<PAGE> 1
NATIONWIDE LIFE INSURANCE COMPANY
Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its
Nationwide Variable Account
The date of this prospectus is May 1, 2000.
- --------------------------------------------------------------------------------
Variable annuities are complex investment products with unique benefits and
advantages that may be particularly useful to many investors in meeting
long-term savings and retirement needs. There are, however, costs and charges
associated with some of these unique benefits - costs and charges that do not
exist or are not present with other investment products. With help from
financial consultants or advisers, investors are encouraged to compare and
contrast the costs and benefits of the variable annuity described in this
prospectus with those of other investment products, including other variable
annuity or variable life insurance products offered by Nationwide Life Insurance
Company and its affiliates. This process will aid in determining whether the
purchase of the contract described in this prospectus is consistent with an
individual's goals, risk tolerance, time horizon, marital status, tax situation,
and other personal characteristics and needs.
THIS PROSPECTUS CONTAINS BASIC INFORMATION YOU SHOULD KNOW ABOUT THE CONTRACTS
BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE.
- --------------------------------------------------------------------------------
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE UNDER THE CONTRACTS:
FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993:
o American Century: Short Term Government (formerly American Century:
Benham Short-Term Government)
o American Century: Income & Growth
o American Century: Growth (formerly American Century: Twentieth Century
Growth)
o American Century: International Growth (formerly American Century:
Twentieth Century International Growth)
o American Century: Ultra (formerly American Century: Twentieth Century
Ultra)
o Delchester Fund-Institutional Class
o Dreyfus A Bonds Plus, Inc.
o Dreyfus Appreciation Fund, Inc.
o Dreyfus Balanced Fund, Inc.
o Dreyfus S&P 500 Index Fund
o Dreyfus Premier Third Century Fund, Inc. - Class Z (formerly, Dreyfus
Third Century Fund, Inc.)
o Evergreen Income and Growth Fund
o Federated Bond Fund - Class F
o Federated High Yield Trust*
o Fidelity Advisor Balanced Fund - Class T
o Fidelity Advisor Equity Income Fund - Class T
o Fidelity Advisor Growth Opportunities Fund - Class T
o Fidelity Advisor High Yield Fund - Class T
o Fidelity Asset Manager(TM)
o Fidelity Equity-Income Fund
o Fidelity Magellan(R)Fund
o Fidelity Puritan Fund
o Fidelity VIP High Income Portfolio* (additional purchase payments or
exchanges may not be made to this Fund on or after December 1, 1993).
o Franklin Mutual Series Fund, Inc. - Mutual Shares Fund: Class A
o INVESCO Dynamics Fund
o Janus Fund
o Janus Twenty Fund
o Janus Worldwide Fund
o Lazard Small Cap Portfolio - Open Shares
o MFS(R)Global Governments Fund - Class A (formerly MFS(R)World
Governments Fund)
o Nationwide(R)Bond Fund - Class D
o Nationwide(R)Fund - Class D
o Nationwide(R)Growth Fund - Class D
1
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o Nationwide(R)Money Market Fund - Prime Shares
o Nationwide S&P 500(R)Index Fund - Service Class (sub-adviser: The
Dreyfus Corporation)
o Nationwide(R)Intermediate U.S. Government Bond Fund - Class D
o Neuberger Berman Guardian Fund, Inc.
o Neuberger Berman Limited Maturity Bond Fund
o Neuberger Berman Partners Fund, Inc.
o Oppenheimer Global Fund/VA
o Phoenix Balanced Fund Series
o Prestige Balanced Fund - Class A
o Prestige International Fund - Class A
o Prestige Large Cap Growth Fund - Class A
o Prestige Large Cap Value Fund - Class A
o Prestige Small Cap Fund - Class A
o Strong Common Stock Fund, Inc.
o Strong Total Return Fund, Inc.
o Templeton Foreign Fund - Class A
o Warburg Pincus Emerging Growth Fund
o Warburg Pincus Global Fixed Income Fund
*These securities may invest in lower quality debt securities commonly referred
to as junk bonds.
FOR PLANS ESTABLISHED PRIOR TO MARCH 6, 1998
o Neuberger Berman Equity Trust(R) - Neuberger Berman Genesis Trust
FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993
o American Century: Short Term Government (formerly American Century:
Benham Short-Term Government)
o American Century: Growth (formerly American Century: Twentieth Century
Growth)
o Fidelity Capital & Income Fund(1)
o Fidelity Equity - Income Fund
o Fidelity VIP High Income Portfolio(2)
o MFS(R)Global Governments Fund - Class A (formerly MFS(R) World
Governments Fund)
o Nationwide(R)Money Market Fund - Prime Shares
(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.
Purchase payments not invested in the underlying mutual fund options of the
Nationwide Variable Account may be allocated to the fixed account.
The Statement of Additional Information (dated May 1, 2000) which contains
additional information about the contracts and the variable account, has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. The table of contents for the Statement of Additional
Information is on page 48.
For general information or to obtain FREE copies of the:
o Statement of Additional Information;
o prospectus, annual report or semi-annual report for any underlying
mutual fund; and
o required Nationwide forms,
call: 1-800-848-6331
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 16609
COLUMBUS, OHIO 43216-6609
The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
WWW.SEC.GOV
THIS ANNUITY IS NOT:
o A BANK DEPOSIT o FEDERALLY INSURED
o ENDORSED BY A BANK o AVAILABLE IN
OR GOVERNMENT AGENCY EVERY STATE
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
2
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
<PAGE> 4
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the contract
value allocated to the variable account before the annuitization date.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit used to calculate the variable payment annuity
payments.
CONTRACT VALUE- The total of all accumulation units in a contract and any amount
held in the fixed account.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- An investment option that is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
INDIVIDUAL RETIREMENT ACCOUNT- An account that qualifies for favorable tax
treatment under Section 408(a) of the Internal Revenue Code, but does not
include Roth IRAs.
INDIVIDUAL RETIREMENT ANNUITY- An annuity contract that qualifies for favorable
tax treatment under Section 408(b) of the Internal Revenue Code, but does not
include Roth IRAs or Simple IRAs.
NATIONWIDE- Nationwide Life Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA,
Simple IRA, or Tax Sheltered Annuity.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Internal Revenue Code.
ROTH IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408A of the Internal Revenue Code.
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 Internal
Revenue 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
Internal Revenue 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.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units and annuity units are
separately maintained.
TAX SHELTERED ANNUITY- An annuity that qualifies for favorable tax treatment
under Section 403(b) of the Internal Revenue Code.
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.
4
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VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- Nationwide Variable Account, a separate account of Nationwide
that contains variable account allocations. The variable account is divided into
sub-accounts, each of which invests in shares of a separate underlying mutual
fund.
5
<PAGE> 6
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.....................................................4
SUMMARY OF STANDARD CONTRACT
EXPENSES (FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)..............8
UNDERLYING MUTUAL FUND ANNUAL
EXPENSES (FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)..............9
EXAMPLE (FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)...................11
SUMMARY OF STANDARD CONTRACT
EXPENSES (FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)................14
UNDERLYING MUTUAL FUND ANNUAL
EXPENSES (FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)................15
EXAMPLE (FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)......................16
SYNOPSIS OF THE CONTRACTS....................................................17
FINANCIAL STATEMENTS.........................................................17
CONDENSED FINANCIAL INFORMATION..............................................18
NATIONWIDE LIFE INSURANCE COMPANY............................................18
NATIONWIDE INVESTMENT SERVICES CORPORATION...................................18
TYPES OF CONTRACTS...........................................................18
Individual Retirement Accounts
Simplified Employee Pension IRAs
SIMPLE IRAs
Roth IRAs
Qualified Contracts
INVESTING IN THE CONTRACT....................................................19
The Variable Account and Underlying Mutual Funds
Guaranteed Term Options
The Fixed Account
CHARGES AND DEDUCTIONS.......................................................21
Mortality and Expense Risk Charge
Contingent Deferred Sales Charge
Elimination of CDSC
Contract Maintenance Charge
Administration Charge
Premium Taxes
CONTRACT OWNERSHIP...........................................................24
Annuitant
Beneficiary and Contingent Beneficiary
OPERATION OF THE CONTRACT....................................................25
Pricing
Allocation of Purchase Payments
Determining the Contract Value
Transfers
RIGHT TO REVOKE..............................................................28
SURRENDER (REDEMPTION).......................................................28
Surrenders Under a Qualified Plan
LOAN PRIVILEGE...............................................................28
Minimum and Maximum Loan Amounts
Loan Processing Fee
How Loan Requests are Processed
Interest
Loan Repayment
Distributions and Annuity Payments
Transferring the Contract
Grace Period and Loan Default
CONTRACT OWNER SERVICES......................................................30
Asset Rebalancing
Dollar Cost Averaging
Systematic Withdrawals
ANNUITY COMMENCEMENT DATE....................................................31
ANNUITIZING THE CONTRACT.....................................................31
Annuitization Date
Annuitization
Fixed Payment Annuity
Variable Payment Annuity
Assumed Investment Rate
Value of an Annuity Unit
Exchanges Among Underlying Mutual Funds
Frequency and Amount of Annuity Payments
Annuity Payment Options
DEATH BENEFITS...............................................................33
Death of Contract Owner
Death of Annuitant
Death of Contract Owner/Annuitant
How the Death Benefit Value is Determined
Death Benefit Payment
REQUIRED DISTRIBUTIONS.......................................................34
Required Distributions for Qualified Plans
6
<PAGE> 7
Required Distributions for Individual Retirement Accounts
Required Distributions for Roth IRAs
FEDERAL TAX CONSIDERATIONS...................................................36
Federal Income Taxes
Withholding
Non-Resident Aliens
Federal Estate, Gift, and Generation Skipping Transfer Taxes
Tax Changes
STATEMENTS AND REPORTS.......................................................39
LEGAL PROCEEDINGS............................................................39
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY..............................40
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.....................46
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS...........................47
APPENDIX B: CONDENSED FINANCIAL INFORMATION..................................56
7
<PAGE> 8
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
The expenses listed below are charged to all contracts issued on or after
January 1, 1993, unless the contract owner meets an available exception.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
purchase payments surrendered)..................7%(1)
Range of CDSC over time:
<TABLE>
<CAPTION>
- -------------------------------- ------------------------
NUMBER OF COMPLETED YEARS FROM CDSC
DATE OF PURCHASE PAYMENT PERCENTAGE
- -------------------------------- ------------------------
<S> <C>
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
- -------------------------------- ------------------------
</TABLE>
(1)Starting with the second year after a purchase payment has been made, 10% of
that purchase payment may be withdrawn without imposition of a CDSC. The CDSC is
waived:
(a) for first year withdrawals of up to 10% of purchase payments for
Individual Retirement Account rollover contracts; or
(b) for any amount withdrawn from this contract required to meet minimum
distribution requirements under the Internal Revenue Code.
This free withdrawal privilege is non-cumulative. Free amounts not taken during
any given contract year cannot be taken as free amounts in a subsequent contract
year (see "Contingent Deferred Sales Charge").
Withdrawals may be restricted for contracts issued pursuant to the terms of a
Qualified Plan.
MAXIMUM ANNUAL CONTRACT
MAINTENANCE CHARGE.............................$30(2)
VARIABLE ACCOUNT CHARGES(3)
(as a percentage of average account value)
Mortality and Expense Risk Charge.............1.25%
Administration Charge.........................0.05%
Total Variable Account Charges...........1.30%
(2)The Contract Maintenance Charge is deducted annually from all contracts on
each contract anniversary.
(3)These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account. They are charged on a daily basis at the
annual rate noted above.
8
<PAGE> 9
<TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Short Term Government (formerly Benham 0.59% 0.00% 0.00% 0.59%
Short-Term Government)
- ----------------------------------------------------------------------------------------------------------------------
American Century: Income & Growth 0.68% 0.00% 0.00% 0.68%
- ----------------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth Century Growth) 1.00% 0.00% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
American Century: International Growth (formerly Twentieth 1.27% 0.00% 0.00% 1.27%
Century International Growth)
- ----------------------------------------------------------------------------------------------------------------------
American Century: Ultra (formerly Twentieth Century Ultra) 1.00% 0.00% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
Delchester Fund-Institutional Class 0.65% 0.05% 0.00% 0.70%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 0.65% 0.31% 0.00% 0.96%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 0.28% 0.36% 0.25% 0.89%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. 0.60% 0.15% 0.22% 0.97%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus S&P 500 Index Fund (formerly Peoples Index Fund(R), 0.25% 0.25% 0.00% 0.50%
Inc.)
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century Fund, Inc. - Class Z 0.75% 0.22% 0.00% 0.97%
(formerly Dreyfus Third Century Fund, Inc.)
