<PAGE> 1
NATIONWIDE LIFE INSURANCE COMPANY
Home Office
P. O. Box 16766
One Nationwide Plaza
Columbus, Ohio 43216
1-800-545-4730 (TTY: 1-800-848-0833)
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED BY THE NATIONWIDE DC 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 supplemental deferred compensation plans for employees of tax exempt
entities. Such Plans will generally qualify for favorable tax treatment under
Sections 401, 403(b) or 457 of the Internal Revenue Code ("Code"), but may also
include other nonqualified deferred compensation plans. Contracts will be issued
only to fund deferred compensation plans to employers who are exempt from
taxation. The employees 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. The assets of Code Section 457
Plans are part of the general assets of the Owner, provided however that the
Owner 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 Owner to the extent such rights are not specifically reserved
in the Plan for Participants as a group or as individuals. The Owner may not
take any action inconsistent with the rights of the Plan's Participants. The
Participants in such Plans have a contractual claim against the Owner for the
benefits promised by such Plans.
Purchase Payments are allocated to the Nationwide DC Variable Account (the
"Variable Account"). The Variable Account is a unit investment trust with 45
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 the 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 the 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 33 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 Variable Account. It is the unit of measurement used to
determine the value of a Contract and each Participant Account.
ACTUARIAL RISK FEE- A charge made for mortality and expense risk and
administration of the Variable Account. It is computed on a daily basis and is
equal to an annual rate of .95% of the daily net asset value of the Variable
Account.
BENEFICIARY- The person named in the application to receive certain benefits
under the Contract upon the death of the designated annuitant. The Beneficiary
can be changed by the 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 ANNIVERSARY- An anniversary of the date of issue of the Contract.
CONTRACT DATE- The date shown as the Contract Date in the Contract.
CONTRACT MAINTENANCE CHARGE- The maximum Contract Maintenance Charge is $15 per
Participant per year to reimburse the Company for certain administrative
expenses relating to the maintenance of individual Participant records and the
mailing of periodic statements to Participants.
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.
DISTRIBUTION- Any payment by the Company of part or all of the Contract Value
under the Contract.
GENERAL ACCOUNT- This is an account comprised of all assets of the Company other
than those in any segregated asset account.
GROUP FIXED CONTRACT- The Company's Group Fixed Fund Retirement Contract or
Group Fixed Tax Deferred Annuity Contract.
NATIONWIDE DC VARIABLE ACCOUNT ("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.
OPTIONAL RETIREMENT INCOME FORMS- The method for making annuity payments.
Several forms are available under the Contract.
OWNER- The employer or other entity 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.
PARTICIPANT ACCOUNT- An account established by the Company for each Participant
in which all financial transactions occurring with respect to a Participant,
under this Contract, other than the purchase and payment of an annuity made from
the Company's General Account, are recorded.
PARTICIPANT ACCOUNT YEAR- For each Participant, the Participant Account Year is
each one year period starting with either the Participant Effective Date or a
Participant Anniversary.
PARTICIPANT ANNIVERSARY- An anniversary of the Participant Effective Date.
2
<PAGE> 3
PARTICIPANT EFFECTIVE DATE- For each Participant, the Participant Effective Date
is the first date Accumulation Units are credited to the Participant's Account
on behalf of such Participant under the Contract.
PLAN- A retirement plan which receives favorable tax treatment under the
provisions of the Code. The Plan document is referred to in the Contract as the
Plan.
PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers among the Sub-Accounts.
RETIREMENT COMMENCEMENT DATE- The date upon which Retirement Income Payments
commence.
RETIREMENT INCOME PAYMENTS- Periodic distributions from a Participant Account
made by the Company to the Owner during the Distribution period.
RETIRED PARTICIPANT- A Participant for whom payments under an Optional
Retirement Income Form are being made.
SUB-ACCOUNT- A separate and distinct division of the 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
in 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 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
UNDERLYING MUTUAL FUND ANNUAL EXPENSES................................................................................6
SYNOPSIS.............................................................................................................13
CONDENSED FINANCIAL INFORMATION......................................................................................14
NATIONWIDE LIFE INSURANCE COMPANY....................................................................................21
THE DC VARIABLE ACCOUNT..............................................................................................21
Voting Rights...............................................................................................21
PERIODIC REPORTS.....................................................................................................22
VARIABLE ACCOUNT CHARGES AND OTHER DEDUCTIONS........................................................................22
Contingent Deferred Sales Charge............................................................................22
Contract Maintenance Charge.................................................................................22
Mortality Risk Charge, Expense Risk And Administration Charge...............................................23
Premium Taxes...............................................................................................23
Experience Credits..........................................................................................24
Expenses of the Variable Account............................................................................24
DESCRIPTION OF THE CONTRACTS.........................................................................................24
A. General................................................................................................24
Purpose of the Contracts...............................................................................24
Modification of the Contract...........................................................................24
Contract Rights and Privileges and Assignments.........................................................25
Exchange Privilege.....................................................................................25
Suspension and Termination.............................................................................25
B. Participant Account Values.............................................................................26
Application of Purchase Payments.......................................................................26
Additional Purchase Payments Prior to Commencement of Annuity Payment..................................26
Crediting Accumulation Units...........................................................................26
Variable Account Accumulation Unit Value...............................................................26
Allocation of Purchase Payments........................................................................27
Valuation of an Account................................................................................27
C. Redemption of Participant Accounts (Termination).......................................................27
D. Distribution of Participant Accounts (Retirement Period)...............................................28
Retirement Income Payments.............................................................................28
Election of Income Form and Date.......................................................................28
Allocation of Retirement Income........................................................................28
Fixed Dollar Annuity...................................................................................28
Minimum Payment........................................................................................28
Death Benefit Before Retirement........................................................................28
Optional Retirement Income Forms.......................................................................29
Death of Retired Participant...........................................................................29
Withdrawal.............................................................................................29
Frequency of Payment...................................................................................30
Determination of Payouts Under Options A1 & A2.........................................................30
Determination of Payouts Under Options B1 & B2.........................................................30
Determination of Amount of Variable Monthly Payments For First Year....................................30
Determination of Amount of Variable Monthly Payments For the Second
and Subsequent Years...............................................................................30
Alternate Assumed Investment Rate......................................................................30
GENERAL INFORMATION..................................................................................................31
Substitution of Securities..................................................................................31
Performance Advertising.....................................................................................31
Contract Owner Inquiries....................................................................................31
Net Investment Factor.......................................................................................32
Valuation of Assets.........................................................................................33
Federal Tax Status..........................................................................................33
Contracts Issued Under the New York Model Plan..............................................................34
LEGAL PROCEEDINGS....................................................................................................34
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.............................................................34
APPENDIX.............................................................................................................35
</TABLE>
4
<PAGE> 5
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
PARTICIPANT TRANSACTION EXPENSES
Maximum Deferred Sales Charge1 ...............................................................5 %
(as a percentage of Purchase Payments) ----
CONTRACT MAINTENANCE CHARGE2 ........................................................................$15
(Per Participant Anniversary) ------
VARIABLE ACCOUNT ANNUAL EXPENSES3
(as a percentage of average account value)
Mortality and Expense Risk Fees ............................................................ 0.50 %
--------
Administration Charge ...................................................................... 0.45 %
--------
Total Variable Account Annual Expenses ..................................................... 0.95 %
--------
</TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES4
(After Expense Reimbursement)
(as a percentage of Underlying Mutual Fund average net assets)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Management Fees Other Expenses 12b-1 Fees Total Fund
Annual Expenses
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Constellation Fund - Institutional Class 0.62% 0.04% 0.00% 0.66%
- --------------------------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 0.61% 0.09% 0.00% 0.70%
- --------------------------------------------------------------------------------------------------------------------------------
The Bond Fund of AmericaSM, Inc.5 0.35% 0.11% 0.23% 0.69%
- --------------------------------------------------------------------------------------------------------------------------------
Davis New York Venture Fund, Inc. 0.63% 0.15% 0.12% 0.90%
- --------------------------------------------------------------------------------------------------------------------------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 0.49% 0.25% 0.00% 0.74%
- --------------------------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management 0.20% 0.00% 0.00% 0.20%
- --------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 0.75% 0.37% 0.00% 1.12%
- --------------------------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund 0.98% 0.21% 0.00% 1.19%
- --------------------------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 0.40% 0.18% 0.00% 0.58%
- --------------------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years 0.40% 0.18% 0.00% 0.58%
- - Institutional Shares
- --------------------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 0.72% 0.25% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 0.70% 0.30% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 0.70% 0.27% 0.00% 0.97%
- --------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.44% 0.24% 0.00% 0.67%
- --------------------------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 0.51% 0.23% 0.00% 0.74%
- --------------------------------------------------------------------------------------------------------------------------------
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% 0.23% 0.00% 0.69%
- --------------------------------------------------------------------------------------------------------------------------------
The Growth Fund of America(R), Inc. 2 0.38% 0.13% 0.24% 0.75%
- --------------------------------------------------------------------------------------------------------------------------------
The Income Fund of America(R), Inc. 2 0.32% 0.10% 0.23% 0.65%
- --------------------------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 2 0.45% 0.25% 0.25% 0.94%
- --------------------------------------------------------------------------------------------------------------------------------
Janus Fund 0.66% 0.25% 0.00% 0.91%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES-CONTINUED
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Management Fees Other Expenses 12b-1 Fees Total Fund
Annual Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Twenty Fund 0.67% 0.35% 0.00% 1.02%
- ---------------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 0.38% 0.11% 0.00% 0.49%
- ---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A2 0.31% 0.23% 0.29% 0.83%
- ---------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A2 0.43% 0.29% 0.25% 0.97%
- ---------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A2 0.45% 0.34% 0.31% 1.10%
- ---------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Bond Fund 0.50% 0.21% 0.00% 0.71%
- ---------------------------------------------------------------------------------------------------------------------------------
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%
- ---------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Manhattan Fund, Inc. 0.80% 0.22% 0.00% 1.02%
- ---------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Partners Fund, Inc. 0.76% 0.11% 0.00% 0.87%
- ---------------------------------------------------------------------------------------------------------------------------------
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 Portfolio2 0.15% 0.10% 0.00% 0.25%
- ---------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 0.49% 0.28% 0.23% 1.00%
- ---------------------------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 1.00% 0.24% 0.00% 1.24%
- ---------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 0.69% 0.20% 0.00% 0.89%
- ---------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 0.63% 0.27% 0.25% 1.15%
- ---------------------------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund, Inc. 0.75% 0.25% 0.25% 1.36%
- ---------------------------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 1.00% 0.00% 0.00% 1.00%
- ---------------------------------------------------------------------------------------------------------------------------------
Twentieth Century Select Investors 1.00% 0.00% 0.00% 1.00%
- ---------------------------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 1.00% 0.00% 0.00% 1.00%
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Imposed only when it is applicable (see "Contingent Deferred Sales Charge").
