<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act File No. 2-75059
'40 Act File No. 811-3330
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 26 /x/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 27 /x/
NATIONWIDE VARIABLE ACCOUNT-II
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. MCCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in
respect of the Prospectus, the Statement of Additional Information and the
Financial Statements.
It is proposed that this filing will become effective (check appropriate
space):
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/ X/ on May 1, 1996 pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/ / on (date) pursuant to paragraph (a) of Rule 485
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of securities by a
prior registration statement in accordance with Rule 24f-2 under the Investment
Company Act of 1940. Pursuant to Paragraph (a)(3) thereof, a non-refundable fee
in the amount of $500 has been paid to the Commission. Registrant filed its
Rule 24f-2 Notice for the fiscal year ended December 31, 1995, on February 15,
1996.
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NATIONWIDE VARIABLE ACCOUNT-II
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
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N-4 ITEM PAGE
<S> <C> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Synopsis or Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 5. General Description of Registrant, Depositor, and Portfolio Companies . . . . . . . . . 22
Item 6. Deductions and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 7. General Description of Variable Annuity Contracts . . . . . . . . . . . . . . . . . . . 26
Item 8. Annuity Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Item 9. Death Benefit and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Item 10. Purchases and Contract Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Item 11. Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Item 12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Item 13. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Item 14. Table of Contents of the Statement of Additional Information . . . . . . . . . . . . . . 45
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Item 16. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Item 17. General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Item 18. Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Item 19. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Item 20. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Item 21. Calculation of Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . 55
Item 22. Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Item 25. Directors and Officers of the Depositor . . . . . . . . . . . . . . . . . . . . . . . 112
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant . . . . 114
Item 27. Number of Contract Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Item 28. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Item 29. Principal Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Item 30. Location of Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Item 31. Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Item 32. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
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NATIONWIDE LIFE INSURANCE COMPANY
Home Office
P.O. Box 16609
Columbus, Ohio 43216-6609, 1-800-848-6331
TDD 1-800-238-3035
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE NATIONWIDE VARIABLE ACCOUNT-II
OF NATIONWIDE LIFE INSURANCE COMPANY
The Individual Deferred Variable Annuity Contracts described in this
Prospectus are flexible Purchase Payment contracts (collectively referred to as
the "Contracts"). Reference throughout the prospectus to such Contracts shall
also mean certificates issued under Group Flexible Fund Retirement Contracts.
For such Group Contracts, references to "Owner" shall mean the "Participant"
unless the Plan otherwise permits or requires the Owner to exercise contractual
rights under the authority of the Plan terms. The Contracts are sold to
individuals for use in retirement plans which may qualify for special federal
tax treatment under the Internal Revenue Code (the "Code"). Annuity payments
under the Contracts are deferred until a selected later date.
Purchase Payments are allocated to the Nationwide Variable Account-II
("Variable Account"), a separate account of Nationwide Life Insurance Company
(the "Company"). The Variable Account is divided into Sub-Accounts, each of
which invests in shares of one of the underlying Mutual Funds described below:
AVAILABLE FOR ALL CONTRACTS
DREYFUS
Dreyfus Stock Index Fund The Dreyfus Socially Responsible Growth Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
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Equity-Income Portfolio Growth Portfolio High Income Portfolio* Overseas Portfolio
</TABLE>
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio Contrafund Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund Government Bond Fund Money Market Fund
Small Company Fund Total Return Fund
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
(FORMERLY "ADVISERS MANAGEMENT TRUST")
Growth Portfolio Limited Maturity Bond Portfolio Partners Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Bond Fund Oppenheimer Global Securities Fund
Oppenheimer Multiple Strategies Fund
STRONG SPECIAL FUND II, INC.
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Discovery Fund II, Inc. International Stock Fund II
TCI PORTFOLIOS, INC., AN AFFILIATE OF TWENTIETH CENTURY COMPANIES, INC.
TCI Balanced TCI Growth TCI International
VAN ECK WORLDWIDE INSURANCE TRUST (FORMERLY VAN ECK INVESTMENT TRUST)
<TABLE>
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Worldwide Bond Fund (Formerly Global Bond Fund) Gold and Natural Resources Fund
</TABLE>
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST
Real Estate Securities Fund
WARBURG PINCUS TRUST
International Equity Portfolio Small Company Growth Portfolio
* The High Income Portfolio may invest in lower quality debt securities
commonly referred to as junk bonds.
AVAILABLE FOR ALL CONTRACTS
ISSUED ON OR AFTER MAY 1, 1987 AND BEFORE SEPTEMBER 1, 1989
AMERICAN VARIABLE INSURANCE SERIES
<TABLE>
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Growth Fund High-Yield Bond Fund U.S. Government/AAA-Rated Securities Fund
</TABLE>
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<PAGE> 4
This prospectus provides you with the basic information you should know
about the Individual Deferred Variable Annuity Contracts issued by the
Nationwide Variable Account-II before investing. You should read it and keep
it for future reference. A Statement of Additional Information dated May 1,
1996, containing further information about the Contracts and the Nationwide
Variable Account-II has been filed with the Securities and Exchange Commission.
You can obtain a copy without charge from Nationwide Life Insurance Company by
calling the number listed above, or writing P.O. Box 16609, Columbus, Ohio
43216-6609.
INVESTMENTS IN THESE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, AND ARE NOT
GUARANTEED OR ENDORSED BY, THE ADVISER OF ANY OF THE UNDERLYING MUTUAL FUNDS
IDENTIFIED ABOVE, THE U.S. GOVERNMENT, OR ANY BANK OR BANK AFFILIATE.
INVESTMENTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. ANY
INVESTMENT IN THE CONTRACT INVOLVES CERTAIN INVESTMENT RISK WHICH MAY INCLUDE
THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1996, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 43 OF THE PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Contract Value prior to the Annuitization Date.
ANNUITANT- The person actually receiving annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
This person must be age 78 or younger at the time of Contract issuance. The
Annuitant may be changed prior to the Annuitization Date with the consent of
the Company.
ANNUITIZATION- The period during which annuity payments are actually received.
ANNUITIZATION DATE- The date on which annuity payments actually commence.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
commence. The Annuity Commencement Date is shown on the Data Page of the
Contract, and is subject to change by the Owner.
ANNUITY PAYMENT OPTION- The chosen form of annuity payments. Several options
are available under the Contract.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY- The Beneficiary is the person designated to receive certain
benefits under the Contract upon the death of the Designated Annuitant prior to
the Annuitization Date. The Beneficiary can be changed by the Contract Owner
as set forth in the Contract.
CODE- The Internal Revenue Code of 1986, as amended.
COMPANY- Nationwide Life Insurance Company.
CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Designated Annuitant.
CONTINGENT DESIGNATED ANNUITANT- The Contingent Designated Annuitant may be the
recipient of certain rights or benefits under this Contract when the Designated
Annuitant dies before the Annuitization Date. If a Contingent Designated
Annuitant is named on the application, all provisions of the Contract which are
based on the death of the Designated Annuitant will be based on the death of
the last survivor of the Designated Annuitant and the Contingent Designated
Annuitant. A Contingent Designated Annuitant may not be named for Contracts
issued as Qualified Contracts, Individual Retirement Annuities, or Tax
Sheltered Annuities.
CONTINGENT OWNER- A Contingent Owner succeeds to the rights of the Contract
Owner upon the Contract Owner's death before Annuitization. For Contracts
issued in the State of New York, references throughout this prospectus to
"Contingent Owner" shall mean "Owner's Beneficiary." A Contingent Owner may
not be named for Contracts issued as Qualified Contracts, Individual Retirement
Annuities, or Tax Sheltered Annuities.
CONTRACT- The Individual Deferred Variable Annuity Contract described in this
prospectus.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER (OWNER)- The Contract Owner is the person who possesses all
rights under the Contract, including the right to designate and change any
designations of the Owner, Contingent Owner, Designated Annuitant, Contingent
Designated Annuitant, Beneficiary, Contingent Beneficiary, Annuity Payment
Option, and the Annuity Commencement Date. The Contract Owner is the person
named as Owner in the application, unless changed.
CONTRACT VALUE- The sum of the value of all Variable Account Accumulation Units
attributable to the Contract plus any amount held under the Contract in the
Fixed Account.
CONTRACT YEAR- Each year the Contract remains in force commencing with the Date
of Issue.
DATE OF ISSUE- The date shown as the Date of Issue on the Data Page of the
Contract.
DEATH BENEFIT- The benefit payable upon the death of the Designated Annuitant
(or the Contingent Designated Annuitant, if applicable). This benefit does not
apply upon the death of the Contract Owner when the Owner and Designated
Annuitant are not the same person. If the Annuitant dies after the
Annuitization Date, any benefit that may be payable shall be as specified in
the Annuity Payment Option elected.
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DESIGNATED ANNUITANT- The person designated prior to the Annuitization Date to
receive annuity payments. No change of Designated Annuitant may be made
without the prior consent of the Company.
DISTRIBUTION- Any payment of part or all of the Contract Value
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- The Fixed Account is made up of all assets of the Company other
than those in the Variable Account or any other segregated asset account of the
Company.
FIXED ANNUITY- An annuity providing for payments which are guaranteed by the
Company as to dollar amount during Annuitization.
HOME OFFICE- The main office of the Company located in Columbus, Ohio.
INDIVIDUAL RETIREMENT ANNUITY (IRA)- An annuity which qualifies for favorable
tax treatment under Section 408 of the Code.
INTEREST RATE GUARANTEE PERIOD- An Interest Rate Guarantee Period is the
interval of time during which an interest rate credited to the Fixed Account
under the Contract is guaranteed to remain the same. For new Purchase Payments
allocated to the Fixed Account or transfers from the Variable Account, this
period begins upon the date of deposit or transfer and ends at the end of the
calendar quarter at least one year (but not more than 15 months) from deposit
or transfer. At the end of an Interest Rate Guarantee Period, a new interest
rate is declared with an Interest Rate Guarantee Period starting at the end of
the prior period and ending at the end of the calendar quarter one year later.
MUTUAL FUND (FUND)- A registered management investment company in which the
assets of the Sub-Accounts of the Variable Account will be invested.
NON-QUALIFIED CONTRACT- A Contract which does not qualify for favorable tax
treatment under Sections 401 and 403(a) (Qualified Plans), 408 (IRAs) or 403(b)
(Tax Sheltered Annuities) of the Code.
PLAN PARTICIPANT-The Plan Participant is the person for whom contributions are
being made to a Qualified Contract or Tax Sheltered Annuity either through
employer contributions or employee salary reduction contributions.
PURCHASE PAYMENTS- A deposit of new value into the Contract. The term
"Purchase Payment" does not include transfers between the Variable Account and
Fixed Account, or among the Sub-Accounts.
QUALIFIED CONTRACTS- A Contract which receives favorable tax treatment under
the provisions of the Code, including those described in Section 401 and
403(a).
SUB-ACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Mutual Fund shares are allocated and for which Accumulation
Units and Annuity Units are separately maintained.
TAX SHELTERED ANNUITY- An annuity which qualifies for favorable tax treatment
under Section 403(b) of the Code.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a
sufficient degree of trading of underlying Mutual Fund shares held by the
Variable Account, such that the current value of Variable Account Accumulation
Units might be materially affected.
VALUATION PERIOD- The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
VARIABLE ACCOUNT- The Nationwide Variable Account-II, a separate investment
account of the Company into which Variable Account Purchase Payments are
allocated. The Variable Account is divided into Sub-Accounts, each of which
invests in shares of a separate underlying Mutual Fund.
VARIABLE ANNUITY- An annuity providing for payments which vary in amount with
the investment experience of the Variable Account.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY OF CONTRACT EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
CONDENSED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
NATIONWIDE LIFE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
THE VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Underlying Mutual Fund Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS . . . . . . . . . . . . . . . . . . . . 21
Mortality Risk Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Expense Risk Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Contingent Deferred Sales Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Elimination of Contingent Deferred Sales Charge . . . . . . . . . . . . . . . . . . . . . . . . 22
Contract Maintenance Charge and Administration Charge . . . . . . . . . . . . . . . . . . . . . 23
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Expenses of Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Investments of the Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Right to Revoke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Loan Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Ownership Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Contingent Owner and Beneficiary Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Substitution of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Contract Owner Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Value of an Annuity Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Assumed Investment Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Frequency and Amount of Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Annuity Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Change in Annuity Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Change in Form of Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Annuity Payment Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Death of Contract Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Death of Designated Annuitant Prior to the Annuitization Date . . . . . . . . . . . . . . . . . 30
Death Benefit After the Annuitization Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Required Distribution for Qualified Plans or Tax Sheltered Annuities . . . . . . . . . . . . . . 30
Required Distributions for Individual Retirement Annuities . . . . . . . . . . . . . . . . . . . 31
Generation-Skipping Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Contract Owner Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Allocation of Purchase Payments and Contract Value . . . . . . . . . . . . . . . . . . . . . . . 33
Value of a Variable Account Accumulation Unit . . . . . . . . . . . . . . . . . . . . . . . . . 34
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Valuation of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Determining the Contract Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Surrender (Redemption) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Surrenders Under a Qualified Plan or Tax Sheltered Annuity Contract . . . . . . . . . . . . . . 36
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Non-Qualified Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Charge for Tax Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Qualified Plans, Individual Retirement Annuities, Individual Retirement Accounts and
Tax Sheltered Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 43
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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SUMMARY OF CONTRACT EXPENSES
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CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge(1) . . . . . . . . . . . . . . . . . . . . . . . 7%
</TABLE>
RANGE OF CONTINGENT DEFERRED SALES CHARGE OVER TIME
<TABLE>
<CAPTION>
Number of Completed Years from Contingent Deferred Sales Load
Date of Purchase Payment Percentage
<S> <C>
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
</TABLE>
<TABLE>
<S> <C>
MAXIMUM ANNUAL CONTRACT MAINTENANCE CHARGE(2) . . . . . . . . . . . . . . . . . . . . . . . . . $30
VARIABLE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 %
Administration Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.05 %
Total Variable Account Annual Expenses . . . . . . . . . . . . . . . . . . . . . . . . 1.30 %
</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
Contingent Deferred Sales Charge. This free withdrawal privilege is
non-cumulative and must be used in the year available. Under current
Company administrative practice the Contingent Deferred Sales Charge is
waived for: (1) first year withdrawals of up to 10% of each Purchase
Payment under Individual Retirement Annuity Contracts (IRAs as defined
under Section 408 of the Code) issued on or after March 1, 1993, or (2)
for Distributions required for the Contract to meet minimum Distribution
rules under the Code. Withdrawals may be restricted for Contracts issued
pursuant to the terms of a Tax Sheltered Annuity Plan or other Qualified
Plan. The Contingent Deferred Sales Charge is imposed only against
Purchase Payments (see "Contingent Deferred Sales Charge").
(2) The annual Contract Maintenance Charge is deducted on each Contract
Anniversary and on the date of surrender in any year in which the entire
Contract Value is surrendered (see "Contract Maintenance Charge and
Administration Charge").
6
8 of 131
<PAGE> 9
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(3)
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Management Total Mutual
Fees Other Expenses Fund Expenses
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AVIS-Growth Fund 0.44% 0.03% 0.47%
- ------------------------------------------------------------------------------------------------------------------------
AVIS- High-Yield Bond Fund 0.51% 0.03% 0.54%
- ------------------------------------------------------------------------------------------------------------------------
AVIS- U.S. Government/AAA Rated Securities 0.51% 0.03% 0.54%
- ------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 0.27% 0.12% 0.39%
- ------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund 0.69% 0.58% 1.27%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity-Income Portfolio 0.51% 0.10% 0.61%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth Portfolio 0.61% 0.09% 0.70%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund -High Income Portfolio 0.60% 0.11% 0.71%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund -Overseas Portfolio 0.76% 0.15% 0.96%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Asset Manager Portfolio 0.71% 0.08% 0.79%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund Portfolio 0.61% 0.11% 0.72%
- ------------------------------------------------------------------------------------------------------------------------
NSAT-Capital Appreciation Fund 0.50% 0.04% 0.54%
- ------------------------------------------------------------------------------------------------------------------------
NSAT-Government Bond Fund 0.50% 0.01% 0.51%
- ------------------------------------------------------------------------------------------------------------------------
NSAT-Money Market Fund 0.50% 0.02% 0.52%
- ------------------------------------------------------------------------------------------------------------------------
NSAT -Small Company Fund 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------
NSAT-Total Return Fund 0.50% 0.01% 0.51%
- ------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 0.84% 0.10% 0.94%
Management Trust-Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 0.65% 0.10% 0.75%
Management Trust-Limited Maturity Bond Portfolio
- ------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 0.85% 0.30% 1.15%
Management Trust-Partners Portfolio
- ------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Bond Fund 0.75% 0.05% 0.80%
- ------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Global Securities Fund 0.74% 0.15% 0.89%
- ------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Multiple Strategies Fund 0.74% 0.03% 0.77%
- ------------------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. 1.00% 0.20% 1.20%
- ------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.-Discovery Fund II, Inc. 1.00% 0.31% 1.31%
- ------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.-International Stock Fund II 1.00% 0.97% 1.97%
- ------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI Balanced 1.00% 0.00% 1.00%
- ------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI Growth 1.00% 0.00% 1.00%
- ------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI International 1.50% 0.00% 1.50%
- ------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide Bond Fund 0.79% 0.15% 0.94%
- ------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Gold and Natural Resources Fund 0.80% 0.16% 0.96%
- ------------------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life Investment Trust-Real Estate 1.00% 1.90% 2.90%
Securities Fund
- ------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International Equity Portfolio 1.00% 0.44% 1.44%
- ------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company Growth Portfolio 0.90% 0.35% 1.25%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(3) The Mutual Fund expenses shown above are assessed at the underlying Mutual
Fund level and are not direct charges against Variable Account assets or
reductions from Contract Values. These underlying Mutual Fund expenses
are taken into consideration in computing each underlying Mutual Fund's
net asset value, which is the share price used to calculate the unit
values of the Variable Account. The management fees and other expenses,
some of which are subject to fee waivers or expense reimbursements are
more fully described in the prospectus for each individual underlying
Mutual Fund. The information relating to the underlying Mutual Fund
expenses was provided by the underlying Mutual Fund and was not
independently verified by the Company.
7
9 of 131
<PAGE> 10
EXAMPLE
The following chart depicts the dollar amount of expenses that would be
incurred under this Contract assuming a $1000 investment and 5% annual return.
These dollar figures are illustrative only and should not be considered a
representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below. The expense amounts presented are derived from
a formula which allows the $30 Contract Maintenance Charge to be expressed as a
percentage of the average Contract account size for existing Contracts. Since
the average Contract account size for Contracts issued under this prospectus is
greater than $1000, the expense effect of the Contract Maintenance Charge is
reduced accordingly.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
If you surrender your If you annuitize your
Contract If you do not surrender Contract
at the end of the your Contract at the end at the end of the
applicable of the applicable time applicable
time period period 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>
AVIS-Growth Fund 89 105 130 223 19 60 103 223 * 60 103 223
- -------------------------------------------------------------------------------------------------------------------------------
AVIS-High-Yield Bond Fund 90 107 134 231 20 62 107 231 * 62 107 231
- -------------------------------------------------------------------------------------------------------------------------------
AVIS-U.S. Govt./AAA Rated 90 107 134 231 20 62 107 231 * 62 107 231
- -------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 89 103 126 214 19 58 99 214 * 58 99 214
- -------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth 98 130 172 308 28 85 145 308 * 85 145 308
Fund
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity-Income 91 110 138 239 21 65 111 239 * 65 111 239
Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth Portfolio 92 112 143 248 22 67 116 248 * 67 116 248
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas Portfolio 94 119 154 271 24 74 127 271 * 74 127 271
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income Portfolio 92 113 143 249 22 68 116 249 * 68 116 249
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Asset Manager 93 115 147 258 23 70 120 258 * 70 120 258
Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund 92 113 144 250 22 68 117 250 * 68 117 250
Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
NSAT-Capital Appreciation Fund 90 107 134 231 20 62 107 231 * 62 107 231
- -------------------------------------------------------------------------------------------------------------------------------
NSAT-Government Bond Fund 90 106 132 228 20 61 105 228 * 61 105 228
- -------------------------------------------------------------------------------------------------------------------------------
NSAT-Money Market Fund 90 107 133 229 20 62 106 229 * 62 106 229
- -------------------------------------------------------------------------------------------------------------------------------
NSAT - Small Company Fund 98 130 171 306 28 85 144 306 * 85 144 306
- -------------------------------------------------------------------------------------------------------------------------------
NSAT-Total Return Fund 90 106 132 228 20 61 105 228 * 61 105 228
- -------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management 94 120 155 274 24 75 128 274 * 75 128 274
Trust-Growth Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management 92 114 145 254 22 69 118 254 * 69 118 254
Trust-Limited Maturity Bond Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management 97 127 166 295 27 82 139 295 * 82 139 295
Trust- Partners Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
10 of 131
<PAGE> 11
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
If you surrender your If you annuitize your
Contract If you do not surrender Contract
at the end of the your Contract at the end at the end of the
applicable of the applicable time applicable
time period period 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>
Oppenheimer Variable Account Funds-Bond Fund 93 116 148 259 23 71 121 259 * 71 121 259
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Global 94 118 153 268 24 73 126 268 * 73 126 268
Securities Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Multiple 93 115 146 256 23 70 119 256 * 70 119 256
Strategies Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. 97 128 169 301 27 83 142 301 * 83 142 301
- ------------------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.- 98 132 175 312 28 87 148 312 * 87 148 312
Discovery Fund II, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - 105 152 208 376 35 107 181 376 * 107 181 376
International Stock Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.- 95 122 158 280 25 77 131 280 * 77 131 280
TCI Balanced
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI Growth 95 122 158 280 25 77 131 280 * 77 131 280
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI International 100 138 184 331 30 93 157 331 * 93 157 331
- ------------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide 94 120 155 274 24 75 128 274 * 75 128 274
Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Gold and 95 121 156 276 25 76 129 276 * 76 129 276
Natural Resources Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life Investment 115 181 254 460 45 136 227 460 * 136 227 460
Trust-Real Estate Securities Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International Equity 100 136 181 325 30 91 154 325 * 91 154 325
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company Growth 98 130 171 306 28 85 144 306 * 85 144 306
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The Contracts sold under this prospectus do not permit annuitizations during
the first two Contract Years.
The purpose of the Summary of Contract Expenses and Example is to assist the
Contract Owner in understanding the various costs and expenses that will be
borne directly or indirectly when investing in the Contract. The expenses of
the Nationwide Variable Account-II as well as those of the underlying Mutual
Fund options are reflected in the Example. For more complete descriptions of
the expenses of the Variable Account, see "Variable Account Charges, Purchase
Payments, and Other Deductions." For more complete information regarding
expenses paid out of the assets of the underlying Mutual Fund options, see the
underlying Mutual Fund prospectuses. Deductions for premium taxes may also
apply but are not reflected in the Example shown above (see "Premium Taxes").
9
11 of 131
<PAGE> 12
SYNOPSIS
The Company does not deduct a sales charge from Purchase Payments made
for these Contracts. However, if any part of the Contract Value of such
Contracts is surrendered, the Company will, with certain exceptions, deduct
from the Contract Owner's Contract Value a Contingent Deferred Sales Charge not
to exceed 7% of the lesser of the total of all Purchase Payments made within 84
months prior to the date of the request to surrender, or the amount
surrendered. This charge, when applicable, is imposed to permit the Company to
recover sales expenses which have been advanced by the Company (see "Contingent
Deferred Sales Charge").
In addition, on each Contract Anniversary the Company will deduct an
annual Contract Maintenance Charge from the Contract Value of the Contracts.
The Company will also assess an Administration Charge equal to an annual rate
of 0.05% of the daily net asset value of the Variable Account. These charges
are to reimburse the Company for administrative expenses related to the issue
and maintenance of the Contracts. The Company does not expect to recover from
these charges an amount in excess of accumulated administrative expenses (see
"Contract Maintenance Charge and Administration Charge").
The Company deducts a Mortality Risk Charge equal to an annual rate of
0.80% of the daily net asset value of the Variable Account for mortality risk
assumed by the Company (see "Mortality Risk Charge").
The Company deducts an Expense Risk Charge equal to an annual rate of
0.45% of the daily net asset value of the Variable Account as compensation for
the Company's risk by undertaking not to increase administrative charges on the
Contracts regardless of the actual administrative costs (see "Expense Risk
Charge").
The initial first year Purchase Payment must be at least $1,500 for
Non-Qualified Contracts. However, if periodic payments are expected by the
Company, this initial first year minimum may be satisfied by Purchase Payments
made on an annualized basis. The cumulative total of all Purchase Payments
under Contracts issued on the life of any one Designated Annuitant may not
exceed $1,000,000 without the prior consent of the Company (see "Allocation of
Purchase Payments and Contract Value").
If the Contract Value at the Annuitization Date is less than $500, the
Contract Value may be distributed in one lump sum in lieu of annuity payments.
If any annuity payment would be less than $20, the Company shall have the right
to change the frequency of payments to such intervals as will result in
payments of at least $20. In no event, however, will annuity payments be made
less frequently than annually (see "Frequency and Amount of Annuity Payments").
Premium taxes payable to any governmental entity will be charged against
the Contracts. If any such premium taxes are payable by the Company at the
time Purchase Payments are made, an equal premium tax deduction may be made
from the Contract prior to the allocation of any Purchase Payment to any
underlying Mutual Fund option (see "Premium Taxes").
To be sure that the Contract Owner is satisfied with the Contract, the
Contract Owner has a ten day free look. Within ten days of the date the
Contract is received, it may be returned to the Home Office of the Company, at
the address shown on page 1 of this prospectus. When the Contract is received
by the Company, the Company will void the Contract and refund the Contract
Value in full unless otherwise required by state and/or federal law. All
Individual Retirement Annuity refunds will be return of Purchase Payments (see
"Right to Revoke").
10
12 of 131
<PAGE> 13
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
AVIS- 16.632869 21.880052 31.55% 533,382 1995
Growth Fund-Q -------------------------------------------------------------------------------
16.767635 16.632869 -0.80% 568,831 1994
-------------------------------------------------------------------------------
14.603954 16.767635 14.82% 614,673 1993
-------------------------------------------------------------------------------
13.356752 14.603954 9.34% 630,618 1992
-------------------------------------------------------------------------------
10.154286 13.356752 31.54% 637,666 1991
-------------------------------------------------------------------------------
10.758820 10.154286 -5.62% 612,309 1990
-------------------------------------------------------------------------------
8.912471 10.758820 20.72% 578,318 1989***
-------------------------------------------------------------------------------
7.950563 8.912471 12.10% 335,760 1988
-------------------------------------------------------------------------------
10.000000 7.950563 -20.49% 245,664 1987
=======================================================================================================================
AVIS- 16.632869 21.880052 31.55% 544,338 1995
Growth Fund-NQ -------------------------------------------------------------------------------
16.767635 16.632869 -0.80% 538,005 1994
-------------------------------------------------------------------------------
14.603954 16.767635 14.82% 573,448 1993
-------------------------------------------------------------------------------
13.356752 14.603954 9.34% 658,355 1992
-------------------------------------------------------------------------------
10.154286 13.356752 31.54% 675,796 1991
-------------------------------------------------------------------------------
10.758820 10.154286 -5.62% 709,255 1990
-------------------------------------------------------------------------------
8.912471 10.758820 20.72% 847,522 1989***
-------------------------------------------------------------------------------
7.950563 8.912471 12.10% 365,976 1988
-------------------------------------------------------------------------------
10.000000 7.950563 -20.49% 148,517 1987
=======================================================================================================================
AVIS- 17.247186 20.792452 20.19% 74,984 1995
High-Yield Bond Fund-Q -------------------------------------------------------------------------------
18.696382 17.247186 -7.75% 90,073 1994
-------------------------------------------------------------------------------
16.269615 18.696382 14.92% 97,302 1993
-------------------------------------------------------------------------------
14.656040 16.269615 11.01% 96,741 1992
-------------------------------------------------------------------------------
11.731211 14.656040 24.93% 104,317 1991
-------------------------------------------------------------------------------
11.446666 11.731211 2.49% 91,778 1990
-------------------------------------------------------------------------------
10.615988 11.446666 7.82% 107,592 1989***
-------------------------------------------------------------------------------
10.185386 10.615988 4.23% 80,266 1988
-------------------------------------------------------------------------------
10.000000 10.185386 1.85% 62,616 1987
=======================================================================================================================
AVIS- 17.247186 20.792452 20.19% 65,007 1995
High-Yield Bond Fund-NQ -------------------------------------------------------------------------------
18.696382 17.247186 -7.75% 63,653 1994
-------------------------------------------------------------------------------
16.269615 18.696382 14.92% 90,260 1993
-------------------------------------------------------------------------------
14.656040 16.269615 11.01% 85,512 1992
-------------------------------------------------------------------------------
11.731211 14.656040 24.93% 93,543 1991
-------------------------------------------------------------------------------
11.446666 11.731211 2.49% 84,258 1990
-------------------------------------------------------------------------------
10.615988 11.446666 7.82% 120,140 1989***
-------------------------------------------------------------------------------
10.185386 10.615988 4.23% 67,570 1988
-------------------------------------------------------------------------------
10.000000 10.185386 1.85% 22,009 1987
=======================================================================================================================
AVIS- 15.872495 18.077072 13.89% 315,331 1995
U.S. Gov't/AAA-Rated -------------------------------------------------------------------------------
Securities Fund-Q 16.810323 15.872495 -5.58% 346,442 1994
-------------------------------------------------------------------------------
15.319654 16.810323 9.73% 414,364 1993
-------------------------------------------------------------------------------
14.425067 15.319654 6.20% 396,892 1992
-------------------------------------------------------------------------------
12.605067 14.425067 14.44% 436,968 1991
-------------------------------------------------------------------------------
11.780016 12.605067 7.00% 457,802 1990
-------------------------------------------------------------------------------
10.909251 11.780016 7.98% 493,935 1989***
-------------------------------------------------------------------------------
10.389044 10.909251 5.01% 303,920 1988
-------------------------------------------------------------------------------
10.000000 10.389044 3.89% 86,816 1987
=======================================================================================================================
AVIS- 15.872495 18.077072 13.89% 238,614 1995
U.S. Gov't/AAA-Rated -------------------------------------------------------------------------------
Securities Fund-NQ 16.810323 15.872495 -5.58% 272,776 1994
-------------------------------------------------------------------------------
15.319654 16.810323 9.73% 365,338 1993
-------------------------------------------------------------------------------
14.425067 15.319654 6.20% 447,387 1992
-------------------------------------------------------------------------------
12.605067 14.425067 14.44% 496,734 1991
-------------------------------------------------------------------------------
11.780016 12.605067 7.00% 528,128 1990
-------------------------------------------------------------------------------
10.909251 11.780016 7.98% 997,613 1989***
-------------------------------------------------------------------------------
10.389044 10.909251 5.01% 801,676 1988
-------------------------------------------------------------------------------
10.000000 10.389044 3.89% 167,148 1987
=======================================================================================================================
</TABLE>
***On October 20, 1989, the Company substituted shares of the American VI
Series for the then existing shares of the American Life/Annuity Series.
The unit values for the American VI Series started at the same unit values
as the corresponding units of the American Life/Annuity Series on the date
of the substitution.
11
13 of 131
<PAGE> 14
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
=============================================================================================================================
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
Dreyfus Stock Index 10.087774 13.619180 35.01% 3,284,707 1995
Fund-Q ------------------------------------------------------------------------------
10.130946 10.087774 -0.43% 539,188 1994
------------------------------------------------------------------------------
10.000000 10.130946 1.31% 114,256 1993
=============================================================================================================================
Dreyfus Stock Index 10.087774 13.619180 35.01% 2,805,145 1995
Fund-NQ ------------------------------------------------------------------------------
10.130946 10.087774 -0.43% 418,990 1994
------------------------------------------------------------------------------
10.000000 10.130946 1.31% 53,556 1993
=============================================================================================================================
The Dreyfus Socially 10.721141 14.239508 32.82% 640,387 1995
------------------------------------------------------------------------------
Responsible Growth 10.702195 10.721141 0.18% 301,426 1994
Fund-Q ------------------------------------------------------------------------------
10.000000 10.702195 7.02% 32,265 1993
=============================================================================================================================
The Dreyfus Socially 10.721141 14.239508 32.82% 421,093 1995
------------------------------------------------------------------------------
Responsible Growth 10.702195 10.721141 0.18% 263,764 1994
Fund-NQ ------------------------------------------------------------------------------
10.000000 10.702195 7.02% 48,396 1993
=============================================================================================================================
Fidelity VIP Fund- 13.701507 14.832631 8.26% 14,272,080 1995
Overseas Portfolio-Q ------------------------------------------------------------------------------
13.646118 13.701507 0.41% 15,065,853 1994
------------------------------------------------------------------------------
10.074553 13.646118 35.45% 11,518,590 1993
------------------------------------------------------------------------------
11.432117 10.074553 -11.88% 5,381,715 1992
------------------------------------------------------------------------------
10.707951 11.432117 6.76% 3,095,641 1991
------------------------------------------------------------------------------
11.042233 10.707951 -3.03% 1,715,341 1990
------------------------------------------------------------------------------
8.858811 11.042233 24.65% 356,389 1989
------------------------------------------------------------------------------
8.300609 8.858811 6.72% 53,275 1988
------------------------------------------------------------------------------
10.000000 8.300609 -16.99% 434 1987
=============================================================================================================================
Fidelity VIP Fund- 13.701507 14.832631 8.26% 14,672,390 1995
Overseas Portfolio-NQ ------------------------------------------------------------------------------
13.646118 13.701507 0.41% 17,550,925 1994
------------------------------------------------------------------------------
10.074553 13.646118 35.45% 14,793,318 1993
------------------------------------------------------------------------------
11.432117 10.074553 -11.88% 5,341,001 1992
------------------------------------------------------------------------------
10.707951 11.432117 6.76% 3,211,265 1991
------------------------------------------------------------------------------
11.042233 10.707951 -3.03% 1,989,713 1990
------------------------------------------------------------------------------
8.858811 11.042233 24.65% 605,461 1989
------------------------------------------------------------------------------
8.300609 8.858811 6.72% 167,313 1988
------------------------------------------------------------------------------
10.000000 8.300609 -16.99% 101,502 1987
=============================================================================================================================
Fidelity VIP Fund- High 18.327364 21.817076 19.04% 6,464,833 1995
Income Portfolio-Q ------------------------------------------------------------------------------
18.859652 18.327364 -2.82% 4,924,388 1994
------------------------------------------------------------------------------
15.855840 18.859652 18.94% 4,044,756 1993
------------------------------------------------------------------------------
13.055215 15.855840 21.45% 1,837,635 1992
------------------------------------------------------------------------------
9.778064 13.055215 33.52% 669,289 1991
------------------------------------------------------------------------------
10.147625 9.778064 -3.64% 277,945 1990
------------------------------------------------------------------------------
10.736745 10.147625 -5.49% 209,652 1989
------------------------------------------------------------------------------
9.736528 10.736745 10.27% 67,813 1988
------------------------------------------------------------------------------
10.000000 9.736528 -2.63% 5,430 1987
=============================================================================================================================
Fidelity VIP Fund- High 18.327364 21.817076 19.04% 7,993,534 1995
Income Portfolio-NQ ------------------------------------------------------------------------------
18.859652 18.327364 -2.82% 6,177,851 1994
------------------------------------------------------------------------------
15.855840 18.859652 18.94% 5,307,509 1993
------------------------------------------------------------------------------
13.055215 15.855840 21.45% 2,645,096 1992
------------------------------------------------------------------------------
9.778064 13.055215 33.52% 1,098,412 1991
------------------------------------------------------------------------------
10.147625 9.778064 -3.64% 425,270 1990
------------------------------------------------------------------------------
10.736745 10.147625 -5.49% 353,195 1989
------------------------------------------------------------------------------
9.736528 10.736745 10.27% 140,237 1988
------------------------------------------------------------------------------
10.000000 9.736528 -2.63% 39,928 1987
=============================================================================================================================
</TABLE>
12
14 of 131
<PAGE> 15
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
===========================================================================================================
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
===========================================================================================================
<S> <C> <C> <C> <C> <C>
Fidelity VIP Fund - 18.646331 24.863579 33.34% 21,482,777 1995
Equity- Income Portfolio-Q -------------------------------------------------------------------------------
17.644458 18.646331 5.68% 15,283,540 1994
-------------------------------------------------------------------------------
15.123262 17.644458 16.67% 10,828,747 1993
-------------------------------------------------------------------------------
13.099125 15.123262 15.45% 6,712,294 1992
-------------------------------------------------------------------------------
10.095775 13.099125 29.75% 4,458,956 1991
-------------------------------------------------------------------------------
12.075648 10.095775 -16.40% 3,063,355 1990
-------------------------------------------------------------------------------
10.425721 12.075648 15.83% 1,898,037 1989
-------------------------------------------------------------------------------
8.589543 10.425721 21.38% 319,889 1988
-------------------------------------------------------------------------------
10.000000 8.589543 -14.10% 8,805 1987
===========================================================================================================
Fidelity VIP Fund - 18.646331 24.863579 33.34% 21,094,657 1995
Equity- Income Portfolio-NQ-------------------------------------------------------------------------------
17.644458 18.646331 5.68% 15,217,260 1994
-------------------------------------------------------------------------------
15.123262 17.644458 16.67% 11,195,669 1993
-------------------------------------------------------------------------------
13.099125 15.123262 15.45% 6,754,475 1992
-------------------------------------------------------------------------------
10.095775 13.099125 29.75% 4,614,322 1991
-------------------------------------------------------------------------------
12.075648 10.095775 -16.40% 3,627,225 1990
-------------------------------------------------------------------------------
10.425721 12.075648 15.83% 2,861,738 1989
-------------------------------------------------------------------------------
8.589543 10.425721 21.38% 678,815 1988
-------------------------------------------------------------------------------
10.000000 8.589543 -14.10% 420,904 1987
===========================================================================================================
Fidelity VIP Fund - 25.451479 34.006052 33.61% 15,252,906 1995
Growth -------------------------------------------------------------------------------
Portfolio-Q 25.790764 25.451479 -1.32% 11,689,858 1994
-------------------------------------------------------------------------------
21.890060 25.790764 17.82% 8,260,724 1993
-------------------------------------------------------------------------------
20.287900 21.890060 7.90% 5,747,021 1992
-------------------------------------------------------------------------------
14.125398 20.287900 43.63% 3,088,464 1991
-------------------------------------------------------------------------------
16.214983 14.125398 -12.69% 1,245,106 1990
-------------------------------------------------------------------------------
12.501824 16.214983 29.70% 398,400 1989
-------------------------------------------------------------------------------
10.938414 12.501824 14.29% 38,122 1988
-------------------------------------------------------------------------------
10.000000 10.938414 9.38% 2,784 1987
===========================================================================================================
Fidelity VIP Fund - 25.451479 34.006052 33.61% 13,813,237 1995
Growth -------------------------------------------------------------------------------
Portfolio-NQ 25.790764 25.451479 -1.32% 10,492,508 1994
-------------------------------------------------------------------------------
21.890060 25.790764 17.82% 8,788,434 1993
-------------------------------------------------------------------------------
20.287900 21.890060 7.90% 6,695,765 1992
-------------------------------------------------------------------------------
14.125398 20.287900 43.63% 4,003,764 1991
-------------------------------------------------------------------------------
16.214983 14.125398 -12.69% 2,190,071 1990
-------------------------------------------------------------------------------
12.501824 16.214983 29.70% 857,832 1989
-------------------------------------------------------------------------------
10.938414 12.501824 14.29% 105,051 1988
-------------------------------------------------------------------------------
10.000000 10.938414 9.38% 209 1987
===========================================================================================================
Fidelity VIP Fund II - 15.641016 18.056027 15.44% 22,704,319 1995
Asset -------------------------------------------------------------------------------
Manager Portfolio-Q 16.874276 15.641016 -7.31% 24,788,850 1994
-------------------------------------------------------------------------------
14.123234 16.874276 19.48% 17,438,762 1993
-------------------------------------------------------------------------------
12.789976 14.123234 10.42% 6,977,842 1992
-------------------------------------------------------------------------------
10.572963 12.789976 20.97% 2,513,661 1991
-------------------------------------------------------------------------------
10.028081 10.572963 5.43% 729,271 1990
-------------------------------------------------------------------------------
10.000000 10.028081 0.28% 124,631 1989
===========================================================================================================
Fidelity VIP Fund II - 15.641016 18.056027 15.44% 16,037,811 1995
Asset -------------------------------------------------------------------------------
Manager Portfolio-NQ 16.874276 15.641016 -7.31% 20,692,145 1994
-------------------------------------------------------------------------------
14.123234 16.874276 19.48% 16,652,403 1993
-------------------------------------------------------------------------------
12.789976 14.123234 10.42% 6,313,629 1992
-------------------------------------------------------------------------------
10.572963 12.789976 20.97% 1,991,456 1991
-------------------------------------------------------------------------------
10.028081 10.572963 5.43% 696,595 1990
-------------------------------------------------------------------------------
10.000000 10.028081 0.28% 161,084 1989
-------------------------------------------------------------------------------
===========================================================================================================
Fidelity VIP Fund II - 10.000000 11.071510 10.72% 3,025,498 1995
Contrafund Portfolio -
===========================================================================================================
Fidelity VIP Fund II - 10.000000 11.071510 10.72 3,490,716 1995
Contrafund Portfolio - NQ
===========================================================================================================
</TABLE>
13
15 of 131
<PAGE> 16
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
=============================================================================================================
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
=============================================================================================================
<S> <C> <C> <C> <C> <C>
NSAT Capital 11.311683 14.442619 27.68% 897,315 1995
Appreciation Fund-Q --------------------------------------------------------------------------------
11.564256 11.311683 -2.18% 890,035 1994
--------------------------------------------------------------------------------
10.689287 11.564256 8.19% 545,013 1993
--------------------------------------------------------------------------------
10.000000 10.689287 6.89% 189,896 1992
=============================================================================================================
NSAT-Capital 11.311683 14.442619 27.68% 904,797 1995
Appreciation Fund-NQ --------------------------------------------------------------------------------
11.564256 11.311683 -2.18% 897,902 1994
--------------------------------------------------------------------------------
10.689287 11.564256 8.19% 549,294 1993
--------------------------------------------------------------------------------
10.000000 10.689287 6.89% 551,252 1992
=============================================================================================================
NSAT- 25.309101 29.663756 17.21% 4,150,795 1995
Government Bond --------------------------------------------------------------------------------
Fund-Q 26.497619 25.309101 -4.49% 4,217,320 1994
--------------------------------------------------------------------------------
24.513489 26.497619 8.09% 4,093,697 1993
--------------------------------------------------------------------------------
23.025331 24.513489 6.46% 3,388,192 1992
--------------------------------------------------------------------------------
19.989831 23.025331 15.19% 2,396,577 1991
--------------------------------------------------------------------------------
18.497836 19.989831 8.07% 1,366,952 1990
--------------------------------------------------------------------------------
16.442690 18.497836 12.64% 769,336 1989
--------------------------------------------------------------------------------
15.416798 16.442690 6.65% 397,372 1988
--------------------------------------------------------------------------------
15.399065 15.416798 0.12% 345,246 1987
--------------------------------------------------------------------------------
13.540778 15.399065 13.72% 202,054 1986
--------------------------------------------------------------------------------
11.790783 13.540778 14.84% 154,882 1985
=============================================================================================================
NSAT- 25.242252 29.585401 17.21% 3,385,486 1995
Government Bond --------------------------------------------------------------------------------
Fund-NQ 26.427634 25.242252 -4.49% 3,855,380 1994
--------------------------------------------------------------------------------
24.448737 26.427634 8.09% 4,068,930 1993
--------------------------------------------------------------------------------
22.964507 24.448737 6.46% 3,746,706 1992
--------------------------------------------------------------------------------
19.937021 22.964507 15.19% 3,069,935 1991
--------------------------------------------------------------------------------
18.448970 19.937021 8.07% 2,213,029 1990
--------------------------------------------------------------------------------
16.399248 18.448970 12.50% 1,776,299 1989
--------------------------------------------------------------------------------
15.376062 16.399248 6.65% 1,568,736 1988
--------------------------------------------------------------------------------
15.358367 15.376062 0.12% 1,514,167 1987
--------------------------------------------------------------------------------
13.504987 15.358367 13.72% 1,661,130 1986
--------------------------------------------------------------------------------
11.759616 13.504987 14.84% 1,044,745 1985
=============================================================================================================
NSAT-Money 20.457373 21.334141 4.29% 9,961,763 1995
Market Fund-Q* --------------------------------------------------------------------------------
19.951530 20.457373 2.54% 11,466,217 1994
--------------------------------------------------------------------------------
19.672720 19.951530 1.42% 5,669,948 1993
--------------------------------------------------------------------------------
19.275668 19.672720 2.06% 5,743,893 1992
--------------------------------------------------------------------------------
18.453701 19.275668 4.45% 5,848,337 1991
--------------------------------------------------------------------------------
17.301093 18.453701 6.66% 4,869,455 1990
--------------------------------------------------------------------------------
16.070303 17.301093 7.66% 1,988,984 1989
--------------------------------------------------------------------------------
15.171173 16.070303 5.93% 1,232,073 1988
--------------------------------------------------------------------------------
14.441015 15.171173 5.06% 646,540 1987
--------------------------------------------------------------------------------
13.730155 14.441015 5.18% 352,785 1986
--------------------------------------------------------------------------------
12.851563 13.730155 6.84% 359,173 1985
- -------------------------------------------------------------------------------------------------------------
</TABLE>
*The 7-day yield on the Money Market Fund as of December 30, 1995 was
3.78%.
