<PAGE> 1
NATIONWIDE LIFE INSURANCE COMPANY
Home Office
P. O. Box 16766
One Nationwide Plaza
Columbus, Ohio 43216
1-800-545-4730, (T.T.Y. 1-800-848-0833)
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED BY THE NACO VARIABLE ACCOUNT OF
NATIONWIDE LIFE INSURANCE COMPANY
The Group Flexible Fund Retirement Contracts (the "Contract" or
"Contracts") described in this prospectus are designed for use in connection
with deferred compensation Plans adopted by Member Counties under the NACo
Program. Such Plans generally qualify for favorable tax treatment under Section
457 of the Internal Revenue Code ("Code"). The assets of such Plans are part of
the general assets of the Member County, provided however that the Member County
must hold all such Plan assets for the exclusive benefit of the Plan's
Participants and beneficiaries. Rights and privileges under the Contracts may be
exercised by the Member County to the extent such rights are not specifically
reserved in the Plan for Participants as a group or as individuals. The Member
County may not take any action inconsistent with the rights of the Plan's
Participants. The Participants have a contractual claim against the Member
County for the benefits promised by such Plans. The Participants are generally
not subject to tax until Distributions are received from the Plan. Purchase
Payments made at any time by or on behalf of any Participant must be at least
$20 per month.
Purchase Payments are allocated to the NACo Variable Account. NACo Variable
Account is a unit investment trust with 28 Sub-Accounts of unit values, each
reflecting investment results of a different management investment company.
Amounts equivalent to the obligations of Nationwide Life Insurance Company ("the
Company") under each Sub-Account will be invested in the specified management
investment company (see Appendix of Participating Underlying Mutual Funds).
This prospectus provides you with the basic information you should know
about the Group Flexible Fund Retirement Contracts issued by NACo Variable
Account before investing. You should read it and keep it for future reference. A
Statement of Additional Information dated NOVEMBER 2, 1996 containing further
information about the Contracts and NACo Variable Account has been filed with
the Securities and Exchange Commission. You can obtain a copy without charge
from the Company by calling the number listed above, or writing P.O. Box 16766,
One Nationwide Plaza, Columbus, Ohio 43216.
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 NOVEMBER 2, 1996, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 25 OF THIS PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS NOVEMBER 2, 1996.
1
<PAGE> 2
GLOSSARY OF TERMS
ACCUMULATION UNIT - A statistical index measuring the net investment results of
each Sub-Account of the NACo Variable Account. It is the unit of measurement
used to determine the value of a Contract and each Participant Account.
ACTUARIAL RISK FEE - The charge made for mortality and expense risk and
administration of the NACo Variable Account. It is computed on a daily basis and
is equal to an annual rate of 0.95% of the daily net asset value of the NACo
Variable Account.
ANNUITANT - The person actually receiving annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
ANNUITIZATION - The date on which annuity payments are actually received.
ANNUITY COMMENCEMENT DATE - The date on which annuity payments are scheduled to
commence.
BENEFICIARY - The person named on the application to receive certain benefits
under the Contract upon the death of the designated Annuitant. The Beneficiary
can be changed by the Contract Owner as set forth in the Contract.
CODE - The Internal Revenue Code of 1986, as amended.
COMPANY - Nationwide Life Insurance Company.
CONTINGENT BENEFICIARY - The person named on the application to be the
Beneficiary if the named Beneficiary is not living at the time of the death of
the designated Annuitant.
CONTRACT - The group flexible fund retirement contract issued by the Company to
the Owner under which the Company invests Purchase Payments made by the Owner
and assists the Owner in making Retirement Income Payments at specified dates.
CONTRACT DATE - The Contract Date is the date shown on the Contract.
CONTRACT YEAR - Each period starting with either (1) the Contract Date or (2) a
Contract Anniversary. The Contract Year ends immediately prior to the next
Contract Anniversary.
CONTRACT ANNIVERSARY - An anniversary of the Contract Date.
DISTRIBUTION - Any payment by the Company of part or all of the Contract Value
under the Contract.
GENERAL ACCOUNT - An account comprised of all assets of the Company other than
those in any segregated asset account (the NACo Variable Account).
MEMBER COUNTY - A county which is a member of the National Association of
Counties ("NACo") or an entity approved by the President of NACo for
participation under the NACo Program.
NACo PROGRAM - The deferred compensation program established and administered
pursuant to Section 457 of the Code for the benefit of Member Counties of NACo.
NACo VARIABLE ACCOUNT - A segregated investment account established by the
Company in which amounts equivalent to the Company's obligations under the
Contract are held for all Participants, and for those Participants during
retirement who have annuitized.
OWNER - The Member County to which the Contract is issued.
PARTICIPANT - An eligible employee, member, or other person who is entitled to
benefits under the Plan. Such persons are determined and reported to the Company
by the Owner.
2
<PAGE> 3
PARTICIPANT ACCOUNT - An account established for each Participant in which all
financial transactions occurring with respect to a Participant, other than the
purchase and payment of an annuity, are recorded.
PARTICIPANT ACCOUNT YEAR - For each Participant, this is each one year period
starting with either the Participant Effective Date or a Participant
Anniversary, as reported to the Company by the Owner or its authorized
representative.
PARTICIPANT ANNIVERSARY - An anniversary of the Participant Effective Date.
PARTICIPANT EFFECTIVE DATE - For each Participant, this is the first date
Accumulation Units are credited to the Participant's Account on behalf of such
Participant under the Contract.
PLAN - A Member County's Code Section 457 deferred compensation plan established
and administered under the auspices of the NACo Program. The Plan document is
referred to in the contract schedule as the Plan. The assets of the Plan are
part of the general assets of the Member County, subject to the claims of the
Member County's creditors. The Participants have a contractual claim against the
Member County for the benefits promised by the Plan.
PURCHASE PAYMENTS - Amounts paid to the Company, pursuant to the Contract, in
order to provide retirement income benefits.
RETIRED PARTICIPANT - A Participant for whom payments under an Optional
Retirement Income Form are being made.
RETIREMENT INCOME PAYMENTS- Periodic payments of the Participant Account made to
the Participant or to a designated Beneficiary during the Distribution period.
RETIREMENT COMMENCEMENT DATE- The date upon which Retirement Income Payments
commence.
SUB-ACCOUNTS - Separate and distinct divisions of the NACo Variable Account to
which specific Underlying Mutual Fund shares are allocated and for which
Accumulation Units are separately maintained.
UNDERLYING MUTUAL FUND - The registered management investment company, specified
on the Contract application, in which the assets of a Sub-Account of the
Variable Account will be invested.
VALUATION DATE - Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the NACo Variable Account's Underlying Mutual Fund shares
that the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD - The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
3
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF TERMS...............................................................................................2
SUMMARY OF CONTRACT EXPENSES....................................................................................5
SYNOPSIS.......................................................................................................11
CONDENSED FINANCIAL INFORMATION................................................................................12
NATIONWIDE LIFE INSURANCE COMPANY..............................................................................15
THE NACo VARIABLE ACCOUNT......................................................................................15
Voting Rights.........................................................................................15
PERIODIC REPORTS...............................................................................................15
NACo VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS
AND OTHER DEDUCTIONS...........................................................................................16
Contingent Deferred Sales Charge......................................................................16
Mortality and Expense Risk and Administration Charges.................................................16
Premium Taxes.........................................................................................17
Experience Credits....................................................................................17
Expenses of the NACo Variable Account.................................................................17
DESCRIPTION OF THE CONTRACTS...................................................................................17
Purpose of the Contracts..............................................................................17
Modification of the Contract..........................................................................18
Contract Rights and Privileges and Assignments........................................................18
Exchange Privilege....................................................................................18
Suspension and Termination............................................................................18
Application of Purchase Payments......................................................................19
Additional Purchase Payment Prior to Commencement of Annuity Payments.................................19
Crediting Accumulation Units..........................................................................19
NACo Variable Account Accumulation Unit Value.........................................................19
Allocation of Purchase Payments.......................................................................20
Valuation of an Account...............................................................................20
Redemption of Participant Accounts (Termination)......................................................20
DISTRIBUTION OF PARTICIPANT ACCOUNTS (RETIREMENT PERIOD).......................................................21
Retirement Income Payments............................................................................21
Election of Income Form and Date......................................................................21
Allocation of Retirement Income.......................................................................21
Fixed Dollar Annuity..................................................................................21
Minimum Payment.......................................................................................21
Death Benefit Before Retirement.......................................................................21
Optional Retirement Income Forms......................................................................21
Death of Retired Participant..........................................................................22
Withdrawal............................................................................................22
Frequency of Payment..................................................................................22
Determination of Payments Under Options A1 and A2.....................................................22
Determination of Payments Under Options B1 and B2.....................................................22
Determination of Amount of Variable Monthly Payments For First Year...................................23
Determination of Amount of Variable Monthly Payments For the Second
and Subsequent Years................................................................................23
Alternate Assumed Interest Rate.......................................................................23
GENERAL INFORMATION............................................................................................24
Substitution of Securities............................................................................24
Performance Advertising...............................................................................24
Contract Owner Inquiries..............................................................................25
Net Investment Factor.................................................................................25
Valuation of Assets...................................................................................25
Federal Tax Status....................................................................................26
Contracts Issued Under the New York Model Plan........................................................26
LEGAL PROCEEDINGS..............................................................................................26
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.......................................................26
APPENDIX.......................................................................................................27
</TABLE>
4
<PAGE> 5
SUMMARY OF CONTRACT EXPENSES
PARTICIPANT TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Contingent Deferred Sales Charge(1) .................................... 4 %
(as a percentage of Purchase Payments) ------------
ANNUAL CONTRACT MAINTENANCE CHARGE(2) ................................................ $0
------------
NACO VARIABLE ACCOUNT ANNUAL EXPENSES(3)
(as a percentage of average account value)
Mortality and Expense Risk Fees .............................................. 0.50 %
------------
Administration Charge ........................................................ 0.45 %
------------
Total NACo Variable Account Annual Expenses .................................. 0.95 %
------------
<FN>
(1)Imposed only when it is applicable (see "Contingent Deferred Sales Charge").
(2)Effective July 1, 1992, the Annual Contract Fee was eliminated.
(3)If total assets of a Plan under the NACo Program as of December 31 of each
year exceed $10 million, the 0.45% Administration charge and the total NACo
Variable Account Annual Expense ("Actuarial Risk Fee") will be reduced on a
sliding scale on May 1 of each succeeding year as follows:
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
ADMINISTRATION CHARGE
ASSETS (AS A PORTION OF THE ACTUARIAL RISK FEE) TOTAL ACTUARIAL RISK FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than $10 million but less than 0.40% 0.90%
or equal to $25 million
- ---------------------------------------------------------------------------------------------------------------------------
Greater than $25 million but less than 0.30% 0.80%
or equal to $50 million
- ---------------------------------------------------------------------------------------------------------------------------
Greater than $50 million but less than 0.20% 0.70%
or equal to $150 million
- ---------------------------------------------------------------------------------------------------------------------------
Greater than $150 million 0.15% 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Administration Charge and Actuarial Risk Fee shall be determined as of
December 31 of such calendar year and reduced according to the sliding scale, if
applicable, effective the next succeeding May 1. For new Contracts after the
effective date of the sliding scale, the Administration Charge and Actuarial
Risk Fee shall be determined in accordance with the above table at the issuance
of the Contract and thereafter each year at the time and in the manner described
above.
