<PAGE> 1
As filed with the Securities and Exchange Commission.
`33 Act Registration No. 2-51911
`40 Act Registration No. 811-2804
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 38 [x]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 39
NATIONWIDE DC VARIABLE ACCOUNT
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. MCCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in respect of
the Prospectus, Statement of Additional Information, and the Financial
Statements.
It is proposed that this filing will become effective (check appropriate space):
immediately upon filing pursuant to paragraph (b) of Rule 485
- ------
X on January 1, 1997, pursuant to paragraph (b) of Rule 485
- ------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
- ------
on (date), pursuant to paragraph (a)(1) of Rule 485
- ------
The Registrant has registered an indefinite number of securities by a prior
registration statement in accordance with Rule 24f-2 under the Investment
Company Act of 1940. Pursuant to Paragraph (a)(3) thereof, a non-refundable fee
in the amount of $500 has been paid to the Commission. Registrant filed its Rule
24f-2 Notice for the fiscal year ended December 31, 1995, on February 15, 1996.
- --------------------------------------------------------------------------------
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<PAGE> 2
NATIONWIDE DC VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM PAGE
<S> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover page..................................................................... 6
Item 2. Definitions.................................................................... 7
Item 3. Synopsis or Highlights......................................................... 17
Item 4. Condensed Financial Information................................................ 18
Item 5. General Description of Registrant, Depositor, and Portfolio Companies ......... 25
Item 6. Deductions and Expenses........................................................ 26
Item 7. General Description of Variable Annuity Contracts.............................. 28
Item 8. Annuity Period................................................................. 30
Item 9. Death Benefit.................................................................. 30
Item 10. Purchases and Contract Value................................................... 30
Item 11. Redemptions.................................................................... 31
Item 12. Taxes.......................................................................... 37
Item 13. Legal Proceedings.............................................................. 38
Item 14. Table of Contents of the Statement of Additional Information................... 38
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page..................................................................... 45
Item 16. Table of Contents.............................................................. 45
Item 17. General Information and History................................................ 45
Item 18. Services....................................................................... 45
Item 19. Purchase of Securities Being Offered........................................... 45
Item 20. Underwriters................................................................... 46
Item 21. Calculation of Performance..................................................... 46
Item 22. Annuity Payments............................................................... 52
Item 23. Financial Statements........................................................... 53
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.............................................. 97
Item 25. Directors and Officers of the Depositor........................................ 99
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant. 101
Item 27. Number of Contract Owners...................................................... 110
Item 28. Indemnification................................................................ 110
Item 29. Principal Underwriters......................................................... 110
Item 30. Location of Accounts and Records............................................... 112
Item 31. Management Services............................................................ 112
Item 32. Undertakings................................................................... 112
</TABLE>
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<PAGE> 3
SUPPLEMENT DATED JANUARY 1, 1997 TO
PROSPECTUS DATED NOVEMBER 2, 1996
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANIES
THROUGH ITS
NATIONWIDE DC VARIABLE ACCOUNT
This Supplement updates certain information contained in your Prospectus. Please
read it and keep it with your Prospectus for future references.
1. Effective January 1, 1997, the Underlying Mutual Fund options TWENTIETH
CENTURY GROWTH INVESTORS, TWENTIETH CENTURY ULTRA INVESTORS and
TWENTIETH CENTURY SELECT INVESTORS will change their names to AMERICAN
CENTURY: TWENTIETH CENTURY GROWTH, AMERICAN CENTURY: TWENTIETH CENTURY
ULTRA, and AMERICAN CENTURY: TWENTIETH CENTURY SELECT, respectively.
Accordingly, any and all references to Twentieth Century Growth
Investors and Twentieth Century Ultra Investors located in the
Prospectus are hereby amended to reflect this name change.
2. Paragraph 2 on page 1 of the Prospectus is hereby deleted in its
entirety and replaced with the following:
Purchase Payments are allocated to the Nationwide DC Variable Account
(the "Variable Account"). The Variable Account is a unit investment
trust with 48 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).
3. The UNDERLYING MUTUAL FUND ANNUAL EXPENSE table located on pages 5 and
6 of the Prospectus is hereby amended to include the following
information:
<TABLE>
<CAPTION>
----------------------------------------------
Management Other Total Fund
Fees Expenses Annual Expenses
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Neuberger & Berman - Guardian Trust 0.84% 0.10% 0.94%
----------------------------------------------------------------------------------------
Neuberger & Berman - Manhattan Trust 0.60% 0.52% 1.12%
----------------------------------------------------------------------------------------
Neuberger & Berman - Partners Trust 0.63% 0.34% 0.97%
----------------------------------------------------------------------------------------
</TABLE>
4. The Example table located on page 9 of the Prospectus is hereby amended
to include the following information:
<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>
Neuberger & Berman - Guardian Trust 60 102 146 269
---------------------------------------------------------------------------------
Neuberger & Berman - Manhattan Trust 62 107 156 288
---------------------------------------------------------------------------------
Neuberger & Berman - Partners Trust 60 103 148 272
---------------------------------------------------------------------------------
</TABLE>
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<PAGE> 4
5. The Example table located on page 10 of the Prospectus is hereby
amended to include the following information:
<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>
Neuberger & Berman - Guardian Trust 20 62 106 229
----------------------------------------------------------------------------------
Neuberger & Berman - Manhattan Trust 22 67 116 248
----------------------------------------------------------------------------------
Neuberger & Berman - Partners Trust 20 63 108 232
----------------------------------------------------------------------------------
</TABLE>
6. The Example table located on page 11 of the Prospectus is hereby
amended to include the following information:
<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>
Neuberger & Berman - Guardian Trust 20 62 106 229
----------------------------------------------------------------------------------
Neuberger & Berman - Manhattan Trust 22 67 116 248
----------------------------------------------------------------------------------
Neuberger & Berman - Partners Trust 20 63 108 232
----------------------------------------------------------------------------------
</TABLE>
7. Paragraph 2 in the SYNOPSIS located on page 13 of the Prospectus is
hereby deleted in its entirety and replaced with the following:
Purchase Payments under the Contracts are placed in the Variable
Account. The Variable Account is a unit investment trust with 48
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").
8. The following footnote is hereby added to the Condensed Financial
Information table located on pages 14 through 20 of the Prospectus:
Unit value information is not provided for the Neuberger &
Berman Guardian Trust, Neuberger & Berman Manhattan Trust and
Neuberger & Berman Partners Trust funds, as said underlying
Mutual Funds were added to the Variable Account effective
January 1, 1997.
9. Paragraph 4 of the section entitled THE DC VARIABLE ACCOUNT located on
page 21 of the Prospectus is hereby deleted in its entirety and
replaced with the following:
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 48 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).
10. The following investment objectives are hereby added to the APPENDIX
located on pages 35 through 40 of the Prospectus:
NEUBERGER & BERMAN - GUARDIAN TRUST
The investment objective of the Trust is to seek capital appreciation
and, secondarily, current income. The Trust is a growth and income fund
that invests in stocks of established, high-quality companies that are
not well followed on Wall Street or are temporarily out of favor.
NEUBERGER & BERMAN - MANHATTAN TRUST
The investment objective of the Trust is to seek capital appreciation
without regard to income. The Trust generally invests in securities of
small, medium and large capitalization companies 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.
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<PAGE> 5
NEUBERGER & BERMAN - PARTNERS TRUST
The investment objective of the Trust is to seek capital growth,
through an approach that is intended to increase capital with
reasonable risk. The Trust's managers look at fundamentals, focusing
particularly on cash flow, return on capital, and asset values.
5 of 134
<PAGE> 6
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.
4
6 of 134
<PAGE> 7
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.
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.
5
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<PAGE> 8
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.
6
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<PAGE> 9
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>
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<PAGE> 10
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
PARTICIPANT TRANSACTION EXPENSES
Maximum Deferred Sales Charge(1) .............. 5%
(as a percentage of Purchase Payments)
CONTRACT MAINTENANCE CHARGE(2) ......................... $ 15
(Per Participant Anniversary)
VARIABLE ACCOUNT ANNUAL EXPENSES(3)
(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 EXPENSES(4)
(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 America(SM), 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% 0.23% 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% 0.21% 0.00% 0.67%
- ----------------------------------------------------------------------------------------------------------------------------------
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>
8
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<PAGE> 11
UNDERLYING MUTUAL FUND ANNUAL EXPENSES-CONTINUED
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Management Other Expenses 12b-1 Fees Total Fund
Fees 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 A(2) 0.31% 0.23% 0.29% 0.83%
- ---------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A(2) 0.43% 0.29% 0.25% 0.97%
- ---------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A(2) 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 Portfolio(2) 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%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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").
9
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<PAGE> 12
(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>
10
12 of 134
<PAGE> 13
<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 The Fund's custodian fee will be reduced based upon
Fund - Class A 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.
11
13 of 134
<PAGE> 14
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>
12
14 of 134
<PAGE> 15
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>
13
15 of 134
<PAGE> 16
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.
14
16 of 134
<PAGE> 17
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").
15
17 of 134
<PAGE> 18
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").
16
18 of 134
<PAGE> 19
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 - 1.305850 1.316836 1,607,538 1994
---------------------------------------------------------------------
Institutional Class 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 - 1.044414 1.035886 870,956 1994
---------------------------------------------------------------------
Institutional Class 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 0.994508 0.966146 720,917 1994
---------------------------------------------------------------------
Fund, Inc. 1.000000 0.994508 5,626 1993
=================================================================================================
Delaware Group 1.449372 1.910384 100,636 1995
---------------------------------------------------------------------
Decatur Fund, Inc. - 1.473401 1.449372 104,006 1994
---------------------------------------------------------------------
Decatur Income Fund 1.289480 1.473401 281,500 1993
---------------------------------------------------------------------
Institutional Class 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 1.025704 1.057458 2,324,960 1994
---------------------------------------------------------------------
Management* - Class A 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 1.814915 1.663803 6,965,653 1994
---------------------------------------------------------------------
Fund, Inc. 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
- -------------------------------------------------------------------------------------------------
</TABLE>
*The 7-day yield on the Dreyfus Cash Management Fund as of December 31, 1995 was
4.68%.
17
19 of 134
<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>
The Evergreen 1.419467 1.741651 3,257,653 1995
----------------------------------------------------------------------
Total Return 1.531292 1.419467 4,439,096 1994
----------------------------------------------------------------------
Fund - Class Y 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 Shares 1.081229 1.243001 508,686 1995
----------------------------------------------------------------------
of Federated 1.119643 1.081229 422,171 1994
----------------------------------------------------------------------
GNMA Trust 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 1.020623 0.991595 1,280,899 1994
----------------------------------------------------------------------
Fund: 2-5 Years - 1.000000 1.020623 696,793 1993
Institutional Shares
==================================================================================================
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 3.448520 3.424310 34,056,352 1994
----------------------------------------------------------------------
Fund 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>
18
20 of 134
<PAGE> 21
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 & 1.239420 1.255568 2,808,994 1994
-------------------------------------------------------------------------
Income Portfolio 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 1.857739 1.840658 5,646,915 1994
-------------------------------------------------------------------------
America(R), Inc. 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 1.533299 1.480756 7,829,528 1994
-------------------------------------------------------------------------
America(R), Inc. 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 1.208959 1.151056 8,239,738 1994
-------------------------------------------------------------------------
Income Fund, Inc. 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>
19
21 of 134
<PAGE> 22
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 7.613442 7.034148 604,020 1994
-------------------------------------------------------------------------
Stock Fund - 6.714892 7.613442 891,831 1993
-------------------------------------------------------------------------
Class A 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 4.834037 4.589533 4,635,532 1994
-------------------------------------------------------------------------
Fund - Class A 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 4.422523 4.265493 877,250 1994
-------------------------------------------------------------------------
Fund - 3.739642 4.422523 1,068,154 1993
-------------------------------------------------------------------------
Class A 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>
20
22 of 134
<PAGE> 23
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 2.583387 2.654661 18,028,497 1994
-------------------------------------------------------------------------
Fund* 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 1.823796 1.741549 406,054 1994
-------------------------------------------------------------------------
Fund, Inc. 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
- --------------------------------------------------------------------------------------------------
</TABLE>
*The 7-day yield on the Nationwide Money Market Fund as of December 31, 1995 was
4.23%.
21
23 of 134
<PAGE> 24
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 8.652501 8.297318 3,674,131 1994
------------------------------------------------------------------------
Fund - 7.410567 8.652501 4,311,483 1993
------------------------------------------------------------------------
Class A 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 1.792223 1.792835 722,997 1994
------------------------------------------------------------------------
Index Portfolio 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 7.370495 7.020585 299,685 1994
------------------------------------------------------------------------
Fund, Inc. - 6.989639 7.370495 513,220 1993
------------------------------------------------------------------------
Class A 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 1.017301 1.002820 742,264 1994
------------------------------------------------------------------------
Fund, Inc. 1.000000 1.017301 16,364 1993
=================================================================================================
T. Rowe Price 1.429428 1.577274 22,425,072 1995
------------------------------------------------------------------------
International 1.454045 1.429428 18,673,315 1994
------------------------------------------------------------------------
Stock Fund(R) 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>
22
24 of 134
<PAGE> 25
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 1.387073 1.378759 25,358,639 1994
------------------------------------------------------------------------
Fund - Class I 1.023491 1.387073 6,636,629 1993
------------------------------------------------------------------------
1.000000 1.023491 0 1992
=================================================================================================
Templeton 1.279328 1.490946 382,441 1995
------------------------------------------------------------------------
Smaller Companies 1.353616 1.279328 225,110 1994
------------------------------------------------------------------------
Growth Fund, Inc. 1.036433 1.353616 117,690 1993
------------------------------------------------------------------------
1.000000 1.036433 0 1992
=================================================================================================
Twentieth 3.359891 4.005400 37,335,163 1995
------------------------------------------------------------------------
Century Growth 3.443124 3.359891 41,134,943 1994
------------------------------------------------------------------------
Investors 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 1.202996 1.095899 194,231 1994
------------------------------------------------------------------------
Investors 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 1.409710 1.345904 88,713,416 1994
------------------------------------------------------------------------
Investors 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.
23
25 of 134
<PAGE> 26
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.
24
26 of 134
<PAGE> 27
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:
- any life income payment option;
- 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
- 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.
25
27 of 134
<PAGE> 28
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.
26
28 of 134
<PAGE> 29
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.
27
29 of 134
<PAGE> 30
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 Owner the value of the Contract, subject to applicable charges,
in accordance with the terms of the Contract (see "Redemption of
Participant Accounts (Termination)").
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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.
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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
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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 receive the value in a lump sum or to apply it under any of
the Optional Retirement Income Forms
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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 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.
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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.
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
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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 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.
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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
(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.
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(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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<PAGE> 43
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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<PAGE> 44
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.
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
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<PAGE> 45
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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<PAGE> 46
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 2, 1996
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS ISSUED
BY THE NATIONWIDE DC VARIABLE ACCOUNT OF
NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the prospectus
and should be read in conjunction with the prospectus dated November 2, 1996.
The prospectus may be obtained from Nationwide Life Insurance Company, P.O. Box
16766, One Nationwide Plaza, Columbus, Ohio 43216, or by calling 1-800-545-4730
(TTY: 1-800-848-0833).
TABLE OF CONTENTS
PAGE
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
GENERAL INFORMATION AND HISTORY
The Nationwide DC Variable Account ("Variable Account") is a separate
investment account of Nationwide Life Insurance Company ("Company"). The Company
is a member of the "Nationwide Insurance Enterprise" and all of the Company's
common stock is owned by Nationwide Corporation. Nationwide Corporation is a
holding company. All of its common stock is held by Nationwide Mutual Insurance
Company (95.2%) and Nationwide Mutual Fire Insurance Company (4.8%).
SERVICES
The Company, which has responsibility for administration of the Contracts
and the Variable Account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each Owner and the
number and type of Contract issued to each such Owner and records with respect
to the Contract Value of each Contract.
All assets of the Variable Account are held in custody for safekeeping by
the Company. The assets of each Sub-Account will be kept physically segregated
and held separate and apart from assets of other Sub-Account and from assets of
any other firm, person, or corporation. The Company will maintain a record of
all purchases and redemption for shares of the Underlying Mutual Fund held in
each Sub-Account.
The Company, or affiliates of the Company may have entered into agreements
with either the investment adviser or distributor for several of the Underlying
Mutual Funds. The agreements relate to administrative services furnished by the
Company or an affiliate of the Company and provide for an annual fee based on
the average aggregate net assets of the Variable Account (and other separate
accounts of the Company or life insurance company subsidiaries of the Company)
invested in particular Underlying Mutual Funds. These fees in no way affect the
net asset value of the Underlying Mutual Funds or fees paid by the Contract
Owner.
The financial statements and schedules included herein have been included
herein in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and
upon the authority of said firm as experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
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-
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Account of the Variable Account and the deposit fund of the Group Fixed Fund
Retirement Contract. Exchanges from the deposit fund to any Sub-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.
UNDERWRITERS
The Contracts, which are offered continuously, are distributed by
Nationwide Financial Services, Inc. ("NFS"), One Nationwide Plaza, Columbus,
Ohio 43215, a wholly owned subsidiary of the Company. During the fiscal years
ended December 31, 1995, 1994 and 1993, no underwriting commissions were paid by
the Company to NFS.
CALCULATION OF PERFORMANCE
Any current yield quotations of the Nationwide Money Market Fund
Sub-Account and the Dreyfus Cash Management Fund Sub-Account, subject to Rule
482 of the Securities Act of 1933, shall consist of a seven calendar day
historical yield, carried at least to the nearest hundredth of a percent. The
yield shall be calculated by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit at the beginning of the base period, subtracting a
hypothetical charge reflecting deductions from Owner accounts, and dividing the
net change in account value by the value of the account at the beginning of the
period to obtain a base period return, and multiplying the base period return by
(365/7) or (366/7) in a leap year. As of December 31, 1995, the Nationwide Money
Market Fund Sub-Account and the Dreyfus Cash Management Fund Sub-Account
seven-day current yield was 4.23% and 4.68% respectively. The Nationwide Money
Market Fund Sub-Account and the Dreyfus Cash Management Fund Sub-Account
effective yield is computed similarly but includes the effect of assumed
compounding on an annualized basis of the current yield quotations of the
Underlying Mutual Fund, and for the period ending December 31, 1994 was 4.32%
and 4.79%, respectively.
The Nationwide Money Market Fund Sub-Account and the Dreyfus Cash
Management Fund Sub-Account yield and effective yield will fluctuate daily.
Actual yields will depend on factors such as the type of instruments in the
Underlying Mutual Funds' portfolio, portfolio quality and average maturity,
changes in interest rates, and the Underlying Mutual Funds' expenses. Although
each Sub-Account determines its yield on the basis of a seven calendar day
period, it may use a different time period on occasion. The yield quotes may
reflect the expense limitation described under "Investment Manager and Other
Services" in the Underlying Mutual Funds' Statement of Additional Information.
There is no assurance that the yields quoted on any give occasion will remain in
effect for any period of time and there is no guarantee that the net asset
values will remain constant. It should be noted that an Owner's investment in
the Nationwide Money Market Fund Sub-Account and the Dreyfus Cash Management
Fund Sub-Account are not guaranteed or insured. Yields of other money market
funds may not be comparable if a different base period or another method of
calculation is used.
All performance advertising shall include quotations of average annual
total return, calculated in accordance with a standard method prescribed by
rules of the Securities and Exchange Commission, to facilitate comparison with
total return quoted by other variable annuity separate accounts. Standardized
average annual total return advertised for a specific period is found by first
taking a hypothetical $1,000 investment in each of the Sub-Account's units on
the first day of the period at the offering price, which is the Accumulation
Unit Value per unit ("initial investment") and computing the ending redeemable
value ("redeemable value") of that investment at the end of the period. The
redeemable value is then divided by the initial investment and this quotient is
taken to the Nth root (N represents the number of years in the period) and 1 is
subtracted from the result which is then expressed as a percentage, carried to
at least the nearest hundredth of a percent. Average annual total return
reflects the deduction of a maximum $15 Contract Maintenance Charge and a 0.95%
Actuarial Risk Fee. The redeemable value also reflects the effect of any
applicable Contingent Deferred Sales Charge that may be imposed at the end of
the period (see "Contingent Deferred Sales Charge" located in the prospectus.)
No deduction is made for premium taxes which may be assessed by certain states.
Non-standardized total return is calculated in a manner similar to average
annual total return except the total return does not reflect the deduction of
any applicable Contingent Deferred Sales Charge or Contract Maintenance Charge,
which, if reflected, would decrease the level of the performance advertised.