2 The Contract Maintenance Charge, if applicable, will also be assessed on the
date that amounts held with respect to a Participant are fully withdrawn from
the Contract (see "Contract Maintenance Charge").
</TABLE>
6
<PAGE> 7
3 If the total assets of a Plan as of June 30, 1996, or as of a later date
mutually agreeable to the Owner and the Company, exceed $10 million, the 0.45%
Administration Charge and the total Variable Account Annual Expense
("Actuarial Risk Fee") will be reduced on a sliding scale on November 2, 1996,
or on such later date mutually agreeable to the Owner and the Company, as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Total
Administrative Charge (as a portion Actuarial
Assets of the Actuarial risk fee) Risk Fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than $10 million but less than or equal to $25 million .40 .90
- ----------------------------------------------------------------------------------------------------------------------------
Greater than $25 million but less than or equal to $50 million .30 .80
- ----------------------------------------------------------------------------------------------------------------------------
Greater than $50 million but less than or equal to $150 million .20 .70
- ----------------------------------------------------------------------------------------------------------------------------
Greater than $150 million .15 .65
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Following this initial reduction, if total assets of a Plan under the Program
as of December 31 of each year exceed $10 million, the Administration Charge
and the total Variable Account Annual Expense will be reduced as set forth
above on May 1 of each succeeding year.
For new Contracts issued on or after the effective date of the reduction, the
Administration charge and correspondingly the Total Variable Account Annual
Expense (Total Actuarial Risk Fee) shall be determined at the issuance of the
Contract and thereafter each year based upon the total assets of the Plan
under the Program as of December 31. Any reduction or increase based on assets
on December 31 of each year will be effective on May 1 of the succeeding year.
4 The Mutual Fund expenses shown above are assessed at the Underlying Mutual
Fund level and are not direct charges against Variable Account assets or
reductions from Contract values. These Underlying Mutual Fund expenses are
taken into consideration in computing each Underlying Mutual Fund's net asset
value, which is the share price used to calculate the 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>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FUND EXPENSES WITHOUT
REIMBURSEMENT OR WAIVER
- ------------------------------------------------------------------------------------------------------------
<S> <C>
AIM Constellation Fund - Institutional Class The Fund is currently waiving a portion of its
fees. Had there been no fee waivers during the
year, management fees would have been 0.63% of
average net assets.
- ------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class The Fund is currently waiving a portion of its
fees. Had there been no fee waivers during the
year, management fees would have been 0.63% of
average net assets.
- ------------------------------------------------------------------------------------------------------------
Federated GNMA Trust - Institutional Shares The total operating expenses would have been 0.80%
absent the voluntary waiver of a portion of the
shareholder service fee.
- ------------------------------------------------------------------------------------------------------------
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%.
- ------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income 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
0.75%.
- ------------------------------------------------------------------------------------------------------------
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%.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------
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%.
- ------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. The management fee paid by the Fund has been
reduced to an annual rate of 0.45% on daily net
assets over $2 billion, and to an annual rate of
0.40% on daily net assets over $4 billion. In the
absence of the voluntary expense limitation, the
Fund's "Management Fee" and "Total Fund Operating
Expenses" would have been 0.48% and 0.97%
respectively.
- ------------------------------------------------------------------------------------------------------------
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.
5 The Manager and Administrator have voluntarily waived their fees to limit new
operating expenses to no more than 0.25% of average net assets of the
Portfolio. Waivers by both the Manager and Administrator are voluntary and
may be terminated at any time.
8
<PAGE> 9
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 initial Purchase Payment and a 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>
AIM Constellation Fund - Institutional Class 57 93 131 238
- -------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 57 94 133 242
- -------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), Inc. 57 94 132 241
- -------------------------------------------------------------------------------------------------------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 58 95 135 247
- -------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management 52 78 106 185
- -------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 62 107 156 288
- -------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund 63 110 159 296
- -------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 56 90 127 229
- -------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 56 90 127 229
Institutional Shares
- -------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 60 103 148 272
- -------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 61 104 149 275
- -------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 60 103 148 272
- -------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 57 93 132 240
- -------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 58 96 137 250
- -------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 60 103 148 272
- -------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 59 98 139 254
- -------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 57 94 132 241
- -------------------------------------------------------------------------------------------------------------
The Growth Fund of America(R)Inc. 58 96 136 248
- -------------------------------------------------------------------------------------------------------------
The Income Fund of America(R)Inc. 57 92 130 237
- -------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 60 102 146 269
- -------------------------------------------------------------------------------------------------------------
Janus Fund 60 101 144 265
- -------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 61 104 150 277
- -------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 55 87 122 218
- -------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 59 98 140 257
- -------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 60 103 148 272
- -------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 62 107 154 286
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Bond Fund 58 94 134 243
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 57 92 129 234
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 57 93 131 238
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 57 91 129 233
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 59 99 141 259
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman Manhattan Fund, Inc. 61 104 150 277
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman Partners Fund, Inc. 59 99 142 261
- -------------------------------------------------------------------------------------------------------------
New York Venture Fund, Inc. 60 100 144 264
- -------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 60 103 149 274
- -------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 61 106 153 283
- -------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 53 80 108 191
- -------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 61 104 149 275
- -------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 63 111 162 301
- -------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 60 101 144 265
- -------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 62 108 157 291
- -------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund 64 115 168 314
- -------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 61 104 149 275
- -------------------------------------------------------------------------------------------------------------
Twentieth Century Select Investors 61 104 149 275
- -------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 61 104 149 275
- -------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
EXAMPLE CONTINUED
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 initial Purchase Payment and a 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>
AIM Constellation Fund - Institutional Class 17 53 91 198
- ------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 17 54 93 202
- ------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), Inc. 17 54 92 201
- ------------------------------------------------------------------------------------------------------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 18 55 95 207
- ------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management 12 38 66 145
- ------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 22 67 116 248
- ------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund 23 70 119 256
- ------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 16 50 87 189
- ------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 16 50 87 189
Institutional Shares
- ------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 20 63 108 232
- ------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 21 64 109 235
- ------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 20 63 108 232
- ------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 17 53 92 200
- ------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 18 56 97 210
- ------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 20 63 108 232
- ------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 19 58 99 214
- ------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 17 54 92 201
- ------------------------------------------------------------------------------------------------------------
The Growth Fund of America(R), Inc. 18 56 96 208
- ------------------------------------------------------------------------------------------------------------
The Income Fund of America(R), Inc. 17 52 90 197
- ------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 20 62 106 229
- ------------------------------------------------------------------------------------------------------------
Janus Fund 20 61 104 225
- ------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 21 64 110 237
- ------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 15 47 82 178
- ------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 18 58 100 217
- ------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 20 63 108 232
- ------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 22 67 114 246
- ------------------------------------------------------------------------------------------------------------
Nationwide(R)Bond Fund 18 54 94 203
- ------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 17 52 89 194
- ------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 17 53 91 198
- ------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 17 51 89 193
- ------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 19 59 101 219
- ------------------------------------------------------------------------------------------------------------
Neuberger & Berman Manhattan Fund, Inc. 21 64 110 237
- ------------------------------------------------------------------------------------------------------------
Neuberger & Berman Partners Fund, Inc. 19 59 102 221
- ------------------------------------------------------------------------------------------------------------
New York Venture Fund, Inc. 20 60 104 224
- ------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 20 63 109 234
- ------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 21 66 113 243