14
16 of 131
<PAGE> 17
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
===================================================================================================================
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
===================================================================================================================
<S> <C> <C> <C> <C> <C>
NSAT-Money 20.457373 21.334141 4.29% 10,688,426 1995
Market Fund-NQ ---------------------------------------------------------------------------------
19.951530 20.457373 2.54% 16,632,423 1994
---------------------------------------------------------------------------------
19.672720 19.951530 1.42% 8,583,554 1993
---------------------------------------------------------------------------------
19.275668 19.672720 2.06% 7,286,887 1992
---------------------------------------------------------------------------------
18.453701 19.275668 4.45% 7,417,882 1991
---------------------------------------------------------------------------------
17.301093 18.453701 6.66% 7,729,382 1990
---------------------------------------------------------------------------------
16.070303 17.301093 7.66% 5,325,942 1989
---------------------------------------------------------------------------------
15.171173 16.070303 5.93% 5,407,347 1988
---------------------------------------------------------------------------------
14.441015 15.171173 5.06% 5,181,222 1987
---------------------------------------------------------------------------------
13.730155 14.441015 5.18% 3,345,080 1986
---------------------------------------------------------------------------------
12.851563 13.730155 6.84% 3,748,407 1985
===================================================================================================================
NSAT-Small 10.000000 11.410135 14.10% 157,084 1995
Company Fund - Q ---------------------------------------------------------------------------------
===================================================================================================================
NSAT-Small 10.000000 11.410135 14.10% 607,477 1995
Company Fund - NQ ---------------------------------------------------------------------------------
===================================================================================================================
NSAT-Total 40.926247 52.147953 27.42% 2,843,673 1995
Return Fund-Q ---------------------------------------------------------------------------------
41.023082 40.926247 -0.24% 2,189,971 1994
---------------------------------------------------------------------------------
37.471598 41.023082 9.48% 1,747,873 1993
---------------------------------------------------------------------------------
35.094975 37.471598 6.77% 1,417,457 1992
---------------------------------------------------------------------------------
25.674744 35.094975 36.69% 905,547 1991
---------------------------------------------------------------------------------
28.286971 25.674744 -9.23% 720,473 1990
---------------------------------------------------------------------------------
25.311336 28.286971 11.76% 604,552 1989
---------------------------------------------------------------------------------
21.361366 25.311336 18.49% 467,922 1988
---------------------------------------------------------------------------------
21.799104 21.361366 -2.01% 542,976 1987
---------------------------------------------------------------------------------
18.369602 21.799104 18.67% 258,649 1986
---------------------------------------------------------------------------------
13.890710 18.369602 32.24% 248,389 1985
===================================================================================================================
NSAT-Total 39.872391 50.805130 27.42% 2,833,128 1995
Return Fund-NQ ---------------------------------------------------------------------------------
39.966728 39.872391 -0.24% 2,396,609 1994
---------------------------------------------------------------------------------
36.506693 39.966728 9.48% 2,125,354 1993
---------------------------------------------------------------------------------
34.191261 36.506693 6.77% 2,066,486 1992
---------------------------------------------------------------------------------
25.013609 34.191261 36.69% 1,759,891 1991
---------------------------------------------------------------------------------
27.558577 25.013609 -9.23% 1,524,116 1990
---------------------------------------------------------------------------------
24.659571 27.558577 11.76% 1,576,425 1989
---------------------------------------------------------------------------------
20.811313 24.659571 18.49% 1,429,315 1988
---------------------------------------------------------------------------------
21.237770 20.811313 -2.01% 2,024,376 1987
---------------------------------------------------------------------------------
17.896579 21.237770 18.67% 2,057,031 1986
---------------------------------------------------------------------------------
13.533020 17.896579 32.24% 2,022,185 1985
===================================================================================================================
Neuberger & Berman 21.247525 27.626244 30.02% 5,919,670 1995
Advisers Management ---------------------------------------------------------------------------------
Trust-Growth Portfolio-Q 22.656907 21.247525 -6.22% 4,909,356 1994
---------------------------------------------------------------------------------
21.495392 22.656907 5.40% 4,959,418 1993
---------------------------------------------------------------------------------
19.882145 21.495392 8.11% 4,432,865 1992
---------------------------------------------------------------------------------
15.527030 19.882145 28.05% 3,336,332 1991
---------------------------------------------------------------------------------
17.135185 15.527030 -9.39% 1,761,170 1990
---------------------------------------------------------------------------------
13.408445 17.135185 27.79% 751,612 1989
---------------------------------------------------------------------------------
10.783816 13.408445 24.34% 109,355 1988
---------------------------------------------------------------------------------
10.000000 10.783816 7.84% 353 1987
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
15
17 of 131
<PAGE> 18
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
============================================================================================================
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
============================================================================================================
<S> <C> <C> <C> <C> <C>
Neuberger & Berman 21.247525 27.626244 30.02% 5,358,461 1995
Advisers Management -----------------------------------------------------------------------------
Trust-Growth Portfolio-NQ 22.656907 21.247525 -6.22% 4,342,056 1994
-----------------------------------------------------------------------------
21.495392 22.656907 5.40% 4,728,052 1993
-----------------------------------------------------------------------------
19.882145 21.495392 8.11% 4,843,969 1992
-----------------------------------------------------------------------------
15.527030 19.882145 28.05% 3,982,667 1991
-----------------------------------------------------------------------------
17.135185 15.527030 -9.39% 2,294,185 1990
-----------------------------------------------------------------------------
13.408445 17.135185 27.79% 1,363,755 1989
-----------------------------------------------------------------------------
10.783816 13.408445 24.34% 291,414 1988
-----------------------------------------------------------------------------
10.000000 10.783816 7.84% 701 1987
===========================================================================================================
Neuberger & Berman 14.896724 16.311479 9.50% 4,061,293 1995
Advisers Management -----------------------------------------------------------------------------
Trust- Limited Maturity 15.115753 14.896724 -1.45% 3,859,535 1994
Bond Portfolio-Q -----------------------------------------------------------------------------
14.362908 15.115753 5.24% 5,013,322 1993
-----------------------------------------------------------------------------
13.836035 14.362908 3.81% 3,563,619 1992
-----------------------------------------------------------------------------
12.589849 13.836035 9.90% 1,462,609 1991
-----------------------------------------------------------------------------
11.776036 12.589849 6.91% 720,644 1990
-----------------------------------------------------------------------------
10.770188 11.776036 9.34% 303,493 1989
-----------------------------------------------------------------------------
10.182117 10.770188 5.78% 104,283 1988
-----------------------------------------------------------------------------
10.000000 10.182117 1.82% 645 1987
===========================================================================================================
Neuberger & Berman 14.896724 16.311479 9.50% 3,866,535 1995
Advisers Management -----------------------------------------------------------------------------
Trust- Limited Maturity 15.115753 14.896724 -1.45% 4,238,249 1994
Portfolio-NQ -----------------------------------------------------------------------------
14.362908 15.115753 5.24% 5,023,386 1993
-----------------------------------------------------------------------------
13.836035 14.362908 3.81% 3,217,005 1992
-----------------------------------------------------------------------------
12.589849 13.836035 9.90% 1,326,257 1991
-----------------------------------------------------------------------------
11.776036 12.589849 6.91% 676,768 1990
-----------------------------------------------------------------------------
10.770188 11.776036 9.34% 299,695 1989
-----------------------------------------------------------------------------
10.182117 10.770188 5.78% 101,445 1988
-----------------------------------------------------------------------------
10.000000 10.182117 1.82% 99 1987
===========================================================================================================
Neuberger & Berman 10.017795 13.494251 34.70% 2,151,917 1995
Advisers Management -----------------------------------------------------------------------------
Trust-Partners Portfolio-Q 10.000000 10.017795 0.18% 223,285 1994
===========================================================================================================
Neuberger & Berman 10.017795 13.494251 34.70% 2,173,222 1995
Advisers Management -----------------------------------------------------------------------------
Trust-Partners Portfolio- 10.000000 10.017795 0.18% 324,320 1994
NQ
===========================================================================================================
Oppenheimer Variable 13.216172 15.831164 19.79% 4,418,303 1995
Accounts Fund-Multiple -----------------------------------------------------------------------------
Strategies Fund-Q 13.655607 13.216172 -3.22% 3,897,893 1994
-----------------------------------------------------------------------------
11.932236 13.655607 14.44% 2,951,734 1993
-----------------------------------------------------------------------------
11.091678 11.932236 7.58% 1,837,408 1992
-----------------------------------------------------------------------------
9.565675 11.091678 15.95% 1,118,029 1991
-----------------------------------------------------------------------------
9.880485 9.565675 -3.19% 643,641 1990
-----------------------------------------------------------------------------
10.000000 9.880485 -1.20% 139,332 1989
===========================================================================================================
Oppenheimer Variable 13.216172 15.831164 19.79% 3,837,204 1995
Accounts Fund-Multiple -----------------------------------------------------------------------------
Strategies Fund-NQ 13.655607 13.216172 -3.22% 3,363,638 1994
-----------------------------------------------------------------------------
11.932236 13.655607 14.44% 2,677,668 1993
-----------------------------------------------------------------------------
11.091678 11.932236 7.58% 1,697,934 1992
-----------------------------------------------------------------------------
9.565675 11.091678 15.95% 1,012,431 1991
-----------------------------------------------------------------------------
9.880485 9.565675 -3.19% 603,205 1990
-----------------------------------------------------------------------------
10.000000 9.880485 -1.20% 184,606 1989
- -----------------------------------------------------------------------------------------------------------
</TABLE>
16
18 of 131
<PAGE> 19
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
==============================================================================================================
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Oppenheimer Variable 14.531774 16.781326 15.48% 3,369,101 1995
Accounts Fund-Bond -----------------------------------------------------------------------------
Fund-Q 15.013579 14.531774 -3.21% 2,694,486 1994
-----------------------------------------------------------------------------
13.456350 15.013579 11.57% 2,304,838 1993
-----------------------------------------------------------------------------
12.801628 13.456350 5.11% 1,429,504 1992
-----------------------------------------------------------------------------
11.026344 12.801628 16.10% 609,779 1991
-----------------------------------------------------------------------------
10.352435 11.026344 6.51% 193,600 1990
-----------------------------------------------------------------------------
10.000000 10.352435 3.52% 64,637 1989
==============================================================================================================
Oppenheimer Variable 14.531774 16.781326 15.48% 3,073,942 1995
Accounts Fund-Bond -----------------------------------------------------------------------------
Fund-NQ 15.013579 14.531774 -3.21% 2,666,115 1994
-----------------------------------------------------------------------------
13.456350 15.013579 11.57% 2,249,484 1993
-----------------------------------------------------------------------------
12.801628 13.456350 5.11% 1,407,269 1992
-----------------------------------------------------------------------------
11.026344 12.801628 16.10% 627,014 1991
-----------------------------------------------------------------------------
10.352435 11.026344 6.51% 243,677 1990
-----------------------------------------------------------------------------
10.000000 10.352435 3.52% 56,538 1989
==============================================================================================================
Oppenheimer Variable 11.307851 11.411200 0.91% 6,518,772 1995
Accounts Fund-Global -----------------------------------------------------------------------------
Securities Fund-Q 12.151882 11.307851 -6.95% 6,376,101 1994
-----------------------------------------------------------------------------
10.000000 12.151882 21.52% 1,254,946 1993
==============================================================================================================
Oppenheimer Variable 11.307851 11.411200 0.91% 4,810,440 1995
Accounts Fund-Global -----------------------------------------------------------------------------
Securities Fund-NQ 12.151882 11.307851 -6.95% 6,373,740 1994
-----------------------------------------------------------------------------
10.000000 12.151882 21.52% 1,833,969 1993
==============================================================================================================
Strong Special 14.551898 18.071722 24.19% 9,874,627 1995
Fund II, Inc.-Q -----------------------------------------------------------------------------
14.230988 14.551898 2.26% 8,576,003 1994
-----------------------------------------------------------------------------
11.519061 14.230988 23.54% 4,733,084 1993
-----------------------------------------------------------------------------
10.000000 11.519061 15.19% 1,132,322 1992
==============================================================================================================
Strong Special 14.551898 18.071722 24.19% 8,712,015 1995
Fund II, Inc.-NQ -----------------------------------------------------------------------------
14.230988 14.551898 2.26% 8,937,552 1994
-----------------------------------------------------------------------------
11.519061 14.230988 23.54% 5,766,194 1993
-----------------------------------------------------------------------------
10.000000 11.519061 15.19% 1,281,636 1992
==============================================================================================================
Strong Variable Insurance 12.143604 16.212409 33.51% 5,223,195 1995
Funds, Inc.-Discovery -----------------------------------------------------------------------------
Fund II, Inc.-Q 13.003747 12.143604 -6.61% 3,921,214 1994
-----------------------------------------------------------------------------
10.796708 13.003747 20.44% 2,178,730 1993
-----------------------------------------------------------------------------
10.000000 10.796708 7.97% 1,002,256 1992
==============================================================================================================
Strong Variable Insurance 12.143604 16.212409 33.51% 5,248,509 1995
Funds, Inc.-Discovery -----------------------------------------------------------------------------
Fund II, Inc.-NQ 13.003747 12.143604 -6.61% 4,385,371 1994
-----------------------------------------------------------------------------
10.796708 13.003747 20.44% 3,188,982 1993
-----------------------------------------------------------------------------
10.000000 10.796708 7.97% 1,433,375 1992
==============================================================================================================
Strong Variable Insurance 10.000000 10.226470 2.26% 78,603 1995
Funds, Inc.-International -----------------------------------------------------------------------------
Stock Fund II - Q
==============================================================================================================
Strong Variable Insurance 10.000000 10.226470 2.26% 86,735 1995
Funds, Inc.-International -----------------------------------------------------------------------------
==============================================================================================================
Stock Fund II - NQ 10.801286 12.912980 19.55% 2,978,792 1995
TCI Portfolios, Inc.- -----------------------------------------------------------------------------
TCI Balanced-Q 10.876699 10.801286 -0.69% 2,670,990 1994
-----------------------------------------------------------------------------
10.232829 10.876699 6.29% 2,039,118 1993
-----------------------------------------------------------------------------
10.000000 10.232829 2.33% 1,233,110 1992
==============================================================================================================
TCI Portfolios, Inc.- 10.801286 12.912980 19.55% 2,471,621 1995
TCI Balanced-NQ -----------------------------------------------------------------------------
10.876699 10.801286 -0.69% 2,324,933 1994
-----------------------------------------------------------------------------
10.232829 10.876699 6.29% 2,073,593 1993
-----------------------------------------------------------------------------
10.000000 10.232829 2.33% 1,301,248 1992
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
17
19 of 131
<PAGE> 20
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
===================================================================================================================
<S> <C> <C> <C> <C> <C>
TCI Portfolios, Inc.- 19.378026 25.074858 29.40% 9,867,412 1995
TCI Growth-Q -----------------------------------------------------------------------------
19.864882 19.378026 -2.45% 9,394,094 1994
-----------------------------------------------------------------------------
18.244594 19.864882 8.88% 8,366,010 1993
-----------------------------------------------------------------------------
18.736465 18.244594 -2.63% 7,578,213 1992
-----------------------------------------------------------------------------
13.379768 18.736465 40.04% 4,222,602 1991
-----------------------------------------------------------------------------
13.732668 13.379768 -2.57% 1,954,531 1990
-----------------------------------------------------------------------------
10.801278 13.732668 27.14% 548,848 1989
-----------------------------------------------------------------------------
11.201686 10.801278 -3.57% 224,112 1988
-----------------------------------------------------------------------------
10.000000 11.201686 12.02% 9,178 1987
===================================================================================================================
TCI Portfolios, Inc.- 19.378026 25.074858 29.40% 7,570,906 1995
TCI Growth-NQ -----------------------------------------------------------------------------
19.864882 19.378026 -2.45% 7,577,109 1994
-----------------------------------------------------------------------------
18.244594 19.864882 8.88% 7,513,748 1993
-----------------------------------------------------------------------------
18.736465 18.244594 -2.63% 8,116,485 1992
-----------------------------------------------------------------------------
13.379768 18.736465 40.04% 5,428,104 1991
-----------------------------------------------------------------------------
13.732668 13.379768 -2.57% 2,629,880 1990
-----------------------------------------------------------------------------
10.801278 13.732668 27.14% 974,118 1989
-----------------------------------------------------------------------------
11.201686 10.801278 -3.57% 348,954 1988
-----------------------------------------------------------------------------
10.000000 11.201686 12.02% 9,741 1987
===================================================================================================================
TCI Portfolios, Inc.- 9.392316 10.402550 10.76% 1,565,354 1995
TCI International-Q -----------------------------------------------------------------------------
10.000000 9.392316 -6.08% 688,372 1994
-----------------------------------------------------------------------------
===================================================================================================================
TCI Portfolios, Inc.- 9.392316 10.402550 10.76% 1,498,305 1995
TCI International-NQ -----------------------------------------------------------------------------
10.000000 9.392316 -6.08% 845,551 1994
===================================================================================================================
Van Eck Worldwide 12.465907 14.433345 15.78% 2,993,355 1995
Insurance Trust - -----------------------------------------------------------------------------
Worldwide Bond Fund-Q 12.798654 12.465907 -2.60% 2,731,900 1994
-----------------------------------------------------------------------------
12.031194 12.798654 6.38% 2,906,303 1993
-----------------------------------------------------------------------------
12.872259 12.031194 -6.53% 2,263,731 1992
-----------------------------------------------------------------------------
11.012132 12.872259 16.89% 1,132,905 1991
-----------------------------------------------------------------------------
10.027192 11.012132 9.82% 453,396 1990
-----------------------------------------------------------------------------
10.000000 10.027192 0.27% 27,550 1989
===================================================================================================================
Van Eck Worldwide 12.465907 14.433345 15.78% 3,020,939 1995
Insurance Trust - -----------------------------------------------------------------------------
Worldwide Bond Fund-NQ 12.798654 12.465907 -2.60% 3,204,016 1994
-----------------------------------------------------------------------------
12.031194 12.798654 6.38% 3,619,098 1993
-----------------------------------------------------------------------------
12.872259 12.031194 -6.53% 2,707,532 1992
-----------------------------------------------------------------------------
11.012132 12.872259 16.89% 1,168,830 1991
-----------------------------------------------------------------------------
10.027192 11.012132 9.82% 497,712 1990
-----------------------------------------------------------------------------
10.000000 10.027192 0.27% 51,091 1989
===================================================================================================================
Van Eck Worldwide 12.728311 13.944310 9.55% 3,166,034 1995
Insurance Trust-Gold and -----------------------------------------------------------------------------
Natural Resources 13.544828 12.728311 -6.03% 3,213,104 1994
Fund-Q -----------------------------------------------------------------------------
8.325308 13.544828 62.69% 2,189,942 1993
-----------------------------------------------------------------------------
8.795164 8.325308 -5.34% 800,912 1992
-----------------------------------------------------------------------------
9.175494 8.795164 -4.15% 449,387 1991
-----------------------------------------------------------------------------
10.823789 9.175494 -15.23% 337,698 1990
-----------------------------------------------------------------------------
10.000000 10.823789 8.24% 44,378 1989
===================================================================================================================
Van Eck Worldwide 12.728311 13.944310 9.55% 3,714,045 1995
Insurance Trust-Gold and -----------------------------------------------------------------------------
Natural Resources 13.544828 12.728311 -6.03% 4,473,812 1994
Fund-NQ -----------------------------------------------------------------------------
8.325308 13.544828 62.69% 3,344,681 1993
-----------------------------------------------------------------------------
8.795164 8.325308 -5.34% 960,152 1992
-----------------------------------------------------------------------------
9.175494 8.795164 -4.15% 565,314 1991
-----------------------------------------------------------------------------
10.823789 9.175494 -15.23% 475,693 1990
-----------------------------------------------------------------------------
10.000000 10.823789 8.24% 83,552 1989
===================================================================================================================
Van Kampen American 10.000000 10.765351 7.65% 161,110 1995
Capital Life Investment -----------------------------------------------------------------------------
Trust-Real Estate
Securities Fund - Q
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
18
20 of 131
<PAGE> 21
CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE AT UNIT VALUE CHANGE IN ACCUMULATION
BEGINNING OF AT END ACCUMULATION UNITS AT END OF
FUND PERIOD OF PERIOD UNIT VALUE THE PERIOD YEAR
============================================================================================================
<S> <C> <C> <C> <C> <C>
Van Kampen American 10.000000 10.765351 7.65% 310,010 1995
Capital Life Investment
Trust-Real Estate
Securities Fund - NQ
============================================================================================================
Warburg Pincus Trust- 10.000000 10.661059 6.61% 1,798,470 1995
International Equity
Portfolio - Q
============================================================================================================
Warburg Pincus Trust- 10.000000 10.661059 6.61% 2,012,385 1995
International Equity
Portfolio - NQ
============================================================================================================
Warburg Pincus Trust- 10.000000 12.430073 24.30% 2,450,661 1995
Small Company Growth
Portfolio - Q
============================================================================================================
Warburg Pincus Trust- 10.000000 12.430073 24.30% 2,574,975 1995
Small Company Growth
Portfolio - NQ
============================================================================================================
</TABLE>
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<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws of
the State of Ohio in March 1929. The Company is a member of the "Nationwide
Insurance Enterprise," with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43216-6609. The Company offers a complete line of life insurance,
including annuities and accident and health insurance. It is admitted to do
business in the District of Columbia, Puerto Rico and in all states.
THE VARIABLE ACCOUNT
The Variable Account was established by the Company on October 7, 1981,
pursuant to the provisions of Ohio law. The Company has caused the Variable
Account to be registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940. Such registration does not involve supervision of the management of the
Variable Account or the Company by the Securities and Exchange Commission.
The Variable Account is a separate investment account of the Company and
as such, is not chargeable with liabilities arising out of any other business
the Company may conduct. The Company does not guarantee the investment
performance of the Variable Account. Obligations under the Contracts, however,
are obligations of the Company. Income, gains and losses, whether or not
realized, from the assets of the Variable Account are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard
to other income, gains, or losses of the Company.
Purchase Payments are allocated within the Variable Account among one or
more Sub-Accounts made up of shares in the underlying Mutual Fund option(s)
designated by the Contract Owner. There are two Sub-Accounts within the
Variable Account for each of the underlying Mutual Fund options which may be
designated by the Contract Owner. One such Sub-Account contains the underlying
Mutual Funds shares attributable to Accumulation Units under Qualified
Contracts, Individual Retirement Annuities, and Tax Sheltered Annuities and one
such Sub-Account contains the underlying Mutual Funds shares attributable to
Accumulation Units under Non-Qualified Contracts.
UNDERLYING MUTUAL FUND OPTIONS
Contract Owners may choose from among a number of different underlying
Mutual Fund options. (See Appendix B which contains a summary of investment
objectives for each underlying Mutual Fund option.) More detailed information
may be found in the current prospectus for each underlying Mutual Fund offered.
Such a prospectus for the Mutual Fund option(s) being considered must accompany
this prospectus and should be read in conjunction herewith. A copy of each
prospectus may be obtained without charge from Nationwide Life Insurance
Company by calling 1-800-848-6331, TDD 1-800-238-3035, or writing P.O. Box
16609, Columbus, Ohio 43216-6609.
The underlying Mutual Fund options may also be available to registered
separate accounts offering variable annuity and variable life products of other
participating insurance companies, as well as to the Variable Account and other
separate accounts of the Company. Although the Company does not anticipate any
disadvantages to this, there is a possibility that a material conflict may
arise between the interest of the Variable Account and one or more of the other
separate accounts participating in the underlying Mutual Funds. A conflict may
occur due to a change in law affecting the operations of variable life and
variable annuity separate accounts, differences in the voting instructions of
the Contract Owners and those of other companies, or some other reason. In the
event of conflict, the Company will take any steps necessary to protect
Contract Owners and variable annuity payees, including withdrawal of the
Variable Account from participation in the underlying Mutual Fund or Mutual
Funds which are involved in the conflict.
VOTING RIGHTS
Voting rights under the Contracts apply ONLY with respect to Purchase
Payments or accumulated amounts allocated to the Variable Account.
In accordance with its view of present applicable law, the Company will
vote the shares of the underlying Mutual Funds held in the Variable Account at
regular and special meetings of the shareholders of the underlying Mutual
Funds. These shares will be voted in accordance with instructions received
from Contract Owners who have an interest in the Variable Account. If the
Investment Company Act of 1940 or any
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Regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result the Company determines that it is
permitted to vote the shares of the underlying Mutual Funds in its own right,
it may elect to do so.
The person having the voting interest under a Contract shall be the
Contract Owner. The number of shares attributable to each Contract Owner is
determined by dividing the Contract Owner's interest in each respective
Sub-Account of the Variable Account by the net asset value of the applicable
share of the underlying Mutual Fund corresponding to the Sub-Account.
The number of shares which a person has the right to vote will be
determined as of the date to be chosen by the Company not more than 90 days
prior to the meeting of the underlying Mutual Fund and voting instructions will
be solicited by written communication at least 21 days prior to such meeting.
Underlying Mutual Fund shares held in the Variable Account as to which no
timely instructions are received will be voted by the Company in the same
proportion as the voting instructions which are received with respect to all
Contracts participating in the Variable Account.
Each person having a voting interest will receive periodic reports
relating to the underlying Mutual Fund, proxy material, and a form with which
to give such voting instructions.
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS
MORTALITY RISK CHARGE
The Company assumes a "mortality risk" by virtue of annuity rates
incorporated in the Contract which cannot be changed regardless of the death
rates of persons receiving annuity payments or of the general population.
For assuming this mortality risk, the Company deducts a Mortality Risk
Charge from the Variable Account. This amount is computed on a daily basis,
and is equal to an annual rate of 0.80% of the daily net asset value of the
Variable Account. The Company expects to generate a profit through assessing
this charge.
EXPENSE RISK CHARGE
The Company will not increase charges for administration of the Contracts
regardless of its actual expenses. For assuming this expense risk, the Company
deducts an Expense Risk Charge from the Variable Account. This amount is
computed on a daily basis, and is equal to an annual rate of 0.45% of the daily
net asset value of the Variable Account. The Company expects to generate a
profit through assessing this charge.
CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for
these Contracts. However, if any part of the Contract Value of such Contracts
is surrendered, the Company will, with certain exceptions (see "Elimination of
Contingent Deferred Sales Charge" section), deduct a Contingent Deferred Sales
Charge not to exceed 7% of the lesser of the total of all Purchase Payments
made within 84 months prior to the date of the request to surrender, or the
amount surrendered. The Contingent Deferred Sales Charge, when it is
applicable, will be used to cover expenses relating to the sale of the
Contracts, including commissions paid to sales personnel, the costs of
preparation of sales literature and other promotional activity. The Company
attempts to recover its distribution costs relating to the sale of the
Contracts from the Contingent Deferred Sales Charge. Any shortfall will be
made up from the General Account of the Company, which may indirectly include
portions of the Mortality and Expense Risk Charges, since the Company expects
to generate a profit from these charges. The maximum amount that may be paid
to a selling agent on the sale of these Contracts is 5.25% of Purchase
Payments.
For purposes of the Contingent Deferred Sales Charge, surrenders under a
Contract come first from the Purchase Payments which have been on deposit under
the Contract for the longest time period. For tax purposes, a surrender is
usually treated as a withdrawal of earnings first. This charge will apply in
the amounts set forth below to Purchase Payments within the time periods set
forth. In no event will any Contingent Deferred Sales Charge be deducted
against any values which have been held under the Contract for at least 84
months, or to commencement of an annuity payout under Contracts which have been
in effect for at least two years or upon the death of the Designated Annuitant.
The Contingent Deferred Sales Charge applies to Purchase Payments as
follows for Contracts issued on or after December 15, 1988:
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<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTINGENT DEFERRED NUMBER OF COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
PURCHASE PAYMENT PERCENTAGE PURCHASE PAYMENT PERCENTAGE
<S> <C> <C> <C>
0 7% 4 3%
1 6% 5 2%
2 5% 6 1%
3 4% 7 0%
</TABLE>
Starting with the second year after a Purchase Payment has been made
under the Contract, 10% of that Purchase Payment may be withdrawn each year
without imposition of the Contingent Deferred Sales Charge. This free
withdrawal privilege is non-cumulative and will not exceed 10% of the Purchase
Payment in any year. The Contingent Deferred Sales Charge is waived for either:
(1) first year withdrawals of up to 10% of each Purchase Payment under
Individual Retirement Annuity Contracts issued on or after March 1, 1993, or
(2) for Distributions required for the Contract to meet minimum Distribution
rules under the Code. Withdrawals may be restricted for Contracts issued
pursuant to the terms of a Tax Sheltered Annuity Plan or other 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.
For Contracts issued prior to December 15, 1988, a Contingent Deferred
Sales charge will be made by the Company equal to 5% of the lesser of the total
of all Purchase Payments made within 96 months prior to the date of the request
for surrender, or the amount surrendered. For Contracts issued prior to
December 15, 1988 the Contract Owner may, after the first year from the date of
each Purchase Payment, withdraw without a Contingent Deferred Sales Charge, up
to 5% of that Purchase Payment for each year that the Purchase Payment has
remained on deposit (less the amount of such Purchase Payment previously
surrendered free of charge).
When a Contract is held by a Charitable Remainder Trust, the amount which
may be withdrawn from this Contract without application of a Contingent
Deferred Sales Charge, shall be the larger of (a) or (b), where (a) is:
The amount which would otherwise be available for withdrawal without
application of a Contingent Deferred Sales Charge;
and where (b) is:
The difference between the total Purchase Payments made to the Contract
as of the date of the withdrawal (reduced by previous withdrawals of such
Purchase Payments), and the Contract Value at the close of the day prior
to the date of the withdrawal.
ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
For Tax Sheltered Annuity Contracts issued on or after December 17, 1990,
Qualified Contracts sold in conjunction with 401 cases sold on or after January
14, 1991, and SEP-IRA Contracts sold on or after January 14, 1991, the Company
will waive the Contingent Deferred Sales Charge when:
A. the Plan Participant experiences a case of hardship (as provided
in Code Section 403(b) and as defined for purposes of Code Section
401(k));
B. the Plan Participant becomes disabled (within the meaning of Code
Section 72(m)(7));
C. the Plan Participant attains age 59 1/2 and has participated in
the Contract for at least 5 years, as determined from the Contract
Anniversary date;
D. the Plan Participant has participated in the Contract for at least
15 years as determined from the Contract Anniversary date;
E. the Plan Participant dies; or
F. the Contract is annuitized after 2 years from the inception of the
Contract.
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For Non-Qualified Contracts and IRA Contracts, the Company will waive the
Contingent Deferred Sales Charge when:
A. the Designated Annuitant dies; or
B. the Contract Owner annuitizes after 2 years in the Contract.
When a Contract described in this prospectus is exchanged for another
Contract issued by the Company, or any of its affiliated insurance companies,
of the type and class which the Company determined is eligible for such
exchange, the Company will waive the Contingent Deferred Sales Charge on the
first Contract. Contingent Deferred Sales Charges may apply to the Contract
received in the exchange.
In no event will elimination of Contingent Deferred Sales Charges be
permitted where such elimination will be unfairly discriminatory to any person,
or where it is prohibited by state law.
CONTRACT MAINTENANCE CHARGE AND ADMINISTRATION CHARGE
Each year on the Contract Anniversary, (and on the date of surrender in
any year in which the entire Contract Value is surrendered) the Company deducts
a Contract Maintenance Charge from the Contract Value to reimburse it for
administrative expenses relating to the issuance and maintenance of the
Contract. The Contract Maintenance Charges are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
AMOUNT TYPE OF CONTRACT ISSUED
------------------------------------------------------------------------------
<S> <C>
- Non-Qualified Contracts
$30.00 - Individual Retirement Annuities
- Tax Sheltered Annuities (sold prior to
December 17, 1990)
- Qualified Contracts (issued pursuant
to a 401 plan prior to January 14,
1991).(1)
------------------------------------------------------------------------------
$12.00 - Tax Sheltered Annuity Contracts issued
on or after December 17, 1990 and before
August 1, 1994.(2)
------------------------------------------------------------------------------
$30.00 to $0.00 - Qualified Contracts issued on or after
January 14, 1991 and before August 1,
1994.(3)
------------------------------------------------------------------------------
$12.00 to $0.00(4) - Qualified Contracts (sold on or after
August 1, 1994).
- Tax Sheltered Annuity Contracts (sold
on or after August 1, 1994).
------------------------------------------------------------------------------
</TABLE>
(1) If additional Contracts are or were issued (on or after January 14, 1991)
pursuant to a plan which was funded by Contracts described in this prospectus
prior to January 14, 1991, such additional Qualified Contracts shall have a
Contract Maintenance Charge of $30.00.
(2) This charge may be lowered to reflect savings in administration of the
Contracts.
(3) Variances are based on internal underwriting guidelines which can result in
reductions of charges in incremental amounts of $5.00. Underwriting
considerations include the size of the group, the average participant account
balance transferred to the Company, if any, and administrative savings.
(4) The charge is determined based on Company underwriting guidelines.
All Contract Maintenance Charge reductions shall be based on objective
underwriting guidelines which shall be applied in a non-discriminatory manner.
The Contract Maintenance Charge will be allocated between the Fixed
Account and Variable Account in the same percentages as the Purchase Payment
investment allocations are to the Fixed Account and Variable Account. The
Company also assesses an Administration Charge equal on an annual basis to
0.05% of the daily net asset value of the Variable Account. The deduction of
the Administration Charge is made from each Sub-Account in the same proportion
that the Contract Value in each Sub-Account bears to the total Contract Value
in the Variable Account. These charges are designed only to reimburse the
Company for administrative expenses and the Company will monitor these charges
to ensure that they do not exceed annual administration expenses. In any
Contract Year when a Contract is surrendered for its full value on any date
other than the
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Contract Anniversary, the Contract Maintenance Charge will be deducted at the
time of such surrender. The amount of the Contract Maintenance Charge may not
be increased by the Company. In no event will reduction or elimination of the
Contract Maintenance Charge be permitted where such reduction or elimination
will be unfairly discriminatory to any person, or where it is prohibited by
state law.
PREMIUM TAXES
The Company will charge against the Contract Value the amount of any
premium taxes levied by a state or any other governmental entity upon Purchase
Payments received by the Company. Premium taxes currently imposed by certain
jurisdictions range from 0% to 3.5%. This range is subject to change. The
method used to recoup premium tax expense will be determined by the Company at
its sole discretion and in compliance with applicable state law. The Company
currently deducts such charges from a Contract Owner's Contract Value either:
(1) at the time the Contract is surrendered, (2) at Annuitization, or (3) at
such earlier date as the Company may become subject to such taxes.
EXPENSES OF VARIABLE ACCOUNT
The Variable Account is responsible for the following types of expenses:
(1) administrative expenses relating to the issuance and maintenance of the
Contracts; (2) mortality risk charge associated with guaranteeing the annuity
purchase rates at issue for the life of the Contracts; and (3) expense risk
charge associated with guaranteeing that the Mortality Risk, Expense Risk,
Contract Maintenance and Administration Charges described in this prospectus
will not change regardless of actual expenses. If these charges are
insufficient to cover these expenses, the loss will be borne by the Company.
For 1995, the Variable Account incurred total expenses equal to 1.47% of
its average net assets, relating to the administrative, sales, mortality and
expense risk charges described above for all Contracts outstanding during that
year. Deductions from and expenses paid out of the assets of the underlying
Mutual Funds are described in each underlying Mutual Fund prospectus.
INVESTMENTS OF THE VARIABLE ACCOUNT
At the time of purchase each Contract Owner elects to have Purchase
Payments attributable to his or her participation in the Variable Account
allocated among one or more of the Sub-Accounts which consist of shares in the
underlying Mutual Fund options. Shares of the respective underlying Mutual
Fund options specified by the Contract Owner are purchased at net asset value
for the respective Sub-Account(s) and converted into Accumulation Units. At
the time of application, the Contract Owner designates the underlying Mutual
Funds to which he or she desires to have Purchase Payments allocated. The
Contract Owner may change the election as to allocation of Purchase Payments or
may elect to exchange amounts among the Sub-Account options pursuant to such
terms and conditions applicable to such transactions as may be imposed by each
of the underlying Mutual Funds, in addition to those set forth in the
Contracts.
RIGHT TO REVOKE
The Contract Owner may revoke the Contract at any time between the date
of application and the date 10 days after receipt of the Contract and receive a
refund of the Contract Value unless otherwise required by state and/or federal
law. All Individual Retirement Annuity refunds will be return of Purchase
Payments. In order to revoke the Contract, it must be mailed or delivered to
the Home Office of the Company at the mailing address shown on page 1 of this
prospectus. Mailing or delivery must occur on or before 10 days after receipt
of the Contract for revocation to be effective. In order to revoke the
Contract, if it has not been received, written notice must be mailed or
delivered to the Home Office of the Company at the mailing address shown on
page 1 of this prospectus.
The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any
additional amounts refunded to the Contract Owner will be paid by the Company.
