<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. 47 [x]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 48
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
DENNIS W. CLICK, 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 and Statement of Additional Information.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date), pursuant to paragraph (b) of Rule 485
[X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date), pursuant to paragraph (a)(1) of Rule 485
- --------------------------------------------------------------------------------
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<PAGE> 2
NATIONWIDE DC VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM PAGE
Part A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C>
Item 1. Cover page...................................................................... 3
Item 2. Definitions..................................................................... 5
Item 3. Synopsis or Highlights.......................................................... 14
Item 4. Condensed Financial Information................................................. 13
Item 5. General Description of Registrant, Depositor, and Portfolio Companies........... 15
Item 6. Deductions and Expenses......................................................... 16
Item 7. General Description of Variable Annuity Contracts............................... 19
Item 8. Annuity Period.................................................................. 22
Item 9. Death Benefit................................................................... 25
Item 10. Purchases and Contract Value.................................................... 19
Item 11. Redemptions..................................................................... 21
Item 12. Taxes........................................................................... 25
Item 13. Legal Proceedings............................................................... 27
Item 14. Table of Contents of the Statement of Additional Information.................... 33
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page...................................................................... 69
Item 16. Table of Contents............................................................... 69
Item 17. General Information and History................................................. 69
Item 18. Services........................................................................ 69
Item 19. Purchase of Securities Being Offered............................................ 70
Item 20. Underwriters.................................................................... 70
Item 21. Calculation of Performance...................................................... 70
Item 22. Annuity Payments................................................................ 71
Item 23. Financial Statements............................................................ 72
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits............................................... 128
Item 25. Directors and Officers of the Depositor......................................... 130
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant...................................................................... 132
Item 27. Number of Contract Owners....................................................... 143
Item 28. Indemnification................................................................. 143
Item 29. Principal Underwriters.......................................................... 143
Item 30. Location of Accounts and Records................................................ 145
Item 31. Management Services............................................................. 145
Item 32. Undertakings.................................................................... 145
</TABLE>
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<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY
Group Flexible Fund Retirement Contract
Issued by Nationwide Life Insurance Company through its Nationwide DC Variable
Account
The date of this prospectus is May 1, 1999.
- --------------------------------------------------------------------------------
This prospectus contains basic information you should know about the contracts
before investing.
Please read it and keep it for future reference.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE UNDER THE CONTRACTS:
* AIM Equity Funds, Inc. - AIM Constellation Fund - Institutional Class
* American Century - Twentieth Century International Discovery Fund -
Investor Class
* American Century: Income & Growth - Investor Class
* American Century: Twentieth Century Growth
* American Century: Twentieth Century Select
* American Century: Twentieth Century Ultra
* Davis New York Venture Fund
* Dreyfus Appreciation Fund, Inc.
* Dreyfus Cash Management Fund - Class A
* Dreyfus Premier Midcap Stock Fund - Class A
* Dreyfus S&P 500 Index Fund
* Dreyfus Third Century Fund, Inc.
* Evergreen Income and Growth Fund (formerly Total Return Fund)
* Federated Bond Fund - Class F
* Federated U.S. Government Securities Fund: 2-5 Years: Institutional Shares
* Fidelity Advisor Growth Opportunities Fund - Class A
* Fidelity Advisor High Yield Fund - Class T
* Fidelity Asset Manager(TM)
* Fidelity Equity-Income Fund
* Fidelity Growth & Income Fund Portfolio
* INVESCO Dynamics Fund
* INVESCO Industrial Income Fund (formerly Financial Industrial Income Fund,
Inc.)
* INVESCO Total Return Fund
* Janus Fund
* Janus Worldwide Fund
* Massachusetts Investors Growth Stock Fund - Class A
* MAS Funds Fixed Income Portfolio
* MFS(R) Growth Opportunities Fund - Class A
* MFS(R) High Income Fund - Class A
* Morgan Stanley Institutional Fund, Inc. - Equity Growth Portfolio - Class B
* Nationwide(R) Bond Fund - Class D
* Nationwide(R) Fund - Class D
* Nationwide(R) Growth Fund - Class D
* Nationwide(R) Money Market Fund
* Nationwide S&P 500(R) Index Fund - Class Y
* LifeDesigns Series
- The Aggressive Portfolio
- The Moderately Aggressive Portfolio
- The Moderate Portfolio
- The Moderately Conservative Portfolio
- The Conservative Portfolio
* Nationwide Separate Account Trust - Nationwide Small Company Fund
* Neuberger Berman Guardian Fund, Inc.
* Neuberger Berman Manhattan Fund, Inc.
* Neuberger Berman Partners Trust
* Oppenheimer Global Fund - Class A
* Prestige Balanced Fund - Class Y
* Prestige International Fund - Class Y
* Prestige Large Cap Growth Fund - Class Y
* Prestige Large Cap Value Fund - Class Y
* Prestige Small Cap Fund - Class Y
* Putnam Investors Fund - Class A
* Putnam Voyager Fund - Class A
* SEI Index Funds - S&P 500 Index Portfolio
* Seligman Growth Fund, Inc. - Class A
* Templeton Foreign Fund - Class I
* T. Rowe Price International Stock Fund(R)
* Warburg Pincus Emerging Growth Fund
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<PAGE> 4
NOT AVAILABLE FOR NEW PLANS ESTABLISHED ON OR AFTER JUNE 30, 1998:
* Fidelity Contrafund
NOT AVAILABLE FOR NEW CONTRACTS ESTABLISHED ON OR AFTER OCTOBER 30, 1997:
* Fidelity Magellan(R) Fund
NOT AVAILABLE FOR NEW CONTRACTS ESTABLISHED ON OR AFTER JANUARY 1, 1994:
* The Bond Fund of America(SM), Inc.
* The Income Fund of America(R), Inc.
* The Growth Fund of America(R), Inc.
NOT AVAILABLE FOR NEW CONTRACRTS ESTABLISHED ON OR AFTER AUGUST 1, 1993:
* Delaware Group Decatur Fund, Inc. - Decatur Income Fund
NOT AVAILABLE FOR NEW CONTRACTS ESTABLISHED ON OR AFTER JANUARY 1, 1987:
* Fidelity Capital & Income Fund (formerly Fidelity High Income Fund)
The Statement of Additional Information (May 1, 1999) which contains additional
information about the contracts and the Nationwide DC Variable Account, is filed
with the U.S. Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. The table of contents for the Statement of Additional
information is on page 31.
For general information or to obtain FREE copies of the:
* Statement of Additional Information
* prospectus for any underlying mutual fund
* required Nationwide forms,
call: 1-800-545-4730
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 16766
COLUMBUS, OHIO 43216
The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
www.sec.gov
-----------
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
The contracts described in this prospectus are marketed primarily to public
sector sponsors of non-qualified deferred compensation plans which qualify for
tax treatment under Section 457 of the Internal Revenue Code. Many such public
sector plan sponsors are members of national civic associations which provide
assistance to member entities in establishing non-qualified deferred
compensation plans and determining the investment options available under such
plans. Acting on the recommendation of these associations, many plan sponsors
have determined that their plans will permit investment in some, but not all, of
the underlying mutual fund options of the variable account. In such cases, the
offering prospectus for the variable account will reflect only those funds which
the contract owner/plan sponsor has determined to be available under the plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
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<PAGE> 5
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit used to calculate the contract value
allocated to the variable account before the annuitization date.
ALLOCATED CONTRACT- Contract under which Nationwide maintains individual
accounts on behalf of each participant.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit used to calculate the variable payment annuity
payments.
CONTRACT VALUE- The total of all accumulation units in a contract.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
GROUP FIXED CONTRACT- Nationwide's Group Fixed Fund Retirement contract or Group
Fixed Tax Deferred Annuity contract.
INITIAL TRANSFER- The initial amount transferred by a contract owner from an
investment product offered by a provider other than Nationwide. The initial
transfer is the initial purchase payment under a contract.
NATIONWIDE- Nationwide Life Insurance Company.
PARTICIPANT ACCOUNT- An account established by Nationwide for each participant.
All financial transactions affecting a participant under the contract, other
than the purchase and payment of an annuity from the general account of
Nationwide, are recorded in the participant's account.
PARTICIPANT EFFECTIVE DATE- The first date accumulation units are credited to
the participant's account on behalf of the participant under the contract.
PARTICIPANT ACCOUNT YEAR- For each participant, the participant account year is
each one-year period starting with either the date accumulation units were first
credited to the participant's account, or an anniversary of that date.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units and annuity units are
separately maintained.
RETIRED PARTICIPANT- A participant who is receiving payments according to the
selected optional retirement income form.
VALUATION PERIOD- Each day the New York Stock Exchange is open.
VARIABLE ACCOUNT-Nationwide DC Variable Account, a separate account of
Nationwide that contains variable account allocations. The variable account is
divided into sub-accounts, each of which invests in shares of a separate
underlying mutual fund.
3
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<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.........................3
SUMMARY OF CONTRACT EXPENSES......................5
UNDERLYING MUTUAL FUND ANNUAL EXPENSES............6
EXAMPLE...........................................9
CONDENSED FINANCIAL INFORMATION..................11
FINANCIAL STATEMENTS.............................11
SYNOPSIS OF THE CONTRACTS........................12
NATIONWIDE LIFE INSURANCE COMPANY................13
NATIONWIDE INVESTMENT SERVICES CORPORATION.......13
INVESTING IN THE CONTRACT........................13
The Variable Account and Underlying
Mutual Funds
STANDARD ACCOUNT CHARGES AND
DEDUCTIONS..................................14
Contingent Deferred Sales Charge
Participant Account Maintenance Charge
Variable Account Annual Expense Fee
Premium Taxes
CONTRACT RIGHTS..................................16
OPERATION OF THE CONTRACT........................17
Minimum Purchase Payments
Application of Purchase Payments
Allocation of Purchase Payments
Value of an Accumulation Unit
Determining the Account Value
Exchange Privilege
Transfer Requests
Experience Credits
MODIFICATION OF THE CONTRACT.....................19
CONTRACT SUSPENSION AND TERMINATION..............19
REDEMPTION OF PARTICIPANT ACCOUNTS...............19
RETIREMENT PERIOD................................20
Additional Purchase Payment Before
Beginning Retirement Income Payments
Retirement Income Payments
Election of Retirement Income Form and Date
Retirement Income Forms
Determination of Life Income Payments
Alternate Assumed Investment Rate
DEATH OF PARTICIPANT.............................23
Participant Death Before Retirement
Death of Retired Participant
FEDERAL TAX CONSIDERATIONS.......................23
Contracts Issued under the New York Model Plan
STATEMENTS AND REPORTS...........................24
YEAR 2000 COMPLIANCE ISSUES......................24
LEGAL PROCEEDINGS................................25
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY..26
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION................................31
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL
FUNDS......................................32
APPENDIX B: CONDENSED FINANCIAL INFORMATION......42
</TABLE>
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<PAGE> 7
SUMMARY OF CONTRACT EXPENSES
All charges are subject to negotiation therefore the expenses described below
may vary from contract to contract. Please refer to the appropriate prospectus
provision for more details.
PARTICIPANT TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge
(as a percentage of purchase payments........5%
MAXIMUM PARTICIPANT ACCOUNT MAINTENANCE CHARGE....$50
MAXIMUM VARIABLE ACCOUNT ANNUAL EXPENSE FEE(1) (as a percentage of average
account value)
.................................0.95% per annum
(1) The maximum Variable Account Annual Expense Fee does not include:
* premium taxes that may be imposed by the state in which the contract was
issued; or
* deductions for management fees and other expenses made by the underlying
mutual funds.
5
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<PAGE> 8
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS AFTER EXPENSE
REIMBURSEMENT)
<TABLE>
<CAPTION>
-------------------------------------------- -------------- ------------------ ----------- ------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund
Expenses
-------------------------------------------- -------------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM Constellation 0.61% 0.05% 0.00% 0.66%
Fund - Institutional Class
-------------------------------------------- -------------- ------------------ ----------- ------------------
American Century - Twentieth Century 1.75% 0.00% 0.00% 1.75%
International Discovery Fund, Inc. -
Investor Class
-------------------------------------------- -------------- ------------------ ----------- ------------------
American Century: Income & Growth - 0.62% 0.00% 0.00% 0.62%
Investor Class
-------------------------------------------- -------------- ------------------ ----------- ------------------
American Century: Twentieth Century Growth 1.00% 0.00% 0.00% 1.00%
-------------------------------------------- -------------- ------------------ ----------- ------------------
American Century: Twentieth Century Select 1.00% 0.00% 0.00% 1.00%
-------------------------------------------- -------------- ------------------ ----------- ------------------
American Century: Twentieth Century Ultra 1.00% 0.00% 0.00% 1.00%
-------------------------------------------- -------------- ------------------ ----------- ------------------
The Bond Fund of America(SM), Inc. 0.33% 0.10% 0.25% 0.68%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Davis New York Venture Fund, Inc. 0.57% 0.12% 0.20% 0.89%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Delaware Group Decatur Fund, Inc.-Decatur 0.49% 0.19% 0.00% 0.68%
Income Fund
-------------------------------------------- -------------- ------------------ ----------- ------------------
Dreyfus Appreciation Fund, Inc. 0.55% 0.32% 0.00% 0.87%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Dreyfus Premier Midcap Stock Fund - Class A 1.10% 0.00% 0.25% 1.35%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Dreyfus Cash Management - Class A 0.20% 0.00% 0.00% 0.20%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Dreyfus S&P 500 Index Fund 0.25% 0.25% 0.00% 0.50%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Dreyfus Third Century Fund, Inc. 0.75% 0.28% 0.00% 1.03%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Evergreen Income and Growth Fund (formerly 0.98% 0.29% 0.00% 1.27%
Total Return Fund)
-------------------------------------------- -------------- ------------------ ----------- ------------------
Federated Bond Fund - Class F 0.60% 0.48% 0.00% 1.08%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Federated U.S. Government Securities 0.39% 0.15% 0.00% 0.54%
Fund: 2-5 Years - Institutional Shares
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Advisor Growth Opportunities Fund 0.49% 0.31% 0.25% 1.05%
- Class A
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Advisor High Yield Fund - Class T 0.59% 0.25% 0.25% 1.09%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Asset Manager(TM) 0.55% 0.24% 0.00% 0.79%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Capital & Income Fund (formerly 0.59% 0.26% 0.00% 0.85%
Fidelity High Income Fund)
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Contrafund 0.48% 0.22% 0.00% 0.70%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Equity-Income Fund 0.47% 0.23% 0.00% 0.70%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Growth & Income Portfolio 0.50% 0.23% 0.00% 0.73%
-------------------------------------------- -------------- ------------------ ----------- ------------------
Fidelity Magellan(R) Fund 0.45% 0.21% 0.00% 0.66%
-------------------------------------------- -------------- ------------------ ----------- ------------------
The Growth Fund of America(R), Inc. 0.36% 0.10% 0.24% 0.70%
-------------------------------------------- -------------- ------------------ ----------- ------------------
The Income Fund of America(R), Inc. 0.28% 0.07% 0.24% 0.59%
-------------------------------------------- -------------- ------------------ ----------- ------------------
INVESCO Dynamics Fund 0.56% 0.27% 0.25% 1.08%
-------------------------------------------- -------------- ------------------ ----------- ------------------
</TABLE>
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<PAGE> 9
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
-------------------------------------------- -------------- ------------------ ------------- -----------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
-------------------------------------------- -------------- ------------------ ------------- -----------------
<S> <C> <C> <C> <C>
INVESCO Industrial Income Fund, Inc. 0.48% 0.22% 0.25% 0.95%
(formerly Financial Industrial Income
Fund, Inc.)