- ------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 13 40 68 151
- ------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 21 64 109 235
- ------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 23 71 122 261
- ------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 20 61 104 225
- ------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 22 68 117 251
- ------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund 24 75 128 274
- ------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 21 64 109 235
- ------------------------------------------------------------------------------------------------------------
Twentieth Century Select Investors 21 64 109 235
- ------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 21 64 109 235
- ------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
EXAMPLE CONTINUED
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 initial Purchase Payment and a 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>
AIM Constellation Fund - Institutional Class 17 53 91 198
- -------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 17 54 93 202
- -------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), Inc. 17 54 92 201
- -------------------------------------------------------------------------------------------------------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 18 55 95 207
- -------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management 12 38 66 145
- -------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 22 67 116 248
- -------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund 23 70 119 256
- -------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 16 50 87 189
- -------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 16 50 87 189
Institutional Shares
- -------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 20 63 108 232
- -------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 21 64 109 235
- -------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 20 63 108 232
- -------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 17 53 92 200
- -------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Fund 18 56 97 210
- -------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 20 63 108 232
- -------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 19 58 99 214
- -------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 17 54 92 201
- -------------------------------------------------------------------------------------------------------------
The Growth Fund of America(R), Inc. 18 56 96 208
- -------------------------------------------------------------------------------------------------------------
The Income Fund of America(R), Inc. 17 52 90 197
- -------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 20 62 106 229
- -------------------------------------------------------------------------------------------------------------
Janus Fund 20 61 104 225
- -------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 21 64 110 237
- -------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 15 47 82 178
- -------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 19 58 100 217
- -------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 20 63 108 232
- -------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 22 67 114 246
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Bond Fund 18 54 94 203
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 17 52 89 194
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 17 53 91 198
- -------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 17 51 89 193
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 19 59 101 219
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman Manhattan Fund, Inc. 21 64 110 237
- -------------------------------------------------------------------------------------------------------------
Neuberger & Berman Partner's Fund, Inc. 19 59 102 221
- -------------------------------------------------------------------------------------------------------------
New York Venture Fund, Inc. 20 60 104 224
- -------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 20 63 109 234
- -------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 21 66 113 243
- -------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 13 40 68 151
- -------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 21 64 109 235
- -------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 23 71 122 261
- -------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 20 61 104 225
- -------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 22 68 117 251
- -------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund 24 75 128 274
- -------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 21 64 109 235
- -------------------------------------------------------------------------------------------------------------
Twentieth Century Select Investors 21 64 109 235
- -------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 21 64 109 235
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
11
<PAGE> 12
The purpose of the Summary of Contract Expenses and Example 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 Variable Account as well as the Underlying Mutual
Fund investment options. For a more detailed explanation of these expenses, see
"Charges 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").
12
<PAGE> 13
SYNOPSIS
The Contracts described in this prospectus are designed for use in
connection with supplemental deferred compensation plans for employees of tax
exempt entities. Such Plans generally will qualify for favorable tax treatment
under Section 401, 403(b), or 457 of the Code, but may also include other
nonqualified deferred compensation plans. Contracts will be issued only to
employers who are exempt from taxation to fund deferred compensation plans. The
employees 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 Variable Account.
The Variable Account is a unit investment trust with 45 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 Underlying Mutual Funds").
The Company does not deduct a sales charge from Purchase Payments made to
these Contracts. However, if any part of such Contracts is withdrawn, the
Company will, with certain exceptions, deduct from the Contract Value a
Contingent Deferred Sales Charge equal to not more than 5% of the lesser of the
total of all Purchase Payments made prior to the date of the request for
surrender, or the amount surrendered. This charge, when applicable, is imposed
to permit the Company to recover sales expenses which have been advanced by the
Company (see "Contingent Deferred Sales Charge").
A Contract Maintenance Charge may be deducted each year from a Participant
Account (see "Contract Maintenance Charge"). Any applicable premium taxes can be
deducted and will be charge 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 Variable Account in an amount equivalent
to 0.95% per year for the Company's contractual promises to accept the mortality
and expense risks and for administration of the Variable Account (see "Expense
Risk Charge", "Mortality Risk Charge" and "Administration Charge"). In addition,
the investment companies whose shares are purchased by the 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, Contract Maintenance Charges, Expense Risk
Charges, Mortality Risk Charges and Administration Charges may be changed by the
Company after the first Contract Year (see "Modification of the Contract").
13
<PAGE> 14
CONDENSED FINANCIAL INFORMATION - NATIONWIDE DC VARIABLE ACCOUNT
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
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
====================================================================================================
<S> <C> <C> <C> <C>
AIM 1.316836 1.776138 3,214,050 1995
Constellation Fund - -----------------------------------------------------------------------------
Institutional Class 1.305850 1.316836 1,607,538 1994
-----------------------------------------------------------------------------
1.120568 1.305850 1,341,351 1993
-----------------------------------------------------------------------------
1.000000 1.120568 0 1992
====================================================================================================
AIM 1.035886 1.389659 1,097,067 1995
Weingarten Fund - -----------------------------------------------------------------------------
Institutional Class 1.044414 1.035886 870,956 1994
-----------------------------------------------------------------------------
1.034606 1.044414 936,998 1993
-----------------------------------------------------------------------------
1.000000 1.034606 0 1992
====================================================================================================
The Bond Fund 1.741422 2.039710 7,434,474 1995
of America(SM), Inc. -----------------------------------------------------------------------------
1.850918 1.741422 7,880,903 1994
-----------------------------------------------------------------------------
1.637181 1.850918 8,560,956 1993
-----------------------------------------------------------------------------
1.484255 1.637181 6,077,266 1992
-----------------------------------------------------------------------------
1.238222 1.484255 5,128,071 1991
-----------------------------------------------------------------------------
1.208717 1.238222 5,102,901 1990
-----------------------------------------------------------------------------
1.109668 1.208717 3,105,875 1989
-----------------------------------------------------------------------------
1.011923 1.109668 1,113,940 1988
-----------------------------------------------------------------------------
1.000000 1.011923 173,764 1987
====================================================================================================
Davis New York 0.966146 1.345221 1,771,764 1995
Venture -----------------------------------------------------------------------------
Fund, Inc. 0.994508 0.966146 720,917 1994
-----------------------------------------------------------------------------
1.000000 0.994508 5,626 1993
====================================================================================================
Delaware Group 1.449372 1.910384 100,636 1995
Decatur Fund, Inc. - -----------------------------------------------------------------------------
Decatur Income Fund 1.473401 1.449372 104,006 1994
Institutional Class -----------------------------------------------------------------------------
1.289480 1.473401 281,500 1993
-----------------------------------------------------------------------------
1.196471 1.289480 162,528 1992
-----------------------------------------------------------------------------
0.991871 1.196471 106,856 1991
-----------------------------------------------------------------------------
1.142606 0.991871 16,158 1990
-----------------------------------------------------------------------------
1.000000 1.142606 0 1989
====================================================================================================
Dreyfus 1.057458 1.110383 2,561,760 1995
Cash -----------------------------------------------------------------------------
Management* - Class A 1.025704 1.057458 2,324,960 1994
-----------------------------------------------------------------------------
1.003770 1.025704 25,763 1993
-----------------------------------------------------------------------------
1.000000 1.003770 0 1992
====================================================================================================
The Dreyfus 1.663803 2.238323 6,501,520 1995
Third Century -----------------------------------------------------------------------------
Fund, Inc. 1.814915 1.663803 6,965,653 1994
-----------------------------------------------------------------------------
1.740666 1.814915 8,765,880 1993
-----------------------------------------------------------------------------
1.723855 1.740666 9,137,872 1992
-----------------------------------------------------------------------------
1.259983 1.723855 5,165,976 1991
-----------------------------------------------------------------------------
1.228377 1.259983 4,118,236 1990
-----------------------------------------------------------------------------
1.057519 1.228377 1,659,197 1989
-----------------------------------------------------------------------------
0.866121 1.057519 618,691 1988
-----------------------------------------------------------------------------
1.000000 0.866121 63,671 1987
- ----------------------------------------------------------------------------------------------------
<FN>
*The 7-day yield on the Dreyfus Cash Management Fund as of December 31, 1995 was
4.68%.
