<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. 31 [x]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 32 [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
DENNIS W. CLICK, 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
[X] on January 2, 1998 pursuant to paragraph (b) of Rule 485
[ ] 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.
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<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM PAGE
Part A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C> <C>
Item 1. Cover page................................................... 7
Item 2. Definitions.................................................. 9
Item 3. Synopsis or Highlights....................................... 19
Item 4. Condensed Financial Information.............................. 20
Item 5. General Description of Registrant, Depositor, and Portfolio
Companies ................................................... 24
Item 6. Deductions and Expenses...................................... 25
Item 7. General Description of Variable Annuity Contracts............ 25
Item 8. Annuity Period............................................... 30
Item 9. Death Benefit and Distributions.............................. 31
Item 10. Purchases and Contract Value................................. 34
Item 11. Redemptions.................................................. 35
Item 12. Taxes........................................................ 36
Item 13. Legal Proceedings............................................ 37
Item 14. Table of Contents of the Statement of Additional Information. 37
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page................................................... 46
Item 16. Table of Contents............................................ 46
Item 17. General Information and History.............................. 46
Item 18. Services..................................................... 46
Item 19. Purchase of Securities Being Offered......................... 46
Item 20. Underwriters................................................. 47
Item 21. Calculation of Yield Quotations of Money Market Sub-Accounts. 47
Item 22. Annuity Payments............................................. 47
Item 23. Financial Statements......................................... 48
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits........................... 108
Item 25. Directors and Officers of the Depositor..................... 111
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant..................................... 113
Item 27. Number of Contract Owners................................... 122
Item 28. Indemnification............................................. 122
Item 29. Principal Underwriter....................................... 122
Item 30. Location of Accounts and Records............................ 124
Item 31. Management Services......................................... 124
Item 32. Undertakings................................................ 124
</TABLE>
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SUPPLEMENT DATED JANUARY 2, 1998 TO
PROSPECTUS DATED MAY 1, 1997 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. THE LISTING OF UNDERLYING MUTUAL FUND OPTIONS UNDER THE SECTION ENTITLED "FOR
CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993" AT PAGE 1 OF THE PROSPECTUS IS
AMENDED TO INCLUDE THE FOLLOWING ADDITIONAL UNDERLYING MUTUAL FUND OPTIONS:
Dreyfus Appreciation Fund, Inc.
Dreyfus Balanced Fund, Inc.
Federated High Yield Trust
Franklin Mutual Series Fund Inc. - Mutual Shares Fund: Class 1
Neuberger & Berman Equity Trust(R) - Neuberger & Berman Genesis Trust
Warburg Pincus Global Fixed Income Fund
2. THE "UNDERLYING MUTUAL FUND ANNUAL EXPENSES (FOR CONTRACTS ISSUED ON OR AFTER
JANUARY 1, 1993)" PROVISION AT PAGE 7 OF THE PROSPECTUS IS AMENDED TO REFLECT
THE ADDITION OF THE FOLLOWING INFORMATION:
- ----------------------------------------------------------------------------
MANAGEMENT OTHER 12b-1 FEES TOTAL
FEES EXPENSES PORTFOLIO
EXPENSES
- ----------------------------------------------------------------------------
Dreyfus Appreciation Fund, 0.55% 0.36% 0.00% 0.91%
Inc.
- ----------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. 0.60% 0.40% 0.00% 1.00%
- ----------------------------------------------------------------------------
Federated High Yield Trust 0.52% 0.36% 0.00% 0.88%
- ----------------------------------------------------------------------------
Franklin Mutual Series 0.60% 0.12% 0.35% 1.07%
Fund Inc. - Mutual Shares
Fund: Class 1
- ----------------------------------------------------------------------------
Neuberger & Berman Equity 0.98% 0.40% 0.00% 1.38%
Trust(R)- Neuberger & Berman
Genesis Trust
- ----------------------------------------------------------------------------
Warburg Pincus Global Fixed 0.50% 0.45% 0.00% 0.95%
Income Fund
- ----------------------------------------------------------------------------
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ADDITIONALLY, THE ACCOMPANYING NARRATIVE TABLE AT PAGE 8 OF THE PROSPECTUS IS
AMENDED TO REFLECT THE FOLLOWING FEE WAIVER OR EXPENSE REIMBURSEMENT INFORMATION
WITH RESPECT TO THE UNDERLYING MUTUAL FUND OPTIONS LISTED ABOVE:
- --------------------------------------------------------------------------------
FUND EXPENSES WITHOUT REIMBURSEMENT OR WAIVER
- --------------------------------------------------------------------------------
Federated High Yield Trust The management fee has been reduced to
reflect the voluntary waiver of a portion of
the management fee. Without such wavier, the maximum
management fee would have been 0.75% of average net
assets. The total operating expenses would have been
1.16% of average net assets absent the voluntary
waivers of portions of the management fee and the
shareholder services fee, of which a portion has
been reduced from 0.25% to 0.20% of average net
assets.
- --------------------------------------------------------------------------------
Neuberger & Berman Equity The above figures reflect a voluntary waiver
Trust(R) - Neuberger & of a portion of the management fee borne
Berman Genesis Trust indirectly by the Trust to reduce that fee
by 0.10% of average net assets. Absent the
reimbursement and fee waiver, the Management
Fees would have been 1.25% making the Total
Operating Expenses 1.65% of average net assets.
- --------------------------------------------------------------------------------
Warburg Pincus Global Fixed Absent the waiver of fees by the Fund's
Income Fund investment adviser, Management Fees, Other
Expenses and Total Portfolio Expenses would have
been 1.00%, 0.51% and 1.51% of average net assets,
respectively.
- --------------------------------------------------------------------------------
3. THE "EXAMPLE (FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)" AT PAGE 9 OF
THE PROSPECTUS IS AMENDED BY ADDING THE FOLLOWING INFORMATION:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
If you surrender If you do not If you annuitize
your Contract surrender your your Contract
at the end of the Contract at the at the end of the
applicable end of the applicable
time period applicable time time period
period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
Yr. Yrs.Yrs. Yrs. Yr. Yrs Yrs. Yrs. Yr. Yrs. Yrs. Yrs.
- --------------------------------------------------------------------------------
Dreyfus 94 119 154 272 24 74 127 272 * 74 127 272
Appreciation Fund,
Inc.
- --------------------------------------------------------------------------------
Dreyfus Balanced 95 122 159 281 25 77 132 281 * 77 132 281
Fund, Inc.
- --------------------------------------------------------------------------------
Federated High 94 118 153 268 24 73 126 268 * 73 126 268
Yield Trust
- --------------------------------------------------------------------------------
Franklin Mutual 96 124 163 288 26 79 136 288 * 79 136 288
Series Fund Inc. -
Mutual Shares
Fund: Class 1
- --------------------------------------------------------------------------------
Neuberger & Berman 99 134 179 320 29 89 152 320 * 89 152 320
Equity Trust(R)-
Neuberger & Berman
Genesis Trust
- --------------------------------------------------------------------------------
Warburg Pincus 95 121 156 276 25 76 129 276 * 76 129 276
Global Fixed
Income Fund
- --------------------------------------------------------------------------------
</TABLE>
THE "EXAMPLE" IS FURTHER AMENDED TO REFLECT THE FOLLOWING CHANGE:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
If you surrender If you do not If you annuitize
your Contract surrender your your Contract
at the end of the Contract at the at the end of the
applicable end of the applicable
time period applicable time time period
period
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3 5 10 1 3 5 10 1 3 5 10
Yr. Yrs. Yrs. Yrs. Yr. Yrs Yrs. Yrs. Yr. Yrs. Yrs. Yrs.
- --------------------------------------------------------------------------------
Dreyfus 94 119 154 272 24 74 127 272 * 74 127 272
Appreciation Fund,
Inc.
- --------------------------------------------------------------------------------
</TABLE>
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4. "APPENDIX B - PARTICIPATING FUNDS UNDERLYING MUTUAL FUND OPTIONS (AVAILABLE
FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)" AT PAGES 34 THROUGH 38 IS
AMENDED BY ADDING THE FOLLOWING INFORMATION:
DREYFUS APPRECIATION FUND, INC.
Investment Objective: To provide long-term capital growth consistent with the
preservation of capital. Current income is a secondary investment objective. The
Fund seeks to meet its objective by investing primarily in the common stocks of
domestic and foreign issuers.
DREYFUS BALANCED FUND, INC.
Investment Objective: To provide long-term capital growth and current income,
consistent with reasonable investment risk. The Fund is managed as a balanced
fund and invests in equity and debt securities, the proportion of which will
vary from time to time in accordance the fund manager's assessment of economic
conditions and investment opportunities.
FEDERATED HIGH YIELD TRUST
Investment Objective: Seeks high current income by investing primarily in a
professionally managed, diversified portfolio of fixed income securities. Such
securities are expected to be lower-rated corporate debt obligations commonly
referred to as "junk bonds." Investments of this type are subject to a greater
risk of loss of principal and interest than investments in higher rated
securities. The Trust's investment adviser will endeavor to limit these risks
through diversifying the portfolio and through careful credit analysis of
individual issuers.
FRANKLIN MUTUAL SERIES FUND INC. - MUTUAL SHARES FUND: CLASS 1
Investment Objective: Seeks capital appreciation, which may occasionally be
short-term. Income is a secondary objective. The Fund seeks to meet its
objectives by primarily investing in common stock, preferred stock and corporate
debt securities which may be convertible into common stock.
NEUBERGER & BERMAN EQUITY TRUST(R) - NEUBERGER & BERMAN GENESIS TRUST
Investment Objective: Seeks capital appreciation by investing primarily in
stocks of companies with small market capitalizations (usually up to
$1.5 billion). The portfolio manager seeks to buy the stocks of strong
companies with a history of solid performance and a proven management team,
which are selling at attractive prices.
WARBURG PINCUS GLOBAL FIXED INCOME FUND
Investment Objective: Seeks to maximize total investment return consistent with
prudent investment management, consisting of a combination of interest income,
currency gains and capital appreciation. The Fund will pursue its objective by
investing in a portfolio principally consisting of investment grade fixed income
securities of governmental and corporate issuers denominated in various
currencies, including U.S. dollars.
5. THE SECTION ENTITLED "ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT" AT PAGE 24 OF
THE PROSPECTUS IS AMENDED BY ADDING THE FOLLOWING PROVISIONS TO PAGE 25 OF
THE PROSPECTUS IMMEDIATELY PROCEEDING THE "ANNUITY PAYMENT OPTION" SECTION:
DEATH OF CONTRACT OWNER PROVISIONS
If the Contract Owner and the Annuitant are not the same person and such
Contract Owner dies prior to the Annuitization Date, then the Designated
Annuitant becomes the Contract Owner. In such event, the entire interest in the
Contract Value, less any applicable deductions (which may include a Contingent
Deferred Sales Charge), must be distributed in accordance with the appropriate
"Required Distribution Provisions" section.
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DEATH OF ANNUITANT PROVISIONS
If the Contract Owner and Annuitant are not the same person, and the Annuitant
dies prior to the Annuitization Date, then the Contingent Designated Annuitant
becomes the Annuitant and no Death Benefit is payable. In the event there is no
living Contingent Designated Annuitant then, upon the Annuitant's death, a Death
Benefit will be payable to the Beneficiary, the Contingent Beneficiary, the
Contract Owner, or the Contract Owner's estate, as specified in the "Beneficiary
Provisions."
The recipient of the Death Benefit may elect to receive such Death Benefits in
the form of: (1) a lump sum distribution; (2) an annuity payout; or (3) any
Distribution that is permitted under state and federal regulations and is
acceptable by the Company. Such election must be received by the Company within
60 days of the Annuitant's death.
If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be paid according to the selected Annuity Payment Option.
DEATH OF CONTRACT OWNER/ANNUITANT PROVISIONS
If any Contract Owner and the Annuitant are the same person, and such person
dies before the Annuitization Date, a Death Benefit will be payable to the
Beneficiary, Contingent Beneficiary, or the last surviving Contract Owner's
estate, as specified in the "Beneficiary Provisions" and in accordance with the
appropriate "Required Distribution Provisions."
If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be paid according to the selected Annuity Payment Option.
DEATH BENEFIT PAYMENT PROVISIONS
The value of the Death Benefit will be determined as of the Valuation Date
coincident with or next following the date the Company receives in good order at
the Home Office the following three items in writing: (1) proper proof of the
Annuitant's death; (2) an election specifying the Distribution method; and (3)
any applicable state required form(s).
If the Annuitant dies prior to his or her 75th birthday, the dollar amount of
the Death Benefit will be the greater of: (1) the Contract Value; or (2) the sum
of all Purchase Payment less any amounts surrendered.
The dollar amount of the Death Benefit will be equal to 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.
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<PAGE> 7
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 prior to January 1, 1993 were issued to the
trustees of Qualified Plans as Qualified Contracts. Contracts issued after
January 1, 1993 may be issued to custodians of Individual Retirement Accounts
("IRAs").
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 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
- --------------------------------------------------------------------------------
- -American Century: Benham Short-Term Fidelity VIP High Income Portfolio*
Government (additional
- --------------------------------------------------------------------------------
- -American Century: Income & Growth Purchase Payments or exchanges may
not be
- --------------------------------------------------------------------------------
- -American Century: Twentieth Century made to this Fund on or after
Growth December 1, 1993).
- --------------------------------------------------------------------------------
- -American Century: Twentieth Century -Janus Fund
International
- --------------------------------------------------------------------------------
Growth -Janus Twenty Fund
- --------------------------------------------------------------------------------
- -American Century: Twentieth Century Ultra -Janus Worldwide Fund
- --------------------------------------------------------------------------------
- -Delchester Fund-Institutional Class -MFS(R) World Governments Fund
- --------------------------------------------------------------------------------
- -Dreyfus A Bonds Plus, Inc. -Nationwide(R) Bond Fund
- --------------------------------------------------------------------------------
- -Dreyfus S & P 500 Index Fund -Nationwide(R) Fund
- --------------------------------------------------------------------------------
- -Dreyfus Third Century Fund, Inc. -Nationwide(R) Growth Fund
- --------------------------------------------------------------------------------
- -Evergreen Income and Growth Fund -Nationwide(R) Money Market Fund
- --------------------------------------------------------------------------------
- -Federated Bond Fund -Nationwide(R) U.S. Government Income
Fund
- --------------------------------------------------------------------------------
- -Fidelity Advisor Balanced Fund - -Neuberger & Berman Guardian Fund,
Class T Inc.
- --------------------------------------------------------------------------------
- -Fidelity Advisor Equity Income Fund - -Neuberger & Berman Limited Maturity
Class T Bond Fund
- --------------------------------------------------------------------------------
- -Fidelity Advisor Growth Opportunities -Neuberger & Berman Partners Fund,
Fund - Class T Inc.
- --------------------------------------------------------------------------------
- -Fidelity Advisor High Yield Fund - -Oppenheimer Global Fund
Class T
- --------------------------------------------------------------------------------
- -Fidelity Asset Manager(TM) -Phoenix Balanced Fund Series
- --------------------------------------------------------------------------------
- -Fidelity Equity-Income Fund -Strong Total Return Fund, Inc.
- --------------------------------------------------------------------------------
- -Fidelity Magellan(R) Fund -Templeton Foreign Fund - Class I
- --------------------------------------------------------------------------------
- -Fidelity Puritan Fund -Warburg Pincus Emerging Growth Fund
- --------------------------------------------------------------------------------
*The High Income Portfolio may invest in lower quality debt securities
commonly referred to as junk bonds.
1
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<PAGE> 8
FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993
- -------------------------------------------------------------------------------
- -American Century: Twentieth Century -Fidelity VIP High Income Portfolio(2)
Growth
- -------------------------------------------------------------------------------
- -American Century: Benham Short-Term -MFS(R) World Governments Fund
Government
- -------------------------------------------------------------------------------
- -Fidelity Capital & Income Fund 1 -Nationwide(R) Money Market Fund
- -------------------------------------------------------------------------------
1 Additional Purchase Payments or exchanges may not be made to this Fund on
or after May 1, 1991. Not available for Contracts which were issued on or
after May 1, 1987.
2 Additional Purchase Payments or exchanges may not be made to this Fund on
or after December 1, 1993.
This prospectus provides you with the basic information you should know
about the Individual Deferred Variable Annuity Contracts issued by Nationwide
Variable Account before investing. You should read it and keep it for future
reference. A Statement of Additional Information dated May 1, 1997, containing
further information about the Contracts and the 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, 1997, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 42 OF THE PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
2
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<PAGE> 9
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 (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.
3
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<PAGE> 10
HOME OFFICE- The main office of the Company located in Columbus, Ohio.
INDIVIDUAL RETIREMENT ACCOUNT/IRA- A custodial account qualifying for favorable
tax treatment under Section 408 of the Code, and which may hold this Contract as
an investment asset. 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.
NON-QUALIFIED CONTRACT- A Contract not qualifying for favorable tax treatment
under Sections 401 (Qualified Plans), 408 (IRAs), or 403(b) (Tax Sheltered
Annuities) of the Code.
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 receiving favorable tax treatment under the Code,
including those described in Sections 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 qualifying for favorable tax treatment
under Section 403(b) of the Code.
UNDERLYING MUTUAL FUND (FUND) - A registered management investment company in
which the assets of the Sub-Accounts of the Variable Account will be invested.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's Underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
VARIABLE ACCOUNT- The Nationwide Variable Account, a separate investment account
of the Company to 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.
4
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<PAGE> 11
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS................................................ 3
SUMMARY OF CONTRACT EXPENSES............................................. 6
SYNOPSIS................................................................. 13
CONDENSED FINANCIAL INFORMATION.......................................... 14
NATIONWIDE LIFE INSURANCE COMPANY........................................ 18
THE VARIABLE ACCOUNT..................................................... 18
Underlying Mutual Fund Options..................................... 18
Voting Rights...................................................... 19
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS........ 19
Mortality Risk Charge.............................................. 19
Expense Risk Charge................................................ 19
Contingent Deferred Sales Charge................................... 19
Elimination of Contingent Deferred Sales Charge.................... 20
Contract Maintenance and Administration Charge..................... 21
Premium Taxes...................................................... 21
Expenses of Variable Account....................................... 21
Investments of the Variable Account................................ 21
Right to Revoke.................................................... 22
Transfers.......................................................... 22
Loan Privilege..................................................... 22
Beneficiary Provisions............................................. 23
Ownership Provisions............................................... 23
Substitution of Securities......................................... 24
Inquiries.......................................................... 24
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT.................................. 24
Value of an Annuity Unit........................................... 24
Assumed Investment Rate............................................ 24
Frequency and Amount of Annuity Payments........................... 24
Annuity Commencement Date.......................................... 24
Change in Annuity Commencement Date................................ 24
Change in Form of Annuity.......................................... 25
Annuity Payment Option............................................. 25
Death Benefit After the Annuitization Date......................... 25
Required Distributions for Qualified Plans......................... 25
Required Distributions for Individual Retirement Annuities and
Individual Retirement Accounts.................................. 26
Generation-Skipping Transfers...................................... 26
GENERAL INFORMATION...................................................... 27
Contract Owner Services............................................ 27
Statements and Reports............................................. 27
Allocation of Purchase Payments and Contract Value................. 28
Value of a Variable Account Accumulation Unit...................... 28
Net Investment Factor.............................................. 28
Valuation of Assets................................................ 29
Determining the Contract Value..................................... 29
Surrender (Redemption)............................................. 29
Surrenders Under a Qualified Plan.................................. 29
Taxes.............................................................. 29
Qualified Plans and Individual Retirement Accounts................. 30
Individual Retirement Accounts..................................... 30
LEGAL PROCEEDINGS........................................................ 30
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION................. 31
APPENDIX A............................................................... 32
APPENDIX B............................................................... 34
5
11 of 135
<PAGE> 12
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
CONTRACT TRANSACTION EXPENSES
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%
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: (a) for first year withdrawals of up to
10% of Purchase Payments for IRA rollover contracts: or (b) for any amount
withdrawn from this Contract required to meet minimum Distribution
requirements under the Code. Withdrawals may be restricted for Contracts
issued pursuant to the terms of a Qualified Plan. 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").
6
12 of 135
<PAGE> 13
UNDERLYING MUTUAL FUND ANNUAL EXPENSES 3
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
Management Other 12b-1 Total
Fees Expenses Fees Portfolio
Expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Benham Short-Term 0.70% 0.00% 0.00% 0.70%
Government
- --------------------------------------------------------------------------------
American Century: Income & Growth 0.30% 0.34% 0.00% 0.64%
- --------------------------------------------------------------------------------
American Century: Twentieth Century 1.00% 0.00% 0.00% 1.00%
Growth
- --------------------------------------------------------------------------------
American Century: Twentieth Century 1.45% 0.00% 0.00% 1.45%
International Growth
- --------------------------------------------------------------------------------
American Century: Twentieth Century 1.00% 0.00% 0.00% 1.00%
Ultra
- --------------------------------------------------------------------------------
Delchester Fund-Institutional Class 0.57% 0.20% 0.00% 0.77%
- --------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 0.65% 0.28% 0.00% 0.93%
- --------------------------------------------------------------------------------
Dreyfus S & P 500 Index Fund 0.30% 0.25% 0.00% 0.55%
(Formerly Peoples Index Fund(R), Inc.)
- --------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 0.75% 0.36% 0.00% 1.11%
- --------------------------------------------------------------------------------
Evergreen Income and Growth Fund 0.98% 0.21% 0.00% 1.19%
- --------------------------------------------------------------------------------
Federated Bond Fund 0.50% 0.59% 0.00% 1.09%
- --------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund - Class T 0.51% 0.31% .50% 1.32%
- --------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund - 0.45% 0.26% 0.50% 1.21%
Class T
- --------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities 0.61% 0.23% 0.50% 1.34%
Fund - Class T
- --------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - 0.60% 0.27% 0.25% 1.12%
Class T
- --------------------------------------------------------------------------------
Fidelity Asset Manager 0.68% 0.27% 0.00% 0.95%
- --------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.45% 0.23% 0.00% 0.68%
- --------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 0.47% 0.21% 0.00% 0.68%
- --------------------------------------------------------------------------------
Fidelity Puritan Fund 0.46% 0.28% 0.00% 0.74%
- --------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.59% 0.12% 0.00% 0.71%
- --------------------------------------------------------------------------------
Janus Fund 0.65% 0.22% 0.00% 0.87%
- --------------------------------------------------------------------------------
Janus Twenty Fund 0.66% 0.24% 0.00% 0.90%
- --------------------------------------------------------------------------------
Janus Worldwide Fund 0.67% 0.30% 0.00% 0.97%
- --------------------------------------------------------------------------------
MFS(R) World Governments Fund 0.90% 0.36% 0.25% 1.51%
- --------------------------------------------------------------------------------
Nationwide(R) Bond Fund 0.50% 0.20% 0.00% 0.70%
- --------------------------------------------------------------------------------
Nationwide(R) Fund 0.50% 0.11% 0.00% 0.61%
- --------------------------------------------------------------------------------
Nationwide(R) Growth Fund 0.50% 0.14% 0.00% 0.64%
- --------------------------------------------------------------------------------
Nationwide(R) Money Market 0.45% 0.15% 0.00% 0.60%
- --------------------------------------------------------------------------------
Nationwide(R) U.S. Government Income 0.65% 0.21% 0.20% 1.06%
Fund
- --------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund, Inc. 0.70% 0.12% 0.00% 0.82%
- --------------------------------------------------------------------------------
Neuberger & Berman Limited Maturity 0.51% 0.19% 0.00% 0.70%
Bond Fund
- --------------------------------------------------------------------------------
Neuberger & Berman Partners Fund, Inc. 0.74% 0.10% 0.00% 0.84%
- --------------------------------------------------------------------------------
Oppenheimer Global Fund 0.71% 0.28% 0.18% 1.17%
- --------------------------------------------------------------------------------
Phoenix Balanced Fund Series 0.51% 0.26% 0.25% 1.02%
- --------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 0.80% 0.28% 0.00% 1.08%
- --------------------------------------------------------------------------------
Templeton Foreign Fund- Class I 0.61% 0.26% 0.25% 1.12%
- --------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 0.90% 0.37% 0.00% 1.27%
- --------------------------------------------------------------------------------
</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 information relating to the Underlying Mutual
Fund expenses was provided by the Underlying Mutual Fund and was not
independently verified by the Company. The following Underlying Mutual
Funds are subject to fee waivers or expense reimbursement arrangements:
7
13 of 135
<PAGE> 14
- --------------------------------------------------------------------------------
FUND EXPENSES WITHOUT REIMBURSEMENT OR WAIVER
- --------------------------------------------------------------------------------
Federated Bond Fund The management fee has been reduced to
reflect the voluntary waiver of a
portion of the management fee. The
adviser can terminate this voluntary
waiver at any time at its sole
discretion. The maximum management fee
is 0.75%. The total operating expenses
were 1.30% absent the voluntary waiver
of the portion of the management fee.
- --------------------------------------------------------------------------------
Fidelity Equity-Income Fund The Fund has entered into arrangements
with its custodian and transfer agent
whereby interest earned on uninvested
cash balances is used to reduce
custodian and transfer agent expenses.
Including these reductions, the total
operating expenses presented in the
table would have been 0.68%.
- --------------------------------------------------------------------------------
Fidelity Magellan(R) Fund The Fund has entered into arrangements
with its custodian and transfer agent
whereby interest earned on uninvested
cash balances is used to reduce
custodian and transfer agent expenses.
Including these reductions, the total
operating expenses presented in the
table would have been 0.95%.
- --------------------------------------------------------------------------------
Fidelity Puritan Fund The Fund has entered into arrangements
with its custodian and transfer agent
whereby interest earned on uninvested
cash balances is used to reduce
custodian and transfer agent expenses.
Including these reductions, the total
operating expenses presented in the
table would have been 0.69%.
- --------------------------------------------------------------------------------
Nationwide(R) Money Market Fund The Fund will waive 0.05% of the total
0.50% management fee until further
notice.
- --------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund Absent the voluntary waiver of a
portion of the fees payable to the
Funds' investment adviser, the
Management Fees for the Fund would have
equaled 0.90%, and Total Fund Operating
Expenses for the Fund would have
equaled 1.26%.
- --------------------------------------------------------------------------------
8
14 of 135
<PAGE> 15
EXAMPLE
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
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 IF YOU DO NOT IF YOU ANNUITIZE
YOUR SURRENDER YOUR YOUR
CONTRACT AT THE END CONTRACT AT THE CONTRACT AT THE END
OF THE APPLICABLE END OF THE OF THE APPLICABLE
TIME PERIOD APPLICABLE TIME TIME PERIOD
PERIOD
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- --------------------------------------------------------------------------------
American Century: 92 113 143 249 22 68 116 249 68 116 249
Benham Short-Term *
Government
- --------------------------------------------------------------------------------
American Century: 71 111 158 243 21 66 113 243 * 66 113 243
Income & Growth
- --------------------------------------------------------------------------------
American Century: 75 122 177 281 25 77 132 281 77 132 281
Twentieth Century *
Growth
- --------------------------------------------------------------------------------
American Century: 80 136 200 327 30 91 155 327 91 155 327
Twentieth Century *
International Growth
- --------------------------------------------------------------------------------
American Century: 75 122 177 281 25 77 132 281 77 132 281
Twentieth Century *
Ultra
- --------------------------------------------------------------------------------
Delchester 73 115 165 257 23 70 120 257 * 70 120 257
Fund-Inst'l
- --------------------------------------------------------------------------------
Dreyfus A Bonds Plus 74 120 173 274 24 75 128 274 * 75 128 274
- --------------------------------------------------------------------------------
Dreyfus S & P 500 70 108 153 233 20 63 108 233 63 108 233
Index Fund (Formerly *
Peoples Index Fund,
Inc.)
- --------------------------------------------------------------------------------
The Dreyfus Third 76 126 183 292 26 81 138 292 * 81 138 292
Century Fund, Inc.
- --------------------------------------------------------------------------------
Evergreen Income and 77 128 187 301 27 83 142 301 * 83 142 301
Growth Fund
- --------------------------------------------------------------------------------
Federated Bond Fund 76 125 182 290 26 80 137 290 * 80 137 290
- --------------------------------------------------------------------------------
Fidelity Advisor
Balanced Fund - *
Class T
- --------------------------------------------------------------------------------
Fidelity Advisor 72 113 162 250 22 68 117 250 68 117 250
Fund Equity *
Income Fund - Class T
- --------------------------------------------------------------------------------
Fidelity Advisor 73 117 168 264 23 72 123 264 72 123 264
Fund Growth *
Opportunities Fund -
Class T
- --------------------------------------------------------------------------------
Fidelity Advisor 74 118 170 267 24 73 125 267 * 73 125 267
High Yield Fund -
Class T
- --------------------------------------------------------------------------------
Fidelity Asset 75 121 174 276 25 76 129 276 * 76 129 276
Manager(TM)
- --------------------------------------------------------------------------------
Fidelity 72 112 160 247 22 67 115 247 * 67 115 247
Equity-Income Fund
- --------------------------------------------------------------------------------
Fidelity Magellan 72 112 160 247 22 67 115 247 * 67 115 247
Fund
- --------------------------------------------------------------------------------
Fidelity Puritan Fund 72 114 163 254 22 69 118 254 * 69 118 254`
- --------------------------------------------------------------------------------
Fidelity VIP High 72 113 162 250 22 68 117 250 * 68 117 250
Income Portfolio
- --------------------------------------------------------------------------------
Janus Fund 74 118 170 267 24 73 125 267 * 73 125 267
- --------------------------------------------------------------------------------
Janus Twenty Fund 74 119 172 271 24 74 127 271 * 74 127 271
- --------------------------------------------------------------------------------
Janus Worldwide Fund 75 121 175 278 25 76 130 278 * 76 130 278
- --------------------------------------------------------------------------------
MFS(R) World 78 130 190 308 28 85 145 308 * 85 145 308
Governments Fund
- --------------------------------------------------------------------------------
Nationwide(R) Bond 72 113 161 249 22 68 116 249 * 68 116 249
Fund
- --------------------------------------------------------------------------------
Nationwide(R) Fund 71 110 156 240 21 65 111 240 * 65 111 240
- --------------------------------------------------------------------------------
Nationwide(R) Growth 71 111 158 243 21 66 113 243 * 66 113 243
Fund
- --------------------------------------------------------------------------------
Nationwide(R) Money 71 110 156 239 21 65 111 239 * 65 111 239
Market Fund
- --------------------------------------------------------------------------------
Nationwide(R) U.S. 74 118 170 266 24 73 125 266 73 125 266
Government Income *
Fund
- --------------------------------------------------------------------------------
Neuberger & Berman 73 116 167 262 23 71 122 262 71 122 262
Guardian *
Fund, Inc.
- --------------------------------------------------------------------------------
Neuberger & Berman 72 113 161 249 22 68 116 249 68 116 249
Limited Maturity *
Bond Fund
- --------------------------------------------------------------------------------
Neuberger & Berman 73 117 168 264 23 72 123 264 72 123 264
Partners *
Fund, Inc.