TRANSFERS
The Owner may request a transfer of up to 100% of the Contract Value from
the Variable Account to the Fixed Account, without penalty or adjustment. All
amounts transferred to the Fixed Account must remain on deposit in the Fixed
Account until the expiration of the current Interest Rate Guarantee Period. In
addition, transfers from the Fixed Account may not be made prior to the end of
the then current Interest Rate Guarantee Period. The Interest Rate Guarantee
Period expires on the final day of a calendar quarter during which the one
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year anniversary of the allocation to the Fixed Account occurs. Transfers must
also be made prior to the Annuitization Date. The Owner's value in each
Sub-Account will be determined as of the date the transfer request is received
in the Home Office in good order. The Company reserves the right to restrict
transfers from the Variable Account to the Fixed Account to 25% of the Contract
Value for any 12 month period.
The Owner may at the maturity of an Interest Rate Guarantee Period,
transfer a portion of the value of the Fixed Account to the Variable Account.
The amount that may be transferred from the Fixed Account to the Variable
Account will be determined by the Company, at its sole discretion, but will not
be less than 10% of the total value of the portion of the Fixed Account that is
maturing. The amount that may be transferred will be declared upon the
expiration date of the then current Interest Rate Guarantee Period. Transfers
from the Fixed Account must be made within 30 days after the expiration date of
the guarantee period. Owners who have entered into a Dollar Cost Averaging
agreement with the Company (see "Dollar Cost Averaging") may transfer from the
Fixed Account to the Variable Account under the terms of that agreement.
Transfers may be made either in writing or, in states allowing such
transfers, by telephone. This telephone exchange privilege is made available
to Contract Owners automatically without Owners having to elect this privilege.
The Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include any or all
of the following, or such other procedures as the Company may, from time to
time, deem reasonable: requesting identifying information, such as name,
contract number, Social Security Number, and/or personal identification number;
tape recording all telephone transactions; or providing written confirmation
thereof to both the Contract Owner and any agent of record, at the last address
of record. The Company will not be liable for following instructions
communicated by telephone which it reasonably believes to be genuine. Any
losses incurred pursuant to actions taken by the Company in reliance on
telephone instructions reasonably believed to be genuine shall be borne by the
Contract Owner. The Company may withdraw the telephone exchange privilege upon
30 days' written notice to the Contract Owners.
ASSIGNMENT
Where permitted, the Contract Owner may assign some or all rights under
the Contract at any time during the lifetime of the Designated Annuitant. Such
assignment will take effect upon receipt by the Company of a written notice
thereof executed by the Contract Owner. The Company assumes no responsibility
for the validity or sufficiency of any assignment. The Company shall not be
liable as to any payment or other settlement made by the Company before receipt
of the assignment. Where necessary for the proper administration of the terms
of the Contract, an assignment will not be recorded until the Company has
received sufficient direction from the Contract Owner and assignee as to the
proper allocation of Contract rights under the assignment. Individual
Retirement Annuities, Tax Sheltered Annuities, and Qualified Contracts may not
be assigned, pledged or otherwise transferred except under such conditions as
may be allowed by applicable law.
If this Contract is a Non-Qualified Contract, any portion of Contract
Value attributable to Purchase Payments made after August 13, 1982, which is
pledged or assigned after August 13, 1982, shall be treated as a Distribution
and shall be included in gross income to the extent that the cash value exceeds
the investment in the Contract for the taxable year in which assigned or
pledged. In addition, any Contract Values assigned may, under certain
conditions, be subject to a tax penalty equal to 10% of the amount which is
included in gross income. Assignments of the entire Contract Value may cause
the portion of the Contract Value which exceeds the total investment in the
Contract to be included in gross income each year that the assignment is in
effect.
LOAN PRIVILEGE
Prior to the Annuitization Date, the Owner of a Qualified Contract or Tax
Sheltered Annuity Contract may receive a loan from the Contract Value subject
to the terms of the Contract, the Plan, and the Code, which impose restrictions
on loans.
Loans from Qualified Contracts or Tax Sheltered Annuities are available
beginning 30 days after the Date of Issue. The Contract Owner may borrow a
minimum of $1,000. In non-ERISA plans, for Contract Values up to $20,000, the
maximum loan balance which may be outstanding at any time is 80% of the
Contract Value, but not more than $10,000. If the Contract Value is $20,000 or
more, the maximum loan balance which may be outstanding at any time is 50% of
the Contract Value, but not more than $50,000. For ERISA plans, the maximum
loan balance which may be outstanding at any time is 50% of the Contract Value,
but not more than $50,000. The $50,000 limit will be reduced by the highest
loan balances owed during the prior one-year period.
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<PAGE> 28
Additional loans are subject to the Contract minimum amount. The aggregate of
all loans may not exceed the Contract Value limitations stated in this
provision.
For salary reduction Tax Sheltered Annuities, loans may only be secured
by the Contract Value. For loans from Qualified Contracts and other Tax
Sheltered Annuities, the Company reserves the right to limit a loan to 50% of
the Contract Value subject to the acceptance by the Contract Owner of the
Company's loan agreement. Where permitted, the Company may require other named
collateral where the loan from a Contract exceeds 50% of the Contract Value.
All loans are made from a collateral fixed account. An amount equal to
the principal amount of the loan will be transferred to the collateral fixed
account. Unless instructed to the contrary by the Contract Owner, the Company
will first transfer to the collateral fixed account the Variable Account units
from the Contract Owner's investment options in proportion to the assets in
each option until the required balance is reached or all such variable units
are exhausted. The remaining required collateral will next be transferred from
the Fixed Account. No withdrawal charges are deducted at the time of the loan,
or on the transfer from the Variable Account to the collateral fixed account.
Until the loan has been repaid in full, that portion of the collateral
fixed account equal to the outstanding loan balance shall be credited with
interest at a rate 2.25% less than the loan interest rate fixed by the Company
for the term of the loan. However, the interest rate credited to the
collateral fixed account will never be less than 3.0%. Specific loan terms are
disclosed at the time of loan application or loan issuance.
Loans must be repaid in substantially level payments, not less frequently
than quarterly, within five years. Loans used to purchase the principal
residence of the Contract Owner must be repaid within 15 years. During the
loan term, the outstanding balance of the loan will continue to earn interest
at an annual rate as specified in the loan agreement. Loan repayments will
consist of principal and interest in amounts set forth in the loan agreement.
Loan repayments will be allocated between the Fixed and Variable Accounts in
the same proportion as when the loan was made.
If the Contract is surrendered while the loan is outstanding, the
surrender value will be reduced by the amount of the loan outstanding plus
accrued interest. If the Contract Owner/Annuitant dies while the loan is
outstanding, the Death Benefit will be reduced by the amount of the loan
outstanding plus accrued interest. If annuity payments start while the loan is
outstanding, the Contract Value will be reduced by the amount of the
outstanding loan plus accrued interest. Until the loan is repaid, the Company
reserves the right to restrict any transfer of the Contract which would
otherwise qualify as a transfer as permitted in the Code.
If a loan payment is not made when due, interest will continue to accrue.
A grace period may be available under the terms of the loan agreement. If a
loan payment is not made when due, or by the end of the applicable grace
period, then that payment, which may be a single periodic payment or payment of
the entire loan, will be treated as a deemed Distribution, as permitted by law,
may be taxable to the borrower, and may be subject to the early withdrawal tax
penalty. Interest which subsequently accrues on defaulted amounts may also be
treated as additional deemed Distributions each year. Any defaulted amounts,
plus accrued interest, will be deducted from the Contract when the Participant
becomes eligible for a Distribution of at least that amount, and this amount
may again be treated as a Distribution where required by law. Additional loans
may not be available while a previous loan remains in default.
Loans may also be subject to additional limitations or restrictions under
the terms of the employer's plan. Loans permitted under this Contract may
still be taxable in whole or part if the Participant has additional loans from
other plans or contracts. The Company will calculate the maximum nontaxable
loan based on the information provided by the Participant or the employer.
Loan repayments must be identified as such or else they will be treated
as Purchase Payments, and will not be used to reduce the outstanding loan
principal or interest due. The Company reserves the right to modify the term
or procedures of the loan in the event of a change in the laws or regulations
relating to the treatment of loans. The Company also reserves the right to
assess a loan processing fee. Individual Retirement Annuities, SEP-IRA
accounts and Non-Qualified Contracts are not eligible for loans.
OWNERSHIP PROVISIONS
Unless otherwise provided, the Contract Owner has all rights under the
Contract. IF THE PURCHASER NAMES SOMEONE OTHER THAN HIMSELF OR HERSELF AS
OWNER, THE PURCHASER WILL HAVE NO RIGHTS UNDER THE CONTRACT. If the Owner dies
prior to the Annuitization Date, Contract ownership
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<PAGE> 29
will be determined in accordance with the "Death of Contract Owner" provision.
If the Designated Annuitant does not survive the Contract Owner or if the
Designated Annuitant and the Owner are the same person, Contract ownership will
be determined in accordance with the "Death Of Designated Annuitant Prior To
The Annuitization Date" provision. After the Annuitization Date ownership will
be based on the Annuity Payment Option selected. Ownership rights under this
Contract may be restricted under the provisions of the retirement or deferred
compensation plan under which this Contract may be issued.
Prior to the Annuitization Date, the Contract Owner may name a new
Contract Owner at any time, but such change may be subject to state and federal
gift taxes and may be treated as an assignment of the Contract for income tax
purposes. Such an assignment would result in a deemed Distribution of the
value of the Contract. Any new choice of Contract Owner will automatically
revoke any prior choice of Contract Owner. Any request for change must be: (1)
made in writing; and (2) received by the Company at its Home Office. A request
for change of Contract Owner must be a "proper written application" and may
include a signature guarantee as specified in the "Surrender" section. The
change will become effective as of the date the written request is signed. A
new choice of Contract Owner will not apply to any payment made or action taken
by the Company prior to the time it was received.
A change in the Designated Annuitant will have the following conditions:
(1) request for such change must be made by the Contract Owner; (2) request
must be made in writing on a form acceptable to the Company; (3) request must
be signed by the Contract Owner; and (4) such change is subject to underwriting
and approval by the Company.
CONTINGENT OWNER AND BENEFICIARY PROVISIONS
The Contingent Owner is the person (or persons) who may receive certain
benefits under the Contract if the Contract Owner dies before the Annuitization
Date. If more than one Contingent Owner survives the Contract Owner, each will
share equally unless otherwise specified in the Contingent Owner designation.
If a Contingent Owner is not named or predeceases the Contract Owner, all
rights and interest of the Contingent Owner will vest in the Contract Owner's
estate. Subject to the terms of any existing assignment, the Contract Owner
may change the Contingent Owner from time to time prior to the Annuitization
Date by written notice to the Company. The change, upon receipt and recording
by the Company at its Home Office, will take effect as of the time the written
notice was signed, whether or not the Contract Owner is living at the time of
recording, but without further liability as to any payment or settlement made
by the Company before receipt of such change. Unless the Contingent Owner is
also the named Beneficiary (or Contingent Beneficiary, if applicable), the
Contingent Owner shall have no rights in the Contract if the Contract
Owner/Annuitant dies. If a Contract Owner/Annuitant dies, disposition of the
Contract shall be determined based on the "Death of Designated Annuitant Prior
to the Annuitization Date" provisions.
The Beneficiary is the person or persons who may receive certain benefits
under the Contract in the event the Designated Annuitant dies prior to the
Annuitization Date. If more than one Beneficiary survives the Designated
Annuitant, each will share equally unless otherwise specified in the Beneficiary
designation. If no Beneficiary survives the Designated Annuitant, all rights
and interest of the Beneficiary shall vest in the Contingent Beneficiary, and if
more than one Contingent Beneficiary survives, each will share equally unless
otherwise specified in the Contingent Beneficiary designation. If a Contingent
Beneficiary is not named or predeceases the Designated Annuitant, all rights and
interest of the Contingent Beneficiary will vest with the Contract Owner or the
Contract Owner's estate. Subject to the terms of any existing assignment, the
Contract Owner may change the Beneficiary or Contingent Beneficiary from time to
time during the lifetime of the Designated Annuitant, by written notice to the
Company. The change, upon receipt by the Company at its Home Office, will take
effect as of the time the written notice was signed, whether or not the
Designated Annuitant is living at the time of recording, but without further
liability as to any payment or settlement made by the Company before receipt of
such change.
SUBSTITUTION OF SECURITIES
If the shares of the underlying Mutual Fund options described in this
prospectus should no longer be available for investment by the Variable Account
or if, in the judgment of the Company's management, further investment in such
underlying Mutual Fund shares should become inappropriate in view of the
purposes of the Contract, the Company may eliminate Sub-Accounts, combine two
or more Sub-Accounts, or substitute shares of another underlying Mutual Fund
for underlying Mutual Fund shares already purchased or to be purchased in the
future with Purchase Payments under the Contract. No substitution of
securities in the Variable Account
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may take place without prior approval of the Securities and Exchange
Commission, and under such requirements as it may impose.
CONTRACT OWNER INQUIRIES
Contract Owner inquiries may be directed to Nationwide Life Insurance
Company by writing P.O. Box 16609, Columbus, Ohio 43216-6609, or calling
1-800-848-6331, TDD 1-800-238-3035.
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT
At the Annuitization Date the Variable Account Contract Value is applied
to the Annuity Payment Option elected and the amount of the first such payment
shall be determined in accordance with the Annuity Table in the Contract.
Subsequent Variable Annuity payments vary in amount in accordance with
the investment performance of the Variable Account. The dollar amount of the
first annuity payment determined as above is divided by the value of an Annuity
Unit as of the Annuitization Date to establish the number of Annuity Units
representing each monthly annuity payment. This number of Annuity Units
remains fixed during the annuity payment period. The dollar amount of the
second and subsequent payments is not predetermined and may change from month
to month. The dollar amount of each subsequent payment is determined by
multiplying the fixed number of Annuity Units by the Annuity Unit Value for the
Valuation Period in which the payment is due. The Company guarantees that the
dollar amount of each payment after the first will not be affected by
variations in mortality experience from mortality assumptions used to determine
the first payment.
VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit was arbitrarily set initially at $10 when
the first underlying Mutual Fund shares were purchased. The value of an
Annuity Unit for a Sub-Account for any subsequent Valuation Period is
determined by multiplying the Annuity Unit Value for the immediately preceding
Valuation Period by the Net Investment Factor for the Valuation Period for
which the Annuity Unit Value is being calculated, and multiplying the result by
an interest factor to neutralize the assumed investment rate of 3.5% per annum
built into the Annuity Tables contained in the Contracts (see "Net Investment
Factor").
ASSUMED INVESTMENT RATE
A 3.5% Assumed Investment Rate is built into the Annuity Tables contained
in the Contracts. A higher assumption would mean a higher initial payment but
more slowly rising or more rapidly falling subsequent payments. A lower
assumption would have the opposite effect. If the actual investment rate is at
the annual rate of 3.5%, the annuity payments will be level.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments. However, if the
net amount available to apply under any Annuity Payment Option is less than
$500, the Company shall have the right to pay such amount in one lump sum in
lieu of the payments otherwise provided for. In addition, if the payments
provided for would be or become less than $20, the Company shall have the right
to change the frequency of payments to such intervals as will result in
payments of at least $20. In no event will the Company make payments under an
annuity option less frequently than annually.
ANNUITY COMMENCEMENT DATE
The Contract Owner selects an Annuity Commencement Date at the time of
application. Such date must be the first day of a calendar month and must be
at least 2 years after the Date of Issue. In the event the Contract is issued
subject to the terms of a Qualified Plan, Annuitization may occur during the
first 2 years subject to approval by the Company.
CHANGE IN ANNUITY COMMENCEMENT DATE
The Contract Owner may, upon prior written notice to the Company, change
the Annuity Commencement Date. The date to which such a change may be made
shall be the first day of a calendar month.
If the Contract Owner requests in writing, and the Company approves the
request, the Annuity Commencement Date may be deferred. No further changes in
the Designated Annuitant will be permitted under the Contract. The amount of
the Death Benefit will be limited to the Contract Value if the Annuity
Commencement Date is postponed beyond the first day of the calendar month after
the Designated
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Annuitant's 75th birthday or such other Annuity Commencement Date provided
under the Contract Owner's Qualified Plan.
CHANGE IN FORM OF ANNUITY
The Contract Owner may, upon prior written notice to the Company, at any
time prior to the Annuitization Date, elect one of the Annuity Payment Options.
ANNUITY PAYMENT OPTIONS
Any of the following Annuity Payment Options may be elected:
Option 1-Life Annuity-An annuity payable monthly during the lifetime of
the Annuitant, ceasing with the last payment due prior to the death of
the Annuitant. IT WOULD BE POSSIBLE UNDER THIS OPTION FOR THE ANNUITANT
TO RECEIVE ONLY ONE ANNUITY PAYMENT IF HE OR SHE DIED BEFORE THE SECOND
ANNUITY PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE OR SHE DIED BEFORE THE
THIRD ANNUITY PAYMENT DATE, AND SO ON.
Option 2-Joint and Last Survivor Annuity-An annuity payable monthly
during the joint lifetimes of the Annuitant and designated second person
and continuing thereafter during the lifetime of the survivor. AS IS THE
CASE UNDER OPTION 1 ABOVE, THERE IS NO MINIMUM NUMBER OF PAYMENTS
GUARANTEED UNDER THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST
SURVIVING ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
Option 3-Life Annuity With 120 or 240 Monthly Payments Guaranteed-An
annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if at the death of the Annuitant payments have been made
for fewer than 120 or 240 months, as selected, payments will be made as
follows:
(1) If the Annuitant is the payee, any guaranteed annuity payments
will be continued during the remainder of the selected period to
the Beneficiary or the Beneficiary may, at any time, elect to have
the present value of the guaranteed number of annuity payments
remaining paid in a lump sum as specified in section (2) below.
(2) If a Beneficiary is the payee, the present value, computed as of
the date on which notice of death is received by the Company at
its Home Office, of the guaranteed number of annuity payments
remaining after receipt of such notice and to which the deceased
would have been entitled had he or she not died, computed at the
Assumed Investment Rate effective in determining the Annuity
Tables, shall be paid in a lump sum.
Some of the stated Annuity Options may not be available in all states.
The Owner may request an alternative non-guaranteed option by giving notice in
writing prior to Annuitization. If such a request is approved by the Company,
it will be permitted under the Contract.
If the Owner of a Non-Qualified Contract fails to elect an Annuity
Payment Option, the Contract Value will continue to accumulate. Qualified Plan
Contracts, Individual Retirement Annuities or Tax Sheltered Annuities are
subject to the minimum Distribution requirements set forth in the Plan,
Contract, or Code.
DEATH OF CONTRACT OWNER
A. For Non-Qualified Contracts issued on or after January 19, 1985, in the
event the Contract Owner dies, the following rules will apply:
(1) If the Contract Owner dies prior to the Annuitization Date, the entire
interest in the Contract, less any applicable deductions (which may
include a Contingent Deferred Sales Charge), must be distributed within 5
years unless the recipient of the Distribution is the Contract Owner's
spouse. Such Distribution will be paid to the Designated Annuitant
unless the Owner has named a Contingent Owner or his or her estate to
receive the Distribution. In the alternative, the Designated Annuitant
or Contingent Owner (where one is named) may elect to receive
Distribution in the form of a life annuity or an annuity for a period
certain not exceeding the Designated Annuitant's (Contingent Owner's)
life expectancy and such annuity must begin within one year following the
date of the Contract Owner's death. In the event the Designated
Annuitant or Contingent Owner is the Contract Owner's spouse, the
Contract may be continued by such Designated Annuitant or Contingent
Owner, treating the spouse as the Contract Owner. In the event the
Designated Annuitant does not survive the Contract Owner, or if the
Designated Annuitant and the Contract Owner are the same person, a
Distribution will be made in accordance with
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the "Death of Designated Annuitant Prior To The Annuitization Date"
provision below; provided, however, that all Distributions made as a
result of the death of the Contract Owner shall be made within the time
limits set forth in this paragraph. If the Contract Owner and the
Designated Annuitant are not the same, no Death Benefit is payable upon
the death of the Contract Owner, but Distribution must be made as
discussed above.
(2) In the event the Contract Owner/Annuitant dies on or after the
Annuitization Date, Distribution, if any, must be made to the Beneficiary
at least as rapidly as under the method of Distribution being used as of
the date of the Contract Owner/Annuitant's death.
B. If the Contract Owner is not a natural person, the death of the Designated
Annuitant (or a change of the Designated Annuitant) will be treated like a death
of the Contract Owner and will result in a Distribution pursuant to Section (1),
regardless of whether a Contingent Designated Annuitant has also been named.
The Distribution will take the form of either:
(a) the Death Benefit described below (if the Designated Annuitant has
died and there is no Contingent Designated Annuitant), or, in all
other cases,
(b) the benefit described in Section (1), of this provision, except
that in the event of a change of Designated Annuitant, the benefit
will be paid to the Contract Owner if the Designated Annuitant is
living, or as a Death Benefit to the Beneficiary upon the death of
the Designated Annuitant (and the Contingent Designated Annuitant,
if any) prior to the expiration of the period described in Section
(1)of this provision.
DEATH OF DESIGNATED ANNUITANT PRIOR TO THE ANNUITIZATION DATE
A Death Benefit is payable to the Beneficiary unless the Owner has named
a Contingent Designated Annuitant. In such case, the Death Benefit is payable
to the Beneficiary upon the death of the last survivor of the Designated
Annuitant and Contingent Designated Annuitant. The value of the Death Benefit
will be determined as of the Valuation Date coincident with or next following
the date the Company receives both (1) due proof of death and (2) an election
for (a) a single sum payment or (b) Annuity Payment Option.
Contracts issued in connection with Qualified Plans, Individual
Retirement Annuities, or Tax Sheltered Annuities will be subject to specific
rules, set forth in the Plan, Contract, or Code concerning distributions upon
the death of the Owner or Designated Annuitant (see the "Required Distribution
For Qualified Plans or Tax Sheltered Annuities" provision).
If a single sum settlement is requested, payment will be made in
accordance with any applicable laws and regulations governing the payment of
Death Benefits. If an Annuity Payment Option is desired, election may be made
by the Beneficiary during the 90-day period commencing with the date written
notice is received by the Company. If no election has been made by the end of
such 90-day period, the Death Benefit will be paid to the Beneficiary in a
single sum. The amount of the Death Benefit will be the greater of (i) the sum
of all Purchase Payments, less any amounts surrendered, or (ii) the Contract
Value.
If the Contract Owner has (1) requested an Annuity Commencement Date
later than the first day of the calendar month after the Designated Annuitant's
75th birthday, (2) the Company has approved the request, and (3) the Designated
Annuitant dies after his or her 75th birthday, the dollar amount of the Death
Benefit will be equal to the Contract Value.
DEATH BENEFIT AFTER THE ANNUITIZATION DATE
If the Annuitant dies after the Annuitization Date, any benefit that may
be payable shall be as specified in the Annuity Payment Option elected.
REQUIRED DISTRIBUTION FOR QUALIFIED PLANS OR TAX SHELTERED ANNUITIES
The entire interest of an Annuitant under a Qualified Contract or Tax
Sheltered Annuity Contract will be distributed in a manner consistent with the
Minimum Distribution and Incidental Benefit (MDIB) provisions of Section
401(a)(9) of the Code and regulations thereunder, as applicable, and will be
paid, notwithstanding anything else contained herein, to the Owner/Annuitant
under the Annuity Payments Option selected, over a period not exceeding:
A. the life of the Owner/Annuitant or the lives of the
Owner/Annuitant and the Owner/Annuitant's Designated Beneficiary;
or
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B. a period not extending beyond the life expectancy of the
Owner/Annuitant or the life expectancy of the Owner/Annuitant and
the Owner/Annuitant's designated Beneficiary provided that, for
Tax Sheltered Annuity Contracts, no Distributions will be required
from this Contract if Distributions otherwise required from this
Contract are being withdrawn from another Tax Sheltered Annuity
Contract of the Annuitant.
If the Owner/Annuitant's entire interest is to be distributed in equal or
substantially equal payments over a period described in A or B, such payments
will commence not later than the first day of April following the calendar year
in which the Owner/Annuitant attains age 70 1/2 (the Required Beginning Date).
In the case of a governmental plan (as defined in Code Section 414(d), or
church plan (as defined in Code Section 401(a)(9)(C)), the Required Beginning
Date will be the later of the dates determined under the preceding sentence or
April 1 of the calendar year following the calendar year in which the Annuitant
retires.
If the Owner dies prior to the commencement of his or her Distribution,
the interest in the Qualified Contract or Tax Sheltered Annuity must be
distributed by December 31 of the year in which the fifth anniversary of his or
her death occurs unless:
(a) In the case of a Tax Sheltered Annuity, the Owner names his or her
surviving spouse as the Beneficiary and such spouse elects to:
(i) treat the annuity as a Tax Sheltered Annuity established for his
or her benefit; or
(ii) receive Distribution of the account in nearly equal payments over
his or her life (or a period not exceeding his or her life
expectancy) and commencing not later than December 31 of the year
in which the Owner would have attained age 70 1/2; or
(b) In the case of a Tax Sheltered Annuity or a Qualified Contract, the Owner
names a Beneficiary other than his or her surviving spouse and such
Beneficiary elects to receive a Distribution of the account in nearly
equal payments over his or her life (or a period not exceeding his or her
life expectancy) commencing not later than December 31 of the year
following the year in which the Owner dies.
If the Owner/Annuitant dies after Distribution has commenced,
Distribution must continue at least as rapidly as under the schedule being used
prior to his or her death, except that a surviving spouse may treat a Tax
Sheltered Annuity as his or her own to the extent permitted by law.
Payments commencing on the Required Beginning Date will not be less than
the lesser of the quotient obtained by dividing the entire interest of the
Owner/Annuitant by the life expectancy of the Owner/Annuitant, or the joint and
last survivor expectancy of the Owner/Annuitant and the Owner/Annuitant's
designated Beneficiary (whichever is applicable under the applicable Minimum
Distribution or MDIB provisions). Life expectancy and joint and last survivor
expectancy are computed by the use of return multiples contained in Section
1.72-9 of the Treasury Regulations.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES
Distribution from an Individual Retirement Annuity must begin not later
than April 1 of the calendar year following the calendar year in which the
Owner attains age 70 1/2, provided that, for Individual Retirement Annuity
Contracts, no Distributions will be required from this Contract if
Distributions otherwise required from this Contract are being withdrawn from
another Individual Retirement Annuity Contract or Individual Retirement Account
of the Annuitant. Distribution may be accepted in a lump sum or in nearly
equal payments over: (a) the Owner's life or the lives of the Owner and his or
her spouse or designated Beneficiary, or (b) a period not extending beyond the
life expectancy of the Owner or the joint life expectancy of the Owner and the
Owner's designated Beneficiary.
If the Owner dies prior to the commencement of his or her Distribution,
the interest in the Individual Retirement Annuity must be distributed by
December 31 of the calendar year in which the fifth anniversary of his or her
death occurs, unless:
(a) The Owner names his or her surviving spouse as the Beneficiary and such
spouse elects to:
(i) treat the annuity as an Individual Retirement Annuity established
for his or her benefit; or
(ii) receive Distribution of the account in nearly equal payments over
his or her life (or a period not exceeding his or her life
expectancy) and commencing not later than December 31 of the year
in which the Owner would have attained age 70 1/2; or
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(b) The Owner names a Beneficiary other than his or her surviving spouse and
such Beneficiary elects to receive a Distribution of the account in
nearly equal payments over his or her life (or a period not exceeding his
or her life expectancy) commencing not later than December 31 of the year
following the year in which the Owner dies.
If the Owner dies after Distribution has commenced, Distribution must
continue at least as rapidly as under the schedule being used prior to his or
her death, except that a surviving spouse may treat the Individual Retirement
Annuity as his or her own, in the same manner as is described in section (a)(i)
of this provision.
If the amounts distributed do not satisfy the Distribution rules
mentioned above, a penalty tax of 50% is levied on the amount that should have
been distributed for that year.
A pro-rata portion of all Distributions will be included in the gross
income of the person receiving the Distribution and taxed at ordinary income
tax rates. The portion of the Distribution which is taxable is based on the
ratio between the amount by which non-deductible contributions exceed prior
non-taxable Distributions and total account balances at the time of the
Distribution. The Owner of an Individual Retirement Annuity must annually
report the amount of non-deductible contributions, the amount of any
Distribution, the amount by which non-deductible contributions for all years
exceed non-taxable Distributions for all years, and the total balance of all
Individual Retirement Accounts and Annuities.
Individual Retirement Annuity Distributions will not receive the benefit
of the tax treatment of a lump sum Distribution from a Qualified Plan. If the
Owner dies prior to the time Distribution of his or her interest in the annuity
is completed, the balance will also be included in his or her gross estate.
GENERATION-SKIPPING TRANSFERS
The Company may be required to determine whether the Death Benefit or any
other payment constitutes a direct skip as defined in Section 2612 of the Code,
and the amount of the tax on the generation-skipping transfer resulting from
such direct skip. If applicable, such payment will be reduced by any tax the
Company is required to pay by Section 2603 of the Code.
A direct skip may occur when property is transferred to or a Death
Benefit is paid to an individual two or more generations younger than the
Contract Owner.
GENERAL INFORMATION
CONTRACT OWNER SERVICES
ASSET REBALANCING- The Contract Owner may direct the automatic
reallocation of contract values to the underlying Mutual Fund options on a
predetermined percentage basis every three months. If the last day of the
three month period falls on a Saturday, Sunday, recognized holiday or any other
day when the New York Stock Exchange is closed, the Asset Rebalancing exchange
will occur on the last business day before that day. An Asset Rebalancing
request must be in writing on a form provided by the Company.
Contracts issued to a Qualified Plan or a Tax Sheltered Annuity Plan as
defined by the Code may have superseding plan restrictions with regard to the
frequency of fund exchanges and underlying Mutual Fund options. The Contract
Owner may want to contact a financial adviser in order to discuss the use of
Asset Rebalancing in his or her Contract.
The Company reserves the right to discontinue offering Asset Rebalancing
upon 30 days' written notice; such discontinuation will not affect Asset
Rebalancing programs which have already commenced. The Company also reserves
the right to assess a processing fee for this service.
DOLLAR COST AVERAGING- The Contract Owner may direct the Company to
automatically transfer from the Money Market Sub-Account, Limited Maturity Bond
Portfolio Sub-Account or the Fixed Account to any other Sub-Account within the
Variable Account on a monthly basis. This service is intended to allow the
Contract Owner to utilize Dollar Cost Averaging, a long-term investment program
which provides for regular, level investments over time. The Company makes no
guarantees that Dollar Cost Averaging will result in a profit or protect
against loss in a declining market. To qualify for Dollar Cost Averaging,
there must be a minimum total Contract Value of $15,000. Transfers for
purposes of Dollar Cost Averaging can only be made from the Money Market
Sub-Account, Limited Maturity Bond Portfolio Sub-Account or the Fixed Account.
The minimum monthly Dollar Cost Averaging transfer is $100. In addition,
Dollar Cost Averaging monthly transfers from the Fixed Account must be equal to
or less than 1/30th of the Fixed Account value when the Dollar Cost Averaging
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program is requested. Transfers out of the Fixed Account, other than for
Dollar Cost Averaging, may be subject to certain additional restrictions (see
"Transfers"). A written election of this service, on a form provided by the
Company, must be completed by the Contract Owner in order to begin transfers.
Once elected, transfers from the Money Market Sub-Account, Limited Maturity
Bond Portfolio Sub-Account or the Fixed Account will be processed monthly until
either the value in the Money Market Sub-Account, Limited Maturity Bond
Portfolio Sub-Account or the Fixed Account is completely depleted or the
Contract Owner instructs the Company in writing to cancel the monthly
transfers.
The Company reserves the right to discontinue offering Dollar Cost
Averaging upon 30 days' written notice; such discontinuation will not affect
Dollar Cost Averaging programs which have already commenced. The Company
also reserves the right to assess a processing fee for this service.
SYSTEMATIC WITHDRAWALS- A Contract Owner may elect in writing on a form
provided by the Company to take Systematic Withdrawals by surrendering a
specified dollar amount (of at least $100) on a monthly, quarterly,
semi-annual, or annual basis. The Company will process the withdrawals as
directed by surrendering on a pro-rata basis Accumulation Units from all
Sub-Accounts in which the Contract Owner has an interest, and the Fixed
Account. A Contingent Deferred Sales Charge may also apply to Systematic
Withdrawals in accordance with the considerations set forth in the "Contingent
Deferred Sales Charge" section. Each Systematic Withdrawal is subject to
federal income taxes on the taxable portion. In addition, a 10% federal
penalty tax may be assessed on Systematic Withdrawals if the Contract Owner is
under age 59 1/2. If directed by the Contract Owner, the Company will withhold
federal income taxes from each Systematic Withdrawal. The Contract Owner may
discontinue Systematic Withdrawals at any time by notifying the Company in
writing.
The Company reserves the right to discontinue offering Systematic
Withdrawals upon 30 days' written notice; such discontinuation will not
affect any Systematic Withdrawal programs already commenced. The Company
also reserves the right to assess a processing fee for this service.
STATEMENTS AND REPORTS
The Company will mail to Contract Owners, at their last known address of
record, any statements and reports required by applicable law or regulation.
Contract Owners should therefore give the Company prompt notice of any address
change. The Company will send a confirmation statement to Contract Owners each
time a transaction is made affecting the Owners' Variable Account Contract
Value, such as making additional Purchase Payments, transfers, exchanges or
withdrawals. Quarterly statements are also mailed detailing the Contract
activity during the calendar quarter. Instead of receiving an immediate
confirmation of transactions made pursuant to some types of periodic payment
plan (such as a dollar cost averaging program) or salary reduction arrangement,
the Contract Owner may receive confirmation of such transactions in their
quarterly statements. The Contract Owner should review the information in
these statements carefully. All errors or corrections must be reported to the
Company immediately to assure proper crediting to the Owner's Contract. The
Company will assume all transactions are accurately reported on quarterly
statements or confirmation statements unless the Contract Owner notifies the
Company otherwise within 30 days after receipt of the statement. The Company
will also send to Contract Owners each year an annual report and a semi-annual
report containing financial statements for the Variable Account, as of December
31 and June 30, respectively.
ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments are allocated to one or more Sub-Accounts within the
Variable Account in accordance with the designation of the underlying Mutual
Funds by the Contract Owner, and converted into Accumulation Units.
The initial first year Purchase Payment must be at least $1,500 for
Non-Qualified Contracts. However, if periodic payments are expected by the
Company, this initial first year minimum may be satisfied by Purchase Payments
made on an annualized basis. Purchase Payments, if any, after the first
Contract Year must be at least $10 each. The Company, however, reserves the
right to lower this $10 Purchase Payment minimum for certain employer sponsored
programs. The Contract Owner may increase or decrease Purchase Payments or
change the frequency of payment. The Contract Owner is not obligated to
continue Purchase Payments in the amount or at the frequency elected. There
are no penalties for failure to continue Purchase Payments.
The cumulative total of all Purchase Payments under Contracts issued on
the life of any one Designated Annuitant may not exceed $1,000,000 without
prior consent of the Company.
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THE PURCHASER IS CAUTIONED THAT INVESTMENT RETURN ON SMALL INITIAL AND
SUBSEQUENT PURCHASE PAYMENTS MAY BE LESS THAN CHARGES ASSESSED BY THE COMPANY.
The initial Purchase Payment allocated to designated Sub-Accounts of the
Variable Account will be priced not later than 2 business days after receipt of
an order to purchase if the application and all information necessary for
processing the purchase order are complete upon receipt by the Company. The
Company may, however, retain the Purchase Payment for up to 5 business days
while attempting to complete an incomplete application. If the application
cannot be made complete within 5 days, the prospective purchaser will be
informed of the reasons for the delay and the Purchase Payment will be returned
immediately unless the prospective purchaser specifically consents to the
Company retaining the Purchase Payment until the application is made complete.
Thereafter, subsequent Purchase Payments will be priced on the basis of the
Accumulation Value next computed for the appropriate Sub-Account after the
additional Purchase Payment is received.
Purchase Payments will not be priced on the following nationally
recognized holidays: New Year's Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
VALUE OF A VARIABLE ACCOUNT ACCUMULATION UNIT
The value of a Variable Account Accumulation Unit for each Sub-Account
was arbitrarily set initially at $10 when underlying Mutual Fund shares in that
Sub-Account were available for purchase. The value for any subsequent
Valuation Period is determined by multiplying the Accumulation Unit value for
each Sub-Account for the immediately preceding Valuation Period by the Net
Investment Factor for the Sub-Account during the subsequent Valuation Period.
The value of an Accumulation Unit may increase or decrease from Valuation
Period to Valuation Period. The number of Accumulation Units will not change
as a result of investment experience.
NET INVESTMENT FACTOR
The Net Investment Factor for any Valuation Period is determined by
dividing (a) by (b) and subtracting (c) from the result where:
(a) is the net of:
(1) the net asset value per share of the underlying Mutual Fund held
in the Sub-Account determined at the end of the current Valuation
Period, plus
(2) the per share amount of any dividend or capital gain Distributions
made by the underlying Mutual Fund held in the Sub-Account if the
"ex-dividend" date occurs during the current Valuation Period.
(b) is the net of:
(1) the net asset value per share of the underlying Mutual Fund held
in the Sub-Account determined at the end of the immediately
preceding Valuation Period, plus or minus
(2) the per share charge or credit, if any, for any taxes reserved for
in the immediately preceding Valuation Period (see "Charge For Tax
Provisions").
(c) is a factor representing the daily Mortality Risk Charge, Expense Risk
Charge and Administration Charge deducted from the Variable Account.
Such factor is equal to an annual rate of 1.30% of the daily net asset
value of the Variable Account.
For underlying Mutual Fund options that credit dividends on a daily basis
and pay such dividends once a month (the Nationwide Separate Account Trust -
Money Market Fund), the Net Investment Factor allows for the monthly
reinvestment of these daily dividends.
The Net Investment Factor may be greater or less than one; therefore, the
value of an Accumulation Unit may increase or decrease. It should be noted
that changes in the Net Investment Factor may not be directly proportional to
changes in the net asset value of underlying Mutual Fund shares, because of the
deduction for Mortality Risk Charge, Expense Risk Charge and Administration
Charge.
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VALUATION OF ASSETS
Underlying Mutual Fund shares in the Variable Account will be valued at
their net asset value.
DETERMINING THE CONTRACT VALUE
The sum of the value of all Variable Account Accumulation Units
attributable to the Contract and amounts credited to the Fixed Account is the
Contract Value. The number of Accumulation Units credited per each Sub-Account
are determined by dividing the net amount allocated to the Sub-Account by the
Accumulation Unit Value for the Sub-Account for the Valuation Period during
which the Purchase Payment is received by the Company. In the event part or
all of the Contract Value is surrendered or charges or deductions are made
against the Contract Value, an appropriate number of Accumulation Units from
the Variable Account and an appropriate amount from the Fixed Account will be
deducted in the same proportion that the Contract Owner's interest in the
Variable Account and the Fixed Account bears to the total Contract Value.
SURRENDER (REDEMPTION)
While the Contract is in force and prior to the earlier of the
Annuitization Date or the death of the Designated Annuitant, the Company will,
upon proper written application by the Contract Owner deemed by the Company to
be in good order, allow the Contract Owner to surrender a portion or all of the
Contract Value. "Proper written application" means that the surrender must be
requested in writing by the Contract Owner, satisfy all good order
requirements, and the Company may require that the signature(s) be guaranteed
by a member firm of the New York, American, Boston, Midwest, Philadelphia, or
Pacific Stock Exchange, or by a commercial bank or a savings and loan, which is
a member of the Federal Deposit Insurance Corporation. In some cases (for
example, requests by a corporation, partnership, agent, fiduciary, or surviving
spouse), the Company will require additional documentation of a customary
nature.
The Company will, upon receipt of any such written request, surrender a
number of Accumulation Units from the Variable Account and an amount from the
Fixed Account necessary to equal the gross dollar amount requested, less any
applicable Contingent Deferred Sales Charge (see "Contingent Deferred Sales
Charge"). In the event of a partial surrender, the Company will, unless
instructed to the contrary, surrender Accumulation Units from all Sub-Accounts
in which the Contract Owner has an interest, and the Fixed Account. The number
of Accumulation Units surrendered from each Sub-Account and the amount
surrendered from the Fixed Account will be in the same proportion that the
Contract Owner's interest in the Sub-Accounts and Fixed Account bears to the
total Contract Value.
The Company will pay any funds applied for from the Variable Account
within 7 days of receipt of such application in the Company's Home Office.
However, the Company reserves the right to suspend or postpone the date of any
payment of any benefit or values for any Valuation Period (1) when the New York
Stock Exchange ("Exchange") is closed, (2) when trading on the Exchange is
restricted, (3) when an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the Variable Account's net
assets, or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders;
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (2) and (3)
exist. The Contract Value on surrender may be more or less than the total of
Purchase Payments made by a Contract Owner, depending on the market value of
the underlying Mutual Fund shares.
Certain redemption restrictions also apply to Contracts issued under the
Texas Optional Retirement Program or the Louisiana Optional Retirement Plan.