</TABLE>
14
<PAGE> 15
CONDENSED FINANCIAL INFORMATION, Continued
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
====================================================================================================
<S> <C> <C> <C> <C>
The Evergreen 1.419467 1.741651 3,257,653 1995
Total Return -----------------------------------------------------------------------------
Fund - Class Y 1.531292 1.419467 4,439,096 1994
-----------------------------------------------------------------------------
1.368966 1.531292 7,948,202 1993
-----------------------------------------------------------------------------
1.256090 1.368966 6,846,744 1992
-----------------------------------------------------------------------------
1.031024 1.256090 7,328,719 1991
-----------------------------------------------------------------------------
1.110904 1.031024 13,632,891 1990
-----------------------------------------------------------------------------
0.959913 1.110904 10,256,138 1989
-----------------------------------------------------------------------------
0.837244 0.959913 5,595,414 1988
-----------------------------------------------------------------------------
1.000000 0.837244 2,115,006 1987
====================================================================================================
The Institutional 1.081229 1.243001 508,686 1995
Shares of Federated -----------------------------------------------------------------------------
GNMA Trust 1.119643 1.081229 422,171 1994
-----------------------------------------------------------------------------
1.061001 1.119643 497,960 1993
-----------------------------------------------------------------------------
1.000000 1.061001 305,851 1992
====================================================================================================
Federated U.S. 0.991595 1.115461 1,877,483 1995
Government Securities -----------------------------------------------------------------------------
Fund: 2-5 Years - 1.020623 0.991595 1,280,899 1994
Institutional Shares -----------------------------------------------------------------------------
1.000000 1.020623 696,793 1993
====================================================================================================
Fidelity Asset 0.958564 1.121926 5,838,128 1995
Manager(TM) -----------------------------------------------------------------------------
1.036089 0.958564 3,916,306 1994
-----------------------------------------------------------------------------
1.000000 1.036089 79,714 1993
====================================================================================================
Fidelity Capital 3.210584 3.712491 463,343 1995
& Income Fund -----------------------------------------------------------------------------
3.397953 3.210584 561,985 1994
-----------------------------------------------------------------------------
2.746533 3.397953 925,953 1993
-----------------------------------------------------------------------------
2.165417 2.746533 1,032,492 1992
-----------------------------------------------------------------------------
1.684020 2.165417 1,471,867 1991
-----------------------------------------------------------------------------
1.768220 1.684020 4,160,164 1990
-----------------------------------------------------------------------------
1.843890 1.768220 4,943,976 1989
-----------------------------------------------------------------------------
1.653959 1.843890 4,248,205 1988
-----------------------------------------------------------------------------
1.649063 1.653959 3,210,794 1987
-----------------------------------------------------------------------------
1.411482 1.649063 1,810,114 1986
====================================================================================================
Fidelity 1.263308 1.705419 62,585,233 1995
Contrafund -----------------------------------------------------------------------------
1.289799 1.263308 40,927,857 1994
-----------------------------------------------------------------------------
1.072342 1.289799 14,514,807 1993
-----------------------------------------------------------------------------
1.000000 1.072342 186,872 1992
====================================================================================================
Fidelity 3.424310 4.471070 35,553,370 1995
Equity-Income -----------------------------------------------------------------------------
Fund 3.448520 3.424310 34,056,352 1994
-----------------------------------------------------------------------------
2.869860 3.448520 41,743,016 1993
-----------------------------------------------------------------------------
2.526472 2.869860 36,410,831 1992
-----------------------------------------------------------------------------
1.971024 2.526472 40,239,204 1991
-----------------------------------------------------------------------------
2.314450 1.971024 65,533,870 1990
-----------------------------------------------------------------------------
1.968876 2.314450 62,489,636 1989
-----------------------------------------------------------------------------
1.622650 1.968876 66,300,418 1988
-----------------------------------------------------------------------------
1.665429 1.622650 55,094,558 1987
-----------------------------------------------------------------------------
1.436150 1.665429 33,659,577 1986
- ----------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
CONDENSED FINANCIAL INFORMATION, Continued
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
====================================================================================================
<S> <C> <C> <C> <C>
Fidelity 1.255568 1.683805 4,155,413 1995
Growth & -----------------------------------------------------------------------------
Income Portfolio 1.239420 1.255568 2,808,994 1994
-----------------------------------------------------------------------------
1.046808 1.239420 1,219,293 1993
-----------------------------------------------------------------------------
1.000000 1.046808 85,896 1992
====================================================================================================
Fidelity Magellan(R) 1.275955 1.729361 92,049,788 1995
Fund -----------------------------------------------------------------------------
1.311856 1.275955 68,044,510 1994
-----------------------------------------------------------------------------
1.062405 1.311856 43,203,753 1993
-----------------------------------------------------------------------------
1.000000 1.062405 10,591,374 1992
====================================================================================================
Fidelity OTC Portfolio 1.000000 1.219506 64,305 1995
====================================================================================================
Fidelity Puritan Fund 1.000000 1.126715 0 1995
====================================================================================================
The Growth 1.840658 2.366626 6,716,573 1995
Fund of -----------------------------------------------------------------------------
America(R), Inc. 1.857739 1.840658 5,646,915 1994
-----------------------------------------------------------------------------
1.638011 1.857739 5,353,392 1993
-----------------------------------------------------------------------------
1.539692 1.638011 3,840,212 1992
-----------------------------------------------------------------------------
1.144684 1.539692 1,551,711 1991
-----------------------------------------------------------------------------
1.205372 1.144684 105,320 1990
-----------------------------------------------------------------------------
1.000000 1.205372 0 1989
====================================================================================================
The Income 1.480756 1.893327 8,645,811 1995
Fund of -----------------------------------------------------------------------------
America(R), Inc. 1.533299 1.480756 7,829,528 1994
-----------------------------------------------------------------------------
1.357846 1.533299 7,258,704 1993
-----------------------------------------------------------------------------
1.223786 1.357846 3,016,773 1992
-----------------------------------------------------------------------------
0.998504 1.223786 631,336 1991
-----------------------------------------------------------------------------
1.000000 0.998504 0 1990
====================================================================================================
INVESCO 1.151056 1.451889 10,632,818 1995
Industrial -----------------------------------------------------------------------------
Income Fund, Inc. 1.208959 1.151056 8,239,738 1994
-----------------------------------------------------------------------------
1.045472 1.208959 3,039,640 1993
-----------------------------------------------------------------------------
1.000000 1.045472 17,289 1992
====================================================================================================
Janus Fund 1.055481 1.353271 13,522,743 1995
-----------------------------------------------------------------------------
1.077425 1.055481 7,345,306 1994
-----------------------------------------------------------------------------
1.000000 1.077425 2,969,768 1993
====================================================================================================
Janus Twenty 0.978264 1.320040 31,831 1995
Fund -----------------------------------------------------------------------------
1.058801 0.978264 11,285 1994
-----------------------------------------------------------------------------
1.000000 1.058801 0 1993
====================================================================================================
MAS Funds Fixed 0.980782 1.156444 366,064 1995
Income Portfolio -----------------------------------------------------------------------------
1.000000 0.980782 31,751 1994
- ----------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
CONDENSED FINANCIAL INFORMATION, Continued
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
====================================================================================================
<S> <C> <C> <C> <C>
Massachusetts 7.034148 8.942612 551,377 1995
Investors Growth ----------------------------------------------------------------------------
Stock Fund - 7.613442 7.034148 604,020 1994
Class A ----------------------------------------------------------------------------
6.714892 7.613442 891,831 1993
----------------------------------------------------------------------------
6.368639 6.714892 914,534 1992
----------------------------------------------------------------------------
4.352449 6.368639 1,056,566 1991
----------------------------------------------------------------------------
4.612779 4.352449 1,577,501 1990
----------------------------------------------------------------------------
3.430876 4.612779 1,393,742 1989
----------------------------------------------------------------------------
3.326929 3.430876 2,091,280 1988
----------------------------------------------------------------------------
3.173352 3.326929 2,154,700 1987
----------------------------------------------------------------------------
2.847946 3.173352 2,334,606 1986
====================================================================================================
MFS(R)Growth 4.589533 6.114190 3,824,999 1995
Opportunities ----------------------------------------------------------------------------