- ----------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 0.97% 0.28% 0.00% 1.25%
- ----------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 0.65% 0.45% 0.00% 1.09%
- ----------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 0.54% 0.34% 0.00% 0.88%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund - Class T 0.43% 0.23% 0.50% 1.14%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund - Class T 0.48% 0.23% 0.50% 1.18%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - Class T 0.43% 0.19% 0.50% 1.11%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T 0.58% 0.21% 0.25% 1.04%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager 0.53% 0.22% 0.00% 0.75%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.47% 0.20% 0.00% 0.67%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 0.43% 0.19% 0.00% 0.62%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 0.44% 0.20% 0.00% 0.64%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.58% 0.11% 0.00% 0.69%
- ----------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund Inc. - Mutual Shares Fund: 0.56% 0.21% 0.35% 1.12%
Class A
- ----------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 0.52% 0.27% 0.25% 1.04%
- ----------------------------------------------------------------------------------------------------------------------
Janus Fund 0.65% 0.20% 0.00% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 0.65% 0.23% 0.00% 0.88%
- ----------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 0.65% 0.24% 0.00% 0.89%
- ----------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - Open Shares 0.75% 0.09% 0.25% 1.09%
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Global Governments Fund - Class A (formerly MFS(R) World 0.75% 0.00% 0.23% 1.98%
Governments Fund)
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - Class D 0.50% 0.33% 0.00% 0.83%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - Class D 0.56% 0.17% 0.00% 0.73%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - Class D 0.58% 0.22% 0.00% 0.80%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market - Prime Shares 0.40% 0.21% 0.00% 0.61%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate U.S. Government Bond Fund - Class D 0.50% 0.29% 0.00% 0.79%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund - Service Class 0.13% 0.35% 0.15% 0.63%
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R) - Neuberger Berman Genesis 1.12% 0.11% 0.00% 1.23%
Trust
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. 0.70% 0.12% 0.00% 0.82%
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund 0.52% 0.18% 0.00% 0.70%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Neuberger Berman Partners Fund, Inc. 0.71% 0.11% 0.00% 0.82%
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA: Class A 0.69% 0.26% 0.21% 1.16%
- ----------------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series 0.53% 0.19% 0.25% 0.97%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A 0.75% 0.10% 0.25% 1.10%
- ----------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 0.85% 0.20% 0.25% 1.30%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Class A 0.80% 0.15% 0.25% 1.20%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A 0.75% 0.15% 0.25% 1.15%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Class A 0.95% 0.15% 0.25% 1.35%
- ----------------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 1.00% 0.17% 0.00% 1.17%
- ----------------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 0.80% 0.14% 0.00% 0.94%
- ----------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund- Class A 0.46% 0.23% 0.25% 0.94%
- ----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 0.90% 0.33% 0.00% 1.23%
- ----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund 0.43% 0.52% 0.00% 0.95%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delchester Fund - Institutional Class 0.65% 0.49% 0.00% 1.14%
- ----------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 0.75% 0.47% 0.00% 1.22%
- ----------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 0.75% 0.40% 0.00% 1.15%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund - Class T 0.43% 0.23% 0.50% 1.16%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities - Class T 0.46% 0.43% 0.25% 1.14%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager 0.42% 0.18% 0.00% 0.60%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Magellan 0.42% 0.18% 0.00% 0.60%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Puritan 0.44% 0.21% 0.00% 0.65%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund - Service Class 0.13% 0.66% 0.24% 1.03%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide Intermediate U.S. Government Bond Fund - 0.50% 0.78% 0.00% 0.78%
Class D
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund 0.54% 0.18% 0.00% 0.72%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A 0.75% 2.44% 0.25% 3.44%
- ----------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 0.85% 1.77% 0.25% 2.87%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Inc. - Class A 0.80% 0.64% 0.25% 1.69%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A 0.75% 0.87% 0.25% 1.87%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Class A 0.95% 1.04% 0.25% 2.24%
- ----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund 1.00% 0.53% 0.00% 1.53%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
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EXAMPLE
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
The following chart shows the expenses (in dollars) that would be incurred under
this contract assuming a $1,000 investment, 5% annual return, and no change in
expenses. These dollar figures are illustrative only and should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the standard 7 year CDSC schedule and the
maximum amount of variable account charges that could be assessed to a contract
(1.30%). The contract maintenance charge is expressed as a percentage of the
average contract account size for existing contracts. Since the average contract
account size is greater than $1,000, the expense effect of the contract
maintenance charge is reduced accordingly. Deductions for premium taxes are not
reflected but may apply.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER YOUR IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------------
1 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 Century: Short Term 91 109 137 237 21 64 110 237 * 64 110 237
Government (formerly Benham
Short-Term Government)
- ---------------------------------------------------------------------------------------------------------------------
American Century: Income & 92 112 142 247 22 67 115 247 * 67 115 247
Growth
- ---------------------------------------------------------------------------------------------------------------------
American Century: Growth 95 122 159 281 25 77 132 281 * 77 132 281
(formerly Twentieth Century
Growth)
- ---------------------------------------------------------------------------------------------------------------------
American Century: International 98 131 173 309 28 86 146 309 * 86 146 309
Growth (formerly Twentieth
Century International Growth)
- ---------------------------------------------------------------------------------------------------------------------
American Century: Ultra 95 122 159 281 25 77 132 281 * 77 132 281
(formerly Twentieth Century
Ultra)
- ---------------------------------------------------------------------------------------------------------------------
Delchester Fund-Inst'l 92 113 143 249 22 68 116 249 * 68 116 249
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus 95 121 156 276 25 76 129 276 * 76 129 276
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 94 119 153 270 24 74 126 270 * 74 126 270
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. 94 120 155 273 24 75 128 273 * 75 128 273
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus S&P 500 Index Fund 90 106 132 228 20 61 105 228 * 61 105 228
(Formerly Peoples Index Fund,
Inc.)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century 95 121 157 278 25 76 130 278 * 76 130 278
Fund, Inc. - Class Z (formerly,
Dreyfus Third Century Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 98 130 172 307 28 85 145 307 * 85 145 307
- ---------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 96 125 164 290 26 80 137 290 * 80 137 290
- ---------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 94 118 153 268 24 73 126 268 * 73 126 268
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund 97 129 170 304 27 84 143 304 * 84 143 604
- - Class T
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Fund Equity 98 130 172 307 28 85 145 607 * 85 145 307
Income Fund -
Class T
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
<TABLE>
EXAMPLE (CONTINUED)
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER YOUR IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------------
1 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>
Fidelity Advisor Fund Growth 94 120 155 274 24 75 128 274 * 75 128 274
Opportunities Fund - Class T
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 96 124 163 288 26 79 136 288 * 79 136 288
Fund - Class T
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 91 109 137 237 21 64 110 237 * 64 110 237
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 92 112 141 246 22 67 114 246 * 67 114 246
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Magellan Fund 91 109 137 237 21 64 110 237 * 64 110 237
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 91 110 139 242 21 65 112 242 * 65 112 242
- ---------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income 92 112 143 248 22 67 116 248 * 67 116 248
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund 96 125 164 291 26 80 137 291 * 80 137 291
Inc.- Mutual Shares Fund: Class
A
- ---------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 96 125 163 289 26 80 136 289 * 80 136 289
- ---------------------------------------------------------------------------------------------------------------------
Janus Fund 93 117 150 264 23 72 123 264 * 72 123 264
- ---------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 94 118 152 266 24 73 125 266 * 73 125 266
- ---------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 94 119 153 270 24 74 126 270 * 74 126 270
- ---------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - 96 125 164 290 26 80 137 290 80 137 290
Open Shares
- ---------------------------------------------------------------------------------------------------------------------
MFS(R) Global Governments Fund - 99 133 177 317 29 88 150 317 * 88 150 317
Class A (formerly MFS(R) World
Governments Fund)
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - Class D 93 116 148 260 23 71 121 260 * 71 121 260
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - Class D 92 112 143 248 22 67 116 248 * 67 116 248
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - Class 93 115 147 257 23 70 120 257 * 70 120 257
D
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund - 91 109 137 236 21 64 110 236 * 64 110 236
Prime Shares
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate U.S. 93 115 147 257 23 70 120 257 * 70 120 257
Government Bond Fund - Class D
- ---------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund 91 110 138 239 21 65 111 239 * 65 111 239
- - Service Class
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R) 98 129 171 305 28 84 144 305 * 84 144 305
- - Neuberger Berman Genesis Trust
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, 93 116 149 262 23 71 122 262 * 71 122 262
Inc.
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited 92 113 143 249 22 68 116 249 * 68 116 249
Maturity Bond Fund
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Fund, 93 116 149 262 23 71 122 262 * 71 122 262
Inc.
- ---------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA 97 127 166 295 27 82 139 295 * 82 139 295
- ---------------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series 95 121 157 278 25 76 130 278 * 16 130 278
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
<TABLE>
EXAMPLE (CONTINUED)
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER YOUR IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------------
1 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>
Prestige Balanced Fund - Class A 96 125 164 291 26 80 137 291 * 80 137 291
- ---------------------------------------------------------------------------------------------------------------------
Prestige International Fund - 98 132 175 312 28 87 148 312 * 87 148 312
Class A
- ---------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund 97 128 169 302 27 83 142 302 * 83 142 302
- - Class A
- ---------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - 97 127 167 297 27 82 140 297 * 82 140 297
Class A
- ---------------------------------------------------------------------------------------------------------------------
Prestige Small Cap - Fund 99 133 177 317 29 88 150 317 * 88 150 317
Class A
- ---------------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 97 128 168 299 27 83 141 299 * 83 141 299
- ---------------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 94 120 156 275 24 75 129 275 * 75 129 275
- ---------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 96 126 165 293 26 81 138 293 * 81 138 293
- ---------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth 97 129 170 304 27 84 143 304 * 84 143 304
Fund
- ---------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed 95 121 156 276 25 76 129 276 * 76 129 276
Income Fund
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
13
<PAGE> 14
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
The expenses listed below are charged to all contracts issued prior to January
1, 1993, unless the contract owner meets an available exception.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
purchase payments surrendered)..................5%(1)
(1)After the first year from the date of any purchase payment, the contract
owner may withdraw 5% of that purchase payment without imposition of a CDSC.
MAXIMUM ANNUAL CONTRACT MAINTENANCE CHARGE.....$30(2)
VARIABLE ACCOUNT CHARGES(3)
(as a percentage of average account value)
Mortality and Expense Risk Charges............1.30%
Total Variable Account Charges...........1.30%
(2)The contract maintenance charge is deducted annually from all contracts on
each contract anniversary.
(3)These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account. They are charged on a daily basis at
the annual rate noted above.
14
<PAGE> 15
<TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Total Mutual
Management Other Fund
Fees Expenses 12b-1 Fees Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Short Term Government (formerly 0.59% 0.00% 0.00% 0.59%
Benham Short-Term Government)
- ----------------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth Century 1.00% 0.00% 0.00% 1.00%
Growth)
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 0.58% 0.24% 0.00% 0.82%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.58% 0.11% 0.00% 0.69%
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Global Governments Fund - Class A (formerly, MFS(R) 0.75% 0.00% 0.23% 0.98%
World Governments Fund)
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - Class D 0.50% 0.33% 0.00% 0.83%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - Class D 0.56% 0.17% 0.00% 0.73%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - Class D 0.58% 0.22% 0.00% 0.80%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market - Prime Shares 0.40% 0.21% 0.00% 0.61%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
15
<PAGE> 16
EXAMPLE
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
The following chart shows the expenses (in dollars) that would be incurred under
this contract assuming a $1,000 investment, 5% annual return, and no change in
expenses. These dollar figures are illustrative only and should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the standard 7 year CDSC schedule and the
maximum amount of variable account charges that could be assessed to a contract
(1.30%). The contract maintenance charge is expressed as a percentage of the
average contract account size for existing contracts. Since the average contract
account size is greater than $1,000, the expense effect of the contract
maintenance charge is reduced accordingly. Deductions for premium taxes are not
reflected but may apply.
The summary of contract expenses and example are to help contract owners
understand the expenses associated with the contract.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------
1 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 Century: 75 125 179 281 25 77 132 281 * 77 132 281
Growth (formerly
Twentieth Century
Growth)
- ---------------------------------------------------------------------------------------------------------------
American Century: 71 112 158 237 21 64 110 237 * 64 110 237
Short Term Government
(formerly Benham
Short-Term Government)
- ---------------------------------------------------------------------------------------------------------------
Fidelity Capital & 71 111 157 236 21 64 110 236 * 64 110 236
Income Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity VIP High 71 111 157 236 21 64 110 236 * 64 110 236
Income Portfolio
- ---------------------------------------------------------------------------------------------------------------
MFS(R) Global 72 117 166 255 22 69 119 255 * 69 119 255
Governments Fund -
Class A (formerly,
MFS(R) World Government
Fund)
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 69 106 148 217 19 58 100 27 * 58 100 217
Market Fund - Prime
Shares
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund 70 109 153 228 20 61 105 228 * 61 105 228
- - Class D
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - 70 111 156 234 20 63 109 234 * 63 109 234
Class D
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 71 111 157 236 21 64 110 236 * 64 110 236
Fund - Class D
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
16
<PAGE> 17
SYNOPSIS OF THE CONTRACTS
The contracts described in this prospectus are deferred variable annuity
contracts. Contracts issued prior to January 1, 1993 were issued to the trustees
of Qualified Plans as Qualified Contracts. Currently (and at all times after
January 1, 1993), the contracts are issued to custodians of Individual
Retirement Accounts for the benefit of Individual Retirement Account holders.
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 for the benefit of Individual Retirement Account holders.
Such account holders will be the annuitant under these contracts. Annuity
payments under the contracts are deferred until a selected later date.
For more detailed information with regard to the differences in contract types,
please see "Types of Contracts" later in the prospectus.
CHARGES AND EXPENSES
Nationwide deducts a mortality risk charge equal to an annual rate of 0.80% of
the daily net assets of the variable account for mortality risk assumed by
Nationwide (see "Mortality Risk Charge").
Nationwide 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 assets of
the variable account as compensation for Nationwide's risk in undertaking not to
increase administrative charges on the contracts regardless of the actual
administrative costs (see "Expense Risk Charge").
Nationwide does not deduct a sales charge from purchase payments made for these
contracts. However, if any part of the contract value is surrendered, Nationwide
will, with certain exceptions, deduct a CDSC not to exceed 7% of purchase
payments surrendered. For contracts issued before January 1, 1993, Nationwide
will deduct a CDSC not to exceed 5% of purchase payments surrendered. This
charge, when applicable, is imposed to permit Nationwide to recover sales
expenses which have been advanced by Nationwide (see "Contingent Deferred Sales
Charge").
On each contract anniversary, Nationwide will deduct a contract maintenance
charge of $30 from the contract value.
For contracts issued on or after January 1, 1993, Nationwide will assess an
administration charge equal to an annual rate of 0.05% of the daily net assets
of the variable account.
These charges are to reimburse Nationwide for administrative expenses related to
the issuance and maintenance of the contracts (see "Contract Maintenance Charge"
and "Administration Charge").
ANNUITY PAYMENTS
Annuity payments begin on the annuitization date. The payments will be based on
the annuity payment option chosen at the time of application (see "Annuity
Payment Options").
TAXATION
How the contracts are taxed depends on the type of contract issued and the
purpose for which the contract is purchased. Nationwide will charge against the
contract any premium taxes levied by any governmental authority (see "Federal
Tax Considerations" and "Premium Taxes").
TEN DAY FREE LOOK
Contract owners may return the contract for any reason within ten days of
receipt and Nationwide will refund the contract value or the amount required by
law (see "Right to Revoke").
FINANCIAL STATEMENTS
Financial statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained without charge by contacting Nationwide's home
office at the telephone number listed on page 2 of this prospectus.
17
<PAGE> 18
CONDENSED FINANCIAL INFORMATION
The value of an accumulation unit is determined on the basis of changes in the
per share value of the underlying mutual funds and the assessment of a variable
account charge which may vary from contract to contract (for more information on
the calculation of accumulation unit values, see "Determining Variable Account
Value - Valuing an Accumulation Unit"). Please refer to Appendix B for
information regarding each class of accumulation units.
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in March,
1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in all states, the District of Columbia and Puerto
Rico.
NATIONWIDE INVESTMENT SERVICES CORPORATION
The contracts are distributed by the general distributor, Nationwide Investment
Services Corporation. ("NISC"), Three Nationwide Plaza, Columbus, Ohio 43215.
(For contracts issued in the State of Michigan, all references to NISC shall
mean Nationwide Investment Svcs. Corporation.) NISC is a wholly owned subsidiary
of Nationwide.
TYPES OF CONTRACTS
The following is a general description of the types of annuity contracts, and is
intended to provide only general information of the various types of contracts;
it is not intended to be comprehensive. The eligibility requirements, tax
benefits, limitations, and other features of these contracts differ one from the
other.
Individual Retirement Accounts (IRAs)
Individual Retirement Accounts are contracts that are issued by insurance
companies and satisfy the following requirements:
o the contract is not transferable by the owner;
o the premiums are not fixed;
o the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from qualified plans, tax-sheltered annuities and other IRAs
can be received);
o certain minimum distribution requirements must be satisfied after the
owner attains the age of 70 1/2;
o the entire interest of the owner in the contract is nonforfeitable; and
o after the death of the owner, additional distribution requirements may
be imposed to ensure distribution of the entire balance in the contract
within the statutory period of time.
Depending on the circumstance of the owner, all or a portion of the
contributions made to the account may be deducted for federal income tax
purposes.
Failure to make the mandatory distributions can result in an additional penalty
tax of 50% of the excess of the amount required to be distributed over the
amount that was actually distributed.
IRAs may receive rollover contribution from other IRAs, from Tax Sheltered
Annuities, and from qualified retirement plans, including 401(k) plans.
For further details regarding IRAs, please refer to the disclosure statement
provided when the IRA was established.
Simplified Employee Pension IRAs (SEP IRAs)
A SEP IRA is a written plan established by an employer for the benefit of
employees, which permits the employer to make contributions to an IRA
established for the benefit of each employee.
An employee may make deductible contributions to a SEP IRA in the same way, and
with the same restrictions and limitations, as for a IRA. In addition, the
employer may make contributions to the SEP IRA, subject to dollar and percentage
limitations imposed by both the Internal Revenue Code and the written plan.
18
<PAGE> 19
A SEP IRA plan must satisfy the following requirements:
o minimum participation rules;
o top-heavy contribution rules;
o nondiscriminatory allocation rules; and
o requirements regarding a written allocation formula.
In addition, the plan cannot restrict withdrawals of non-elective contributions,
and must restrict withdrawals of elective contributions before March 15th of the
following year.
SIMPLE IRAs
A SIMPLE IRA is an individual retirement annuity which is funded exclusively by
a qualified salary reduction arrangement and satisfies the following:
o vesting requirements,
o participation requirements; and
o administrative requirements.
The funds contributed to a SIMPLE IRA cannot be commingled with funds in IRAs or
SEP IRAs.
A SIMPLE IRA cannot receive rollover distributions except from another SIMPLE
IRA.
Roth IRAs
Roth IRA contracts are contracts that are issued by insurance companies and
satisfy the following requirements:
o the contract is not transferable by the owner;
o the premiums are not fixed;
o the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from other Roth IRAs and Traditional IRAs can be received);
o the entire interest of the owner in the contract is nonforfeitable; and
o after the death of the owner, certain distribution requirements may be
imposed to ensure distribution of the entire balance in the contract
within the statutory period of time.
A Roth IRA can receive a rollover from a Traditional IRA; however, the amount
rolled over from the Traditional IRA to the Roth IRA is required to be included
in the owner's federal gross income at the time of the rollover, and will be
subject to federal income tax.
There are income limitations on eligibility to participate in a Roth IRA and
additional income limitations for eligibility to roll over amounts from a
Traditional IRA to a Roth IRA. For further details regarding Roth IRAs, please
refer to the disclosure statement provided when the Roth IRA was established.
