NATIONWIDE VARIABLE ACCOUNT II, 497, 1997-10-02

NATIONWIDE VARIABLE ACCOUNT II
497, 1997-10-02

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<PAGE>

NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE
P.O. Box 182356
Columbus, Ohio 43218-2356, 1-800-243-6295
TDD 1-800-238-3035
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE NATIONWIDE LIFE INSURANCE COMPANY
THROUGH ITS NATIONWIDE VARIABLE ACCOUNT-II

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. 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:
<TABLE>
<CAPTION>
<S> <C>

AVAILABLE FOR ALL CONTRACTS
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., AN AFFILIATE OF AMERICAN CENTURY COMPANIES, INC.
American Century VP Balanced American Century VP Capital Appreciation
American Century VP International American Century VP Value
DREYFUS
The Dreyfus Socially Responsible Growth Fund Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund Capital Appreciation Portfolio Dreyfus Variable Investment Fund Growth & Income Portfolio*

FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio Growth Portfolio High Income Portfolio* Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio Contrafund Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
Growth Opportunities Portfolio
MORGAN STANLEY
Morgan Stanley Universal Funds, Inc. - Emerging Markets Debt Portfolio
Van Kampen American Capital Life Investment Trust - Morgan Stanley Real Estate Securities Portfolio
(fka Real Estate Securities Fund)
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund Government Bond Fund Money Market Fund
Small Company Fund Total Return Fund
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST
Growth Portfolio Limited Maturity Bond Portfolio Partners Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Bond Fund Oppenheimer Global Securities Fund
Oppenheimer Growth Fund Oppenheimer Multiple Strategies Fund
STRONG OPPORTUNITY FUND II, INC. (FKA STRONG SPECIAL FUND II, INC.)
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Discovery Fund II, Inc. International Stock Fund II
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
WARBURG PINCUS TRUST
International Equity Portfolio Post-Venture Capital Portfolio
Small Company Growth Portfolio
* These Portfolios may invest in lower quality debt securities commonly referred to as junk bonds.
</TABLE>

1
<PAGE>

AVAILABLE FOR ALL CONTRACTS
ISSUED ON OR AFTER MAY 1, 1987 AND BEFORE SEPTEMBER 1, 1989
AMERICAN VARIABLE INSURANCE SERIES

Growth Fund High-Yield Bond Fund U.S. Government/AAA-Rated Securities Fund

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 October 1,
1997, 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 182356, Columbus, Ohio
43218-2356.

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 OCTOBER 1, 1997, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 47 OF THE PROSPECTUS.

THE DATE OF THIS PROSPECTUS IS OCTOBER 1, 1997.

2
<PAGE>

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, unless
the Company has approved a request for an Annuitant of greater age. 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 at
Annuitization.

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 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 designated and the Annuitant dies before the Annuitization Date,
the Contingent Designated Annuitant becomes the Annuitant. A Contingent
Designated Annuitant may not be named for Contracts issued as Qualified
Contracts, Individual Retirement Annuities, SEP IRAs or Tax Sheltered Annuities.

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 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,
SEP IRAs 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 on the Data Page, unless changed.

CONTRACT VALUE- The sum of the value of all 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 which is 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.

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.

3
<PAGE>

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 contract 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 - 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.

JOINT OWNER- The Joint Owner, if any, possesses an undivided interest in the
entire Contract in conjunction with the Owner. If a Joint Owner is named,
references to "Contract Owner" or "Owner" in this prospectus will apply to both
the Owner and Joint Owner or either of them. If permitted by state law, Joint
Owners must be spouses at the time Joint Ownership is requested. Joint
Ownership may be selected only for Non-Qualified Plans.

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 PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers between the Variable Account and Fixed
Account, or among the Sub-Accounts.

QUALIFIED CONTRACTS- A Contract issued to fund a Qualified Plan.

QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
the provisions of Sections 401 or 403(a) of the Code.

SEP IRA- A retirement plan which receives favorable tax treatment under the
provisions of Section 408(k) of the Code.

SUB-ACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Mutual Fund shares are allocated and for which Accumulation
Units and Annuity Units are separately maintained.

TAX SHELTERED ANNUITY- An annuity which qualifies for favorable tax treatment
under Section 403(b) of the Code.

VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.

VALUATION PERIOD- The period of time commencing at the close of a Valuation Date
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 are not predetermined
or guaranteed as to dollar amount and which vary in amount with the investment
experience of the Variable Account.

4
<PAGE>

TABLE OF CONTENTS

GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY OF CONTRACT EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . 7
UNDERLYING MUTUAL FUND ANNUAL EXPENSES . . . . . . . . . . . . . . . . . . . 8
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
CONDENSED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . .13
NATIONWIDE LIFE INSURANCE COMPANY. . . . . . . . . . . . . . . . . . . . . .22
THE VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Underlying Mutual Fund Options . . . . . . . . . . . . . . . . . . . . .22
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Substitution of Securities . . . . . . . . . . . . . . . . . . . . . . .23
VARIABLE ACCOUNT CHARGES AND OTHER DEDUCTIONS.. . . . . . . . . . . . . . .23
Expenses of the Variable Account . . . . . . . . . . . . . . . . . . . .23
Mortality Risk Charge. . . . . . . . . . . . . . . . . . . . . . . . . .23
Expense Risk Charge. . . . . . . . . . . . . . . . . . . . . . . . . . .23
Contract Maintenance Charge and Administration Charge. . . . . . . . . .23
Contingent Deferred Sales Charge . . . . . . . . . . . . . . . . . . . .24
For Contracts Issued Prior to December 15, 1988. . . . . . . . . . . . .24
Waiver of the Contingent Deferred Sales Charge . . . . . . . . . . . . .25
Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
OPERATION OF THE CONTRACT. . . . . . . . . . . . . . . . . . . . . . . . . .26
Investments of the Variable Account. . . . . . . . . . . . . . . . . . .26
Allocation of Purchase Payments and Contract Value . . . . . . . . . . .26
Value of an Accumulation Unit. . . . . . . . . . . . . . . . . . . . . .26
Net Investment Factor. . . . . . . . . . . . . . . . . . . . . . . . . .27
Valuation of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . .27
Determining the Contract Value . . . . . . . . . . . . . . . . . . . . .27
Right to Revoke. . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Contract Ownership Provisions. . . . . . . . . . . . . . . . . . . . . .28
Joint Ownership Provisions . . . . . . . . . . . . . . . . . . . . . . .29
Contingent Ownership Provisions. . . . . . . . . . . . . . . . . . . . .29
Beneficiary Provisions . . . . . . . . . . . . . . . . . . . . . . . . .29
Surrender (Redemption) . . . . . . . . . . . . . . . . . . . . . . . . .29
Surrenders Under a Qualified Contract or Tax-Sheltered
Annuity Contract . . . . . . . . . . . . . . . . . . . . . . . . . .30
Loan Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Contract Owner Services. . . . . . . . . . . . . . . . . . . . . . . . .32
Asset Rebalancing . . . . . . . . . . . . . . . . . . . . . . . . . .32
Dollar Cost Averaging . . . . . . . . . . . . . . . . . . . . . . . .32
Systematic Withdrawals. . . . . . . . . . . . . . . . . . . . . . . .33
ANNUITY PAYMENT PERIOD, DEATH BENEFIT, AND OTHER DISTRIBUTIONS . . . . . . .33
Annuity Commencement Date. . . . . . . . . . . . . . . . . . . . . . . .33
Change in Annuity Commencement Date. . . . . . . . . . . . . . . . . . .33
Annuity Payment Period-Variable Account. . . . . . . . . . . . . . . . .33
Value of an Annuity Unit . . . . . . . . . . . . . . . . . . . . . . . .34
Assumed Investment Rate. . . . . . . . . . . . . . . . . . . . . . . . .34
Frequency and Amount of Annuity Payments . . . . . . . . . . . . . . . .34
Change in Form of Annuity. . . . . . . . . . . . . . . . . . . . . . . .34
Annuity Payment Options. . . . . . . . . . . . . . . . . . . . . . . . .34
Death of Contract Owner Provisions-Non-Qualified Contracts . . . . . . .35
Death of Annuitant Provisions- Non-Qualified Contracts . . . . . . . . .35
Death of the Contract Owner/Annuitant Provisions . . . . . . . . . . . .35
Death Benefit Payment Provisions . . . . . . . . . . . . . . . . . . . .35
Required Distribution Provisions for Non-Qualified Contracts . . . . . .35

5
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Required Distributions For Qualified Plans and
Tax Sheltered Annuities . . . . . . . . . . . . . . . . . . . . . . .36
Required Distributions for Individual Retirement
Annuities and SEP IRAs. . . . . . . . . . . . . . . . . . . . . . . .37
Generation-Skipping Transfers. . . . . . . . . . . . . . . . . . . . . .38
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . .38
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .38
Non-Qualified Contracts-Natural Persons as Owners. . . . . . . . . . . .38
Non-Qualified Contracts-Non-Natural Persons as Owners. . . . . . . . . .39
Qualified Plans, Individual Retirement Annuities, SEP IRAs,
and Tax Sheltered Annuities . . . . . . . . . . . . . . . . . . . . .40
Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Non-Resident Aliens. . . . . . . . . . . . . . . . . . . . . . . . . . .40
Federal Estate, Gift, and Generation Skipping Transfer Taxes . . . . . .41
Charge for Tax Provisions. . . . . . . . . . . . . . . . . . . . . . . .41
Diversification. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Tax Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Contract Owner Inquiries . . . . . . . . . . . . . . . . . . . . . . . .42
Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . .42
Advertising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . .47
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

6
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SUMMARY OF CONTRACT EXPENSES

CONTRACT OWNER TRANSACTION EXPENSES

Maximum Contingent Deferred Sales Charge (1). . . . . . . . . . . 7%
----------------------------------------------------------------------
RANGE OF CONTINGENT DEFERRED SALES CHARGE OVER TIME

Number of Completed Years from Contingent Deferred Sales Charge
Date of Purchase Payment Percentage
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
----------------------------------------------------------------------

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%

1 During the first Contract Year, the Contract Owner may withdraw without a
Contingent Deferred Sales Charge (CDSC) any amount in order for this
Contract to meet minimum distribution requirements under the Code or up to
10% of each Purchase Payment under Individual Retirement Annuity Contracts
issued on or after March 1, 1993. Starting with the second Contract Year
after a Purchase Payment has been made, the Contract Owner may withdraw
without a CDSC, the greater of (a) an amount equal to 10% of that Purchase
Payment made to the Contract or (b) any amount withdrawn in order for this
Contract to meet minimum distribution requirements under the Code.
Withdrawals may be restricted for Contracts issued pursuant to the terms of
a Tax Sheltered Annuity Plan or other Qualified Plan. This CDSC-free
withdrawal privilege is non-cumulative; that is, free amounts not taken
during any given Contract Year cannot be taken as free amounts in a
subsequent Contract Year (see "Contingent Deferred Sales Charge" for
additional waiver provisions).

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").