- --------------------------------------------------------------------------------
Oppenheimer Global 75 122 176 280 25 77 131 280 * 77 131 280
Fund
- --------------------------------------------------------------------------------
Phoenix Balanced 73 115 165 257 23 70 120 257 * 70 120 257
Fund Series
- --------------------------------------------------------------------------------
Strong Total Return 76 125 181 289 26 80 136 289 * 80 136 289
Fund, Inc.
- --------------------------------------------------------------------------------
Templeton Foreign 74 118 170 267 24 73 125 267 * 73 125 267
Fund - Class I
- --------------------------------------------------------------------------------
Warburg Pincus 78 131 191 309 28 86 146 309 86 146 309
Emerging Growth Fund *
- --------------------------------------------------------------------------------
</TABLE>
*The Contracts sold under this prospectus do not permit annuitizations during
the first two Contract years.
9
15 of 135
<PAGE> 16
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").
10
16 of 135
<PAGE> 17
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
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>
<CAPTION>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(3)
- --------------------------------------------------------------------------------
Total
Management Other 12b-1 Portfolio
Fees Expenses Fees Expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Benham Short-Term 0.60% 0.00% 0.00% 0.70%
Government
- --------------------------------------------------------------------------------
American Century: Twentieth Century 1.00% 0.00% 0.00% 1.00%
Growth
- --------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.60% 0.11% 0.00% 0.71%
- --------------------------------------------------------------------------------
MFS(R) World Governments Fund 0.90% 0.36% 0.25% 1.51%
- --------------------------------------------------------------------------------
Nationwide(R) Bond Fund* 0.50% 0.01% 0.00% 0.51%
- --------------------------------------------------------------------------------
Nationwide(R) Fund* 0.50% 0.11% 0.00% 0.61%
- --------------------------------------------------------------------------------
Nationwide(R) Growth Fund* 0.50% 0.14% 0.00% 0.64%
- --------------------------------------------------------------------------------
Nationwide(R) Money Market 0.45% 0.15% 0.00% 0.60%
- --------------------------------------------------------------------------------
</TABLE>
1 The Contract Owner may, after the first year from the date of any Purchase
Payment, withdraw 5% of that Purchase Payment without imposition of a
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 information relating to the Underlying Mutual
Fund expenses was provided by the Underlying Mutual Fund and was not
independently verified by the Company. The following Underlying Mutual
Funds are subject to fee waivers or expense reimbursement arrangements:
- --------------------------------------------------------------------------------
FUND EXPENSES WITHOUT REIMBURSEMENT OR WAIVER
- --------------------------------------------------------------------------------
Nationwide(R) Money Market Fund The Fund will waive 0.05% of the total
0.50% management fee until further
notice.
- --------------------------------------------------------------------------------
11
17 of 135
<PAGE> 18
EXAMPLE
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
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 IF YOU DO NOT IF YOU ANNUITIZE
YOUR SURRENDER YOUR YOUR
CONTRACT AT THE CONTRACT AT THE CONTRACT AT THE END
END OF THE END OF THE OF THE APPLICABLE
APPLICABLE TIME APPLICABLE TIME TIME PERIOD
PERIOD PERIOD
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS.YRS. YR. YRS. YRS. YRS.
- --------------------------------------------------------------------------------
American 75 122 172 282 25 77 132 282 ** 77 132 282
Century:
Twentieth
Century
Growth.
- --------------------------------------------------------------------------------
American 72 113 157 250 22 68 117 250 ** 68 117 250
Century:
Benham
Short-Term
Government
- --------------------------------------------------------------------------------
Fidelity 75 122 172 282 25 77 132 282 ** 77 132 282
Capital &
Income Fund
- --------------------------------------------------------------------------------
Fidelity VIP 72 113 157 251 22 68 117 251 ** 68 117 251
High Income
Portfolio
- --------------------------------------------------------------------------------
MFS(R) World 82 142 204 344 32 97 164 344 ** 97 164 344
Governments
Fund
- --------------------------------------------------------------------------------
Nationwide(R) 71 110 152 242 21 65 112 242 ** 65 112 242
Money Market
Fund
- --------------------------------------------------------------------------------
Nationwide(R) 72 113 157 251 22 68 117 251 ** 68 117 251
Bond Fund
- --------------------------------------------------------------------------------
Nationwide(R) 71 111 153 243 21 66 113 243 ** 66 113 243
Fund
- --------------------------------------------------------------------------------
Nationwide(R) 72 112 154 246 22 67 114 246 ** 67 114 246
Growth Fund
- --------------------------------------------------------------------------------
</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 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").
12
18 of 135
<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 IRA refunds will be return of Purchase
Payments (see "Right To Revoke").
13
19 of 135
<PAGE> 20
CONDENSED FINANCIAL INFORMATION
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 AT END ACCUMULATION UNITS AT
FUND BEGINNING OF PERIOD UNIT VALUE END OF THE YEAR
OF PERIOD PERIOD
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American 20.449954 21.012508 2.75% 157,941 1996
Century: Benham
---------------------------------------------------------------
Short-Term 18.748399 20.449954 9.08% 216,620 1995
Government
---------------------------------------------------------------
(formerly 19.087872 18.748399 -1.78% 183,649 1994
Twentieth
Century
---------------------------------------------------------------
U.S. 18.563845 19.087872 2.82% 182,484 1993
Governments
---------------------------------------------------------------
Short-Term) 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
- --------------------------------------------------------------------------------
American 45.274141 51.389039 13.51% 186,518 1996
Century:
---------------------------------------------------------------
Twentieth 38.113717 45.274141 18.79% 231,124 1995
Century Growth
---------------------------------------------------------------
(formerly 39.197771 38.113717 -2.77% 324,141 1994
Twentieth
Century
---------------------------------------------------------------
Growth) 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
- --------------------------------------------------------------------------------
American 11.748911 13.268469 12.93% 37,683 1996
Century:
---------------------------------------------------------------
Twentieth 10.000000 11.748911 17.49% 25,477 1995
Century
International
Growth
(formerly
Twentieth
Century
International
Equity Fund)
- --------------------------------------------------------------------------------
American 12.289075 13.807925 12.36% 530,842 1996
Century:
---------------------------------------------------------------
Twentieth 9.043121 12.289075 35.89% 266,570 1995
Century Ultra
---------------------------------------------------------------
(formerly 9.505758 9.043121 -4.87% 116,020 1994
Twentieth
Century
---------------------------------------------------------------
Ultra) 10.000000 9.505758 -4.94% 2,713 1993
- --------------------------------------------------------------------------------
Delchester Fund 12.257125 13.618147 11.10% 70,363 1996
Inst'l
---------------------------------------------------------------
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 10.819193 10.958199 1.28% 169,248 1996
Plus, Inc.
---------------------------------------------------------------
9.110600 10.819193 18.75% 53,005 1995
---------------------------------------------------------------
10.000000 9.110600 -8.89% 15,283 1994
- --------------------------------------------------------------------------------
Dreyfus S & P 14.505515 17.509385 20.71% 187,389 1996
500 Index
---------------------------------------------------------------
Fund 10.749166 14.505515 34.95% 33,323 1995
---------------------------------------------------------------
10.819026 10.749166 -0.65% 12,668 1994
---------------------------------------------------------------
10.000000 10.819026 8.19% 585 1993
- --------------------------------------------------------------------------------
The Dreyfus 12.829548 15.742432 22.70% 21,194 1996
Third Century
---------------------------------------------------------------
Fund, Inc. 9.570659 12.829548 34.05% 12,292 1995
---------------------------------------------------------------
10.477293 9.570659 -8.65% 7,325 1994
---------------------------------------------------------------
10.000000 10.477293 4.77% 2,583 1993
- --------------------------------------------------------------------------------
Evergreen 12.594984 14.032960 11.42% 65,357 1996
Income and
---------------------------------------------------------------
Growth Fund 10.301799 12.594984 22.26% 60,789 1995
(formerly
---------------------------------------------------------------
Evergreen Total 11.153183 10.301799 -7.63% 51,305 1994
Return Fund)
---------------------------------------------------------------
10.000000 11.153183 11.53% 32,321 1993
- --------------------------------------------------------------------------------
Fidelity 10.213719 11.552736 13.11% 59,163 1996
Advisor Equity
---------------------------------------------------------------
Income Fund - 10.000000 10.213719 2.14% 0 1995
Class T
- --------------------------------------------------------------------------------
Fidelity 10.325686 11.997760 16.19% 177,245 1996
Advisor Growth
---------------------------------------------------------------
Opportunities 10.000000 10.325686 3.26% 0 1995
Fund -
Class T
- --------------------------------------------------------------------------------
</TABLE>
14
20 of 135
<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 AT END ACCUMULATION UNITS AT
FUND BEGINNING OF PERIOD UNIT VALUE END OF THE YEAR
OF PERIOD PERIOD
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Fidelity Advisor 10.057673 11.241941 11.77% 70,939 1996
High Yield
--------------------------------------------------------------
Fund - Class T 10.000000 10.057673 0.58% 0 1995
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Fidelity Advisor 10.177458 10.890814 7.01% 2,740 1996
Income &
--------------------------------------------------------------
Growth Fund - 10.000000 10.177458 1.77% 0 1995
Class T
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Fidelity Asset 11.183603 12.442308 11.25% 244,667 1996
Manager
--------------------------------------------------------------
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 37.550944 41.287772 9.95% 29,770 1996
--------------------------------------------------------------
Capital & Income 32.589111 37.550944 15.23% 37,608 1995
--------------------------------------------------------------
Fund 34.612981 32.589111 -5.85% 47,236 1994
--------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Fidelity Equity- 46.285491 55.285184 19.44% 257,747 1996
--------------------------------------------------------------
Income Fund 35.576037 46.285491 30.10% 263,736 1995
--------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Fidelity 16.158074 17.810611 10.23% 656,562 1996
Magellan(R) Fund
--------------------------------------------------------------
11.964387 16.158074 35.05% 563,859 1995
--------------------------------------------------------------
12.346838 11.964387 -3.10% 307,064 1994
--------------------------------------------------------------
10.000000 12.346838 23.47% 59,100 1993
- --------------------------------------------------------------------------------
Fidelity Puritan 14.410892 16.377974 13.65% 475,617 1996
Fund
--------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Fidelity VIP- 19.364421 21.793257 12.54% 12,382 1996
--------------------------------------------------------------
High Income 16.267014 19.364421 19.04% 22,970 1995
--------------------------------------------------------------
Portfolio 16.739460 16.267014 -2.82% 34,151 1994
--------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Janus Fund 10.239338 12.087447 18.05% 133,123 1996
--------------------------------------------------------------
10.000000 10.239338 2.39% 0 1995
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Janus Twenty Fund 11.699046 14.762398 26.18% 230,288 1996
--------------------------------------------------------------
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
- --------------------------------------------------------------------------------
</TABLE>
15
21 of 135
<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 AT END ACCUMULATION UNITS AT
FUND BEGINNING OF PERIOD UNIT VALUE END OF THE YEAR
OF PERIOD PERIOD
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
MFS(R) World 35.454983 36.879814 4.02% 28,013 1996
------------------------------------------------------------
Governments 31.104159 35.454983 13.99% 34,015 1995
------------------------------------------------------------
Fund 33.728667 31.104159 -7.78% 39,642 1994
------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Nationwide(R) 37.782872 37.842928 0.16% 42,476 1996
------------------------------------------------------------
Bond Fund 30.832258 37.782872 22.54% 38,843 1995
------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Nationwide(R) Fund 57.857937 70.764576 22.31% 34,681 1996
------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Nationwide(R) 65.471148 75.405663 15.17% 48,441 1996
------------------------------------------------------------
Growth Fund 51.535806 65.471148 27.04% 48,841 1995
------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Nationwide(R) 18.898613 19.580907 3.61% 327,248 1996
------------------------------------------------------------
Money Market Fund 18.146709 18.898613 4.14% 424,693 1995
------------------------------------------------------------
17.721943 18.146709 2.40% 326,464 1994
------------------------------------------------------------
17.504831 17.721943 1.24% 294,859 1993
------------------------------------------------------------
17.183173 17.504831 1.87% 303,845 1992
------------------------------------------------------------
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
- --------------------------------------------------------------------------------
</TABLE>
16
22 of 135
<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 AT END ACCUMULATION UNITS AT
FUND BEGINNING OF PERIOD UNIT VALUE END OF THE YEAR
OF PERIOD PERIOD
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Nationwide(R) 10.124709 10.324818 1.98% 6,372 1996
U.S.
Government --------------------------------------------------------------
Income Fund 10.000000 10.124709 1.25% 0 1995
- --------------------------------------------------------------------------------
Neuberger & 12.571028 14.625126 16.34% 357,346 1996
Berman
Guardian Fund --------------------------------------------------------------
9.640402 12.571028 30.40% 139,046 1995
--------------------------------------------------------------
10.000000 9.640402 -3.60% 25,549 1994
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Neuberger & 10.735070 11.068501 3.11% 74,163 1996
Berman
Limited Maturity --------------------------------------------------------------
Bond Fund 9.833352 10.735070 9.17% 91,976 1995
--------------------------------------------------------------
9.995028 9.833352 -1.62% 89,231 1994
--------------------------------------------------------------
10.000000 9.995028 -0.05% 423 1993
- --------------------------------------------------------------------------------
Neuberger & 14.924653 18.631249 24.84% 222,551 1996
Berman
Partners Fund --------------------------------------------------------------
11.183371 14.924653 33.45% 73,504 1995
--------------------------------------------------------------
11.548721 11.183371 -3.16% 38,329 1994
--------------------------------------------------------------
10.000000 11.548721 15.49% 9,926 1993
- --------------------------------------------------------------------------------
Oppenheimer 15.538850 18.022572 15.98% 228,413 1996
Global Fund
--------------------------------------------------------------
13.503390 15.538850 15.07% 160,871 1995
--------------------------------------------------------------
14.119303 13.503390 -4.36% 87,590 1994
--------------------------------------------------------------
10.000000 14.119303 41.19% 5,128 1993
- --------------------------------------------------------------------------------
Phoenix Balanced 11.373217 12.187868 7.16% 43,659 1996
Fund Series --------------------------------------------------------------
9.338434 11.373217 21.79% 23,786 1995
--------------------------------------------------------------
10.000000 9.338434 -6.62% 9,028 1994
- --------------------------------------------------------------------------------
Strong Total 14.893186 16.766964 12.58% 63,801 1996
Return Fund, Inc. --------------------------------------------------------------
11.881033 14.893186 25.35% 41,291 1995
--------------------------------------------------------------
12.205201 11.881033 -2.66% 19,727 1994
--------------------------------------------------------------
10.000000 12.205201 22.05% 3,939 1993
- --------------------------------------------------------------------------------
Templeton 11.097523 12.923758 16.46% 266,447 1996
Foreign Fund - --------------------------------------------------------------
Class I 10.000000 11.097523 10.98% 69,083 1995
- --------------------------------------------------------------------------------
Warburg Pincus 10.895016 11.814248 8.44% 250,912 1996
Emerging --------------------------------------------------------------
Growth Fund 10.000000 10.895016 8.95% 0 1995
- --------------------------------------------------------------------------------
</TABLE>
Unit value information is not provided for the American Century: Income &
Growth, 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.
17
23 of 135
<PAGE> 24
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).
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 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.
18
24 of 135
<PAGE> 25
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.)
19
25 of 135
<PAGE> 26
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.
CONTINGENT NUMBER OF
NUMBER OF COMPLETED DEFERRED COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
PURCHASE PAYMENT PERCENTAGE PURCHASE PAYMENT PERCENTAGE
0 7% 4 3%
1 6% 5 2%
2 5% 6 1%
3 4% 7 0%
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: (a) for first year
withdrawals of up to 10% of Purchase Payments for IRA rollover contracts or (b)
any amount withdrawn from this Contract required for this Contract to meet
minimum distribution requirements under the Code. Withdrawals may be restricted
for Contracts issued pursuant to the terms of a Qualified Plan. 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 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. For
any Purchase Payments made, 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).
ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
For Contracts sold pursuant to Qualified Plans established on or after
January 1, 1993, as described in Section 401 of the Code and SEP-IRA Contracts
sold on or after January 1, 1993, the Company will waive the Contingent Deferred
Sales Charge when:
A. the Plan Participant experiences a case of hardship (as defined for
purposes of Code Section 401(k));
B. the Plan Participant becomes disabled (within the meaning of Code
Section 72(m)(7));
C. the Plan Participant attains age 59 1/2 and has participated in the
Contract for at least 5 years, as determined from the Contract
Anniversary date;
D. the Plan Participant has participated in the Contract for at least 15
years as determined from the Contract Anniversary date;
E. the Plan Participant dies; or
F. the Plan Participant annuitizes after 2 years in the Contract.
For IRAs the Company will waive the Contingent Deferred Sales Charge when:
A. the Designated Annuitant dies; or
B. the Contract Owner annuitizes after 2 years in the Contract.
20
26 of 135
<PAGE> 27
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.
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 (and on the date of surrender in any
year in which the entire Contract Value is surrendered), the Company deducts an
annual Contract Maintenance Charge of $30 from the Contract Value to reimburse
it for the administrative expenses relating to the issuance and maintenance of
the Contract. For Contracts issued pursuant to Qualified Plans described in
Section 401 of the Code, established on or after January 1, 1993 and SEP-IRA
Contracts established on or after January 1, 1993 and before August 1, 1994, the
Contract Maintenance Charge varies from $30 to $0. Underwriting considerations
include the size of the group, the average participant account balance
transferred to the Company, if any, and administrative savings. For Contracts
issued to Qualified Plans described in Section 401 of the Code and SEP-IRA
Contracts established on or after August 1, 1994, the Contract Maintenance
Charge varies from $12 to $0. Variances are based on internal underwriting
guidelines. 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 assess 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 1996, the Variable Account incurred total expenses equal to 1.56% 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.
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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.
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.
LOAN PRIVILEGE
Loans are available only for Contracts issued on or 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 Annuities, Individual Retirement Accounts and SEP-IRA accounts 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.
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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 the current allocation at the time the repayment is received.
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.
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.
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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.
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 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.
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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, 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. Qualified Plan
Contracts or Individual Retirement Annuities are subject to the minimum
Distribution requirements set forth in the Plan, Contract, or the Code.
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.
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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.
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.
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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.
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.
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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 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.
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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 Fund s 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.
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.
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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; or (2)
Individual Retirement Annuities and Individual Retirement Accounts.
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.
QUALIFIED PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS
The Contracts may be used with Qualified Plans (Contracts issued on or
before January 1, 1993), Individual Retirement Accounts funded 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 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.
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.
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INDIVIDUAL RETIREMENT ACCOUNTS
The Internal Revenue Service issued a ruling on September 25, 1981 that
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
From time to time the Company is a party to litigation and arbitration
proceedings in the ordinary course of its business, none of which is expected to
have a material adverse effect on the Company.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance pricing
and sales practices. A number of these lawsuits have resulted in substantial
jury awards or settlements. In October 1996, a policyholder of Nationwide Life
filed a complaint in Alabama state court against Nationwide Life and an agent of
Nationwide Life (Wayne M. King v. Nationwide Life Insurance Company and Danny
Nix), related to the sale of a whole life policy on a "vanishing premium" basis
and seeking unspecified compensatory and punitive damages. In February 1997,
Nationwide Life was named as a defendant in a lawsuit filed in New York Supreme
Court also related to the sale of whole life policies on a "vanishing premium"
basis (John H. Snyder v. Nationwide Mutual Insurance Company, Nationwide Mutual
Insurance Co. and Nationwide Life Insurance Co.). The plaintiff in such lawsuit
seeks to represent a national class of Nationwide Life policyholders and claims
unspecified compensatory and punitive damages. This lawsuit is in an early stage
and has not been certified as a class action. Nationwide Life intends to defend
these cases vigorously. There can be no assurance that any future litigation
relating to pricing and sales practices will not have a material adverse effect
on the Company.
The General Distributor, Nationwide Advisory 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
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APPENDIX A
Purchase Payments and transfers allocated to the Fixed Account portion of
the Contract become part of the general account of the Company supporting
insurance and annuity obligations. Under 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 is 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 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 concerning 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 Nationwide Variable Account 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.
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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%.
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APPENDIX B
PARTICIPATING FUNDS
UNDERLYING MUTUAL FUND OPTIONS
(AVAILABLE FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
For 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:
AMERICAN CENTURY: BENHAM SHORT-TERM GOVERNMENT
(formerly 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.
AMERICAN CENTURY: INCOME & GROWTH
(formerly 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.
AMERICAN CENTURY: TWENTIETH CENTURY GROWTH
(formerly 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.
AMERICAN CENTURY: TWENTIETH CENTURY INTERNATIONAL GROWTH
(formerly 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.
AMERICAN CENTURY: TWENTIETH CENTURY ULTRA
(formerly 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.
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.
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DREYFUS S & P 500 INDEX FUND
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.
EVERGREEN INCOME AND GROWTH FUND
(formerly 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.
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.
FIDELITY ADVISOR BALANCED FUND - CLASS T
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.
FIDELITY ADVISOR EQUITY INCOME FUND - CLASS T
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 - CLASS T
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 - CLASS T
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 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.
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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
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.
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.
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.
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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.
37
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<PAGE> 44
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 - CLASS I
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.
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.
38
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<PAGE> 45
UNDERLYING MUTUAL FUND OPTIONS
(AVAILABLE FOR CONTRACTS ISSUED ON OR AFTER DECEMBER 25, 1982 AND BEFORE JANUARY
1, 1993)
For 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:
AMERICAN CENTURY: BENHAM SHORT-TERM GOVERNMENT
(FORMERLY 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.
AMERICAN CENTURY: TWENTIETH CENTURY GROWTH
(FORMERLY 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.
FIDELITY CAPITAL & INCOME FUND
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 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
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.
39
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<PAGE> 46
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1997
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, 1997. 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
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 Financial Services, Inc. (NFS"), a holding company.
NFS has two classes of common stock outstanding with different voting rights
enabling Nationwide Corporation (the holder of all of the outstanding Class B
Common Stock) to control NFS. Nationwide Corporation is a holding company as
well. All of its common stock is held by Nationwide Mutual Insurance Company
(95.3%) and Nationwide Mutual Fire Insurance Company (4.7%), the ultimate
controlling persons of Nationwide Insurance Enterprise.
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.
1
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<PAGE> 47
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 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
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<PAGE> 48
<PAGE> 1
Independent Auditors' Report
----------------------------
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Variable Account:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account as of December 31, 1996,
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, 1996, by correspondence
with the transfer agents of the underlying mutual funds. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and 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, 1996,
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 7, 1997
<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments at market value:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
352,166 shares (cost $3,329,420) $ 3,327,970
American Century: Income & Growth Fund (ACIncGro)
9,549 shares (cost $201,878) 192,507
American Century: Twentieth Century Growth Fund (ACTCGro)
443,122 shares (cost $9,134,062) 9,695,503
American Century: Twentieth Century International Growth Fund (ACTCIntlGr)
62,812 shares (cost $508,980) 499,981
American Century: Twentieth Century Ultra Fund (ACTCUltra)
260,938 shares (cost $6,797,299) 7,329,751
Delaware Group Delchester High-Yield Bond Fund, Inc. --
Delchester Fund Institutional Class (DeHYBd)
151,175 shares (cost $941,293) 958,452
Dreyfus A Bonds Plus, Inc. (DryABds)
128,688 shares (cost $1,853,340) 1,854,392
Dreyfus S&P 500 Index Fund (Dry500Ix)
147,661 shares (cost $3,174,622) 3,281,018
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
37,828 shares (cost $338,693) 333,646
The Evergreen Total Return Fund -- Class Y (EvTotRet)
42,997 shares (cost $839,111) 917,131
Federated Investment Series Funds, Inc. -- Federated Bond Fund -- Class F (FedBdFd)
10,243 shares (cost $100,765) 99,873
Fidelity Advisor Equity-Income Fund -- Class T (FAEqInc)
31,182 shares (cost $656,849) 683,504
Fidelity Advisor Growth Opportunities Fund -- Class T (FAGrOpp)
60,241 shares (cost $2,078,053) 2,126,506
Fidelity Advisor High Yield Fund -- Class T (FAHiYld)
65,372 shares (cost $791,211) 797,539
Fidelity Advisor Income & Growth Fund -- Class T (FAIncGr)
1,824 shares (cost $29,613) 29,871
Fidelity Asset Manager(TM) (FidAsMgr)
184,830 shares (cost $2,829,942) 3,044,154
Fidelity Capital & Income Fund (FidCapInc)
132,273 shares (cost $1,191,344) 1,238,072
Fidelity Equity-Income Fund (FidEqInc)
333,029 shares (cost $11,426,729) 14,263,635
Fidelity Magellan(R) Fund (FidMgln)
144,985 shares (cost $11,657,388) 11,693,067
Fidelity Puritan(R) Fund (FidPurtn)
451,817 shares (cost $7,460,394) 7,789,321
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Fidelity VIP -- High Income Portfolio (FidVIPHI)
21,554 shares (cost $242,137) 269,853
Janus Fund (JanFund)
65,811 shares (cost $1,679,627) 1,609,086
Janus Twenty Fund (Jan20Fd)
123,753 shares (cost $3,576,224) 3,399,499
Janus Worldwide Fund (JanWrldwde)
13,815 shares (cost $488,922) 465,425
MFS(R) World Governments Fund -- Class A (MFSWdGvt)
92,422 shares (cost $1,061,998) 1,044,368
Nationwide(R) Bond Fund (NWBdFd)
174,036 shares (cost $1,645,444) 1,616,791
Nationwide(R) Fund (NWFund)
123,198 shares (cost $2,028,689) 2,488,606
Nationwide(R) Growth Fund (NWGroFd)
276,926 shares (cost $3,089,203) 3,683,114
Nationwide(R) Money Market Fund (NWMyMkt)
7,642,255 shares (cost $7,642,255) 7,642,255
Nationwide(R) U.S. Government Income Fund (NWUSGvt)
6,582 shares (cost $65,768) 65,816
Neuberger & Berman Guardian Fund (NBGuard)
203,903 shares (cost $4,851,586) 5,226,045
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
82,284 shares (cost $820,121) 821,194
Neuberger & Berman Partners Fund (NBPartFd)
164,590 shares (cost $3,903,279) 4,146,017
Oppenheimer Global Fund -- Class A (OppGlob)
105,470 shares (cost $3,788,490) 4,116,503
Phoenix Balanced Fund Series -- Class A (PhxBalFd)
33,488 shares (cost $563,195) 532,116
Strong Total Return Fund, Inc. (StTotRet)
39,285 shares (cost $1,130,346) 1,069,724
Templeton Foreign Fund -- Class I (TemForFd)
332,378 shares (cost $3,231,735) 3,443,435
Warburg Pincus Emerging Growth Fund -- Common Shares (WPEmGro)
89,232 shares (cost $2,900,286) 2,964,301
------------
Total investments 114,760,041
Accounts receivable 33,220
------------
Total assets 114,793,261
Accounts payable 4,844
------------
Contract owners' equity (note 4) $114,788,417
============
</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, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Investment activity:
Reinvested capital gains and dividends $ 8,358,915 5,403,676 4,476,720
Mortality, expense and administration charges (note 2) (1,250,216) (828,380) (666,881)
------------ ----------- -----------
Net investment activity 7,108,699 4,575,296 3,809,839
------------ ----------- -----------
Proceeds from mutual fund shares sold 32,882,395 19,494,999 19,343,653
Cost of mutual fund shares sold (30,480,861) (19,182,917) (18,215,058)
------------ ----------- -----------
Realized gain (loss) on investments 2,401,534 312,082 1,128,595
Change in unrealized gain (loss) on investments 2,414,112 6,984,871 (5,977,389)
------------ ----------- -----------
Net gain (loss) on investments 4,815,646 7,296,953 (4,848,794)
------------ ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations 11,924,345 11,872,249 (1,038,955)
------------ ----------- -----------
Equity transactions:
Purchase payments received from contract owners 36,936,853 21,817,759 16,078,025
Redemptions (11,033,070) (11,831,829) (5,989,583)
Annuity benefits (22,282) (18,792) (19,197)
Annual contract maintenance charge (note 2) (82,641) (70,366) (68,239)
Contingent deferred sales charges (note 2) (162,303) (43,999) (50,816)
Adjustments to maintain reserves 1,139 5,498 1,593
------------ ----------- -----------
Net equity transactions 25,637,696 9,858,271 9,951,783
------------ ----------- -----------
Net change in contract owners' equity 37,562,041 21,730,520 8,912,828
Contract owners' equity beginning of period 77,226,376 55,495,856 46,583,028
------------ ----------- -----------
Contract owners' equity end of period $114,788,417 77,226,376 55,495,856
============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(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 contract is
through the Company for Individual Retirement Account rollovers;
however, other distributors may be utiized.
(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 charges.
With certain exceptions, contract owners in either the
accumulation or the payout phase may invest in the following:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
(formerly Twentieth Century Investors, Inc. -- U.S. Governments
Short-Term (TCUSGvt))
American Century: Income & Growth Fund (ACIncGro)
American Century: Twentieth Century Growth Fund (ACTCGro)
(formerly Twentieth Century Investors, Inc. -- Growth Investors
(TCGroInv))
American Century: Twentieth Century International Growth Fund
(ACTCIntlGr) (formerly Twentieth Century World Investors, Inc. --
International Equity (TCIntlEq))
American Century: Twentieth Century Ultra Fund (ACTCUltra)
(formerly Twentieth Century Investors, Inc. -- Ultra Investors
(TCUltra))
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)
Federated Investment Series Funds, Inc. -- Federated Bond Fund --
Class F (FedBdFd)
Fidelity Advisor Equity-Income Fund -- Class T (FAEqInc)
Fidelity Advisor Growth Opportunities Fund -- Class T (FAGrOpp)
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
Fidelity Advisor Income & Growth Fund -- Class T (FAIncGr)
Fidelity Asset Manager(TM) (FidAsMgr)
Fidelity Capital & Income Fund (FidCapInc)
(not available for additional purchase payments or exchanges after
May 1, 1991)
Fidelity Equity-Income Fund (FidEqInc)
Fidelity Magellan(R) Fund (FidMgln)
<PAGE> 6
Fidelity Puritan(R) Fund (FidPurtn)
Portfolio of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - High Income Portfolio (FidVIPHI)
(not available for additional purchase payments or exchanges after
December 1, 1993)
Janus Fund (JanFund)
Janus Twenty Fund (Jan20Fd)
Janus Worldwide Fund (JanWrldwde)
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)
Warburg Pincus Emerging Growth Fund -- Common Shares (WPEmGro)
At December 31, 1996, contract owners have invested in all of the
above funds. The contract owners' equity is affected by the
investment results of each fund, equity transactions by contract
owners and certain contract expenses (see 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, 1996. The cost of
investments sold is determined on the 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.
(f) Reclassifications
Certain 1995 and 1994 amounts have been reclassified to conform with
the current year presentation.
<PAGE> 7
(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 contract 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.