5
<PAGE> 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(1)
(After Expense Reimbursement)
(as a percentage of Underlying Mutual Fund average net assets)
<TABLE>
<CAPTION>
Total Underlying
Management Other 12b-1 Mutual Fund
Fees Expenses Fees Annual Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Bond Fund of America(SM), Inc. 0.35% 0.11% 0.23% 0.69%
- --------------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 0.75% 0.37% 0.00% 1.12%
- --------------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund - Class Y 0.98% 0.21% 0.00% 1.19%
- --------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities: 2-5 0.40% 0.18% 0.00% 0.58%
Years - Institutional Shares
- --------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.44% 0.23% 0.00% 0.67%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 0.70% 0.30% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 0.70% 0.28% 0.00% 0.98%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 0.73% 0.19% 0.00% 0.92%
- --------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 0.53% 0.29% 0.00% 0.82%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 0.46% 0.21% 0.00% 0.67%
- --------------------------------------------------------------------------------------------------------------------
The Investment Company of America(R) 0.26% 0.13% 0.21% 0.60%
- --------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 0.38% 0.11% 0.00% 0.49%
- --------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund-Class A 0.43% 0.29% 0.25% 0.97%
- --------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund-Class A 0.45% 0.34% 0.31% 1.10%
- --------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock 0.31% 0.23% 0.29% 0.83%
Fund-Class A
- --------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 0.50% 0.13% 0.00% 0.63%
- --------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 0.50% 0.16% 0.00% 0.66%
- --------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 0.45% 0.17% 0.00% 0.62%
- --------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 0.72% 0.12% 0.00% 0.84%
- --------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund-Class A 0.61% 0.13% 0.25% 0.99%
- --------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund -Class A 0.53% 0.29% 0.25% 1.07%
- --------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S & P 500 Index Portfolio 0.15% 0.05% 0.05% 0.25%
- --------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc.-Class A(2) 0.49% 0.28% 0.23% 1.00%
- --------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust-Treasury 0.63% 0.26% 0.00% 0.89%
Portfolio - Institutional Class
- --------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 0.69% 0.20% 0.00% 0.89%
- --------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund(2) - Class I 0.63% 0.27% 0.25% 1.15%
- --------------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 1.00% 0.00% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 1.00% 0.00% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------
<FN>
(1)The Mutual Fund expenses shown above are assessed at the Underlying Mutual Fund
level and are not direct charges against the NACo 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 NACo Variable Account's
unit value. There are no front-end load fees (sales charges) at the Underlying
Mutual Fund level. The following funds are subject to fee waivers or expense
reimbursement arrangements:
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FUND EXPENSES WITHOUT
REIMBURSEMENT OR WAIVER
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Federated U.S. Government Securities Fund: 2-5 Years The total operating expenses would have been 0.79%
- - Institutional Shares absent the voluntary waiver of a portion of the
shareholder service fee.
- ------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund The Fund has entered into arrangements with its
custodian and transfer agent whereby interest
earned on uninvested cash balances is used to
reduce custodian and transfer agent expenses.
Including these reductions, the total operating
expenses presented in the table would have been
0.68%.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Fidelity Magellan(R) Fund The Fund has entered into arrangements with its
custodian and transfer agent whereby interest
earned on uninvested cash balances is used to
reduce custodian and transfer agent expenses.
Including these reductions, the total operating
expenses presented in the table would have been
0.95%.
- ------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio The Fund has entered into arrangements with its
custodian and transfer agent whereby interest
earned on uninvested cash balances is used to
reduce custodian and transfer agent expenses.
Including these reductions, the total operating
expenses presented in the table would have been
0.83%.
- ------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund The Fund has entered into arrangements with its
custodian and transfer agent whereby interest
earned on uninvested cash balances is used to
reduce custodian and transfer agent expenses.
Including these reductions, the total operating
expenses presented in the table would have been
0.69%.
- ------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A The Fund's custodian fee will be reduced based upon
the amount of cash maintained by the Fund.
- ------------------------------------------------------------------------------------------------------------
MFS(R) Growth Opportunities Fund Currently, 0.10% of the distribution/service fee
is being waived.
- ------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A The Fund's custodian fee will be reduced based upon
the amount of cash maintained by the Fund.
- ------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund The Fund will waive 0.05% of the total 0.50%
management fee until further notice.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The information relating to the Underlying Mutual Fund expenses was provided by
the Underlying Mutual Fund and was not independently verified by the Company.
7
<PAGE> 8
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming total NACo Variable Account annual expenses of
0.95%, a $1,000 initial Purchase Payment and 5% annual return on assets.
<TABLE>
<CAPTION>
----------------------------------------------------
If you surrender your Contract
at the end of the applicable
time period
- ---------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Bond Fund of America (SM), Inc. 57 93 132 240
- ---------------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 62 107 155 287
- ---------------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund - Class V 62 109 159 295
- ---------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 years - 56 89 124 223
Institutional Shares
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 57 93 131 239
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 60 103 149 274
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 60 102 147 271
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 60 102 147 271
- ---------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 58 97 138 253
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 57 93 132 240
- ---------------------------------------------------------------------------------------------------------------------
The Investment Company of America(R) 56 90 127 230
- ---------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 55 87 121 217
- ---------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund- Class A 60 102 147 271
- ---------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund-Class A 62 106 154 285
- ---------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund-Class A 59 98 139 256
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 57 91 129 233
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 57 92 130 237
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 56 91 128 232
- ---------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 59 98 141 258
- ---------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund-Class A 60 103 148 273
- ---------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund-Class A 61 105 152 282
- ---------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S & P 500 Index Portfolio 53 79 108 189
- ---------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc.-Class A 60 103 149 274
- ---------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 59 100 143 262
Institutional Class
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 60 100 144 264
- ---------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 62 108 157 290
- ---------------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 60 103 149 274
- ---------------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 60 103 149 274
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(continued on next page)
8
<PAGE> 9
EXAMPLE (CONTINUED)
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming total NACo Variable Account annual expenses of
0.95%, a $1,000 initial Purchase Payment and 5% annual return on assets.
<TABLE>
<CAPTION>
----------------------------------------------------
If you do not surrender your Contract
at the end of the applicable
time period
- ---------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Bond Fund of America(SM), Inc. 17 53 92 200
- ---------------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 22 67 115 247
- ---------------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund -Class V 22 69 119 255
- ---------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 years- 16 49 84 183
Institutional Shares
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 17 53 91 199
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 20 62 107 231
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 20 62 107 231
- ---------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 18 57 98 213
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 17 53 92 200
- ---------------------------------------------------------------------------------------------------------------------
The Investment Company of America(R) 16 50 87 190
- ---------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 15 47 81 177
- ---------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund- Class A 20 62 107 231
- ---------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund-Class A 22 66 114 245
- ---------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund-Class A 19 58 99 216
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 17 51 89 193
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 17 52 90 197
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 16 51 88 192
- ---------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 19 58 101 218
- ---------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund-Class A 20 63 108 233
- ---------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund-Class A 21 65 112 242
- ---------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S & P 500 Index Portfolio 13 39 68 149
- ---------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc.-Class A 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 19 60 103 222
Institutional Class
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 20 60 104 224
- ---------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 22 68 117 250
- ---------------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(continued on next page)
9
<PAGE> 10
EXAMPLE (CONTINUED)
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a total NACo Variable Account annual expenses of
0.95%, $1,000 initial Purchase Payment and 5% annual return on assets.
<TABLE>
<CAPTION>
----------------------------------------------------
If you annuitize your Contract
at the end of the applicable time period
- ---------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Bond Fund of America(SM), Inc. 17 53 92 200
- ---------------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 22 67 115 247
- ---------------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund - Class V 22 69 119 255
- ---------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 years - 16 49 84 183
Institutional Shares
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 17 53 91 199
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 20 62 107 231
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 20 62 107 231
- ---------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 18 57 98 213
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 17 53 92 200
- ---------------------------------------------------------------------------------------------------------------------
The Investment Company of America(R) 16 50 87 190
- ---------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 15 47 81 177
- ---------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund- Class A 20 62 107 231
- ---------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund-Class A 22 66 114 245
- ---------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund-Class A 19 58 99 216
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 17 51 89 193
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 17 52 90 197
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 16 51 88 192
- ---------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 19 58 101 218
- ---------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund-Class A 20 63 108 233
- ---------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund-Class A 21 65 112 242
- ---------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S & P 500 Index Portfolio 13 39 68 149
- ---------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc.-Class A 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 19 60 103 222
Institutional Class
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 20 60 104 224
- ---------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 22 68 117 250
- ---------------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 20 63 109 234
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
This Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
The purpose of the preceding tables is to assist the Participant in
understanding the various costs and expenses that a Participant will bear
directly or indirectly when investing in the Contract. The table reflects
expenses of the NACo Variable Account as well as the Underlying Mutual Fund
investment options. For a more detailed explanation of these expenses, see "NACo
Variable Account Charges, Purchase Payments, and Other Deductions." For more and
complete information regarding expenses paid out of the assets of a particular
Underlying Mutual Fund, see the Underlying Mutual Fund's prospectus. In addition
to the expenses shown above, deductions for premium taxes may also be
applicable, depending upon the jurisdiction in which the Contract is sold (see
"Premium Taxes").
10
<PAGE> 11
SYNOPSIS
The Contracts described in this prospectus are designed for use in
connection with deferred compensation plans adopted by Member Counties under the
NACo Program. Such Plans qualify for favorable tax treatment under Section 457
of the Code. The Participants are generally not subject to federal income tax on
amounts deferred under such plans until Distributions are received from the
Plan. Purchase Payments made at any time by or on behalf of any Participant must
be at least $20 per month.
Purchase Payments under the Contracts are placed in the NACo Variable
Account. The NACo Variable Account is a unit investment trust with 28
Sub-Accounts of unit values, each reflecting investment results of a different
management investment company. Amounts equivalent to the obligations of the
Company under each Sub-Account will be invested in the specified management
investment company (see "Appendix of Participating Funds").
The Company does not deduct a sales charge from Purchase Payments made for
these Contracts. However, in the event of the termination of this Contract and
directions from the Owner to the Company to withdraw all or part of the account
value of the Contract, the Company will, with certain exceptions, deduct from
the Contract Value, on a per Participant basis, a Contingent Deferred Sales
Charge ("CDSC") equal to not more than 4% of the lesser of the total of all
Purchase Payments made prior to the date of the request for withdrawal, or the
amount withdrawn. Absent Contract termination by the Owner, the CDSC provision
will not apply and therefore any full or partial withdrawals made on behalf of a
Participant will not be subject to any CDSC. The CDSC, when applicable, is
imposed to permit the Company to recover sales expenses which have been advanced
by the Company (see "Contingent Deferred Sales Charge").