7
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UNDERLYING MUTUAL FUND ANNUAL EXPENSES(3)
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS)

- --------------------------------------------------------------------------------------------------------------------
Management Total Mutual
Fees Other Expenses Fund Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>

American Century Variable Portfolios, Inc.-American 1.00% 0.00% 1.00%
Century VP Balanced
- --------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.-American 1.00% 0.00% 1.00%
Century VP Capital Appreciation
- --------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.-American 1.50% 0.00% 1.50%
Century VP International
- --------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.-American 1.00% 0.00% 1.00%
Century VP Value
- --------------------------------------------------------------------------------------------------------------------
AVIS-Growth Fund 0.42% 0.02% 0.44%
- --------------------------------------------------------------------------------------------------------------------
AVIS-High-Yield Bond Fund 0.50% 0.03% 0.53%
- --------------------------------------------------------------------------------------------------------------------
AVIS-U.S. Government/AAA Rated Securities 0.51% 0.02% 0.53%
- --------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 0.25% 0.05% 0.30%
- --------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund-Growth & Income 0.75% 0.08% 0.83%
Portfolio
- --------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund* 0.72% 0.24% 0.96%
- --------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund-Capital
Appreciation Portfolio 0.75% 0.09% 0.84%
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity-Income Portfolio 0.51% 0.07% 0.58%
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth Portfolio 0.61% 0.08% 0.69%
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income Portfolio 0.59% 0.12% 0.71%
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas Portfolio 0.76% 0.17% 0.93%
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Asset Manager Portfolio* 0.64% 0.10% 0.74%
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Contrafund Portfolio 0.61% 0.13% 0.74%
- --------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund III-Growth Opportunities Portfolio 0.61% 0.16% 0.77%
- --------------------------------------------------------------------------------------------------------------------
Morgan Stanley Universal Funds, Inc.-Emerging
Markets Debt Portfolio 0.80% 0.50% 1.30%
- --------------------------------------------------------------------------------------------------------------------
NSAT-Capital Appreciation Fund 0.50% 0.02% 0.52%
- --------------------------------------------------------------------------------------------------------------------
NSAT-Government Bond Fund 0.50% 0.01% 0.51%
- --------------------------------------------------------------------------------------------------------------------
NSAT-Money Market Fund 0.50% 0.03% 0.53%
- --------------------------------------------------------------------------------------------------------------------
NSAT-Small Company Fund 1.00% 0.10% 1.10%
- --------------------------------------------------------------------------------------------------------------------
NSAT-Total Return Fund 0.50% 0.02% 0.52%
- --------------------------------------------------------------------------------------------------------------------
Neuberger&Berman Advisers Management Trust- 0.83% 0.09% 0.92%
Growth Portfolio
- --------------------------------------------------------------------------------------------------------------------
Neuberger&Berman Advisers Management Trust- 0.65% 0.13% 0.78%
Limited Maturity Bond Portfolio
- --------------------------------------------------------------------------------------------------------------------
Neuberger&Berman Advisers Management Trust- 0.84% 0.11% 0.95%
Partners Portfolio
- --------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Bond Fund 0.74% 0.04% 0.78%
- --------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Global 0.73% 0.08% 0.81%
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Growth Fund 0.75% 0.04% 0.79%
- --------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds-Multiple 0.73% 0.04% 0.77%
Strategies Fund
- --------------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. 1.00% 0.17% 1.17%
- --------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.-Discovery 1.00% 0.21% 1.21%
Fund II, Inc.
- --------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc.-International 1.00% 0.90% 1.90%
Stock Fund II
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

8
<PAGE>

UNDERLYING MUTUAL FUND ANNUAL EXPENSES(3)
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS)
CONTINUED
<TABLE>
<CAPTION>

Van Eck Worldwide Insurance Trust-Worldwide 1.00% 0.08% 1.08%
Hard Assets Fund
- --------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide 1.00% 0.08% 1.08%
Bond Fund*
- --------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide 1.00% 0.00% 1.00%
Emerging Markets Fund*
- --------------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life Investment
Trust-Morgan Stanley Real Estate Securities
Portfolio* 0.83% 0.27% 1.10%
- --------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International Equity Portfolio* 0.96% 0.40% 1.36%
- --------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Post-Venture Capital 0.62% 0.78% 1.40%
Portfolio*
- --------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company Growth 0.90% 0.26% 1.16%
Portfolio*
- --------------------------------------------------------------------------------------------------------------------
</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 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.

* The investment advisers for the indicated underlying Mutual Funds have
voluntarily agreed to reimburse a portion of the management fees and/or
operating expenses resulting in a reduction of the total expenses. Absent
any such partial reimbursement, "Management Fees" and "Other Expenses"
would have been 0.75% and 0.24% for the Dreyfus Socially Responsible Growth
Fund, Inc.; 0.71% and 0.10% for the Fidelity VIP Fund II-Asset Manager
Portfolio; 1.00% and 0.10% for the Van Eck Worldwide Insurance
Trust-Worldwide Bond Fund; 1.00% and 1.06% for the Van Eck Worldwide
Insurance Trust-Worldwide Emerging Markets Fund; 1.00% and 0.27% for the
Morgan Stanley Real Estate Securities Portfolio (Van Kampen American
Capital Life Investment Trust). Absent any such partial reimbursement,
"Total Mutual Fund Expenses" would have been 0.81% for the Oppenheimer
Variable Account Funds-Growth Fund, 1.40% for the Warburg Pincus
Trust-International Equity Portfolio; 5.56% for the Warburg Pincus Trust
Post-Venture Capital Portfolio; and 1.17% for the Warburg Pincus
Trust-Small Company Growth Portfolio.

9
<PAGE>

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.

- ----------------------------------------------------------------------------------------------------------------------------------
If you surrender your Contract If you do not surrender your If you annuitize your Contract
at the end of the applicable Contract at the end of the at the end of the applicable
time period applicable time period time period
- ----------------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

American Century Variable 95 121 157 278 25 76 130 278 * 76 130 278
Portfolios, Inc.-American
Century VP Balanced
- ----------------------------------------------------------------------------------------------------------------------------------
American Century Variable 95 121 157 278 25 76 130 278 * 76 130 278
Portfolios, Inc.-American
Century VP Capital
Appreciation
- ----------------------------------------------------------------------------------------------------------------------------------
American Century Variable 100 137 183 329 30 92 156 329 * 92 156 329
Portfolios, Inc.-American
Century VP International
- ----------------------------------------------------------------------------------------------------------------------------------
American Century Variable 95 121 157 278 25 76 130 278 * 76 130 278
Portfolios, Inc.-American
Century VP Value
- ----------------------------------------------------------------------------------------------------------------------------------
AVIS-Growth Fund 89 103 128 218 19 58 101 218 * 58 101 218
- ----------------------------------------------------------------------------------------------------------------------------------
AVIS-High-Yield Bond Fund 90 106 132 228 20 61 105 228 * 61 105 228
- ----------------------------------------------------------------------------------------------------------------------------------
AVIS-U.S. Govt./AAA Rated 90 106 132 228 20 61 105 228 * 61 105 228
- ----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 87 99 120 202 17 54 93 202 * 54 93 202
- ----------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF-Capital
Appreciation Portfolio 93 116 149 261 23 71 122 261 * 71 122 261
- ----------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF-Growth & Income 93 116 148 260 23 71 121 260 * 71 121 260
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially 94 120 155 274 24 75 128 274 * 75 128 274
Responsible Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Equity- 90 108 135 233 20 63 108 233 * 63 108 233
Income Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Growth 92 111 141 245 22 66 114 245 * 66 114 245
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-Overseas 94 119 154 271 24 74 127 271 * 74 127 271
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund-High Income 92 112 142 247 22 67 115 247 * 67* 115 247
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II-Asset 92 113 144 250 22 68 117 250 * 68 117 250
Manager Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II- 92 113 144 250 22 68 117 250 * 68 117 250
Contrafund Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund III-Growth
Opportunities Portfolio 92 114 145 254 22 69 118 254 * 69 118 254
- ----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Universal
Funds, Inc.-Emerging Markets
Debt Portfolio 98 131 173 309 28 86 146 309 * 86 146 309
- ----------------------------------------------------------------------------------------------------------------------------------
NSAT-Capital Appreciation 90 106 132 227 20 61 105 227 * 61 105 227
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
NSAT-Government Bond 90 106 131 225 20 61 104 225 * 61 104 225
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

10
<PAGE>

NSAT-Money Market Fund 90 106 132 228 20 61 105 228 * 61 105 228
- ----------------------------------------------------------------------------------------------------------------------------------
NSAT - Small Company Fund 96 124 163 288 26 79 136 288 * 79 136 288
- ----------------------------------------------------------------------------------------------------------------------------------
NSAT-Total Return Fund 90 106 132 227 20 61 105 227 * 61 105 227
- ----------------------------------------------------------------------------------------------------------------------------------
Neuberger&Berman Advisers 94 119 153 270 24 74 126 270 * 74 126 270
Management Trust-Growth
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Neuberger&Berman Advisers 92 114 146 255 22 69 119 255 * 69 119 255
Management Trust-Limited
Maturity Bond Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Neuberger&Berman Advisers 94 120 155 273 24 75 128 273 * 75 128 273
Management Trust- Partners
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable 92 114 146 255 22 69 119 255 * 69 119 255
Account Funds-Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable 93 115 147 258 23 70 120 258 * 70 120 258
Account Funds-Global
Securities Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable
Account Funds-Growth Fund 93 115 146 256 23 70 119 256 * 70 119 256
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable 93 115 147 258 23 70 120 258 * 70 120 258
Account Funds-Multiple
Strategies Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, 97 127 166 295 27 82 139 295 * 82 139 295
Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance 97 127 166 295 27 82 139 295 * 82 139 295
Funds, Inc.- Discovery Fund
II, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance 104 149 204 368 34 104 177 368 * 104 177 368
Funds, Inc. -International
Stock Fund II
- ----------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance 96 124 162 286 26 79 135 286 * 79 135 286
Trust-Worldwide Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance 95 121 157 278 25 76 130 278 * 76 130 278
Trust-Worldwide Emerging
Markets Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance 96 124 162 286 26 79 135 286 * 79 135 286
Trust-Worldwide Hard Assets
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Van Kampen American Capital
Life Investment Trust-Morgan
Stanley Real Estate
Securities Portfolio 96 124 163 288 26 79 136 288 * 79 136 288
- ----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust- 99 133 176 315 29 88 149 315 * 88 149 315
International Equity
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Post- 99 134 178 319 29 89 151 319 * 89 151 319
Venture Capital Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small 96 126 166 294 26 81 139 294 * 81 139 294
Company Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
*The Contracts sold under this prospectus do not permit annuitizations during the first two Contract Years.
</TABLE>

11
<PAGE>

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 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").

SYNOPSIS

The Individual Deferred Variable Annuity Contracts described in this
prospectus are designed for use in connection with the following types of
Contracts (1) Non-Qualified, (2) Individual Retirement Annuities, (3) Tax
Sheltered Annuities, (4) SEP IRAs and (5) Qualified.

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").

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 risks 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").

Upon Annuitization, the selected Annuity Payment Option will begin (see
"Annuity Payment Option"). However, if the net amount to be applied to any
Annuity Payment Option 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").

The Company will charge against the Purchase Payments or the Contract Value
the amount of any premium taxes levied by a state or any other governmental
entity (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. If a Contract is returned to
the Company in a timely manner, the Company will void the Contract and refund
the Contract Value in full unless otherwise required by state and/or federal
law. State and/or federal law may provide additional free look privileges. All
Individual Retirement Annuity refunds will be return of Purchase Payments (see
"Right to Revoke").

12
<PAGE>

CONDENSED FINANCIAL INFORMATION(1)
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

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>

American Century Variable 12.912980 14.300170 10.74% 3,254,121 1996
Portfolios, Inc. - 10.801286 12.912980 19.55% 2,978,792 1995
American Century VP 10.876699 10.801286 (0.69%) 2,670,990 1994
Balanced-Q 10.232829 10.876699 6.29% 2,039,118 1993
10.000000 10.232829 2.33% 1,233,110 1992
- ---------------------------------------------------------------------------------------------------------------------------
American Century Variable 12.912980 14.300170 10.74% 2,577,277 1996
Portfolios, Inc. - 10.801286 12.912980 19.55% 2,471,621 1995
American Century VP 10.876699 10.801286 (0.69%) 2,324,933 1994
Balanced-NQ 10.232829 10.876699 6.29% 2,073,593 1993
10.000000 10.232829 2.33% 1,301,248 1992
- ---------------------------------------------------------------------------------------------------------------------------
American Century Variable 25.074858 23.677551 (5.57%) 9,324,052 1996
Portfolios, Inc. - 19.378026 25.074858 29.40% 9,867,412 1995
American Century VP 19.864882 19.378026 (2.45%) 9,394,094 1994
Capital Appreciation-Q 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
- ---------------------------------------------------------------------------------------------------------------------------
American Century Variable 25.074858 23.677551 (5.57%) 6,231,979 1996
American Century Variable 19.378026 25.074858 29.40% 7,570,906 1995
Portfolios , Inc. - 19.864882 19.378026 (2.45%) 7,577,109 1994
American Century VP 18.244594 19.864882 8.88% 7,513,748 1993
Capital Appreciation-NQ 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
- ---------------------------------------------------------------------------------------------------------------------------
American Century Variable 10.402550 11.745639 12.91% 2,194,705 1996
Portfolios, Inc. - 9.392316 10.402550 10.76% 1,565,354 1995
American Century VP 10.000000 9.392316 (6.08%) 688,372 1994
International-Q
- ---------------------------------------------------------------------------------------------------------------------------
American Century Variable 10.402550 11.745639 12.91% 1,758,586 1996
Portfolios, Inc. - 9.392316 10.402550 10.76% 1,498,305 1995
American Century VP 10.000000 9.392316 (6.08%) 845,551 1994
International-NQ
- ---------------------------------------------------------------------------------------------------------------------------
American Century Variable 10.000000 10.142565 1.43% 12,933 1996*
Portfolio, Inc. -
American Century VP Value Q
- ---------------------------------------------------------------------------------------------------------------------------
American Century Variable 10.000000 10.142565 1.43% 77,276 1996*
Portfolio, Inc. -
American Century VP Value
NQ
- ---------------------------------------------------------------------------------------------------------------------------
AVIS- 21.880052 24.479182 11.88% 486,423 1996
Growth Fund-Q 16.632869 21.880052 31.55% 533,382 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

13
<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

AVIS- 21.880052 24.479182 11.88% 471,250 1996
Growth Fund-NQ 16.632869 21.880052 31.55% 544,338 1995
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- 20.792452 23.160826 11.39% 74,769 1996
High-Yield Bond Fund-Q 17.247186 20.792452 20.19% 74,984 1995
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- 20.792452 23.160826 11.39% 53,096 1996
High-Yield Bond Fund-NQ 17.247186 20.792452 20.19% 65,007 1995
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- 18.077072 18.395431 1.76% 183,087 1996
U.S. Gov't/AAA-Rated 15.872495 18.077072 13.89% 315,331 1995
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- 18.077072 18.395431 1.76% 149,634 1996
U.S. Gov't/AAA-Rated 15.872495 18.077072 13.89% 238,614 1995
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.

