made, the
Contingent Deferred Sales Charge will apply to all amounts surrendered in
excess thereof.
For Contracts issued prior to August 4, 1981, the amount which may be
surrendered at any time without charge is the greater of the amounts determined
under (a) and (b) above. No sales charges are deducted on redemption proceeds
that are transferred to the Fixed Account option of this annuity.
ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
The Company will waive the Contingent Deferred Sales Charge when:
A. the Annuitant dies; or
B. the Contract is annuitized after the second Contract Year.
For Contracts issued prior to December 25, 1982, the Contingent Deferred
Sales Charges will be eliminated on amounts derived from redemption of
underlying Mutual Fund shares of Nationwide Investing Foundation's Nationwide
Fund, Nationwide Growth Fund, Nationwide Bond Fund or Nationwide Money Market
Fund, where such proceeds are applied to the purchase of Contracts described in
this prospectus within 60 days after the issuance of such proceeds.
When a Contract described in this prospectus is exchanged for another
Contract issued by the Company or any of its affiliate insurance companies, of
the type and class which the Company determined is eligible for such exchange,
the Company will waive the Contingent Deferred Sales Charge on the first
Contract.
23
28 of 114
<PAGE> 29
In no event will elimination of Contingent Deferred Sales Charges be
permitted where such elimination will be unfairly discriminatory to any person,
or where it is prohibited by law.
CONTRACT MAINTENANCE AND ADMINISTRATION CHARGE
Each year on the Contract Anniversary, the Company deducts an annual
Contract Maintenance Charge of $30 from the Contract Value to reimburse it for
administrative expenses relating to the issuance and maintenance of the
Contract. The Contract Maintenance Charge will be allocated between the Fixed
Account and Variable Account in the same percentages as the Purchase Payment
investment allocations are to the Fixed Account and Variable Account. The
Company also assesses an Administration Charge equal on an annual basis to 0.05%
of the daily net asset value of the Variable Account, for Contracts issued on or
after January 1, 1993. The deduction of the Administration Charge is made from
each Sub-Account in the same proportion that the Contract Value in each
Sub-Account bears to the total Contract Value in the Variable Account. These
charges are designed only to reimburse the Company for administrative expenses,
the Company does not expect to recover from these charges any amount in excess
of accumulated expenses. In any Contract Year when a Contract is surrendered for
its full value on other than the Contract Anniversary, the Contract Maintenance
Charge will be deducted at the time of such surrender. The amount of the
Contract Maintenance Charge may not be increased by the Company. In no event
will reduction or elimination of the Contract Maintenance Charge be permitted
where such reduction or elimination will be unfairly discriminatory to any
person, or where it is prohibited by state law.
PREMIUM TAXES
The Company will charge against the Contract Value the amount of any
premium taxes levied by a state or any other governmental entity upon Purchase
Payments received by the Company. Premium taxes currently imposed by certain
jurisdictions range from 0% to 3.5%. This range is subject to change. The method
used to recoup premium tax expense will be determined by the Company at its sole
discretion and in compliance with applicable state law. The Company currently
deducts such charges from a Contract Owner's Contract Value either: (1) at the
time the Contract is surrendered, (2) at Annuitization, or (3) in those states
which require, at the time Purchase Payments are made to the Contract.
EXPENSES OF VARIABLE ACCOUNT
The Variable Account is responsible for the following types of expenses:
(1) administrative expenses relating to the issuance and maintenance of the
Contract; (2) mortality risk charge associated with guaranteeing the annuity
purchase rates at issue for the life of the Contracts; and (3) expense risk
charge associated with guaranteeing that the Mortality Risk, Expense Risk,
Contract Maintenance and Administration Charges described in this prospectus
will not be changed regardless of actual expenses. If these charges are
insufficient to cover these expenses, the loss will be borne by the Company.
For 1995, the Variable Account incurred total expenses equal to 1.42% of
its average net assets relating to the administrative, sales, mortality and
expense risk charges described above for all Contracts outstanding during that
year. Deductions from and expenses paid out of the assets of the underlying
Mutual Funds are described in each underlying Mutual Fund's prospectus.
INVESTMENTS OF THE VARIABLE ACCOUNT
At the time of purchase, Purchase Payments are allocated among one or
more of the Sub-Accounts which consist of shares in the underlying Mutual Funds.
Shares of the respective underlying Mutual Fund option(s) are purchased at net
asset value for the respective Sub-Account(s) and converted into Accumulation
Units. The Contract Owner (or Annuitant, if so authorized) designates the
underlying Mutual Fund(s) to which he or she desires to have Purchase Payments
allocated. The election as to allocation of Purchase Payments or as to transfers
of the Contract Value from one Sub-Account to another may be changed pursuant to
such terms and conditions applicable to such transactions as may be imposed by
each of the underlying Mutual Fund options, in addition to those set forth in
the Contracts.
RIGHT TO REVOKE
The Contract Owner (or Annuitant, if so authorized) may revoke the
Contract at any time between the date of application and the date 10 days after
receipt of the Contract and receive a refund of the Contract Value unless
otherwise required by state and/or federal law. In order to revoke the Contract
it must be mailed or delivered to the Home Office of the Company at the mailing
address shown on page 1 of this prospectus. Mailing or delivery must occur on or
before 10 days after receipt of the Contract for revocation to be effective. In
order to revoke the Contract, if it has not been received, written notice must
be mailed or delivered to the Home Office of the Company at the mailing address
shown on page 1 of this prospectus.
24
29 of 114
<PAGE> 30
The 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 the Company.
TRANSFERS
A transfer of up to 100% of the Contract Value from the Variable Account
to the Fixed Account may be requested without penalty or adjustment. All amounts
transferred to the Fixed Account must remain on deposit in the Fixed Account
until the expiration of the Interest Rate Guarantee Period. Transfers from the
Fixed Account may not be made prior to the end of the then current Interest Rate
Guarantee Period. The Interest Rate Guarantee Period for any amount allocated to
the Fixed Account expires on the final day of a calendar quarter during which
the one year anniversary of the allocation to the Fixed Account occurs.
Transfers must also be made prior to the Annuitization Date. For all transfers
involving the Variable Account, the Contract Owner's value in each Sub-Account
will be determined as of the date the transfer request is received in the Home
Office in good order. The Company reserves the right to restrict transfers from
the Variable Account to the Fixed Account to 25% of the Contract Value for any
12 month period.
At the maturity of an Interest Rate Guarantee Period, a portion of the
value of the Fixed Account may be transferred to the Variable Account. The
amount that may be transferred from the Fixed Account to the Variable Account
will be determined by the Company, at its sole discretion, but will not be less
than 10% of the total value of the portion of the Fixed Account that is
maturing. The amount that may be transferred from the Fixed Account will be
declared upon the expiration date of the then current Interest Rate Guarantee
Period. The specific percentage will be declared upon the expiration date of the
guaranteed period. Transfers from the Fixed Account must be made within 45 days
after the expiration date of the guarantee period. If a Dollar Cost Averaging
agreement with the Company (see "Dollar Cost Averaging") has been established,
transfers from the Fixed Account to the Variable Account will be determined
under the terms of that agreement.
Transfers may be made either in writing or, in states allowing such
transfers, by telephone. This telephone exchange privilege is made available
automatically without the need of any affirmative election. The Company will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Such procedures may include any or all of the following,
or such other procedures as the Company may, from time to time, deem reasonable:
requesting identifying information, such as name, contract number, Social
Security Number, and/or personal identification number; tape recording all
telephone transactions, and providing written confirmation thereof to the person
authorized to make exchanges and any agent of record, at the last address of
record. The Company will not be liable for following instructions communicated
by telephone which it reasonably believes to be genuine. Losses incurred
pursuant to actions taken by the Company in reliance on telephone instructions
reasonably believed to be genuine shall not be borne by the Company. The Company
may withdraw the telephone exchange privilege upon 30 days' written notice to
Contract Owners.
ASSIGNMENT
Where permitted, the Contract Owner may assign some or all of the rights
under the Contract at any time during the lifetime of the Annuitant. Such
assignment will take effect upon receipt by the Company of a written notice
thereof executed by the Contract Owner. The Company assumes no responsibility
for the validity or sufficiency of any assignment. The Company shall not be
liable as to any payment or other settlement made by the Company before receipt
of the assignment. Where necessary for proper administration of the terms of the
Contract, an assignment will not be recorded until the Company has received
sufficient direction from the Owner and assignee as to the proper allocation of
contract rights under the assignment. Qualified Contracts may not be assigned,
pledged or otherwise transferred except under such conditions as may be allowed
by applicable law.
If this Contract is a Non-Qualified Contract, any portion of Contract
Value attributable to Purchase Payments made after August 13, 1982, which is
pledged or assigned after August 13, 1982, shall be treated as a Distribution
and shall be included in gross income to the extent that the cash value exceeds
the investment in the Contract, for the taxable year in which assigned or
pledged. In addition, any Contract Value assigned would, under certain
conditions, be subject to a tax penalty equal to 10% of the amount which is
included in gross income. Individual Retirement Annuities and Individual
Retirement Accounts are not eligible for assignment. Thus, any Contract
described in this prospectus and issued after January 1, 1993 is non-assignable.
Assignments of the entire Contract Value may cause amounts to be included in
gross income each year that the assignment is in effect.
LOAN PRIVILEGE
Loans are available only for Contracts issued on or after December 25,
1982 and before January 1, 1993.
Prior to the Annuitization Date, the Owner of a Qualified Contract may
receive a loan from their Contract Value, subject to the terms of the Contract,
the Plan, and the Code, which imposes restrictions on loans. Individual
Retirement
25
30 of 114
<PAGE> 31
Annuities, Individual Retirement Accounts and SEP-IRA accounts and Non-Qualified
Contracts are not eligible for loans.
Loans from Qualified Contracts are available beginning 30 days after the
Date of Issue. The Contract Owner may borrow a minimum of $1,000. In non-ERISA
plans, for Contract Values up to $20,000, the maximum loan balance which may be
outstanding at any time is 80% of the Contract Value, but not more than $10,000.
If the Contract Value is $20,000 or more, the maximum loan balance which may be
outstanding at any time is 50% of the Contract Value, but not more than $50,000.
For ERISA plans, the maximum loan balance which may be outstanding at any time
is 50% of the Contract Value, but not more than $50,000. The $50,000 limit will
be reduced by the highest loan balances owed during the prior one-year period.
Additional loans are subject to the contract minimum amount. The aggregate of
all loans may not exceed the Contract Value limitations stated above.
All loans are made from a collateral fixed account. An amount equal to
the principal amount of the loan will be transferred to the collateral fixed
account. Unless instructed to the contrary by the Contract Owner, the Company
will first transfer to the Fixed Account the Variable Account units from the
Contract Owner's investment options in proportion to the assets in each option
until the required balance is reached or all such variable units are exhausted.
The remaining required collateral will next be transferred from the Fixed
Account. No withdrawal charges are deducted at the time of the loan, or on the
transfer from the Variable Account to the Fixed Account.
Until the loan has been repaid in full, that portion of the collateral
fixed account equal to the outstanding loan balance shall be credited with
interest at a rate 2.25% less than the loan interest rate fixed by the Company
for the term of the loan. However, the interest rate credited to the collateral
fixed account will never be less than (3.0%). Specific loan terms are disclosed
at the time of loan application or loan issuance.
Loans must be repaid in substantially level payments, not less frequently
than quarterly, within five years. Loans used to purchase the principal
residence of the Contract Owner must be repaid within 15 years. During the loan
term, the outstanding balance of the loan will continue to earn interest at an
annual rate as specified in the loan agreement. Loan repayments will consist of
principal and interest in amounts set forth in the loan agreement. Loan
repayments will be allocated between the Fixed and Variable Accounts in the same
proportion as when the loan was made.
If the Contract is surrendered while the loan is outstanding, the
surrender value will be reduced by the amount of the loan outstanding plus
accrued interest. If the Contract Owner/Annuitant dies while the loan is
outstanding, the Death Benefit will be reduced by the amount of the loan
outstanding plus accrued interest. If annuity payments start while the loan is
outstanding, the Contract Value will be reduced by the amount of the outstanding
loan plus accrued interest. Until the loan is repaid, the Company reserves the
right to restrict any transfer of the Contract which would otherwise qualify as
a transfer as permitted in Section 1035 of the Code.
If a loan payment is not made when due, interest will continue to
accrue. A grace period may be available under the terms of the loan agreement.
If a loan payment is not made when due, or by the end of the applicable grace
period, then that payment, which may be a single periodic payment or payment of
the entire loan, will be treated as a deemed Distribution, as permitted by law,
may be taxable to the borrower, and may be subject to an early withdrawal tax
penalty. Interest which subsequently accrues on defaulted amounts may also be
treated as additional deemed Distributions each year. Any defaulted amounts,
plus accrued interest, will be deducted from the Contract when the Participant
becomes eligible for a distribution of at least that amount, and this amount may
again be treated as a Distribution where required by law. Additional loans may
not be available while a previous loan remains in default.
Loans may also be subject to additional limitations or restrictions
under the terms of the employer's plan. Loans permitted under this Contract may
still be taxable in whole or part if the Participant has additional loans from
other plans or contracts. The Company will calculate the maximum nontaxable loan
based on the information provided by the Participant or the employer.
Loan repayments must be identified as such or else they will be treated
as Purchase Payments, and will not be used to reduce the outstanding loan
principal or interest due. The Company reserves the right to modify the term or
procedures of the loan in the event of a change in the laws or regulations
relating to the treatment of loans. The Company also reserves the right to
assess a loan processing fee.
BENEFICIARY PROVISIONS
Subject to the terms of any existing assignment, the Contract Owner (or
Annuitant, if so authorized) may change the Beneficiary from time to time during
the lifetime of the Annuitant, by written notice to the Company. The change
will, upon receipt by the Company at its Home Office, take effect as of the time
the written notice was signed, whether or not the Annuitant is living at the
time of recording, but without further liability as to any payment or settlement
made by the Company before receipt of such change.
26
31 of 114
<PAGE> 32
Unless otherwise provided in the Contract or in an effective change of
Beneficiary designation, all rights and interests of any Beneficiary
predeceasing the Annuitant shall vest in the Contingent Beneficiary if
designated. If a Contingent Beneficiary is not designated or predeceases the
Beneficiary, all rights and interests of the Beneficiary will vest in the
Contract Owner or the Contract Owner's estate.
The Beneficiary will be the designated person or persons who survive the
Annuitant, and if more than one survive, they will share equally unless
otherwise specified in the Beneficiary designation. In the event that the
Beneficiary dies before the Annuitant, the Contingent Beneficiary will become
the Beneficiary.
OWNERSHIP PROVISIONS
Unless otherwise provided, the Contract Owner has all rights under the
Contract. Ownership rights may be exercised by the Annuitant if the Contract
Owner has authorized the Annuitant to exercise such rights. IF THE PURCHASER
NAMES SOMEONE OTHER THAN HIMSELF OR HERSELF AS OWNER, THE PURCHASER WILL HAVE NO
RIGHTS UNDER THE CONTRACT. If the Annuitant does not survive the Contract Owner
or if the Annuitant and the Owner are the same person, Contract ownership will
be determined in accordance with the "Death Of Annuitant Prior To The
Annuitization Date" provision. After the Annuitization Date ownership will be
determined based on the Annuity Payment Option selected. Ownership rights under
this Contract may be restricted under the provisions of the retirement or
deferred compensation plan under which this Contract may be issued.
For Contracts issued prior to December 25, 1982, the Contract Owner may
name a new Contract Owner at any time, but such change may be subject to state
and federal gift taxes and may be treated as an assignment for federal income
tax purposes. Such an assignment would result in a deemed Distribution of the
value of the Contract. Any new choice of Contract Owner will automatically
revoke any prior choice of Contract Owner. Any request for change must be: (1)
made in writing; and (2) received by the Company at its Home Office. A request
for change of Contract Owner must be a "proper written application" and may
include a signature guarantee as specified in the "Surrender" section. The
change will become effective as of the date the written request is signed. A new
choice of Contract Owner will not apply to any payment made or action taken by
the Company prior to the time it was received.
SUBSTITUTION OF SECURITIES
If the shares of the underlying Mutual Fund options described in this
prospectus should no longer be available for investment by the Variable Account
or if, in the judgment of the Company's management, further investment in such
underlying Mutual Fund shares should become inappropriate, the Company may
substitute shares of another underlying Mutual Fund for shares already purchased
or to be purchased in the future by Purchase Payments under the Contract. No
substitution of securities in the Variable Account may take place without prior
approval of the Securities and Exchange Commission, and under such requirements
as it may impose.
INQUIRIES
Inquiries may be directed to Nationwide Life Insurance Company by writing
P.O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-848-6331, TDD
1-800-238-3035.
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT
At the Annuitization Date the Variable Account Contract Value is applied
to the Annuity Payment Option elected and the amount of the first such payment
shall be determined in accordance with the Annuity Table in the Contract.
Subsequent Variable Annuity payments vary in amount in accordance with
the investment performance of the Variable Account. The dollar amount of the
first annuity payment determined as above is divided by the value of an Annuity
Unit as of the Annuitization Date to establish the number of Annuity Units
representing each monthly annuity payment. This number of Annuity Units remains
fixed during the annuity payment period. The dollar amount of the second and
subsequent payments is not predetermined and may change from month to month. The
dollar amount of each subsequent payment is 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 Company guarantees that the dollar amount of each
payment after the first will not be affected by variations in mortality
experience from mortality assumptions used to determine the first payment.
VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit was arbitrarily set initially at $10 when
the first underlying Mutual Fund shares were purchased. The value of an Annuity
Unit for a Sub-Account for any subsequent Valuation Period is determined by
multiplying the Annuity Unit Value for the immediately preceding Valuation
Period by the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated, and multiplying the result by an
interest factor to
27
32 of 114
<PAGE> 33
neutralize the assumed investment rate of 3.5% per annum built into the Annuity
Tables contained in the Contracts (see "Net Investment Factor").
ASSUMED INVESTMENT RATE
A 3.5% Assumed Investment Rate is built into the Annuity Tables contained
in the Contracts. A higher assumption would mean a higher initial payment but
more slowly rising or more rapidly falling subsequent payments. A lower
assumption would have the opposite effect. If the actual investment rate is at
the annual rate of 3.5%, the annuity payments will be level.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments. However, if the
net amount available to apply under any Annuity Payment Option is less than
$500, the Company shall have the right to pay such amount in one lump sum in
lieu of the payments otherwise provided for. In addition, if the payments
provided for would be or become less than $20, the Company shall have the right
to change the frequency of payments to such intervals as will result in payments
of at least $20. In no event will the Company make payments under an annuity
option less frequently than annually.
ANNUITY COMMENCEMENT DATE
The Contract Owner (or Annuitant, if so authorized) selects an Annuity
Commencement Date at the time of application. Such date must be the first day of
a calendar month and must be at least 2 years after the Date of Issue. In the
event the Contract is issued subject to the terms of a Qualified Plan,
Annuitization may occur during the first 2 years subject to approval by the
Company.
CHANGE IN ANNUITY COMMENCEMENT DATE
The Contract Owner (or Annuitant, if so authorized) may, upon prior
written notice to the Company, change the Annuity Commencement Date. The date to
which such a change may be made shall be the first day of a calendar month.
If requested in writing, and the Company approves the request, the
Annuity Commencement Date may be deferred. The amount of the Death Benefit will
be limited to the Contract Value if the Annuity Commencement Date is postponed
beyond the first day of the calendar month after the Annuitant's 75th birthday.
CHANGE IN FORM OF ANNUITY
The Contract Owner (or Annuitant, if so authorized) may, upon prior
written notice to the Company, at any time prior to the Annuitization Date,
elect one of the Annuity Payment Options.
ANNUITY PAYMENT OPTION
Any of the following Annuity Payment Option may be elected:
Option 1-Life Annuity-An annuity payable monthly during the lifetime of
the Annuitant, ceasing with the last payment due prior to the death of
the Annuitant. IT WOULD BE POSSIBLE UNDER THIS OPTION FOR THE ANNUITANT
TO RECEIVE ONLY ONE ANNUITY PAYMENT IF HE OR SHE DIED BEFORE THE SECOND
ANNUITY PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE OR SHE DIED BEFORE THE
THIRD ANNUITY PAYMENT DATE, AND SO ON.
Option 2-Joint and Last Survivor Annuity-An annuity payable monthly
during the joint lifetimes of the Annuitant and designated second person
and continuing thereafter during the lifetime of the survivor. AS IS THE
CASE UNDER OPTION 1 ABOVE, THERE IS NO MINIMUM NUMBER OF PAYMENTS
GUARANTEED UNDER THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST
SURVIVING ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
Option 3-Life Annuity With 120 or 240 Monthly Payments Guaranteed-An
annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if at the death of the Annuitant payments have been made
for fewer than 120 or 240 months, as selected, payments will be made as
follows:
(1) If an Annuitant is payee, any guaranteed annuity payments will be
continued during the remainder of the selected period to the
Beneficiary or the Beneficiary may, at any time, elect to have the
present value of the guaranteed number of annuity payments
remaining paid in a lump sum as specified in section (2) below.
(2) If a Beneficiary is payee, the present value, computed as of the
date on which notice of death is received by the Company at its
Home Office, of the guaranteed number of annuity payments
remaining after receipt of such notice and to which the deceased
would have been entitled had he or she not died,
28
33 of 114
<PAGE> 34
computed at the Assumed Investment Rate effective in determining
the Annuity Tables, shall be paid in a lump sum.
Some of the stated Annuity Options may not be available in all states.
The Owner (or Annuitant, if so authorized) may request an alternative
non-guaranteed option by giving notice in writing prior to Annuitization. If
such a request is approved by the Company, it will be permitted under the
Contract.
If the Owner, (or Annuitant, if so authorized) of a Non-Qualified
Contract fails to elect an Annuity Payment Option Form, the Contract Value will
continue to accumulate. Qualified Plan Contracts or Individual Retirement
Annuities are subject to the minimum Distribution requirements set forth in the
Plan, Contract, or the Code.
DEATH OF DESIGNATED ANNUITANT PRIOR TO THE ANNUITIZATION DATE (FOR CONTRACTS
ISSUED PRIOR TO DECEMBER 25, 1982)
The Death Benefit is payable to the Beneficiary unless, the Owner has
named a Contingent Designated Annuitant. In such case, the Death Benefit is
payable to the Beneficiary upon the death of the last survivor of the Annuitant
and Contingent Designated Annuitant. The value of the Death Benefit will be
determined as of the Valuation Date coincident with or next following the date
the Company receives (1) due proof of death and (2) an election for either a
single sum payment or an Annuity Payment Option.
If a single sum settlement is requested, payment will be made in
accordance with any applicable laws and regulations governing the payment of
Death Benefits. If an Annuity Payment Option is desired, election may be made by
the Beneficiary during the 90-day period commencing with the date written notice
is received by the Company. If no election has been made by the end of such
90-day period, the Death Benefit will be paid to the Beneficiary in a single
sum. The amount of the Death Benefit will be the greater of (i) the sum of all
Purchase Payments, less any amounts surrendered, or (ii) the Contract Value.
If the Contract Owner has (1) requested an Annuity Commencement Date
later than the first day of the calendar month after the Annuitant's 75th
birthday; (2) the Company has approved the request; and (3) the Annuitant dies
after his or her 75th birthday; the dollar amount of the Death Benefit will be
equal to the Contract Value.
DEATH BENEFIT AFTER THE ANNUITIZATION DATE
If the Annuitant dies after the Annuitization Date, any benefit that may
be payable shall be as specified in the Annuity Payment Option elected.
REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS
The entire interest of an Annuitant under a Qualified Contract will be
distributed in a manner consistent with the Minimum Distribution and Incidental
Benefit (MDIB) provisions of Section 401(a)(9) of the Code and regulations
thereunder, as applicable, and will be paid, notwithstanding anything else
contained herein, to the Owner/Annuitant under the Annuity Payments Options
selected, over a period not exceeding:
A. the life of the Owner/Annuitant or the lives of the
Owner/Annuitant and the Owner/Annuitant's designated Beneficiary;
or
B. a period not extending beyond the life expectancy of the
Owner/Annuitant or the life expectancy of the Owner/Annuitant and
the Owner/Annuitant's designated Beneficiary.
If the Owner/Annuitant's entire interest is to be distributed in equal or
substantially equal payments over a period described in A or B, such payments
will commence not later than the first day of April following the calendar year
in which the Owner/Annuitant attains age 70-1/2 (the Required Beginning Date).
In the case of a governmental plan (as defined in Code Section 414(d)) or church
plan (as defined in Code Section 401(a)(9)(C)), the Required Beginning Date will
be the later of the dates determined under the preceding sentence or April 1 of
the calendar year following the calendar year in which the Annuitant retires.
If the Owner/Annuitant dies prior to the commencement of his or her
Distribution, the interest in the Qualified Contract must be distributed by
December 31 of the calendar year during which the fifth anniversary of his or
her death occurs unless:
In the case of a Qualified Contract, the Owner/Annuitant names a
Beneficiary other than his or her surviving spouse and such Beneficiary elects
to receive a Distribution of the account in nearly equal payments over his or
her life (or a period not exceeding his or her life expectancy) commencing not
later than December 31 of the year following the year in which the
Owner/Annuitant dies.
If the Owner/Annuitant dies after Distribution has commenced,
Distribution must continue at least as rapidly as under the schedule being used
prior to his or her death.