With respect to Contracts issued under the Texas Optional Retirement Program,
the Texas Attorney General has ruled that withdrawal benefits are available
only in the event of a participant's death, retirement, termination of
employment due to total disability, or other termination of employment in a
Texas public institution of higher education. Retirement benefits made
pursuant to the Louisiana Optional Retirement Plan are to be paid in the form
of lifetime income and, except for Death Benefits, lump sum cash payments are
not permitted. A participant under the Louisiana Optional Retirement Plan may
take a Distribution from the Contract only in the event of retirement or
termination of employment. A participant under either the Texas Optional
Retirement Program or the Louisiana Optional Retirement Plan will not,
therefore, be entitled to receive the right of withdrawal in order to receive
the cash values credited to such participant under the Contract unless one of
the foregoing conditions has been satisfied. The value of such Contracts may,
however, be transferred to other contracts or other carriers during the
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participation in these retirement programs, subject to any applicable
Contingent Deferred Sales Charge. The Company issues this Contract to
participants in the Texas Optional Retirement Program in reliance upon, and in
compliance with, Rule 6c-7 of the Investment Company Act of 1940 and to
participants in the Louisiana Optional Retirement Plan in reliance upon, and in
compliance with, an exemptive order the Company obtained from the Securities
and Exchange Commission on August 22, 1990.
SURRENDERS UNDER A QUALIFIED PLAN OR TAX SHELTERED ANNUITY CONTRACT
Except as provided below, the Owner may Surrender part or all of the
Contract Value at any time this Contract is in force prior to the earlier of
the Annuitization Date or the death of the Designated Annuitant:
A. The surrender of Contract Value attributable to contributions made
pursuant to a salary reduction agreement (within the meaning of Code
Section 402(g)(3)(A) or (C)), or transfers from a Custodial Account
described in Section 403(b)(7) of the Code, may be executed only:
1. when the Contract Owner attains age 59 1/2, separates from
service, dies, or becomes disabled (within the meaning of Code
Section 72(m)(7)); or
2. in the case of hardship (as defined for purposes of Code Section
401(k)), provided that any surrender of Contract Value in the case
of hardship may not include any income attributable to salary
reduction contributions.
B. The surrender limitations described in Section A. above also apply to:
1. salary reduction contributions to Tax Sheltered Annuities made for
plan years beginning after December 31, 1988;
2. earnings credited to such contracts after the last plan year
beginning before January 1, 1989, on amounts attributable to
salary reduction contributions; and
3. all amounts transferred from 403(b)(7) Custodial Accounts (except
that earnings, and employer contributions as of December 31, 1988
in such Custodial Accounts, may be withdrawn in the case of
hardship).
C. Any Distribution other than the above, including exercise of a
contractual ten-day free look provision (when available) may result in
the immediate application of taxes and penalties and/or retroactive
disqualification of a Qualified Contract or Tax Sheltered Annuity.
A premature Distribution may not be eligible for rollover treatment. To
assist in preventing disqualification of a Tax Sheltered Annuity in the event
of a ten-day free look, the Company will agree to transfer the proceeds to
another contract which meets the requirements of Section 403(b) of the Code,
upon proper direction by the Contract Owner. The foregoing is the Company's
understanding of the withdrawal restrictions which are currently applicable
under Code Section 401(k)(2)(B), Code Section 403(b)(11) and Revenue Ruling
90-24. Such restrictions are subject to legislative change and/or
reinterpretation from time to time.
The Contract surrender provisions may also be modified pursuant to the
plan terms and Code tax provisions when the Contract is issued to fund a
Qualified Plan.
INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF
A PERSONAL TAX ADVISER.
TAXES
The Company does not make any guarantee regarding the tax status of any
Contract or any transaction involving the Contracts.
Section 72 of the Code governs taxation of annuities in general. That
section sets forth different rules for: (1) Qualified Contracts; (2) Individual
Retirement Annuities and Individual Retirement Accounts; (3) Tax Sheltered
Annuities; or (4) Non-Qualified Contracts. Each type of annuity is discussed
below.
Distributions to Participants from Qualified Contracts or Tax Sheltered
Annuities are generally taxed when received. A portion of each Distribution is
excludable from income based on the ratio between the after tax investment of
the Owner/Annuitant in the Contract and the value of the Contract at the time
of the withdrawal or Annuitization.
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<PAGE> 39
Distributions from Individual Retirement Annuities and Contracts owned by
Individual Retirement Accounts are also generally taxed when received. The
portion of each such payment which is excludable is based on the ratio between
the amount by which nondeductible Purchase Payments to all such Contracts
exceeds prior non-taxable Distributions from such Contracts, and the total
account balances in such Contracts, at the time of the Distribution. The Owner
of such Individual Retirement Annuities or the Annuitant under Contracts held
by Individual Retirement Accounts must annually report to the Internal Revenue
Service the amount of nondeductible Purchase Payments, the amount of any
Distribution, the amount by which nondeductible Purchase Payments for all years
exceed non-taxable Distributions for all years, and the total balance in all
Individual Retirement Annuities and Accounts.
The Tax Reform Act of 1986 and subsequent legislation changed some of the
rules regarding the tax treatment of Distributions from Qualified Plans and
annuities purchased by Qualified Plans. You should consult your financial
consultant or legal or tax advisor to discuss in detail your particular tax
situation and the use of the Contracts.
NON-QUALIFIED CONTRACTS
The rules applicable to Non-Qualified Contracts provide that a portion of
each annuity payment received is excludable from taxable income based on the
ratio between the Contract Owner's investment in the Contract and the expected
return on the Contract. The maximum amount excludable from income is the
investment in the Contract. If the Designated Annuitant dies prior to
excluding from income the entire investment in the Contract, the Designated
Annuitant's final tax return may reflect a deduction for the balance of the
investment in the Contract.
Distributions made from the Contract prior to the Annuitization Date are
taxable to the Contract Owner to the extent that the cash value of the Contract
exceeds the Contract Owner's investment at the time of the Distribution.
Distributions, for this purpose, include partial surrenders, dividends, loans,
or any portion of the Contract which is assigned or pledged; or for Contracts
issued after April 22, 1987, any portion of the Contract transferred by gift.
For these purposes, a transfer by gift may occur upon Annuitization if the
Contract Owner and the Designated Annuitant are not the same individual. In
determining the taxable amount of a Distribution, all annuity contracts issued
after October 21, 1988, by the same company to the same Contract Owner during
any 12 month period, will be treated as one annuity contract. (Additional
limitations on the use of multiple contracts may be imposed by Treasury
regulations). Distributions prior to the Annuitization Date with respect to
that portion of the Contract invested prior to August 14, 1982, are treated
first as a recovery of the investment in the Contract as of that date. A
Distribution in excess of the amount of the investment in the Contract as of
August 14, 1982, will be treated as taxable income.
The Tax Reform Act of 1986 has changed the tax treatment of certain
Non-Qualified Contracts held by entities other than individuals. Such entities
are taxed currently on the earnings on the Contract which are attributable to
contributions made to the Contract after February 28, 1986. There are
exceptions for Qualified Contracts, Individual Retirement Annuities and Tax
Sheltered Annuities; immediate annuities; and certain Contracts owned for the
benefit of an individual. An immediate annuity, for purposes of this
discussion, is a single premium Contract on which payments begin within one
year of purchase. If this Contract is issued as a result of an exchange
described in Section 1035 of the Code, it will generally be considered to have
been purchased on the purchase date of the contract give up in the exchange.
Code Section 72 also provides for a penalty, equal to 10% of any
Distribution which is includable in gross income, if such Distribution is made
prior to attaining age 59 1/2, the death or disability of the Contract Owner.
The penalty does not apply if the Distribution is one of a series of
substantially equal periodic payments made over the life or life expectancy (or
joint lives or life expectancies) of the Designated Annuitant (and the
Designated Annuitant's Beneficiary), or is made from an immediate annuity, or
is allocable to an investment in the Contract before August 14, 1982. A
Contract Owner wishing to begin taking Distributions to which the 10% tax
penalty does not apply should forward a written request to the Company. Upon
receipt of a written request from the Contract Owner, the Company will inform
the Contract Owner of the procedures pursuant to Company Policy and subject to
limitations of the Contract including but not limited to first year
withdrawals. If the Designated Annuitant or Owner selects an annuity for life
or life expectancy, or begins a pre-defined series of withdrawals based on life
expectancy, and changes the method of payment before the expiration of 5 years
and the attainment of age 59 1/2, the early withdrawal penalty will apply. The
penalty will be equal to that which would have been imposed had no exception
applied from the outset, and the Designated Annuitant will also pay interest on
the amount of the penalty from the date it would have originally applied until
it is actually paid.
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In order to qualify as an Annuity Contract under Section 72 of the Code,
the Contract must provide for Distribution to be made upon the death of the
Contract Owner. In such case the Designated Annuitant, Beneficiary or other
named recipient must receive the Distribution within 5 years of the Owner's
death. However, the recipient may elect for payments to be made over his or her
life or life expectancy if such payments begin within one year from the death of
the Contract Owner. If the Contract Owner's Beneficiary is the surviving
spouse, such spouse may be treated as the Contract Owner and the Contract may be
continued throughout the life of the surviving spouse. In the event the
Contract Owner dies on or after the Annuitization Date and before the entire
interest has been distributed, the remaining portion must be distributed at
least as rapidly as under the method of Distribution being used as of the date
of the Contract Owner's death. If the Contract Owner is not an individual, the
death of the Designated Annuitant (or a change in the Designated Annuitant) will
result in a Distribution pursuant to these rules, regardless of whether a
Contingent Designated Annuitant has been named (see "Required Distribution
For Qualified Plans or Tax Sheltered Annuities").
The Company is required to withhold tax from certain Distributions to the
extent that such Distribution would constitute income to the Contract Owner. The
Contract Owner is entitled to elect not to have federal income tax withheld from
any such Distribution, but may be subject to penalties in the event insufficient
federal income tax is paid, through withholding estimated payments.
Generally, the taxable portion of any Distribution from a Contract to
a nonresident alien of the United States is subject to tax withholding at a
rate equal to thirty percent (30%) of such amount or, if applicable, a lower
treaty rate. A payment may not be subject to withholding where the recipient
sufficiently establishes that such payment is effectively connected to the
recipient's conduct of a trade or business in the United States and such
payment is includable in the recipient's gross income.
Payment of a benefit or transfer of any property to an individual two or
more generations younger than the Contract Owner may constitute a
generation-skipping transfer, subject to taxation under Section 2601 et seq. of
the Code.
DIVERSIFICATION
The Internal Revenue Service has promulgated regulations under Section
817(h) of the Code relating to diversification standards for the investments
underlying a variable annuity contract. The regulations provide that a
variable annuity contract which does not satisfy the diversification standards
will not be treated as an annuity contract, unless the failure to satisfy the
regulations was inadvertent, the failure is corrected, and the Owner or the
Company pays an amount to the Internal Revenue Service. The amount will be
based on the tax that would have been paid by the Owner if the income, for the
period the contract was not diversified, had been received by the Owner. If
the failure to diversify is not corrected in this manner, the Owner of an
annuity contract will be deemed the Owner of the underlying securities and will
be taxed on the earnings of his or her account. The Company believes, under
its interpretation of the Code and regulations thereunder, that the investments
underlying this Contract meet these diversification standards.
Representatives of the Internal Revenue Service have suggested, from time
to time, that the number of underlying Mutual Funds available or the number of
transfer opportunities available under a variable product may be relevant in
determining whether the product qualifies for the desired tax treatment. No
formal guidance has been issued in the area. Should the Secretary of the
Treasury issue additional rules or regulations limiting the number of
underlying Mutual Funds, transfers between underlying Mutual Funds, exchanges
of underlying Mutual Funds or changes in investment objectives of underlying
Mutual Funds such that the Contract would no longer qualify as an annuity under
Section 72 of the Code, the Company will take whatever steps are available to
remain in compliance.
CHARGE FOR TAX PROVISIONS
The Company is no longer required to maintain a capital gain reserve
liability on Non-Qualified Contracts since capital gains attributable to assets
held in the Company's Variable Account for such Contracts are not taxable to
the Company. However, the Company reserves the right to implement and adjust
the tax charge in the future, if the tax laws change.
QUALIFIED PLANS, INDIVIDUAL RETIREMENT ANNUITIES, INDIVIDUAL RETIREMENT
ACCOUNTS AND TAX SHELTERED ANNUITIES
The Contracts may be used with Qualified Plans, Individual Retirement
Annuities, Individual Retirement Accounts, Tax Sheltered Annuities and other
plans receiving favorable tax treatment. For information regarding
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eligibility, limitations on permissible amounts of Purchase Payments, and tax
consequences on Distribution from such plans, the purchasers of such Contracts
should seek competent advice. The terms of such plans may limit the rights
available under the Contracts.
The Code permits the rollover of most Distributions from Qualified Plans
to other Qualified Plans, Individual Retirement Accounts, or Individual
Retirement Annuities. Most Distributions from Tax Sheltered Annuities may be
rolled into another Tax Sheltered Annuity, an Individual Retirement Account, or
an Individual Retirement Annuity. Distributions which may not be rolled over
are those which are:
1. one of a series of substantially equal annual (or more frequent)
payments made: a) over the life (or life expectancy) of the
employee, b) the joint lives (or joint life expectancies) of the
employee and the employee's designated Beneficiary, or c) for a
specified period of ten years or more, or
2. a required minimum Distribution.
Any Distribution eligible for rollover will be subject to federal tax
withholding at a 20 percent rate unless the Distribution is transferred
directly to an appropriate plan as described in this provision.
Individual Retirement Accounts and Individual Retirement Annuities may
not provide life insurance benefits. If the Death Benefit exceeds the greater
of the cash value of the Contract or the sum of all Purchase Payments (less
surrenders), it is possible the Internal Revenue Service could determine that
the Individual Retirement Account or Individual Retirement Annuity did not
qualify for the desired tax treatment.
The Contract is available for Qualified Plans electing to comply with
section 404(c) of ERISA. It is the responsibility of the plan and its
fiduciaries to determine and satisfy section 404(c) requirements.
ADVERTISING
A "yield" and "effective yield" may be advertised for the Nationwide
Separate Account Trust Money Market Fund Sub-Account. "Yield" is a measure of
the net dividend and interest income earned over a specific seven-day period
(which period will be stated in the advertisement) expressed as a percentage of
the offering price of the Sub-Account's units. Yield is an annualized figure,
which means that it is assumed that the Sub-Account 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 Securities and Exchange Commission. The effective
yield will be slightly higher than yield due to this compounding effect.
The Company may also from time to time advertise the performance of the
Sub-Accounts of the Variable Account relative to the performance of other
variable annuity sub-accounts or 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:
precious metals; real estate; stocks and bonds; closed-end funds; CDs; bank
money market deposit accounts and passbook savings; and the Consumer Price
Index.
The Sub-Accounts of the Variable Account may also be compared to certain
market indexes, which may include, but are not limited to: S&P 500;
Shearson/Lehman Intermediate Government/Corporate Bond Index; Shearson/Lehman
Long-Term Government/Corporate Bond Index; Donoghue Money Fund Average; U.S.
Treasury Note Index; Bank Rate Monitor National Index of 2 1/2 Year CD Rates;
and Dow Jones Industrial Average.
Normally these rankings and ratings are published by independent
tracking services and publications of general interest including, but not
limited to: Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar,
Donoghue's, magazines such as Money, Forbes, Kiplinger's Personal Finance
Magazine, Financial World, Consumer Reports, Business Week, Time, Newsweek,
National Underwriter, U.S. News and World Report; rating services such as
LIMRA, Value, Best's Agent Guide, Western Annuity Guide, Comparative Annuity
Reports; and other publications such as the Wall Street Journal, Barron's,
Investor's Daily, and Standard & Poor's Outlook. In addition, Variable Annuity
Research & Data Service (The VARDS Report) is an independent rating service
that ranks over 500 variable annuity funds based upon total return performance.
These rating services and publications rank the performance of the underlying
Mutual Fund options against all underlying mutual funds over specified periods
and against underlying mutual funds in specified categories. The rankings may
or may not include the effects of sales or other charges.
The Company is also ranked and rated by independent financial rating
services, among which are Moody's, Standard & Poor's and A.M. Best Company.
The purpose of these ratings is to reflect the financial
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strength or claims-paying ability of the Company. The ratings are not intended
to reflect the investment experience or financial strength of the Variable
Account. The Company may advertise these ratings from time to time. In
addition, the Company may include in certain advertisements, endorsements in
the form of a list of organizations, individuals or other parties which
recommend the Company or the Contracts. Furthermore, the Company may
occasionally include in advertisements comparisons of currently taxable and tax
deferred investment programs, based on selected tax brackets, or discussions of
alternative investment vehicles and general economic conditions.
The Company may from time to time advertise several types of historical
performance for the Sub-Accounts of the Variable Account. The Company may
advertise for the Sub-Accounts standardized "average annual total return,"
calculated in a manner prescribed by the Securities and Exchange Commission,
and nonstandardized "total return." "Average annual total return" will show
the percentage rate of return of a hypothetical initial investment of $1,000
for at least the most recent one, five and ten year period, or for a period
covering the time the underlying Mutual Fund option held in the Sub-Account has
been in existence, if the underlying Mutual Fund option has not been in
existence for one of the prescribed periods. This calculation reflects the
deduction of all applicable charges made to the Contracts except for premium
taxes, which may be imposed by certain states.
Nonstandardized "total return" will be calculated in a similar manner and
for the same time periods as the average annual total return except total
return will assume an initial investment of $10,000 and will not reflect the
deduction of any applicable Contingent Deferred Sales Charge, which, if
reflected, would decrease the level of performance shown. The Contingent
Deferred Sales Charge is not reflected because the Contracts are designed for
long term investment. An assumed initial investment of $10,000 will be used
because that figure more closely approximates the size of a typical Contract
than does the $1,000 figure used in calculating the standardized average annual
total return quotations. The amount of the hypothetical initial investment
assumed affects performance because the Contract Maintenance Charge is a fixed
per Contract charge.
For those underlying Mutual Fund options which have not been held as
Sub-Accounts within the Variable Account for one of the quoted periods, the
standardized average annual total return and nonstandardized total return
quotations will show the investment performance such underlying Mutual Fund
options would have achieved (reduced by the applicable charges) had they been
held as Sub-Accounts within the Variable Account for the period quoted.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE COMPANY
IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE FUTURE
RESULTS. A CONTRACT OWNER'S CONTRACT VALUE AT REDEMPTION MAY BE MORE OR LESS
THAN ORIGINAL COST.
Below are quotations of standardized average annual total return and
non-standardized total return calculated as described above, for each of the
Sub-Accounts available within the Variable Account for which there is
significant investment history. These figures are based upon historical
earnings and are not necessarily representative of future results.
UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVIS Growth Fund 31.25% 16.37% 15.11%* 2-08-84
------------------------------------------------------------------------------------------------------------
AVIS High Yield Bond 19.89% 11.83% 10.75%* 2-08-84
Fund
------------------------------------------------------------------------------------------------------------
AVIS US Govt./AAA-rated 13.59% 7.22% 6.78%* 11-19-85
------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth Fund 32.52% N/A 16.74% 10-06-93
------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 34.71% 14.24% 10.57% 9-29-89
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 33.04% 19.54% 11.61% 10-09-86
Equity Income Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 33.31% 19.00% 13.11% 10-09-86
Growth Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 18.74% 17.21% 9.81%* 9-09-85
High Income Portfolio
-----------------------------------------------------------------------------------------------------------
Fidelity Vip Fund- 7.96% 6.46% 5.66% 1-28-87
Overseas Portfolio
------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 43
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity VIP Fund II- 15.14% 11.07% 9.54% 9-06-89
Asset Manager.
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund Portfolio N/A N/A 37.93% 7-01-95
------------------------------------------------------------------------------------------------------------
NSAT- 27.38% N/A 9.52% 4-15-92
Capital Appreciation Fund
------------------------------------------------------------------------------------------------------------
NSAT-Government Bond Fund 16.91% 7.96% 7.94%* 11-08-82
------------------------------------------------------------------------------------------------------------
NSAT-Money Market Fund 3.99% 2.66% 4.26%* 11-10-81
------------------------------------------------------------------------------------------------------------
NSAT-Small Company Fund N/A N/A 100.73%* 10-23-95
------------------------------------------------------------------------------------------------------------
NSAT-Total Return 27.12% 15.01% 10.79%* 11-08-82
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- 29.72% 11.98% 10.35%* 9-10-84
Growth Portfolio
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- 9.20% 5.05% 5.99%* 9-10-84
Limited Maturity Bond
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- 34.40% N/A 15.70% 3-22-94
Partners Portfolio
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 15.18% 8.51% 7.71%* 4-30-85
Bond Fund
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 0.61% 7.85% 7.62% 11-12-90
Global Securities Fund
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 19.49% 10.35% 9.43% 2-09-87
Multiple Strategies Fund
------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. 23.89% N/A 17.34% 5-08-92
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.- 33.21% N/A 13.87% 5-08-92
Discovery Fund II, Inc.
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.- N/A N/A 12.24% 10-23-95
International Stock II
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.- 19.25% N/A 8.11% 5-01-91
TCI Balanced
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.- 29.10% 13.16% 11.12% 11-20-87
TCI Growth
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.- 10.46% N/A 2.19% 5-01-94
TCI International
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide Bond Fund 15.48% 5.29% 5.68% 9-01-89
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Gold & Natural 9.25% 8.46% 5.06% 9-01-89
Resources Fund
------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life Investment Trust-Real N/A N/A 15.75% 7-01-95
Estate Securities Fund
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International Equity Portfolio N/A N/A 13.25% 7-01-95
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company Growth Portfolio N/A N/A 53.71% 7-01-95
------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents 10 years to 12/31/95.
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STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVIS-Growth Fund 23.15% 14.10% 13.50%* 2-08-84
------------------------------------------------------------------------------------------------------------
AVIS-High Yield Bond Fund 11.79% 9.43% 8.87%* 2-08-84
------------------------------------------------------------------------------------------------------------
AVIS-US Govt./AAA-rated 5.49% 4.51% 4.50%* 11-19-85
------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth Fund 24.42% N/A 11.26% 10-06-93
------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 26.61% 11.80% 7.61% 9-19-89
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 24.94% 17.36% 9.02% 10-09-86
Equity Income Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 25.21% 16.90% 10.75% 10-09-86
Growth Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 10.64% 15.11% 7.61%* 9-09-85
High Income Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas Portfolio -0.14% 3.52% 3.04% 1-28-87
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Asset Manager Portfolio 7.04% 8.62% 6.79% 9-06-89
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund Portfolio N/A N/A 28.23% 7-01-95
------------------------------------------------------------------------------------------------------------
NSAT-Capital Appreciation Fund 19.28% N/A 5.82% 4-15-92
------------------------------------------------------------------------------------------------------------
NSAT-Government 8.81% 5.26% 5.78%* 11-08-82
Bond Fund
------------------------------------------------------------------------------------------------------------
NSAT-Money Market Fund -4.11% -0.42% 1.81%* 11-10-81
------------------------------------------------------------------------------------------------------------
NSAT-Small Company Fund N/A N/A 91.03% 10-23-95
------------------------------------------------------------------------------------------------------------
NSAT-Total Return Fund 19.02% 12.73% 8.79%* 11-08-82
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- Growth 21.62% 9.52% 8.35%* 9-10-84
Portfolio
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- Limited 1.10% 2.16% 3.72%* 9-10-84
Maturity Bond Portfolio
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- Partners 26.30% N/A 9.68% 3-22-94
Portfolio
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Bond Fund 7.08% 5.85% 5.47% 4-30-85
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Global -7.36% 5.06% 4.26% 11-12-90
Securities Fund
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Multiple 11.39% 7.77% 7.27% 2-09-87
Strategies Fund.
------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. 15.79% N/A 14.12% 5-08-92
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.- 25.11% N/A 10.36% 5-08-92
Discovery Fund II, Inc.
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.- N/A N/A 2.54% 10-23-95
International Stock Fund II
------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 45
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TCI Portfolios, Inc.-TCI Balanced 11.15% N/A 4.98% 5-01-91
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI Growth 21.00% 10.77% 8.65% 11-20-87
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI International 2.36% N/A -4.44% 5-01-94
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide Bond 7.38% 2.37% 2.70% 9-01-89
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Gold & Natural 1.15% 5.55% 1.66% 9-01-89
Resources Fund
------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life Investment Trust- N/A N/A 6.05% 7-01-95
Real Estate Securities Fund
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International Equity Portfolio N/A N/A 3.55% 7-01-95
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company Growth Portfolio N/A N/A 44.01% 7-01-95
------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents 10 years to 12/31/95.
LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business to which the Company and the Variable
Account are parties or to which any of their property is the subject.
The General Distributor, Nationwide Financial Services, Inc., is not
engaged in any litigation of any material nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Calculations of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Underlying Mutual Fund Performance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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<PAGE> 46
APPENDIX A
Purchase Payments under the Fixed Account portion of the Contract and
transfers to the Fixed Account portion become part of the general account of
the Company, which support insurance and annuity obligations. Because of
exemptive and exclusionary provisions, interests in the general account have
not been registered under the Securities Act of 1933 ("1933 Act"), nor is the
general account registered as an investment company under the Investment
Company Act of 1940 ("1940 Act"). Accordingly, neither the general account nor
any interest therein are generally subject to the provisions of the 1933 or
1940 Acts, and we have been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosures in this prospectus which
related to the guaranteed interest portion. Disclosures regarding the Fixed
Account portion of the Contract and the general account, however, may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
FIXED ACCOUNT ALLOCATIONS
THE FIXED ACCOUNT
The Fixed Account is made up of all the general assets of the Company,
other than those in the Nationwide Variable Account II and any other segregated
asset account. Fixed Account Purchase Payments will be allocated to the Fixed
Account by election of the Contract Owner at the time of purchase.
The Company will invest the assets of the Fixed Account in those assets
chosen by the Company and allowed by applicable law. Investment income from
such Fixed Account assets will be allocated by the Company between itself and
the Contracts participating in the Fixed Account.
The level of annuity payments made to Annuitants under the Contracts will
not be affected by the mortality experience (death rate) of persons receiving
such payments or of the general population. The Company assumes this "mortality
risk" by virtue of annuity rates incorporated in the Contract which cannot be
changed. In addition, the Company guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company
includes compensation for mortality and expense risks borne by the Company in
connection with Fixed Account Contracts. The amount of such investment income
allocated to the Contracts will vary from year to year in the sole discretion
of the Company at such rate or rates as the Company prospectively declares from
time to time. Any such rate or rates so determined will remain effective for a
period of not less than twelve months, and remain at such rate unless changed.
However, the Company guarantees that it will credit interest at not less than
3.0% per year (or as otherwise required under state law, or at such minimum
rate as stated in the contract when sold). ANY INTEREST CREDITED TO AMOUNTS
ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3.0% PER YEAR WILL BE DETERMINED IN
THE SOLE DISCRETION OF THE COMPANY. THE CONTRACT OWNER ASSUMES THE RISK THAT
INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM
GUARANTEE OF 3.0% FOR ANY GIVEN YEAR. New Purchase Payments deposited to the
Contract which are allocated to the Fixed Account may receive a different rate
of interest than money transferred from the Variable Sub-Accounts to the Fixed
Account and amounts maturing in the Fixed Account at the expiration of an
Interest Rate Guarantee Period.
The Company guarantees that, at any time, the Fixed Account Contract
Value will not be less than the amount of the Purchase Payments allocated to
the Fixed Account, plus interest credited as described above, less the sum of
all administrative charges, any applicable premium taxes, and less any amounts
surrendered. If the Contract Owner effects a surrender, the amount available
from the Fixed Account will be reduced by any applicable Contingent Deferred
Sales Charge (see "Contingent Deferred Sales Charge").
TRANSFERS
Contract Owners may at the maturity of an Interest Rate Guarantee Period,
transfer a portion of the value of the Fixed Account to the Variable Account.
The maximum percentage that may be transferred will be determined by the
Company at its sole discretion, but will not be less than 10% of the total
value of the portion of the Fixed Account that is maturing and will be declared
upon the expiration date of the then current Interest Rate Guarantee Period.
The Interest Rate Guarantee Period expires on the final day of a calendar
quarter. Transfers under this provision must be made within 30 days after the
expiration date of the guarantee period. Owners who have entered into a Dollar
Cost Averaging Agreement with the Company (see "Dollar Cost Averaging") may
transfer from the Fixed Account to the Variable Account under the terms of that
agreement.
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<PAGE> 47
Any Group Annuity Contract offered in conjunction with the prospectus, the
assets of which are invested in the general account of the Company, may be
subject to restrictions or surrender of a plan's or a participant's interest in
the Annuity Contract, and may require that such a surrender be completed over a
period of 5 years.
ANNUITY PAYMENT PERIOD-FIXED ACCOUNT
FIRST AND SUBSEQUENT PAYMENTS
A Fixed Annuity is an annuity with payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. The first Fixed
Annuity payment will be determined by applying the Fixed Account Contract Value
to the applicable Annuity Table in accordance with the Annuity Payment Option
elected. This will be done at the Annuitization Date on an age last birthday
basis. Fixed Annuity payments after the first will not be less than the first
Fixed Annuity payment.
The Company does not credit discretionary interest to Fixed Annuity
payments during the annuity payment period for annuity options based on life
contingencies. The Annuitant must rely on the Annuity Tables applicable to the
Contracts to determine the amount of such Fixed Annuity payments.
ANNUITY TABLES AND ASSUMED INTEREST RATE
The Annuity Tables contained in the Contracts are based on the 1971
Individual Annuity Mortality Table (set back one year) and an assumed interest
rate of 3.5%.
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<PAGE> 48
APPENDIX B
PARTICIPATING UNDERLYING MUTUAL FUNDS
AVAILABLE FOR ALL CONTRACTS
DREYFUS STOCK INDEX FUND
The Dreyfus Stock Index Fund, Inc. is an open-end, non-diversified,
management investment company. It was incorporated under Maryland law on
January 24, 1989 and commenced operations on September 29, 1989. Wells Fargo
Nikko Investment Advisors serves as the Fund's index fund manager. As of May
1, 1994, the Dreyfus Life and Annuity Index Fund began doing business as the
Dreyfus Stock Index Fund.
Investment Objective: 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 Composite Stock Price Index. The Fund
is neither sponsored by nor affiliated with Standard & Poor's Corporation.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end,
diversified, management investment company. It was incorporated under Maryland
law on July 20, 1992, and commenced operations on October 7, 1993. The Dreyfus
Corporation serves as the Fund's investment advisor. Tiffany Capital Advisors,
Inc. serves as the Fund's sub-investment adviser and provides day-to-day
management of the Fund's portfolio.
Investment Objective: The Fund's primary goal is to provide capital growth
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 contributed to the
enhancement of the quality of life in America. Current income is secondary to
the primary goal.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
The Fund is an open-end, diversified, management investment company
organized as a Massachusetts business trust on November 13, 1981. The Fund's
shares are purchased by insurance companies to fund benefits under variable
insurance and annuity policies. Fidelity Management & Research Company ("FMR")
is the Fund's manager.
- - EQUITY-INCOME PORTFOLIO
Investment Objective: To seek reasonable income by investing primarily in
income-producing equity securities. In choosing these securities FMR
also will consider the potential for capital appreciation. The
Portfolio's goal is to achieve a yield which exceeds the composite yield
on the securities comprising the Standard & Poor's 500 Composite Stock
Price Index.
- - GROWTH PORTFOLIO
Investment Objective: Seeks to achieve capital appreciation. This
Portfolio will invest in the securities of both well-known and
established companies, and smaller, less well-known companies which may
have a narrow product line or whose securities are thinly traded. These
latter securities will often involve greater risk than may be found in
the ordinary investment security. FMR's analysis and expertise plays an
integral role in the selection of securities and, therefore, the
performance of the Portfolio. Many securities which FMR believes would
have the greatest potential may be regarded as speculative, and
investment in the Portfolio may involve greater risk than is inherent in
other mutual funds. It is also important to point out that the Portfolio
makes most sense for you if you can afford to ride out changes in the
stock market, because it invests primarily in common stocks. FMR also
can make temporary investments in securities such as investment-grade
bonds, high-quality preferred stocks and short-term notes, for defensive
purposes when it believes market conditions warrant.
- - 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
Portfolio manager will seek high current income normally by investing the
Portfolio's assets as follows:
- at least 65% in income-producing debt securities and preferred
stocks, including convertible securities
- 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
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<PAGE> 49
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.
- - OVERSEAS PORTFOLIO
Investment Objective: To seek long term growth of capital primarily
through investments in foreign securities. The Overseas Portfolio
provides a means for investors to diversify their own portfolios by
participating in companies and economies outside of the United States.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
The Variable Insurance Products Fund II is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
March 21, 1988. The Fund's shares are purchased by insurance companies to fund
benefits under variable insurance and annuity policies. FMR is the Fund's
manager.
- - ASSET MANAGER PORTFOLIO
Investment Objective: To seek high total return with reduced risk over
the long-term by allocating its assets among domestic and foreign stocks,
bonds and short-term fixed income instruments.
- - CONTRAFUND PORTFOLIO
Investment Objective: To seek capital appreciation by investing
primarily in companies that the fund manager believes to be undervalued
due to an overly pessimistic appraisal by the public. This strategy can
lead to investments in domestic or foreign companies, small and large,
many of which may not be well known. The Fund primarily invests in
common stock and securities convertible into common stock, but it has the
flexibility to invest in any type of security that may produce capital
appreciation.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust (the "Trust") is a diversified open-end
management investment company created under the laws of Massachusetts. The
Trust offers shares in the five separate Mutual Funds listed below, each with
its own investment objectives. Currently, shares of the Trust will be sold
only to life insurance company separate accounts to fund the benefits under
variable life insurance policies or variable annuity contracts issued by life
insurance companies. The assets of the Trust are managed by Nationwide
Financial Services, Inc. of One Nationwide Plaza, Columbus, Ohio 43216, a
wholly-owned subsidiary of Nationwide Life Insurance Company.
- - CAPITAL APPRECIATION FUND
Investment Objective: The Fund is designed for investors who are
interested in long-term growth. The Fund seeks to meet its objective
primarily through a diversified portfolio of the common stock of
companies which the investment manager determines have a better-than-
average potential for sustained capital growth over the long term.
- - GOVERNMENT BOND FUND
Investment Objective: To provide as high a level of income as is
consistent with the preservation of capital. It seeks to achieve its
objective by investing in a diversified portfolio of securities issued or
backed by the U.S. Government, its agencies or instrumentalities.
- - MONEY MARKET FUND
Investment Objective: To seek as high a level of current income as is
considered consistent with the preservation of capital and liquidity by
investing primarily in money market instruments.
- - SMALL COMPANY FUND
Investment Objective: The Fund seeks long-term growth of capital by
investing primarily in equity securities of domestic and foreign
companies with market capitalizations of less than $1 billion at the time
of purchase. Nationwide Financial Services, Inc. ("NFS"), the Fund's
adviser, has employed a group of sub-advisers, each of which will manage
a portion of the Fund's portfolio. These sub-advisers are the Dreyfus
Corporation, Neuberger & Berman, L. P., Pictet International Management
Limited, Van Eck
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<PAGE> 50
Associates Corporation, Strong Capital Management, Inc. and Warburg,
Pincus Counsellors, Inc. The sub-advisers were chosen because they
utilize a number of different investment styles when investing in small
company stocks. By utilizing a number of investment styles, NFS hopes to
increase prospects for investment return and to reduce market risk and
volatility.
- - TOTAL RETURN FUND
Investment Objective: To obtain a reasonable long-term total return
(i.e., earnings growth plus potential dividend yield) on invested capital
from a flexible combination of current return and capital gains through
investments in common stocks, convertible issues, money market
instruments and bonds with a primary emphasis on common stocks.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST (FORMERLY "ADVISERS MANAGEMENT
TRUST")
Neuberger & Berman Advisers Management Trust is an open-end diversified
management investment company established as a Massachusetts business trust on
December 14, 1983. Shares of the Trust are offered in connection with certain
variable annuity contracts and variable life insurance policies issued through
life insurance company separate accounts and are also offered directly to
qualified pension and retirement plans outside of the separate account context.
The investment adviser is Neuberger & Berman Management Incorporated.
- - GROWTH PORTFOLIO
Investment Objective: The Portfolio seeks capital growth through
investments in common stocks of companies that the investment adviser
believes will have above average earnings or otherwise provide investors
with above average potential for capital appreciation. To maximize this
potential, the investment adviser may also utilize, from time to time,
securities convertible into common stocks, warrants and options to
purchase such stocks.
- - LIMITED MATURITY BOND PORTFOLIO
Investment Objective: To provide the high level of current income,
consistent with low risk to principal and liquidity. As a secondary
objective, it also seeks to enhance its total return through capital
appreciation when market factors, such as falling interest rates and
rising bond prices, indicate that capital appreciation may be available
without significant risk to principal. It seeks to achieve its
objectives through investments in a diversified portfolio of limited
maturity debt securities.
- - PARTNERS PORTFOLIO
Investment Objective: To seek capital growth. This Portfolio will seek
to achieve its objective by investing primarily in the common stock of
established companies. Its investment program seeks securities believed
to be undervalued based on fundamentals such as low price-to-earnings
ratios, consistent cash flows, and support from asset values. The
objective of the Partners Portfolio is not fundamental and can be changed
by the Trustees of the Trust without shareholder approval. Shareholders
will, however, receive at least 30 days notice thereof. There is no
assurance the investment objective will be met.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
The Oppenheimer Variable Account Funds is an open-end, diversified
management investment company organized as a Massachusetts business trust in
1984. Shares of the Funds are sold only to provide benefits under variable
life insurance policies and variable annuity contracts. Oppenheimer Management
Corporation is the Funds' investment adviser.
- - OPPENHEIMER BOND FUND
Investment Objective: Primarily to seek a high level of current income
from investment in high yield fixed-income securities rated "Baa" or
better by Moody's or "BBB" or better by Standard & Poor's. Secondarily,
the fund seeks capital growth when consistent with its primary objective.
- - OPPENHEIMER GLOBAL SECURITIES FUND
Investment Objective: To seek long-term capital appreciation by investing
a substantial portion of assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special situations which
are considered to be speculative.
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<PAGE> 51
- - OPPENHEIMER MULTIPLE STRATEGIES FUND
Investment Objective: To seek a total investment return (which includes
current income and capital appreciation in the value of its shares) from
investments in common stocks and other equity securities, bonds and other
debt securities, and "money market" securities.
STRONG SPECIAL FUND II, INC.
The Strong Special Fund II, Inc. is a diversified, open-end management
company commonly called a mutual fund. The Special Fund II, Inc. was
incorporated in Wisconsin and may only be purchased by the separate accounts of
insurance companies for the purpose of funding variable annuity contracts and
variable life insurance policies. Strong Capital Management Inc. (the
"Advisor") is the investment advisor for the Fund.
Investment Objective: To seek capital appreciation through investments
in a diversified portfolio of equity securities.
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Variable Insurance Funds, Inc. ("Corporation") is an open-end
management investment company commonly referred to as a mutual fund.
Incorporated in the State of Wisconsin, the Corporation has been authorized to
issue shares of common stock and series and classes of series of common stock.
The International Stock Fund II and The Strong Discovery Fund II, Inc.
("Funds") are offered by the Corporation to insurance company separate accounts
for the purpose of funding variable life insurance policies and variable
annuity contracts. Strong Capital Management, Inc. is the investment advisor
to the Funds.
- - DISCOVERY FUND II, INC.
Investment Objective: To seek maximum capital appreciation through
investments in a diversified portfolio of securities. The Fund normally
emphasizes investment in equity securities and may invest up to 100% of
its total assets in equity securities including common stocks, preferred
stocks and securities convertible into common or preferred stocks.
Although the Fund normally emphasizes investment in equity securities,
the Fund has the flexibility to invest in any type of security that the
Advisor believes has the potential for capital appreciation including up
to 100% of its total assets in debt obligations, including intermediate
to long-term corporate or U.S. government debt securities.
- - INTERNATIONAL STOCK FUND II
Investment Objective: To seek capital growth by investing primarily in
the equity securities of issuers located outside the United States.
TCI PORTFOLIOS, INC., MEMBER OF THE TWENTIETH CENTURY FAMILY OF MUTUAL FUNDS.
TCI Portfolios, Inc. was organized as a Maryland corporation in 1987. It
is a diversified, open-end investment management company, designed only to
provide investment vehicles for variable annuity and variable life insurance
products of insurance companies. A member of the Twentieth Century Family of
Mutual Funds, TCI Portfolios is managed by Investors Research Corporation.
- - TCI BALANCED
Investment Objective: Capital growth and current income. The Fund will
seek to achieve its objective by maintaining approximately 60% of the
assets of the Fund in common stocks (including securities convertible
into common stocks and other equity equivalents) that are considered by
management to have better-than-average prospects for appreciation and
approximately 40% in fixed income securities. A minimum of 25% of the
fixed income portion of the Fund will be invested in fixed income senior
securities. There can be no assurance that the Fund will achieve its
investment objective.
- - TCI GROWTH
Investment Objective: Capital growth. The Fund will seek to achieve its
objective by investing in common stocks (including securities convertible
into common stocks and other equity equivalents) that meet certain
fundamental and technical standards of selection and have, in the opinion
of the Fund's investment manager, better than average potential for
appreciation. The Fund tries to stay fully invested in such securities,
regardless of the movement of stock prices generally.