14
<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

Dreyfus Stock Index 13.619180 16.470432 20.94% 7,592,255 1996
Fund-Q 10.087774 13.619180 35.01% 3,284,707 1995
10.130946 10.087774 (0.43%) 539,188 1994
10.000000 10.130946 1.31% 114,256 1993
- ---------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index 13.619180 16.470432 20.94% 6,210,747 1996
Fund-NQ 10.087774 13.619180 35.01% 2,805,145 1995
10.130946 10.087774 (0.43%) 418,990 1994
10.000000 10.130946 1.31% 53,556 1993
- ---------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially 14.239508 17.037112 19.65% 1,552,615 1996
Responsible Growth 10.721141 14.239508 32.82% 640,387 1995
Fund-Q 10.702195 10.721141 0.18% 301,426 1994
10.000000 10.702195 7.02% 32,265 1993
- ---------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially 14.239508 17.037112 19.65% 1,190,421 1996
Responsible Growth 10.721141 14.239508 32.82% 421,093 1995
Fund-NQ 10.702195 10.721141 0.18% 263,764 1994
10.000000 10.702195 7.02% 48,396 1993
- ---------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable
Investment Fund -
Growth & Income
Portfolio Q 10.000000 9.986925 (0.13%) 15,022 1996*
- ---------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable
Investment Fund -
Growth & Income
Portfolio NQ 10.000000 9.986925 (0.13%) 2,643 1996*
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund- 14.832631 16.573676 11.74% 13,781,464 1996
Overseas Portfolio-Q 13.701507 14.832631 8.26% 14,272,080 1995
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- 14.832631 16.573676 11.74% 12,840,712 1996
Overseas Portfolio-NQ 13.701507 14.832631 8.26% 14,672,390 1995
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 21.817076 24.553550 12.54% 7,274,256 1996
Income Portfolio-Q 18.327364 21.817076 19.04% 6,464,833 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

Fidelity VIP Fund- High 21.817076 24.553550 12.54% 8,722,126 1996
Income Portfolio-NQ 18.327364 21.817076 19.04% 7,993,534 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - 24.863579 28.043676 12.79% 23,565,494 1996
Equity-Income Portfolio 18.646331 24.863579 33.34% 21,482,777 1995
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- 24.863579 28.043676 12.79% 20,058,276 1996
Equity-Income Portfolio 18.646331 24.863579 33.34% 21,094,657 1995
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-Growth 34.006052 38.497038 13.21% 17,849,804 1996
Portfolio-Q 25.451479 34.006052 33.61% 15,252,906 1995
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 (12.89%) 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 Growth 34.006052 38.497038 13.21% 13,715,597 1996
Portfolio-NQ 25.451479 34.006052 33.61% 13,813,237 1995
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 (12.89%) 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-Asset 18.056027 20.422622 13.11% 21,570,235 1996
Manager Portfolio-Q 15.641016 18.056027 15.44% 22,704,319 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

Fidelity VIP Fund II - Asset 18.056027 20.422622 13.11% 13,822,886 1996
Manager Portfolio-NQ 15.641016 18.056027 15.44% 16,037,811 1995
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 - 11.071500 13.255157 19.72% 10,594,586 1996
Contrafund Portfolio - Q 10.000000 11.071500 10.72% 3,025,498 1995
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - 11.071500 13.255157 19.72% 9,866,842 1996
Contrafund Portfolio - NQ 10.000000 11.071500 10.72% 3,490,716 1995
- ---------------------------------------------------------------------------------------------------------------------------
NSAT- 29.663756 30.296925 2.13% 3,938,276 1996
Government Bond 25.309101 29.663756 17.21% 4,150,795 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
NSAT- 29.585401 30.216906 2.13% 3,184,368 1996
Government Bond 25.242252 29.585401 17.21% 3,385,486 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
NSAT-Money 21.334141 22.132823 3.74% 9,766,503 1996
Market Fund-Q*** 20.457373 21.334141 4.29% 9,961,763 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

NSAT-Money 21.334141 22.132823 3.74% 10,963.993 1996
Market Fund-NQ*** 20.457373 21.334141 4.29% 10,688,426 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
NSAT-Small 11.410135 13.831813 21.22% 3,071,120 1996
Company Fund - Q 10.000000 11.410135 14.10% 157,084 1995
- ---------------------------------------------------------------------------------------------------------------------------
NSAT-Small 11.410135 13.831813 21.22% 3,061,699 1996
Company Fund - NQ 10.000000 11.410135 14.10% 607,477 1995
- ---------------------------------------------------------------------------------------------------------------------------
NSAT-Total 52.147953 62.707634 20.25% 3,546,292 1996
Return Fund-Q 40.926247 52.147953 27.42% 2,843,673 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
NSAT-Total 50.805130 61.092889 20.25% 3,148,253 1996
Return Fund-NQ 39.872391 50.805130 27.42% 2,833,128 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
Neuberger&Berman 27.626244 29.757359 7.71% 5,597,573 1996
Advisers Management 21.247525 27.626244 30.02% 5,919,670 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
Neuberger&Berman 27.626244 29.757359 7.71% 4,702,904 1996
Advisers Management 21.247525 27.626244 30.02% 5,358,461 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

***The 7-day yield on the Money Market Fund as of December 31, 1996 was 3.64%.

<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

Neuberger&Berman 16.311479 16.791470 2.94% 3,722,398 1996
Advisers Management 14.896724 16.311479 9.50% 4,061,293 1995
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 16.311479 16.791470 2.94% 3,388,267 1996
Advisers Management 14.896724 16.311479 9.50% 3,866,535 1995
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 13.494251 17.256151 27.88% 5,383,558 1996
Advisers Management 10.017795 13.494251 34.70% 2,151,917 1995
Trust-Partners Portfolio-Q 10.000000 10.017795 0.18% 223,285 1994
- ---------------------------------------------------------------------------------------------------------------------------
Neuberger&Berman
Advisers Management 13.494251 17.256151 27.88% 5,392,259 1996
Trust-Partners Portfolio- 10.017795 13.494251 34.70% 2,173,222 1995
NQ 10.000000 10.017795 0.18% 324,320 1994
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable 15.831164 18.045475 13.99% 4,869,534 1996
Accounts Fund-Multiple 13.216172 15.831164 19.79% 4,418,303 1995
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 15.831164 18.045475 13.99% 3,811,559 1996
Accounts Fund-Multiple 13.216172 15.831164 19.79% 3,837,204 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable 16.781326 17.356310 3.43% 3,808,030 1996
Accounts Fund-Bond 14.531774 16.781326 15.48% 3,369,101 1995
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 16.781326 17.356310 3.43% 3,276,566 1996
Accounts Fund-Bond 14.531774 16.781326 15.48% 3,073,942 1995
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

Oppenheimer Variable 11.411200 13.266755 16.26% 7,895,779 1996
Accounts Fund-Global 11.307851 11.411200 0.91% 6,518,772 1995
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 11.411200 13.266755 16.26% 5,355,527 1996
Accounts Fund-Global 11.307851 11.411200 0.91% 4,810,440 1995
Securities Fund-NQ 12.151882 11.307851 (6.95%) 6,373,740 1994
10.000000 12.151882 21.52% 1,833,969 1993
- ---------------------------------------------------------------------------------------------------------------------------
Strong Opportunity 18.071722 21.072564 16.61% 11,342,542 1996
Fund II, Inc.-Q 14.551898 18.071722 24.19% 9,874,627 1995
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 Opportunity 18.071722 21.072564 16.61% 8,634,564 1996
Fund II, Inc.-NQ 14.551898 18.071722 24.19% 8,712,015 1995
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 16.212409 16.129688 (0.51%) 4,502,456 1996
Funds, Inc.-Discovery 12.143604 16.212409 33.51% 5,223,195 1995
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 16.212409 16.129688 (0.51%) 3,833,429 1996
Funds, Inc.-Discovery 12.143604 16.212409 33.51% 5,248,509 1995
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
Funds, Inc.-International 10.226470 11.140682 8.94% 1,788,555 1996
Stock Fund II - Q 10.000000 10.226470 2.26% 78,603 1995
- ---------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance
Funds, Inc.-International 10.226470 11.140682 8.94% 1,660,749 1996
Stock Fund II - NQ 10.000000 10.226470 2.26% 86,735 1995
- ---------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide 14.433345 14.604281 1.18% 2,627,198 1996
Insurance Trust - 12.465907 14.433345 15.78% 2,993,355 1995
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% 51,091 1989
- ---------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide 14.433345 14.604281 1.18% 2,639,292 1996
Insurance Trust - 12.465907 14.433345 15.78% 3,020,939 1995
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% 27,550 1989
- ---------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide 13.944310 16.248199 16.52% 3,151,393 1996
Insurance Trust-Worldwide 12.728311 13.944310 9.55% 3,166,034 1995
Hard Assets Fund-Q 13.544828 12.728311 (6.03%) 3,213,104 1994
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
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

CONDENSED FINANCIAL INFORMATION-CONTINUED
Accumulation Unit Values for an Accumulation Unit outstanding throughout the
period.

Van Eck Worldwide 13.944310 16.248199 16.52% 3,558,069 1996
Insurance Trust-Worldwide 12.728311 13.944310 9.55% 3,714,045 1995
Hard Assets Fund-NQ 13.544828 12.728311 (6.03%) 4,473,812 1994
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 Eck Worldwide
Insurance Trust -
Worldwide Emerging
Markets Fund -Q 10.000000 10.077830 0.78% 271,881 1996*
- ---------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide
Insurance Trust -
Worldwide Emerging
Markets Fund NQ 10.000000 10.077830 0.78% 239,183 1996*
- ---------------------------------------------------------------------------------------------------------------------------
Van Kampen American
Capital Life Investment
Trust-Morgan Stanley
Real Estate Securities 10.765351 14.931303 38.70% 2,491,780 1996
Portfolio - Q 10.000000 10.765351 7.65% 310,010 1995
- ---------------------------------------------------------------------------------------------------------------------------
Van Kampen American
Capital Life Investment
Trust-Morgan Stanley
Real Estate Securities 10.765351 14.931303 38.70% 3,554,657 1996
Portfolio - NQ 10.000000 10.765351 7.65% 310,010 1995
- ---------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-
International Equity
Portfolio - Q 10.661059 11.572294 8.55% 5,551,036 1996
10.000000 10.661059 6.61% 1,798,470 1995
- ---------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-
International Equity 10.661059 11.572294 8.55% 5,736,148 1996
Portfolio - NQ 10.000000 10.661059 6.61% 2,012,385 1995
- ---------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-
Post-Venture Capital
Portfolio Q 10.000000 10.163772 1.64% 205,349 1996*
- ---------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-
Post-Venture Capital
Portfolio NQ 10.000000 10.163772 1.64% 198,784 1996*
- ---------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-
Small Company Growth 12.430073 13.973889 12.42% 4,899,073 1996
Portfolio - Q 10.000000 12.430073 24.30% 2,450,661 1995
- ---------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-
Small Company Growth 12.430073 13.973889 12.42% 4,810,067 1996
Portfolio - NQ 10.000000 12.430073 24.30% 2,574,975 1995
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

* The American Century Variable Portfolio, Inc. - American Century VP Value,
Dreyfus Variable Investment Fund - Growth and Income Portfolio, Van Eck
Worldwide Insurance Trust - Worldwide Emerging Markets Fund, and Warburg
Pincus Trust - Post-Venture Capital Portfolio were added December 23, 1996.
Consequently, the Condensed financial information reflects the accumulation
unit outstanding for the period from December 23, 1996 to December 31,
1996.

1 Accumulation unit history value information is not yet available for the
Dreyfus Variable Investment Fund-Capital Appreciation Portfolio, Fidelity
Variable Insurance Products Fund III-Growth Opportunities Portfolio, Morgan
Stanley Universal Funds, Inc.-Emerging Markets Debt Portfolio and the
Oppenheimer Variable Account Funds-Oppenheimer Growth Fund, which were
added as underlying Mutual Fund options effective July 14, 1997.

<PAGE>

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 43215. 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 underlying Mutual Fund option(s) should be read in
conjunction with this prospectus. A copy of each prospectus may be obtained
without charge from Nationwide Life Insurance Company by calling 1-800-243-6295,
TDD 1-800-238-3035, or writing P.O. Box 182356, Columbus, Ohio 43218-2356.