-------------------------------------------- -------------- ------------------ ------------- -----------------
INVESCO Total Return Fund 0.64% 0.22% 0.00% 0.86%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Janus Fund 0.65% 0.21% 0.00% 0.86%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Janus Worldwide Fund 0.65% 0.30% 0.00% 0.95%
-------------------------------------------- -------------- ------------------ ------------- -----------------
LifeDesigns Series - The Aggressive 0.50% 0.00% 0.00% 0.50%
Portfolio
-------------------------------------------- -------------- ------------------ ------------- -----------------
LifeDesigns Series - The Conservative 0.50% 0.00% 0.00% 0.50%
Portfolio
-------------------------------------------- -------------- ------------------ ------------- -----------------
LifeDesigns Series - The Moderate Portfolio 0.50% 0.00% 0.00% 0.50%
-------------------------------------------- -------------- ------------------ ------------- -----------------
LifeDesigns Series - The Moderately 0.50% 0.00% 0.00% 0.50%
Aggressive Portfolio
-------------------------------------------- -------------- ------------------ ------------- -----------------
LifeDesigns Series - The Moderately 0.50% 0.00% 0.00% 0.50%
Conservative Portfolio
-------------------------------------------- -------------- ------------------ ------------- -----------------
MAS Funds Fixed Income Portfolio 0.37% 0.11% 0.00% 0.48%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Massachusetts Investors Growth Stock Fund 0.30% 0.21% 0.21% 0.72%
- Class A
-------------------------------------------- -------------- ------------------ ------------- -----------------
MFS(R) Growth Opportunities Fund - Class A 0.42% 0.26% 0.16% 0.84%
-------------------------------------------- -------------- ------------------ ------------- -----------------
MFS(R) High Income Fund - Class A 0.48% 0.28% 0.30% 1.06%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Morgan Stanley Institutional Fund, Inc. - 0.58% 0.22% 0.25% 1.05%
Equity Growth Portfolio - Class B
-------------------------------------------- -------------- ------------------ ------------- -----------------
Nationwide(R) Bond Fund - Class D* 0.50% 0.29% 0.00% 0.79%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Nationwide(R) Fund - Class D* 0.57% 0.15% 0.00% 0.72%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Nationwide(R) Growth Fund - Class D* 0.58% 0.20% 0.00% 0.78%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Nationwide(R) Money Market Fund* 0.40% 0.20% 0.00% 0.60%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Nationwide S&P 500(R) Index Fund - Class Y 0.13% 0.35% 0.00% 0.48%
-------------------------------------------- -------------- ------------------ ------------- -----------------
NSAT - Nationwide Small Company Fund 1.00% 0.11% 0.00% 1.11%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Neuberger Berman Guardian Fund, Inc. 0.70% 0.10% 0.00% 0.80%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Neuberger Berman Manhattan Fund, Inc. 0.79% 0.19% 0.00% 0.98%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Neuberger Berman Partners Trust 0.86% 0.05% 0.00% 0.91%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Oppenheimer Global Fund - Class A 0.70% 0.25% 0.18% 1.13%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Prestige Balanced Fund - Class Y 0.25% 0.70% 0.00% 0.95%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Prestige International Fund - Class Y 0.43% 0.82% 0.00% 1.25%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Prestige Large Cap Growth Fund - Class Y 0.35% 0.70% 0.00% 1.05%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Prestige Large Cap Value Fund - Class Y 0.30% 0.70% 0.00% 1.00%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Prestige Small Cap Fund - Class Y 0.50% 0.70% 0.00% 1.20%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Putnam Investors Fund - Class A 0.56% 0.19% 0.25% 1.00%
-------------------------------------------- -------------- ------------------ ------------- -----------------
Putnam Voyager Fund - Class A 0.49% 0.28% 0.25% 1.02%
-------------------------------------------- -------------- ------------------ ------------- -----------------
SEI Index Funds -S&P 500 Index Portfolio 0.19% 0.06% 0.00% 0.25%
-------------------------------------------- -------------- ------------------ ------------- -----------------
</TABLE>
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<PAGE> 10
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
-------------------------------------------- -------------- ------------------ ------------- -------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
-------------------------------------------- -------------- ------------------ ------------- -------------------
<S> <C> <C> <C> <C>
Seligman Growth Fund, Inc. - Class A 0.70% 0.23% 0.23% 1.16%
-------------------------------------------- -------------- ------------------ ------------- -------------------
T. Rowe Price International Stock Fund(R) 0.67% 0.18% 0.00% 0.85%
-------------------------------------------- -------------- ------------------ ------------- -------------------
Templeton Foreign Fund - Class I 0.61% 0.22% 0.25% 1.08%
-------------------------------------------- -------------- ------------------ ------------- -------------------
Warburg Pincus Emerging Growth Fund 0.90% 0.31% 0.00% 1.21%
-------------------------------------------- -------------- ------------------ ------------- -------------------
</TABLE>
On may 9, 1998, the assets of the Nationwide Bond Fund, Nationwide Growth Fund,
and Nationwide Money Market Fund (the "Acquired Funds") were aquired by
corresponding funds in an Ohio business trust in exchange for the assumption of
the stated liabilities of the Acquired Funds and a number of full and fractional
Class D shares of the applicable new fund (for the Nationwide Money Market Fund,
shares will be issued without class designation) (the "Reorganization"). The
Reorganization has previously been approved by shareholders of the Acuired
Funds. Prior to the time of the Reorganization, the total underlying mutual fund
annual expenses were 0.72% for the Nationwide Bond Fund, 0.60% for the
Nationwide Fund, 0.64% for the Nationwide Growth Fund, and 0.59% for the
Nationwide Moiney Market Fund.
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value to calculate the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federated Bond Fund - Class F 0.75% 0.50% 0.00% 1.25%
-------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years 0.40% 0.40% 0.00% 0.80%
- Institutional Shares
-------------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income Fund, Inc. (formerly 0.51% 0.22% 0.25% 0.98%
Financial Industrial Income Fund, Inc.), Inc.
-------------------------------------------------------------------------------------------------------------------
Janus Fund 0.65% 0.22% 0.00% 0.87%
-------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 0.65% 0.31% 0.00% 0.96%
-------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund 0.50% 0.14% 0.00% 0.64%
-------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund - Class Y 0.13% 0.46% 0.00% 0.59%
-------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class Y 0.75% 0.70% 0.00% 1.45%
-------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class Y 0.85% 0.82% 0.00% 1.67%
-------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Class Y 0.80% 0.70% 0.00% 1.50%
-------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class Y 0.75% 0.70% 0.00% 1.45%
-------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Class Y 0.95% 0.70% 0.00% 1.65%
-------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index Fund Portfolio 0.25% 0.30% 0.00% 0.55%
-------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 0.90% 0.32% 0.00% 1.22%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 11
EXAMPLE
The following chart shows the amount of expenses (in dollars) that would be
incurred under the contracts assuming a $1,000 investment, 5% annual return, and
no change in expenses. These dollar figures are illustrative only and should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the maximum Variable Account Annual Expense
Fee (0.95%). Deductions for premium taxes are not reflected but may apply. The
example also reflects the Contract Maintenance Charge, expressed as a percentage
of average account value. Since the average contract value is greater than
$1,000, the expense effect of the Contract Maintenance Charge is reduced
accordingly.
The summary of contract expenses and example are to help contract owners
understand expenses associated with the contracts.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your contract If you do not surrender your If you annuitize your contract
at the end of the applicable contract at the end of the at the end of the applicable
time period applicable time period time period
- --------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM 67 103 141 248 17 53 91 198 17 53 91 198
Constellation Fund -
Institutional Class
- --------------------------------------------------------------------------------------------------------------------------
American Century - Twentieth 78 137 199 364 28 87 149 314 28 87 149 314
Century International
Discovery Fund, Inc. -
Investor Class
- --------------------------------------------------------------------------------------------------------------------------
American Century: Income & 67 101 139 243 17 51 89 193 17 51 89 193
Growth - Investor Class
- --------------------------------------------------------------------------------------------------------------------------
American Century: Twentieth 71 114 159 285 21 64 109 235 21 64 109 235
Century Growth
- --------------------------------------------------------------------------------------------------------------------------
American Century: Twentieth 71 114 159 285 21 64 109 235 21 64 109 235
Century Select
- --------------------------------------------------------------------------------------------------------------------------
American Century: Twentieth 71 114 159 285 21 64 109 235 21 64 109 235
Century Ultra
- --------------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), 67 103 142 250 17 53 92 200 17 53 92 200
Inc.
- --------------------------------------------------------------------------------------------------------------------------
Davis New York Venture Fund, 69 110 153 273 19 60 103 223 19 60 103 223
Inc.
- --------------------------------------------------------------------------------------------------------------------------
Delaware Group Decatur Fund, 67 103 142 250 17 53 92 200 17 53 92 200
Inc. - Decatur Income Fund
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, 69 109 152 271 19 59 102 221 19 59 102 221
Inc.
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock 74 125 178 323 24 75 128 273 24 75 128 273
Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Cash Management - 62 88 116 195 12 38 66 145 12 38 66 145
Class A
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus S&P 500 Index Fund 65 98 132 230 15 48 82 180 15 48 82 180
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Third Century Fund, 71 115 161 289 21 65 111 239 21 65 111 239
Inc.
- --------------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth 73 120 169 306 23 70 119 256 23 70 119 256
Fund (formerly Total Return
Fund)
- --------------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 71 116 163 294 21 66 113 244 21 66 113 244
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
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<PAGE> 12
EXAMPLE (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your contract If you do not surrender your If you annuitize your contract
at the end of the applicable contract at the end of the at the end of the applicable
time period applicable time period time period
- --------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federated U. S. Government 66 99 134 234 16 49 84 184 16 49 84 184
Securities Fund: 2-5 Years -
Institutional Shares
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 71 115 162 291 21 65 112 241 21 65 112 241
Opportunities Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 72 116 164 295 22 66 114 245 22 66 114 245
Fund - Class T
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 68 107 148 262 18 57 98 212 18 57 98 212
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income 69 109 151 269 19 59 101 219 19 59 101 219
Fund (formerly Fidelity High
Income Fund)
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 67 104 143 252 17 54 93 202 17 54 93 202
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 67 104 143 252 17 54 93 202 17 54 93 202
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Growth & Income 68 105 145 256 18 55 95 206 18 55 95 206
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 67 103 141 248 17 53 91 198 17 53 91 198
- --------------------------------------------------------------------------------------------------------------------------
The Growth Fund of America(R) 67 104 143 252 17 54 93 202 17 54 93 202
Inc.
- --------------------------------------------------------------------------------------------------------------------------
The Income Fund of America(R) 66 100 137 240 16 50 87 190 16 50 87 190
- --------------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 71 116 163 294 21 66 113 244 21 66 113 244
- --------------------------------------------------------------------------------------------------------------------------
INVESCO Industrial Income 70 112 156 280 20 62 106 230 20 62 106 230
Fund, Inc. (formerly
Financial Industrial Income
Fund, Inc.)
- --------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 69 109 152 270 19 59 102 220 19 59 102 220
- --------------------------------------------------------------------------------------------------------------------------
Janus Fund 69 109 152 270 19 59 102 220 19 59 102 220
- --------------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 70 112 156 280 20 62 106 230 20 62 106 230
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 98 132 230 15 48 82 180 15 48 82 180
Aggressive Portfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 98 132 230 15 48 82 180 15 48 82 180
Conservative Portfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 98 132 230 15 48 82 180 15 48 82 180
Moderate Portfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 98 132 230 15 48 82 180 15 48 82 180
Moderately Aggressive
Porfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 98 132 230 15 48 82 180 15 48 82 180
Moderately Conservative
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income 65 97 131 227 15 47 81 177 15 47 81 177
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 68 105 144 254 18 55 94 204 18 55 94 204
Growth Stock Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
MFS(R) Growth Opportunities 69 108 151 268 19 58 101 218 19 58 101 218
Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
MFS(R) High Income Fund - 71 115 162 292 21 65 112 242 21 65 112 242
Class A
- --------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 71 115 162 291 21 65 112 241 21 65 112 241
Fund, Inc. - Equity Growth
Portfolio - Class B
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - 68 107 148 262 18 57 98 212 18 57 98 212
Class D
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 13
EXAMPLE (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your contract If you do not surrender your If you annuitize your contract
at the end of the applicable contract at the end of the at the end of the applicable
time period applicable time period time period
- --------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Nationwide(R) Fund - Class D 68 105 144 254 18 55 94 204 18 55 94 204
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - 68 107 147 261 18 57 97 211 18 57 97 211
Class D
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund 66 101 138 241 16 51 88 191 16 51 88 191
- --------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index 65 97 131 227 15 47 81 177 15 47 81 177
Fund - Class Y
- --------------------------------------------------------------------------------------------------------------------------
NSAT - Nationwide Small 72 117 165 297 22 67 115 247 22 67 115 247
Company Fund
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian 68 107 148 263 18 57 98 213 18 57 98 213
Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Manhattan 70 113 158 283 20 63 108 233 20 63 108 233
Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners 70 111 154 275 20 61 104 225 20 61 104 225
Trust
- --------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - 72 118 166 299 22 68 116 249 22 68 116 249
Class A
- --------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 70 112 156 280 20 62 106 230 20 62 106 230
Class Y
- --------------------------------------------------------------------------------------------------------------------------
Prestige International Fund 73 121 172 312 23 71 122 262 23 71 122 262
- - Class Y
- --------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 71 115 162 291 21 65 112 241 21 65 112 241
Fund - Class Y
- --------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value 71 114 159 285 21 64 109 235 21 64 109 235
Fund - Class Y
- --------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 73 120 170 307 23 70 120 257 23 70 120 257
Class Y
- --------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - 71 114 159 285 21 64 109 235 21 64 109 235
Class A
- --------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 71 114 160 287 21 64 110 237 21 64 110 237
- --------------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 63 90 118 201 13 40 68 151 13 40 68 151
Index Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 72 119 168 303 22 69 118 253 22 69 118 253
Class A
- --------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 69 109 151 269 19 59 101 219 19 59 101 219
Stock Fund(R)
- --------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 71 115 162 291 21 65 112 241 21 65 112 241
Class I
- --------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 73 120 170 308 23 70 120 258 23 70 120 258
Growth Fund
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONDENSED FINANCIAL INFORMATION
The accumulation unit value for each sub-account reflects changes in the value
of the underlying mutual fund and the deduction of the Variable Account Annual
Expense Fee. For specific accumulation unit value for each class of the
underlying mutual funds, please refer to Appendix B.