The average annual total return and total return quotations will be current
to the last day of the calendar quarter preceding the date on which an
advertisement is submitted for publication. The standardized average annual
total return figures will be based on rolling calendar quarters and will cover
periods of, at least, one, five, and ten years, or a period covering the time a
Underlying Mutual Fund held in the Sub-Account has been in existence, if the
Underlying Mutual Fund has not been in existence for one of the prescribed
periods. The non-
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standardized total return will cover the cumulative current calendar year and
the most recently completed calendar year, and periods of three, five and ten
years on a rolling calendar quarter basis. For those Underlying Mutual Funds
which have not been held as Sub-Account within the Variable Account for one of
the quoted periods, the standardized average annual total return and
non-standardized total return quotations will show the investment performance
such Underlying Mutual Funds would have achieved (reduced by the applicable
charges) had they been held as Sub-Accounts for the period quoted.
Quotations of average annual total return and total return are based upon
historical earnings and will fluctuate. Any quotation of performance, therefore,
should not be considered a guarantee of future performance. Factors affecting a
Sub-Accounts' performance include general market conditions, operating expenses
and investment management. When redeemed, a Contract Owner and Participant
Account may be more or less than original cost.
Below are quotations of average annual total return and total return,
calculated as described in this provision, for each of the Sub-Accounts
available.
DC VARIABLE ACCOUNT
SERIES PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
SERIES OPTIONS TO 12/31/95 TO 12/31/95 TO 12/31/95
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM Constellation Fund - Institutional Class 29.38 % 23.77% 18.58%
- ----------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 28.65 % 12.14% 13.88%
- ----------------------------------------------------------------------------------------------------------------
The Bond Fund of America, Inc.(SM) 11.63 % 8.72% 7.47%
- ----------------------------------------------------------------------------------------------------------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 26.31 % 12.29% 10.24%
- ----------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management (0.50)% 1.48% 3.71%(1)
- ----------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 29.03 % 10.45% 9.25%
- ----------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund 17.20 % 9.29% 6.98%
- ----------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 9.46 % 5.18% 6.47%
- ----------------------------------------------------------------------------------------------------------------
Federated Intermediate Government Trust-Institutional Shares 6.99 % 4.59% 5.60%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 11.54 % 10.92% 10.17%(2)
- ----------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 10.13 % 15.66% 8.84%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 29.50 % 21.58% 17.27%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 25.07 % 16.27% 10.81%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 28.61 % 18.65% 16.68%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 30.03 % 17.77% 15.33%
- ----------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 31.42 % 17.58% 13.58%
- ----------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 14.82 % 14.00% 10.81%
- ----------------------------------------------------------------------------------------------------------------
The Growth Fund of America(R), Inc. 23.07 % 14.05% 12.69%
- ----------------------------------------------------------------------------------------------------------------
The Income Fund of America(R), Inc. 22.36 % 11.96% 9.66%
- ----------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 20.64 % 13.45% 11.64%
- ----------------------------------------------------------------------------------------------------------------
Janus Fund 22.71 % 14.06% 13.42%
- ----------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 29.44 % 15.24% 12.86%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents total return for the nine years, two months from inception
(October, 1986).
(2) Represents total return for the seven years from inception (December,
1988).
(Continued on next page)
7
48 of 134
<PAGE> 49
DC VARIABLE ACCOUNT
SERIES PERFORMANCE SUMMARY - CONTINUED
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
SERIES OPTIONS TO 12/31/95 TO 12/31/95 TO 12/31/95
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MAS Funds Fixed Income Portfolio 12.41 % 8.22% 7.87%
- -----------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 21.63 % 13.96% 10.95%
- -----------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 27.72 % 11.77% 8.88%
- -----------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 10.54 % 16.34% 6.74%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R)Bond Fund 17.48 % 6.83% 6.44%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund 23.26 % 10.54% 11.21%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund 21.99 % 13.31% 10.54%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund (0.99)% 0.93% 3.13%
- -----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 25.37 % 16.75% 12.62%
- -----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Manhattan Fund, Inc. 24.27 % 13.76% 11.79%
- -----------------------------------------------------------------------------------------------------------------
New York Venture Fund, Inc. 33.74 % 17.92% 14.98%
- -----------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 30.75 % 14.10% 11.63%
- -----------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 33.33 % 19.86% 16.17%
- -----------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 30.55 % 13.52% 12.21%
- -----------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 21.76 % 12.54% 10.73%
- -----------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 25.66 % 23.21% 18.69%(3)
- -----------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 4.84 % 8.74% 12.97%
- -----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 4.61 % 9.04% 13.30%
- -----------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund, Inc. 11.04 % 14.53% 9.99%
- -----------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 13.71 % 12.13% 12.11%
- -----------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 30.88 % 22.59% 17.64%
- -----------------------------------------------------------------------------------------------------------------
Twentieth Century Select Investors 16.01 % 7.54% 10.23%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(3) Represents total return for the six years from inception (December, 1989).
8
49 of 134
<PAGE> 50
DC VARIABLE ACCOUNT
SERIES PERFORMANCE SUMMARY
NON-STANDARDIZED TOTAL RETURN
(The total return figures shown below do not reflect the deduction of the
Contract Maintenance Charges or any applicable Contingent Deferred Sales
Charges)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
YEAR ENDED 3 YEARS 5 YEARS 10 YEARS
SERIES OPTIONS 12/31/95 TO 12/31/95 TO 12/31/95 TO 12/31/95
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Constellation Fund - Institutional Class 34.88% 16.59% 25.00% 19.48%
- ---------------------------------------------------------------------------------------------------------------------
AIM Weingarten Fund - Institutional Class 34.15% 10.33% 13.80% 14.85%
- ---------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), Inc. 17.13% 7.60% 10.50% 8.79%
- ---------------------------------------------------------------------------------------------------------------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 31.81% 14.00% 14.01% 11.41%
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management 5.00% 3.42% 3.66% 5.23%(1)
- ---------------------------------------------------------------------------------------------------------------------
The Dreyfus Third Century Fund, Inc. 34.53% 8.74% 12.18% 10.52%
- ---------------------------------------------------------------------------------------------------------------------
The Evergreen Total Return Fund 22.70% 8.36% 11.06% 8.35%
- ---------------------------------------------------------------------------------------------------------------------
Federated GNMA Trust-Institutional Shares 14.96% 5.42% 7.15% 7.83%
- ---------------------------------------------------------------------------------------------------------------------
Federated Intermediate Government Trust-Institutional Shares 12.49% 5.05% 6.58% 7.01%
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 17.04% 9.76% 12.59% 11.60%(2)
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 15.63% 10.57% 17.13% 10.15%
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 35.00% 16.73% 22.89% 18.27%
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 30.57% 15.93% 17.80% 12.03%
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income Portfolio 34.11% 17.17% 20.09% 17.58%
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 35.53% 17.63% 19.24% 16.32%
- ---------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 36.92% 12.38% 19.02% 14.68%
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 20.32% 13.47% 15.59% 11.99%
- ---------------------------------------------------------------------------------------------------------------------
The Growth Fund of America(R), Inc. 28.57% 13.05% 15.63% 13.77%
- ---------------------------------------------------------------------------------------------------------------------
The Income Fund of America(R), Inc. 27.86% 11.72% 13.65% 10.90%
- ---------------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. 26.14% 11.57% 15.01% 12.80%
- ---------------------------------------------------------------------------------------------------------------------
Janus Fund 28.21% 11.32% 15.62% 14.48%
- ---------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 34.94% 8.52% 16.70% 14.00%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents total return for the nine years, two months from inception
(October, 1986).
(2) Represents total return for the seven years from inception (December,
1988).
(Continued on next page)
9
50 of 134
<PAGE> 51
DC VARIABLE ACCOUNT
SERIES PERFORMANCE SUMMARY - CONTINUED
NON-STANDARDIZED TOTAL RETURN
(The total return figures shown below do not reflect the deduction of the
Contract Maintenance Charges or any applicable Contingent Deferred Sales
Charges)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED 3 YEARS 5 YEARS 10 YEARS
SERIES OPTIONS 12/31/95 TO 12/31/95 TO 12/31/95 TO 12/31/95
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MAS Funds Fixed Income Portfolio 17.91% 7.63% 10.02% 9.15%
- -----------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 27.13% 10.02% 15.49% 12.12%
- -----------------------------------------------------------------------------------------------------------------
MFS(R) Growth Opportunities Fund - Class A 33.22% 13.33% 13.49% 10.21%
- -----------------------------------------------------------------------------------------------------------------
MFS(R) High Income Fund - Class A 16.04% 9.80% 17.75% 8.21%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund 22.98% 7.08% 8.74% 7.84%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund 28.76% 10.71% 12.28% 12.33%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 27.49% 12.22% 14.93% 11.71%
- -----------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund 4.51% 2.95% 3.14% 4.69%
- -----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Guardian Fund 30.87% 13.91% 18.25% 13.77%
- -----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Manhattan Fund, Inc. 29.77% 10.53% 15.35% 12.91%
- -----------------------------------------------------------------------------------------------------------------
New York Venture Fund, Inc. 39.24% 16.17% 19.40% 16.01%
- -----------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 36.25% 15.12% 15.73% 12.80%
- -----------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 38.83% 17.45% 21.26% 17.15%
- -----------------------------------------------------------------------------------------------------------------
SEI Index Funds-S&P 500 Index Portfolio 36.05% 13.98% 15.18% 13.32%
- -----------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 27.26% 8.53% 14.14% 11.89%
- -----------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. 31.16% 17.05% 24.46% 20.00%(3)
- -----------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 10.34% 14.61% 10.56% 13.85%
- -----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class I 10.11% 14.04% 10.85% 14.21%
- -----------------------------------------------------------------------------------------------------------------
Templeton Smaller Companies Growth Fund, Inc. 16.54% 12.89% 16.04% 11.18%
- -----------------------------------------------------------------------------------------------------------------
Twentieth Century Growth Investors 19.21% 6.14% 13.67% 13.15%
- -----------------------------------------------------------------------------------------------------------------
Twentieth Century Ultra Investors 36.38% 16.25% 23.82% 18.63%
- -----------------------------------------------------------------------------------------------------------------
Twentieth Century Select Investors 21.51% 7.93% 9.37% 11.33%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(3) Represents total return for the six years from inception (December, 1989).
10
51 of 134
<PAGE> 52
DC VARIABLE ACCOUNT
SERIES PERFORMANCE SUMMARY - CONTINUED
NON-STANDARDIZED TOTAL RETURN
(The total return figures shown below do not reflect the deduction of the
Contract Maintenance Charges or any applicable Contingent Deferred Sales
Charges)
THE FOLLOWING FUNDS ARE IN CONJUNCTION WITH CONTRACTS ISSUED PURSUANT TO SECTION
403(b) OF THE CODE ("TAX-SHELTERED ANNUITY CONTRACTS"):1
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEAR ENDED 3 YEARS 5 YEARS 10 YEARS
SERIES OPTIONS 12/31/95 TO 12/31/95 TO 12/31/95 TO 12/31/95
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DREYFUS SOCIALLY RESPONSIBLE 33.29% NA NA NA
- ----------------------------------------------------------------------------------------------------------------
DREYFUS STOCK INDEX FUND 35.49% 13.60% 14.88% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY ASSET MANAGER PORTFOLIO 15.85% 8.92% 11.70% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY OVERSEAS PORTFOLIO 8.64% 14.17% 7.11% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY INCOME PORTFOLIO 33.82% 18.45% 20.18% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY VIP GROWTH PORTFOLIO 34.09% 16.23% 19.64% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY VIP HIGH INCOME PORTFOLIO 19.47% 11.62% 17.83% 10.42%
- ----------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST GROWTH 30.49% 9.11% 12.61% 10.95%
- ----------------------------------------------------------------------------------------------------------------
PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN LIMITED MATURITY BOND 9.89% 4.70% 5.69% 6.59%
- ----------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN PARTNERS PORTFOLIO 35.18% NA NA NA
- ----------------------------------------------------------------------------------------------------------------
NSAT CAPITAL APPRECIATION FUND 27.82% 10.85% NA NA
- ----------------------------------------------------------------------------------------------------------------
NSAT GOVERNMENT BOND FUND 17.63% 6.94% 8.60% 8.54%
- ----------------------------------------------------------------------------------------------------------------
NSAT MONEY MARKET FUND 4.65% 3.10% 3.31% 4.87%
- ----------------------------------------------------------------------------------------------------------------
NSAT TOTAL RETURN FUND 27.88% 12.04% 15.64% 11.39%
- ----------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY BALANCED PORTFOLIO 19.98% 8.45% NA NA
- ----------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY GROWTH 29.86% 11.58% 13.79% NA
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
11
52 of 134
<PAGE> 53
DC VARIABLE ACCOUNT
SERIES PERFORMANCE SUMMARY - CONTINUED
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
THE FOLLOWING FUNDS ARE IN CONJUNCTION WITH CONTRACTS ISSUED PURSUANT TO SECTION
403(b) OF THE CODE ("TAX-SHELTERED ANNUITY CONTRACTS").
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
SERIES OPTIONS TO 12/31/95 TO 12/31/95 TO 12/31/95
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DREYFUS SOCIALLY RESPONSIBLE 27.79 % NA NA
- ----------------------------------------------------------------------------------------------------------------
DREYFUS STOCK INDEX FUND 29.99 % 13.21% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY ASSET MANAGER PORTFOLIO 10.35 % 9.98% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY OVERSEAS PORTFOLIO 3.14 % 5.06% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY INCOME PORTFOLIO 28.32 % 18.71% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY VIP GROWTH PORTFOLIO 28.59 % 18.20% NA
- ----------------------------------------------------------------------------------------------------------------
FIDELITY VIP HIGH INCOME PORTFOLIO 13.97 % 16.38% 9.11%
- ----------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST GROWTH PORTFOLIO 24.99 % 10.90% 9.74%
- ----------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN LIMITED MATURITY BOND 4.39 % 3.64% 5.18%
- ----------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN PARTNERS PORTFOLIO 29.68 % NA NA
- ----------------------------------------------------------------------------------------------------------------
NSAT CAPITAL APPRECIATION FUND 22.32 % NA NA
- ----------------------------------------------------------------------------------------------------------------
NSAT GOVERNMENT BOND FUND 12.13 % 6.70% 7.22%
- ----------------------------------------------------------------------------------------------------------------
NSAT MONEY MARKET FUND (0.85)% 1.10% 3.33%
- ----------------------------------------------------------------------------------------------------------------
NSAT TOTAL RETURN FUND 22.38 % 14.06% 10.19%
- ----------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY BALANCED PORTFOLIO 14.48 % NA NA
- ----------------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY GROWTH 24.36 % 12.14% NA
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUITY PAYMENTS
See "Distribution of Participant Accounts (Retirement Period)" in the
prospectus.
12
53 of 134
<PAGE> 54
Independent Auditors' Report
The Board of Directors and Contract Owners of
Nationwide DC Variable Account
Nationwide Life Insurance Company:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide DC Variable Account as of December 31,
1995, and the related statements of operations and changes in contract owners'
equity and schedules of changes in unit value for each of the years in the three
year period then ended. These financial statements and schedules of changes in
unit value are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules of changes in unit value based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedules of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and the
transfer agents of the underlying mutual funds. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedules of changes in
unit value referred to above present fairly, in all material respects, the
financial position of Nationwide DC Variable Account as of December 31, 1995,
and the results of its operations and its changes in contract owners' equity and
the schedules of changes in unit value for each of the years in the three year
period then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1996
<PAGE> 55
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Nationwide Life Insurance Company:
We have audited the consolidated financial statements of Nationwide Life
Insurance Company (a wholly owned subsidiary of Nationwide Corporation) and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Participating insurance and the related surplus are discussed in note 12. The
Company and its counsel are of the opinion that the ultimate ownership of the
participating surplus in excess of the contemplated equitable policyholder
dividends belongs to the shareholder. The accompanying consolidated financial
statements are presented on such basis.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
In 1994, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
In 1993, the Company adopted the provisions of SFAS No. 109, Accounting for
Income Taxes and SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions.
KPMG Peat Marwick LLP
Columbus, Ohio
February 26, 1996
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Balance Sheets
December 31, 1995 and 1994
(000's omitted)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ----------------- ----------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $13,438,630 in 1995; $8,318,865 in 1994) $ 14,167,377 8,045,906
Equity securities (cost $27,362 in 1995; $18,372 in 1994) 33,718 24,713
Fixed maturities held-to-maturity, at amortized cost (fair value $3,602,310 in 1994) - 3,688,787
Mortgage loans on real estate 4,786,599 4,222,284
Real estate 239,089 252,681
Policy loans 370,908 340,491
Other long-term investments 67,280 63,914
Short-term investments (note 13) 45,732 131,643
----------- -----------
19,710,703 16,770,419
----------- -----------
Cash 10,485 7,436
Accrued investment income 239,881 220,540
Deferred policy acquisition costs 1,094,195 1,064,159
Deferred Federal income tax -- 36,515
Other assets 795,169 790,603
Assets held in Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
$40,614,111 31,112,133
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Future policy benefits and claims (notes 6 and 8) 18,200,128 16,321,461
Policyholders' dividend accumulations 353,554 338,058
Other policyholder funds 71,155 72,770
Accrued Federal income tax (note 7):
Current 34,064 13,126
Deferred 238,877 -
----------- -----------
272,941 13,126
----------- -----------
Other liabilities 284,143 235,778
Liabilities related to Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
37,945,599 29,203,654
----------- -----------
Shareholder's equity (notes 3, 4, 5, 7, 12 and 13):
Capital shares, $1 par value. Authorized 5,000 shares, issued and
outstanding 3,815 shares 3,815 3,815
Additional paid-in capital 673,782 622,753
Retained earnings 1,606,607 1,401,579
Unrealized gains (losses) on securities available-for-sale, net 384,308 (119,668)
----------- -----------
2,668,512 1,908,479
----------- -----------
Commitments and contingencies (notes 9 and 15)
$40,614,111 31,112,133
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues (note 16):
Traditional life insurance premiums $ 274,957 209,538 215,715
Accident and health insurance premiums 509,658 324,524 312,655
Universal life and investment product policy charges 307,676 239,021 188,057
Net investment income (note 5) 1,482,980 1,289,501 1,204,426
Realized gains (losses) on investments (notes 5 and 13) 836 (16,384) 113,673
---------- ---------- ----------
2,576,107 2,046,200 2,034,526
---------- ---------- ----------
Benefits and expenses:
Benefits and claims 1,656,287 1,279,763 1,236,906
Provision for policyholders' dividends on participating policies (note 12) 48,074 46,061 53,189
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Other operating costs and expenses 458,970 352,402 329,396
---------- ---------- ----------
2,256,375 1,772,970 1,721,625
---------- ---------- ----------
Income before Federal income tax expense and cumulative effect of
changes in accounting principles 319,732 273,230 312,901
---------- ---------- ----------
Federal income tax expense (note 7):
Current 103,464 79,847 75,124
Deferred 3,790 9,657 31,634
---------- ---------- ----------
107,254 89,504 106,758
---------- ---------- ----------
Income before cumulative effect of changes in accounting principles 212,478 183,726 206,143
Cumulative effect of changes in accounting principles, net (note 3) -- -- 5,365
---------- ---------- ----------
Net income $ 212,478 183,726 211,508
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Additional on securities Total
Capital paid-in Retained available-for- shareholder's
shares capital earnings sale, net equity
----------- ----------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
1993:
Balance, beginning of year $ 3,815 311,753 1,024,150 90,524 1,430,242
Capital contributions -- 111,000 -- -- 111,000
Dividends paid to shareholder -- -- (17,805) -- (17,805)
Net income -- -- 211,508 -- 211,508
Unrealized losses on equity securities, net -- -- -- (83,777) (83,777)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 422,753 1,217,853 6,747 1,651,168
========== ========== ========= ========== ==========
1994:
Balance, beginning of year 3,815 422,753 1,217,853 6,747 1,651,168
Capital contribution -- 200,000 -- -- 200,000
Net income -- -- 183,726 -- 183,726
Adjustment for change in accounting for
certain investments in debt and equity
securities, net (note 3) -- -- -- 216,915 216,915
Unrealized losses on securities available-
for-sale, net -- -- -- (343,330) (343,330)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 622,753 1,401,579 (119,668) 1,908,479
========== ========== ========== ========== ==========
1995:
Balance, beginning of year 3,815 622,753 1,401,579 (119,668) 1,908,479
Capital contribution (note 13) -- 51,029 -- (4,111) 46,918
Dividends paid to shareholder -- -- (7,450) -- (7,450)
Net income -- -- 212,478 -- 212,478
Unrealized gains on securities available-
for-sale, net -- -- -- 508,087 508,087
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 673,782 1,606,607 384,308 2,668,512
========== ========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
-------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 212,478 183,726 211,508
Adjustments to reconcile net income to net cash provided by operating
activities:
Capitalization of deferred policy acquisition costs (349,456) (264,434) (191,994)
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Amortization and depreciation 10,319 6,207 11,156
Realized losses (gains) on invested assets, net 717 15,949 (113,648)
Deferred Federal income tax expense (benefit) 4,023 (2,166) (6,006)
Increase in accrued investment income (19,341) (29,654) (4,218)
Increase in other assets (3,227) (112,566) (549,277)
Increase in policy liabilities 198,200 1,038,641 509,370
Increase in policyholders' dividend accumulations 15,496 15,372 17,316
Increase in accrued Federal income tax payable 20,938 832 16,838
Increase in other liabilities 48,365 17,826 26,958
Other, net (20,556) (19,303) (11,745)
----------- ----------- ------------
Net cash provided by operating activities 211,000 945,174 18,392
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 706,442 579,067 --
Proceeds from sale of securities available-for-sale 131,420 247,876 247,502
Proceeds from maturity of fixed maturities held-to-maturity 633,173 516,003 1,192,093
Proceeds from sale of fixed maturities -- -- 33,959
Proceeds from repayments of mortgage loans on real estate 215,134 220,744 146,047
Proceeds from sale of real estate 48,477 46,713 23,587
Proceeds from repayments of policy loans and sale of other invested assets 79,620 134,998 59,643
Cost of securities available-for-sale acquired (2,232,047) (2,569,672) (12,550)
Cost of fixed maturities held-to-maturity acquired (669,449) (675,835) (2,016,831)
Cost of mortgage loans on real estate acquired (821,078) (627,025) (475,336)
Cost of real estate acquired (10,970) (15,962) (8,827)
Policy loans issued and other invested assets acquired (92,904) (118,012) (76,491)
----------- ----------- ------------
Net cash used in investing activities (2,012,182) (2,261,105) (887,204)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from capital contributions 46,918 200,000 111,000
Dividends paid to shareholder (7,450) -- (17,805)
Increase in universal life and investment product account balances 3,202,135 3,640,958 2,249,740
Decrease in universal life and investment product account balances (1,523,283) (2,449,580) (1,458,504)
----------- ----------- -----------
Net cash provided by financing activities 1,718,320 1,391,378 884,431
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (82,862) 75,447 15,619
Cash and cash equivalents, beginning of year 139,079 63,632 48,013
----------- ----------- -----------
Cash and cash equivalents, end of year $ 56,217 139,079 63,632
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(000's omitted)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Nationwide Life Insurance Company (NLIC) is a wholly owned subsidiary of
Nationwide Corporation (Corp.). Wholly-owned subsidiaries of NLIC include
Nationwide Life and Annuity Insurance Company (NLAIC) (formerly known as
Financial Horizons Life Insurance Company), West Coast Life Insurance
Company (WCLIC), Employers Life Insurance Company of Wausau and
subsidiaries (ELICW), National Casualty Company (NCC) and Nationwide
Financial Services, Inc. (NFS). NLIC and its subsidiaries are
collectively referred to as "the Company."