The Fund may invest in cash and cash equivalents temporarily or when it
is unable to find common stocks meeting its criteria of selection. It
may purchase securities only of companies that have a record of at
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least three years continuous operation. There can be no assurance that
the Fund will achieve its investment objective.
- - TCI INTERNATIONAL
Investment Objective: To seek capital growth. The Fund will seek to
achieve its investment objective by investing primarily in securities of
foreign companies that meet certain fundamental and technical standards
of selection and, in the opinion of the investment manager, have
potential for appreciation. Under normal conditions, the Fund will
invest at least 65% of its assets in common stocks or other equity
securities of issuers from at least three countries outside the United
States. Securities of United States issuers may be included in the
portfolio from time to time. Although the primary investment of the Fund
will be common stocks (defined to include depository receipts for common
stocks), the Fund may also invest in other types of securities consistent
with the Fund's objective. When the manager believes that the total
return potential of other securities equals or exceeds the potential
return of common stocks, the Fund may invest up to 35% of its assets in
such other securities. There can be no assurance that the Fund will
achieve its objectives.
(Although the Statement of Additional Information concerning TCI
Portfolios, Inc., refers to redemptions of securities in kind under
certain conditions, all surrendering or redeeming Contract Owners will
receive cash from the Company.)
VAN ECK WORLDWIDE INSURANCE TRUST (FORMERLY VAN ECK INVESTMENT TRUST)
Van Eck Worldwide Insurance Trust is an open-end management investment
company organized as a "Business Trust" under the laws of the Commonwealth of
Massachusetts on January 7, 1987. Trust shares are offered only to separate
accounts of various insurance companies to fund the benefits of variable
insurance and annuity policies. The investment adviser and manager is Van Eck
Associates Corporation.
- - WORLDWIDE BOND FUND (FORMERLY GLOBAL BOND FUND)
Investment Objective: To seek high total return through a flexible policy
of investing globally, primarily in debt securities.
- - GOLD AND NATURAL RESOURCES FUND
Investment Objective: To seek long-term capital appreciation by investing
in equity and debt securities of companies engaged in the exploration,
development, production and distribution of gold and other natural
resources, such as strategic and other metals, minerals, forest products,
oil, natural gas and coal. Current income is not an objective.
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST
The Van Kampen American Capital Life Investment Trust is an open-end
diversified management investment company organized as a Massachusetts business
trust on June 3, 1985. The Trust offers shares in separate funds which are
sold only to insurance companies to provide funding for variable life insurance
policies and variable annuity contracts. Van Kampen American Capital Asset
Management, Inc. serves as the Fund's investment adviser.
- - REAL ESTATE SECURITIES FUND
Investment Objective: To seek long-term capital growth by investing in a
portfolio of securities of companies operating in the real estate
industry ("Real Estate Securities"). Current income is a secondary
consideration. Real Estate Securities include equity securities,
including common stocks and convertible securities, as well as
non-convertible preferred stocks and debt securities of real estate
industry companies. A "real estate industry company" is a company that
derives at least 50% of its assets (marked to market), gross income or
net profits from the ownership, construction, management or sale of
residential, commercial or industrial real estate. Under normal market
conditions, at least 65% of the Fund's total assets will be invested in
Real Estate Securities, primarily equity securities of real estate
investment trusts. The Fund may invest up to 25% of its total assets in
securities issued by foreign issuers, some or all of which may also be
Real Estate Securities. There can be no assurance that the Fund will
achieve its investment objective.
WARBURG PINCUS TRUST
The Warburg Pincus Trust ("Trust") is an open-end management investment company
organized in March 1995 as a business trust under the laws of The Commonwealth
of Massachusetts. The Trust offers its shares to
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insurance companies for allocation to separate accounts for the purpose of
funding variable annuity and variable life contracts. Trust portfolios are
managed by Warburg, Pincus Counsellors, Inc. ("Counsellors.")
- - INTERNATIONAL EQUITY PORTFOLIO
Investment Objective: To seek long-term capital appreciation by
investing primarily in a broadly diversified portfolio of equity
securities of companies, wherever organized, that in the judgment of
"Counsellors" have their principal business activities and interests
outside the United States. The Portfolio will ordinarily invest
substantially all of its assets, but no less than 65% of its total
assets, in common stocks, warrants and securities convertible into or
exchangeable for common stocks. The Portfolio intends to invest
principally in the securities of financially strong companies with
opportunities for growth within growing international economies and
markets through increased earning power and improved utilization or
recognition of assets.
- - SMALL COMPANY GROWTH PORTFOLIO
Investment Objective: To seek capital growth by investing in a portfolio
of equity securities of small-sized domestic companies. The Portfolio
ordinarily will invest at least 65% of its total assets in common stocks
or warrants of small-sized companies (i.e., companies having stock market
capitalizations of between $25 million and $1 billion at the time of
purchase) that represent attractive opportunities for capital growth.
The Portfolio intends to invest primarily in companies whose securities
are traded on domestic stock exchanges or in the over-the-counter market.
The Portfolio's investments will be made on the basis of their equity
characteristics and securities ratings generally will not be a factor in
the selection process.
AVAILABLE FOR ALL CONTRACTS ISSUED ON OR AFTER MAY 1, 1987 AND
BEFORE SEPTEMBER 1, 1989
AMERICAN VARIABLE INSURANCE SERIES
The American Variable Insurance Series was organized as a Massachusetts
business trust in 1983, and is a fully managed, diversified, open-end
investment company. Shares of the series are offered only to separate accounts
of various insurance companies which fund certain variable annuity and life
insurance contracts.
- - GROWTH FUND
Investment Objective: To provide growth of capital. Whatever current
income is generated by the Fund is likely to be incidental to the
objective of capital growth. Ordinarily, accomplishment of the Fund's
objective of capital growth will be sought by investing primarily in
common stocks or securities with common stock characteristics.
- - HIGH-YIELD BOND FUND
Investment Objective: Seeks high current income and secondarily seeks
capital appreciation. The Fund invests substantially in intermediate and
long-term corporate obligations, with emphasis on higher yielding, higher
risk, lower rated or unrated securities. These investments are subject
to greater market fluctuations and risk of loss of income and principal
than are investments in lower yielding fixed income securities.
- - U.S. GOVERNMENT/AAA-RATED SECURITIES FUND
Investment Objective: A high level of current income consistent with
prudent investment risk and preservation of capital. It seeks to achieve
its objective by investing primarily in a combination of (i) securities
guaranteed by the U.S. Government (backed by the full faith and credit of
the U.S.), and (ii) corporate debt securities rated AAA by Standard and
Poor's Corporation or Aaa by Moody's Investors Service, Inc. (or that
have not received a rating but are determined to be of comparable quality
by the Investment Adviser).
51
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<PAGE> 54
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED
BY THE NATIONWIDE VARIABLE ACCOUNT-II
OF NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and in some respects more detailed than set forth in
the prospectus and should be read in conjunction with the prospectus dated May
1, 1996. The prospectus may be obtained from Nationwide Life Insurance Company
by writing P. O. Box 16609, Columbus, Ohio 43216-6609, or calling
1-800-848-6331, TDD 1-800-238-3035.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Calculations of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Underlying Mutual Fund Performance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
GENERAL INFORMATION AND HISTORY
The Nationwide Variable Account-II is a separate investment account of
Nationwide Life Insurance Company ("Company"). The Nationwide Variable
Account-II was formerly known as the "Nationwide Spectrum Variable Account."
The Company is a member of the Nationwide Insurance Enterprise and all of the
Company's common stock is owned by Nationwide Corporation. Nationwide
Corporation is a holding company. All of its common stock is held by Nationwide
Mutual Insurance Company (95.3%) and Nationwide Mutual Fire Insurance Company
(4.7%).
SERVICES
The Company, which has responsibility for administration of the Contracts
and the Variable Account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each Contract Owner
and the number and type of Contract issued to each such Contract Owner and
records with respect to the Contract Value of each Contract.
The Custodian of the assets of the Variable Account is the Company. The
Company will maintain a record of all purchases and redemptions of shares of
the underlying Mutual Funds. The Company, or affiliates of the Company, have
entered into agreements with either the investment adviser or distributor for
several of the underlying Mutual Funds. The agreements relate to
administrative services provided by the Company or an affiliate of the Company
and provide for an annual fee based on the average aggregate net assets of the
Variable Account (and other separate accounts of the Company or life insurance
company subsidiaries of the Company) invested in particular underlying Mutual
Funds. These fees in no way affect the net asset value of the underlying
Mutual Funds or fees paid by the Contract Owner.
The financial statements and schedules have been included herein in
reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and upon the
authority of said firm as experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
("NASD").
The Contract Owner may transfer up to 100% of the Contract Value from the
Variable Account to the Fixed Account. However, the Company, at its sole
discretion, reserves the right to limit such transfers to 25% of the Contract
Value for any 12 month period. Contract Owners may at the maturity of an
Interest Rate Guarantee Period transfer a portion of the Contract Value of the
Fixed Account to the Variable Account. Such portion will be determined by the
Company at its sole discretion (but will not be less than 10% of the total
value
1
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<PAGE> 55
of the portion of the Fixed Account that is maturing), and will be declared
upon the expiration date of the then current Interest Rate Guarantee Period.
The Interest Rate Guarantee Period expires on the final day of a calendar
quarter. Transfers under this provision must be made within 45 days after the
termination date of the guarantee period. Owners who have entered into a
Dollar Cost Averaging agreement with the Company may transfer from the Fixed
Account under the terms of that agreement.
Transfers from the Fixed and Variable Accounts may not be made prior to
the first Contract Anniversary. Transfers from the Fixed Account may not be
made within 12 months of any prior Transfer. Transfers must also be made prior
to the Annuitization Date.
UNDERWRITERS
The Contracts, which are offered continuously, are distributed by
Nationwide Financial Services, Inc. ("NFS"), One Nationwide Plaza, Columbus,
Ohio 43216, a wholly owned subsidiary of the Company. During the fiscal years
ended December 31, 1995, 1994 and 1993, no underwriting commissions were paid
by the Company to NFS.
CALCULATIONS OF PERFORMANCE
Any current yield quotations of the Nationwide Separate Account Trust
Money Market Fund Sub-Account, subject to Rule 482 of the Securities Act of
1933, shall consist of a seven calendar day historical yield, carried at least
to the nearest hundredth of a percent. The yield shall be calculated by
determining the net change, exclusive of capital changes, in the value of
hypothetical pre-existing account having a balance of one accumulation unit at
the beginning of the base period, subtracting a hypothetical charge reflecting
deductions from Contract Owner accounts, and dividing the net change in account
value by the value of the account at the beginning of the period to obtain a
base period return, and multiplying the base period return by (365/7) or
(366/7) in a leap year. As of December 30, 1995, the Nationwide Separate
Account Trust Money Market Fund Sub-Account's seven-day current unit value
yield was 3.78%. The Nationwide Separate Account Trust Money Market Fund
Sub-Account's effective yield is computed similarly but includes the effect of
assumed compounding on an annualized basis of the current unit value yield
quotations of the Fund, and for the period ending December 30, 1995 was 3.86%.
The Nationwide Separate Account Trust Money Market Fund Sub-Account's
yield and effective yield will fluctuate daily. Actual yields will depend on
factors such as the type of instruments in the Fund's portfolio, portfolio
quality and average maturity, changes in interest rates, and the Fund's
expenses. Although the Sub-Account determines its yield on the basis of a
seven calendar day period, it may use a different time period on occasion. The
yield quotes may reflect the expense limitation described "Investment Manager
and Other Services" in the Fund's Statement of Additional Information. There
is no assurance that the yields quoted on any given occasion will remain in
effect for any period of time and there is no guarantee that the net asset
values will remain constant. It should be noted that a Contract Owner's
investment in the Nationwide Separate Account Trust Money Market Fund
Sub-Account is not guaranteed or insured. Yield of other money market funds
may not be comparable if a different base period or another method of
calculation is used.
All performance advertising shall also include quotations of standardized
average annual total return, calculated in accordance with a standard method
prescribed by rules of the Securities and Exchange Commission, to facilitate
comparison with standardized average annual total return advertised for a
specific period is found by first taking a hypothetical $1,000 investment in
each of the Sub-Accounts' units on the first day of the period at the offering
price, which is the Accumulation Unit Value per unit ("initial investment") and
computing the ending redeemable value ("redeemable value") of that investment
at the end of the period. The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. Standardized average annual total return reflects the deduction of a
maximum $30 Contract Maintenance Charge and a 1.30% Mortality, Expense Risk and
Administration Charge. The redeemable value also reflects the effect of any
applicable Contingent Deferred Sales Charge that may be imposed at the end of
the period (see "Contingent Deferred Sales Charge" located in the prospectus).
No deduction is made for premium taxes which may be assessed by certain states.
Nonstandardized total return may also be advertised, and is calculated in a
manner similar to standardized average annual total return except the
nonstandardized total return is based on a hypothetical initial investment of
$10,000 and does not reflect the deduction of any applicable Contingent
Deferred Sales Charge. Reflecting the Contingent Deferred Sales Charge would
decrease the level of the performance advertised. The Contingent Deferred
Sales Charge is not reflected because the Contract is designed for long term
investment.
2
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<PAGE> 56
An assumed initial investment of $10,000 will be used because that figure more
closely approximates the size of a typical Contract than does the $1,000 figure
used in calculating the standardized average annual total return quotations.
The amount of the hypothetical initial investment used affects performance
because the Contract Maintenance Charge is fixed per Contract charge.
The standardized average annual total return and nonstandardized average
annual total return quotations will be current to the last day of the calendar
quarter preceding the date on which an advertisement is submitted for
publication. Both the standardized average annual return and the
nonstandardized average annual total return will be based on rolling calendar
quarters and will cover periods of one, five, and ten years, or a period
covering the time the underlying Mutual Fund held in the Sub-Account has been
in existence, if the underlying Mutual Fund has not been in existence for one
of the prescribed periods. For those underlying Mutual Funds which have not
been held as Sub-Accounts within the Variable Account for one of the quoted
periods, the average annual total return and nonstandardized total return
quotations will show the investment performance such underlying Mutual Funds
would have achieved (reduced by the applicable charges) had they been held as
Sub-Accounts within the Variable Account for the period quoted.
Quotations of average annual total return and total return are based upon
historical earnings and will fluctuate. Any quotation of performance,
therefore, would not be considered a guarantee of future performance. Factors
affecting a Sub-Account's performance include general market conditions,
operating expenses and investment management. A Contract Owner's account when
redeemed may be more or less than original cost.
Below are quotations of standardized average annual total return and
nonstandardized average annual total return calculated as described above, for
each of the Sub-Accounts available within the Variable Account.
UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVIS Growth Fund 31.25% 16.37% 15.11%* 2-08-84
------------------------------------------------------------------------------------------------------------
AVIS High Yield Bond 19.89% 11.83% 10.75%* 2-08-84
Fund
------------------------------------------------------------------------------------------------------------
AVIS US Govt./AAA-rated 13.59% 7.22% 6.78%* 11-19-85
------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth Fund 32.52% N/A 16.74% 10-06-93
------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 34.71% 14.24% 10.57% 9-29-89
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 33.04% 19.54% 11.61% 10-09-86
Equity Income Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 33.31% 19.00% 13.11% 10-09-86
Growth Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 18.74% 17.21% 9.81%* 9-09-85
High Income Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 7.96% 6.46% 5.66% 1-28-87
Overseas Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II- 15.14% 11.07% 9.54% 9-06-89
Asset Manager.
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund Portfolio N/A N/A 37.93% 7-01-95
------------------------------------------------------------------------------------------------------------
NSAT- 27.38% N/A 9.52% 4-15-92
Capital Appreciation Fund
------------------------------------------------------------------------------------------------------------
NSAT-Government Bond Fund 16.91% 7.96% 7.94%* 11-08-82
------------------------------------------------------------------------------------------------------------
NSAT-Money Market Fund 3.99% 2.66% 4.26%* 11-10-81
------------------------------------------------------------------------------------------------------------
NSAT-Small Company Fund N/A N/A 100.73%* 10-23-95
------------------------------------------------------------------------------------------------------------
NSAT-Total Return 27.12% 15.01% 10.79%* 11-08-82
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- 29.72% 11.98% 10.35%* 9-10-84
Growth Portfolio
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- 9.20% 5.05% 5.99%* 9-10-84
Limited Maturity Bond
------------------------------------------------------------------------------------------------------------
</TABLE>
3
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<PAGE> 57
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
N&B Advisers Management Trust- 34.40% N/A 15.70% 3-22-94
Partners Portfolio
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 15.18% 8.51% 7.71%* 4-30-85
Bond Fund
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 0.61% 7.85% 7.62% 11-12-90
Global Securities Fund
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 19.49% 10.35% 9.43% 2-09-87
Multiple Strategies Fund
------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. 23.89% N/A 17.34% 5-08-92
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.- 33.21% N/A 13.87% 5-08-92
Discovery Fund II, Inc.
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.- N/A N/A 12.24% 10-23-95
International Stock II
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.- 19.25% N/A 8.11% 5-01-91
TCI Balanced
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.- 29.10% 13.16% 11.12% 11-20-87
TCI Growth
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.- 10.46% N/A 2.19% 5-01-94
TCI International
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust- 15.48% 5.29% 5.68% 9-01-89
Worldwide Bond Fund
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Gold 9.25% 8.46% 5.06% 9-01-89
& Natural Resources Fund
------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life N/A N/A 15.75% 7-01-95
Investment Trust-Real Estate Securities
Fund
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International N/A N/A 13.25% 7-01-95
Equity Portfolio
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company N/A N/A 53.71% 7-01-95
Growth Portfolio
------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents 10 years to 12/31/95.
4
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<PAGE> 58
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVIS-Growth Fund 23.15% 14.10% 13.50%* 2-08-84
------------------------------------------------------------------------------------------------------------
AVIS-High Yield Bond Fund 11.79% 9.43% 8.87%* 2-08-84
------------------------------------------------------------------------------------------------------------
AVIS-US Govt./AAA-rated 5.49% 4.51% 4.50%* 11-19-85
------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth 24.42% N/A 11.26% 10-06-93
Fund
------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 26.61% 11.80% 7.61% 9-19-89
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 24.94% 17.36% 9.02% 10-09-86
Equity Income Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 25.21% 16.90% 10.75% 10-09-86
Growth Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 10.64% 15.11% 7.61%* 9-09-85
High Income Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas Portfolio -0.14% 3.52% 3.04% 1-28-87
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Asset Manager 7.04% 8.62% 6.79% 9-06-89
Portfolio
------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund N/A N/A 28.23% 7-01-95
Portfolio
------------------------------------------------------------------------------------------------------------
NSAT-Capital Appreciation Fund 19.28% N/A 5.82% 4-15-92
------------------------------------------------------------------------------------------------------------
NSAT-Government 8.81% 5.26% 5.78%* 11-08-82
Bond Fund
------------------------------------------------------------------------------------------------------------
NSAT-Money Market Fund -4.11% -0.42% 1.81%* 11-10-81
------------------------------------------------------------------------------------------------------------
NSAT-Small Company Fund N/A N/A 91.03% 10-23-95
------------------------------------------------------------------------------------------------------------
NSAT-Total Return Fund 19.02% 12.73% 8.79%* 11-08-82
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- Growth 21.62% 9.52% 8.35%* 9-10-84
Portfolio
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- 1.10% 2.16% 3.72%* 9-10-84
Limited Maturity Bond Portfolio
------------------------------------------------------------------------------------------------------------
N&B Advisers Management Trust- 26.30% N/A 9.68% 3-22-94
Partners Portfolio
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 7.08% 5.85% 5.47%* 4-30-85
Bond Fund
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- -7.36% 5.06% 4.26% 11-12-90
Global Securities Fund
------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds- 11.39% 7.77% 7.27% 2-09-87
Multiple Strategies Fund.
------------------------------------------------------------------------------------------------------------
Strong Special Fund II, Inc. 15.79% N/A 14.12% 5-08-92
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, 25.11% N/A 10.36% 5-08-92
Inc.-Discovery Fund II, Inc.
------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, N/A N/A 2.54% 10-23-95
Inc.-
International Stock Fund II
------------------------------------------------------------------------------------------------------------
</TABLE>
5
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<PAGE> 59
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 To 12/31/95 Effective
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TCI Portfolios, Inc.-TCI Balanced 11.15% N/A 4.98% 5-01-91
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI Growth 21.00% 10.77% 8.65% 11-20-87
------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI 2.36% N/A -4.44% 5-01-94
International
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust- 7.38% 2.37% 2.70% 9-01-89
Worldwide Bond
------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust- 1.15% 5.55% 1.66% 9-01-89
Gold & Natural Resources Fund
------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life N/A N/A 6.05% 7-01-95
Investment Trust-Real Estate
Securities Fund
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International N/A N/A 3.55% 7-01-95
Equity Portfolio
------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company N/A N/A 44.01% 7-01-95
Growth Portfolio
------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents 10 years to 12/31/95.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the prospectus.
6
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<PAGE> 60
<PAGE> 1
Independent Auditors' Report
The Board of Directors and Contract Owners of
Nationwide Variable Account-II
Nationwide Life Insurance Company:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account-II as of December 31,
1995, and the related statements of operations and changes in contract owners'
equity and schedules of changes in unit value for each of the years in the three
year period then ended. These financial statements and schedules of changes in
unit value are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules of changes in unit value based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedules of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and the
transfer agents of the underlying mutual funds. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedules of changes in unit
value referred to above present fairly, in all material respects, the financial
position of Nationwide Variable Account-II as of December 31, 1995, and the
results of its operations and its changes in contract owners' equity and the
schedules of changes in unit value for each of the years in the three year
period then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT - II
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American VI Series - Growth Fund (AVISGro)
623,618 shares (cost $17,102,560) ............................. $ 23,585,245
American VI Series - High-Yield Bond Fund (AVISHiYld)
209,306 shares (cost $2,846,218) .............................. 2,911,446
American VI Series - U.S. Government/AAA-Rated
Securities Fund (AVISGvt)
873,261 shares (cost $9,829,632) .............................. 10,016,309
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
1,283,878 shares (cost $19,489,630) ........................... 22,223,921
Dreyfus Stock Index Fund (DryStkIx)
8,082,567 shares (cost $126,497,616) .......................... 139,020,158
Fidelity VIP - Equity-Income Portfolio (FidEqInc)
70,933,143 shares (cost $1,121,753,271) ....................... 1,366,881,661
Fidelity VIP - Growth Portfolio (FidGro)
41,657,161 shares (cost $1,007,914,736) ....................... 1,216,389,107
Fidelity VIP - High Income Portfolio (FidHiInc)
35,625,333 shares (cost $396,271,298) ......................... 429,285,265
Fidelity VIP - Overseas Portfolio (FidOSeas)
30,101,938 shares (cost $483,895,870) ......................... 513,238,037
Fidelity VIP-II - Asset Manager Portfolio (FidAsMgr)
53,135,805 shares (cost $754,251,432) ......................... 839,014,368
Fidelity VIP-II - Contrafund Portfolio (FidContP)
8,756,011 shares (cost $119,727,547) .......................... 120,657,834
Nationwide SAT - Capital Appreciation Fund (NWCapApp)
2,445,307 shares (cost $29,478,590) ........................... 32,962,742
Nationwide SAT - Government Bond Fund (NWGvtBd)
22,840,938 shares (cost $250,126,269) ......................... 259,473,061
Nationwide SAT - Money Market Fund (NWMyMkt)
645,520,465 shares (cost $645,520,465) ........................ 645,520,465
Nationwide SAT - Small Company Fund (NWSmCoFd)
1,101,835 shares (cost $11,998,226) ........................... 12,582,961
Nationwide SAT - Total Return Fund (NWTotRet)
30,093,969 shares (cost $308,837,627) ......................... 347,284,398
Neuberger & Berman - Growth Portfolio (NBGro)
14,090,647 shares (cost $320,541,062) ......................... 364,384,131
Neuberger & Berman - Limited Maturity Bond Portfolio (NBLtdMat)
12,726,836 shares (cost $181,308,175) ......................... 187,211,761
Neuberger & Berman - Partners Portfolio (NBPart)
7,301,731 shares (cost $87,389,993) ........................... 96,601,896
Oppenheimer - Bond Fund (OppBdFd)
12,804,993 shares (cost $146,405,041) ......................... 151,611,114
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Oppenheimer - Global Securities Fund (OppGlSec)
13,111,179 shares (cost $203,180,884) ................................ 196,667,679
Oppenheimer - Multiple Strategies Fund (OppMult)
11,577,330 shares (cost $155,408,345) ................................ 168,450,154
Strong VIP - Strong Discovery Fund II, Inc. (StDisc2)
17,003,436 shares (cost $198,646,115) ................................ 228,526,175
Strong VIP - Strong International Stock Fund II, Inc. (StIntStk2)
244,173 shares (cost $2,469,688) ..................................... 2,495,453
Strong VIP - Strong Special Fund II, Inc. (StSpec2)
25,493,567 shares (cost $377,099,377) ................................ 434,410,378
TCI Portfolios - TCI Balanced (TCIBal)
12,691,118 shares (cost $77,814,222) ................................. 89,345,470
TCI Portfolios - TCI Growth (TCIGro)
41,306,546 shares (cost $402,345,402) ................................ 498,156,942
TCI Portfolios - TCI International (TCIInt)
9,214,985 shares (cost $46,379,231) .................................. 49,115,872
Van Eck - Gold and Natural Resources Fund (VEGoldNR)
8,270,057 shares (cost $115,551,771) ................................. 119,254,224
Van Eck - Worldwide Bond Fund (VEWrldBd)
9,525,862 shares (cost $104,143,426) ................................. 106,118,098
Van Kampen American Capital - Real Estate Securities Fund (VKACRESec)
674,076 shares (cost $7,031,745) ..................................... 7,239,575
Warburg Pincus - International Equity Portfolio (WPIntEq)
5,874,837 shares (cost $61,513,027) .................................. 62,567,014
Warburg Pincus - Small Company Growth Portfolio (WPSmCoGr)
7,488,672 shares (cost $84,455,241) .................................. 93,683,286
--------------
Total assets ......................................................... 8,836,886,200
ACCOUNTS PAYABLE .............................................................. 1,990,179
--------------
CONTRACT OWNERS' EQUITY (NOTE 4) .............................................. $8,834,896,021
==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
NATIONWIDE VARIABLE ACCOUNT - II
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends ................. $ 255,746,278 219,361,059 87,058,811
--------------- ------------- -------------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares ... 2,702,034,116 2,081,239,624 1,118,924,497
Cost of mutual fund shares sold ................... (2,527,741,633) (1,966,796,733) (1,023,878,546)
--------------- ------------- -------------
Realized gain (loss) on investments ............... 174,292,483 114,442,891 95,045,951
Change in unrealized gain (loss) on investments ... 974,875,269 (372,586,662) 239,514,450
--------------- ------------- -------------
Net gain (loss) on investments ............... 1,149,167,752 (258,143,771) 334,560,401
--------------- ------------- -------------
Net investment activity ................. 1,404,914,030 (38,782,712) 421,619,212
--------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners ........ 2,272,793,729 2,110,347,434 1,441,981,228
Redemptions ............................................ (445,809,864) (229,544,830) (142,035,153)
Annuity benefits ....................................... (401,351) (155,993) (112,491)
Adjustments to maintain reserves ....................... (180,793) 29,075 (21,397)
--------------- ------------- -------------
Net equity transactions ................. 1,826,401,721 1,880,675,686 1,299,812,187
--------------- ------------- -------------
EXPENSES (NOTE 2):
Contract charges ....................................... (99,429,327) (67,631,096) (42,061,726)
Contingent deferred sales charges ...................... (7,795,056) (4,253,379) (2,613,738)
--------------- ------------- -------------
Total expenses .......................... (107,224,383) (71,884,475) (44,675,464)
--------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ....................... 3,124,091,368 1,770,008,499 1,676,755,935
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................. 5,710,804,653 3,940,796,154 2,264,040,219
--------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ....................... $ 8,834,896,021 5,710,804,653 3,940,796,154
=============== ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
NATIONWIDE VARIABLE ACCOUNT - II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account-II (the Account) was established pursuant
to a resolution of the Board of Directors of Nationwide Life Insurance Company
(the Company) on October 7, 1981. The Account has been registered as a unit
investment trust under the Investment Company Act of 1940.
The Company offers tax qualified and non-tax qualified Individual
Deferred Variable Annuity Contracts, and Individual Modified Single Premium
Deferred Variable Annuity Contracts through the Account. The primary
distribution for the contracts is through the brokerage community; however,
other distributors are utilized.
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees, are offered for purchase. See note
2 for a discussion of contract expenses.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in the following:
Funds of the American Variable Insurance Series (American VI Series)
(available only for contracts issued on or after May 1, 1987 and before
September 1, 1989);
American VI Series - Growth Fund (AVISGro)
American VI Series - High-Yield Bond Fund (AVISHiYld)
American VI Series - U.S. Government/AAA-Rated Securities Fund
(AVISGvt)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)(formerly Dreyfus Life and Annuity
Index Fund, Inc. (DLAI))
Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity
VIP);
Fidelity VIP - Equity-Income Portfolio (FidEqInc)
Fidelity VIP - Growth Portfolio (FidGro)
Fidelity VIP - High Income Portfolio (FidHiInc)
Fidelity VIP - Overseas Portfolio (FidOSeas)
Portfolio of the Fidelity Variable Insurance Products Fund II (Fidelity
VIP- II);
Fidelity VIP-II - Asset Manager Portfolio (FidAsMgr)
Fidelity VIP-II - Contrafund Portfolio (FidContP)
Funds of the Nationwide Separate Account Trust (Nationwide SAT) (managed
for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NWCapApp)
Nationwide SAT - Government Bond Fund (NWGvtBd)
Nationwide SAT - Money Market Fund (NWMyMkt)
Nationwide SAT - Small Company Fund (NWSmCoFd)
Nationwide SAT - Total Return Fund (NWTotRet)
Portfolios of the Neuberger & Berman Advisers Management Trust (Neuberger
& Berman);
Neuberger & Berman - Growth Portfolio (NBGro)
Neuberger & Berman - Limited Maturity Bond Portfolio (NBLtdMat)
Neuberger & Berman - Partners Portfolio (NBPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer);
Oppenheimer - Bond Fund (OppBdFd)
Oppenheimer - Global Securities Fund (OppGlSec)
Oppenheimer - Multiple Strategies Fund (OppMult)
<PAGE> 6
Funds of the Strong Variable Insurance Products Funds (Strong VIP);
Strong VIP - Strong Discovery Fund II, Inc. (StDisc2)
Strong VIP - Strong International Stock Fund II, Inc. (StIntStk2)
Strong VIP - Strong Special Fund II, Inc. (StSpec2)
Portfolios of the TCI Portfolios, Inc. (TCI Portfolios);
TCI Portfolios - TCI Balanced (TCIBal)
TCI Portfolios - TCI Growth (TCIGro)
TCI Portfolios - TCI International (TCIInt)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck) (formerly Van
Eck Investment Trust);
Van Eck - Gold and Natural Resources Fund (VEGoldNR)
Van Eck - Worldwide Bond Fund (VEWrldBd)
(formerly Van Eck - Global Bond Fund (VEGlobBd))
Fund of the Van Kampen American Capital Life Investment Trust (Van
Kampen American Capital);
Van Kampen American Capital - Real Estate Securities Fund (VKACRESec)
Portfolios of the Warburg Pincus Trust (Warburg Pincus);
Warburg Pincus - International Equity Portfolio (WPIntEq)
Warburg Pincus - Small Company Growth Portfolio (WPSmCoGr)
At December 31, 1995, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment results of each
fund, equity transactions by contract owners and certain contract expenses (see
note 2).
The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their contracts and
exclude any purchase payments for fixed dollar benefits, the latter being
included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1995. The cost of investments sold is
determined on a specific identification basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations
of the Company which is taxed as a life insurance company under the Internal
Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments
received from the contract owners. However, if any part of the contract value of
such contracts is surrendered, the Company will, with certain exceptions, deduct
from a contract owner's contract value a contingent deferred sales charge. For
contracts issued prior to December 15, 1988, the contingent deferred sales
charge will be equal to 5% of the lesser of the total of all purchase payments
made within 96 months prior to the date of the request for surrender or the
amount surrendered. For contracts issued on or after December 15, 1988, the
Company will deduct a contingent deferred sales charge not to exceed 7% of the
lesser of purchase payments or the amount surrendered, such charge declining 1%
per year, to 0%, after the purchase payment has been held in the contract for 84
months. No sales charges are deducted on redemptions used to purchase units in
the fixed investment options of the Company.
<PAGE> 7
The following administrative charges are deducted by the Company: (a) for
The BEST OF AMERICA(R) contracts an annual contract maintenance charge of $30,
with certain exceptions, which is satisfied by surrendering units; and (b) for
The BEST OF AMERICA(R) contracts issued prior to December 15, 1988, a charge for
mortality and expense risk assessed through the daily unit value calculation
equal to an annual rate of 0.80% and 0.50%, respectively; for The BEST OF
AMERICA(R) contracts issued on or after December 15, 1988, a mortality risk
charge, an expense risk charge and an administration charge assessed through the
daily unit value calculation equal to an annual rate of 0.80%, 0.45% and 0.05%,
respectively; for The BEST OF AMERICA(R) America's Vision Annuity contracts, a
mortality risk charge, an expense risk charge and an administration charge
assessed through the daily unit value calculation equal to an annual rate of
0.80%, 0.45% and 0.15%, respectively; and for The BEST OF AMERICA(R) Nationwide
Insurance Enterprise Annuity contracts, a mortality risk charge assessed through
the daily unit value calculation equal to an annual rate of 0.80%.
(3) SCHEDULE I
Schedule I presents the components of the change in the unit values,
which are the basis for contract owners' equity. This schedule is presented for
each series, as applicable, in the following format:
- Beginning unit value - Jan. 1
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to capital
gains and dividend distributions from the underlying mutual funds.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
- Contract charges
(This amount reflects the decrease in the unit value due to the
mortality risk charge, an expense risk charge and an administration
charge discussed in note 2.)