Any applicable premium taxes can be deducted and will be charged against
the Contracts. If any such premium taxes are payable at the time Purchase
Payments are made, the premium tax deduction will be made from the Contract
prior to allocation to any Underlying Mutual Fund option (see "Premium Taxes").
A daily deduction is made from the NACo Variable Account in an amount
equivalent to an annual rate up to of 0.95% of the daily net asset value of the
NACo Variable Account for the Company's contractual promises to accept the
mortality and expense risks and for administration of the NACo Variable Account
(see "Mortality and Expense Risk and Administration"). In addition, the
investment companies whose shares are purchased by the NACo Variable Account
make certain deductions from their assets.
The Contracts provide that the mortality basis, minimum death benefits and
the deductions made from Purchase Payments, Participants' Accounts, the
Contingent Deferred Sales Charges, and Actuarial Risk Fees may be changed by the
Company after the first Contract Year (see "Modification of the Contract").
11
<PAGE> 12
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values (For an accumulation unit outstanding throughout the
period)
<TABLE>
<CAPTION>
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation Units
At Beginning At End Outstanding At The
Underlying Mutual Fund Of Period Of Period End Of The Period Year
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Bond Fund of 1.741422 2.039710 6,578,720 1995
America(SM), Inc. ------------------------------------------------------------------------
1.850918 1.741422 5,740,929 1994
------------------------------------------------------------------------
1.637181 1.850918 5,644,051 1993
------------------------------------------------------------------------
1.484255 1.637181 4,185,113 1992
------------------------------------------------------------------------
1.338732 1.484255 3,262,200 1991*
- ------------------------------------------------------------------------------------------------------
The Dreyfus Third 1.663803 2.238323 9,402,637 1995
Century Fund, Inc. ------------------------------------------------------------------------
1.814915 1.663803 9,817,673 1994
------------------------------------------------------------------------
1.740666 1.814915 10,291,485 1993
------------------------------------------------------------------------
1.723855 1.740666 8,918,980 1992
------------------------------------------------------------------------
1.503652 1.723855 4,654,790 1991*
- ------------------------------------------------------------------------------------------------------
The Evergreen 1.419467 1.741651 2,635,928 1995
Total Return Fund - Class V ------------------------------------------------------------------------
1.531292 1.419467 3,343,918 1994
------------------------------------------------------------------------
1.368966 1.531292 10,220,011 1993
------------------------------------------------------------------------
1.256090 1.368966 8,701,160 1992
------------------------------------------------------------------------
1.146614 1.256090 7,977,105 1991*
- ------------------------------------------------------------------------------------------------------
Federated U.S. Government 1.062969 1.195751 2,344,091 1995
Securities Fund: 2-5 years - ------------------------------------------------------------------------
Institutional Shares 1.094086 1.062969 1,802,090 1994
------------------------------------------------------------------------
1.031362 1.094086 1,501,568 1993
------------------------------------------------------------------------
1.000000 1.031362 359,089 1992
- ------------------------------------------------------------------------------------------------------
Fidelity Capital & 3.210584 3.712491 818,785 1995
Income Fund ------------------------------------------------------------------------
3.397953 3.210584 900,127 1994
------------------------------------------------------------------------
2.746533 3.397953 1,009,928 1993
------------------------------------------------------------------------
2.165417 2.746533 1,100,291 1992
------------------------------------------------------------------------
1.972198 2.165417 1,260,909 1991*
- ------------------------------------------------------------------------------------------------------
Fidelity Contrafund 0.974545 1.315600 86,483,728 1995
------------------------------------------------------------------------
0.994981 0.974545 59,048,072 1994
------------------------------------------------------------------------
1.000000 0.994981 17,300,194 1993
- ------------------------------------------------------------------------------------------------------
Fidelity Equity- Income Fund 3.424310 4.471070 41,090,717 1995
------------------------------------------------------------------------
3.448520 3.424310 37,439,255 1994
------------------------------------------------------------------------
2.869860 3.448520 30,564,448 1993
------------------------------------------------------------------------
2.526472 2.869860 25,417,028 1992
------------------------------------------------------------------------
2.283309 2.526472 24,200,256 1991*
- ------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 0.960039 1.301185 63,751,788 1995
------------------------------------------------------------------------
0.987051 0.960039 43,410,162 1994
------------------------------------------------------------------------
1.000000 0.987051 9,307,585 1993
- ------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 1.001544 1.371346 3,611,136 1995
------------------------------------------------------------------------
1.000000 1.001544 414,031 1994
- ------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 0.959935 1.154955 11,375,851 1995
------------------------------------------------------------------------
1.000000 0.959935 3,191,039 1994
- ------------------------------------------------------------------------------------------------------
The Investment 1.157835 1.498194 21,189,283 1995
Company of America(R) ------------------------------------------------------------------------
1.167040 1.157835 15,911,747 1994
------------------------------------------------------------------------
1.055548 1.167040 9,316,764 1993
------------------------------------------------------------------------
1.000000 1.055548 1,904,764 1992
- ------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income 0.980782 1.156444 461,663 1995
Portfolio ------------------------------------------------------------------------
1.000000 0.980782 16,059 1994
- ------------------------------------------------------------------------------------------------------
Massachusetts Investors 7.034148 8.942612 877,034 1995
Growth Stock Fund-Class A ------------------------------------------------------------------------
7.613442 7.034148 876,723 1994
------------------------------------------------------------------------
6.714892 7.613442 837,196 1993
------------------------------------------------------------------------
6.368639 6.714892 711,003 1992
------------------------------------------------------------------------
5.100857 6.368639 559,059 1991*
- ------------------------------------------------------------------------------------------------------
<FN>
*Period from July 1, 1991 (the date Participant accounts of the NACo Program
were transferred from the Nationwide DC Variable Account to the NACo Variable
Account and the NACo Variable Account commenced operations exclusive to the
NACo Program).
</TABLE>
(Continued on next page)
12
<PAGE> 13
CONDENSED FINANCIAL INFORMATION (continued)
Accumulation Unit Values (For an accumulation unit outstanding throughout the
period)
<TABLE>
<CAPTION>
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation Units
At Beginning At End Outstanding At The
Underlying Mutual Fund Of Period Of Period End Of The Period Year
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS(R)Growth 4.589533 6.114190 2,209,754 1995
Opportunities Fund-Class A ------------------------------------------------------------------------
4.834037 4.589533 2,656,048 1994
------------------------------------------------------------------------
4.200054 4.834037 6,486,767 1993
------------------------------------------------------------------------
3.936838 4.200054 6,897,026 1992
------------------------------------------------------------------------
3.656615 3.936838 7,710,706 1991*
- ------------------------------------------------------------------------------------------------------
MFS(R)High 4.265493 4.949752 1,898,625 1995
Income Fund- Class A ------------------------------------------------------------------------
4.422523 4.265493 1,736,718 1994
------------------------------------------------------------------------
3.739642 4.422523 1,666,484 1993
------------------------------------------------------------------------
3.225557 3.739642 1,036,199 1992
------------------------------------------------------------------------
2.894993 3.225557 817,803 1991*
- ------------------------------------------------------------------------------------------------------
Nationwide(R) 9.468045 12.191058 2,755,666 1995
Fund ------------------------------------------------------------------------
9.502760 9.468045 2,754,540 1994
------------------------------------------------------------------------
8.985447 9.502760 2,950,704 1993
------------------------------------------------------------------------
8.810680 8.985447 3,032,348 1992
------------------------------------------------------------------------
7.837093 8.810680 2,238,323 1991*
- ------------------------------------------------------------------------------------------------------
Nationwide(R) 2.092009 2.667201 2,409,384 1995
Growth Fund ------------------------------------------------------------------------
2.081399 2.092009 2,602,594 1994
------------------------------------------------------------------------
1.887524 2.081399 6,293,504 1993
------------------------------------------------------------------------
1.792687 1.887524 5,507,203 1992
------------------------------------------------------------------------
1.498853 1.792687 4,283,563 1991*
- ------------------------------------------------------------------------------------------------------
Nationwide(R)Money 2.654661 2.774433 15,458,252 1995
Market Fund** ------------------------------------------------------------------------
2.583387 2.654661 14,664,113 1994
------------------------------------------------------------------------
2.542721 2.583387 15,887,549 1993
------------------------------------------------------------------------
2.487178 2.542721 17,431,451 1992
------------------------------------------------------------------------
2.437912 2.487178 20,546,392 1991*
- ------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian 0.955773 1.250781 7,940,457 1995
Fund ------------------------------------------------------------------------
1.000000 0.955773 907,272 1994
- ------------------------------------------------------------------------------------------------------
Putnam Investors 8.297318 11.305164 2,260,621 1995
Fund-Class A ------------------------------------------------------------------------
8.652501 8.297318 2,145,377 1994
------------------------------------------------------------------------
7.410567 8.652501 1,975,963 1993
------------------------------------------------------------------------
6.934213 7.410567 1,682,860 1992
------------------------------------------------------------------------
6.383603 6.934213 1,597,104 1991*
- ------------------------------------------------------------------------------------------------------
Putnam Voyager 1.982311 2.752130 27,203,903 1995
Fund-Class A ------------------------------------------------------------------------
1.992379 1.982311 19,751,850 1994
------------------------------------------------------------------------
1.698751 1.992379 12,946,038 1993
------------------------------------------------------------------------
1.563079 1.698751 5,917,563 1992
------------------------------------------------------------------------
1.256187 1.563079 1,655,847 1991*
- ------------------------------------------------------------------------------------------------------
Seligman Growth 7.020585 8.934609 616,776 1995
Fund, Inc.-Class A ------------------------------------------------------------------------
7.370495 7.020585 582,039 1994
------------------------------------------------------------------------
6.989639 7.370495 538,601 1993
------------------------------------------------------------------------
6.340967 6.989639 364,304 1992
------------------------------------------------------------------------
5.483042 6.340967 308,224 1991*
- ------------------------------------------------------------------------------------------------------
<FN>
*Period from July 1, 1991 (the date Participant accounts of the NACo Program
were transferred from the Nationwide DC Variable Account to the NACo Variable
Account and the NACo Variable Account commenced operations exclusive to the
NACo Program).
**The 7-day yield on the Nationwide(R) Money Market Fund as of December 31, 1995
was 4.23 %.