FINANCIAL STATEMENTS
Financial Statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained without charge by contacting Nationwide's home
office at the telephone number located on page 2 of this prospectus.
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<PAGE> 14
SYNOPSIS OF THE CONTRACTS
Group Flexible Fund Retirement Contracts are designed for use in connection with
supplemental deferred compensation plans for employees of tax exempt entities.
The plans generally will qualify for favorable tax treatment under Sections 401,
403(b), or 457 of the Internal Revenue Code, but may also include other
non-qualified deferred compensation plans. Contracts are issued only to
employers who are exempt from taxation to fund deferred compensation plans.
Employees generally are not subject to federal income tax on amounts deferred
under these plans until distributions are received from the plan.
Plans established for the benefit of any organization that is exempt from
federal income tax under Section 457 of the Internal Revenue Code with the
exception of government plans, remain the sole property of the contract owner,
subject to the claims of the contract owner's general creditors. Consequently,
all amounts deferred to the plan, all income and property attributable to such
amounts remain the property of the contract owner until such amounts are made
available to participants in the plan or to the participants' beneficiaries.
Plans established after August 20, 1996 by a state, or any political subdivision
of a state, must hold the assets and income of the plan in trust for the
exclusive benefit of the participants and beneficiaries of the plan. For this
purpose, custodial accounts and certain annuity contracts are treated as trusts.
Plans in existence on August 20, 1996 must be amended prior to January 1, 1999
to satisfy these trust and exclusive benefit requirements to continue to receive
favorable tax treatment.
For these Plans, Nationwide issues a single group contract to the contract
owner, covering all present and future participating employees. Nationwide
provides a certificate to the contract owner to deliver to each retired
participant or other person for whom a Retirement Income Form is purchased. The
certificate sets forth the benefits to which the recipient is entitled. And if
legally required, Nationwide provides a certificate to the contract owner for
delivery to any other person required by law to receive a certificate.
Nationwide establishes an account for each participant under the contracts. The
account contains values and reflects activity for each participant. Plan
participants generally receive tax deferral on amounts deposited into the plan
and are taxed when amounts are distributed from the plan.
Purchase payments are normally submitted monthly, but the schedule may be
adjusted to fit the contract owner's payroll practices. Purchase payments made
by or on behalf of each participant must be at least $20 per month.
The contracts strive to provide each participant with:
* an initial retirement income payment, reflecting cost of living changes
during pre-retirement years (without requiring increased purchase payments
to keep pace with cost of living increases during those years), and
* subsequent retirement income payments which will vary with the cost of
living changes during his or her retired lifetime.
Nationwide will apply purchase rates set forth in the contracts to accumulated
amounts in participant accounts. These accumulated amounts reflect the
investment performance of the underlying mutual funds selected by the
participant. Consequently, a participants' retirement income payments are
directly affected by their investment choices under the contract. 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. However, there is
no exact correlation and for some periods, the prices of securities have
declined while the cost of living was rising.
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<PAGE> 15
MINIMUM PURCHASE PAYMENTS
Purchase payments made at any time by or on behalf of any participant must be at
least $20 per month.
CHARGES AND EXPENSES
Nationwide does not deduct a sales charge from purchase payments upon deposit
into the contracts. However Nationwide may deduct a Contingent Deferred Sales
Charge ("CDSC") if any amount is withdrawn from the contract. This CDSC
reimburses Nationwide for sales expenses. The amount of the CDSC will not exceed
the lesser of:
(1) 5% of the amount surrendered; or
(2) 5% of the total of all purchase payments made before the surrender
date.
Nationwide may assess a Participant Account Maintenance Charge. This charge
varies from contract to contract and will not be assessed unless specifically
agreed upon by the contract owner and Nationwide. The maximum Participant
Account Maintenance Charge is $50 (see "Participant Account Maintenance
Charge").
Nationwide can deduct a Variable Account Annual Expense Fee at a maximum of
0.95% of average account value. Nationwide can assess this fee in return for
bearing certain risks and administrative expenses. This fee is negotiable and
varies from contract to contract to reflect unique plan characteristics.
The CDSC, Participant Account Maintenance Charge and Variable Account Annual
Expense Fee, when negotiated, may be decreased upon notice to the contract owner
(see "Modification of the Contract").
RETIREMENT INCOME PAYMENTS
Retirement income payments begin on the annuitzation date. Payments are based on
the retirement income form chosen (see "Retirement Income Payments" and
"Retirement Income Forms").
TAXATION
How the contracts are taxed depends on the type of contract issued. Nationwide
will charge against the contract any premium taxes levied by any governmental
authority (see "Federal Tax Considerations" and "Premium Taxes").
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in March,
1929. Nationwide is a member of the "Nationwide Insurance Enterprise" with its
home office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide is a
provider of life insurance, annuities and retirement products. It is admitted to
do business in all states, the District of Columbia and Puerto Rico.
NATIONWIDE INVESTMENT SERVICES CORPORATION
The contracts are underwritten and distributed by Nationwide Investment Services
Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio 43215. NISC is a
wholly owned subsidiary of Nationwide Life Insurance Company.
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
The variable account is a separate account that invests in the underlying mutual
funds listed in Appendix A. Nationwide established the variable account on July
10, 1974 pursuant to Ohio law. Although the variable account is registered with
the SEC as a unit investment trust pursuant to the Investment Company Act of
1940 ("1940 Act"), the SEC does not supervise it or the management of
Nationwide.
Income, gains, and losses credited to, or charged against, the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and are not
13
15 of 161
<PAGE> 16
chargeable with liabilities incurred in any other business of Nationwide.
Nationwide is obligated to pay all amounts promised to contract owners under the
contracts.
The variable account is divided into sub-accounts. Nationwide uses the assets of
each sub-account to buy shares of the underlying mutual funds based on contract
owner instructions.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote contract owner shares at
special shareholder meetings based on contract owner instructions. However, if
the law changes and Nationwide is allowed to vote in its own right, it may elect
to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholders' vote as soon as possible before
the shareholder meeting. Notification will contain proxy materials and a form
with which to give Nationwide voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a contract owner may vote is determined by dividing
the cash value of the amount they have allocated to an underlying mutual fund by
the net asset value of that underlying mutual fund. Nationwide will designate a
date for this determination not more than 90 days before the shareholder
meeting.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
1) shares of a current underlying mutual fund are no longer available for
investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC and state insurance departments.
STANDARD ACCOUNT CHARGES AND DEDUCTIONS
The charges and fees described in this section vary from contract to contract,
depending on plan characteristics and the particular needs and preferences of
contract owners. Generally, the charges and fees are negotiable. This
flexibility allows Nationwide and the contract owner to custom design a charge
structure that meets the financial goals of both the contract owners and
Nationwide.
While a contract is in effect, a circumstance may arise that would require a
renegotiation of the contract terms. In this situation, charges and fees will
not be higher than those in effect before the re-
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<PAGE> 17
negotiation. In other words, the charges and fees of a renegotiated contract may
decrease, but under no circumstances will they increase.
CONTINGENT DEFERRED SALES CHARGE
No sales charge is deducted from purchase payments when amounts are deposited
into the contracts. However, if any part of the contract is surrendered,
Nationwide will deduct a CDSC when applicable. The CDSC is used to cover sales
expenses, including commissions, production of sales material, and other
promotional expenses. If expenses are greater than the CDSC, Nationwide will
make up any shorfall from its general account.
If 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 is surrendered, a CDSC, when it is applicable, can be assessed by
Nationwide. The CDSC will not exceed the lesser of:
1) 5% of the total of all purchase payments made on behalf of the
surrendering participant or the withdrawing contract owner before the
date of the surrender request; or
2) 5% of the amount surrendered.
The total CDSC assessed to any participant will never exceed 5% (or a lesser
percentage, if applicable) of the total purchase payments made on behalf of the
participant for the 16 years before the surrender date.
When a CDSC of less than 5% is negotiated and assessed, the reduced charge may
reflect actual variations in expenses, usually resulting from reduced marketing
expenses.
No CDSC will be assessed against distributions paid as:
- any life income payment option;
- designated period payment option of 5 or more years for a participant who
has a minimum of 5 participant account years before the beginning of
benefit payments; and
- a single-sum or periodic payment resulting from a participant's death.
PARTICIPANT ACCOUNT MAINTENANCE CHARGE
Nationwide may assess a Participant Account Maintenance Charge to reimburse it
for administrative expenses involved in issuing and maintaining the contracts.
The maximum Participant Account Maintenance Charge is $50. Nationwide will not
assess this charge unless it is negotiated and contractually agreed upon by
Nationwide and the contract owner.
Generally, by negotiating a higher Participant Account Maintenance Charge, a
contract owner can expect to lower other charges that are assessed in connection
with the contract. Conversely, a contract owner that negotiates a lower
Participant Account Maintenance Charge can expect to incur higher charges
elsewhere in the expense structure.
If a Participant Account Maintenance Charge is negotiated, it will be assessed
against each applicable participant in the plan. Nationwide will deduct the
charge from each participant's account on the participant anniversary, which is
the anniversary of the date accumulation units were first credited to the
participant's account. Each year's deduction will compensate Nationwide for
expenses incurred during the previous year. The deduction will occur during both
the accumulation and annuity payment periods.
The Participant Account Maintenance Charge is made by canceling a number of
accumulation units during both the accumulation and annuity periods, equal in
value to the applicable 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.
On the date that a full withdrawal is taken from a participant's account,
Nationwide will deduct a pro-rated Participant Account Maintenance Charge. The
amount of the charge will be 1/12 of the applicable Participant Account
Maintenance Charge, multiplied by the number of whole or partial months between
the last
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<PAGE> 18
participant anniversary (or participant effective date during the first year of
a participant account) and the withdrawal date.
The deduction for the Participant Account Maintenance Charge will be taken
proportionately from each sub-account based on relative value at the time the
deduction is made.
This contract may be used by a plan in conjunction with other investment
options, such as Nationwide's Group Fixed Fund Retirement Contract. In this
case, the deduction for the Participant Account Maintenance Charge may be
reduced so that the combined total of the Participant Account Maintenance Charge
and any similar charges imposed under other investment options does not exceed
the Participant Account Maintenance Charge negotiated for this contract. The
charge will be deducted proportionately from the sub-accounts and amounts held
in the other investment options based on the relative values at the time the
deduction is made.
THE VARIABLE ACCOUNT MAINTENANCE CHARGE WILL NOT BE ASSESSED UNLESS NEGOTIATED
BETWEEN NATIONWIDE AND THE CONTRACT OWNER.
VARIABLE ACCOUNT ANNUAL EXPENSE FEE
Nationwide can deduct a Variable Account Annual Expense Fee up to an maximum
rate of 0.95% of average account value in exchange for assuming various risks
and administrative expenses associated with the contracts. This fee is subject
to negotiation and can vary for each contract to reflect unique plan
characteristics.
The following factors may be considered in negotiating the amount of this fee:
1) plan size;
2) the number of eligible employees;
3) the number of plan participants;
4) demographics of the plan participants;
5) general economic conditions;
6) the varying costs associated with the underlying mutual funds that are
offered in the contract;
7) the type of contract (e.g. allocated vs. unallocated);
8) distribution costs;
9) any recovery of credits on initial transfers; and
10) other factors Nationwide deems relevant.
PREMIUM TAXES
Nationwide may charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
3.5%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such earlier date as Nationwide becomes subject to premium taxes.
CONTRACTS RIGHTS
The contract owner owns the contract for the exclusive benefit of the plan's
participants and beneficiaries. Contractual rights may be exercised by the
contract owner subject to those rights specifically reserved in the plan
documents for participants, either as a group or as individuals. The contract
owner may not take any action inconsistent with the rights of the plan's
participants. The contract may not be assigned.
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<PAGE> 19
OPERATION OF THE CONTRACT
MINIMUM PURCHASE PAYMENTS
Purchase payments for each participant must be at least $20 per month. Payments
must be made no less frequently than monthly, unless Nationwide agrees
otherwise.
APPLICATION OF PURCHASE PAYMENTS
Initial purchase payments allocated to sub-accounts will be priced no later than
2 business days after receipt of an order to purchase if the application and all
necessary information are complete. If the application is not complete,
Nationwide may retain a purchase payment for up to 5 business days while
attempting to complete it. If the application is not completed within 5 business
days, the participant will be informed of the reason for the delay. The purchase
payment will be returned unless the participant specifically allows Nationwide
to hold the purchase payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received.
Purchase payments will not be priced on the following nationally recognized
holidays:
* New Year's Day * Independence Day
* Martin Luther King, Jr. Day * Labor Day
* Presidents Day * Thanksgiving
* Good Friday * Christmas
* Memorial Day
When permissible under state insurance law, Nationwide may credit up to 8% of an
initial transfer into the contract. An initial transfer is the amount
transferred into the contract from a non-Nationwide investment product. It
serves as the initial purchase payment under the contract. This credit will
reimburse the contract owner for any exit penalty assessed by the previous
provider. Nationwide will recover this credit by reducing service agent and/or
broker compensation or through the negotiation of an increased Participant
Account Maintenance Charge or Variable Account Annual Expense Fee.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to each participant's account as
instructed by the contract owner. Shares of the sub-accounts are purchased at
net asset value, then converted into accumulation units. The contract owner, or
the participant if the plan so permits, may change allocations among
sub-accounts for future purchase payments. However, no change may be made that
would result in an amount less than 1% being allocated to any sub-account for
any participant. Nationwide will accept these changes as frequently as permitted
by the plan. An allocation change will not affect the allocation of purchase
payments before the change.
VALUE OF AN ACCUMULATION UNIT
Purchase payments or transfers are allocated to the sub-account in the form of
accumulation units. Nationwide calculates accumulation unit values each day the
New York Stock Exchange is open for trading.
The accumulation unit value for a valuation period is determined by multiplying
the accumulation unit value for each sub-account for the immediately preceding
valuation period by a net investment factor.
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<PAGE> 20
The net investment factor is calculated by dividing (a) by (b), and then
subtracting (c) from the result, where:
(a) is the net of:
(1) the net asset value of the underlying mutual fund as of the end
of the current valuation period; and
(2) the per share amount of any dividend or income distributions made
by the underlying mutual fund (if the ex-dividend date occurs
during the current valuation period).