Fund - Class A 4.834037 4.589533 4,635,532 1994
----------------------------------------------------------------------------
4.200054 4.834037 9,303,110 1993
----------------------------------------------------------------------------
3.936838 4.200054 10,600,796 1992
----------------------------------------------------------------------------
3.246855 3.936838 13,413,614 1991
----------------------------------------------------------------------------
3.427388 3.246855 23,047,089 1990
----------------------------------------------------------------------------
2.692907 3.427388 24,300,466 1989
----------------------------------------------------------------------------
2.493461 2.692907 28,164,998 1988
----------------------------------------------------------------------------
2.421913 2.493461 29,369,357 1987
----------------------------------------------------------------------------
2.312498 2.421913 38,069,020 1986
====================================================================================================
MFS(R)High 4.265493 4.949752 806,763 1995
Income ----------------------------------------------------------------------------
Fund - 4.422523 4.265493 877,250 1994
Class A ----------------------------------------------------------------------------
3.739642 4.422523 1,068,154 1993
----------------------------------------------------------------------------
3.225557 3.739642 1,036,507 1992
----------------------------------------------------------------------------
2.186959 3.225557 1,186,991 1991
----------------------------------------------------------------------------
2.651605 2.186959 2,159,639 1990
----------------------------------------------------------------------------
2.731036 2.651605 2,739,257 1989
----------------------------------------------------------------------------
2.453867 2.731036 2,747,679 1988
----------------------------------------------------------------------------
2.470209 2.453867 2,713,471 1987
----------------------------------------------------------------------------
2.248114 2.470209 3,349,170 1986
====================================================================================================
Nationwide(R) 1.619166 1.991196 92,001 1995
Bond Fund ----------------------------------------------------------------------------
1.778765 1.619166 51,492 1994
----------------------------------------------------------------------------
1.621957 1.778765 148,222 1993
----------------------------------------------------------------------------
1.516560 1.621957 197,350 1992
----------------------------------------------------------------------------
1.309926 1.516560 363,511 1991
----------------------------------------------------------------------------
1.222004 1.309926 420,858 1990
----------------------------------------------------------------------------
1.114209 1.222004 314,062 1989
----------------------------------------------------------------------------
1.039905 1.114209 188,045 1988
----------------------------------------------------------------------------
1.074676 1.039905 28,819 1987
- ----------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
CONDENSED FINANCIAL INFORMATION, Continued
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
====================================================================================================
<S> <C> <C> <C> <C>
Nationwide(R) 9.468045 12.191058 2,905,460 1995
Fund -----------------------------------------------------------------------------
9.502760 9.468045 3,036,527 1994
-----------------------------------------------------------------------------
8.985447 9.502760 3,690,273 1993
-----------------------------------------------------------------------------
8.810680 8.985447 4,218,392 1992
-----------------------------------------------------------------------------
6.830443 8.810680 3,906,633 1991
-----------------------------------------------------------------------------
6.875188 6.830443 3,792,110 1990
-----------------------------------------------------------------------------
5.187286 6.875188 2,756,965 1989
-----------------------------------------------------------------------------
4.485232 5.187286 3,174,211 1988
-----------------------------------------------------------------------------
4.438511 4.485232 2,879,455 1987
-----------------------------------------------------------------------------
3.809764 4.438511 3,446,791 1986
====================================================================================================
Nationwide(R) 2.092009 2.667201 3,668,270 1995
Growth Fund -----------------------------------------------------------------------------
2.081399 2.092009 3,759,425 1994
-----------------------------------------------------------------------------
1.887524 2.081399 5,928,120 1993
-----------------------------------------------------------------------------
1.792687 1.887524 5,747,753 1992
-----------------------------------------------------------------------------
1.330199 1.792687 5,108,711 1991
-----------------------------------------------------------------------------
1.452973 1.330199 7,279,598 1990
-----------------------------------------------------------------------------
1.276112 1.452973 4,762,338 1989
-----------------------------------------------------------------------------
1.051373 1.276112 1,947,635 1988
-----------------------------------------------------------------------------
1.236522 1.051373 352,893 1987
====================================================================================================
Nationwide(R) 2.654661 2.774433 20,350,850 1995
Money Market -----------------------------------------------------------------------------
Fund* 2.583387 2.654661 18,028,497 1994
-----------------------------------------------------------------------------
2.542721 2.583387 20,122,594 1993
-----------------------------------------------------------------------------
2.487178 2.542721 22,067,362 1992
-----------------------------------------------------------------------------
2.377082 2.487178 33,612,374 1991
-----------------------------------------------------------------------------
2.224557 2.377082 48,721,235 1990
-----------------------------------------------------------------------------
2.062504 2.224557 43,599,432 1989
-----------------------------------------------------------------------------
1.944054 2.062504 39,596,561 1988
-----------------------------------------------------------------------------
1.848104 1.944054 35,995,910 1987
-----------------------------------------------------------------------------
1.754559 1.848104 41,090,565 1986
====================================================================================================
Neuberger & Berman 1.000000 1.696655 0 1995
Guardian Fund -----------------------------------------------------------------------------
====================================================================================================
Neuberger & 1.741549 2.259932 394,751 1995
Berman Manhattan -----------------------------------------------------------------------------
Fund, Inc. 1.823796 1.741549 406,054 1994
-----------------------------------------------------------------------------
1.673695 1.823796 317,549 1993
-----------------------------------------------------------------------------
1.434738 1.673695 56,526 1992
-----------------------------------------------------------------------------
1.106565 1.434738 7,124 1991
-----------------------------------------------------------------------------
1.214940 1.106565 0 1990
-----------------------------------------------------------------------------
1.000000 1.214940 0 1989
- ----------------------------------------------------------------------------------------------------
<FN>
*The 7-day yield on the Nationwide Money Market Fund as of December 31, 1995 was
4.23%.
</TABLE>
18
<PAGE> 19
CONDENSED FINANCIAL INFORMATION, Continued
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
====================================================================================================
<S> <C> <C> <C> <C>
Putnam 8.297318 11.305164 3,422,356 1995
Investors -----------------------------------------------------------------------------
Fund - 8.652501 8.297318 3,674,131 1994
Class A -----------------------------------------------------------------------------
7.410567 8.652501 4,311,483 1993
-----------------------------------------------------------------------------
6.934213 7.410567 4,294,647 1992
-----------------------------------------------------------------------------
5.445269 6.934213 4,745,398 1991
-----------------------------------------------------------------------------
5.654203 5.445269 6,112,297 1990
-----------------------------------------------------------------------------
4.262206 5.654203 5,893,052 1989
-----------------------------------------------------------------------------
4.003173 4.262206 9,986,301 1988
-----------------------------------------------------------------------------
3.885972 4.003173 10,268,895 1987
-----------------------------------------------------------------------------
3.389459 3.885972 14,447,283 1986
====================================================================================================
Putnam Voyager 1.982311 2.752130 21,036,155 1995
Fund - Class A -----------------------------------------------------------------------------
1.992379 1.982311 14,803,070 1994
-----------------------------------------------------------------------------
1.698751 1.992379 11,820,145 1993
-----------------------------------------------------------------------------
1.563079 1.698751 7,640,204 1992
-----------------------------------------------------------------------------
1.049811 1.563079 4,622,048 1991
-----------------------------------------------------------------------------
1.000000 1.049811 290,518 1990
====================================================================================================
SEI Index 1.792835 2.439184 1,072,618 1995
Funds - S&P 500 -----------------------------------------------------------------------------
Index Portfolio 1.792223 1.792835 722,997 1994
-----------------------------------------------------------------------------
1.647325 1.792223 509,498 1993
-----------------------------------------------------------------------------
1.548965 1.647325 257,368 1992
-----------------------------------------------------------------------------
1.203412 1.548965 121,485 1991
-----------------------------------------------------------------------------
1.254560 1.203412 509 1990
-----------------------------------------------------------------------------
1.000000 1.254560 0 1989
====================================================================================================
Seligman 7.020585 8.934609 277,527 1995
Growth -----------------------------------------------------------------------------
Fund, Inc. - 7.370495 7.020585 299,685 1994
Class A -----------------------------------------------------------------------------
6.989639 7.370495 513,220 1993
-----------------------------------------------------------------------------
6.340967 6.989639 555,163 1992
-----------------------------------------------------------------------------
4.611005 6.340967 685,494 1991
-----------------------------------------------------------------------------
4.910683 4.611005 977,515 1990