NLIC, NLAIC, WCLIC and ELICW are life and accident and health insurers
and NCC is a property and casualty insurer. The Company is licensed in
all 50 states, the District of Columbia, the Virgin Islands and Puerto
Rico. The Company offers a full range of life insurance, health insurance
and annuity products through exclusive agents, brokers and other
distribution channels and is subject to competition from other insurers
throughout the United States. The Company is subject to regulation by the
Insurance Departments of states in which it is licensed, and undergoes
periodic examinations by those departments.
The following is a description of the most significant risks facing
life and health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce insurer
profits, new legal theories or insurance company insolvencies through
guaranty fund assessments may create costs for the insurer beyond
those currently recorded in the consolidated financial statements. The
Company mitigates this risk by offering a wide range of products and
by operating throughout the United States, thus reducing its exposure
to any single product or jurisdiction, and also by employing
underwriting practices which identify and minimize the adverse impact
of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by the
Company will default or that other parties, including reinsurers,
which owe the Company money, will not pay. The Company minimizes this
risk by adhering to a conservative investment strategy, by maintaining
sound reinsurance and credit and collection policies and by
providing for any amounts deemed uncollectible.
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This change
in rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent
that liabilities come due more quickly than assets mature, an insurer
would have to borrow funds or sell assets prior to maturity and
potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities. See note 4.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities as of the
date of the consolidated financial statements and the reported amounts of
revenues and expenses for the reporting period. Actual results could differ
significantly from those estimates.
The most significant estimates include those used in determining deferred
policy acquisition costs, valuation allowances for mortgage loans on real
estate and real estate investments and the liability for future policy benefits
and claims. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
(a) CONSOLIDATION POLICY
The December 31, 1995 consolidated financial statements include the
accounts of NLIC and its wholly owned subsidiaries NLAIC, WCLIC, ELICW, NCC
and NFS. The December 31, 1994 and 1993 consolidated financial statements
include the accounts of NLIC, NLAIC, WCLIC, NCC and NFS. The December 31,
1994 consolidated balance sheet also includes the accounts of ELICW, which
was acquired by NLIC effective December 31, 1994. See Note 13. All
significant intercompany balances and transactions have been eliminated.
(b) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities and
equity securities as either held-to-maturity, available-for-sale or
trading. Fixed maturity securities are classified as held-to-maturity when
the Company has the positive intent and ability to hold the securities to
maturity and are stated at amortized cost. Fixed maturity securities not
classified as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the unrealized gains
and losses, net of adjustments to deferred policy acquisition costs and
deferred Federal income tax, reported as a separate component of
shareholder's equity. The adjustment to deferred policy acquisition costs
represents the change in amortization of deferred policy acquisition costs
that would have been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed maturity
securities classified as held-to-maturity or trading as of
December 31, 1995.
Mortgage loans on real estate are carried at the unpaid principal balance
less valuation allowances. The Company provides valuation allowances for
impairments of mortgage loans on real estate based on a review by portfolio
managers. The measurement of impaired loans is based on the present value
of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the fair value of the collateral, if
the loan is collateral dependent. Loans in foreclosure and loans considered
to be impaired are placed on non-accrual status. Interest received on
non-accrual status mortgage loans on real estate are included in interest
income in the period received.
Real estate is carried at cost less accumulated depreciation and valuation
allowances. Other long-term investments are carried on the equity basis,
adjusted for valuation allowances.
Realized gains and losses on the sale of investments are determined on the
basis of specific security identification. Estimates for valuation
allowances and other than temporary declines are included in realized gains
and losses on investments.
In March, 1995, the Financial Accounting Standards Board (FASB) issued
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121 - ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
(SFAS 121). SFAS 121 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
The statement is effective for fiscal years beginning after December 15,
1995 and earlier application is permitted. Previously issued consolidated
financial statements shall not be restated. The Company will adopt SFAS 121
in 1996 and the impact on the consolidated financial statements is not
expected to be material.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(c) REVENUES AND BENEFITS
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums and
benefits and consist primarily of whole life, limited-payment life, term
life and certain annuities with life contingencies. Premiums for
traditional life insurance products are recognized as revenue when due.
Benefits and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This association
is accomplished by the provision for future policy benefits and the
deferral and amortization of policy acquisition costs.
UNIVERSAL LIFE AND INVESTMENT PRODUCTS: Universal life products include
universal life, variable universal life and other interest-sensitive life
insurance policies. Investment products consist primarily of individual and
group deferred annuities, annuities without life contingencies and
guaranteed investment contracts. Revenues for universal life and investment
products consist of asset fees, cost of insurance, policy administration
and surrender charges that have been earned and assessed against policy
account balances during the period. Policy benefits and claims that are
charged to expense include benefits and claims incurred in the period in
excess of related policy account balances and interest credited to policy
account balances.
ACCIDENT AND HEALTH INSURANCE: Accident and health insurance premiums
are recognized as revenue over the terms of the policies. Policy claims are
charged to expense in the period that the claims are incurred.
(d) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For traditional life and
individual health insurance products, these deferred policy acquisition
costs are predominantly being amortized with interest over the premium
paying period of the related policies in proportion to the ratio of actual
annual premium revenue to the anticipated total premium revenue. Such
anticipated premium revenue was estimated using the same assumptions as
were used for computing liabilities for future policy benefits. For
universal life and investment products, deferred policy acquisition costs
are being amortized with interest over the lives of the policies in
relation to the present value of estimated future gross profits from
projected interest margins, asset fees, cost of insurance, policy
administration and surrender charges. For years in which gross profits are
negative, deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs are
adjusted to reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale as described in note 2(b).
(e) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the consolidated statements of income and cash
flows except for the fees the Company receives for administrative services
and risks assumed.
(f) FUTURE POLICY BENEFITS
Future policy benefits for traditional life and individual health
insurance policies have been calculated using a net level premium method
based on estimates of mortality, morbidity, investment yields and
withdrawals which were used or which were being experienced at the time the
policies were issued, rather than the assumptions prescribed by state
regulatory authorities. See note 6.
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been calculated
based on participants' contributions plus interest credited less applicable
contract charges.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Future policy benefits and claims for collectively renewable long-term
disability policies (primarily discounted at 5.2%) and group long-term
disability policies (primarily discounted at 5.5%) are the present value of
amounts not yet due on reported claims and an estimate of amounts to be
paid on incurred but unreported claims. The impact of reserve discounting
is not material. Future policy benefits and claims on other
group health insurance policies are not discounted.
(g) PARTICIPATING BUSINESS
Participating business represents approximately 45% (45% in 1994 and
48% in 1993) of the Company's ordinary life insurance in force, 72% (72% in
1994 and 1993) of the number of policies in force, and 39% (41% in 1994 and
45% in 1993) of life insurance premiums. The provision for policyholder
dividends is based on current dividend scales. Future dividends are
provided for ratably in future policy benefits based on dividend scales in
effect at the time the policies were issued. Dividend scales are approved
by the Board of Directors.
Income attributable to participating policies in excess of policyholder
dividends is accounted for as belonging to the shareholder. See note 12.
(h) FEDERAL INCOME TAX
NLIC, NLAIC, WCLIC and NCC file a consolidated Federal income tax
return with Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Corp. Through 1994, ELICW filed a consolidated Federal
income tax return with Employers Insurance of Wausau A Mutual Company.
Beginning in 1995, ELICW files a separate Federal income tax return.
In 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES, which required a change
from the deferred method of accounting for income tax of APB Opinion 11 to
the asset and liability method of accounting for income tax. Under the
asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under this method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to
reduce the deferred tax assets to the amounts expected to be realized.
The Company has reported the cumulative effect of the change in method
of accounting for income tax in the 1993 consolidated statement of income.
See note 3.
(i) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense
accounts. Assets and liabilities related to reinsurance ceded are reported
on a gross basis.
(j) CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all short-term investments with original maturities of three
months or less to be cash equivalents.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(k) RECLASSIFICATION
Certain items in the 1994 and 1993 consolidated financial
statements have been reclassified to conform to the 1995
presentation.
(3) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, the Company changed its method of
accounting for certain investments in debt and equity securities in
connection with the issuance of STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 115 - ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. As of January 1, 1994, the Company classified fixed
maturity securities with amortized cost and fair value of $6,593,844
and $7,024,736, respectively, as available-for-sale and recorded the
securities at fair value. Previously, these securities were recorded
at amortized cost. The effect as of January 1, 1994 has been recorded
as a direct credit to shareholder's equity as follows:
<TABLE>
<CAPTION>
<S> <C>
Excess of fair value over amortized cost of fixed maturity
securities available-for-sale $ 430,892
Adjustment to deferred policy acquisition costs (97,177)
Deferred Federal income tax (116,800)
---------
$ 216,915
=========
During 1993, the Company adopted accounting principles in connection
with the issuance of two accounting standards by the FASB. The effect
as of January 1, 1993, the date of adoption, has been recognized in
the 1993 consolidated statement of income as the cumulative effect of
changes in accounting principles, as follows:
Asset/liability method of recognizing income tax (note 2(h)) $ 26,344
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $11,296) (note 11) (20,979)
--------
$ 5,365
========
</TABLE>
(4) BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance
with GAAP. Annual Statements for NLIC and NLAIC, WCLIC, ELICW and NCC,
filed with the Department of Insurance of the State of Ohio (the
Department), California Department of Insurance, Wisconsin Insurance
Department and Michigan Bureau of Insurance, respectively, are prepared
on the basis of accounting practices prescribed or permitted by such
regulatory authorities. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
The statutory capital shares and surplus of NLIC as reported to
regulatory authorities as of December 31, 1995, 1994 and 1993 was
$1,363,031, $1,262,861 and $992,631, respectively. The statutory net
income of NLIC as reported to regulatory authorities for the years
ended December 31, 1995, 1994 and 1993 was $86,529, $76,532 and
$185,943, respectively.
<PAGE> 11
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(5) INVESTMENTS
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 772,589 674,346 --
Equity securities 1,436 550 7,230
Fixed maturities held-to-maturity 232,692 193,009 800,255
Mortgage loans on real estate 410,965 376,783 364,810
Real estate 39,222 40,280 39,684
Short-term investments 12,249 6,990 5,080
Other 61,701 42,831 33,832
---------- ---------- ----------
Total investment income 1,530,854 1,334,789 1,250,891
Less investment expenses 47,874 45,288 46,465
---------- ---------- ----------
Net investment income $1,482,980 1,289,501 1,204,426
========== ========== ==========
</TABLE>
An analysis of realized gains (losses) on investments, net of
valuation allowances, by investment type follows for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- --------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 6,792 (7,120) --
Equity securities 3,435 1,427 129,728
Fixed maturities -- -- 20,225
Mortgage loans on real estate (7,312) (20,462) (28,241)
Real estate and other (2,079) 9,771 (8,039)
-------- -------- --------
$ 836 (16,384) 113,673
======== ======== ========
</TABLE>
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1995 1994
--------------- -------------
<S> <C> <C>
Gross unrealized gains (losses) $ 735,103 (266,618)
Adjustment to deferred policy acquisition costs (143,851) 82,525
Deferred Federal income tax (206,944) 64,425
--------- ---------
$ 384,308 (119,668)
========= =========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturities held-to-maturity
follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 1,001,706 (703,851) --
Equity securities 15 (1,990) (128,837)
Fixed maturities held-to-maturity 86,477 (421,427) 223,392
----------- ----------- -----------
$ 1,088,198 (1,127,268) 94,555
=========== =========== ===========
</TABLE>
<PAGE> 12
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of securities available-for-sale
were as follows as of December 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
-------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 438,109 36,714 (53) 474,770
Obligations of states and political subdivisions 9,742 1,252 (1) 10,993
Debt securities issued by foreign governments 162,442 9,641 (66) 172,017
Corporate securities 8,902,494 524,796 (30,561) 9,396,729
Mortgage-backed securities 3,925,843 196,645 (9,620) 4,112,868
--------- ----------- ----------- -----------
Total fixed maturities 13,438,630 769,048 (40,301) 14,167,377
Equity securities 27,362 6,441 (85) 33,718
---------- ----------- ----------- -----------
$13,465,992 775,489 (40,386) 14,201,095
=========== =========== ============ ===========
</TABLE>
The amortized cost and estimated fair value of securities available-for-sale
and fixed maturities held-to-maturity were as follows as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 393,156 1,794 (18,941) 376,009
Obligations of states and political subdivisions 2,202 55 (21) 2,236
Debt securities issued by foreign governments 177,910 872 (9,205) 169,577
Corporate securities 4,201,738 50,405 (128,698) 4,123,445
Mortgage-backed securities 3,543,859 18,125 (187,345) 3,374,639
---------- ---------- ---------- ---------
Total fixed maturities 8,318,865 71,251 (344,210) 8,045,906
Equity securities 18,372 6,637 (296) 24,713
---------- ---------- ---------- ---------
$8,337,237 77,888 (344,506) 8,070,619
========== ========= ========== =========
FIXED MATURITY SECURITIES HELD-TO-MATURITY
Obligations of states and political subdivisions $ 11,613 92 (255) 11,450
Debt securities issued by foreign governments 16,131 111 (39) 16,203
Corporate securities 3,661,043 34,180 (120,566) 3,574,657
---------- ---------- ---------- ---------
$3,688,787 34,383 (120,860) 3,602,310
========== ========== ========== =========
</TABLE>
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale as of December 31, 1995, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
----------- ------------
<S> <C> <C>
FIXED MATURITY SECURITIES AVAILABLE-FOR-SALE
- --------------------------------------------
Due in one year or less $ 641,490 647,639
Due after one year through five years 5,365,703 5,623,126
Due after five years through ten years 2,477,457 2,609,262
Due after ten years 1,028,137 1,174,482
----------- -----------
9,512,787 10,054,509
Mortgage-backed securities 3,925,843 4,112,868
----------- -----------
$13,438,630 14,167,377
=========== ===========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1995 and 1994
were $131,420 and $247,876, respectively, while proceeds from sales of
investments in fixed maturity securities during 1993 were $33,959. Gross gains
of $7,197 ($3,406 in 1994 and $2,413 in 1993) and gross losses of $2,309
($21,866 in 1994 and $39 in 1993) were realized on those sales.
During 1995, the Company transferred fixed maturity securities classified as
held-to-maturity with amortized cost of $27,929 to available-for-sale
securities due to evidence of a significant deterioration in the issuer's
creditworthiness. The transfer of those fixed maturity securities resulted in
a gross unrealized loss of $4,285.
As permitted by the FASB's Special Report, A GUIDE TO IMPLEMENTATION OF
STATEMENT 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, issued in November, 1995, the Company transferred all of its fixed
maturity securities previously classified as held-to-maturity to
available-for-sale. As of December 14, 1995, the date of transfer, the fixed
maturity securities had amortized cost of $3,705,644, resulting in a gross
unrealized gain of $171,531.
Investments that were non-income producing for the twelve month period
preceding December 31, 1995 amounted to $28,958 ($11,513 for 1994) and
consisted of $8,228 (none in 1994) in fixed maturity securities, $14,740
($11,111 in 1994) in real estate and $5,990 ($402 in 1994) in other long-term
investments.
Real estate is presented at cost less accumulated depreciation of $30,931 in
1995 ($29,275 in 1994) and valuation allowances of $26,250 in 1995 ($27,330 in
1994).
Other long-term investments are presented net of valuation allowances of $457
as of December 31, 1995. There were no such valuation allowances as of December
31, 1994.
As of December 31, 1995, the recorded investment of mortgage loans on real
estate considered to be impaired (under STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN as amended
by STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 118, ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN - INCOME RECOGNITION AND DISCLOSURE) was $44,995,
which includes $23,975 of impaired mortgage loans on real estate for which the
related valuation allowance was $5,276 and $21,020 of impaired mortgage loans
on real estate for which there was no valuation allowance. During 1995, the
average recorded investment in impaired mortgage loans on real estate was
approximately $22,621 and interest income recognized on those loans was $416,
which is equal to interest income recognized using a cash-basis method of
income recognition.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the year ended December 31, 1995:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Allowance, beginning year $ 47,892
Additions charged to operations 7,653
Direct write-downs charged against the allowance (4,850)
--------
Allowance, end of year $ 50,695
========
</TABLE>
Foresclosures of mortgage loans on real estate were $37,187 in 1994 and
mortgage loans on real estate in process of foreclosure or in-substance
foreclosed as of December 31, 1994 totaled $19,878, which approximated fair
value.
Fixed maturity securities with an amortized cost of $13,982 and $11,137 as
of December 31, 1995 and 1994, respectively, were on deposit with various
regulatory agencies as required by law.
(6) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for investment contracts represents
approximately 82% and 81% of the total liability for future policy benefits
as of December 31, 1995 and 1994, respectively. The average interest rate
credited on investment product policies was approximately 6.5%, 6.5% and
7.0% for the years ended December 31, 1995, 1994 and 1993, respectively.
The liability for future policy benefits for traditional life insurance and
individual health insurance policies has been established based upon the
following assumptions:
INTEREST RATES: Interest rates vary as follows:
<TABLE>
<CAPTION>
Health
Year of issue Life Insurance insurance
-------------- ------------------------------------------------------------ ---------------
<S> <C> <C>
1995 7.6%, not graded - permanent contracts with loan provisions 4.5%
7.7%, not graded - all other contracts
1984-1994 6.0% to 10.5%, not graded 5.0% to 6.0%
1966-1983 6.0% to 8.1%, graded over 20 years to 4.0% to 6.6% 3.5% to 6.0%
1965 and prior generally lower than post 1965 issues 3.5% to 4.0%
</TABLE>
WITHDRAWALS: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience.