(b) is the net asset value of the underlying mutual fund determined as of
the end of the preceding valuation period.
(c) is a factor representing the daily Variable Account Annual Expense
Fee, as negotiated under the contract.
Based on the net investment factor, the value of an accumulation unit may
increase or decrease from valuation period to valuation period. 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 of
variable account charges.
DETERMINING THE ACCOUNT VALUE
A participant's account value is equal to the sum of the value of all
accumulation units credited to the participant's account. The number of
accumulation units credited to each participant account for each sub-account is
determined by dividing the amount allocated to that sub-account for that
participant by the accumulation unit value for that sub-account for the
valuation period the purchase payment was received.
The value of a participant's account on any day can be determined by multiplying
the total number of accumulation units credited to the participant's account for
each sub-account by the current accumulation unit value for that sub-account.
Each participant and the contract 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. These reports are for informational purposes only and do not mean
that a participant has any rights in his or her account beyond those provided
for in the plan.
EXCHANGE PRIVILEGE
The contract owner, or the participant if the plan so provides, may 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. If the contract
owner elects an exchange privilege, there is no charge for exchanges.
TRANSFER REQUESTS
In addition to submitting exchange requests in writing, the participant also may
make exchanges by telephone and the internet, provided that the contract owner
executes documents agreeing to certain restrictions applicable to these
privileges. Telephone and internet exchange requests must be received by
Nationwide by the close of the New York Stock Exchange in order to receive that
day's closing sub-account price.
Nationwide will use reasonable procedures to confirm that telephone and internet
instructions are genuine. Nationwide's failure to follow these procedures will
result in its liability for fraudulent or unauthorized transfers. However,
Nationwide will not be liable for following telephone or internet instructions
that it reasonably believed to be genuine. Nationwide may withdraw the telephone
and/or internet exchange privilege upon 30 days written notice to contract
owners and participants.
If Nationwide receives the transfer request before the end of a valuation date,
the transfer will receive the accumulation unit values of that date. However, if
Nationwide receives the transfer request after the close of business on a
valuation date, the transfer will receive the next valuation date's accumulation
unit value.
For those plans funded by this contract and Nationwide's Group Fixed Fund
Retirement Contract, the contract owner, or the participant if the plan so
provides, may exchange values between any sub-account and the Group Fixed
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<PAGE> 21
Fund Retirement Contract. Exchanges from the Nationwide Group Fixed Fund
Retirement Contract to any sub-account will be subject to the limitations of the
Nationwide Group Fixed Fund Retirement Contract. Exchanges will be effective
when received in good order at Nationwide's home office.
EXPERIENCE CREDITS
Depending on the state in which the contract was issued, the contracts are
either participating or non-participating. Contract owners of participating
contracts have the right to receive any surplus distributed by Nationwide. A
surplus distribution will occur if Nationwide's Board of Directors determines
that charges and fees assessed under the contracts were higher than necessary to
maintain the contracts. Nationwide will distribute any surplus by purchasing
additional accumulation units and crediting them to participant accounts. To
date, Nationwide has not made any surplus distributions to participant accounts
and Nationwide does not guarantee that there will be a surplus distribution in
the future. Non-participating contracts do not have the right to receive surplus
distributions.
MODIFICATION OF THE CONTRACT
The following charges may be decreased, if negotiated, upon notice to the
contract owner:
* Contingent Deferred Sales Charge
* Participant Account Maintenance Charge
* Variable Account Annual Expense Fee
Nationwide may change any other provision of the contract by giving notice to
contract owners not less than 90 days before the change is to be effective.
CONTRACT SUSPENSION AND TERMINATION
Nationwide may suspend the contract at any time upon written notice to contract
owners if:
a) the contract owner fails to remit to Nationwide any purchase payment
specified in the plan;
b) Nationwide rejects a plan amendment submitted by the contract owner
that Nationwide determines would adversely affect the contract's
financial experience.
The contract owner may suspend the contract at any time upon 90 days written
notice to Nationwide. Suspension will become effective on the 91st day after
Nationwide receives the notice. If a contract is suspended, Nationwide will not
accept new purchase payments, except by mutual consent. All other contract terms
will continue to apply.
Once the suspension is effective, the contract owner may, upon 30 days written
notice to Nationwide, terminate the contract. Termination will become effective
on the 31st day after Nationwide receives the notice. Upon termination,
Nationwide will pay the contract owner the value of the contract, in accordance
with the terms of the contract. This amount is subject to applicable charges
including CDSC.
REDEMPTION OF PARTICIPANT ACCOUNTS
The contract owner's right to redeem participant accounts, either fully or
partially, will be governed by the terms of the plan.
If the plan so permits, the contract owner may redeem a participant account,
fully or partially, at any time before retirement income payments begin under
Option B1 or B2. A partial redemption will not affect requirements to make
future purchase payments.
For partial redemptions, Nationwide will cancel accumulation units from the
sub-accounts. The requested dollar amount cannot exceed available accumulation
unit value. The contract owner must instruct Nationwide how the redemption
should be taken from the sub-accounts. If no instruction is given, the
redemption will be taken proportionately from each sub-account based on the
value of each sub-account at the time of the redemption.
Instead of a lump sum distribution of a full or partial redemption, the contract
owner (or participant, if permitted by the plan) may elect to have the
redemption paid pursuant to
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Retirement Income Form A1 or A2, subject to the minimums applicable to these
options.
If the contract owner terminates the contract, all participant accounts under
the contract will be redeemed as permitted by the plan. A CDSC may apply.
However, absent contract termination, no CDSC will apply to full or partial
redemptions.
Nationwide will pay all redemption amounts to the contract owner. The contract
owner is obligated to distribute these amounts to the participant. The contract
owner and Nationwide may agree to have Nationwide pay these amounts directly to
the participant.
Nationwide will pay any redemption amounts within 7 days of receiving the
redemption request. However, Nationwide may suspend or postpone payment when:
(1) the New York Stock Exchange is closed;
(2) trading on the New York Stock Exchange is restricted;
(3) an emergency is declared by the SEC making disposal or valuation of
securities held in the variable account impracticable; or
(4) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Participant account value upon full surrender may be more or less than the total
of all purchase payments.
RETIREMENT PERIOD
ADDITIONAL PURCHASE PAYMENT BEFORE BEGINNING RETIREMENT INCOME PAYMENTS
The contract owner may make one additional purchase payment to each
participant's account in order to increase retirement income payments. The
contract owner must notify Nationwide of this election in the documentation
electing the Retirement Income Form and retirement date (see "Election of
Retirement Income Form and Date"). The purchase payment must be made by the last
business day before retirement income payments begin. This purchase payment is
subject to any applicable premium taxes.
The annuity rates under the contract apply to the entire value, including any
such additional purchase payment that does not exceed 5 times the purchase
payments allocated to a participant's account before the date of notice is
given. Any amount in excess of this amount may be applied at annuity rates
currently offered to this type of contract.
RETIREMENT INCOME PAYMENTS
The distribution period is the period during which a participant account is paid
out in installments. Since the distribution period usually occurs after a
participant retires, it is also referred to as the retirement period.
Nationwide will pay all retirement distributions to the contract owner. The
contract owner is obligated to distribute these amounts to the participant. The
contract owner and Nationwide may agree to have Nationwide pay these amounts
directly to the participant.
Upon retirement, a participant's account value can be used to purchase either a
fixed dollar annuity, a variable payment annuity, or an available combination of
both.
Nationwide is obligated to make payments under a variable payment annuity.
However, the amount of each payment is not guaranteed. Variable payment amounts
will reflect the investment performance of the sub-accounts, but will not be
affected by adverse mortality experience or by increased expenses.
A fixed dollar annuity provides for payments that are guaranteed as to dollar
amount during the distribution period. Upon retirement, the participant's
account value is used to purchase a contract funded by Nationwide's general
account. Once this contract has been purchased, the participant's account will
no longer vary with the investment performance of the underlying mutual funds.
To determine the amount of the first fixed dollar annuity payment, the value is
applied to the
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applicable annuity table based on the distribution schedule elected. The fixed
payment annuity can be distributed in any of the forms listed under the
provision "Retirement Income Forms." Specifically, they can be distributed as:
1) payments for a designated period;
2) payments of a designated amount;
3) life income with payment certain; or
4) joint and survivor life income.
Fixed dollar annuities are available under a plan upon the contract owner's
election.
ELECTION OF RETIREMENT INCOME FORM AND DATE
The contract provides for retirement income payments to begin on the date and
under the retirement options set forth in the plan. At least one month before
retirement income payments are set to begin, the contract owner may elect one of
the retirement income options set forth in this prospectus. Nationwide must
receive this election in writing. The plan may restrict changes in the
retirement income option elected.
If, at retirement, the present value of a participant's account is less than
$3,500, Nationwide may make a lump sum distribution instead of periodic
payments.
RETIREMENT INCOME FORMS
Retirement distributions may take any of the following forms, as permitted by
the plan:
Amount and Period Certain Options
OPTION A1: PAYMENTS FOR A DESIGNATED PERIOD
Payments will be made monthly for a set number of years not to exceed 30
years. The amount of each payment will vary with the performance of the
underlying mutual funds in which the participant account invests.
Nationwide calculates each payment by multiplying (a) by (b), where:
(a) is the accumulation unit value on the day the payment is made; and
(b) is the number of accumulation units applied under this option divided
by the number of payments selected.
Once the amount of the payment is calculated, Nationwide will cancel
available accumulation units to equal the dollar amount of that payment.
Exchanges between the investment options are permitted subject to the
limitations set forth in the Group Fixed Fund Retirement Contract.
Exchanges may cause the number of accumulation units to change,
necessitating a recalculation of the payment amount.
If the period selected under this option is less than 5 years, and the
participant has less than 5 participant account years, a CDSC will be
assessed against each payment.
OPTION A2: PAYMENTS OF A DESIGNATED AMOUNT
Payments will be made monthly in equal installments of a set amount (not
less than $25 per month) until no accumulation units remain in the
participant account. The participant's account is adjusted each valuation
date to reflect investment results. Nationwide will cancel accumulation
units up to the designated dollar amount of the payment.
Exchanges between the investment options are permitted subject to the
limitations set forth in the Group Fixed Fund Retirement Contract.
Life Income Options
For the following options, payments will be determined annually and will remain
level throughout the year. Each year, on the anniversary of the beginning of
retirement income payments, a new monthly payment will be determined. That new
payment will remain level for that year.
Nationwide will use the retired participant's adjusted age to determine each
year's set monthly payment. This adjusted age may not be the same as the retired
participant's actual age.
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Life income options are based on:
* the mortality tables specified in the contract;
* the adjusted age of the retired participant;
* the type of retirement income payment option(s) selected; and
* in the case of variable payments, the investment performance of the
specific sub-accounts elected.
OPTION B1: LIFE INCOME WITH PAYMENT CERTAIN
Payments will be made at least annually during a participant's lifetime for
a set period of 60, 120, 180, 240, 300 or 360 months, as elected. If the
participant dies before the end of the selected period, level payments will
continue to the beneficiary during the remainder of the selected period.
Unless prohibited by the plan, the beneficiary may elect at any time to
receive the present value of the remaining number of payments in a single
payment, calculated using the same assumed investment rate used previously.
Nationwide will cancel accumulation units up to the designated dollar
amount of each payment.
OPTION B2: JOINT AND SURVIVOR LIFE INCOME
Payments will be made monthly during the joint lifetime of a designated
annuitant and a named beneficiary Payments will be made as long as either
of the two is living. If the annuitant predeceases the designated
annuitant, payments will continue to be paid to the beneficiary at 100%,
75%, 66 2/3% or 50% of the original payment amount as elected until the
beneficiary's death. If the beneficiary predeceases the participant,
payments will continue at 100% to the designated annuitant.
Nationwide will cancel accumulation units up to the designated dollar
amount of each payment.
Other Options
Alternate distribution methods may be used with Nationwide's consent.
Frequency of Payment
The retired participant, with the contract owner's consent, may receive payments
under any option annually, semi-annually, or quarterly instead of monthly. Any
change in frequency of payments must be on the anniversary of the beginning of
retirement income payments.
Withdrawal
If allowed by the plan, any amount remaining under option A1 or A2 may be
withdrawn. If that amount is at least $5,000, the withdrawn amount may be
applied to option B1 or B2, subject to minimum payment requirements.
DETERMINATION OF LIFE INCOME PAYMENTS
First Year Payments
To determine the payment that will be distributed monthly for the first year
after retirement, Nationwide first determines the participant's account value as
of the retirement date. This value is found by multiplying the number of
accumulation units in each sub-account for that participant's account by the
accumulation unit value for that sub-account on the last business day of the
second calendar week before the date the first payment will be made.
Based on the participant's account value, Nationwide then determines the amount
of each monthly payment. The monthly payment amount is found by dividing the
accumulation unit value of that sub-account in the participant's account by the
amount required to provide $1 per month (the purchase rate). This payment amount
will remain level throughout the year.
Once the monthly payment amount is found, Nationwide multiplies the payment by
12 to get the total payment for the year. Then Nationwide cancels the number of
accumulation units from the participant's account to equal the total payments
for the year. The accumulation units will be canceled from each sub-account in
the same proportion that new purchase payments are
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allocated. The value is then transferred to Nationwide's general account
from which monthly payments are made.
The total annual amount is calculated so that if there are no partial
redemptions, and no underlying mutual fund dividends are taken in cash, the
monthly payments will be level as long as the net investment factor equals the
assumed investment rate plus an amount equal to the annual administrative
charge. Payments in subsequent years will vary depending on how the
sub-accounts' performance compares to the assumed investment rate.
Subsequent Years' Payments
On each anniversary of the beginning of the retirement income payments, the next
year's monthly payment amount will be calculated. The calculation will be
performed in the same manner as the first year's payment, except that the
current participant account value will be used. Similarly, accumulation units
will be cancelled and the value will be transferred to Nationwide's general
account, from which monthly payments will be made.
ALTERNATE ASSUMED INVESTMENT RATE
A 3.5% per annum assumed investment rate is built into the purchase rate basis
in the contracts. If not prohibited by law, a contract owner may, at contract
issuance, elect an alternate assumed investment rate of 5% per annum. The choice
of assumed investment rate affects the pattern of retirement income payments. A
higher assumption would mean a higher initial payment but more slowly rising or
rapidly falling subsequent payments. A lower assumption would have the opposite
effect.
The contract aims to provide level payments when the economy is relatively
stable. Higher payments should reflect only increased investment results from
inflation or increased productivity. The success of this goal depends on the
validity of the assumption that the net investment result equals the assumed
investment rate during stable economic periods.
DEATH OF PARTICIPANT
PARTICIPANT DEATH BEFORE RETIREMENT
If a participant dies before beginning retirement income payments, a death
benefit equal to the participant's account value is payable as set forth in the
plan. The death benefit will be paid when Nationwide:
1) receives and verifies the participant's death; and
2) verifies beneficiary designations.