-----------------------------------------------------------------------------
3.714452 4.910683 916,525 1989
-----------------------------------------------------------------------------
3.491789 3.714452 1,189,216 1988
-----------------------------------------------------------------------------
3.351057 3.491789 1,200,692 1987
-----------------------------------------------------------------------------
2.905343 3.351057 1,618,100 1986
====================================================================================================
Strong 1.002820 1.315349 1,353,697 1995
Common Stock -----------------------------------------------------------------------------
Fund, Inc. 1.017301 1.002820 742,264 1994
-----------------------------------------------------------------------------
1.000000 1.017301 16,364 1993
====================================================================================================
T. Rowe Price 1.429428 1.577274 22,425,072 1995
International -----------------------------------------------------------------------------
Stock Fund(R) 1.454045 1.429428 18,673,315 1994
-----------------------------------------------------------------------------
1.047655 1.454045 11,658,962 1993
-----------------------------------------------------------------------------
1.095728 1.047655 4,370,293 1992
-----------------------------------------------------------------------------
0.954695 1.095728 2,239,924 1991
-----------------------------------------------------------------------------
1.000000 0.954695 441,232 1990
- ----------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
CONDENSED FINANCIAL INFORMATION, Continued
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
====================================================================================================
<S> <C> <C> <C> <C>
Templeton 1.378759 1.518092 32,915,364 1995
Foreign -----------------------------------------------------------------------------
Fund - Class I 1.387073 1.378759 25,358,639 1994
-----------------------------------------------------------------------------
1.023491 1.387073 6,636,629 1993
-----------------------------------------------------------------------------
1.000000 1.023491 0 1992
====================================================================================================
Templeton 1.279328 1.490946 382,441 1995
Smaller Companies -----------------------------------------------------------------------------
Growth Fund, Inc. 1.353616 1.279328 225,110 1994
-----------------------------------------------------------------------------
1.036433 1.353616 117,690 1993
-----------------------------------------------------------------------------
1.000000 1.036433 0 1992
====================================================================================================
Twentieth 3.359891 4.005400 37,335,163 1995
Century Growth -----------------------------------------------------------------------------
Investors 3.443124 3.359891 41,134,943 1994
-----------------------------------------------------------------------------
3.350122 3.443124 51,977,134 1993
-----------------------------------------------------------------------------
3.533694 3.350122 58,356,370 1992
-----------------------------------------------------------------------------
2.110582 3.533694 53,923,483 1991
-----------------------------------------------------------------------------
2.216085 2.110582 67,311,152 1990
-----------------------------------------------------------------------------
1.562983 2.216085 49,896,477 1989
-----------------------------------------------------------------------------
1.536055 1.562983 51,598,758 1988
-----------------------------------------------------------------------------
1.374167 1.536055 38,777,840 1987
-----------------------------------------------------------------------------
1.164500 1.374167 23,661,751 1986
====================================================================================================
Twentieth 1.095899 1.331631 1,254,199 1995
Century Select -----------------------------------------------------------------------------
Investors 1.202996 1.095899 194,231 1994
-----------------------------------------------------------------------------
1.059075 1.202996 386,750 1993
-----------------------------------------------------------------------------
1.118927 1.059075 383,487 1992
-----------------------------------------------------------------------------
1.000000 1.118927 2,950 1991
====================================================================================================
Twentieth 1.345904 1.835553 105,140,475 1995
Century Ultra -----------------------------------------------------------------------------
Investors 1.409710 1.345904 88,713,416 1994
-----------------------------------------------------------------------------
1.168340 1.409710 68,551,255 1993
-----------------------------------------------------------------------------
1.164722 1.168340 33,483,411 1992
-----------------------------------------------------------------------------
1.000000 1.164722 11,412 1991
- ----------------------------------------------------------------------------------------------------
</TABLE>
Neuberger & Berman Partners Fund first became available through the Variable
Account in 1996; therefore, no 1995 unit value information is available for
these Underlying Mutual Funds.
20
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws of
the State of Ohio in March, 1929. The Company is a member of the Nationwide
Insurance Enterprise, with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43215. The Company offers a complete line of life insurance, including
annuities and accident and health insurance. It is admitted to do business in
all states, the District of Columbia, the Virgin Islands, and Puerto Rico.
THE DC VARIABLE ACCOUNT
The DC Variable Account (the "Variable Account") was established by the
Company on July 10, 1974, pursuant to the provisions of Ohio law. The Variable
Account was also registered with the Securities and Exchange Commission as a
unit investment trust pursuant to the provisions of the Investment Company Act
of 1940. Such registration does not involve supervision of the management of the
Variable Account or the Company by the Securities and Exchange Commission.
On November 2, 1977, the Company established the Nationwide DC Variable
Account II as a unit investment trust, for the sole purpose of maintaining the
qualification of the Variable Account as a regulated investment company, under
Section 851 of the Code. The Company later determined that the continued
maintenance of the DC Variable Account-II was no longer necessary or desirable
to achieve the tax result of that Variable Account's prior private letter
ruling.
Effective February 29, 1988, the Company caused the Variable Account and
the DC Variable Account-II to be combined into a single segregated asset account
of the Company, thereafter known as the DC Variable Account. Both prior to and
after this transaction, the annuity unit values for a Sub-Account of DC Variable
Account-II were exactly equivalent to an accumulation unit value for the
corresponding Sub-Accounts in the DC Variable Account.
The net Purchase Payments applied to the Variable Account are invested in
shares of the Underlying Mutual Funds available under the terms of the Contract.
The Variable Account is divided into 45 Sub-Accounts, each of which represents a
separate Underlying Mutual Fund (see "Participating Underlying Mutual Funds in
the Appendix" for a description of the investment objective of each Underlying
Mutual Fund).
Each Sub-Account in the 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 Variable Account as a whole be
chargeable with liabilities arising out of any other business the Company may
conduct.
VOTING RIGHTS
The 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 Variable
Account at regular and special meetings of the shareholders of Underlying Mutual
Funds in accordance with instructions received from the Owners. The Company will
mail to each Owner at its last known address all periodic reports and proxy
material of the applicable Underlying Mutual Fund(s), 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.
21
<PAGE> 22
PERIODIC REPORTS
The Company 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 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 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.
VARIABLE ACCOUNT CHARGES 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, the Contingent Deferred Sales Charge, when it is
applicable, will be used to cover expenses relating to the sale of the
Contracts, including commissions paid to sales personnel, the costs of
preparation of sales literature, and other promotional activity. Gross
commissions paid on the sale of these Contracts vary depending upon the Contract
of the general agent performing the marketing and enrollment function in
connection with a particular Contract.
Should part or all of the Contract Value representing Participant Accounts
that have been established under the Contract and held in the Variable Account
for less than 16 years be surrendered, a Contingent Deferred Sales Charge will,
when it is applicable, be made by the Company. This charge will not exceed 5% of
the lesser of (1) the total of all Purchase Payments received on behalf of the
surrendering Participant or the withdrawing Owner prior to the date of the
request for surrender or (2) the amount surrendered. The cumulative sum of all
such charges, per Participant, shall never exceed 5% (or such lesser percentage,
if applicable) of the total Purchase Payments made on behalf of such Participant
during the period of up to 16 years prior to the date on which the surrender is
requested.
When a Contingent Deferred Sales Charge of less than 5% is negotiated and
assessed, the reduced charge will reflect actual variations in expenses, usually
resulting from reduced agent's commissions.
No Contingent Deferred Sales Charge will be imposed on Contract Value that
is paid under:
o any life income payment option;
o Designated Period payment options of 5 or more years for a
Participant who has a minimum of 5 Participant Account Years prior
to the time the benefit payments are to commence; and
o a one-sum or periodic payment payable because of a Participant's
death.
CONTRACT MAINTENANCE CHARGE
FOR CONTRACTS WITH AN EFFECTIVE DATE ON OR AFTER MAY 1, 1991, THE COMPANY
WILL NOT ASSESS THE FLAT DOLLAR CONTRACT MAINTENANCE CHARGE. In addition, for
those Contracts with an effective date prior to May 1, 1991, the Company will
eliminate the Contract Maintenance Charge at such time as the Company and the
Owner renegotiate the Company's continued participation as an annuity provider
under the Owner's Plan, and the Company issues a new Contract.
For Contracts with an effective date prior to May 1, 1991, the Company
will make a maximum charge of $15 per Participant per year to reimburse the
Company for certain administrative expenses relating to the maintenance of
individual Participant records and the mailing of periodic statements to
Participants. The Contract Maintenance Charges, which are guaranteed never to
increase, are designed only to help the Company offset such administrative
expenses, and such charges will not exceed the Company's actual administration
expenses under the Contracts.