MORTALITY: Mortality and morbidity rates are based on published tables,
modified for the Company's actual experience.
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the liability for unpaid claims and claim adjustment expenses is
summarized for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 637,998 592,180 760,209
Less reinsurance recoverables 438,761 430,720 547,683
--------- --------- ---------
Net balance, beginning of year 199,237 161,460 212,526
--------- --------- ---------
Incurred related to:
Current year 425,907 273,299 309,721
Prior years (17,203) (26,156) (26,248)
--------- --------- ---------
Total incurred 408,704 247,143 283,473
--------- --------- ---------
Paid related to:
Current year 290,605 175,700 208,978
Prior years 111,353 73,889 125,561
--------- --------- ---------
Total paid 401,958 249,589 334,539
--------- --------- ---------
Unpaid claims of acquired companies 2,542 40,223 --
--------- --------- ---------
Net balance, end of year 208,525 199,237 161,460
Plus reinsurance recoverables 491,321 438,761 430,720
--------- --------- ---------
Balance, end of year $ 699,846 637,998 592,180
========= ========= =========
</TABLE>
Reinsurance recoverables include amounts from affiliates, as discussed in
note 13, of $477,912, $430,936, $430,278 and $534,983 as of December 31,
1995, 1994, 1993 and 1992, respectively.
The provision for claims and claim adjustment expenses for prior years
decreased in each of the three years ended December 31, 1995 due to
lower-than-anticipated costs to settle accident and health insurance claims.
(7) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 179,916 124,044
Fixed maturity securities available-for-sale -- 95,536
Liabilities in Separate Accounts 129,120 94,783
Mortgage loans on real estate and real estate 26,062 25,632
Other policyholder funds 7,752 7,137
Other assets and other liabilities 47,215 57,528
--------- ---------
Total gross deferred tax assets 390,065 404,660
--------- ---------
Deferred tax liabilities:
Deferred policy acquisition costs 312,616 317,224
Fixed maturity securities available-for-sale 266,184 --
Equity securities available-for-sale and other
long-term investments 3,431 3,620
Other 46,711 47,301
--------- ---------
Total gross deferred tax liabilities 628,942 368,145
--------- ---------
$(238,877) 36,515
========= =========
</TABLE>
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company has determined that valuation allowances are not necessary as
of December 31, 1995, 1994 and 1993 based on its analysis of future
deductible amounts. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion
of the total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery of
Federal income tax paid within the statutory carryback period. In
addition, for future deductible amounts for securities available-for-sale,
affiliates of the Company which are included in the same consolidated
Federal income tax return hold investments that could be sold for capital
gains that could offset capital losses realized by the Company should
securities available-for-sale be sold at a loss.
<TABLE>
Total Federal income tax expense for the years ended December 31, 1995,
1994 and 1993 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
--------------- ----- -------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 111,906 35.0 $ 95,631 35.0 $ 109,515 35.0
Tax exempt interest and dividends
received deduction (137) (0.1) (194) (0.1) (2,322) (0.7)
Current year increase in U.S. Federal
income tax rate -- -- -- -- 1,704 0.5
Other, net (4,515) (1.4) (5,933) (2.1) (2,139) (0.7)
--------- ---- --------- ---- --------- ----
Total (effective rate of each year) $ 107,254 33.5 $ 89,504 32.8 $ 106,758 34.1
========= ==== ========= ==== ========= ====
</TABLE>
Total Federal income tax paid was $75,309, $87,576 and $58,286 during the
years ended December 31, 1995, 1994 and 1993, respectively.
Prior to 1984, the Life Insurance Company Income Tax Act of 1959 as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the deferral
from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was accumulated in
the Policyholders' Surplus Account (PSA). Management considers the
likelihood of distributions from the PSA to be remote; therefore, no
Federal income tax has been provided for such distributions in the
consolidated financial statements. The DRA eliminated any additional
deferrals to the PSA. Any distributions from the PSA, however, will
continue to be taxable at the then current tax rate. The balance of the
PSA was approximately $35,344 as of December 31, 1995.
(8) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107 - DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (SFAS 107) requires disclosure of fair
value information about existing on and off-balance sheet financial
instruments. SFAS 107 defines the fair value of a financial instrument as
the amount at which the financial instrument could be exchanged in a
current transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using present
value or other valuation techniques.
These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Although
fair value estimates are calculated using assumptions that management
believes are appropriate, changes in assumptions could cause these
estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets
and,in many cases, could not be realized in the immediate settlement of
the instruments. SFAS 107 excludes certain assets and liabilities from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from SFAS 107 disclosures, estimated fair value of policy reserves on
life insurance contracts are provided to make the fair value disclosures
more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying
amount reported in the consolidated balance sheets for these
instruments approximates their fair value.
FIXED MATURITY AND EQUITY SECURITIES: Fair value for fixed
maturity securities is based on quoted market prices, where available.
For fixed maturity securities not actively traded, fair value is
estimated using values obtained from independent pricing services or,
in the case of private placements, is estimated by discounting
expected future cash flows using a current market rate applicable to
the yield, credit quality and maturity of the investments. The fair
value for equity securities is based on quoted market prices.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of
assets held in Separate Accounts is based on quoted market prices. The
fair value of liabilities related to Separate Accounts is the
amount payable on demand.
MORTGAGE LOANS ON REAL ESTATE: The fair value for mortgage
loans on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations. Fair
value for mortgages in default is the estimated fair value of the
underlying collateral.
INVESTMENT CONTRACTS: Fair value for the Company's liabilities under
investment type contracts is disclosed using two methods. For
investment contracts without defined maturities, fair value is the
amount payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted cash
flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the
contracts being valued.
POLICY RESERVES ON LIFE INSURANCE CONTRACTS: Included are disclosures
for individual life, universal life and supplementary contracts with
life contingencies for which the estimated fair value is the amount
payable on demand. Also included are disclosures for the Company's
limited payment policies, which the Company has used discounted cash
flow analyses similar to those used for investment contracts with
known maturities to estimate fair value.
POLICYHOLDERS' DIVIDEND ACCUMULATIONS AND OTHER POLICYHOLDER FUNDS:
The carrying amount reported in the consolidated balance sheets for
these instruments approximates their fair value.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on life insurance contracts were
as follow as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------------------------- -------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
- ------
Investments:
Securities available-for-sale:
Fixed maturities $14,167,377 14,167,377 8,045,906 8,045,906
Equity securities 33,718 33,718 24,713 24,713
Fixed maturities held-to-maturity -- -- 3,688,787 3,602,310
Mortgage loans on real estate 4,786,599 5,169,805 4,222,284 4,173,284
Policy loans 370,908 370,908 340,491 340,491
Short-term investments 45,732 45,732 131,643 131,643
Cash 10,485 10,485 7,436 7,436
Assets held in Separate Accounts 18,763,678 18,763,678 12,222,461 12,222,461
LIABILITIES
- -----------
Investment contracts 13,561,943 13,221,724 12,189,894 11,657,556
Policy reserves on life insurance contacts 3,695,814 3,659,074 3,170,085 2,934,384
Policyholders' dividend accumulations 353,554 353,554 338,058 338,058
Other policyholder funds 71,155 71,155 72,770 72,770
Liabilities related to Separate Accounts 18,763,678 18,224,933 12,222,461 11,807,331
</TABLE>
(9) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES
--------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a party to
financial instruments with off-balance-sheet risk in the normal course of
business through management of its investment portfolio. These financial
instruments include commitments to extend credit in the form of loans. These
instruments involve, to varying degrees, elements of credit risk in excess
of amounts recognized on the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are agreements
to lend to a borrower, and are subject to conditions established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a deposit. Commitments
extended by the Company are based on management's case-by-case credit
evaluation of the borrower and the borrower's loan collateral. The
underlying mortgage property represents the collateral if the commitment is
funded. The Company's policy for new mortgage loans on real estate is to
lend no more than 80% of collateral value. Should the commitment be funded,
the Company's exposure to credit loss in the event of nonperformance by the
borrower is represented by the contractual amounts of these commitments less
the net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments. Commitments on
mortgage loans on real estate of $361,974 extending into 1996 were
outstanding as of December 31, 1995.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the United
States. The Company has a diversified portfolio with no more than 20% (22%
in 1994) in any geographic area and no more than 2% (2% in 1994) with any
one borrower.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The summary below depicts loans by remaining principal balance as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995:
East North Central $ 140,732 110,361 534,814 184,201 970,108
East South Central 23,978 15,653 183,790 84,588 308,009
Mountain -- 18,940 144,156 48,727 211,823
Middle Atlantic 124,079 72,201 183,562 18,383 398,225
New England 9,594 39,526 153,644 1 202,765
Pacific 190,628 239,687 395,914 107,650 933,879
South Atlantic 101,904 74,731 458,355 279,692 914,682
West North Central 134,866 14,205 81,521 37,586 268,178
West South Central 69,143 99,618 194,717 272,323 635,801
--------- --------- --------- --------- ---------
$ 794,924 684,922 2,330,473 1,033,151 4,843,470
========= ========= ========= =========
Less valuation allowances and unamortized discount 56,871
---------
Total mortgage loans on real estate, net $4,786,599
=========
</TABLE>
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1994:
East North Central $ 109,233 103,499 540,686 191,489 944,907
East South Central 24,298 10,803 127,845 76,897 239,843
Mountain 3,150 13,770 140,358 39,682 196,960
Middle Atlantic 61,299 53,285 140,847 30,111 285,542
New England 10,536 43,282 139,131 4 192,953
Pacific 195,393 210,930 397,911 68,768 873,002
South Atlantic 87,150 81,576 424,150 210,354 803,230
West North Central 127,760 11,766 80,854 4,738 225,118
West South Central 51,013 84,796 184,923 194,788 515,520
--------- --------- --------- --------- ---------
$ 669,832 613,707 2,176,705 816,831 4,277,075
========= ========= ========= =========
Less valuation allowances and unamortized discount 54,791
---------
Total mortgage loans on real estate, net $4,222,284
=========
</TABLE>
(10) PENSION PLAN
------------
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least one
thousand hours of service within a twelve-month period and who have met
certain age requirements. Benefits are based upon the highest average
annual salary of a specified number of consecutive years of the last ten
years of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company.
Effective January 1, 1995, the plan was amended to provide enhanced
benefits for participants who met certain eligibility requirements and
elected early retirement no later than March 15, 1995. The entire cost of
the enhanced benefit was borne by NMIC and certain of its property and
casualty insurance company affiliates.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Effective December 31, 1995, the Nationwide Insurance Companies and
Affiliates Retirement Plan was merged with the Farmland Mutual Insurance
Company Employees' Retirement Plan and the Wausau Insurance Companies
Pension Plan to form the Nationwide Insurance Enterprise Retirement
Plan. Immediately prior to the merger, the plans were amended to provide
consistent benefits for service after January 1, 1996. These amendments had
no significant impact on the accumulated benefit obligation or projected
benefit obligation as of December 31, 1995.
Pension costs charged to operations by the Company during the years ended
December 31, 1995, 1994 and 1993 were $14,105, $10,451 and $6,702,
respectively.
The Company's net accrued pension expense as of December 31, 1995 and
1994 was $1,376 and $1,836, respectively.
The net periodic pension cost for the Nationwide Insurance Companies and
Affiliates Retirement Plan as a whole for the years ended December 31,
1995, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,524 64,740 47,694
Interest cost on projected benefit obligation 95,283 73,951 70,543
Actual return on plan assets (249,294) (21,495) (105,002)
Net amortization and deferral 143,353 (62,150) 20,832
--------- --------- ---------
$ 53,866 55,046 34,067
========= ========= =========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate 7.50% 5.75% 6.75%
Rate of increase in future compensation levels 6.25% 4.50% 4.75%
Expected long-term rate of return on plan assets 8.75% 7.00% 7.50%
</TABLE>
Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1995
(post-merger) and the Nationwide Insurance Companies and Affiliates
Retirement Plan as of December 31, 1995 (pre-merger) and 1994 follows:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Accumulated benefit obligation:
Vested $ 1,236,730 1,002,079 914,850
Nonvested 26,503 8,998 7,570
----------- ----------- -----------
$ 1,263,233 1,011,077 922,420
=========== =========== ===========
Net accrued pension expense:
Projected benefit obligation for services rendered
to date $ 1,780,616 1,447,522 1,305,547
Plan assets at fair value 1,738,004 1,508,781 1,241,771
----------- ----------- -----------
Plan assets (less than) in excess of projected
benefit obligation (42,612) 61,259 (63,776)
Unrecognized prior service cost 42,845 42,850 46,201
Unrecognized net (gains) losses (63,130) (86,195) 39,408
Unrecognized net obligation (asset) at transition 41,305 (19,841) (21,994)
----------- ----------- -----------
$ (21,592) (1,927) (161)
=========== =========== ===========
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Weighed average discount rate 6.00% 6.00% 7.50%
Rate of increase in future compensation levels 4.25% 4.25% 6.25%
</TABLE>
Assets of the Nationwide Insurance Enterprise Retirement Plan are invested
in group annuity contracts of NLIC and ELICW. Prior to the merger, the
assets of the Nationwide Insurance Companies and Affiliates Retirement
Plan were invested in a group annuity contract of NLIC.
(11) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
-------------------------------------------
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years of
service with the Company after reaching age 40. Postretirement health
care benefit contributions are adjusted annually and contain cost-sharing
features such as deductibles and coinsurance. In addition, there are caps
on the Company's portion of the per-participant cost of the postretirement
health care benefits. These caps can increase annually, but not more than
three percent. The Company's policy is to fund the cost of health care
benefits in amounts determined at the discretion of management. Plan
assets are invested primarily in group annuity contracts of NLIC.
Effective January 1, 1993, the Company adopted the provisions of STATEMENT
OF FINANCIAL ACCOUNTING STANDARDS NO. 106 - EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (SFAS 106), which requires the
accrual method of accounting for postretirement life and health care
insurance benefits based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of
employees who are expected to qualify for such benefits.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation as of January 1, 1993. Accordingly, a
noncash charge of $32,275 ($20,979 net of related income tax benefit) was
recorded in the 1993 consolidated statement of income as a cumulative
effect of a change in accounting principle. See note 3. The adoption of
SFAS 106, including the cumulative effect of the change in accounting
principle, increased the expense for postretirement benefits by $35,277
to $36,544 in 1993. Certain affiliated companies elected to amortize their
initial transition obligation over periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of
December 31, 1995 and 1994 was $51,490 and $36,001, respectively, and the
net periodic postretirement benefit cost (NPPBC) for 1995 and 1994 was
$8,269 and $4,627, respectively.
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1995, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits attributed to employee service during the year $ 6,235 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,151 14,011 13,928
Actual return on plan assets (2,657) (1,622) --
Amortization of unrecognized transition obligation of affiliates 2,966 568 568
Net amortization and deferral (1,619) 1,622 --
-------- -------- --------
$ 19,076 23,165 21,586
======== ======== ========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the plan as a whole as of
December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 88,680 76,677
Fully eligible, active plan participants 28,793 22,013
Other active plan participants 90,375 59,089
--------- ---------
Accumulated postretirement benefit obligation (APBO) 207,848 157,779
Plan assets at fair value 54,325 49,012
--------- ---------
Plan assets less than accumulated postretirement benefit obligation (153,523) (108,767)
Unrecognized transition obligation of affiliates 1,827 6,577
Unrecognized net gains (1,038) (41,497)
--------- ---------
$(152,734) (143,687)
========= =========
</TABLE>
Actuarial assumptions used for the measurement of the APBO as of
December 31, 1995 and 1994 and the NPPBC for 1995, 1994 and 1993 were
as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994 1993
APBO NPPBC APBO NPPBC NPPBC
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Discount rate 6.75% 8% 8% 7% 8%
Assumed health care cost trend rate:
Initial rate 11% 10% 11% 12% 14%
Ultimate rate 6% 6% 6% 6% 6%
Uniform declining period 12 Years 12 Years 12 Years 12 Years 12 Years
</TABLE>
The health care cost trend rate assumption has an effect on the amounts
reported. For the plan as a whole, a one percentage point increase in
the assumed health care cost trend rate would increase the APBO as of
December 31, 1995 by $641 and the NPPBC for the year ended December 31,
1995 by $107.
(12) REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND
RESTRICTIONS
-------------------------------------------------------------
Each insurance company's state of domicile imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and each of its
insurance subsidiaries exceed the minimum risk-based capital
requirements.
In accordance with the requirements of the New York statutes, the
Company has agreed with the Superintendent of Insurance of that state
that so long as participating policies and contracts are held by
residents of New York, no profits on participating policies and
contracts in excess of the larger of (a) ten percent of such profits or
(b) fifty cents per year per thousand dollars of participating life
insurance in force, exclusive of group term, as of the year-end shall
inure to the benefit of the shareholder. Such New York statutes
further provide that so long as such agreement is in effect, such
excess of profits shall be exhibited as "participating policyholders'
surplus" in annual statements filed with the Superintendent and shall
be used only for the payment or apportionment of dividends to
participating policyholders at least to the extent required by statute
or for the purpose of making up any loss on participating policies.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In the opinion of counsel for the Company, the ultimate ownership of the
entire surplus, however classified, of the Company resides with the
shareholder, subject to the usual requirements under state laws and
regulations that certain deposits, reserves and minimum surplus be
maintained for the protection of the policyholders until all policy
contracts are discharged.
Based on the opinion of counsel with respect to the ownership of its
surplus, the Company is of the opinion that the earnings attributable to
participating policies in excess of the amounts paid as dividends to
policyholders belong to the shareholder rather than the policyholders,
and such earnings are so treated by the Company.
The amount of shareholder's equity other than capital shares was
$2,664,697, $1,904,664 and $1,647,353 as of December 31, 1995, 1994 and
1993, respectively. The amount thereof not presently available for
dividends to the shareholder due to the New York restrictions was
$1,503,241, $929,934 and $954,037 as of December 31, 1995, 1994 and 1993,
respectively.
Ohio law limits the payment of dividends to shareholders. The maximum
dividend that may be paid by the Company without prior approval of the
Director of the Department is limited to the greater of statutory gain
from operations of the preceding calendar year or 10% of statutory
shareholder's surplus as of the prior December 31. Therefore, $2,468,687
of shareholder's equity, as presented in the accompanying consolidated
financial statements, is so restricted as to dividend payments in 1996.
Each of NLIC's insurance company subsidiaries are limited in their
payment of dividends by the state insurance department of their
respective state of domicile. As of December 31, 1995, the maximum amount
of shareholder's equity available for dividend payment to NLIC in 1996 by
its insurance company subsidiaries without prior approval are:
<TABLE>
<S> <C>
Nationwide Life and Annuity Insurance Company $10,143
West Coast Life Insurance Company 13,153
Employers Life Insurance Company of Wausau 10,132
National Casualty Company --
-------
$33,428
=======
</TABLE>
(13) TRANSACTIONS WITH AFFILIATES
----------------------------
On March 1, 1995, Corp. contributed all of the outstanding shares of
Farmland Life Insurance Company (Farmland) to NLIC, which then merged
Farmland into WCLIC effective June 30, 1995. The contribution resulted in
a direct increase to consolidated shareholder's equity of $46,918. The
contribution of Farmland has been accounted for in a manner similar to a
pooling of interests and accordingly, Farmland's results are included in
the consolidated statements of income beginning January 1, 1995. However,
prior period consolidated financial statements have not been restated due
to the impact of Farmland being immaterial.
Effective December 31, 1994, NLIC purchased all of the outstanding shares
of ELICW from Wausau Service Corporation (WSC) for $155,000. NLIC
transferred fixed maturity securities and cash with a fair value of
$155,000 to WSC on December 28, 1994, which resulted in a realized loss
of $19,239 on the disposition of the securities. The purchase price
approximated both the historical cost basis and fair value of net assets
of ELICW. ELICW has and will continue to share home office, other
facilities, equipment and common management and administrative services
with WSC.
Certain annuity products are sold through three affiliated companies
which are also subsidiaries of Corp. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1995 were
$57,969, $50,470 and $44,577, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
The Company participates in intercompany repurchase agreements with
affiliates whereby the seller will transfer securities to the buyer at a
stated value. Upon demand or a stated period, the securities will be
repurchased by the seller at the original sales price plus a price
differential. Transactions under the agreements during 1995 and
1994 were not material.
During 1993, the Company sold equity securities with a market value
$194,515 to NMIC, resulting in a realized gain of $122,823. With the
proceeds, the Company purchased securities with a market value of
$194,139 and cash of $376 from NMIC.