- Ending unit value - Dec. 31
- Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
<PAGE> 8
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31,
1995, for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
----- ----------
<S> <C> <C> <C>
Contracts in accumulation phase:
The BEST OF AMERICA(R) Nationwide Insurance
Enterprise Annuity contracts:
The Dreyfus Socially Responsible Growth Fund, Inc.:
Tax qualified ........................................ 806 $10.330490 $ 8,326
Non-tax qualified .................................... 232 10.330490 2,397
Dreyfus Stock Index Fund:
Tax qualified ........................................ 750 10.575706 7,932
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ........................................ 2,701 10.729806 28,981
Non-tax qualified .................................... 920 10.729806 9,871
Fidelity VIP - Growth Portfolio:
Tax qualified ........................................ 5,324 9.643317 51,341
Non-tax qualified .................................... 4,256 9.643317 41,042
Fidelity VIP - High Income Portfolio:
Tax qualified ........................................ 806 10.155366 8,185
Non-tax qualified .................................... 525 10.155366 5,332
Fidelity VIP - Overseas Portfolio:
Tax qualified ........................................ 111 10.484931 1,164
Non-tax qualified .................................... 24 10.484931 252
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified ........................................ 488 10.533861 5,141
Non-tax qualified .................................... 69 10.533861 727
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified ........................................ 484 10.207482 4,940
Non-tax qualified .................................... 1,565 10.207482 15,975
Nationwide SAT - Government Bond Fund:
Tax qualified ........................................ 329 10.262495 3,376
Nationwide SAT - Money Market Fund:
Tax qualified ........................................ 1,951 10.076854 19,660
Non-tax qualified .................................... 578 10.076854 5,824
Nationwide SAT - Small Company Fund:
Tax qualified ........................................ 1,552 11.411037 17,710
Non-tax qualified .................................... 676 11.411037 7,714
Nationwide SAT - Total Return Fund:
Tax qualified ........................................ 42 10.500717 441
Non-tax qualified .................................... 450 10.500717 4,725
Neuberger & Berman - Growth Portfolio:
Tax qualified ........................................ 2,596 9.971367 25,886
Non-tax qualified .................................... 1,831 9.971367 18,258
Neuberger & Berman - Limited Maturity
Bond Portfolio:
Non-tax qualified .................................... 18,239 10.180593 185,684
Neuberger & Berman - Partners Portfolio:
Tax qualified ........................................ 934 10.570046 9,872
Non-tax qualified .................................... 233 10.570046 2,463
Oppenheimer - Bond Fund:
Non-tax qualified .................................... 71 10.287129 730
Oppenheimer - Global Securities Fund:
Non-tax qualified .................................... 44 10.087683 444
Oppenheimer - Multiple Strategies Fund:
Non-tax qualified .................................... 78 10.302692 804
Strong VIP - Strong Discovery Fund II, Inc.:
Tax qualified ........................................ 418 10.468286 4,376
Non-tax qualified .................................... 1,763 10.468286 18,456
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
Strong VIP - Strong Special Fund II, Inc.:
Tax qualified ........................................ 491 10.587949 5,199
Non-tax qualified .................................... 309 10.587949 3,272
TCI Portfolios - TCI Growth:
Tax qualified ........................................ 2,625 9.880281 25,936
Non-tax qualified .................................... 2,306 9.880281 22,784
TCI Portfolios - TCI International:
Tax qualified ........................................ 72 10.355977 746
Non-tax qualified 741 10.355977 7,674
Van Eck - Gold and Natural Resources Fund:
Tax qualified ........................................ 305 11.060595 3,373
Non-tax qualified .................................... 194 11.060595 2,146
Van Eck - Worldwide Bond Fund:
Tax qualified ........................................ 496 10.113918 5,017
Van Kampen American Capital - Real Estate
Securities Fund:
Tax qualified ........................................ 231 10.597781 2,448
Non-tax qualified .................................... 235 10.597781 2,490
Warburg Pincus - International Equity Portfolio:
Tax qualified ........................................ 56 10.363169 580
Warburg Pincus - Small Company Growth Portfolio:
Tax qualified ........................................ 3,368 11.154927 37,570
Non-tax qualified .................................... 959 11.154927 10,698
The BEST OF AMERICA(R) contracts:
American VI Series - Growth Fund:
Tax qualified ........................................ 533,382 21.880052 11,670,426
Non-tax qualified .................................... 544,338 21.880052 11,910,144
American VI Series - High-Yield Bond Fund:
Tax qualified ........................................ 74,984 20.729452 1,554,377
Non-tax qualified .................................... 65,007 20.729452 1,347,559
American VI Series - U.S. Government/AAA-Rated
Securities Fund:
Tax qualified ........................................ 315,331 18.077072 5,700,261
Non-tax qualified .................................... 238,614 18.077072 4,313,442
The Dreyfus Socially Responsible Growth Fund, Inc.:
Tax qualified ........................................ 640,387 14.239508 9,118,796
Non-tax qualified .................................... 421,093 14.239508 5,996,157
Dreyfus Stock Index Fund:
Tax qualified ........................................ 3,284,707 13.619180 44,735,016
Non-tax qualified .................................... 2,805,145 13.619180 38,203,775
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ........................................ 21,482,777 24.863579 534,138,723
Non-tax qualified .................................... 21,094,657 24.863579 524,488,671
Fidelity VIP - Growth Portfolio:
Tax qualified ........................................ 15,252,906 34.006052 518,691,115
Non-tax qualified .................................... 13,813,237 34.006052 469,733,656
Fidelity VIP - High Income Portfolio:
Tax qualified ........................................ 6,464,833 21.817076 141,043,753
Non-tax qualified .................................... 7,993,534 21.817076 174,395,539
Fidelity VIP - Overseas Portfolio:
Tax qualified ........................................ 14,272,080 14.832631 211,692,496
Non-tax qualified .................................... 14,672,390 14.832631 217,630,147
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified ........................................ 22,704,319 18.056027 409,949,797
Non-tax qualified .................................... 16,037,811 18.056027 289,579,148
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified ........................................ 3,025,498 11.071500 33,496,801
Non-tax qualified .................................... 3,490,716 11.071500 38,647,462
</TABLE>
<PAGE> 10
<TABLE>
<S> <C> <C> <C>
Nationwide SAT - Capital Appreciation Fund:
Tax qualified......................................... 897,315 14.442619 12,959,579
Non-tax qualified..................................... 904,797 14.442619 13,067,638
Nationwide SAT - Government Bond Fund:
Tax qualified......................................... 4,150,795 29.663756 123,128,170
Non-tax qualified..................................... 3,385,486 29.585401 100,160,961
Nationwide SAT - Money Market Fund:
Tax qualified......................................... 9,961,763 21.334141 212,525,656
Non-tax qualified..................................... 10,688,426 21.334141 228,028,387
Nationwide SAT - Small Company Fund:
Tax qualified......................................... 157,084 11.410135 1,792,350
Non-tax qualified..................................... 607,477 11.410135 6,931,395
Nationwide SAT - Total Return Fund:
Tax qualified......................................... 2,843,673 52.147953 148,291,726
Non-tax qualified..................................... 2,833,128 50.805130 143,937,436
Neuberger & Berman - Growth Portfolio:
Tax qualified......................................... 5,919,670 27.626244 163,538,248
Non-tax qualified..................................... 5,358,461 27.626244 148,034,151
Neuberger & Berman - Limited Maturity
Bond Portfolio:
Tax qualified......................................... 4,061,293 16.311479 66,245,695
Non-tax qualified..................................... 3,866,535 16.311479 63,068,904
Neuberger & Berman - Partners Portfolio:
Tax qualified......................................... 2,151,917 13.494251 29,038,508
Non-tax qualified..................................... 2,173,222 13.494251 29,326,003
Oppenheimer - Bond Fund:
Tax qualified......................................... 3,369,101 16.781326 56,537,982
Non-tax qualified..................................... 3,073,942 16.781326 51,584,823
Oppenheimer - Global Securities Fund:
Tax qualified......................................... 6,518,772 11.411200 74,387,011
Non-tax qualified..................................... 4,810,440 11.411200 54,892,893
Oppenheimer - Multiple Strategies Fund:
Tax qualified......................................... 4,418,303 15.831164 69,946,879
Non-tax qualified..................................... 3,837,204 15.831164 60,747,406
Strong VIP - Strong Discovery Fund II, Inc.:
Tax qualified......................................... 5,223,195 16.212409 84,680,574
Non-tax qualified..................................... 5,248,509 16.212409 85,090,975
Strong VIP - Strong International Stock Fund II, Inc.:
Tax qualified......................................... 78,603 10.226470 803,831
Non-tax qualified..................................... 86,735 10.226470 886,993
Strong VIP - Strong Special Fund II, Inc.:
Tax qualified......................................... 9,874,627 18.071722 178,451,514
Non-tax qualified..................................... 8,712,015 18.071722 157,441,113
TCI Portfolios - TCI Balanced:
Tax qualified......................................... 2,978,792 12.912980 38,465,082
Non-tax qualified..................................... 2,471,621 12.912980 31,915,993
TCI Portfolios - TCI Growth:
Tax qualified......................................... 9,867,412 25.074858 247,423,955
Non-tax qualified..................................... 7,570,906 25.074858 189,839,393
TCI Portfolios - TCI International:
Tax qualified......................................... 1,565,354 10.402550 16,283,673
Non-tax qualified..................................... 1,498,305 10.402550 15,586,193
Van Eck - Gold and Natural Resources Fund:
Tax qualified......................................... 3,166,034 13.944310 44,148,160
Non-tax qualified..................................... 3,714,045 13.944310 51,789,795
Van Eck - Worldwide Bond Fund:
Tax qualified......................................... 2,993,355 14.433345 43,204,125
Non-tax qualified..................................... 3,020,939 14.433345 43,602,255
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
Van Kampen American Capital - Real Estate
Securities Fund:
Tax qualified......................................... 161,110 10.765351 1,734,406
Non-tax qualified..................................... 310,010 10.765351 3,337,366
Warburg Pincus - International Equity Portfolio:
Tax qualified......................................... 1,798,470 10.661059 19,173,595
Non-tax qualified..................................... 2,012,385 10.661059 21,454,155
Warburg Pincus - Small Company Growth Portfolio:
Tax qualified......................................... 2,450,661 12.430073 30,461,895
Non-tax qualified..................................... 2,574,975 12.430073 32,007,127
The BEST OF AMERICA(R) America's Vision
Annuity(SM) contracts:
The Dreyfus Socially Responsible Growth Fund, Inc.:
Tax qualified......................................... 195,462 13.462638 2,631,434
Non-tax qualified..................................... 331,788 13.462638 4,466,742
Dreyfus Stock Index Fund:
Tax qualified......................................... 1,651,153 13.549203 22,371,807
Non-tax qualified..................................... 2,487,342 13.549203 33,701,502
Fidelity VIP - Equity-Income Portfolio:
Tax qualified......................................... 8,772,439 14.333670 125,741,246
Non-tax qualified..................................... 12,709,387 14.333670 182,172,159
Fidelity VIP - Growth Portfolio:
Tax qualified......................................... 6,525,239 13.458405 87,819,309
Non-tax qualified..................................... 10,395,158 13.458405 139,902,246
Fidelity VIP - High Income Portfolio:
Tax qualified......................................... 4,074,649 11.707151 47,702,531
Non-tax qualified..................................... 5,647,831 11.707151 66,120,010
Fidelity VIP - Overseas Portfolio:
Tax qualified......................................... 3,053,190 11.394419 34,789,326
Non-tax qualified..................................... 4,289,622 11.394419 48,877,750
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified......................................... 5,437,140 11.038610 60,018,468
Non-tax qualified..................................... 7,152,807 11.038610 78,957,047
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified......................................... 1,651,204 11.065996 18,272,217
Non-tax qualified..................................... 2,730,876 11.065996 30,219,863
Nationwide SAT - Capital Appreciation Fund:
Tax qualified......................................... 217,088 12.811228 2,781,164
Non-tax qualified..................................... 324,265 12.811228 4,154,233
Nationwide SAT - Government Bond Fund:
Tax qualified......................................... 1,375,356 11.196001 15,398,487
Non-tax qualified..................................... 1,845,640 11.196001 20,663,787
Nationwide SAT - Money Market Fund:
Tax qualified......................................... 7,418,948 10.683538 79,260,613
Non-tax qualified..................................... 11,573,455 10.683538 123,645,446
Nationwide SAT - Small Company Fund:
Tax qualified......................................... 61,355 11.408018 699,939
Non-tax qualified..................................... 274,709 11.408018 3,133,885
Nationwide SAT - Total Return Fund:
Tax qualified......................................... 1,799,440 12.801951 23,036,343
Non-tax qualified..................................... 2,431,303 12.801951 31,125,422
Neuberger & Berman - Growth Portfolio:
Tax qualified......................................... 1,628,798 12.286164 20,011,679
Non-tax qualified..................................... 2,653,678 12.286164 32,603,523
</TABLE>
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
Neuberger & Berman - Limited Maturity
Bond Portfolio:
Tax qualified......................................... 2,080,555 10.786223 22,441,330
Non-tax qualified..................................... 3,264,440 10.786223 35,210,978
Neuberger & Berman - Partners Portfolio:
Tax qualified......................................... 1,257,295 13.474969 16,942,011
Non-tax qualified..................................... 1,579,425 13.474969 21,282,703
Oppenheimer - Bond Fund:
Tax qualified......................................... 1,725,638 11.228877 19,376,977
Non-tax qualified..................................... 2,135,137 11.228877 23,975,191
Oppenheimer - Global Securities Fund:
Tax qualified......................................... 2,901,407 10.479380 30,404,946
Non-tax qualified..................................... 3,528,736 10.479380 36,978,965
Oppenheimer - Multiple Strategies Fund:
Tax qualified......................................... 1,296,727 11.763879 15,254,540
Non-tax qualified..................................... 1,911,329 11.763879 22,484,643
Strong VIP - Strong Discovery Fund II, Inc.:
Tax qualified......................................... 1,701,819 13.432714 22,860,048
Non-tax qualified..................................... 2,670,161 13.432714 35,867,509
Strong VIP - Strong International Stock Fund II, Inc.:
Tax qualified......................................... 25,615 10.224570 261,902
Non-tax qualified..................................... 53,080 10.224570 542,720
Strong VIP - Strong Special Fund II, Inc.:
Tax qualified......................................... 3,116,534 13.287288 41,410,285
Non-tax qualified..................................... 4,296,074 13.287288 57,083,173
TCI Portfolios - TCI Balanced:
Tax qualified......................................... 602,257 11.914266 7,175,450
Non-tax qualified..................................... 989,420 11.914266 11,788,213
TCI Portfolios - TCI Growth:
Tax qualified......................................... 1,787,046 12.792935 22,861,563
Non-tax qualified..................................... 2,955,898 12.792935 37,814,611
TCI Portfolios - TCI International:
Tax qualified......................................... 647,594 10.387676 6,726,997
Non-tax qualified..................................... 1,011,780 10.387676 10,510,043
Van Eck - Gold and Natural Resources Fund:
Tax qualified......................................... 720,611 11.453100 8,253,230
Non-tax qualified..................................... 1,314,047 11.453100 15,049,912
Van Eck - Worldwide Bond Fund:
Tax qualified......................................... 688,208 11.473340 7,896,044
Non-tax qualified..................................... 986,151 11.473340 11,314,446
Van Kampen American Capital - Real Estate
Securities Fund:
Tax qualified......................................... 69,755 10.759998 750,564
Non-tax qualified..................................... 131,252 10.759998 1,412,271
Warburg Pincus - International Equity Portfolio:
Tax qualified......................................... 707,567 10.655759 7,539,663
Non-tax qualified..................................... 1,351,263 10.655759 14,398,733
Warburg Pincus - Small Company Growth Portfolio:
Tax qualified......................................... 972,182 12.423899 12,078,291
Non-tax qualified..................................... 1,536,271 12.423899 19,086,476
Reserves for annuity contracts in payout phase: ========= =========
Tax qualified......................................... 1,425,295
Non-tax qualified..................................... 1,518,928
--------------
$8,834,896,021
==============
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 13
- --------------------------------------------------------------------------------
SCHEDULE I
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R)
NATIONWIDE INSURANCE ENTERPRISE ANNUITY CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULE OF CHANGES IN UNIT VALUE
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
DrySRGro DryStkIx FkdEqInc FidGro FidHiInc FidOSeas FidAsMgr
---------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1995**
Beginning unit value - Jan. 1 $10.000000 10.000000 10.000000 10.000000 10.000000 10.000000 10.000000
- ---------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .284361 .133565 .055400 .000000 .000000 .000000 .000000
- ---------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .059585 .455824 .688141 (.343684) .168653 .498416 .547401
- ---------------------------------------------------------------------------------------------------------------------
Contract charges (.013456) (.013683) (.013735) (.012999) (.013287) (.013485) (.013540)
- ---------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.330490 10.575706 10.729806 9.643317 10.155366 10.484931 10.533861
- ---------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 3%(b) 6%(b) 7%(b) (4)%(b) 2%(b) 5%(b) 5%(b)
=====================================================================================================================
<CAPTION>
FidContP NWGvtBd
--------- ---------
<S> <C> <C>
1995**
Beginning unit value - Jan. 1 10.000000 10.000000
- ---------------------------------------------------------
Reinvested capital gains
and dividends .131621 .160077
- ---------------------------------------------------------
Unrealized gain (loss) .089202 .115777
- ---------------------------------------------------------
Contract charges (.013341) (.013359)
- ---------------------------------------------------------
Ending unit value - Dec. 31 10.207482 10.262495
- ---------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 2%(b) 3%(b)
=========================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** These investment options were not available prior to 1995 and no other
investment options were being utilized.
<PAGE> 14
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R)
NATIONWIDE INSURANCE ENTERPRISE ANNUITY CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULE OF CHANGES IN UNIT VALUE
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
NWMyMkt NWSmCoFd NWTotRet NBGro NBLtdMat
------- -------- -------- ----- --------
<S> <C> <C> <C> <C> <C>
1995**
Beginning unit value - Jan. 1 $10.000000 10.000000 10.000000 10.000000 10.000000
- ---------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .090135 .017460 .616695 .000000 .000000
- ---------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 1.407776 (.102353) (.015308) .193905
- ---------------------------------------------------------------------------------------------
Contract charges (.013281) (.014199) (.013625) (.013325) (.013312)
- ---------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.076854 11.411037 10.500717 9.971367 10.180593
- ---------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 1%(b) 14%(b) 5%(b) 0%(b) 2%(b)
=============================================================================================
<CAPTION>
NBPart OppBdFd OppGlSec OppMult
------ ------- -------- -------
<S> <C> <C> <C> <C>
1995**
Beginning unit value - Jan. 1 10.000000 10.000000 10.000000 10.000000
- -------------------------------------------------------------------------------
Reinvested capital gains
and dividends .000000 .170891 .000000 .105143
- -------------------------------------------------------------------------------
Unrealized gain (loss) .583646 .129602 .100810 .210984
- -------------------------------------------------------------------------------
Contract charges (.013600) (.013364) (.013127) (.013435)
- -------------------------------------------------------------------------------
Ending unit value - Dec. 31 10.570046 10.287129 10.087683 10.302692
- -------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 6%(b) 3%(b) 1%(b) 3%(b)
===============================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** These investment options were not available prior to 1995 and no other
investment options were being utilized.
<PAGE> 15
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R)
NATIONWIDE INSURANCE ENTERPRISE ANNUITY CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULE OF CHANGES IN UNIT VALUE
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
StDisc2 StSpec2 TCIgro TCIInt VEGoldNR
------- ------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
1995**
Beginning unit value - Jan. 1 $10.000000 10.000000 10.000000 10.000000 10.000000
- ---------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .134105 .031024 .000000 .000000 .053476
- ---------------------------------------------------------------------------------------------
Unrealized gain (loss) .347815 .570573 (.106657) .369293 1.021372
- ---------------------------------------------------------------------------------------------
Contract charges (.013634) (.013648) (.013062) (.013316) (.014253)
- ---------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.468286 10.587949 9.880281 10.355977 11.060595
- ---------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 5%(b) 6%(b) (1)%(b) 4%(b) 11%(b)
=============================================================================================
<CAPTION>
VEwrldBd VKACRESec WPintEQ WPSmCoGr
-------- --------- ------- --------
<S> <C> <C> <C> <C>
1995**
Beginning unit value - Jan. 1 10.000000 10.000000 10.000000 10.000000
- -----------------------------------------------------------------------------
Reinvested capital gains
and dividends .187333 .090508 .075167 .000000
- -----------------------------------------------------------------------------
Unrealized gain (loss) (.060143) .520696 .301322 1.168850
- -----------------------------------------------------------------------------
Contract charges (.013272) (.013423) (.013320) (.013923)
- -----------------------------------------------------------------------------
Ending unit value - Dec. 31 10.113918 10.597781 10.363169 11.154927
- -----------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 1%(b) 6%(b) 4%(b) 12%(b)
=============================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** These investment options were not available prior to 1995 and no other
investment options were being utilized.
<PAGE> 16
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R) CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
AVISGro+ AVISHiYld+ AVISGvt+ DrySRGro DryStkIx FidEqInc FidGro
-------- ---------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $16.632869 17.247186 15.872495 10.721141 10.087774 18.646331 25.451479
- --------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.970200 1.862872 1.241711 .391978 .361278 1.458073 .140639
- --------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.537128 1.870069 1.184664 3.289326 3.325716 5.043000 8.817717
- --------------------------------------------------------------------------------------------------------------------
Contract charges (.260145) (.250675) (.221798) (.162937) (.155588) (.283825) (.403783)
- --------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $21.880052 20.729452 18.077072 14.239508 13.619180 24.863579 34.006052
- --------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 32% 20% 14% 33% 35% 33% 34%
====================================================================================================================
1994
Beginning unit value - Jan. 1 $16.767635 18.696382 16.810323 10.702195 10.130946 17.644458 25.790764
- --------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .539769 1.648226 1.072204 .276343 .283238 1.324090 1.551366
- --------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.458197) (2.863015) (1.799954) (.117315) (.195244) (.084066) (1.565204)
- --------------------------------------------------------------------------------------------------------------------
Contract charges (.216338) (.234407) (.210078) (.140082) (.131166) (.238151) (.325447)
- --------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $16.632869 17.247186 15.872495 10.721141 10.087774 18.646331 25.451479
- --------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (1)% (8)% (6)% 0% 0% 6% (1)%
====================================================================================================================
1993
Beginning unit value - Jan. 1 $14.603954 16.269615 15.319654 10.000000 10.000000 15.123262 21.890060
- --------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .676117 1.606197 1.097138 .031105 1.497786 .440973 .486821
- --------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.690570 1.051273 .607970 .703067 (1.333974) 2.298480 3.727181
- --------------------------------------------------------------------------------------------------------------------
Contract charges (.203006) (.230703) (.214439) (.031977) (.032866) (.218257) (.313298)
- --------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $16.767635 18.696382 16.810323 10.702195 10.130946 17.644458 25.790764
- --------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 15% 15% 10% 7%(b) 1%(b) 17% 18%
====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
FidHiInc FidOSeas FidAsMgr FidContP NWCapApp
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 18.327364 13.701507 15.641016 10.000000 11.311683
- -------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.326946 .104797 .328525 .142778 .642190
- -------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.428014 1.210063 2.303674 .998371 2.653706
- -------------------------------------------------------------------------------------------
Contract charges (.265248) (.183736) (.217188) (.069649) (.164960)
- -------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 21.817076 14.832631 18.056027 11.071500 14.442619
- -------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 19% 8% 15% 11%(b) 28%
===========================================================================================
1994
Beginning unit value - Jan. 1 18.859652 13.646118 16.874276 ** 11.564256
- -------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.728139 .070437 .820188 .182737
- -------------------------------------------------------------------------------------------
Unrealized gain (loss) (2.016825) .168983 (1.841072) (.286833)
- -------------------------------------------------------------------------------------------
Contract charges (.243602) (.184031) (.212376) (.148477)
- -------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 18.327364 13.701507 15.641016 11.311683
- -------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (3)% 0% (7)% (2)%
===========================================================================================
1993
Beginning unit value - Jan. 1 15.855840 10.074553 14.123234 ** 10.689287
- -------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.303797 .235418 .655581 .260100
- -------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.928892 3.494272 2.296222 .755961
- -------------------------------------------------------------------------------------------
Contract charges (.228877) (.158125) (.200761) (.141092)
- -------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 18.859652 13.646118 16.874276 11.564256
- -------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 19% 35% 19% 8%
===========================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance
charge discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** This investment option was not being utilized or was not available.
+ See note 1(b).
<PAGE> 17
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R) CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
NWGvtBd NWGvtBd NWTotRet NWTotRet
Qual Non-Qual NWMyMkt NWSmCoFd Qual Non-Qual
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $25.309101 25.242252 20.457373 10.000000 40.926247 39.872391
---------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.790910 1.786181 1.150096 .017459 4.054856 3.950443
---------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.924333 2.916602 .000000 1.418317 7.778269 7.577969
---------------------------------------------------------------------------------------------------------------------------
Contract charges (.360588) (.359634) (.273328) (.025641) (.611419) (.595673)
---------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $29.663756 29.585401 21.334141 11.410135 52.147953 50.805130
---------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 17% 17% 4% 14%(b) 27% 27%
===========================================================================================================================
1994
Beginning unit value - Jan. 1 $26.497619 26.427634 19.951530 ** 41.023082 39.966728
---------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.662261 1.657870 .769331 2.069920 2.016621
---------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (2.516459) (2.509816) .000000 (1.626696) (1.584802)
---------------------------------------------------------------------------------------------------------------------------
Contract charges (.334320) (.333436) (.263488) (.540059) (.526156)
---------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $25.309101 25.242252 20.457373 40.926247 39.872391
---------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (4)% (4)% 3% 0% 0%
===========================================================================================================================
1993
Beginning unit value - Jan. 1 $24.513489 24.448737 19.672720 ** 37.471598 36.506693
---------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.565876 1.561741 .538378 1.528737 1.489372
---------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .758226 .756217 .000000 2.538282 2.472924
---------------------------------------------------------------------------------------------------------------------------
Contract charges (.339972) (.339061) (.259568) (.515535) (.502261)
---------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $26.497619 26.427634 19.951530 41.023082 39.966728
---------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 8% 8% 1% 9% 9%
===========================================================================================================================
<CAPTION>
NBGro NBLtdMat NBPart OppBdFd OppGlSec OppMult
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 21.247525 14.896724 10.017795 14.531774 11.307851 13.216172
---------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .751645 .827026 .081856 1.000174 .297358 1.064619
---------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 5.960166 .791918 3.550121 1.454423 (.045704) 1.742703
---------------------------------------------------------------------------------------------------------------------------
Contract charges (.333092) (.204189) (.155521) (.205045) (.148305) (.192330)
---------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 27.626244 16.311479 13.494251 16.781326 11.411200 15.831164
---------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 30% 9% 35% 15% 1% 20%
===========================================================================================================================
1994
Beginning unit value - Jan. 1 22.656907 15.115753 10.000000 15.013579 12.151882 13.655607
---------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 2.730116 .638336 .000000 .845781 .214070 .695235
---------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (3.855326) (.662388) .072563 (1.135198) (.900281) (.959283)
---------------------------------------------------------------------------------------------------------------------------
Contract charges (.284172) (.194977) (.054768) (.192388) (.157820) (.175387)
---------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 21.247525 14.896724 10.017795 14.531774 11.307851 13.216172
---------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (6)% (1)% 0%(b) (3)% (7)% (3)%
===========================================================================================================================
1993
Beginning unit value - Jan. 1 21.495392 14.362908 ** 13.456350 10.000000 11.932236
---------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .498087 .590488 .935484 .000000 .527244
---------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .947061 .357208 .810882 2.187556 1.363520
---------------------------------------------------------------------------------------------------------------------------
Contract charges (.283633) (.194851) (.189137) (.035674) (.167393)
---------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 22.656907 15.115753 15.013579 12.151882 13.655607
---------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 5% 5% 12% 22%(b) 14%
===========================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance
charge discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** This investment option was not being utilized or was not available.
<PAGE> 18
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R) CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
StDisc2 StIntStk2 StSpec2 TCIBal TCIGro TCIInt
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $12.143604 10.000000 14.551898 10.801286 19.378026 9.392316
--------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .211635 .041084 .752969 .305744 .022298 .000000
--------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 4.041557 .209464 2.978530 1.961261 5.972516 1.136498
--------------------------------------------------------------------------------------------------------------------------------
Contract charges (.184387) (.024078) (.211675) (.155311) (.297982) (.126264)
--------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $16.212409 10.226470 18.071722 12.912980 25.074858 10.402550
--------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 34% 2%(b) 24% 20% 29% 11%
================================================================================================================================
1994
Beginning unit value - Jan. 1 $13.003747 ** 14.230988 10.876699 19.864882 10.000000
--------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .971108 .407882 .260548 .002124 .000000
--------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.670219) .103551 (.194362) (.235006) (.554314)
--------------------------------------------------------------------------------------------------------------------------------
Contract charges (.161032) (.190523) (.141599) (.253974) (.053370)
--------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $12.143604 14.551898 10.801286 19.378026 9.392316
--------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (7)% 2% (1)% (2)% (6)%(b)
================================================================================================================================
1993
Beginning unit value - Jan. 1 $10.796708 ** 11.519061 10.232829 18.244594 **
--------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains.
and dividends .809269 .057233 .193822 .049563
--------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.547378 2.824331 .588305 1.819573
--------------------------------------------------------------------------------------------------------------------------------
Contract charges (.149608) (.169637) (.138257) (.248848)
--------------------------------------------------------------------------------------------------------------------------------
Ending unit value Dec. 31 $13.003747 14.230988 10.876699 19.864882
--------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 20% 24% 6% 9%
================================================================================================================================
<CAPTION>
VEGoldNR VEWrldBd VKACRESec WPIntEq WPSmCoGr
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 12.728311 12.465907 10.000000 10.000000 10.000000
----------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .125379 1.008457 .091958 .077344 .000000
----------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.262065 1.139655 .739393 .650502 2.501564
----------------------------------------------------------------------------------------------------------------------------
Contract charges (.171445) (.180674) (.066000) (.066787) (.071491)
----------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 13.944310 14.433345 10.765351 10.661059 12.430073
----------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 10% 16% 8%(b) 7%(b) 24%(b)
============================================================================================================================
1994
Beginning unit value - Jan. 1 13.544828 12.798654 ** ** **
----------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .068031 .051478
----------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.711769) (.222396)
----------------------------------------------------------------------------------------------------------------------------
Contract charges (.172779) (.161829)
----------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 12.728311 12.465907
----------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (6)% (3)%
============================================================================================================================
1993
Beginning unit value - Jan. 1 8.325308 12.031194 ** ** **
----------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains.
and dividends .039162 .966990
----------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 5.323236 (.037324)
----------------------------------------------------------------------------------------------------------------------------
Contract charges (.142878) (.162206)
----------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 13.544828 12.798654
----------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 63% 6%
============================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** This investment option was not being utilized or was not available.
- --------------------------------------------------------------------------------
<PAGE> 19
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R)
AMERICA'S VISION ANNUITY(SM) CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
DrySRGro DryStkIx FidEqInc FidGro FidHiInc
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $10.146464 10.046079 10.760332 10.082986 9.844496
--------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .370596 .359517 .841191 .055711 .712698
--------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.111650 3.310456 2.908537 3.491973 1.303393
--------------------------------------------------------------------------------------------------------------------
Contract charges (.166072) (.166849) (.176390) (.172265) (.153436)
--------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $13.462638 13.549203 14.333670 13.458405 11.707151
--------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 33% 35% 33% 33% 19%
====================================================================================================================
1994***
Beginning unit value - Jan. 1 $10.138790 10.099271 10.192462 10.227729 10.140663
--------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .261532 .282153 .764674 .615160 .929117
--------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.110944) (.194528) (.048662) (.620912) (1.084223)
--------------------------------------------------------------------------------------------------------------------
Contract charges (.142914) (.140817) (.148142) (.138991) (.141061)
--------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.146464 10.046079 10.760332 10.082986 9.844496
--------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 0% (1)% 6% (1)% (3)%
====================================================================================================================
<CAPTION>
FidOSeas FidAsMgr FidContP NWCapApp NWGvtBd
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 10.536141 9.571852 10.000000 10.044095 9.562079
--------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .080579 .201029 .142710 .569727 .676196
--------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .929853 1.408870 .998320 2.355148 1.104438
--------------------------------------------------------------------------------------------------------------------
Contract charges (.152154) (.143141) (.075034) (.157742) (.146712)
--------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 11.394419 11.038610 11.065996 12.811228 11.196001
--------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 8% 15% 11%(b) 28% 17%
====================================================================================================================
1994***
Beginning unit value - Jan. 1 10.504149 10.337032 ** 10.278752 10.021251
--------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .054214 .502389 .162311 .628252
--------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .130333 (1.127465) (.254834) (.951262)
--------------------------------------------------------------------------------------------------------------------
Contract charges (.152555) (.140104) (.142134) (.136162)
--------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 10.536141 9.571852 10.044095 9.562079
--------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 0% (7)% (2)% (5)%
====================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** This investment option was not being utilized or was not available.
*** These investment options were not available prior to 1994.
<PAGE> 20
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R)
AMERICA'S VISION ANNUITY(SM) CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
NWMyMkt NWSmCoFd NWTotRet NBGro NBLtdMat NBPart
------- -------- -------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $10.254838 10.000000 10.057257 9.458916 9.860649 10.013591
- -------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .576257 .017456 .995563 .334560 .547347 .081808
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 1.418186 1.910936 2.652367 .523785 3.546970
- -------------------------------------------------------------------------------------------------------
Contract charges (.147557) (.027624) (.161805) (.159679) (.145558) (.167400)
- -------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.683538 11.408018 12.801951 12.286164 10.786223 13.474969
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 4% 14%(b) 27% 30% 9% 35%
=======================================================================================================
1994***
Beginning unit value - Jan. 1 $10.011385 ** 10.091256 10.096549 10.015749 10.000000
- -------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .385849 .508763 1.216477 .422915 .000000
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (.399693) (1.717723) (.438889) .072593
- -------------------------------------------------------------------------------------------------------
Contract charges (.142396) (.143069) (.136387) (.139126) (.059002)
- -------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.254838 10.057257 9.458916 9.860649 10.013591
- -------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 2% 0% (6)% (2)% 0%(b)
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
OppBdFd OppGlSec OppMult StDisc2
------- -------- ------- -------
<S> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 9.733460 10.394970 9.830640 10.071698
- ------------------------------------------------------------------------------
Reinvested capital gains
and dividends .669514 .273289 .791531 .175352
- ------------------------------------------------------------------------------
Unrealized gain (loss) .973805 (.042048) 1.295766 3.350345
- ------------------------------------------------------------------------------
Contract charges (.147902) (.146831) (.154058) (.164681)
- ------------------------------------------------------------------------------
Ending unit value - Dec. 31 11.228877 10.479380 11.763879 13.432714
- ------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 15% 1% 20% 33%
==============================================================================
1994***
Beginning unit value - Jan. 1 10.066342 11.182167 10.167774 10.796000
- ------------------------------------------------------------------------------
Reinvested capital gains
and dividends .566682 .196942 .517326 .805515
- ------------------------------------------------------------------------------
Unrealized gain (loss) (.760661) (.827742) (.713828) (1.385836)
- ------------------------------------------------------------------------------
Contract charges (.138903) (.156397) (.140632) (.143981)
- ------------------------------------------------------------------------------
Ending unit value - Dec. 31 9.733460 10.394970 9.830640 10.071698
- ------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (3)% (7)% (3)% (7)%
==============================================================================
<FN>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** This investment option was not being utilized or was not available.
*** These investment options were not available prior to 1994.
</TABLE>
<PAGE> 21
SCHEDULE I, CONTINUED
NATIONWIDE VARIABLE ACCOUNT - II
THE BEST OF AMERICA(R)
AMERICA'S VISION ANNUITY(SM) CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
StIntStk2 StSpec2 TCIBal TCIGro TCIInt VEGoldNR
--------- ------- ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $10.000000 10.710138 9.975959 9.896469 9.388381 10.464922
- --------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .041077 .553997 .282199 .011387 .000000 .103018
- --------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .209428 2.190922 1.810577 3.048970 1.135219 1.036957
- --------------------------------------------------------------------------------------------------------
Contract charges (.025935) (.167769) (.154469) (.163891) (.135924) (.151797)
- --------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.224570 13.287288 11.914266 12.792935 10.387676 11.453100
- --------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 2%(b) 24% 19% 29% 11% 9%
========================================================================================================
1994***
Beginning unit value - Jan. 1 ** $10.484543 10.055760 10.155359 10.000000 11.147499
- --------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .300283 .240728 .001086 .000000 .055957
- --------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .076473 (.179560) (.120150) (.554133) (.585405)
- --------------------------------------------------------------------------------------------------------
Contract charges (.151161) (.140969) (.139826) (.057486) (.153129)
- --------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $10.710138 9.975959 9.896469 9.388381 10.464922
- --------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 2% (1)% (3)% (6)%(b) (6)%
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
VEWrldBd VKACRESec WPIntEq WPSmCoGr
-------- --------- ------- --------
<S> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 9.919400 10.000000 10.000000 10.000000
- ------------------------------------------------------------------------------
Reinvested capital gains
and dividends .802034 .091916 .077309 .000000
- ------------------------------------------------------------------------------
Unrealized gain (loss) .906733 .739173 .650383 2.500906
- ------------------------------------------------------------------------------
Contract charges (.154827) (.071091) (.071933) (.077007)
- ------------------------------------------------------------------------------
Ending unit value - Dec. 31 11.473340 10.759998 10.655759 12.423899
- ------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 16% 8%(b) 7%(b) 24%(b)
==============================================================================
1994***
Beginning unit value - Jan. 1 10.194477 ** ** **
- ------------------------------------------------------------------------------
Reinvested capital gains
and dividends .040987
- ------------------------------------------------------------------------------
Unrealized gain (loss) (.177244)
- ------------------------------------------------------------------------------
Contract charges (.138820)
- ------------------------------------------------------------------------------
Ending unit value - Dec. 31 9.919400
- ------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (3)%
==============================================================================
<FN>
* An annualized rate of return cannot be determined as:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not being utilized for the entire year
indicated.
** This investment option was not being utilized or was not available.
*** These investment options were not available prior to 1994.
</TABLE>
See note 3.
<PAGE> 61
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Nationwide Life Insurance Company:
We have audited the consolidated financial statements of Nationwide Life
Insurance Company (a wholly owned subsidiary of Nationwide Corporation) and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Participating insurance and the related surplus are discussed in note 12. The
Company and its counsel are of the opinion that the ultimate ownership of the
participating surplus in excess of the contemplated equitable policyholder
dividends belongs to the shareholder. The accompanying consolidated financial
statements are presented on such basis.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
In 1994, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
In 1993, the Company adopted the provisions of SFAS No. 109, Accounting for
Income Taxes and SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions.
KPMG Peat Marwick LLP
Columbus, Ohio
February 26, 1996
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Balance Sheets
December 31, 1995 and 1994
(000's omitted)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ----------------- ----------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $13,438,630 in 1995; $8,318,865 in 1994) $ 14,167,377 8,045,906
Equity securities (cost $27,362 in 1995; $18,372 in 1994) 33,718 24,713
Fixed maturities held-to-maturity, at amortized cost (fair value $3,602,310 in 1994) - 3,688,787
Mortgage loans on real estate 4,786,599 4,222,284
Real estate 239,089 252,681
Policy loans 370,908 340,491
Other long-term investments 67,280 63,914
Short-term investments (note 13) 45,732 131,643
----------- -----------
19,710,703 16,770,419
----------- -----------
Cash 10,485 7,436
Accrued investment income 239,881 220,540
Deferred policy acquisition costs 1,094,195 1,064,159
Deferred Federal income tax -- 36,515
Other assets 795,169 790,603
Assets held in Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
$40,614,111 31,112,133
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Future policy benefits and claims (notes 6 and 8) 18,200,128 16,321,461
Policyholders' dividend accumulations 353,554 338,058
Other policyholder funds 71,155 72,770
Accrued Federal income tax (note 7):
Current 34,064 13,126
Deferred 238,877 -
----------- -----------
272,941 13,126
----------- -----------
Other liabilities 284,143 235,778
Liabilities related to Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
37,945,599 29,203,654
----------- -----------
Shareholder's equity (notes 3, 4, 5, 7, 12 and 13):
Capital shares, $1 par value. Authorized 5,000 shares, issued and
outstanding 3,815 shares 3,815 3,815
Additional paid-in capital 673,782 622,753
Retained earnings 1,606,607 1,401,579
Unrealized gains (losses) on securities available-for-sale, net 384,308 (119,668)
----------- -----------
2,668,512 1,908,479
----------- -----------
Commitments and contingencies (notes 9 and 15)
$40,614,111 31,112,133
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues (note 16):
Traditional life insurance premiums $ 274,957 209,538 215,715
Accident and health insurance premiums 509,658 324,524 312,655
Universal life and investment product policy charges 307,676 239,021 188,057
Net investment income (note 5) 1,482,980 1,289,501 1,204,426
Realized gains (losses) on investments (notes 5 and 13) 836 (16,384) 113,673
---------- ---------- ----------
2,576,107 2,046,200 2,034,526
---------- ---------- ----------
Benefits and expenses:
Benefits and claims 1,656,287 1,279,763 1,236,906
Provision for policyholders' dividends on participating policies (note 12) 48,074 46,061 53,189
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Other operating costs and expenses 458,970 352,402 329,396
---------- ---------- ----------
2,256,375 1,772,970 1,721,625
---------- ---------- ----------
Income before Federal income tax expense and cumulative effect of
changes in accounting principles 319,732 273,230 312,901
---------- ---------- ----------
Federal income tax expense (note 7):
Current 103,464 79,847 75,124
Deferred 3,790 9,657 31,634
---------- ---------- ----------
107,254 89,504 106,758
---------- ---------- ----------
Income before cumulative effect of changes in accounting principles 212,478 183,726 206,143
Cumulative effect of changes in accounting principles, net (note 3) -- -- 5,365
---------- ---------- ----------
Net income $ 212,478 183,726 211,508
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Additional on securities Total
Capital paid-in Retained available-for- shareholder's
shares capital earnings sale, net equity
----------- ----------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
1993:
Balance, beginning of year $ 3,815 311,753 1,024,150 90,524 1,430,242
Capital contributions -- 111,000 -- -- 111,000
Dividends paid to shareholder -- -- (17,805) -- (17,805)
Net income -- -- 211,508 -- 211,508
Unrealized losses on equity securities, net -- -- -- (83,777) (83,777)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 422,753 1,217,853 6,747 1,651,168
========== ========== ========= ========== ==========
1994:
Balance, beginning of year 3,815 422,753 1,217,853 6,747 1,651,168
Capital contribution -- 200,000 -- -- 200,000
Net income -- -- 183,726 -- 183,726
Adjustment for change in accounting for
certain investments in debt and equity
securities, net (note 3) -- -- -- 216,915 216,915
Unrealized losses on securities available-
for-sale, net -- -- -- (343,330) (343,330)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 622,753 1,401,579 (119,668) 1,908,479
========== ========== ========== ========== ==========
1995:
Balance, beginning of year 3,815 622,753 1,401,579 (119,668) 1,908,479
Capital contribution (note 13) -- 51,029 -- (4,111) 46,918
Dividends paid to shareholder -- -- (7,450) -- (7,450)
Net income -- -- 212,478 -- 212,478
Unrealized gains on securities available-
for-sale, net -- -- -- 508,087 508,087
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 673,782 1,606,607 384,308 2,668,512
========== ========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
-------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 212,478 183,726 211,508
Adjustments to reconcile net income to net cash provided by operating
activities:
Capitalization of deferred policy acquisition costs (349,456) (264,434) (191,994)
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Amortization and depreciation 10,319 6,207 11,156
Realized losses (gains) on invested assets, net 717 15,949 (113,648)
Deferred Federal income tax expense (benefit) 4,023 (2,166) (6,006)
Increase in accrued investment income (19,341) (29,654) (4,218)
Increase in other assets (3,227) (112,566) (549,277)
Increase in policy liabilities 198,200 1,038,641 509,370
Increase in policyholders' dividend accumulations 15,496 15,372 17,316
Increase in accrued Federal income tax payable 20,938 832 16,838
Increase in other liabilities 48,365 17,826 26,958
Other, net (20,556) (19,303) (11,745)
----------- ----------- ------------
Net cash provided by operating activities 211,000 945,174 18,392
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 706,442 579,067 --
Proceeds from sale of securities available-for-sale 131,420 247,876 247,502
Proceeds from maturity of fixed maturities held-to-maturity 633,173 516,003 1,192,093
Proceeds from sale of fixed maturities -- -- 33,959
Proceeds from repayments of mortgage loans on real estate 215,134 220,744 146,047
Proceeds from sale of real estate 48,477 46,713 23,587
Proceeds from repayments of policy loans and sale of other invested assets 79,620 134,998 59,643
Cost of securities available-for-sale acquired (2,232,047) (2,569,672) (12,550)
Cost of fixed maturities held-to-maturity acquired (669,449) (675,835) (2,016,831)
Cost of mortgage loans on real estate acquired (821,078) (627,025) (475,336)
Cost of real estate acquired (10,970) (15,962) (8,827)
Policy loans issued and other invested assets acquired (92,904) (118,012) (76,491)
----------- ----------- ------------
Net cash used in investing activities (2,012,182) (2,261,105) (887,204)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from capital contributions 46,918 200,000 111,000
Dividends paid to shareholder (7,450) -- (17,805)
Increase in universal life and investment product account balances 3,202,135 3,640,958 2,249,740
Decrease in universal life and investment product account balances (1,523,283) (2,449,580) (1,458,504)
----------- ----------- -----------
Net cash provided by financing activities 1,718,320 1,391,378 884,431
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (82,862) 75,447 15,619
Cash and cash equivalents, beginning of year 139,079 63,632 48,013
----------- ----------- -----------
Cash and cash equivalents, end of year $ 56,217 139,079 63,632
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(000's omitted)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Nationwide Life Insurance Company (NLIC) is a wholly owned subsidiary of
Nationwide Corporation (Corp.). Wholly-owned subsidiaries of NLIC include
Nationwide Life and Annuity Insurance Company (NLAIC) (formerly known as
Financial Horizons Life Insurance Company), West Coast Life Insurance
Company (WCLIC), Employers Life Insurance Company of Wausau and
subsidiaries (ELICW), National Casualty Company (NCC) and Nationwide
Financial Services, Inc. (NFS). NLIC and its subsidiaries are
collectively referred to as "the Company."
NLIC, NLAIC, WCLIC and ELICW are life and accident and health insurers
and NCC is a property and casualty insurer. The Company is licensed in
all 50 states, the District of Columbia, the Virgin Islands and Puerto
Rico. The Company offers a full range of life insurance, health insurance
and annuity products through exclusive agents, brokers and other
distribution channels and is subject to competition from other insurers
throughout the United States. The Company is subject to regulation by the
Insurance Departments of states in which it is licensed, and undergoes
periodic examinations by those departments.
The following is a description of the most significant risks facing
life and health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce insurer
profits, new legal theories or insurance company insolvencies through
guaranty fund assessments may create costs for the insurer beyond
those currently recorded in the consolidated financial statements. The
Company mitigates this risk by offering a wide range of products and
by operating throughout the United States, thus reducing its exposure
to any single product or jurisdiction, and also by employing
underwriting practices which identify and minimize the adverse impact
of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by the
Company will default or that other parties, including reinsurers,
which owe the Company money, will not pay. The Company minimizes this
risk by adhering to a conservative investment strategy, by maintaining
sound reinsurance and credit and collection policies and by
providing for any amounts deemed uncollectible.
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This change
in rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent
that liabilities come due more quickly than assets mature, an insurer
would have to borrow funds or sell assets prior to maturity and
potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities. See note 4.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities as of the
date of the consolidated financial statements and the reported amounts of
revenues and expenses for the reporting period. Actual results could differ
significantly from those estimates.
The most significant estimates include those used in determining deferred
policy acquisition costs, valuation allowances for mortgage loans on real
estate and real estate investments and the liability for future policy benefits
and claims. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
(a) CONSOLIDATION POLICY
The December 31, 1995 consolidated financial statements include the
accounts of NLIC and its wholly owned subsidiaries NLAIC, WCLIC, ELICW, NCC
and NFS. The December 31, 1994 and 1993 consolidated financial statements
include the accounts of NLIC, NLAIC, WCLIC, NCC and NFS. The December 31,
1994 consolidated balance sheet also includes the accounts of ELICW, which
was acquired by NLIC effective December 31, 1994. See Note 13. All
significant intercompany balances and transactions have been eliminated.