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 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 Contract Owner shall be the person who has the voting interest under
the Contract. The number of underlying Mutual Fund 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

<PAGE>

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. 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.

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.

SUBSTITUTION OF SECURITIES

If the shares of the underlying Mutual Fund options described in this
prospectus should no longer be available for investment by the Variable Account
or if, in the judgment of the Company's management, further investment in such
underlying Mutual Fund shares should become inappropriate, the Company may
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 may take place
without prior approval of the Securities and Exchange Commission, under such
requirements as it may impose.

VARIABLE ACCOUNT CHARGES AND OTHER DEDUCTIONS

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 1996, the Variable Account incurred total expenses equal to 1.50% of
its average net assets, relating to the administrative, sales, mortality and
expense risk charges described below 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.

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.

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:

<PAGE>

- --------------------------------------------------------------------------------
AMOUNT TYPE OF CONTRACT ISSUED
- --------------------------------------------------------------------------------

$30.00 - Non-Qualified Contracts
- 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); SEP IRAs
- Tax Sheltered Annuity Contracts (sold on or
after August 1, 1994).
- --------------------------------------------------------------------------------

(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 deduction of the Contract Maintenance Charge is made from each
Sub-Account and the Fixed Account in the same proportion that the value of the
Sub-Account or Fixed Account bears to the total Contract Value. In any Contract
Year when a Contract is surrendered for its full value on any date other than
the Contract Anniversary, the Contract Maintenance Charge will be deducted at
the time of such surrender. The amount of the Contract Maintenance Charge may
not be increased by the Company. In no event will reduction or elimination of
the Contract Maintenance Charge be permitted where such reduction or elimination
will be unfairly discriminatory to any person, or where it is prohibited by
state law.

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 value in that Sub-Account bears to the total Variable Account value.
The Contract Maintenance Charge and Administrative Charge 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.

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 "Waiver 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.

The Contingent Deferred Sales Charge is calculated by multiplying the
applicable Contingent Deferred Sales Charge percentages noted below by the
Purchase Payments that are surrendered. For purposes of calculating the
Contingent Deferred Sales Charge, surrenders are considered to come first from
the oldest

<PAGE>

Purchase Payment made to the Contract, then the next oldest Purchase Payment and
so forth. For tax purposes, a surrender is usually treated as a withdrawal of
earnings first.

The Contingent Deferred Sales Charge applies to Purchase Payments as
follows for Contracts issued on or after December 15, 1988:

NUMBER OF COMPLETED CONTINGENT DEFERRED NUMBER OF COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
PURCHASE PAYMENT PERCENTAGE PURCHASE PAYMENT PERCENTAGE
<S> <C> <C> <C> <C>
0 7% 4 3%
1 6% 5 2%
2 5% 6 1%
3 4% 7 0%

</TABLE>

FOR CONTRACTS ISSUED PRIOR TO DECEMBER 15, 1988

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 these Contracts, 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).

WAIVER OF CONTINGENT DEFERRED SALES CHARGE

During the first Contract Year, the Contract Owner may withdraw without a
Contingent Deferred Sales Charge (CDSC) any amount in order for this Contract to
meet minimum distribution requirements under the Code or up to 10% of each
purchase payment under Individual Retirement Annuity Contracts issued on or
after March 1, 1993. Starting with the second year after a Purchase Payment has
been made, the Contract Owner may withdraw, without a CDSC, the greater of: (a)
an amount equal to 10% of that Purchase Payment or (b) any amount withdrawn from
this Contract to meet minimum distribution requirements under the Code. This
CDSC-free withdrawal privilege is non-cumulative; that is, free amounts not
taken during any given Contract Year cannot be taken as free amounts in a
subsequent Contract Year.

In addition, no CDSC will be deducted: (1) upon the Annuitization of
Contracts which have been in force for at least two years, (2) upon payment of a
death benefit pursuant to the death of the Annuitant, or (3) from any values
which have been held under a Contract for at least 84 months. No CDSC applies
upon the transfer of values among the Sub-Accounts or between the Fixed Account
and the Variable Account. 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 may waive the CDSC on the first
Contract. A CDSC may apply to the contract received in the exchange.

When a Contract is held by a Charitable Remainder Trust, the amount which
may be withdrawn from this Contract without application of a CDSC, shall be the
larger of (a) or (b), where (a) is the amount which would otherwise be available
for withdrawal without application of a CDSC; 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.

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 591/2 and has participated in the
Contract for at least 5 years, as determined from the Contract
Anniversary date immediately preceding the Distribution;

D. the Plan Participant has participated in the Contract for at least 15
years as determined from the Contract Anniversary date immediately
preceding the Distribution;

E. the Plan Participant dies; or

F. the Contract is annuitized after 2 years from the inception of the
Contract.

<PAGE>

The Contract Owner may be subject to income tax on all or a portion of any
such withdrawals and to a tax penalty if the Contract Owner takes withdrawals
prior to age 59 1/2 (See "FEDERAL TAX CONSIDERATIONS- Non-Qualified
Contracts-Natural Persons as Owners").

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.

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.

OPERATION OF THE CONTRACT

INVESTMENTS OF THE VARIABLE ACCOUNT

The 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. 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.

ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE

Purchase Payments are allocated to the Fixed Account or 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. Subsequent Purchase Payments, if any, after the first
Contract Year must be at least $10 each. 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 Company reserves the right
to lower the subsequent Purchase Payment $10 minimum for certain employer
sponsored programs. 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.

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 no later than 2 business days after receipt of
an order to purchase if all information necessary for processing the purchase
order is complete. The Company may, however, retain the Purchase Payment for up
to 5 business days while attempting to complete an order to purchase. If it is
not 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 order to purchase is 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 AN ACCUMULATION UNIT

The value of an 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

<PAGE>

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, Administration Charge,
and any charge or credit for tax reserves.

VALUATION OF ASSETS

Underlying Mutual Fund shares in the Variable Account will be valued at
their net asset value.

DETERMINING THE CONTRACT VALUE

The sum of the value of all 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 each of the Variable Account
and the Fixed Account bears to the total Contract Value.

RIGHT TO REVOKE

Unless otherwise required by state and/or federal law, the Contract Owner
may revoke the Contract 10 days after receipt of the Contract and receive a
refund of the Contract Value. 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

Transfers between the Fixed and Variable Account must be made prior to the
Annuitization Date. The Contract Owner may request a transfer of up to 100% of
the Variable Account value to the Fixed Account,

<PAGE>

without penalty or adjustment. However, 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. 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 for any amount allocated
to the Fixed Account expires on the final day of a calendar quarter during which
the one year anniversary of the allocation to the Fixed Account occurs. For all
transfers involving the Variable Account, the Contract Owner's value in each
Sub-Account will be determined as of the date the transfer request is received
in the Home Office in good order.

The Contract 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 45 days after the expiration date of
the guarantee period. Contract 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 the Contract Owner's election. The
Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include the
following: 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; or
such other procedures as the Company may deem reasonable. Although the
Company's failure to follow reasonable procedures may result in the Company's
liability for any losses due to unauthorized or fraudulent telephone transfers,
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.

Contracts described in this prospectus may in some cases be sold to
individuals who independently utilize the services of a firm or individual
engaged in market timing. Generally, such firms or individuals obtain
authorization from multiple Contract Owners to make transfers and exchanges
among the Sub-Accounts (the underlying Mutual Funds) on the basis of perceived
market trends. Because of the unusually large transfers of funds associated
with some of these transactions, the ability of the Company or underlying Mutual
Funds to process such transactions may be compromised, and the execution of such
transactions may possibly disadvantage or work to the detriment of other
Contract Owners not utilizing market timing services.

Accordingly, the right to exchange Contract Values among the Sub-Accounts
may be subject to modification if such rights are exercised by a market timing
firm or any other third party authorized to initiate transfer or exchange
transactions on behalf of multiple Contract Owners. THE RIGHTS OF INDIVIDUAL
CONTRACT OWNERS TO EXCHANGE CONTRACT VALUES, WHEN INSTRUCTIONS ARE SUBMITTED
DIRECTLY BY THE CONTRACT OWNER, OR BY THE CONTRACT OWNER'S REPRESENTATIVE OF
RECORD AS AUTHORIZED BY THE EXECUTION OF A VALID NATIONWIDE LIMITED POWER OF
ATTORNEY FORM, WILL NOT BE MODIFIED IN ANY WAY. In modifying such rights, the
Company may, among other things, not accept (1) the transfer or exchange
instructions of any agent acting under a power of attorney on behalf of more
than one Contract Owner, or (2) the transfer or exchange instructions of
individual Contract Owners who have executed preauthorized transfer or exchange
forms which are submitted by market timing firms or other third parties on
behalf of more than one Contract Owner at the same time. The Company will not
impose any such restrictions or otherwise modify exchange rights unless such
action is reasonably intended to prevent the use of such rights in a manner that
will disadvantage or potentially impair the contract rights of other Contract
Owners.

CONTRACT 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. Prior to the
Annuitization Date, the Contract Owner may name a new Contract Owner in
Non-Qualified Contracts. Such change may be subject to state and federal gift
taxes and may also result in federal income taxation. Any change of Contract
Owner designation will automatically revoke any prior Contract Owner
designation. Once proper notice of the change is received and recorded by the
Company, the change will become effective as of the date the written request is
recorded. A change of Owner will not apply and will not be

<PAGE>

effective with respect to any payment made or action taken by the Company prior
to the time that the change was received and recorded by the Company.

Prior to the Annuitization Date, the Contract Owner may request a change in
the Annuitant, the Contingent Annuitant, Contingent Owner, Beneficiary, or
Contingent Beneficiary. Such a request must be made in writing on a form
acceptable to the Company and must be signed by both the Contract Owner and the
person to be named as Designated Annuitant, Contingent Designated Annuitant, or
Contingent Owner, as applicable. Such request must be received by the Company
at its Home Office prior to the Annuitization Date. Any such change is subject
to underwriting and approval by the Company. If the Contract Owner is not a
natural person and there is a change of the Annuitant, such change shall be
treated as the death of a Contract Owner and Distributions shall be made as if
the Contract Owner died at the time of such change.

On the Annuitization Date, the Annuitant shall become the Contract Owner.

JOINT OWNERSHIP PROVISIONS

Where permitted by state law, joint owners must be spouses at the time
joint ownership is requested. If a Joint Owner is named, the Joint Owner will
possess an undivided interest in the Contract. Unless otherwise provided, the
exercise of any ownership right in the Contract (including the right to
surrender or partially surrender the Contract, to change the Contract Owner, the
Contingent Owner, the Designated Annuitant, the Contingent Designated Annuitant,
the Beneficiary, the Contingent Beneficiary, the Annuity Payment Option or the
Annuitization Date) shall require a written request signed by both Joint Owners.
The Company will not be liable for any loss, liability, cost, or expense for
acting in accordance with the instructions of either the Owner or Joint Owner.

CONTINGENT OWNERSHIP PROVISIONS

The Contingent Owner is the person who may receive certain benefits under the
Contract if the Contract Owner, who is not the Annuitant, dies prior to the
Annuitization Date and there is no surviving Joint Owner. If more than one
Contingent Owner survives the Contract Owner, each will share equally unless
otherwise specified in the Contingent Owner designation. If no Contingent Owner
survives a Contract Owner and there is no surviving Joint Owner, all rights and
interest of the Contingent Owner will vest in the Designated Annuitant. If a
Contract Owner, who is also the Designated Annuitant, dies before the
Annuitization Date and there is no surviving Joint Owner, then the Contingent
Owner does not have any rights in the Contract; however, if the Contingent Owner
is also the Beneficiary, the Contingent Owner will have all the rights of a
beneficiary.

Subject to the terms of any existing assignment, the Contract Owner may
change the Contingent Owner prior to the Annuitization Date by written notice to
the Company. The change will take effect upon receipt and recording by the
Company at its Home Office, 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.

BENEFICIARY PROVISIONS

The Beneficiary is the person or persons who may receive certain benefits
under the Contract in the event the Annuitant dies prior to the Annuitization
Date. If more than one Beneficiary survives the Annuitant, each will share
equally unless otherwise specified in the Beneficiary designation. If no
Beneficiary survives the 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 no Contingent Beneficiaries survive the
Annuitant, all rights and interest of the Contingent Beneficiary will vest with
the Contract Owner or the estate of the last surviving Contract Owner.

Subject to the terms of any existing assignment, the Contract Owner
may change the Beneficiary or Contingent Beneficiary during the lifetime of the
Annuitant, by written notice to the Company. The change will take effect upon
receipt and recording by the Company at its Home Office, whether or not the
Annuitant is living at the time of recording, but without further liability as
to any payment or settlement made by the Company before receipt of such change.