Intercompany reinsurance contracts exist between NLIC and NMIC, NLIC and
WCLIC, NLIC and NCC, WCLIC and NMIC and WCLIC and ELICW as of December
31, 1995. These contracts are immaterial to the consolidated financial
statements.
NCC participates in several 100% quota share reinsurance agreements with
NMIC and Nationwide Mutual Fire Insurance Company, the minority
shareholder of Corp. As a result of these agreements, the following
assets and (liabilities) are included in the consolidated financial
statements as of December 31, 1995 and 1994 for reinsurance ceded:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Reinsurance recoverable $ 590,379 541,289
Unearned premium reserves (112,467) (110,353)
Liability for unpaid claims and claim adjustment expense (477,912) (430,936)
</TABLE>
The ceding of reinsurance does not discharge the original insurer from
primary liability to its policyholder. The insurer which assumes the
coverage assumes the related liability and it is the practice of insurers
to treat insured risks, to the extent of reinsurance ceded, as though
they were risks for which the original insurer is not liable. Management
believes the financial strength of NMIC reduces to an acceptable level
any risk to NCC under these intercompany reinsurance agreements.
ELICW assumes certain accident and health insurance business from
Employers Insurance of Wausau A Mutual Company, an affiliate. During
1995, total premiums assumed by ELICW under the reinsurance
agreement were $150,622.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC) and California Cash Management
Company (CCMC), both affiliates, under which NCMC and CCMC act as common
agents in handling the purchase and sale of short-term securities for the
respective accounts of the participants. Amounts on deposit with NCMC and
CCMC were $21,644 and $92,531 as of December 31, 1995 and 1994,
respectively, and are included in short-term investments on the
accompanying consolidated balance sheets.
(14) BANK LINES OF CREDIT
--------------------
As of December 31, 1995 and 1994, NLIC had $120,000 of confirmed but
unused bank lines of credit which support a $100,000 commercial paper
borrowing authorization.
(15) CONTINGENCIES
-------------
The Company is a defendant in various lawsuits. In the opinion of
management, the effects, if any, of such lawsuits are not expected to be
material to the Company's financial position or results of operations.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(16) SEGMENT INFORMATION
-------------------
The Company operates in the long-term savings, life insurance and
accident and health insurance lines of business in the life insurance and
property and casualty insurance industries. Long-term savings operations
include both qualified and non-qualified annuity contracts issued to both
individuals and groups. Life insurance operations include whole life,
universal life, variable universal life and endowment and term life
insurance issued to individuals and groups. Accident and health insurance
operations also provide coverage to individuals and groups. Corporate
primarily includes investments, and the related investment income, which
are not specifically allocated to one of the three operating segments. In
addition, realized gains and losses on all general account investments
are reported as a component of the corporate segment.
During 1995, the Company changed its reporting segments to better reflect
the way the businesses are managed. Prior periods have been restated to
reflect these changes.
The following table summarizes the revenues and income (loss) before
Federal income tax expense and cumulative effect of changes in accounting
principles for the years ended December 31, 1995, 1994 and 1993 and
assets as of December 31, 1995, 1994 and 1993, by business segment.
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Long-term savings $ 1,406,241 1,125,013 1,048,045
Life insurance 502,885 452,795 432,343
Accident and health insurance 532,383 345,545 339,764
Corporate 134,598 122,847 214,374
------------ ------------ ------------
$ 2,576,107 2,046,200 2,034,526
============ ============ ============
Income (loss) before Federal income tax expense and
cumulative effect of changes in accounting principles:
Long-term savings 129,475 95,530 47,966
Life insurance 63,169 46,119 36,383
Accident and health insurance (12,521) 13,221 15,041
Corporate 139,609 118,360 213,511
------------ ------------ ------------
$ 319,732 273,230 312,901
============ ============ ============
Assets:
Long-term savings 34,634,892 25,815,273 20,695,598
Life insurance 3,675,581 3,231,651 2,897,574
Accident and health insurance 307,643 291,296 297,200
Corporate 1,995,995 1,773,913 1,515,989
------------ ------------ ------------
$ 40,614,111 31,112,133 25,406,361
============ ============ ============
</TABLE>
<PAGE> 26
Schedule I
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Summary of Investments - Other Than Investments in Related Parties
December 31, 1995
(000's omitted)
<TABLE>
<CAPTION>
----------------- --------------- ------------------
Column B Column C Column D
----------------- --------------- ---------------
Amount at which
shown in the
consolidated
Cost Market value balance sheet
----------------- ---------------- -------------------
<S> <C> <C> <C>
Fixed maturities available-for-sale:
Bonds and notes:
U.S. Government and government agencies and authorities $ 3,913,961 4,116,744 4,116,744
States, municipalities and political subdivisions 9,742 10,993 10,993
Foreign governments 162,442 172,016 172,016
Public utilities 2,053,701 2,146,000 2,146,000
All other corporate 7,298,784 7,721,624 7,721,624
----------------- ---------------- -------------------
Total fixed maturities available-for-sale 13,438,630 14,167,377 14,167,377
----------------- ---------------- -------------------
Equity securities available-for-sale:
Common stocks:
Industrial, miscellaneous and all other 26,037 32,474 32,474
Non-redeemable preferred stock 1,325 1,244 1,244
----------------- ---------------- -------------------
Total equity securities available-for-sale 27,362 33,718 33,718
----------------- ---------------- -------------------
Mortgage loans on real estate 4,838,432 4,786,599*
Real estate:
Investment properties 213,340 171,739*
Acquired in satisfaction of debt 82,930 67,350*
Policy loans 370,908 370,908
Other long-term investments 73,190 67,280#
Short-term investments 45,732 45,732
----------------- -------------------
Total investments $19,090,524 19,710,703
================= ===================
</TABLE>
* Difference from Column B is primarily due to accumulated depreciation
and valuation allowances due to impairments on real estate and
valuation allowances due to impairments on mortgage loans on real
estate. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations and note 5 to the consolidated
financial statements.
# Difference from Column B is primarily due to operating losses of
investments in limited partnerships.
See accompanying independent auditors' report.
<PAGE> 27
Schedule III
------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Supplementary Insurance Information
December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Column A Column B Column C Column D Column E Column F
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Deferred Future policy Other policy
policy benefits, losses, claims and
Segment acquisition claims and Unearned premiums benefits payable Premium
costs loss expenses (1) (2) revenue
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
1995: Long-term savings $ 668,784 14,847,449 455 -
Life insurance 416,209 2,494,344 408,990 274,957
Accident and health
insurance 9,202 858,335 15,264 509,658
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,094,195 18,200,128 424,709 784,615
============== ===================== ================== ===============
1994: Long-term savings 663,696 13,300,015 240 -
Life insurance 387,486 2,245,375 397,174 209,538
Accident and health
insurance 12,977 776,071 13,414 324,524
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,064,159 16,321,461 410,828 534,062
============== ===================== ================== ===============
1993: Long-term savings 506,243 11,308,024 1,262 -
Life insurance 291,683 2,047,844 378,788 215,715
Accident and health
insurance 14,018 736,387 14,595 312,655
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $ 811,944 14,092,255 394,645 528,370
============== ===================== ================== ===============
- ----------------------------------- -------------- -------------------- ------------------ ----------------- --------------
Column A Column G Column H Column I Column J Column K
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Net Amortization Other
investment Benefits, claims, of deferred operating
Segment income losses and policy expenses Premiums
(3) settlement expenses acquisition costs (3) written
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
1995: Long-term savings $1,124,207 1,009,632 51,998 210,525
Life insurance 202,285 267,123 34,124 94,461
Accident and health
insurance 22,725 379,532 6,922 153,984 473,513
Corporate 133,763 - - -
-------------- -------------------- ------------------- ------------------
Total $1,482,980 1,656,287 93,044 458,970
============== ==================== =================== ==================
1994: Long-term savings 945,318 807,756 56,236 171,038
Life insurance 183,933 237,125 33,394 90,535
Accident and health
insurance 21,020 234,882 5,114 90,829 315,688
Corporate 139,230 - - -
-------------- -------------------- ------------------- ------------------
Total $1,289,501 1,279,763 94,744 352,402
============== ==================== =================== ==================
1993: Long-term savings 897,639 800,385 43,291 157,046
Life insurance 178,978 227,786 35,220 89,496
Accident and health
insurance 27,108 208,735 23,623 82,854 263,117
Corporate 100,701 - - -
-------------- -------------------- ------------------- ------------------
Total $1,204,426 1,236,906 102,134 329,396
============== ==================== =================== ==================
<FN>
(1) Unearned premiums are included in Column C amounts. (3) Allocations of net investment income and certain general
(2) Column E agrees to the sum of the consolidated balance expenses are based on a number of assumptions and
sheet captions, "Policyholders' dividend estimates, and reported operating results would
accumulations" and "Other policyholder funds". change by segment if different methods were applied.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 28
Schedule IV
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Reinsurance
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed from of amount
Gross amount other companies other companies Net amount assumed to net
------------------- ------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
1995:
Life insurance in force $51,613,116 6,865,011 742,451 45,490,556 1.6%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 281,687 12,817 6,087 274,957 2.2%
Accident and health
insurance 427,943 73,131 154,846 509,658 30.4%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 709,630 85,948 160,933 784,615 20.5%
=================== ================== ================= ================== ===============
1994:
Life insurance in force $46,262,595 5,289,259 819,799 41,793,135 2.0%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 209,918 7,551 7,171 209,538 3.4%
Accident and health
insurance 389,573 69,095 4,046 324,524 1.2%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 599,491 76,646 11,217 534,062 2.1%
=================== ================== ================= ================== ===============
1993:
Life insurance in force $39,417,116 4,352,071 180,739 35,245,784 0.5%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 218,764 6,161 3,112 215,715 1.4%
Accident and health
insurance 398,289 88,506 2,872 312,655 0.9%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 617,053 94,667 5,984 528,370 1.1%
=================== ================== ================= ================== ===============
</TABLE>
See accompanying independent auditors' report.
<PAGE> 29
Schedule V
----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Column A Column B Column C Column D Column E
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Balance at Charged to Balance at
beginning of costs and Charged to Deductions end of
Description period expenses other accounts (1) period
- ------------------------------------------------- ---------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1995:
Valuation allowances - fixed maturity securities $ - 10,153 - 10,153 -
Valuation allowances - mortgage loans on real
estate 47,892 7,653 - 4,850 50,695
Valuation allowances - real estate 27,330 (1,080) - - 26,250
Valuation allowances - other long-term
investments - 457 - - 457
1994:
Valuation allowances - fixed maturity securities 6,680 (6,680) - - -
Valuation allowances - mortgage loans on real
estate 42,350 21,672 - 16,130 47,892
Valuation allowances - real estate 31,357 (4,027) - - 27,330
1993:
Valuation allowances - fixed maturity securities 5,746 934 - - 6,680
Valuation allowances - mortgage loans on real
estate 31,872 28,241 - 17,763 42,350
Valuation allowances - real estate 35,471 (4,114) - - 31,357
Valuation allowances - other long-term
investments 700 (700) - - -
<FN>
(1) Amounts represent direct write-downs charged against the valuation
allowance.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 56
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
(a) Financial Statements: PAGE
<S> <C>
(1) Financial statements and schedule included
in Prospectus.
(Part A):
Condensed Financial Information. 18
(2) Financial statements and schedule included
in Part B: 53
Those financial statements and schedule
required by Item 23 to be included in Part B
have been incorporated therein by reference
to the Prospectus (Part A).
Nationwide DC Variable Account:
Independent Auditors' Report. 53
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1995 54
Statements of Operations and Changes in
Contract Owners' Equity for the years ended
December 31, 1995, 1994 and 1993. 57
Notes to Financial Statements. 58
Schedules of Changes in Unit Values. 62
Nationwide Life Insurance Company:
Independent Auditors' Report. 68
Consolidated Balance Sheets as of December
31, 1995 and 1994. 69
Consolidated Statements of Income for the
years ended December 31, 1995, 1994 and
1993. 70
Consolidated Statements of Shareholder's
Equity for the years ended December 31,
1995, 1994 and 1993. 71
Consolidated Statements of Cash Flows for
the years ended December 31, 1995, 1994
and 1993. 72
Notes to Consolidated Financial Statements. 73
Schedule I - Summary of Investments - Other
Than Investments in Related Parties 93
Schedule III - Supplementary Insurance Information 94
Schedule IV - Reinsurance 95
Schedule V - Valuation and Qualifying Accounts 96
</TABLE>
98 of 134
<PAGE> 57
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of
Directors authorizing the establishment of
the Registrant - Filed previously with Registration
Statement and is hereby incorporated by reference.
(2) Not Applicable
(3) Underwriting or Distribution of contracts between
the Registrant and Principal Underwriter - Filed
previously with Registration Statement and is
hereby incorporated by reference.
(4) The form of the variable annuity contract -
Filed previously with Registration Statement and is
hereby incorporated by reference.
(5) Variable Annuity Application - Filed previously
with Registration Statement and is hereby
incorporated by reference.
(6) Articles of Incorporation of Depositor - Filed
previously with Registration Statement and is
hereby incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with
Registration Statement and is hereby incorporated
by reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
99 of 134
<PAGE> 58
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olives, NC 28365
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
100 of 134
<PAGE> 59
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President,
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
James E. Brock Senior Vice President -
One Nationwide Plaza Life Company Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President-Chief Actuary-
One Nationwide Plaza Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
</TABLE>
101 of 134
<PAGE> 60
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Matthew S. Easley Vice President -
One Nationwide Plaza Life Marketing and Administrative Services
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President -
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
</TABLE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
102 of 134
<PAGE> 61
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
Affiliate Agency, Inc. Delaware Life Insurance Agency
Allnations, Inc. Ohio Promotes cooperative insurance corporations
worldwide
American Marine Underwriters, Inc. Florida Underwriting Manager
Auto Direkt Insurance Company Germany Insurance Company
The Beak and Wire Corporation Ohio Radio Tower Joint Venture
California Cash Management Company California Investment Securities Agent
Colonial County Mutual Insurance Texas Insurance Company
Company
Colonial Insurance Company of California Insurance Company
California
Columbus Insurance Brokerage and Germany Insurance Broker
Service GMBH
Companies Agency Insurance Services California Insurance Broker
of California
Companies Agency of Alabama, Inc. Alabama Insurance Broker
Companies Agency of Idaho, Inc. Idaho Insurance Broker
Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for Policies placed
through Brokers
Companies Agency of Kentucky, Inc. Kentucky Insurance Broker
Companies Agency of Massachusetts, Massachusetts Insurance Broker
Inc.
Companies Agency of New York, Inc. New York Insurance Broker
Companies Agency of Pennsylvania, Pennsylvania Insurance Broker
Inc.
Companies Agency of Phoenix, Inc. Arizona Insurance Broker
Companies Agency of Texas, Inc. Texas Insurance Broker
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Annuity Agency of Texas, Texas Insurance Broker
Inc.
Countrywide Services Corporation Delaware Products Liability, Investigative and Claims
Management Services
Employers Insurance of Wausau A Wisconsin Insurance Company
Mutual Company
</TABLE>
103 of 134
<PAGE> 62
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
** Employers Life Insurance Company of Wisconsin Life Insurance Company
Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Insurance Company
Financial Horizons Distributors Alabama Life Insurance Agency
Agency of Alabama, Inc.
Financial Horizons Distributors Ohio Insurance Agency
Agency of Ohio
Financial Horizons Distributors Oklahoma Life Insurance Agency
Agency of Oklahoma, Inc.
Financial Horizons Distributors Texas Life Insurance Agency
Agency of Texas, Inc.
* Financial Horizons Investment Trust Massachusetts Investment Company
Financial Horizons Securities Oklahoma Broker Dealer
Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Company of Nevada Nevada Self-Insurance Administration Claims
Examinations and Data Processing Services
Gates, McDonald & Company of New New York Workers Compensation Claims Administration
York, Inc.
Greater La Crosse Health Plans, Inc. Wisconsin Writes Commercial Health and Medicare
Supplement Insurance
InHealth Agency, Inc. Ohio Insurance Agency
InHealth Management Systems, Inc. Ohio Develops and operates Managed Care Delivery
System
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency
Key Health Plan, Inc. California Pre-paid health plans
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
Leben Direkt Insurance Company Germany Life Insurance Company
Lone Star General Agency, Inc. Texas Insurance Agency
** MRM Investments, Inc. Ohio Owns and operates a Recreational Ski Facility
** National Casualty Company Michigan Insurance Company
National Casualty Company of Great Britain Insurance Company
America, Ltd.
** National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Cash Management Company Ohio Investment Securities Agent
</TABLE>
104 of 134
<PAGE> 63
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Nationwide Communications, Inc. Ohio Radio Broadcasting Business
Nationwide Community Urban Ohio Redevelopment of blighted areas within the
Redevelopment Corporation City of Columbus, Ohio
Nationwide Corporation Ohio Organized for the purpose of acquiring,
holding, encumbering, transferring, or
otherwise disposing of shares, bonds, and
other evidences of indebtedness, securities,
and contracts of other persons, associations,
corporations, domestic or foreign and to form
or acquire the control of other corporations
Nationwide Development Company Ohio Owns, leases and manages commercial real estate
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
** Nationwide Advisory Services, Inc. Ohio Registered Broker-Dealer, Investment Manager
and Administrator
Nationwide General Insurance Company Ohio Insurance Company
Nationwide HMO, Inc. Ohio Health Maintenance Organization
* Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
Nationwide Insurance Golf Charities, Ohio Membership Non-Profit Corporation
Inc.
Nationwide Investing Foundation Michigan Investment Company
* Nationwide Investing Massachusetts Investment Company
Foundation II
Nationwide Investment Services Oklahoma Registered Broker-Dealer in Deferred
Corporation Compensation Market
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
** Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
** Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Mutual Fire Insurance Ohio Insurance Company
Company
Nationwide Mutual Insurance Company Ohio Insurance Company
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
** Nationwide Property Management, Inc. Ohio Owns, leases, manages and deals in Real
Property
</TABLE>
105 of 134
<PAGE> 64
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
* Nationwide Separate Account Trust Massachusetts Investment Company
NEA Valuebuilder Investor Services Alabama Life Insurance Agency
of Alabama, Inc.
NEA Valuebuilder Investor Services Arizona Life Insurance Agency
of Arizona, Inc.
NEA Valuebuilder Investor Services Massachusetts Life Insurance Agency
of Massachusetts, Inc.
NEA Valuebuilder Investor Services Montana Life Insurance Agency
of Montana, Inc.
NEA Valuebuilder Investor Services Nevada Life Insurance Agency
of Nevada, Inc.
NEA Valuebuilder Investor Services Ohio Life Insurance Agency
of Ohio, Inc.
NEA Valuebuilder Investor Services Oklahoma Life Insurance Agency
of Oklahoma, Inc.
NEA Valuebuilder Investor Services Texas Life Insurance Agency
of Texas, Inc.
NEA Valuebuilder Investor Services Wyoming Life Insurance Agency
of Wyoming
NEA Valuebuilder Investor Services, Delaware Life Insurance Agency
Inc.
NEA Valuebuilder Services Insurance Massachusetts Life Insurance Agency
Agency, Inc.