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide Variable Account is a variable account that invests in the underlying
mutual funds listed in Appendix A. Nationwide established the variable account
on March 3, 1976, pursuant to Ohio law. Although the variable account is
registered with the SEC as a unit investment trust pursuant to the Investment
Company Act of 1940 ("1940 Act"), the SEC does not supervise the management of
Nationwide or the variable account.
Income, gains, and losses credited to, or charged against, the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and are not chargeable with liabilities
incurred in any other business of Nationwide. Nationwide is obligated to pay all
amounts promised to contract owners under the contracts.
The variable account is divided into sub-accounts, each corresponding to a
single underlying mutual fund. Nationwide uses the assets of each sub-account to
buy shares of the underlying mutual funds based on contract owner instructions.
The sub-account contains shares attributable to accumulation units under
Individual Retirement Accounts, Roth IRAs, SEP IRAs, and Qualified contracts.
19
<PAGE> 20
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. They are only available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance companies, or in
some cases, through participation in certain qualified pension or retirement
plans.
The investment advisers of the underlying mutual funds may manage publicly
traded mutual funds with similar names and investment objectives. However, the
underlying mutual funds are NOT directly related to any publicly traded mutual
fund. Contract owners should not compare the performance of a publicly traded
fund with the performance of underlying mutual funds participating in the
variable account. The performance of the underlying mutual funds could differ
substantially from that of any publicly traded funds.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote contract owner shares at
special shareholder meetings based on contract owner instructions. However, if
the law changes and Nationwide is allowed to vote in its own right, it may elect
to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholders' vote as soon as possible before
the shareholder meeting. Notification will contain proxy materials and a form
with which to give Nationwide voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a contract owner may vote is determined by dividing
the cash value of the amount they have allocated to an underlying mutual fund by
the net asset value of that underlying mutual fund. Nationwide will designate a
date for this determination not more than 90 days before the shareholder
meeting.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
For contracts issued after January 1, 1993, the underlying mutual fund options
offered are also available to the general public. (Based on Nationwide's
marketing plan for the contracts, Nationwide 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 funds. A
conflict may occur due to a number of reasons, including a change in law
affecting the operations of variable annuity separate accounts or differences in
the voting instructions of the owners and others maintaining a voting interest
in the underlying mutual funds. In the event of conflict, Nationwide will take
any steps necessary to protect those with interests in the contracts.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
20
<PAGE> 21
1) shares of a current underlying mutual fund are no longer available for
investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. The general account is not subject
to the same laws as the variable account and the SEC has not reviewed material
in this prospectus relating to the fixed account. However, information relating
to the fixed account is subject to federal securities laws relating to accuracy
and completeness of prospectus disclosure.
Purchase payments will be allocated to the fixed account by election of the
contract owner.
The investment income earned by the fixed account will be allocated to the
contracts at varying guaranteed interest rate(s) depending on the following
categories of fixed account allocations:
o New Money Rate - The rate credited on the fixed account allocation when
the contract is purchased or when subsequent purchase payments are
made. Subsequent purchase payments may receive different New Money
Rates than the rate when the contract was issued, since the New Money
Rate is subject to change based on market conditions.
o Variable Account to Fixed Rate - Allocations transferred from any of
the underlying investment options in the variable account to the fixed
account may receive a different rate. The rate may be lower than the
New Money Rate. There may be limits on the amount and frequency of
movements from the variable account to the fixed account.
o Renewal Rate - The rate available for maturing fixed account
allocations which are entering a new guarantee period. The contract
owner will be notified of this rate in a letter issued with the
quarterly statements when any of the money in the contract owner's
fixed account matures. At that time, the contract owner will have an
opportunity to leave the money in the fixed account and receive the
Renewal Rate or the contract owner can move the money to any of the
other underlying mutual fund options.
o Dollar Cost Averaging Rate - From time to time, Nationwide may offer a
more favorable rate for an initial purchase payment into a new contract
when used in conjunction with a dollar cost averaging program.
All of these rates are subject to change on a daily basis; however, once applied
to the fixed account, the interest rates are guaranteed until the end of the
calendar quarter during the12 month anniversary in which the fixed account
allocation occurs.
Credited interest rates are annualized rates - the effective yield of interest
over a one-year period. Interest is credited to each contract on a daily basis.
As a result, the credited interest rate is compounded daily to achieve the
stated effective yield.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The contract owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
3.0% for any given year.
Nationwide guarantees that the fixed account contract value will not be less
than the amount of the purchase payments allocated to the fixed account, plus
interest credited as described above, less any applicable charges including
CDSC.
CHARGES AND DEDUCTIONS
MORTALITY AND EXPENSE RISK CHARGE
Nationwide deducts a mortality and expense risk charge from the variable
account.
21
<PAGE> 22
The amount is computed on a daily basis, and is equal to an annual rate of 1.25%
(1.30% for contracts issued prior to January 1, 1993) of the daily net assets of
the variable account.
The mortality risk charge is equal to an annual rate of 0.80% of the daily net
assets of the variable account. By guaranteeing the contract's annuity rate,
Nationwide assumes the mortality risk. These guarantees cannot change regardless
of the death rates of persons receiving annuity payments or of the general
population. Nationwide expects to generate a profit from this charge.
The expense risk charge is equal to an annual rate of 0.45% (0.50% for contracts
issued prior to January 1, 1993) of the daily net assets of the variable
account. By guaranteeing the contract's annuity rate, Nationwide assumes the
expense risk. These guarantees cannot change regardless of its annual expenses.
Nationwide expects to generate profit from this charge. If the mortality and
expense charge is insufficient to cover actual expenses, the loss is borne by
Nationwide.
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
No deduction for a sales charge is made from the purchase payments for this
contract. However, if any part of the contract value of such contracts is
surrendered, Nationwide will, with certain exceptions, deduct a CDSC (see
"Elimination of CDSC"). The CDSC will not exceed the lesser of 7% of purchase
payments surrendered.
The CDSC, when it is applicable, will be used to cover expenses relating to the
sale of the contract, including commissions paid to sales personnel, the costs
of preparation of sales literature and other promotional activity. Nationwide
attempts to recover its distribution costs relating to the sale of the contract
from the CDSC. Any shortfall will be made up from the general account of
Nationwide, which may indirectly include portions of the mortality risk charge
and expense risk charge since Nationwide 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 CDSC will be deducted by
Nationwide. For purposes of the CDSC, 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.)
For contracts issued on or after January 1, 1993, the CDSC will apply in the
amounts set forth below. In no event will any CDSC be made against any values
which have been held under the contract for at least 7 years, or to commencement
of an annuity payout under contracts which have been in effect for at least two
years or upon the death of the annuitant.
<TABLE>
<CAPTION>
- -------------------------------- -----------------------
NUMBER OF YEARS FROM DATE OF
PURCHASE PAYMENT CDSC PERCENTAGE
- -------------------------------- -----------------------
<S> <C>
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
- -------------------------------- -----------------------
</TABLE>
Starting with the second year after a purchase payment has been made under the
contract, 10% of that purchase payment may be withdrawn each year without
imposition of the CDSC. This free withdrawal privilege is non-cumulative and
will not exceed 10% of the purchase payment in any year. The CDSC is waived:
a) for first year withdrawals of up to 10% of purchase payments for
Individual Retirement Account rollover contracts; or
b) for any amount withdrawn from this contract in order to meet minimum
distribution requirements under the Internal Revenue 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 withdrawals are taken prior to age 59 1/2.
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For contracts issued before January 1, 1993 a CDSC will be deducted by
Nationwide equal to 5% of the lesser of the total of all purchase payments made
within 8 years prior to the date of the request for surrender, or the amount
surrendered. In no event will any CDSC be made against any values which have
been held under the contract for at least 8 years. Certain partial surrenders
may be requested for which no CDSC 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 CDSC, 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 CDSC
For contracts sold pursuant to Qualified Plans established on or after January
1, 1993, as described in Section 401 of the Code, SEP-IRA contracts sold on or
after January 1, 1993, and Roth IRAs, Nationwide will waive the CDSC when:
1) the plan participant experiences a case of hardship (as defined for
purposes of Internal Revenue Code Section 401(k));
2) the plan participant becomes disabled (within the meaning of Internal
Revenue Code Section 72(m)(7));
3) 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;
4) the plan participant has participated in the contract for at least 15
years as determined from the contract anniversary date;
5) the plan participant dies; or
6) the plan participant annuitizes after 2 years in the contract.
For Individual Retirement Accounts, Nationwide will waive the CDSC when:
1) the designated annuitant dies; or
2) the contract owner annuitizes after 2 years in the contract.
When a contract is exchanged for another contract issued by Nationwide or any of
its affiliate insurance companies, of the type and class which Nationwide
determined is eligible for such exchange, Nationwide will waive the CDSC on the
first contract.
In no event will elimination of the CDSC be permitted where such elimination
would be unfairly discriminatory to any person, or where it is prohibited by
law.
CONTRACT MAINTENANCE CHARGE
Each year on the contract anniversary (and on the date of surrender in any year
in which the entire contract value is surrendered), Nationwide deducts a
contract maintenance charge of $30 from the contract value. This charge
reimburses Nationwide for administrative expenses relating to the issuance and
maintenance of the contract. For contracts issued pursuant to Qualified Plans
described in Section 401 of the Internal Revenue 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 Nationwide, if any, and
administrative savings. For contracts issued to Qualified Plans described in
Section 401 of the Internal Revenue 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.
ADMINISTRATION CHARGE
Nationwide deducts an administration charge from the variable account. This
amount is computed on a daily basis, and is equal to an annual rate of 0.05% of
the daily net assets of the variable account for contracts issued after January
1, 1993. The administration charge is designed only to reimburse Nationwide for
administrative expenses. Nationwide will
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monitor this charge to ensure that it does not exceed annual administration
expenses.
PREMIUM TAXES
Nationwide will charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
5.0%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such other date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
CONTRACT OWNERSHIP
The contract owner has all rights under the contract, including the right to
designate and change any designations of the contract owner, annuitant,
contingent annuitant, beneficiary, contingent beneficiary, annuity payment
option, and annuity commencement date. Contract rights may be exercised by the
annuitant if the contract owner has authorized the annuitant to exercise such
rights. Purchasers who name someone other than themselves as the contract owner
will have no rights under the contract.
Contract owners of Non-Qualified contracts may name a new contract owner at any
time before the annuitization date. Any change of contract owner automatically
revokes any prior contract owner designation. Changes in contract ownership may
result in federal income taxation and may be subject to state and federal gift
taxes.
A change in contract ownership must be submitted in writing and recorded at
Nationwide's home office. Once recorded, the change will be effective as of the
date signed. However, the change will not affect any payments made or actions
taken by Nationwide before it was recorded.
The contract owner may also request a change in the annuitant, contingent
annuitant, beneficiary, or contingent beneficiary before the annuitization date.
These changes must be:
o on a Nationwide form;
o signed by the contract owner; and
o received at Nationwide's home office before the annuitization date.
Nationwide must review and approve any change requests. If the contract owner is
not a natural person and there is a change of the annuitant, distributions will
be made as if the contract owner died at the time of the change.
ANNUITANT
The annuitant is the person designated to receive annuity payments during
annuitization of the contract and upon whose continuation of life any annuity
payment involving life contingencies depends. This person must be age 78 or
younger at the time of contract issuance, unless Nationwide approves a request
for an annuitant of greater age. The annuitant may be changed prior to the
annuitization date with the consent of Nationwide.
Although not the contract owner, the annuitant may exercise contract rights if
authorized by the holder of the contract (an Individual Retirement Account or
Qualified Plan trustee(s)).
BENEFICIARY AND CONTINGENT BENEFICIARY
The beneficiary is the person who is entitled to the death benefit if the
annuitant dies before the annuitization date and there is no joint owner. The
contract owner can name more than one beneficiary. Multiple beneficiaries will
share the death benefit equally, unless otherwise specified.
If no beneficiary(ies) survive the annuitant, the contingent beneficiaries
receive the death benefit. Contingent beneficiaries will share the death benefit
equally, unless otherwise specified.
If no beneficiaries or contingent beneficiaries survive the annuitant, the
contract owner or the last surviving contract owner's estate will receive the
death benefit.
The contract owner may change the beneficiary or contingent beneficiary during
the annuitant's
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lifetime by submitting a written request to Nationwide. Once recorded, the
change will be effective as of the date it was signed, whether or not the
annuitant was living at the time it was recorded. The change will not affect any
action taken by Nationwide before the change was recorded.
OPERATION OF THE CONTRACT
The cumulative total of all purchase payments under contracts issued by
Nationwide on the life of any one annuitant cannot exceed $1,000,000 without
Nationwide's prior consent.
PRICING
Initial purchase payments allocated to sub-accounts will be priced at the
accumulation unit value determined no later than 2 business days after receipt
of an order to purchase if the application and all necessary information are
complete. If the application is not complete, Nationwide may retain a purchase
payment for up to 5 business days while attempting to complete it. If the
application is not completed within 5 business days, the prospective purchaser
will be informed of the reason for the delay. The purchase payment will be
returned unless the prospective purchaser specifically allows Nationwide to hold
the purchase payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received.
Purchase payments will not be priced when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
o New Year's Day o Independence Day
o Martin Luther King, Jr. Day o Labor Day
o Presidents' Day o Thanksgiving
o Good Friday o Christmas
o Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist.
If Nationwide is closed on days when the New York Stock Exchange is open,
contract value may be affected since the contract owner would not have access to
their account.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to the sub-accounts and the fixed account
as instructed by the contract owner. Shares of the underlying mutual funds
allocated to the sub-accounts are purchased at net asset value, then converted
into accumulation units. Contract owners can change allocations or make
exchanges among the sub-accounts or the fixed account. However, no change may be
made that would result in an amount less than 1% of the purchase payments being
allocated to any sub-account for any contract owner. Certain transactions may be
subject to conditions imposed by the underlying mutual funds, as well as those
set forth in the contract.
DETERMINING THE CONTRACT VALUE
The contract value is:
1) the value of amounts allocated to the sub-accounts of the variable
account; and
2) amounts allocated to the fixed account.
If part or all of the contract value is surrendered, or charges are assessed
against the whole contract value, Nationwide will deduct a proportionate amount
from each sub-account and the fixed account based on current cash values.
Determining Variable Account Value - Valuing an Accumulation Unit
Purchase payments or transfers allocated to sub-accounts are accounted for in
accumulation units. Accumulation unit values (for each sub-
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account) are determined by calculating the net investment factor for the
underlying mutual funds for the current valuation period and multiplying that
result with the accumulation unit values determined on the previous valuation
period.
Nationwide uses the net investment factor as a way to calculate the investment
performance of a sub-account from valuation period to valuation period. For each
sub-account, the net investment factor shows the investment performance of the
underlying mutual fund in which a particular sub-account invests, including the
charges assessed against that sub-account for a valuation period.
The net investment factor for any particular sub-account is determined by
dividing (a) by (b), and then subtracting (c) from the result, where:
(a) is:
(1) the net asset value of the underlying mutual fund as of the
end of the current valuation period; and
(2) the per share amount of any dividend or income distributions
made by the underlying mutual fund (if the ex-dividend date
occurs during the current valuation period);
(b) is the net asset value of the underlying mutual fund determined as of
the end of the preceding valuation period; and
(c) is a factor representing the daily variable account charges. The factor
is equal to an annual rate of 1.30% of the daily net assets of the
variable account.
Based on the net investment factor, the value of an accumulation unit may
increase or decrease. Changes in the net investment factor may not be directly
proportional to changes in the net asset value of the underlying mutual fund
shares because of the deduction of variable account charges.
Though the number of accumulation units will not change as a result of
investment experience, the value of an accumulation unit may increase or
decrease from valuation period to valuation period.
Determining Fixed Account Value
Nationwide determines the value of the fixed account by:
1) adding all amounts allocated to the fixed account, minus amounts
previously transferred or withdrawn; and
2) adding any interest earned on the amounts allocated.