</TABLE>
(Continued on next page)
13
<PAGE> 14
CONDENSED FINANCIAL INFORMATION (continued)
Accumulation Unit Values (For an Accumulation Unit outstanding throughout the
period)
<TABLE>
<CAPTION>
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation Units
At Beginning At End Outstanding At The
Underlying Mutual Fund Of Period Of Period End Of The Period Year
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Investments Trust - 1.066889 1.119630 1,524,715 1995
Treasury ------------------------------------------------------------------------
Portfolio - Institutional Class*** 1.034183 1.066889 1,223,255 1994
------------------------------------------------------------------------
1.012172 1.034183 500,957 1993
------------------------------------------------------------------------
1.000000 1.012172 246,584 1992
- ---------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock 0.929695 1.025854 10,412,582 1995
Fund(R) ------------------------------------------------------------------------
1.000000 0.929695 4,482,375 1994
- ---------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 0.944596 1.040054 16,316,118 1995
------------------------------------------------------------------------
1.000000 0.944596 6,972,585 1994
- ---------------------------------------------------------------------------------------------------------------
Twentieth Century 3.359891 4.005400 37,362,979 1995
Growth Investors ------------------------------------------------------------------------
3.443124 3.359891 38,748,520 1994
------------------------------------------------------------------------
3.350122 3.443124 41,912,416 1993
------------------------------------------------------------------------
3.533694 3.350122 43,106,409 1992
------------------------------------------------------------------------
2.571846 3.533694 31,955,054 1991*
- ---------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra 0.926489 1.263551 79,405,506 1995
Investors ------------------------------------------------------------------------
0.970411 0.926489 59,484,505 1994
------------------------------------------------------------------------
1.000000 0.970411 21,036,904 1993
- ---------------------------------------------------------------------------------------------------------------
<FN>
*Period from July 1, 1991 (the date Participant accounts of the NACo Program
were transferred from the Nationwide DC Variable Account to the NACo Variable
Account and the NACo Variable Account commenced operations exclusive to the
NACo Program).
***The 7-day yield on the Short-Term Investments Trust - Treasury Portfolio as of December 31, 1995 was
4.68%.
</TABLE>
The SEI Index Funds - S&P Index Portfolio first became effective on May 1, 1996,
in conjunction with this Plan. Accordingly, information for this fund is not
available at this time.
14
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY
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 it's 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 all states, the District of
Columbia, the Virgin Islands, and Puerto Rico.
THE NACo VARIABLE ACCOUNT
NACo Variable Account was established by the Company on September 7, 1988,
pursuant to the provisions of Ohio law. NACo Variable Account has been
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 NACo Variable
Account or the Company by the Securities and Exchange Commission.
The net Purchase Payments applied to the NACo Variable Account are invested
in shares of the Underlying Mutual Funds available under the terms of the
Contract. The NACo Variable Account is divided into 28 Sub-Accounts of
Accumulation Units, each of which represents a separate Underlying Mutual Fund
(see "Appendix Participating Funds" for a description of the investment
objective of each Underlying Mutual Fund).
Each Sub-Account in the NACo Variable Account is administered and accounted
for as a part of the separate account, but the income, capital gains or losses
of each Sub-Account are credited to or charged against the assets held for that
Sub-Account in accordance with the terms of each Contract, without regard to
other income, capital gains or losses of any other Sub-Account, or arising out
of any other business the Company may conduct. The assets within each
Sub-Account are not chargeable with liabilities arising out of the business
conducted by any other Sub-Account, nor will the NACo Variable Account as a
whole be chargeable with liabilities arising out of any other business the
Company may conduct.
VOTING RIGHTS
The NACo Variable Account will be owner of record of all Underlying Mutual
Fund shares purchased by the respective account until such Underlying Mutual
Fund shares are sold, but all securities will be held for the benefit of the
Owners of the Contracts. In accordance with its view of present applicable law,
the Company will vote the shares of the Underlying Mutual Funds held in the NACo
Variable Account at regular and special meetings of the shareholders of the
Underlying Mutual Funds in accordance with instructions received from the
Owners. The Company or its designee will mail to each Owner at its last known
address all periodic reports and proxy material of the applicable Underlying
Mutual Fund, and a form with which to give voting instructions. Any Underlying
Mutual Fund shares as to which no timely instructions are received will be voted
by the Company in the same proportion as the instructions received from all
persons furnishing timely instructions. An Owner's voting rights may decrease
with the cancellation of Accumulation Units to make annuity payments.
PERIODIC REPORTS
The Company or its designee will, semi-annually, provide to each person
covered by a Contract, a Statement of Assets, Liabilities and Contract Owners'
Equity and a Statement of Operations and Changes in Contract Owners' Equity of
the NACo Variable Account. Each Participant and Retired Participant will also be
informed, periodically, of the number of Accumulation Units credited to his or
her account as well as the total account value.
The current prospectus of the NACo Variable Account will be made available
to Participants through the Owner. In addition, the Owner may, under the terms
of the Plan, have an obligation to furnish additional information to
Participants, such as: a notice of any changes in the Plan, or tax status of the
Plan and the financial condition of the Owner as it relates to obligations under
the Plan.
15
<PAGE> 16
NACo VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS AND OTHER DEDUCTIONS
THE FEES AND CHARGES DEDUCTED UNDER THE CONTRACT IN THE AGGREGATE ARE REASONABLE
IN RELATION TO THE SERVICES RENDERED, THE EXPENSES EXPECTED TO BE INCURRED, AND
THE RISKS ASSUMED BY THE COMPANY.
CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for
these Contracts. However, a Contingent Deferred Sales Charge ("CDSC"), when it
is applicable, will be used to cover expenses relating to the sale of the
Contracts, including compensation 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 a Contingent Deferred Sales Charge. Any shortfall will be borne by the
Company from surplus held in its General Account, which may indirectly include
portions of the Actuarial Risk Fee, since the Company intends to generate a
profit from this fee.
If the Owner terminates the Contract in accordance with the section
entitled "Suspension And Termination" and directs the Company to withdraw all or
part of the Contract Value, the Company will assess a CDSC against the amount
withdrawn, by deducting an amount from each Participant's Account as indicated
below. For purposes of the CDSC, withdrawals under a Contract come first from
the Purchase Payments which have been on deposit under the Contract for the
longest time period.
For withdrawals made through December 31, 1997, the CDSC will be the lesser
of (i) and (ii) below, where:
(i) is the lesser of 4% of the Purchase Payments made on behalf of a
Participant prior to the date of the withdrawal, or 4% of the amount
withdrawn; and
(ii) is the lesser of the applicable percentage set forth in the table
below multiplied by the Purchase Payments made on behalf of a
Participant prior to the date of withdrawal, or the applicable
percentage set forth below multiplied by the amount withdrawn.
For withdrawals made after December 31, 1997, the CDSC will be the lesser
of (iii) and (iv) below, where:
(iii) is the lesser of 2% of the Purchase Payments made on behalf of a
Participant prior to the date of the withdrawal, or 2% of the amount
withdrawn; and
(iv) is the lesser of the applicable percentage set forth in the table
below multiplied by the Purchase Payments made on behalf of a
Participant prior to the date of withdrawal, or the applicable
percentage set forth below multiplied by the amount withdrawn.
Notwithstanding the above, the Contingent Deferred Sales Charge will not
apply to any withdrawals made on or after January 1, 2001.
<TABLE>
<CAPTION>
Number of Completed
Contingent Deferred Years of Participation
Sales Charge Percentage (Beginning July 1, 1985)
----------------------- ------------------------
<S> <C>
4% 1 Through 12
3% 13
2% 14
1% 15
0% 16 And After
</TABLE>
Years of participation credited toward the CDSC schedule set forth above
may only be those earned beginning with the date a Participant's first deferral
was deposited in the Contracts.
MORTALITY AND EXPENSE RISK AND ADMINISTRATION CHARGES
The Contracts contain purchase rates applicable at and after retirement.
These purchase rates may be used to determine the Retirement Income Payments to
be made by the Owner to Participants in accordance with the terms of the Plan.
However, the Owners have contracted with the Company to provide Retirement
Income Payments.
Under the terms of the Contracts, the Company assumes the risk that the
actuarial estimate of mortality rates among Retired Participants may prove
erroneous and amounts set aside for retirement income benefits on the basis of
such estimate may prove inadequate.
For the Company's contractual promise to accept these risks and for the
administrative costs associated with the NACo Variable Account, the Contracts
provide for the daily deduction of an Actuarial Risk Fee (see "Glossary of
16
<PAGE> 17
Terms"). The deduction is based on the daily value of the applicable NACo
Variable Account Sub-Account, and is equivalent to 0.95% on an annual basis
(0.10% for the mortality risk, 0.40% for the expense risk, and 0.45% for
administration of the NACo Variable Account). The 0.45% administration portion
of the Actuarial Risk Fee has been set at a level to recover no more than the
actual cost associated with administering the Contracts. If this Actuarial Risk
Fee is insufficient to cover the actual cost of the mortality risk, the expense
risk, or the administrative costs, the loss will be borne by the Company.
Conversely, if the Actuarial Risk Fee proves more than sufficient, the excess
will be a profit to the Company. If total assets of a Plan under the NACo
Program exceed $10 million, as of the specified date each year, the 0.45%
Administrative portion of the Actuarial Risk Fee will be reduced on a sliding
scale corresponding to total assets of a plan under the NACo Program (see
"Summary of Contract Expenses"). This reduction reflects the lower cost per
Participant to administer larger asset pools.
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 annuity
considerations received by the Company. Premium taxes currently imposed by
certain states range from 0% to 3.5% per annum. Currently, the Company is not
deducting such taxes from an Owner's Contract Value at the time of
Annuitization, but reserves the right to deduct such taxes when incurred.
Retirement Income Payments may be reduced or Accumulation Units canceled to
provide for premium taxes assessed.
EXPERIENCE CREDITS
The Contracts described herein are participating where permitted by law in
the state of issue. A participating Contract provides the right to participate
in the Distribution of surplus of the Company. In the event that Actuarial Risk
Fees collected under this Contract accrue to the Company in excess of an amount
deemed necessary at the sole discretion of the Company's Board of Directors,
such excess may be allocated to the Contract by purchasing additional
Accumulation Units and crediting such additional units to the Participant
Accounts. There have not been any Experience Credits to date. The Company cannot
offer any assurance that there will be Experience Credits in the future.
EXPENSES OF THE NACO VARIABLE ACCOUNT
The NACo Variable Account's total expenses for the fiscal year ended
December 31, 1995 were 0.95% of the average net assets on an annualized basis.
Deductions from and expenses paid out of the assets of the Underlying Mutual
Funds are described in the prospectus of each Underlying Mutual Fund.
DESCRIPTION OF THE CONTRACTS
PURPOSE OF THE CONTRACTS
The Contracts described in this prospectus are Group Flexible Fund
Retirement Contracts designed to fund deferred compensation plans adopted by
Member Counties under the NACo Program established under Section 457 of the
Code. A single group Contract is issued to the Owner, covering all present and
future participating employees. The Company will issue a certificate to the
Owner for delivery to each Retired Participant or other person for whom an
Optional Retirement Income Form is purchased, setting forth in substance the
benefits to which such person is entitled. In addition, if any applicable law
requires, the Company will issue a descriptive certificate to the Owner for
delivery to any such person required by law to receive such certificate, setting
forth in substance the benefits to which such person is entitled. For purposes
of determining benefits payable under the Plan, an individual accumulation
account is established for each Participant. The frequency of Purchase Payments
is normally monthly, but may be adjusted to fit the payroll practices of the
Owner. Purchase Payments made at any time by or on behalf of any Participant
must be at least $20 per month.