(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's equity
The following is a summary of contract owners' equity at December 31,
1996, for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
Contract owners' equity represented by: Units Unit Value
------- ----------
<S> <C> <C> <C>
Contracts in accumulation phase:
American Century: Benham Short-Term Government Fund:
Tax qualified 157,941 $21.012508 $3,318,737
American Century: Income & Growth Fund:
Tax qualified 18,133 10.551440 191,329
American Century: Twentieth Century Growth Fund:
Tax qualified 186,518 51.389039 9,584,981
American Century: Twentieth Century International
Growth Fund:
Tax qualified 37,683 13.268469 499,996
American Century: Twentieth Century Ultra Fund:
Tax qualified 530,842 13.807925 7,329,827
Delaware Group Delchester High-Yield Bond Fund, Inc. --
Delchester Fund Institutional Class:
Tax qualified 70,363 13.618147 958,214
Dreyfus A Bonds Plus, Inc.:
Tax qualified 169,248 10.958199 1,854,653
Dreyfus S&P 500 Index Fund:
Tax qualified 187,389 17.509385 3,281,066
The Dreyfus Third Century Fund, Inc.:
Tax qualified 21,194 15.742432 333,645
The Evergreen Total Return Fund -- Class Y:
Tax qualified 65,357 14.032960 917,152
Federated Investment Series Funds, Inc. --
Federated Bond Fund - Class F:
Tax qualified 9,873 10.117861 99,894
Fidelity Advisor Equity-Income Fund -- Class T:
Tax qualified 59,163 11.552736 683,495
Fidelity Advisor Growth Opportunities Fund -- Class T:
Tax qualified 177,245 11.997760 2,126,543
Fidelity Advisor High Yield Fund -- Class T:
Tax qualified 70,939 11.241941 797,492
Fidelity Advisor Income & Growth Fund -- Class T:
Tax qualified 2,740 10.890814 29,841
Fidelity Asset Manager(TM):
Tax qualified 244,667 12.442308 3,044,222
Fidelity Capital & Income Fund:
Tax qualified 29,770 41.287772 1,229,137
Fidelity Equity-Income Fund:
Tax qualified 257,747 55.285184 14,249,590
Fidelity Magellan(R) Fund:
Tax qualified 656,562 17.810611 11,693,770
Fidelity Puritan(R) Fund:
Tax qualified 475,617 16.377974 7,789,643
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
Fidelity VIP -- High Income Portfolio:
Tax qualified 12,382 21.793257 269,844
Janus Fund:
Tax qualified 133,123 12.087447 1,609,117
Janus Twenty Fund:
Tax qualified 230,288 14.762398 3,399,603
Janus Worldwide Fund:
Tax qualified 45,099 10.317427 465,306
MFS(R) World Governments Fund -- Class A:
Tax qualified 28,013 36.879814 1,033,114
Nationwide(R) Bond Fund:
Tax qualified 42,476 37.842928 1,607,416
Non-tax qualified 194 37.680696 7,310
Nationwide(R) Fund:
Tax qualified 34,681 70.764576 2,454,186
Non-tax qualified 314 73.708492 23,144
Nationwide(R) Growth Fund:
Tax qualified 48,441 75.405663 3,652,726
Non-tax qualified 230 79.618909 18,312
Nationwide(R) Money Market Fund:
Tax qualified -- Pre 12/25/82 49,431 24.656210 1,218,781
Tax qualified 327,248 19.580907 6,407,813
Non-tax qualified 1,317 24.812035 32,677
Nationwide(R) U.S. Government Income Fund:
Tax qualified 6,372 10.324818 65,790
Neuberger & Berman Guardian Fund:
Tax qualified 357,346 14.625126 5,226,230
Neuberger & Berman Limited Maturity Bond Fund:
Tax qualified 74,163 11.068501 820,873
Neuberger & Berman Partners Fund:
Tax qualified 222,551 18.631249 4,146,403
Oppenheimer Global Fund -- Class A:
Tax qualified 228,413 18.022572 4,116,590
Phoenix Balanced Fund Series -- Class A:
Tax qualified 43,659 12.187868 532,110
Strong Total Return Fund, Inc.:
Tax qualified 63,801 16.766964 1,069,749
Templeton Foreign Fund -- Class I:
Tax qualified 266,447 12.923758 3,443,497
Warburg Pincus Emerging Growth Fund --
Common Shares:
Tax qualified 250,912 11.814248 2,964,337
======= =========
Reserves for annuity contracts in payout phase:
Tax qualified 190,262
------------
$114,788,417
============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
SCHEDULE I
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
ACBenSTGvt ACIncGro ACTCGro ACTCIntlGr ACTCUltra
----------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 $20.449954 10.000000 45.274141 11.748911 12.289075
- ----------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.108203 .745798 .989050 1.366595 .784229
- ----------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.274998) (.171142) 5.759350 .314097 .906054
- ----------------------------------------------------------------------------------------------------
Contract charges (.270651) (.023216) (.633502) (.161134) (.171433)
- ----------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $21.012508 10.551440 51.389039 13.268469 13.807925
- ----------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 3% 6%(b) 14% 13% 12%
====================================================================================================
1995
Beginning unit
value - Jan. 1 $18.748399 ** 38.113717 10.000000 9.043121
- ----------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.086234 6.277505 .010869 .581551
- ----------------------------------------------------------------------------------------------------
Unrealized gain (loss) .873119 1.457594 1.867440 2.805900
- ----------------------------------------------------------------------------------------------------
Contract charges (.257798) (.574675) (.129398) (.141497)
- ----------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $20.449954 45.274141 11.748911 12.289075
- ----------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 9% 19% 17%(b) 36%
====================================================================================================
1994
Beginning unit
value - Jan. 1 $19.087872 ** 39.197771 ** 9.505758
- ----------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .888205 5.656730 .283163
- ----------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.981660) (6.232359) (.626504)
- ----------------------------------------------------------------------------------------------------
Contract charges (.246018) (.508425) (.119296)
- ----------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $18.748399 38.113717 9.043121
- ----------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) (2)% (3)% (5)%
=====================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DeHYBd DryABds Dry500Ix Dry3dCen EvTotRet
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 12.257125 10.819193 14.505515 12.829548 12.594984
- ----------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.289054 .647812 .780714 2.175909 .700093
- ----------------------------------------------------------------------------------------------------
Unrealized gain (loss) .240682 (.368674) 2.430685 .924520 .909855
- ----------------------------------------------------------------------------------------------------
Contract charges (.168714) (.140132) (.207529) (.187545) (.171972)
- ----------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 13.618147 10.958199 17.509385 15.742432 14.032960
- ----------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 11% 1% 21% 23% 11%
====================================================================================================
1995
Beginning unit
value - Jan. 1 10.867271 9.110600 10.749166 9.570659 10.301799
- ----------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.215468 .658102 .397253 .897413 .668749
- ----------------------------------------------------------------------------------------------------
Unrealized gain (loss) .327407 1.181188 3.524795 2.507797 1.773798
- ----------------------------------------------------------------------------------------------------
Contract charges (.153021) (.130697) (.165699) (.146321) (.149362)
- ----------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 12.257125 10.819193 14.505515 12.829548 12.594984
- ----------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 13% 19% 35% 34% 22%
====================================================================================================
1994
Beginning unit
value - Jan. 1 11.511092 10.000000 10.819026 10.477293 11.153183
- ----------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.272604 .673864 1.169814 1.340681 .771284
- ----------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.770117) (1.452714) (1.099729) (2.117415) (1.484673)
- ----------------------------------------------------------------------------------------------------
Contract charges (.146308) (.110550) (.139945) (.129900) (.137995)
- ----------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 10.867271 9.110600 10.749166 9.570659 10.301799
- ----------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) (6)% (9)%(b) (1)% (9)% (8)%
=====================================================================================================
</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 being utilized
for the entire year indicated.
**This investment option was not being utilized or was not available.
<PAGE> 11
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
FedBdFd FAEqInc FAGrOpp FAHiYld FAIncGr
---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 $10.000000 10.213719 10.325686 10.057673 10.177458
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .119423 .480953 .638324 1.033892 .403927
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .020151 .998707 1.176512 .290378 .443422
- -------------------------------------------------------------------------------------------------------
Contract charges (.021713) (.140643) (.142762) (.140002) (.133993)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $10.117861 11.552736 11.997760 11.241941 10.890814
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 1%(b) 13% 16% 12% 7%
=======================================================================================================
1995
Beginning unit
value - Jan. 1 ** ** ** ** **
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss)
- -------------------------------------------------------------------------------------------------------
Contract charges
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a)
=======================================================================================================
1994
Beginning unit
value - Jan. 1 ** ** ** ** **
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss)
- -------------------------------------------------------------------------------------------------------
Contract charges
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a)
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
FidAsMgr FidCapInc FidEqInc FidMgIn FidPurtn
---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 11.183603 37.550944 46.285491 16.158074 14.410892
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .974182 3.350435 3.536178 2.629260 1.859609
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .437258 .903646 6.122667 (.758693) .307268
- -------------------------------------------------------------------------------------------------------
Contract charges (.152735) (.517253) (.659152) (.218030) (.199795)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 12.442308 41.287772 55.285184 17.810611 16.377974
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 11% 10% 19% 10% 14%
- -------------------------------------------------------------------------------------------------------
1995
Beginning unit
value - Jan. 1 $9.589367 32.589111 35.576037 11.964387 12.020413
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .319835 3.427571 2.721500 .938243 .761762
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.408821 2.006467 8.520244 3.445891 1.800691
- -------------------------------------------------------------------------------------------------------
Contract charges (.134420) (.472205) (.532290) (.190447) (.171974)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $11.183603 37.550944 46.285491 16.158074 14.410892
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 17% 15% 30% 35% 20%
- -------------------------------------------------------------------------------------------------------
1994
Beginning unit
value - Jan. 1 $10.415849 34.612981 35.955883 12.346838 11.972512
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .386944 2.899199 3.474735 .480494 .964375
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.082752) (4.479225) (3.384084) (.704119) (.757623)
- -------------------------------------------------------------------------------------------------------
Contract charges (.130674) (.443844) (.470497) (.158826) (.158851)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $9.589367 32.589111 35.576037 11.964387 12.020413
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) (8)% (6)% (1)% (3)% 0%
=======================================================================================================
</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 being utilized for the entire
year indicated.
**This investment option was not being utilized or was not available.
<PAGE> 12
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
FidVIPHI JanFund Jan20Fd JanWrldwde MFSWdGvt
--------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 $19.364421 10.239338 11.699046 10.000000 35.454983
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.765562 1.372042 2.474450 .631391 .996797
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .933745 .623531 .763449 (.292087) .893467
- -------------------------------------------------------------------------------------------------------
Contract charges (.270471) (.147464) (.174547) (.021877) (.465433)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $21.793257 12.087447 14.762398 10.317427 36.879814
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 13% 18% 26% 3%(b) 4%
=======================================================================================================
1995
Beginning unit
value - Jan. 1 $16.267014 ** 8.701036 ** 31.104159
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.177771 1.991385 4.432437
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.155057 1.142737 .359301
- -------------------------------------------------------------------------------------------------------
Contract charges (.235421) (.136112) (.440914)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $19.364421 11.699046 35.454983
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 19% 34% 14%
=======================================================================================================
1994
Beginning unit
value - Jan. 1 $16.739460 ** 9.451097 ** 33.728667
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.533862 .025710 1.658769
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.790091) (.657508) (3.874555)
- -------------------------------------------------------------------------------------------------------
Contract charges (.216217) (.118263) (.408722)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $16.267014 8.701036 31.104159
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) (3)% (8)% (8)%
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
NWMyMkt
NWBdFd NWFund NWGroFd Pre 12/25/82 NWMyMkt
--------- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 37.782872 57.857937 65.471148 23.797066 18.898613
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 2.420301 5.294223 5.745821 1.177631 .935221
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.877444) 8.447372 5.102552 .000000 .000000
- -------------------------------------------------------------------------------------------------------
Contract charges (.482801) (.834956) (.913858) (.318487) (.252927)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 37.842928 70.764576 75.405663 24.656210 19.580907
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 0% 22% 15% 4% 4%
=======================================================================================================
1995
Beginning unit
value - Jan. 1 30.832258 45.095466 51.535806 22.850271 18.146709
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 2.340919 3.894595 6.923629 1.251864 .994176
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 5.062302 9.527720 7.791689 .000000 .000000
- -------------------------------------------------------------------------------------------------------
Contract charges (.452607) (.659844) (.779976) (.305069) (.242272)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 37.782872 57.857937 65.471148 23.797066 18.898613
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 23% 28% 27% 4% 4%
=======================================================================================================
1994
Beginning unit
value - Jan. 1 33.991130 45.422888 51.458079 22.315407 17.721943
- -------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 2.317590 4.420863 1.956402 .829315 .658609
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (5.061696) (4.160340) (1.208860) .000000 .000000
- -------------------------------------------------------------------------------------------------------
Contract charges (.414766) (.587945) (.669815) (.294451) (.233843)
- -------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 30.832258 45.095466 51.535806 22.850271 18.146709
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) (9)% (1)% 0% 2% 2%
=======================================================================================================
</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 being utilized for the entire
year indicated.
**This investment option was not being utilized or was not available.
<PAGE> 13
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
NWUSGvt NBGuard NBLtdMat NBPartFd OppGlob
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 $10.124709 12.571028 10.735070 14.924653 15.538850
- ----------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .584669 .818924 .652728 1.883265 .840380
- ----------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.252576) 1.409253 (.177361) 2.039177 1.862683
- ----------------------------------------------------------------------------------------------------------
Contract charges (.131984) (.174079) (.141936) (.215846) (.219341)
- ----------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $10.324818 14.625126 11.068501 18.631249 18.022572
- ----------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 2% 16% 3% 25% 16%
==========================================================================================================
1995
Beginning unit
value - Jan. 1 ** $9.640402 9.833352 11.183371 13.503390
- ----------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .546753 .635595 1.728556 .955752
- ----------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.533695 .401069 2.184589 1.269343
- ----------------------------------------------------------------------------------------------------------
Contract charges (.149822) (.134946) (.171863) (.189635)
- ----------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $12.571028 10.735070 14.924653 15.538850
- ----------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 30% 9% 33% 15%
==========================================================================================================
1994
Beginning unit
value - Jan. 1 ** $10.000000 9.995028 11.548721 14.119303
- ----------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .249418 .555641 .945341 1.418589
- ----------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.492915) (.588488) (1.162325) (1.850696)
- ----------------------------------------------------------------------------------------------------------
Contract charges (.116101) (.128829) (.148366) (.183806)
- ----------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $ 9.640402 9.833352 11.183371 13.503390
- ----------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) (4)%(b) (2)% (3)% (4)%
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
PhxBalFd StTotRet TemForFd WPEmGro
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1996
Beginning unit
value - Jan. 1 11.373217 14.893186 11.097523 10.895016
- ------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.602292 2.715211 .541519 .024787
- ------------------------------------------------------------------------------------------
Unrealized gain (loss) (.635106) (.634729) 1.440934 1.044888
- ------------------------------------------------------------------------------------------
Contract charges (.152535) (.206704) (.156218) (.150443)
- ------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 12.187868 16.766964 12.923758 11.814248
- ------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 7% 13% 16% 8%
==========================================================================================
1995
Beginning unit
value - Jan. 1 9.338434 11.881033 10.000000 **
- ------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .913359 .793239 .700873
- ------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.255938 2.394151 .523675
- ------------------------------------------------------------------------------------------
Contract charges (.134514) (.175237) (.127025)
- ------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 11.373217 14.893186 11.097523
- -------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) 22% 25% 11%(b)
===========================================================================================
1994
Beginning unit
value - Jan. 1 10.000000 12.205201 ** **
- -------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .295350 .172665
- -------------------------------------------------------------------------------------------
Unrealized gain (loss) (.843207) (.340340)
- -------------------------------------------------------------------------------------------
Contract charges (.113709) (.156493)
- -------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 9.338434 11.881033
- -------------------------------------------------------------------------------------------
Percentage increase
(decrease) in unit
value*(a) (7)%(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 being utilized for the entire
year indicated.
**This investment option was not being utilized or was not available.
<PAGE> 14
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT
NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
NWBdFd NWFund NWGroFd NWMyMkt
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
1996
Beginning unit value - Jan. 1 $37.620900 60.264917 69.129314 23.947460
- ---------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 2.409921 5.514472 6.066865 1.185080
- ---------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.869397) 8.798796 5.387662 .000000
- ---------------------------------------------------------------------------------------------------------------------------
Contract charges (.480728) (.869693) (.964932) (.320505)
- ---------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $37.680696 73.708492 79.618909 24.812035
- ---------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 0% 22% 15% 4%
===========================================================================================================================
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%
===========================================================================================================================
</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> 49
NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
325,544 shares (cost $3,086,052)................................................................ $ 3,069,880
American Century: Income & Growth Fund (ACIncGro)
30,926 shares (cost $658,749)................................................................... 728,002
American Century: Twentieth Century Growth Fund (ACTCGro)
395,562 shares (cost $8,105,866)................................................................ 10,181,775
American Century: Twentieth Century International Growth Fund (ACTCIntlGr)
60,415 shares (cost $502,039)................................................................... 576,360
American Century: Twentieth Century Ultra Fund (ACTCUltra)
286,757 shares (cost $7,862,513)................................................................ 9,376,964
Delaware Group Delchester High-Yield Bond Fund, Inc. -
Delchester Fund Institutional Class (DeHYBd)
198,237 shares (cost $1,241,758)................................................................ 1,280,614
Dreyfus A Bonds Plus, Inc. (DryABds)
125,239 shares (cost $1,791,408)................................................................ 1,802,189
Dreyfus S&P 500 Index Fund (Dry500Ix)
191,281 shares (cost $4,476,183)................................................................ 5,111,040
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
52,758 shares (cost $488,316)................................................................... 546,577
Evergreen Income and Growth Fund - Class Y (EvIncGro)
41,670 shares (cost $814,274)................................................................... 959,668
Federated Investment Series Funds, Inc. - Federated Bond Fund - Class F (FedBdFd)
29,794 shares (cost $289,491)................................................................... 290,487
Fidelity Advisor Balanced Fund - Class T (FABal)
5,232 shares (cost $89,353)..................................................................... 96,368
Fidelity Advisor Equity-Income Fund - Class T (FAEqInc)
38,051 shares (cost $819,273)................................................................... 960,030
Fidelity Advisor Growth Opportunities Fund - Class T (FAGrOpp)
96,799 shares (cost $3,519,296)................................................................. 3,931,956
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
126,676 shares (cost $1,544,123)................................................................ 1,574,584
Fidelity Asset Manager(TM) (FidAsMgr)
178,462 shares (cost $2,815,248)................................................................ 3,217,672
Fidelity Capital & Income Fund (FidCapInc)
129,122 shares (cost $1,172,846)................................................................ 1,229,240
Fidelity Equity-Income Fund (FidEqInc)
323,914 shares (cost $11,542,296)............................................................... 15,933,309
Fidelity Magellan(R) Fund (FidMgln)
142,931 shares (cost $11,745,373)............................................................... 13,013,832
Fidelity Puritan(R) Fund (FidPurtn)
527,425 shares (cost $8,913,372)................................................................ 10,189,843
</TABLE>
3
<PAGE> 50
<TABLE>
<S> <C>
Fidelity VIP - High Income Portfolio (FidVIPHI)
21,107 shares (cost $236,870)................................................................... 262,359
Janus Fund (JanFund)
104,994 shares (cost $2,703,635)................................................................ 2,899,932
Janus Twenty Fund (Jan20Fd)
148,200 shares (cost $4,416,506)................................................................ 4,871,343
Janus Worldwide Fund (JanWrldwde)
59,349 shares (cost $2,117,247)................................................................. 2,378,695
MFS(R) World Governments Fund - Class A (MFSWdGvt)
73,901 shares (cost $833,080)................................................................... 815,132
Nationwide(R) Bond Fund (NWBdFd)
165,629 shares (cost $1,546,166)................................................................ 1,525,447
Nationwide(R) Fund (NWFund)
134,533 shares (cost $2,381,072)................................................................ 3,331,037
Nationwide(R) Growth Fund (NWGroFd)
264,825 shares (cost $3,115,840)................................................................ 4,155,107
Nationwide(R) Money Market Fund (NWMyMkt)
8,399,906 shares (cost $8,399,906).............................................................. 8,399,906
Nationwide(R) U.S. Government Income Fund (NWUSGvt)
4,527 shares (cost $45,012)..................................................................... 45,319
Neuberger & Berman Guardian Fund (NBGuard)
241,508 shares (cost $5,982,050)................................................................ 6,984,402
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
80,176 shares (cost $798,088)................................................................... 798,556
Neuberger & Berman Partners Fund (NBPartFd)
200,754 shares (cost $5,017,687)................................................................ 5,870,038
Oppenheimer Global Fund - Class A (OppGlob)
111,143 shares (cost $4,149,888)................................................................ 5,056,991
Phoenix Balanced Fund Series - Class A (PhxBalFd)
31,992 shares (cost $529,056)................................................................... 553,776
Strong Total Return Fund, Inc. (StTotRet)
48,337 shares (cost $1,400,958)................................................................. 1,474,761
Templeton Foreign Fund - Class I (TemForFd)
411,792 shares (cost $4,114,789)................................................................ 4,743,845
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
102,696 shares (cost $3,337,581)................................................................ 3,699,094
-------------
Total investments............................................................................ 141,936,130
Accounts receivable................................................................................... 74,820
-------------
Total assets................................................................................. 142,010,950
ACCOUNTS PAYABLE......................................................................................... 148
-------------
CONTRACT OWNERS' EQUITY (NOTE 3)......................................................................... $ 142,010,802
=============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 51
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL ACBenSTGvt ACIncGro
---------------------------- ------------------------ --------------------
1997 1996 1997 1996 1997 1996
------------- ----------- ---------- ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ...................... $ 1,181,299 1,014,822 91,925 117,233 3,655 --
Mortality, expense and administration
charges (note 2) ........................ (826,587) (555,812) (21,758) (28,776) (2,870) --
------------- ----------- ---------- ---------- -------- ---
Net investment activity ................. 354,712 459,010 70,167 88,457 785 --
------------- ----------- ---------- ---------- -------- ---
Proceeds from mutual fund shares sold ..... 26,655,100 14,617,261 693,417 509,287 146,680 --
Cost of mutual fund shares sold ........... (24,092,908) (13,597,151) (687,086) (517,177) (137,531) --
------------- ----------- ---------- ---------- -------- ---
Realized gain (loss) on investments ..... 2,562,192 1,020,110 6,331 (7,890) 9,149 --
Change in unrealized gain (loss) on
investments ............................. 12,623,122 856,306 (14,721) (72,229) 78,624 --
------------- ----------- ---------- ---------- -------- ---
Net gain (loss) on investments .......... 15,185,314 1,876,416 (8,390) (80,119) 87,773 --
------------- ----------- ---------- ---------- -------- ---
Reinvested capital gains .................. 374,659 1,691,249 -- -- -- --
------------- ----------- ---------- ---------- -------- ---
Net increase (decrease) in contract
owners' equity resulting from
operations ......................... 15,914,685 4,026,675 61,777 8,338 88,558 --
------------- ----------- ---------- ---------- -------- ---
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds . 18,534,519 18,154,988 36,005 212,450 448,748 --
Redemptions ............................... (7,012,541) (4,925,767) (337,412) (258,868) (406) --
Annuity benefits .......................... (11,540) (10,994) (467) (468) -- --
Annual contract maintenance charge (note 2) (62,190) (51,263) (1,282) (1,657) (42) --
Contingent deferred sales charges (note 2) (149,519) (38,145) (14,178) (638) -- --
Adjustments to maintain reserves .......... 8,971 (1,335) (65) (33) (63) --
------------- ----------- ---------- ---------- -------- ---
Net equity transactions ............... 11,307,700 13,127,484 (317,399) (49,214) 448,237 --
------------- ----------- ---------- ---------- -------- ---
Net change in contract owners' equity ....... 27,222,385 17,154,159 (255,622) (40,876) 536,795 --
Contract owners' equity beginning of period . 114,788,417 77,226,376 3,326,874 4,438,464 191,329 --
------------- ----------- ---------- ---------- -------- ---
Contract owners' equity end of period ....... $ 142,010,802 94,380,535 3,071,252 4,397,588 728,124 --
============= =========== ========== ========== ======== =====
ACTCGro
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ...................... -- --
Mortality, expense and administration
charges (note 2) ........................ (64,242) (66,090)
----------- -----------
Net investment activity ................. (64,242) (66,090)
----------- -----------
Proceeds from mutual fund shares sold ..... 1,805,710 1,886,264
Cost of mutual fund shares sold ........... (1,740,608) (2,096,221)
----------- -----------
Realized gain (loss) on investments ..... 65,102 (209,957)
Change in unrealized gain (loss) on
investments ............................. 1,514,468 916,970
----------- -----------
Net gain (loss) on investments .......... 1,579,570 707,013
----------- -----------
Reinvested capital gains .................. -- --
----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ......................... 1,515,328 640,923
----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds . (104) (290,213)
Redemptions ............................... (991,041) (1,209,021)
Annuity benefits .......................... (5,584) (5,405)
Annual contract maintenance charge (note 2) (12,733) (13,858)
Contingent deferred sales charges (note 2) (13,749) (3,240)
Adjustments to maintain reserves .......... 10,290 (4,455)
----------- -----------
Net equity transactions ............... (1,012,921) (1,526,192)
----------- -----------
Net change in contract owners' equity ....... 502,407 (885,269)
Contract owners' equity beginning of period . 9,690,046 10,571,646
----------- -----------
Contract owners' equity end of period ....... 10,192,453 9,686,377
=========== ===========
</TABLE>
<PAGE> 52
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ACTCIntlGr ACTCUltra DeHYBd
--------------------- ------------------------ ----------------------
1997 1996 1997 1996 1997 1996
--------- -------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- -- -- 56,298 42,025
Mortality, expense and administration
charges (note 2) ............................ (3,270) (2,701) (52,857) (28,516) (7,835) (5,421)
--------- -------- ---------- ---------- ---------- --------
Net investment activity ..................... (3,270) (2,701) (52,857) (28,516) 48,463 36,604
--------- -------- ---------- ---------- ---------- --------
Proceeds from mutual fund shares sold ......... 138,636 370,371 1,034,165 244,994 113,265 175,064
Cost of mutual fund shares sold ............... (128,229) (350,622) (688,761) (190,379) (112,153) (199,832)
--------- -------- ---------- ---------- ---------- --------
Realized gain (loss) on investments ......... 10,407 19,749 345,404 54,615 1,112 (24,768)
Change in unrealized gain (loss) on investments 83,319 2,625 981,999 318,881 21,697 12,026
Net gain (loss) on investments .............. 93,726 22,374 1,327,403 373,496 22,809 (12,742)
--------- -------- ---------- ---------- ---------- --------
Reinvested capital gains ...................... -- -- -- -- -- --
--------- -------- ---------- ---------- ---------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 90,456 19,673 1,274,546 344,980 71,272 23,862
--------- -------- ---------- ---------- ---------- --------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... (13,361) 125,226 1,099,186 2,175,394 344,409 (13,407)
Redemptions ................................... (596) (403) (313,857) (137,267) (90,798) (3,979)
Annuity benefits .............................. -- -- -- -- -- --
Annual contract maintenance charge (note 2) ... (115) (30) (3,446) (1,597) (219) (134)
Contingent deferred sales charges (note 2) .... (15) -- (9,285) (6,454) (2,252) (117)
Adjustments to maintain reserves .............. (2) (147) 51 1,288 80 (39)
--------- -------- ---------- ---------- ---------- --------
Net equity transactions ................... (14,089) 124,646 772,649 2,031,364 251,220 (17,676)
--------- -------- ---------- ---------- ---------- --------
Net change in contract owners' equity ........... 76,367 144,319 2,047,195 2,376,344 322,492 6,186
Contract owners' equity beginning of period ..... 499,996 299,327 7,329,827 3,275,899 958,214 799,336
--------- -------- ---------- ---------- ---------- --------
Contract owners' equity end of period ........... $ 576,363 443,646 9,377,022 5,652,243 1,280,706 805,522
========= ======== ========== ========== ========== ========
DRyABds
------------------------
1997 1996
---------- ----------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 45,006 19,010
Mortality, expense and administration
charges (note 2) ............................ (11,416) (4,891)
---------- ----------
Net investment activity ..................... 33,590 14,119
---------- ----------
Proceeds from mutual fund shares sold ......... 520,491 140,436
Cost of mutual fund shares sold ............... (533,026) (130,627)
---------- ----------
Realized gain (loss) on investments ......... (12,535) 9,809
Change in unrealized gain (loss) on investments 9,729 (40,725)
Net gain (loss) on investments .............. (2,806) (30,916)
---------- ----------
Reinvested capital gains ...................... -- --
---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 30,784 (16,797)
---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... (6,458) 697,681
Redemptions ................................... (74,949) (70,892)
Annuity benefits .............................. -- --
Annual contract maintenance charge (note 2) ... (480) (251)
Contingent deferred sales charges (note 2) .... (1,364) (483)
Adjustments to maintain reserves .............. 2 --
---------- ----------
Net equity transactions ................... (83,249) 626,055
---------- ----------
Net change in contract owners' equity ........... (52,465) 609,258
Contract owners' equity beginning of period ..... 1,854,653 573,471
---------- ----------
Contract owners' equity end of period ........... 1,802,188 1,182,729
========== ==========
</TABLE>
<PAGE> 53
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Dry500Ix Dry3dCen EvIncGro
------------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
----------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- -- -- 22,364 21,125
Mortality, expense and administration
charges (note 2) ............................ (25,708) (5,018) (3,168) (1,170) (5,924) (5,141)
Net investment activity ..................... (25,708) (5,018) (3,168) (1,170) 16,440 15,984