TRANSFERS PRIOR TO ANNUITIZATION
Transfers from the Fixed Account to the Variable Account
Fixed account allocations may be transferred to the variable account only upon
reaching the end of an interest rate guarantee period. Normally, Nationwide will
permit 100% of such fixed account allocations to be transferred to the variable
account; however Nationwide may, under certain economic conditions and at its
discretion, limit the maximum transferable amount. Under no circumstances will
the maximum transferable amount be less than 10% of the fixed account allocation
reaching the end of an interest rate guarantee period. Transfers of the fixed
account allocations must be made within 45 days after reaching the end of an
interest rate guarantee period.
Contract owners who use dollar cost averaging may transfer from the fixed
account to the variable account under the terms of that program (see "Dollar
Cost Averaging").
Transfers to the Fixed Account
Variable account allocations may be transferred to the fixed account at any
time. Normally, Nationwide will not restrict transfers from the variable account
to the fixed account, however, Nationwide may establish a maximum transfer limit
from the variable account to the fixed account. Except as noted below, under no
circumstances will the transfer limit be less than 10% of the current value of
the variable account, less any transfers made in the 12 months preceding the
date the transfer is requested, but not including transfers made prior to the
imposition of the transfer limit. However, where permitted by state law,
Nationwide reserves the right to refuse transfers or purchase payments to
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the fixed account from the variable account when the fixed account value is
greater than or equal to 30% of the contract value at the time the purchase
payment is made or the transfer is requested.
Amounts transferred to the variable account will receive the accumulation unit
value next determined after the transfer request is received.
Transfers Among the Sub-Accounts
Allocations may be transferred among the sub-accounts once per valuation period.
TRANSFER AFTER ANNUITIZATION
After annuitization, transfers may only be made on the anniversary of the
annuitization date.
TRANSFER REQUESTS
Nationwide will accept transfer requests in writing or over the telephone.
Nationwide will use reasonable procedures to confirm that telephone instructions
are genuine and will not be liable for following telephone instructions that it
reasonably determined to be genuine. Nationwide may withdraw the telephone
exchange privilege upon 30 days written notice to contract owners.
For transfers involving the variable account, Nationwide determines contract
value as of the date the completed transfer request is received.
Interest Rate Guarantee Period
The interest rate guarantee period is the period of time that the fixed account
interest rate is guaranteed to remain the same. Within 45 days of the end of an
interest rate guarantee period, transfers may be made from the fixed account to
the variable account. Nationwide will determine the amount that may be
transferred and will declare this amount at the end of the guarantee period.
This amount will not be less than 10% of the amount in the fixed account that is
maturing.
For new purchase payments allocated to the fixed account, or transfers to the
fixed account from the variable account this period begins on the date of
deposit or transfer and ends on the one year anniversary of the deposit or
transfer. The guaranteed interest rate period may last for up to 3 months beyond
the 1 year anniversary because guaranteed terms end on the last day of a
calendar quarter.
During an interest rate guarantee period, transfers cannot be made from the
fixed account, and amounts transferred to the fixed account must remain on
deposit.
Market Timing Firms
Some contract owners may use market timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market timing firms will submit transfer or exchange requests on
behalf of multiple contract owners at the same time. Sometimes this can result
in unusually large transfers of funds. These large transfers might interfere
with the ability of Nationwide or the underlying mutual fund to process
transactions. This can potentially disadvantage contract owners not using market
timing firms. To avoid this, Nationwide may modify transfer and exchange rights
of contract owners who use market timing firms (or other third parties) to
transfer or exchange funds on their behalf.
The exchange and transfer rights of individual contract owners will not be
modified in any way when instructions are submitted directly by the contract
owner, or by the contract owner's representative (as authorized by the execution
of a valid Nationwide Limited Power of Attorney Form).
To protect contract owners, Nationwide may refuse exchange and transfer
requests:
o submitted by any agent acting under a power of attorney on behalf of
more than one contract owner; or
o submitted on behalf of individual contract owners who have executed
pre-authorized exchange forms which are submitted by market timing
firms (or other third parties) on behalf of more than one contract
owner at the same time.
Nationwide will not restrict exchange rights unless Nationwide believes it to be
necessary for the protection of all contract owners.
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RIGHT TO REVOKE
Contract owners have a ten day "free look" to examine the contract. The contract
may be returned to Nationwide's home office for any reason within ten days of
receipt and Nationwide will refund the contract value or another amount required
by law. The refunded contract value will reflect the deduction of any contract
charges, unless otherwise required by law. All IRA and Roth IRA refunds will be
a return of purchase payments. State and/or federal law may provide additional
free look privileges.
Liability of the variable account under this provision is limited to the
contract value in each sub-account on the date of revocation. Any additional
amounts refunded to the contract owner will be paid by Nationwide.
SURRENDER (REDEMPTION)
Contract owners may surrender some or all of their contract value before the
earlier of the annuitization date or the annuitant's death. Surrender requests
must be in writing and Nationwide may require additional information. When
taking a full surrender, the contract must accompany the written request.
Nationwide may require a signature guarantee.
Nationwide will pay any amount surrendered from the sub-accounts within 7 days.
However, Nationwide may suspend or postpone payment when it is unable to price a
purchase payment or transfer.
Partial Surrenders (Partial Redemption)
Nationwide will surrender accumulation units from the sub-accounts and an amount
from the fixed account. The amount withdrawn from each investment option will be
in proportion to the value in each option at the time of the surrender request.
A CDSC may apply. The contract owner may direct Nationwide to deduct the CDSC
either from:
a) the amount requested; or
b) the contract value remaining after the contract owner has received the
amount requested.
If the contract owner does not make a specific election, any applicable CDSC
will be taken from the contract value remaining after the contract owner has
received the amount requested.
Full Surrenders (Full Redemptions)
The contract value upon full surrender may be more or less than the total of all
purchase payments made to the contract. The contract value will reflect variable
account charges, a contract maintenance charge, underlying mutual fund charges
and the investment performance of the underlying mutual funds. A CDSC may apply.
SURRENDERS UNDER A QUALIFIED PLAN
The contract surrender provisions may be modified pursuant to the plan terms and
Internal Revenue Code provisions when the contract is issued to fund a Qualified
Plan.
LOAN PRIVILEGE
Loans are available only for contracts issued on or before January 1, 1993.
The loan privilege is ONLY available to owners of Qualified Contracts. These
contract owners can take loans from the contract value beginning 30 days after
the contract is issued up to the annuitization date. Loans are subject to the
terms of the contract, the plan, and the Internal Revenue Code. Nationwide may
modify the terms of a loan to comply with changes in applicable law.
MINIMUM AND MAXIMUM LOAN AMOUNTS
Contract owners may borrow a minimum of $1,000, unless Nationwide is required by
law to allow a lesser minimum amount. Each loan must individually satisfy the
contract minimum amount.
Nationwide will calculate the maximum nontaxable loan amount based upon
information provided by the participant or the employer. Loans may be taxable if
a participant has additional loans from other plans. The total of all
outstanding loans must not exceed the following limits:
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<TABLE>
<CAPTION>
- ---------------- ------------ ---------------------------
CONTRACT MAXIMUM OUTSTANDING LOAN
VALUES BALANCE ALLOWED
- ---------------- ------------ ---------------------------
<S> <C> <C>
NON-ERISA PLANS up to up to 80% of contract
$20,000 value (not more than
$10,000)
- ---------------- ------------ ---------------------------
$20,000 up to 50% of contract
and over value (not more than
$50,000*)
- ---------------- ------------ ---------------------------
ERISA PLANS All up to 50% of contract
value (not more than
$50,000*)
- ---------------- ------------ ---------------------------
</TABLE>
*The $50,000 limits will be reduced by the highest outstanding balance owed
during the previous 12 months.
LOAN PROCESSING FEE
Nationwide may charge a Loan Processing Fee at the time each new loan is
processed. If assessed it compensates Nationwide for expenses related to
administering and processing loans. Loans are not available in all states. In
addition, some states may not allow Nationwide to assess a Loan Processing Fee.
HOW LOAN REQUESTS ARE PROCESSED
All loans are made from the collateral fixed account. Nationwide transfers
accumulation units in proportion to the assets in each sub-account to the
collateral fixed account until the requested amount is reached. If there are not
enough accumulation units available in the contract to reach the requested loan
amount, Nationwide next transfers contract value from the fixed account. No CDSC
will be deducted on transfers related to loan processing.
INTEREST
The outstanding loan balance in the collateral fixed account is credited with
interest until the loan is repaid in full. The interest rate will be 2.25% less
than the loan interest rate fixed by Nationwide. It is guaranteed never to fall
below 3.0%.
Specific loan terms are disclosed at the time of loan application or issuance.
LOAN REPAYMENT
Loans must be repaid in five years. However, if the loan is used to purchase the
contract owner's principal residence, the contract owner has 15 years to repay
the loan.
Contract owners must identify loan repayments as loan repayments or they will be
treated as purchase payments and will not reduce the outstanding loan. Payments
must be substantially level and made at least quarterly.
Loan repayments will consist of principal and interest in amounts set forth in
the loan agreement. Repayments are allocated to the sub-accounts in accordance
with the contract, unless Nationwide and the contract owner have agreed to amend
the contract at a later date on a case by case basis.
DISTRIBUTIONS AND ANNUITY PAYMENTS
Distributions made from the contract while a loan is outstanding will be reduced
by the amount of the outstanding loan plus accrued interest if:
o the contract is surrendered;
o the contract owner/annuitant dies;
o the contract owner who is not the annuitant dies prior to
annuitization; or
o annuity payments begin.
TRANSFERRING THE CONTRACT
Nationwide reserves the right to restrict any transfer of the contract while the
loan is outstanding.
GRACE PERIOD AND LOAN DEFAULT
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available (please refer to the terms of the loan agreement).
If a loan payment is not made by the end of the applicable grace period, the
entire loan will be treated as a deemed distribution and will be taxable to the
borrower. This deemed distribution may also be subject to an early withdrawal
tax penalty by the Internal Revenue Service.
After default, interest will continue to accrue on the loan. Defaulted amounts,
plus interest, are deducted from the contract value when the participant is
eligible for a distribution of at least that amount. Additional loans are not
available while a previous loan is in default.
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CONTRACT OWNER SERVICES
ASSET REBALANCING
Asset rebalancing is the automatic reallocation of contract values to the
sub-accounts on a predetermined percentage basis. Asset rebalancing is not
available for assets held in the fixed account. Requests for asset rebalancing
must be on a Nationwide form.
Asset rebalancing occurs every three months or on another frequency if permitted
by Nationwide. If the last day of the three-month period falls on a Saturday,
Sunday, recognized holiday, or any other day when the New York Stock Exchange is
closed, asset rebalancing will occur on the next business day.
Asset rebalancing may be subject to employer limitations or restrictions for
contracts issued to a Qualified Plan. Contract owners should consult a financial
adviser to discuss the use of asset rebalancing.
Nationwide reserves the right to stop establishing new asset rebalancing
programs. Nationwide also reserves the right to assess a processing fee for this
service.
DOLLAR COST AVERAGING
Dollar cost averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from certain sub-accounts and the fixed account into other
sub-accounts. Nationwide does not guarantee that this program will result in
profit or protect contract owners from loss.
Contract owners direct Nationwide to automatically transfer specified amounts
from the fixed account and the Money Market Fund to any other underlying mutual
fund.
Dollar Cost Averaging from the Fixed Account
Transfers from the fixed account must be equal to or less than 1/30th of the
fixed account value at the time the program is requested. A dollar cost
averaging program which transfers amounts from the fixed account to the variable
account is not the same as an enhanced rate dollar cost averaging program.
Contract owners that wish to utilize dollar cost averaging from the fixed
account should first inquire as to whether any enhanced rate dollar cost
averaging programs are available.
Enhanced Rate Dollar Cost Averaging Program
Nationwide may, from time to time, offer enhanced rate dollar cost averaging
programs. Dollar cost averaging transfers for this program may only be made from
the fixed account. Such enhanced rate dollar cost averaging programs allow the
contract owner to earn a higher rate of interest on assets in the fixed account
than would normally be credited when not participating in the program. Each
enhanced interest rate is guaranteed for as long as the corresponding program is
in effect. Nationwide will process transfers until either amounts in the
enhanced rate fixed account are exhausted, or the contract owner instructs
Nationwide in writing to stop the transfers. For this program only, when a
written request to discontinue transfers is received, Nationwide will
automatically transfer the remaining amount in the enhanced rate fixed account
to the NSAT Money Market Fund.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the contract owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new dollar cost averaging
programs. Nationwide also reserves the right to assess a processing fee for this
service.
SYSTEMATIC WITHDRAWALS
Systematic withdrawals allow contract owners (or annuitants if authorized) to
receive a specified amount (of at least $100) on a monthly, quarterly,
semi-annual, or annual basis. Requests for systematic withdrawals and requests
to discontinue systematic withdrawals must be in writing.
The withdrawals will be taken from the sub-accounts and the fixed account
proportionately unless Nationwide is instructed otherwise.
If the contract owner takes systematic withdrawals, the maximum amount that can
be
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withdrawn annually without a CDSC is the greater of:
1) 10% of all purchase payments made to the contract as of the withdrawal
date; or
2) an amount withdrawn to meet minimum distribution requirements under the
Internal Revenue Code.
The CDSC-free withdrawal privilege for systematic withdrawals is non-cumulative.
Free amounts not taken during any contract year cannot be taken as free amounts
in a subsequent contract year.
Nationwide will withhold federal income taxes from systematic withdrawals unless
otherwise instructed by the contract owner. The Internal Revenue Service may
impose a 10% penalty tax if the contract owner is under age 59 1/2 unless the
contract owner has made an irrevocable election of distributions of
substantially equal payments.
Nationwide reserves the right to stop establishing new systematic withdrawal
programs. Nationwide also reserves the right to assess a processing fee for this
service. Systematic withdrawals are not available before the end of the ten-day
free look period (see "Right to Revoke").
ANNUITY COMMENCEMENT DATE
The annuity commencement date is the date on which annuity payments are
scheduled to begin. The contract owner may change the annuity commencement date
before annuitization. This change must be in writing and approved by Nationwide.
ANNUITIZING THE CONTRACT
ANNUITIZATION DATE
The annuitization date is the date that annuity payments begin. It will be the
first day of a calendar month unless otherwise agreed, and must be at least 2
years after the contract is issued. If the contract is issued to fund a
Qualified Plan or Tax Sheltered Annuity annuitization may occur during the first
2 years subject to Nationwide's approval.
ANNUITIZATION
Annuitization is the period during which annuity payments are received. It is
irrevocable once payments have begun. Upon arrival of the annuitization date,
the annuitant must choose:
(1) an annuity payment option; and
(2) either a fixed payment annuity, variable payment annuity, or an
available combination.
Nationwide guarantees that each payment under a fixed payment annuity will be
the same throughout annuitization. Under a variable payment annuity, the amount
of each payment will vary with the performance of the underlying mutual funds
chosen by the contract owner.
FIXED PAYMENT ANNUITY
A fixed payment annuity is an annuity where the amount of the annuity payment
remains level.
The first payment under a fixed payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
1) deducting applicable premium taxes from the total contract value; then
2) applying the contract value amount specified by the contract owner to
the fixed payment annuity table for the annuity payment option elected.
Subsequent payments will remain level unless the annuity payment option elected
provides otherwise. Nationwide does not credit discretionary interest during
annuitization.
VARIABLE PAYMENT ANNUITY
A variable payment annuity is an annuity where the amount of the annuity
payments will vary depending on the performance of the underlying mutual funds
selected.
The first payment under a variable payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
1) deducting applicable premium taxes from the total contract value; then
2) applying the contract value amount specified by the contract owner to
the
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variable payment annuity table for the annuity payment option elected.
The dollar amount of the first payment is converted into a set number of annuity
units that will represent each monthly payment. This is done by dividing the
dollar amount of the first payment by the value of an annuity unit as of the
annuitization date. This number of annuity units remains fixed during
annuitization.
The second and subsequent payments are determined by multiplying the fixed
number of annuity units by the annuity unit value for the valuation period in
which the payment is due. The amount of the second and subsequent payments will
vary with the performance of the selected underlying mutual funds. Nationwide
guarantees that variations in mortality experience from assumptions used to
calculate the first payment will not affect the dollar amount of the second and
subsequent payments.
ASSUMED INVESTMENT RATE
An assumed investment rate is the percentage rate of return assumed to determine
the amount of the first payment under a variable payment annuity. Nationwide
uses the assumed investment rate of 3.5% to calculate the first annuity payment.