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 Contract Owner must
request the surrender in writing and include the Contract. 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 may require that the signature(s) be guaranteed by a member
firm of a major stock exchange or other depository institution qualified to give
such a guaranty.

<PAGE>

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 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 CONTRACT 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).

<PAGE>

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. Distributions pursuant to Qualified Domestic Relations Orders will not
be considered to be a violation of the restrictions stated in this provision.

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.

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 may 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. 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 processed in the same manner as a Purchase Payment. Loan
repayments will be allocated among the Fixed and Variable Accounts in accordance
with the Contract, unless the Contract Owner and the Company agree to amend the
Contract at a later date on a case by case basis.

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 a Contract Owner who is not the Annuitant dies prior to
Annuitization and while the loan is outstanding, the Distribution 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

<PAGE>

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,
the entire loan will be treated as a deemed Distribution, 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 loan's term or
procedures if there is a change in applicable law. The Company also reserves
the right to assess a loan processing fee.

Individual Retirement Annuities, SEP IRAs and Non-Qualified Contracts are
not eligible for loans.

ASSIGNMENT

Where permitted, the Contract Owner may assign some or all rights under the
Contract at any time during the lifetime of the Annuitant prior to the
Annuitization Date. Such assignment will take effect upon receipt and recording
by the Company at its Home Office of a written notice executed by the Contract
Owner. The Company is not responsible for the validity or tax consequences of
any assignment. The Company shall not be liable as to any payment or other
settlement made by the Company before recording 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.

If this Contract is a Non-Qualified Contract, any portion of the 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 it was pledged or
assigned. 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. All rights in this Contract are personal to the
Contract Owner and may not be assigned without written consent of the Company.
Assignment of the entire Contract Value may cause the portion of the Contract
Value exceeding the total investment in the Contract and previously taxed
amounts to be included in gross income for federal income tax purposes each year
that the assignment is in effect. Individual Retirement Annuities, SEP IRAs,
Tax Sheltered Annuities, and Qualified Contracts, may not be assigned, pledged
or otherwise transferred except under such conditions as may be allowed by law.

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 or based on another frequency authorized by
the Company. 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 first business day
after that day. An Asset Rebalancing request must be in writing on a form
provided by the Company. The Contract Owner may want to contact a financial
adviser in order to discuss the use of Asset Rebalancing in his or her Contract.

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 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- If the Contract Value is $15,000 or more, the
Contract Owner may direct the Company to automatically transfer a specified
amount from the Money Market Fund Sub-Account, Limited

<PAGE>

Maturity Bond Portfolio Sub-Account or the Fixed Account to any other
Sub-Account within the Variable Account on a monthly basis or as frequently as
otherwise authorized by the Company. 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. The minimum monthly Dollar Cost Averaging transfer
is $100. In addition, Dollar Cost Averaging monthly transfers from the Fixed
Account must be equal to or less than 1/30th of the Fixed Account value when the
Dollar Cost Averaging program is requested. Transfers out of the Fixed Account,
other than for Dollar Cost Averaging, may be subject to certain additional
restrictions (see "Transfers"). A written election of this service, on a form
provided by the Company, must be completed by the Contract Owner in order to
begin transfers. Once elected, transfers from the Money Market Fund
Sub-Account, Limited Maturity Bond Portfolio Sub-Account or the Fixed Account
will be processed monthly or on another approved frequency until either the
value in the Money Market Fund 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 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 of 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. Unless directed by the Contract Owner, the Company will withhold
federal income taxes from each Systematic Withdrawal. In addition, the
Internal Revenue Service may assess a 10% federal penalty tax on Systematic
Withdrawals if the Contract Owner is under age 591/2. Unless the Contract
Owner has made an irrevocable election of distributions of substantially
equal payments, the Systematic Withdrawals may be discontinued 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. Systematic withdrawals
are not available prior to the expiration of the ten day free look provision of
the Contract or of applicable state/federal law.

ANNUITY PAYMENT PERIOD, DEATH BENEFIT AND OTHER DISTRIBUTIONS

ANNUITY COMMENCEMENT DATE

An Annuity Commencement Date will be selected. Such date must be the first
day of a calendar month or any other agreed upon date 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 or Tax Sheltered Annuity Plan, Annuitization may
occur during the first 2 years subject to approval by the Company.

CHANGE IN ANNUITY COMMENCEMENT DATE

If the Contract Owner requests in writing and the Company approves the
request, the Annuity Commencement Date may be changed. The new date must comply
with the Annuity Commencement Date provisions above.

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

<PAGE>

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.

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 periodically, but at least
annually, 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 periodically,
but at least annually, 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 such
recipient as chosen by the Annuitant at the time the Annuity Payment
Option was selected. In the alternative, the recipient 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 someone other than the Annuitant 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
Contract 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.

<PAGE>

If the Contract Owner of a Non-Qualified Contract fails to elect an Annuity
Payment Option, no distribution will be made until an effective Annuity Payment
Option has been elected. Qualified Plan Contracts, Individual Retirement
Annuities, SEP IRAs, or Tax Sheltered Annuities are subject to the minimum
Distribution requirements set forth in the Plan, Contract, or Code.

DEATH OF CONTRACT OWNER PROVISIONS - NON-QUALIFIED CONTRACTS

For Non-Qualified Contracts, if the Contract Owner and the Annuitant are
not the same person and such Contract Owner dies prior to the Annuitization
Date, then the Joint Owner, if any, becomes the new Contract Owner. If there is
no surviving Joint Owner, the Contingent Owner becomes the new Contract Owner.
If there is no surviving Contingent Owner, the Designated Annuitant becomes the
Contract Owner. The entire interest in the Contract Value, less any applicable
deductions (which may include a Contingent Deferred Sales Charge), must be
distributed in accordance with the "Required Distribution Provisions-
Non-Qualified Contracts" provisions.

DEATH OF THE ANNUITANT PROVISIONS - NON-QUALIFIED CONTRACTS

If the Contract Owner and Designated Annuitant are not the same person, and
the Designated Annuitant dies prior to the Annuitization Date, a Death Benefit
will be payable to the Beneficiary, the Contingent Beneficiary, the Contract
Owner, or the last surviving Contract Owner's estate, as specified in the
"Beneficiary Provisions", unless there is a surviving Contingent Designated
Annuitant. In such case, the Contingent Designated Annuitant becomes the
Designated Annuitant and no Death Benefit is payable.

The Beneficiary may elect to receive such Death Benefits in the form of:
(1) a lump sum distribution; (2) election of an annuity payout; or (3) any
distribution that is permitted under state and federal regulations and is
acceptable by the Company. Such election must be received by the Company within
60 days of the Annuitant's death.

If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be paid according to the selected Annuity Payment Option.

DEATH OF THE CONTRACT OWNER/ANNUITANT PROVISIONS

If any Contract Owner and Designated Annuitant are the same person, and
such person dies before the Annuitization Date, a Death Benefit will be payable
to the Beneficiary, the Contingent Beneficiary, the Contract Owner, or the last
surviving Contract Owner's estate, as specified in the Beneficiary Provisions
and in accordance with the appropriate "Required Distributions Provisions."

If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be paid according to the selected Annuity Payment Option.

DEATH BENEFIT PAYMENT PROVISIONS

The value of the Death Benefit will be determined as of the Valuation Date
coincident with or next following the date the Company receives in writing at
the Home Office the following three items: (1) proper proof of the Designated
Annuitant's death; (2) an election specifying the distribution method; and (3)
any applicable state required form(s).

If the Designated Annuitant dies prior to his 75th birthday the dollar
amount of the death benefit will be the greater of: (1) the Contract Value; or,
(2) the sum of all purchase payments, less any amounts surrendered.

If the Contract Owner has (1) requested an Annuity Commencement Date later
than the first day of the calendar month after the Annuitant's 75th birthday;
(2) the Company has approved the request; and (3) the Designated Annuitant dies
after his or her 75th birthday, the dollar amount of the death benefit will be
equal to the Contract Value.

If the Annuitant dies after the Annuitization Date, any payment that may be
payable will be determined according to the selected Annuity Payment Option.

REQUIRED DISTRIBUTION PROVISIONS FOR NON-QUALIFIED CONTRACTS

Upon the death of any Contract Owner or Joint Owner (including an Annuitant
who becomes the Owner of the Contract on the Annuitization Date) (each of the
foregoing "a deceased Owner"), certain distributions for Non-Qualified Contracts
issued on or after January 19, 1985, are required by Section 72(s) of the Code.
Notwithstanding any provision of the Contract to the contrary, the following
distributions shall be made in accordance with such requirements:

<PAGE>

1. If any deceased Owner dies on or after the Annuitization Date and
before the entire interest under the Contract has been distributed,
then the remaining portion of such interest shall be distributed at
least as rapidly as under the method of distribution in effect as of
the date of such deceased Owner's death.

2. If any deceased Owner dies prior to the Annuitization Date, then the
entire interest in the Contract (consisting of either the Death
Benefit or the Contract Value reduced by certain charges as set forth
elsewhere in the Contract) shall be distributed within 5 years of the
death of the deceased Owner, provided however:

(a) If any portion of such interest is payable to or for the benefit
of a natural person who is a surviving Contract Owner, Contingent
Owner, Joint Owner, Annuitant, Contingent Designated Annuitant,
Beneficiary, or Contingent Beneficiary as the case may be (each a
"designated beneficiary"), such portion may, at the election of
the designated beneficiary, be distributed over the life of such
designated beneficiary, or over a period not extending beyond the
life expectancy of such designated beneficiary, provided that
payments begin within one year of the date of the deceased
Owner's death (or such longer period as may be permitted by
federal income tax regulations), and

(b) If the designated beneficiary is the surviving spouse of the
deceased Owner, such spouse may elect to become the Owner of this
Contract, in lieu of a Death Benefit, and the distributions
required under these distribution rules will be made upon the
death of such spouse.

In the event that this Contract is owned by a person that is not a natural
person (e.g., a trust or corporation), then, for purposes of these distribution
provisions, (i) the death of the Annuitant shall be treated as the death of any
Owner, (ii) any change of the Annuitant shall be treated as the death of any
Owner, and (iii) in either case the appropriate distribution required under
these distribution rules shall be made upon such death or change, as the case
may be. The Annuitant is the primary annuitant as defined in Section
72(s)(6)(B) of the Code.

These distribution provisions shall not be applicable to any Contract that
is not required to be subject to the provisions of 72(s) of the Code by reason
of Section 72(s)(5) or any other law or rule (including Tax Sheltered Annuities,
Individual Retirement Annuities, Qualified Plans and SEP IRAs).

Upon the death of a "deceased Owner", the designated beneficiary must elect
a method of distribution which complies with these above distribution provisions
and which is acceptable to the Company. Such election must be received by the
Company within 60 days of the deceased Owner's death.

REQUIRED DISTRIBUTIONS 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 applicable regulations and will be paid,
notwithstanding anything else contained herein, to the Annuitant under the
Annuity Payments Option selected, over a period not exceeding:

A. the life of the Annuitant or the lives of the Annuitant and the
Annuitant's designated beneficiary under the selected Annuity Payment
Option; or

B. a period not extending beyond the life expectancy of the Annuitant or
the life expectancy of the Annuitant and the Annuitant's designated
beneficiary under the selected annuity Payment Option.

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 Annuitant's entire interest in a Qualified Plan or Tax Sheltered
Annuity is to be distributed in equal or substantially equal payments over a
period described in (A) or (B), above, such payments will commence no later than
(i) the first day of April following the calendar year in which the Annuitant
attains age 70 1/2 or (ii) when the Annuitant retires, whichever is later (the
"required beginning date"). However, provision (ii) does not apply to any
employee who is a 5% Owner (as defined in Section 416 of the Code) with respect
to the plan year ending in the calendar year in which the employee attains the
age of 70 1/2.

If the Annuitant 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 calendar year in which the fifth anniversary
of his or her death occurs unless:

(a) the Annuitant names his or her surviving spouse as the Beneficiary and
such spouse elects to receive Distribution of the account in
substantially 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 Annuitant would have attained age
70 1/2; or

<PAGE>

(b) the Annuitant names a Beneficiary other than his or her surviving
spouse and such Beneficiary elects to receive a Distribution of the
account in substantially 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 Annuitant
dies.

If the Annuitant dies after Distribution has commenced, Distribution must
continue at least as rapidly as under the schedule being used prior to his or
her death.

Payments commencing on the required beginning date will not be less than
the lesser of the quotient obtained by dividing the entire interest of the
Annuitant by the life expectancy of the Annuitant, or the joint and last
survivor expectancy of the Annuitant and the Annuitant's designated beneficiary
(if the Annuitant dies prior to the required beginning date) or the beneficiary
under the selected Annuity Payment Option (if the Annuitant dies after the
required beginning date) whichever is applicable under the applicable minimum
distribution or MDIB provisions. Life expectancy and joint and last survivor
expectancy are computed by the use of return multiples contained in Section
1.72-9 of the Treasury Regulations.