The basic objectives of the Contracts are to provide each Participant with
an initial Retirement Income Payment, which will tend to reflect the changes
which have occurred in the cost of living during pre-retirement years (without
the necessity of increased Purchase Payments to keep pace with any increase in
the cost of living which might occur during those years), and to provide
subsequent Retirement Income Payments which will tend to vary with the cost of
living changes during his or her retired lifetime. The Company seeks to
accomplish these objectives by applying purchase rates contained in the Contract
to the amounts accumulated through investment in Underlying Mutual Funds.
Notwithstanding the foregoing, there is no assurance that these objectives will
be attained. Historically, the value of a diversified portfolio of common stocks
held for an extended period of time has tended to rise during periods of
inflation. There has, however, been no exact correlation, and for some periods,
the prices of securities have declined while the cost of living was rising.
17
<PAGE> 18
MODIFICATION OF THE CONTRACT
Contract provisions with respect to the mortality basis, minimum death
benefits, and the deductions made from Purchase Payments, Participant Accounts,
the Contingent Deferred Sales Charges, if applicable, and Actuarial Risk Fees
may not be changed prior to the first Contract Anniversary. These same
provisions may not be changed except as they apply to Participants entering the
Contract after the effective date of such change.
Other than as set forth above, the Company reserves the right to change all
other provisions of the Contract by giving notice to the Owner not less than 90
days before the effective date of the change.
CONTRACT RIGHTS AND PRIVILEGES AND ASSIGNMENTS
The Contract belongs to the Owner provided, however, that under Code
Section 457 Plans, the Owner must hold the Contract for the exclusive benefit of
the Plan's participants and beneficiaries. All contractual rights and privileges
may be exercised by the Owner, subject to any rights specifically reserved in
the Plan for Participants as a group or as individuals. With respect to 457
Plans, the Owner may not take any action inconsistent with the rights of such
457 Plan's participants. The Contract may not be assigned.
EXCHANGE PRIVILEGE
The Company will permit the Owner, or the Participant if the Plan so
provides, to exchange amounts among the Sub-Accounts as frequently as permitted
by the Plan, subject to the limits and rules set by each Underlying Mutual Fund.
For those Contracts where the Owner has elected an exchange privilege, there
will be no charge for exchanges among the Sub-Accounts.
The Company will also permit the Participant to utilize the Telephone
Exchange Privilege, for exchanging amounts among Sub-Accounts, if forms are
executed by the Contract Owner and Participant agreeing with certain
restrictions applicable to such privilege.
Telephone exchange requests must be received by the Company by the close of
the New York Stock Exchange in order to receive that day's closing Sub-Accounts
price. A telephone exchange request may not be revoked once instructions have
been recorded and accepted. If the Participant is unable to execute an exchange
request by telephone (for example, during times of unusual market activity), the
Participant might consider placing the exchange order by mail. The Company will
employ reasonable procedures to confirm that instruction communicated by
telephone are genuine. Such procedures may include any or all of the following,
or such other procedures as the Company may, from time to time, deem reasonable:
requesting identifying information, such as name, contract number, Social
Security Number, and/or personal identification number; tape recording all
telephone transactions; and providing written confirmation thereof to the Owner
or Participant and any agent of record, at the last address of record. Failure
to follow reasonable procedures may result in the Company's liability for any
losses due to unauthorized or fraudulent telephone transfers. However, 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
Participant. The Company may determine to withdraw the Telephone Exchange
Privilege, upon 30 days written notice to Contract Owners and Participants.
On the date the Company receives an exchange request in good order, which
includes all of the information necessary for processing the request, the
Company will transfer the amount to be converted. Such transfers will be based
on the Accumulation Unit Values of the affected Sub-Accounts if received at the
Company's Home Office by the close of the New York Stock Exchange on a day on
which the New York Stock Exchange is open for business. If the exchange request
is received after the close of the New York Stock Exchange on any day, or on a
day the New York Stock Exchange is closed for business, the transfer will be
based on the next business day on which the New York Stock Exchange is open.
For those Plans which provide this Contract and Nationwide's Group Fixed
Fund Retirement Contract, the Owner, or the Participant if the Plan so provides,
may exchange Accumulation Units between any Sub-Account of the NACo Variable
Account and the Group Fixed Fund Retirement Contract. Exchanges from the deposit
fund to any Sub-Account of the NACo Variable Account will be subject to the
limitations of the Group Fixed Fund Retirement Contract. Exchanges will be
effected when received in good order by the Company at its Home Office.
SUSPENSION AND TERMINATION
The Contract may be suspended at the option of the Company on written
notice to the Owner if: (a) the Owner has failed to remit to the Company any
Purchase Payment specified in the Plan; or (b) if the Company does not accept an
amendment to the Plan, filed with the Company by the Owner, which in the
Company's
18
<PAGE> 19
opinion would adversely affect its administrative procedures or financial
experience, or both, with respect to the Contract. The Owner may suspend the
Contract upon 90 days written notice to the Company. Suspension of the Contract
will become effective as of the ninety-first (91st) day following receipt of
written notice by the Company. Suspension of the Contract shall mean only that
no further Purchase Payments will be accepted by the Company except by mutual
consent, and all other terms of the Contract shall continue to apply. After
suspension of the Contract has become effective, the Owner may, upon 30 days
written notice, terminate the Contract. Termination of the Contract will become
effective as of the 31st day following receipt of written notice by the Company.
Upon termination of the Contract, the Company will pay to the Owner the
redemption value, subject to applicable charges, plus the balance of the annual
premiums transferred from the NACo Variable Account to the General Account for
payment of variable Retirement Income benefits under retirement Options B1 and
B2 (see "Optional Retirement Income Forms"). Payment of redemption values may be
suspended when redemption of Underlying Mutual Fund shares are suspended as
provided in the section entitled "Redemption of Participant Accounts
(Termination)." Payment of any amounts under this section will be subject to any
applicable CDSC (see "Contingent Deferred Sales Charge").
APPLICATION OF PURCHASE PAYMENTS
Nationwide Life shall receive Purchase Payments from the Owner in
accordance with the requirements of the Plan. Net Purchase Payments received on
behalf of Participants will be applied by the Company to purchase Accumulation
Units of Sub-Accounts in the NACo Variable Account in accordance with the
instructions of the Owner. Purchase Payments made at any time by or on behalf of
each Participant must be at least $20 per month. Payments must be no less than
monthly, unless agreed to by the Company.
An initial Purchase Payment will be priced not later than 2 business days
after receipt of an order to purchase, if the application of the Participant and
all information necessary for processing the purchase order are complete upon
receipt by the Company. The Company may retain the Purchase Payment for up to 5
business days while attempting to complete an incomplete application. If the
application cannot be made complete within 5 business days, the Owner will be
informed of the reasons for the delay and the Purchase Payment will be returned
immediately unless the Owner consents to the Company retaining the Purchase
Payment until the application of the Participant is made complete. Upon
completion of such incomplete application, the Purchase Payment will be priced
within 2 business days.
Purchase Payments will not be priced on days when the New York Stock
Exchange is not open for business.
ADDITIONAL PURCHASE PAYMENT PRIOR TO COMMENCEMENT OF ANNUITY PAYMENTS
The Owner shall have the right to make one additional Purchase Payment in
respect to a Participant for the purpose of increasing Retirement Income
Payments. Notice of such payment shall be given to the Company at the time the
notice to distribute is given, and such additional Purchase Payment must be made
no later than the last business day prior to the date upon which Retirement
Income Payments are to commence. Any such additional Purchase Payment shall be
subject to any applicable premium taxes. The annuity rates provided under this
Contract at the time of issue shall be applicable to the entire value, including
any such additional Purchase Payment, of such account which does not exceed five
times the Purchase Payment allocated to such account prior to the date notice to
distribute is given. Any excess amount may be applied at annuity rates then
offered by the Company for contracts of the same type as this Contract.
CREDITING ACCUMULATION UNITS
When a Purchase Payment is received by the Company, the net Purchase
Payment for each Sub-Account is applied separately to provide Accumulation Units
which are credited to a Participant Account in accordance with the instructions
of the Owner. The number of Accumulation Units credited to each receipt
Participant Account for each Sub-Account is determined by dividing the net
Purchase Payment allocated to that Sub-Account for that Participant by the value
of the Accumulation Unit for that Sub-Account next computed following of the
Purchase Payment by the Company. The net Purchase Payment for each Participant
is the total Purchase Payment for that Participant less any taxes then payable.
NACo VARIABLE ACCOUNT ACCUMULATION UNIT VALUE
The value of an Accumulation Unit for each Sub-Account was established at a
value equal to the accumulation unit value of the corresponding Sub-Account of
the Nationwide DC Variable Account on January 2, 1990. The DC Variable Account
is a segregated investment account of the Company in which Member Counties
formerly held Contracts. The value of an Accumulation Unit for each new
Sub-Account added to the NACo Variable Account after January 2, 1990, will be
established at $1.00 as of the date Underlying Mutual Fund shares are available
for purchase for that Sub-Account. The value of Accumulation Units for any
Sub-Account for
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any subsequent business day is determined by multiplying the value for the
preceding business day by the Net Investment Factor for that Sub-Account for the
period since that day. A business day is any day on which the New York Stock
Exchange is open for trading or any other day during which there is a sufficient
degree of trading of the Underlying Mutual Fund shares that the current net
asset value of their Accumulation Units might be materially affected.
ALLOCATION OF PURCHASE PAYMENTS
The Owner or Participant must specify the proportion of the Purchase
Payments to be applied to provide benefits under any Sub-Account of the NACo
Variable Account. The Company will permit the Owner, or the Participant if the
Plan so permits, to change the allocation percentages among Sub-Accounts for
subsequent Purchase Payments, provided that no change may be made which would
result in an amount less than 1% of the payment being allocated to any
Sub-Account for any Participant. The Company will permit such allocation changes
as frequently as permitted by the Plan. A change in allocation percentages will
not affect Accumulation Units of any Sub-Account resulting from Purchase
Payments made before the change.
VALUATION OF AN ACCOUNT
The sum of the value of all Accumulation Units credited to the Participant
Account in respect of the Participant is the Participant Account Value. Purchase
Payments are allocated among the Sub-Accounts of the NACo Variable Account in
accordance with the instructions of the Owner.
The value of a Participant's Account on any day can be determined by
multiplying the total number of Accumulation Units credited to the account for
each Sub-Account by the current Accumulation Unit Value for that Sub-Account in
respect of the Participant. Each Participant and the Owner will be advised
periodically of the number of Accumulation Units credited to his or her account
for each Sub-Account, the current Accumulation Unit Values, and the total value
of his or her account. Such reports to Participants are for informational
purposes only and should not be interpreted to mean that a Participant has any
rights with respect to his or her account beyond that provided by the Owner in
accordance with the terms of the Plan.