----------- ---------- -------- -------- -------- --------
Proceeds from mutual fund shares sold ......... 1,554,236 44,207 332,261 29,468 101,520 31,665
Cost of mutual fund shares sold ............... (1,330,477) (33,884) (306,366) (25,583) (98,118) (31,990)
----------- ---------- -------- -------- -------- --------
Realized gain (loss) on investments ......... 223,759 10,323 25,895 3,885 3,402 (325)
Change in unrealized gain (loss) on investments 528,461 56,665 63,307 12,800 67,374 22,541
----------- ---------- -------- -------- -------- --------
Net gain (loss) on investments .............. 752,220 66,988 89,202 16,685 70,776 22,216
----------- ---------- -------- -------- -------- --------
Reinvested capital gains ...................... -- -- -- -- -- --
----------- ---------- -------- -------- -------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 726,512 61,970 86,034 15,515 87,216 38,200
----------- ---------- -------- -------- -------- --------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 1,214,350 996,322 149,306 36,368 (2,595) 10,389
Redemptions ................................... (108,026) (7,181) (21,806) (2,281) (40,973) (3,212)
Annuity benefits .............................. -- -- -- -- -- --
Annual contract maintenance charge (note 2) ... (869) (154) (215) (145) (187) (182)
Contingent deferred sales charges (note 2) .... (1,955) (266) (385) (135) (942) (5)
Adjustments to maintain reserves .............. (5) 13 (5) 8 1 81
----------- ---------- -------- -------- -------- --------
Net equity transactions ................... 1,103,495 988,734 126,895 33,815 (44,696) 7,071
----------- ---------- -------- -------- -------- --------
Net change in contract owners' equity ........... 1,830,007 1,050,704 212,929 49,330 42,520 45,271
Contract owners' equity beginning of period ..... 3,281,066 483,367 333,645 157,701 917,152 765,636
----------- ---------- -------- -------- -------- --------
Contract owners' equity end of period ........... $ 5,111,073 1,534,071 546,574 207,031 959,672 810,907
=========== ========== ======== ======== ======== ========
<CAPTION>
FedBdFd
---------------------
1997 1996
-------- ------
<S> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 9,498 --
Mortality, expense and administration
charges (note 2) ............................ (1,627) --
Net investment activity ..................... 7,871 --
-------- ------
Proceeds from mutual fund shares sold ......... 17,330 --
Cost of mutual fund shares sold ............... (17,533) --
-------- ------
Realized gain (loss) on investments ......... (203) --
Change in unrealized gain (loss) on investments 1,889 --
-------- ------
Net gain (loss) on investments .............. 1,686 --
Reinvested capital gains ...................... -- --
-------- ------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 9,557 --
-------- ------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 186,439 --
Redemptions ................................... (3,667) --
Annuity benefits .............................. -- --
Annual contract maintenance charge (note 2) ... (5) --
Contingent deferred sales charges (note 2) .... -- --
Adjustments to maintain reserves .............. (13) --
-------- ------
Net equity transactions ................... 182,754 --
-------- ------
Net change in contract owners' equity ........... 192,311 --
Contract owners' equity beginning of period ..... 99,894 --
-------- ------
Contract owners' equity end of period ........... 292,205 --
======== ======
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
FABal FAEqInc
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 1,021 104 4,735 782
Mortality, expense and administration
charges (note 2)..................... (426) (63) (5,330) (462)
-------------- -------------- -------------- --------------
Net investment activity.............. 595 41 (595) 320
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 15,243 14,622 75,743 27,598
Cost of mutual fund shares sold........ (14,365) (15,104) (64,906) (26,938)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 878 (482) 10,837 660
Change in unrealized gain (loss) on investments 6,758 - 114,103 (925)
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 7,636 (482) 124,940 (265)
-------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 8,231 (441) 124,345 55
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 64,677 441 166,620 208,312
Redemptions............................ (5,952) - (13,671) (429)
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) (53) - (164) (3)
Contingent deferred sales charges (note 2) (348) - (589) -
Adjustments to maintain reserves....... (25) - (7) (2)
-------------- -------------- -------------- --------------
Net equity transactions............ 58,299 441 152,189 207,878
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 66,530 - 276,534 207,933
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 29,841 - 683,495 -
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 96,371 - 960,029 207,933
============== ============== ============== ==============
<CAPTION>
FAGrOpp FAHiYld
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 42,970 13,534
Mortality, expense and administration
charges (note 2)..................... (18,867) (1,860) (7,596) (2,236)
------------- -------------- -------------- --------------
Net investment activity.............. (18,867) (1,860) 35,374 11,298
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 529,346 21,694 61,592 312,740
Cost of mutual fund shares sold........ (460,076) (21,358) (60,780) (313,496)
------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 69,270 336 812 (756)
Change in unrealized gain (loss) on investments 364,207 21,532 24,133 (1,501)
------------- -------------- -------------- --------------
Net gain (loss) on investments....... 433,477 21,868 24,945 (2,257)
------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 414,610 20,008 60,319 9,041
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 1,489,475 839,071 745,207 461,067
Redemptions............................ (95,097) - (27,763) (6,041)
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) (576) (19) (121) (20)
Contingent deferred sales charges (note 2) (3,001) - (474) (302)
Adjustments to maintain reserves....... 26 2 9 (7)
------------- -------------- -------------- --------------
Net equity transactions............ 1,390,827 839,054 716,858 454,697
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 1,805,437 859,062 777,177 463,738
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 2,126,543 - 797,492 -
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 3,931,980 859,062 1,574,669 463,738
============= ============== ============== ==============
</TABLE>
<PAGE> 55
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FidAsMgr FidCapInc
--------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ---------- ----------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 50,181 37,151 49,215 73,071
Mortality, expense and administration
charges (note 2) ............................ (20,098) (15,940) (7,149) (8,797)
----------- ---------- ---------- ----------
Net investment activity ..................... 30,083 21,211 42,066 64,274
----------- ---------- ---------- ----------
Proceeds from mutual fund shares sold ......... 614,319 236,192 79,058 274,880
Cost of mutual fund shares sold ............... (519,825) (221,440) (67,951) (203,400)
----------- ---------- ---------- ----------
Realized gain (loss) on investments ......... 94,494 14,752 11,107 71,480
Change in unrealized gain (loss) on investments 188,211 47,315 9,667 (83,275)
----------- ---------- ---------- ----------
Net gain (loss) on investments .............. 282,705 62,067 20,774 (11,795)
----------- ---------- ---------- ----------
Reinvested capital gains ...................... -- -- -- --
----------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 312,788 83,278 62,840 52,479
----------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 80,323 314,017 (19) (16,019)
Redemptions ................................... (212,727) (19,952) (69,355) (238,756)
Annuity benefits .............................. -- -- (531) (506)
Annual contract maintenance charge (note 2) ... (1,057) (794) (1,792) (2,245)
Contingent deferred sales charges (note 2) .... (5,873) (636) (280) (528)
Adjustments to maintain reserves .............. 17 (84) (883) (60)
----------- ---------- ---------- ----------
Net equity transactions ................... (139,317) 292,551 (72,860) (258,114)
----------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 173,471 375,829 (10,020) (205,635)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 3,044,222 2,220,460 1,238,341 1,421,302
----------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 3,217,693 2,596,289 1,228,321 1,215,667
=========== ========== ========== ==========
<CAPTION>
FidEqInc FidMgln
--------------------------- ---------------------------
1997 1996 1997 1996
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 169,340 161,239 108,309 59,156
Mortality, expense and administration
charges (note 2) ............................ (96,415) (83,823) (78,838) (64,509)
----------- ---------- ---------- ----------
Net investment activity ..................... 72,925 77,416 29,471 (5,353)
----------- ---------- ---------- ----------
Proceeds from mutual fund shares sold ......... 1,526,472 1,438,215 1,651,101 1,954,931
Cost of mutual fund shares sold ............... (1,018,509) (891,004) (1,363,490) (1,631,108)
----------- ---------- ---------- ----------
Realized gain (loss) on investments ......... 507,963 547,211 287,611 323,823
Change in unrealized gain (loss) on investments 1,554,107 221,542 1,232,780 (1,645,529)
----------- ---------- ---------- ----------
Net gain (loss) on investments .............. 2,062,070 768,753 1,520,391 (1,321,706)
----------- ---------- ---------- ----------
Reinvested capital gains ...................... 161,586 163,388 210,841 1,520,319
----------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,296,581 1,009,557 1,760,703 193,260
----------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 543,699 1,173,679 65,340 1,201,935
Redemptions ................................... (1,144,153) (1,060,619) (482,354) (140,477)
Annuity benefits .............................. (1,584) (1,380) -- --
Annual contract maintenance charge (note 2) ... (12,538) (12,469) (6,133) (3,646)
Contingent deferred sales charges (note 2) .... (12,777) (3,654) (17,472) (5,805)
Adjustments to maintain reserves .............. 48 145 52 150
----------- ---------- ---------- ----------
Net equity transactions ................... (627,305) 95,702 (440,567) 1,052,157
----------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 1,669,276 1,105,259 1,320,136 1,245,417
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 14,264,106 12,222,053 11,693,770 9,110,875
----------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 15,933,382 13,327,312 13,013,906 10,356,292
=========== ========== ========== ==========
</TABLE>
9
<PAGE> 56
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FidPurtn FidVIPHI
---------------------------- --------------------------
1997 1996 1997 1996
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................................ $ 158,246 89,608 18,061 33,607
Mortality, expense and administration
charges (note 2) .......................................... (57,211) (34,423) (1,529) (2,453)
------------ ------------ ------------ ----------
Net investment activity ................................... 101,035 55,185 16,532 31,154
------------ ------------ ------------ ----------
Proceeds from mutual fund shares sold ....................... 609,642 235,870 27,147 144,855
Cost of mutual fund shares sold ............................. (531,404) (214,299) (25,560) (146,997)
------------ ------------ ------------ ----------
Realized gain (loss) on investments ....................... 78,238 21,571 1,587 (2,142)
Change in unrealized gain (loss) on investments ............. 947,544 166,695 (2,226) (11,439)
------------ ------------ ------------ ----------
Net gain (loss) on investments ............................ 1,025,782 188,266 (639) (13,581)
------------ ------------ ------------ ----------
Reinvested capital gains .................................... -- -- 2,232 6,575
------------ ------------ ------------ ----------
Net increase (decrease) in contract owners'
equity resulting from operations ...................... 1,126,817 243,451 18,125 24,148
------------ ------------ ------------ ----------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ................... 1,472,626 1,458,398 (4,194) (129,318)
Redemptions ................................................. (190,582) (90,430) (21,184) (12,887)
Annuity benefits ............................................ -- -- -- --
Annual contract maintenance charge (note 2) ................. (2,683) (1,525) (124) (178)
Contingent deferred sales charges (note 2) .................. (5,951) (3,592) (95) (24)
Adjustments to maintain reserves ............................ 34 89 (185) 13
------------ ------------ ------------ ----------
Net equity transactions ................................. 1,273,444 1,362,940 (25,782) (142,394)
------------ ------------ ------------ ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......................... 2,400,261 1,606,391 (7,657) (118,246)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................... 7,789,643 4,344,394 269,844 444,801
------------ ------------ ------------ ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......................... $ 10,189,904 5,950,785 262,187 326,555
============ ============ ============ ==========
<CAPTION>
JanFund Jan20Fd
----------------------- -------------------------
1997 1996 1997 1996
--------- ------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................................ -- -- -- --
Mortality, expense and administration
charges (note 2) .......................................... (15,077) (2,201) (27,452) (10,075)
--------- ------- --------- ---------
Net investment activity ................................... (15,077) (2,201) (27,452) (10,075)
--------- ------- --------- ---------
Proceeds from mutual fund shares sold ....................... 336,177 20,021 1,581,620 90,463
Cost of mutual fund shares sold ............................. (314,835) (18,025) (1,445,719) (79,749)
--------- ------- --------- ---------
Realized gain (loss) on investments ....................... 21,342 1,996 135,901 10,714
Change in unrealized gain (loss) on investments ............. 266,838 24,665 631,562 179,351
--------- ------- --------- ---------
Net gain (loss) on investments ............................ 288,180 26,661 767,463 190,065
--------- ------- --------- ---------
Reinvested capital gains .................................... -- -- -- --
--------- ------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ...................... 273,103 24,460 740,011 179,990
--------- ------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ................... 1,083,334 738,220 980,704 878,124
Redemptions ................................................. (64,103) (514) (243,098) (29,864)
Annuity benefits ............................................ -- -- -- --
Annual contract maintenance charge (note 2) ................. (362) (15) (1,129) (561)
Contingent deferred sales charges (note 2) .................. (1,142) -- (4,758) (975)
Adjustments to maintain reserves ............................ (4) 7 33 1,656
--------- ------- --------- ---------
Net equity transactions ................................. 1,017,723 737,698 731,752 848,380
--------- ------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......................... 1,290,826 762,158 1,471,763 1,028,370
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................... 1,609,117 -- 3,399,603 1,130,058
--------- ------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ......................... 2,899,943 762,158 4,871,366 2,158,428
========= ======= ========= =========
</TABLE>
10
<PAGE> 57
<TABLE>
<CAPTION>
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
JANWRLDWDE MFSWDGVT
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - - -
Mortality, expense and administration
charges (note 2)..................... (9,942) - (6,285) (7,389)
-------------- -------------- -------------- --------------
Net investment activity.............. (9,942) - (6,285) (7,389)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 309,800 - 339,743 210,742
Cost of mutual fund shares sold........ (297,970) - (366,667) (228,307)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 11,830 - (26,924) (17,565)
Change in unrealized gain (loss) on
investments.......................... 284,944 - (319) 5,379
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 296,774 - (27,243) (12,186)
-------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 286,832 - (33,528) (19,575)
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 1,639,228 - (113,043) (87,721)
Redemptions............................ (12,516) - (74,976) (54,175)
Annuity benefits....................... - - (1,301) (1,315)
Annual contract maintenance charge (note 2) (148) - (873) (1,342)
Contingent deferred sales charges (note 2) (5) - (1,161) (315)
Adjustments to maintain reserves....... 5 - (1) (10)
-------------- -------------- -------------- --------------
Net equity transactions............ 1,626,564 - (191,355) (144,878)
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 1,913,396 - (224,883) (164,453)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 465,306 - 1,044,394 1,219,461
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 2,378,702 - 819,511 1,055,008
============== ============== ============== ==============
<CAPTION>
NWBDFD NWFUND
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 50,589 47,527 20,071 17,596
Mortality, expense and administration
charges (note 2)..................... (10,063) (9,379) (18,174) (12,762)
------------- -------------- -------------- --------------
Net investment activity.............. 40,526 38,148 1,897 4,834
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 250,075 203,805 254,019 50,871
Cost of mutual fund shares sold........ (273,436) (207,123) (158,378) (31,998)
------------- -------------- -------------- --------------
Realized gain (loss) on investments.. (23,361) (3,318) 95,641 18,873
Change in unrealized gain (loss) on
investments.......................... 7,935 (98,422) 490,047 147,465
------------- -------------- -------------- --------------
Net gain (loss) on investments....... (15,426) (101,740) 585,688 166,338
------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
------------- -------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 25,100 (63,592) 587,585 171,172
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds (93,456) 209,302 293,395 139,649
Redemptions............................ (21,775) (13,267) (41,895) 13,625
Annuity benefits....................... (100) (101) (586) (491)
Annual contract maintenance charge (note 2) (521) (399) (948) (747)
Contingent deferred sales charges (note 2) (625) (208) (183) (4)
Adjustments to maintain reserves....... (13) (71) (844) (30)
------------- -------------- -------------- --------------
Net equity transactions............ (116,490) 195,256 248,939 152,002
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (91,390) 131,664 836,524 323,174
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 1,616,821 1,493,256 2,488,828 1,788,791
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 1,525,431 1,624,920 3,325,352 2,111,965
============== ============== ============== ==============
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
NWGROFD NWMYMKT
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 18,800 19,412 206,059 209,032
Mortality, expense and administration
charges (note 2)..................... (25,136) (21,789) (54,634) (56,354)
-------------- -------------- -------------- --------------
Net investment activity.............. (6,336) (2,377) 151,425 152,678
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 508,855 382,729 7,885,564 4,782,020
Cost of mutual fund shares sold........ (306,509) (267,313) (7,885,564) (4,782,020)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 202,346 115,416 - -
Change in unrealized gain (loss) on investments 445,355 105,136 - -
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 647,701 220,552 - -
-------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 641,365 218,175 151,425 152,678
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 60,694 143,664 1,730,014 278,296
Redemptions............................ (225,679) (289,613) (1,070,376) (1,128,739)
Annuity benefits....................... (612) (554) (775) (774)
Annual contract maintenance charge (note 2) (1,492) (1,307) (4,846) (4,947)
Contingent deferred sales charges (note 2) (2,616) (1,771) (18,493) (4,027)
Adjustments to maintain reserves....... (46) (20) 216 (321)
-------------- -------------- -------------- --------------
Net equity transactions............ (169,751) (149,601) 635,740 (860,512)
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 471,614 68,574 787,165 (707,834)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 3,683,393 3,217,540 7,675,383 9,264,318
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 4,155,007 3,286,114 8,462,548 8,556,484
============== ============== ============== ==============
<CAPTION>
NWUSGVT NBGUARD
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 1,086 42 16,044 12,782
Mortality, expense and administration
charges (note 2)..................... (238) (8) (39,603) (16,986)
------------- -------------- -------------- --------------
Net investment activity.............. 848 34 (23,559) (4,204)
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 46,252 303 432,748 140,734
Cost of mutual fund shares sold........ (46,295) (313) (320,754) (111,236)
------------- -------------- -------------- --------------
Realized gain (loss) on investments.. (43) (10) 111,994 29,498
Change in unrealized gain (loss) on investments 260 22 627,893 44,241
------------- -------------- -------------- --------------
Net gain (loss) on investments....... 217 12 739,887 73,739
------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 1,065 46 716,328 69,535
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds (16,974) 5,654 1,248,605 1,764,923
Redemptions............................ (4,312) - (199,249) (23,851)
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) (20) (6) (1,600) (412)
Contingent deferred sales charges (note 2) (206) - (5,979) (893)
Adjustments to maintain reserves....... (6) (3) 38 280
------------- -------------- -------------- --------------
Net equity transactions............ (21,518) 5,645 1,041,815 1,740,047
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (20,453) 5,691 1,758,143 1,809,582
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 65,790 - 5,226,230 1,747,951
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 45,337 5,691 6,984,373 3,557,533
============= ============== ============== ==============
</TABLE>
12
<PAGE> 59
<TABLE>
<CAPTION>
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
NBLtDMat NBPArtFd
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 26,152 31,856 - -
Mortality, expense and administration
charges (note 2)..................... (5,295) (6,874) (31,260) (11,189)
-------------- -------------- -------------- --------------
Net investment activity.............. 20,857 24,982 (31,260) (11,189)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 368,717 163,884 431,852 42,766
Cost of mutual fund shares sold........ (369,101) (164,369) (313,974) (37,376)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. (384) (485) 117,878 5,390
Change in unrealized gain (loss) on
investments.......................... (605) (25,701) 609,613 145,155
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... (989) (26,186) 727,491 150,545
-------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 19,868 (1,204) 696,231 139,356
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 42,300 197,520 1,122,162 1,034,828
Redemptions............................ (82,046) (15,499) (91,442) (26,128)
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) (175) (144) (1,243) (697)
Contingent deferred sales charges (note 2) (2,247) (239) (2,099) (883)
Adjustments to maintain reserves....... 3 102 65 255
-------------- -------------- -------------- --------------
Net equity transactions............ (42,165) 181,740 1,027,443 1,007,375
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (22,297) 180,536 1,723,674 1,146,731
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 820,873 987,369 4,146,403 1,097,022
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 798,576 1,167,905 5,870,077 2,243,753
============== ============== ============== ==============
<CAPTION>
OppGlob PhxBalFd
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 6,504 6,306
Mortality, expense and administration
charges (note 2)..................... (29,996) (18,894) (3,267) (2,659)
------------- -------------- -------------- --------------
Net investment activity.............. (29,996) (18,894) 3,237 3,647
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 868,740 180,513 172,594 18,588
Cost of mutual fund shares sold........ (729,148) (183,147) (177,663) (16,732)
------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 139,592 (2,634) (5,069) 1,856
Change in unrealized gain (loss) on
investments.......................... 579,090 247,692 55,799 487
------------- -------------- -------------- --------------
Net gain (loss) on investments....... 718,682 245,058 50,730 2,343
------------- -------------- -------------- --------------
Reinvested capital gains............... - - - 303
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 688,686 226,164 53,967 6,293
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 535,585 593,888 (27,460) 226,885
Redemptions............................ (272,745) (72,506) (4,557) (1,388)
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) (2,015) (1,363) (151) (37)
Contingent deferred sales charges (note 2) (9,156) (2,276) (132) (38)
Adjustments to maintain reserves....... 65 37 2 (3)
------------- -------------- -------------- --------------
Net equity transactions............ 251,734 517,780 (32,298) 225,419
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 940,420 743,944 21,669 231,712
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 4,116,590 2,499,750 532,110 270,523
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $5,057,010 3,243,694 553,779 502,235
============= ============== ============== ==============
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
StTotRet TemForFd
------------------------------ -----------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 5,170 2,624 - -
Mortality, expense and administration
charges (note 2)..................... (8,743) (4,616) (26,580) (9,869)
-------------- -------------- -------------- --------------
Net investment activity.............. (3,573) (1,992) (26,580) (9,869)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 216,379 44,466 324,966 39,906
Cost of mutual fund shares sold........ (197,877) (37,651) (291,346) (35,972)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 18,502 6,815 33,620 3,934
Change in unrealized gain (loss) on
investments......................... 134,426 24,635 417,356 115,889
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 152,928 31,450 450,976 119,823
-------------- -------------- -------------- --------------
Reinvested capital gains............... - 664 - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 149,355 30,122 424,396 109,954
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 415,217 179,777 1,014,748 1,454,943
Redemptions............................ (155,445) (6,410) (134,025) (14,219)
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) (278) (162) (967) (175)
Contingent deferred sales charges (note 2) (3,990) (233) (3,754) (404)
Adjustments to maintain reserves....... 157 10 (36) 26
-------------- -------------- -------------- --------------
Net equity transactions............ 255,661 172,982 875,966 1,440,171
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 405,016 203,104 1,300,362 1,550,125
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 1,069,749 614,955 3,443,497 766,650
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 1,474,765 818,059 4,743,859 2,316,775
============== ============== ============== ==============
<CAPTION>
WPEmGro
-----------------------------
1997 1996
------------- --------------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - -
Mortality, expense and administration
charges (note 2)..................... (20,708) (2,478)
------------- --------------
Net investment activity.............. (20,708) (2,478)
------------- --------------
Proceeds from mutual fund shares sold.. 679,625 152,097
Cost of mutual fund shares sold........ (690,918) (134,361)
------------- --------------
Realized gain (loss) on investments.. (11,293) 17,736
Change in unrealized gain (loss) on
investments.......................... 297,498 (3,657)
------------- --------------
Net gain (loss) on investments....... 286,205 14,079
------------- --------------
Reinvested capital gains............... - -
------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 265,497 11,601
------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 539,787 935,243
Redemptions............................ (67,933) (524)
Annuity benefits....................... - -
Annual contract maintenance charge (note 2) (588) (42)
Contingent deferred sales charges (note 2) (1,988) -
Adjustments to maintain reserves....... (20) (212)
------------- --------------
Net equity transactions............ 469,258 934,465
------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 734,755 946,066
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 2,964,337 -
------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $3,699,092 946,066
============= ==============
</TABLE>
14
<PAGE> 61
================================================================================
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
(UNAUDITED)
(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 contract is
through the Company for Individual Retirement Account rollovers;
however, other distributors may be utiized.
(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 charges.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in the following:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
(formerly Twentieth Century Investors, Inc. - U.S. Governments
Short-Term (TCUSGvt))
American Century: Income & Growth Fund (ACIncGro)
American Century: Twentieth Century Growth Fund (ACTCGro)
(formerly Twentieth Century Investors, Inc. - Growth Investors
(TCGroInv))
American Century: Twentieth Century International Growth Fund
(ACTCIntlGr) (formerly Twentieth Century World Investors, Inc.
- International Equity (TCIntlEq))
American Century: Twentieth Century Ultra Fund (ACTCUltra)
(formerly Twentieth Century Investors, Inc. - Ultra Investors
(TCUltra))
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)
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
Evergreen Income and Growth Fund - Class Y (EvIncGro)
(formerly The Evergreen Total Return Fund - Class Y (EvTotRet))
Federated Investment Series Funds, Inc. - Federated Bond Fund -
Class F (FedBdFd)
Fidelity Advisor Balanced Fund - Class T (FABal)
(formerly Fidelity Advisor Income & Growth Fund - Class T
(FAIncGr)
Fidelity Advisor Equity-Income Fund - Class T (FAEqInc)
Fidelity Advisor Growth Opportunities Fund - Class T (FAGrOpp)
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
Fidelity Asset Manager(TM) (FidAsMgr)
Fidelity Capital & Income Fund (FidCapInc)
(not available for additional purchase payments or exchanges
after May 1, 1991)
Fidelity Equity-Income Fund (FidEqInc)
15
<PAGE> 62
Fidelity Magellan(R) Fund (FidMgln)
Fidelity Puritan(R) Fund (FidPurtn)
Portfolio of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - High Income Portfolio (FidVIPHI)
(not available for additional purchase payments or exchanges
after December 1, 1993)
Janus Fund (JanFund) Janus Twenty Fund (Jan20Fd)
Janus Worldwide Fund (JanWrldwde)
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)
Warburg Pincus Emerging Growth Fund - Common Shares
(WPEmGro)
At June 30, 1997, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners and
certain contract expenses (see 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 June 30, 1997. The cost of investments
sold is determined on the 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.
(f) Reclassifications
Certain 1996 amounts have been reclassified to conform with the current
year presentation.
16
<PAGE> 63
(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 contract 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.
17
<PAGE> 64
<TABLE>
<CAPTION>
(3) COMPONENTS OF CONTRACT OWNERS'S EQUITY
The following is a summary of contract owners' equity at June 30, 1997, for
each series, in both the accumulation and payout phases.
Contract owners' equity represented by: UNITS UNIT VALUE
------- ----------
<S> <C> <C> <C>
Contracts in accumulation phase:
American Century: Benham Short-Term Government Fund:
Tax qualified .................................. 143,074 $ 21.411922 $ 3,063,489
American Century: Income & Growth Fund:
Tax qualified .................................. 58,967 12.347988 728,124
American Century: Twentieth Century Growth Fund:
Tax qualified .................................. 167,576 60.064246 10,065,326
American Century: Twentieth Century International
Growth Fund:
Tax qualified .................................. 36,480 15.799415 576,363
American Century: Twentieth Century Ultra Fund:
Tax qualified .................................. 587,159 15.970158 9,377,022
Delaware Group Delchester High-Yield Bond Fund, Inc. -
Delchester Fund Institutional Class:
Tax qualified ................................. 88,659 14.445299 1,280,706
Dreyfus A Bonds Plus, Inc.:
Tax qualified ................................. 161,545 11.155948 1,802,188
Dreyfus S&P 500 Index Fund, Inc.:
Tax qualified ................................. 244,322 20.919413 5,111,073
The Dreyfus Third Century Fund, Inc.:
Tax qualified ................................. 29,751 18.371612 546,574
Evergreen Income and Growth Fund - Class Y:
Tax qualified ................................. 62,220 15.423843 959,672
Federated Investment Series Funds, Inc. -
Federated Bond Fund - Class F:
Tax qualified ................................. 28,041 10.420617 292,205
Fidelity Advisor Balanced Fund - Class T:
Tax qualified ................................. 7,805 12.347336 96,371
Fidelity Advisor Equity-Income Fund - Class T:
Tax qualified ................................. 72,278 13.282446 960,029
Fidelity Advisor Growth Opportunities Fund - Class T:
Tax qualified ................................. 286,656 13.716720 3,931,980
Fidelity Advisor High Yield Fund - Class T:
Tax qualified ................................. 133,356 11.808007 1,574,669
Fidelity Asset Manager(TM):
Tax qualified ................................. 233,994 13.751176 3,217,693
Fidelity Capital & Income Fund:
Tax qualified ................................. 28,071 43.434703 1,219,256
Fidelity Equity-Income Fund:
Tax qualified ................................. 246,894 64.473989 15,918,241
Fidelity Magellan(R)Fund:
Tax qualified ................................. 634,544 20.509068 13,013,906
Fidelity Puritan(R)Fund:
Tax qualified ................................. 549,341 18.549323 10,189,904
</TABLE>
18
<PAGE> 65
<TABLE>
<S> <C> <C> <C>
Fidelity VIP - High Income Portfolio:
Tax qualified ................................. 11,243 23.320029 262,187
Janus Fund:
Tax qualified ................................. 213,760 13.566351 2,899,943
Janus Twenty Fund:
Tax qualified ................................. 277,567 17.550234 4,871,366
Janus Worldwide Fund:
Tax qualified ................................. 195,055 12.195030 2,378,702
MFS(R)World Governments Fund - Class A:
Tax qualified ................................. 22,644 35.765728 809,879
Nationwide(R)Bond Fund:
Tax qualified ................................. 39,382 38.510870 1,516,635
Non-tax qualified ............................. 177 38.345774 6,787
Nationwide(R) Fund:
Tax qualified ................................. 37,845 86.766810 3,283,690
Non-tax qualified ............................. 314 90.376443 28,378
Nationwide(R) Growth Fund:
Tax qualified ................................. 46,390 88.806418 4,119,730
Non-tax qualified ............................. 230 93.768413 21,567
Nationwide(R) Money Market Fund:
Tax qualified - Pre 12/25/82 .................. 46,306 25.105010 1,162,513
Tax qualified ................................. 364,018 19.937325 7,257,545
Non-tax qualified 1,070 25.263671 27,032
Nationwide(R) U.S. Government Income Fund:
Tax qualified ................................. 4,287 10.575346 45,337
Neuberger & Berman Guardian Fund:
Tax qualified ................................. 424,883 16.438344 6,984,373
Neuberger & Berman Limited Maturity Bond Fund:
Tax qualified ................................. 70,469 11.332296 798,576
Neuberger & Berman Partners Fund:
Tax qualified ................................. 273,192 21.487003 5,870,077
Oppenheimer Global Fund - Class A:
Tax qualified ................................. 242,259 20.874396 5,057,010
Phoenix Balanced Fund Series - Class A:
Tax qualified ................................. 41,412 13.372440 553,779
Strong Total Return Fund, Inc.:
Tax qualified ................................. 78,726 18.732879 1,474,765
Templeton Foreign Fund - Class I:
Tax qualified ................................. 332,251 14.277936 4,743,859
Warburg Pincus Trust Emerging Growth Fund -
Common Shares:
Tax qualified ................................. 290,645 12.727183 3,699,092
======= =========
Reserves for annuity contracts in payout phase:
Tax qualified ................................. 213,189
----------
$ 142,010,802
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
19
<PAGE> 66
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Nationwide Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Nationwide Life
Insurance Company and subsidiaries (collectively the Company) as of December 31,
1996 and 1995, and the related consolidated statements of income, shareholder's
equity and cash flows for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with 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.
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, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996, in conformity with generally accepted
accounting principles.