29
34 of 114
<PAGE> 35
Payments commencing on the Required Beginning Date will not be less than
the lesser of the quotient obtained by dividing the entire interest of the
Owner/Annuitant by the life expectancy of the Owner/Annuitant, or the joint and
last survivor expectancy of the Owner/Annuitant and the Owner/Annuitant's
designated Beneficiary (whichever is applicable under the applicable Minimum
Distribution or MDIB provisions). Life expectancy and joint and last survivor
expectancy are computed by the use of return multiples contained in Section
1.72-9 of the Treasury Regulations.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES AND INDIVIDUAL
RETIREMENT ACCOUNTS
Distributions from an Individual Retirement Annuity or Individual
Retirement Account must begin not later than April 1 of the calendar year
following the calendar year in which the Annuitant or Account Holder attains age
70-1/2. Distribution may be accepted in a lump sum or in nearly equal payments
over: (a) the Owner/Annuitant's life or the lives of the Owner/Annuitant and his
or her spouse or Designated Beneficiary, or (b) a period not extending beyond
your life expectancy or the life expectancy of the Owner/Annuitant and his or
her spouse or designated Beneficiary.
If the Owner/Annuitant dies prior to the commencement of Distributions,
the interest in the Qualified Contract must be distributed by December 31 of the
calendar year during which the fifth anniversary of your death occurs unless:
(a) The Owner/Annuitant has named his or her surviving spouse as the
Beneficiary and such spouse elects to:
(i) treat the annuity as an Individual Retirement Annuity established
for his or her benefit; or
(ii) receive Distribution of the account in nearly equal payments over
his or her life (or a period not exceeding his or her life
expectancy) and commencing not later than December 31 of the year
in which you would have attained age 70-1/2; or
(b) The Owner/Annuitant has named a Beneficiary other than his or her
surviving spouse and such Beneficiary elects to receive a Distribution of
the account in nearly equal payments over his or her life (or a period
not exceeding his or her life expectancy) commencing not later than
December 31 of the year following the year in which the Owner/Annuitant
dies.
If the Owner/Annuitant dies after Distribution has commenced,
Distribution must continue at least as rapidly as under the schedule being used
prior to your death, except to the extent that a surviving spouse Beneficiary
may elect to treat the Contract as his or her own, in the same manner as is
described in section (a)(i) above.
If the amounts Distributed to you do not satisfy the Distribution rules
mentioned above, a penalty tax of 50% is levied on the amount that should have
been distributed for that year.
A pro-rata portion of all Distributions will be included in the gross
income of the person receiving the Distribution and taxed at ordinary income tax
rates. The portion of the Distribution which is taxable is based on the ratio
between the amount by which non-deductible contributions exceed prior
non-taxable Distributions and total account balances at the time of the
Distribution. The Owner/Annuitant must annually report to the Internal Revenue
Service the amount of non-deductible contributions, the amount of any
Distribution, the amount by which non-deductible contributions for all years
exceed non-taxable Distributions for all years, and the total balance of all
Individual Retirement Annuities and Individual Retirement Accounts.
Individual Retirement Annuity and Individual Retirement Account
Distributions will not receive the benefit of the tax treatment of a lump sum
Distribution from a Qualified Plan. If the Owner/Annuitant dies prior to the
time Distribution of his or her interest in the annuity is completed, the
balance will also be included in his or her gross estate.
GENERATION-SKIPPING TRANSFERS
The Company may be required to determine whether the Death Benefit or any
other payment constitutes a direct skip as defined in Section 2612 of the Code,
and the amount of the tax on the generation-skipping transfer resulting from
such direct skip. If applicable, such payment will be reduced by any tax the
Company is required to pay by Section 2603 of the Code.
A direct skip may occur when property is transferred to or a Death
Benefit is paid to an individual two or more generations younger than the
Contract Owner.
30
35 of 114
<PAGE> 36
GENERAL INFORMATION
CONTRACT OWNER SERVICES
ASSET REBALANCING-The Contract Owner (or Annuitant, if so authorized) may
direct the automatic reallocation of contract values to the underlying Mutual
Fund options on a predetermined percentage basis every three months. 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, the Asset
Rebalancing exchange will occur on the last business day before that day. Asset
Rebalancing will not affect future allocations of Purchase Payments. An Asset
Rebalancing request must be in writing on a form provided by the Company.
Contracts issued to a Qualified Plan as defined by the Code may have
superseding plan restrictions with regard to the frequency of Fund exchanges and
underlying Mutual Fund options. The Contract Owner may want to contact a
financial adviser in order to discuss the use of Asset Rebalancing in his or her
contract.
The Company reserves the right to discontinue offering Asset Rebalancing
upon 30 days' written notice; such discontinuation will not affect Asset
Rebalancing programs which have already commenced. The Company also reserves the
right to assess a processing fee for this service.
DOLLAR COST AVERAGING-The Contract Owner (or Annuitant, if so authorized)
may direct the Company to automatically transfer from the Money Market
Sub-Account or the Fixed Account to any other Sub-Account within the Variable
Account on a monthly basis. This service is intended to allow the Contract Owner
to utilize Dollar Cost Averaging, a long-term investment program which provides
for regular, level investments over time. The Company makes no guarantees that
Dollar Cost Averaging will result in a profit or protect against loss in a
declining market. To qualify for Dollar Cost Averaging there must be a minimum
total Contract Value of $15,000. Transfers for purposes of Dollar Cost Averaging
can only be made from the Money Market Sub-Account or the Fixed Account. The
minimum monthly Dollar Cost Averaging transfer is $100. In addition, Dollar Cost
Averaging monthly transfers from the Fixed Account must be equal to or less than
1/30th of the Fixed Account value when the Dollar Cost Averaging program is
requested. Transfers out of the Fixed Account, other than for Dollar Cost
Averaging, may be subject to certain additional restrictions (see "Transfers").
A written election of this service, on a form provided by the Company, must be
completed by the Contract Owner (or Annuitant) in order to begin transfers. Once
elected, transfers from the Money Market Sub-Account or the Fixed Account will
be processed monthly until either the value in the Money Market Sub-Account or
the Fixed Account is completely depleted or the Contract Owner instructs the
Company in writing to cancel the monthly transfers.
The Company reserves the right to discontinue offering Dollar Cost
Averaging upon 30 days' written notice; such discontinuation will not affect
Dollar Cost Averaging programs already commenced. The Company also reserves the
right to assess a processing fee for this service.
SYSTEMATIC WITHDRAWALS-A Contract Owner (or Annuitant, if so authorized)
may elect in writing on a form provided by the Company to take Systematic
Withdrawals by surrendering a specified dollar amount (of at least $100) on a
monthly, quarterly, semi-annual, or annual basis. The Company will process the
withdrawals as directed by surrendering on a pro-rata basis Accumulation Units
from all Sub-Accounts and the Fixed Account. A Contingent Deferred Sales Charge
may also apply to Systematic Withdrawals in accordance with the considerations
set forth in the "Contingent Deferred Sales Charge" section. Each Systematic
Withdrawal is subject to federal income taxes on the taxable portion. In
addition, a 10% federal penalty tax may be assessed on Systematic Withdrawals if
the recipient is under age 59 1/2. If directed by the Contract Owner, the
Company will withhold federal income taxes from each Systematic Withdrawal. The
Contract Owner (or Annuitant, if so authorized) may discontinue Systematic
Withdrawals at any time by notifying the Company in writing.
The Company reserves the right to discontinue offering Systematic
Withdrawals upon 30 days' written notice; such discontinuation will not affect
any Systematic Withdrawal programs already commenced. The Company also reserves
the right to assess a processing fee for this service.
STATEMENTS AND REPORTS
The Company will mail to the Contract Owner (or Annuitant if so
authorized to receive statements), at the last known address of record, any
statements and reports required by applicable law or regulation. The Company
should, therefore, be given prompt notice of any address change. The Company
will send a confirmation statement each time a transaction is made affecting the
Variable Account Contract Value, such as making additional Purchase Payments,
transfers, exchanges or withdrawals. Quarterly statements are also mailed
detailing the Contract activity during the calendar quarter. Instead of
receiving an immediate confirmation of transactions made pursuant to some types
of periodic payment plan (such as a dollar cost averaging program) or salary
reduction arrangement, the Contract Owner (or Annuitant) may receive
confirmation of such transactions in their quarterly statements. The Contract
Owner should
31
36 of 114
<PAGE> 37
review the information in these statements carefully. All errors or corrections
must be reported to the Company immediately to assure proper crediting to the
Contract. The Company will assume all transactions are accurately reported on
quarterly statements or confirmation statements unless the Company is otherwise
notified within 30 days after receipt of the statement. The Company will also
send each year an annual report and a semi-annual report containing financial
statements for the Variable Account, as of December 31 and June 30,
respectively.
ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments are allocated to one or more Sub-Accounts within the
Variable Account in accordance with the designation of the underlying Mutual
Fund options by the Contract Owner (or Annuitant, if so authorized), and
converted into Accumulation Units.
The cumulative total of all Purchase Payments under Contracts issued on
the life of any one Annuitant may not exceed $1,000,000 without prior consent of
the Company.
THE PURCHASER IS CAUTIONED THAT INVESTMENT RETURN ON SMALL INITIAL AND
SUBSEQUENT PURCHASE PAYMENTS MAY BE LESS THAN CHARGES ASSESSED BY THE COMPANY.
The initial Purchase Payment allocated to designated Sub-Accounts of the
variable Account will be priced not later than 2 business days after receipt of
an order to purchase, if the application and all information necessary for
processing the purchase order are complete upon receipt by the Company, and the
Company may retain the Purchase Payment for up to 5 business days while
attempting to complete an incomplete application. If the application cannot be
made complete within 5 days, the prospective purchaser will be informed of the
reasons for the delay and the Purchase Payment will be returned immediately
unless the prospective purchaser specifically consents to the Company retaining
the Purchase Payment until the application is made complete. Thereafter,
subsequent Purchase Payments will be priced on the basis of the Accumulation
Unit Value next computed for the appropriate Sub-Account after the additional
Purchase Payment is received.
Purchase Payments will not be priced on the following nationally
recognized holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
VALUE OF A VARIABLE ACCOUNT ACCUMULATION UNIT
The value of a Variable Account Accumulation Unit for each Sub-Account
was arbitrarily set initially at $10 when the underlying Mutual Fund shares in
that Sub-Account were available for purchase. The value for any subsequent
Valuation Period is determined by multiplying the Accumulation Unit value for
each Sub-Account for the immediately preceding Valuation Period by the Net
Investment Factor for the Sub-Account during the subsequent Valuation Period.
The value of an Accumulation Unit may increase or decrease from Valuation Period
to Valuation Period. The number of Accumulation Units will not change as a
result of investment experience.
NET INVESTMENT FACTOR
The Net Investment Factor for any Valuation Period is determined by
dividing (a) by (b) and subtracting (c) from the result where:
(a) is the net of:
(1) the net asset value per share of the underlying Mutual Fund held
in the Sub-Account determined at the end of the current Valuation
Period, plus
(2) the per share amount of any dividend or capital gain Distributions
made by the underlying Mutual Fund held in the Sub-Account if the
"ex-dividend" date occurs during the current Valuation Period,
(b) is the net of:
(1) the net asset value per share of the underlying Mutual Fund held
in the Sub-Account determined at the end of the immediately
preceding Valuation Period, plus or minus
(2) the per share charge or credit, if any, for any taxes reserved for
in the immediately preceding Valuation Period (see "Charge For Tax
Provisions").
(c) is a factor representing the daily Mortality Risk Charge, Expense Risk
Charge and Administration Charge deducted from the Variable Account. Such
factor is equal to an annual rate of 1.30% of the daily net asset value
of the Variable Account.
For underlying Mutual Funds that credit dividends on a daily basis and
pay such dividends once a month (such as money market funds and certain bond
funds), the Net Investment Factor allows for the monthly reinvestment of these
daily dividends.
32
37 of 114
<PAGE> 38
The Net Investment Factor may be greater or less than one; therefore, the
value of an Accumulation Unit may increase or decrease. It should be noted that
changes in the Net Investment Factor may not be directly proportional to changes
in the net asset value of underlying Mutual Fund shares, because of the
deduction for Mortality Risk Charge, Expense Risk Charge and Administration
Charge, and any charge or credit for tax reserves.
VALUATION OF ASSETS
Underlying Mutual Fund shares in the Variable Account will be valued at
their net asset value.
DETERMINING THE CONTRACT VALUE
The sum of the value of all Variable Account Accumulation Units
attributable to the Contract and amounts credited to the Fixed Account is the
Contract Value. The number of Accumulation Units credited per each Sub-Account
is determined by dividing the net amount allocated to the Sub-Account by the
Accumulation Unit Value for the Sub-Account for the Valuation Period during
which the Purchase Payment is received by the Company. If part or all of the
Contract Value is surrendered or charges or deductions are made against the
Contract Value, an appropriate number of Accumulation Units from the Variable
Account and an appropriate amount from the Fixed Account will be deducted in the
same proportion that the Contract Owner's (or Annuitant's) interest in the
Variable Account and the Fixed Account bears to the total Contract Value.
SURRENDER (REDEMPTION)
While the Contract is in force and prior to the earlier of the
Annuitization Date or the death of the Annuitant, the Company will, upon proper
written application by the Contract Owner (or Annuitant, if so authorized)
deemed by the Company to be in good order, allow the surrender of a portion or
all of the Contract Value. "Proper written application" means that the surrender
must be requested in writing by the Contract Owner (or Annuitant, if so
authorized), satisfy all good order requirements, and the Company may require
that signature(s) be guaranteed by a member firm of the New York, American,
Boston, Midwest, Philadelphia, or Pacific Stock Exchange, or by a commercial
bank or a savings and loan, which is a member of the Federal Deposit Insurance
Corporation. In some cases (for example, requests by a corporation, partnership,
agent or fiduciary) the Company will require additional documentation of a
customary nature.
The Company will, upon receipt of any such written request, surrender a
number of Accumulation Units from the Variable Account and an amount from the
Fixed Account necessary to equal the gross dollar amount requested, less any
applicable Contingent Deferred Sales Charge (see "Contingent Deferred Sales
Charge"). In the event of a partial surrender, the Company will, unless
instructed to the contrary, surrender Accumulation Units from all Sub-Accounts
in which an interest is maintained, and the Fixed Account. The number of
Accumulation Units surrendered from each Sub-Account and the amount surrendered
from the Fixed Account will be in the same proportion that the Contract Owner's
(or Annuitant's) interest in the Sub-Accounts and Fixed Account bears to the
total Contract Value.
The Company will pay any Funds applied for from the Variable Account
within 7 days of receipt of such application in the Company's Home Office.
However, the Company reserves the right to suspend or postpone the date of any
payment of any benefit or values for any Valuation Period (1) when the New York
Stock Exchange ("Exchange") or the Company's Home Office is closed, (2) when
trading on the Exchange is restricted, (3) when an emergency exists as a result
of which disposal of securities held in the Variable Account is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Variable Account's net assets, or (4) during any other period when the
Securities and Exchange Commission, by order, so permits for the protection of
security holders, provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the conditions
prescribed in (2) and (3) exist. The Contract Value upon surrender may be more
or less than the total of Purchase Payments made, depending on the market value
of the underlying Mutual Fund shares.
SURRENDERS UNDER A QUALIFIED PLAN
The Contract surrender provisions may also be modified pursuant to the
plan terms and Code tax provisions when the Contract is issued to fund a
Qualified Plan.
TAXES
INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF
A PERSONAL TAX ADVISER.
The Company does not make any guarantee regarding the tax status of any
Contract or any transaction involving the Contracts.
Section 72 of the Code governs taxation of annuities in general. That
section sets forth different rules for: (1) Qualified Contracts; (2) Individual
Retirement Annuities and Individual Retirement Accounts; or (3) Non-Qualified
Contracts. Each type of annuity is discussed below.
33
38 of 114
<PAGE> 39
Distributions to Participants from Qualified Contracts are generally
taxed when received. A portion of each Distribution is excludable from income
based on the ratio between the after tax investment of the Owner/Annuitant in
the Contract and the value of the Contract at the time of the withdrawal or
Annuitization.
Distributions from Individual Retirement Annuities and Contracts owned by
Individual Retirement Accounts are also generally taxed when received. The
portion of each such payment which is excludable is based on the ratio between
the amount by which nondeductible Purchase Payments to all such Contracts
exceeds prior non-taxable Distributions from such Contracts, and the total
account balances in such Contracts, at the time of the Distribution. The Owner
of such Individual Retirement Annuities or the Annuitant under Contracts held by
Individual Retirement Accounts must annually report to the Internal Revenue
Service the amount of nondeductible Purchase Payments, the amount of any
Distribution, the amount by which nondeductible Purchase Payments for all years
exceed non-taxable Distributions for all years, and the total balance in all
Individual Retirement Annuities and Accounts.
NON-QUALIFIED CONTRACTS
THIS SECTION PROVIDES A GENERAL DESCRIPTION OF THE TAX REQUIREMENTS FOR
NON-QUALIFIED CONTRACTS. MOST OF THESE REQUIREMENTS WILL ONLY APPLY TO CONTRACTS
WHICH WERE ISSUED ON OR AFTER DECEMBER 31, 1983, AND WHICH HAVE INVESTED IN THE
FIXED ACCOUNT.
The rules applicable to Non-Qualified Contracts provide that a portion of
each annuity payment received is excludable from taxable income based on the
ratio between the Contract Owner's investment in the Contract and the expected
return on the Contract. The maximum amount excludable from income is the
investment in the Contract. If the Annuitant dies prior to excluding from income
the entire investment in the Contract, the Annuitant's final tax return may
reflect a deduction for the balance of the investment in the Contract.
Distributions made from the Contract prior to Annuitization 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, dividends, or any portion of the
Contract which is assigned or pledged; and for Contracts issued after April 22,
1987, any portion of the Contract 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. 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 any 12 month period, will be treated
as one annuity contract. Additional limitations on the use of multiple Contracts
may be imposed by Treasury regulations. Distributions prior to Annuitization
with respect to that portion of the Contract invested prior to August 14, 1982,
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 Tax Reform Act of 1986 changed the tax treatment of certain
Non-Qualified Contracts held by entities other than individuals. Such entities
are taxed currently on the earnings on the Contract which are attributable to
contributions made to the Contract after February 28, 1986. There are exceptions
for Qualified Contracts, Individual Retirement Annuities, immediate annuities,
and certain Contracts owned for the benefit of an individual. An immediate
annuity, for purposes of this discussion, is a single Purchase Payment Contract
on which payments begin within one year of purchase.
Code Section 72 also provides for a penalty, equal to 10% of any
Distribution which is includable in gross income, if such Distribution is made
prior to attaining age 59 1/2, the death or disability of the Contract Owner.
The penalty does not apply if the Distribution is one of a series of
substantially equal periodic payments made over the life or life expectancy (or
joint lives or life expectancies) of the Annuitant (and the Annuitant's
Beneficiary), or is made from an immediate annuity, or is allocable to an
investment in the Contract before August 14, 1982. A Contract Owner wishing to
begin taking Distributions to which the 10% tax penalty does not apply should
forward a written request to the Company. Upon receipt of a written request from
the Contract Owner, the Company will inform the Contract Owner of the procedures
pursuant to Company Policy and subject to limitations of the Contract including
but not limited to first year withdrawals. If the Annuitant selects an annuity
for life or life expectancy and changes the method of payment before the
expiration of 5 years and the attainment of age 59 1/2, the early withdrawal
penalty will apply. The penalty will
34
39 of 114
<PAGE> 40
be equal to that which would have been imposed had no exception applied from the
outset, and the Annuitant will also pay interest on the amount of the penalty
from the date it would have originally applied until it is actually paid.
In order to qualify as an Annuity Contract under Section 72 of the Code,
the Contract must provide for Distribution to be made upon the death of the
Contract Owner. In such case the Annuitant, Beneficiary or other named recipient
must receive the Distribution within 5 years of the Owner's death. However, the
recipient may elect for payments to be made over his or her life or life
expectancy if such payments begin within one year following the death of the
Contract Owner. If the Contract Owner's Beneficiary is the surviving spouse,
such spouse may be treated as the Contract Owner and the Contract may be
continued throughout the life of the surviving spouse subject to certain minimum
distribution requirements for Individual Retirement Annuities and Individual
Retirement Accounts. In the event the Contract Owner dies on or after the
Annuitization Date and before the entire interest has been distributed, the
remaining portion must be distributed at least as rapidly as under the method of
Distribution being used as of the date of the Contract Owner's death. If the
Contract Owner is not an individual, the death of the Annuitant (or a change of
the Annuitant) will result in a Distribution under their rules, regardless of
whether a Contingent Designated Annuitant has been named (see "Required
Distribution for Qualified Plans").
The Company is required to withhold tax from certain Distributions to the
extent that such Distribution would constitute income to the Contract Owner. The
Contract Owner is entitled to elect not to have federal income tax withheld from
any such Distribution, but may be subject to penalties in the event insufficient
federal income tax is withheld during a calendar year.
Generally, the taxable portion of any Distribution from a Contract to a
nonresident alien of the United States is subject to tax withholding at a rate
equal to thirty percent (30%) of such amount or, if applicable, a lower treaty
rate. A payment may not be subject to withholding where the recipient
sufficiently establishes that such payment is effectively connected to the
recipient's conduct of a trade or business in the United States and such payment
is includable in the recipient's gross income.
Payment of a benefit or transfer of any property to an individual two or
more generations younger than the contract owner may constitute a
generation-skipping transfer, subject to taxation under Section 2601 et. seq. of
the Code.
CHARGE FOR TAX PROVISIONS
The Company is no longer required to maintain a capital gain reserve
liability on Non-Qualified Contracts since capital gains attributable to assets
held in the Company's Variable Account for such Contracts are not taxable to the
Company. However, the Company reserves the right to implement and adjust the tax
charge in the future, if the tax laws change.
QUALIFIED PLANS, INDIVIDUAL RETIREMENT ANNUITIES, AND INDIVIDUAL RETIREMENT
ACCOUNTS
The Contracts may be used with Qualified Plans (Contracts issued after
December 25, 1982 and before January 1, 1993), Individual Retirement Annuities
(Contracts issued before December 25, 1982), Individual Retirement Accounts
(Contracts issued after January 1, 1993, and other plans receiving favorable tax
treatment. For information regarding eligibility, limitations on permissible
amounts of Purchase Payments, and tax consequences on Distribution from such
plans, the purchasers of such Contracts should seek competent advice. The terms
of such plans may limit the rights available under the Contracts.
The Code permits the rollover of most Distributions from Qualified Plans
to other Qualified Plans, Individual Retirement Accounts, or Individual
Retirement Annuities. Distributions which may not be rolled over are those which
are:
1. one of a series of substantially equal annual (or more frequent)
payments made: a) over the life (or life expectancy) of the
employee, b) the joint lives (or joint life expectancies) of the
employee and the employee's designated Beneficiary, or c) for a
specified period of ten years or more, and
2. a required minimum Distribution
Any Distribution eligible for rollover will be subject to federal tax
withholding at a 20 percent rate unless the distribution is transferred directly
to an appropriate plan as described above.
Individual Retirement Accounts and Individual Retirement Annuities may
not provide life insurance benefits. If the Death Benefit exceeds the greater of
the cash value of the Contract or the sum of all Purchase Payments (less any
surrenders), it is possible the Internal Revenue Service could determine that
the Individual Retirement Account or Individual Retirement Annuity did not
qualify for the desired tax treatment.
35
40 of 114
<PAGE> 41
The Contract is available for Qualified Plans electing to comply with
section 404(c) of ERISA. It is the responsibility of the plan and its
fiduciaries to determine and satisfy section 404(c) requirements.
INDIVIDUAL RETIREMENT ACCOUNTS
The Internal Revenue Service determined that, effective September 25,
1981, Individual Retirement Annuities could not be established using variable
annuity Contracts that allocated assets to separate accounts of life insurance
companies, if the separate account purchased shares of publicly available Mutual
Funds. The owner of such a contract is treated as the owner of the underlying
Mutual Fund shares purchased and is taxed on any dividends accruing or
recognized gains.
It is possible to establish an Individual Retirement Account funded with
such a variable annuity contract, by depositing the Funds in a trust or
custodial account which qualifies under Section 408 of the Code, and having the
trustee or custodian purchase the Contract. Such an Individual Retirement
Account is subject to rules which are comparable to those which apply to
Individual Retirement Annuities. The trustee or custodian is treated as the
owner of the underlying Mutual Fund shares, and the individual establishing the
account is taxed in the manner described in "Required Distributions For
Individual Retirement Annuities And Individual Retirement Accounts."
LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business to which the Company and the Variable
Account are parties or to which any of their property is the subject.
The General Distributor, Nationwide Financial Services, Inc., is not
engaged in any litigation of any material nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History................................... 1
Services.......................................................... 1
Purchase of Securities Being Offered.............................. 1
Underwriters...................................................... 2
Calculation of Yield Quotations of Money Market Sub-Accounts...... 2
Annuity Payments.................................................. 2
Financial Statements.............................................. 3
36
41 of 114
<PAGE> 42
APPENDIX A
Purchase Payments under the Fixed Account portion of the Contract and
transfers to the Fixed Account portion become part of the general account of the
Company, which support insurance and annuity obligations. Because of exemptive
and exclusionary provisions, interests in the general account have not been
registered under the Securities Act of 1933 ("1933 Act"), nor is the general
account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the general account nor any interest
therein are generally subject to the provisions of the 1933 or 1940 Acts, and we
have been advised that the staff of the Securities and Exchange Commission has
not reviewed the disclosures in this prospectus which related to the guaranteed
interest portion. Disclosures regarding the Fixed Account portion of the
Contract and the general account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
FIXED ACCOUNT ALLOCATIONS
THE FIXED ACCOUNT
The Fixed Account is made up of all the general assets of the Company,
other than those in the Nationwide Variable Account II and any other segregated
asset account. Fixed Account Purchase Payments will be allocated to the Fixed
Account by election of the Contract Owner at the time of purchase.