The Participant and Owner should review the information in these reports
carefully. All errors or corrections must be reported to the Company immediately
to assure proper crediting to the Contract and appropriate Sub-Accounts. The
Company will assume all transactions are accurate unless the Participant or the
Owner notifies the Company otherwise within 30 days after receipt of the report.
REDEMPTION OF PARTICIPANT ACCOUNTS (TERMINATION)
The Owner's right to redeem (terminate) Participant Accounts, either fully
or partially, will be governed by the terms of the Plan which the Contract is
issued to fund. It should be recognized that the value of the investment on
redemption can be more or less than its cost. All such payments will be made by
the Company to the Owner. It is the Owner's obligation to distribute such
payments to a Participant. The Company may undertake the obligation on behalf of
the Owner to distribute such payments directly to a Participant by agreement
with the Owner. To the extent permitted by the Plan, a Participant Account may
be redeemed fully or partially at any time prior to the date Retirement Income
Payments commence for the Participant under either Option B1 or B2. No partial
redemption will directly affect future requirements to make Purchase Payments
for that Participant nor his or her retirement date. If the Contract is
terminated by the Owner, all Participant Accounts in the NACo Variable Account
will be redeemed to the extent permitted by the Plan, and such Participant
Accounts will be subject to any applicable CDSC. However, absent Contract
termination by the Owner, the CDSC provision will not apply and therefore any
full or partial redemptions made on behalf of a Participant will not be subject
to any CDSC (see "Contingent Deferred Sales Charge").
A request for a partial redemption of a Participant Account containing more
than one Sub-Account of Accumulation Units must specify the allocation of the
partial redemption among the Sub-Accounts of Accumulation Units. However, if no
such direction is contained in the request for a partial redemption, the Company
may pro-rate the redemption among the applicable Sub-Accounts of Accumulation
Units. Upon receipt at the Company's Home Office of a written request for a full
or partial redemption of a Participant Account, the Company will determine the
value of the number of Accumulation Units redeemed at the Accumulation Unit
Value next computed following receipt of such written request by the Company.
Payment of any such amount will be made to the Owner with reasonable promptness,
and in any event, within 7 days of the date the request is received by the
Company. Payment of redemption values may be suspended when redemption of the
Underlying Mutual Fund shares is suspended (i) during any period in which the
New York Stock Exchange is closed, or (ii) in the event that the Securities and
Exchange Commission may by order direct for the protection of Owners or
Participants. Instead of a lump sum Distribution of a full or partial
redemption, the Owner, or Participant if
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permitted by the Plan, may elect to have that amount paid out in installments
under Option A1 or A2, subject to the minimums applicable to these options.
DISTRIBUTION OF PARTICIPANT ACCOUNTS (RETIREMENT PERIOD)
RETIREMENT INCOME PAYMENTS
The period during which a Participant Account is paid out in periodic
installments is known as the Distribution period. Because periodic Distributions
will normally be made after the Participant retires, the Distribution period is
also called the retirement period. All such periodic Distributions will be made
by the Company to the Owner. It is the Owner's obligation to pay such amounts to
a Participant. The Company may undertake the obligation on behalf of the Owner
to pay such amounts directly to a Participant by agreement with the Owner.
Retirement Income Payments under Options B1 and B2 are determined on the basis
of (i) the mortality tables specified in the Contract, (ii) the adjusted age of
the Retired Participants, (iii) the type of Retirement Income Payment option(s)
selected, and (iv) in the case of variable payments, the investment performance
of the specific NACo Variable Account Sub-Account elected. While the Company may
be obligated to make variable Retirement Income Payments under the Contract, the
amount of each such payment is not guaranteed. The dollar amount of variable
payments will reflect investment gains and losses, and investment income of the
NACo Variable Account Sub-Account on which they are based, but they will not be
affected by adverse mortality experience or by an increase in the Company's
expenses above the amount provided for in the Contracts.
ELECTION OF INCOME FORM AND DATE
The Contracts provide for Retirement Income Payments to begin on the date
and under the retirement options elected in accordance with the Plan. At least
one month prior to a Participant's Retirement Commencement Date (see "Glossary
of Terms"), the Contract Owner may by written election to the Company at its
home office, elect any one of the retirement income options described in this
prospectus. The Plan may restrict changes in election of retirement income
options.
ALLOCATION OF RETIREMENT INCOME
Upon retirement, Accumulation Units in a Participant's Account may be used
to purchase a Fixed Dollar Annuity for the Participant. For Participants
electing Options A1 or A2 as described in this prospectus, Accumulation Units in
a Participant's Account of any Sub-Account in the NACo Variable Account will be
used to provide variable Retirement Income Payments as described further in this
prospectus.
FIXED DOLLAR ANNUITY
A Fixed Dollar Annuity is an annuity with payments which are guaranteed as
to dollar amount during the retirement period. The first fixed dollar payment
will be determined by applying the General Account Contract value to the
applicable Annuity Table in accordance with the Optional Retirement Income Form
elected. This will be done at the retirement date. Fixed Dollar Annuity payments
after the first will not be less than the First Fixed Dollar Annuity payment.
The availability of Fixed Dollar Annuity Contracts under a particular Plan is
subject to the election of the Owner.
MINIMUM PAYMENT
If the present value of the Participant's accrued benefit at the time of
retirement is less than $3,500, the Company shall have the right to make a lump
sum Distribution to such Retired Participant.
DEATH BENEFIT BEFORE RETIREMENT
In the event a Participant dies before his or her retirement income
commences, a death benefit equal to the value of such Participant Account, on
the date due proof of death is received in writing by the Company will be paid
as provided by the Plan. If the Plan so provides, a Beneficiary may elect either
to receive such value in a lump sum or to apply it under any of the Optional
Retirement Income Forms contained in this Contract, subject to the minimums
applicable to such optional forms. Monthly payments due under such options may
be fixed, variable, or a combination of fixed and variable.
OPTIONAL RETIREMENT INCOME FORMS
The availability of the following Optional Retirement Income Forms are
subject to the election of the Owner.
OPTION A1-Payments for a Designated Period. Payments are made monthly for
any specified number of years not exceeding 30 years. The amount of each
variable payment will be determined by multiplying (a) by (b) where (a) is
the Accumulation Unit Value for the date the payment is made and (b) is the
number of
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Accumulation Units applied under this option divided by the number of
payments selected. Exchanges between the investment options are permitted
subject to limitations outlined in the Company's Group Fixed Fund
Retirement Contract. A period certain payment period of less than 5 years
for a Participant who has less than a minimum of 5 Participant Account
Years would result in imposition of the applicable Contingent Deferred
Sales Charge.
OPTION A2-Payments of a Designated Amount. Payments are made monthly in
equal installments (not less than $25 per month) until the amount applied,
adjusted each business day for investment results, is exhausted. The final
installment will be the sum remaining with the Company. Payments under this
option which result in a payment period of less than 5 years for a
Participant who has less than 5 Participant Account Years would result in
imposition of the applicable Contingent Deferred Sales Charge.
OPTION B1-Life Income with Payment Certain. Payments are made monthly
during the lifetime of an individual with payments made for a period
certain of 60, 120, 180, 240, 300 or 360 months as elected. If the
individual dies before the end of the period certain, level payments will
continue to the designated Beneficiary during the remainder of the period
certain.
OPTION B2 - Joint and Survivor Life Income. Payments are made monthly
during the joint lifetime of an individual and another named individual.
Payments will continue to be made as long as either is living. This option
will permit the choice of 100%, 75%, 66 2/3% or 50% of the original payment
amount to be paid to the Beneficiary. Payments will stop with the last
payment due prior to the death of the Beneficiary. If the Beneficiary
predeceases the designated Annuitant, then payments continue at 100% to the
designated Annuitant.
OTHER FORMS AND BENEFIT PAYMENTS - With the consent of the Company, the
amount due upon Distribution may be applied on any other mutually agreeable
basis.
Exchanges processed while Participants are receiving payments under Option
A1 may change the number of Accumulation Units remaining. In this event, the
payment amount must be recalculated.
On the date on which Retirement Income Payments under Option B1 or B2 or
any other Retirement Income Payment measured by a life or lives commence in
respect of a Participant, all Accumulation Units (or the number thereof
appropriate to the election made) in any Sub-Account will be canceled.
DEATH OF RETIRED PARTICIPANT
If any Retired Participant dies while receiving payments, any death benefit
payable will be determined in accordance with the Retirement Income Form
elected. Calculation of the present value of any remaining payments certain for
purposes of making a lump sum payment will be based on the same assumed
investment rate used by the Company in determining the payments certain prior to
the death of the Retired Participant.
WITHDRAWAL
If permitted by the Plan, any amount remaining under Option A1 or A2 may be
withdrawn, or if that amount is at least $5,000, it may be applied under either
Option B1 or B2, subject to the minimum payment requirements described
previously. Unless prohibited by the Plan, a Beneficiary receiving payments
certain under Option B1 after the death of a Retired Participant may elect at
any time to receive the present value at the current dollar amount of the
remaining number of payments certain in a single payment, calculated on the
basis of the assumed investment rate used in computing the amount of the
previous payments.
FREQUENCY OF PAYMENT
At the election of the Retired Participant, and with the consent of the
Owner, payments made under any option may be made annually, semi-annually, or
quarterly instead of monthly. Any change in frequency of payments must be on the
anniversary of the commencement of Retirement Income Payments.
DETERMINATION OF PAYMENTS UNDER OPTIONS A1 AND A2
Monthly payments under Options A1 and A2 will be determined in the manner
set forth in the description of the options. As each payment is made under
either of these options, a number of Accumulation Units equal in value to the
payment will be canceled.
DETERMINATION OF PAYMENTS UNDER OPTIONS B1 AND B2
Variable monthly payments under Options B1 and B2 will be determined
annually and will remain level throughout the year. Each year, as of the
anniversary of the commencement of Retirement Income Payments, a
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new variable monthly payment will be determined and that new payment will remain
level for that year. An adjusted age is used to determine the amount of monthly
payment for each year. Such adjusted age may not be the same as the actual age
of the Retired Participant.
DETERMINATION OF AMOUNT OF VARIABLE MONTHLY PAYMENTS FOR FIRST YEAR
In determining the amount of Retirement Income Payments under Options B1
and B2, the value held on behalf of a Participant is determined by multiplying
the number of Accumulation Units in each Sub-Account for that account by the
Accumulation Unit value for that Sub-Account on the last business day of the
second calendar week immediately preceding the date on which the first payment
is due.
The first year variable monthly payment for each Sub-Account is determined
by dividing the value of the Accumulation Units of that Sub-Account in the
Participant Account by the amount required to provide $1 per month (the purchase
rate).