In 1994, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
KPMG Peat Marwick LLP
Columbus, Ohio
January 31, 1997
<PAGE> 2
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1996 and 1995
($000's omitted)
Assets 1996 1995
------ ----------------- ----------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturity securities (cost $11,970,878 in 1996; $11,862,556 in 1995) $12,304,639 12,485,564
Equity securities (cost $43,890 in 1996; $23,617 in 1995) 59,131 29,953
Mortgage loans on real estate, net 5,272,119 4,602,764
Real estate, net 265,759 229,442
Policy loans 371,816 336,356
Other long-term investments 28,668 61,989
Short-term investments (note 13) 4,789 32,792
----------------- ----------------
18,306,921 17,778,860
----------------- ----------------
Cash 43,784 9,455
Accrued investment income 210,182 212,963
Deferred policy acquisition costs 1,366,509 1,020,356
Investment in subsidiaries classified as discontinued operations (notes 1 and 2) 485,707 506,677
Other assets (note 6) 426,441 388,214
Assets held in Separate Accounts (note 8) 26,926,702 18,591,108
----------------- ----------------
$47,766,246 38,507,633
================= ================
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims (notes 6 and 8) $17,179,060 16,358,614
Policyholders' dividend accumulations 361,401 348,027
Other policyholder funds 60,073 65,297
Accrued federal income tax (note 7):
Current 30,170 35,301
Deferred 162,212 246,627
----------------- ----------------
192,382 281,928
----------------- ----------------
Dividend payable to shareholder (notes 1 and 2) 485,707 -
Other liabilities 423,047 234,147
Liabilities related to Separate Accounts (note 8) 26,926,702 18,591,108
----------------- ----------------
45,628,372 35,879,121
----------------- ----------------
Commitments and contingencies (notes 6, 9 and 15)
Shareholder's equity (notes 3, 4, 5, 12 and 13):
Capital shares, $1 par value. Authorized 5,000,000 shares, issued and
outstanding 3,814,779 shares 3,815 3,815
Additional paid-in capital 527,874 657,118
Retained earnings 1,432,593 1,583,275
Unrealized gains on securities available-for-sale, net 173,592 384,304
----------------- ----------------
2,137,874 2,628,512
----------------- ----------------
$47,766,246 38,507,633
================= ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 1996, 1995 and 1994
($000's omitted)
<TABLE>
<CAPTION>
1996 1995 1994
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues (note 16):
Investment product and universal life insurance product policy charges $ 400,902 286,534 217,245
Traditional life insurance premiums 198,642 199,106 176,658
Net investment income (note 5) 1,357,759 1,294,033 1,210,811
Realized losses on investments (note 5) (326) (1,724) (16,527)
Other income 35,861 20,702 11,312
--------------- -------------- -------------
1,992,838 1,798,651 1,599,499
--------------- -------------- -------------
Benefits and expenses:
Benefits and claims 1,160,580 1,115,493 992,667
Provision for policyholders' dividends on participating policies (note 12) 40,973 39,937 38,754
Amortization of deferred policy acquisition costs 133,394 82,695 85,568
Other operating expenses (note 13) 342,394 272,954 240,652
--------------- -------------- -------------
1,677,341 1,511,079 1,357,641
--------------- -------------- -------------
Income from continuing operations before federal income tax expense 315,497 287,572 241,858
--------------- -------------- -------------
Federal income tax expense (benefit) (note 7):
Current 116,512 88,700 73,559
Deferred (5,623) 11,108 5,030
--------------- -------------- -------------
110,889 99,808 78,589
--------------- -------------- -------------
Income from continuing operations 204,608 187,764 163,269
Income from discontinued operations (less federal income tax expense of
$4,453, $7,446 and $10,915 in 1996, 1995 and 1994, respectively) (note 2) 11,324 24,714 20,459
--------------- -------------- -------------
Net income $ 215,932 212,478 183,728
=============== ============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1996, 1995 and 1994
($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>
1994:
Balance, beginning of year $3,815 406,089 1,194,519 6,745 1,611,168
Capital contribution - 200,000 - - 200,000
Net income - - 183,728 - 183,728
Adjustment for change in accounting for
certain investments in debt and equity
securities, net (note 4) - - - 212,553 212,553
Unrealized losses on securities available-
for-sale, net - - - (338,971) (338,971)
----------- ------------- --------------- ----------------- ---------------
Balance, end of year $3,815 606,089 1,378,247 (119,673) 1,868,478
=========== ============= =============== ================= ===============
1995:
Balance, beginning of year 3,815 606,089 1,378,247 (119,673) 1,868,478
Capital contribution (note 13) - 51,029 - (4,111) 46,918
Dividends to shareholder - - (7,450) - (7,450)
Net income - - 212,478 - 212,478
Unrealized gains on securities available-
for-sale, net - - - 508,088 508,088
----------- ------------- --------------- ----------------- ---------------
Balance, end of year $3,815 657,118 1,583,275 384,304 2,628,512
=========== ============= =============== ================= ===============
1996:
Balance, beginning of year 3,815 657,118 1,583,275 384,304 2,628,512
Capital contribution (note 13) - 25 5 - 30
Dividends to shareholder - (129,269) (366,619) (39,819) (535,707)
Net income - - 215,932 - 215,932
Unrealized losses on securities available-
for-sale, net - - - (170,893) (170,893)
----------- ------------- --------------- ----------------- ---------------
Balance, end of year $3,815 527,874 1,432,593 173,592 2,137,874
=========== ============= =============== ================= ===============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
($000's omitted)
<TABLE>
<CAPTION>
1996 1995 1994
---------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 215,932 212,478 183,728
Adjustments to reconcile net income to net cash provided by operating
activities:
Capitalization of deferred policy acquisition costs (422,572) (321,327) (242,431)
Amortization of deferred policy acquisition costs 133,394 82,695 85,568
Amortization and depreciation 6,962 10,234 3,603
Realized (gains) losses on invested assets, net (284) 3,250 16,094
Deferred federal income tax expense (benefit) 7,603 (30,673) 9,946
Decrease (increase) in accrued investment income 2,781 (16,999) (12,808)
(Increase) decrease in other assets (38,876) 39,880 (102,676)
Increase in policy liabilities 305,755 135,937 118,361
Increase in policyholders' dividend accumulations 13,374 12,639 15,298
(Decrease) increase in accrued federal income tax payable (5,131) 30,836 (5,714)
Increase in other liabilities 188,900 26,851 506
Other, net (61,679) 1,832 (29,595)
--------------- --------------- ---------------
Net cash provided by operating activities 346,159 187,633 39,880
---------------- --------------- ---------------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 1,162,766 634,553 544,843
Proceeds from sale of securities available-for-sale 299,558 107,345 228,308
Proceeds from maturity of fixed maturity securities held-to-maturity - 564,450 491,862
Proceeds from repayments of mortgage loans on real estate 309,050 207,832 190,574
Proceeds from sale of real estate 18,519 48,331 46,713
Proceeds from repayments of policy loans and sale of other invested assets 22,795 53,587 120,506
Cost of securities available-for-sale acquired (1,573,640) (1,942,413) (1,816,370)
Cost of fixed maturity securities held-to-maturity acquired - (593,636) (410,379)
Cost of mortgage loans on real estate acquired (972,776) (796,026) (471,570)
Cost of real estate acquired (7,862) (10,928) (6,385)
Policy loans issued and other invested assets acquired (57,740) (75,910) (65,302)
Short-term investments, net 28,003 77,837 (89,376)
Purchase of affiliate (note 13) - - (155,000)
---------------- --------------- ---------------
Net cash used in investing activities (771,327) (1,724,978) (1,391,576)
---------------- --------------- ---------------
Cash flows from financing activities:
Proceeds from capital contributions 30 - 200,000
Dividends paid to shareholder (50,000) (7,450) -
Increase in investment product and universal life insurance
product account balances 2,293,933 2,809,385 3,547,976
Decrease in investment product and universal life insurance
product account balances (1,784,466) (1,258,758) (2,412,595)
---------------- --------------- --------------
Net cash provided by financing activities 459,497 1,543,177 1,335,381
---------------- --------------- --------------
Net increase (decrease) in cash 34,329 5,832 (16,315)
---------------- --------------- ---------------
Cash, beginning of year 9,455 3,623 19,938
---------------- --------------- ---------------
Cash, end of year $ 43,784 9,455 3,623
================ =============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
($000's omitted)
(1) Organization and Description of Business
----------------------------------------
Nationwide Life Insurance Company (NLIC) is a wholly owned subsidiary
of Nationwide Corporation (Nationwide Corp.). Wholly owned subsidiaries
of NLIC include Nationwide Life and Annuity Insurance Company (NLAIC),
Employers Life Insurance Company of Wausau and subsidiaries (ELICW),
National Casualty Company (NCC), West Coast Life Insurance Company
(WCLIC), Nationwide Advisory Services, Inc. (formerly Nationwide
Financial Services, Inc.), Nationwide Investment Services Corporation
(formerly PEBSCO Securities Corporation) (NISC) and NWE, Inc. NLIC and
its subsidiaries are collectively referred to as "the Company."
Nationwide Corp. formed Nationwide Financial Services, Inc. (NFS) in
November 1996 as a holding company for NLIC and the other companies of
the Nationwide Insurance Enterprise that offer or distribute long-term
savings and retirement products. On January 27, 1997, Nationwide Corp.
contributed to NFS the common stock of NLIC and three marketing and
distribution companies. NFS is planning an initial public offering of
its Class A common stock during the first quarter of 1997.
In anticipation of the restructuring described above, on September 24,
1996, NLIC's Board of Directors declared a dividend payable January 1,
1997 to Nationwide Corp. consisting of the outstanding shares of common
stock of certain subsidiaries (ELICW, NCC and WCLIC) that do not offer
or distribute long-term savings and retirement products. In addition,
during 1996, NLIC entered into two reinsurance agreements whereby all
of NLIC's accident and health and group life insurance business was
ceded to ELICW and another affiliate effective January 1, 1996. These
subsidiaries and all accident and health and group life insurance
business have been accounted for as discontinued operations for all
periods presented. See notes 2 and 13.
In addition, as part of the restructuring described above, NLIC intends
to make an $850,000 distribution to NFS which will then make an
equivalent distribution to Nationwide Corp.
The Company is a leading provider of long-term savings and retirement
products to retail and institutional customers and is subject to
competition from other financial services providers 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 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, 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 reinsurance and credit and collection
policies and by providing for any amounts deemed uncollectible.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
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) Discontinued Operations
-----------------------
As discussed in note 1, NFS is a holding company for NLIC and certain
other companies that offer or distribute long-term savings and
retirement products. Prior to the contribution by Nationwide Corp. to
NFS of the outstanding common stock of NLIC and other companies, NLIC
effected certain transactions with respect to certain subsidiaries and
lines of business that were unrelated to long-term savings and
retirement products.
On September 24, 1996, NLIC's Board of Directors declared a dividend to
Nationwide Corp. consisting of the outstanding shares of common stock
of three subsidiaries: ELICW, NCC and WCLIC. ELICW writes group
accident and health and group life insurance business and maintains it
offices in Wausau, Wisconsin. NCC is a property and casualty company
that serves as a fronting company for a property and casualty
subsidiary of Nationwide Mutual Insurance Company (NMIC), an affiliate.
NCC maintains its offices in Scottsdale, Arizona. WCLIC writes high
dollar term life insurance policies and is located in San Francisco,
California. ELICW, NCC and WCLIC have been accounted for as
discontinued operations for all periods presented. NLIC did not
recognize any gain or loss on the disposal of these subsidiaries.
A summary of the combined results of operations, including the results
of the accident and health and group life insurance business ELICW
assumed from NLIC in 1996, and assets and liabilities of ELICW, NCC and
WCLIC as of and for the years ended December 31, 1996, 1995 and 1994 is
as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Revenues $ 668,870 422,149 84,226
Net income 11,324 26,456 11,753
Assets, consisting primarily of investments 3,029,293 2,967,326 2,537,692
Liabilities, consisting primarily of policy benefits and claims 2,543,586 2,460,649 2,179,263
</TABLE>
During 1996, NLIC entered into two reinsurance agreements whereby all
of NLIC's accident and health and group life insurance business was
ceded to ELICW and NMIC, effective January 1, 1996. See note 13 for a
complete discussion of the reinsurance agreements. NLIC has
discontinued its accident and health and group life insurance business
and in connection therewith has entered into reinsurance agreements to
cede all existing and any future writings to other affiliated companies
and will cease writing any new business prior to December 31, 1997.
NLIC's accident and health and group life insurance business is
accounted for as discontinued operations for all periods presented.
NLIC did not recognize any gain or loss on the disposal of the accident
and health and group life insurance business. The assets, liabilities,
results of operations and activities of discontinued operations are
distinguished physically, operationally and for financial reporting
purposes from the remaining assets, liabilities, results of operations
and activities of NLIC.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
A summary of the results of operations, net of amounts ceded to ELICW
and NMIC in 1996, and assets and liabilities of NLIC's accident and
health and group life insurance business as of and for the years ended
December 31, 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Revenues $ - 354,788 362,476
Net income (loss) - (1,742) 8,706
Assets, consisting primarily of investments 259,185 239,426 234,082
Liabilities, consisting primarily of policy benefits and claims 259,185 239,426 234,082
</TABLE>
(3) 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. Annual Statements for NLIC and its insurance
subsidiaries, filed with the department of insurance of each insurance
company's state of domicile, are prepared on the basis of accounting
practices prescribed or permitted by each department. Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as
state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not
so prescribed. The Company has no material permitted statutory
accounting practices.
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosures of contingent
assets and liabilities as of the date of the consolidated financial
statements and the reported amounts of revenues and expenses for the
reporting period. Actual results could differ significantly from those
estimates.
The most significant estimates include those used in determining
deferred policy acquisition costs, valuation allowances for mortgage
loans on real estate and real estate investments 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 consolidated financial statements include the accounts of NLIC
and its wholly owned subsidiaries. Subsidiaries that are
classified and reported as discontinued operations are not
consolidated but rather are reported as "Investment in
Subsidiaries Classified as Discontinued Operations" in the
accompanying consolidated balance sheets and "Income for
Discontinued Operations" in the accompanying consolidated
statements of income. 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, 1996 or 1995.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
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. Impairment
losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the
assets' carrying amount.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification.
Estimates for valuation allowances and other than temporary
declines are included in realized gains and losses on investments.
(c) Revenues and Benefits
---------------------
INVESTMENT PRODUCTS AND UNIVERSAL LIFE INSURANCE PRODUCTS:
Investment products consist primarily of individual and group
variable and fixed annuities, annuities without life contingencies
and guaranteed investment contracts. Universal life insurance
products include universal life insurance, variable universal life
insurance and other interest-sensitive life insurance policies.
Revenues for investment products and universal life insurance
products consist of net investment income, asset fees, cost of
insurance, policy administration and surrender charges that have
been earned and assessed against policy account balances during
the period. Policy benefits and claims that are charged to expense
include interest credited to policy account balances and benefits
and claims incurred in the period in excess of related policy
account balances.
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of whole life insurance,
limited-payment life insurance, term life insurance and certain
annuities with life contingencies. Premiums for traditional life
insurance products are recognized as revenue when due. Benefits
and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This
association is accomplished by the provision for future policy
benefits and the deferral and amortization of policy acquisition
costs.
ACCIDENT AND HEALTH INSURANCE PRODUCTS: 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. All accident and health insurance
business is accounted for as discontinued operations. See note 2.
(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
investment products and universal life insurance products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest
margins, asset fees, cost of insurance, policy administration and
surrender charges. For years in which gross profits are negative,
deferred policy acquisition costs are amortized based on the
present value of gross revenues. For traditional life 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. 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 3(b).
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(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.
(f) Future Policy Benefits
----------------------
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges.
Future policy benefits for traditional life insurance policies
have been calculated 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 and claims for collectively renewable
long-term disability policies and group long-term disability
policies 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. All health insurance
business is accounted for as discontinued operations. See note 2.
(g) Participating Business
----------------------
Participating business represents approximately 52% in 1996 (54%
in 1995 and 55% in 1994) of the Company's life insurance in force,
78% in 1996 (79% in 1995 and 79% in 1994) of the number of life
insurance policies in force, and 40% in 1996 (47% in 1995 and 51%
in 1994) 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.
(h) Federal Income Tax
------------------
The Company, with the exception of ELICW, files a consolidated
federal income tax return with NMIC, the majority shareholder of
Nationwide Corp. The members of the consolidated tax return group
have a tax sharing arrangement which provides, in effect, for each
member to bear essentially the same federal income tax liability
as if separate tax returns were filed. Through 1994, ELICW filed a
consolidated federal income tax return with Employers Insurance of
Wausau A Mutual Company, an affiliate. Beginning in 1995, ELICW
files a separate federal income tax return.
The Company utilizes the asset and liability method of accounting
for income tax. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under this method, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
<PAGE> 11
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(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. All of the Company's accident
and health and group life insurance business is ceded to
affiliates and is accounted for as discontinued operations. See
notes 2 and 13.
(j) Reclassification
----------------
Certain items in the 1995 and 1994 consolidated financial
statements have been reclassified to conform to the 1996
presentation.
(4) Change in Accounting Principle
------------------------------
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 (SFAS)
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 $6,299,665
and $6,721,714, 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 $ 422,049
Adjustment to deferred policy acquisition costs (95,044)
Deferred federal income tax (114,452)
--------------
$ 212,553
==============
</TABLE>
(5) Investments
-----------
The amortized cost and estimated fair value of securities
available-for-sale were as follows as of December 31, 1996:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
1996:
Fixed maturity securities:
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 275,696 4,795 (1,340) 279,151
Obligations of states and political subdivisions 6,242 450 (2) 6,690
Debt securities issued by foreign governments 100,656 2,141 (857) 101,940
Corporate securities 7,999,310 285,946 (33,686) 8,251,570
Mortgage-backed securities 3,588,974 91,438 (15,124) 3,665,288
------------ ---------- ------------ ------------
Total fixed maturity securities 11,970,878 384,770 (51,009) 12,304,639
Equity securities 43,890 15,571 (330) 59,131
------------ ---------- ------------ ------------
$12,014,768 400,341 (51,339) 12,363,770
============ ========== ============ ============
</TABLE>
<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
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>
1995:
Fixed maturity securities:
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 310,186 12,764 (1) 322,949
Obligations of states and political subdivisions 8,655 1,205 (1) 9,859
Debt securities issued by foreign governments 101,414 4,387 (66) 105,735
Corporate securities 7,888,440 473,681 (25,742) 8,336,379
Mortgage-backed securities 3,553,861 165,169 (8,388) 3,710,642
------------ ---------- ----------- ---------------
Total fixed maturity securities 11,862,556 657,206 (34,198) 12,485,564
Equity securities 23,617 6,382 (46) 29,953
------------ ---------- ----------- ---------------
$11,886,173 663,588 (34,244) 12,515,517
============ ========== =========== ===============
</TABLE>
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1996, 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 $ 440,235 444,214
Due after one year through five years 3,937,010 4,053,152
Due after five years through ten years 2,809,813 2,871,806
Due after ten years 1,194,846 1,270,179
--------------- --------------
8,381,904 8,639,351
Mortgage-backed securities 3,588,974 3,665,288
--------------- --------------
$11,970,878 12,304,639
=============== ==============
</TABLE>
The components of unrealized gains on securities available-for-sale,
net, were as follows as of December 31:
<TABLE>
<CAPTION>
1996 1995
--------------- --------------
<S> <C> <C>
Gross unrealized gains $349,002 629,344
Adjustment to deferred policy acquisition costs (81,939) (138,914)
Deferred federal income tax (93,471) (171,649)
--------------- --------------
173,592 318,781
Unrealized gains on securities available-for-sale, net, of
subsidiaries classified as discontinued operations (note 2) - 65,523
--------------- --------------
$173,592 384,304
=============== ==============
</TABLE>
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturity securities
held-to-maturity follows for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ------------- --------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(289,247) 876,332 (675,373)
Equity securities 8,905 (26) (1,927)
Fixed maturity securities held-to-maturity - 75,626 (398,183)
--------------- ------------- --------------
$(280,342) 951,932 (1,075,483)
=============== ============= ==============
</TABLE>
Proceeds from the sale of securities available-for-sale during 1996,
1995 and 1994 were $299,558, $107,345 and $228,308, respectively.
During 1996, gross gains of $6,606 ($4,838 and $3,045 in 1995 and 1994,
respectively) and gross losses of $6,925 ($2,147 and $21,280 in 1995
and 1994, respectively) were realized on those sales.
During 1995, the Company transferred fixed maturity securities
classified as held-to-maturity with amortized cost of $25,429 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
$3,535.
As permitted by the Financial Accounting Standards Board'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 $3,320,093, resulting in a gross unrealized gain
of $155,940.
Investments that were non-income producing for the twelve month period
preceding December 31, 1996 amounted to $26,805 ($27,712 in 1995) and
consisted of $248 ($6,982 in 1995) in fixed maturity securities,
$20,633 ($14,740 in 1995) in real estate and $5,924 ($5,990 in 1995) in
other long-term investments.
Real estate is presented at cost less accumulated depreciation of
$30,338 as of December 31, 1996 ($30,482 as of December 31, 1995) and
valuation allowances of $15,219 as of December 31, 1996 ($25,819 as of
December 31, 1995).
The recorded investment of mortgage loans on real estate considered to
be impaired (under SFAS NO. 114 - ACCOUNTING BY CREDITORS FOR
IMPAIRMENT OF A LOAN as amended by SFAS NO. 118 - ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN-INCOME RECOGNITION AND DISCLOSURE)
as of December 31, 1996 was $51,765 ($44,409 as of December 31, 1995),
which includes $41,663 ($23,975 as of December 31, 1995) of impaired
mortgage loans on real estate for which the related valuation allowance
was $8,485 ($5,276 as of December 31, 1995) and $10,102 ($20,434 as of
December 31, 1995) of impaired mortgage loans on real estate for which
there was no valuation allowance. During 1996, the average recorded
investment in impaired mortgage loans on real estate was approximately
$39,674 ($22,181 in 1995) and interest income recognized on those loans
was $2,103 ($387 in 1995), which is equal to interest income recognized
using a cash-basis method of income recognition.
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995
------------- --------------
<S> <C> <C>
Allowance, beginning of year $49,128 46,381
Additions charged to operations 4,497 7,433
Direct write-downs charged against the allowance (2,587) (4,686)
------------- -------------
Allowance, end of year $51,038 49,128
============= ==============
</TABLE>
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ------------- ------------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $ 917,135 685,787 647,927
Equity securities 1,291 1,330 509
Fixed maturity securities held-to-maturity - 201,808 185,938
Mortgage loans on real estate 432,815 395,478 372,734
Real estate 44,332 38,344 40,170
Short-term investments 4,155 10,576 6,141
Other 3,998 7,239 2,121
--------------- ------------- --------------
Total investment income 1,403,726 1,340,562 1,255,540
Less investment expenses 45,967 46,529 44,729
--------------- ------------- ---------------
Net investment income $1,357,759 1,294,033 1,210,811
=============== ============= ==============
</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>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(3,462) 4,213 (7,296)
Equity securities 3,143 3,386 1,422
Mortgage loans on real estate (4,115) (7,091) (20,446)
Real estate and other 4,108 (2,232) 9,793
------------ ------------ ------------
$ (326) (1,724) (16,527)
============ ============ ============
</TABLE>
Fixed maturity securities with an amortized cost of $6,161 and $5,592
as of December 31, 1996 and 1995, 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 87% and 87% of the total liability for future
policy benefits as of December 31, 1996 and 1995, respectively. The
average interest rate credited on investment product policies was
approximately 6.3%, 6.6% and 6.5% for the years ended December 31,
1996, 1995 and 1994, respectively.
The liability for future policy benefits for traditional life insurance
policies has been established based upon the following assumptions:
Interest rates: Interest rates vary as follows:
--------------
<TABLE>
<CAPTION>
Year of issue Interest rates
----------------- ----------------------------------------
<S> <C>
1996 6.6%, not graded
1984-1995 6.0% to 10.5%, not graded
1966-1983 6.0% to 8.1%, graded over 20 years to 4.0% to 6.6%
1965 and prior generally lower than post 1965 issues
</TABLE>
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
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.
The Company has entered into a reinsurance contract to cede a portion
of its general account individual annuity business to The Franklin Life
Insurance Company (Franklin). Total recoveries due from Franklin were
$240,451 and $245,255 as of December 31, 1996 and 1995, respectively.
The contract is immaterial to the Company's results of operations. The
ceding of risk does not discharge the original insurer from its primary
obligation to the policyholder. Under the terms of the contract,
Franklin has established a trust as collateral for the recoveries. The
trust assets are invested in investment grade securities, the market
value of which must at all times be greater than or equal to 102% of
the reinsured reserves.
The Company has reinsurance agreements with certain affiliates as
described in note 13. All other reinsurance agreements are not material
to either premiums or reinsurance recoverables.
(7) Federal Income Tax
-------------------
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1996
and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
----------------- ---------------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $175,571 149,192
Liabilities in Separate Accounts 188,426 129,120
Mortgage loans on real estate and real estate 23,366 25,165
Other policyholder funds 7,407 7,424
Other assets and other liabilities 53,757 41,847
----------------- ---------------
Total gross deferred tax assets 448,527 352,748
Less valuation allowances (7,000) (7,000)
----------------- ---------------
Net deferred tax assets 441,527 345,748
================= ===============
Deferred tax liabilities:
Deferred policy acquisition costs 399,345 299,579
Fixed maturity securities 133,210 227,345
Deferred tax on realized investment gains 37,597 40,634
Equity securities and other long-term investments 8,210 3,780
Other 25,377 21,037
----------------- ---------------
Total gross deferred tax liabilities 603,739 592,375
----------------- ---------------
$162,212 246,627
================= ===============
</TABLE>
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. Nearly all future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. There
has been no change in the valuation allowance for the years ended
December 31, 1996, 1995 and 1994.
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Total federal income tax expense for the years ended December 31, 1996,
1995 and 1994 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $110,424 35.0 $100,650 35.0 $84,650 35.0
Tax exempt interest and dividends
received deduction (212) (0.1) (18) (0.0) (130) (0.1)
Other, net 677 0.3 (824) (0.3) (5,931) (2.5)
------------ -------- ------------- -------- ------------- --------
Total (effective rate of each year) $110,889 35.2 $ 99,808 34.7 $78,589 32.5
============ ======== ============= ======== ============= ========
</TABLE>
Total federal income tax paid was $115,839, $51,840 and $83,239
during the years ended December 31, 1996, 1995 and 1994,
respectively.
(8) Disclosures about Fair Value of Financial Instruments
-----------------------------------------------------
SFAS 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.
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 is provided to make the fair value disclosures
more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The 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, which includes certain surrender
charges.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
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 analyses. 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 insurance, universal life
insurance and supplementary contracts with life contingencies for
which the estimated fair value is the amount payable on demand.
Also included are disclosures for the Company's limited payment
policies, which the Company has used discounted cash flow analyses
similar to those used for investment contracts with known
maturities to estimate fair value.
POLICYHOLDERS' DIVIDEND ACCUMULATIONS AND OTHER POLICYHOLDER
FUNDS: The carrying amount reported in the consolidated balance
sheets for these instruments approximates their fair value.
COMMITMENTS TO EXTEND CREDIT: Commitments to extend credit have
nominal fair value because of the short-term nature of such
commitments. See note 9.
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on life insurance contracts
were as follows as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------------------------------ -------------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------------------------------ --------------- ---------------
<S> <C> <C> <C> <C>
Assets
------
Investments:
Securities available-for-sale:
Fixed maturity securities $12,304,639 12,304,639 12,485,564 12,485,564
Equity securities 59,131 59,131 29,953 29,953
Mortgage loans on real estate, net 5,272,119 5,397,865 4,602,764 4,961,655
Policy loans 371,816 371,816 336,356 336,356
Short-term investments 4,789 4,789 32,792 32,792
Cash 43,784 43,784 9,455 9,455
Assets held in Separate Accounts 26,926,702 26,926,702 18,591,108 18,591,108
Liabilities
-----------
Investment contracts 13,914,441 13,484,526 13,229,360 12,876,798
Policy reserves on life insurance contracts 2,971,337 2,775,991 2,836,323 2,733,486
Policyholders' dividend accumulations 361,401 361,401 348,027 348,027
Other policyholder funds 60,073 60,073 65,297 65,297
Liabilities related to Separate Accounts 26,926,702 26,164,213 18,591,108 18,052,362
</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.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $327,456 extending into
1997 were outstanding as of December 31, 1996.
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 21% (20% in 1995) in any geographic area and no more than 2% (2%
in 1995) with any one borrower as of December 31, 1996.
The Company had a significant reinsurance recoverable balance from one
reinsurer as of December 31, 1996 and 1995. See note 6.
The summary below depicts loans by remaining principal balance as of
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
------------ ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1996:
East North Central $139,518 119,069 549,064 215,038 1,022,689
East South Central 33,267 22,252 172,968 90,623 319,110
Mountain 17,972 43,027 113,292 73,390 247,681
Middle Atlantic 129,077 54,046 160,833 18,498 362,454
New England 33,348 43,581 161,960 - 238,889
Pacific 202,562 325,046 424,295 110,108 1,062,011
South Atlantic 103,889 134,492 482,934 385,185 1,106,500
West North Central 126,467 2,441 75,180 40,529 244,617
West South Central 104,877 120,314 197,090 304,256 726,537
------------- ------------- ------------- -------------- ------------
$890,977 864,268 2,337,616 1,237,627 5,330,488
============ ============= ============= =============
Less valuation allowances and unamortized discount 58,369
--------------
Total mortgage loans on real estate, net $5,272,119
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1995:
East North Central $138,965 101,925 514,995 175,213 931,098
East South Central 21,329 13,053 180,858 82,383 297,623
Mountain - 17,219 138,220 45,274 200,713
Middle Atlantic 116,187 64,813 158,252 10,793 350,045
New England 9,559 39,525 148,449 1 197,534
Pacific 183,206 233,186 374,915 105,419 896,726
South Atlantic 106,246 73,541 446,800 278,265 904,852
West North Central 133,899 14,205 78,065 36,651 262,820
West South Central 69,140 92,594 190,299 267,268 619,301
------------ ------------ ------------- ------------- --------------
$778,531 650,061 2,230,853 1,001,267 4,660,712
============ ============= ============= =============
Less valuation allowances and unamortized discount 57,948
--------------
Total mortgage loans on real estate, net $4,602,764
==============
</TABLE>
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(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.
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, 1996, 1995 and 1994 were $7,381, $10,478 and
$10,063, respectively.
The Company's net accrued pension expense as of December 31, 1996 and
1995 was $1,075 and $1,392, respectively.
The net periodic pension cost for the Nationwide Insurance Enterprise
Retirement Plan as a whole for the year ended December 31, 1996 and for
the Nationwide Insurance Companies and Affiliates Retirement Plan as a
whole for the years ended December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 75,466 64,524 64,740
Interest cost on projected benefit obligation 105,511 95,283 73,951
Actual return on plan assets (210,583) (249,294) (21,495)
Net amortization and deferral 101,795 143,353 (62,150)
--------------- --------------- ---------------
$ 72,189 53,866 55,046
=============== =============== ===============
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Weighted average discount rate 6.00% 7.50% 5.75%
Rate of increase in future compensation levels 4.25% 6.25% 4.50%
Expected long-term rate of return on plan assets 6.75% 8.75% 7.00%
</TABLE>
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1996 and 1995
follows:
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Accumulated benefit obligation:
Vested $1,338,554 1,236,730
Nonvested 11,149 26,503
--------------- ---------------
$1,349,703 1,263,233
=============== ===============
Net accrued pension expense:
Projected benefit obligation for services rendered to
date $1,847,828 1,780,616
Plan assets at fair value 1,947,933 1,738,004
--------------- ---------------
Plan assets in excess of (less than) projected benefit
obligation 100,105 (42,612)
Unrecognized prior service cost 37,870 42,845
Unrecognized net gains (201,952) (63,130)
Unrecognized net asset at transition 37,158 41,305
--------------- ---------------
$ (26,819) (21,592)
=============== ===============
</TABLE>
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Weighted average discount rate 6.50% 6.00%
Rate of increase in future compensation levels 4.75% 4.25%
</TABLE>
Assets of the Nationwide Insurance Enterprise Retirement Plan are
invested in group annuity contracts of NLIC and ELICW.