If the plan so provides, the beneficiary may receive the death benefit:
1) as a lump sum; or
2) in the form of a Retirement Income Form contained in the contract, subject
to applicable minimums. Retirement income payments may be fixed, variable,
or a combination of both.
DEATH OF RETIRED PARTICIPANT
If a retired participant dies while receiving payments, any payment due will be
determined according to the Retirement Income Form elected. The calculation of
the net present value of any remaining payments under a period certain option
will be based on the same assumed investment rated used in determining the
payments before the retired participant's death.
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. Depending on Nationwide's
obligation under the contract, the accumulation units will either remain in the
variable account or be transferred to Nationwide's general account.
FEDERAL TAX CONSIDERATIONS
Consult a financial adviser, legal counsel or tax adviser to discuss in detail
the taxation and the use of the contracts.
Nationwide does not guarantee the tax status of the contracts or any
transactions involving the contracts. The contracts are treated as a trust
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under rules similar to Internal Revenue Code Section 401(f).
Under existing federal income tax law, Nationwide is not required to pay taxes
on the variable account's investment income when it is credited to contract
owners. Nationwide is taxed as a life insurance company under Part One,
Subchapter L of the Internal Revenue Code.
Contract owners would normally be taxed on income and capital gains earned under
the contract, whether or not taken in cash. However, the contracts are issued
only to organizations exempt from federal income tax.
Distributions will normally contain purchase payments that were not previously
included in the participant's gross income. Upon distribution, these amounts
should be included in the gross income of the recipient.
The contract owner is responsible for ensuring that the plan is established and
administered in accordance with the provisions set forth in the Internal Revenue
Code.
CONTRACTS ISSUED UNDER THE NEW YORK MODEL PLAN
In order to sell the contracts to governmental employers in the state of New
York, the following amendments must be made to the contract:
* References to "annuity" payments throughout the prospectus are modified to
mean "benefit" payments.
* The "Suspension and Termination" provision is amended to allow a
participant to "freeze" his or her account and maintain the account on
deposit with Nationwide even though the contract was terminated.
* All references to Life Retirement Income Forms A1, A2, B1 and B2 throughout
this prospectus shall mean Option 1, Option 2, Option 3, and Option 4,
respectively.
* All references to "CDSC" and "Contingent Deferred Sales Charge" throughout
this prospectus are deleted.
STATEMENTS AND REPORTS
Semi-annually, Nationwide (or a designee) will provide each participant a
Statement of Assets, Liabilities and Contract Owners' Equity and a Statement of
Operations and Changes in Contract Owners' Equity for the variable account.
Additionally, each participant and retired participant will receive periodic
reports on the value of his or her account.
Participants should review these reports carefully. All errors or corrections
must be reported to Nationwide immediately to assure proper crediting to the
contract. Unless Nationwide is notified within 30 days of receipt of the report,
Nationwide will assume all transactions are correct.
Nationwide will provide contract owners with the variable account's prospectus
to make available to participants. The contract owner may, under the terms of
the plan, be required to provide additional information to participants, such as
changes in the plan, changes in the tax status of the plan, or the financial
condition of the contract owner as it relates to obligations under the plan.
YEAR 2000 COMPLIANCE ISSUES
Nationwide has developed and implemented a plan to address issues related to the
Year 2000. The problem relates to many existing computer systems using only two
digits to identify a year in a date field. These systems were designed and
developed without considering the impact of the upcoming change in the century.
If not corrected, many computer systems could fail or create erroneous results
when processing information dated after December 31, 1999.
Like many organizations, Nationwide is required to renovate or replace computer
systems so that the systems will function properly after December 31, 1999.
Nationwide has completed an inventory and assessment of all computer systems and
has developed a plan to renovate or replace all applications that were
identified as not Year 2000 compliant.
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As of the end of July 1998, Nationwide has renovated 97% of all applications
that required renovation. Testing of the renovated programs is in process,
including running each application with the date moved forward to Year 2000.
Nationwide expects to complete the testing of all renovated applications by the
end of 1998. For applications being replaced, Nationwide anticipates all
replacement systems to be in place and functioning by the end of 1998.
Contingency plans are substantially completed which identify actions to be taken
if Nationwide's renovation and replacement strategies fall behind schedule.
Nationwide is also completing an inventory and assessment of all vendor
products. As of the end of July 1998, 83% of products had been assessed and 69%
were Year 2000 compliant. Nationwide is certifying that each vendor product is
Year 2000 compliant. At the end of July 1998, 24% of vendor products that were
identified as Year 2000 compliant had been certified. Nationwide anticipates
having all vendor products assessed and certified by the end of 1998. Any vendor
products that cannot be certified as Year 2000 compliant will be replaced or
eliminated.
In addition to resolving internal Year 2000 readiness issues, Nationwide is
working with all business partners to assess Year 2000 issues associated with
the exchange of electronic data. Nationwide has completed an inventory and
assessment of all interfaces with business partners and is in the process of
testing those interfaces. Nationwide has also initiated plans to survey producer
business partners to ascertain their Year 2000 readiness.
Operating expenses in 1997 and in the first six months of 1998 include
approximately $45 million and $22.6 million, respectively, for technology
projects, including costs related to Year 2000. In the second half of 1998,
Nationwide anticipates spending an amount comparable to expense for the first
half of 1998. At this time, no significant Year 2000 costs are anticipated in
1999. Management does not anticipate that the completion of Year 2000 renovation
and replacement activities will result in a reduction in operating expenses.
Rather, personnel and resources currently allocated to Year 2000 issues will be
assigned to other technology-related projects. These expenses do not have an
effect on the assets of the variable account and are not charged through to the
contract owner.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
In February 1997, Nationwide Life Insurance Company was named as a defendant in
a lawsuit filed in New York Supreme Court related to the sale of whole life
policies on a "vanishing premium" basis (John H. Snyder v. Nationwide Life
Insurance Co.). The plaintiff in this lawsuit seeks to represent a national
class of Nationwide policyholders and claims unspecified compensatory and
punitive damages. On August 20, 1998, the Court in the Snyder case signed an
order preliminarily approving a class for settlement purposes and scheduled a
fairness hearing for December 17, 1998. The proposed settlement, if ultimately
approved, is not expected to have a material adverse effect on the financial
condition of Nationwide Life Insurance Company.
In April 1998, Nationwide Life Insurance Company was named as a defendant in a
lawsuit filed in Ohio State Court similar to the Snyder lawsuit (David Mishler
v. Nationwide Life Insurance Co.). These plaintiffs seek to represent a similar
class, make similar allegations and seek unspecified compensatory and punitive
damages.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance contract
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and the other who was the owner of a variable annuity contract, brought an
action in a Texas federal court against Nationwide Life Insurance Company and
the American Century Group as defendants (Robert Young and David D. Distad v.
Nationwide Life Insurance Company et al.). In this action, plaintiffs seek to
represent a class of variable life insurance policy owners and variable annuity
contract owners who they claim were misled when purchasing these variable
contracts. Plaintiffs alleged the purchasers were led to believe that the
performance of an underlying mutual fund managed by American Century, whose
shares may only be purchased by insurance companies, would track the performance
of a public mutual fund, also managed by American Century. The amended complaint
seeks unspecified compensatory and punitive damages. On April 27, 1998, the
Court denied, in part, and granted, in part, motions to dismiss the complaint
filed by Nationwide Life Insurance Company and American Century. The parties are
presently engaged in discovery on the issue of whether the lawsuit should be
certified as a class action. Plaintiffs filed their motion in support of class
certification and Nationwide Life Insurance Company intends to file a response
opposing class certification. Nationwide Life Insurance Company intends to
defend this case vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY
ADVERTISING
A "yield" and "effective yield" may be advertised for the Nationwide Money
Market Fund, NSAT - Money Market Fund, and the Dreyfus Cash Management Fund -
Class A. "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 fund's
units. Yield is an annualized figure, which means that it is assumed that funds
generate the same level of net income over a 52-week period. The "effective
yield" is calculated similarly but includes the effect of assumed compounding,
calculated under rules prescribed by the SEC. The effective yield will be
slightly higher than yield due to this compounding effect.
Nationwide may advertise the performance of a sub-account in relation to the
performance of other variable annuity sub-accounts, underlying mutual fund
options with similar or different objectives, or the investment industry as a
whole. Other investments to which the sub-accounts may be compared include, but
are not limited to:
* precious metals;
* real estate;
* stocks and bonds;
* closed-end funds;
* bank money market deposit accounts and passbook savings;
* CDs; and
* the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
* S&P 500;
* Shearson/Lehman Intermediate Government/Corporate Bond Index;
* Shearson/Lehman Long-Term Government/Corporate Bond Index;
* Donoghue Money Fund Average;
* U.S. Treasury Note Index;
* Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and Dow Jones
* Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
* Lipper Analytical Services, Inc.,
* CDA/Wiesenberger,
* Morningstar,
* Donoghue's,
* magazines such as:
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Money;
Forbes;
Kiplinger's Personal Finance Magazine;
Financial World
Consumer Reports
Business Week;
Time;
Newsweek;
National Underwriter;
News and World Report;
* LIMRA;
* Value;
* Best's Agent Guide;
* Western Annuity Guide;
* Comparative Annuity Reports;
* Wall Street Journal;
* Barron's;
* Investor's Daily;
* Standard & Poor's Outlook; and
* Variable Annuity Research & Data Service (The VARDS Report)
These rating services and publications rank the underlying mutual funds'
performance against other funds. These rankings may or may not include the
effects of sales charges or other fees.
Financial Rating Services
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. Nationwide may
advertise these ratings. These ratings reflect Nationwide's financial strength
or claims-paying ability. The ratings are not intended to reflect the investment
experience or financial strength of the variable account.
Some Nationwide advertisements and endorsements may include lists of
organizations, individuals or other parties that recommend Nationwide or the
contract. Furthermore, Nationwide may occasionally advertise comparisons of
currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
Historical Performance of the Sub-Accounts
Nationwide will advertise historical performance of the sub-accounts. Nationwide
may advertise for the sub-account's standardized "average annual total return,"
calculated in a manner prescribed by the SEC, and nonstandardized "total
return." Average annual total return shows the percentage rate of return of a
hypothetical initial investment of $1,000 for the most recent one, five and ten
year periods (or for a period covering the time the underlying mutual fund has
been available in the variable account if it has not been available for one of
the prescribed periods). This calculation reflects the deduction of all charges
made to the contracts, except for premium taxes, which may be imposed by certain
states.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," shows the percentage rate of return of a hypothetical
initial investment of $10,000 for the most recent one, five and ten year periods
(or for a period covering the time the underlying mutual fund has been in
existence). For those underlying mutual funds which have not been available for
one of the prescribed periods, the nonstandardized total return illustrations
will show the investment performance the underlying mutual funds would have
achieved (reduced by the same charges except the CDSC) had they been available
in the variable account for one of the periods. The CDSC is not reflected
because the contracts are designed for long term investment. The CDSC, if
reflected, would decrease the level of performance shown. An initial investment
of $10,000 is assumed because that amount is closer to the size of a typical
contract than $1,000, which was used in calculating the standardized average
annual total return.
The standardized average annual total return and nonstandardized total return
quotations are calculated using data for the period ended December 31, 1997.
However, Nationwide generally provides performance information more frequently.
Information relating to performance of the sub-accounts is based on historical
earnings and does not represent or guarantee future results.