Neckura General Insurance Company Germany Insurance Company
Neckura Holding Company Germany Administrative Service for Neckura Insurance
Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Insurance Massachusetts Markets and Administers Deferred Compensation
Agency, Inc. Plans for Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers Deferred Compensation
Plans for Public Employees
Pension Associates of Wausau, Inc. Wisconsin Pension plan administration, record keeping
and consulting and compensation consulting
Public Employees Benefit Services Delaware Marketing and Administration of Deferred
corporation Employee Compensation Plans for Public
Employees
Public Employees Benefit Services Alabama Markets and Administers Deferred Compensation
Corporation of Alabama Plans for Public Employees
</TABLE>
106 of 134
<PAGE> 65
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Public Employees Benefit Services Arkansas Markets and Administers Deferred Compensation
Corporation of Arkansas Plans for Public Employees
Public Employees Benefit Services Montana Markets and Administers Deferred Compensation
Corporation of Montana Plans for Public Employees
Public Employees Benefit Services New Mexico Markets and Administers Deferred Compensation
Corporation of New Mexico Plans for Public Employees
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura Insurance Group
Group
Wausau Business Insurance Company Illinois Insurance Company
Wausau General Insurance Company Illinois Insurance Company
Wausau Insurance Company (U.K.) United Kingdom Insurance and Reinsurance Company
Limited
Wausau International Underwriters California Special Risks, Excess and Surplus Lines
Insurance Underwriting Manager
** Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company
Company
Wausau Service Corporation Wisconsin Holding Company
Wausau Underwriters Insurance Company Wisconsin Insurance Company
** West Coast Life Insurance Company California Life Insurance Company
</TABLE>
107 of 134
<PAGE> 66
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED CHART)
OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-Q Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance Contracts
Account-A Separate Account
* Nationwide VL Separate Account-B Ohio Nationwide Life and Annuity Issuer of Life Insurance Contracts
Separate Account
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance Contracts
Account
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance Contracts
Account
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance Contracts
Account
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DCVA-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
</TABLE>
108 of 134
<PAGE> 67
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side}
______________________
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|______________________|
<S> <C> <C>
________________________________________________________________________________________________
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| (EMPLOYERS) |_________________________________
| Contribution Note Cost |_________________________________
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________ __________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | | | |
| | | | | NATIONWIDE LLOYDS | | COMPANIES |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | | | |
| ------------- Shares | | ------------- Shares |_____| |_____| AGENCY OF |
| | | |_____| |_____| |
| Cost | | Cost | | | | TEXAS, INC. |
| ---- | | ---- | | A TEXAS LLOYDS | | |
| Employers-- | | Employers-- | | | | |
| 100% $15,683,300 | | 100% $106,763,000 | | | | |
|_______________________________| |________________________________| |_____________________| |__________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 10,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $21,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $44,560,006 |
| |______________________________|
|
| ______________________________
| | GREATER LA CROSSE |
| | HEALTH PLANS, INC. |
| | |
| | Common Stock: 3,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-33.3% $861,761 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ALABAMA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF KENTUCKY, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PENNSYLVANIA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF MASSACHUSETTS, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF NEW YORK, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PHOENIX, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF IDAHO, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COUNTRYWIDE SERVICES |
| | CORPORATION |
| | |
| | Common Stock: 100 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $145,852 |
| |______________________________|
|
|
| ______________________________
| | WAUSAU GENERAL |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 200,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $31,000,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU INTERNATIONAL |
| | UNDERWRITERS |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $10,000 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | INSURANCE SERVICES |
| | OF CALIFORNIA |
| | |
|____| Common Stock: 1,000 |
| | ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
| ______________________________
| | AMERICAN MARINE |
| | UNDERWRITERS, INC. |
| | |
| | Common Stock: 20 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $248,222 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ILLINOIS, INC. |
| | |
| | Common Stock: 250 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $2,500 |
| |______________________________|
|
| ______________________________ _____________________________
| | COMPANIES AGENCY, INC. | | PENSION ASSOCIATES |
| | | | OF WAUSAU, INC. |
| | | | |
| | Common Stock: 100 | | Common Stock: 1,000 |
|____| ------------- Shares |____| ------------- Shares |
| | | |
| Cost | | Companies Cost |
| ---- | | Agency, Inc. ---- |
| WSC-100% $10,000 | | (Wisconsin) -- $10,000 |
|______________________________| | 100% |
|_____________________________|
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| |
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
___| NATIONWIDE MUTUAL |_____________________________________________| NATIONWIDE MUTUAL |
___| INSURANCE COMPANY |_____________________________________________| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
|_________________________________________| |___________________________|
| || |________________________________________________________________ |
| || | | |
______________|_______________ || | _____________________________ _____________|_______|______________
| | || | | | | |
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NATIONWIDE |
| | || | | INSURANCE COMPANY | | CORPORATION |
| Common Stock: 2,936 | || | | | | |
| ------------- Shares | || | | Common Stock: 20,000 Shares | | Common Stock: Control |
| Cost | || |___| ------------- | | ------------- ------- |
| ---- | || | | | | $13,642,432 100% |
| Casualty-26% $88,320 | || | | Cost | | |
| Fire-26% $88,463 | || | | ---- | | Shares Cost |
| Preferred Stock: 1,466 Shares| || | | Casualty-100% $5,944,422 | | ----- ---- |
| ---------------- | || | |_____________________________| | Casualty 12,992,922 $751,352,485 |
| Cost | || | | Fire 649,510 24,007,936 |
| ---- | || | | |
| Casualty-6.8% $100,000 | || | | (See Page 2) |
| Fire-6.8% $100,000 | || | |____________________________________|
|______________________________| || |
|| |
_________________________ || | _____________________________
| | || | | |
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY |
| INSURANCE COMPANY | || | | AND CASUALTY |
| | || | | INSURANCE COMPANY |
| Guaranty Fund |______|| | | |
| ------------- |_______| | | Common Stock: 60,000 Shares |
| Certificate | | | ------------- |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | |
| | | COLONIAL INSURANCE |
_______________|___________ | | COMPANY OF CALIFORNIA |
| F & B, INC. | | | (COLONIAL) |
| | | | |
| Common Stock: 1 Share | |___| Common Stock: 1,750 Shares |
| ------------- | | | ------------- |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | | | |
| | | | SCOTTSDALE | | NATIONAL PREMIUM & |
| NATIONWIDE AGRIBUSINESS | | | INSURANCE COMPANY | | BENEFIT ADMINISTRATION |
| INSURANCE COMPANY | | | | | COMPANY |
| | | | Common Stock: 30,136 Shares | | |
| Common Stock: 1,000,000 |___|___| ------------- |______| Common Stock: 10,000 |
| ------------- Shares | | | | | ------------ Shares |
| | | | Cost | | |
| | | | ---- | | Cost |
| | | | Casualty-100% $150,000,000 | | ---- |
| Casualty-99.9% $26,714,335 | | |_____________________________| | Scottsdale-100% $10,000 |
| | | |__________________________|
| Other Capital: | |
| -------------- | |
| Casualty-Ptd. $ 713,567 | |
|____________________________| |
|
|
|
|
| _____________________________ ______________________________
| | NECKURA HOLDING | | NECKURA |
| | COMPANY (NECKURA) | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 10,000 Shares | | Common Stock: 6,000 Shares |
|___| ------------- |_____________________| ------------- |
| | | | | |
| | Cost | | | Cost |
| | --- | | | ---- |
| | Casualty-100% $87,943,140 | | | Neckura-100% DM 6,000,000 |
| |_____________________________| | |______________________________|
| |
| | _____________________________
| | | NECKURA LIFE |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS INSURANCE |
| | | BROKERAGE AND SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIREKT |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT COMPANY | | | GmbH |
| | | | | |
| | Common Stock: 99,000 Shares | | | Common Stock: 50 Shares |
| | ------------- | |_____| ------------- |
| | | | |
|___| Cost | | Cost |
| | --- | | ---- |
| | Casualty-100% $15,100,000 | | Neckura-100% DM 50,000 |
| | Other Capital: | |____________________________|
| | -------------- |
| | Casualty-Ptd. $ 2,796,100 |
| |_____________________________|
|
|
| _____________________________
| | SCOTTSDALE |
| | INDEMNITY COMPANY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | INDEMNITY COMPANY |
| | |
| | Common Stock: 28,000 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $294,529,000 |
| |_____________________________|
|
| _____________________________ __________________________
| | LONE STAR | | COLONIAL COUNTY MUTUAL |
| | GENERAL AGENCY, INC. | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 1,000 Shares |______| Surplus Debentures: |
|___| ------------- |______| ------------------- |
| | | | |
| | Cost | | Cost |
| | ---- | | ---- |
| | Casualty-100% $5,000,000 | | Colonial $500,000 |
| |_____________________________| | Lone Star 150,000 |
| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | CORPORATION |
| | |
| | Common Stock: 10 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,000 |
| |_____________________________|
|
| _____________________________
| | INSURANCE |
| | INTERMEDIARIES, INC. |
| | |
| | Common Stock: 1,615 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,615,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________
| | CALIFORNIA CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 90 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $9,000 |
| |_____________________________|
|
|
| _____________________________ __________________________
| | NATIONWIDE | | THE BEAK AND |
| | COMMUNICATIONS, INC. | | WIRE CORPORATION |
| | | | |
| | Common Stock: 14,750 Shares | | Common Stock: 750 Shares |
|___| ------------- |_____| ------------- |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| Casualty-100% $11,510,000 | | NW Comm- $531,000 |
| | | 100% |
| Other Capital: | |__________________________|
| -------------- |
| Casualty-Ptd. 1,000,000 |
|_____________________________|
<FN>
Subsidiary Companies - Solid Line
Contractual Association - Double Line
December 31, 1995
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|_________________
| NATIONWIDE LIFE INSURANCE |
| COMPANY (NW LIFE) |
|Common Stock: 3,814,779 Shares|
| ------------- |
| |
| NW Corp.- Cost |
| 100% ---- |
| $950,226,915 |
|______________________________|
_________________________________________________________________________________|
____________|_____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | NATIONWIDE LIFE AND |
| FINANCIAL SERVICES, INC. | | COMPANY (NC) | | | ANNUITY INSURANCE COMPANY |
| (NW FIN. SERV.) | | Common Stock: 100 Shares | | | |
______|Common Stock: 7,676 Shares| | ------------- | | | Common Stock: 66,000 Shares |
| ____|------------- | | | |_______| ------------- |
| | | Cost | | Cost | | | NW Life- Cost |
| | | ---- | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |__________________________| |___________________________| | |______________________________|
| | __________________________ ___________|_______________ | ________________________________
| | | NATIONWIDE | | | | | WEST COAST LIFE |
| | | INVESTOR SERVICES, INC. | | | | | INSURANCE COMPANY |
| | | Common Stock: 5 Shares | | NCC OF AMERICA, INC. | | | Common Stock: 1,000,000 Shares|
| |___| ------------- | | (INACTIVE) | |_______| ------------- |
| | | NW Fin. Serv.-100% | | | | | |
| | | Cost | | NC-100% | | | Cost |
| | | ---- | | | | | ---- |
| | | $5,000 | | | | | NW Life-100% $133,809,265 |
| | |__________________________| |___________________________| | |________________________________|
| | __________________________ ______________________________ | ____________________________
| | | NATIONWIDE | | EMPLOYERS LIFE INSURANCE CO. | | | NATIONWIDE PROPERTY |
| | | INVESTING | | OF WAUSAU (ELIOW) | | | MANAGEMENT, INC. |
| | | FOUNDATION | | | | | Common Stock: 59 Shares |
| |___| | ______| Common Stock: 250,000 Shares |____|_______| ------------ |
| ___| | | | ------------- Cost | | | Cost |
| | | | | | ---- | | | ---- |
| | | | | | NW Life-100% $155,000,000 | | | NW Life-100% $1,907,896 |
| | | COMMON LAW TRUST | | |______________________________| | |__________________________ |
| | |__________________________| | | |
| | | _____________________________ | __________|_______________
| | __________________________ | | WAUSAU PREFERRED | | | MRM INVESTMENTS, INC. |
| | | NATIONWIDE | | | HEALTH INSURANCE CO. | | | |
| | | INVESTING | | | | | | Common Stock: 1 Share |
| |___| FOUNDATION II | |______| Common Stock: 200 Shares | | | ------------ |
| ___| | | | ------------- | | | |
| | | | | | Cost | | | Cost |
| | | | | | ---- | | | Nat. Prop. ---- |
| | | COMMON LAW TRUST | | | ELIOW -- 100% $57,413,193 | | | Mgmt.-100% $550,000 |
| | |__________________________| | |_____________________________| | |___________________________|
| | | |
| | | _____________________________ | ___________________________
| | __________________________ | | KEY HEALTH PLAN, INC. | | | NWE, INC. |
| | | NATIONWIDE | | | | | | |
| | | SEPARATE ACCOUNT | |______| Common Stock: 1,000 Shares | |______| Common Stock: 100 Shares |
| | | TRUST | | ------------- | | ------------ |
| |___| | | Cost | | Cost |
| ___| | | ---- | | ---- |
| | | COMMON LAW TRUST | | ELIOW-80% $2,700,000 | | NW Life-100% $35,971,375 |
| | | | |_____________________________| |___________________________|
| | |__________________________|
| |
| | __________________________
| | | FINANCIAL HORIZONS |
| | | INVESTMENT TRUST |
| |___| |
|_____| |
| COMMON LAW TRUST |
|__________________________|
</TABLE>
<PAGE> 70
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| INSURANCE COMPANY |___________________________________________________________
| (CASUALTY) |
|_______________________________________|
| _______________________________________________________________
__________________|______________|___
| NATIONWIDE CORPORATION (NW Corp) |
| Common Stock: Control: |
| ------------- ------- |
| 13,642,432 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty 12,992,922 $751,352,485 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_________________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES BENEFIT | | GATES, McDONALD | | NATIONWIDE FINANCIAL |
|SERVICES CORPORATION (PEBSCO) | | & COMPANY (GATES) | | INSTITUTION DISTRIBUTORS |
______| Common Stock: 236,494 Shares | | Common Stock: 254 Shares | | AGENCY, INC. (NFIDAI)|
| ____| ------------- | | ------------- |___ _____| Common Stock: 1,000 Shares|
| | | Cost | | | | | ___| ------------- |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $ 7,830,936 | | ---- | | | | | NW Corp. ---- |
| | |______________________________| | NW Corp.- $25,683,532 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK, INC. | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 Shares | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- | | | | | |___|Common Stock: 10,000 Shares|
| | | Cost | | Cost | | | | |----------- |
| | | ---- | | ---- | | | | | Cost |
| | | PEBSCO-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |____________________________| | | | | | | NFIDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | ALABAMA | | | | | | | LANDMARK FINANCIAL |
| | |Common Stock: 100,000 Shares| | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____|------------- | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___|Common Stock: 10,000 Shares|
| | | ---- | | ---- | | | |------------- |
| | | PEBSCO-100% $1,000 | | $93,750 | | | | Cost |
| | |____________________________| |___________________________| | | | ---- |
| | | | | NFIDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ____________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 Shares| | | | FINANCIAL HORIZONS |
| |____| ------------- | | | | SECURITIES CORP. |
| | | Cost | ________________________________|_|___|Common Stock: 10,000 Shares|
| | | ---- | | AFFILIATE AGENCY, INC. | | | |------------- |
| | | PEBSCO-100% $500 | | | | | | Cost |
| | |____________________________| | Common Stock: 100 Shares | | | | ---- |
| | | | | | | NFIDAI-100% $153,000 |
| | | NFIDAI-100% Cost | | | |___________________________|
| | | ---- | | |
| | ___________________________ | $100 | | |
| | | PEBSCO OF MASSACHUSETTS | |___________________________| | |
| | | INSURANCE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 1,000 Shares| | | | |
| | | ------------- | | | | FINANCIAL HORIZONS |
| | | Cost | | |___| DISTRIBUTORS |
| | | ---- | | ___| AGENCY OF OHIO, |
| | | PEBSCO-100% $1,000 | | | | INC. |
| | |___________________________| | | |___________________________|
| | | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | MONTANA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 500 Shares | | ___| DISTRIBUTORS AGENCY |
| | | ------------- | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | ---- | | |
| | | PEBSCO-100% $500 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | NEW MEXICO | | | | |
| | | | | |___| FINANCIAL HORIZONS |
| |____|Common Stock: 1,000 Shares | | ___| DISTRIBUTORS AGENCY |
| | |------------- | | | | OF TEXAS, INC. |
| | | Cost | | | |___________________________|
| | | ----- | | |
| | | PEBSCO-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____| AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS, INC. | | |
|___________________________| |___________________________|
</TABLE>
<PAGE> 71
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE INSURANCE COMPANY |
| (FIRE) |
|_______________________________________|
________________________________________|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | NATIONWIDE HMO, INC. |
| INVESTOR SERVICES, INC. | | | (NW HMO) |
| (NEA) | | | Common Stock: 100 Shares |
_______| Common Stock: 500 Shares | |_____| ------------ |
| _____| ------------- | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $14,603,732 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MANAGEMENT |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| |_____| OF ALABAMA, INC. | | | Common Stock: 100 Shares |
| | | Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW HMO ---- |
| | | NEA-100% $5,000 | | | INC.-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH |
| | | INVESTOR SERVICES | | | AGENCY, INC. |
| | | OF MONTANA, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | Cost |
| | | Cost | | NW HMO ---- |
| | | ----- | | INC.-99% $116,077 |
| | | NEA-100% $500 | |___________________________|
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF NEVADA, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF OHIO, INC. |
| | | Common Stock: 100 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-91% $5,000 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF WYOMING, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | |
| | | NEA VALUEBUILDER |
| |_____| INVESTOR SERVICES |
| | | OF TEXAS, INC. |
| | | |
| | |___________________________|
| |
| | ___________________________
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
December 31, 1995
</TABLE>
Page 2
<PAGE> 72
ITEM 27. NUMBER OF CONTRACT OWNERS
The number of Owners of Contracts as of June 30, 1996 was 3,218.
ITEM 28. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State of
Ohio, for indemnification by the Company of any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative by reason of the fact that such person
is or was a director, officer or employee of the Company, against
expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, to the extent and
under the circumstances permitted by the General Corporation Law of the
State of Ohio.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Act") may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Nationwide Advisory Services, Inc. ("NAS") acts as general
distributor for the Nationwide DC Variable Account,
Nationwide Multi-Flex Variable Account, Nationwide DCVA-II,
Nationwide Variable Account-II, Nationwide Variable
Account-5, Nationwide Variable Account-6, Nationwide
Variable Account-8, Nationwide VA Separate Account-A,
Nationwide VA Separate Account-B, Nationwide VA Separate
Account-C, Nationwide VL Separate Account-A, Nationwide VL
Separate Account-B, Nationwide VLI Separate Account-2,
Nationwide VLI Separate Account-3, NACo Variable Account and
the Nationwide Variable Account, all of which are separate
investment accounts of the Company or its affiliates.
NAS also acts as principal underwriter for the Nationwide
Investing Foundation, Nationwide Separate Account Trust,
Financial Horizons Investment Trust, and Nationwide
Investing Foundation II, which are open-end management
investment companies.
(b) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, Ohio 43215
D. Richard McFerson Chairman of the Board of Directors and Chairman and
One Nationwide Plaza Chief Executive Officer--Nationwide
Columbus, OH 43215 Insurance Enterprise and Director
Gordon E. McCutchan
One Nationwide Plaza Executive Vice President-Law and
Columbus, OH 43215 Corporate Services and Director
Robert A. Oakley Executive Vice President - Chief Financial
One Nationwide Plaza Officer and Director
Columbus, Ohio 43215
Robert J. Woodward Executive Vice President - Chief Investment
One Nationwide Plaza Officer and Director
Columbus, Ohio 43215
W. Sidney Druen Senior Vice President and
One Nationwide Plaza General Counsel and
Columbus, OH 43215 Assistant Secretary
</TABLE>
111 of 134
<PAGE> 73
<TABLE>
<S> <C>
James F. Laird, Jr. Vice President and General
One Nationwide Plaza Manager
Columbus, OH 43215
Peter J. Neckermann Vice President
One Nationwide Plaza
Columbus, OH 43215
Harry S. Schermer Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
Rae I. Mercer Secretary
One Nationwide Plaza
Columbus, OH 43215
William G. Goslee Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
</TABLE>
<TABLE>
<CAPTION>
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
----------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Advisory
Services,
Inc.
</TABLE>
112 of 134
<PAGE> 74
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Robert O. Cline
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43215
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) File a post-effective amendment to this registration statement
as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never
more than 16 months old for so long as payments under the
variable annuity contracts may be accepted;
(b) Include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant
can check to request a Statement of Additional Information, or
(2) a post card or similar written communication affixed to or
included in the prospectus that the applicant can remove to
send for a Statement of Additional Information; and
(c) Deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form promptly upon written or oral request.
(d) Represent that any contract offered by the prospectus and
which is issued pursuant to Section 403(b) of the Code, is
issued by the Registrant in reliance upon, and in compliance
with, the Securities and Exchange Commission's no-action
letter to the American Council of Life Insurance (publicly
available November 28, 1988) which permits withdrawal
restrictions to the extent necessary to comply with IRC
Section 403(b)(11).
(e) Represent that 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.
113 of 134
<PAGE> 75
OFFERED BY
NATIONWIDE
LIFE INSURANCE COMPANY
Group
Flexible Fund
Retirement
Contracts
PROSPECTUS
NOVEMBER 2, 1996
114 of 134
<PAGE> 76
NATIONWIDE LIFE INSURANCE COMPANY
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED THROUGH THE NATIONWIDE DC VARIABLE ACCOUNT
(Supplement Dated November 2, 1996 to Prospectus Dated November 2, 1996)
THIS SUPPLEMENT UPDATES CERTAIN INFORMATION CONTAINED IN THE PROSPECTUS AND
SHOULD BE KEPT FOR FUTURE REFERENCE. THIS SUPPLEMENT IS FOR USE ONLY WITH
CONTRACTS ISSUED PURSUANT TO SECTION 403(b) OF THE CODE ("TAX-SHELTERED ANNUITY
CONTRACTS").