The assumed investment rate of 3.5% is the percentage rate of return required to
maintain level variable annuity payments. Subsequent variable annuity payments
may be more or less than the first based on whether actual investment
performance is higher or lower than the assumed investment rate of 3.5%.
VALUE OF AN ANNUITY UNIT
Annuity unit values for sub-accounts are determined by multiplying the net
investment factor for the valuation period for which the annuity unit is being
calculated by the immediately preceding valuation period's annuity unit value,
and multiplying the result by an interest factor to neutralize the assumed
investment rate of 3.5% per annum built into the variable payment annuity
purchase rate basis in the contracts.
EXCHANGES AMONG UNDERLYING MUTUAL FUNDS
Exchanges among underlying mutual funds during annuitization must be in writing.
Exchanges will occur on each anniversary of the annuitization date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Payments are made based on the annuity payment option selected, unless:
o the amount to be distributed is less than $500, in which case
Nationwide may make one lump sum payment of the contract value; or
o an annuity payment would be less than $20, in which case Nationwide can
change the frequency of payments to intervals that will result in
payments of at least $20. Payments will be made at least annually.
ANNUITY PAYMENT OPTIONS
Contract owners must elect an annuity payment option before the annuitization
date. The annuity payment options are:
(1) LIFE ANNUITY - An annuity payable periodically, but at least annually,
for the lifetime of the annuitant. Payments will end upon the
annuitant's death. For example, if the annuitant dies before the second
annuity payment date, the annuitant will receive only one annuity
payment. The annuitant will only receive two annuity payments if he or
she dies before the third annuity payment date, and so on.
(2) JOINT AND LAST SURVIVOR ANNUITY - An annuity payable periodically, but
at least annually, during the joint lifetimes of the annuitant and a
designated second individual. If one of these parties dies, payments
will continue for the lifetime of the survivor. As is the case under
option 1, there is no guaranteed number of payments. Payments end upon
the death of the last surviving party, regardless of the number of
payments received.
(3) LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED - An annuity
payable monthly during the lifetime of the annuitant. If the annuitant
dies before all of the guaranteed payments have been made, payments
will continue to the end of the guaranteed period and will be paid to a
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designee chosen by the annuitant at the time the annuity payment option
was elected.
The designee may elect to receive the present value of the remaining
guaranteed payments in a lump sum. The present value will be computed
as of the date Nationwide receives the notice of the annuitant's death.
Not all of the annuity payment options may be available in all states. Contract
owners may request other options before the annuitization date. These options
are subject to Nationwide's approval.
No distribution for Non-Qualified contracts will be made until an annuity
payment option has been elected. Qualified contracts, IRAs, SEP IRAs and Tax
Sheltered Annuities are subject to the "minimum distribution" requirements set
forth in the plan, contract, and the Internal Revenue Code.
DEATH BENEFITS
DEATH OF CONTRACT OWNER
If the contract owner and the annuitant are not the same person and the contract
owner dies prior to the annuitization date, then the annuitant becomes the
contract owner. In such event, the entire interest in the contract value, less
any applicable deductions (which may include a CDSC), must be distributed in
accordance with the appropriate "Required Distributions" section.
DEATH OF ANNUITANT
If the contract owner and annuitant are not the same person, and the annuitant
dies prior to the annuitization date, then the contingent annuitant becomes the
annuitant and no death benefit is payable. In the event there is no living
contingent 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" section.
DEATH OF CONTRACT OWNER/ANNUITANT
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" section and in accordance with the
appropriate "Required Distributions" section.
HOW THE DEATH BENEFIT VALUE IS DETERMINED
The beneficiary may elect to receive the death benefit:
(1) in a lump sum;
(2) as an annuity; or
(3) in any other manner permitted by law and approved by Nationwide.
The beneficiary must notify Nationwide of this election within 60 days of the
annuitant's death.
If the annuitant dies after the annuitization date, any benefit that may be
payable will be paid according to the selected annuity payment option.
The death benefit value is determined as of the date Nationwide receives:
(1) proper proof of the annuitant's death;
(2) an election specifying the distribution method; and
(3) any state required form(s).
DEATH BENEFIT PAYMENT
For contracts issued on or after the later of May 1, 1998 or a date on which
state insurance authorities approve applicable contract modifications:
o If the annuitant dies on or after his or her 75th birthday and prior to
the annuitization date, 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;
and
2) Nationwide approved the request.
o If the annuitant dies prior to his or her 75th birthday and prior to
the annuitization date, the dollar amount of the death benefit will be
the greater of:
1) the contract value; or
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2) the sum of all purchase payments, less an adjustment for
amounts surrendered.
The adjustment for amounts surrendered will reduce item (2) above in
the same proportion that the contract value was reduced on the date(s)
of the partial surrender(s).
If the annuitant dies after the annuitization date, any payment that may be
payable will be determined according to the selected annuity payment option.
For contracts issued prior to May 1, 1998 or a date prior to approval of
applicable contract modifications by state insurance authorities:
o If the annuitant dies on or after his or her 75th birthday and prior to
the annuitization date, 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;
and
2) Nationwide approved the request.
o If the annuitant dies prior to his or her 75th birthday and prior to
the annuitization date, the dollar amount of the death benefit will be
the greater of:
1) the contract value; or
2) the sum of all purchase payments, less any amounts
surrendered.
If the annuitant dies after the annuitization date, any payment that may be
payable will be determined according to the selected annuity payment option.
REQUIRED DISTRIBUTIONS
REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS
Distributions from Qualified Contracts will be made according to the Minimum
Distribution and Incidental Benefit ("MDIB") provisions of Section 401(a)(9) of
the Internal Revenue Code. Distributions will be made to the annuitant according
to the selected annuity payment option over a period not longer than:
a) the life of the annuitant or the joint lives of the annuitant and the
annuitant's designated beneficiary; or
b) a period not longer than the life expectancy of the annuitant or the
joint life expectancies of the annuitant and the annuitant's designated
beneficiary.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Tax Sheltered Annuity of the annuitant.
If the annuitant's entire interest in a Qualified Plan or Tax Sheltered Annuity
will be distributed in equal or substantially equal payments over a period
described in a) or b), the payments will begin on the required beginning date.
The required beginning date is the later of:
a) April 1 of the calendar year following the calendar year in which the
annuitant reaches age 70 1/2; or
b) the annuitant's retirement date.
Provision b) does not apply to any employee who is a 5% owner (as defined in
Section 416 of the Internal Revenue Code) with respect to the plan year ending
in the calendar year when the employee attains the age of 70 1/2.
Distributions commencing on the required distribution date must satisfy MDIB
provisions set forth in the Internal Revenue Code. Those provisions require that
distribution cannot be less than the amount determined by dividing the
annuitant's interest in the Tax Sheltered Annuity by the end of the previous
calendar year by:
a) the annuitant's life expectancy, or if applicable;
b) the joint and survivor life expectancy of the annuitant and the
annuitant's beneficiary.
The life expectancies and joint life expectancies are determined by reference to
Treasury Regulation 1.72-9.
If the annuitant dies before distributions begin, the interest in the Qualified
Contract or Tax Sheltered Annuity must be distributed by December 31 of the
calendar year in which the fifth anniversary of the annuitant's death occurs
unless:
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a) the annuitant names his or her surviving spouse as the beneficiary and
the spouse chooses to receive distribution of the contract in
substantially equal payments over his or her life (or a period not
longer than his or her life expectancy) and beginning no later than
December 31 of the year in which the annuitant would have attained age
70 1/2; or
b) the annuitant names a beneficiary other than his or her surviving
spouse and the beneficiary elects to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year in which the annuitant
dies.
If the annuitant dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule used before the annuitant's
death.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ACCOUNTS
Distributions from an IRA or SEP IRA must begin no later than April 1 of the
calendar year following the calendar year in which the contract owner reaches
age 70 1/2. Distribution may be paid in a lump sum or in substantially equal
payments over:
a) the contract owner's life or the lives of the contract owner and his or
her spouse or designated beneficiary; or
b) a period not longer than the life expectancy of the contract owner or
the joint life expectancy of the contract owner and the contract
owner's designated beneficiary.
If the contract owner dies before distributions begin, the interest in the IRA
or SEP IRA must be distributed by December 31 of the calendar year in which the
fifth anniversary of the contract owner's death occurs, unless:
a) the contract owner names his or her surviving spouse as the beneficiary
and such spouse chooses to:
1) treat the contract as an Individual Retirement Annuity or SEP
IRA established for his or her benefit; or
2) receive distribution of the contract in substantially equal
payments over his or her life (or a period not longer than his
or her life expectancy) and beginning no later than December
31 of the year in which the contract owner would have reached
age 70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and such beneficiary elects to receive a distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year of the contract owner's
death.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Individual Retirement Annuity, SEP IRA or
Individual Retirement Account of the contract owner.
If the contract owner dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule being used before the
contract owner's death. However, a surviving spouse who is the beneficiary under
the annuity payment option may treat the contract as his or her own, in the same
manner as is described in section (a)(1) of this provision.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
A portion of each distribution will be included in the recipient's gross income
and taxed at ordinary income tax rates. The portion of a distribution which is
taxable is based on the ratio between the amount by which non-deductible
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purchase payments exceed prior non-taxable distributions and total account
balances at the time of the distribution. The owner of an Individual Retirement
Annuity or SEP IRA must annually report the amount of non-deductible purchase
payments, the amount of any distribution, the amount by which non-deductible
purchase payments for all years exceed non-taxable distributions for all years,
and the total balance of all Individual Retirement Annuities.
Individual Retirement Annuity or SEP IRA distributions will not receive the
favorable tax treatment of a lump sum distribution from a Qualified Plan. If the
contract owner dies before the entire interest in the contract has been
distributed, the balance will also be included in his or her gross estate.
REQUIRED DISTRIBUTIONS FOR ROTH IRAS
The rules for Roth IRAs do not require distributions to begin during the
contract owner's lifetime.
When the contract owner dies, the interest in the Roth IRA must be distributed
by December 31 of the calendar year in which the fifth anniversary of his or her
death occurs, unless:
a) the contract owner names his or her surviving spouse as the beneficiary
and the spouse chooses to:
1) treat the contract as a Roth IRA established for his or her
benefit; or
2) receive distribution of the contract in substantially equal
payments over his or her life (or a period not longer than his
or her life expectancy) and beginning no later than December
31 of the year following the year in which the contract owner
would have reached age 70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and the beneficiary chooses to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year in which the contract
owner dies.
Distributions from Roth IRAs may be either taxable or nontaxable, depending upon
whether they are "qualified distributions" or "non-qualified distributions" (see
"Federal Tax Considerations").
FEDERAL TAX CONSIDERATIONS
FEDERAL INCOME TAXES
The tax consequences of purchasing a contract described in this prospectus will
depend on:
o the type of contract purchased;
o the purposes for which the contract is purchased; and
o the personal circumstances of individual investors having interests in
the contracts.
See "Synopsis of the Contracts" for a brief description of the various types of
contracts and the different purposes for which the contracts may be purchased.
Existing tax rules are subject to change, and may affect individuals differently
depending on their situation. Nationwide does not guarantee the tax status of
any contracts or any transactions involving the contracts.
If the contract is purchased as an investment of certain retirement plans (such
as qualified retirement plans, Individual Retirement Accounts, and custodial
accounts as described in Sections 401, 408(a), and 403(b)(7) of the Internal
Revenue Code), tax advantages enjoyed by the contract owner and/or annuitant may
relate to participation in the plan rather than ownership of the annuity
contract. Such plans are permitted to purchase investments other than annuities
and retain tax-deferred status.
The following is a brief summary of some of the federal income tax
considerations related to the contracts. In addition to the federal income tax,
distributions from annuity contracts may be subject to state and local income
taxes. The tax rules across all states and localities are not uniform and
therefore will not be discussed in this prospectus. Tax rules that may apply to
contracts issued in U.S. territories such as Puerto
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Rico and Guam are also not discussed. Nothing in this prospectus should be
considered to be tax advice. Contract owners and prospective contract owners are
encouraged to consult a financial consultant, tax advisor or legal counsel to
discuss the taxation and use of the contracts.
The Internal Revenue Code sets forth different income tax rules for the
following types of annuity contracts:
o IRAs
o SEP IRAs;
o SIMPLE IRAs; and
o Roth IRAs.
IRAs, SEP IRAs and SIMPLE IRAs
Distributions from IRAs, SEP IRAs and SIMPLE IRAs are generally taxed when
received. If any of the amount contributed to the IRA was nondeductible for
federal income tax purposes, then a portion of each distribution is excludable
from income.
If distributions of income from an IRA are made prior to the date that the owner
attains the age of 59 1/2 years, the income is subject to both the regular
income tax and an additional penalty tax of 10%. (For SIMPLE IRAs, the 10%
penalty is increased to 25% if the distribution is made during the 2 year period
beginning on the date that the individual first participated in the SIMPLE IRA.)
The penalty tax can be avoided if the distribution is:
o made to a beneficiary on or after the death of the owner;
o attributable to the owner becoming disabled (as defined in the Internal
Revenue Code);
o part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and
his or her designated beneficiary;
o used for qualified higher education expenses; or
o used for expenses attributable to the purchase of a home for a
qualified first-time buyer.
Roth IRAs
Distributions of earnings from Roth IRAs are taxable or nontaxable depending
upon whether they are "qualified distributions" or "non-qualified
distributions." A "qualified distribution" is one that satisfies the five-year
rule and meets one of the following requirements:
o it is made on or after the date on which the contract owner attains age
59 1/2;
o it is made to a beneficiary (or the contract owner's estate) on or
after the death of the contract owner;
o it is attributable to the contract owner's disability; or
o it is used for expenses attributable to the purchase of a home for a
qualified first-time buyer.
The five year rule generally is satisfied if the distribution is not made within
the five taxable year period beginning with the first taxable year in which a
contribution is made to any Roth IRA established for the owner.
A qualified distribution is not included in gross income for federal income tax
purposes.
A non-qualified distribution is not includible in gross income to the extent
that the distribution, when added to all previous distributions, does not exceed
that total amount of contributions made to the Roth IRA. Any non-qualified
distribution in excess of the aggregate amount of contributions will be included
in the contract owner's gross income in the year that is distributed to the
contract owner.
Special rules apply for Roth IRAs that have proceeds received from a traditional
IRA prior to January 1, 1999 if the owner elected the special 4-year income
averaging provisions that were in effect for 1998.
If non-qualified distributions of income from a Roth IRA are made prior to the
date that the owner attains the age of 59 1/2 years, the income
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is subject to both the regular income tax and an additional penalty tax of 10%.
The penalty tax can be avoided if the distribution is:
o made to a beneficiary on or after the death of the owner;
o attributable to the owner becoming disabled as defined in the Internal
Revenue Code;
o part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and
his or her designated beneficiary;
o for qualified higher education expenses; or
o used for expenses attributable to the purchase of a home for a
qualified first-time buyer.
If the contract owner dies before the contract is completely distributed, the
balance may be included in the contract owner's gross estate for tax purposes.
WITHHOLDING
Pre-death distributions from the contracts are subject to federal income tax.
Nationwide will withhold the tax from the distributions unless the contract
owner requests otherwise.
Contract owners may not waive withholding if the distribution is subject to
mandatory back-up withholding (if no taxpayer identification number is given or
if the Internal Revenue Service notifies Nationwide that mandatory back-up
withholding is required). Mandatory back-up withholding rates are 31% of income
that is distributed.
NON-RESIDENT ALIENS
Generally, a pre-death distribution from a contract to a non-resident alien is
subject to federal income tax at a rate of 30% of the amount of income that is
distributed. Nationwide is required to withhold this amount and send it to the
Internal Revenue Service. Some distributions to non-resident aliens may be
subject to a lower (or no) tax if a treaty applies. In order to obtain the
benefits of such a treaty, the non-resident alien must:
1) provide Nationwide with proof of residency and citizenship (in
accordance with Internal Revenue Service requirements); and
2) provide Nationwide with an individual taxpayer identification number.
If the non-resident alien does not meet the above conditions, Nationwide will
withhold 30% of income from the distribution.
Another way to avoid the 30% withholding is for the non-resident alien to
provide Nationwide with sufficient evidence that:
1) the distribution is connected to the non-resident alien's conduct of
business in the United States; and
2) the distribution is includible in the non-resident alien's gross income
for United States federal income tax purposes.