The Company will invest the assets of the Fixed Account in those assets
chosen by the Company and allowed by applicable law. Investment income from such
Fixed Account assets will be allocated by the Company between itself and the
Contracts participating in the Fixed Account.
The level of annuity payments made to Annuitants under the Contracts will
not be affected by the mortality experience (death rate) of persons receiving
such payments or of the general population. The Company assumes this "mortality
risk" by virtue of annuity rates incorporated in the Contract which cannot be
changed. In addition, the Company guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company
includes compensation for mortality and expense risks borne by the Company in
connection with Fixed Account Contracts. The amount of such investment income
allocated to the Contracts will vary from year to year in the sole discretion of
the Company at such rate or rates as the Company prospectively declares from
time to time. Any such rate or rates so determined will remain effective for a
period of not less than twelve months, and remain at such rate unless changed.
However, the Company guarantees that it will credit interest at not less than
3.0% per year (as otherwise required under state law, or at such minimum rate as
stated in the Contract when sold). ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO
THE FIXED ACCOUNT IN EXCESS OF 3.0% PER YEAR WILL BE DETERMINED IN THE SOLE
DISCRETION OF THE COMPANY. 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. New Purchase Payments deposited to the Contract which
are allocated to the Fixed Account may receive a different rate of interest than
money transferred from the Variable Account Sub-Accounts to the Fixed Account
and amounts maturing in the Fixed Account after the expiration of an Interest
Rate Guarantee Period.
The Company guarantees that, at any time, 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 the sum of all
administrative charges, any applicable premium taxes, and less any amounts
surrendered. If the Contract Owner effects a surrender, the amount available
from the Fixed Account will be reduced by any applicable Contingent Deferred
Sales Charge (see "Contingent Deferred Sales Charge").
TRANSFERS
Contract Owners (or Annuitants, if so authorized) may at the maturity of
an Interest Rate Guarantee Period, transfer a portion of the value of the Fixed
Account from the Fixed Account to the Variable Account. The maximum percentage
that may be transferred will be determined by the Company at its sole
discretion, but will not be less than 10% of the total value of the portion of
the Fixed Account that is maturing and will be declared upon the expiration date
of the then current Interest Rate Guarantee Period. The Interest Rate Guarantee
Period expires on the final day of a calendar quarter. Transfers must be made
within 45 days after the expiration date of the guarantee period. Owners who
have entered into a Dollar Cost Averaging Agreement with the Company (see
"Dollar Cost Averaging") may transfer from the Fixed Account to the Variable
Account under the terms of that agreement.
37
42 of 114
<PAGE> 43
ANNUITY PAYMENT PERIOD-FIXED ACCOUNT
FIRST AND SUBSEQUENT PAYMENTS
A Fixed Annuity is an annuity with payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. The first Fixed
Annuity payment will be determined by applying the Fixed Account Contract Value
to the applicable Annuity Table in accordance with the Annuity Payment Option
elected. This will be done at the Annuitization Date on an age last birthday
basis. Fixed Annuity payments after the first will not be less than the first
Fixed Annuity payment.
The Company does not credit discretionary interest to Fixed Annuity
payments during the annuity payment period for annuity options based on life
contingencies. The Annuitant must rely on the Annuity Tables applicable to the
Contracts to determine the amount of such Fixed Annuity payments.
ANNUITY TABLES AND ASSUMED INTEREST RATE
The Annuity Tables contained in the Contracts are based on the 1971
Individual Annuity Mortality Table (set back one year) and an assumed interest
rate of 3.5%.
38
43 of 114
<PAGE> 44
APPENDIX B PARTICIPATING FUNDS
UNDERLYING MUTUAL FUND OPTIONS AVAILABLE FOR CONTRACTS
ISSUED ON OR AFTER JANUARY 1, 1993
For new Contracts issued on or after January 1, 1993, Variable Account
Purchase Payments may be allocated only to the Sub-Accounts which consist
of shares of the underlying Mutual Fund options listed below:
Delchester Fund-Institutional Class
Investment Objective: Seeks to provide high current income by investing
principally in corporate bonds, and also in U.S. Government securities
and commercial paper. This Fund invests primarily in high-yield
securities (junk bonds) and greater risks may be involved with an
investment in the Fund than an investment in a Mutual Fund comprised
primarily of investment grade bonds.
Dreyfus A Bonds Plus, Inc.
Investment Objective: The Fund's goal is to provide the maximum amount of
current income to the extent consistent with the preservation of capital
and the maintenance of liquidity. The Fund invests principally in debt
obligations of corporations, the U.S. Government and its agencies and
instrumentalities, and major U.S. banking institutions. The Fund's
investment objective cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act of 1940) of the
Fund's outstanding voting shares. There can be no assurance that the
Fund's investment objective will be achieved.
Dreyfus S & P 500 Index Fund (Formerly Peoples Index Fund, Inc.)
Investment Objective: Seeks to provide investment results that correspond
to the price and yield performance of publicly-traded common stocks in
the aggregate, as represented by the Standard & Poor's 500 Composite
Stock Price Index. The Fund's investment objective cannot be changed
without approval by the holders of a majority of the Fund's outstanding
voting shares.
The Dreyfus Third Century Fund, Inc.
Investment Objective: Primarily seeks to provide capital growth through
equity investment in companies that, in the opinion of the Fund's
management, not only meet traditional investment standards but which also
show evidence that they conduct their business, in a manner that
contributes to the enhancement of the quality of life in America. Current
income is secondary to the primary goal. The Evergreen Total Return Fund
Investment Objective: Seeks to achieve a return consisting of current
income and capital appreciation in the value of its shares. The emphasis
on current income and capital appreciation will be relatively equal
although, over time, changes in the outlook for market conditions and the
level of interest rates will cause the Fund to vary its emphasis between
these two elements in its search for the optimum return for its
shareholders. The Fund seeks to achieve its investment objective through
investments in common stocks, preferred stocks, securities convertible
into or exchangeable for common stocks and fixed income securities. The
Fund may also write covered call options.
Fidelity Advisor Equity Income Fund
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities, with a
secondary emphasis on growth potential.
Fidelity Advisor Growth Opportunities Fund
Investment Objective: Pursues capital growth that exceeds market
performance through investments in growth, cyclical, and value stocks,
and securities convertible to common stocks.
Fidelity Advisor High Yield Fund
Investment Objective: A bond Fund designed to meet the needs of the
long-term investor, seeking above-average monthly income and potential
capital growth by investing in lower-rated, high-yielding, fixed income
securities.
Fidelity Advisor Income Growth Fund
Investment Objective: Seeks income and growth potential by investing in
securities including U.S. government and corporate bonds, and a
diversified selection of common stocks.
39
44 of 114
<PAGE> 45
Fidelity Asset Manager(TM)
Investment Objective: Seeks high total return with reduced risk over the
long term by allocating its assets among stocks, bonds and short-term
instruments.
Fidelity Equity-Income Fund
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities. The Fund
seeks a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's 500 Composite Stock Price index. In
addition, consistent with the above objective, in managing its portfolio,
the Fund will consider the potential for achieving capital appreciation.
Fidelity Magellan(R) Fund
Investment Objective: Seeks capital appreciation by investing primarily
in common stock and securities convertible into common stock. Up to 20%
of the Fund's assets may also be invested in debt securities of all types
and qualities issued by foreign and domestic issuers if the Fund's
management believes that doing so will result in capital appreciation. No
emphasis is placed on dividend income except when the Fund's management
believes that this income will have a favorable influence on the market
value of the security. Because the Fund has no limitation on the quality
of debt securities in which it may invest, the debt securities in its
portfolio may be of poor quality and may present the risk of default or
may be in default.
Fidelity Puritan Fund
Investment Objective: Seeks to obtain as much income as possible,
consistent with the preservation and conservation of capital, by
investing in a broadly diversified portfolio of high-yielding securities,
including common stocks, preferred stocks, and bonds. While emphasis on
income is an important objective, this does not preclude growth in
capital since some securities offering a better than average yield may
also possess some growth possibilities.
Fidelity VIP High Income Portfolio (additional Purchase Payments or
exchanges may not be made to this Fund on or after December 1, 1993)
Investment Objective: Seeks to obtain a high level of current income by
investing primarily in high-risk, lower rated, high-yielding,
fixed-income securities, while also considering growth of capital. The
Fund's manager will seek high current income normally by investing the
Portfolio's assets as follows:
- at least 80% in income-producing debt securities and preferred stocks,
including convertible securities; and
- up to 20% in common stocks and other equity securities when consistent
with the Portfolio's primary objective or acquired as part of a unit
combining fixed-income and equity securities.
Higher yields are usually available on securities that are lower-rated or
that are unrated. Lower-rated securities are usually defined as Ba or
lower by Moody's; BB or lower by Standard & Poor's and may be deemed to
be of a speculative nature. The Portfolio may also purchase lower-quality
bonds such as those rated Ca3 by Moody's or C- by Standard & Poor's which
provide poor protection for payment of principal and interest (commonly
referred to as "junk bonds"). For a further discussion of lower-rated
securities, please see the "Risks of Lower-Rated Debt Securities" section
of the Portfolio's prospectus.
Janus Fund
Investment Objective: Seeks long-term growth of capital by investing
primarily in common stocks of a large number of issuers of any size.
Generally this Fund emphasizes issuers with larger market
capitalizations.
Janus Twenty Fund
Investment Objective: Seeks growth of capital in a manner consistent with
the preservation of capital. Under normal conditions, the Fund will
concentrate its investments in a core position of 20-30 common stocks.
However, the percentage of the Fund's assets invested in common stocks
will vary, depending upon its investment adviser's opinion of prevailing
market, financial and economic conditions. Consequently, the Fund may at
times hold substantial positions in cash, or interest bearing securities.
MFS(R) World Governments Fund
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.
40
45 of 114
<PAGE> 46
Nationwide(R) Bond Fund
Investment Objective: Seeks to generate a high level of income consistent
with capital preservation through investments in high quality bonds and
other fixed income securities. Through investment in long-term income
obligations, including corporate debt securities, United States and
Canadian government obligations and commercial paper, this Fund seeks to
serve those who are less willing to accept the greater risk and higher
volatility of a common stock portfolio.
Nationwide(R) Fund
Investment Objective: Seeks to obtain a reasonable current income on
invested capital and possible growth of such income through timely
investments in common stocks, convertible issues or bonds. Major emphasis
in the selection of investments for this Fund is placed on securities
which will provide a reasonable current return. Though growth of capital
considerations is secondary, an effort is made to select those securities
which, while paying a reasonable current return, also hold some promise
of long-term growth as well as possibilities of growth of income.
Nationwide(R) Growth Fund
Investment Objective: Seeks to achieve reasonable growth of capital
through selective participation in the long-term progress of business
without emphasis on current return on invested capital. Major emphasis in
the selection of securities for this Fund is placed on strong companies
which have capable management, and are in fields where social and
economic trends, technical developments and new processes or products
indicate greater than average growth.
Nationwide(R) Money Market Fund
Investment Objective: Seeks to provide as high a level of current income
as is consistent with the preservation of capital and maintenance of
liquidity, through a diversified portfolio of high quality money market
instruments maturing in one year or less.
Nationwide(R) U.S. Government Income Fund
Investment Objective: Seeks to provide as high a level of current income
as is consistent with the preservation of capital by investing in
securities of the U.S. Government, its agencies and instrumentalities.
The average dollar-weighted maturity of the Fund will be maintained at
between 3 and 10 years.
Neuberger & Berman Guardian Fund, Inc.
Investment Objective: Seeks capital appreciation through investments
generally in dividend-paying issues of established companies that its
investment officers believe are well managed. The emphasis of the Fund's
investments is on common stock. The Fund diversifies its holdings among
different industries and different companies in light of conditions
prevailing at any given time. Current income is a secondary objective.
Neuberger & Berman Limited Maturity Bond Fund
Investment Objective: Seeks highest current income consistent with low
risk to principal and liquidity. The Fund invests in a diversified
portfolio of short-to intermediate-term debt securities and other debt
securities with special features producing similar price characteristics.
Total return is a secondary objective.
Neuberger & Berman Partners Fund, Inc.
Investment Objective: Seeks capital growth. The Fund invests in
securities solely on the basis of management's evaluation of their
investment merit and potential for growth using a value-oriented approach
to the selection of individual securities. The Fund's management believes
that the Fund is an attractive investment vehicle for conservative
investors who are interested in long-term appreciation from stock
investments, but who have a low tolerance for risk.
Oppenheimer Global Fund
Investment Objective: Seeks capital appreciation. The Fund emphasizes
investment in foreign and domestic securities considered by the Fund's
investment manager to have appreciation possibilities, primarily common
stocks or securities having investment characteristics of common stocks
(such as convertible securities) of "growth-type" companies. As a matter
of fundamental policy, under normal market conditions, the Fund will
invest its total assets in securities of issuers traded in markets in at
least three different countries (which may include the United States).
The portfolio may also emphasize securities of cyclical industries and
"special situations" when the Fund's manager believes that they present
opportunities for capital growth. The remainder of the Fund's invested
assets will be invested in securities for liquidity purposes.
41
46 of 114
<PAGE> 47
Phoenix Balanced Fund Series
Investment Objective: The Fund seeks reasonable income, long-term capital
growth and conservation of capital. It is intended that the Fund will
invest in common stocks and fixed income securities, with emphasis on
income-producing securities which appear to have some potential for
capital enhancement.
Strong Total Return Fund, Inc.
Investment Objective: Seeks a combination of income and capital
appreciation which will produce the highest total return while assuming
reasonable risks. "Reasonable risks" refers to the advisor's judgment
that the risks of investing in the securities in the Total Return Fund's
portfolio are no greater than normal. The Total Return Fund invests in
common stocks and other equity-type securities; corporate bonds,
debentures, and notes; and short-term money market instruments. Common
stocks may be either growth or income oriented. Other equity-type
securities are limited to convertible bonds, preferred stocks, warrants,
and convertible preferred shares. Short-term money market instruments
include U.S. Treasury obligations, bank certificates of deposit,
commercial paper, and variable-rate master demand notes (floating-rate
debt instruments without a fixed maturity). The Total Return Fund may
also invest in debt securities issued or guaranteed by the U.S.
government and its agencies or instrumentalities.
Templeton Foreign Fund
Investment Objective: Seeks long-term capital growth through a flexible
policy of investing in stocks and debt obligations of companies and
governments outside the United States. Any income realized will be
incidental.
Twentieth Century Growth Investors
Investment Objective: Seeks capital growth through investment in
securities which the management considers to have better than average
prospects for appreciation of value. The Fund's investment approach
identifies companies with accelerating earnings and revenues. As part of
its strategy, the Fund remains essentially fully invested in stocks at
all times.
Twentieth Century International Equity Fund
Investment Objective: Seeks capital growth by investing in an
international portfolio of common stocks, primarily in developed markets;
stocks considered by the investment manager to have prospects for
appreciation. The Fund will invest primarily in common stocks (defined to
include depository receipts for common stocks) and other equity
equivalents of such companies.
Twentieth Century Ultra Investors
Investment Objective: The investment objective of the Fund is to seek
capital growth by investing primarily in common stocks that are
considered by management to have better-than-average prospects for
appreciation.
Twentieth Century U.S. Governments Short-Term
Investment Objective: To seek current income and limited price volatility
by maintaining an average weighted portfolio maturity of four years or
less. U.S. Governments invests in securities of the United States
government and its agencies.
Warburg Pincus Emerging Growth Fund:
Investment Objective: Seeks maximum capital appreciation by investing in
equity securities of small- to medium-sized companies in the United
States with emerging or renewed growth potential.
UNDERLYING MUTUAL FUND OPTIONS AVAILABLE FOR CONTRACTS
ISSUED ON OR AFTER DECEMBER 25, 1982 AND BEFORE JANUARY 1, 1993
For new Contracts issued on or after December 25, 1982, and before
January 1, 1993 Variable Account Purchase Payments may be allocated only to the
Sub-Accounts which consist of shares of the underlying Mutual Fund options
listed below:
Fidelity Capital & Income Fund (additional Purchase Payments or exchanges
may not be made to this Fund on or after May 1, 1991. Not available for
Contracts issued on or after May 1, 1987)
Investment Objective: Seeks to provide a combination of income and
capital growth by investing primarily in debt instruments and common and
preferred stocks, with a focus on lower-quality debt securities of
companies with uncertain financial positions.
Fidelity Equity-Income Fund
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities. The Fund
seeks a yield which exceeds the composite yield on the securities
42
47 of 114
<PAGE> 48
comprising the Standard & Poor's 500 Composite Stock Price index. In
addition, consistent with the above objective, in managing its portfolio,
the Fund will consider the potential for achieving capital appreciation.
Fidelity VIP High Income Portfolio (additional Purchase Payments or
exchanges may not be made to this Fund on or after December 1, 1993)
Investment Objective: Seeks to obtain a high level of current income by
investing primarily in high-risk, lower rated, high-yielding,
fixed-income securities, while also considering growth of capital. The
Fund's manager will seek high current income normally by investing the
Portfolio's assets as follows:
- at least 80% in income-producing debt securities and preferred stocks,
including convertible securities; and
- up to 20% in common stocks and other equity securities when consistent
with the Portfolio's primary objective or acquired as part of a unit
combining fixed-income and equity securities.
Higher yields are usually available on securities that are lower-rated or
that are unrated. Lower-rated securities are usually defined as Ba or
lower by Moody's; BB or lower by Standard & Poor's and may be deemed to
be of a speculative nature. The Portfolio may also purchase lower-quality
bonds such as those rated Ca3 by Moody's or C- by Standard & Poor's which
provide poor protection for payment of principal and interest (commonly
referred to as "junk bonds"). For a further discussion of lower-rated
securities, please see the "Risks of Lower-Rated Debt Securities" section
of the Portfolio's prospectus.
MFS(R) World Governments Fund
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.
Nationwide(R) Money Market Fund
Investment Objective: To provide as high a level of current income as is
consistent with the preservation of capital and maintenance of liquidity,
through a diversified portfolio of high quality money market instruments
maturing in one year or less.
Twentieth Century Growth Investors
Investment Objective: To seek capital growth through investment in
securities which the management considers to have better than average
prospects for appreciation of value. The Fund's investment approach
identifies companies with accelerating earnings and revenues. As part of
it strategy, the Fund remains essentially fully invested in stocks at all
times.
Twentieth Century U.S. Governments Short-Term
Investment Objective: To seek current income and limited price volatility
by maintaining an average weighted portfolio maturity of four years or
less. U.S. Governments invests in securities of the United States
government and its agencies.
UNDERLYING MUTUAL FUND OPTIONS AVAILABLE FOR CONTRACTS
ISSUED PRIOR TO DECEMBER 25, 1982
For Contracts issued prior to December 25, 1982, Variable Account
Purchase Payments may be allocated only to Sub-Accounts which consist of shares
of the four Mutual Funds listed below. Each of the underlying Mutual Fund
options listed below is a series of shares of Nationwide Investing Foundation
and receives investment advice from Nationwide Financial Services, Inc.
Nationwide(R) Bond Fund
Investment Objective: Seeks to generate a high level of income consistent
with capital preservation through investments in high quality bonds and
other fixed income securities. Through investment in long-term income
obligations, including corporate debt securities, United States and
Canadian government obligations and commercial paper, this Fund seeks to
serve those who are less willing to accept the greater risk and higher
volatility of a common stock portfolio.
Nationwide(R) Fund
Investment Objective: Seeks to obtain a reasonable current income on
invested capital and possible growth of such income through timely
investments in common stocks, convertible issues or bonds. Major emphasis
in the selection of investments for this Fund is placed on securities
which will provide a reasonable current return.
43
48 of 114
<PAGE> 49
Though growth of capital considerations is secondary, an effort is made
to select those securities which, while paying a reasonable current
return, also hold some promise of long-term growth as well as
possibilities of growth of income.
Nationwide(R) Growth Fund
Investment Objective: Seeks to achieve reasonable growth of capital
through selective participation in the long-term progress of business
without emphasis on current return on invested capital. Major emphasis in
the selection of securities for this Fund is placed on strong companies
which have capable management, and are in fields where social and
economic trends, technical developments and new processes or products
indicate greater than average growth.
Nationwide(R) Money Market Fund
Investment Objective: Seeks to provide as high a level of current income
as is consistent with the preservation of capital and maintenance of
liquidity, through a diversified portfolio of high quality money market
instruments maturing in one year or less.
44
49 of 114
<PAGE> 50
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 31, 1996
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED
BY THE NATIONWIDE VARIABLE ACCOUNT OF
NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the prospectus
and should be read in conjunction with the prospectus dated May 1, 1996. The
prospectus may be obtained from Nationwide Life Insurance Company by writing P.
O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-848-6631, TDD
1-800-238-3035.
TABLE OF CONTENTS
PAGE
General Information and History................................... 1
Services.......................................................... 1
Purchase of Securities Being Offered.............................. 1
Underwriters...................................................... 2
Calculation of Yield Quotations of Money Market Sub-Accounts...... 2
Annuity Payments.................................................. 2
Financial Statements.............................................. 3
GENERAL INFORMATION AND HISTORY
The Nationwide Variable Account ("Variable Account") is a separate
investment account of Nationwide Life Insurance Company ("Company"). The Company
is a member of the Nationwide Insurance Enterprise and all of the Company's
common stock is owned by Nationwide Corporation. Nationwide Corporation is a
holding company. All of its common stock is held by Nationwide Mutual Insurance
Company (95.3%) and Nationwide Mutual Fire Insurance Company (4.7%).
SERVICES
The Company, which has responsibility for administration of the Contracts
and the Variable Account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each Contract Owner
and the number and type of Contract issued to each such Contract Owner and
records with respect to the Contract Value of each Contract.
The Custodian of the assets of the Variable Account is the Company. The
Company will maintain a record of all purchases and redemptions of shares of the
underlying Mutual Fund options. The Company, or affiliates of the Company may
have entered into agreements with either the investment adviser or distributor
for several of the underlying Mutual Funds. The agreements relate to
administrative services furnished by the Company or an affiliate of the Company
and provide for an annual fee based on the average aggregate net assets of the
Variable Account (and other separate accounts of the Company or life insurance
company subsidiaries of the Company) invested in particular underlying Mutual
Funds. These fees in no way affect the net asset value of the underlying Mutual
Funds or fees paid by the Contract Owner.
The financial statements and schedules have been included herein in
reliance upon the reports of KPMG Peat Marwick LLP, independent certified public
accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and upon the authority
of said firm as experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
("NASD").
The Contract Owner may, on written request, transfer up to 100% of the
Contract Value from the Variable Account to the Fixed Account. However, the
Company reserves the right to restrict transfers from the Variable Account to
25% of Contract Value in any 12 month period. Such transfers must be made prior
to the earlier of the Annuitization Date or the death of the Designated
Annuitant. However, no such transfers will be permitted prior to the first
Contract Anniversary, or within 12 months of any prior transfer. Contract Owners
may at the maturity of an Interest Rate Guarantee Period transfer a portion of
the Contract Value of the Fixed Account to the Variable Account. Such portion
will be determined by the Company at its sole discretion, but will not be less
than 10% of the total value of the portion of the Fixed Account that is
maturing, and will be declared upon the expiration date of the then current
interest rate guarantee period. The Interest Rate Guarantee Period expires on
the final day of a calendar quarter; therefore the
1
50 of 114
<PAGE> 51
Interest Rate Guarantee Period for deposits or transfers in the Fixed Account
may continue for up to three months after a one year period has expired.
Transfers under this provision must be made within 30 days after the expiration
date of the guarantee period. Owners who have entered into a Dollar Cost
Averaging Agreement with the Company may transfer from the Fixed Account to the
Variable Account under the terms of that agreement.
UNDERWRITERS
The Contracts, which are offered continuously, are distributed by
Nationwide Advisory Services, Inc. ("NAS"), One Nationwide Plaza, Columbus, Ohio
43216, a wholly owned subsidiary of the Company. During the fiscal years ended
December 31, 1995, 1994 and 1993 no underwriting commissions were paid by the
Company to NAS.
CALCULATION OF YIELD QUOTATIONS OF MONEY MARKET SUB-ACCOUNTS
Current yield quotations of the Nationwide Money Market Fund are based on
a seven calendar day historical yield, computed by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period, dividing
the net change in the account value by the value of the account at the beginning
of the base period to obtain a base period return and multiplying the base
period return by 365/7 (366/7 in a leap year). The resulting yield figure is
carried to at least the nearest hundredth of one percent. For purposes of this
calculation, the net change in account value reflects the value of additional
shares purchased with dividends from the original share and any such additional
shares. The Fund's effective yield represents a compounding on an annualized
basis of the current yield quotations of the Fund.
The Fund's yield will fluctuate daily. Actual yields will depend on
factors such as the type of instruments in the Fund's portfolio, portfolio
quality and average maturity, changes in interest rates, and the Fund's
expenses.
Although the Fund determines its yield on the basis of a seven calendar
day period, it may use a different time span on occasion. The yield quotes may
reflect the expense limitation described under "Investment Manager and Other
Services" in the Fund prospectus.
There is no assurance that the yields quoted on any given occasion will
remain in effect for any period of time and there is no guarantee that the net
asset values will remain constant. It should be noted that a shareholder's
investment in the Fund is not guaranteed or insured. Yields of other money
market Funds may not be comparable if a different base period or another method
of calculation is used.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the prospectus.