Once the first year's variable monthly payment amount has been determined
for a Participant, the Company will deduct the annual premium from the
Participant Account. This deduction is made by canceling a number of
Accumulation Units in the Participant Account equal in value to the annual
premium. The allocation of the annual premium between Sub-Account will be in
such relationship as the monthly payments from each Sub-Account have to each
other.
The annual premium is calculated so that if there are no partial
redemptions (and therefore no Underlying Mutual Fund dividends have been taken
in cash) the payee will receive level annual payments if the net investment
factor, on an annual basis, is equal to the Assumed Investment Rate plus an
amount equal to the annual administrative charge. Payments for subsequent years
will be smaller than, equal to, or greater than the payments received during the
initial year, depending on whether the actual net investment result on an annual
basis of a Sub-Account is smaller than, equal to, or greater than the Assumed
Investment Rate.
DETERMINATION OF AMOUNT OF VARIABLE MONTHLY PAYMENTS FOR THE SECOND AND
SUBSEQUENT YEARS
As of the first anniversary of the commencement of Retirement Income
Payments, the second year variable monthly payments will be determined in
exactly the same manner as for the first year, using the purchase rates in the
Contract for the Retired Participant's age as then determined under the terms of
the Contract. As in the first year, an annual premium will be deducted and
transferred to the General Account from which Account the Company will make the
Retirement Income Payments. Subsequent annual determinations will be made in the
same manner.
Upon the death of any Retired Participant, the Participant Account will be
reduced by the number of Accumulation Units not required to provide further
payments during the remainder of a period certain, if any, or to a contingent
Retired Participant. Any Accumulation Units so canceled will either remain in
the NACo Variable Account or be transferred to the Company's General Account,
depending on the Company's obligation.
ALTERNATE ASSUMED INVESTMENT RATE
The Contracts include purchase rates based on a 3.5% rate per annum. If not
prohibited by the laws and regulations of the states in which this Contract is
issued, an Owner may elect on the Contract Date to have all variable benefits
payable for all Participants determined on an Assumed Investment Rate of 5% per
annum. The Assumed Investment Rate basis in the Contract is used merely to
determine each year's monthly payment from investment experience of any of the
NACo Variable Account Sub-Accounts. The choice of the Assumed Investment Rate
affects the pattern of Retirement Income Payments. A higher Assumed Investment
Rate will produce a higher initial payment, but a more slowly rising series of
subsequent payments (or a more rapidly falling series of subsequent payments)
than a lower Assumed Investment Rate.
Although a higher initial payment would be received under a higher Assumed
Investment Rate, there is a point in time after which payments under a lower
Assumed Investment Rate would be greater, assuming payment continues after that
point in time.
The objective of a variable retirement Contract is to provide level
payments during periods when the economy is relatively stable and to reflect as
increased payments only the excess of investment results flowing from inflation
or an increase in productivity. The achievement of this objective will depend in
part upon the validity of the assumption that the net investment result, on an
annual basis, of a Sub-Account equals the Assumed Investment Rate during periods
of stable prices.
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GENERAL INFORMATION
SUBSTITUTION OF SECURITIES
If the shares of any Underlying Mutual Fund should no longer be available
for investment by the NACo Variable Account or, if in the judgment of the
Company's management, further investment in such Underlying Mutual Fund shares
should become inappropriate in view of the purposes of the Contract, the Company
may substitute shares of another Underlying Mutual Fund for Underlying Mutual
Fund shares already purchased or to be purchased in the future by Purchase
Payments under the Contract.
From time to time it may become necessary for the Company to substitute
Underlying Mutual Fund shares for reasons relating to the historical investment
performance of the Underlying Mutual Funds. The Company, in consultation with
NACo and NACo's advisers, has developed standards for substituting Underlying
Mutual Funds that consistently experience poor investment performance over time.
These standards involve comparing the performance of each Underlying Mutual Fund
within the NACo Variable Account to the performance of all other mutual funds
within the Underlying Mutual Fund's same risk category. Underlying Mutual Funds
within the same risk category are Underlying Mutual Funds with similar
investment objectives and policies, and similar volatilities of investment
return.
In no event will any substitution of securities in the NACo Variable
Account take place without prior approval of the Securities and Exchange
Commission, and under such requirements as it may impose.
PERFORMANCE ADVERTISING
The Company may from time to time advertise several types of historical
performance for the Sub-Accounts of the NACo Variable Account. A "yield" and
"effective yield" may be advertised for the Nationwide Money Market Fund and the
Short-Term Investments Trust Treasury Portfolio 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-Accounts' units. Yield is an
annualized figure, which means that it is assumed that the Sub-Account generates
the same level of net income each week 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 advertise for the Sub-Account standardized "average
annual total return", calculated in a manner prescribed by the Securities and
Exchange Commission, and non-standardized "total return." "Average annual total
return" will show the percentage rate of return of a hypothetical initial
investment of $1,000 for rolling calendar quarters and will cover, at least the
most recent one, five and ten year periods, or for a period from inception to
date if the Underlying Mutual Fund held in the Sub-Account 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. Non-standardized "total return"
will be calculated in a similar manner as will average annual total return
except total return will not reflect the deduction of any applicable Contingent
Deferred Sales Charge, which, if reflected, would decrease the level of
performance shown.
The Company may also from time to time advertise the performance of the
Sub-Accounts of the NACo Variable Account relative to the performance of other
variable annuity sub-accounts or mutual funds with similar or different
objectives, or the investment industry as a whole.
The Sub-Accounts of the NACo 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; 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, U.S. News and
World Report, National Underwriter; 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 Underlying Mutual Funds based upon total return performance. These
rating services and publications rank the performance of the Underlying Mutual
Funds against all mutual funds over specified periods and against mutual funds
in specified categories. The rankings may or may not include the effects of
sales or other charges.
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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 NACo 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 Contract.
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.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE
COMPANY IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE
FUTURE RESULTS. THE OWNER'S OR PARTICIPANT'S ACCOUNT VALUE AT REDEMPTION MAY BE
MORE OR LESS THAT ORIGINAL COST.
The Statement of Additional Information contains more detailed information
about the performance calculations, including actual examples for each type of
performance advertised.
CONTRACT OWNER INQUIRIES
Owner and Participant inquiries may be directed to Nationwide Life
Insurance Company by writing P. O. Box 16766, One Nationwide Plaza, Columbus,
Ohio 43216, or calling 1-800-545-4730, T.T.Y. 1-800-848-0833.
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, plus
or minus
(3) a per share charge or credit, if any, for any taxes reserved for
which is determined by the Company to have resulted from the
investment operations of the Sub-Account.
(b) is the net of
(1) the net asset value per share of the Underlying Mutual Fund held in
the Sub-Account determined as of the end of the immediately preceding
Valuation Period, plus or minus
(2) the per share charge or credit for any taxes reserved for in the
immediately preceding Valuation Period.
(c) is a factor representing the daily Actuarial Risk Fee deducted from the
NACo Variable Account. Such factor is equal to an annual rate of 0.95% of
the daily net asset value of the NACo Variable Account.
For Underlying Mutual Funds that credit dividends on a daily basis and pay
such dividends once each month or quarter (such as money market funds and
certain bond funds), the Net Investment Factor allows for the monthly or
quarterly 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 the Actuarial Risk Fee and the effect of the various purchase and
sale transactions on any particular day.
VALUATION OF ASSETS
Underlying Mutual Fund shares in the NACo Variable Account will be
purchased and valued at their net asset value (daily bid price exclusive of any
sales charges). An Underlying Mutual Fund's net asset value per share is
determined by dividing the value of the total assets of the Underlying Mutual
Fund, less liabilities, by the number of shares outstanding, with no charge for
sales expense.
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FEDERAL TAX STATUS
The following description of the federal tax status of these Contracts is
not exhaustive, and special rules are provided with respect to situations not
discussed herein. For complete information, consult a qualified tax advisor. The
Company does not make any guarantee regarding the tax status of any Contract or
any transaction involving the Contracts. The Contracts are treated as a trust
for purposes of the Code under rules similar to the rules under Section 401(f)
of the Code.
For federal income tax purposes, the operations of the NACo Variable
Account form a part of the Company's operations. Under existing federal income
tax law, no taxes are payable by the Company on the investment income of the
NACo Variable Account to the extent it is credited to the Owners under the
Contracts. The Company is taxed as a life insurance company under Part One,
Subchapter L, of the Code.
Income and capital gains of the NACo Variable Account would normally be
taxable to Owners whether or not taken by the Owners in cash. However, the
Contracts are issued only to organizations exempt from federal income tax.
The amounts received by the Participant under the Plan normally represent
the accumulation of Purchase Payments which were not previously included in the
Participant's gross income, and therefore any such amounts should be included in
gross income of a Participant or Beneficiary when such amounts are received.
It is the responsibility of each Owner to determine that its Plan is
established and administered in accordance with the applicable provisions of the
Code.
CONTRACTS ISSUED UNDER THE NEW YORK MODEL PLAN
The following Contract amendments are required by the Rules and Regulations
of the New York State Deferred Compensation Board in order to market the
Contracts to governmental employers for use in funding public employee deferred
compensation plans in the State of New York.
Throughout the prospectus, references to "annuity" payments are modified to
"benefit" payments.
The "Suspension and Termination" provisions are amended to permit a
Participant to "freeze" his or her account and maintain the account on deposit
with the Company notwithstanding the Contract Owner's termination of its
contractual relationship with the Company. These accounts shall remain the
exclusive property of the Contract Owner, subject to the claims of its general
creditors.
All references throughout the prospectus to Life Income Options B1 and B2
are deleted. All references to "Contingent Deferred Sales Charge" are deleted.
LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business to which Nationwide Life Insurance
Company, or the NACo 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.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History...............................................1
Services......................................................................1
Purchase of Securities Being Offered..........................................1
Underwriters..................................................................2
Calculation of Performance....................................................2
Annuity Payments..............................................................4
Financial Statements..........................................................5
</TABLE>
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APPENDIX
PARTICIPATING UNDERLYING MUTUAL FUNDS
THE COMPANY MAY LIMIT THE NUMBER OF UNDERLYING MUTUAL FUNDS SELECTED BY OWNER,
AND ALL UNDERLYING MUTUAL FUNDS MAY NOT BE AVAILABLE UNDER YOUR PLAN.
A SUMMARY OF INVESTMENT OBJECTIVES IS CONTAINED IN THE DESCRIPTIONS OF EACH
UNDERLYING MUTUAL FUND BELOW. MORE DETAILED INFORMATION MAY BE FOUND IN THE
CURRENT PROSPECTUS FOR EACH UNDERLYING MUTUAL FUND. SUCH A PROSPECTUS FOR THE
UNDERLYING MUTUAL FUND OR FUNDS BEING CONSIDERED SHOULD ACCOMPANY THIS
PROSPECTUS AND SHOULD BE READ IN CONJUNCTION HEREWITH. A COPY OF EACH PROSPECTUS
MAY BE OBTAINED WITHOUT CHARGE FROM NATIONWIDE LIFE INSURANCE COMPANY, P. O. BOX
16766, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216, 1-800-545-4730 (TDD
1-800-848-0833)
THE DREYFUS THIRD CENTURY FUND, INC.