Note that these distributions may be subject to back-up withholding, currently
31%, if a correct taxpayer identification number is not provided.
FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES
The following transfers may be considered a gift for federal gift tax purposes:
o a transfer of the contract from one contract owner to another; or
o a distribution to someone other than a contract owner.
Upon the contract owner's death, the value of the contract may subject to estate
taxes, even if all or a portion of the value is also subject to federal income
taxes.
Section 2612 of the Internal Revenue Code may require Nationwide to determine
whether a death benefit or other distribution is a "direct skip" and the amount
of the resulting generation skipping transfer tax, if any. A direct skip is when
property is transferred to, or a death benefit or other distribution is made to:
a) an individual who is two or more generations younger than the contract
owner; or
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b) certain trusts, as described in Section 2613 of the Internal Revenue
Code (generally, trusts that have no beneficiaries who are not 2 or
more generations younger than the contract owner).
If the contract owner is not an individual, then for this purpose ONLY,
"contract owner" refers to any person:
o who would be required to include the contract, death benefit,
distribution, or other payment in his or her federal gross estate at
his or her death; or
o who is required to report the transfer of the contract, death benefit,
distribution, or other payment for federal gift tax purposes.
If a transfer is a direct skip, Nationwide will deduct the amount of the
transfer tax from the death benefit, distribution or other payment, and remit it
directly to the Internal Revenue Service.
TAX CHANGES
The foregoing tax information is based on Nationwide's understanding of federal
tax laws. It is NOT intended as tax advice. All information is subject to change
without notice. For more details, contact your personal tax and/or financial
advisor.
STATEMENTS AND REPORTS
Nationwide will mail contract owners statements and reports. Therefore, contract
owners should promptly notify Nationwide of any address change.
These mailings will contain:
o statements showing the contract's quarterly activity;
o confirmation statements showing transactions that affect the contract's
value. Confirmation statements will not be sent for recurring
transactions (i.e., dollar cost averaging or salary reduction
programs). Instead, confirmation of recurring transactions will appear
in the contract's quarterly statements;
o semi-annual reports as of June 30 containing financial statements for
the variable account; and
o annual reports as of December 31 containing financial statements for
the variable account.
Contract owners should review statements and confirmations carefully. All errors
or corrections must be reported to Nationwide immediately to assure proper
crediting to the contract. Unless Nationwide is notified within 30 days of
receipt of the statement, Nationwide will assume statements and confirmation
statements are correct.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance contract and the other who was the owner of a variable annuity
contract, commenced a lawsuit in a federal court in Texas against Nationwide and
the American Century group of defendants (Robert Young and David D. Distad v.
Nationwide Life Insurance Company et al.). In this lawsuit, plaintiffs sought to
represent a class of variable life insurance contract owners and variable
annuity contract owners whom they claim were allegedly misled when purchasing
these variable contracts into believing that the performance of their underlying
mutual fund option managed by American Century, whose shares may only be
purchased by insurance companies, would track the performance of a mutual fund,
also managed by American Century, whose shares are publicly traded. The amended
complaint seeks unspecified compensatory and punitive damages. On April 27,
1998, the District Court denied, in part, and granted, in part, motions to
dismiss the
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complaint filed by Nationwide and American Century. The remaining claims against
Nationwide allege securities fraud, common law fraud, civil conspiracy, and
breach of contract. The District Court, on December 2, 1998, issued an order
denying plaintiffs' motion for class certification and the appeals court
declined to review the order denying class certification upon interlocutory
appeal. On June 11, 1999, the District Court denied the plaintiffs' motion to
amend their complaint and reconsider class certification. In January 2000,
Nationwide and American Century settled this lawsuit now limited to the claims
of the two named plaintiffs. On February 9, 2000 the court dismissed this
lawsuit with prejudice.
On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court
related to the sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide
Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life
and Annuity Insurance Company). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as a class action on behalf of all persons who purchased
individual deferred annuity contracts or participated in group annuity contracts
sold by Nationwide and the other named Nationwide affiliates which were used to
fund certain tax-deferred retirement plans. The amended complaint seeks
unspecified compensatory and punitive damages. No class has been certified. On
June 11, 1999, Nationwide and the other named defendants filed a motion to
dismiss the amended complaint. On March 8, 2000, the court denied the motion to
dismiss the amended complaint filed by Nationwide and other named defendants.
Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, NISC, is not engaged in any material litigation of any
nature.
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY
A "yield" and "effective yield" may be advertised for Money Market Fund. "Yield"
is a measure of the net dividend and interest income earned over a specific
seven-day period (which period will be stated in the advertisement) expressed as
a percentage of the offering price of the Money Market Fund's units. Yield is an
annualized figure, which means that it is assumed that the Money Market Fund
generates the same level of net income over a 52-week period. The "effective
yield" is calculated similarly but includes the effect of assumed compounding,
calculated under rules prescribed by the SEC. The effective yield will be
slightly higher than yield due to this compounding effect.
Nationwide may advertise the performance of a sub-account in relation to the
performance of other variable annuity sub-accounts, underlying mutual fund
options with similar or different objectives, or the investment industry as a
whole. Other investments to which the sub-accounts may be compared include, but
are not limited to:
o precious metals;
o real estate;
o stocks and bonds;
o closed-end funds;
o bank money market deposit accounts and passbook savings;
o CDs; and
o the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
o S&P 500;
o Shearson/Lehman Intermediate Government/Corporate Bond Index;
o Shearson/Lehman Long-Term Government/Corporate Bond Index;
o Donoghue Money Fund Average;
o U.S. Treasury Note Index;
o Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and
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o Dow Jones Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
o Lipper Analytical Services, Inc.;
o CDA/Wiesenberger;
o Morningstar;
o Donoghue's;
o magazines such as:
- Money;
- Forbes;
- Kiplinger's Personal Finance Magazine;
- Financial World;
- Consumer Reports;
- Business Week;
- Time;
- Newsweek;
- National Underwriter; and
- News and World Report;
o LIMRA;
o Value;
o Best's Agent Guide;
o Western Annuity Guide;
o Comparative Annuity Reports;
o Wall Street Journal;
o Barron's;
o Investor's Daily;
o Standard & Poor's Outlook; and
o Variable Annuity Research & Data Service (The VARDS Report).
These rating services and publications rank the underlying mutual funds'
performance against other funds. These rankings may or may not include the
effects of sales charges or other fees.
Financial Rating Services
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. Nationwide may
advertise these ratings. These ratings reflect Nationwide's financial strength
or claims-paying ability. The ratings are not intended to reflect the investment
experience or financial strength of the variable account.
Some Nationwide advertisements and endorsements may include lists of
organizations, individuals or other parties that recommend Nationwide or the
contract. Furthermore, Nationwide may occasionally advertise comparisons of
currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
Historical Performance of the Sub-Accounts
Nationwide will advertise historical performance of the sub-accounts. Nationwide
may advertise for the sub-account's standardized "average annual total return,"
calculated in a manner prescribed by the SEC, and nonstandardized "total
return." Average annual total return shows the percentage rate of return of a
hypothetical initial investment of $1,000 for the most recent one, five and ten
year periods (or for a period covering the time the underlying mutual fund has
been available in the variable account if it has not been available for one of
the prescribed periods). This calculation reflects the standard 7-year CDSC
schedule and the deduction of all charges that could be made to the contracts,
except for premium taxes, which may be imposed by certain states.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," shows the percentage rate of return of a hypothetical
initial investment of $10,000 for the most recent one, five and ten year periods
(or for a period covering the time the underlying mutual fund has been in
existence). For those underlying mutual funds which have not been available for
one of the prescribed periods, the nonstandardized total return illustrations
will show the investment performance the underlying mutual funds would have
achieved (reduced by the same charges except the CDSC) had they been available
in the variable account for one of the periods. The CDSC is not reflected
because the contracts are designed for long term investment. The CDSC, if
reflected, would decrease the level of performance shown. An initial investment
of $10,000 is assumed because that amount is closer to the size of a typical
contract than $1,000, which was used in calculating the standardized average
annual total return.
41
<PAGE> 42
The standardized average annual total return and nonstandardized total return
quotations are calculated using data for the period ended December 31, 1999. If
the underlying mutual fund has been available in the variable account for less
than one year, (of if the underlying mutual fund has been effective for less
than one year) standardized and non-standardized return is not annualized.
However, Nationwide generally provides performance information more frequently.
Information relating to performance of the sub-accounts is based on historical
earnings and does not represent or guarantee future results.
42
<PAGE> 43
UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY
<TABLE>
NON-STANDARDIZED TOTAL RETURN
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
10 Years To
1 Year To 5 Years To 12/31/99 or Date Fund
Sub-Account Options 12/31/99 12/31/99 Life of Fund Effective
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Short-Term Government (formerly 0.22% 4.02% 3.90% 12/15/82
Benham Short-Term Government)
- -------------------------------------------------------------------------------------------------------------------
American Century: Income & Growth 16.12% 26.14% 19.52% 12/17/90
- -------------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth 32.63% 25.07% 16.28% 10/31/58
Century Growth)
- -------------------------------------------------------------------------------------------------------------------
American Century: International Growth (formerly 62.01% 22.70% 17.80% 05/01/91
Twentieth Century International Growth)
- -------------------------------------------------------------------------------------------------------------------
American Century: Ultra (formerly Twentieth 39.33% 27.83% 22.68% 11/02/81
Century Ultra)
- -------------------------------------------------------------------------------------------------------------------
Delchester Fund-Institutional Class -4.77% 5.31% 7.18% 08/20/70
- -------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 0.14% 5.52% 5.84% 06/25/76
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 8.24% 24.29% 15.10% 01/31/84
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. 8.47% 12.95% 10.67% 09/30/92
- -------------------------------------------------------------------------------------------------------------------
Dreyfus S&P 500 Index Fund 18.39% 26.00% 15.74% 01/02/90
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century Fund, Inc. - Class Z 28.17% 28.04% 16.31% 03/29/72
(formerly, Dreyfus Third Century Fund, Inc.)
- -------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 14.55% 13.46% 8.85% 08/31/78
- -------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F -3.91% 6.06% 7.84% 05/20/87
- -------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 0.37% 7.78% 9.05% 08/23/84
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund - Class T 2.84% 11.08% 9.78% 01/31/87
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund - Class T 1.57% 16.30% 15.15% 09/30/92
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - Class 2.23% 19.23% 16.35% 11/30/87
T
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T 6.65% 9.21% 11.79% 01/31/87
- -------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 11.81% 14.77% 12.04% 12/28/88
- -------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 5.46% 18.35% 12.82% 05/16/66
- -------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 22.14% 24.40% 17.15% 05/02/63
- -------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 1.22% 13.74% 11.38% 04/16/47
- -------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund, Inc. - Mutual Shares 12.84% 15.89% 12.51% 01/31/68
Fund: Class A
- -------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 69.27% 31.19% 22.29%
- -------------------------------------------------------------------------------------------------------------------
Janus Fund 44.92% 29.25% 18.73% 12/31/85
- -------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 62.46% 43.14% 25.05% 04/26/85
- -------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 61.94% 28.98% 23.30% 05/15/91
- -------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - Open Shares -0.15% 2.56% 5.54%
- -------------------------------------------------------------------------------------------------------------------
MFS(R) World Governments Fund - Class A (formerly -5.06% 2.55% 4.68% 02/25/81
MFS(R) World Governments Fund)
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund -4.35% 6.08% 5.56% 03/01/80
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund -1.83% 22.14% 13.76% 05/30/33
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 14.82% 20.51% 13.52% 02/27/61
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund - Prime Shares 3.02% 3.43% 3.15% 03/01/80
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate U.S. Government Bond Fund -3.54% 5.66% 4.44% 02/28/92
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 44
<TABLE>
NON-STANDARDIZED TOTAL RETURN (CONTINUED)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
10 Years To
1 Year To 5 Years To 12/31/99 or Date Fund
Sub-Account Options 12/31/99 12/31/99 Life of Fund Effective
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nationwide S&P 500(R) Index Fund - Class R 17.69% N/A 25.96% 10/30/98(1)
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R) - Neuberger Berman 2.36% 14.90% 11.10% 09/26/88
Genesis Trust
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. 6.75% 13.60% 11.92% 06/01/50
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund 0.02% 3.96% 4.37% 06/09/86
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Fund, Inc. 6.10% 18.66% 13.02% 07/16/68
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA 56.12% 22.57% 14.42% 12/08/69
- -----------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series 9.02% 14.05% 10.13% 01/30/81
- -----------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A 7.42% N/A 12.29% 11/02/98(1)
- -----------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 19.18% N/A 21.50% 11/02/98(1)
- -----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Class A 32.65% N/A 44.42% 11/02/98(1)
- -----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A -6.40% N/A -1.41% 11/02/98(1)
- -----------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Fund Class A 16.78% N/A 22.32% 11/02/98(1)
- -----------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 38.23% 22.43% 19.87% 12/29/89
- -----------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 57.37% 28.65% 17.28% 12/30/81
- -----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 37.10% 11.39% 9.56% 10/05/82
- -----------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 39.69% 22.12% 16.58% 01/31/88
- -----------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund -1.21% 5.60% 5.50% 11/01/90
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
10 Years or
Date Fund
Available in Date Fund
Variable Added to
1 Year To 5 Years To Account Variable
Sub-Account Options 12/31/99 12/31/99 To 12/31/99 Account
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Short-Term Government
(formerly Benham Short-Term Government) -9.30% 0.95% 1.42% 04/30/84
- -----------------------------------------------------------------------------------------------------------------
American Century: Income & Growth 6.42% N/A 21.46% 10/31/96
- -----------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth 22.93% 22.78% 14.34% 01/28/83
Century Growth)
- -----------------------------------------------------------------------------------------------------------------
American Century: International Growth 52.31% N/A 22.25% 02/01/95
(formerly Twentieth Century International
Growth)
- -----------------------------------------------------------------------------------------------------------------
American Century: Ultra (formerly Twentieth 29.63% 25.74% 16.85% 10/15/93
Century Ultra)
- -----------------------------------------------------------------------------------------------------------------
Delchester Fund-Institutional Class -13.95% 2.49% 1.94% 12/31/92
- -----------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. -9.38% 2.65% -0.15% 01/31/94
- -----------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. -1.46% N/A 12.55% 01/05/98
- -----------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. -1.23% N/A 2.65% 01/05/98
- -----------------------------------------------------------------------------------------------------------------
Dreyfus S&P 500 Index Fund 8.69% 24.00% 17.02% 01/04/93
- -----------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century Fund, Inc. - Class 18.47% 26.04% 16.18% 01/04/93
Z (formerly, Dreyfus Third Century Fund, Inc.)
- -----------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 4.85% 11.00% 7.44% 01/04/93
- -----------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F -13.15% N/A -1.44% 11/01/96
- -----------------------------------------------------------------------------------------------------------------
Federated High Yield Trust -9.17% N/A -7.00% 12/31/97
- -----------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund - Class T -6.86% N/A 7.41% 12/18/95
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE> 45
<TABLE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN (CONTINUED)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
10 Years or
Date Fund
Available in Date Fund
Variable Added to
1 Year To 5 Years To Account Variable
Sub-Account Options 12/31/99 12/31/99 To 12/31/99 Account
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor Equity Income Fund - Class T -8.05% N/A 9.85% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - -7.44% N/A 13.74% 12/18/95
Class T
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T -3.05% N/A 3.42% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 2.11% 12.28% 7.90% 10/15/93
- ----------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund -4.24% 16.20% 10.72% 03/16/83
- ----------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 12.44% 22.28% 17.93% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund -8.38% 11.32% 10.43% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund, Inc. - Mutual 3.14% N/A -0.07% 01/05/98
Shares Fund: Class A
- ----------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 59.57% N/A 62.93% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Janus Fund 35.22% N/A 26.67% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 52.76% 41.23% 27.42% 10/15/93
- ----------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 52.24% N/A 28.79% 11/01/96
- ----------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - Open Shares -9.65% N/A -6.54% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
MFS(R) World Governments Fund - Class A (formerly -14.22% -0.51% 2.53% 02/15/83
MFS(R) World Governments Fund)
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund -13.56% 3.29% 3.33% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund -11.21% 20.10% 11.73% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 5.12% 18.29% 11.44% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund - Prime Shares -6.68% 0.23% 0.49% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate U.S. Government Bond -12.80% N/A -0.79% 12/18/95
Fund
- ----------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index Fund - Class R 7.99% N/A 6.10% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R) - Neuberger -7.32% N/A -8.24% 01/05/98
Berman Genesis Trust
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. -2.95% 11.28% 8.15% 01/31/94
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund -9.49% 0.89% -0.49% 09/30/93
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Fund, Inc. -3.60% 16.58% 12.74% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA 46.42% 20.12% 18.80% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series -0.68% 11.56% 7.69% 01/31/94
- ----------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A -2.28% N/A -3.46% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 9.48% N/A 7.74% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Class A 22.95% N/A 21.18% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A -15.47% N/A -14.30% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Fund Class A 7.08% N/A 9.17% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 28.53% N/A 31.01% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 47.67% 26.41% 20.61% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 27.40% N/A 9.04% 02/01/95
- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 29.97% N/A 15.92% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund -10.64% N/A -2.97% 01/05/98
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1)The Nationwide S&P 500(R) Index Fund, Prestige Balanced Fund, Prestige
International Fund, Prestige Large Cap Growth Fund, Prestige Large Cap Value
Fund and Prestige Small Cap Fund were added to the variable account on December
23, 1998. Therefore, no performance information is available.