2
51 of 114
<PAGE> 52
<PAGE> 1
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Contract Owners of
Nationwide Variable Account
Nationwide Life Insurance Company:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account as of December 31, 1995,
and the related statements of operations and changes in contract owners' equity
and schedules of changes in unit value for each of the years in the three year
period then ended. These financial statements and schedules of changes in unit
value are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules of changes in
unit value based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedules of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and the
transfer agents of the underlying mutual funds. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedules of changes in unit
value referred to above present fairly, in all material respects, the financial
position of Nationwide Variable Account as of December 31, 1995, and the results
of its operations and its changes in contract owners' equity and the schedules
of changes in unit value for each of the years in the three year period then
ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1996
- -------------------------------------------------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Delaware Group Delchester High-Yield Bond Fund, Inc. - Delchester Fund
Institutional Class (DeHyBd)
128,274 shares (cost $830,095).......................................... $ 799,146
Dreyfus A Bonds Plus, Inc. (DryABds)
38,435 shares (cost $543,964)........................................... 573,452
Dreyfus S&P 500 Index Fund (Dry500Ix)
25,439 shares (cost $441,378)........................................... 483,346
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
19,137 shares (cost $145,856)........................................... 157,688
The Evergreen Total Return Fund - Class Y (EvTotRet)
38,436 shares (cost $746,258)........................................... 765,641
Fidelity Asset Manager(TM) (FidAsMgr)
140,095 shares (cost $2,053,447)........................................ 2,220,511
Fidelity Capital & Income Fund (FidCapIn)
155,140 shares (cost $1,319,326)........................................ 1,421,081
Fidelity Equity-Income Fund (FidEqInc)
322,227 shares (cost $10,020,804)....................................... 12,222,089
Fidelity Magellan(R) Fund (FidMgln)
105,965 shares (cost $8,110,929)........................................ 9,110,906
Fidelity Puritan Fund (FidPurtn)
255,404 shares (cost $4,071,433)........................................ 4,344,424
Fidelity VIP - High Income Portfolio (FidHiInc)
36,914 shares (cost $421,562)........................................... 444,813
Janus Twenty Fund (Jan20Fd)
44,023 shares (cost $1,120,595)......................................... 1,130,065
MFS(R) World Governments Fund - Class A (MFSWdGvt)
110,656 shares (cost $1,301,562)........................................ 1,219,428
Nationwide(R) Bond Fund (NWBdFd)
152,673 shares (cost $1,466,716)........................................ 1,493,137
Nationwide(R) Fund (NWFund)
101,546 shares (cost $1,541,872)........................................ 1,788,228
Nationwide(R) Growth Fund (NWGroFd)
260,900 shares (cost $2,674,654)........................................ 3,216,893
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Nationwide(R) Money Market Fund (NWMyMkt)
9,255,173 shares (cost $9,255,173)...................................... 9,255,173
Neuberger & Berman Guardian Fund (NBGuard)
75,897 shares (cost $1,645,853)......................................... 1,747,909
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
97,260 shares (cost $969,786)........................................... 987,192
Neuberger & Berman Partners Fund (NBPartFd)
49,549 shares (cost $1,069,012)......................................... 1,097,025
Oppenheimer Global Fund - Class A (OppGlob)
71,647 shares (cost $2,500,229)......................................... 2,499,779
Phoenix Balanced Fund Series - Class A (PhxBalFd)
16,103 shares (cost $257,112)........................................... 270,526
Strong Total Return Fund, Inc. (StTotRet)
21,668 shares (cost $570,584)........................................... 614,935
Templeton Foreign Fund - Class I (TemForFd)
83,517 shares (cost $772,935)........................................... 766,686
Twentieth Century Growth Investors (TCGroInv)
545,125 shares (cost $11,527,624)....................................... 10,569,971
Twentieth Century International Equity (TCIntlEq)
38,477 shares (cost $288,806)........................................... 299,354
Twentieth Century Ultra Investors (TCUltra)
125,466 shares (cost $2,834,209)........................................ 3,275,919
Twentieth Century U.S. Governments Short-Term (TCUSGvt)
463,231 shares (cost $4,415,647)........................................ 4,437,748
-----------
Total investments................................................... 77,213,065
Accounts receivable......................................................... 13,735
-----------
Total assets........................................................ 77,226,800
Accounts payable............................................................ 424
-----------
Contract owners' equity (note 4)............................................ $77,226,376
===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE> 4
- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Investment activity:
Reinvested capital gains and dividends.................. $ 5,403,676 4,476,720 2,952,700
Gain (loss) on investments: ------------ ----------- -----------
Proceeds from redemptions of mutual fund shares..... 19,494,999 19,343,653 14,007,169
Cost of mutual fund shares sold..................... (19,182,917) (18,215,058) (11,941,205)
------------ ----------- -----------
Realized gain (loss) on investments................. 312,082 1,128,595 2,065,964
Change in unrealized gain (loss) on investments..... 6,984,871 (5,977,389) (991,082)
------------ ----------- -----------
Net gain (loss) on investments.................. 7,296,953 (4,848,794) 1,074,882
------------ ----------- -----------
Net investment activity..................... 12,700,629 (372,074) 4,027,582
------------ ----------- -----------
Equity transactions:
Purchase payments received from contract
owners.............................................. 21,817,759 16,078,025 5,555,624
Redemptions............................................. (11,831,829) (5,989,583) (5,484,670)
Annuity benefits........................................ (18,792) (19,197) (19,218)
Adjustments to maintain reserves........................ 5,498 1,593 2,272
------------ ----------- -----------
Net equity transactions..................... 9,972,636 10,070,838 54,008
------------ ----------- -----------
Expenses (note 2):
Contract charges........................................ (898,746) (735,120) (641,707)
Contingent deferred sales charges....................... (43,999) (50,816) (70,164)
------------ ----------- -----------
Total expenses.............................. (942,745) (785,936) (711,871)
------------ ----------- -----------
Net change in contract owners' equity....................... 21,730,520 8,912,828 3,369,719
Contract owners' equity beginning of period................. 55,495,856 46,583,028 43,213,309
------------ ----------- -----------
Contract owners' equity end of period....................... $ 77,226,376 55,495,856 46,583,028
============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE> 5
- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account (the Account) was established pursuant to
a resolution of the Board of Directors of Nationwide Life Insurance Company (the
Company) on March 3, 1976. The Account has been registered as a unit investment
trust under the Investment Company Act of 1940.
The Company offers Individual Deferred Variable Annuity Contracts through
the Account. As of December 25, 1982, only tax qualified contracts are issued.
The primary distribution for the contracts is through the Company for Individual
Retirement Account rollovers; however, other distributors may be utilized.
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees, are offered for purchase. See note
2 for a discussion of contract expenses.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in the following:
Delaware Group Delchester High-Yield Bond Fund, Inc. - Delchester Fund
Institutional Class (DeHyBd)
Dreyfus A Bonds Plus, Inc. (DryABds)
Dreyfus S&P 500 Index Fund (Dry500Ix) (formerly Peoples Index Fund(R),
Inc. (PeoIxFd))
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
The Evergreen Total Return Fund - Class Y (EvTotRet)
Fidelity Advisor Equity-Income Fund - Class A (FAEqInc)
Fidelity Advisor Growth Opportunities Fund - Class A (FAGrOpp)
Fidelity Advisor High Yield Fund - Class A (FAHiYld)
Fidelity Advisor Income & Growth Fund - Class A (FAIncGr)
Fidelity Asset Manager(TM) (FidAsMgr)
Fidelity Capital & Income Fund (FidCapIn)
(not available for additional purchase payments or exchanges after
May 1, 1991)
Fidelity Equity-Income Fund (FidEqInc)
Fidelity Magellan(R) Fund (FidMgln)
Fidelity Puritan Fund (FidPurtn)
Portfolio of the Fidelity Variable Insurance Products Fund (Fidelity
VIP); Fidelity VIP - High Income Portfolio (FidHiInc) (not
available for additional purchase payments or exchanges after
December 1, 1993)
Janus Fund (JanFund)
Janus Twenty Fund (Jan20Fd)
MFS(R) World Governments Fund - Class A (MFSWdGvt)
Nationwide(R) Bond Fund (NWBdFd) (managed for a fee by an affiliated
investment advisor)
Nationwide(R) Fund (NWFund) (managed for a fee by an affiliated
investment advisor)
Nationwide(R) Growth Fund (NWGroFd) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) Money Market Fund (NWMyMkt) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) U.S. Government Income Fund (NWUSGvt)
(managed for a fee by an affiliated investment advisor)
Neuberger & Berman Guardian Fund (NBGuard)
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
Neuberger & Berman Partners Fund (NBPartFd)
Oppenheimer Global Fund - Class A (OppGlob)
Phoenix Balanced Fund Series - Class A (PhxBalFd)
Strong Total Return Fund, Inc. (StTotRet)
Templeton Foreign Fund - Class I (TemForFd)
Twentieth Century Growth Investors (TCGroInv)
Twentieth Century International Equity (TCIntlEq)
Twentieth Century Ultra Investors (TCUltra)
Twentieth Century U.S. Governments Short-Term (TCUSGvt)
Warburg Pincus Emerging Growth - Common Shares (WPEmGro)
<PAGE> 6
At December 31, 1995, contract owners have invested in all of the above
funds, except the Fidelity Advisor Equity-Income Fund - Class A, the Fidelity
Advisor Growth Opportunities Fund - Class A, the Fidelity Advisor High Yield
Fund - Class A, the Fidelity Advisor Income & Growth Fund - Class A, the Janus
Fund, the Nationwide(R) U.S. Government Income Fund, and the Warburg Pincus
Emerging Growth - Common Shares.
The contract owners' equity is affected by the investment results of each
fund, equity transactions by contract owners and certain contract expenses (see
note 2). The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their contracts and
exclude any purchase payments for fixed dollar benefits, the latter being
included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing net
asset value per share at December 31, 1995. The cost of investments sold is
determined on a specific identification basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations
of the Company which is taxed as a life insurance company under the Internal
Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments
received from the contract owners. However, if any part of the contract value of
such contracts is surrendered, the Company will, with certain exceptions, deduct
from a contract owner's contract value a contingent deferred sales charge. For
contracts issued prior to January 1, 1993, the contingent deferred sales charge
will be equal to 5% of the lesser of the total of all purchase payments made
within 96 months prior to the date of the request for surrender or the amount
surrendered. For contracts issued on or after January 1, 1993, the Company will
deduct a contingent deferred sales charge not to exceed 7% of the lesser of
purchase payments or the amount surrendered, such charge declining 1% per year,
to 0%, after the purchase payment has been held in the contract for 84 months.
No sales charges are deducted on redemptions used to purchase units in the fixed
investment options of the Company.
The following administrative charges are deducted by the Company: (a) an
annual contract maintenance charge of $30, with certain exceptions, which is
satisfied by surrendering units; and (b) for contracts issued prior to January
1, 1993, a charge for mortality and expense risk assessed through the daily unit
value calculation equal to an annual rate of 0.80% and 0.50%, respectively; for
contracts issued on or after January 1, 1993, a mortality risk charge, an
expense risk charge and an administration charge assessed through the daily unit
value calculation equal to an annual rate of 0.80%, 0.45% and 0.05%,
respectively.
<PAGE> 7
(3) SCHEDULE I
Schedule I presents the components of the change in the unit values,
which are the basis for contract owners' equity. This schedule is presented in
the following format:
- Beginning unit value - Jan. 1
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying
mutual funds.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
- Contract charges
(This amount reflects the decrease in the unit value due to the
mortality risk charge, expense risk charge and administration
charge discussed in note 2.)
- Ending unit value - Dec. 31
- Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
<PAGE> 8
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1995,
for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
Contract owners' equity represented by: Units Unit Value
------- ----------
<S> <C> <C>
Contracts in accumulation phase:
Delaware Group Delchester High-Yield
Bond Fund, Inc. - Delchester Fund
Institutional Class:
Tax qualified...................................... 65,214 $12.257125 $ 799,336
Dreyfus A Bonds Plus, Inc.:
Tax qualified...................................... 53,005 10.819193 573,471
Dreyfus S&P 500 Index Fund:
Tax qualified...................................... 33,323 14.505515 483,367
The Dreyfus Third Century Fund, Inc.:
Tax qualified...................................... 12,292 12.829548 157,701
The Evergreen Total Return Fund - Class Y:
Tax qualified...................................... 60,789 12.594984 765,636
Fidelity Asset Manager(TM):
Tax qualified...................................... 198,546 11.183603 2,220,460
Fidelity Capital & Income Fund:
Tax qualified...................................... 37,608 37.550944 1,412,216
Fidelity Equity-Income Fund:
Tax qualified...................................... 263,736 46.285491 12,207,150
Fidelity Magellan(R) Fund:
Tax qualified...................................... 563,859 16.158074 9,110,875
Fidelity Puritan Fund:
Tax qualified...................................... 301,466 14.410892 4,344,394
Fidelity VIP - High Income Portfolio:
Tax qualified...................................... 22,970 19.364421 444,801
Janus Twenty Fund:
Tax qualified...................................... 96,594 11.699046 1,130,058
MFS(R) World Governments Fund - Class A:
Tax qualified...................................... 34,015 35.454983 1,206,001
Nationwide(R) Bond Fund:
Tax qualified...................................... 38,843 37.782872 1,467,600
Non-tax qualified.................................. 622 37.620900 23,400
Nationwide(R) Fund:
Tax qualified...................................... 30,473 57.857937 1,763,105
Non-tax qualified.................................. 258 60.264917 15,548
Nationwide(R) Growth Fund:
Tax qualified...................................... 48,841 65.471148 3,197,676
Non-tax qualified.................................. 120 69.129314 8,296
Nationwide(R) Money Market Fund:
Tax qualified - Pre 12/25/82....................... 49,996 23.797066 1,189,758
Tax qualified...................................... 424,693 18.898613 8,026,109
Non-tax qualified.................................. 1,323 23.947460 31,682
Neuberger & Berman Guardian Fund:
Tax qualified...................................... 139,046 12.571028 1,747,951
Neuberger & Berman Limited Maturity Bond Fund:
Tax qualified...................................... 91,976 10.735070 987,369
Neuberger & Berman Partners Fund:
Tax qualified...................................... 73,504 14.924653 1,097,022
Oppenheimer Global Fund - Class A:
Tax qualified...................................... 160,871 15.538850 2,499,750
Phoenix Balanced Fund Series - Class A:
Tax qualified...................................... 23,786 11.373217 270,523
Strong Total Return Fund, Inc.:
Tax qualified...................................... 41,291 14.893186 614,955
Templeton Foreign Fund - Class I:
Tax qualified...................................... 69,083 11.097523 766,650
Twentieth Century Growth Investors:
Tax qualified...................................... 231,124 45.274141 10,463,941
Twentieth Century International Equity:
Tax qualified...................................... 25,477 11.748911 299,327
Twentieth Century Ultra Investors:
Tax qualified...................................... 266,570 12.289075 3,275,899
Twentieth Century U.S. Governments Short-Term:
Tax qualified...................................... 216,620 20.449954 4,429,869
======= ==========
Reserves for annuity contracts in payout phase:
Tax qualified...................................... 194,480
-----------
$77,226,376
===========
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 9
- --------------------------------------------------------------------------------
SCHEDULE I
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
DeHyBd DryABds Dry500Ix Dry3dCen EvTotRet FidAsMgr FidCapIn FidEqInc
------ ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995***
Beginning unit value - Jan. 1 $10.867271 9.110600 10.749166 9.570659 10.301799 9.589367 32.589111 35.576037
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.215468 .658102 .397253 .897413 .668749 .319835 3.427571 2.721500
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .327407 1.181188 3.524795 2.507797 1.773798 1.408821 2.006467 8.520244
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.153021) (.130697) (.165699) (.146321) (.149362) (.134420) (.472205) (.532290)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $12.257125 10.819193 14.505515 12.829548 12.594984 11.183603 37.550944 46.285491
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 13% 19% 35% 34% 22% 17% 15% 30%
===================================================================================================================================
1994
Beginning unit value - Jan. 1 $11.511092 10.000000 10.819026 10.477293 11.153183 10.415849 34.612981 35.955883
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.272604 .673864 1.169814 1.340681 .771284 .386944 2.899199 3.474735
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.770117) (1.452714) (1.099729) (2.117415) (1.484673) (1.082752) (4.479225) (3.384084)
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.146308) ( .110550) (.139945) (.129900) (.137995) (.130674) (.443844) (.470497)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.867271 9.110600 10.749166 9.570659 10.301799 9.589367 32.589111 35.576037
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (6)% (9)%(b) (1)% (9)% (8)% (8)% (6)% (1)%
===================================================================================================================================
1993
Beginning unit value - Jan. 1 $10.000000 ** 10.000000 10.000000 10.000000 10.000000 28.076548 30.029661
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.182306 .620996 .763556 1.208371 .409348 2.810534 1.323037
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .471495 .332942 (.155922) .084471 .034341 4.147502 5.040278
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.142709) (.134912) (.130341) (.139659) (.027840) (.421603) (.437093)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $11.511092 10.819026 10.477293 11.153183 10.415849 34.612981 35.955883
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 15%(b) 8%(b) 5%(b) 12%(b) 4%(b) 23% 20%
===================================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not utilized for the entire year indicated.
**This investment option was not available or was not utilized.
***No other investment options were being utilized.
<PAGE> 10
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
FidMgln FidPurtn FidHiInc Jan20Fd MFSWdGvt NWBdFd NWFund
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995**
Beginning unit value - Jan. 1 $11.964387 12.020413 16.267014 8.701036 31.104159 30.832258 45.095466
- ----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .938243 .761762 1.177771 1.991385 4.432437 2.340919 3.894595
- ----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.445891 1.800691 2.155057 1.142737 .359301 5.062302 9.527720
- ----------------------------------------------------------------------------------------------------------------------
Contract charges (.190447) (.171974) (.235421) (.136112) (.440914) (.452607) (.659844)
- ----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $16.158074 14.410892 19.364421 11.699046 35.454983 37.782872 57.857937
- ----------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 35% 20% 19% 34% 14% 23% 28%
======================================================================================================================
1994
Beginning unit value - Jan. 1 $12.346838 11.972512 16.739460 9.451097 33.728667 33.991130 45.422888
- ----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .480494 .964375 1.533862 .025710 1.658769 2.317590 4.420863
- ----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.704119) (.757623) (1.790091) (.657508) (3.874555) (5.061696) (4.160340)
- ----------------------------------------------------------------------------------------------------------------------
Contract charges (.158826) (.158851) (.216217) (.118263) (.408722) (.414766) (.587945)
- ----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $11.964387 12.020413 16.267014 8.701036 31.104159 30.832258 45.095466
- ----------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (3)% 0% (3)% (8)% (8)% (9)% (1)%
======================================================================================================================
1993
Beginning unit value - Jan. 1 $10.000000 10.000000 14.073333 10.000000 28.864451 31.104546 43.104048
- ----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.173742 1.451507 1.157225 .264912 3.190912 2.458273 3.251045
- ----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.321301 .666192 1.712047 (.787472) 2.083311 .864801 (.371871)
- ----------------------------------------------------------------------------------------------------------------------
Contract charges (.148205) (.145187) (.203145) (.026343) (.410007) (.436490) (.560334)
- ----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $12.346838 11.972512 16.739460 9.451097 33.728667 33.991130 45.422888
- ----------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 23%(b) 20%(b) 19% (5)%(b) 17% 9% 5%
======================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not utilized for the entire year indicated.
**No other investment options were being utilized.
<PAGE> 11
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
NWMyMkt
NWGroFd Pre 12/25/82 NWMyMkt NBGuard NBLtdMat NBPartFd OppGlob
--------- ------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995***
Beginning unit value - Jan. 1 $51.535806 22.850271 18.146709 9.640402 9.833352 11.183371 13.503390
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 6.923629 1.251864 .994176 .546753 .635595 1.728556 .955752
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 7.791689 .000000 .000000 2.533695 .401069 2.184589 1.269343
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.779976) (.305069) (.242272) (.149822) (.134946) (.171863) (.189635)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $65.471148 23.797066 18.898613 12.571028 10.735070 14.924653 15.538850
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 27% 4% 4% 30% 9% 33% 15%
=========================================================================================================================
1994
Beginning unit value - Jan. 1 $51.458079 22.315407 17.721943 10.000000 9.995028 11.548721 14.119303
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.956402 .829315 .658609 .249418 .555641 .945341 1.418589
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.208860) .000000 .000000 (.492915) (.588488) (1.162325) (1.850696)
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.669815) (.294451) (.233843) (.116101) (.128829) (.148366) (.183806)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $51.535806 22.850271 18.146709 9.640402 9.833352 11.183371 13.503390
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 0% 2% 2% (4)%(b) (2)% (3)% (4)%
=========================================================================================================================
1993
Beginning unit value - Jan. 1 $46.832151 22.042019 17.504831 ** 10.000000 10.000000 10.000000
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.830294 .563931 .447841 .190065 1.163476 1.251857
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.434588 .000000 .000000 (.162079) .524641 3.014957
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.638954) (.290543) (.230729) (.032958) (.139396) (.147511)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $51.458079 22.315407 17.721943 9.995028 11.548721 14.119303
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 10% 1% 1% 0%(b) 15%(b) 41%(b)
=========================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance
charge discussed in note 2; and
(b) This investment option was not utilized for the entire year
indicated.
** This investment option was not available or was not utilized.
*** No other investment options were being utilized.
<PAGE> 12
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
PhxBalFd StTotRet TemForFd TCGroInv TCIntlEq TCUltra TCUSGvt
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1995***
Beginning unit value - Jan. 1 $ 9.338434 11.881033 10.000000 38.113717 10.000000 9.043121 18.748399
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .913359 .793239 .700873 6.277505 .010869 .581551 1.086234
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.255938 2.394151 .523675 1.457594 1.867440 2.805900 .873119
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.134514) (.175237) (.127025) (.574675) (.129398) (.141497) (.257798)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $11.373217 14.893186 11.097523 45.274141 11.748911 12.289075 20.449954
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 22% 25% 11%(b) 19% 17%(b) 36% 9%
=========================================================================================================================
1994
Beginning unit value - Jan. 1 $10.000000 12.205201 ** 39.197771 ** 9.505758 19.087872
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .295350 .172665 5.656730 .283163 .888205
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.843207) (.340340) (6.232359) (.626504) (.981660)
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.113709) (.156493) (.508425) (.119296) (.246018)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $9.338434 11.881033 38.113717 9.043121 18.748399
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (7)%(b) (3)% (3)% (5)% (2)%
=========================================================================================================================
1993
Beginning unit value - Jan. 1 ** $10.000000 ** 38.275689 ** 10.000000 18.563845
- -------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .191064 4.379740 .000000 .652799
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.158921 (2.963789) (.468221) .119394
- -------------------------------------------------------------------------------------------------------------------------
Contract charges (.144784) (.493869) (.026021) (.248166)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $12.205201 39.197771 9.505758 19.087872
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 22%(b) 2% (5)%(b) 3%
=========================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance
charge discussed in note 2; and
(b) This investment option was not utilized for the entire year
indicated.
** This investment option was not available or was not utilized.
*** No other investment options were being utilized.
- --------------------------------------------------------------------------------
<PAGE> 13
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
NWBdFd NWFund NWGroFd NWMyMkt
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $30.700082 46.971513 54.415339 22.994681
- --------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 2.330893 4.056617 7.310483 1.259777
- --------------------------------------------------------------------------------------------------
Unrealized gain (loss) 5.040599 9.924079 8.227039 .000000
- --------------------------------------------------------------------------------------------------
Contract charges (.450674) (.687292) (.823547) (.306998)
- --------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $37.620900 60.264917 69.129314 23.947460
- --------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 23% 28% 27% 4%
==================================================================================================
1994
Beginning unit value - Jan. 1 $33.845410 47.312558 54.333269 22.456439
- --------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 2.307668 4.604779 2.065716 .834547
- --------------------------------------------------------------------------------------------------
Unrealized gain (loss) (5.040000) (4.333421) (1.276404) .000000
- --------------------------------------------------------------------------------------------------
Contract charges (.412996) (.612403) (.707242) (.296305)
- --------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $30.700082 46.971513 54.415339 22.994681
- --------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* (9)% (1)% 0% 2%
==================================================================================================
1993
Beginning unit value - Jan. 1 $30.971200 44.897247 49.448867 22.181323
- --------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 2.447737 3.386294 1.932560 .567483
- --------------------------------------------------------------------------------------------------
Unrealized gain (loss) .861084 (.387333) 3.626496 .000000
- --------------------------------------------------------------------------------------------------
Contract charges (.434611) (.583650) (.674654) (.292367)
- --------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $33.845410 47.312558 54.333269 22.456439
- --------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 9% 5% 10% 1%
==================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as contract charges do not
include the annual contract maintenance charge discussed in note 2.
See note 3.
- -------------------------------------------------------------------------------
<PAGE> 53
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Nationwide Life Insurance Company:
We have audited the consolidated financial statements of Nationwide Life
Insurance Company (a wholly owned subsidiary of Nationwide Corporation) and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Participating insurance and the related surplus are discussed in note 12. The
Company and its counsel are of the opinion that the ultimate ownership of the
participating surplus in excess of the contemplated equitable policyholder
dividends belongs to the shareholder. The accompanying consolidated financial
statements are presented on such basis.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
In 1994, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
In 1993, the Company adopted the provisions of SFAS No. 109, Accounting for
Income Taxes and SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions.