(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.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation; however, certain affiliated
companies elected to amortize their initial transition obligation over
periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of December 31,
1996 and 1995 was $34,884 and $33,537, respectively, and the net
periodic postretirement benefit cost (NPPBC) for 1996, 1995 and 1994
was $3,286, $3,132 and $4,284, respectively.
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1996, 1995 and 1994 was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $ 6,541 6,235 8,586
Interest cost on accumulated postretirement benefit obligation 13,679 14,151 14,011
Actual return on plan assets (4,348) (2,657) (1,622)
Amortization of unrecognized transition obligation of affiliates 173 2,966 568
Net amortization and deferral 1,830 (1,619) 1,622
----------- ----------- -----------
$17,875 19,076 23,165
=========== =========== ===========
</TABLE>
Information regarding the funded status of the plan as a whole as of
December 31, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 92,954 88,680
Fully eligible, active plan participants 23,749 28,793
Other active plan participants 83,986 90,375
--------------- ---------------
Accumulated postretirement benefit obligation (APBO) 200,689 207,848
Plan assets at fair value 63,044 54,325
--------------- ---------------
Plan assets less than accumulated postretirement benefit obligation (137,645) (153,523)
Unrecognized transition obligation of affiliates 1,654 1,827
Unrecognized net gains (23,225) (1,038)
--------------- ---------------
$(159,216) (152,734)
=============== ===============
</TABLE>
Actuarial assumptions used for the measurement of the APBO as of
December 31, 1996 and 1995 and the NPPBC for 1996, 1995 and 1994 were
as follows:
<TABLE>
<CAPTION>
1996 1996 1995 1995 1994
APBO NPPBC APBO NPPBC NPPBC
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Discount rate 7.25% 6.65% 6.75% 8.00% 7.00%
Long-term rate of return on plan
assets, net of tax - 4.80% - 8.00% N/A
Assumed health care cost trend rate:
Initial rate 11.00% 11.00% 11.00% 10.00% 12.00%
Ultimate rate 6.00% 6.00% 6.00% 6.00% 6.00%
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, 1996 by $701 and the NPPBC for the year ended December 31,
1996 by $83.
(12) Shareholder's Equity, 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 company subsidiaries exceed the minimum risk-based capital
requirements.
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
The statutory capital shares and surplus of NLIC as of December 31,
1996, 1995 and 1994 was $1,000,647, $1,363,031 and $1,262,861,
respectively. The statutory net income of NLIC for the years ended
December 31, 1996, 1995 and 1994 was $73,218, $86,529 and $76,532,
respectively.
NLIC is limited in the amount of shareholder dividends it may pay
without prior approval by the Department of Insurance of the State of
Ohio (the Department). NLIC's dividend of the outstanding shares of
common stock of certain companies which was declared on September 24,
1996 and the anticipated $850,000 dividend (as discussed in note 1) are
deemed extraordinary under Ohio insurance laws. As a result of such
dividends, any dividend paid by NLIC during the 12-month period
immediately following the $850,000 dividend would also be an
extraordinary dividend under Ohio insurance laws. Accordingly, no such
dividend could be paid without prior regulatory approval.
In addition, the payment of dividends by NLIC may also be subject to
restrictions set forth in the insurance laws of New York that limit the
amount of statutory profits on NLIC's participating policies (measured
before dividends to policyholders) that can inure to the benefit of the
Company and its stockholder.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and stockholder dividends
in the future.
(13) Transactions With Affiliates
----------------------------
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1996, 1995 and 1994, the
Company made lease payments to NMIC and its subsidiaries of $9,065,
$8,986 and $8,133, respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by this agreement are subject to
allocation among NMIC, the Company and other affiliates. Amounts
allocated to the Company were $101,584, $107,112, and $100,601 in 1996,
1995 and 1994, respectively. The allocations are based on techniques
and procedures in accordance with insurance regulatory guidelines.
Measures used to allocate expenses among companies include individual
employee estimates of time spent, special cost studies, salary expense,
commissions expense and other methods agreed to by the participating
companies that are within industry guidelines and practices. The
Company believes these allocation methods are reasonable. In addition,
the Company does not believe that expenses recognized under the
intercompany agreements are materially different than expenses that
would have been recognized had the Company operated on a stand alone
basis. Amounts payable to NMIC from the Company under the cost sharing
agreement were $15,111 and $1,186 as of December 31, 1996 and 1995,
respectively.
The Company also participates in intercompany repurchase agreements
with affiliates whereby the seller will transfer securities to the
buyer at a stated value. Upon demand or 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 1996 and
1995 were not material. The Company believes that the terms of the
repurchase agreements are materially consistent with what the Company
could have obtained with unaffiliated parties.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
Intercompany reinsurance contracts exist between NLIC and, respectively
NMIC and ELICW whereby all of NLIC's accident and health and group life
insurance business is ceded on a modified coinsurance basis. NLIC
entered into the reinsurance agreements during 1996 because the
accident and health and group life insurance business was unrelated to
NLIC's long-term savings and retirement products. Accordingly, the
accident and health and group life insurance business has been
accounted for as discontinued operations for all periods presented.
Under modified coinsurance agreements, invested assets are retained by
the ceding company and investment earnings are paid to the reinsurer.
Under the terms of NLIC's agreements, the investment risk associated
with changes in interest rates is borne by NMIC or ELICW, as the case
may be. Risk of asset default is retained by NLIC, although a fee is
paid by NMIC or ELICW, as the case may be, to NLIC for the NLIC's
retention of such risk. The agreements will remain in force until all
policy obligations are settled. However, with respect to the agreement
between NLIC and NMIC, either party may terminate the contract on
January 1 of any year with prior notice. The ceding of risk does not
discharge the original insurer from its primary obligation to the
policyholder. NLIC believes that the terms of the modified coinsurance
agreements are consistent in all material respects with what NLIC could
have obtained with unaffiliated parties.
Amounts ceded to ELICW in 1996 are included in ELICW's results of
operations for 1996 which, combined with the results of WCLIC and NCC,
are summarized in note 2. Amounts ceded to ELICW in 1996 include
premiums of $224,224, net investment income and other revenue of
$14,833, and benefits, claims and other expenses of $246,641. Amounts
ceded to NMIC in 1996 include premiums of $97,331, net investment
income of $10,890, and benefits, claims and other expenses of $100,476.
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 $4,789 and $9,654 as of December 31,
1996 and 1995, respectively, and are included in short-term investments
on the accompanying consolidated balance sheets.
On April, 5 1996, Nationwide Corp. contributed all of the outstanding
shares, with shareholder equity value of $30, of NISC to NLIC. NLIC
contributed an additional $500 to NISC on August 30, 1996.
On March 1, 1995, Nationwide Corp. contributed all of the outstanding
shares of common stock of Farmland Life Insurance Company (Farmland) to
NLIC. Farmland merged into WCLIC effective June 30, 1995. The
contribution resulted in a direct increase to consolidated
shareholder's equity of $46,918. As discussed in note 2, WCLIC is
accounted for as discontinued operations.
Effective December 31, 1994, NLIC purchased all of the outstanding
shares of common stock 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. As discussed in note 2, ELICW is
accounted for as discontinued operations.
Certain annuity products are sold through three affiliated companies
which are also subsidiaries of Nationwide Corp. Total commissions and
fees paid to these affiliates for the years ended December 31, 1996,
1995 and 1994 were $76,922, $57,280 and $50,168, respectively.
(14) Bank Lines of Credit
--------------------
In August 1996, NLIC, along with NMIC, established a $600,000 revolving
credit facility which provides for a $600,000 loan over a five year
term on a fully revolving basis with a group of national financial
institutions. The credit facility provides for several and not joint
liability with respect to any amount drawn by either NLIC or NMIC. NLIC
and NMIC pay facility and usage fees to the financial institutions to
maintain the revolving credit facility. All previously existing line of
credit agreements were canceled.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(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.
(16) Segment Information
-------------------
The Company has three primary segments: Variable Annuities, Fixed
Annuities and Life Insurance. The Variable Annuities segment consists
of annuity contracts that provide the customer with the opportunity to
invest in mutual funds managed by the Company and independent
investment managers, with the investment returns accumulating on a
tax-deferred basis. The Fixed Annuities segment consists of annuity
contracts that generate a return for the customer at a specified
interest rate, fixed for a prescribed period, with returns accumulating
on a tax-deferred basis. The Life Insurance segment consists of
insurance products that provide a death benefit and may also allow the
customer to build cash value on a tax-deferred basis. In addition, the
Company reports corporate expenses and investments, and the related
investment income supporting capital not specifically allocated to its
product segments in a Corporate and Other segment. In addition, all
realized gains and losses, investment management fees and other revenue
earned from mutual funds, other than the portion allocated to the
variable annuities and life insurance segments, are reported in the
Corporate and Other segment.
During 1996, 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 from continuing
operations before federal income tax expense for the years ended
December 31, 1996, 1995 and 1994 and assets as of December 31, 1996,
1995 and 1994, by business segment.
<TABLE>
<CAPTION>
1996 1995 1994
----------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Variable Annuities $ 284,638 189,071 132,687
Fixed Annuities 1,092,566 1,051,970 939,868
Life Insurance 435,657 409,135 383,150
Corporate and Other 179,977 148,475 143,794
----------------- --------------- ---------------
$ 1,992,838 1,798,651 1,599,499
================= =============== ===============
Income from continuing operations before federal income tax
expense:
Variable Annuities 90,244 50,837 24,574
Fixed Annuities 135,405 137,000 138,950
Life Insurance 67,242 67,590 53,046
Corporate and Other 22,606 32,145 25,288
----------------- --------------- ---------------
$ 315,497 287,572 241,858
================= =============== ===============
Assets:
Variable Annuities 25,069,725 17,333,039 11,146,465
Fixed Annuities 13,994,715 13,250,359 11,668,973
Life Insurance 3,353,286 3,027,420 2,752,283
Corporate and Other 5,348,520 4,896,815 3,678,303
----------------- --------------- ---------------
$47,766,246 38,507,633 29,246,024
================= =============== ===============
</TABLE>
<PAGE> 25
<TABLE>
SCHEDULE I
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Summary of Investments -
Other Than Investments in Related Parties
As of December 31, 1996
($000's omitted)
<CAPTION>
- --------------------------------------------------------------- --------------- -------------- -----------------
Column A Column B Column C Column D
- --------------------------------------------------------------- --------------- -------------- -----------------
Amount at which
shown in the
consolidated
Type of Investment Cost Market value balance sheet
- --------------------------------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
Fixed maturity securities available-for-sale:
Bonds:
U.S. Government and government agencies and authorities $ 3,757,887 3,834,762 3,834,762
States, municipalities and political subdivisions 6,242 6,690 6,690
Foreign governments 100,656 101,940 101,940
Public utilities 1,798,736 1,843,938 1,843,938
All other corporate 6,307,357 6,517,309 6,517,309
--------------- -------------- -----------------
Total fixed maturity securities available-for-sale 11,970,878 12,304,639 12,304,639
--------------- -------------- -----------------
Equity securities available-for-sale:
Common stocks:
Industrial, miscellaneous and all other 43,501 50,405 50,405
Non-redeemable preferred stock 389 8,726 8,726
--------------- -------------- -----------------
Total equity securities available-for-sale 43,890 59,131 59,131
--------------- -------------- -----------------
Mortgage loans on real estate, net 5,327,317 5,272,119 (1)
Real estate, net:
Investment properties 253,383 217,611 (1)
Acquired in satisfaction of debt 57,933 48,148 (1)
Policy loans 371,816 371,816
Other long-term investments 27,370 28,668 (2)
Short-term investments 4,789 4,789
--------------- ----------------
Total investments $18,057,376 18,306,921
=============== ================
<FN>
- ----------
(1) Difference from Column B is primarily due to valuation allowances due to
impairments on mortgage loans on real estate and due to accumulated
depreciation and valuation allowances due to impairments on real estate.
See note 5 to the consolidated financial statements.
(2) Difference from Column B is primarily due to operating gains of investments
in limited partnerships.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 26
<TABLE>
<CAPTION>
SCHEDULE III
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Supplemental Insurance Information
As of December 31, 1996, 1995 and 1994
and for each of the years then ended
($000's omitted)
- ----------------------------------- -------------- ------------------ ----------------- ------------------ ---------------
Column A Column B Column C Column D Column E Column F
- ----------------------------------- -------------- ------------------ ----------------- ----------------- ---------------
Deferred Future policy Other policy
policy benefits, losses, claims and
acquisition claims and Unearned premiums benefits payable Premium
Segment costs loss expenses (1) (2) revenue
- ----------------------------------- -------------- ------------------ ----------------- ---------------- --------------
<C> <C> <C> <C> <C> <C>
1996: Variable Annuities $ 791,611 - - -
Fixed Annuities 242,421 14,952,877 687 24,030
Life Insurance 414,417 1,995,802 395,739 174,612
Corporate and Other (81,940) 230,381 25,048 -
-------------- ------------------ ---------------- --------------
Total $1,366,509 17,179,060 421,474 198,642
============== ================== ================ ==============
1995: Variable Annuities 571,283 - - -
Fixed Annuities 221,111 14,221,622 455 32,774
Life Insurance 366,876 1,898,641 383,983 166,332
Corporate and Other (138,914) 238,351 28,886 -
-------------- ------------------ ---------------- --------------
Total $1,020,356 16,358,614 413,324 199,106
============== ================== ================ ==============
1994: Variable Annuities 395,397 - - -
Fixed Annuities 198,639 12,633,253 240 20,134
Life Insurance 327,079 1,806,762 371,984 156,524
Corporate and Other 74,445 233,569 26,927 -
-------------- ------------------ ---------------- --------------
Total $ 995,560 14,673,584 399,151 176,658
============== ================== ================ ==============
<CAPTION>
- ----------------------------------- -------------- ------------------- ----------------- ---------------- --------------
Column A Column G Column H Column I Column J Column K
- ----------------------------------- -------------- ------------------- ----------------- ---------------- --------------
Net Amortization Other
investment Benefits, claims, of deferred operating
income losses and policy expenses Premiums
Segment (3) settlement expenses acquisition costs (3) written
- ----------------------------------- -------------- ------------------- ----------------- ----------------- --------------
1996: Variable Annuities $ (21,449) 4,624 57,412 132,357
Fixed Annuities 1,050,557 838,533 38,635 79,737
Life Insurance 174,002 211,386 37,347 78,965
Corporate and Other 154,649 106,037 - 51,335
-------------- ------------------- ----------------- -----------------
Total $1,357,759 1,160,580 133,394 342,394
============== =================== ================= =================
1995: Variable Annuities (17,640) 2,881 26,264 109,089
Fixed Annuities 1,002,718 804,980 29,499 80,260
Life Insurance 171,255 201,986 31,021 68,832
Corporate and Other 137,700 105,646 (4,089) 14,773
-------------- ------------------- ----------------- -----------------
Total $1,294,033 1,115,493 82,695 272,954
============== =================== ================= =================
1994: Variable Annuities (13,415) 2,277 22,135 83,701
Fixed Annuities 903,572 702,082 29,849 69,975
Life Insurance 166,329 191,006 29,495 69,861
Corporate and Other 154,325 97,302 4,089 17,115
-------------- ------------------- ----------------- -----------------
Total $1,210,811 992,667 85,568 240,652
============== =================== ================= =================
<FN>
- ----------
(1) Unearned premiums are included in Column C amounts.
(2) Column E agrees to the sum of the Balance Sheet captions, Policyholders'
dividend accumulations and Other policyholder funds.
(3) Allocations of net investment income and certain general expenses are based
on a number of assumptions and estimates, and reported operating results
would change by segment if different methods were applied.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 27
SCHEDULE IV
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Reinsurance
As of December 31, 1996, 1995 and 1994
and for each of the years then ended
($000's omitted)
<TABLE>
<CAPTION>
- ------------------------------- ----------------- ----------------- ---------------- ---------------- ---------------
Column A Column B Column C Column D Column E Column F
- ------------------------------- ----------------- ----------------- ---------------- ---------------- ---------------
Percentage
Ceded to Assumed from of amount
Gross amount other companies other companies Net amount assumed to net
----------------- ----------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
1996:
Life insurance in force $47,071,264 6,633,567 288,593 40,726,290 0.7%
================= ================= ================ ================ ===============
Premiums:
Life insurance 225,615 29,282 2,309 198,642 1.2%
Accident and health insurance 291,871 305,789 13,918 - N/A
----------------- ----------------- ---------------- ---------------- ---------------
Total $ 517,486 335,071 16,227 198,642 8.2%
================= ================= ================ ================ ===============
1995:
Life Insurance in force $41,087,025 8,935,743 391,174 32,542,456 1.2%
================= ================= ================ ================ ===============
Premiums:
Life insurance 221,257 24,360 2,209 199,106 1.1%
Accident and health insurance 298,058 313,036 14,978 - N/A
----------------- ----------------- ---------------- ---------------- ---------------
Total $ 519,315 337,396 17,187 199,106 8.6%
================= ================= ================ ================ ===============
1994:
Life Insurance in force $35,926,633 7,550,623 829,742 29,205,752 2.8%
================= ================= ================ ================ ===============
Premiums:
Life insurance 198,705 24,912 2,865 176,658 1.6%
Accident and health insurance 303,435 321,696 18,261 - N/A
----------------- ----------------- ---------------- ---------------- ---------------
Total $ 502,140 346,608 21,126 176,658 12.0%
================= ================= ================ ================ ===============
<FN>
- ----------
Note: The life insurance caption represents principally premiums from
traditional life insurance and life-contingent immediate annuities and
excludes deposits on invesment products and universal life insurance
products.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 28
<TABLE>
<CAPTION>
SCHEDULE V
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1996, 1995 and 1994
($000's omitted)
- ------------------------------------------------- ------------ ----------------------------- ------------ -------------
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>
1996:
Valuation allowances - mortgage loans on real
estate $49,128 4,497 - 2,587 51,038
Valuation allowances - real estate 25,819 (10,600) - - 15,219
------------ ------------ -------------- ------------ -------------
Total $74,947 (6,103) - 2,587 66,257
============ ============ ============== ============ =============
1995:
Valuation allowances - fixed maturity securities - 8,908 - 8,908 -
Valuation allowances - mortgage loans on real
estate 46,381 7,433 - 4,686 49,128
Valuation allowances - real estate 27,330 (1,511) - - 25,819
------------ ------------ -------------- ------------ -------------
Total $73,711 14,830 - 13,594 74,947
============ ============ ============== ============ =============
1994:
Valuation allowances - fixed maturity securities 4,800 (4,800) - - -
Valuation allowances - mortgage loans on real
estate 42,150 20,445 - 16,214 46,381
Valuation allowances - real estate 31,357 (4,027) - - 27,330
------------ ------------ -------------- ------------ -------------
Total $78,307 11,618 - 16,214 73,711
============ ============ ============== ============ =============
<FN>
- ----------
(1) Amounts represent direct write-downs charged against the valuation allowance.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 67
<PAGE>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
ASSETS 1997 1996
------------- ------------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities (cost $12,313.6 in 1997; $11,970.9 in 1996) $12,738.7 12,304.6
Equity securities (cost $60.8 in 1997; $43.9 in 1996) 73.8 59.1
Mortgage loans on real estate, net 5,135.4 5,272.1
Real estate, net 305.1 265.8
Policy loans 403.9 371.8
Other long-term investments 23.0 28.7
Short-term investments 431.8 4.8
--------- ---------
19,111.7 18,306.9
--------- ---------
Cash 100.7 43.8
Accrued investment income 221.3 210.2
Deferred policy acquisition costs 1,570.0 1,366.5
Investment in subsidiaries classified as discontinued operations - 485.7
Other assets 394.6 426.5
Assets held in Separate Accounts 36,791.6 26,926.7
--------- ---------
$58,189.9 47,766.3
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDER'S EQUITY
Future policy benefits and claims $17,817.8 17,179.1
Policyholders' dividend accumulations 369.4 361.4
Other policyholder funds 59.7 60.1
Accrued federal income tax:
Current 46.3 30.2
Deferred 207.1 162.2
--------- ---------
253.4 192.4
--------- ---------
Dividend payable - 485.7
Other liabilities 536.2 423.0
Liabilities related to Separate Accounts 36,791.6 26,926.7
--------- ---------
55,828.1 45,628.4
--------- ---------
Shareholder's equity:
Capital shares, $1.00 par value. Authorized 5.0 million shares,
issued and outstanding 3.8 million shares 3.8 3.8
Additional paid-in capital 914.7 527.9
Retained earnings 1,229.9 1,432.6
Unrealized gains on securities available-for-sale, net 213.4 173.6
--------- ---------
2,361.8 2,137.9
--------- ---------
$58,189.9 47,766.3
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(Unaudited)
(in millions of dollars)
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, September 30,
----------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Investment product and universal life insurance product
policy charges $143.3 102.3 393.4 288.8
Life insurance premiums 50.2 47.2 155.9 150.3
Net investment income 355.3 339.9 1,047.6 1,009.6
Realized gains (losses) on investments (4.8) (5.1) 4.3 4.3
Other income 12.4 9.9 38.2 28.5
------- ------- ------- -------
556.4 494.2 1,639.4 1,481.5
------- ------- ------- -------
Benefits and expenses:
Interest credited 256.0 245.6 756.9 732.9
Other benefits and claims 41.8 51.5 134.3 139.4
Provision for policyholders' dividends on
participating policies 9.1 8.7 31.3 31.5
Amortization of deferred policy acquisition costs 43.7 25.7 126.7 96.8
Other operating expenses 97.9 91.8 286.0 239.9
------- ------- ------- -------
448.5 423.3 1,335.2 1,240.5
------- ------- ------- -------
Income from continuing operations before federal
income tax expense 107.9 70.9 304.2 241.0
------- ------- ------- -------
Federal income tax expense (benefit):
Current 28.2 35.3 83.4 93.9
Deferred 9.5 (10.0) 23.5 (9.4)
------- ------- ------- -------
37.7 25.3 106.9 84.5
------- ------- ------- -------
Income from continuing operations 70.2 45.6 197.3 156.5
Income from discontinued operations (less federal income
tax expense of $1.0 and $5.0 in 1996) - 2.3 - 9.6
------- ------- ------- -------
Net income $ 70.2 47.9 197.3 166.1
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Shareholder's Equity
(Unaudited)
Nine Months Ended September 30, 1997 and 1996
(in millions of dollars)
<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>
1996:
Balance, January 1, 1996 $3.8 657.1 1,583.3 384.3 2,628.5
Dividends to shareholder - (79.3) (356.3) (28.6) (464.2)
Net income - - 166.1 - 166.1
Unrealized losses on securities
available-for-sale, net - - - (249.8) (249.8)
------ ------- -------- ------- --------
Balance, September 30, 1996 $3.8 577.8 1,393.1 105.9 2,080.6
------ ------- -------- ------- --------
------ ------- -------- ------- --------
1997:
Balance, January 1, 1997 3.8 527.9 1,432.6 173.6 2,137.9
Capital contributions - 836.8 - - 836.8
Dividends to shareholder - (450.0) (400.0) - (850.0)
Net income - - 197.3 - 197.3
Unrealized gains on securities
available-for-sale, net - - - 39.8 39.8
------ ------- -------- ------- --------
Balance, September 30, 1997 $3.8 914.7 1,229.9 213.4 2,361.8
------ ------- -------- ------- --------
------ ------- -------- ------- --------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30, 1997 and 1996
(in millions of dollars)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 197.3 166.1
Adjustments to reconcile net income to net cash provided
by operating activities:
Capitalization of deferred policy acquisition costs (358.2) (313.7)
Amortization of deferred policy acquisition costs 126.7 96.8
Amortization and depreciation (0.5) 5.2
Realized gains on investments, net (4.3) (4.3)
Deferred federal income tax 23.5 15.1
Increase in accrued investment income (11.1) (2.5)
Decrease (increase) in other assets 31.4 (36.0)
Increase in policyholder account balances 58.2 233.3
Increase in policyholders' dividend accumulations 8.0 10.0
Increase (decrease) in accrued federal income tax payable 16.1 (0.6)
Increase in other liabilities 113.2 176.6
Other, net (3.9) (19.3)
---------- ----------
Net cash provided by operating activities 196.4 326.7
---------- ----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 640.8 917.4
Proceeds from sale of securities available-for-sale 248.7 223.3
Proceeds from repayments of mortgage loans on real estate 296.1 191.1
Proceeds from sale of real estate 23.2 16.1
Proceeds from repayments of policy loans and sale of
other invested assets 19.8 18.6
Cost of securities available-for-sale acquired (1,732.1) (1,047.9)
Cost of mortgage loans on real estate acquired (552.2) (721.7)
Cost of real estate acquired (24.3) (4.8)
Policy loans issued and other invested assets acquired (48.2) (43.1)
Short-term investments, net (428.2) (62.3)
---------- ----------
Net cash used in investing activities (1,556.4) (513.3)
---------- ----------
Cash flows from financing activities:
Proceeds from capital contributions 836.8 -
Increase in investment product and universal
life insurance product account balances 2,343.1 1,851.3
Decrease in investment product and universal
life insurance product account balances (1,763.0) (1,597.0)
---------- ----------
Net cash provided by financing activities 1,416.9 254.3
---------- ----------
Net increase in cash 56.9 67.7
Cash, beginning of period 43.8 9.4
---------- ----------
Cash, end of period $ 100.7 77.1
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Nine Months Ended September 30, 1997
(1) ORGANIZATION AND BASIS OF PRESENTATION
Prior to January 27, 1997, Nationwide Life Insurance Company (NLIC) was a
wholly owned subsidiary of Nationwide Corporation (Nationwide Corp.). On
January 27, 1997, Nationwide Corp. contributed the common stock of NLIC to
Nationwide Financial Services, Inc. (NFS). NFS was formed by Nationwide
Corp. in November 1996 as a holding company for members of the Nationwide
Insurance Enterprise that offer or distribute long-term savings and
retirement products. NLIC and its subsidiaries are collectively referred
to as "the Company."
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting
principles, which differ from statutory accounting practices prescribed or
permitted by regulatory authorities, for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
The financial information included herein reflects all adjustments (all of
which are normal and recurring in nature) which are, in the opinion of
management, necessary for a fair presentation of financial position and
results of operations. Operating results for all periods presented are not
necessarily indicative of the results that may be expected for the full
year. All significant intercompany balances and transactions have been
eliminated. The accompanying unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial
statements and related notes for the year ended December 31, 1996 included
in the Company's annual report on Form 10-K.
Certain items in the prior period consolidated financial statements have
been reclassified to conform to the current period presentation.
(2) DIVIDENDS AND CAPITAL CONTRIBUTIONS
On September 24, 1996, NLIC's Board of Directors declared a dividend to
Nationwide Corp. consisting of the common stock of certain subsidiaries
classified as discontinued operations. As of and during the year ended
December 31, 1996, these previously wholly owned subsidiaries of NLIC were
classified as discontinued operations since they do not offer or distribute
long-term savings and retirement products. The dividend was paid by NLIC
on January 1, 1997.
On February 24, 1997, NLIC paid a dividend to NFS, which made an equivalent
dividend to Nationwide Corp., consisting of securities having an aggregate
fair value of $850.0 million. NLIC recognized a gain of $14.4 million on
the transfer of securities.
On March 10, 1997 and March 11, 1997, NFS made cash capital contributions
to NLIC totaling $836.8 million.
<PAGE> 68
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
<S> <C>
(a) Financial Statements:
(1) Financial statements and schedule included
in Prospectus
(Part A) 20
Condensed Financial Information.
(2) Financial statements and schedule included
in Part B: 48
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. 48
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1996. 49
Statements of Operations and Changes in
Contract Owners' Equity for the years ended
December 31, 1996, 1995 and 1994. 51
Notes to Financial Statements. 52
Schedules of Changes in Unit Value. 57
Statements of Assets, Liabilities and Contract
Owners' Equity as of June 30, 1997 (unaudited). 62
Statements of Operations and Changes in Contract
Owners' Equity for six months period ended June 30,
1997 and 1996 (unaudited). 64
Notes to Financial Statements as of June 30, 1997 and 1996
(unaudited). 74
Nationwide Life Insurance Company:
Independent Auditors' Report. 79
Consolidated Balance Sheets as of December
31, 1996 and 1995. 80
Consolidated Statements of Income for the
years ended December 31, 1996, 1995 and
1994. 81
Consolidated Statements of Shareholder's
Equity for the years ended December 31,
1996, 1995 and 1994. 82
Consolidated Statements of Cash Flows for
the years ended December 31, 1996, 1995
and 1994. 83
Notes to Consolidated Financial Statements. 84
Consolidated Balance Sheets (unaudited) for nine months
ended September 30, 1997 and 1996. 103
Consolidated Statements of Income (unaudited) for three and
nine months ended September 30, 1997 and 1996. 104
Consolidated Statements of Shareholder's Equity (unaudited)
for nine months ended September 30, 1997 and 1996. 105
Consolidated Statements of Cash Flows (unaudited) for
nine months ended September 30, 1997 and 1996. 106
Notes to Unaudited Consolidated Financial Statements for
nine months ended September 30, 1997. 107
</TABLE>
108 of 135
<PAGE> 69
<TABLE>
<S> <C>
Schedule I - Consolidated Summary of Investments - Other
Than Investments in Related Parties 131
Schedule III - Supplementary Insurance
Information 132
Schedule IV - Reinsurance 133
Schedule V - Valuation and Qualifying Accounts 134
</TABLE>
109 of 135
<PAGE> 70
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, (File No. 2-58043),
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,
(File No. 2-58043), and
hereby incorporated by
reference.
(4) The form of the variable
annuity contract - Filed
previously with the
Registration Statement (File
No. 2-58043), and hereby
incorporated by reference.
(5) Variable Annuity Application
- Attached hereto.
(6) Articles of Incorporation of
Depositor -Filed previously
with the Registration
Statement (File No.
2-58043), and hereby
incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed
previously with the
Registration Statement (File
No. 2-58043) and hereby
incorporated by reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
110 of 135
<PAGE> 71
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 Olive, 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 Board
1247 Stafford Road and Director
Darlington, MD 21034
Dimon 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, OH 43025
C. Ray Noecker Director
2770 Winchester Southern S.
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
111 of 135
<PAGE> 72
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, OH 43215
Robert J. Woodward, Jr. Executive Vice President -
One Nationwide Plaza Chief Investment Officer
Columbus, OH 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 Individual Annuity Operations
Columbus, OH 43215
112 of 135
<PAGE> 73
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Matthew S. Easley Vice President - Marketing, Innovation
One Nationwide Plaza and Compliance
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Applications Services
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Retail Operations
Columbus, OH 43215
Joseph P. Rath Vice President - Product
One Nationwide Plaza and Market Compliance
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
113 of 135
<PAGE> 74
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Affiliate Agency, Inc. Delaware Life Insurance Agency
Affiliate Agency of Ohio Life Insurance Agency
Ohio, Inc.
Allnations, Inc. Ohio Promotes cooperative insurance
corporations worldwide
American Marine Florida Underwriting Manager
Underwriters, Inc.
Auto Direkt Insurance Germany Insurance Company
Company
The Beak and Wire Ohio Radio Tower Joint Venture
Corporation
California Cash California Investment Securities Agent
Management Company
Colonial County Mutual Texas Insurance Company
Insurance Company
Colonial Insurance California Insurance Company
Company of California
Columbus Insurance Germany Insurance Broker
Brokerage and Service
GMBH
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Agency California Insurance Broker
Insurance Services of
California
Companies Agency of Alabama Insurance Broker
Alabama, Inc.