(b) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities and
equity securities as either held-to-maturity, available-for-sale or
trading. Fixed maturity securities are classified as held-to-maturity when
the Company has the positive intent and ability to hold the securities to
maturity and are stated at amortized cost. Fixed maturity securities not
classified as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the unrealized gains
and losses, net of adjustments to deferred policy acquisition costs and
deferred Federal income tax, reported as a separate component of
shareholder's equity. The adjustment to deferred policy acquisition costs
represents the change in amortization of deferred policy acquisition costs
that would have been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed maturity
securities classified as held-to-maturity or trading as of
December 31, 1995.
Mortgage loans on real estate are carried at the unpaid principal balance
less valuation allowances. The Company provides valuation allowances for
impairments of mortgage loans on real estate based on a review by portfolio
managers. The measurement of impaired loans is based on the present value
of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the fair value of the collateral, if
the loan is collateral dependent. Loans in foreclosure and loans considered
to be impaired are placed on non-accrual status. Interest received on
non-accrual status mortgage loans on real estate are included in interest
income in the period received.
Real estate is carried at cost less accumulated depreciation and valuation
allowances. Other long-term investments are carried on the equity basis,
adjusted for valuation allowances.
Realized gains and losses on the sale of investments are determined on the
basis of specific security identification. Estimates for valuation
allowances and other than temporary declines are included in realized gains
and losses on investments.
In March, 1995, the Financial Accounting Standards Board (FASB) issued
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121 - ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
(SFAS 121). SFAS 121 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
The statement is effective for fiscal years beginning after December 15,
1995 and earlier application is permitted. Previously issued consolidated
financial statements shall not be restated. The Company will adopt SFAS 121
in 1996 and the impact on the consolidated financial statements is not
expected to be material.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(c) REVENUES AND BENEFITS
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums and
benefits and consist primarily of whole life, limited-payment life, term
life and certain annuities with life contingencies. Premiums for
traditional life insurance products are recognized as revenue when due.
Benefits and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This association
is accomplished by the provision for future policy benefits and the
deferral and amortization of policy acquisition costs.
UNIVERSAL LIFE AND INVESTMENT PRODUCTS: Universal life products include
universal life, variable universal life and other interest-sensitive life
insurance policies. Investment products consist primarily of individual and
group deferred annuities, annuities without life contingencies and
guaranteed investment contracts. Revenues for universal life and investment
products consist of asset fees, cost of insurance, policy administration
and surrender charges that have been earned and assessed against policy
account balances during the period. Policy benefits and claims that are
charged to expense include benefits and claims incurred in the period in
excess of related policy account balances and interest credited to policy
account balances.
ACCIDENT AND HEALTH INSURANCE: Accident and health insurance premiums
are recognized as revenue over the terms of the policies. Policy claims are
charged to expense in the period that the claims are incurred.
(d) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For traditional life and
individual health insurance products, these deferred policy acquisition
costs are predominantly being amortized with interest over the premium
paying period of the related policies in proportion to the ratio of actual
annual premium revenue to the anticipated total premium revenue. Such
anticipated premium revenue was estimated using the same assumptions as
were used for computing liabilities for future policy benefits. For
universal life and investment products, deferred policy acquisition costs
are being amortized with interest over the lives of the policies in
relation to the present value of estimated future gross profits from
projected interest margins, asset fees, cost of insurance, policy
administration and surrender charges. For years in which gross profits are
negative, deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs are
adjusted to reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale as described in note 2(b).
(e) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the consolidated statements of income and cash
flows except for the fees the Company receives for administrative services
and risks assumed.
(f) FUTURE POLICY BENEFITS
Future policy benefits for traditional life and individual health
insurance policies have been calculated using a net level premium method
based on estimates of mortality, morbidity, investment yields and
withdrawals which were used or which were being experienced at the time the
policies were issued, rather than the assumptions prescribed by state
regulatory authorities. See note 6.
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been calculated
based on participants' contributions plus interest credited less applicable
contract charges.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Future policy benefits and claims for collectively renewable long-term
disability policies (primarily discounted at 5.2%) and group long-term
disability policies (primarily discounted at 5.5%) are the present value of
amounts not yet due on reported claims and an estimate of amounts to be
paid on incurred but unreported claims. The impact of reserve discounting
is not material. Future policy benefits and claims on other
group health insurance policies are not discounted.
(g) PARTICIPATING BUSINESS
Participating business represents approximately 45% (45% in 1994 and
48% in 1993) of the Company's ordinary life insurance in force, 72% (72% in
1994 and 1993) of the number of policies in force, and 39% (41% in 1994 and
45% in 1993) of life insurance premiums. The provision for policyholder
dividends is based on current dividend scales. Future dividends are
provided for ratably in future policy benefits based on dividend scales in
effect at the time the policies were issued. Dividend scales are approved
by the Board of Directors.
Income attributable to participating policies in excess of policyholder
dividends is accounted for as belonging to the shareholder. See note 12.
(h) FEDERAL INCOME TAX
NLIC, NLAIC, WCLIC and NCC file a consolidated Federal income tax
return with Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Corp. Through 1994, ELICW filed a consolidated Federal
income tax return with Employers Insurance of Wausau A Mutual Company.
Beginning in 1995, ELICW files a separate Federal income tax return.
In 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES, which required a change
from the deferred method of accounting for income tax of APB Opinion 11 to
the asset and liability method of accounting for income tax. Under the
asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under this method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to
reduce the deferred tax assets to the amounts expected to be realized.
The Company has reported the cumulative effect of the change in method
of accounting for income tax in the 1993 consolidated statement of income.
See note 3.
(i) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense
accounts. Assets and liabilities related to reinsurance ceded are reported
on a gross basis.
(j) CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all short-term investments with original maturities of three
months or less to be cash equivalents.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(k) RECLASSIFICATION
Certain items in the 1994 and 1993 consolidated financial
statements have been reclassified to conform to the 1995
presentation.
(3) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, the Company changed its method of
accounting for certain investments in debt and equity securities in
connection with the issuance of STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 115 - ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. As of January 1, 1994, the Company classified fixed
maturity securities with amortized cost and fair value of $6,593,844
and $7,024,736, respectively, as available-for-sale and recorded the
securities at fair value. Previously, these securities were recorded
at amortized cost. The effect as of January 1, 1994 has been recorded
as a direct credit to shareholder's equity as follows:
<TABLE>
<CAPTION>
<S> <C>
Excess of fair value over amortized cost of fixed maturity
securities available-for-sale $ 430,892
Adjustment to deferred policy acquisition costs (97,177)
Deferred Federal income tax (116,800)
---------
$ 216,915
=========
During 1993, the Company adopted accounting principles in connection
with the issuance of two accounting standards by the FASB. The effect
as of January 1, 1993, the date of adoption, has been recognized in
the 1993 consolidated statement of income as the cumulative effect of
changes in accounting principles, as follows:
Asset/liability method of recognizing income tax (note 2(h)) $ 26,344
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $11,296) (note 11) (20,979)
--------
$ 5,365
========
</TABLE>
(4) BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance
with GAAP. Annual Statements for NLIC and NLAIC, WCLIC, ELICW and NCC,
filed with the Department of Insurance of the State of Ohio (the
Department), California Department of Insurance, Wisconsin Insurance
Department and Michigan Bureau of Insurance, respectively, are prepared
on the basis of accounting practices prescribed or permitted by such
regulatory authorities. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
The statutory capital shares and surplus of NLIC as reported to
regulatory authorities as of December 31, 1995, 1994 and 1993 was
$1,363,031, $1,262,861 and $992,631, respectively. The statutory net
income of NLIC as reported to regulatory authorities for the years
ended December 31, 1995, 1994 and 1993 was $86,529, $76,532 and
$185,943, respectively.
<PAGE> 11
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(5) INVESTMENTS
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 772,589 674,346 --
Equity securities 1,436 550 7,230
Fixed maturities held-to-maturity 232,692 193,009 800,255
Mortgage loans on real estate 410,965 376,783 364,810
Real estate 39,222 40,280 39,684
Short-term investments 12,249 6,990 5,080
Other 61,701 42,831 33,832
---------- ---------- ----------
Total investment income 1,530,854 1,334,789 1,250,891
Less investment expenses 47,874 45,288 46,465
---------- ---------- ----------
Net investment income $1,482,980 1,289,501 1,204,426
========== ========== ==========
</TABLE>
An analysis of realized gains (losses) on investments, net of
valuation allowances, by investment type follows for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- --------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 6,792 (7,120) --
Equity securities 3,435 1,427 129,728
Fixed maturities -- -- 20,225
Mortgage loans on real estate (7,312) (20,462) (28,241)
Real estate and other (2,079) 9,771 (8,039)
-------- -------- --------
$ 836 (16,384) 113,673
======== ======== ========
</TABLE>
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1995 1994
--------------- -------------
<S> <C> <C>
Gross unrealized gains (losses) $ 735,103 (266,618)
Adjustment to deferred policy acquisition costs (143,851) 82,525
Deferred Federal income tax (206,944) 64,425
--------- ---------
$ 384,308 (119,668)
========= =========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturities held-to-maturity
follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 1,001,706 (703,851) --
Equity securities 15 (1,990) (128,837)
Fixed maturities held-to-maturity 86,477 (421,427) 223,392
----------- ----------- -----------
$ 1,088,198 (1,127,268) 94,555
=========== =========== ===========
</TABLE>
<PAGE> 12
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of securities available-for-sale
were as follows as of December 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
-------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 438,109 36,714 (53) 474,770
Obligations of states and political subdivisions 9,742 1,252 (1) 10,993
Debt securities issued by foreign governments 162,442 9,641 (66) 172,017
Corporate securities 8,902,494 524,796 (30,561) 9,396,729
Mortgage-backed securities 3,925,843 196,645 (9,620) 4,112,868
--------- ----------- ----------- -----------
Total fixed maturities 13,438,630 769,048 (40,301) 14,167,377
Equity securities 27,362 6,441 (85) 33,718
---------- ----------- ----------- -----------
$13,465,992 775,489 (40,386) 14,201,095
=========== =========== ============ ===========
</TABLE>
The amortized cost and estimated fair value of securities available-for-sale
and fixed maturities held-to-maturity were as follows as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 393,156 1,794 (18,941) 376,009
Obligations of states and political subdivisions 2,202 55 (21) 2,236
Debt securities issued by foreign governments 177,910 872 (9,205) 169,577
Corporate securities 4,201,738 50,405 (128,698) 4,123,445
Mortgage-backed securities 3,543,859 18,125 (187,345) 3,374,639
---------- ---------- ---------- ---------
Total fixed maturities 8,318,865 71,251 (344,210) 8,045,906
Equity securities 18,372 6,637 (296) 24,713
---------- ---------- ---------- ---------
$8,337,237 77,888 (344,506) 8,070,619
========== ========= ========== =========
FIXED MATURITY SECURITIES HELD-TO-MATURITY
Obligations of states and political subdivisions $ 11,613 92 (255) 11,450
Debt securities issued by foreign governments 16,131 111 (39) 16,203
Corporate securities 3,661,043 34,180 (120,566) 3,574,657
---------- ---------- ---------- ---------
$3,688,787 34,383 (120,860) 3,602,310
========== ========== ========== =========
</TABLE>
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale as of December 31, 1995, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
----------- ------------
<S> <C> <C>
FIXED MATURITY SECURITIES AVAILABLE-FOR-SALE
- --------------------------------------------
Due in one year or less $ 641,490 647,639
Due after one year through five years 5,365,703 5,623,126
Due after five years through ten years 2,477,457 2,609,262
Due after ten years 1,028,137 1,174,482
----------- -----------
9,512,787 10,054,509
Mortgage-backed securities 3,925,843 4,112,868
----------- -----------
$13,438,630 14,167,377
=========== ===========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1995 and 1994
were $131,420 and $247,876, respectively, while proceeds from sales of
investments in fixed maturity securities during 1993 were $33,959. Gross gains
of $7,197 ($3,406 in 1994 and $2,413 in 1993) and gross losses of $2,309
($21,866 in 1994 and $39 in 1993) were realized on those sales.
During 1995, the Company transferred fixed maturity securities classified as
held-to-maturity with amortized cost of $27,929 to available-for-sale
securities due to evidence of a significant deterioration in the issuer's
creditworthiness. The transfer of those fixed maturity securities resulted in
a gross unrealized loss of $4,285.
As permitted by the FASB's Special Report, A GUIDE TO IMPLEMENTATION OF
STATEMENT 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, issued in November, 1995, the Company transferred all of its fixed
maturity securities previously classified as held-to-maturity to
available-for-sale. As of December 14, 1995, the date of transfer, the fixed
maturity securities had amortized cost of $3,705,644, resulting in a gross
unrealized gain of $171,531.
Investments that were non-income producing for the twelve month period
preceding December 31, 1995 amounted to $28,958 ($11,513 for 1994) and
consisted of $8,228 (none in 1994) in fixed maturity securities, $14,740
($11,111 in 1994) in real estate and $5,990 ($402 in 1994) in other long-term
investments.
Real estate is presented at cost less accumulated depreciation of $30,931 in
1995 ($29,275 in 1994) and valuation allowances of $26,250 in 1995 ($27,330 in
1994).
Other long-term investments are presented net of valuation allowances of $457
as of December 31, 1995. There were no such valuation allowances as of December
31, 1994.
As of December 31, 1995, the recorded investment of mortgage loans on real
estate considered to be impaired (under STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN as amended
by STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 118, ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN - INCOME RECOGNITION AND DISCLOSURE) was $44,995,
which includes $23,975 of impaired mortgage loans on real estate for which the
related valuation allowance was $5,276 and $21,020 of impaired mortgage loans
on real estate for which there was no valuation allowance. During 1995, the
average recorded investment in impaired mortgage loans on real estate was
approximately $22,621 and interest income recognized on those loans was $416,
which is equal to interest income recognized using a cash-basis method of
income recognition.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the year ended December 31, 1995:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Allowance, beginning year $ 47,892
Additions charged to operations 7,653
Direct write-downs charged against the allowance (4,850)
--------
Allowance, end of year $ 50,695
========
</TABLE>
Foresclosures of mortgage loans on real estate were $37,187 in 1994 and
mortgage loans on real estate in process of foreclosure or in-substance
foreclosed as of December 31, 1994 totaled $19,878, which approximated fair
value.
Fixed maturity securities with an amortized cost of $13,982 and $11,137 as
of December 31, 1995 and 1994, respectively, were on deposit with various
regulatory agencies as required by law.
(6) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for investment contracts represents
approximately 82% and 81% of the total liability for future policy benefits
as of December 31, 1995 and 1994, respectively. The average interest rate
credited on investment product policies was approximately 6.5%, 6.5% and
7.0% for the years ended December 31, 1995, 1994 and 1993, respectively.
The liability for future policy benefits for traditional life insurance and
individual health insurance policies has been established based upon the
following assumptions:
INTEREST RATES: Interest rates vary as follows:
<TABLE>
<CAPTION>
Health
Year of issue Life Insurance insurance
-------------- ------------------------------------------------------------ ---------------
<S> <C> <C>
1995 7.6%, not graded - permanent contracts with loan provisions 4.5%
7.7%, not graded - all other contracts
1984-1994 6.0% to 10.5%, not graded 5.0% to 6.0%
1966-1983 6.0% to 8.1%, graded over 20 years to 4.0% to 6.6% 3.5% to 6.0%
1965 and prior generally lower than post 1965 issues 3.5% to 4.0%
</TABLE>
WITHDRAWALS: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience.
MORTALITY: Mortality and morbidity rates are based on published tables,
modified for the Company's actual experience.
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the liability for unpaid claims and claim adjustment expenses is
summarized for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 637,998 592,180 760,209
Less reinsurance recoverables 438,761 430,720 547,683
--------- --------- ---------
Net balance, beginning of year 199,237 161,460 212,526
--------- --------- ---------
Incurred related to:
Current year 425,907 273,299 309,721
Prior years (17,203) (26,156) (26,248)
--------- --------- ---------
Total incurred 408,704 247,143 283,473
--------- --------- ---------
Paid related to:
Current year 290,605 175,700 208,978
Prior years 111,353 73,889 125,561
--------- --------- ---------
Total paid 401,958 249,589 334,539
--------- --------- ---------
Unpaid claims of acquired companies 2,542 40,223 --
--------- --------- ---------
Net balance, end of year 208,525 199,237 161,460
Plus reinsurance recoverables 491,321 438,761 430,720
--------- --------- ---------
Balance, end of year $ 699,846 637,998 592,180
========= ========= =========
</TABLE>
Reinsurance recoverables include amounts from affiliates, as discussed in
note 13, of $477,912, $430,936, $430,278 and $534,983 as of December 31,
1995, 1994, 1993 and 1992, respectively.
The provision for claims and claim adjustment expenses for prior years
decreased in each of the three years ended December 31, 1995 due to
lower-than-anticipated costs to settle accident and health insurance claims.
(7) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 179,916 124,044
Fixed maturity securities available-for-sale -- 95,536
Liabilities in Separate Accounts 129,120 94,783
Mortgage loans on real estate and real estate 26,062 25,632
Other policyholder funds 7,752 7,137
Other assets and other liabilities 47,215 57,528
--------- ---------
Total gross deferred tax assets 390,065 404,660
--------- ---------
Deferred tax liabilities:
Deferred policy acquisition costs 312,616 317,224
Fixed maturity securities available-for-sale 266,184 --
Equity securities available-for-sale and other
long-term investments 3,431 3,620
Other 46,711 47,301
--------- ---------
Total gross deferred tax liabilities 628,942 368,145
--------- ---------
$(238,877) 36,515
========= =========
</TABLE>
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company has determined that valuation allowances are not necessary as
of December 31, 1995, 1994 and 1993 based on its analysis of future
deductible amounts. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion
of the total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery of
Federal income tax paid within the statutory carryback period. In
addition, for future deductible amounts for securities available-for-sale,
affiliates of the Company which are included in the same consolidated
Federal income tax return hold investments that could be sold for capital
gains that could offset capital losses realized by the Company should
securities available-for-sale be sold at a loss.
<TABLE>
Total Federal income tax expense for the years ended December 31, 1995,
1994 and 1993 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
--------------- ----- -------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 111,906 35.0 $ 95,631 35.0 $ 109,515 35.0
Tax exempt interest and dividends
received deduction (137) (0.1) (194) (0.1) (2,322) (0.7)
Current year increase in U.S. Federal
income tax rate -- -- -- -- 1,704 0.5
Other, net (4,515) (1.4) (5,933) (2.1) (2,139) (0.7)
--------- ---- --------- ---- --------- ----
Total (effective rate of each year) $ 107,254 33.5 $ 89,504 32.8 $ 106,758 34.1
========= ==== ========= ==== ========= ====
</TABLE>
Total Federal income tax paid was $75,309, $87,576 and $58,286 during the
years ended December 31, 1995, 1994 and 1993, respectively.
Prior to 1984, the Life Insurance Company Income Tax Act of 1959 as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the deferral
from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was accumulated in
the Policyholders' Surplus Account (PSA). Management considers the
likelihood of distributions from the PSA to be remote; therefore, no
Federal income tax has been provided for such distributions in the
consolidated financial statements. The DRA eliminated any additional
deferrals to the PSA. Any distributions from the PSA, however, will
continue to be taxable at the then current tax rate. The balance of the
PSA was approximately $35,344 as of December 31, 1995.
(8) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107 - DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (SFAS 107) requires disclosure of fair
value information about existing on and off-balance sheet financial
instruments. SFAS 107 defines the fair value of a financial instrument as
the amount at which the financial instrument could be exchanged in a
current transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using present
value or other valuation techniques.
These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Although
fair value estimates are calculated using assumptions that management
believes are appropriate, changes in assumptions could cause these
estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets
and,in many cases, could not be realized in the immediate settlement of
the instruments. SFAS 107 excludes certain assets and liabilities from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from SFAS 107 disclosures, estimated fair value of policy reserves on
life insurance contracts are provided to make the fair value disclosures
more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying
amount reported in the consolidated balance sheets for these
instruments approximates their fair value.
FIXED MATURITY AND EQUITY SECURITIES: Fair value for fixed
maturity securities is based on quoted market prices, where available.
For fixed maturity securities not actively traded, fair value is
estimated using values obtained from independent pricing services or,
in the case of private placements, is estimated by discounting
expected future cash flows using a current market rate applicable to
the yield, credit quality and maturity of the investments. The fair
value for equity securities is based on quoted market prices.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of
assets held in Separate Accounts is based on quoted market prices. The
fair value of liabilities related to Separate Accounts is the
amount payable on demand.
MORTGAGE LOANS ON REAL ESTATE: The fair value for mortgage
loans on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations. Fair
value for mortgages in default is the estimated fair value of the
underlying collateral.
INVESTMENT CONTRACTS: Fair value for the Company's liabilities under
investment type contracts is disclosed using two methods. For
investment contracts without defined maturities, fair value is the
amount payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted cash
flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the
contracts being valued.
POLICY RESERVES ON LIFE INSURANCE CONTRACTS: Included are disclosures
for individual life, universal life and supplementary contracts with
life contingencies for which the estimated fair value is the amount
payable on demand. Also included are disclosures for the Company's
limited payment policies, which the Company has used discounted cash
flow analyses similar to those used for investment contracts with
known maturities to estimate fair value.
POLICYHOLDERS' DIVIDEND ACCUMULATIONS AND OTHER POLICYHOLDER FUNDS:
The carrying amount reported in the consolidated balance sheets for
these instruments approximates their fair value.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on life insurance contracts were
as follow as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------------------------- -------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
- ------
Investments:
Securities available-for-sale:
Fixed maturities $14,167,377 14,167,377 8,045,906 8,045,906
Equity securities 33,718 33,718 24,713 24,713
Fixed maturities held-to-maturity -- -- 3,688,787 3,602,310
Mortgage loans on real estate 4,786,599 5,169,805 4,222,284 4,173,284
Policy loans 370,908 370,908 340,491 340,491
Short-term investments 45,732 45,732 131,643 131,643
Cash 10,485 10,485 7,436 7,436
Assets held in Separate Accounts 18,763,678 18,763,678 12,222,461 12,222,461
LIABILITIES
- -----------
Investment contracts 13,561,943 13,221,724 12,189,894 11,657,556
Policy reserves on life insurance contacts 3,695,814 3,659,074 3,170,085 2,934,384
Policyholders' dividend accumulations 353,554 353,554 338,058 338,058
Other policyholder funds 71,155 71,155 72,770 72,770
Liabilities related to Separate Accounts 18,763,678 18,224,933 12,222,461 11,807,331
</TABLE>
(9) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES
--------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a party to
financial instruments with off-balance-sheet risk in the normal course of
business through management of its investment portfolio. These financial
instruments include commitments to extend credit in the form of loans. These
instruments involve, to varying degrees, elements of credit risk in excess
of amounts recognized on the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are agreements
to lend to a borrower, and are subject to conditions established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a deposit. Commitments
extended by the Company are based on management's case-by-case credit
evaluation of the borrower and the borrower's loan collateral. The
underlying mortgage property represents the collateral if the commitment is
funded. The Company's policy for new mortgage loans on real estate is to
lend no more than 80% of collateral value. Should the commitment be funded,
the Company's exposure to credit loss in the event of nonperformance by the
borrower is represented by the contractual amounts of these commitments less
the net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments. Commitments on
mortgage loans on real estate of $361,974 extending into 1996 were
outstanding as of December 31, 1995.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the United
States. The Company has a diversified portfolio with no more than 20% (22%
in 1994) in any geographic area and no more than 2% (2% in 1994) with any
one borrower.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The summary below depicts loans by remaining principal balance as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995:
East North Central $ 140,732 110,361 534,814 184,201 970,108
East South Central 23,978 15,653 183,790 84,588 308,009
Mountain -- 18,940 144,156 48,727 211,823
Middle Atlantic 124,079 72,201 183,562 18,383 398,225
New England 9,594 39,526 153,644 1 202,765
Pacific 190,628 239,687 395,914 107,650 933,879
South Atlantic 101,904 74,731 458,355 279,692 914,682
West North Central 134,866 14,205 81,521 37,586 268,178
West South Central 69,143 99,618 194,717 272,323 635,801
--------- --------- --------- --------- ---------
$ 794,924 684,922 2,330,473 1,033,151 4,843,470
========= ========= ========= =========
Less valuation allowances and unamortized discount 56,871
---------
Total mortgage loans on real estate, net $4,786,599
=========
</TABLE>
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1994:
East North Central $ 109,233 103,499 540,686 191,489 944,907
East South Central 24,298 10,803 127,845 76,897 239,843
Mountain 3,150 13,770 140,358 39,682 196,960
Middle Atlantic 61,299 53,285 140,847 30,111 285,542
New England 10,536 43,282 139,131 4 192,953
Pacific 195,393 210,930 397,911 68,768 873,002
South Atlantic 87,150 81,576 424,150 210,354 803,230
West North Central 127,760 11,766 80,854 4,738 225,118
West South Central 51,013 84,796 184,923 194,788 515,520
--------- --------- --------- --------- ---------
$ 669,832 613,707 2,176,705 816,831 4,277,075
========= ========= ========= =========
Less valuation allowances and unamortized discount 54,791
---------
Total mortgage loans on real estate, net $4,222,284
=========
</TABLE>
(10) PENSION PLAN
------------
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least one
thousand hours of service within a twelve-month period and who have met
certain age requirements. Benefits are based upon the highest average
annual salary of a specified number of consecutive years of the last ten
years of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company.
Effective January 1, 1995, the plan was amended to provide enhanced
benefits for participants who met certain eligibility requirements and
elected early retirement no later than March 15, 1995. The entire cost of
the enhanced benefit was borne by NMIC and certain of its property and
casualty insurance company affiliates.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Effective December 31, 1995, the Nationwide Insurance Companies and
Affiliates Retirement Plan was merged with the Farmland Mutual Insurance
Company Employees' Retirement Plan and the Wausau Insurance Companies
Pension Plan to form the Nationwide Insurance Enterprise Retirement
Plan. Immediately prior to the merger, the plans were amended to provide
consistent benefits for service after January 1, 1996. These amendments had
no significant impact on the accumulated benefit obligation or projected
benefit obligation as of December 31, 1995.
Pension costs charged to operations by the Company during the years ended
December 31, 1995, 1994 and 1993 were $14,105, $10,451 and $6,702,
respectively.
The Company's net accrued pension expense as of December 31, 1995 and
1994 was $1,376 and $1,836, respectively.
The net periodic pension cost for the Nationwide Insurance Companies and
Affiliates Retirement Plan as a whole for the years ended December 31,
1995, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,524 64,740 47,694
Interest cost on projected benefit obligation 95,283 73,951 70,543
Actual return on plan assets (249,294) (21,495) (105,002)
Net amortization and deferral 143,353 (62,150) 20,832
--------- --------- ---------
$ 53,866 55,046 34,067
========= ========= =========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate 7.50% 5.75% 6.75%
Rate of increase in future compensation levels 6.25% 4.50% 4.75%
Expected long-term rate of return on plan assets 8.75% 7.00% 7.50%
</TABLE>
Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1995
(post-merger) and the Nationwide Insurance Companies and Affiliates
Retirement Plan as of December 31, 1995 (pre-merger) and 1994 follows:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Accumulated benefit obligation:
Vested $ 1,236,730 1,002,079 914,850
Nonvested 26,503 8,998 7,570
----------- ----------- -----------
$ 1,263,233 1,011,077 922,420
=========== =========== ===========
Net accrued pension expense:
Projected benefit obligation for services rendered
to date $ 1,780,616 1,447,522 1,305,547
Plan assets at fair value 1,738,004 1,508,781 1,241,771
----------- ----------- -----------
Plan assets (less than) in excess of projected
benefit obligation (42,612) 61,259 (63,776)
Unrecognized prior service cost 42,845 42,850 46,201
Unrecognized net (gains) losses (63,130) (86,195) 39,408
Unrecognized net obligation (asset) at transition 41,305 (19,841) (21,994)
----------- ----------- -----------
$ (21,592) (1,927) (161)
=========== =========== ===========
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Weighed average discount rate 6.00% 6.00% 7.50%
Rate of increase in future compensation levels 4.25% 4.25% 6.25%
</TABLE>
Assets of the Nationwide Insurance Enterprise Retirement Plan are invested
in group annuity contracts of NLIC and ELICW. Prior to the merger, the
assets of the Nationwide Insurance Companies and Affiliates Retirement
Plan were invested in a group annuity contract of NLIC.
(11) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
-------------------------------------------
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years of
service with the Company after reaching age 40. Postretirement health
care benefit contributions are adjusted annually and contain cost-sharing
features such as deductibles and coinsurance. In addition, there are caps
on the Company's portion of the per-participant cost of the postretirement
health care benefits. These caps can increase annually, but not more than
three percent. The Company's policy is to fund the cost of health care
benefits in amounts determined at the discretion of management. Plan
assets are invested primarily in group annuity contracts of NLIC.
Effective January 1, 1993, the Company adopted the provisions of STATEMENT
OF FINANCIAL ACCOUNTING STANDARDS NO. 106 - EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (SFAS 106), which requires the
accrual method of accounting for postretirement life and health care
insurance benefits based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of
employees who are expected to qualify for such benefits.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation as of January 1, 1993. Accordingly, a
noncash charge of $32,275 ($20,979 net of related income tax benefit) was
recorded in the 1993 consolidated statement of income as a cumulative
effect of a change in accounting principle. See note 3. The adoption of
SFAS 106, including the cumulative effect of the change in accounting
principle, increased the expense for postretirement benefits by $35,277
to $36,544 in 1993. Certain affiliated companies elected to amortize their
initial transition obligation over periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of
December 31, 1995 and 1994 was $51,490 and $36,001, respectively, and the
net periodic postretirement benefit cost (NPPBC) for 1995 and 1994 was
$8,269 and $4,627, respectively.
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1995, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits attributed to employee service during the year $ 6,235 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,151 14,011 13,928
Actual return on plan assets (2,657) (1,622) --
Amortization of unrecognized transition obligation of affiliates 2,966 568 568
Net amortization and deferral (1,619) 1,622 --
-------- -------- --------
$ 19,076 23,165 21,586
======== ======== ========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the plan as a whole as of
December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 88,680 76,677
Fully eligible, active plan participants 28,793 22,013
Other active plan participants 90,375 59,089
--------- ---------
Accumulated postretirement benefit obligation (APBO) 207,848 157,779
Plan assets at fair value 54,325 49,012
--------- ---------
Plan assets less than accumulated postretirement benefit obligation (153,523) (108,767)
Unrecognized transition obligation of affiliates 1,827 6,577
Unrecognized net gains (1,038) (41,497)
--------- ---------
$(152,734) (143,687)
========= =========
</TABLE>
Actuarial assumptions used for the measurement of the APBO as of
December 31, 1995 and 1994 and the NPPBC for 1995, 1994 and 1993 were
as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994 1993
APBO NPPBC APBO NPPBC NPPBC
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Discount rate 6.75% 8% 8% 7% 8%
Assumed health care cost trend rate:
Initial rate 11% 10% 11% 12% 14%
Ultimate rate 6% 6% 6% 6% 6%
Uniform declining period 12 Years 12 Years 12 Years 12 Years 12 Years
</TABLE>
The health care cost trend rate assumption has an effect on the amounts
reported. For the plan as a whole, a one percentage point increase in
the assumed health care cost trend rate would increase the APBO as of
December 31, 1995 by $641 and the NPPBC for the year ended December 31,
1995 by $107.
(12) REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND
RESTRICTIONS
-------------------------------------------------------------
Each insurance company's state of domicile imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and each of its
insurance subsidiaries exceed the minimum risk-based capital
requirements.
In accordance with the requirements of the New York statutes, the
Company has agreed with the Superintendent of Insurance of that state
that so long as participating policies and contracts are held by
residents of New York, no profits on participating policies and
contracts in excess of the larger of (a) ten percent of such profits or
(b) fifty cents per year per thousand dollars of participating life
insurance in force, exclusive of group term, as of the year-end shall
inure to the benefit of the shareholder. Such New York statutes
further provide that so long as such agreement is in effect, such
excess of profits shall be exhibited as "participating policyholders'
surplus" in annual statements filed with the Superintendent and shall
be used only for the payment or apportionment of dividends to
participating policyholders at least to the extent required by statute
or for the purpose of making up any loss on participating policies.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In the opinion of counsel for the Company, the ultimate ownership of the
entire surplus, however classified, of the Company resides with the
shareholder, subject to the usual requirements under state laws and
regulations that certain deposits, reserves and minimum surplus be
maintained for the protection of the policyholders until all policy
contracts are discharged.
Based on the opinion of counsel with respect to the ownership of its
surplus, the Company is of the opinion that the earnings attributable to
participating policies in excess of the amounts paid as dividends to
policyholders belong to the shareholder rather than the policyholders,
and such earnings are so treated by the Company.
The amount of shareholder's equity other than capital shares was
$2,664,697, $1,904,664 and $1,647,353 as of December 31, 1995, 1994 and
1993, respectively. The amount thereof not presently available for
dividends to the shareholder due to the New York restrictions was
$1,503,241, $929,934 and $954,037 as of December 31, 1995, 1994 and 1993,
respectively.
Ohio law limits the payment of dividends to shareholders. The maximum
dividend that may be paid by the Company without prior approval of the
Director of the Department is limited to the greater of statutory gain
from operations of the preceding calendar year or 10% of statutory
shareholder's surplus as of the prior December 31. Therefore, $2,468,687
of shareholder's equity, as presented in the accompanying consolidated
financial statements, is so restricted as to dividend payments in 1996.
Each of NLIC's insurance company subsidiaries are limited in their
payment of dividends by the state insurance department of their
respective state of domicile. As of December 31, 1995, the maximum amount
of shareholder's equity available for dividend payment to NLIC in 1996 by
its insurance company subsidiaries without prior approval are:
<TABLE>
<S> <C>
Nationwide Life and Annuity Insurance Company $10,143
West Coast Life Insurance Company 13,153
Employers Life Insurance Company of Wausau 10,132
National Casualty Company --
-------
$33,428
=======
</TABLE>
(13) TRANSACTIONS WITH AFFILIATES
----------------------------
On March 1, 1995, Corp. contributed all of the outstanding shares of
Farmland Life Insurance Company (Farmland) to NLIC, which then merged
Farmland into WCLIC effective June 30, 1995. The contribution resulted in
a direct increase to consolidated shareholder's equity of $46,918. The
contribution of Farmland has been accounted for in a manner similar to a
pooling of interests and accordingly, Farmland's results are included in
the consolidated statements of income beginning January 1, 1995. However,
prior period consolidated financial statements have not been restated due
to the impact of Farmland being immaterial.
Effective December 31, 1994, NLIC purchased all of the outstanding shares
of ELICW from Wausau Service Corporation (WSC) for $155,000. NLIC
transferred fixed maturity securities and cash with a fair value of
$155,000 to WSC on December 28, 1994, which resulted in a realized loss
of $19,239 on the disposition of the securities. The purchase price
approximated both the historical cost basis and fair value of net assets
of ELICW. ELICW has and will continue to share home office, other
facilities, equipment and common management and administrative services
with WSC.
Certain annuity products are sold through three affiliated companies
which are also subsidiaries of Corp. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1995 were
$57,969, $50,470 and $44,577, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
The Company participates in intercompany repurchase agreements with
affiliates whereby the seller will transfer securities to the buyer at a
stated value. Upon demand or a stated period, the securities will be
repurchased by the seller at the original sales price plus a price
differential. Transactions under the agreements during 1995 and
1994 were not material.
During 1993, the Company sold equity securities with a market value
$194,515 to NMIC, resulting in a realized gain of $122,823. With the
proceeds, the Company purchased securities with a market value of
$194,139 and cash of $376 from NMIC.
Intercompany reinsurance contracts exist between NLIC and NMIC, NLIC and
WCLIC, NLIC and NCC, WCLIC and NMIC and WCLIC and ELICW as of December
31, 1995. These contracts are immaterial to the consolidated financial
statements.
NCC participates in several 100% quota share reinsurance agreements with
NMIC and Nationwide Mutual Fire Insurance Company, the minority
shareholder of Corp. As a result of these agreements, the following
assets and (liabilities) are included in the consolidated financial
statements as of December 31, 1995 and 1994 for reinsurance ceded:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Reinsurance recoverable $ 590,379 541,289
Unearned premium reserves (112,467) (110,353)
Liability for unpaid claims and claim adjustment expense (477,912) (430,936)
</TABLE>
The ceding of reinsurance does not discharge the original insurer from
primary liability to its policyholder. The insurer which assumes the
coverage assumes the related liability and it is the practice of insurers
to treat insured risks, to the extent of reinsurance ceded, as though
they were risks for which the original insurer is not liable. Management
believes the financial strength of NMIC reduces to an acceptable level
any risk to NCC under these intercompany reinsurance agreements.
ELICW assumes certain accident and health insurance business from
Employers Insurance of Wausau A Mutual Company, an affiliate. During
1995, total premiums assumed by ELICW under the reinsurance
agreement were $150,622.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC) and California Cash Management
Company (CCMC), both affiliates, under which NCMC and CCMC act as common
agents in handling the purchase and sale of short-term securities for the
respective accounts of the participants. Amounts on deposit with NCMC and
CCMC were $21,644 and $92,531 as of December 31, 1995 and 1994,
respectively, and are included in short-term investments on the
accompanying consolidated balance sheets.
(14) BANK LINES OF CREDIT
--------------------
As of December 31, 1995 and 1994, NLIC had $120,000 of confirmed but
unused bank lines of credit which support a $100,000 commercial paper
borrowing authorization.
(15) CONTINGENCIES
-------------
The Company is a defendant in various lawsuits. In the opinion of
management, the effects, if any, of such lawsuits are not expected to be
material to the Company's financial position or results of operations.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(16) SEGMENT INFORMATION
-------------------
The Company operates in the long-term savings, life insurance and
accident and health insurance lines of business in the life insurance and
property and casualty insurance industries. Long-term savings operations
include both qualified and non-qualified annuity contracts issued to both
individuals and groups. Life insurance operations include whole life,
universal life, variable universal life and endowment and term life
insurance issued to individuals and groups. Accident and health insurance
operations also provide coverage to individuals and groups. Corporate
primarily includes investments, and the related investment income, which
are not specifically allocated to one of the three operating segments. In
addition, realized gains and losses on all general account investments
are reported as a component of the corporate segment.
During 1995, the Company changed its reporting segments to better reflect
the way the businesses are managed. Prior periods have been restated to
reflect these changes.
The following table summarizes the revenues and income (loss) before
Federal income tax expense and cumulative effect of changes in accounting
principles for the years ended December 31, 1995, 1994 and 1993 and
assets as of December 31, 1995, 1994 and 1993, by business segment.
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Long-term savings $ 1,406,241 1,125,013 1,048,045
Life insurance 502,885 452,795 432,343
Accident and health insurance 532,383 345,545 339,764
Corporate 134,598 122,847 214,374
------------ ------------ ------------
$ 2,576,107 2,046,200 2,034,526
============ ============ ============
Income (loss) before Federal income tax expense and
cumulative effect of changes in accounting principles:
Long-term savings 129,475 95,530 47,966
Life insurance 63,169 46,119 36,383
Accident and health insurance (12,521) 13,221 15,041
Corporate 139,609 118,360 213,511
------------ ------------ ------------
$ 319,732 273,230 312,901
============ ============ ============
Assets:
Long-term savings 34,634,892 25,815,273 20,695,598
Life insurance 3,675,581 3,231,651 2,897,574
Accident and health insurance 307,643 291,296 297,200
Corporate 1,995,995 1,773,913 1,515,989
------------ ------------ ------------
$ 40,614,111 31,112,133 25,406,361
============ ============ ============
</TABLE>
<PAGE> 26
Schedule I
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Summary of Investments - Other Than Investments in Related Parties
December 31, 1995
(000's omitted)
<TABLE>
<CAPTION>
----------------- --------------- ------------------
Column B Column C Column D
----------------- --------------- ---------------
Amount at which
shown in the
consolidated
Cost Market value balance sheet
----------------- ---------------- -------------------
<S> <C> <C> <C>
Fixed maturities available-for-sale:
Bonds and notes:
U.S. Government and government agencies and authorities $ 3,913,961 4,116,744 4,116,744
States, municipalities and political subdivisions 9,742 10,993 10,993
Foreign governments 162,442 172,016 172,016
Public utilities 2,053,701 2,146,000 2,146,000
All other corporate 7,298,784 7,721,624 7,721,624
----------------- ---------------- -------------------
Total fixed maturities available-for-sale 13,438,630 14,167,377 14,167,377
----------------- ---------------- -------------------
Equity securities available-for-sale:
Common stocks:
Industrial, miscellaneous and all other 26,037 32,474 32,474
Non-redeemable preferred stock 1,325 1,244 1,244
----------------- ---------------- -------------------
Total equity securities available-for-sale 27,362 33,718 33,718
----------------- ---------------- -------------------
Mortgage loans on real estate 4,838,432 4,786,599*
Real estate:
Investment properties 213,340 171,739*
Acquired in satisfaction of debt 82,930 67,350*
Policy loans 370,908 370,908
Other long-term investments 73,190 67,280#
Short-term investments 45,732 45,732
----------------- -------------------
Total investments $19,090,524 19,710,703
================= ===================
</TABLE>
* Difference from Column B is primarily due to accumulated depreciation
and valuation allowances due to impairments on real estate and
valuation allowances due to impairments on mortgage loans on real
estate. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations and note 5 to the consolidated
financial statements.