KPMG Peat Marwick LLP
Columbus, Ohio
February 26, 1996
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Balance Sheets
December 31, 1995 and 1994
(000's omitted)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ----------------- ----------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $13,438,630 in 1995; $8,318,865 in 1994) $ 14,167,377 8,045,906
Equity securities (cost $27,362 in 1995; $18,372 in 1994) 33,718 24,713
Fixed maturities held-to-maturity, at amortized cost (fair value $3,602,310 in 1994) - 3,688,787
Mortgage loans on real estate 4,786,599 4,222,284
Real estate 239,089 252,681
Policy loans 370,908 340,491
Other long-term investments 67,280 63,914
Short-term investments (note 13) 45,732 131,643
----------- -----------
19,710,703 16,770,419
----------- -----------
Cash 10,485 7,436
Accrued investment income 239,881 220,540
Deferred policy acquisition costs 1,094,195 1,064,159
Deferred Federal income tax -- 36,515
Other assets 795,169 790,603
Assets held in Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
$40,614,111 31,112,133
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Future policy benefits and claims (notes 6 and 8) 18,200,128 16,321,461
Policyholders' dividend accumulations 353,554 338,058
Other policyholder funds 71,155 72,770
Accrued Federal income tax (note 7):
Current 34,064 13,126
Deferred 238,877 -
----------- -----------
272,941 13,126
----------- -----------
Other liabilities 284,143 235,778
Liabilities related to Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
37,945,599 29,203,654
----------- -----------
Shareholder's equity (notes 3, 4, 5, 7, 12 and 13):
Capital shares, $1 par value. Authorized 5,000 shares, issued and
outstanding 3,815 shares 3,815 3,815
Additional paid-in capital 673,782 622,753
Retained earnings 1,606,607 1,401,579
Unrealized gains (losses) on securities available-for-sale, net 384,308 (119,668)
----------- -----------
2,668,512 1,908,479
----------- -----------
Commitments and contingencies (notes 9 and 15)
$40,614,111 31,112,133
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues (note 16):
Traditional life insurance premiums $ 274,957 209,538 215,715
Accident and health insurance premiums 509,658 324,524 312,655
Universal life and investment product policy charges 307,676 239,021 188,057
Net investment income (note 5) 1,482,980 1,289,501 1,204,426
Realized gains (losses) on investments (notes 5 and 13) 836 (16,384) 113,673
---------- ---------- ----------
2,576,107 2,046,200 2,034,526
---------- ---------- ----------
Benefits and expenses:
Benefits and claims 1,656,287 1,279,763 1,236,906
Provision for policyholders' dividends on participating policies (note 12) 48,074 46,061 53,189
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Other operating costs and expenses 458,970 352,402 329,396
---------- ---------- ----------
2,256,375 1,772,970 1,721,625
---------- ---------- ----------
Income before Federal income tax expense and cumulative effect of
changes in accounting principles 319,732 273,230 312,901
---------- ---------- ----------
Federal income tax expense (note 7):
Current 103,464 79,847 75,124
Deferred 3,790 9,657 31,634
---------- ---------- ----------
107,254 89,504 106,758
---------- ---------- ----------
Income before cumulative effect of changes in accounting principles 212,478 183,726 206,143
Cumulative effect of changes in accounting principles, net (note 3) -- -- 5,365
---------- ---------- ----------
Net income $ 212,478 183,726 211,508
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Additional on securities Total
Capital paid-in Retained available-for- shareholder's
shares capital earnings sale, net equity
----------- ----------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
1993:
Balance, beginning of year $ 3,815 311,753 1,024,150 90,524 1,430,242
Capital contributions -- 111,000 -- -- 111,000
Dividends paid to shareholder -- -- (17,805) -- (17,805)
Net income -- -- 211,508 -- 211,508
Unrealized losses on equity securities, net -- -- -- (83,777) (83,777)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 422,753 1,217,853 6,747 1,651,168
========== ========== ========= ========== ==========
1994:
Balance, beginning of year 3,815 422,753 1,217,853 6,747 1,651,168
Capital contribution -- 200,000 -- -- 200,000
Net income -- -- 183,726 -- 183,726
Adjustment for change in accounting for
certain investments in debt and equity
securities, net (note 3) -- -- -- 216,915 216,915
Unrealized losses on securities available-
for-sale, net -- -- -- (343,330) (343,330)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 622,753 1,401,579 (119,668) 1,908,479
========== ========== ========== ========== ==========
1995:
Balance, beginning of year 3,815 622,753 1,401,579 (119,668) 1,908,479
Capital contribution (note 13) -- 51,029 -- (4,111) 46,918
Dividends paid to shareholder -- -- (7,450) -- (7,450)
Net income -- -- 212,478 -- 212,478
Unrealized gains on securities available-
for-sale, net -- -- -- 508,087 508,087
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 673,782 1,606,607 384,308 2,668,512
========== ========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
-------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 212,478 183,726 211,508
Adjustments to reconcile net income to net cash provided by operating
activities:
Capitalization of deferred policy acquisition costs (349,456) (264,434) (191,994)
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Amortization and depreciation 10,319 6,207 11,156
Realized losses (gains) on invested assets, net 717 15,949 (113,648)
Deferred Federal income tax expense (benefit) 4,023 (2,166) (6,006)
Increase in accrued investment income (19,341) (29,654) (4,218)
Increase in other assets (3,227) (112,566) (549,277)
Increase in policy liabilities 198,200 1,038,641 509,370
Increase in policyholders' dividend accumulations 15,496 15,372 17,316
Increase in accrued Federal income tax payable 20,938 832 16,838
Increase in other liabilities 48,365 17,826 26,958
Other, net (20,556) (19,303) (11,745)
----------- ----------- ------------
Net cash provided by operating activities 211,000 945,174 18,392
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 706,442 579,067 --
Proceeds from sale of securities available-for-sale 131,420 247,876 247,502
Proceeds from maturity of fixed maturities held-to-maturity 633,173 516,003 1,192,093
Proceeds from sale of fixed maturities -- -- 33,959
Proceeds from repayments of mortgage loans on real estate 215,134 220,744 146,047
Proceeds from sale of real estate 48,477 46,713 23,587
Proceeds from repayments of policy loans and sale of other invested assets 79,620 134,998 59,643
Cost of securities available-for-sale acquired (2,232,047) (2,569,672) (12,550)
Cost of fixed maturities held-to-maturity acquired (669,449) (675,835) (2,016,831)
Cost of mortgage loans on real estate acquired (821,078) (627,025) (475,336)
Cost of real estate acquired (10,970) (15,962) (8,827)
Policy loans issued and other invested assets acquired (92,904) (118,012) (76,491)
----------- ----------- ------------
Net cash used in investing activities (2,012,182) (2,261,105) (887,204)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from capital contributions 46,918 200,000 111,000
Dividends paid to shareholder (7,450) -- (17,805)
Increase in universal life and investment product account balances 3,202,135 3,640,958 2,249,740
Decrease in universal life and investment product account balances (1,523,283) (2,449,580) (1,458,504)
----------- ----------- -----------
Net cash provided by financing activities 1,718,320 1,391,378 884,431
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (82,862) 75,447 15,619
Cash and cash equivalents, beginning of year 139,079 63,632 48,013
----------- ----------- -----------
Cash and cash equivalents, end of year $ 56,217 139,079 63,632
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(000's omitted)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Nationwide Life Insurance Company (NLIC) is a wholly owned subsidiary of
Nationwide Corporation (Corp.). Wholly-owned subsidiaries of NLIC include
Nationwide Life and Annuity Insurance Company (NLAIC) (formerly known as
Financial Horizons Life Insurance Company), West Coast Life Insurance
Company (WCLIC), Employers Life Insurance Company of Wausau and
subsidiaries (ELICW), National Casualty Company (NCC) and Nationwide
Financial Services, Inc. (NFS). NLIC and its subsidiaries are
collectively referred to as "the Company."
NLIC, NLAIC, WCLIC and ELICW are life and accident and health insurers
and NCC is a property and casualty insurer. The Company is licensed in
all 50 states, the District of Columbia, the Virgin Islands and Puerto
Rico. The Company offers a full range of life insurance, health insurance
and annuity products through exclusive agents, brokers and other
distribution channels and is subject to competition from other insurers
throughout the United States. The Company is subject to regulation by the
Insurance Departments of states in which it is licensed, and undergoes
periodic examinations by those departments.
The following is a description of the most significant risks facing
life and health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce insurer
profits, new legal theories or insurance company insolvencies through
guaranty fund assessments may create costs for the insurer beyond
those currently recorded in the consolidated financial statements. The
Company mitigates this risk by offering a wide range of products and
by operating throughout the United States, thus reducing its exposure
to any single product or jurisdiction, and also by employing
underwriting practices which identify and minimize the adverse impact
of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by the
Company will default or that other parties, including reinsurers,
which owe the Company money, will not pay. The Company minimizes this
risk by adhering to a conservative investment strategy, by maintaining
sound reinsurance and credit and collection policies and by
providing for any amounts deemed uncollectible.
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This change
in rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent
that liabilities come due more quickly than assets mature, an insurer
would have to borrow funds or sell assets prior to maturity and
potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities. See note 4.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities as of the
date of the consolidated financial statements and the reported amounts of
revenues and expenses for the reporting period. Actual results could differ
significantly from those estimates.
The most significant estimates include those used in determining deferred
policy acquisition costs, valuation allowances for mortgage loans on real
estate and real estate investments and the liability for future policy benefits
and claims. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
(a) CONSOLIDATION POLICY
The December 31, 1995 consolidated financial statements include the
accounts of NLIC and its wholly owned subsidiaries NLAIC, WCLIC, ELICW, NCC
and NFS. The December 31, 1994 and 1993 consolidated financial statements
include the accounts of NLIC, NLAIC, WCLIC, NCC and NFS. The December 31,
1994 consolidated balance sheet also includes the accounts of ELICW, which
was acquired by NLIC effective December 31, 1994. See Note 13. All
significant intercompany balances and transactions have been eliminated.
(b) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities and
equity securities as either held-to-maturity, available-for-sale or
trading. Fixed maturity securities are classified as held-to-maturity when
the Company has the positive intent and ability to hold the securities to
maturity and are stated at amortized cost. Fixed maturity securities not
classified as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the unrealized gains
and losses, net of adjustments to deferred policy acquisition costs and
deferred Federal income tax, reported as a separate component of
shareholder's equity. The adjustment to deferred policy acquisition costs
represents the change in amortization of deferred policy acquisition costs
that would have been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed maturity
securities classified as held-to-maturity or trading as of
December 31, 1995.
Mortgage loans on real estate are carried at the unpaid principal balance
less valuation allowances. The Company provides valuation allowances for
impairments of mortgage loans on real estate based on a review by portfolio
managers. The measurement of impaired loans is based on the present value
of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the fair value of the collateral, if
the loan is collateral dependent. Loans in foreclosure and loans considered
to be impaired are placed on non-accrual status. Interest received on
non-accrual status mortgage loans on real estate are included in interest
income in the period received.
Real estate is carried at cost less accumulated depreciation and valuation
allowances. Other long-term investments are carried on the equity basis,
adjusted for valuation allowances.
Realized gains and losses on the sale of investments are determined on the
basis of specific security identification. Estimates for valuation
allowances and other than temporary declines are included in realized gains
and losses on investments.
In March, 1995, the Financial Accounting Standards Board (FASB) issued
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121 - ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
(SFAS 121). SFAS 121 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
The statement is effective for fiscal years beginning after December 15,
1995 and earlier application is permitted. Previously issued consolidated
financial statements shall not be restated. The Company will adopt SFAS 121
in 1996 and the impact on the consolidated financial statements is not
expected to be material.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(c) REVENUES AND BENEFITS
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums and
benefits and consist primarily of whole life, limited-payment life, term
life and certain annuities with life contingencies. Premiums for
traditional life insurance products are recognized as revenue when due.
Benefits and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This association
is accomplished by the provision for future policy benefits and the
deferral and amortization of policy acquisition costs.
UNIVERSAL LIFE AND INVESTMENT PRODUCTS: Universal life products include
universal life, variable universal life and other interest-sensitive life
insurance policies. Investment products consist primarily of individual and
group deferred annuities, annuities without life contingencies and
guaranteed investment contracts. Revenues for universal life and investment
products consist of asset fees, cost of insurance, policy administration
and surrender charges that have been earned and assessed against policy
account balances during the period. Policy benefits and claims that are
charged to expense include benefits and claims incurred in the period in
excess of related policy account balances and interest credited to policy
account balances.
ACCIDENT AND HEALTH INSURANCE: Accident and health insurance premiums
are recognized as revenue over the terms of the policies. Policy claims are
charged to expense in the period that the claims are incurred.
(d) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For traditional life and
individual health insurance products, these deferred policy acquisition
costs are predominantly being amortized with interest over the premium
paying period of the related policies in proportion to the ratio of actual
annual premium revenue to the anticipated total premium revenue. Such
anticipated premium revenue was estimated using the same assumptions as
were used for computing liabilities for future policy benefits. For
universal life and investment products, deferred policy acquisition costs
are being amortized with interest over the lives of the policies in
relation to the present value of estimated future gross profits from
projected interest margins, asset fees, cost of insurance, policy
administration and surrender charges. For years in which gross profits are
negative, deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs are
adjusted to reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale as described in note 2(b).
(e) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the consolidated statements of income and cash
flows except for the fees the Company receives for administrative services
and risks assumed.
(f) FUTURE POLICY BENEFITS
Future policy benefits for traditional life and individual health
insurance policies have been calculated using a net level premium method
based on estimates of mortality, morbidity, investment yields and
withdrawals which were used or which were being experienced at the time the
policies were issued, rather than the assumptions prescribed by state
regulatory authorities. See note 6.
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been calculated
based on participants' contributions plus interest credited less applicable
contract charges.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Future policy benefits and claims for collectively renewable long-term
disability policies (primarily discounted at 5.2%) and group long-term
disability policies (primarily discounted at 5.5%) are the present value of
amounts not yet due on reported claims and an estimate of amounts to be
paid on incurred but unreported claims. The impact of reserve discounting
is not material. Future policy benefits and claims on other
group health insurance policies are not discounted.
(g) PARTICIPATING BUSINESS
Participating business represents approximately 45% (45% in 1994 and
48% in 1993) of the Company's ordinary life insurance in force, 72% (72% in
1994 and 1993) of the number of policies in force, and 39% (41% in 1994 and
45% in 1993) of life insurance premiums. The provision for policyholder
dividends is based on current dividend scales. Future dividends are
provided for ratably in future policy benefits based on dividend scales in
effect at the time the policies were issued. Dividend scales are approved
by the Board of Directors.
Income attributable to participating policies in excess of policyholder
dividends is accounted for as belonging to the shareholder. See note 12.
(h) FEDERAL INCOME TAX
NLIC, NLAIC, WCLIC and NCC file a consolidated Federal income tax
return with Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Corp. Through 1994, ELICW filed a consolidated Federal
income tax return with Employers Insurance of Wausau A Mutual Company.
Beginning in 1995, ELICW files a separate Federal income tax return.
In 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES, which required a change
from the deferred method of accounting for income tax of APB Opinion 11 to
the asset and liability method of accounting for income tax. Under the
asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under this method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to
reduce the deferred tax assets to the amounts expected to be realized.
The Company has reported the cumulative effect of the change in method
of accounting for income tax in the 1993 consolidated statement of income.
See note 3.
(i) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense
accounts. Assets and liabilities related to reinsurance ceded are reported
on a gross basis.
(j) CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all short-term investments with original maturities of three
months or less to be cash equivalents.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(k) RECLASSIFICATION
Certain items in the 1994 and 1993 consolidated financial
statements have been reclassified to conform to the 1995
presentation.
(3) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, the Company changed its method of
accounting for certain investments in debt and equity securities in
connection with the issuance of STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 115 - ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. As of January 1, 1994, the Company classified fixed
maturity securities with amortized cost and fair value of $6,593,844
and $7,024,736, respectively, as available-for-sale and recorded the
securities at fair value. Previously, these securities were recorded
at amortized cost. The effect as of January 1, 1994 has been recorded
as a direct credit to shareholder's equity as follows:
<TABLE>
<CAPTION>
<S> <C>
Excess of fair value over amortized cost of fixed maturity
securities available-for-sale $ 430,892
Adjustment to deferred policy acquisition costs (97,177)
Deferred Federal income tax (116,800)
---------
$ 216,915
=========
During 1993, the Company adopted accounting principles in connection
with the issuance of two accounting standards by the FASB. The effect
as of January 1, 1993, the date of adoption, has been recognized in
the 1993 consolidated statement of income as the cumulative effect of
changes in accounting principles, as follows:
Asset/liability method of recognizing income tax (note 2(h)) $ 26,344
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $11,296) (note 11) (20,979)
--------
$ 5,365
========
</TABLE>
(4) BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance
with GAAP. Annual Statements for NLIC and NLAIC, WCLIC, ELICW and NCC,
filed with the Department of Insurance of the State of Ohio (the
Department), California Department of Insurance, Wisconsin Insurance
Department and Michigan Bureau of Insurance, respectively, are prepared
on the basis of accounting practices prescribed or permitted by such
regulatory authorities. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
The statutory capital shares and surplus of NLIC as reported to
regulatory authorities as of December 31, 1995, 1994 and 1993 was
$1,363,031, $1,262,861 and $992,631, respectively. The statutory net
income of NLIC as reported to regulatory authorities for the years
ended December 31, 1995, 1994 and 1993 was $86,529, $76,532 and
$185,943, respectively.
<PAGE> 11
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(5) INVESTMENTS
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 772,589 674,346 --
Equity securities 1,436 550 7,230
Fixed maturities held-to-maturity 232,692 193,009 800,255
Mortgage loans on real estate 410,965 376,783 364,810
Real estate 39,222 40,280 39,684
Short-term investments 12,249 6,990 5,080
Other 61,701 42,831 33,832
---------- ---------- ----------
Total investment income 1,530,854 1,334,789 1,250,891
Less investment expenses 47,874 45,288 46,465
---------- ---------- ----------
Net investment income $1,482,980 1,289,501 1,204,426
========== ========== ==========
</TABLE>
An analysis of realized gains (losses) on investments, net of
valuation allowances, by investment type follows for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- --------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 6,792 (7,120) --
Equity securities 3,435 1,427 129,728
Fixed maturities -- -- 20,225
Mortgage loans on real estate (7,312) (20,462) (28,241)
Real estate and other (2,079) 9,771 (8,039)
-------- -------- --------
$ 836 (16,384) 113,673
======== ======== ========
</TABLE>
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1995 1994
--------------- -------------
<S> <C> <C>
Gross unrealized gains (losses) $ 735,103 (266,618)
Adjustment to deferred policy acquisition costs (143,851) 82,525
Deferred Federal income tax (206,944) 64,425
--------- ---------
$ 384,308 (119,668)
========= =========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturities held-to-maturity
follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 1,001,706 (703,851) --
Equity securities 15 (1,990) (128,837)
Fixed maturities held-to-maturity 86,477 (421,427) 223,392
----------- ----------- -----------
$ 1,088,198 (1,127,268) 94,555
=========== =========== ===========
</TABLE>
<PAGE> 12
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of securities available-for-sale
were as follows as of December 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
-------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 438,109 36,714 (53) 474,770
Obligations of states and political subdivisions 9,742 1,252 (1) 10,993
Debt securities issued by foreign governments 162,442 9,641 (66) 172,017
Corporate securities 8,902,494 524,796 (30,561) 9,396,729
Mortgage-backed securities 3,925,843 196,645 (9,620) 4,112,868
--------- ----------- ----------- -----------
Total fixed maturities 13,438,630 769,048 (40,301) 14,167,377
Equity securities 27,362 6,441 (85) 33,718
---------- ----------- ----------- -----------
$13,465,992 775,489 (40,386) 14,201,095
=========== =========== ============ ===========
</TABLE>
The amortized cost and estimated fair value of securities available-for-sale
and fixed maturities held-to-maturity were as follows as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 393,156 1,794 (18,941) 376,009
Obligations of states and political subdivisions 2,202 55 (21) 2,236
Debt securities issued by foreign governments 177,910 872 (9,205) 169,577
Corporate securities 4,201,738 50,405 (128,698) 4,123,445
Mortgage-backed securities 3,543,859 18,125 (187,345) 3,374,639
---------- ---------- ---------- ---------
Total fixed maturities 8,318,865 71,251 (344,210) 8,045,906
Equity securities 18,372 6,637 (296) 24,713
---------- ---------- ---------- ---------
$8,337,237 77,888 (344,506) 8,070,619
========== ========= ========== =========
FIXED MATURITY SECURITIES HELD-TO-MATURITY
Obligations of states and political subdivisions $ 11,613 92 (255) 11,450
Debt securities issued by foreign governments 16,131 111 (39) 16,203
Corporate securities 3,661,043 34,180 (120,566) 3,574,657
---------- ---------- ---------- ---------
$3,688,787 34,383 (120,860) 3,602,310
========== ========== ========== =========
</TABLE>
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale as of December 31, 1995, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
----------- ------------
<S> <C> <C>
FIXED MATURITY SECURITIES AVAILABLE-FOR-SALE
- --------------------------------------------
Due in one year or less $ 641,490 647,639
Due after one year through five years 5,365,703 5,623,126
Due after five years through ten years 2,477,457 2,609,262
Due after ten years 1,028,137 1,174,482
----------- -----------
9,512,787 10,054,509
Mortgage-backed securities 3,925,843 4,112,868
----------- -----------
$13,438,630 14,167,377
=========== ===========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1995 and 1994
were $131,420 and $247,876, respectively, while proceeds from sales of
investments in fixed maturity securities during 1993 were $33,959. Gross gains
of $7,197 ($3,406 in 1994 and $2,413 in 1993) and gross losses of $2,309
($21,866 in 1994 and $39 in 1993) were realized on those sales.
During 1995, the Company transferred fixed maturity securities classified as
held-to-maturity with amortized cost of $27,929 to available-for-sale
securities due to evidence of a significant deterioration in the issuer's
creditworthiness. The transfer of those fixed maturity securities resulted in
a gross unrealized loss of $4,285.
As permitted by the FASB's Special Report, A GUIDE TO IMPLEMENTATION OF
STATEMENT 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, issued in November, 1995, the Company transferred all of its fixed
maturity securities previously classified as held-to-maturity to
available-for-sale. As of December 14, 1995, the date of transfer, the fixed
maturity securities had amortized cost of $3,705,644, resulting in a gross
unrealized gain of $171,531.
Investments that were non-income producing for the twelve month period
preceding December 31, 1995 amounted to $28,958 ($11,513 for 1994) and
consisted of $8,228 (none in 1994) in fixed maturity securities, $14,740
($11,111 in 1994) in real estate and $5,990 ($402 in 1994) in other long-term
investments.
Real estate is presented at cost less accumulated depreciation of $30,931 in
1995 ($29,275 in 1994) and valuation allowances of $26,250 in 1995 ($27,330 in
1994).
Other long-term investments are presented net of valuation allowances of $457
as of December 31, 1995. There were no such valuation allowances as of December
31, 1994.
As of December 31, 1995, the recorded investment of mortgage loans on real
estate considered to be impaired (under STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN as amended
by STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 118, ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN - INCOME RECOGNITION AND DISCLOSURE) was $44,995,
which includes $23,975 of impaired mortgage loans on real estate for which the
related valuation allowance was $5,276 and $21,020 of impaired mortgage loans
on real estate for which there was no valuation allowance. During 1995, the
average recorded investment in impaired mortgage loans on real estate was
approximately $22,621 and interest income recognized on those loans was $416,
which is equal to interest income recognized using a cash-basis method of
income recognition.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the year ended December 31, 1995:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Allowance, beginning year $ 47,892
Additions charged to operations 7,653
Direct write-downs charged against the allowance (4,850)
--------
Allowance, end of year $ 50,695
========
</TABLE>
Foresclosures of mortgage loans on real estate were $37,187 in 1994 and
mortgage loans on real estate in process of foreclosure or in-substance
foreclosed as of December 31, 1994 totaled $19,878, which approximated fair
value.
Fixed maturity securities with an amortized cost of $13,982 and $11,137 as
of December 31, 1995 and 1994, respectively, were on deposit with various
regulatory agencies as required by law.
(6) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for investment contracts represents
approximately 82% and 81% of the total liability for future policy benefits
as of December 31, 1995 and 1994, respectively. The average interest rate
credited on investment product policies was approximately 6.5%, 6.5% and
7.0% for the years ended December 31, 1995, 1994 and 1993, respectively.
The liability for future policy benefits for traditional life insurance and
individual health insurance policies has been established based upon the
following assumptions:
INTEREST RATES: Interest rates vary as follows:
<TABLE>
<CAPTION>
Health
Year of issue Life Insurance insurance
-------------- ------------------------------------------------------------ ---------------
<S> <C> <C>
1995 7.6%, not graded - permanent contracts with loan provisions 4.5%
7.7%, not graded - all other contracts
1984-1994 6.0% to 10.5%, not graded 5.0% to 6.0%
1966-1983 6.0% to 8.1%, graded over 20 years to 4.0% to 6.6% 3.5% to 6.0%
1965 and prior generally lower than post 1965 issues 3.5% to 4.0%
</TABLE>
WITHDRAWALS: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience.
MORTALITY: Mortality and morbidity rates are based on published tables,
modified for the Company's actual experience.