Companies Agency of Idaho Insurance Broker
Idaho, Inc.
Companies Agency of Illinois Acts as Collection Agent for
Illinois, Inc. Policies placed through Brokers
Companies Agency of Kentucky Insurance Broker
Kentucky, Inc.
Companies Agency of Massachusetts Insurance Broker
Massachusetts, Inc.
Companies Agency of New New York Insurance Broker
York, Inc.
Companies Agency of Pennsylvania Insurance Broker
Pennsylvania, Inc.
Companies Agency of Arizona Insurance Broker
Phoenix, Inc.
Companies Agency of Texas Insurance Broker
Texas, Inc.
Companies Annuity Agency Texas Insurance Broker
of Texas, Inc.
Countrywide Services Delaware Products Liability,
Corporation Investigative and Claims
Management Services
Employers Insurance of Wisconsin Insurance Company
Wausau A Mutual Company
</TABLE>
114 of 135
<PAGE> 75
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
** Employers Life Insurance Wisconsin Life Insurance Company
Company of Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Iowa Insurance Company
Insurance Company
Financial Horizons Alabama Life Insurance Agency
Distributors Agency of
Alabama, Inc.
Financial Horizons Ohio Life Insurance Agency
Distributors Agency of
Ohio, Inc.
Financial Horizons Oklahoma Life Insurance Agency
Distributors Agency of
Oklahoma, Inc.
Financial Horizons Texas Life Insurance Agency
Distributors Agency of
Texas, Inc.
* Financial Horizons Massachusetts Investment Company
Investment Trust
Financial Horizons Oklahoma Broker Dealer
Securities Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Nevada Self-Insurance Administration
Company of Nevada Claims Examinations and Data
Processing Services
Gates, McDonald & New York Workers Compensation Claims
Company of New York, Inc. Administration
Gates, McDonald Health Ohio Managed Care Organization
Plus, Inc.
Greater La Crosse Health Wisconsin Writes Commercial Health and
Plans, Inc. Medicare Supplement Insurance
Insurance Ohio Insurance Broker and Insurance
Intermediaries, Inc. Agency
Key Health Plan, Inc. California Pre-paid health plans
Landmark Financial New York Life Insurance Agency
Services of New York,
Inc.
Leben Direkt Insurance Germany Life Insurance Company
Company
Lone Star General Texas Insurance Agency
Agency, Inc.
** MRM Investments, Inc. Ohio Owns and operates a
Recreational Ski Facility
** National Casualty Company Michigan Insurance Company
National Casualty Great Britain Insurance Company
Company of America, Ltd.
** National Premium and Delaware Insurance Administrative
Benefit Administration Services
Company
** Nationwide Advisory Ohio Registered Broker-Dealer,
Services, Inc. Investment Manager and
Administrator
Nationwide Agency, Inc. Ohio Insurance Agency
Nationwide Agribusiness Iowa Insurance Company
Insurance Company
** Nationwide Asset Massachusetts Investment Company
Allocation Trust
Nationwide Cash Ohio Investment Securities Agent
Management Company
</TABLE>
115 of 135
<PAGE> 76
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Nationwide Ohio Radio Broadcasting Business
Communications, Inc.
Nationwide Community Ohio Redevelopment of blighted
Urban Redevelopment areas within the City of
Corporation 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 Ohio Owns, leases and manages
Company commercial real estate
Nationwide Financial Delaware Insurance Agency
Institution Distributors
Agency, Inc.
Nationwide Financial Delaware Holding Company
Services, Inc.
Nationwide General Ohio Insurance Company
Insurance Company
Nationwide HMO, Inc. Ohio Health Maintenance Organization
* Nationwide Indemnity Ohio Reinsurance Company
Company
Nationwide Insurance Ohio Membership Non-Profit
Enterprise Foundation Corporation
Nationwide Insurance Ohio Membership Non-Profit
Golf Charities, Inc. Corporation
Nationwide Investing Michigan Investment Company
Foundation
* Nationwide Investing Massachusetts Investment Company
Foundation II
Nationwide Investment Oklahoma Registered Broker-Dealer in
Services Corporation Deferred Compensation Market
Nationwide Investors Ohio Stock Transfer Agent
Services, Inc.
** Nationwide Life and Ohio Life Insurance Company
Annuity Insurance Company
** Nationwide Life Ohio Life Insurance Company
Insurance Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Management Ohio Develops and operates Managed
Systems, Inc. Care Delivery System
Nationwide Mutual Fire Ohio Insurance Company
Insurance Company
Nationwide Mutual Ohio Insurance Company
Insurance Company
Nationwide Properties, Ohio Develops, owns and operates
Ltd. real estate and real estate
investments.
Nationwide Property and Ohio Insurance Company
Casualty Insurance
Company
</TABLE>
116 of 135
<PAGE> 77
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Nationwide Realty Ohio Develops, owns and operates
Investors, Ltd. real estate and real estate
investments.
* Nationwide Separate Massachusetts Investment Company
Account Trust
NEA Valuebuilder Delaware Life Insurance Agency
Investor Services, Inc.
NEA Valuebuilder Alabama Life Insurance Agency
Investor Services of
Alabama, Inc.
NEA Valuebuilder Arizona Life Insurance Agency
Investor Services of
Arizona, Inc.
NEA Valuebuilder Montana Life Insurance Agency
Investor Services of
Montana, Inc.
NEA Valuebuilder Nevada Life Insurance Agency
Investor Services of
Nevada, Inc.
NEA Valuebuilder Ohio Life Insurance Agency
Investor Services of
Ohio, Inc.
NEA Valuebuilder Oklahoma Life Insurance Agency
Investor Services of
Oklahoma, Inc.
NEA Valuebuilder Texas Life Insurance Agency
Investor Services of
Texas, Inc.
NEA Valuebuilder Wyoming Life Insurance Agency
Investor Services of
Wyoming, Inc.
NEA Valuebuilder Massachusetts Life Insurance Agency
Services Insurance
Agency, Inc.
Neckura General Germany Insurance Company
Insurance Company
Neckura Holding Company Germany Administrative Service for
Neckura Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Germany Life Insurance Company
Company
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Massachusetts Markets and Administers
Insurance Agency, Inc. Deferred Compensation Plans
for Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers
Deferred Compensation Plans
for Public Employees
Pension Associates of Wisconsin Pension plan administration,
Wausau, Inc. record keeping and consulting
and compensation consulting
Physicians Plus Wisconsin Health Maintenance organization
Insurance Corporation
Prevea Health Insurance Wisconsin Health Maintenance organization
Plan, Inc.
Public Employees Benefit Delaware Markets and Administrates
Services Corporation Deferred Compensation Plans
for Public Employees
Public Employees Benefit Alabama Markets and Administers
Services Corporation of Deferred Compensation Plans
Alabama for Public Employees
</TABLE>
117 of 135
<PAGE> 78
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Public Employees Benefit Arkansas Markets and Administers
Services Corporation of Deferred Compensation Plans
Arkansas for Public Employees
Public Employees Benefit Montana Markets and Administers
Services Corporation of Deferred Compensation Plans
Montana for Public Employees
Public Employees Benefit New Mexico Markets and Administers
Services Corporation of Deferred Compensation Plans
New Mexico for Public Employees
Scottsdale Indemnity Ohio Insurance Company
Company
Scottsdale Insurance Ohio Excess and surplus lines
Company insurance company
Scottsdale Surplus Lines Arizona Excess and surplus lines
Insurance Company insurance company
SVM Sales GmbH, Neckura Germany Sales support for Neckura
Insurance Group Insurance Group
Wausau Business Wisconsin Insurance Company
Insurance Company
Wausau General Insurance Illinois Insurance Company
Company
Wausau Insurance Company United Kingdom Insurance and Reinsurance
(U.K.) Limited Company
Wausau International California Special Risks, Excess and
Underwriters Surplus Lines Insurance
Underwriting Manager
** Wausau Preferred Health Wisconsin Insurance and Reinsurance
Insurance Company Company
Wausau Service Wisconsin Holding Company
Corporation
Wausau Underwriters Wisconsin Insurance Company
Insurance Company
</TABLE>
118 of 135
<PAGE> 79
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
(SEE ATTACHED CHART)
STATE UNLESS OTHERWISE
OF INDICATED
COMPANY ORGANIZATION PRINCIPAL BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* NACo Variable Account Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* Nationwide DC Variable Ohio Nationwide Life Issuer of Annuity
Account Separate Account Contracts
* Nationwide DCVA-II Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* Nationwide Life Separate Ohio Nationwide Life Issuer of Annuity
Account No. 1 Separate Account Contracts
* Nationwide Multi-Flex Ohio Nationwide Life Issuer of Annuity
Variable Account Separate Account Contracts
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity
Account-A Annuity Separate Contracts
Account
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity
Account-B Annuity Separate Contracts
Account
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity
Account-C Annuity Separate Contracts
Account
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-II Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-3 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-4 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-5 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-6 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-8 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-9 Separate Account Contracts
* Nationwide Fidelity Ohio Nationwide Life Issuer of Annuity
Advisor Variable Account Separate Account Contracts
* Nationwide VL Separate Ohio Nationwide Life and Issuer of Life
Account-A Annuity Separate Insurance Policies
Account
Nationwide VL Separate Ohio Nationwide Life and Issuer of Life
Account-B Annuity Separate Insurance Policies
Account
* Nationwide VL Separate Ohio Nationwide Life and Issuer of Life
Account-C Annuity Separate Insurance Policies
Account
* Nationwide VLI Separate Ohio Nationwide Life Issuer of Life
Account Separate Account Insurance Policies
* Nationwide VLI Separate Ohio Nationwide Life Issuer of Life
Account-2 Separate Account Insurance Policies
* Nationwide VLI Separate Ohio Nationwide Life Issuer of Life
Account-3 Separate Account Insurance Policies
* Nationwide VLI Separate Ohio Nationwide Life Issuer of Life
Account-4 Separate Account Insurance Policies
</TABLE>
119 of 135
<PAGE> 80
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE(R) (left side)
<S> <C> <C> <C>
- ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- ------------------------
------------------------------------------
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| (EMPLOYERS) |
| |========================================
| Contribution Note Cost |
| ----------------- ---- |
| Casualty $400,000,000 |
------------------------------------------
|
-----------------------------------------------------------------------
| | |
- --------------------------- --------------------------- ---------------------------- ---------------------------
| SAN DIEGO LOTUS | | WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | |
| CORPORATION | | (U.K.) LIMITED | | CORPORATION (WSC) | | NATIONWIDE LLOYDS |
|Common Stock: 748,212 | |Common Stock: 8,506,800 | |Common Stock: 1,000 Shares| | |
|------------ Shares | |------------ Shares | |------------ | | |
| | | | | |=========| |
| Cost | | Cost | | Cost | || | A TEXAS LLOYDS |
| ---- | | ---- | | ---- | || | |
|Employers- | |Employers- | |Employers- | || | |
|100% $29,000,000| |100% $18,683,300| |100% $176,763,000| || | |
- --------------------------- --------------------------- ---------------------------- || ---------------------------
| ||
--------------------------------------------------------------------- ||
| | | ||
- --------------------------- | --------------------------- | ---------------------------- | || ---------------------------
| WAUSAU BUSINESS | | | COMPANIES AGENCY | | | COUNTRYWIDE SERVICES | | || | |
| INSURANCE COMPANY | | | OF KENTUCKY, INC. | | | CORPORATION | | || | |
|Common Stock: 10,900,000 | | |Common Stock: 1,000 | | |Common Stock: 100 Shares | | || | COMPANIES |
|------------ Shares | | |------------ Shares | | |------------ | | || | AGENCY OF |
| |---|---| | |---| | | ||==| TEXAS, INC. |
| Cost | | | Cost | | | Cost | | || | |
| ---- | | | ---- | | | ---- | | || | |
|WSC-100% $33,800,000| | |WSC-100% $1,000 | | |WSC-100% $145,852 | | || | |
- --------------------------- | --------------------------- | ---------------------------- | || ---------------------------
| | | ||
- --------------------------- | --------------------------- | ---------------------------- | || ---------------------------
| WAUSAU UNDERWRITERS | | | COMPANIES AGENCY | | | WAUSAU GENERAL | | || | |
| INSURANCE COMPANY | | | OF MASSACHUSETTS, INC. | | | INSURANCE COMPANY | | || | |
|Common Stock: 8,750 | | |Common Stock: 1,000 | | |Common Stock: 200,000 | | || | COMPANIES ANNUITY |
|------------ Shares | | |------------ Shares | | |------------ Shares | | || | AGENCY OF |
| |---|---| | |---| | | ====| TEXAS, INC. |
| Cost | | | Cost | | | Cost | | | |
| ---- | | | ---- | | | ---- | | | |
|WSC-100% $69,560,006| | |WSC-100% $1,000 | | |WSC-100% $39,000,000 | | | |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| | |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| GREATER LA CROSSE | | | COMPANIES AGENCY | | | WAUSAU INTERNATIONAL | | | AMERICAN MARINE |
| HEALTH PLANS, INC. | | | OF NEW YORK, INC. | | | UNDERWRITERS | | | UNDERWRITERS, INC. |
|Common Stock: 3,000 | | |Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 20 |
|------------ Shares | | |------------ Shares | | |------------ Shares | | |------------ Shares |
| |---|---| | |---| | |------| |
| Cost | | | Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- | | | ---- |
|WSC-33.3% $861,761 | | |WSC-100% $1,000 | | |WSC-100% $10,000 | | |WSC-100% $248,222 |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| | |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| COMPANIES AGENCY | | | COMPANIES AGENCY | | | COMPANIES AGENCY | | | COMPANIES AGENCY |
| OF ALABAMA, INC. | | | OF PENNSYLVANIA, INC. | | | INSURANCE SERVICES | | | OF ILLINOIS, INC. |
| | | | | | | OF CALIFORNIA | | | |
|Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 250 |
|------------ Shares | | |------------ Shares | |---|------------ Shares | |------|------------ Shares |
| |---|---| | | | | | | |
| Cost | | | Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- | | | ---- |
|WSC-100% $100 | | |WSC-100% $100 | | |WSC-100% $1,000 | | |WSC-100% $2,500 |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| | |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| COMPANIES AGENCY | | | COMPANIES AGENCY | | | PHYSICIANS PLUS | | | COMPANIES |
| OF IDAHO, INC. | | | OF PHOENIX, INC. | | | INSURANCE | | | AGENCY, INC. |
| | | | | | | CORPORATION | | | |
|Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 7,150 | | |Common Stock: 100 |
|------------ Shares | | |------------ Shares | | |------------ Shares | | |------------ Shares |
| |-------| | |---|Preferred Stock: 11,540 | |------| |
| | | | | |--------------- Shares | | | |
| | | | | | | | | |
| Cost | | Cost | | | Cost | | | Cost |
| ---- | | ---- | | | ---- | | | ---- |
|WSC-100% $1,000 | |WSC-100% $1,000 | | |WSC-33 1/3% $6,215,459| | |WSC-100% $10,000 |
- --------------------------- --------------------------- | ---------------------------- | ---------------------------
| |
| ---------------------------- | ---------------------------
| | PREVEA HEALTH | | | PENSION ASSOCIATES |
| | INSURANCE PLAN, INC. | | | OF WAUSAU, INC. |
| |Common Stock: 3,000 Shares| | |Common Stock: 1,000 |
| |------------ | | |------------ Shares |
----| | -------| |
| | | |
| Cost | |Companies Cost |
| ---- | |Agency, Inc. ---- |
|WSC-33 1/3% $500,000 | |(Wisconsin)-100% $10,000 |
---------------------------- ---------------------------
</TABLE>
<PAGE> 81
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE(R) (middle)
<S> <C> <C>
-----------------------------------------------------------------------------
| |
| |
| NATIONWIDE MUTUAL |
=======| INSURANCE COMPANY |================================================
| (CASUALTY) |
| |
| |
-----------------------------------------------------------------------------
| || |
| || -------------------------------------------------------------
| || ---------------------------------------------------------------------------------------
| || | |
- -------------------------------- || | -------------------------------- --------------------------------
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|Common Stock: 3,136 Shares | || | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|------------ | || | | | | |
| Cost | || | |Common Stock: 20,000 | |Common Stock: 10,000 |
| ---- | || | |------------ Shares | |------------ Shares |
|Casualty-24.5% $88,320 | || | | Cost | | Cost |
|Fire-24.5% $88,463 | || | | ---- | | ---- |
|Preferred Stock: 1,466 Shares | || |----|Casualty-100% $5,944,422 | ---------|Casualty-100% $87,943,140 |
|--------------- | || | | | | | |
| Cost | || | | | | | |
| ---- | || | | | | | |
|Casualty-7.7% $100,000 | || | | | | | |
|Fire-7.7% $100,000 | || | | | | | |
- -------------------------------- || | -------------------------------- | --------------------------------
|| | |
- -------------------------------- || | -------------------------------- | --------------------------------
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY | | | NECKURA |
| INSURANCE COMPANY | || | | AND CASUALTY | | | INSURANCE COMPANY |
|Guaranty Fund | || | | INSURANCE COMPANY | | | |
|------------ |========= |----|Common Stock: 60,000 | |--------|Common Stock: 6,000 |
|Certificate | | |------------ Shares | | |------------ Shares |
|----------- Cost | | | Cost | | | Cost |
| ---- | | | ---- | | |Neckura- ---- |
|Casualty $500,000 | | |Casualty-100% $6,000,000 | | |100% DM 6,000,000 |
- -------------------------------- | -------------------------------- | --------------------------------
| | |
- -------------------------------- | -------------------------------- | --------------------------------
| F & B, INC. | | | COLONIAL INSURANCE | | | NECKURA LIFE |
| | | | COMPANY OF CALIFORNIA | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | (COLONIAL) | | | |
|------------ | |----|Common Stock: 1,750 | |--------|Common Stock: 4,000 |
| Cost | | |------------ Shares | | |------------ Shares |
| ---- | | | Cost | | | Cost |
|Farmland | | | ---- | | | ---- |
|Mutual-100% $10 | | |Casualty-100% $11,750,000 | | |Neckura-100% DM 15,825,681 |
- -------------------------------- | -------------------------------- | --------------------------------
| |
- -------------------------------- | -------------------------------- | --------------------------------
| NATIONWIDE AGRIBUSINESS | | | SCOTTSDALE | | | NECKURA GENERAL |
| INSURANCE COMPANY | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
|Common Stock: 1,000,000 | | | | | | |
|------------ Shares | | |Common Stock: 30,136 | | |Common Stock: 1,500 |
| Cost |------------------|------------ Shares | |--------|------------ Shares |
| ---- | | Cost | | | Cost |
|Casualty-99.9% $26,714,335 | | ---- | | | ---- |
|Other Capital: | |Casualty-100% $150,000,000 | | |Neckura-100% DM 1,656,925 |
|------------- | | | | | |
|Casualty-Ptd. $ 713,567 | | | | | |
- -------------------------------- -------------------------------- | --------------------------------
| |
-------------------------------- | --------------------------------
| SCOTTSDALE | | | COLUMBUS INSURANCE |
| SURPLUS LINES | | | BROKERAGE AND SERVICE |
| INSURANCE COMPANY | | | GmbH |
| | | |Common Stock: 1 Share |
| | |--------|------------ |
| "NEWLY FORMED" | | | Cost |
| | | | ---- |
| | | |Neckura-100% DM 51,639 |
| | | | |
| | | | |
-------------------------------- | --------------------------------
| |
-------------------------------- | --------------------------------
| NATIONAL PREMIUM & | | | LEBEN DIREKT |
| BENEFIT ADMINISTRATION | | | INSURANCE COMPANY |
| COMPANY | | | |
|Common Stock: 10,000 | | |Common Stock: 4,000 Shares |
|------------ Shares |------------------|------------ |
| Cost | | Cost |
| ---- | | ---- |
|Scottsdale-100% $10,000 | |Neckura-100% DM 4,000,000 |
| | | |
| | | |
-------------------------------- --------------------------------
-------------------------------- --------------------------------
| SVM SALES | | AUTO DIREKT |
| GmbH | | INSURANCE COMPANY |
| | | |
|Common Stock: 50 Shares | |Common Stock: 1,500 Shares |
|------------ | |------------ |
| Cost | | Cost |
| ---- | | ---- |
|Neckura-100% DM 50,000 | |Neckura-100% DM 1,643,149 |
| | | |
| | | |
-------------------------------- --------------------------------
</TABLE>
<PAGE> 82
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE(R) (right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION|
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
-----------------------------------------------------------------------------
| |
| |
| NATIONWIDE MUTUAL |
=======| FIRE INSURANCE COMPANY |
| (FIRE) |
| |
| |
-----------------------------------------------------------------------------
|
- --------------- --------------------------------------------------
| |
- ----------------------------------------------------------------------------------------------------------------- |
| | | |
| -------------------------------- | -------------------------------- ----------------------------------
| | SCOTTSDALE | | | NATIONWIDE | | NATIONWIDE |
| | INDEMNITY COMPANY | | | COMMUNITY URBAN | | CORPORATION |
| | | | | REDEVELOPMENT | | |
| | | | | CORPORATION | |Common Stock: Control: |
| |Common Stock: 50,000 | | |Common Stock: 10 Shares | |------------ ------- |
|-----|------------ Shares | |----|------------ | |$13,642,432 100% |
| | Cost | | | Cost | | Shares Cost |
| | ---- | | | ---- | | ------ ---- |
| |Casualty-100% $8,800,000 | | |Casualty-100% $1,000 | |Casualty 12,992,922 $751,352,485|
| | | | | | |Fire 649,510 24,007,936|
| | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- ----------------------------------
| |
| -------------------------------- | --------------------------------
| | NATIONWIDE | | | INSURANCE |
| | INDEMNITY COMPANY | | | INTERMEDIARIES, INC. |
| | | | | |
|-----|Common Stock: 28,000 | |----|Common Stock: 1,615 |
| |------------ Shares | | |------------ Shares |
| | Cost | | | Cost |
| | ---- | | | ---- |
| |Casualty-100% $294,529,000 | | |Casualty-100% $1,615,000 |
| -------------------------------- | --------------------------------
| |
| -------------------------------- | --------------------------------
| | LONE STAR | | | NATIONWIDE CASH |
| | GENERAL AGENCY, INC. | | | MANAGEMENT COMPANY |
| | | | |Common Stock: 100 Shares |
------|Common Stock: 1,000 | |----|------------ |
|------------ Shares | | | Cost |
| Cost | | | ---- |
| ---- | | |Casualty-90% $9,000 |
|Casualty-100% $5,000,000 | | |NW Adv. Serv. 1,000 |
-------------------------------- | --------------------------------
|| |
-------------------------------- | --------------------------------
| COLONIAL COUNTY MUTUAL | | | CALIFORNIA CASH |
| INSURANCE COMPANY | | | MANAGEMENT |
| | | | |
|Surplus Debentures | | |Common Stock: 90 Shares |
|------------------ | |----|------------ |
| Cost | | | Cost |
| ---- | | | ---- |
|Colonial $500,000 | | |Casualty-100% $9,000 |
|Lone Star 150,000 | | | |
-------------------------------- | --------------------------------
|
| -------------------------------- --------------------------------
| | NATIONWIDE | | THE BEAK AND |
| | COMMUNICATIONS, INC. | | WIRE CORPORATION |
| |Common Stock: 14,750 | | |
| |------------ Shares | |Common Stock: 750 Shares |
-----| Cost |------------------|------------ |
| ---- | | Cost |
|Casualty-100% $11,510,000 | | ---- |
|Other Capital: | |NW Comm-100% $531,000 |
|------------- | | |
|Casualty-Ptd. 1,000,000 | | |
-------------------------------- --------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Lines
March 6, 1997
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
(Left Side)
NATIONWIDE INSURANCE ENTERPRISE(R)
------------------------------------------------
| EMPLOYERS INSURANCE |
| OF WAUSAU |==========================================
| A MUTUAL COMPANY |
------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
| | |
--------------------------- --------------------------- ---------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | INSTITUTION DISTRIBUTORS |
| | | CAPITAL TRUST | | AGENCY, INC. (NFIDAI) |
| Common Stock: 3,814,779 | | Preferred Stock: | | Common Stock: 1,000 |
| ------------ Shares | | --------------- | | ------------ Shares |
| | | | | |
| NFS--100% | | NFS--100% | | NFS--100% |
--------------------------- --------------------------- ---------------------------
| ||
--------------------------- | --------------------------- --------------------------- || --------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | FINANCIAL HORIZONS | || | |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES | | DISTRIBUTORS AGENCY | || | |
| (NW LIFE) | | | (NW ADV. SERV.) | | OF ALABAMA, INC. | || | |
| Common Stock: 68,000 | | | Common Stock: 7,676 | | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--|--| ------------ Shares |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OHIO, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life--100% $58,070,003 | | | NW Life--100% $5,996,261 | || | NFIDIA--100% $100 | || | |
--------------------------- | --------------------------- || --------------------------- || --------------------------
| || ||
--------------------------- | --------------------------- || --------------------------- || --------------------------
| NWE, INC. | | | NATIONWIDE | || | LANDMARK FINANCIAL | || | |
| | | | INVESTOR SERVICES, INC. | || | SERVICES OF | || | |
| | | | | || | NEW YORK, INC. | || | |
| Common Stock: 100 | | | Common Stock: 5 | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | ------------ Shares |==|| | ------------ Shares | ||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OKLAHOMA, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life--100% $35,971,375 | | | NW Adv. Serv.--100% $5,000| || | NFIDIA--100% $10,100 | || | |
--------------------------- | --------------------------- || --------------------------- || --------------------------
| || ||
--------------------------- | --------------------------- || --------------------------- || --------------------------
| NATIONWIDE INVESTMENT | | | FINANCIAL HORIZONS | || | FINANCIAL HORIZONS | || | |
| SERVICES CORPORATION | | | INVESTMENT TRUST | || | SECURITIES CORP. | || | |
| | | | | || | | || | |
| Common Stock: 5,000 | | | | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | |==|| | ------------ Shares | ||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF TEXAS, INC. |
| Cost | | | | || | Cost | || | |
| ---- | | | | || | ---- | || | |
| NW Life--100% $529,728 | | | COMMON LAW TRUST | || | NFIDIA--100% $153,000 | || | |
--------------------------- | --------------------------- || --------------------------- || --------------------------
| || ||
--------------------------- | --------------------------- || --------------------------- || --------------------------
| NATIONWIDE LIFE INSURANCE | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | || | |
| COMPANY OF NEW YORK | | | INVESTING | || | | || | |
| | | | FOUNDATION | || | | || | |
| Common Stock: | | | | || | Common Stock: 100 | || | AFFILIATE |
| ------------ Shares |--| | |==|| | ------------ Shares |__||==| AGENCY OF |
| Cost | | | | || | | | OHIO, INC. |
| ---- | | | | || | Cost | | |
| NW Life--100% | | | | || | ---- | | |
| (Proposed) | | | COMMON LAW TRUST | || | NFIDIA--100% $100 | | |
--------------------------- | --------------------------- || --------------------------- --------------------------
| ||
--------------------------- | --------------------------- ||
| NATIONWIDE REALTY | | | NATIONWIDE | ||
| INVESTORS, LTD. | | | INVESTING | ||
| | | | FOUNDATION II | ||
| Units: | | | | ||
| ------ | | | |==||
| | | | | ||
| | | | | ||
| NW Life--90% | | | | ||
| NW Mutual--10% | | | COMMON LAW TRUST | ||
--------------------------- | --------------------------- ||
| ||
--------------------------- | --------------------------- ||
| NATIONWIDE REALTY | | | NATIONWIDE | ||
| INVESTORS, LTD. | | | SEPARATE ACCOUNT | ||
| | | | TRUST | ||
| Units: | | | | ||
| ------ |__| | |__||
| | | |
| | | |
| NW Life--97.6% | | |
| NW Mutual--2.4% | | COMMON LAW TRUST |
--------------------------- ---------------------------
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
(Center)
<S> <C> <C> <C> <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 |
---------------------------------------
|
----------------------------------------------------------------------------------------------------------------------
| | | |
--------------------------- -------------------------- ----------------------------- ----------------------------
| NATIONWIDE FINANCIAL | | MRM INVESTMENTS, INC. | | WEST COAST LIFE | | NATIONAL CASUALTY |
| SERVICES, INC. (NFS) | | | | INSURANCE COMPANY | | COMPANY |
| | | | | | | (NC) |
| Common Stock: Control | | Common Stock: 1 | | Common Stock: 1,000,000 | | Common Stock: 100 |
| ------------ ------- | | ------------ Share | | ------------ Shares | | ------------ Shares |
| | | | | | | |
| | | Cost | | Cost | | Cost |
| Class A Public--100% | | ---- | | ---- | | ---- |
| Class B NW Corp--100% | | NW Corp.--100% $1,339,218 | | NW Corp.--100% $152,946,930 | | NW Corp.--100% $73,442,439 |
--------------------------- --------------------------- ----------------------------- ----------------------------
| |
- -------------------------------------------------------------------------------- |
| | |
--------------------------- --------------------------- ----------------------------
| PUBLIC EMPLOYEES BENEFIT | | NEA VALUEBUILDER | | NCC OF AMERICA, INC. |
| SERVICES CORPORATION | | INVESTOR SERVICES, INC. | | (INACTIVE) |
| (PEBSCO) | | (NEA) | | |
| Common Stock: 236,494 |==|| | Common Stock: 500 | | |
| ------------ Shares | || | ------------ Shares | | |
| | || | | | |
| NFS--100% | || | NFS--100% | | NFS--100% |
--------------------------- || ----------------------------- ----------------------------
|| ||
--------------------------- || --------------------------- ||
| PEBSCO OF | || | NEA VALUEBUILDER | ||
| ALABAMA | || | INVESTOR SERVICES | ||
| | || | OF ALABAMA, INC. | ||
| Common Stock: 100,000 | || | Common Stock: 500 | ||
| ------------ Shares |--|| | ------------ Shares |--||
| | || | | ||
| Cost | || | Cost | ||
| ---- | || | ---- | ||
| PEBSCO--100% $1,000 | || | NEA--100% $5,000 | ||
--------------------------- || --------------------------- ||
|| ||
--------------------------- || --------------------------- ||
| PEBSCO OF | || | NEA VALUEBUILDER | ||
| ARKANSAS | || | INVESTOR SERVICES | ||
| | || | OF ARIZONA, INC | ||
| Common Stock: 50,000 | || | Common Stock: 100 | ||
| ------------ Shares |--|| | ------------ Shares |--||
| | || | | ||
| Cost | || | Cost | ||
| ---- | || | ---- | ||
| PEBSCO--100% $500 | || | NEA--100% $1,000 | ||
--------------------------- || --------------------------- ||
|| ||
--------------------------- || --------------------------- ||
| PEBSCO OF MASSACHUSETTS | || | NEA VALUEBUILDER | ||
| INSURANCE AGENCY, INC. | || | INVESTOR SERVICES | ||
| | || | OF MONTANA, INC. | ||
| Common Stock: 1,000 | || | Common Stock: 500 | ||
| ------------ Shares |--|| | ------------ Shares |--||
| | || | | ||
| Cost | || | Cost | ||
| ---- | || | ---- | ||
| PEBSCO--100% $1,000 | || | NEA--100% $500 | ||
--------------------------- || --------------------------- ||
|| ||
--------------------------- || --------------------------- || ---------------------------
| PEBSCO OF | || | NEA VALUEBUILDER | || | |
| MONTANA | || | INVESTOR SERVICES | || | |
| | || | OF NEVADA, INC. | || | NEA VALUEBUILDER |
| Common Stock: 500 | || | Common Stock: 500 | || | INVESTOR SERVICES |
| ------------ Shares |--|| | ------------ Shares | ||==| OF OHIO, INC. |
| | || | | || | |
| Cost | || | Cost | || | |
| ---- | || | ---- | || | |
| PEBSCO--100% $500 | || | NEA--100% $500 | || | |
--------------------------- || --------------------------- || ---------------------------
|| ||
--------------------------- || --------------------------- || ---------------------------
| PEBSCO OF | || | NEA VALUEBUILDER | || | |
| NEW MEXICO | || | INVESTOR SERVICES | || | |
| | || | OF WYOMING, INC. | || | NEA VALUEBUILDER |
| Common Stock: 1,000 | || | Common Stock: 500 | || | INVESTOR SERVICES |
| ------------ Shares |--|| | ------------ Shares | ||==| OF OKLAHOMA, INC. |
| | || | | || | |
| Cost | || | Cost | || | |
| ---- | || | ---- | || | |
| PEBSCO--100% $1,000 | || | NEA--100% $500 | || | |
--------------------------- || --------------------------- || ---------------------------
|| ||
--------------------------- || --------------------------- || ----------------------------
| | || | NEA VALUEBUILDER | || | |
| | || | SERVICES INSURANCE | || | |
| PEBSCO OF | || | AGENCY, INC. | || | NEA VALUEBUILDER |
| TEXAS, INC. | || | Common Stock: 100 | || | INVESTOR SERVICES |
| |==|| | ------------ Shares |__||==| OF TEXAS, INC. |
| | | | | |
| | | Cost | | |
| | | ---- | | |
| | | NEA--100% $1,000 | | |
--------------------------- --------------------------- ----------------------------
</TABLE>
<PAGE> 85
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------
| NATIONWIDE MUTUAL |
========================================| FIRE INSURANCE COMPANY |
| (FIRE) |
------------------------------------------------
|
- -----------------------------------------------------------------|
- ----------------------------------------------------------------------------------------------
| | |
--------------------------- ------------------------------ ------------------------------
| GATES, MCDONALD | | EMPLOYERS LIFE INSURANCE | | NATIONWIDE HMO, INC. |
| & COMPANY (GATES) | | OF WAUSAU (ELIOW) | | (NW HMO) |
| | | | | |
| Common Stock: 254 | | Common Stock: 250,000 | | Common Stock: 100 |
|-- | ------------ Shares | |--| ------------ Shares | |--| ------------ Shares |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| | NW CORP.--100% $25,683,532 | | | NW CORP.--100% $126,509,480 | | | NW CORP.--100% $14,603,732 |
| ----------------------------- | ------------------------------ | ------------------------------
| | |
| --------------------------- | ------------------------------ | ------------------------------
| | GATES, MCDONALD & COMPANY | | | WAUSAU PREFERRED | | | NATIONWIDE MANAGEMENT |
| | OF NEW YORK, INC. | | | HEALTH INSURANCE CO. | | | SYSTEMS, INC. |
| | | | | | | | |
| | Common Stock: 3 | | | Common Stock: 250,000 | | | Common Stock: 100 |
|-- | ------------ Shares | |--| ------------ Shares | |--| ------------ Shares |
| | | | | | | | |
| | Cost | | | Cost | | | NW HMO Cost |
| | ---- | | | ---- | | | ---- |
| | GATES--100% $106,947 | | | NW CORP.--100% $57,413,193 | | | Inc.--100% $25,149 |
| ----------------------------- | ------------------------------ | ------------------------------
| | |
| ----------------------------- | ------------------------------ | ------------------------------
| | GATES, MCDONALD & COMPANY | | | KEY HEALTH PLAN, INC. | | | NATIONWIDE |
| | OF NEVADA | | | | | | AGENCY, INC. |
| | | | | | | | |
| | Common Stock: 40 | | | Common Stock: 1,000 | | | Common Stock: 100 |
|-- | ------------ Shares | |--| ------------ Shares | |--| ------------ Shares |
| | | | | | | |
| | Cost | | Cost | | | NW HMO Cost |
| | ---- | | ---- | | | ---- |
| | Gates--100% $93,750 | | ELIOPW--80% $2,700,000 | | | Inc.--99% $116,077 |
| ----------------------------- ------------------------------ | ------------------------------
|
| -----------------------------
| | GATES, MCDONALD |
| | HEALTH PLUS, INC. |
| | |
| | Common Stock: 200 |
|-- | ------------ Shares |
| |
| Cost |
| ---- |
| NW CORP.--100% $2,000,000 |
-----------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Partnership Interest -- Dotted Line
March 6, 1997
Page 2
</TABLE>
<PAGE> 86
Item 27. NUMBER OF CONTRACT OWNERS
The number of Contract Owners as of August 31, 1997 was 3,397.