22
<PAGE> 23
The Contract Maintenance Charge is made by canceling a number of
Accumulation Units on each Participant Anniversary equal in value to the
applicable Contract Maintenance Charge. If a Participant Account includes more
than one Sub-Account, the deduction will be allocated among Sub-Accounts on the
basis of relative values at the time the deduction is made. For those Contracts
where the Owner has so elected, there will be no charge for the transfers among
Sub-Accounts.
The Company will assess a Contract Maintenance Charge on the date (other
than a Participant Anniversary) that amounts held in respect of a Participant
are fully withdrawn from the Variable Account. In such case, the amount of the
Contract Maintenance Charge will be 1/12 of the applicable Contract Maintenance
Charge, multiplied by the number of whole or partial calendar months which have
elapsed between the Participant Anniversary (or the Participant Effective Date
during the first Participant Account Year) and the date of full withdrawal.
For those Plans which provide this Contract and certain other investment
options (such as the Company's Group Fixed Fund Retirement Contract), the
Contract Maintenance Charge under this Contract may be reduced so that the total
of the Contract Maintenance Charges and any similar administrative charges
imposed under other investment options available under the Plan shall not exceed
the Contract Maintenance Charge assessed under this Contract. In this event,
such charge will be allocated among Sub-Accounts of the Variable Account and
amounts held in such other investment options available under the Plan on the
basis of the relative values of the Participant's Accounts at the time the
deduction is made. When a Contract Maintenance Charge of less than $15 is
otherwise negotiated and assessed, the reduced charge will reflect actual
variations in administrative expenses incurred by the Company, usually resulting
from an Owner or Plan administrator assuming certain administrative functions
otherwise required to be performed by the Company.
MORTALITY RISK CHARGE, EXPENSE RISK AND ADMINISTRATION CHARGE
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: (i)
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; and (ii) deductions for sales and
Administrative Charges may be insufficient to cover the actual cost of these
items.
For the Company's contractual promise to accept these risks and for Charges
of the Variable Account, the Contracts provide for the daily deduction of an
Actuarial Risk Fee (see "Glossary of Terms"). The deduction is based on the
daily value of the applicable Sub-Accounts, and is equivalent to 0.95% on an
annual basis (0.35% for the Mortality Risk Charge, 0.15% for the Expense Risk,
and 0.45% for the Administration of the Variable Account). If this Actuarial
Risk Fee is insufficient to cover the actual cost of the mortality risk, the
expense risk, the administration of the Variable Account, or the Contract
Maintenance Charges, 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 the Plan 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 the Plan. The
reduction reflects the lower cost per participant to administer larger asset
pools (see "Summary of Contract Expenses").
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. The Company is currently 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.
23
<PAGE> 24
EXPERIENCE CREDITS
The Contracts described herein may be participating or non-participating. A
participating contract provides the right to participate in the Distribution of
surplus of the Company. In the event that Contract Maintenance Charges and
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 of 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 VARIABLE ACCOUNT
The Variable Account's total expenses for the fiscal year ended December
31, 1995, were 0.99% of the average net assets. Deductions from and expenses
paid out of the assets of the Underlying Mutual Funds are described in the
prospectuses of each of the Underlying Mutual Fund.
DESCRIPTION OF THE CONTRACTS
A. GENERAL
PURPOSE OF THE CONTRACTS
The Contracts described in this prospectus are Group Flexible Fund
Retirement Contracts designed to fund certain deferred compensation plans
generally established under either Section 401, 403(b) or 457 of the Code
(although they may include certain other nonqualified deferred compensation
plans) for employees of states and their political subdivisions and any
other organizations exempt from taxation. 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 the lifetime of the
retiree. 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.
MODIFICATION OF THE CONTRACT
Contract provisions with respect to the mortality basis, minimum death
benefits, and the deductions made from Purchase Payments, Participant
Accounts, Contingent Deferred Sales Charges, if applicable, Contract
Maintenance Charges 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 may modify the Contract at
any time without consent of the Owner or Participants. No such modification
shall be retroactive or affect Retired Participants in any manner without
their written consent, unless such modification is considered necessary to
obtain the benefit of federal or state statutes or regulations or to
maintain qualification of the Plan.
24
<PAGE> 25
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 Owner and Participant agreeing with certain restrictions
applicable to such privilege. Telephone exchange requests must be received
by the Company prior to the close of the New York Stock Exchange in order
to receive that day's closing Sub-Account price. A telephone exchange
request may not be revoked once instructions have been recorded and
accepted. The Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may
include any or all of the following, or such other procedures as the
Company may, from time to time, deem reasonable: requesting identifying
information, such as name, contract number, Social Security Number, and/or
personal identification number; tape recording all telephone transactions;
and providing written confirmation thereof to the 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. 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
may determine to withdraw the Telephone Exchange Privilege, upon a thirty
(30) day written notice to 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 prior to 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 the Company'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
Variable Account and the Group Fixed Fund Retirement Contract. Exchanges
from the deposit fund to any Sub-Account of the 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 upon 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 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 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. Upon termination of the Contract, the Company will
pay to the
25
<PAGE> 26
Owner the value of the Contract, subject to applicable charges, in
accordance with the terms of the Contract (see "Redemption of Participant
Accounts (Termination)").
B. PARTICIPANT ACCOUNT VALUES
APPLICATION OF PURCHASE PAYMENTS
The Company 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 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. Purchase 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 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 receipt 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.
VARIABLE ACCOUNT ACCUMULATION UNIT VALUE
The value of an Accumulation Unit for each Sub-Account was established
at $1.00 as of the date Underlying Mutual Fund shares were available for
purchase for that Sub-Account. The value of Accumulation Units for any
Sub-Account for 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.
26
<PAGE> 27
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
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 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 (or 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-Account. 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.
C. 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, after the assessment of
any applicable Contingent Deferred Sales Charge. 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, less the Contingent Deferred Sales Charge, if any, 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, subject to the Contingent Deferred Sales
Charge. No partial redemption will directly affect future requirements to
make Purchase Payments. If the Contract is terminated by the Owner, all
Participant Accounts in the Variable Account will be redeemed to the extent
permitted by the Plan.
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 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, less any applicable Contingent Deferred Sales Charge, 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 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 permitted by the Plan, may
elect to
27
<PAGE> 28
have that amount paid out in installments under Option A1 or A2, subject to
the minimums applicable to these options.
D. 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 Sub-Accounts 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 Sub-Accounts 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 the "Optional Retirement Income Forms" section. The
Plan may restrict changes in election of retirement income options.
ALLOCATION OF RETIREMENT INCOME
At 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 the "Optional
Retirement Income Forms" section, Accumulation Units in a Participant's
Account of any Sub-Account in the 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 such payment 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
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receive the 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 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 for 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% 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 pursuant
to Option A1 may change the number of Accumulation Units remaining. In this
event, the payment amount must be recalculated.
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
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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 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-Accounts
will be in such relationship as the monthly payments from each Sub-Accounts
have to each other.
The annual premium is calculated so that if there are no partial
redemption's (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 Contract Maintenance 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.
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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 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 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 Sub-Account of subsequent payments (or a more rapidly falling
Sub-Account 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.
GENERAL INFORMATION
SUBSTITUTION OF SECURITIES
If the shares of any Underlying Mutual Fund should no longer be
available for investment by the Variable Account or, if in the judgment of
the Company's management, further investment in such Underlying Mutual Fund
shares should become inappropriate in view of the purposes of the Contract,
the Company may 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. No substitution of
securities in any Sub-Accounts may 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 Variable Account. A "yield" and
"effective yield" may be advertised for the Nationwide Money Market Fund
Sub-Account, the Dreyfus Cash Management Fund Sub-Account and the
Nationwide Separate Account Trust Money Market Fund Sub-Account. "Yield" is
a measure of the net dividend and interest income earned over a specific
seven-day period (which period will be stated in the advertisement)
expressed as a percentage of the offering price of the Sub-Account 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's 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
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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 Contract
Maintenance Charge or 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 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 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 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.
The Company is also ranked and rated by independent financial rating
services, among which are Moody's, Standard & Poor's and A.M. Best Company.
The purpose of these ratings is to reflect the financial strength or
claims-paying ability of the Company. The ratings are not intended to
reflect the investment experience or financial strength of the Variable
Account. The Company may advertise these ratings from time to time. In
addition, the Company may include in certain advertisements, endorsements
in the form of a list of organizations, individuals or other parties which
recommend the Company or the 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 THAN 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 (TTY: 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
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(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 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, if any, for any taxes reserved for
in the immediately preceding Valuation Period.