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the liability for unpaid claims and claim adjustment expenses is
summarized for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 637,998 592,180 760,209
Less reinsurance recoverables 438,761 430,720 547,683
--------- --------- ---------
Net balance, beginning of year 199,237 161,460 212,526
--------- --------- ---------
Incurred related to:
Current year 425,907 273,299 309,721
Prior years (17,203) (26,156) (26,248)
--------- --------- ---------
Total incurred 408,704 247,143 283,473
--------- --------- ---------
Paid related to:
Current year 290,605 175,700 208,978
Prior years 111,353 73,889 125,561
--------- --------- ---------
Total paid 401,958 249,589 334,539
--------- --------- ---------
Unpaid claims of acquired companies 2,542 40,223 --
--------- --------- ---------
Net balance, end of year 208,525 199,237 161,460
Plus reinsurance recoverables 491,321 438,761 430,720
--------- --------- ---------
Balance, end of year $ 699,846 637,998 592,180
========= ========= =========
</TABLE>
Reinsurance recoverables include amounts from affiliates, as discussed in
note 13, of $477,912, $430,936, $430,278 and $534,983 as of December 31,
1995, 1994, 1993 and 1992, respectively.
The provision for claims and claim adjustment expenses for prior years
decreased in each of the three years ended December 31, 1995 due to
lower-than-anticipated costs to settle accident and health insurance claims.
(7) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 179,916 124,044
Fixed maturity securities available-for-sale -- 95,536
Liabilities in Separate Accounts 129,120 94,783
Mortgage loans on real estate and real estate 26,062 25,632
Other policyholder funds 7,752 7,137
Other assets and other liabilities 47,215 57,528
--------- ---------
Total gross deferred tax assets 390,065 404,660
--------- ---------
Deferred tax liabilities:
Deferred policy acquisition costs 312,616 317,224
Fixed maturity securities available-for-sale 266,184 --
Equity securities available-for-sale and other
long-term investments 3,431 3,620
Other 46,711 47,301
--------- ---------
Total gross deferred tax liabilities 628,942 368,145
--------- ---------
$(238,877) 36,515
========= =========
</TABLE>
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company has determined that valuation allowances are not necessary as
of December 31, 1995, 1994 and 1993 based on its analysis of future
deductible amounts. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion
of the total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery of
Federal income tax paid within the statutory carryback period. In
addition, for future deductible amounts for securities available-for-sale,
affiliates of the Company which are included in the same consolidated
Federal income tax return hold investments that could be sold for capital
gains that could offset capital losses realized by the Company should
securities available-for-sale be sold at a loss.
<TABLE>
Total Federal income tax expense for the years ended December 31, 1995,
1994 and 1993 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
--------------- ----- -------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 111,906 35.0 $ 95,631 35.0 $ 109,515 35.0
Tax exempt interest and dividends
received deduction (137) (0.1) (194) (0.1) (2,322) (0.7)
Current year increase in U.S. Federal
income tax rate -- -- -- -- 1,704 0.5
Other, net (4,515) (1.4) (5,933) (2.1) (2,139) (0.7)
--------- ---- --------- ---- --------- ----
Total (effective rate of each year) $ 107,254 33.5 $ 89,504 32.8 $ 106,758 34.1
========= ==== ========= ==== ========= ====
</TABLE>
Total Federal income tax paid was $75,309, $87,576 and $58,286 during the
years ended December 31, 1995, 1994 and 1993, respectively.
Prior to 1984, the Life Insurance Company Income Tax Act of 1959 as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the deferral
from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was accumulated in
the Policyholders' Surplus Account (PSA). Management considers the
likelihood of distributions from the PSA to be remote; therefore, no
Federal income tax has been provided for such distributions in the
consolidated financial statements. The DRA eliminated any additional
deferrals to the PSA. Any distributions from the PSA, however, will
continue to be taxable at the then current tax rate. The balance of the
PSA was approximately $35,344 as of December 31, 1995.
(8) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107 - DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (SFAS 107) requires disclosure of fair
value information about existing on and off-balance sheet financial
instruments. SFAS 107 defines the fair value of a financial instrument as
the amount at which the financial instrument could be exchanged in a
current transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using present
value or other valuation techniques.
These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Although
fair value estimates are calculated using assumptions that management
believes are appropriate, changes in assumptions could cause these
estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets
and,in many cases, could not be realized in the immediate settlement of
the instruments. SFAS 107 excludes certain assets and liabilities from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from SFAS 107 disclosures, estimated fair value of policy reserves on
life insurance contracts are provided to make the fair value disclosures
more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying
amount reported in the consolidated balance sheets for these
instruments approximates their fair value.
FIXED MATURITY AND EQUITY SECURITIES: Fair value for fixed
maturity securities is based on quoted market prices, where available.
For fixed maturity securities not actively traded, fair value is
estimated using values obtained from independent pricing services or,
in the case of private placements, is estimated by discounting
expected future cash flows using a current market rate applicable to
the yield, credit quality and maturity of the investments. The fair
value for equity securities is based on quoted market prices.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of
assets held in Separate Accounts is based on quoted market prices. The
fair value of liabilities related to Separate Accounts is the
amount payable on demand.
MORTGAGE LOANS ON REAL ESTATE: The fair value for mortgage
loans on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations. Fair
value for mortgages in default is the estimated fair value of the
underlying collateral.
INVESTMENT CONTRACTS: Fair value for the Company's liabilities under
investment type contracts is disclosed using two methods. For
investment contracts without defined maturities, fair value is the
amount payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted cash
flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the
contracts being valued.
POLICY RESERVES ON LIFE INSURANCE CONTRACTS: Included are disclosures
for individual life, universal life and supplementary contracts with
life contingencies for which the estimated fair value is the amount
payable on demand. Also included are disclosures for the Company's
limited payment policies, which the Company has used discounted cash
flow analyses similar to those used for investment contracts with
known maturities to estimate fair value.
POLICYHOLDERS' DIVIDEND ACCUMULATIONS AND OTHER POLICYHOLDER FUNDS:
The carrying amount reported in the consolidated balance sheets for
these instruments approximates their fair value.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on life insurance contracts were
as follow as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------------------------- -------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
- ------
Investments:
Securities available-for-sale:
Fixed maturities $14,167,377 14,167,377 8,045,906 8,045,906
Equity securities 33,718 33,718 24,713 24,713
Fixed maturities held-to-maturity -- -- 3,688,787 3,602,310
Mortgage loans on real estate 4,786,599 5,169,805 4,222,284 4,173,284
Policy loans 370,908 370,908 340,491 340,491
Short-term investments 45,732 45,732 131,643 131,643
Cash 10,485 10,485 7,436 7,436
Assets held in Separate Accounts 18,763,678 18,763,678 12,222,461 12,222,461
LIABILITIES
- -----------
Investment contracts 13,561,943 13,221,724 12,189,894 11,657,556
Policy reserves on life insurance contacts 3,695,814 3,659,074 3,170,085 2,934,384
Policyholders' dividend accumulations 353,554 353,554 338,058 338,058
Other policyholder funds 71,155 71,155 72,770 72,770
Liabilities related to Separate Accounts 18,763,678 18,224,933 12,222,461 11,807,331
</TABLE>
(9) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES
--------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a party to
financial instruments with off-balance-sheet risk in the normal course of
business through management of its investment portfolio. These financial
instruments include commitments to extend credit in the form of loans. These
instruments involve, to varying degrees, elements of credit risk in excess
of amounts recognized on the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are agreements
to lend to a borrower, and are subject to conditions established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a deposit. Commitments
extended by the Company are based on management's case-by-case credit
evaluation of the borrower and the borrower's loan collateral. The
underlying mortgage property represents the collateral if the commitment is
funded. The Company's policy for new mortgage loans on real estate is to
lend no more than 80% of collateral value. Should the commitment be funded,
the Company's exposure to credit loss in the event of nonperformance by the
borrower is represented by the contractual amounts of these commitments less
the net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments. Commitments on
mortgage loans on real estate of $361,974 extending into 1996 were
outstanding as of December 31, 1995.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the United
States. The Company has a diversified portfolio with no more than 20% (22%
in 1994) in any geographic area and no more than 2% (2% in 1994) with any
one borrower.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The summary below depicts loans by remaining principal balance as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995:
East North Central $ 140,732 110,361 534,814 184,201 970,108
East South Central 23,978 15,653 183,790 84,588 308,009
Mountain -- 18,940 144,156 48,727 211,823
Middle Atlantic 124,079 72,201 183,562 18,383 398,225
New England 9,594 39,526 153,644 1 202,765
Pacific 190,628 239,687 395,914 107,650 933,879
South Atlantic 101,904 74,731 458,355 279,692 914,682
West North Central 134,866 14,205 81,521 37,586 268,178
West South Central 69,143 99,618 194,717 272,323 635,801
--------- --------- --------- --------- ---------
$ 794,924 684,922 2,330,473 1,033,151 4,843,470
========= ========= ========= =========
Less valuation allowances and unamortized discount 56,871
---------
Total mortgage loans on real estate, net $4,786,599
=========
</TABLE>
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1994:
East North Central $ 109,233 103,499 540,686 191,489 944,907
East South Central 24,298 10,803 127,845 76,897 239,843
Mountain 3,150 13,770 140,358 39,682 196,960
Middle Atlantic 61,299 53,285 140,847 30,111 285,542
New England 10,536 43,282 139,131 4 192,953
Pacific 195,393 210,930 397,911 68,768 873,002
South Atlantic 87,150 81,576 424,150 210,354 803,230
West North Central 127,760 11,766 80,854 4,738 225,118
West South Central 51,013 84,796 184,923 194,788 515,520
--------- --------- --------- --------- ---------
$ 669,832 613,707 2,176,705 816,831 4,277,075
========= ========= ========= =========
Less valuation allowances and unamortized discount 54,791
---------
Total mortgage loans on real estate, net $4,222,284
=========
</TABLE>
(10) PENSION PLAN
------------
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least one
thousand hours of service within a twelve-month period and who have met
certain age requirements. Benefits are based upon the highest average
annual salary of a specified number of consecutive years of the last ten
years of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company.
Effective January 1, 1995, the plan was amended to provide enhanced
benefits for participants who met certain eligibility requirements and
elected early retirement no later than March 15, 1995. The entire cost of
the enhanced benefit was borne by NMIC and certain of its property and
casualty insurance company affiliates.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Effective December 31, 1995, the Nationwide Insurance Companies and
Affiliates Retirement Plan was merged with the Farmland Mutual Insurance
Company Employees' Retirement Plan and the Wausau Insurance Companies
Pension Plan to form the Nationwide Insurance Enterprise Retirement
Plan. Immediately prior to the merger, the plans were amended to provide
consistent benefits for service after January 1, 1996. These amendments had
no significant impact on the accumulated benefit obligation or projected
benefit obligation as of December 31, 1995.
Pension costs charged to operations by the Company during the years ended
December 31, 1995, 1994 and 1993 were $14,105, $10,451 and $6,702,
respectively.
The Company's net accrued pension expense as of December 31, 1995 and
1994 was $1,376 and $1,836, respectively.
The net periodic pension cost for the Nationwide Insurance Companies and
Affiliates Retirement Plan as a whole for the years ended December 31,
1995, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,524 64,740 47,694
Interest cost on projected benefit obligation 95,283 73,951 70,543
Actual return on plan assets (249,294) (21,495) (105,002)
Net amortization and deferral 143,353 (62,150) 20,832
--------- --------- ---------
$ 53,866 55,046 34,067
========= ========= =========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate 7.50% 5.75% 6.75%
Rate of increase in future compensation levels 6.25% 4.50% 4.75%
Expected long-term rate of return on plan assets 8.75% 7.00% 7.50%
</TABLE>
Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1995
(post-merger) and the Nationwide Insurance Companies and Affiliates
Retirement Plan as of December 31, 1995 (pre-merger) and 1994 follows:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Accumulated benefit obligation:
Vested $ 1,236,730 1,002,079 914,850
Nonvested 26,503 8,998 7,570
----------- ----------- -----------
$ 1,263,233 1,011,077 922,420
=========== =========== ===========
Net accrued pension expense:
Projected benefit obligation for services rendered
to date $ 1,780,616 1,447,522 1,305,547
Plan assets at fair value 1,738,004 1,508,781 1,241,771
----------- ----------- -----------
Plan assets (less than) in excess of projected
benefit obligation (42,612) 61,259 (63,776)
Unrecognized prior service cost 42,845 42,850 46,201
Unrecognized net (gains) losses (63,130) (86,195) 39,408
Unrecognized net obligation (asset) at transition 41,305 (19,841) (21,994)
----------- ----------- -----------
$ (21,592) (1,927) (161)
=========== =========== ===========
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Weighed average discount rate 6.00% 6.00% 7.50%
Rate of increase in future compensation levels 4.25% 4.25% 6.25%
</TABLE>
Assets of the Nationwide Insurance Enterprise Retirement Plan are invested
in group annuity contracts of NLIC and ELICW. Prior to the merger, the
assets of the Nationwide Insurance Companies and Affiliates Retirement
Plan were invested in a group annuity contract of NLIC.
(11) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
-------------------------------------------
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years of
service with the Company after reaching age 40. Postretirement health
care benefit contributions are adjusted annually and contain cost-sharing
features such as deductibles and coinsurance. In addition, there are caps
on the Company's portion of the per-participant cost of the postretirement
health care benefits. These caps can increase annually, but not more than
three percent. The Company's policy is to fund the cost of health care
benefits in amounts determined at the discretion of management. Plan
assets are invested primarily in group annuity contracts of NLIC.
Effective January 1, 1993, the Company adopted the provisions of STATEMENT
OF FINANCIAL ACCOUNTING STANDARDS NO. 106 - EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (SFAS 106), which requires the
accrual method of accounting for postretirement life and health care
insurance benefits based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of
employees who are expected to qualify for such benefits.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation as of January 1, 1993. Accordingly, a
noncash charge of $32,275 ($20,979 net of related income tax benefit) was
recorded in the 1993 consolidated statement of income as a cumulative
effect of a change in accounting principle. See note 3. The adoption of
SFAS 106, including the cumulative effect of the change in accounting
principle, increased the expense for postretirement benefits by $35,277
to $36,544 in 1993. Certain affiliated companies elected to amortize their
initial transition obligation over periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of
December 31, 1995 and 1994 was $51,490 and $36,001, respectively, and the
net periodic postretirement benefit cost (NPPBC) for 1995 and 1994 was
$8,269 and $4,627, respectively.
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1995, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits attributed to employee service during the year $ 6,235 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,151 14,011 13,928
Actual return on plan assets (2,657) (1,622) --
Amortization of unrecognized transition obligation of affiliates 2,966 568 568
Net amortization and deferral (1,619) 1,622 --
-------- -------- --------
$ 19,076 23,165 21,586
======== ======== ========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the plan as a whole as of
December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 88,680 76,677
Fully eligible, active plan participants 28,793 22,013
Other active plan participants 90,375 59,089
--------- ---------
Accumulated postretirement benefit obligation (APBO) 207,848 157,779
Plan assets at fair value 54,325 49,012
--------- ---------
Plan assets less than accumulated postretirement benefit obligation (153,523) (108,767)
Unrecognized transition obligation of affiliates 1,827 6,577
Unrecognized net gains (1,038) (41,497)
--------- ---------
$(152,734) (143,687)
========= =========
</TABLE>
Actuarial assumptions used for the measurement of the APBO as of
December 31, 1995 and 1994 and the NPPBC for 1995, 1994 and 1993 were
as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994 1993
APBO NPPBC APBO NPPBC NPPBC
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Discount rate 6.75% 8% 8% 7% 8%
Assumed health care cost trend rate:
Initial rate 11% 10% 11% 12% 14%
Ultimate rate 6% 6% 6% 6% 6%
Uniform declining period 12 Years 12 Years 12 Years 12 Years 12 Years
</TABLE>
The health care cost trend rate assumption has an effect on the amounts
reported. For the plan as a whole, a one percentage point increase in
the assumed health care cost trend rate would increase the APBO as of
December 31, 1995 by $641 and the NPPBC for the year ended December 31,
1995 by $107.
(12) REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND
RESTRICTIONS
-------------------------------------------------------------
Each insurance company's state of domicile imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and each of its
insurance subsidiaries exceed the minimum risk-based capital
requirements.
In accordance with the requirements of the New York statutes, the
Company has agreed with the Superintendent of Insurance of that state
that so long as participating policies and contracts are held by
residents of New York, no profits on participating policies and
contracts in excess of the larger of (a) ten percent of such profits or
(b) fifty cents per year per thousand dollars of participating life
insurance in force, exclusive of group term, as of the year-end shall
inure to the benefit of the shareholder. Such New York statutes
further provide that so long as such agreement is in effect, such
excess of profits shall be exhibited as "participating policyholders'
surplus" in annual statements filed with the Superintendent and shall
be used only for the payment or apportionment of dividends to
participating policyholders at least to the extent required by statute
or for the purpose of making up any loss on participating policies.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In the opinion of counsel for the Company, the ultimate ownership of the
entire surplus, however classified, of the Company resides with the
shareholder, subject to the usual requirements under state laws and
regulations that certain deposits, reserves and minimum surplus be
maintained for the protection of the policyholders until all policy
contracts are discharged.
Based on the opinion of counsel with respect to the ownership of its
surplus, the Company is of the opinion that the earnings attributable to
participating policies in excess of the amounts paid as dividends to
policyholders belong to the shareholder rather than the policyholders,
and such earnings are so treated by the Company.
The amount of shareholder's equity other than capital shares was
$2,664,697, $1,904,664 and $1,647,353 as of December 31, 1995, 1994 and
1993, respectively. The amount thereof not presently available for
dividends to the shareholder due to the New York restrictions was
$1,503,241, $929,934 and $954,037 as of December 31, 1995, 1994 and 1993,
respectively.
Ohio law limits the payment of dividends to shareholders. The maximum
dividend that may be paid by the Company without prior approval of the
Director of the Department is limited to the greater of statutory gain
from operations of the preceding calendar year or 10% of statutory
shareholder's surplus as of the prior December 31. Therefore, $2,468,687
of shareholder's equity, as presented in the accompanying consolidated
financial statements, is so restricted as to dividend payments in 1996.
Each of NLIC's insurance company subsidiaries are limited in their
payment of dividends by the state insurance department of their
respective state of domicile. As of December 31, 1995, the maximum amount
of shareholder's equity available for dividend payment to NLIC in 1996 by
its insurance company subsidiaries without prior approval are:
<TABLE>
<S> <C>
Nationwide Life and Annuity Insurance Company $10,143
West Coast Life Insurance Company 13,153
Employers Life Insurance Company of Wausau 10,132
National Casualty Company --
-------
$33,428
=======
</TABLE>
(13) TRANSACTIONS WITH AFFILIATES
----------------------------
On March 1, 1995, Corp. contributed all of the outstanding shares of
Farmland Life Insurance Company (Farmland) to NLIC, which then merged
Farmland into WCLIC effective June 30, 1995. The contribution resulted in
a direct increase to consolidated shareholder's equity of $46,918. The
contribution of Farmland has been accounted for in a manner similar to a
pooling of interests and accordingly, Farmland's results are included in
the consolidated statements of income beginning January 1, 1995. However,
prior period consolidated financial statements have not been restated due
to the impact of Farmland being immaterial.
Effective December 31, 1994, NLIC purchased all of the outstanding shares
of ELICW from Wausau Service Corporation (WSC) for $155,000. NLIC
transferred fixed maturity securities and cash with a fair value of
$155,000 to WSC on December 28, 1994, which resulted in a realized loss
of $19,239 on the disposition of the securities. The purchase price
approximated both the historical cost basis and fair value of net assets
of ELICW. ELICW has and will continue to share home office, other
facilities, equipment and common management and administrative services
with WSC.
Certain annuity products are sold through three affiliated companies
which are also subsidiaries of Corp. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1995 were
$57,969, $50,470 and $44,577, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
The Company participates in intercompany repurchase agreements with
affiliates whereby the seller will transfer securities to the buyer at a
stated value. Upon demand or a stated period, the securities will be
repurchased by the seller at the original sales price plus a price
differential. Transactions under the agreements during 1995 and
1994 were not material.
During 1993, the Company sold equity securities with a market value
$194,515 to NMIC, resulting in a realized gain of $122,823. With the
proceeds, the Company purchased securities with a market value of
$194,139 and cash of $376 from NMIC.
Intercompany reinsurance contracts exist between NLIC and NMIC, NLIC and
WCLIC, NLIC and NCC, WCLIC and NMIC and WCLIC and ELICW as of December
31, 1995. These contracts are immaterial to the consolidated financial
statements.
NCC participates in several 100% quota share reinsurance agreements with
NMIC and Nationwide Mutual Fire Insurance Company, the minority
shareholder of Corp. As a result of these agreements, the following
assets and (liabilities) are included in the consolidated financial
statements as of December 31, 1995 and 1994 for reinsurance ceded:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Reinsurance recoverable $ 590,379 541,289
Unearned premium reserves (112,467) (110,353)
Liability for unpaid claims and claim adjustment expense (477,912) (430,936)
</TABLE>
The ceding of reinsurance does not discharge the original insurer from
primary liability to its policyholder. The insurer which assumes the
coverage assumes the related liability and it is the practice of insurers
to treat insured risks, to the extent of reinsurance ceded, as though
they were risks for which the original insurer is not liable. Management
believes the financial strength of NMIC reduces to an acceptable level
any risk to NCC under these intercompany reinsurance agreements.
ELICW assumes certain accident and health insurance business from
Employers Insurance of Wausau A Mutual Company, an affiliate. During
1995, total premiums assumed by ELICW under the reinsurance
agreement were $150,622.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC) and California Cash Management
Company (CCMC), both affiliates, under which NCMC and CCMC act as common
agents in handling the purchase and sale of short-term securities for the
respective accounts of the participants. Amounts on deposit with NCMC and
CCMC were $21,644 and $92,531 as of December 31, 1995 and 1994,
respectively, and are included in short-term investments on the
accompanying consolidated balance sheets.
(14) BANK LINES OF CREDIT
--------------------
As of December 31, 1995 and 1994, NLIC had $120,000 of confirmed but
unused bank lines of credit which support a $100,000 commercial paper
borrowing authorization.
(15) CONTINGENCIES
-------------
The Company is a defendant in various lawsuits. In the opinion of
management, the effects, if any, of such lawsuits are not expected to be
material to the Company's financial position or results of operations.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(16) SEGMENT INFORMATION
-------------------
The Company operates in the long-term savings, life insurance and
accident and health insurance lines of business in the life insurance and
property and casualty insurance industries. Long-term savings operations
include both qualified and non-qualified annuity contracts issued to both
individuals and groups. Life insurance operations include whole life,
universal life, variable universal life and endowment and term life
insurance issued to individuals and groups. Accident and health insurance
operations also provide coverage to individuals and groups. Corporate
primarily includes investments, and the related investment income, which
are not specifically allocated to one of the three operating segments. In
addition, realized gains and losses on all general account investments
are reported as a component of the corporate segment.
During 1995, the Company changed its reporting segments to better reflect
the way the businesses are managed. Prior periods have been restated to
reflect these changes.
The following table summarizes the revenues and income (loss) before
Federal income tax expense and cumulative effect of changes in accounting
principles for the years ended December 31, 1995, 1994 and 1993 and
assets as of December 31, 1995, 1994 and 1993, by business segment.
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Long-term savings $ 1,406,241 1,125,013 1,048,045
Life insurance 502,885 452,795 432,343
Accident and health insurance 532,383 345,545 339,764
Corporate 134,598 122,847 214,374
------------ ------------ ------------
$ 2,576,107 2,046,200 2,034,526
============ ============ ============
Income (loss) before Federal income tax expense and
cumulative effect of changes in accounting principles:
Long-term savings 129,475 95,530 47,966
Life insurance 63,169 46,119 36,383
Accident and health insurance (12,521) 13,221 15,041
Corporate 139,609 118,360 213,511
------------ ------------ ------------
$ 319,732 273,230 312,901
============ ============ ============
Assets:
Long-term savings 34,634,892 25,815,273 20,695,598
Life insurance 3,675,581 3,231,651 2,897,574
Accident and health insurance 307,643 291,296 297,200
Corporate 1,995,995 1,773,913 1,515,989
------------ ------------ ------------
$ 40,614,111 31,112,133 25,406,361
============ ============ ============
</TABLE>
<PAGE> 26
Schedule I
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Summary of Investments - Other Than Investments in Related Parties
December 31, 1995
(000's omitted)
<TABLE>
<CAPTION>
----------------- --------------- ------------------
Column B Column C Column D
----------------- --------------- ---------------
Amount at which
shown in the
consolidated
Cost Market value balance sheet
----------------- ---------------- -------------------
<S> <C> <C> <C>
Fixed maturities available-for-sale:
Bonds and notes:
U.S. Government and government agencies and authorities $ 3,913,961 4,116,744 4,116,744
States, municipalities and political subdivisions 9,742 10,993 10,993
Foreign governments 162,442 172,016 172,016
Public utilities 2,053,701 2,146,000 2,146,000
All other corporate 7,298,784 7,721,624 7,721,624
----------------- ---------------- -------------------
Total fixed maturities available-for-sale 13,438,630 14,167,377 14,167,377
----------------- ---------------- -------------------
Equity securities available-for-sale:
Common stocks:
Industrial, miscellaneous and all other 26,037 32,474 32,474
Non-redeemable preferred stock 1,325 1,244 1,244
----------------- ---------------- -------------------
Total equity securities available-for-sale 27,362 33,718 33,718
----------------- ---------------- -------------------
Mortgage loans on real estate 4,838,432 4,786,599*
Real estate:
Investment properties 213,340 171,739*
Acquired in satisfaction of debt 82,930 67,350*
Policy loans 370,908 370,908
Other long-term investments 73,190 67,280#
Short-term investments 45,732 45,732
----------------- -------------------
Total investments $19,090,524 19,710,703
================= ===================
</TABLE>
* Difference from Column B is primarily due to accumulated depreciation
and valuation allowances due to impairments on real estate and
valuation allowances due to impairments on mortgage loans on real
estate. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations and note 5 to the consolidated
financial statements.