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 principal
underwriter and 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 Variable Account-9, Nationwide VA Separate
Account-A, Nationwide VA Separate Account-B, Nationwide VA
Separate Account-C, Nationwide VL Separate Account-A, Nationwide
VL Separate Account-B, Nationwide VL Separate Account-C,
Nationwide VLI Separate Account-2, Nationwide VLI Separate
Account-3, Nationwide VLI Separate Account-4, 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, and Nationwide Asset Allocation Trust, 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, OH 43215
Dimon Richard McFerson Chairman of the Board of
One Nationwide Plaza Directors and 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
122 of 135
<PAGE> 87
Robert A. Oakley Executive Vice President - Chief
One Nationwide Plaza Financial Officer and Director
Columbus, OH 43215
Robert J. Woodward, Jr. Executive Vice President - Chief
One Nationwide Plaza Investment Officer and Director
Columbus, OH 43215
W. Sidney Druen Senior Vice President and
One Nationwide Plaza General Counsel and
Columbus, OH 43215 Assistant Secretary
James F. Laird, Jr. Vice President - General
One Nationwide Plaza Manager and Acting Treasurer
Columbus, OH 43215
Edwin P. McCausland Vice President -
One Nationwide Plaza Fixed Income Securities
Columbus, OH 43215
Charles Bath Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
Joseph P. Rath Vice President - Compliance
One Nationwide Plaza
Columbus, OH 43215
William G. Goslee Vice President
One Nationwide Plaza
Columbus, OH 43215
Peter J. Neckermann Vice President
One Nationwide Plaza
Columbus, OH 43215
Rae M. Pollina Secretary
One Nationwide Plaza
Columbus, OH 43215
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
Nationwide N/A N/A N/A N/A
Advisory
Services,
Inc.
123 of 135
<PAGE> 88
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).
124 of 135
<PAGE> 89
PROSPECTUS
MAY 1, 1997
NATIONWIDE
VARIABLE ACCOUNT
INDIVIDUAL DEFERRED
VARIABLE ANNUITY CONTRACTS
OFFERED BY
NATIONWIDE
LIFE INSURANCE COMPANY
125 of 135
<PAGE> 90
NATIONWIDE LIFE INSURANCE COMPANY
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED THROUGH NATIONWIDE VARIABLE ACCOUNT
(SUPPLEMENT DATED MAY 1, 1997, AS AMENDED JANUARY 2, 1998,
TO THE PROSPECTUS DATED MAY 1, 1997)
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 an
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.
126 of 135
<PAGE> 91
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 IF YOU DO NOT IF YOU ANNUITIZE
YOUR SURRENDER YOUR YOUR
CONTRACT AT THE END CONTRACT AT THE CONTRACT AT THE
OF THE APPLICABLE END OF THE END OF THE
TIME PERIOD APPLICABLE TIME APPLICABLE TIME
PERIOD PERIOD
- --------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American 22 68 117 250 22 68 117 250 * 68 117 250
Century:
Benham
Short-Term
Government
- --------------------------------------------------------------------------------
American 22 67 115 247 22 67 115 247 * 67 115 247
Century:
Income &
Growth
- --------------------------------------------------------------------------------
American 25 77 132 282 25 77 132 282 * 77 132 282
Century:
Twentieth
Century Growth
- --------------------------------------------------------------------------------
American 33 102 172 359 33 102 172 359 * 102 172 359
Century:
Twentieth
Century
International
Growth
- --------------------------------------------------------------------------------
American 25 77 132 282 25 77 132 282 * 77 132 282
Century:
Twentieth
Century Ultra
- --------------------------------------------------------------------------------
Delchester 23 72 123 264 23 72 123 264 * 72 123 264
Fund-Inst'l
- --------------------------------------------------------------------------------
Dreyfus A 25 77 132 281 25 77 132 281 * 77 132 281
Bonds Plus
- --------------------------------------------------------------------------------
Dreyfus 24 74 127 272 24 74 127 272 * 74 127 272
Appreciation
Fund, Inc.
- --------------------------------------------------------------------------------
Dreyfus 25 77 132 281 25 77 132 281 * 77 132 281
Balanced
Fund, Inc.
- --------------------------------------------------------------------------------
Dreyfus S & P 20 63 109 234 20 63 109 234 * 63 109 234
500 Index
Fund
(Formerly
Peoples Index
Fund, Inc.)
- --------------------------------------------------------------------------------
The Dreyfus 26 81 139 294 26 81 139 294 * 81 139 294
Third Century
Fund, Inc.
- --------------------------------------------------------------------------------
Federated 26 80 137 291 26 80 137 291 * 80 137 291
Bond Fund
- --------------------------------------------------------------------------------
Federated 24 73 126 268 24 73 126 268 * 73 126 268
High Yield
Trust
- --------------------------------------------------------------------------------
Evergreen 27 83 142 302 27 83 142 302 * 83 142 302
Total Return
Fund
- --------------------------------------------------------------------------------
Fidelity 30 92 157 330 30 92 157 330 * 982 157 330
Advisor Fund
Equity Income
Fund
- --------------------------------------------------------------------------------
Fidelity 31 96 163 342 31 96 163 342 * 96 163 342
Advisor Fund
Growth
Opportunities
Fund
- --------------------------------------------------------------------------------
Fidelity 27 82 140 298 27 82 140 298 * 82 140 298
Advisor High
Yield Fund
- --------------------------------------------------------------------------------
Fidelity 30 92 157 330 30 92 157 330 * 92 157 330
Advisor
Balanced Fund
- - Class T
- --------------------------------------------------------------------------------
Fidelity 25 77 131 279 25 77 131 279 * 77 131 279
Asset
Manager(TM)
- --------------------------------------------------------------------------------
Fidelity 22 67 116 248 22 67 116 248 * 67 116 248
Equity-Income
Fund
- --------------------------------------------------------------------------------
Fidelity 25 77 131 279 25 77 131 279 * 77 131 279
Magellan Fund
- --------------------------------------------------------------------------------
Fidelity 23 70 120 258 23 70 120 258 * 70 120 258
Puritan Fund
- --------------------------------------------------------------------------------
Fidelity VIP 22 68 117 251 22 68 117 251 * 68 117 251
High Income
Portfolio
- --------------------------------------------------------------------------------
Franklin 26 79 136 288 26 79 136 288 * 79 136 288
Mutual Series
Fund, Inc. -
Mutual Shares
Fund: Class I
- --------------------------------------------------------------------------------
Janus Fund 24 75 128 273 24 75 128 273 * 75 128 273
- --------------------------------------------------------------------------------
Janus Twenty 25 78 133 284 25 78 133 284 * 78 133 284
Fund
- --------------------------------------------------------------------------------
Janus 28 85 145 307 28 85 145 307 * 85 145 307
Worldwide Fund
- --------------------------------------------------------------------------------
</TABLE>
127 of 135
<PAGE> 92
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MFS(R) World 32 97 164 344 32 97 164 344 * 97 164 344
Governments
Fund
- --------------------------------------------------------------------------------
Nationwide(R) 22 68 117 251 22 68 117 251 * 68 117 251
Bond Fund
- --------------------------------------------------------------------------------
Nationwide(R) 21 66 113 243 21 66 113 243 * 66 113 243
Fund
- --------------------------------------------------------------------------------
Nationwide(R) 22 67 114 246 22 67 114 246 * 67 114 246
Growth Fund
- --------------------------------------------------------------------------------
Nationwide(R) 21 65 112 242 21 65 112 242 * 65 112 242
Money Market
Fund
- --------------------------------------------------------------------------------
Nationwide(R) 26 80 137 290 26 80 137 290 * 80 137 290
U.S.
Government
Income Fund
- --------------------------------------------------------------------------------
Neuberger & 29 89 152 320 29 89 152 320 * 89 152 320
Berman Equity
Trust (R) -
Neuberger &
Berman
Genesis Trust
- --------------------------------------------------------------------------------
Neuberger & 24 73 125 266 24 73 125 266 * 73 125 266
Berman
Guardian
Fund, Inc.
- --------------------------------------------------------------------------------
Neuberger & 22 68 117 250 22 68 117 250 * 68 117 250
Berman
Limited
Maturity Bond
Fund
- --------------------------------------------------------------------------------
Neuberger & 24 73 126 268 24 73 126 268 * 73 126 268
Berman
Partners
Fund, Inc.
- --------------------------------------------------------------------------------
Oppenheimer 27 84 143 303 27 84 143 303 * 84 143 303
Global Fund
- --------------------------------------------------------------------------------
Phoenix 25 78 133 284 25 78 133 284 * 78 133 284
Balanced Fund
Series
- --------------------------------------------------------------------------------
Strong Total 27 82 140 297 27 82 140 297 * 82 140 297
Return Fund,
Inc.
- --------------------------------------------------------------------------------
Templeton 27 82 140 298 27 82 140 298 * 82 140 298
Foreign Fund
- - Class I
- --------------------------------------------------------------------------------
Warburg 28 86 146 309 28 86 146 309 * 86 146 309
Pincus
Emerging
Growth Fund
- --------------------------------------------------------------------------------
Warburg 25 76 129 276 25 76 129 276 * 76 129 276
Pincus Global
Fixed Income
Fund -
- --------------------------------------------------------------------------------
</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 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.
128 of 135
<PAGE> 93
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.
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.
129 of 135
<PAGE> 94
ACCOUNTANTS' CONSENT AND INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT
SCHEDULES
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of the Nationwide Variable Account:
The audits referred to in our report on Nationwide Life Insurance Company (the
Company) dated January 31, 1997 included the related financial statement
schedules as of December 31, 1996, and for each of the years in the three-year
period ended December 31, 1996, included in the registration statement. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits. In our opinion, such 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.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG Peat Marwick LLP
Columbus, Ohio
April 24, 1997
130 of 135
<PAGE> 95
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act
of 1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT certifies that it meets the
requirements of Rule 485(b) under the Securities Act of 1933 for effectiveness
of the Post-Effective Amendment and has caused this Post-Effective Amendment to
be signed on its behalf in the City of Columbus, and State of Ohio, on this 30th
day of December, 1997.
NATIONWIDE VARIABLE ACCOUNT
-------------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
-------------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
-------------------------------------------
Joseph P. Rath
Vice President - Product
and Market Compliance
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 30th day
of December, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <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 -
DIMON RICHARD MCFERSON Nationwide Insurance Enterprise and
- ----------------------------- Director
Dimon 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
ARDEN L. SHISLER Director Attorney-in-Fact
- -----------------------------
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>
131 of 135
<PAGE> 96
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, and NATIONWIDE
LIFE AND ANNUITY INSURANCE COMPANY, both Ohio corporations, which have filed or
will file with the U.S. Securities and Exchange Commission under the provisions
of the Securities Act of 1933, as amended, various Registration Statements and
amendments thereto for the registration under said Act of Individual Deferred
Variable Annuity Contracts in connection with 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, Nationwide Variable Account-8, Nationwide Variable
Account-9, Nationwide VA Separate Account-A, Nationwide VA Separate Account-B,
Nationwide VA Separate Account-C and Nationwide VA Separate Account-Q; 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 Nationwide Multiple Maturity Separate Account and
Nationwide Multiple Maturity Separate Account-A, and the registration of Group
Flexible Fund Retirement Contracts in connection with Nationwide DC Variable
Account, Nationwide DCVA-II, and 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 Nationwide VLI Separate Account, Nationwide VLI Separate
Account-2, Nationwide VLI Separate Account-3, Nationwide VLI Separate Account-4,
Nationwide VL Separate Account-A, Nationwide VL Separate Account-B, and
Nationwide VL Separate Account-C, and hereby constitutes and appoints Dimon R.
McFerson, Joseph J. Gasper, W. Sidney Druen, Mark R. Thresher, 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 U.S. Securities and Exchange Commission, hereby granting
unto said attorneys, and each of them, full power and authority to do and
perform all and every act and thing requisite to all intents and purposes as
he/she might or could do in person, hereby ratifying and confirming that which
said attorneys, or any of them, may lawfully do or cause to be done by virtue
hereof. This instrument may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this 22nd day of July, 1997.
<TABLE>
<CAPTION>
<S> <C>
/s/ Lewis J. Alphin /s/ David O. Miller
- ------------------------------------------------- --------------------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
/s/ Keith W. Eckel /s/ C. Ray Noecker
- ------------------------------------------------- -------------------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
/s/ Willard J. Engel /s/ Robert A. Oakley
- ------------------------------------------------- --------------------------------------------------
Willard J. Engel, Director Robert A. Oakley, Executive Vice President - Chief
Financial Officer
/s/ Fred C. Finney /s/ James F. Patterson
- ------------------------------------------------- --------------------------------------------------
Fred C. Finney, Director James F. Patterson, Director
/s/ Charles L. Fuellgraf /s/ Arden L. Shisler
- ------------------------------------------------- --------------------------------------------------
Charles L. Fuellgraf, Jr., Director Arden L. Shisler, Director
/s/ Joseph J. Gasper /s/ Robert L. Stewart
- ------------------------------------------------- --------------------------------------------------
Joseph J. Gasper, President and Chief Operating Officer Robert L. Stewart, Director
and Director
/s/ Henry S. Holloway /s/ Nancy C. Thomas
- ------------------------------------------------- --------------------------------------------------
Henry S. Holloway, Chairman of the Board, Director Nancy C. Thomas, Director
/s/ Dimon Richard McFerson /s/ Harold W. Weihl
- ------------------------------------------------- --------------------------------------------------
Dimon R. McFerson, Chairman and Chief Executive Harold W. Weihl, Director
Officer-Nationwide Insurance Enterprise and Director
</TABLE>
<PAGE> 1
Exhibit 5
<TABLE>
<S> <C> <C>
[LOGO] PLEASE MAKE CHECK PAYABLE TO: NATIONWIDE LIFE INSURANCE COMPANY
Send Variable Annuity Application and check to:
Individual Investment Products
P.O. Box 16609, Columbus, Ohio 43216-6609
ANNUITY APPLICATION 1-800-848-6331
- ------------------------------------------------------------------------------------------------------------------------------------
DESIGNATED ANNUITANT (Print Name) Sex [ ] M [ ] F
ADDRESS BIRTHDATE MO. DAY YEAR
-------------------------------------- ---------------------------
---------------------------------------------- ---------------------------
OCCUPATION
-----------------------------
SOC. SEC. NO. __ __ __ - __ __ - __ __ __ __ EMPLOYER
------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT OWNER NATIONWIDE ADVISORY SERVICES INC. AS CUSTODIAN FOR
-------------------------------------------------------------
ADDRESS (Name of Applicant)
-----------------------------------
------------------------------------------- Tax I.D. or Soc. Sec. No.
BIRTHDATE __ __ __ - __ __ - __ __ __ __
--------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY (Print Name) RELATIONSHIP
------------------------------------ ----------------------------------
CONTINGENT BENEFICIARY RELATIONSHIP
------------------------------------ ----------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUITY PURCHASE PAYMENTS: First Purchase Payment $___________________________ submitted herewith. A copy of this application
duly signed by the agent will constitute receipt for such amount. If this application is declined, there will be no liability on
the part of the Company, and any sums submitted with this application will be refunded.
The Contract Owner intends to make subsequent purchase payments in the amount of $___________on a
[ ] monthly [ ] quarterly [ ] semi-annual [ ] annual basis. Billing # _________________
- ------------------------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT ALLOCATION: (whole percentages only, must total 100%)
_______% AMCENT: BENHAM _______% FIDELITY ADVISOR GROWTH _______% NEUBERGER & BERMAN
SHORT-TERM GOVERNMENT OPPORTUNITIES FUND GUARDIAN FUND, INC.
_______% AMCENT: INCOME & GROWTH _______% FIDELITY ADVISOR _______% NEUBERGER & BERMAN
_______% AMCENT: TWENTIETH HIGH YIELD FUND LIMITED MATURITY
CENTURY GROWTH _______% FIDELITY ADVISOR BOND FUND, INC.
_______% AMCENT: TWENTIETH BALANCED FUND _______% NEUBERGER & BERMAN
CENTURY INT'L GROWTH _______% FIDELITY ASSET MANAGER PARTNERS FUND, INC.
_______% AMCENT: TWENTIETH _______% FIDELITY EQUITY-INCOME _______% OPPENHEIMER GLOBAL
CENTURY ULTRA FUND FUND
_______% DELCHESTER FUND _______% FIDELITY MAGELLAN(R)FUND _______% PHOENIX BALANCED
_______% DREYFUS A BONDS PLUS _______% FIDELITY PURITAN FUND FUND SERIES
_______% DREYFUS APPRECIATION _______% FRANKLIN MUTUAL SERIES _______% STRONG TOTAL
FUND, INC SHARES FUND CLASS 1 RETURN FUND, INC.
_______% DREYFUS BALANCED FUND INC _______% JANUS FUND _______% TEMPLETON FOREIGN
_______% DREYFUS S & P 500 _______% JANUS TWENTY FUND FUND
INDEX FUND _______% JANUS WORLDWIDE FUND _______% WARBURG PINCUS
_______% DREYFUS THIRD _______% MFS(R) WORLD GLOBAL FIXED INCOME
CENTURY FUND GOVERNMENTS FUND FUND
_______% EVERGREEN INCOME _______% NATIONWIDE(R) BOND FUND _______% WARBURG PINCUS
AND GROWTH FUND _______% NATIONWIDE(R) FUND EMERGING GROWTH
_______% FEDERATED BOND FUND _______% NATIONWIDE(R) GROWTH FUND FUND
_______% FEDERATED HIGH YIELD _______% NATIONWIDE(R) MONEY
TRUST MARKET FUND
_______% FIDELITY ADVISOR _______% NATIONWIDE(R) U.S. GOVERNMENT _______% FIXED ACCOUNT
EQUITY-INCOME FUND INCOME FUND
_______% NEUBERGER & BERMAN
GENESIS TRUST
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUITY COMMENCEMENT DATE: OPTIONAL ANNUITY FORM ELECTED:
The First Day of Unless otherwise indicated, I hereby elect the Life Annuity
-------------------------------------- Option.
- ---------------------------------------------------------
CHECK CONTRACT TYPE: [ ] Life Annuity [ ] 120 or [ ] 240 Monthly Payments and
life. [ ] Joint and Last Survivor Annuity.
Second Person
[ ] IRA [ ] SEP IRA [ ] SIMPLE-IRA ---------------------------------------------
[ ] 401(a) [ ] 401(k) ------------------------
MO DAY YR. Relationship
Year for which contribution applied Birthdate ------------------------
-------------------
- --------------------------------------------------------- ------------------------ ---------------------
----------------------------------------------------------------
REMARKS:
Will the annuity applied for replace existing annuity or life
insurance? [ ] Yes [ ] No. If yes, explain:
- ------------------------------------------------------------------------------------------------------------------------------------
I hereby represent my answers to the above questions to be correct and true to the best of my knowledge and belief and agree that
this application shall be a part of any annuity contract issued by the Company.
I UNDERSTAND THAT ANNUITY PAYMENTS AND SURRENDER VALUES, WHEN BASED UPON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE
AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT. RECEIPT OF A CURRENT VARIABLE ANNUITY PROSPECTUS IS HEREBY ACKNOWLEDGED.
[ ] Please send me a copy of the Statement of Additional Information to the prospectus.
SIGNED AT ____________________________________________________________ ON ________________________________
(Date)
APPLICANT _________________________________________________________ WITNESS _____________________________
(Signature of Applicant) (Print Agent Name and No.)
AGENT'S PHONE # ___________________________________________________ _____________________________________
(Signature of Agent)
AGENT: Do you have reason to believe the Contract applied for is to replace existing annuities
or insurance owned by the annuitant? [ ] Yes [ ] No
General Agent ______________________________________________ Branch Office Location _______________________
City ______________________________________ State ______________ Zip _____________ Telephone ____________
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
[LOGO] PLEASE MAKE CHECK PAYABLE TO: NATIONWIDE LIFE INSURANCE COMPANY
Send Variable Annuity Application and check to:
Individual Investment Products
P.O. Box 16609, Columbus, Ohio 43216-6609
ANNUITY APPLICATION 1-800-848-6331
- ------------------------------------------------------------------------------------------------------------------------------------
DESIGNATED ANNUITANT (Print Name) Sex [ ] M [ ] F
ADDRESS BIRTHDATE MO. DAY YEAR
-------------------------------------- ---------------------------
---------------------------------------------- ---------------------------
OCCUPATION
-----------------------------
SOC. SEC. NO. __ __ __ - __ __ - __ __ __ __ EMPLOYER
------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT OWNER NATIONWIDE ADVISORY SERVICES INC. AS CUSTODIAN FOR
-------------------------------------------------------------
ADDRESS (Name of Applicant)
-----------------------------------
------------------------------------------- Tax I.D. or Soc. Sec. No.
BIRTHDATE __ __ __ - __ __ - __ __ __ __
--------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY (Print Name) RELATIONSHIP
------------------------------------ ----------------------------------
CONTINGENT BENEFICIARY RELATIONSHIP
------------------------------------ ----------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUITY PURCHASE PAYMENTS: First Purchase Payment $___________________________ submitted herewith. A copy of this application
duly signed by the agent will constitute receipt for such amount. If this application is declined, there will be no liability on
the part of the Company, and any sums submitted with this application will be refunded.
The Contract Owner intends to make subsequent purchase payments in the amount of $___________on a
[ ] monthly [ ] quarterly [ ] semi-annual [ ] annual basis. Billing # _________________
- ------------------------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT ALLOCATION: (whole percentages only, must total 100%)
_______% AMCENT: BENHAM _______% FIDELITY ADVISOR GROWTH _______% NEUBERGER & BERMAN
SHORT-TERM GOVERNMENT OPPORTUNITIES FUND GUARDIAN FUND, INC.
_______% AMCENT: INCOME & GROWTH _______% FIDELITY ADVISOR _______% NEUBERGER & BERMAN
_______% AMCENT: TWENTIETH HIGH YIELD FUND LIMITED MATURITY
CENTURY GROWTH _______% FIDELITY ADVISOR BOND FUND, INC.
_______% AMCENT: TWENTIETH BALANCED FUND _______% NEUBERGER & BERMAN
CENTURY INT'L GROWTH _______% FIDELITY ASSET MANAGER PARTNERS FUND, INC.
_______% AMCENT: TWENTIETH _______% FIDELITY EQUITY-INCOME _______% OPPENHEIMER GLOBAL
CENTURY ULTRA FUND FUND
_______% DELCHESTER FUND _______% FIDELITY MAGELLAN(R)FUND _______% PHOENIX BALANCED
_______% DREYFUS A BONDS PLUS _______% FIDELITY PURITAN FUND FUND SERIES
_______% DREYFUS APPRECIATION _______% FRANKLIN MUTUAL SERIES _______% STRONG TOTAL
FUND, INC SHARES FUND CLASS 1 RETURN FUND, INC.
_______% DREYFUS BALANCED FUND INC _______% JANUS FUND _______% TEMPLETON FOREIGN
_______% DREYFUS S & P 500 _______% JANUS TWENTY FUND FUND
INDEX FUND _______% JANUS WORLDWIDE FUND _______% WARBURG PINCUS
_______% DREYFUS THIRD _______% MFS(R) WORLD GLOBAL FIXED INCOME
CENTURY FUND GOVERNMENTS FUND FUND
_______% EVERGREEN INCOME _______% NATIONWIDE(R) BOND FUND _______% WARBURG PINCUS
AND GROWTH FUND _______% NATIONWIDE(R) FUND EMERGING GROWTH
_______% FEDERATED BOND FUND _______% NATIONWIDE(R) GROWTH FUND FUND
_______% FEDERATED HIGH YIELD _______% NATIONWIDE(R) MONEY
TRUST MARKET FUND
_______% FIDELITY ADVISOR _______% NATIONWIDE(R) U.S. GOVERNMENT _______% FIXED ACCOUNT
EQUITY-INCOME FUND INCOME FUND
_______% NEUBERGER & BERMAN
GENESIS TRUST
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUITY COMMENCEMENT DATE: OPTIONAL ANNUITY FORM ELECTED:
The First Day of Unless otherwise indicated, I hereby elect the Life Annuity
-------------------------------------- Option.
- ---------------------------------------------------------
CHECK CONTRACT TYPE: [ ] Life Annuity [ ] 120 or [ ] 240 Monthly Payments and
life. [ ] Joint and Last Survivor Annuity.
Second Person
[ ] IRA [ ] SEP IRA [ ] SIMPLE-IRA ---------------------------------------------
[ ] 401(a) [ ] 401(k) ------------------------
MO DAY YR. Relationship
Year for which contribution applied Birthdate ------------------------
-------------------
- --------------------------------------------------------- ------------------------ ---------------------
----------------------------------------------------------------
REMARKS:
Will the annuity applied for replace existing annuity or life
insurance? [ ] Yes [ ] No. If yes, explain:
- ------------------------------------------------------------------------------------------------------------------------------------
I hereby represent my answers to the above questions to be correct and true to the best of my knowledge and belief and agree that
this application shall be a part of any annuity contract issued by the Company.
I UNDERSTAND THAT ANNUITY PAYMENTS AND SURRENDER VALUES, WHEN BASED UPON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE
AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT. RECEIPT OF A CURRENT VARIABLE ANNUITY PROSPECTUS IS HEREBY ACKNOWLEDGED.
[ ] Please send me a copy of the Statement of Additional Information to the prospectus.
SIGNED AT ____________________________________________________________ ON ________________________________
(Date)
APPLICANT _________________________________________________________ WITNESS _____________________________
(Signature of Applicant) (Print Agent Name and No.)
AGENT'S PHONE # ___________________________________________________ _____________________________________
(Signature of Agent)
AGENT: Do you have reason to believe the Contract applied for is to replace existing annuities
or insurance owned by the annuitant? [ ] Yes [ ] No
General Agent ______________________________________________ Branch Office Location _______________________
City ______________________________________ State ______________ Zip _____________ Telephone ____________
</TABLE>