1. The section entitled "SUMMARY OF CONTRACT EXPENSES" in the prospectus is
amended by including the following Underlying Mutual Fund options available
only for Tax-Sheltered Annuity Contracts.
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
PARTICIPANT TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge................ 4-5%
(as a percentage of Purchase Payments) -----
ANNUAL CONTRACT MAINTENANCE CHARGE(1)............................ $ 15
-----
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fee.......................... 0.50%
-----
Administration Charge................................... 0.45%
-----
Total Variable Account Annual Expenses.................. 0.95%
-----
</TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(2)
(as a percentage of Underlying Mutual Fund average net assets)
<TABLE>
<CAPTION>
---------------------------------------------
Management Other Total Underlying
Fees Expenses Mutual Fund
Expenses
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dreyfus Socially Responsible Growth Fund, Inc. 0.69 0.58 1.27
- ----------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 0.27 0.12 0.39
- ----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund - 0.51 0.10 0.61
Equity Income Portfolio
- ----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund - 0.61 0.09 0.70
Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund - High 0.60 0.11 0.71
Income Portfolio(3)
- ----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund - 0.76 0.15 0.91
Overseas Portfolio
- ----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II - 0.71 0.08 0.79
Asset Manager Portfolio
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust - Growth 0.84 0.10 0.94
Portfolio
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust - Limited 0.65 0.10 0.75
Maturity Bond Portfolio
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust - Partners 0.85 0.30 1.15
Portfolio
- ----------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 0.50 0.04 0.54
- ----------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 0.50 0.01 0.51
- ----------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 0.50 0.02 0.52
- ----------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 0.50 0.01 0.51
- ----------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Balanced 1.00 0.00 1.00
- ----------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Growth 1.00 0.00 1.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Annual Contract Maintenance Charge will also be assessed on the date
that amounts held with respect to a Participant are fully withdrawn from
the Contract.
(2) The Underlying 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.
(3) The Fidelity Investments Variable Insurance Products Fund - High Income
Portfolio may invest in lower quality debt securities commonly referred to
as junk bonds.
115 of 134
<PAGE> 77
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 initial Purchase Payment and 5% annual
return on assets.
<TABLE>
<CAPTION>
------------------------------------------------
If you surrender your Contract
at the end of the applicable time period
------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dreyfus Socially Responsible Growth Fund, Inc. 63 112 163 304
- ---------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 54 84 116 207
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 56 91 128 232
Products Fund - Equity Income Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 57 94 133 242
Products Fund - Growth Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 58 94 134 243
Products Fund - High Income Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 60 101 144 265
Products Fund - Overseas Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 58 97 138 252
Products Fund II - Asset Manager Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 60 102 146 269
- - Growth Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 58 96 136 248
- - Limited Maturity Bond Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 62 108 157 291
- - Partners Portfolio
- ---------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 56 89 124 224
- ---------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 55 88 123 221
- ---------------------------------------------------------------------------------------------------
NSAT Money Market Fund 56 88 123 222
- ---------------------------------------------------------------------------------------------------
NSAT Total Return Fund 55 88 123 221
- ---------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Balanced 61 104 149 275
- ---------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Growth 61 104 149 275
- ---------------------------------------------------------------------------------------------------
</TABLE>
(continued on next page)
116 of 134
<PAGE> 78
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 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>
Dreyfus Socially Responsible Growth Fund, Inc. 23 72 123 264
- ---------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 14 44 76 167
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 16 51 88 192
Products Fund - Equity Income Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 17 54 93 202
Products Fund - Growth Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 18 54 94 203
Products Fund - High Income Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 20 61 104 225
Products Fund - Overseas Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 18 57 98 212
Products Fund II - Asset Manager Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 20 62 106 229
- - Growth Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 18 56 96 208
- - Limited Maturity Bond Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 22 68 117 251
- - Partners Portfolio
- ---------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 16 49 84 184
- ---------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 15 48 83 181
- ---------------------------------------------------------------------------------------------------
NSAT Money Market Fund 16 48 83 182
- ---------------------------------------------------------------------------------------------------
NSAT Total Return Fund 15 48 83 181
- ---------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Balanced 21 64 109 235
- ---------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Growth 21 64 109 235
- ---------------------------------------------------------------------------------------------------
</TABLE>
(continued on next page)
117 of 134
<PAGE> 79
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 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>
Dreyfus Socially Responsible Growth Fund, Inc. 23 72 123 264
- ---------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 14 44 76 167
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 16 51 88 192
Products Fund - Equity Income Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 17 54 93 202
Products Fund - Growth Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 18 54 94 203
Products Fund - High Income Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 20 61 104 225
Products Fund - Overseas Portfolio
- ---------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance 18 57 98 212
Products Fund II - Asset Manager Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 20 62 106 229
- - Growth Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 18 56 96 208
- - Limited Maturity Bond Portfolio
- ---------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust 22 68 117 251
- - Partners Portfolio
- ---------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 16 49 84 184
- ---------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 15 48 83 181
- ---------------------------------------------------------------------------------------------------
NSAT Money Market Fund 16 48 83 182
- ---------------------------------------------------------------------------------------------------
NSAT Total Return Fund 15 48 83 181
- ---------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Balanced 21 64 109 235
- ---------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - TCI Growth 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.
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
"Variable Account Charges and Other Deductions" in the 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" in the prospectus).
118 of 134
<PAGE> 80
2. The section entitled "CONDENSED FINANCIAL INFORMATION" in the prospectus
is amended by adding the following information about the Underlying Mutual
Fund options available for Tax-Sheltered Annuity Contracts.
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values (For an Accumulation Unit
outstanding throughout the period)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
==================================================================================================================
<S> <C> <C> <C> <C>
Dreyfus Stock Index 0.975745 1.322035 5,213 1995
Fund -------------------------------------------------------------------------------
1.000000 0.975745 782 1994
==================================================================================================================
Dreyfus Socially 0.977428 1.302837 0 1995
Responsible Growth Fund -------------------------------------------------------------------------------
1.000000 0.977428 0 1994
==================================================================================================================
Fidelity Investments 1.018963 1.366323 29,541 1995
Variable Insurance -------------------------------------------------------------------------------
Products Fund: Growth 1.000000 1.018963 7,026 1994
Portfolio
==================================================================================================================
Fidelity Investments 0.974175 1.303642 37,796 1995
Variable Insurance -------------------------------------------------------------------------------
Products Fund: Equity 1.000000 0.974175 5,699 1994
Income Portfolio
==================================================================================================================
Fidelity Investments 0.992271 1.185437 10,485 1995
Variable Insurance -------------------------------------------------------------------------------
Products Fund: High 1.000000 0.992271 1,484 1994
Income Portfolio
==================================================================================================================
Fidelity Investments 0.955979 1.107535 10,482 1995
Variable Insurance -------------------------------------------------------------------------------
Products Fund II: Asset 1.000000 0.955979 2,037 1994
Manager Portfolio
==================================================================================================================
Fidelity Investments 0.947883 1.029809 55,723 1995
Variable Insurance -------------------------------------------------------------------------------
Products Fund: 1.000000 0.947883 10,984 1994
Overseas Portfolio
==================================================================================================================
Neuberger & Berman 1.272940 1.661013 24,304 1995
Advisers Management -------------------------------------------------------------------------------
Trust - 1.352530 1.272940 17,238 1994
Growth Portfolio -------------------------------------------------------------------------------
1.278609 1.352530 12,520 1993
-------------------------------------------------------------------------------
1.178398 1.278609 8,757 1992
-------------------------------------------------------------------------------
0.917001 1.178398 4,358 1991
-------------------------------------------------------------------------------
1.000000 0.917001 0 1990
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
119 of 134
<PAGE> 81
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>
Neuberger & Berman 0.995462 1.093904 2,860 1995
Advisers ----------------------------------------------------------------------------
Management 1.000000 0.995462 597 1994
Trust - Limited Maturity
Bond Portfolio
==============================================================================================================
Neuberger & Berman 0.966223 1.306186 5,923 1995
Advisers ----------------------------------------------------------------------------
Management Trust - 1.000000 0.966223 3,237 1994
Partners Portfolio
==============================================================================================================
NSAT Government 1.338281 1.574158 5,714 1995
Bond Fund ----------------------------------------------------------------------------
1.396125 1.338281 971 1994
----------------------------------------------------------------------------
1.286974 1.396125 632 1993
----------------------------------------------------------------------------
1.204500 1.286974 1,660 1992
----------------------------------------------------------------------------
1.041986 1.204500 527 1991
----------------------------------------------------------------------------
1.000000 1.041986 0 1990
==============================================================================================================
NSAT Capital 1.000000 1.208468 0 1995
Appreciation Fund
==============================================================================================================
NSAT Money 1.155984 1.209790 14,512 1995
Market Fund ----------------------------------------------------------------------------
1.123427 1.155984 2,543 1994
----------------------------------------------------------------------------
1.103814 1.123427 0 1993
----------------------------------------------------------------------------
1.077714 1.103814 0 1992
----------------------------------------------------------------------------
1.028111 1.077714 0 1991
----------------------------------------------------------------------------
1.000000 1.028111 0 1990
==============================================================================================================
NSAT Total 1.525590 1.950853 11,766 1995
Return Fund ----------------------------------------------------------------------------
(formerly 1.523742 1.525590 3,996 1994
"Common ----------------------------------------------------------------------------
Stock Fund") 1.386859 1.523742 845 1993
----------------------------------------------------------------------------
1.294230 1.386859 500 1992
----------------------------------------------------------------------------
0.943464 1.294230 69 1991
----------------------------------------------------------------------------
1.000000 0.943464 0 1990
==============================================================================================================
TCI Portfolios, Inc. - 0.986992 1.184177 1,504 1995
TCI Balanced ----------------------------------------------------------------------------
1.000000 0.986992 0 1994
==============================================================================================================
TCI Portfolios, Inc. 1.331537 1.729155 50,891 1995
TCI Growth ----------------------------------------------------------------------------
1.360119 1.331537 38,898 1994
----------------------------------------------------------------------------
1.244720 1.360119 33,128 1993
----------------------------------------------------------------------------
1.273681 1.244720 21,051 1992
----------------------------------------------------------------------------
0.906306 1.273681 10,348 1991
----------------------------------------------------------------------------
1.000000 0.906306 4,711 1990
- --------------------------------------------------------------------------------------------------------------
</TABLE>
120 of 134
<PAGE> 82
3. The section entitled "CONTRACT MAINTENANCE CHARGE" in the prospectus is
amended by adding the following paragraph:
For Tax-Sheltered Annuity Contracts, 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.
4. The section entitled "DESCRIPTION OF THE CONTRACTS" in the prospectus is
amended by adding the following new section:
PARTICIPANT RIGHTS UNDER TAX-SHELTERED ANNUITY CONTRACTS
Participant rights under the Contract are set forth in the Plan, if
any, and are described more fully in the Certificate of Participation
issued to each Participant by the Company and which describes the rights
and benefits to which the Participant is entitled under the Contract. The
term Owner, as used throughout the Contract, refers to the purchaser and
the holder of the Contract. However, the Owner's rights are limited by the
Plan, if any, the Code and applicable regulations. Participant Accounts
held under the Contract shall be non-forfeitable at all times. No amounts
payable under the Contract with respect to a Participant may be sold,
assigned, discounted, or pledged as collateral for a loan or as a security
for the performance of an obligation or for any other purpose to any
person other than the Company. In addition, to the extent permitted by
law, no such sum shall in any way be subject to legal process requiring
the payment of any claim against the payee. The Company will accept
direction only from the Participant except as otherwise specifically
provided in the Plan, if any. The Company shall be entitled to rely on any
action taken or omitted by the Participant, pursuant to the terms of the
Contract.
5. The section entitled "SUSPENSION AND TERMINATION" in the prospectus is
amended by deleting the last two sentences of that section.
6. The section entitled "APPLICATION OF PURCHASE PAYMENTS" in the prospectus
is amended by adding the following paragraph at the end:
With respect to Tax-Sheltered Annuity Contracts, Purchase Payments for
each Participant may not exceed the Contract's allowable portion of the
lesser of the maximum exclusion allowance under Code Section 403(b), or
the elective deferral limits set forth in Code Section 402(g), except for
amounts eligible for rollover, transfer or exchange treatment under the
Code. In no event may the Purchase Payments exceed the limits described in
Code Section 415. The amount of the Purchase Payments and earnings thereon
in excess of the limits set forth in Code Section 402(g) ("excess
deferrals") shall be returned in accordance with that section to the
Participant upon written request, without application of the Contingent
Deferred Sales Charge, if any, and in accordance with the Plan, if any.
The Company may change the required minimum annual Purchase Payment to any
amount which does not violate the applicable provisions of the Code.
7. The section entitled "REDEMPTION OF PARTICIPANT ACCOUNTS (TERMINATION)" in
the prospectus is amended by adding the following paragraph at the end:
With respect to Tax-Sheltered Annuity Contracts, Section 403(b)(11) of
the Code prohibits redemptions of Purchase Payments made pursuant to a
salary reduction agreement (within the meaning of 402(g)(3)(C) of the
Code)before the person reaches age 59 1/2, separates from service, dies,
becomes disabled (within the meaning of Code Section 72(m)(7)), or faces a
financial hardship as defined by the Plan, or, if no Plan is specified, as
used in Section 403(b)(11)(B) of the Code and applicable regulations. This
prohibition applies to Purchase Payments made in years beginning after
December 31, 1988, to earnings on those Purchase Payments, and to earnings
on amounts held as of December 31, 1988. Hardship redemptions are limited
to the amount of Purchase Payments attributable to Participant elective
contributions and earnings on Purchase Payments held as of December 31,
1988, and may be subject to a 10% tax penalty. The value of contracts
issued pursuant to Section 403(b) may be transferred to other contracts of
other carriers. However, the exchange, under Section 1035 of the Code, of
a contract which had an accumulated value prior to January 1, 1989, for a
new contract may subject the pre-1989 value to the limits of Section
121 of 134
<PAGE> 83
403(b)(11). The Company issues this Contract in reliance upon, and in
compliance with, a Securities and Exchange Commission industry-wide
no-action letter (publicly available November 28, 1988) which permits
withdrawal restrictions to the extent necessary to comply with Section
403(b)(11).
8. The section entitled "DISTRIBUTION OF PARTICIPANT ACCOUNTS (RETIREMENT
PERIOD)" in the prospectus is amended by Including the following section:
REQUIRED DISTRIBUTION FOR TAX-SHELTERED ANNUITY CONTRACTS
The entire interest of a Participant under a Contract issued pursuant
to Code Section 403(b) accruing after December 31, 1986, will,
notwithstanding anything else contained herein, be distributed to the
Participant under the Optional Retirement Income Form selected over-
A. the life of the Participant or the lives of the Participant and
the Participant's designated Beneficiary; or
B. a period not extending beyond the life expectancy of the
Participant or the life expectancy of the Participant and the
Participant's designated Beneficiary.
If the Participant's entire interest is to be distributed in equal or
substantially equal payments over a period described in A or B, such
payments will commence no later than the first day of April following the
calendar year In which the Participant attains age 70 1/2 (the Required
Beginning Date). In the case of a governmental plan or church plan (as
defined in Code Section 89(i)(4)), the Required Beginning Date will be the
later of the dates determined under the preceding sentence or April 1 of
the calendar year following the calendar year in which the Participant
retires.
Payments commencing on the Required Beginning Date will not be less
than the lesser of the quotient obtained by dividing the entire interest
of the Participant by the life expectancy of the Participant, or the joint
and last survivor expectancy of the Participant and the Participant's
designated Beneficiary (whichever is applicable). Life expectancy and
joint and last survivor expectancy are computed by the use of return
multiples contained in Section 1.72-9 of the Treasury Regulations.
All Optional Retirement Income Forms described in the prospectus must
comply with the minimum Distribution and incidental death benefit
provision of Code Section 401(a)(9) and applicable regulations.
9. The section entitled "DEATH BENEFIT BEFORE RETIREMENT" in the prospectus
is deleted in its entirety and replaced with the following:
DEATH BENEFIT BEFORE RETIREMENT
If the Participant dies before his or her retirement income commences,
generally the entire Participant Account Value must be distributed within
five years after the Participant's death. There are two exceptions: (1) if
payments are to be made to the Participant's designated Beneficiary and
the Distributions begin within one year of the Participant's death,
payments may be extended over the life (or a period not exceeding the life
expectancy) of the Beneficiary; and (2) if the Beneficiary is the
surviving spouse and the Distributions begin by the time the Participant
would have reached age 70 1/2, payments may be made over the life (or a
period not exceeding life expectancy) of the surviving spouse.
10. References throughout the Prospectus to the "GROUP FIXED FUND RETIREMENT
CONTRACT" are hereby changed to "GROUP FIXED TAX DEFERRED ANNUITY
CONTRACT."
11. The Appendix of Participating Underlying Mutual Funds in the prospectus is
amended in its entirety by the following Underlying Mutual Funds. These
Underlying Mutual Funds are available only to serve as the Underlying
investment for variable annuity and variable life contracts issued through
separate accounts of life Insurance companies which may or may not be
affiliated. A full description of the Underlying Mutual Funds, their
investment policies and restrictions, risks, charges and expenses and all
other aspects of their operation is contained in the prospectuses of the
Underlying Mutual Funds, which should be read in conjunction with this
prospectus before investing.
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<PAGE> 84
DREYFUS STOCK FUND INDEX
The Dreyfus Stock Index Fund, Inc. is an open-end, non-diversified,
management investment company. It was incorporated under Maryland law on January
24, 1989 and commenced operations on September 29, 1989. Wells Fargo Nikko
Investment Advisors serves as the Fund's index fund manager. As of May 1, 1994,
the Dreyfus Life and Annuity Index Fund began doing business as the Dreyfus
Stock Index Fund.
The investment objective of the Fund is to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's Composite Index of 500
Stocks. The Fund is neither sponsored by nor affiliated with Standard & Poor's
Corporation.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end,
diversified, management investment company. It was incorporated under Maryland
law on July 20, 1992, and commenced operations on October 7, 1993. The Dreyfus
Corporation serves as the Fund's investment advisor. Tiffany Capital Advisors,
Inc. serves as the Fund's sub-investment adviser and provides day-to-day
management of the Fund's portfolio.
The investment objective of the Fund is to provide capital growth equity
investment in companies that, in the opinion of the Fund's management, not only
meet traditional investment standards, but which also show evidence that they
conduct their business in a manner that contributed to the enhancement of the
quality of life in America. Current income is secondary to the primary goal.
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND
The fund is an open-end, diversified, management investment company
organized as a Massachusetts business trust on November 13, 1981. The funds
shares are purchased by insurance companies to fund benefits under variable
insurance and annuity policies. Fidelity Management & Research Company ("FMR")
is the Fund's manager.
EQUITY-INCOME PORTFOLIO
The investment objective of the Fund is to seek reasonable income by
investing primarily in income-producing equity securities. In choosing
these securities FMR also will consider the potential for capital
appreciation. The Portfolio's goal is to achieve a yield which exceeds the
composite yield on the securities comprising the Standard & Poor's
Composite Index of 500 Stocks.
GROWTH PORTFOLIO
The investment objective of the Fund seeks to achieve capital
appreciation. This Portfolio will invest in the securities of both
well-known and established companies, and smaller, less well-known
companies which may have a narrow product line or whose securities are
thinly traded. These latter securities will often involve greater risk than
may be found in the ordinary investment security. FMR's analysis and
expertise plays an integral role in the selection of securities and,
therefore, the performance of the Portfolio. Many securities which FMR
believes would have the greatest potential may be regarded as speculative,
and investment in the Portfolio may involve greater risk than is inherent
in other mutual funds. It is also important to point out that the Portfolio
makes most sense for you if you can afford to ride out changes in the stock
market, because it invests primarily in common stocks. FMR also can make
temporary investments in securities such as investment-grade bonds,
high-quality preferred stocks and short-term notes, for defensive purposes
when it believes market conditions warrant.
HIGH INCOME PORTFOLIO
The investment objective of the Fund seeks to obtain a high level of
current income by investing primarily in high-risk, lower-rated,
high-yielding, fixed-income securities, while also considering growth of
capital. The Portfolio manager will seek high current income normally by
investing the Portfolio's assets as follows:
- at least 65% in income-producing debt securities and preferred stocks,
including convertible securities
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<PAGE> 85
- up to 20% in common stocks and other equity securities when consistent
with the Portfolio's primary objective or acquired as part of a unit
combining fixed-income and equity securities.