# Difference from Column B is primarily due to operating losses of
investments in limited partnerships.
See accompanying independent auditors' report.
<PAGE> 27
Schedule III
------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Supplementary Insurance Information
December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Column A Column B Column C Column D Column E Column F
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Deferred Future policy Other policy
policy benefits, losses, claims and
Segment acquisition claims and Unearned premiums benefits payable Premium
costs loss expenses (1) (2) revenue
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
1995: Long-term savings $ 668,784 14,847,449 455 -
Life insurance 416,209 2,494,344 408,990 274,957
Accident and health
insurance 9,202 858,335 15,264 509,658
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,094,195 18,200,128 424,709 784,615
============== ===================== ================== ===============
1994: Long-term savings 663,696 13,300,015 240 -
Life insurance 387,486 2,245,375 397,174 209,538
Accident and health
insurance 12,977 776,071 13,414 324,524
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,064,159 16,321,461 410,828 534,062
============== ===================== ================== ===============
1993: Long-term savings 506,243 11,308,024 1,262 -
Life insurance 291,683 2,047,844 378,788 215,715
Accident and health
insurance 14,018 736,387 14,595 312,655
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $ 811,944 14,092,255 394,645 528,370
============== ===================== ================== ===============
- ----------------------------------- -------------- -------------------- ------------------ ----------------- --------------
Column A Column G Column H Column I Column J Column K
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Net Amortization Other
investment Benefits, claims, of deferred operating
Segment income losses and policy expenses Premiums
(3) settlement expenses acquisition costs (3) written
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
1995: Long-term savings $1,124,207 1,009,632 51,998 210,525
Life insurance 202,285 267,123 34,124 94,461
Accident and health
insurance 22,725 379,532 6,922 153,984 473,513
Corporate 133,763 - - -
-------------- -------------------- ------------------- ------------------
Total $1,482,980 1,656,287 93,044 458,970
============== ==================== =================== ==================
1994: Long-term savings 945,318 807,756 56,236 171,038
Life insurance 183,933 237,125 33,394 90,535
Accident and health
insurance 21,020 234,882 5,114 90,829 315,688
Corporate 139,230 - - -
-------------- -------------------- ------------------- ------------------
Total $1,289,501 1,279,763 94,744 352,402
============== ==================== =================== ==================
1993: Long-term savings 897,639 800,385 43,291 157,046
Life insurance 178,978 227,786 35,220 89,496
Accident and health
insurance 27,108 208,735 23,623 82,854 263,117
Corporate 100,701 - - -
-------------- -------------------- ------------------- ------------------
Total $1,204,426 1,236,906 102,134 329,396
============== ==================== =================== ==================
<FN>
(1) Unearned premiums are included in Column C amounts. (3) Allocations of net investment income and certain general
(2) Column E agrees to the sum of the consolidated balance expenses are based on a number of assumptions and
sheet captions, "Policyholders' dividend estimates, and reported operating results would
accumulations" and "Other policyholder funds". change by segment if different methods were applied.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 28
Schedule IV
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Reinsurance
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed from of amount
Gross amount other companies other companies Net amount assumed to net
------------------- ------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
1995:
Life insurance in force $51,613,116 6,865,011 742,451 45,490,556 1.6%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 281,687 12,817 6,087 274,957 2.2%
Accident and health
insurance 427,943 73,131 154,846 509,658 30.4%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 709,630 85,948 160,933 784,615 20.5%
=================== ================== ================= ================== ===============
1994:
Life insurance in force $46,262,595 5,289,259 819,799 41,793,135 2.0%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 209,918 7,551 7,171 209,538 3.4%
Accident and health
insurance 389,573 69,095 4,046 324,524 1.2%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 599,491 76,646 11,217 534,062 2.1%
=================== ================== ================= ================== ===============
1993:
Life insurance in force $39,417,116 4,352,071 180,739 35,245,784 0.5%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 218,764 6,161 3,112 215,715 1.4%
Accident and health
insurance 398,289 88,506 2,872 312,655 0.9%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 617,053 94,667 5,984 528,370 1.1%
=================== ================== ================= ================== ===============
</TABLE>
See accompanying independent auditors' report.
<PAGE> 29
Schedule V
----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Column A Column B Column C Column D Column E
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Balance at Charged to Balance at
beginning of costs and Charged to Deductions end of
Description period expenses other accounts (1) period
- ------------------------------------------------- ---------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1995:
Valuation allowances - fixed maturity securities $ - 10,153 - 10,153 -
Valuation allowances - mortgage loans on real
estate 47,892 7,653 - 4,850 50,695
Valuation allowances - real estate 27,330 (1,080) - - 26,250
Valuation allowances - other long-term
investments - 457 - - 457
1994:
Valuation allowances - fixed maturity securities 6,680 (6,680) - - -
Valuation allowances - mortgage loans on real
estate 42,350 21,672 - 16,130 47,892
Valuation allowances - real estate 31,357 (4,027) - - 27,330
1993:
Valuation allowances - fixed maturity securities 5,746 934 - - 6,680
Valuation allowances - mortgage loans on real
estate 31,872 28,241 - 17,763 42,350
Valuation allowances - real estate 35,471 (4,114) - - 31,357
Valuation allowances - other long-term
investments 700 (700) - - -
<FN>
(1) Amounts represent direct write-downs charged against the valuation
allowance.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 54
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<S> <C>
(a) Financial Statements:
(1) Financial statements and schedule included PAGE
in Prospectus
(Part A):
Condensed Financial Information. 20
(2)Financial statements and schedule included
in Part B:
Those financial statements and schedule required by Item
23 to be included in Part B have been incorporated therein
by reference to the Prospectus (Part A).
Nationwide Variable Account:
Independent Auditors' Report. 52
Statement of Assets, Liabilities and Contract 53
Owners' Equity as of December 31, 1995.
Statements of Operations and Changes in 55
Contract Owners' Equity for the years ended
December 31, 1995, 1994 and 1993.
Notes to Financial Statements. 56
Schedules of Changes in Unit Value. 60
Nationwide Life Insurance Company:
Independent Auditors' Report. 65
Consolidated Balance Sheets as of December 66
31, 1995 and 1994.
Consolidated Statements of Income for the 67
years ended December 31, 1995, 1994 and
1993.
Consolidated Statements of Shareholder's 68
Equity for the years ended December 31,
1995, 1994 and 1993.
Consolidated Statements of Cash Flows for 69
the years ended December 31, 1995, 1994
and 1993.
Notes to Consolidated Financial Statements. 70
Schedule I - Summary of Investments - Other
Than Investments in Related Parties 90
Schedule III - Supplementary Insurance
Information 91
Schedule IV - Reinsurance 92
Schedule V - Valuation and Qualifying Accounts 93
</TABLE>
94 of 114
<PAGE> 55
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of Directors
authorizing the establishment of the Registrant -
Filed previously with the Registration Statement,
and hereby incorporated by reference.
(2) Not Applicable
(3) Underwriting or Distribution of Contracts between
the Registrant and Principal Underwriter - Filed
previously with the Registration Statement, and
hereby incorporated by reference.
(4) The form of the variable annuity contract - Filed
previously with Post-Effective Amendment No. 19 to
the Registration Statement and hereby incorporated
by reference.
(5) Variable Annuity Application - Filed previously
with Post-Effective Amendment No. 19 to the
Registration Statement, and hereby incorporated by
reference.
(6) Articles of Incorporation of Depositor Filed
previously with the Registration Statement, and
hereby incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with the
Registration Statement, and hereby incorporated by
reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
95 of 114
<PAGE> 56
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olives, NC 28365
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
96 of 114
<PAGE> 57
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President,
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
James E. Brock Senior Vice President -
One Nationwide Plaza Life Company Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President-Chief Actuary-
One Nationwide Plaza Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
97 of 114
<PAGE> 58
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Matthew S. Easley Vice President -
One Nationwide Plaza Annuity and Pension Actuarial
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President -
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
98 of 114
<PAGE> 59
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED
OF ORGANIZATION CHART) UNLESS
COMPANY OTHERWISE PRINCIPAL BUSINESS
INDICATED
<S> <C> <C> <C>
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
Affiliate Agency, Inc. Delaware Life Insurance Agency
Allnations, Inc. Ohio Promotes cooperative insurance corporations
worldwide
American Marine Underwriters, Inc. Florida Underwriting Manager
Auto Direkt Insurance Company Germany Insurance Company
The Beak and Wire Corporation Ohio Radio Tower Joint Venture
California Cash Management Company California Investment Securities Agent
Colonial County Mutual insurance Texas Insurance Company
Company
Colonial Insurance Company of California Insurance Company
California
Columbus Insurance Brokerage and Germany Insurance Broker
Service GMBH
Companies Agency Insurance Services California Insurance Broker
of California
Companies Agency of Alabama, Inc. Alabama Insurance Broker
Companies Agency of Idaho, Inc. Idaho Insurance Broker
Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for Policies placed
through Brokers
Companies Agency of Kentucky, Inc. Kentucky Insurance Broker
Companies Agency of Massachusetts, Massachusetts Insurance Broker
Inc.
Companies Agency of New York, Inc. New York Insurance Broker
Companies Agency of Pennsylvania, Inc. Pennsylvania Insurance Broker
Companies Agency of Phoenix, Inc. Arizona Insurance Broker
Companies Agency of Texas, Inc. Texas Insurance Broker
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Annuity Agency of Texas, Texas Insurance Broker
Inc.
Countrywide Services Corporation Delaware Products Liability, Investigative and Claims
Management Services
Employers Insurance of Wausau A Wisconsin Insurance Company
Mutual Company
</TABLE>
99 of 114
<PAGE> 60
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED
OF ORGANIZATION CHART) UNLESS
COMPANY OTHERWISE PRINCIPAL BUSINESS
INDICATED
<S> <C> <C> <C>
**Employers Life Insurance Company of Wisconsin Life Insurance Company
Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Insurance Company
Financial Horizons Distributors Alabama Life Insurance Agency
Agency of Alabama, Inc.
Financial Horizons Distributors Ohio Insurance Agency
Agency of Ohio
Financial Horizons Distributors Oklahoma Life Insurance Agency
Agency of Oklahoma, Inc.
Financial Horizons Distributors Texas Life Insurance Agency
Agency of Texas, Inc.
*Financial Horizons Investment Trust Massachusetts Investment Company
Financial Horizons Securities Oklahoma Broker Dealer
Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Company of Nevada Nevada Self-Insurance Administration Claims
Examinations and Data Processing Services
Gates, McDonald & Company of New New York Workers Compensation Claims Administration
York, Inc.
Greater La Crosse Health Plans, Inc. Wisconsin Writes Commercial Health and Medicare
Supplement Insurance
InHealth Agency, Inc. Ohio Insurance Agency
InHealth Management Systems, Inc. Ohio Develops and operates Managed Care Delivery
System
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency
Key Health Plan, Inc. California Pre-paid health plans
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
Leben Direkt Insurance Company Germany Life Insurance Company
Lone Star General Agency, Inc. Texas Insurance Agency
**MRM Investments, Inc. Ohio Owns and operates a Recreational Ski Facility
**National Casualty Company Michigan Insurance Company
National Casualty Company of America, Great Britain Insurance Company
Ltd.
**National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Cash Management Company Ohio Investment Securities Agent
</TABLE>
100 of 114
<PAGE> 61
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED
OF ORGANIZATION CHART) UNLESS
COMPANY OTHERWISE PRINCIPAL BUSINESS
INDICATED
<S> <C> <C> <C>
Nationwide Communications, Inc. Ohio Radio Broadcasting Business
Nationwide Community Urban Ohio Redevelopment of blighted areas within the
Redevelopment Corporation City of Columbus, Ohio
Nationwide Corporation Ohio Organized for the purpose of acquiring,
holding, encumbering, transferring, or
otherwise disposing of shares, bonds,
and other evidences of indebtedness,
securities, and contracts of other
persons, associations, corporations,
domestic or foreign and to form or
acquire the control of other
corporations
Nationwide Development Company Ohio Owns, leases and manages commercial real
estate
Nationwide Financial Institution Delaware Insurance Agency Distributors Agency,
Inc.
**Nationwide Advisory Services, Inc. Ohio Registered Broker-Dealer, Investment
Manager and Administrator
Nationwide General Insurance Company Ohio Insurance Company Nationwide HMO, Inc.
Ohio Health Maintenance Organization
* Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
Nationwide Insurance Golf Charities, Ohio Membership Non-Profit Corporation
Inc.
Nationwide Investing Foundation Michigan Investment Company
* Nationwide Investing Massachusetts Investment Company
Foundation II
Nationwide Investment Services Oklahoma Registered Broker-Dealer in Deferred
Corporation Compensation Market
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
**Nationwide Life and Annuity Insurance Ohio Life Insurance Company Company
**Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Mutual Fire Insurance Ohio Insurance Company
Company
Nationwide Mutual Insurance Company Ohio Insurance Company
Nationwide Property and Casualty Ohio Insurance Company Insurance Company
**Nationwide Property Management, Inc. Ohio Owns, leases, manages and deals in Real
Property
</TABLE>
101 of 114
<PAGE> 62
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED
OF ORGANIZATION CHART) UNLESS
COMPANY OTHERWISE PRINCIPAL BUSINESS
INDICATED
<S> <C> <C> <C>
*Nationwide Separate Account Trust Massachusetts Investment Company
NEA Valuebuilder Investor Services of Alabama Life Insurance Agency
Alabama, Inc.
NEA Valuebuilder Investor Services of Arizona Life Insurance Agency
Arizona, Inc.
NEA Valuebuilder Investor Services of Massachusetts Life Insurance Agency
Massachusetts, Inc.
NEA Valuebuilder Investor Services of Montana Life Insurance Agency
Montana, Inc.
NEA Valuebuilder Investor Services of Nevada Life Insurance Agency
Nevada, Inc.
NEA Valuebuilder Investor Services of Ohio Life Insurance Agency
Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma Life Insurance Agency
Oklahoma, Inc.
NEA Valuebuilder Investor Services of Texas Life Insurance Agency
Texas, Inc.
NEA Valuebuilder Investor Services of Wyoming Life Insurance Agency
Wyoming
NEA Valuebuilder Investor Services, Delaware Life Insurance Agency
Inc.
NEA Valuebuilder Services Insurance Massachusetts Life Insurance Agency
Agency, Inc.
Neckura General Insurance Company Germany Insurance Company
Neckura Holding Company Germany Administrative Service for Neckura Insurance
Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Insurance Massachusetts Markets and Administers Deferred Compensation
Agency, Inc. Plans for Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers Deferred Compensation
Plans for Public Employees
Pension Associates of Wausau, Inc. Wisconsin Pension plan administration, record keeping
and consulting and compensation consulting
Public Employees Benefit Services Delaware Marketing and Administration of Deferred
corporation Employee Compensation Plans for Public
Employees
Public Employees Benefit Services Alabama Markets and Administers Deferred Compensation
Corporation of Alabama Plans for Public Employees
</TABLE>
102 of 114
<PAGE> 63
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED
OF ORGANIZATION CHART) UNLESS
COMPANY OTHERWISE PRINCIPAL BUSINESS
INDICATED
<S> <C> <C> <C>
Public Employees Benefit Services Arkansas Markets and Administers Deferred Compensation
Corporation of Arkansas Plans for Public Employees
Public Employees Benefit Services Montana Markets and Administers Deferred Compensation
Corporation of Montana Plans for Public Employees
Public Employees Benefit Services New Mexico Markets and Administers Deferred Compensation
Corporation of New Mexico Plans for Public Employees
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura Insurance Group
Group
Wausau Business Insurance Company Illinois Insurance Company
Wausau General Insurance Company Illinois Insurance Company
Wausau Insurance Company (U.K.) United Kingdom Insurance and Reinsurance Company
Limited
Wausau International Underwriters California Special Risks, Excess and Surplus Lines
Insurance Underwriting Manager
** Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company
Company
Wausau Service Corporation Wisconsin Holding Company
Wausau Underwriters Insurance Company Wisconsin Insurance Company
** West Coast Life Insurance Company California Life Insurance Company
</TABLE>
103 of 114
<PAGE> 64
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
STATE (SEE ATTACHED CHART) UNLESS
COMPANY OF ORGANIZATION OTHERWISE INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DCVA-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Life Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-Q Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance
Account-A Separate Account Contracts
* Nationwide VL Separate Account-B Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Contracts
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
</TABLE>
104 of 114
<PAGE> 65
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side}
______________________
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|______________________|
<S> <C> <C>
________________________________________________________________________________________________
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| (EMPLOYERS) |_________________________________
| Contribution Note Cost |_________________________________
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________ __________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | | | |
| | | | | NATIONWIDE LLOYDS | | COMPANIES |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | | | |
| ------------- Shares | | ------------- Shares |_____| |_____| AGENCY OF |
| | | |_____| |_____| |
| Cost | | Cost | | | | TEXAS, INC. |
| ---- | | ---- | | A TEXAS LLOYDS | | |
| Employers-- | | Employers-- | | | | |
| 100% $15,683,300 | | 100% $106,763,000 | | | | |
|_______________________________| |________________________________| |_____________________| |__________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 10,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $21,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $44,560,006 |
| |______________________________|
|
| ______________________________
| | GREATER LA CROSSE |
| | HEALTH PLANS, INC. |
| | |
| | Common Stock: 3,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-33.3% $861,761 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ALABAMA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF KENTUCKY, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PENNSYLVANIA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF MASSACHUSETTS, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF NEW YORK, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PHOENIX, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF IDAHO, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COUNTRYWIDE SERVICES |
| | CORPORATION |
| | |
| | Common Stock: 100 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $145,852 |
| |______________________________|
|
|
| ______________________________
| | WAUSAU GENERAL |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 200,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $31,000,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU INTERNATIONAL |
| | UNDERWRITERS |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $10,000 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | INSURANCE SERVICES |
| | OF CALIFORNIA |
| | |
|____| Common Stock: 1,000 |
| | ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
| ______________________________
| | AMERICAN MARINE |
| | UNDERWRITERS, INC. |
| | |
| | Common Stock: 20 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $248,222 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ILLINOIS, INC. |
| | |
| | Common Stock: 250 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $2,500 |
| |______________________________|
|
| ______________________________ _____________________________
| | COMPANIES AGENCY, INC. | | PENSION ASSOCIATES |
| | | | OF WAUSAU, INC. |
| | | | |
| | Common Stock: 100 | | Common Stock: 1,000 |
|____| ------------- Shares |____| ------------- Shares |
| | | |
| Cost | | Companies Cost |
| ---- | | Agency, Inc. ---- |
| WSC-100% $10,000 | | (Wisconsin) -- $10,000 |
|______________________________| | 100% |
|_____________________________|
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| |
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
___| NATIONWIDE MUTUAL |_____________________________________________| NATIONWIDE MUTUAL |
___| INSURANCE COMPANY |_____________________________________________| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
|_________________________________________| |___________________________|
| || |________________________________________________________________ |
| || | | |
______________|_______________ || | _____________________________ _____________|_______|______________
| | || | | | | |
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NATIONWIDE |
| | || | | INSURANCE COMPANY | | CORPORATION |
| Common Stock: 2,936 | || | | | | |
| ------------- Shares | || | | Common Stock: 20,000 Shares | | Common Stock: Control |
| Cost | || |___| ------------- | | ------------- ------- |
| ---- | || | | | | $13,642,432 100% |
| Casualty-26% $88,320 | || | | Cost | | |
| Fire-26% $88,463 | || | | ---- | | Shares Cost |
| Preferred Stock: 1,466 Shares| || | | Casualty-100% $5,944,422 | | ----- ---- |
| ---------------- | || | |_____________________________| | Casualty 12,992,922 $751,352,485 |
| Cost | || | | Fire 649,510 24,007,936 |
| ---- | || | | |
| Casualty-6.8% $100,000 | || | | (See Page 2) |
| Fire-6.8% $100,000 | || | |____________________________________|
|______________________________| || |
|| |
_________________________ || | _____________________________
| | || | | |
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY |
| INSURANCE COMPANY | || | | AND CASUALTY |
| | || | | INSURANCE COMPANY |
| Guaranty Fund |______|| | | |
| ------------- |_______| | | Common Stock: 60,000 Shares |
| Certificate | | | ------------- |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | |
| | | COLONIAL INSURANCE |
_______________|___________ | | COMPANY OF CALIFORNIA |
| F & B, INC. | | | (COLONIAL) |
| | | | |
| Common Stock: 1 Share | |___| Common Stock: 1,750 Shares |
| ------------- | | | ------------- |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | | | |
| | | | SCOTTSDALE | | NATIONAL PREMIUM & |
| NATIONWIDE AGRIBUSINESS | | | INSURANCE COMPANY | | BENEFIT ADMINISTRATION |
| INSURANCE COMPANY | | | | | COMPANY |
| | | | Common Stock: 30,136 Shares | | |
| Common Stock: 1,000,000 |___|___| ------------- |______| Common Stock: 10,000 |
| ------------- Shares | | | | | ------------ Shares |
| | | | Cost | | |
| | | | ---- | | Cost |
| | | | Casualty-100% $150,000,000 | | ---- |
| Casualty-99.9% $26,714,335 | | |_____________________________| | Scottsdale-100% $10,000 |
| | | |__________________________|
| Other Capital: | |
| -------------- | |
| Casualty-Ptd. $ 713,567 | |
|____________________________| |
|
|
|
|
| _____________________________ ______________________________
| | NECKURA HOLDING | | NECKURA |
| | COMPANY (NECKURA) | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 10,000 Shares | | Common Stock: 6,000 Shares |
|___| ------------- |_____________________| ------------- |
| | | | | |
| | Cost | | | Cost |
| | --- | | | ---- |
| | Casualty-100% $87,943,140 | | | Neckura-100% DM 6,000,000 |
| |_____________________________| | |______________________________|
| |
| | _____________________________
| | | NECKURA LIFE |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS INSURANCE |
| | | BROKERAGE AND SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIREKT |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT COMPANY | | | GmbH |
| | | | | |
| | Common Stock: 99,000 Shares | | | Common Stock: 50 Shares |
| | ------------- | |_____| ------------- |
| | | | |
|___| Cost | | Cost |
| | --- | | ---- |
| | Casualty-100% $15,100,000 | | Neckura-100% DM 50,000 |
| | Other Capital: | |____________________________|
| | -------------- |
| | Casualty-Ptd. $ 2,796,100 |
| |_____________________________|
|
|
| _____________________________
| | SCOTTSDALE |
| | INDEMNITY COMPANY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | INDEMNITY COMPANY |
| | |
| | Common Stock: 28,000 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $294,529,000 |
| |_____________________________|
|
| _____________________________ __________________________
| | LONE STAR | | COLONIAL COUNTY MUTUAL |
| | GENERAL AGENCY, INC. | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 1,000 Shares |______| Surplus Debentures: |
|___| ------------- |______| ------------------- |
| | | | |
| | Cost | | Cost |
| | ---- | | ---- |
| | Casualty-100% $5,000,000 | | Colonial $500,000 |
| |_____________________________| | Lone Star 150,000 |
| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | CORPORATION |
| | |
| | Common Stock: 10 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,000 |
| |_____________________________|
|
| _____________________________
| | INSURANCE |
| | INTERMEDIARIES, INC. |
| | |
| | Common Stock: 1,615 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,615,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________
| | CALIFORNIA CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 90 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $9,000 |
| |_____________________________|
|
|
| _____________________________ __________________________
| | NATIONWIDE | | THE BEAK AND |
| | COMMUNICATIONS, INC. | | WIRE CORPORATION |
| | | | |
| | Common Stock: 14,750 Shares | | Common Stock: 750 Shares |
|___| ------------- |_____| ------------- |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| Casualty-100% $11,510,000 | | NW Comm- $531,000 |
| | | 100% |
| Other Capital: | |__________________________|
| -------------- |
| Casualty-Ptd. 1,000,000 |
|_____________________________|
<FN>
Subsidiary Companies - Solid Line
Contractual Association - Double Line
December 31, 1995
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|_________________
| NATIONWIDE LIFE INSURANCE |
| COMPANY (NW LIFE) |
|Common Stock: 3,814,779 Shares|
| ------------- |
| |
| NW Corp.- Cost |
| 100% ---- |
| $950,226,915 |
|______________________________|
_________________________________________________________________________________|
____________|_____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | NATIONWIDE LIFE AND |
| FINANCIAL SERVICES, INC. | | COMPANY (NC) | | | ANNUITY INSURANCE COMPANY |
| (NW FIN. SERV.) | | Common Stock: 100 Shares | | | |
______|Common Stock: 7,676 Shares| | ------------- | | | Common Stock: 66,000 Shares |
| ____|------------- | | | |_______| ------------- |
| | | Cost | | Cost | | | NW Life- Cost |
| | | ---- | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |__________________________| |___________________________| | |______________________________|
| | __________________________ ___________|_______________ | ________________________________
| | | NATIONWIDE | | | | | WEST COAST LIFE |
| | | INVESTOR SERVICES, INC. | | | | | INSURANCE COMPANY |
| | | Common Stock: 5 Shares | | NCC OF AMERICA, INC. | | | Common Stock: 1,000,000 Shares|
| |___| ------------- | | (INACTIVE) | |_______| ------------- |
| | | NW Fin. Serv.-100% | | | | | |
| | | Cost | | NC-100% | | | Cost |
| | | ---- | | | | | ---- |
| | | $5,000 | | | | | NW Life-100% $133,809,265 |
| | |__________________________| |___________________________| | |________________________________|
| | __________________________ ______________________________ | ____________________________
| | | NATIONWIDE | | EMPLOYERS LIFE INSURANCE CO. | | | NATIONWIDE PROPERTY |
| | | INVESTING | | OF WAUSAU (ELIOW) | | | MANAGEMENT, INC. |
| | | FOUNDATION | | | | | Common Stock: 59 Shares |
| |___| | ______| Common Stock: 250,000 Shares |____|_______| ------------ |
| ___| | | | ------------- Cost | | | Cost |
| | | | | | ---- | | | ---- |
| | | | | | NW Life-100% $155,000,000 | | | NW Life-100% $1,907,896 |
| | | COMMON LAW TRUST | | |______________________________| | |__________________________ |
| | |__________________________| | | |
| | | _____________________________ | __________|_______________
| | __________________________ | | WAUSAU PREFERRED | | | MRM INVESTMENTS, INC. |
| | | NATIONWIDE | | | HEALTH INSURANCE CO. | | | |
| | | INVESTING | | | | | | Common Stock: 1 Share |
| |___| FOUNDATION II | |______| Common Stock: 200 Shares | | | ------------ |
| ___| | | | ------------- | | | |
| | | | | | Cost | | | Cost |
| | | | | | ---- | | | Nat. Prop. ---- |
| | | COMMON LAW TRUST | | | ELIOW -- 100% $57,413,193 | | | Mgmt.-100% $550,000 |
| | |__________________________| | |_____________________________| | |___________________________|
| | | |
| | | _____________________________ | ___________________________
| | __________________________ | | KEY HEALTH PLAN, INC. | | | NWE, INC. |
| | | NATIONWIDE | | | | | | |
| | | SEPARATE ACCOUNT | |______| Common Stock: 1,000 Shares | |______| Common Stock: 100 Shares |
| | | TRUST | | ------------- | | ------------ |
| |___| | | Cost | | Cost |
| ___| | | ---- | | ---- |
| | | COMMON LAW TRUST | | ELIOW-80% $2,700,000 | | NW Life-100% $35,971,375 |
| | | | |_____________________________| |___________________________|
| | |__________________________|
| |
| | __________________________
| | | FINANCIAL HORIZONS |
| | | INVESTMENT TRUST |
| |___| |
|_____| |
| COMMON LAW TRUST |
|__________________________|
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| INSURANCE COMPANY |___________________________________________________________
| (CASUALTY) |
|_______________________________________|
| _______________________________________________________________
__________________|______________|___
| NATIONWIDE CORPORATION (NW Corp) |
| Common Stock: Control: |
| ------------- ------- |
| 13,642,432 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty 12,992,922 $751,352,485 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_________________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES BENEFIT | | GATES, McDONALD | | NATIONWIDE FINANCIAL |
|SERVICES CORPORATION (PEBSCO) | | & COMPANY (GATES) | | INSTITUTION DISTRIBUTORS |
______| Common Stock: 236,494 Shares | | Common Stock: 254 Shares | | AGENCY, INC. (NFIDAI)|
| ____| ------------- | | ------------- |___ _____| Common Stock: 1,000 Shares|
| | | Cost | | | | | ___| ------------- |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $ 7,830,936 | | ---- | | | | | NW Corp. ---- |
| | |______________________________| | NW Corp.- $25,683,532 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK, INC. | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 Shares | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- | | | | | |___|Common Stock: 10,000 Shares|
| | | Cost | | Cost | | | | |----------- |
| | | ---- | | ---- | | | | | Cost |
| | | PEBSCO-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |____________________________| | | | | | | NFIDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | ALABAMA | | | | | | | LANDMARK FINANCIAL |
| | |Common Stock: 100,000 Shares| | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____|------------- | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___|Common Stock: 10,000 Shares|
| | | ---- | | ---- | | | |------------- |
| | | PEBSCO-100% $1,000 | | $93,750 | | | | Cost |
| | |____________________________| |___________________________| | | | ---- |
| | | | | NFIDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ____________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 Shares| | | | FINANCIAL HORIZONS |
| |____| ------------- | | | | SECURITIES CORP. |
| | | Cost | ________________________________|_|___|Common Stock: 10,000 Shares|
| | | ---- | | AFFILIATE AGENCY, INC. | | | |------------- |
| | | PEBSCO-100% $500 | | | | | | Cost |
| | |____________________________| | Common Stock: 100 Shares | | | | ---- |
| | | | | | | NFIDAI-100% $153,000 |
| | | NFIDAI-100% Cost | | | |___________________________|
| | | ---- | | |
| | ___________________________ | $100 | | |
| | | PEBSCO OF MASSACHUSETTS | |___________________________| | |
| | | INSURANCE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 1,000 Shares| | | | |
| | | ------------- | | | | FINANCIAL HORIZONS |
| | | Cost | | |___| DISTRIBUTORS |
| | | ---- | | ___| AGENCY OF OHIO, |
| | | PEBSCO-100% $1,000 | | | | INC. |
| | |___________________________| | | |___________________________|
| | | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | MONTANA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 500 Shares | | ___| DISTRIBUTORS AGENCY |
| | | ------------- | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | ---- | | |
| | | PEBSCO-100% $500 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | NEW MEXICO | | | | |
| | | | | |___| FINANCIAL HORIZONS |
| |____|Common Stock: 1,000 Shares | | ___| DISTRIBUTORS AGENCY |
| | |------------- | | | | OF TEXAS, INC. |
| | | Cost | | | |___________________________|
| | | ----- | | |
| | | PEBSCO-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____| AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS, INC. | | |
|___________________________| |___________________________|
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE INSURANCE COMPANY |
| (FIRE) |
|_______________________________________|
________________________________________|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | NATIONWIDE HMO, INC. |
| INVESTOR SERVICES, INC. | | | (NW HMO) |
| (NEA) | | | Common Stock: 100 Shares |
_______| Common Stock: 500 Shares | |_____| ------------ |
| _____| ------------- | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $14,603,732 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MANAGEMENT |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| |_____| OF ALABAMA, INC. | | | Common Stock: 100 Shares |
| | | Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW HMO ---- |
| | | NEA-100% $5,000 | | | INC.-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH |
| | | INVESTOR SERVICES | | | AGENCY, INC. |
| | | OF MONTANA, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | Cost |
| | | Cost | | NW HMO ---- |
| | | ----- | | INC.-99% $116,077 |
| | | NEA-100% $500 | |___________________________|
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF NEVADA, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF OHIO, INC. |
| | | Common Stock: 100 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-91% $5,000 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF WYOMING, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | |
| | | NEA VALUEBUILDER |
| |_____| INVESTOR SERVICES |
| | | OF TEXAS, INC. |
| | | |
| | |___________________________|
| |
| | ___________________________
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
</TABLE>
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
December 31, 1995
Page 2
<PAGE> 70
Item 27. NUMBER OF CONTRACT OWNERS
The number of Contract Owners of Qualified and Non-Qualified
Contracts as of February 22, 1996 was 2,866 and 30, respectively.