(c)is a factor representing the daily Actuarial Risk Fee deducted from the
Variable Account. Such factor is equal to an annual rate of 0.95% of
the daily net asset value of the 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 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.
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 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
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 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.
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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 Owner's termination of its
contractual relationship with the Company. These accounts shall remain the
exclusive property of the Owner, subject to the claims of its general
creditors.
All references throughout the prospectus to Optional Retirement Income
Forms A1, A2, B1 and B2 shall mean Option 1, Option 2, Option 3 and Option
4, respectively. 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 the Company, or the Variable
Account, are parties or to which any of their property is the subject.
The General Distributor, Nationwide Advisory Services, Inc., is not
engaged in any litigation of any material nature.
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.........................................................6
Financial Statements.....................................................7
</TABLE>
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APPENDIX
PARTICIPATING UNDERLYING MUTUAL FUNDS
(THE COMPANY MAY LIMIT THE NUMBER OF UNDERLYING MUTUAL FUNDS SELECTED BY THE
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 FUNDS BEING CONSIDERED SHOULD ACCOMPANY THE PROSPECTUS AND
SHOULD BE READ IN CONJUNCTION HEREWITH. A COPY OF EACH PROSPECTUS MAY BE
OBTAINED WITHOUT CHARGE FROM NATIONWIDE LIFE INSURANCE COMPANY.
THE FOLLOWING FUNDS ARE AVAILABLE ONLY FOR DEFERRED COMPENSATION CONTRACTS.
AIM WEINGARTEN FUND - INSTITUTIONAL CLASS
The investment objective of the Fund is to provide growth of capital
through investments primarily in common stocks of leading U.S. companies
considered by management to have strong earnings momentum.
AIM CONSTELLATION FUND - INSTITUTIONAL CLASS
The investment objective of the Fund is to provide capital appreciation
primarily through investments in common stocks with emphasis on medium-sized and
smaller emerging growth companies.
DREYFUS CASH MANAGEMENT
The investment objective of the Fund is to provide investor with as
high a level of current income as is consistent with the preservation of capital
and the maintenance of liquidity.
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
meet traditional investment standards, but which also show evidence that they
conduct their business in a manner that contributes to the enhancement of the
quality of life in America. Current income is secondary to the primary goal.
THE EVERGREEN TOTAL RETURN FUND
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.
FEDERATED GNMA TRUST-INSTITUTIONAL SHARES
The investment objective of the Fund is current income. The Fund
pursues this investment objective by investing primarily in instruments issued
or guaranteed by the Government National Mortgage Association ("GNMA").
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 ASSET MANAGER(TM)
The investment objective of the Fund is a high total return with
reduced risk over the long term by allocating its assets among domestic and
foreign stocks, bonds, and short-term instruments.
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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 GROWTH & INCOME PORTFOLIO
The investment objective of the Fund is long term capital growth,
current income, and growth of income consistent with reasonable investment risk.
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.
INVESCO INDUSTRIAL INCOME FUND, INC. (FORMERLY "FINANCIAL INDUSTRIAL INCOME
FUND, INC.")
The investment objective of the Fund is to seek the best possible
current income while following sound investment practices by investing in
securities which will provide a relatively high yield and stable return and
which, over a period of years, may also provide capital appreciation. Capital
growth potential is a secondary factor in the selection of portfolio securities
of the Fund. The Fund invests in common stocks, as well as convertible bond and
preferred stocks.
JANUS FUND
The Janus Fund is a diversified fund that seeks long-term growth of
capital by investing primarily in common stocks of a large number of issuers of
any size. Janus Capital's fundamental analysis and selection process focuses on
stocks with earnings growth potential that may not be recognized by the market.
Such securities are selected solely for their capital growth potential;
investment income is not a consideration.
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JANUS TWENTY FUND
The investment objective of the Fund is growth of capital in a manner
consistent with the preservation of capital. Under normal conditions, the Fund
will concentrate its investments in a core position of 20-30 common stocks.
However, the percentage of the Fund's assets invested in common stocks will
vary, depending upon its investment adviser's opinion of prevailing market,
financial and economic conditions. Consequently, the Fund may at times hold
substantial positions in cash, or interest-bearing securities.
MAS FUNDS FIXED INCOME PORTFOLIO
The investment objective of the Fund is to achieve above-average total
return over a market cycle of three to five years, consistent with reasonable
risk, by investing in a diversified portfolio of U.S. Government 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.
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.
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.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A
The investment objective of the Fund is long-term growth of capital and
future income rather that current income.
NATIONWIDE(R) BOND FUND
The investment objective of the Fund is to generate a high level of
income, consistent with capital preservation, through investments in
high-quality bonds and other fixed income securities. Through investment in
long-term income obligations, including corporate debt securities, United States
and Canadian Government obligations and commercial paper, this Fund seeks to
serve those who are less willing to accept the risk associated with stocks.
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) 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.
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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.
NEUBERGER & BERMAN MANHATTAN FUND, INC.
The Fund seeks capital appreciation without regard to income. It
invests, through its corresponding Portfolio, in securities believed to have the
maximum potential for long-term capital appreciation. It does not seek to invest
in securities that pay dividends or interest, and any such income is incidental.
The Portfolio expects to be almost fully invested in common stocks, often of
companies that may be temporarily out of favor in the market. Its aggressive
growth investment program involves greater risks and share price volatility than
programs that invest in more conservative securities.
NEUBERGER & BERMAN PARTNERS FUND, INC.
The Fund seeks capital growth by investing in securities solely on the
basis of management's evaluation of their investment merit and potential for
growth using a value-oriented approach to the selection of individual
securities. The Fund's management believes that the Fund is an attractive
investment vehicle for conservative investors who are interested in long-term
appreciation from stock investments, but who have a low tolerance for risk.
NEW YORK VENTURE FUND, INC.
The investment objective of the Fund is growth of capital. It invests
primarily in common stocks, and securities convertible into common stocks. The
Fund invests in securities subject to the risk of price fluctuations reflecting
both market evaluations of the business involved and general changes in the
equity markets. It invests in securities of foreign issuers, which involve
special risk factors, and may hedge currency fluctuation risks related thereto.
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 500 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
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investment objective is a fundamental policy of the portfolio. There can be no
assurance that the Portfolio will achieve its investment objective.
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.
STRONG COMMON STOCK FUND, INC.
The Strong Common Stock Fund seeks capital growth. It seeks to attain
this objective by investing in a diversified portfolio of equity securities
which, in the opinion of the Fund's investment advisor, possess the potential
for price appreciation.
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.
TEMPLETON SMALLER COMPANIES GROWTH FUND, INC.
The investment objective of the Fund is long-term capital growth,
primarily through investment in common stocks and all types of common stock
equivalents, including rights, warrants and preferred stock, of companies of
various nations throughout the world.
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.
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 SELECT 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. Common stocks chosen must have a
record of paying or having committed themselves to the payment of regular cash
dividends, but growth is the primary consideration, and the dividends may not be
significant.
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 FUND IS NOT AVAILABLE FOR NEW CONTRACTS 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.
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Effective on and after May 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 May
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
Participants directs the Company to invest in the Fidelity Capital & Income Fund
Sub-Account on and after May 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 Variable Account which were purchased from February 1, 1991 to
May 1, 1991 shall be paid by the Company from surplus and shall not be paid,
directly or indirectly, by Contract Owners, Participants or the Variable
Account.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE FOR NEW CONTRACTS ISSUED
ON OR AFTER AUGUST 1, 1993:
DELAWARE GROUP DECATUR FUND, INC.-DECATUR INCOME FUND
The investment Objective of the Fund is to achieve the highest possible
current income by investing primarily in common stocks that provide the
potential for income and capital appreciation without undue risk to principal.
THE FOLLOWING UNDERLYING MUTUAL FUNDS MAY NOT BE AVAILABLE TO ALL CONTRACT
OWNERS ON OR AFTER JANUARY 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 GROWTH FUND OF AMERICA(R), INC.
The investment objective of the Fund is growth of capital. The
realization of current income will not be a consideration. The Fund seeks to
achieve its objective by investing in a diversified portfolio consisting
primarily of common stocks. However, assets may also be held in securities
convertible into common stocks, cash or cash equivalents, straight debt
securities (including U.S. Government securities), or nonconvertible preferred
stocks. The Fund will maintain at least 65% of the value of its total assets in
growth-type securities under normal market conditions.
THE INCOME FUND OF AMERICA(R), INC.
The investment objective is to emphasize current income while
secondarily striving to attain capital growth. The Fund believes that a
portfolio with relatively high current income can also generate growth of
capital.
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