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SUB-ACCOUNT PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN MONEY MARKET FUNDS
<TABLE>
<CAPTION>
========================================= ========================================= ========================================
CURRENT YIELD EFFECTIVE YIELD
SERIES OPTIONS PERIOD ENDING 12/31/97 PERIOD ENDING 12/31/97
========================================= ========================================= ========================================
<S> <C> <C>
Dreyfus Cash Management Fund - Class A 3.83% 3.90%
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Nationwide(R) Money Market Fund 4.23% 4.32%
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Nationwide Separate Account Trust- 4.40% 4.50%
Money Market Fund
- ----------------------------------------- ----------------------------------------- ----------------------------------------
</TABLE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN OTHER THAN MONEY MARKET FUNDS
<TABLE>
<CAPTION>
======================================================= ================ ================ ================== ===============
10 YEARS OR
DATE FUND
AVAILABLE IN
VARIABLE
1 YEAR 3 YEARS 5 YEARS ACCOUNT
SERIES OPTIONS TO 12/31/97 TO 12/31/97 TO 12/31/97 TO 12/31/97
======================================================= ================ ================ ================== ===============
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM Constellation Fund - 5.87% 18.23% 13.78% 18.65%
Institutional Class
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
American Century: Twentieth Century Growth 21.56% 17.76% 9.67% 13.21%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
American Century: Twentieth Century Select 24.44% 20.99% 12.25% 12.36%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
American Century: Twentieth Century Ultra 15.47% 21.01% 14.89% 19.91%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
The Bond Fund of America(SM), Inc. 1.70% 7.47% 5.18% 7.36%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Davis New York Venture Fund, Inc. 25.91% 30.08% 19.37% 19.12%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 22.23% 24.24% 16.09% 12.70%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Dreyfus S&P 500 Index Fund 25.33% 27.13% 16.72% 13.11%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Dreyfus Third Century Fund, Inc. 21.65% 26.31% 13.22% 14.02%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Evergreen Income and Growth Fund 17.90% 17.01% 10.07% 9.93%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Federated U.S. Government Securities Fund: 2-5 Years -0.38% 4.08% 2.45% 5.02%
- - Institutional Shares
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Asset Manager(TM) 14.62% 13.95% 10.39% 11.37%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Capital & Income Fund 7.12% 10.49% 9.18% 9.57%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Contrafund 15.34% 23.45% 16.82% 21.07%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Equity-Income Fund 22.26% 24.03% 17.47% 14.46%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Growth & Income Portfolio 22.44% 24.90% 18.09% 17.70%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Magellan(R) Fund 18.90% 21.09% 15.97% 16.83%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
The Growth Fund of America(R), Inc. 19.16% 20.10% 13.76% 14.52%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
The Income Fund of America(R), Inc. 14.51% 18.45% 12.09% 11.88%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
INVESCO Industrial Income Fund, Inc. 18.75% 19.84% 13.12% 14.82%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Janus Fund 15.06% 20.31% 12.81% 16.30%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
MAS Funds Fixed Income Portfolio 2.07% 8.09% 5.41% 7.54%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Massachusetts Investors Growth Stock Fund - Class A 40.25% 29.19% 17.07% 15.89%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
MFS(R) Growth Opportunities Fund - Class A 15.62% 22.94% 14.67% 12.52%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
MFS(R) High Income Fund - Class A 5.28% 10.40% 8.54% 8.23%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Nationwide(R) Bond Fund - Class D 1.77% 7.46% 3.72% 6.21%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Nationwide(R) Fund - Class D 31.81% 27.54% 16.29% 15.48%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
</TABLE>
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<PAGE> 31
<TABLE>
<CAPTION>
======================================================= ================ ================ ================== ===============
10 YEARS OR
DATE FUND
AVAILABLE IN
VARIABLE
1 YEAR 3 YEARS 5 YEARS ACCOUNT
SERIES OPTIONS TO 12/31/97 TO 12/31/97 TO 12/31/97 TO 12/31/97
======================================================= ================ ================ ================== ===============
<S> <C> <C> <C> <C>
Nationwide(R) Growth Fund - Class D 18.54% 20.21% 13.47% 12.73%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Neuberger Berman Guardian Fund, Inc. 10.32% 18.93% 13.21% 15.40%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Neuberger Berman Partners Fund, Inc. 21.51% 26.95% 17.51% 14.97%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Neuberger Berman Manhattan Fund, Inc. 21.48% 19.39% 11.48% 14.10%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Putnam Investors Fund - Class A 26.72% 27.52% 17.82% 15.19%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Putnam Voyager Fund - Class A 18.29% 22.34% 15.95% 16.95%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
SEI Index Funds-S&P 500 Index Portfolio 25.32% 27.43% 17.04% 15.53%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Seligman Growth Fund, Inc. - Class A 10.49% 18.95% 10.38% 12.51%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Strong Common Stock Fund, Inc. 16.35% 22.03% 16.95% 19.18%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
T. Rowe Price International Stock Fund(R) -4.77% 6.02% 10.18% 8.30%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Templeton Foreign Fund - Class I -0.86% 8.01% 11.08% 10.30%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
</TABLE>
NON-STANDARDIZED AVERAGE TOTAL ANNUAL RETURN
(The total return figures shown below do not reflect the deduction of the
Participant Account Maintenance Charge or any applicable Contingent Deferred
Sales Charges)
<TABLE>
<CAPTION>
======================================================= ================ ================ ================== ===============
10 YEARS
1 YEAR 3 YEARS 5 YEARS TO 12/31/97
SERIES OPTIONS TO 12/31/97 TO 12/31/97 TO 12/31/97 OR LIFE OF
FUND
======================================================= ================ ================ ================== ===============
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM Constellation Fund - 12.37% 20.60% 15.56% 19.51%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
American Century: Twentieth Century Growth 28.06% 20.26% 11.77% 14.29%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
American Century: Twentieth Century Select 30.94% 23.39% 14.22% 13.50%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
American Century: Twentieth Century Ultra 21.97% 23.33% 16.66% 20.74%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
The Bond Fund of America(SM), Inc. 8.20% 10.23% 7.34% 8.71%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Davis New York Venture Fund, Inc. 32.41% 32.21% 21.07% 20.04%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Delaware Group Decatur Fund, Inc.-Decatur Income Fund 28.73% 26.52% 17.88% 13.89%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Dreyfus S&P 500 Index Fund 31.83% 29.33% 18.54% 14.60%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Dreyfus Third Century Fund, Inc. 28.15% 28.52% 15.20% 15.09%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Evergreen Income and Growth Fund 24.40% 19.51% 12.09% 11.21%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Federated U.S. Government Securities Fund: 2-5 Years 6.12% 6.99% 4.76% 6.51%
- - Institutional Shares
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Asset Manager(TM) 21.12% 16.54% 12.33% 12.63%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Capital & Income Fund 13.62% 13.18% 11.13% 10.90%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Contrafund 21.84% 25.71% 18.54% 21.86%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Equity-Income Fund 28.76% 26.31% 19.18% 15.58%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Growth & Income Portfolio 28.94% 27.15% 19.78% 18.65%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Fidelity Magellan(R) Fund 25.40% 23.42% 17.69% 17.76%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
The Growth Fund of America(R), Inc. 25.66% 22.49% 15.61% 15.55%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
The Income Fund of America(R), Inc. 21.01% 20.87% 14.00% 13.05%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
</TABLE>
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<PAGE> 32
<TABLE>
<CAPTION>
======================================================= ================ ================ ================== ===============
10 YEARS
1 YEAR 3 YEARS 5 YEARS TO 12/31/97
SERIES OPTIONS TO 12/31/97 TO 12/31/97 TO 12/31/97 OR LIFE OF
FUND
======================================================= ================ ================ ================== ===============
<S> <C> <C> <C> <C>
INVESCO Industrial Income Fund, Inc. 25.25% 22.24% 15.00% 15.83%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Janus Fund 21.56% 22.68% 14.71% 17.22%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
MAS Funds Fixed Income Portfolio 8.57% 10.83% 7.56% 8.88%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Massachusetts Investors Growth Stock Fund - Class A 46.75% 31.43% 18.92% 16.98%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
MFS(R) Growth Opportunities Fund - Class A 22.12% 25.23% 16.50% 13.71%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
MFS(R) High Income Fund - Class A 11.78% 13.08% 10.53% 9.66%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Nationwide(R) Bond Fund - Class D 8.27% 10.20% 5.97% 7.62%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Nationwide(R) Fund - Class D 38.31% 29.78% 18.16% 16.52%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Nationwide(R) Growth Fund - Class D 25.04% 22.60% 15.35% 13.87%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Neuberger Berman Guardian Fund, Inc. 16.82% 21.31% 15.05% 16.37%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Neuberger Berman Manhattan Fund, Inc. 27.98% 21.80% 13.46% 15.13%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Putnam Investors Fund - Class A 33.22% 29.72% 19.57% 16.29%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Putnam Voyager Fund - Class A 24.79% 24.63% 17.70% 17.92%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
SEI Index Funds-S&P 500 Index Portfolio 31.82% 29.63% 18.84% 16.58%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Seligman Growth Fund, Inc. - Class A 16.99% 21.34% 12.40% 13.64%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
T. Rowe Price International Stock Fund(R) 1.73% 8.85% 11.96% 9.57%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
Templeton Foreign Fund - Class I 5.64% 10.78% 12.86% 11.45%
- ------------------------------------------------------- ---------------- ---------------- ------------------ ---------------
</TABLE>
Performance summary information is not available for the following underlying
mutual funds because they were first made available in November 1998: American
Century -Twentieth Century International Discovery Fund; Dreyfus Capital
Appreciation Fund, Inc.; Dreyfus Premier Midcap Stock Fund; Federated Bond Fund;
Fidelity Advisor Growth Opportunities Fund; Fidelity Advisor high Yield Fund;
INVESCO Dynamics Fund; INVESCO Total Return Fund; Morgan Stanley Institutional
Fund, Inc. - Equity Growth Portfolio - Class B; Nationwide S&P 500(R) Index
Fund; Neuberger Berman Partners Trust; Oppenheimer Global Fund - Class A;
Prestige Balanced Fund - Class Y; Prestige International Fund - Class Y;
Prestige Large Cap Growth Fund - Class Y; Prestige Large Cap Value Fund - Class
Y; Prestige Small Cap Fund - Class Y.
Performance summary information is not available for the following underlying
mutual funds because they were first made available in January 1998: Janus
Worldwide Fund; LifeDesign Series - The Moderately Aggressive Portfolio;
LifeDesign Series - The Moderate Portfolio; LifeDesign Series - The Moderately
Conservative Portfolio; LifeDesign Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
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<PAGE> 33
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..............................................................................2
Underwriters......................................................................................................2
Calculations of Performance.......................................................................................2
Annuity Payments..................................................................................................3
Financial Statements..............................................................................................4
</TABLE>
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<PAGE> 34
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
A summary of the investment objective for each underlying mutual fund is listed
below.
There is no guarantee that the investment objectives will be met.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE WHEN THE CONTRACTS ARE
ISSUED TO 457 DEFERRED COMPENSATION PLANS.
AIM EQUITY INDEX FUNDS, INC. - 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 AIM Advisers, Inc. serves as the Fund's
investment adviser.
AMERICAN CENTURY - TWENTIETH CENTURY INTERNATIONAL DISCOVERY FUND - INVESTOR
CLASS
The investment objective of the Fund is capital growth by investing primarily in
an internationally diversified portfolio of equity securities of issuers that
meet certain fundamental and technical standards of selection (relating
primarily to acceleration of earnings and revenues). The Fund will invest its
assets primarily in equity securities of small foreign issuers (those issuers
having, at the time of investment, a market capitalization of less than U.S. $1
billion or a public float of less than U.S. $500 million). The "public float" of
an issuer is defined as the aggregate market value of the issuer's outstanding
securities held by non-affiliates of the issuer. The Fund may invest up to 50%
of its assets in securities of issuers in emerging market countries. Due to the
significant risks associated with the Fund's investment strategy, an investment
in the Fund may not be appropriate for all investors. American Century
Investment Management, Inc. serves as the Fund's investment adviser.
AMERICAN CENTURY: INCOME & GROWTH - INVESTOR CLASS GROWTH
The investment objective of the Fund is to seek dividend growth, current income
and capital appreciation by investing in common stocks. The Fund may buy
securities convertible into common stock, such as convertible bonds, convertible
preferred stocks or warrants. The Fund may also, for liquidity purposes, invest
in high-quality money market instruments with remaining maturities of one year
or less. The Fund may also enter into repurchase agreements, collateralized by
U.S. government securities, with banks or broker-dealers deemed to present
minimal credit risk. American Century Investment Management, Inc. serves as the
Fund's investment adviser.
AMERICAN CENTURY: TWENTIETH CENTURY GROWTH
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. American Century
Investment Management, Inc. serves as the Fund's investment adviser.
AMERICAN CENTURY: TWENTIETH CENTURY SELECT
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. American
Century Investment Management, Inc. serves as the Fund's investment adviser.
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<PAGE> 35
AMERICAN CENTURY: TWENTIETH CENTURY ULTRA
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.
American Century Investment Management, Inc. serves as the Fund's investment
adviser.
DAVIS 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. Davis
Selected Advisers, L.P., serves as the Fund's investment adviser.
DREYFUS APPRECIATION FUND, INC.
The primary investment objective of the Fund is to provide long-term capital
growth consistent with the preservation of capital. Current income is a
secondary investment objective. The Fund seeks to meet its objectives by
investing primarily in the common stocks of domestic and foreign issuers. The
Dreyfus Corporation serves as the Fund's investment adviser.
DREYSFUS CASH MANAGEMENT FUND - CLASS A
The investment objective of the Fund is to privode investors with as high a
level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. The Dreyfus Corporation serves as the Fund's
investment adviser.
DREYFUS PREMIER MIDCAP STOCK FUND - CLASS A
The investment objective of the Fund is to seek total investment returns
(including capital appreciation and income) which consistently outperform the
Standard & Poor's 400 MidCap Index. The Fund attempts to maintain a diversified
holding in common stocks of medium capitalization companies (firms with a market
value between $200 million and $5 billion). The Dreyfus Corporation serves as
the Fund's investment adviser.
DREYFUS S&P 500 INDEX FUND
The Fund's objective 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 500 Composite Stock Price Index. The
Dreyfus Corporation serves as the Fund's investment adviser.
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 Dreyfus
Corporation serves as the Fund's investment adviser.
EVERGREEN INCOME AND GROWTH FUND (FORMERLY 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. Evergreen Asset Management Corp. serves as the Fund's investment
adviser.
FEDERATED BOND FUND - CLASS F
The investment objective of the Fund is to provide as high a level of current
income as is consistent with the preservation of capital. The Fund invests
primarily in a professionally managed, diversified portfolio of bonds. Under
normal circumstances, at least 65% of the
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<PAGE> 36
Fund's net assets will be invested in investment grade securities, including
repurchase agreements collateralized by investment grade securities. The Fund
may invest in corporate debt obligations, U.S. Government obligations, municipal
securities, asset-backed securities, adjustable rate mortgage securities,
collateralized mortgage obligations, and other securities which are deemed to be
consistent with the Fund's investment objectives. Federated Advisers serves as
the Fund's investment adviser.
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. Federated Management serves as the Fund's
investment adviser.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - CLASS A
The investment objective of the Fund is to pursue capital growth that exceeds
market performance through investments in growth, cyclical, and value stocks.
Fidelity Management & Research Company serves as the Fund's investment adviser.
FIDELITY ADVISOR HIGH YIELD FUND - CLASS T
The Fidelity Advisor High Yield Fund is a bond fund designed to meet the needs
of the long-term investor, seeking above-average monthly income and potential
capital growth by investing in lower-rated, high-yielding, fixed income
securities. Fidelity Management & Research Company serves as the Fund's
investment adviser.
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. Fidelity Management & Research Company serves
as the Fund's investment adviser.
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
Management & Research Company serves as the Fund's investment adviser.
INVESCO DYNAMICS FUND
The investment objective of the Fund is to seek appreciation of capital through
aggressive investment policies. The Fund invests primarily in common stocks of
U.S. companies traded on national securities exchanges and over-the-counter. The
Fund also has the flexibility to invest in preferred stocks and convertible or
straight issues of debentures, as well as foreign securities. INVESCO Funds
Group, Inc. serves as the Fund's investment adviser
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.
INVESCO Funds Group, Inc. serves as the Fund's investment adviser.
INVESCO TOTAL RETURN FUND
The investment objective of the Fund is to seek to achieve a high total return
on investment through capital appreciation and current income by investing in a
combination of equity securities (consisting of common stocks and, to a lesser
degree, securities convertible into
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<PAGE> 37
common stock) and fixed income securities. The equity securities purchased by
the Fund generally will be issued by companies which are listed on a national
securities exchange and which usually pay regular dividends. This Fund seeks
reasonably consistent total returns over a variety of market cycles. INVESCO
Funds Group, Inc. serves as the Fund's investment adviser. INVESCO Capital
Management, Inc. serves as the Fund's sub-adviser.
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. Janus Capital Corporation serves as the Fund's
investment adviser.
JANUS WORLDWIDE FUND
The investment objective of the Fund is long-term growth of capital in a manner
consistent with preservation of capital The objective is pursued primarily
through investments in common stocks of foreign and domestic issuers. The Fund
may invest on a worldwide basis in companies and organizations of any size,
regardless of country or organization or place of principal business activity.
The Fund normally invests in issuers from at least five different countries.
Janus Capital Corporation serves as the Fund's investment adviser.
LIFEDESIGNS SERIES
LifeDesigns Series consists of five separate nondiversified funds each of which
is a separately managed nondiversified portfolio with its own investment
objective and policies. The objective of each of the Portfolios which is
fundamental, is to maximize total investment return (i.e. capital growth and
income) subject to investment restrictions and asset allocation policies. The
Portfolios will maximize total investment return as is specifically detailed in
the following objectives which are non-fundamental and can be changed without
approval of a Portfolio's shareholders.