Higher yields are usually available on securities that are
lower-rated or that are unrated. Lower-rated securities are usually defined
as Baa or lower by Moody's; BBB or lower by Standard & Poor's and may be
deemed to be of a speculative nature. The Portfolio may also purchase
lower-quality bonds such as those rated Ca3 by Moody's or C- by Standard &
Poor's which provide poor protection for payment of principal and interest
(commonly referred to as "junk bonds"). For a further discussion of
lower-rated securities, please see the "Risks of Lower-Rated Debt
Securities" section of the Portfolio's prospectus.
OVERSEAS PORTFOLIO
The investment objective of the Fund is to seek long term growth of
capital primarily through investments in foreign securities. The Overseas
Portfolio provides a means for investors to diversify their own portfolios
by participating in companies and economies outside of the United States.
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND II:
The Variable Insurance Products Fund II is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on March 21, 1988. The fund's shares are purchased by insurance companies
to fund benefits under variable insurance and annuity policies. FMR is the
fund's manager.
ASSET MANAGER PORTFOLIO
The investment objective of the Fund is to seek high total return
with reduced risk over the long-term by allocating its assets among
domestic and foreign stocks, bonds and short-term fixed income instruments.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust (the "Trust") is a diversified
open-end investment company created under the laws of Massachusetts. The Trust
offers shares in the four separate Funds listed below, each with its own
investment objectives. Currently, shares of the Trust will be sold only to life
insurance company separate accounts to fund the benefits under variable
insurance or annuity policies issued by life Insurance companies. The assets of
the Trust are managed by Nationwide Financial Services, Inc. of One Nationwide
Plaza, Columbus, Ohio 43215, a wholly-owned subsidiary of Nationwide Life
Insurance Company.
CAPITAL APPRECIATION FUND
The Fund is designed for investors who are interested in long-term
growth. The Fund seeks to meet its objectives primarily through a
diversified portfolio of the common stock of companies which the investment
manager determines to have a better-than-average potential for sustained
capital growth over the long-term.
GOVERNMENT BOND FUND
The investment objective of the Fund is to provide as high a level
of income as is consistent with the preservation of capital. It seeks to
achieve its objective by investing in a diversified portfolio of securities
issued or backed by the U.S. Government, its agencies or instrumentalities.
TOTAL RETURN FUND (FORMERLY "COMMON STOCK FUND")
The investment objective of the Fund is to obtain a reasonable
long-term total return (i.e., earnings growth plus potential dividend
yield) on invested capital from a flexible combination of current return
and capital gains through investments in common stocks, convertible issues,
money market instruments and bonds with a primary emphasis on common
stocks.
124 of 134
<PAGE> 86
MONEY MARKET FUND
The investment objective of the Fund is to seek as high a level of
current income as is considered consistent with the preservation of capital
and liquidity by investing primarily In money market instruments.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Neuberger & Berman Advisers Management Trust is an open-ended
diversified management investment company established as a Massachusetts
business trust on December 14, 1983. The Distribution of trust shares is only in
connection with certain variable annuity contracts and variable life insurance
policies issued through the insurance company separate accounts. The investment
adviser is Neuberger & Berman Management Incorporated.
GROWTH PORTFOLIO
The investment objective of the Fund is capital growth through
investments in common stocks of companies that the investment adviser
believes will have above average earnings or otherwise provide investors
with above average potential for capital appreciation. To maximize this
potential, the investment adviser may also utilize, from time to time,
securities convertible into common stocks, warrants and options to purchase
such stocks.
LIMITED MATURITY BOND PORTFOLIO
The investment objective of the Fund is to provide the highest
level of current income, consistent with low risk to principal and
liquidity. As a secondary objective, it also seeks to enhance its total
return through capital appreciation when market factors, such as falling
interest rates and rising bond prices, indicate that capital appreciation
may be available without significant risk to principal. It seeks to achieve
its objectives through investments in a diversified portfolio of limited
maturity debt securities.
PARTNERS PORTFOLIO
The investment objective of the Fund is to seek capital growth
through an investment approach designed to increase capital with reasonable
risk. The Fund uses the value-oriented investment approach investing
primarily in common stocks of established companies. Its investment program
seeks securities believed to be undervalued based on factors such as low
price-to-earnings ratios, consistent cash flow, and support from asset
values.
TCI PORTFOLIOS, INC., A MEMBER OF THE TWENTIETH CENTURY FAMILY OF MUTUAL FUNDS
TCI Portfolios, Inc. was organized as a Maryland corporation in
1987. It is a diversified, open-end investment company, designed only to provide
investment vehicles for variable annuity and variable life insurance products of
insurance companies. The investment manager is Investors Research Corporation
which is wholly owned by Twentieth Century Companies, Inc., and also manages the
Twentieth Century family of funds.
TCI BALANCED
The investment objective of the Fund is capital growth and current
income. The fund will seek to achieve its objective by maintaining
approximately 60% of the assets of the fund in common stocks (including
securities convertible into common stocks and other equity equivalents)
that are considered by management to have better-than-average prospects for
appreciation and approximately 40% in fixed income securities. A minimum of
25% of the fixed income portion of the fund will be invested in fixed
income senior securities. There can be no assurance that the Fund will
achieve its investment objective.
TCI GROWTH
The investment objective of the Fund is capital growth. The Fund
will seek to achieve its objective by investing primarily in common stocks
(including securities convertible into common stocks and other equity
equivalents) that meet certain fundamental and technical standards of
selection and, in the opinion of the Fund's management have better than
average potential for appreciation. The Fund tries to stay fully invested
in such stocks, regardless of the movement of stock prices generally.
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<PAGE> 87
The Fund may invest in cash and cash equivalents temporarily or
when it is unable to find common stocks meeting its criteria of selection.
It may purchase securities only of companies that have a record of at least
three years continuous operation. All securities in the Fund's portfolio
are listed on major stock exchanges or traded over-the-counter.
(Although the Statement of Additional Information concerning TCI
Portfolios, Inc., refers to redemptions of securities in kind under certain
conditions, all surrendering or redeeming Owners will receive cash from the
Company.)
12. The section entitled "FEDERAL TAX STATUS" in the prospectus is amended by
adding the following paragraphs at the end:
Recent changes to the Code permit the rollover of most
Distributions from qualified Plans to other qualified Plans, Individual
Retirement Accounts, or Individual Retirement Annuities. Most Distributions
from Tax Sheltered Annuities may be rolled over to other Tax Sheltered
Annuities, Individual Retirement Accounts or Individual Retirement
Annuities. Distributions which may not be rolled over are those which are:
1. one of series of substantially equal annual (or more frequent)
payments made: a) over the life (or life expectancy) of the
employee, b) the joint lives (or joint life expectancies) of
the employee and the employee's designated Beneficiary, or c)
for a specified period of ten years or more; and
2. a required minimum Distribution
Any Distribution eligible for rollover will be subject to federal
tax withholding at a 20 percent rate unless the Distribution is transferred
directly to a Qualified Plan, Individual Retirement Account, or Individual
Retirement Annuity.
You should consult your financial or tax consultant to discuss in
detail your particular tax situation and the use of the Contracts.
126 of 134
<PAGE> 88
NATIONWIDE LIFE INSURANCE COMPANY
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
Issued Through The Nationwide DC Variable Account
(Supplement Dated to Prospectus Dated November 2, 1996)
This supplement updates certain information contained in the Prospectus and
should be kept for future reference. This supplement is for use exclusively with
Contracts issued which offer Nationwide Asset Allocation Funds.
1. The "GLOSSARY OF TERMS" is hereby amended to add the following definition:
NATIONWIDE ASSET ALLOCATION FUND ("ASSET ALLOCATION FUND") - One
of a series of Underlying Mutual Funds advised by Nationwide
Financial Services, Inc., each of which has been constructed as a
"fund of funds".
2. The section entitled "SUMMARY OF CONTRACT EXPENSES" on page 5 of the
Prospectus is hereby amended to include the following information:
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of Underlying Mutual Fund average net assets)
<TABLE>
<CAPTION>
--------------------------------------------------------
Management Fees Other Expenses Total Fund Annual
Expenses
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nationwide Asset Allocation Fund -
Aggressive Fund 0.50% 0.00% 0.50%
- -----------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund -
Moderately Aggressive Fund 0.50% 0.00% 0.50%
- -----------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund -
Moderate Fund 0.50% 0.00% 0.50%
- -----------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund -
Moderately Conservative Fund 0.50% 0.00% 0.50%
- -----------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund -
Conservative Fund 0.50% 0.00% 0.50%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
127 of 134
<PAGE> 89
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.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nationwide Asset Allocation Fund - Aggressive Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderately Aggressive Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderate Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderately Conservative Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Conservative Fund
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 90
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 surrender your Contract at the
end of the applicable time period.
- ------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs.
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nationwide Asset Allocation Fund - Aggressive Fund
- ------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderately Aggressive Fund
- ------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderate Fund
- ------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderately Conservative Fund
- ------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Conservative Fund
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
129 of 134
<PAGE> 91
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 surrender your Contract at the end of the applicable
time period.
- ------------------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nationwide Asset Allocation Fund - Aggressive Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderately Aggressive Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderate Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Moderately Conservative Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Nationwide Asset Allocation Fund - Conservative Fund
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
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<PAGE> 92
3. The section entitled "VARIABLE ACCOUNT CHARGES AND OTHER DEDUCTIONS" on
page 21 of the Prospectus is hereby amended by adding the following
sections:
CONTRACT SURRENDER CHARGE
Upon termination of the Contract, an Owner whose Contract is invested in
the Nationwide Asset Allocation Funds will be assessed a surrender charge
calculated using a market value adjustment formula which only applies to
the fixed interest contract portion of each Asset Allocation Fund. The
market value adjustment is the amount which the Company determines, in
accordance with its then current procedures applicable to all fixed
interest contracts of this type and class, would be the net capital loss,
if any, resulting to the Company if investments were liquidated to make the
lump sum withdrawal. The then current Company procedures for determination
of the market value adjustment will be provided to the Owner on request.
ASSET ALLOCATION FUND CHARGES
A Participant Account will be assessed a market value adjustment against
the fixed interest contract portion of an Asset Allocation Fund for any
exchange or transfer from such Asset Allocation Fund, when certain
restrictions are exceeded (said restrictions are more fully set forth in
the Section entitled "Exchanges and Transfers for Asset Allocation Funds").
The Company reserves the right to change the percentage of said market
value adjustment on a quarterly basis.
The section entitled "DESCRIPTION OF THE CONTRACTS - EXCHANGE PRIVILEGE" on
Page 24 of the Prospectus is hereby amended by adding the following
sentence at the end of the first paragraph:
Exchanges and transfers from the Asset Allocations are also
subject to the provisions of the "Exchanges and Transfers for the
Asset Allocation Funds" set forth below.
4. The section entitled "DESCRIPTION OF THE CONTRACTS" on Page 24 of the
Prospectus is hereby amended by adding the following section after the
"EXCHANGE PRIVILEGE" section:
EXCHANGES AND TRANSFERS FOR ASSET ALLOCATION FUNDS
The Company will permit the Owner or the Participant, if the Plan so
provides, to exchange or transfer amounts among the Asset Allocation Funds
as frequently as permitted by the Plan. Exchanges or transfers from another
investment vehicle to an Asset Allocation Fund are permitted, subject to
the limits and rules as set by any such other investment provider.
The following provisions apply to exchanges and transfers from an Asset
Allocation Fund. Fifty percent (50%) of a Participant Account may be
exchanged or transferred out of any Asset Allocation Fund per calendar
year. There will be no charge for such exchange or transfer. In the event
more than 50% of a Participant Account is exchanged or transferred in a
calendar year, then such exchange or transfer shall be subject to market
value adjustment (see "Asset Allocation Fund Charge"). One hundred percent
(100%) of a Participant Account value in each Asset Allocation Fund can be
exchanged or transferred over a two year period, free of charge, subject to
all of the following requirements:
1) At least 50% of a Participant Account must be exchanged or
transferred during the first calendar year. Any exchange or
transfer exceeding 50% is subject to the charge described in the
section entitled "Asset Allocation Fund Charges";
2) Upon such election, no new deferrals or exchanges will be allowed
into the Asset Allocation Fund until after a Participant's Account
value reaches zero; and
3) 100% of the Participant Account must be exchanged or transferred
in one transaction during the second calendar year.
In the event the above conditions are not met, the election of this option
will have been deemed canceled and the Participant Account shall then be
permitted to only transfer 50% of the Participant Account within such
calendar year without incurring the Asset Allocation Fund charge as
described above.
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<PAGE> 93
5. The section entitled "SUSPENSION AND TERMINATION" on page 24 of the
Prospectus is hereby amended by adding the following sentence.
"Upon such termination by the Owner, payment of Contract Values
will be subject to any applicable Contingent Deferred Sales Charge
and Contract Surrender Charge."
6. The Appendix located on page 34 of the Prospectus is hereby amended to
include the following information:
Each Asset Allocation Fund seeks to maximize total investment
return (i.e., capital growth and income) subject to its investment
restrictions and asset allocation policies. Each Fund has been
constructed as a "fund of funds" which means that it pursues its
investment objective primarily by allocating its investments among
other mutual funds (the "Underlying Funds"); some of the
Underlying Funds will invest primarily in equity securities
("Equity Funds") while others will invest primarily in bonds and
other fixed income securities ("Bond Funds"). The Underlying Funds
will include portfolios advised by the Asset Allocation Funds'
investment adviser, Nationwide Financial Services, Inc. ("NFS"),
as well as other mutual funds which are not affiliated with the
Funds advised by NFS. Each of the Asset Allocation Funds, except
the Nationwide Asset Allocation - Aggressive Fund will also invest
in a fixed interest contract issued by the Company (the
"Nationwide Contract").
Nationwide Asset Allocation Seeks to provide growth of
- Aggressive Fund -- capital. It will invest in
Equity Funds. It is generally
appropriate for investors
looking for high returns over
an investment time horizon of
at least 15 years and having
a higher tolerance for market
fluctuations.
Nationwide Asset Allocation Seeks to provide growth of
- Moderately Aggressive Fund -- capital. It will invest
primarily in Equity Funds,
but the Fund will attempt to
reduce its volatility by also
investing in the Nationwide
Contract and Bond Funds. It
is generally appropriate for
moderate investors looking
for high returns over an
investment horizon of at
least 15 years or for more
aggressive investors over an
investment horizon of 10 to
15 years.
Nationwide Asset Allocation Seeks growth of capital and
- Moderate Fund income. It will also invest
primarily in Equity Funds,
but will invest a significant
percentage of its assets in
the Nationwide Contract and
Bond Funds. It is appropriate
for moderate investors
seeking moderate returns over
an investment time horizon of
between 10 and 15 years, as
well as more conservative
investors over an investment
time horizon of over 15 years
and more aggressive investors
over an investment time
horizon of 5 to 10 years.
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<PAGE> 94
Nationwide Asset Allocation Seeks income and,
- Moderately Conservative Fund -- secondarily, long term growth
of capital. It will generally
invest half of its assets in
Equity funds with the
remainder in the Nationwide
Contract and Bond Funds. It
is appropriate for moderate
investors seeking lower
fluctuations in returns
combined with some of the
upside potential of equity
investments over an
investment time horizon of
between five and 10 years, as
well as more conservative
investors over an investment
time horizon of between 10
and 15 years and more
aggressive investors over an
investment time horizon of
less than 5 years.
Nationwide Asset Allocation Seeks income and secondarily,
- Conservative Fund -- long term growth of capital.
It will invest primarily in a
fixed income combination of
the Nationwide Contract and
the Bond Funds, with a
smaller investment in Equity
Funds. It is appropriate for
investors seeking lower
fluctuations in returns over
an investment time horizon of
less than five years, as well
as more conservative
investors with an investment
time horizon of between five
and 10 years.
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<PAGE> 95
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company
Act of 1940, the Registrant, NATIONWIDE DC VARIABLE ACCOUNT, certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of the
Post-Effective Amendment and has caused this Post-Effective Amendment to be
signed on its behalf in the City of Columbus, and State of Ohio, on this 20th
day of December, 1996.
NATIONWIDE DC VARIABLE ACCOUNT
---------------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
---------------------------------------------
(Depositor)
By /s/ W. SIDNEY DRUEN
---------------------------------------------
W. Sidney Druen,
Senior Vice President and General Counsel
and Assistant Secretary
As required by the Securities Act of 1933, this Post-Effective
Amendment has been signed by the following persons in the capacities indicated
on the 20th day of December, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
/s/ LEWIS J. ALPHIN Director
- -------------------------------
Lewis J. Alphin
/s/ KEITH W. ECKEL Director
- -------------------------------
Keith W. Eckel
/s/ WILLARD J. ENGEL Director
- -------------------------------
Willard J. Engel
/s/ FRED C. FINNEY Director
- -------------------------------
Fred C. Finney
/s/ JOSEPH J. GASPER President/Chief
- ------------------------------- Operating Officer and Director
Joseph J. Gasper
/s/ CHARLES L. FUELLGRAF, JR. Director
- -------------------------------
Charles L. Fuellgraf, Jr.
/s/ HENRY S. HOLLOWAY Chairman of the Board
- ------------------------------- and Director
Henry S. Holloway
/s/ D. RICHARD McFERSON Chairman and Chief Executive
- ------------------------------- Officer-Nationwide Insurance
D. Richard McFerson Enterprise and Director
/s/ DAVID O. MILLER Director
- -------------------------------
David O. Miller
/s/ C. RAY NOECKER Director
- -------------------------------
C. Ray Noecker
/s/ ROBERT A. OAKLEY Executive Vice President-
- ------------------------------- Chief Financial Officer
Robert A. Oakley
/s/ JAMES F. PATTERSON Director By /s/ W. SIDNEY DRUEN
- ------------------------------- ---------------------------------
James F. Patterson W. Sidney Druen, Attorney-in-Fact
/s/ ARDEN L. SHISLER Director
- -------------------------------
Arden L. Shisler
/s/ ROBERT L. STEWART Director
- -------------------------------
Robert L. Stewart
/s/ NANCY C. THOMAS Director
- -------------------------------
Nancy C. Thomas
/s/ HAROLD W. WEIHL Director
- -------------------------------
Harold W. Weihl
</TABLE>
134 of 134
<PAGE> 96
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, which has filed or will file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933, as amended,
various Registration Statements and amendments thereto for the registration
under said Act of Individual Deferred Variable Annuity Contracts in connection
with the MFS Variable Account, Nationwide Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-3, Nationwide Variable Account-4,
Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide
Fidelity Advisor Variable Account, Nationwide Multi-Flex Variable Account and
Nationwide Variable Account-8; and the registration of fixed interest rate
options subject to a market value adjustment offered under some or all of the
aforementioned individual Variable Annuity Contracts in connection with the
Nationwide Multiple Maturity Separate Account, and the registration of Group
Flexible Fund Retirement Contracts in connection with the Nationwide DC
Variable Account, Nationwide DCVA-II, and the NACo Variable Account; and the
registration of Group Common Stock Variable Annuity Contracts in connection
with Separate Account No. 1; and the registration of variable life insurance
policies in connection with the Nationwide VLI Separate Account, Nationwide
VLI Separate Account-2 and Nationwide VLI Separate Account-3 of Nationwide Life
Insurance Company, hereby constitutes and appoints D. Richard McFerson, Joseph
J. Gasper, Gordon E. McCutchan, W. Sidney Druen, and Joseph P. Rath, and each
of them with power to act without the others, his/her attorney, with full power
of substitution and resubstitution, for and in his/her name, place and stead,
in any and all capacities, to approve, and sign such Registration Statements
and any and all amendments thereto, with power to affix the corporate seal of
said corporation thereto and to attest said seal and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys, and
each of them, full power and authority to do and perform all and every act and
thing requisite to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming that which said attorneys, or any of
them, may lawfully do or cause to be done by virtue hereof. This instrument
may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this 9th day of August, 1996.
- ------------------------------------- -------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
- ------------------------------------- -------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
- ------------------------------------- -------------------------------------
Willard J. Engel, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
- -------------------------------------
Fred C. Finney, Director -------------------------------------
James F. Patterson, Director
- -------------------------------------
Charles F. Fuellgraf, Jr., Director -------------------------------------
Arden L. Shisler, Director
- -------------------------------------
Joseph J. Gasper, President and Chief -------------------------------------
Operating Officer and Director Robert L. Stewart, Director
- ------------------------------------- -------------------------------------
Henry S. Holloway, Chairman of the Nancy C. Thomas, Director
Board, Director
-------------------------------------
- ------------------------------------- Harold W. Weihl, Director
D. Richard McFerson, Chairman and
Chief Executive Officer-Nationwide
Insurance Enterprise and Director