45
<PAGE> 46
TABLE OF CONTENTS: STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History..............................................1
Services.....................................................................1
Purchase of Securities Being Offered.........................................1
Underwriters.................................................................2
Calculation of Performance...................................................2
Annuity Payments.............................................................3
Financial Statements.........................................................4
46
<PAGE> 47
APPENDIX A: OBJECTIVES FOR THE UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investments
for variable annuity contracts and variable life insurance policies issued by
insurance companies.
There is no guarantee that the investment objectives will be met.
(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: SHORT-TERM GOVERNMENT (FORMERLY BENHAM SHORT-TERM GOVERNMENT)
Investment Objective: To seek current income and limited price volatility by
maintaining an average weighted portfolio maturity of four years or less. The
fund invests in securities of the United States government and its agencies.
American Century Investment Management, Inc. serves as the fund's investment
adviser.
AMERICAN CENTURY: INCOME & GROWTH
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 Investment Management, Inc. serves as the fund's
investment adviser.
AMERICAN CENTURY: GROWTH (FORMERLY TWENTIETH CENTURY GROWTH)
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 Investment
Management, Inc. serves as the fund's investment adviser.
AMERICAN CENTURY: INTERNATIONAL GROWTH (FORMERLY TWENTIETH CENTURY INTERNATIONAL
GROWTH)
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
Investment Management, Inc. serves as the fund's investment adviser.
AMERICAN CENTURY: ULTRA (FORMERLY TWENTIETH CENTURY ULTRA)
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. American Century
Investment Management, Inc. serves as the fund's investment adviser.
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.
Delaware Management Company, Inc. serves as the fund's investment adviser.
DREYFUS A BONDS PLUS, INC.
Investment Objective: The fund's goal is to provide the maximum amount of
current income
47
<PAGE> 48
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. The Dreyfus Corporation serves as
the fund's investment adviser.
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. The Dreyfus Corporation serves as the fund's
investment adviser.
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. The Dreyfus Corporation serves as the
fund's investment adviser.
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 Corporation
serves as the fund's investment adviser.
DREYFUS PREMIER THIRD CENTURY FUND, INC. - CLASS Z (FORMERLY, DREYFUS THIRD
CENTURY FUND, INC.)
Investment Objective: Primarily seeks to provide capital growth through equity
investment in companies that, in the opinion of the fund's management, not only
meet traditional investment standards but which also show evidence that they
conduct their business, in a manner that contributes to the enhancement of the
quality of life in America. Current income is secondary to the primary goal. The
Dreyfus Corporation serves as the fund's investment adviser.
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. Evergreen Asset Management Corp.
serves as the Fund's investment adviser.
FEDERATED BOND FUND - CLASS F
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
48
<PAGE> 49
securities which are deemed to be consistent with the fund's investment
objective. Federated Investment Management Company serves as the fund's
investment adviser.
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. Federated Investment Management Company serves as the fund's
investment adviser.
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 Management & Research Company serves as the
fund's investment adviser.
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 Management & Research Company serves as
the fund's investment adviser.
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 Management & Research Company serves as
the fund's investment adviser.
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
Management & Research Company serves as the fund's investment adviser.
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 Management & Research Company serves as the fund's investment adviser.
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 Management & Research
Company serves as the fund's investment adviser.
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 Management & Research Company serves as
the fund's investment adviser.
FIDELITY PURITAN FUND
Investment Objective: Seeks to obtain as much income as possible, consistent
with the preservation and conservation of capital, by
49
<PAGE> 50
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 Management & Research Company serves as the fund's
investment adviser.
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:
o at least 80% in income-producing debt securities and preferred stocks,
including convertible securities; and
o 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.
Fidelity Management & Research Company serves as the fund's investment adviser.
FRANKLIN MUTUAL SERIES FUND, INC. - MUTUAL SHARES FUND: CLASS A
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. Franklin Mutual
serves as the fund's investment adviser.
INVESCO DYNAMICS FUND
Investment Objective: To seek appreciation of capital through aggressive
investment policies. The fund invests primarily in common stocks of U.S.
companies traded on national securities exchanges and over-the-counter. The fund
also has the flexibility to invest in preferred stocks and convertible or
straight issues of debentures, as well as foreign securities. INVESCO Fund
Group, Inc. serves as the fund's investment adviser. INVESCO Trust Company
serves as the fund's sub-adviser.
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 Capital Corporation
serves as the Fund's investment adviser.
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 Capital Corporation serves as the
fund's investment adviser.
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
50
<PAGE> 51
country of organization or place of principal business activity. The fund
normally invests in issuers from at least five different countries. Janus
Capital Corporation serves as the fund's investment adviser.
LAZARD SMALL CAP PORTFOLIO - OPEN SHARES
Investment Objective: To seek capital appreciation through investing primarily
in equity securities of companies with market capitalizations under $1 billion
that are believed by the investment adviser to be inexpensively priced relative
to the return on total capital or equity. Lazard Asset Management serves as the
fund's investment adviser.
MFS(R) GLOBAL GOVERNMENTS FUND - CLASS A (FORMERLY 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. Massachusetts Financial
Services Company serves as the fund's investment adviser.
NATIONWIDE BOND FUND - CLASS D
Investment Objective: Seeks as high a level of income as is consistent with
preservation of capital. The fund invests primarily in fixed-income securities
and currently focuses on corporate debt investments and U.S. Government
mortgage-backed securities. Under normal market conditions, the dollar-weighted
average portfolio maturity of the fund will be intermediate, which is defined as
being between six and ten years. Villanova Mutual Fund Capital Trust ("VMF") is
the fund's investment advisor. VMF is an indirect subsidiary of Nationwide
Financial Services, Inc.
NATIONWIDE FUND - CLASS D
Investment Objective: Seeks total return through a flexible combination of
current income and capital appreciation. The fund invests primarily in common
stocks, but also in convertible securities, other equity securities, bonds and
money market obligations. VMF is the fund's investment advisor
NATIONWIDE GROWTH FUND - CLASS D
Investment Objective: Seeks long-term capital appreciation. The fund invests
primarily in equity securities of companies of all sizes. Major emphasis in the
selection of securities is placed on companies which have capable management,
and are in fields where social and economic trends, technological developments,
and new processes or products indicate a potential for greater-than-average
growth. VMF is the fund's investment adviser.
NATIONWIDE MONEY MARKET FUND - PRIME SHARES
Investment Objective: Seeks as high a level of current income as is consistent
with the preservation of capital and maintenance of liquidity. The fund invests
in high-quality money market instruments maturing in 397 days or less. VMF is
the fund's investment adviser.
NATIONWIDE(R) INTERMEDIATE U.S. GOVERNMENT BOND FUND - CLASS D
Investment Objective: Seeks as high a level of current income as is consistent
with the preservation of capital. The fund invests in securities of the U.S.
Government and its agencies and instrumentalities. The average duration of the
Fund will be between three and a half and six years. VMF is the Fund's
Investment adviser.
NATIONWIDE S&P 500(R) INDEX FUND - SERVICE CLASS
Investment Objective: To provide investment results that correspond to the price
and yield performance of publicly traded common stocks as represented by the
Standard & Poor's 500 Composite Stock Price Index (the "Index"). The Fund
attempts to be fully invested at all times in stocks that comprise the Index and
stock index futures, and in any event, at least 80% of the Fund's net assets
will be invested in stocks comprising the Index. VMF serves as the fund's
51
<PAGE> 52
investment adviser and The Dreyfus Corporation is the fund's sub-adviser.
"S&P(R)" has been licensed for use by Nationwide Advisory Services, Inc. The
fund is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the fund.
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. Neuberger Berman Management Incorporated serves as the
fund's investment adviser. THIS FUND IS NOT AVAILABLE FOR PLANS ESTABLISHED ON
OR AFTER MARCH 6, 1998.
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 Management Incorporated serves
as the fund's investment adviser. THIS FUND IS NOT AVAILABLE FOR PLANS
ESTABLISHED ON OR AFTER MARCH 6, 1998
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 Management Incorporated serves as the fund's
investment adviser.
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. Neuberger Berman Management Incorporated serves as the fund's investment
adviser.
OPPENHEIMER GLOBAL FUND/VA
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. OppenheimerFunds,
Inc. serves as the fund's investment adviser.
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. Phoenix Investment
Counsel serves as the fund's investment adviser.
PRESTIGE BALANCED FUND - CLASS A
Investment Objective: To provide a high total return from a diversified
portfolio of equity and
52
<PAGE> 53
fixed income securities. The fund seeks to provide a total return that
approaches the total return typical of a portfolio of fixed income securities.
Under normal market conditions, the Fund will invest approximately 60% of its
asset in equity securities and 40% in fixed income securities. The equity
securities will primarily be securities of large and medium sized companies
included in the Standard & Poor's 500 Composite Stock Price Index, and the fixed
income securities will cover a range of fixed income sectors and securities,
including government, corporate, asset-backed and mortgage-backed securities.
VMF serves as the Fund's investment adviser and J.P. Morgan Investment
Management Inc. is the fund's sub-adviser.
PRESTIGE INTERNATIONAL FUND - CLASS A
Investment Objective: Capital appreciation. The fund seeks to accomplish its
investment objective by investing primarily in equity securities of non- United
States companies that, in the opinion of its subadviser, are inexpensively
priced relative to the return on total capital or equity. The fund invests
primarily in equity securities of non-United State companies. Under normal
market conditions, the Fund will invest at least 80% of the value of its total
assets in the equity securities of companies within at least three different
countries (not including the United States). VMF serves as the Fund's investment
adviser and Lazard Asset Management is the Fund's sub-adviser.
PRESTIGE LARGE CAP GROWTH FUND - CLASS A
Investment Objective: Long-term capital appreciation. The fund seeks to achieve
its investment objective from a broadly diversified portfolio of equity
securities of large capitalization companies that are expected to have better
prospects of earnings growth than the growth rate of the general domestic
economy. Dividend income is a secondary objective. A large capitalization
company is a company with a market capitalization and industry characteristics
that are similar to companies in Russell 1000(R) Growth Index, which currently
have market capitalizations that range from $14 billion to $272 billion. VMF
serves as the fund's investment adviser and Goldman Sachs Asset Management is
the Fund's sub-adviser.
PRESTIGE LARGE CAP VALUE FUND - CLASS A
Investment Objective: To maximize total return, consisting of both capital
appreciation and current income. The fund seeks to achieve its investment
objective by investing in U.S. equity securities that are currently undervalued
as determined by its subadviser. Under normal market conditions, substantially
all, but in no event less than 65% of the Fund's total assets will be invested
in equity securities of large capitalization U.S. companies, including foreign
companies whose securities are traded in the United States and who comply with
U.S. accounting standards. A large capitalization company is a company with a
market capitalization and industry characteristics that are similar to companies
in the Russell 1000(R) Value Index, which currently have market capitalizations
that range from $1.4 billion to $272 billion. VMF serves as the fund's
investment adviser and Brinson Partners, Inc. is the fund's sub-adviser.
PRESTIGE SMALL CAP FUND - CLASS A
Investment Objective: Long-term capital appreciation. The fund seeks to
accomplish its investment objective from a broadly diversified portfolio of
equity securities issued by U.S. companies that have small market
capitalizations. Under normal market conditions, the fund will invest at least
65% of its total assets in equity securities of companies whose market
capitalizations at the time of investment do not exceed 110% of the largest
company in the Russell 2000(R) Small Stock Index; these companies currently have
market capitalizations that range from $222 million to $1.4 billion. VMF serves
as the Fund's investment adviser and INVESCO Management & Research, Inc. serves
as the fund's sub-adviser, providing daily portfolio management for the fund.
STRONG COMMON STOCK FUND, INC.
Investment Objective: To seek capital growth by investing in a diversified
portfolio of equity securities which, in the opinion of the Fund's
53
<PAGE> 54
investment adviser, possess the potential for price appreciation. Strong Capital
Management, Inc. serves as the Fund's investment adviser.
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. Strong Capital Management, Inc. serves as the fund's
investment adviser.
TEMPLETON FOREIGN FUND - CLASS A
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. Templeton Investment
Counsel, Inc. serves as the Fund's investment adviser.
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. Credit Suisse Asset Management, LLC,
serves as the Fund's investment adviser.
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. Credit Suisse Asset Management, LLC, serves
as the fund's investment adviser.
(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: SHORT-TERM GOVERNMENT (FORMERLY BENHAM SHORT-TERM GOVERNMENT)
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 Investment Management, Inc. serves as the fund's
investment adviser.
AMERICAN CENTURY: GROWTH (FORMERLY TWENTIETH CENTURY GROWTH)
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. American Century Investment
Management, Inc. serves as the fund's investment adviser.
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
54
<PAGE> 55
Management & Research Company serves as the fund's investment adviser.
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 Management & Research
Company serves as the fund's investment adviser.
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.
Fidelity Management & Research Company serves as the fund's investment adviser.
MFS(R) GLOBAL GOVERNMENTS FUND - CLASS A (FORMERLY 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. Massachusetts Financial
Services Company serves as the Fund's investment adviser.
NATIONWIDE MONEY MARKET FUND - PRIME SHARES
Investment Objective: Seeks as high a level of current income as is consistent
with the preservation of capital and maintenance of liquidity. The fund invests
in high-quality money market instruments maturing in 397 days or less. VMF
serves as the fund's investment adviser.