- THE AGGRESSIVE PORTFOLIO
The investment objective of this Fund is to provide growth of capital by
investing in underlying funds which invest primarily in equity securities
("Equity Funds"). This Fund is generally appropriate for investors seeking
higher returns over an investment time horizon of at least 15 years and
having a higher tolerance for market fluctuations. Nationwide Advisory
Services, Inc. ("NAS") serves as the Fund's investment adviser.
- THE MODERATELY AGGRESSIVE PORTFOLIO
The investment objective of this Fund is to provide growth of capital by
investing primarily in Equity Funds. However, the Fund attempts to reduce
its volatility by also investing in the Nationwide Contract and Proprietary
Funds which also invest primarily in fixed income securities ("Bond
Funds"). This Fund is generally appropriate for moderate investors seeking
high returns over an investment time horizon of 15 years or for more
aggressive investors with an investment time horizon of 10 to 15 years. NAS
serves as the Fund's investment adviser.
- THE MODERATE PORTFOLIO
The investment objective of this Fund is to provide growth of capital by
investing primarily in Equity Funds, but will also invest a significant
percentage of its assets in the Nationwide Contract and in Bond Funds. This
Fund is generally appropriate for moderate investors seeking moderate
returns over an investment time horizon of between 10 and 15 years;
conservative investors with an investment time horizon of at least 15 years
or more; and more aggressive investors with an investment time horizon of 5
to 10 years. NAS serves as the Fund's investment adviser.
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<PAGE> 38
- THE MODERATELY CONSERVATIVE PORTFOLIO
The investment objective of this Fund is to provide primarily income and,
secondarily, long term growth of capital. This Fund will seek to meet its
objectives by generally investing half of its assets in Equity Funds with
the remainder in the Nationwide Contract and Bond Funds. This Fund is
generally appropriate for moderate investors seeking lower fluctuations in
principal combined with some of the upside potential of equity investments
over an investment time horizon of between 5 and 10 years. This Fund is
also generally appropriate for conservative investors with an investment
time horizon of between 10 and 15 years and more aggressive investors with
an investment time horizon of less than 5 years. NAS serves as the Fund's
investment adviser.
- THE CONSERVATIVE PORTFOLIO
The investment objective of this Fund is to provide primarily income and,
secondarily, long term growth of capital. This Fund will seek to meet its
objectives by primarily investing in a combination of the Nationwide
Contract and Bond Funds, with a smaller investment in Equity Funds. This
Fund is generally appropriate for investors seeking low fluctuations in
principal over an investment time horizon of less than 5 years, as well as
more conservative investors with an investment time horizon of between 5
and 10 years. NAS serves as the Fund's investment adviser.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A
The investment objective of the Fund is long-term growth of capital and future
income rather than current income. Massachusetts Financial Services Company
serves as the fund's investment adviser.
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. Miller Anderson &
Sherrerd, L.L.P. serves as the Fund's investment adviser.
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. Massachusetts
Financial Services Company serves as the Fund's investment adviser.
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
Financial Services Company serves as the Fund's investment adviser.
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<PAGE> 39
MORGAN STANLEY INSTITUTIONAL FUND, INC. - EQUITY GROWTH PORTFOLIO - CLASS B
The investment objective of the Portfolio is to seek long-term capital
appreciation by investing in growth-oriented equity securities of medium and
large capitalization companies. Equity securities include common and preferred
stocks, convertible securities and rights and warrants to purchase common
stocks. Under normal circumstances, the Portfolio will invest at least 65% of
the value of its total assets in equity securities. Morgan Stanley Dean Witter
Investment Management, Inc. serves as the Portfolio's investment adviser.
NATIONWIDE(R) BOND FUND - CLASS D
The invesment objective of the Fund is to seek as high a level of income as is
consistent with preservation of capital. The Fund invests primarily in
fixed-income securities and currently focuses on corporate debt investments and
U.S. Government mortgage-backed securities. Under normal market conditions, the
dollar-weighted average portfolio maturity of the Fund will be intermediate,
which is defined as being between six and ten years.
NATIONWIDE(R) FUND - CLASS D
The investment objective of the Fund is to seek total return through a flexible
combination of current income and capital appreciation. The Fund invests
primarily in common stocks, but also in convertible securities, other equity
securities, bonds and money market obligations. Nationwide Advisory Services,
Inc. serves as the Fund's investment adviser.
NATIONWIDE(R) MONEY MARKET FUND
The investment objective of the Fund is to seek as high a level of current
income as is consistent with the preservation of capital and maintenance of
liquidity. The Fund invests in high-quality money market instruments maturing in
397 days or less. Nationwide Advisory Services, Inc. serves as the Fund's
investment adviser.
NATIONWIDE S&P 500(R) INDEX FUND - CLASS Y
The investment objective of the Fund is to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
as represented by the Standard & Poor's 500 Composite Stock Price Index (the
"Index"). The Fund attempts to be fully invested at all times in stocks that
comprise the Index and stock index futures, and in any event, at least 80% of
the Fund's net assets will be invested in stocks comprising the Index.
Nationwide Advisory Services, Inc. serves as the Fund's investment adviser and
The Dreyfus Corporation is the Fund's sub-adviser.
"S&P 500(R)" has been licensed for use by Nationwide Advisory Services, Inc. The
Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.
NATIONWIDE SEPARATE ACCOUNT TRUST - NATIONWIDE SMALL COMPANY FUND
The investment objective of the Fund is long-term growth of capital by investing
primarily in equity securities of domestic and foreign companies with market
capitalizations of less than $1 billion at the time of purchase. The
subadvisers, Dreyfus Corporation, Neuberger & Berman, L.P., Lazard Asset
Management, Strong Capital Management, Inc. and Warburg Pincus Asset Management,
Inc., were chosen because they utilize a number of different investment styles
when investing in small company stocks. By utilizing different investment
styles, the Fund's adviser, Nationwide Advisory Services, Inc., hopes to
increase prospects for investment return and to reduce market risk and
volatility.
NEUBERGER BERMAN GUARDIAN FUND, INC.
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
37
39 of 161
<PAGE> 40
Management Incorporated serves as the Fund's investment adviser.
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
Management Incorporated serves as the Fund's investment adviser.
NEUBERGER BERMAN PARTNERS TRUST
The investment objective of the Fund is to seek capital growth. The Fund invests
using a value-oriented approach to the selection of individual securities. The
Fund manager seeks capital growth through an investment approach that is
designed to increase capital with reasonable risk. Neuberger Berman Management,
Inc. serves as the Fund's investment adviser.
OPPENHEIMER GLOBAL FUND - CLASS A
The investment objective of the Fund is to seek capital appreciation. The Fund
emphasizes investment in foreign and domestic securities considered by the
Fund's investment manager to have appreciation possibilities, primarily common
stocks or securities having investment characteristics of common stocks (such as
convertible securities) of "growth-type" companies. As a matter of fundamental
policy, under normal market conditions, the Fund will invest its total assets in
securities of issuers traded in markets in at least three different countries
(which may include the United States). The portfolio may also emphasize
securities of cyclical industries and "special situations" when the Fund's
manager believes that they present opportunities for capital growth.
OppenheimerFunds, Inc. serves as the Fund's investment adviser.
PRESTIGE BALANCED FUND - CLASS Y
The investment objective of the Fund is to provide a high total return from a
diversified portfolio of equity and fixed income securities. The Fund seeks to
provide a total return that approaches the total return of the universe of
equity securities of large and medium sized companies and that exceeds the
return typical of a portfolio of fixed income securities. Under normal market
conditions, the Fund will invest approximately 60% of its assets in equity
securities and 40% in fixed income securities. The equity securities will
primarily be securities of large and medium sized companies included in the
Standard & Poor's 500 Composite Stock Price Index, and the fixed income
securities will cover a range of fixed income sectors and securities, including
government, corporate, asset-backed and mortgage-backed securities. Nationwide
Advisory Services, Inc. serves as the Fund's investment adviser and J.P. Morgan
Investment Management Inc. is the Fund's sub-adviser.
PRESTIGE INTERNATIONAL FUND - CLASS Y
The investment objective of the Fund is capital appreciation. The Fund seeks to
accomplish its investment objective by investing primarily in equity securities
of non-United States companies that, in the opinion of its subadviser, are
inexpensively priced relative to the return on total capital or equity. The Fund
invests primarily in equity securities of non-United States companies. Under
normal market conditions, the Fund will invest at least 80% of the value of its
total assets in the equity securities of companies within at least three
different countries (not including the United States). Nationwide Advisory
Services, Inc. serves as the Fund's investment adviser and Lazard Asset
Management is the Fund's sub-adviser.
38
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<PAGE> 41
PRESTIGE LARGE CAP GROWTH FUND - CLASS Y
The investment objective of the Fund is long-term capital appreciation. The Fund
seeks to achieve its investment objective from a broadly diversified portfolio
of equity securities of large capitalization companies that are expected to have
better prospects for earnings growth than the growth rate of the general
domestic economy. Dividend income is a secondary objective. A large
capitalization company is a company with a market capitalization and industry
characteristics that are similar to companies in the Russell 1000(R) Growth
Index, which currently have market capitalizations that range from $1.4 billion
to $272 billion. Nationwide Advisory Services, Inc. serves as the Fund's
investment adviser and Goldman Sachs Asset Management is the Fund's sub-adviser.
PRESTIGE LARGE CAP VALUE FUND - CLASS Y
The investment objective of the Fund is to maximize total return, consisting of
both capital appreciation and current income. The Fund seeks to achieve its
investment objective by investing in U.S. equity securities that are currently
undervalued as determined by its subadviser. Under normal market conditions,
substantially all, but in no event less than 65% of the Fund's total assets will
be invested in equity securities of large capitalization U.S. companies,
including foreign companies whose securities are traded in the United States and
who comply with U.S. accounting standards. A large capitalization company is a
company with a market capitalization and industry characteristics that are
similar to companies in the Russell 1000(R) Value Index, which currently have
market capitalizations that range from $1.4 billion to $272 billion. Nationwide
Advisory Services, Inc. serves as the Fund's investment adviser and Brinson
Partners, Inc. is the Fund's sub-adviser.
PRESTIGE SMALL CAP FUND - CLASS Y
The investment objective of the Fund is long-term capital appreciation. The Fund
seeks to accomplish its investment objective from a broadly diversified
portfolio of equity securities issued by U.S. companies that have small market
capitalizations. Under normal market conditions, the Fund will invest at least
65% of its total assets in equity securities of companies whose market
capitalizations at the time of investment do not exceed 110% of the largest
company in the Russell 2000(R) Small Stock Index; these companies currently have
market capitalizations that range from $222 million to $1.4 billion. Nationwide
Advisory Services, Inc. serves as the Fund's investment adviser and INVESCO
Management & Research, Inc. serves as the Fund's sub-adviser, providing daily
portfolio management for the Fund.
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 Investment Management, Inc. serves as the Fund's investment
adviser.
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. Putnam
Investment Management, Inc. serves as the Fund's investment adviser.
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
39
41 of 161
<PAGE> 42
of which are listed on the New York Stock Exchange. The investment objective is
a fundamental policy of the portfolio. There can be no assurance that the
Portfolio will achieve its investment objective. SEI Fund Management serves as
the Fund's investment adviser.
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.
J. & W. Seligman & Co., Incorporated serves as the Fund's investment adviser.
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 Investment Counsel, Inc. serves as the Fund's investment adviser.
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. T. Rowe Price
Associates, Inc. serves as the Fund's investment adviser.
WARBURG PINCUS EMERGING GROWTH FUND
The investment objective of the Fund is maximum capital appreciation by
investing in equity securities of small-to-medium sized companies in the United
States with emerging or renewed growth potential. Warburg Pincus Asset
Management, Inc. serves as the Fund's investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE TO NEW PLANS ESTABLISHED
ON OR AFTER JUNE 30, 1998:
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
Management & Research Company serves as the Fund's investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE TO NEW CONTRACTS ISSUED ON
OR AFTER OCTOBER 1, 1997:
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 Management & Research Company serves as the Fund's
investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT 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.
40
42 of 161
<PAGE> 43
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.
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 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, Nationwide shall no longer permit contract
owners or participants to make additional purchase payments or to exchange
contract values into the Fidelity Capital & Income Fund (formerly Fidelity High
Income Fund) sub-account. However, contract values held in the Fidelity Capital
& Income Fund (formerly Fidelity High Income Fund) sub-account as of May 1, 1991
may continue to be invested in that sub-account. Unless Nationwide is notified
otherwise, any purchase payments or exchanges which the contract owner or
participants directs Nationwide to invest in the Fidelity Capital & Income Fund
(formerly Fidelity High Income Fund) sub-account on and after May 1, 1991 shall
instead be automatically invested in the Nationwide Money Market Fund
sub-account.
Nationwide has determined that further investment in the Fidelity Capital &
Income Fund (formerly Fidelity High Income Fund) sub-account is not in the best
interests of the contract 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 Nationwide in the variable account which were
purchased from February 1, 1991 to May 1, 1991 shall be paid by Nationwide from
surplus and shall not be paid, directly or indirectly, by contract owners,
participants or the variable account.
41
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<PAGE> 44
APPENDIX B
The information shown below illustrates different accumulation unit values for
each tier (current as of December 31 of the preceding year.) Additional
information is maintained in the Statement of Additional Information for this
prospectus. A Statement of Additional Information, as well as specific
information concerning the accumulation unit values for any particular plan, may
be obtained by calling 1-800-545-4730 or by writing to P.O.Box 16766, Columbus,
Ohio 43216.