Item 28. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State
of Ohio, for indemnification by the Company of any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director, officer or
employee of the Company, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, to the extent and under the circumstances
permitted by the General Corporation Law of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Advisory Services, Inc. ("NAS") acts as general
distributor for the Nationwide Multi-Flex Variable Account,
Nationwide DC Variable Account, Nationwide DCVA-II,
Nationwide Variable Account-II, Nationwide Variable
Account-5, Nationwide Variable Account-6, Nationwide
Variable Account-8, Nationwide VA Separate Account-A,
Nationwide VA Separate Account-B, Nationwide VA Separate
Account-C, Nationwide VL Separate Account-A, Nationwide VL
Separate Account-B, Nationwide VLI Separate Account-2,
Nationwide VLI Separate Account-3, NACo Variable Account and
the Nationwide Variable Account, all of which are separate
investment accounts of the Company or its affiliates.
NAS also acts as principal underwriter for the Nationwide
Investing Foundation, Nationwide Separate Account Trust,
Financial Horizons Investment Trust, and Nationwide
Investing Foundation II, which are open-end management
investment companies.
(b) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS AND OFFICERS
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, Ohio 43215
D. Richard McFerson Chairman of the Board of Directors and
One Nationwide Plaza Chairman and
Columbus, OH 43215 Chief Executive Officer--Nationwide
Insurance Enterprise and Director
Gordon E. McCutchan
One Nationwide Plaza Executive Vice President-Law and
Columbus, OH 43215 Corporate Services and Director
Robert A. Oakley Executive Vice President - Chief Financial
One Nationwide Plaza Officer and Director
Columbus, Ohio 43215
Robert J. Woodward Executive Vice President - Chief
One Nationwide Plaza Investment Officer and Director
Columbus, Ohio 43215
107 of 114
<PAGE> 71
(b) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS AND OFFICERS
W. Sidney Druen Senior Vice President and
One Nationwide Plaza General Counsel and
Columbus, OH 43215 Assistant Secretary
James F. Laird, Jr. Vice President and General
One Nationwide Plaza Manager
Columbus, OH 43215
Peter J. Neckermann Vice President
One Nationwide Plaza
Columbus, OH 43215
Harry S. Schermer Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
Rae I. Mercer Secretary
One Nationwide Plaza
Columbus, OH 43215
William G. Goslee Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
<TABLE>
<CAPTION>
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Advisory
Services,
Inc.
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Robert O. Cline
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity Contracts may be accepted;
(b) include either (1) as part of any application to purchase a
Contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
The Registrant hereby represents that the fees and charges
deducted under the Contract in the aggregate are reasonable in
relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the Company.
The Registrant hereby represents that any Contract offered by the
prospectus and which is issued pursuant to Section 403(b) of the
Code is issued by the Registrant in reliance upon, and in
compliance with, the Securities and Exchange Commission's
no-action letter to the American Council of Life Insurance
(publicly available November 28, 1988) which permits withdrawal
restrictions to the extent necessary to comply with IRC Section
403(b)(11).
108 of 114
<PAGE> 72
PROSPECTUS
MAY 1, 1996
NATIONWIDE
VARIABLE ACCOUNT
INDIVIDUAL DEFERRED
VARIABLE ANNUITY CONTRACTS
OFFERED BY
NATIONWIDE
LIFE INSURANCE COMPANY
109 of 114
<PAGE> 73
NATIONWIDE LIFE INSURANCE COMPANY
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED THROUGH NATIONWIDE VARIABLE ACCOUNT
(SUPPLEMENT DATED MAY 1, 1997 TO THE PROSPECTUS DATED MAY 1, 1996)
THIS SUPPLEMENT IS FOR USE ONLY WITH CONTRACTS ISSUED TO INDIVIDUAL RETIREMENT
ACCOUNTS THAT ARE DESCRIBED IN SECTION 408(a) OF THE INTERNAL REVENUE CODE (THE
"CODE") AND WHICH ALSO SATISFY THE DEFINITION OF SIMPLE RETIREMENT ACCOUNTS IN
SECTION 408(p) OF THE CODE (AS ENACTED IN SECTION 1421 OF THE SMALL BUSINESS JOB
PROTECTION ACT OF 1996).
1. The section entitled "GLOSSARY OF SPECIAL TERMS" in the prospectus is amended
by adding the following:
SIMPLE IRA - An Individual Retirement Account as defined by Section 408(a) or
and Individual Retirement Annuity as defined by Section 408(b) of the Code, to
which the only contributions that can be made are contributions under a SIMPLE
Plan and rollovers or transfers from another SIMPLE IRA.
SIMPLE PLAN - The Savings Incentive Match Plan for Employees of Small Employers.
This plan is a written arrangement established under Section 408(p) of the Code
which provides a simplified tax-favored retirement plan for Small Employers. In
a SIMPLE Plan, each employee may choose whether to have the Small Employer make
payments as contributions under the SIMPLE Plan or to receive these payments
directly in cash. A Small Employer that chooses to establish a SIMPLE Plan must
make either matching contributions or non-elective contributions. All
contributions under a SIMPLE Plan are made to SIMPLE IRAs.
SMALL EMPLOYER - An employer that had no more than 100 employees who earned
$5,000 or more in compensation during the preceding calendar year.
TWO-YEAR PERIOD - The Two-Year Period begins on the first day in which
contributions made by a Small Employer are deposited into the individual
employee's SIMPLE IRA.
2. The section entitled "SUMMARY OF CONTRACT EXPENSES" in the prospectus is
amended by adding the following footnote:
(3) The Contingent Deferred Sales Charge is waived for those Contracts
issued under a SIMPLE IRA Plan. Withdrawals may be made from the
Contract at any time without the imposition of any Contingent Deferred
Sales Charge. Any additional references throughout the prospectus to
the Contingent Deferred Sales Charge do not apply to Contracts issued
under SIMPLE IRA Plans, as required by Federal tax law, such charges do
not apply to Contracts issued under SIMPLE IRA Plans.
APO-2503-8 110
<PAGE> 74
3. The "EXAMPLE" Chart in the prospectus is amended with respect to Contracts
issued as SIMPLE IRAs as follows:
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1,000 investment and 5% annual return. These
dollar figures are illustrative only and should not be considered a
representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ------------------------------------------------------------------------------------------------------------
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>
American Century: 22 68 117 250 22 68 117 250 * 68 117 250
Benham Short-Term
Government
- ------------------------------------------------------------------------------------------------------------
American Century: 22 67 115 247 22 67 115 247 * 67 115 247
Income & Growth
- ------------------------------------------------------------------------------------------------------------
American Century: 25 77 132 282 25 77 132 282 * 77 132 282
Twentieth Century
Growth
- ------------------------------------------------------------------------------------------------------------
American Century: 33 102 172 359 33 102 172 359 * 102 172 359
Twentieth Century
International Growth
- ------------------------------------------------------------------------------------------------------------
American Century: 25 77 132 282 25 77 132 282 * 77 132 282
Twentieth Century
Ultra
- ------------------------------------------------------------------------------------------------------------
Delchester 23 72 123 264 23 72 123 264 * 72 123 264
Fund-Inst'l
- ------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus 25 77 132 281 25 77 132 281 * 77 132 281
- ------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 20 63 109 234 20 63 109 234 * 63 109 234
Index Fund (Formerly
Peoples Index Fund,
Inc.)
- ------------------------------------------------------------------------------------------------------------
The Dreyfus Third 26 81 139 294 26 81 139 294 * 81 139 294
Century Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Federated Bond Fund 26 80 137 291 26 80 137 291 * 80 137 291
- ------------------------------------------------------------------------------------------------------------
Evergreen Total 27 83 142 302 27 83 142 302 * 83 142 302
Return Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Advisor 30 92 157 330 30 92 157 330 * 982 157 330
Fund Equity Income
Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Advisor 31 96 163 342 31 96 163 342 * 96 163 342
Fund Growth
Opportunities Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Advisor 27 82 140 298 27 82 140 298 * 82 140 298
High Yield Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Advisor 30 92 157 330 30 92 157 330 * 92 157 330
Income & Growth Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Asset 25 77 131 279 25 77 131 279 * 77 131 279
Manager(TM)
- ------------------------------------------------------------------------------------------------------------
Fidelity 22 67 116 248 22 67 116 248 * 67 116 248
Equity-Income
Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Magellan 25 77 131 279 25 77 131 279 * 77 131 279
Fund
- ------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 23 70 120 258 23 70 120 258 * 70 120 258
- ------------------------------------------------------------------------------------------------------------
Fidelity VIP High 22 68 117 251 22 68 117 251 * 68 117 251
Income Portfolio
- ------------------------------------------------------------------------------------------------------------
Janus Fund 24 75 128 273 24 75 128 273 * 75 128 273
- ------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 25 78 133 284 25 78 133 284 * 78 133 284
- ------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 28 85 145 307 28 85 145 307 * 85 145 307
- ------------------------------------------------------------------------------------------------------------
MFS(R)World 32 97 164 344 32 97 164 344 * 97 164 344
Governments Fund
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond
Fund 22 68 117 251 22 68 117 251 * 68 117 251
- ------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 21 66 113 243 21 66 113 243 * 66 113 243
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 22 67 114 246 22 67 114 246 * 67 114 246
Fund
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 21 65 112 242 21 65 112 242 * 65 112 242
Market Fund
- ------------------------------------------------------------------------------------------------------------
Nationwide(R) U.S. 26 80 137 290 26 80 137 290 * 80 137 290
Government Income
Fund
- ---------------------------------------------------------------------------------------------------------------
Neuberger & Berman 24 73 125 266 24 73 125 266 * 73 125 266
Guardian Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
APO-2503-8 111
<PAGE> 75
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ------------------------------------------------------------------------------------------------------------
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>
Neuberger & Berman 22 68 117 250 22 68 117 250 * 68 117 250
Limited Maturity
Bond Fund
- ------------------------------------------------------------------------------------------------------------
Neuberger & Berman 24 73 126 268 24 73 126 268 * 73 126 268
Partners Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Oppenheimer Global 27 84 143 303 27 84 143 303 * 84 143 303
Fund
- ------------------------------------------------------------------------------------------------------------
Phoenix Balanced 25 78 133 284 25 78 133 284 * 78 133 284
Fund Series
- ------------------------------------------------------------------------------------------------------------
Strong Total Return 27 82 140 297 27 82 140 297 * 82 140 297
Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Templeton Foreign 27 82 140 298 27 82 140 298 * 82 140 298
Fund - Class I
- ------------------------------------------------------------------------------------------------------------
Warburg Pincus 28 86 146 309 28 86 146 309 * 86 146 309
Emerging Growth Fund
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The purpose of the Summary of Contract Expenses and Example is to assist the
Contract Owner in understanding the various costs and expenses both direct and
indirect. The expenses of the Variable Account as well as those of the
underlying Mutual Funds are reflected in the Example chart above. For more
complete descriptions of the expenses of the Variable Account, see "Variable
Account Charges, Purchase Payments, and Other Deductions." For more complete
information regarding expenses paid out of the assets of a particular underlying
Mutual Fund, see the underlying Mutual Fund's prospectus. Deductions for premium
taxes may also apply but are not reflected in the Example chart shown above (see
"Premium Taxes").
4. A new provision entitled "TAXATION OF SIMPLE IRA PLANS" is added to the
prospectus after the provision entitled "QUALIFIED PLANS, INDIVIDUAL RETIREMENT
ANNUITIES, AND INDIVIDUAL RETIREMENT Accounts". The new provision reads as
follows:
TAXATION OF SIMPLE IRA PLANS
Generally, distributions from a SIMPLE IRA are taxed in the same manner as an
IRA described under Sections 408(a) and 408(b) of the Code (see "Qualified
Plans, Individual Retirement Annuities And Individual Retirement Accounts").
However, any payment or distribution received from a SIMPLE IRA during the
Two-Year Period beginning on the date on which the individual first participated
in any SIMPLE Plan maintained by the individual's employer, will be taxed
according to Section 72(t)(6) of the Code.
A SIMPLE IRA may receive contributions under a qualified salary reduction
arrangement only. Therefore, a SIMPLE IRA cannot receive rollover distributions
from non-SIMPLE IRA individual retirement accounts or individual retirement
annuities; stock bonus, pension, or profit sharing plans; Section 403(b) plans;
or any source, other than another SIMPLE IRA.
Distributions from SIMPLE IRAs generally are includible in income similar to the
manner in which Distributions from IRAs are included in income. Section 72(t)(6)
of the Code provides that the rate of additional penalty tax is increased from
10% to 25% for withdrawals taken prior to age 59 1/2 during the Two-Year Period.
If, however, one of the exceptions to the application of the tax under Section
72(t) applies (for example, those amounts paid after age 59 1/2, after death, or
as part of a series of substantially equal payments), the exception also applies
to distributions within the Two-Year Period and the 25% additional penalty tax
rate does not apply.
APO-2503-8 112
<PAGE> 76
Distributions from a SIMPLE IRA during the Two-Year Period generally qualify as
rollover contributions (and thus are not includible in gross income) only if the
distributions are paid into another SIMPLE IRA and satisfy all other
requirements as specified in Section 408(d)(3) of the Code for treatment as
rollover contributions.
Any amount in a SIMPLE IRA can be transferred to another SIMPLE IRA in a
tax-free trustee-to-trustee transfer during the Two-Year Period. If however,
during the Two-Year Period, an amount is paid from a SIMPLE IRA directly to the
trustee of an IRA that is not a SIMPLE IRA, the payment will be treated as a
distribution from the SIMPLE IRA and as a contribution to another IRA, and thus
will not qualify as a rollover contribution. After the expiration of the
Two-Year Period, any amount in a SIMPLE IRA can be transferred in a tax-free
trustee-to-trustee transfer to another IRA that was not established as a SIMPLE
IRA.
For information regarding eligibility to establish or participate in a SIMPLE
IRA Plan, limitations on permissible amounts of Purchase Payments, and tax
consequences of Distributions from SIMPLE IRA Plans, the purchasers of such
Contracts should seek competent advice. The terms of such Plans may limit the
rights available under the Contract.
Any Distribution from a SIMPLE IRA that is eligible for rollover treatment will
be subject to federal tax withholding at the statutory rate (currently 20%)
unless the Distribution is made directly to an appropriate Plan as described
above.
APO-2503-8 113
<PAGE> 77
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act
of 1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT has caused this
Post-Effective Amendment to be signed on its behalf in the City of Columbus, and
State of Ohio, on this 28th day of February, 1997.
NATIONWIDE VARIABLE ACCOUNT
----------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
----------------------------------
(Depositor)
By/s/JOSEPH P. RATH
----------------------------------
Joseph P. Rath
Vice President and
Associate General Counsel
As required by the Securities Act of 1933, this Post-Effective Amendment has
been signed by the following persons in the capacities indicated on the 28th day
of February, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
LEWIS J. ALPHIN Director
- -----------------------------
Lewis J. Alphin
Director
KEITH W. ECKEL
- -----------------------------
Keith W. Eckel
Director
WILLARD J. ENGEL
- -----------------------------
Willard J. Engel
Director
FRED C. FINNEY
- -----------------------------
Fred C. Finney
CHARLES L. FUELLGRAF, JR. Director
- -----------------------------
Charles L. Fuellgraf, Jr.
JOSEPH J. GASPER President/Chief Operating Officer and Director
- -----------------------------
Joseph J. Gasper
HENRY S. HOLLOWAY Chairman of the Board and Director
- -----------------------------
Henry S. Holloway
Chairman and Chief Executive Officer - Nationwide Insurance
D. RICHARD MCFERSON Enterprise and Director
- -----------------------------
D. Richard McFerson
DAVID O. MILLER Director
- -----------------------------
David O. Miller
C. RAY NOECKER Director
- -----------------------------
C. Ray Noecker
ROBERT A. OAKLEY Executive Vice President-Chief Financial Officer
- -----------------------------
Robert A. Oakley
JAMES F. PATTERSON Director By /s/JOSEPH P. RATH
- ----------------------------- --------------------
James F. Patterson Joseph P. Rath
Attorney-in-Fact
ARDEN L. SHISLER Director
- -----------------------------
Arden L. Shisler
Director
ROBERT L. STEWART
- -----------------------------
Robert L. Stewart
Director
NANCY C. THOMAS
- -----------------------------
Nancy C. Thomas
Director
HAROLD W. WEIHL
- -----------------------------
Harold W. Weihl
</TABLE>
APO-2503-8 114
<PAGE> 78
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, which has filed or will file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933, as amended,
various Registration Statements and amendments thereto for the registration
under said Act of Individual Deferred Variable Annuity Contracts in connection
with the MFS Variable Account, Nationwide Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-3, Nationwide Variable Account-4,
Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide
Fidelity Advisor Variable Account, Nationwide Multi-Flex Variable Account and
Nationwide Variable Account-8; and the registration of fixed interest rate
options subject to a market value adjustment offered under some or all of the
aforementioned individual Variable Annuity Contracts in connection with the
Nationwide Multiple Maturity Separate Account, and the registration of Group
Flexible Fund Retirement Contracts in connection with the Nationwide DC
Variable Account, Nationwide DCVA-II, and the NACo Variable Account; and the
registration of Group Common Stock Variable Annuity Contracts in connection
with Separate Account No. 1; and the registration of variable life insurance
policies in connection with the Nationwide VLI Separate Account, Nationwide
VLI Separate Account-2 and Nationwide VLI Separate Account-3 of Nationwide Life
Insurance Company, hereby constitutes and appoints D. Richard McFerson, Joseph
J. Gasper, Gordon E. McCutchan, W. Sidney Druen, and Joseph P. Rath, and each
of them with power to act without the others, his/her attorney, with full power
of substitution and resubstitution, for and in his/her name, place and stead,
in any and all capacities, to approve, and sign such Registration Statements
and any and all amendments thereto, with power to affix the corporate seal of
said corporation thereto and to attest said seal and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys, and
each of them, full power and authority to do and perform all and every act and
thing requisite to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming that which said attorneys, or any of
them, may lawfully do or cause to be done by virtue hereof. This instrument
may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this 9th day of August, 1996.
- ------------------------------------- -------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
- ------------------------------------- -------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
- ------------------------------------- -------------------------------------
Willard J. Engel, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
- -------------------------------------
Fred C. Finney, Director -------------------------------------
James F. Patterson, Director
- -------------------------------------
Charles F. Fuellgraf, Jr., Director -------------------------------------
Arden L. Shisler, Director
- -------------------------------------
Joseph J. Gasper, President and Chief -------------------------------------
Operating Officer and Director Robert L. Stewart, Director
- ------------------------------------- -------------------------------------
Henry S. Holloway, Chairman of the Nancy C. Thomas, Director
Board, Director
-------------------------------------
- ------------------------------------- Harold W. Weihl, Director
D. Richard McFerson, Chairman and
Chief Executive Officer-Nationwide
Insurance Enterprise and Director