If the amounts distributed to the Annuitant are less than those mentioned
above, penalty tax of 50% is levied on the excess of the amount that should have
been distributed for that year over the amount that actually was distributed for
that year.

REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES AND SEP IRAS

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. Distribution may be accepted in a lump sum or in
substantially 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

(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.

No Distribution will be required from this Contract if Distributions
otherwise required from this Contract are being withdrawn from another
Individual Retirement Annuity or Individual Annuity Account of the Contract
Owner.

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 who is the beneficiary under the
Annuity Payment Option, may treat the Contract as his or her own, in the same
manner as is described in section (a)(i) of this provision.

If the amounts distributed to the Contract Owner are less than those
mentioned above, penalty tax of 50% is levied on the excess of the amount that
should have been distributed for that year over the amount that actually was
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 Purchase Payments 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 Purchase Payments, the amount of any
Distribution, the amount by which non-deductible Purchase Payments for all years
exceed non-taxable Distributions for all years, and the total balance of all
Individual Retirement Annuities.

Individual Retirement Annuity 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.

<PAGE>

Simplified Employee Pensions (SEPs) and Salary Reduction Simplified
Employee Pensions (SAR SEPs), described in Section 408(k) of the Code, are taxed
in a manner similar to IRAs, and are subject to similar distribution
requirements as IRAs. SAR SEPs cannot be established after 1996.

GENERATION-SKIPPING TRANSFERS

The Company may 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.

FEDERAL TAX CONSIDERATIONS

FEDERAL INCOME TAXES

The Company does not make any guarantee regarding the tax status for any
Contract or any transaction involving the Contracts. Contract Owners should
consult a financial consultant, legal counsel or tax advisor to discuss in
detail the taxation and the use of the Contracts.

Section 72 of the Code governs federal income taxation of annuities in
general. That section sets forth different rules for: (1) Qualified Contracts;
(2) Individual Retirement Annuities, including SEP IRAs; (3) Tax Sheltered
Annuities; and (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.

Distributions from Individual Retirement Annuities and Contracts owned by
Individual Retirement Accounts are 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.

A change of the Annuitant or Contingent Annuitant may be treated by the
Internal Revenue Service as a taxable transaction.

NON-QUALIFIED CONTRACTS - NATURAL PERSONS AS OWNERS

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 until the investment has been recovered; thereafter the
entire amount is includable in income. The maximum amount excludable from
income is the investment in the Contract. If the Annuitant dies prior to
excluding from income the entire investment in the Contract, the Annuitant's
final tax return may reflect a deduction for the balance of the investment in
the Contract.

Distributions made from the Contract prior to 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 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

<PAGE>

attributable to contributions made to the Contract after February 28, 1986.
There are exceptions for 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 the result of an exchange described
in Section 1035 of the Code, for purposes of determining whether the Contract is
an immediate annuity, it will generally be considered to have been purchased on
the purchase date of the contract given up in the exchange.

Code Section 72 also provides for a penalty tax, equal to 10% of the
portion of any Distribution that is includable in gross income, if such
Distribution is made prior to attaining age 59 1/2. The penalty tax does not
apply if the Distribution is attributable to the Contract Owner's death,
disability, or is one of a series of substantially equal periodic payments made
over the life or life expectancy of the Contract Owner (or the joint lives or
joint life expectancies of the Contract Owner and the beneficiary selected by
the Contract Owner to receive payment under the Annuity Payment Option selected
by the Contract Owner) or for the purchase of 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. Such election
shall be irrevocable and may not be amended or changed.

In order to qualify as an annuity contract under Section 72 of the Code,
the contract must provide for Distribution of the entire contract to be made
upon the death of a Contract Owner. If a Contract Owner dies prior to the
Annuitization Date, then the Joint Contract Owner, the Contingent Owner or other
named recipient must receive the Distribution within 5 years of the Contract
Owner's death. However, the recipient may elect for payments to be made over
his/her life or life expectancy provided that such payments begin within one
year from the death of the Contract Owner. If the Joint Contract Owner,
Contingent Owner or other named recipient 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 (see "Required Distribution For Qualified Plans and Tax Sheltered
Annuities"). If the Contract Owner is not an individual, the death of the
Annuitant (or a change in the Annuitant) will result in a Distribution pursuant
to these rules, regardless of whether a Contingent Annuitant is named.

The Code requires that any election to receive an annuity rather than a
lump sum payment must be made within 60 days after the lump sum becomes payable
(generally, the election must be made within 60 days after the death of an Owner
or the Annuitant). If the election is made more than 60 days after the lump sum
first becomes payable, the election would be ignored for tax purposes, and the
entire amount of the lump sum would be subject to immediate tax. If the
election is made within the 60 day period, each Distribution would be taxable
when it is paid.

NON-QUALIFIED CONTRACTS - NON-NATURAL PERSONS AS OWNERS

The foregoing discussion of the taxation of Non-Qualified Contracts applies
to Contracts owned (or, pursuant to Section 72(u) of the Code, deemed to be
owned) by individuals; it does not apply to Contracts where one or more
non-individuals is an Owner.

As a general rule, contracts owned by corporations, partnerships, trusts,
and similar entities ("Non-Natural Persons"), rather than by one or more
individuals, are not treated as annuity contracts for most purposes under the
Code; in particular, they are not treated as annuity contracts for purposes of
Section 72. Therefore, the taxation rules for Distributions, as described
above, do not apply to Non-Qualified Contracts owned by Non-Natural Persons.
Rather, the following rules will apply:

The income earned under a Non-Qualified Contract that is owned by a
Non-Natural Person is taxed as ordinary income during the taxable year that it
is earned, and is not deferred, even if the income is not distributed out of the
Contract to the Owner.

The foregoing Non-Natural Person rule does not apply to all entity-owned
contracts. First, for this purpose, a Contract that is owned by a Non-Natural
Person as an agent for an individual is treated as owned by the individual.
This exception does not apply, however, to a Non-Natural Person who is an
employer that holds the Contract under a non-qualified deferred compensation
arrangement for one or more employees.

The Non-Natural Person rules also do not apply to a Contract that is (a)
acquired by the estate of a decedent by reason of the death of the decedent; (b)
issued in connection with certain qualified retirement plans and individual
retirement plans; (c) used in connection with certain structured settlements;
(d) purchased by an employer upon the termination of certain qualified
retirement plans; or (e) an immediate annuity.

<PAGE>

QUALIFIED PLANS, INDIVIDUAL RETIREMENT ANNUITIES, SEP IRAS AND TAX SHELTERED
ANNUITIES

The Contract may be purchased as a Qualified Contract, an Individual
Retirement Annuity, SEP IRA, or a Tax Sheltered Annuity. The Contract Owner
should seek competent advice as to the tax consequences associated with the use
of a Contract as an Individual Retirement Annuity.

For information regarding eligibility, limitations on permissible amounts
of Purchase Payments, and the tax consequences of distributions from Qualified
Plans, Tax Sheltered Annuities, Individual Retirement Annuities, SEP IRAs and
other plans that receive favorable tax treatment, the purchasers of such
contracts should seek competent advice. The terms of such plans may limit the
rights available under the Contracts.

Pursuant to Section 403(b)(1)(E) Code, a Contract that is issued as a
Tax-Sheltered Annuity is required to limit the amount of the Purchase Payment
for any year to an amount that does not exceed the limit set forth in Section
402(g) of the Code ($7,000), as it is from time to time increased to reflect
increases in the cost of living. This limit may be reduced by any deposits,
contributions or payments made to any other Tax-Sheltered Annuity or other plan,
contract or arrangement by or on behalf of the Owner.

The Code permits the rollover of most Distributions from Qualified Plans to
other Qualified Plans or Individual Retirement Annuities. Most Distributions
from Tax-Sheltered Annuities may be rolled into another Tax-Sheltered Annuity,
Individual Retirement Annuity, or an Individual Retirement Account.
Distributions that 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 Contract
Owner, (b) over the joint lives (or joint life expectancies) of the
Contract Owner and the Contract Owner'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 rate of twenty percent (20%) unless the Distribution is
transferred directly to an appropriate plan as described above.

The Contract is available for Qualified Plans electing to comply with
section 404(c) of ERISA. It is the responsibility of the plan and its
fiduciaries to determine and satisfy the requirements of section 404(c).

WITHHOLDING

The Company is required to withhold tax from certain Distributions to the
extent that such Distribution would constitute income to the Contract Owner or
other payee. The Contract Owner or other payee is entitled to elect not to have
federal income tax withheld from any such Distribution, but may be subject to
penalties in the event insufficient federal income tax is withheld during a
calendar year. However, if the Internal Revenue Service notifies the Company
that the Contract Owner or other payee has furnished an incorrect taxpayer
identification number, or if the Contract Owner or other payee fails to provide
a taxpayer identification number, the Distributions may be subject to back-up
withholding at the statutory rate, which is presently 31%, and which cannot be
waived by the Contract Owner or other payee.

NON-RESIDENT ALIENS

Distributions to nonresident aliens (NRAs) are generally subject to federal
income tax and tax withholding, at a statutory rate of thirty percent (30%) of
the amount of income that is distributed. The Company may be required to
withhold such amount from the Distribution and remit it to the Internal Revenue
Service. Distributions to certain NRAs may be subject to lower, or in certain
instances, zero tax and withholding rates, if the United States has entered
into an applicable treaty. However, in order to obtain the benefits of such
treaty provisions, the NRA must give to the Company sufficient proof of his or
her residency and citizenship in the form and manner prescribed by the Internal
Revenue Service. In addition, for any Distribution made after December 31,
1997, the NRA must obtain an Individual Taxpayer Identification Number from the
Internal Revenue Service, and furnish that number to the Company prior to the
Distribution. If the Company does not have the proper proof of citizenship or
residency and (for Distributions after December 31, 1997) a proper Individual
Taxpayer Identification Number prior to any Distribution, the Company will be
required to withhold 30% of the income, regardless of any treaty provision.

A payment may not be subject to withholding where the recipient
sufficiently establishes to the Company that such payment is effectively
connected to the recipient's conduct of a trade or business in the United States
and that such payment is includable in the recipient's gross income for United
States federal income tax purposes. Any such Distributions will be subject to
the rules set forth in the section entitled "Withholding."

<PAGE>

FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES

A transfer of the Contract from one Contract Owner to another, or the
payment of a Distribution under the Contract to someone other than a Contract
Owner, may constitute a gift for federal gift tax purposes. Upon the death of
the Contract Owner, the value of the Contract may be included in his or her
gross estate, even if a all or a portion of the value is also subject to federal
income taxes.

The Company may be required to determine whether the Death Benefit or any
other payment or Distribution constitutes a "direct skip" as defined in Section
2612 of the Code, and the amount of the generation skipping transfer tax, if
any, resulting from such direct skip. A direct skip may occur when property is
transferred to, or a Death Benefit or other Distribution is made to (a) an
individual who is two or more generations younger than the Owner; or (b) certain
trusts, as described in Section 2613 of the Code (generally, trusts that have no
beneficiaries who are not 2 or more generations younger than the Owner). If the
Owner is not an individual, then for this purpose only, "Owner" refers to any
person who would be required to include the Contract, Death Benefit,
Distribution, or other payment in his federal gross estate at his death, or who
is required to report the transfer of the Contract, Death Benefit, Distribution,
or other payment for federal gift tax purposes.

If the Company determines that a generation skipping transfer tax is
required to be paid by reason of such direct skip, the Company is required to
reduce the amount of such Death Benefit, Distribution, or other payment by such
tax liability, and pay the tax liability directly to the Internal Revenue
Service.

Federal estate, gift and generation skipping transfer tax consequences, and
state and local estate, inheritance, succession, generation skipping transfer,
and other tax consequences, of owning or transferring a Contract, and of
receiving a Distribution, Death Benefit, or other payment, depend on the
circumstances of the person owning or transferring the Contract, or receiving a
Distribution, Death Benefit, or other payment.

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.

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 this 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.

TAX CHANGES

In the recent past, the Code has been subjected to numerous amendments and
changes, and it is reasonable to believe that it will continue to be revised.
The United States Congress has, in the past, considered numerous legislative
proposals that, if enacted, could change the tax treatment of the Contracts. It
is reasonable to believe that such proposals, and other proposals will be
considered in the future, and some of them may be enacted into law. In
addition, the Treasury Department may amend existing regulations, issue new
regulations, or adopt new interpretations of existing law that may be in
variance with its current positions on these matters. In addition, current
state law (which is not discussed herein), and future amendments to state law,
may affect the tax consequences of the Contract.