# Difference from Column B is primarily due to operating losses of
investments in limited partnerships.
See accompanying independent auditors' report.
<PAGE> 27
Schedule III
------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Supplementary Insurance Information
December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Column A Column B Column C Column D Column E Column F
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Deferred Future policy Other policy
policy benefits, losses, claims and
Segment acquisition claims and Unearned premiums benefits payable Premium
costs loss expenses (1) (2) revenue
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
1995: Long-term savings $ 668,784 14,847,449 455 -
Life insurance 416,209 2,494,344 408,990 274,957
Accident and health
insurance 9,202 858,335 15,264 509,658
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,094,195 18,200,128 424,709 784,615
============== ===================== ================== ===============
1994: Long-term savings 663,696 13,300,015 240 -
Life insurance 387,486 2,245,375 397,174 209,538
Accident and health
insurance 12,977 776,071 13,414 324,524
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,064,159 16,321,461 410,828 534,062
============== ===================== ================== ===============
1993: Long-term savings 506,243 11,308,024 1,262 -
Life insurance 291,683 2,047,844 378,788 215,715
Accident and health
insurance 14,018 736,387 14,595 312,655
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $ 811,944 14,092,255 394,645 528,370
============== ===================== ================== ===============
- ----------------------------------- -------------- -------------------- ------------------ ----------------- --------------
Column A Column G Column H Column I Column J Column K
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Net Amortization Other
investment Benefits, claims, of deferred operating
Segment income losses and policy expenses Premiums
(3) settlement expenses acquisition costs (3) written
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
1995: Long-term savings $1,124,207 1,009,632 51,998 210,525
Life insurance 202,285 267,123 34,124 94,461
Accident and health
insurance 22,725 379,532 6,922 153,984 473,513
Corporate 133,763 - - -
-------------- -------------------- ------------------- ------------------
Total $1,482,980 1,656,287 93,044 458,970
============== ==================== =================== ==================
1994: Long-term savings 945,318 807,756 56,236 171,038
Life insurance 183,933 237,125 33,394 90,535
Accident and health
insurance 21,020 234,882 5,114 90,829 315,688
Corporate 139,230 - - -
-------------- -------------------- ------------------- ------------------
Total $1,289,501 1,279,763 94,744 352,402
============== ==================== =================== ==================
1993: Long-term savings 897,639 800,385 43,291 157,046
Life insurance 178,978 227,786 35,220 89,496
Accident and health
insurance 27,108 208,735 23,623 82,854 263,117
Corporate 100,701 - - -
-------------- -------------------- ------------------- ------------------
Total $1,204,426 1,236,906 102,134 329,396
============== ==================== =================== ==================
<FN>
(1) Unearned premiums are included in Column C amounts. (3) Allocations of net investment income and certain general
(2) Column E agrees to the sum of the consolidated balance expenses are based on a number of assumptions and
sheet captions, "Policyholders' dividend estimates, and reported operating results would
accumulations" and "Other policyholder funds". change by segment if different methods were applied.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 28
Schedule IV
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Reinsurance
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed from of amount
Gross amount other companies other companies Net amount assumed to net
------------------- ------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
1995:
Life insurance in force $51,613,116 6,865,011 742,451 45,490,556 1.6%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 281,687 12,817 6,087 274,957 2.2%
Accident and health
insurance 427,943 73,131 154,846 509,658 30.4%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 709,630 85,948 160,933 784,615 20.5%
=================== ================== ================= ================== ===============
1994:
Life insurance in force $46,262,595 5,289,259 819,799 41,793,135 2.0%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 209,918 7,551 7,171 209,538 3.4%
Accident and health
insurance 389,573 69,095 4,046 324,524 1.2%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 599,491 76,646 11,217 534,062 2.1%
=================== ================== ================= ================== ===============
1993:
Life insurance in force $39,417,116 4,352,071 180,739 35,245,784 0.5%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 218,764 6,161 3,112 215,715 1.4%
Accident and health
insurance 398,289 88,506 2,872 312,655 0.9%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 617,053 94,667 5,984 528,370 1.1%
=================== ================== ================= ================== ===============
</TABLE>
See accompanying independent auditors' report.
<PAGE> 29
Schedule V
----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Column A Column B Column C Column D Column E
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Balance at Charged to Balance at
beginning of costs and Charged to Deductions end of
Description period expenses other accounts (1) period
- ------------------------------------------------- ---------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1995:
Valuation allowances - fixed maturity securities $ - 10,153 - 10,153 -
Valuation allowances - mortgage loans on real
estate 47,892 7,653 - 4,850 50,695
Valuation allowances - real estate 27,330 (1,080) - - 26,250
Valuation allowances - other long-term
investments - 457 - - 457
1994:
Valuation allowances - fixed maturity securities 6,680 (6,680) - - -
Valuation allowances - mortgage loans on real
estate 42,350 21,672 - 16,130 47,892
Valuation allowances - real estate 31,357 (4,027) - - 27,330
1993:
Valuation allowances - fixed maturity securities 5,746 934 - - 6,680
Valuation allowances - mortgage loans on real
estate 31,872 28,241 - 17,763 42,350
Valuation allowances - real estate 35,471 (4,114) - - 31,357
Valuation allowances - other long-term
investments 700 (700) - - -
<FN>
(1) Amounts represent direct write-downs charged against the valuation
allowance.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 62
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
<S> <C>
(a) Financial Statements:
(1) Financial statements and schedule included PAGE
in Prospectus
(Part A):
Condensed Financial Information. 13
(2) Financial statements and schedule included
in Part B:
Those financial statements and schedule 60
required by Item 23 to be included in Part B
have been incorporated therein by reference
to the Prospectus (Part A).
Nationwide Variable Account-II:
Independent Auditors' Report. 60
Statement of Assets, Liabilities and Contract 61
Owners' Equity as of December 31, 1995.
Statements of Operations and Changes in 63
Contract Owners' Equity for the years ended
December 31, 1995, 1994 and 1993.
Notes to Financial Statements. 64
Schedules of Changes in Unit Value. 72
Nationwide Life Insurance Company:
Independent Auditors' Report. 81
Consolidated Balance Sheets as of December 82
31, 1995 and 1994.
Consolidated Statements of Income for the 83
years ended December 31, 1995, 1994 and
1993.
Consolidated Statements of Shareholder's 84
Equity for the years ended December 31,
1995, 1994 and 1993.
Consolidated Statements of Cash Flows for 85
the years ended December 31, 1995, 1994
and 1993.
Notes to Consolidated Financial Statements. 86
Schedule I--Summary of Investments--Other than 106
Investments in Related Parties
Schedule II--Supplementary Insurance Information 107
Schedule IV--Reinsurance 108
Schedule V--Valuation and Qualifying Accounts 109
</TABLE>
110 of 131
<PAGE> 63
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of
Directors authorizing the establishment of
the Registrant - Filed previously with the
Registration Statement, and hereby
incorporated by reference.
(2) Not Applicable
(3) Underwriting or Distribution of contracts
between the Registrant and Principal
Underwriter - Filed previously with the
Registration Statement, and hereby
incorporated by reference.
(4) The form of the variable annuity contract -
Attached hereto.
(5) Variable Annuity Application - Attached
hereto
(6) Articles of Incorporation of Depositor -
Filed previously with the Registration
Statement, and hereby incorporated by
reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with
the Registration Statement, and hereby
incorporated by reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Performance Advertising Calculation
Schedule - Filed previously with Post-
Effective Amendment No. 14 to the
Registration Statement, and hereby
incorporated by reference.
111 of 131
<PAGE> 64
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olives, NC 28365
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
112 of 131
<PAGE> 65
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President,
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
James E. Brock Senior Vice President -
One Nationwide Plaza Life Company Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President-Chief Actuary-
One Nationwide Plaza Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
</TABLE>
113 of 131
<PAGE> 66
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Matthew S. Easley Vice President -
One Nationwide Plaza Annuity and Pension Actuarial
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President -
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
</TABLE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated
financial statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
114 of 131
<PAGE> 67
<TABLE>
<CAPTION>
NO. VOTING
STATE SECURITIES
COMPANY OF ORGANIZATION (SEE ATTACHED PRINCIPAL BUSINESS
CHART) UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
Affiliate Agency, Inc. Delaware Life Insurance Agency
Allnations, Inc. Ohio Promotes cooperative insurance
corporations worldwide
American Marine Underwriters, Inc. Florida Underwriting Manager
Auto Direkt Insurance Company Germany Insurance Company
The Beak and Wire Corporation Ohio Radio Tower Joint Venture
California Cash Management Company California Investment Securities Agent
Colonial County Mutual insurance Texas Insurance Company
Company
Colonial Insurance Company of California Insurance Company
California
Columbus Insurance Brokerage and Germany Insurance Broker
Service GMBH
Companies Agency Insurance Services California Insurance Broker
of California
Companies Agency of Alabama, Inc. Alabama Insurance Broker
Companies Agency of Idaho, Inc. Idaho Insurance Broker
Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for Policies
placed through Brokers
Companies Agency of Kentucky, Inc. Kentucky Insurance Broker
Companies Agency of Massachusetts, Massachusetts Insurance Broker
Inc.
Companies Agency of New York, Inc. New York Insurance Broker
Companies Agency of Pennsylvania, Pennsylvania Insurance Broker
Inc.
Companies Agency of Phoenix, Inc. Arizona Insurance Broker
Companies Agency of Texas, Inc. Texas Insurance Broker
Companies Annuity Agency of Texas, Texas Insurance Broker
Inc.
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Annuity Agency of Texas, Texas Insurance Broker
Inc.
Countrywide Services Corporation Delaware Products Liability, Investigative
and Claims Management Services
Employers Insurance of Wausau A Wisconsin Insurance Company
Mutual Company
** Employers Life Insurance Company of Wisconsin Life Insurance Company
Wausau
F & B, Inc. Iowa Insurance Agency
</TABLE>
115 of 131
<PAGE> 68
<TABLE>
<CAPTION>
NO. VOTING
STATE SECURITIES
COMPANY OF ORGANIZATION (SEE ATTACHED PRINCIPAL BUSINESS
CHART) UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Farmland Mutual Insurance Company Iowa Insurance Company
Financial Horizons Distributors Alabama Life Insurance Agency
Agency of Alabama, Inc.
Financial Horizons Distributors Ohio Insurance Agency
Agency of Ohio
Financial Horizons Distributors Oklahoma Life Insurance Agency
Agency of Oklahoma, Inc.
Financial Horizons Distributors Texas Life Insurance Agency
Agency of Texas, Inc.
* Financial Horizons Investment Trust Massachusetts Investment Company
Financial Horizons Securities Oklahoma Broker Dealer
Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Company of Nevada Nevada Self-Insurance Administration Claims
Examinations and Data Processing Services
Gates, McDonald & Company of New New York Workers Compensation Claims Administration
York, Inc.
Greater La Crosse Health Plans, Wisconsin Writes Commercial Health and Medicare
Inc. Supplement Insurance
InHealth Agency, Inc. Ohio Insurance Agency
InHealth Management Systems, Inc. Ohio Develops and operates Managed Care Delivery
System
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency
Key Health Plan, Inc. California Pre-paid health plans
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
Leben Direkt Insurance Company Germany Life Insurance Company
Lone Star General Agency, Inc. Texas Insurance Agency
** MRM Investments, Inc. Ohio Owns and operates a Recreational Ski
Facility
** National Casualty Company Michigan Insurance Company
National Casualty Company of Great Britain Insurance Company
America, Ltd.
** National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Cash Management Company Ohio Investment Securities Agent
Nationwide Communications, Inc. Ohio Radio Broadcasting Business
Nationwide Community Urban Ohio Redevelopment of blighted areas within the
Redevelopment Corporation City of Columbus, Ohio
</TABLE>
116 of 131
<PAGE> 69
<TABLE>
<CAPTION>
NO. VOTING
STATE SECURITIES
COMPANY OF ORGANIZATION (SEE ATTACHED PRINCIPAL BUSINESS
CHART) UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Nationwide Corporation Ohio Organized for the purpose of acquiring,
holding, encumbering, transferring, or
otherwise disposing of shares, bonds, and
other evidences of indebtedness,
securities, and contracts of other persons,
associations, corporations, domestic or
foreign and to form or acquire the control
of other corporations
Nationwide Development Company Ohio Owns, leases and manages commercial real
estate
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
** Nationwide Financial Services, Inc. Ohio Registered Broker-Dealer, Investment
Manager and Administrator
Nationwide General Insurance Ohio Insurance Company
Company
Nationwide HMO, Inc. Ohio Health Maintenance Organization
* Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
Nationwide Insurance Golf Ohio Membership Non-Profit Corporation
Charities, Inc.
Nationwide Investing Foundation Michigan Investment Company
* Nationwide Investing Massachusetts Investment Company
Foundation II
Nationwide Investment Services Oklahoma Registered Broker-Dealer in Deferred
Corporation Compensation Market
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
** Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
** Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Mutual Fire Insurance Ohio Insurance Company
Company
Nationwide Mutual Insurance Company Ohio Insurance Company
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
** Nationwide Property Management, Ohio Owns, leases, manages and deals in Real
Inc. Property
* Nationwide Separate Account Trust Massachusetts Investment Company
NEA Valuebuilder Investor Services Alabama Life Insurance Agency
of Alabama, Inc.
NEA Valuebuilder Investor Services Arizona Life Insurance Agency
of Arizona, Inc.
</TABLE>
117 of 131
<PAGE> 70
<TABLE>
<CAPTION>
NO. VOTING
STATE SECURITIES
COMPANY OF ORGANIZATION (SEE ATTACHED PRINCIPAL BUSINESS
CHART) UNLESS
OTHERWISE
INDICATED
<S> <C> <C>
NEA Valuebuilder Investor Services Massachusetts Life Insurance Agency
of Massachusetts, Inc.
NEA Valuebuilder Investor Services Montana Life Insurance Agency
of Montana, Inc.
NEA Valuebuilder Investor Services Nevada Life Insurance Agency
of Nevada, Inc.
NEA Valuebuilder Investor Services Ohio Life Insurance Agency
of Ohio, Inc.
NEA Valuebuilder Investor Services Oklahoma Life Insurance Agency
of Oklahoma, Inc.
NEA Valuebuilder Investor Services Texas Life Insurance Agency
of Texas, Inc.
NEA Valuebuilder Investor Services Wyoming Life Insurance Agency
of Wyoming
NEA Valuebuilder Investor Services, Delaware Life Insurance Agency
Inc.
NEA Valuebuilder Services Insurance Massachusetts Life Insurance Agency
Agency, Inc.
Neckura General Insurance Company Germany Insurance Company
Neckura Holding Company Germany Administrative Service for Neckura
Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Insurance Massachusetts Markets and Administers Deferred
Agency, Inc. Compensation Plans for Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers Deferred
Compensation Plans for Public Employees
Pension Associates of Wausau, Inc. Wisconsin Pension plan administration, record keeping
and consulting and compensation consulting
Public Employees Benefit Services Delaware Marketing and Administration of Deferred
corporation Employee Compensation Plans for Public
Employees
Public Employees Benefit Services Alabama Markets and Administers Deferred
Corporation of Alabama Compensation Plans for Public Employees
Public Employees Benefit Services Arkansas Markets and Administers Deferred
Corporation of Arkansas Compensation Plans for Public Employees
Public Employees Benefit Services Montana Markets and Administers Deferred
Corporation of Montana Compensation Plans for Public Employees
Public Employees Benefit Services New Mexico Markets and Administers Deferred
Corporation of New Mexico Compensation Plans for Public Employees
</TABLE>
118 of 131
<PAGE> 71
<TABLE>
<CAPTION>
NO. VOTING
STATE SECURITIES
COMPANY OF ORGANIZATION (SEE ATTACHED PRINCIPAL BUSINESS
CHART) UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura Insurance Group
Group
Wausau Business Insurance Company Illinois Insurance Company
Wausau General Insurance Company Illinois Insurance Company
Wausau Insurance Company (U.K.) United Kingdom Insurance and Reinsurance Company
Limited
Wausau International Underwriters California Special Risks, Excess and Surplus Lines
Insurance Underwriting Manager
** Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company
Company
Wausau Service Corporation Wisconsin Holding Company
Wausau Underwriters Insurance Wisconsin Insurance Company
Company
** West Coast Life Insurance Company California Life Insurance Company
</TABLE>
119 of 131
<PAGE> 72
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
STATE (SEE ATTACHED CHART) UNLESS
COMPANY OF ORGANIZATION OTHERWISE INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Life Separate Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
No. 1 Account
* Nationwide Multi-Flex Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-Q Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Ohio Nationwide Life Separate Issuer of Annuity Contracts
Variable Account Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance
Account-A Separate Account Contracts
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
</TABLE>
120 of 131
<PAGE> 73
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side}
______________________
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|______________________|
<S> <C> <C>
________________________________________________________________________________________________
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| (EMPLOYERS) |_________________________________
| Contribution Note Cost |_________________________________
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________ __________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | | | |
| | | | | NATIONWIDE LLOYDS | | COMPANIES |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | | | |
| ------------- Shares | | ------------- Shares |_____| |_____| AGENCY OF |
| | | |_____| |_____| |
| Cost | | Cost | | | | TEXAS, INC. |
| ---- | | ---- | | A TEXAS LLOYDS | | |
| Employers-- | | Employers-- | | | | |
| 100% $15,683,300 | | 100% $106,763,000 | | | | |
|_______________________________| |________________________________| |_____________________| |__________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 10,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $21,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $44,560,006 |
| |______________________________|
|
| ______________________________
| | GREATER LA CROSSE |
| | HEALTH PLANS, INC. |
| | |
| | Common Stock: 3,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-33.3% $861,761 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ALABAMA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF KENTUCKY, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PENNSYLVANIA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF MASSACHUSETTS, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF NEW YORK, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PHOENIX, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF IDAHO, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COUNTRYWIDE SERVICES |
| | CORPORATION |
| | |
| | Common Stock: 100 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $145,852 |
| |______________________________|
|
|
| ______________________________
| | WAUSAU GENERAL |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 200,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $31,000,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU INTERNATIONAL |
| | UNDERWRITERS |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $10,000 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | INSURANCE SERVICES |
| | OF CALIFORNIA |
| | |
|____| Common Stock: 1,000 |
| | ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
| ______________________________
| | AMERICAN MARINE |
| | UNDERWRITERS, INC. |
| | |
| | Common Stock: 20 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $248,222 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ILLINOIS, INC. |
| | |
| | Common Stock: 250 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $2,500 |
| |______________________________|
|
| ______________________________ _____________________________
| | COMPANIES AGENCY, INC. | | PENSION ASSOCIATES |
| | | | OF WAUSAU, INC. |
| | | | |
| | Common Stock: 100 | | Common Stock: 1,000 |
|____| ------------- Shares |____| ------------- Shares |
| | | |
| Cost | | Companies Cost |
| ---- | | Agency, Inc. ---- |
| WSC-100% $10,000 | | (Wisconsin) -- $10,000 |
|______________________________| | 100% |
|_____________________________|
</TABLE>
121 of 131
<PAGE> 74
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| |
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
___| NATIONWIDE MUTUAL |_____________________________________________| NATIONWIDE MUTUAL |
___| INSURANCE COMPANY |_____________________________________________| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
|_________________________________________| |___________________________|
| || |________________________________________________________________ |
| || | | |
______________|_______________ || | _____________________________ _____________|_______|______________
| | || | | | | |
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NATIONWIDE |
| | || | | INSURANCE COMPANY | | CORPORATION |
| Common Stock: 2,936 | || | | | | |
| ------------- Shares | || | | Common Stock: 20,000 Shares | | Common Stock: Control |
| Cost | || |___| ------------- | | ------------- ------- |
| ---- | || | | | | $13,642,432 100% |
| Casualty-26% $88,320 | || | | Cost | | |
| Fire-26% $88,463 | || | | ---- | | Shares Cost |
| Preferred Stock: 1,466 Shares| || | | Casualty-100% $5,944,422 | | ----- ---- |
| ---------------- | || | |_____________________________| | Casualty 12,992,922 $751,352,485 |
| Cost | || | | Fire 649,510 24,007,936 |
| ---- | || | | |
| Casualty-6.8% $100,000 | || | | (See Page 2) |
| Fire-6.8% $100,000 | || | |____________________________________|
|______________________________| || |
|| |
_________________________ || | _____________________________
| | || | | |
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY |
| INSURANCE COMPANY | || | | AND CASUALTY |
| | || | | INSURANCE COMPANY |
| Guaranty Fund |______|| | | |
| ------------- |_______| | | Common Stock: 60,000 Shares |
| Certificate | | | ------------- |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | |
| | | COLONIAL INSURANCE |
_______________|___________ | | COMPANY OF CALIFORNIA |
| F & B, INC. | | | (COLONIAL) |
| | | | |
| Common Stock: 1 Share | |___| Common Stock: 1,750 Shares |
| ------------- | | | ------------- |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | | | |
| | | | SCOTTSDALE | | NATIONAL PREMIUM & |
| NATIONWIDE AGRIBUSINESS | | | INSURANCE COMPANY | | BENEFIT ADMINISTRATION |
| INSURANCE COMPANY | | | | | COMPANY |
| | | | Common Stock: 30,136 Shares | | |
| Common Stock: 1,000,000 |___|___| ------------- |______| Common Stock: 10,000 |
| ------------- Shares | | | | | ------------ Shares |
| | | | Cost | | |
| | | | ---- | | Cost |
| | | | Casualty-100% $150,000,000 | | ---- |
| Casualty-99.9% $26,714,335 | | |_____________________________| | Scottsdale-100% $10,000 |
| | | |__________________________|
| Other Capital: | |
| -------------- | |
| Casualty-Ptd. $ 713,567 | |
|____________________________| |
|
|
|
|
| _____________________________ ______________________________
| | NECKURA HOLDING | | NECKURA |
| | COMPANY (NECKURA) | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 10,000 Shares | | Common Stock: 6,000 Shares |
|___| ------------- |_____________________| ------------- |
| | | | | |
| | Cost | | | Cost |
| | --- | | | ---- |
| | Casualty-100% $87,943,140 | | | Neckura-100% DM 6,000,000 |
| |_____________________________| | |______________________________|
| |
| | _____________________________
| | | NECKURA LIFE |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS INSURANCE |
| | | BROKERAGE AND SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIREKT |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT COMPANY | | | GmbH |
| | | | | |
| | Common Stock: 99,000 Shares | | | Common Stock: 50 Shares |
| | ------------- | |_____| ------------- |
| | | | |
|___| Cost | | Cost |
| | --- | | ---- |
| | Casualty-100% $15,100,000 | | Neckura-100% DM 50,000 |
| | Other Capital: | |____________________________|
| | -------------- |
| | Casualty-Ptd. $ 2,796,100 |
| |_____________________________|
|
|
| _____________________________
| | SCOTTSDALE |
| | INDEMNITY COMPANY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | INDEMNITY COMPANY |
| | |
| | Common Stock: 28,000 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $294,529,000 |
| |_____________________________|
|
| _____________________________ __________________________
| | LONE STAR | | COLONIAL COUNTY MUTUAL |
| | GENERAL AGENCY, INC. | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 1,000 Shares |______| Surplus Debentures: |
|___| ------------- |______| ------------------- |
| | | | |
| | Cost | | Cost |
| | ---- | | ---- |
| | Casualty-100% $5,000,000 | | Colonial $500,000 |
| |_____________________________| | Lone Star 150,000 |
| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | CORPORATION |
| | |
| | Common Stock: 10 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,000 |
| |_____________________________|
|
| _____________________________
| | INSURANCE |
| | INTERMEDIARIES, INC. |
| | |
| | Common Stock: 1,615 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,615,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________
| | CALIFORNIA CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 90 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $9,000 |
| |_____________________________|
|
|
| _____________________________ __________________________
| | NATIONWIDE | | THE BEAK AND |
| | COMMUNICATIONS, INC. | | WIRE CORPORATION |
| | | | |
| | Common Stock: 14,750 Shares | | Common Stock: 750 Shares |
|___| ------------- |_____| ------------- |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| Casualty-100% $11,510,000 | | NW Comm- $531,000 |
| | | 100% |
| Other Capital: | |__________________________|
| -------------- |
| Casualty-Ptd. 1,000,000 |
|_____________________________|
<FN>
Subsidiary Companies - Solid Line
Contractual Association - Double Line
December 31, 1995 page 1
</TABLE>
<PAGE> 75
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|_________________
| NATIONWIDE LIFE INSURANCE |
| COMPANY (NW LIFE) |
|Common Stock: 3,814,779 Shares|
| ------------- |
| |
| NW Corp.- Cost |
| 100% ---- |
| $950,226,915 |
|______________________________|
_________________________________________________________________________________|
____________|_____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | NATIONWIDE LIFE AND |
| FINANCIAL SERVICES, INC. | | COMPANY (NC) | | | ANNUITY INSURANCE COMPANY |
| (NW FIN. SERV.) | | Common Stock: 100 Shares | | | |
______|Common Stock: 7,676 Shares| | ------------- | | | Common Stock: 66,000 Shares |
| ____|------------- | | | |_______| ------------- |
| | | Cost | | Cost | | | NW Life- Cost |
| | | ---- | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |__________________________| |___________________________| | |______________________________|
| | __________________________ ___________|_______________ | ________________________________
| | | NATIONWIDE | | | | | WEST COAST LIFE |
| | | INVESTOR SERVICES, INC. | | | | | INSURANCE COMPANY |
| | | Common Stock: 5 Shares | | NCC OF AMERICA, INC. | | | Common Stock: 1,000,000 Shares|
| |___| ------------- | | (INACTIVE) | |_______| ------------- |
| | | NW Fin. Serv.-100% | | | | | |
| | | Cost | | NC-100% | | | Cost |
| | | ---- | | | | | ---- |
| | | $5,000 | | | | | NW Life-100% $133,809,265 |
| | |__________________________| |___________________________| | |________________________________|
| | __________________________ ______________________________ | ____________________________
| | | NATIONWIDE | | EMPLOYERS LIFE INSURANCE CO. | | | NATIONWIDE PROPERTY |
| | | INVESTING | | OF WAUSAU (ELIOW) | | | MANAGEMENT, INC. |
| | | FOUNDATION | | | | | Common Stock: 59 Shares |
| |___| | ______| Common Stock: 250,000 Shares |____|_______| ------------ |
| ___| | | | ------------- Cost | | | Cost |
| | | | | | ---- | | | ---- |
| | | | | | NW Life-100% $155,000,000 | | | NW Life-100% $1,907,896 |
| | | COMMON LAW TRUST | | |______________________________| | |__________________________ |
| | |__________________________| | | |
| | | _____________________________ | __________|_______________
| | __________________________ | | WAUSAU PREFERRED | | | MRM INVESTMENTS, INC. |
| | | NATIONWIDE | | | HEALTH INSURANCE CO. | | | |
| | | INVESTING | | | | | | Common Stock: 1 Share |
| |___| FOUNDATION II | |______| Common Stock: 200 Shares | | | ------------ |
| ___| | | | ------------- | | | |
| | | | | | Cost | | | Cost |
| | | | | | ---- | | | Nat. Prop. ---- |
| | | COMMON LAW TRUST | | | ELIOW -- 100% $57,413,193 | | | Mgmt.-100% $550,000 |
| | |__________________________| | |_____________________________| | |___________________________|
| | | |
| | | _____________________________ | ___________________________
| | __________________________ | | KEY HEALTH PLAN, INC. | | | NWE, INC. |
| | | NATIONWIDE | | | | | | |
| | | SEPARATE ACCOUNT | |______| Common Stock: 1,000 Shares | |______| Common Stock: 100 Shares |
| | | TRUST | | ------------- | | ------------ |
| |___| | | Cost | | Cost |
| ___| | | ---- | | ---- |
| | | COMMON LAW TRUST | | ELIOW-80% $2,700,000 | | NW Life-100% $35,971,375 |
| | | | |_____________________________| |___________________________|
| | |__________________________|
| |
| | __________________________
| | | FINANCIAL HORIZONS |
| | | INVESTMENT TRUST |
| |___| |
|_____| |
| COMMON LAW TRUST |
|__________________________|
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| INSURANCE COMPANY |___________________________________________________________
| (CASUALTY) |
|_______________________________________|
| _______________________________________________________________
__________________|______________|___
| NATIONWIDE CORPORATION (NW Corp) |
| Common Stock: Control: |
| ------------- ------- |
| 13,642,432 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty 12,992,922 $751,352,485 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_________________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES BENEFIT | | GATES, McDONALD | | NATIONWIDE FINANCIAL |
|SERVICES CORPORATION (PEBSCO) | | & COMPANY (GATES) | | INSTITUTION DISTRIBUTORS |
______| Common Stock: 236,494 Shares | | Common Stock: 254 Shares | | AGENCY, INC. (NFIDAI)|
| ____| ------------- | | ------------- |___ _____| Common Stock: 1,000 Shares|
| | | Cost | | | | | ___| ------------- |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $ 7,830,936 | | ---- | | | | | NW Corp. ---- |
| | |______________________________| | NW Corp.- $25,683,532 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK, INC. | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 Shares | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- | | | | | |___|Common Stock: 10,000 Shares|
| | | Cost | | Cost | | | | |----------- |
| | | ---- | | ---- | | | | | Cost |
| | | PEBSCO-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |____________________________| | | | | | | NFIDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | ALABAMA | | | | | | | LANDMARK FINANCIAL |
| | |Common Stock: 100,000 Shares| | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____|------------- | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___|Common Stock: 10,000 Shares|
| | | ---- | | ---- | | | |------------- |
| | | PEBSCO-100% $1,000 | | $93,750 | | | | Cost |
| | |____________________________| |___________________________| | | | ---- |
| | | | | NFIDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ____________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 Shares| | | | FINANCIAL HORIZONS |
| |____| ------------- | | | | SECURITIES CORP. |
| | | Cost | ________________________________|_|___|Common Stock: 10,000 Shares|
| | | ---- | | AFFILIATE AGENCY, INC. | | | |------------- |
| | | PEBSCO-100% $500 | | | | | | Cost |
| | |____________________________| | Common Stock: 100 Shares | | | | ---- |
| | | | | | | NFIDAI-100% $153,000 |
| | | NFIDAI-100% Cost | | | |___________________________|
| | | ---- | | |
| | ___________________________ | $100 | | |
| | | PEBSCO OF MASSACHUSETTS | |___________________________| | |
| | | INSURANCE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 1,000 Shares| | | | |
| | | ------------- | | | | FINANCIAL HORIZONS |
| | | Cost | | |___| DISTRIBUTORS |
| | | ---- | | ___| AGENCY OF OHIO, |
| | | PEBSCO-100% $1,000 | | | | INC. |
| | |___________________________| | | |___________________________|
| | | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | MONTANA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 500 Shares | | ___| DISTRIBUTORS AGENCY |
| | | ------------- | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | ---- | | |
| | | PEBSCO-100% $500 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | NEW MEXICO | | | | |
| | | | | |___| FINANCIAL HORIZONS |
| |____|Common Stock: 1,000 Shares | | ___| DISTRIBUTORS AGENCY |
| | |------------- | | | | OF TEXAS, INC. |
| | | Cost | | | |___________________________|
| | | ----- | | |
| | | PEBSCO-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____| AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS, INC. | | |
|___________________________| |___________________________|
</TABLE>
<PAGE> 77
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE INSURANCE COMPANY |
| (FIRE) |
|_______________________________________|
________________________________________|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | NATIONWIDE HMO, INC. |
| INVESTOR SERVICES, INC. | | | (NW HMO) |
| (NEA) | | | Common Stock: 100 Shares |
_______| Common Stock: 500 Shares | |_____| ------------ |
| _____| ------------- | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $14,603,732 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MANAGEMENT |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| |_____| OF ALABAMA, INC. | | | Common Stock: 100 Shares |
| | | Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW HMO ---- |
| | | NEA-100% $5,000 | | | INC.-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH |
| | | INVESTOR SERVICES | | | AGENCY, INC. |
| | | OF MONTANA, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | Cost |
| | | Cost | | NW HMO ---- |
| | | ----- | | INC.-99% $116,077 |
| | | NEA-100% $500 | |___________________________|
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF NEVADA, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF OHIO, INC. |
| | | Common Stock: 100 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-91% $5,000 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF WYOMING, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | |
| | | NEA VALUEBUILDER |
| |_____| INVESTOR SERVICES |
| | | OF TEXAS, INC. |
| | | |
| | |___________________________|
| |
| | ___________________________
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
</TABLE>
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
December 31, 1995
Page 2
122 of 131
<PAGE> 78
Item 27. NUMBER OF CONTRACT OWNERS
The number of contract Owners of Qualified and Non-Qualified
Contracts as of February 22, 1996 was 200,857 and 85,304
respectively.
Item 28. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State
of Ohio, for indemnification by the Company of any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director, officer or
employee of the Company, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, to the extent and under the circumstances
permitted by the General Corporation Law of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Financial Services, Inc. ("NFS") acts as general
distributor for the Nationwide Multi-Flex Variable Account,
Nationwide DC Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-5, Nationwide
Variable Account- 6, Nationwide Variable Account-8,
Nationwide VA Separate Account-A, Nationwide VA Separate
Account-B, Nationwide VA Separate Account-C, Nationwide VL
Separate Account-A, Nationwide VLI Separate Account-2,
Nationwide VLI Separate Account-3, NACo Variable Account and
the Nationwide Variable Account, all of which are separate
investment accounts of the Company or its affiliates.
NFS also acts as principal underwriter for the Nationwide
Investing Foundation, Nationwide Separate Account Trust,
Financial Horizons Investment Trust, and Nationwide
Investing Foundation II, which are open-end management
investment companies.
(b) NATIONWIDE FINANCIAL SERVICES, INC.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, Ohio 43215
D. Richard McFerson Chairman of the Board of Directors and
One Nationwide Plaza Chairman and
Columbus, OH 43215 Chief Executive Officer--Nationwide
Insurance Enterprise and Director
Gordon E. McCutchan Executive Vice President-Law and
One Nationwide Plaza Corporate Services and Director
Columbus, OH 43215
Robert A. Oakley Executive Vice President - Chief Financial
One Nationwide Plaza Officer and Director
Columbus, Ohio 43215
</TABLE>
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<PAGE> 79
(b) NATIONWIDE FINANCIAL SERVICES, INC.
DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
Robert J. Woodward Executive Vice President - Chief
One Nationwide Plaza Investment Officer and Director
Columbus, Ohio 43215
W. Sidney Druen Senior Vice President and
One Nationwide Plaza General Counsel and
Columbus, OH 43215 Assistant Secretary
James F. Laird, Jr. Vice President and General
One Nationwide Plaza Manager
Columbus, OH 43215
Peter J. Neckermann Vice President
One Nationwide Plaza
Columbus, OH 43215
Harry S. Schermer Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
Rae I. Mercer Secretary
One Nationwide Plaza
Columbus, OH 43215
William G. Goslee Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
</TABLE>
<TABLE>
<CAPTION>
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
----------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Financial
Services,
Inc.
</TABLE>
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<PAGE> 80
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Robert O. Cline
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
The Registrant hereby represents that any contract offered by the
prospectus and which is issued pursuant to Section 403(b) of the
Code is issued by the Registrant in reliance upon, and in
compliance with, the Securities and Exchange Commission's
no-action letter to the American Council of Life Insurance
(publicly available November 28, 1988) which permits withdrawal
restrictions to the extent necessary to comply with Section
403(b)(11) of the Code.
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<PAGE> 81
Offered by
Nationwide Life Insurance Company
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide Variable Account - II
Individual Deferred Variable Annuity Contract
PROSPECTUS
May 1, 1996
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<PAGE> 82
ACCOUNTANTS' CONSENT AND INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT
SCHEDULES
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners' of Nationwide Variable Account II:
The audits referred to in our report on Nationwide Life Insurance Company (the
Company) dated February 26, 1996, included the related financial statement
schedules as of December 31, 1995, and for each of the years in the three-year
period ended December 31, 1995, included in the registration statement. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Services" in the Statement of Additional
Information.
KPMG Peat Marwick LLP
Columbus, Ohio
April 26, 1996
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<PAGE> 83
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act
of 1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT-II, certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of this
Post-Effective Amendment and has caused this Post-Effective Amendment to be
signed on its behalf in the City of Columbus, and State of Ohio, on this 26th
day of April, 1996.
NATIONWIDE VARIABLE ACCOUNT-II
-------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
-------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
-------------------------------------
Joseph P. Rath
Vice President and
Associate General Counsel
As required by the Securities Act of 1933, this Post-Effective Amendment has
been signed by the following persons in the capacities indicated on the 26th
day of April 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
LEWIS J. ALPHIN Director
- ------------------------------
Lewis J. Alphin
KEITH W. ECKEL Director
- ------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- ------------------------------
Willard J. Engel
FRED C. FINNEY Director
- ------------------------------
Fred C. Finney
CHARLES L. FUELLGRAF, JR. Director
- ------------------------------
Charles L. Fuellgraf, Jr.
JOSEPH J. GASPER President/Chief Operating Officer and Director
- ------------------------------
Joseph J. Gasper
HENRY S. HOLLOWAY Chairman of the Board and Director
- ------------------------------
Henry S. Holloway
D. RICHARD MCFERSON Chairman and Chief Executive Officer -- Nationwide
- ------------------------------ Insurance Enterprise and Director
D. Richard McFerson
DAVID O. MILLER Director
- ------------------------------
David O. Miller
C. RAY NOECKER Director
- ------------------------------
C. Ray Noecker
ROBERT A. OAKLEY Executive Vice President-
- ------------------------------ Chief Financial Officer
Robert A. Oakley
JAMES F. PATTERSON Director By/s/JOSEPH P. RATH
- ------------------------------ -------------------------
James F. Patterson Joseph P. Rath
Attorney-in-Fact
ARDEN L. SHISLER Director
- ------------------------------
Arden L. Shisler
ROBERT L. STEWART Director
- ------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- ------------------------------
Nancy C. Thomas
HAROLD W. WEIHL Director
- ------------------------------
Harold W. Weihl
</TABLE>
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<PAGE> 84
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, which has filed or will file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1993, as amended,
various Registration Statements and amendments thereto for the registration
under said Act of Individual Deferred Variable Annuity Contracts in connection
with the MFS Variable Account, Nationwide Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-3, Nationwide Variable Account-4,
Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide
Fidelity Advisor Variable Account, Nationwide Multi-Flex Variable Account and
Nationwide Variable Account-8; and the registration of fixed interest rate
options subject to a market value adjustment offered under some or all of the
aforementioned individual Variable Annuity Contracts in connection with the
Nationwide Multiple Maturity Separate Account, and the registration of Group
Flexible fund Retirement Contracts in connection with the Nationwide DC
Variable Account, Nationwide DCVA III, and the NACo Variable Account; and the
registration of Group Common Stock Variable Annuity Contracts in connection
with Separate Account No. 1; and the registration of variable life insurance
policies in connection with the Nationwide VLI Separate Account, Nationwide
VLI Separate Account-2, Nationwide VLI Separate Account-3 of Nationwide Life
Insurance Company, hereby constitutes and appoints D. Richard McFerson, Joseph
J. Gasper, Gordon E. McCutchan, W. Sidney Druen, and Joseph P. Rath, and each
of them with power to act without the others, his/her attorney, with full power
of substitution and resubstitution, for and in his/her name, place and stead,
in any and all capacities, to approve, and sign such Registration Statements
and any and all amendments thereto, with power to affix the corporate seal of
said corporation thereto and to attest said seal and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys, and
each of them, full power and authority to do and perform all and every act and
thing requisite to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming that which said attorneys, or any of
them, may lawfully do or cause to be done by virtue hereof. This instrument
may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this 4th day of April, 1996.
/s/ Lewis J. Alphin /s/ David O. Miller
- ------------------------------------- -------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
/s/ Keith W. Eckel /s/ C. Ray Noecker
- ------------------------------------- -------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
/s/ Willard P. Engel /s/ Robert A. Oakley
- ------------------------------------- -------------------------------------
Willard P. Engel, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
/s/ Fred C. Finney
- ------------------------------------- /s/ James F. Patterson
Fred C. Finney, Director -------------------------------------
James F. Patterson, Director
/s/ Charles L. Fuellgraf
- ------------------------------------- /s/ Arden L. Shisler
Charles L. Fuellgraf, Director -------------------------------------
Arden L. Shisler, Director
/s/ Joseph J. Gasper
- ------------------------------------- /s/ Robert L. Stewart
Joseph J. Gasper, President and Chief -------------------------------------
Operating Officer and Director Robert L. Stewart, Director
/s/ Henry S. Holloway /s/ Nancy C. Thomas
- ------------------------------------- -------------------------------------
Henry S. Holloway, Chairman of the Nancy C. Thomas, Director
Board, Director
/s/ Harold W. Weihl
/s/ D. Richard McFerson -------------------------------------
- ------------------------------------- Harold W. Weihl, Director
D. Richard McFerson, Chairman and
Chief Executive Officer-Nationwide
Insurance Enterprise and Director