55
<PAGE> 56
APPENDIX B: 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 BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Short 23.012292 23.132624 0.52% 87,493 1999
Term Government 21.986961 23.012292 4.66% 131,664 1998
(formerly Benham Short 21.012508 21.986961 4.64% 138,808 1997
Term Government) 20.449954 21.012508 2.75% 157,941 1996
18.748399 20.449954 9.08% 216,620 1995
19.087872 18.748399 -1.78% 183,649 1994
18.563845 19.087872 2.82% 182,484 1993
18.018283 18.563845 3.03% 177,970 1992
16.352445 18.018283 10.19% 191,264 1991
15.400806 16.352445 6.18% 188,328 1990
- -----------------------------------------------------------------------------------------------------------------------
American Century: Income 17.640513 20.537578 16.42% 534,684 1999
& Growth 14.002308 17.640513 25.98% 397,026 1998
10.551440 14.002308 32.71% 135,424 1997
10.000000 10.551440 5.51% 18,133 1996
- -----------------------------------------------------------------------------------------------------------------------
American Century: 88.518097 117.667874 32.93% 153,919 1999
Growth (formerly 65.572069 88.518097 34.99% 150,519 1998
Twentieth Century Growth) 51.389039 65.572069 27.60% 158,492 1997
45.274141 51.389039 13.51% 186,518 1996
38.113717 45.274141 18.79% 231,124 1995
39.197771 38.113717 -2.77% 324,141 1994
38.275689 39.197771 2.41% 335,369 1993
40.518750 38.275689 -5.54% 404,811 1992
24.287059 40.518750 66.83% 410,440 1991
25.592676 24.287059 -5.10% 401,940 1990
- -----------------------------------------------------------------------------------------------------------------------
American Century: 18.416900 29.892733 62.31% 67,212 1999
International Growth 15.678789 18.416900 17.46% 48,212 1998
(formerly Twentieth 13.268469 15.678789 18.17% 31,799 1997
Century International 11.748911 13.268469 12.93% 7,683 1996
Growth) 10.000000 11.748911 17.49% 25,477 1995
- -----------------------------------------------------------------------------------------------------------------------
American Century: Ultra 22.284614 31.115121 39.63% 958,510 1999
(formerly Twentieth 16.780808 22.284614 32.80% 784,677 1998
Century Ultra) 13.807925 16.780808 21.53% 660,821 1997
12.289075 13.807925 12.36% 530,842 1996
9.043121 12.289075 35.89% 266,570 1995
9.505758 9.043121 -4.87% 116,020 1994
10.000000 9.505758 -4.94% 2,713 1993
- -----------------------------------------------------------------------------------------------------------------------
Delchester Fund Inst'l 14.911925 14.244875 -4.47% 79,605 1999
15.348845 14.911925 -2.85% 73,489 1998
13.618147 15.348845 12.71% 87,319 1997
12.257125 13.618147 11.10% 70,363 1996
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
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE> 57
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dreyfus Appreciation Fund, 12.724781 13.811292 8.54% 156,211 1999
Inc. - Q 10.000000 12.724781 27.25% 56,730 1998
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, 10.755504 11.699291 8.77% 29,698 1999
Inc. - Q 10.000000 10.755504 7.56% 14,859 1998
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 12.008201 12.061566 0.44% 160,276 1999
11.848519 12.008201 1.35% 14,859 1998
10.958199 11.848519 8.12% 156,006 1997
10.819193 10.958199 1.28% 169,248 1996
9.110600 10.819193 18.75% 53,005 1995
10.000000 9.110600 -8.89% 15,283 1994
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus S&P 500 Index 28.976575 34.392545 18.69% 692,394 1999
Fund 22.921661 28.976575 26.42% 429,513 1998
17.509385 22.921661 30.91% 332,923 1997
14.505515 17.509385 20.71% 187,389 1996
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
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third 25.825514 33.178138 28.47% 59,207 1999
Century Fund, Inc. - Class 20.101260 25.825514 28.48% 41,708 1998
Z (formerly, Dreyfus Third 15.742432 20.101260 27.69% 35,892 1997
Century Fund, Inc.) 12.829548 15.742432 22.70% 21,194 1996
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 Income and 17.031564 19.561585 14.85% 72,494 1999
Growth Fund (formerly 17.394044 17.031564 -2.08% 75,243 1998
Evergreen Total Return 14.032960 17.394044 23.95% 63,791 1997
Fund) 12.594984 14.032960 11.42% 65,357 1996
10.301799 12.594984 22.26% 60,789 1995
11.153183 10.301799 -7.63% 51,305 1994
10.000000 11.153183 11.53% 32,321 1993
- -----------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - 11.547474 11.130751 -3.61% 139,182 1999
Class F 11.076983 11.547474 4.25% 104,392 1998
10.117861 11.076983 9.48% 33,538 1997
10.000000 10.117861 1.18% 9,873 1996
- -----------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 9.976102 10.042770 0.67% 49,637 1999
- - Q 10.000000 9.976102 -0.24% 49,055 1998
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced 14.984876 15.455350 3.14% 86,087 1999
Fund - Class T 13.150098 14.984876 13.95% 31,056 1998
10.890814 13.150098 20.74% 13,345 1997
10.177458 10.890814 7.01% 2,740 1996
10.000000 10.177458 1.77% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE> 58
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Advisor Equity 16.455574 16.762859 1.87% 122,013 1999
Income Fund - Class T 14.355400 16.455574 14.63% 103,814 1998
11.552736 14.355400 24.26% 84,318 1997
10.213719 11.552736 13.11% 59,163 1996
10.000000 10.213719 2.14% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 18.629791 19.101353 2.53% 488,519 1999
Opportunities Fund - 15.224094 18.629791 22.37% 391,088 1998
Class - T 11.997760 15.224094 26.89% 315,184 1997
10.325686 11.997760 16.19% 177,245 1996
10.000000 10.325686 3.26% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High 12.545500 13.417364 6.95% 219,180 1999
Yield 12.767617 12.545500 -1.74% 22,247 1998
Fund - Class T 11.241941 12.767617 13.57% 195,236 1997
10.057673 11.241941 11.77% 70,939 1996
10.000000 10.057673 0.58% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager 17.206302 19.290540 12.11% 290,579 1999
15.016191 17.206302 14.58% 240,850 1998
12.442308 15.016191 20.57% 244,272 1997
11.183603 12.442308 11.25% 244,667 1996
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 Capital & Income 48.330455 54.000183 11.73% 17,840 1999
Fund 46.743425 48.330455 3.40% 24,848 1998
41.287772 46.743425 13.21% 27,378 1997
37.550944 41.287772 9.95% 29,770 1996
32.589111 37.550944 15.23% 37,608 1995
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
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Equity - Income 78.774753 83.313397 5.76% 193,545 1999
Fund 70.928467 78.774753 11.06% 216,592 1998
55.285184 70.928467 28.30% 245,733 1997
46.285491 55.285184 19.44% 257,747 1996
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
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE> 59
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Magellan(R) Fund 29.350937 35.935860 22.44% 1,080,953 1999
22.253917 29.350937 31.89% 775,189 1998
17.810611 22.253917 24.95% 655,202 1997
16.158074 17.810611 10.23% 6,562 1996
11.964387 16.158074 35.05% 63,859 1995
12.346838 11.964387 -3.10% 07,064 1994
10.000000 12.346838 23.47% 9,100 1993
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 22.760633 23.106868 1.52% 637,179 1999
19.778111 22.760633 15.08% 631,678 1998
16.377974 19.778111 20.76% 99,590 1997
14.410892 16.377974 13.65% 75,617 1996
12.020413 14.410892 19.89% 01,466 1995
11.972512 12.020413 0.40% 61,179 1994
10.000000 11.972512 19.73% 4,320 1993
- -----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High 23.899779 25.512888 6.75% 4,175 1999
Income Portfolio 25.310146 23.899779 -5.57% 5,077 1998
21.793257 25.310146 16.14% 0,793 1997
19.364421 21.793257 12.54% 2,382 1996
16.267014 19.364421 19.04% 2,970 1995
16.739460 16.267014 -2.82% 4,151 1994
14.073333 16.739460 18.94% 2,931 1993
11.587552 14.073333 21.45% 2,842 1992
10.000000 11.587552 15.88% 0,365 1991
- -----------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series 9.868029 11.164707 13.14% 26,055 1999
Franklin Mutual Series 10.000000 9.868029 -1.32% 18,848 1998
Franklin Mutual Series
- -----------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 10.504025 17.811356 69.57% 198,949 1999
- - Q 10.000000 10.504025 5.04% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Janus Fund 20.070038 29.145619 45.22% 595,937 1999
14.640570 20.070038 37.09% 303,830 1998
12.087447 14.640570 21.12% 35,485 1997
10.239338 12.087447 18.05% 33,123 1996
10.000000 10.239338 2.39% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 32.342568 52.641837 62.76% 995,837 1999
18.897600 32.342568 71.15% 507,576 1998
14.762398 18.897600 28.01% 12,701 1997
11.699046 14.762398 26.18% 30,288 1996
8.701036 11.699046 34.46% 6,594 1995
9.451097 8.701036 -7.94% 6,135 1994
10.000000 9.451097 -5.49% 1,020 1993
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE> 60
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Worldwide Fund 15.241714 24.727791 62.24% 769,694 1999
12.268712 15.241714 24.23% 459,107 1998
10.317427 12.268712 18.91% 23,968 1997
10.000000 10.317427 3.17% 5,099 1996
- -----------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio 10.448830 10.464373 0.15% 17,391 1999
- - Open Shares - Q 10.000000 10.448830 4.49% 45 1998
- -----------------------------------------------------------------------------------------------------------------------
MFS(R) Global 37.527462 35.741694 -4.76% 14,393 1999
Governments Fund - Q 36.509244 37.527462 2.79% 19,990 1998
36.879814 36.509244 -1.00% 0,631 1997
35.454983 36.879814 4.02% 8,013 1996
31.104159 35.454983 13.99% 4,015 1995
33.728667 31.104159 -7.78% 9,642 1994
28.864451 33.728667 16.85% 5,016 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
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - 43.667785 41.898652 -4.05% 37,478 1999
Class D - Q 40.827520 43.667785 6.96% 36,470 1998
37.842928 40.827520 7.89% 41,735 1997
37.782872 37.842928 0.16% 42,476 1996
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
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - 43.480582 41.719901 -4.05% 73 1999
Class D - NQ 40.652493 43.480582 6.96% 148 1998
37.680696 40.652493 7.89% 176 1997
37.620900 37.680696 0.16% 194 1996
30.700082 37.620900 22.54% 622 1995
33.845410 30.700082 -9.29% 657 1994
30.971200 33.845410 9.28% 676 1993
29.061793 30.971200 6.57% 836 1992
25.191682 29.061793 15.36% 1,030 1997
23.585215 25.191682 6.81% 1,070, 1990
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE> 61
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R) Fund - 125.467347 123.552516 -1.53% 69,097 1999
Class D - Q 97.524886 125.467347 28.65% 59,155 1998
70.764576 97.524886 37.82% 45,672 1997
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
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - 130.686988 128.692505 -1.53% 149 1999
Class D - NQ 101.582074 130.686988 28.65% 176 1998
73.708492 101.582074 37.82% 314 1997
60.264917 73.708492 22.31% 314 1996
46.971513 60.264917 28.30% 258 1995
47.312558 46.971513 -0.72% 259 1994
44.897247 47.312558 5.38% 260 1993
44.182806 44.897247 1.62% 261 1992
34.374796 44.482806 28.53% 753 1991
34.724214 34.374796 -1.01% 1,169 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 114.746202 132.098827 15.12% 26,654 1999
Fund - Class D - Q 93.947252 114.746202 22.14% 30,515 1998
75.405663 93.947252 24.59% 46,513 1997
65.471148 75.405663 15.17% 48,441 1996
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
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 121.157545 139.479726 15.12% 208 1999
Fund - Class D - NQ 99.196488 121.157545 22.14% 218 1998
79.618909 99.196488 24.59% 229 1997
69.129314 79.618909 15.17% 230 1996
54.415339 69.129314 27.04% 120 1995
54.333269 54.415339 0.15% 121 1994
49.448867 54.333269 9.88% 126 1993
47.133788 49.448867 4.91% 397 1992
35.098768 47.133788 34.29% 568 1991
38.476025 35.098768 -8.78% 580 1990
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE> 62
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R) Money 26.532610 27.412298 3.32% 27,248 1999
Market Fund - Prime 25.582330 26.532610 3.71% 32,255 1997
Shares - Pre 12/25/82 - Q 24.656210 25.582330 3.76% 43,632 1996
23.787066 24.656210 3.61% 49,431 1995
22.850271 23.797066 4.14% 49,996 1994
22.315407 88.850271 2.40% 56,127 1993
22.04209 22.315407 1.24% 68,074 1992
21.636991 22.042019 1.87% 92,318 1991
20.752553 21.636991 4.26% 118,625 1990
19.490217 20.752553 6.48% 139,482 1989
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 21.071063 21.769674 3.32% 621,449 1999
Market Fund - Prime 19.580907 20.316392 3.76% 32,458 1997
Shares - Q 18.898613 19.580907 3.61% 327,248 1996
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 17.183176 4.26% 450,748 1991
15.478296 16.480790 6.48% 548,549 1990
14.401492 15.478296 7.48% 568,349 1989
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 26.700292 27.585541 3.32% 838 1999
Market Fund - Prime 25.744006 26.700292 3.71% 841 1998
Shares - NQ 24.812035 25.744006 3.76% 844 1997
23.947460 24.812035 3.61% 1,317 1996
22.994681 23.947460 4.14% 1,323 1995
22.456439 22.994681 2.40% 1,329 1994
22.181323 22.456439 1.24% 1,335 1993
21.773734 22.181323 1.87% 2,211 1992
20.883706 21.773734 4.26% 3,526 1991
19.613392 20.883706 6.48% 3,539 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) 10.015679 11.817107 17.99% 17,851 1999
Index Fund - Service Class 10.000000 10.015679 0.16% 0 1998(1)
- -Q
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate 11.915504 11.529833 -3.24% 38,138 1999
U.S. Government Bond Fund 11.156351 11.915504 6.80% 43,459 1998
- - Class D - Q 10.324818 11.156351 8.05% 6,737 1997
10.124709 10.324818 1.98% 6,372 1996
10.000000 10.124709 1.25% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity 9.266508 9.512964 2.66% 71,239 1999
Trust(R) Neuberger Berman 11.915504 9.266508 -7.33% 67,525 1998
Genesis Trust - Q
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
62
<PAGE> 63
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Neuberger Berman 17.198573 18.411034 7.05% 379,737 1999
Guardian Fund 17.024633 17.198573 1.02% 436,072 1998
14.625126 17.024633 16.41% 448,443 1997
12.571028 14.625126 16.34% 357,346 1996
9.640402 12.571028 30.40% 139,046 1995
10.000000 9.640402 -3.60% 25,549 1994
- -----------------------------------------------------------------------------------------------------------------------
Neuberger Berman 12.056542 12.095451 0.32% 19,912 1999
Limited Maturity Bond 11.672986 12.056542 3.29% 81,393 1998
Fund 11.068501 11.672986 5.46% 67,262 1997
10.735070 11.068501 3.11% 74,163 1996
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 Berman 24.928856 26.523895 6.40% 311,323 1999
Partners Fund 23.764888 24.928856 4.90% 374,224 1998
18.631249 23.764888 27.55% 312,513 1997
14.924653 18.631249 24.84% 222,551 1996
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 Global 24.105920 37.706431 56.42% 315,244 1999
Fund/VA - Class A 21.669822 24.105920 11.24% 301,407 1998
18.022572 21.669822 20.24% 262,844 1997
15.538850 18.022572 15.98% 228,413 1996
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 Fund 16.652539 18.203902 9.32% 58,295 1999
Series - Q 14.235004 16.652539 16.98% 47,793 1998
12.187868 14.235004 16.80% 46,629 1997
11.373217 12.187868 7.16% 43,659 1996
9.338434 11.373217 21.79% 23,786 1995
10.000000 9.338434 -6.62% 9,028 1994
- -----------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund 10.034647 10.809720 7.72% 355 1999
- Class A- Q 10.000000 10.034647 0.35% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Prestige International 10.035113 11.989686 19.48% 4,361 1999
Fund Class A - Q 10.000000 10.035113 0.35% 181 1998(1)
- -----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 10.084070 13.394083 32.82% 1,471 1999
Fund Class A- Q 10.000000 10.084070 0.84% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value 10.229636 9.619068 -5.97% 109 1999
Fund Class A - Q 10.000000 10.229636 2.30% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund 10.359298 12.128362 17.08% 8,135 1999
Class A - Q 10.000000 10.359298 3.59% 45 1998
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE> 64
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Strong Common Stock Fund, 10.418119 14.432187 38.53% 69,558 1999
Inc. - Q 10.000000 10.418119 4.18% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Strong Total Return 26.782090 42.228152 57.67% 115,792 1999
Fund, Inc. 20.549313 26.782090 30.33% 75,602 1998
16.766964 20.549313 22.56% 78,495 1997
14.893186 16.766964 12.58% 63,801 1996
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 Foreign 12.770793 17.547470 37.40% 334,228 1999
Fund - Class A 13.604014 12.770793 -6.12% 318,666 1998
12.923758 13.604014 5.26% 354,769 1997
11.097523 12.923758 16.46% 266,477 1996
10.000000 11.097523 10.98% 69,083 1995
- -----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 14.769496 20.672241 39.97% 288,739 1999
Growth Fund 14.140391 14.769496 4.45% 338,034 1998
11.814248 14.140391 19.69% 316,835 1997
10.895016 11.814248 8.44% 250,912 1996
10.000000 10.895016 8.95% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global 10.651516 10.554122 -0.91% 5,420 1999
Fixed Income Fund - Q 10.000000 10.651516 6.52% 14,079 1998
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
64