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
to 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 of America. Current income is secondary to the primary goal.
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS - INSTITUTIONAL SHARES
The investment objective of the Fund is current income. The Fund pursues
this investment objective by investing in U.S. government securities with
remaining maturities of five years or less.
FIDELITY CONTRAFUND
The investment objective of the Fund is capital appreciation by investing
in securities that its manager believes are undervalued due to an overly
pessimistic appraisal by the public. Although the Fund will usually be invested
primarily in common stocks and securities convertible into common stock, the
percentage of its assets invested in other securities may vary.
FIDELITY EQUITY-INCOME FUND
The investment objective of the Fund is to obtain reasonable income from a
portfolio consisting primarily of income-producing equity securities. The Fund
seeks a yield which exceeds the composite yield on the securities comprising the
Standard & Poor's Composite Index of 500 Stocks. In pursuing this objective, the
Fund will also consider the potential for capital appreciation.
FIDELITY MAGELLAN(R) FUND
The investment objective of the Fund is capital appreciation by investing
primarily in common stock and securities convertible into common stock. The Fund
may also invest in foreign securities, which involves additional risks. The Fund
may also invest in stock index futures and options both of which can be volatile
investments.
FIDELITY OTC PORTFOLIO
The investment objective of the Fund is to seek capital appreciation by
investing primarily in securities traded on the over-the counter (OTC)
securities market. Securities traded on the OTC include, among others,
industrial corporations, financial services institutions, public utilities, and
transportation companies, common and preferred stocks, securities convertible
into common stock, warrants and similar rights, and debt securities, and
obligations of the federal government. The fund does not place any weight on
dividend and interest income unless it believes this income will have a
favorable influence on the market value of a security.
FIDELITY PURITAN FUND
The investment objective of the Fund seeks to obtain as much income as
possible, consistent with the preservation and conservation of capital, by
investing in a broadly diversified portfolio of securities, including common
stocks, preferred stocks, and bonds. While emphasis on income is an important
objective, this does not preclude growth in capital since some securities
offering a better than average yield may also possess some growth possibilities.
MAS FUNDS FIXED INCOME PORTFOLIO
The investment objective of the Fund is to achieve above-average total
return over a market cycle of three of five years, consistent with reasonable
risk, by investing in a diversified portfolio of U. S. government
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securities, corporate bonds (including bonds rated below investment grade
commonly referred to as "junk bonds"), foreign fixed-income securities and
mortgage-backed securities of domestic issuers and other fixed-income
securities. The portfolio's average weighted maturity will ordinarily be greater
than five years.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A
The investment objective of the Fund is the long-term growth of capital and
future income rather than current income.
MFS(R) HIGH INCOME FUND - CLASS A
The investment objective of the Fund is high current income by investing
primarily in a professionally managed diversified portfolio of fixed income
securities, some of which may involve equity features. Securities offering the
high current income sought by this Fund are ordinarily in the lower rating
categories of recognized rating agencies or are unrated and generally involve
greater volatility of price and risk of principal and income than securities in
the high rating categories. Capital growth, if any, is a consideration
incidental to the investment objective of high current income.
NATIONWIDE(R) FUND
The investment objective of the Fund is to obtain a total return from a
flexible combination of current income and capital appreciation. Primary
emphasis is given to common stocks, but investments may also include convertible
issues, bonds and money market instruments.
NATIONWIDE(R) MONEY MARKET FUND
The investment objective of the Fund is to provide as high a level of
current income as is consistent with the preservation of capital and maintenance
of liquidity, through investment in a diversified portfolio of high quality
money market instruments maturing in 397 days or less. These instruments
include, but are not limited to, U.S. Government and Agency obligations,
obligations of large commercial and foreign banks, certificates of deposit of
large savings associations, taxable or partly taxable obligations of state,
county and local governments, highly rated commercial paper, highly rated
corporate obligations, and repurchase agreements in any of the above.
NEUBERGER & BERMAN GUARDIAN FUND
The Fund seeks capital appreciation through investments generally in
dividend-paying issues of established companies that its investment officers
believe are well managed. The emphasis of the Fund's investments is on common
stock. The Fund diversifies its holdings among different industries and
different companies in light of conditions prevailing at any given time. Current
income is a secondary objective.
PUTNAM INVESTORS FUND - CLASS A
The investment objective of the Fund is long-term growth of capital and any
increased income resulting from such growth. The Fund is designed for investors
seeking long-term growth of capital from a portfolio consisting primarily of
common stocks. The Fund's management emphasizes investment in quality growth
stocks.
PUTNAM VOYAGER FUND - CLASS A
The investment objective of the Fund is capital appreciation. The Fund
invests primarily in common stocks believed by the Fund's Investment Manager,
Putnam Management, to have potential for capital appreciation significantly
greater than the market average. The Fund is designed for investors willing to
assume above-average risk in return for above-average capital growth potential.
SEI INDEX FUNDS - S & P 500 INDEX PORTFOLIO
The S & P Index Portfolio seeks to provide investment results that
correspond to the aggregate price and dividend performance of the securities in
the Standard & Poor's 500 Composite Stock Price Index which is comprised of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
The investment objective is a fundamental policy of the Portfolio. There can be
no assurance that the Portfolio will achieve its investment objective.
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SELIGMAN GROWTH FUND, INC. - CLASS A
The investment objective of the Fund is longer-term growth in capital value
and an increase in future income. Fund assets have been invested primarily in
common stocks with the inherent investment risks tempered by portfolio
diversification.
SHORT-TERM INVESTMENTS TRUST - TREASURY PORTFOLIO - INSTITUTIONAL CLASS
The investment objective of the Portfolio is the maximization of current
income to the extent consistent with the preservation of capital and maintenance
of liquidity. The Portfolio seeks to achieve its objective by investing in a
portfolio consisting of direct obligations of the U.S. Treasury and repurchase
agreements secured by such obligations. The instruments purchased by the
Portfolio will have maturities of 397 days or less.
T. ROWE PRICE INTERNATIONAL STOCK FUND(R)
The Fund's objective is long-term growth of capital through investments
primarily in common stocks of established, non-U.S. Companies.
TEMPLETON FOREIGN FUND - CLASS I
The investment objective of the Fund is long-term capital growth through a
flexible policy of investing in stocks and debt obligations of companies and
governments outside the United States. Any income realized will be incidental.
TWENTIETH CENTURY GROWTH INVESTORS
The investment objective of the Fund is capital growth through investment
in securities which the management considers to have better-than-average
prospects for appreciation. It is management's intention that the portfolio will
generally consist of common stocks of large established companies.
TWENTIETH CENTURY ULTRA INVESTORS
The investment objective of the Fund is capital growth by investing
primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. It is management's intention
that the portfolio will generally consist of common stocks of medium-sized and
smaller companies.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR OWNERS WHOSE
PREDECESSOR NATIONWIDE DCVA CONTRACT WAS ISSUED ON OR AFTER JANUARY 1, 1987:
FIDELITY CAPITAL & INCOME FUND (FORMERLY, "FIDELITY HIGH INCOME FUND")
The investment objective of the Fund is to seek to provide a combination of
income and capital growth by investing primarily in debt instruments and common
and preferred stocks, with a focus on lower-quality debt securities and
securities of companies with uncertain financial positions.
Effective on and after July 1, 1991, the Company shall no longer permit
Owners or Participants to make additional Purchase Payments or to exchange
Contract values into the Fidelity Capital & Income Fund Sub-Account. However,
Contract values held in the Fidelity Capital & Income Fund Sub-Account as of
July 1, 1991 may continue to be invested in that Sub-Account. Unless the Company
is notified otherwise, any Purchase Payments or exchanges which the Owner or
Participant directs the Company to invest in the Fidelity Capital & Income Fund
Sub-Account on and after July 1, 1991 shall instead be automatically invested in
the Nationwide Money Market Fund Sub-Account.
The Company has determined that further investment in the Fidelity Capital
& Income Fund Sub-Account is not in the best interests of the Owners and
Participants in view of the Fund's adoption, effective for shares purchased on
and after February 1, 1991, of a redemption fee equal to 1.5% of the net asset
value of any Fund shares redeemed which are held less than twelve months. Any
redemption fees which the Fund may assess against Fund shares held by the
Company in the NACo Variable Account which were purchased from February 1, 1991
to July 1, 1991 shall be paid by the Company from surplus and shall not be paid,
directly or indirectly, by Contract Owners, Participants or the NACo Variable
Account.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR NEW CONTRACTS
ISSUED ON OR AFTER OCTOBER 1, 1993:
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THE EVERGREEN TOTAL RETURN FUND - CLASS V
The investment objective of the Fund is current income and capital
appreciation. The Fund invests primarily in common and preferred stocks,
securities convertible into or exchangeable for common stocks, and fixed income
securities. The Fund's objective is to maximize the "total return" on its
portfolio of investments.
MFS(R) GROWTH OPPORTUNITIES FUND - CLASS A (FORMERLY "MFS(R) CAPITAL DEVELOPMENT
FUND")
The investment objective of the Fund is growth of capital. Dividend income,
if any, is incidental to the objective of capital growth. To achieve this
objective, a flexible approach toward types of companies as well as types of
securities is maintained by the Fund, depending upon the economic environment
and the relative attractiveness of the various securities markets.
NATIONWIDE(R) GROWTH FUND
The investment objective of the Fund is to achieve long-term capital
appreciation without emphasis on current return. Major emphasis in the selection
of securities is placed on companies which have capable management, and are in
fields where social and economic trends, technological developments, and new
processes or products indicate a potential for greater than average growth.
THE FOLLOWING UNDERLYING MUTUAL FUNDS MAY NOT BE AVAILABLE TO ALL CONTRACT
OWNERS ON OR AFTER JULY 1, 1994:
THE BOND FUND OF AMERICA(SM), INC.
The Fund's investment objective is to provide as high a level of current
income as is consistent with the preservation of capital. The Fund invests
substantially all of its assets in marketable corporate debt securities, U.S.
Government securities, mortgage-related securities, other asset-backed
securities and cash or money market instruments. Normally, at least 65% of the
Fund's assets will be invested in bonds.
THE INVESTMENT COMPANY OF AMERICA(R), INC.
The investment objectives are long-term growth of capital and income. The
Fund strives to accomplish these objectives through constant supervision,
careful selection and broad diversification. In the selection of securities for
investment, the possibilities of appreciation and potential dividends are given
more weight than current yield. The Fund ordinarily invests principally in
common stocks. However, assets may also be held in securities convertible into
common stocks, straight debt securities (rated in the top three quality
categories by Standard & Poor's Corporation or Moody's Investor Service, Inc. or
determined to be of equivalent quality by Capital Research and Management
Company), cash equivalent quality by Capital Research and Management Company),
cash or cash equivalents, U.S. Government securities, or nonconvertible
preferred stocks.
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