<PAGE>

The foregoing discussion, which is based on the Company's understanding of
federal tax laws as they are currently interpreted by the Internal Revenue
Service, is general and is not intended as tax advice.Statutes, regulations, and
rulings are subject to interpretation by the courts. The courts may determine
that a different interpretation than the currently favored interpretation is
appropriate, thereby changing the operation of the rules that are applicable to
annuity contracts.

Any of the foregoing may change from time to time without any notice, and
the tax consequences arising out of a Contract may be changed retroactively.
There is no way of predicting whether, when, and to what extent any such change
may take place. No representation is made as to the likelihood of the
continuation of these current laws, interpretations, and policies.

THE FOREGOING IS A GENERAL EXPLANATION AS TO CERTAIN TAX MATTERS PERTAINING TO
ANNUITY CONTRACTS. IT IS NOT INTENDED TO BE LEGAL OR TAX ADVICE, AND SHOULD NOT
TAKE THE PLACE OF YOUR INDEPENDENT LEGAL, TAX AND/OR FINANCIAL ADVISOR.

GENERAL INFORMATION

CONTRACT OWNER INQUIRIES

Contract Owner inquiries may be directed to Nationwide Life Insurance
Company by writing P.O. Box 182356, Columbus, Ohio 43218-2356, or calling
1-800-243-6295, TDD 1-800-238-3035.

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. 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.

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 a
Sub-Account 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;

<PAGE>

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 charges or
other fees.

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 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.

<PAGE>

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 TOTAL RETURN

- -----------------------------------------------------------------------------------------------------
1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/96 12/31/96 To 12/31/96 Effective
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century Variable 10.44% 5.02% 8.53% 5-01-91
Portfolios, Inc. - American Century
VP Balanced

American Century Variable -5.87% 4.51% 9.14% 11-20-87
Portfolios, Inc. - American Century
VP Capital Appreciation

American Century Variable 12.61% N/A 5.98% 5-01-94
Portfolios, Inc. - American Century
VP International

American Century Variable N/A N/A 17.11% 5-01-96
Portfolios, Inc. - American Century
VP Value

AVIS Growth Fund 11.58% 12.63% 13.49%* 2-08-84

AVIS High Yield Bond Fund 11.43% 9.33% 10.04%* 2-08-84

AVIS US Govt./AAA-rated 1.46% 4.71% 5.63%* 11-19-85

Dreyfus Socially Responsible 19.35% N/A 17.55% 10-06-93
Growth Fund

Dreyfus Stock Index Fund 20.64% 12.88% 11.92% 9-29-89

Dreyfus Variable Investment 17.78% N/A 25.18% 5-02-94
Fund - Growth & Income Portfolio

Fidelity VIP Fund-Equity Income 12.49% 16.21% 12.04%* 10-09-86
Portfolio

Fidelity VIP Fund-Growth Portfolio 12.91% 13.42% 13.46%* 10-09-86

Fidelity VIP Fund-High Income 12.24% 13.24% 9.45%* 9-09-85
Portfolio

Fidelity VIP Fund- Overseas 11.44% 7.43% 6.24% 1-28-87
Portfolio

Fidelity VIP Fund II-Asset Manager 12.81% 9.56% 9.99% 9-06-89

Fidelity VIP Fund II-Contrafund 19.42% N/A 28.31% 7-01-95
Portfolio

NSAT-Capital Appreciation Fund 24.19% N/A 12.50% 4-15-92

NSAT-Government Bond Fund 1.83% 5.37% 6.77%* 11-08-82

NSAT-Money Market Fund 3.44% 2.51% 4.12%* 11-10-81

NSAT-Small Company Fund 20.92% N/A 30.78% 10-23-95

NSAT-Total Return 19.95% 12.05% 10.92%* 11-08-82

N&B Advisers Management Trust- 7.41% 8.13% 9.78%* 9-10-84
Growth Portfolio

N&B Advisers Management Trust- 2.64% 3.67% 5.05%* 9-10-84
Limited Maturity Bond

N&B Advisers Management Trust- 27.58% N/A 19.85% 3-22-94
Partners Portfolio

Oppenheimer Variable Account 3.13% 6.01% 7.17%* 4-30-85
Funds-Bond Fund
Oppenheimer Variable Account 15.96% 10.72% 8.95% 11-12-90
Funds-Global Securities Fund
- ----------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

NON-STANDARDIZED TOTAL RETURN

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------

1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/96 12/31/96 To 12/31/96 Effective
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oppenheimer Variable Account 13.69% 9.96% 9.87% 2-09-87
Funds-Multiple Strategies Fund

Strong Opportunity Fund II, Inc. 16.31% N/A 17.14% 5-08-92

Strong Variable Insurance Funds, -0.81% N/A 10.56% 5-08-92
Inc.-Discovery Fund II, Inc.

Strong Variable Insurance Funds, 8.64% N/A 8.99% 10-23-95
Inc.- International Stock II

Van Eck Worldwide Insurance Trust- 0.88% 2.25% 5.02% 9-01-89
Worldwide Bond Fund

Van Eck Worldwide Insurance Trust- 16.22% 12.82% 6.53% 9-01-89
Worldwide Hard Assets Fund

Van Eck Worldwide Insurance Trust 24.89% N/A 22.93% 12-27-95
- - Worldwide Emerging Markets Fund

Van Kampen American Capital Life 38.40% N/A 30.27% 7-01-95
Investment Trust-Morgan Stanley
Real Estate Securities Portfolio

Warburg Pincus Trust-International 8.25% N/A 9.79% 7-01-95
Equity Portfolio

Warburg Pincus Trust - N/A N/A -10.04% 9-30-96
Post-Venture Capital Portfolio

Warburg Pincus Trust-Small 12.12% N/A 24.50% 7-01-95
Company Growth Portfolio
- ----------------------------------------------------------------------------------------------------

</TABLE>

* Represents 10 years to 12/31/96.

<PAGE>

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

- -----------------------------------------------------------------------------------------------------

American Century Variable 2.34% 1.80% 5.73% 5-01-91
Portfolios, Inc.-American Century
VP Balanced

American Century Variable -13.46% 1.48% 6.80% 11-20-87
Portfolios, Inc.-American Century
VP Capital Appreciation

American Century Variable 4.51% N/A 1.16% 5-01-94
Portfolios, Inc.-American Century
VP International

American Century Variable N/A N/A 7.41% 5-01-96
Portfolios, Inc. - American
Century VP Value

AVIS-Growth Fund 3.48% 10.03% 11.67%* 2-08-84

AVIS-High Yield Bond Fund 3.33% 6.63% 8.00%* 2-08-84

AVIS-US Govt./AAA-rated -6.56% 1.80% 3.20%* 11-19-85

Dreyfus Socially Responsible 11.25% N/A 13.50% 10-06-93
Growth Fund

Dreyfus Stock Index Fund 12.54% 10.13% 9.20% 9-19-89

Dreyfus Variable Investment Fund 9.68% N/A 21.08% 5-02-94
- - Growth & Income Portfolio

Fidelity VIP Fund-Equity Income 4.39% 13.82% 9.90%* 10-09-86
Portfolio

Fidelity VIP Fund-Growth 4.81% 10.84% 11.55%* 10-09-86
Portfolio

Fidelity VIP Fund-High Income 4.14% 10.84% 7.08%* 9-09-85
Portfolio

Fidelity VIP Fund-Overseas 3.34% 4.50% 3.67% 1-28-87
Portfolio

Fidelity VIP Fund II-Asset 4.71% 6.90% 7.46% 9-06-89
Manager Portfolio

Fidelity VIP Fund II-Contrafund 11.32% N/A 23.79% 7-01-95
Portfolio

NSAT-Capital Appreciation Fund 16.09% N/A 9.35% 4-15-92

NSAT-Government Bond Fund -6.21% 2.47% 4.49%* 11-08-82

NSAT-Money Market Fund -4.66% -0.61% 1.65%* 11-10-81

NSAT-Small Company Fund 12.82% N/A 21.64% 10-23-95

NSAT-Total Return Fund 11.85% 9.31% 8.75%* 11-08-82

N&B Advisers Management -0.69% 5.28% 7.71%* 9-10-84
Trust- Growth Portfolio

N&B Advisers Management -5.45% 0.64% 2.63%* 9-10-84
Trust-Limited Maturity Bond
Portfolio

N&B Advisers Management 19.48% N/A 15.73% 3-22-94
Trust-Partners Portfolio

Oppenheimer Variable Account -4.97% 3.15% 4.92%* 4-30-85
Funds-Bond Fund

Oppenheimer Variable Account 7.86% 8.11% 5.91% 11-12-90
Funds-Global Securities Fund

Oppenheimer Variable Account 5.59% 7.25% 7.77% 2-09-87
Funds-Multiple Strategies Fund
- ----------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

- -----------------------------------------------------------------------------------------------------

1 Year To 5 Years To Life of Fund Date Fund
SUB-ACCOUNT OPTIONS 12/31/96 12/31/96 To 12/31/96 Effective
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strong Opportunity Fund II, Inc. 8.21% N/A 14.45% 5-08-92

Strong Variable Insurance Funds, -8.70% N/A 7.58% 5-08-92
Inc.-Discovery Fund II, Inc.

Strong Variable Insurance Funds, 0.54% N/A -0.14% 10-23-95
Inc.- International Stock Fund II

Van Eck Worldwide Insurance -7.11% -1.00% 2.24% 9-01-89
Trust-Worldwide Bond

Van Eck Worldwide Insurance 8.12% 10.29% 3.35% 9-01-89
Trust-Worldwide Hard Assets
Fund

Van Eck Worldwide Insurance 16.79% N/A 11.62% 12-27-95
Trust - Worldwide Emerging
Markets Fund

Van Kampen American Capital 30.30% N/A 23.24% 7-01-95
Life Investment Trust-Morgan
Stanley Real Estate Securities
Portfolio

Warburg Pincus Trust- 0.15% N/A 2.68% 7-01-95
International Equity Portfolio

Warburg Pincus Trust - N/A N/A -18.85% 9-30-96
Post-Venture Capital Portfolio

Warburg Pincus Trust-Small 4.02% N/A 17.79% 7-01-95
Company Growth Portfolio
- ----------------------------------------------------------------------------------------------------

</TABLE>

* Represents 10 years to 12/31/96.

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 Advisory Services, Inc., is not engaged
in any litigation of any material nature.

From time to time the Company is a party to litigation and arbitration
proceedings in the ordinary course of its business, none of which is expected to
have a material adverse effect on the Company.

In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance pricing
and sales practices. A number of these lawsuits have resulted in substantial
jury awards or settlements. In February 1997, Nationwide Life was named as a
defendant in a lawsuit filed in New York Supreme Court also related to the sale
of whole life policies on a "vanishing premium" basis (John H. Snyder v.
Nationwide Mutual Insurance Company, Nationwide Mutual Insurance Co. and
Nationwide Life Insurance Co.). The plaintiff in such lawsuit seeks to
represent a national class of Nationwide Life policyholders and claims
unspecified compensatory and punitive damages. This lawsuit is in an early stage
and has not been certified as a class action. Nationwide Life intends to defend
this case vigorously. There can be no assurance that any future litigation
relating to pricing and sales practices will not have a material adverse effect
on the Company.

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

Page
General Information and History . . . . . . . . . . . . . . . . . . . . . 1
Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase of Securities Being Offered. . . . . . . . . . . . . . . . . . . 1
Underwriters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Calculations of Performance . . . . . . . . . . . . . . . . . . . . . . . 2
Underlying Mutual Fund Performance Summary. . . . . . . . . . . . . . . . 3
Annuity Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 7

<PAGE>

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 45 days after the expiration
date of the guarantee period. Owners who have entered into a Dollar Cost
Averaging Agreement with the Company (see "Dollar Cost Averaging") may transfer
from the Fixed Account to the Variable Account under the terms of that
agreement. 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.

<PAGE>

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.

<PAGE>

APPENDIX B

PARTICIPATING UNDERLYING MUTUAL FUNDS

BELOW ARE THE INVESTMENT OBJECTIVES OF EACH UNDERLYING MUTUAL FUND AVAILABLE
THROUGH THE VARIABLE ACCOUNT. THERE CAN BE NO ASSURANCE THAT THE INVESTMENT
OBJECTIVES WILL BE ACHIEVED.

AVAILABLE FOR ALL CONTRACTS

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. A MEMBER OF THE AMERICAN CENTURY-SM-
INVESTMENTS.

American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end management investment
company, designed only to provide investment vehicles for variable annuity
and variable life insurance products of insurance companies. American
Century Variable Portfolios, Inc. is managed by American Century Investment
Management, Inc.

-AMERICAN CENTURY VP BALANCED (FORMERLY "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.

-AMERICAN CENTURY VP CAPITAL APPRECIATION (FORMERLY "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 least three
years continuous operation. There can be no assurance that the Fund will
achieve its investment objective.

-AMERICAN CENTURY VP INTERNATIONAL (FORMERLY "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.

-AMERICAN CENTURY VP VALUE (FORMERLY "TCI VALUE")

INVESTMENT OBJECTIVE: The investment objective of the Fund is long-term
capital growth; income is a secondary objective. Under normal market
conditions, the Fund expects to invest at least 80% of the value of its
total asset in equity securities, including common and preferred stock,
convertible preferred stock and convertible debt obligations. The equity
securities in which the Fund will invest will be primarily securities of
well-established companies with intermediate-to-large market
capitalizations that are believed by management to be undervalued at the
time of purchase.

(Although the Statement of Additional Information concerning refers to
redemptions of securities in kind under certain conditions, all
surrendering or redeeming Contract Owners will receive cash from the
Company.)

<PAGE>

DREYFUS STOCK INDEX FUND, INC.

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. The Dreyfus
Corporation ("Dreyfus") serves as the Fund's manager, while Mellon Equity
Associates, an affiliate of Dreyfus, serves as the Fund's index manager.

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 500 Composite Stock
Price Index. The Fund is neither sponsored by nor affiliated with Standard
& Poor's Corporation.

DREYFUS VARIABLE INVESTMENT FUND

Dreyfus Variable Investment Fund (the "Fund") is an open-end, management
investment company. It was organized as an unincorporated business trust under
the laws of the Commonwealth of Massachusetts on October 29, 1986 and commenced
operations on August 31, 1990. The Dreyfus Corporation ("Dreyfus") serves as
the Fund's manager. Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation.

-CAPITAL APPRECIATION PORTFOLIO

INVESTMENT OBJECTIVE: The Portfolio's primary investment objective is to
provide long-term capital growth consistent with the preservation of
capital; current income is a secondary investment objective. This
Portfolio invests primarily in the common stocks of domestic and foreign
issuers.

-GROWTH AND INCOME PORTFOLIO

INVESTMENT OBJECTIVE: To provide long-term capital growth, current income
and growth of income, consistent with reasonable investment risk. The
Portfolio invests in equity securities, debt securities and money market
instruments of domestic and foreign issuers. The proportion of the
Portfolio's assets invested in each type of security will vary from time to
time in accordance with Dreyfus' assessment of economic conditions and
investment opportunities. In purchasing equity securities, Dreyfus will
invest in common stocks, preferred stocks and securities convertible into
common stocks, particularly those which offer opportunities for capital
appreciation and growth of earnings, while paying current dividends. The
Portfolio will generally invest in investment-grade debt obligations,
except that it may invest up to 35% of the value of its net assets in
convertible debt securities rated not lower than Caa by Moody's Investor
Service, Inc. or CCC by Standard & Poor's Ratings Group, Fitch Investors
Service, L.P. or Duff & Phelps Credit Rating Co., or if unrated, deemed to
be of comparable quality by Dreyfus. These securities are considered to
have predominantly speculative characteristics with respect to capacity to
pay interest and repay principal and are considered to be of poor standing.
See "Investment Considerations and Risks-Lower Rated Securities" in the
Portfolio's prospectuses.

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. NCM Capital Management
Group, 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
through equity investment in companies that, in the opinion of the Fund's
management, not only meet traditional investment standards but which also
show evidence that they conduct their business in a manner that contributes
to the enhancement of the quality of life in America. Current income is
secondary to the primary goal.

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

<PAGE>

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
underlying 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

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. Fidelity Management &
Research Company ("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.

FIDELITY VARIABLE INSURANCE PRODUCTS FUND III

The Fidelity Variable Insurance Products Fund III (the "Fund") is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on July 14, 1994. The Fund's name was changed from Fidelity Advisor
Annuity Fund to Variable Insurance Products Fund III on December 30, 1996.

<PAGE>

The Fund shares are purchased by insurance companies to fund benefits under
variable life insurance and annuity contracts. Fidelity Management & Research
Company ("FMR") is the Fund's manager.

- - GROWTH OPPORTUNITIES PORTFOLIO

INVESTMENT OBJECTIVE: To provide capital growth by investing primarily in
common stocks and securities convertible into common stocks. The
Portfolio, under normal conditions, will invest at least 65% of its total
assets in securities of companies that FMR believes have long-term growth
potential. Although the Portfolio invests primarily in common stock and
securities convertible into common stock, it has the ability to purchase
other securities, such as preferred stock and bonds, that may produce
capital growth. The Portfolio may invest in foreign securities without
limitation.

MORGAN STANLEY UNIVERSAL FUNDS, INC.

Morgan Stanley Universal Funds, Inc. (the "Fund") is a mutual fund designed to
provide investment vehicles for variable annuity contracts and variable life
insurance policies and for certain tax-qualified investors. The Fund is an
open-end management investment company, or mutual fund. The Fund is managed by
Morgan Stanley Asset Management, Inc.

- - EMERGING MARKETS DEBT PORTFOLIO

INVESTMENT OBJECTIVE: The Portfolio seeks high total return by investing
primarily in dollar- and non-dollar denominated Fixed Income Securities of
government and private-sector issuers located in emerging market countries,
which securities provide a high level of current income, while at the same
time holding the potential for capital appreciation if the perceived
creditworthiness of the issuer improves due to improving economic,
financial, political, social or other conditions in the country in which
the issuer is located.

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 Advisory Services,
Inc., One Nationwide Plaza, Columbus, Ohio 43215, 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 Advisory Services, Inc. ("NAS"), 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
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

<PAGE>

small company stocks. By utilizing a number of investment styles, NAS
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 (FORMERLY "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 prior 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 Funds, Inc. 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 have appreciation possibilities. Current income is not
an objective. These securities may be considered to be speculative.

-OPPENHEIMER GROWTH FUND

INVESTMENT OBJECTIVE: The Fund seeks to achieve capital appreciation by
investing in securities of well-known established companies. In seeking
its objective of capital appreciation, the Fund will emphasize

<PAGE>

investments in securities of well-known and established companies. Such
securities generally have a history of earnings and dividends and are
issued by seasoned companies (having an operating history of at least five
years including predecessors). Current income is a secondary consideration
in the selection of the Fund's portfolio securities.

-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 OPPORTUNITY FUND II, INC. (fka "STRONG SPECIAL FUND II, INC.")

The Strong Opportunity Fund II, Inc. ("Fund") (fka "Strong Special Fund II,
Inc.") is a diversified, open-end management company commonly called a Mutual
Fund. The Fund 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.

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.

-WORLDWIDE EMERGING MARKETS FUND

INVESTMENT OBJECTIVE: Seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the world. The
Fund specifically emphasizes investment in countries that, compared to the
world's major economies, exhibit relatively low gross national product per
capita, as well as the potential for rapid economic growth. Peregrine
Asset Management (Hong Kong) Limited serves as sub-investment adviser to
this Fund.

<PAGE>

-WORLDWIDE HARD ASSETS FUND (FORMERLY "GOLD AND NATURAL RESOURCES FUND")

INVESTMENT DESCRIPTION: Seeks long-term capital appreciation by investing
globally, primarily in "Hard Assets Securities." Hard assets are tangible,
finite assets, such as real estate, energy, timber, and industrial and
previous metals. Income is a secondary consideration.

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.

-MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO

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 Portfolio's total
assets will be invested in Real Estate Securities, primarily equity
securities of real estate investment trusts. The Portfolio 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 Portfolio 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 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.

-POST-VENTURE CAPITAL PORTFOLIO

INVESTMENT OBJECTIVE: The Portfolio seeks long-term growth of capital by
investing primarily in equity securities of issuers in their post-venture
capital stage of development and pursues an aggressive investment strategy.
Under normal market conditions, the Portfolio will invest at least 65% of
its total assets in equity securities of "post-venture capital companies."
A post-venture capital company is one that has received venture capital
financing either (a) during the early stages of the company's existence or
the early stages of the development of a new product or service or (b) as
part of a restructuring or recapitalization of the company. The Portfolio
may invest up to 10% of its assets in venture capital and other investment
funds.

-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.

56
<PAGE>

SUPPLEMENT DATED OCTOBER 1, 1997 TO
PROSPECTUS DATED OCTOBER 1, 1997 FOR

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS

ISSUED BY

NATIONWIDE LIFE INSURANCE COMPANY

THROUGH ITS

NATIONWIDE VARIABLE ACCOUNT-II

This Supplement updates certain information contained in your Prospectus.
Please read it and keep it with your Prospectus for future reference.

1. Effective November 1, 1997, the "UNDERLYING MUTUAL FUND ANNUAL EXPENSES"
provision of the Prospectus is amended by changing the Management Fees and
Other Expenses of the following Nationwide Separate Account Trust
underlying Mutual Fund options:

Management Other Total Mutual
Fees Expenses Fund Expenses
------------------------------------------------------------------------------
Nationwide Separate Account Trust - 0.65% 0.03% 0.68%
Capital Appreciation Fund
Nationwide Separate Account Trust - 0.65% 0.02% 0.67%
Total Return Fund
Nationwide Separate Account Trust - 0.55% 0.02% 0.57%
Government Bond Fund
Nationwide Separate Account Trust - 0.45% 0.02% 0.47%
Money Market Fund

2. Effective November 1, 1997, the "EXAMPLE" in the Prospectus is amended to
reflect the following information:

If you surrender your Contract If you do not surrender your If you annuitize your Contract
at the end of the applicable Contract at the end of the at the end of the applicable
time period applicable time period time period
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3 5 10 1 3 5 10 1 3 5 10
Yr. Yrs. Yrs. Yrs. Yr. Yrs. Yrs. Yrs. Yr. Yrs. Yrs. Yrs.
Nationwide Separate Account
Trust - Capital Appreciation 91 111 140 244 21 66 113 244 * 66 113 244
Fund
Nationwide Separate Account
Trust - Total Return Fund 91 111 140 243 21 66 113 243 * 66 113 243
Nationwide Separate Account
Trust - Government Bond Fund 90 108 135 232 20 63 108 232 * 63 108 232
Nationwide Separate Account
Trust - Money Market Fund 89 104 129 221 19 59 102 221 * 59 102 221
</TABLE>

3. The "DOLLAR COST AVERAGING" provision of the prospectus is amended
effective November 3, 1997 by replacing the first paragraph of such
provision with the following:

DOLLAR COST AVERAGING - If the Contract Value is $15,000 or more, the
Contract Owner may direct the Company to automatically transfer a specified
amount from the Nationwide Separate Account Trust (NSAT) Government Bond
Fund, NSAT Money Market Fund, the Neuberger & Berman Advisers Management
Trust (AMT) Limited Maturity Bond Portfolio or the Fixed Account to any
other Sub-Account within the Variable Account on a monthly basis or as
frequently as otherwise authorized by the Company. 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
<PAGE>

declining market. The minimum monthly Dollar Cost Averaging transfer is
$100. In addition, Dollar Cost Averaging monthly transfers from the Fixed
Account must be equal to 1/30th of the Fixed Account value when the Dollar
Cost Averaging program is requested. Transfers out of the Fixed Account,
other than for Dollar Cost Averaging, may be subject to certain additional
restrictions (see "Transfers"). A written election of this service, on a
form provided by the Company, must be completed by the Contract Owner in
order to begin transfers. Once elected, transfers from the NSAT Government
Bond Fund, NSAT Money Market Fund, Neuberger & Berman AMT Limited Maturity
Bond Portfolio or the Fixed Account will be processed monthly or on another
approved frequency until either the value in such funds is depleted or the
Contract Owner instructs the Company in writing to cancel the transfers.

4. The following information is added to the "FEDERAL TAX CONSIDERATIONS"
section as the second provision:

PUERTO RICO

Under the Puerto Rico tax code, Distributions prior to Annuitization
are treated as nontaxable return of principal until the principal is fully
recovered; thereafter, all Distributions are fully taxable. Distributions
after Annuitization are treated as part taxable income and part nontaxable
return of principal. The amount excluded from gross income after
Annuitization is equal to the amount of the Distribution in excess of 3% of
the total Purchase Payments paid, until an amount equal to the total
Purchase Payments paid has been excluded; thereafter, the entire
Distribution is included in gross income. Puerto Rico does not impose an
early withdrawal penalty tax. Generally, Puerto Rico does not require
income tax to be withheld from Distributions of income. A personal tax
advisor should be consulted.

5. Effective July 11, 1997, the Van Kampen American Capital Life Investment
Trust - Real Estate Securities Portfolio (formerly, "Van Kampen American
Capital Life Investment Trust - Real Estate Securities Fund") changed its
name to the following:

VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST -
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO

Accordingly, any and all references in the Prospectus are amended to
reflect this name change.

5. The portfolio manager for the Warburg Pincus Trust is changing from
Warburg, Pincus Counsellors, Inc. to Warburg Pincus Asset Management, Inc.
effective October 15, 1997. Accordingly, any and all references in the
Prospectus are amended to reflect this change.