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
TIER I*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.95%
<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 Equity Funds, Inc.- 2.055366 2.309709 4,142,513 1997
----------------------- -------------------- ----------------------- ----------------
AIM Constellation Fund - 1.776138 2.055366 6,309,167 1996
----------------------- -------------------- ----------------------- ----------------
Institutional Class 1.316836 1.776138 3,214,050 1995
----------------------- -------------------- ----------------------- ----------------
1.305850 1.316836 1,607,538 1994
----------------------- -------------------- ----------------------- ----------------
1.120568 1.305850 1,341,351 1993
----------------------- -------------------- ----------------------- ----------------
1.000000 1.120568 0 1992
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
American Century: 4.562802 5.842997 23,886,079 1997
----------------------- -------------------- ----------------------- ----------------
Twentieth Century 4.005400 4.562802 12,224,812 1996
----------------------- -------------------- ----------------------- ----------------
Growth 3.359891 4.005400 37,335,163 1995
----------------------- -------------------- ----------------------- ----------------
3.443124 3.359891 41,134,943 1994
----------------------- -------------------- ----------------------- ----------------
3.350122 3.443124 51,977,134 1993
----------------------- -------------------- ----------------------- ----------------
3.533694 3.350122 58,356,370 1992
----------------------- -------------------- ----------------------- ----------------
2.110582 3.533694 53,923,483 1991
----------------------- -------------------- ----------------------- ----------------
2.216085 2.110582 67,311,152 1990
----------------------- -------------------- ----------------------- ----------------
1.562983 2.216085 49,896,477 1989
----------------------- -------------------- ----------------------- ----------------
1.536055 1.562983 51,598,758 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
American Century: 1.572461 2.058976 1,111,408 1997
----------------------- -------------------- ----------------------- ----------------
Twentieth Century 1.331631 1.572461 41,014 1996
----------------------- -------------------- ----------------------- ----------------
Select 1.095899 1.331631 1,254,199 1995
----------------------- -------------------- ----------------------- ----------------
1.202996 1.095899 194,231 1994
----------------------- -------------------- ----------------------- ----------------
1.059075 1.202996 386,750 1993
----------------------- -------------------- ----------------------- ----------------
1.118927 1.059075 383,487 1992
----------------------- -------------------- ----------------------- ----------------
1.000000 1.118927 2,950 1991
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
42
44 of 161
<PAGE> 45
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>
American Century: 2.069865 2.524538 132,438,228 1997
----------------------- -------------------- ----------------------- ----------------
Twentieth Century 1.835553 2.069865 70,399,683 1996
----------------------- -------------------- ----------------------- ----------------
Ultra 1.345904 1.835553 105,140,475 1995
----------------------- -------------------- ----------------------- ----------------
1.409710 1.345904 88,713,416 1994
----------------------- -------------------- ----------------------- ----------------
1.168340 1.409710 68,551,255 1993
----------------------- -------------------- ----------------------- ----------------
1.164722 1.168340 33,483,411 1992
----------------------- -------------------- ----------------------- ----------------
1.000000 1.164722 11,412 1991
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
The Bond Fund 2.155739 2.332586 5,345,075 1997
----------------------- -------------------- ----------------------- ----------------
of America(R), Inc. 2.039710 2.155739 3,518,054 1996
----------------------- -------------------- ----------------------- ----------------
1.741422 2.039710 7,434,474 1995
----------------------- -------------------- ----------------------- ----------------
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
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Davis New York 1.686019 2.232520 199,664 1997
----------------------- -------------------- ----------------------- ----------------
Venture 1.345221 1.686019 1,180,098 1996
----------------------- -------------------- ----------------------- ----------------
Fund, Inc. 0.966146 1.345221 1,771,764 1995
----------------------- -------------------- ----------------------- ----------------
0.994508 0.966146 720,917 1994
----------------------- -------------------- ----------------------- ----------------
1.000000 0.994508 5,626 1993
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Delaware Group 2.280210 2.935219 96,261 1997
----------------------- -------------------- ----------------------- ----------------
Decatur Fund, Inc. - 1.910384 2.280210 78,578 1996
----------------------- -------------------- ----------------------- ----------------
Decatur Income Fund 1.449372 1.910384 100,636 1995
----------------------- -------------------- ----------------------- ----------------
Institutional Class 1.473401 1.449372 104,006 1994
----------------------- -------------------- ----------------------- ----------------
1.289480 1.473401 281,500 1993
----------------------- -------------------- ----------------------- ----------------
1.196471 1.289480 162,528 1992
----------------------- -------------------- ----------------------- ----------------
0.991871 1.196471 106,856 1991
----------------------- -------------------- ----------------------- ----------------
1.142606 0.991871 16,158 1990
----------------------- -------------------- ----------------------- ----------------
1.000000 1.142606 0 1989
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Dreyfus 1.159356 1.212149 231,535 1997
----------------------- -------------------- ----------------------- ----------------
Cash 1.110383 1.159356 618,162 1996
----------------------- -------------------- ----------------------- ----------------
Management** - Class 1.057458 1.110383 2,561,760 1995
----------------------- -------------------- ----------------------- ----------------
A 1.025704 1.057458 2,324,960 1994
----------------------- -------------------- ----------------------- ----------------
1.003770 1.025704 25,763 1993
----------------------- -------------------- ----------------------- ----------------
1.000000 1.003770 0 1992
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
43
45 of 161
<PAGE> 46
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>
Dreyfus 2.756438 3.532278 10,221,038 1997
----------------------- -------------------- ----------------------- ----------------
Third Century 2.238323 2.756438 3,824,949 1996
----------------------- -------------------- ----------------------- ----------------
Fund, Inc. 1.663803 2.238323 6,501,520 1995
----------------------- -------------------- ----------------------- ----------------
1.814915 1.663803 6,965,653 1994
----------------------- -------------------- ----------------------- ----------------
1.740666 1.814915 8,765,880 1993
----------------------- -------------------- ----------------------- ----------------
1.723855 1.740666 9,137,872 1992
----------------------- -------------------- ----------------------- ----------------
1.259983 1.723855 5,165,976 1991
----------------------- -------------------- ----------------------- ----------------
1.228377 1.259983 4,118,236 1990
----------------------- -------------------- ----------------------- ----------------
1.057519 1.228377 1,659,197 1989
----------------------- -------------------- ----------------------- ----------------
0.866121 1.057519 618,691 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Dreyfus S&P 500 Index 1.000000 1.217658 15,653,811 1997
----------------------- -------------------- ----------------------- ----------------
Fund
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Evergreen 1.947502 2.422617 1,909,226 1997
----------------------- -------------------- ----------------------- ----------------
Income and Growth 1.741651 1.947502 1,146,375 1996
----------------------- -------------------- ----------------------- ----------------
Fund (formerly 1.419467 1.741651 3,257,653 1995
----------------------- -------------------- ----------------------- ----------------
Evergreen Total 1.531292 1.419467 4,439,096 1994
----------------------- -------------------- ----------------------- ----------------
Return Fund) 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
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Federated U.S. 1.144380 1.214470 2,077,904 1997
----------------------- -------------------- ----------------------- ----------------
Government 1.115461 1.144380 1,214,422 1996
----------------------- -------------------- ----------------------- ----------------
Securities 0.991595 1.115461 1,877,483 1995
----------------------- -------------------- ----------------------- ----------------
Fund: 2-5 Years - 1.020623 0.991595 1,280,899 1994
----------------------- -------------------- ----------------------- ----------------
Institutional Shares 1.000000 1.020623 696,793 1993
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Fidelity Asset 1.252704 1.517270 4,375,583 1997
----------------------- -------------------- ----------------------- ----------------
Manager(TM) 1.121926 1.252704 2,611,685 1996
----------------------- -------------------- ----------------------- ----------------
0.958564 1.121926 5,838,128 1995
----------------------- -------------------- ----------------------- ----------------
1.036089 0.958564 3,916,306 1994
----------------------- -------------------- ----------------------- ----------------
1.000000 1.036089 79,714 1993
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
44
46 of 161
<PAGE> 47
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 Capital 4.096488 4.654233 294,820 1997
----------------------- -------------------- ----------------------- -----------------
& Income Fund (formerly 3.712491 4.096488 125,230 1996
----------------------- -------------------- ----------------------- -----------------
Fidelity High Income Fund) 3.210584 3.712491 463,343 1995
----------------------- -------------------- ----------------------- -----------------
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
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Fidelity 2.059778 2.509557 99,795,570 1997
----------------------- -------------------- ----------------------- -----------------
Contrafund 1.705419 2.059778 56,288,590 1996
----------------------- -------------------- ----------------------- -----------------
1.263308 1.705419 62,585,233 1995
----------------------- -------------------- ----------------------- -----------------
1.289799 1.263308 40,927,857 1994
----------------------- -------------------- ----------------------- -----------------
1.072342 1.289799 14,514,807 1993
----------------------- -------------------- ----------------------- -----------------
1.000000 1.072342 186,872 1992
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Fidelity 5.359692 6.900916 42,604,023 1997
----------------------- -------------------- ----------------------- -----------------
Equity-Income 4.471070 5.359692 18,493,235 1996
----------------------- -------------------- ----------------------- -----------------
Fund 3.424310 4.471070 35,553,370 1995
----------------------- -------------------- ----------------------- -----------------
3.448520 3.424310 34,056,352 1994
----------------------- -------------------- ----------------------- -----------------
2.869860 3.448520 41,743,016 1993
----------------------- -------------------- ----------------------- -----------------
2.526472 2.869860 36,410,831 1992
----------------------- -------------------- ----------------------- -----------------
1.971024 2.526472 40,239,204 1991
----------------------- -------------------- ----------------------- -----------------
2.314450 1.971024 65,533,870 1990
----------------------- -------------------- ----------------------- -----------------
1.968876 2.314450 62,489,636 1989
----------------------- -------------------- ----------------------- -----------------
1.622650 1.968876 66,300,418 1988
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Fidelity 2.001775 2.581177 3,435,213 1997
----------------------- -------------------- ----------------------- -----------------
Growth & 1.683805 2.001775 4,201,944 1996
----------------------- -------------------- ----------------------- -----------------
Income Portfolio 1.255568 1.683805 4,155,413 1995
----------------------- -------------------- ----------------------- -----------------
1.239420 1.255568 2,808,994 1994
----------------------- -------------------- ----------------------- -----------------
1.046808 1.239420 1,219,293 1993
----------------------- -------------------- ----------------------- -----------------
1.000000 1.046808 85,896 1992
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Fidelity Magellan(R) 1.913110 2.398961 95,356,893 1997
----------------------- -------------------- ----------------------- -----------------
Fund 1.729361 1.913110 56,756,036 1996
----------------------- -------------------- ----------------------- -----------------
1.275955 1.729361 92,049,788 1995
----------------------- -------------------- ----------------------- -----------------
1.311856 1.275955 68,044,510 1994
----------------------- -------------------- ----------------------- -----------------
1.062405 1.311856 43,203,753 1993
----------------------- -------------------- ----------------------- -----------------
1.000000 1.062405 10,591,374 1992
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
</TABLE>
45
47 of 161
<PAGE> 48
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 Growth 2.691979 3.382686 4,016,452 1997
----------------------- -------------------- ----------------------- ----------------
Fund of 2.366626 2.691979 2,478,693 1996
----------------------- -------------------- ----------------------- ----------------
America(R), Inc. 1.840658 2.366626 6,716,573 1995
----------------------- -------------------- ----------------------- ----------------
1.857739 1.840658 5,646,915 1994
----------------------- -------------------- ----------------------- ----------------
1.638011 1.857739 5,353,392 1993
----------------------- -------------------- ----------------------- ----------------
1.539692 1.638011 3,840,212 1992
----------------------- -------------------- ----------------------- ----------------
1.144684 1.539692 1,551,711 1991
----------------------- -------------------- ----------------------- ----------------
1.205372 1.144684 105,320 1990
----------------------- -------------------- ----------------------- ----------------
1.000000 1.205372 0 1989
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
The Income 2.160929 2.614863 7,017,085 1997
----------------------- -------------------- ----------------------- ----------------
Fund of 1.893327 2.160929 5,291,391 1996
----------------------- -------------------- ----------------------- ----------------
America(R), Inc. 1.480756 1.893327 8,645,811 1995
----------------------- -------------------- ----------------------- ----------------
1.533299 1.480756 7,829,528 1994
----------------------- -------------------- ----------------------- ----------------
1.357846 1.533299 7,258,704 1993
----------------------- -------------------- ----------------------- ----------------
1.223786 1.357846 3,016,773 1992
----------------------- -------------------- ----------------------- ----------------
0.998504 1.223786 631,336 1991
----------------------- -------------------- ----------------------- ----------------
1.000000 0.998504 0 1990
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
INVESCO 1.678513 2.102364 10,884,376 1997
----------------------- -------------------- ----------------------- ----------------
Industrial 1.451889 1.678513 7,428,110 1996
----------------------- -------------------- ----------------------- ----------------
Income Fund, Inc. 1.151056 1.451889 10,632,818 1995
(formerly
----------------------- -------------------- ----------------------- ----------------
Financial 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 1.603290 1.948907 33,709,518 1997
----------------------- -------------------- ----------------------- ----------------
1.353271 1.603290 15,851,766 1996
----------------------- -------------------- ----------------------- ----------------
1.055481 1.353271 13,522,743 1995
----------------------- -------------------- ----------------------- ----------------
1.077425 1.055481 7,345,306 1994
----------------------- -------------------- ----------------------- ----------------
1.000000 1.077425 2,969,768 1993
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
MAS Funds Fixed 1.229760 1.335173 1,990,827 1997
----------------------- -------------------- ----------------------- ----------------
Income Portfolio 1.156444 1.229760 718,247 1996
----------------------- -------------------- ----------------------- ----------------
0.980782 1.156444 366,064 1995
----------------------- -------------------- ----------------------- ----------------
1.000000 0.980782 31,751 1994
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
46
48 of 161
<PAGE> 49
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 10.880822 15.968069 450,089 1997
----------------------- -------------------- ----------------------- ----------------
Investors Growth 8.942612 10.880822 164,786 1996
----------------------- -------------------- ----------------------- ----------------
Stock Fund - 7.034148 8.942612 551,377 1995
----------------------- -------------------- ----------------------- ----------------
Class A 7.613442 7.034148 604,020 1994
----------------------- -------------------- ----------------------- ----------------
6.714892 7.613442 891,831 1993
----------------------- -------------------- ----------------------- ----------------
6.368639 6.714892 914,534 1992
----------------------- -------------------- ----------------------- ----------------
4.352449 6.368639 1,056,566 1991
----------------------- -------------------- ----------------------- ----------------
4.612779 4.352449 1,577,501 1990
----------------------- -------------------- ----------------------- ----------------
3.430876 4.612779 1,393,742 1989
----------------------- -------------------- ----------------------- ----------------
3.326929 3.430876 2,091,280 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
MFS(R) Growth 7.380232 9.012670 3,078,940 1997
----------------------- -------------------- ----------------------- ----------------
Opportunities 6.114190 7.380232 843,158 1996
----------------------- -------------------- ----------------------- ----------------
Fund - Class A 4.589533 6.114190 3,824,999 1995
----------------------- -------------------- ----------------------- ----------------
4.834037 4.589533 4,635,532 1994
----------------------- -------------------- ----------------------- ----------------
4.200054 4.834037 9,303,110 1993
----------------------- -------------------- ----------------------- ----------------
3.936838 4.200054 10,600,796 1992
----------------------- -------------------- ----------------------- ----------------
3.246855 3.936838 13,413,614 1991
----------------------- -------------------- ----------------------- ----------------
3.427388 3.246855 23,047,089 1990
----------------------- -------------------- ----------------------- ----------------
2.692907 3.427388 24,300,466 1989
----------------------- -------------------- ----------------------- ----------------
2.493461 2.692907 28,164,998 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
MFS(R) High 5.518160 6.168371 633,922 1997
----------------------- -------------------- ----------------------- ----------------
Income 4.949752 5.518160 164,395 1996
----------------------- -------------------- ----------------------- ----------------
Fund - 4.265493 4.949752 806,763 1995
----------------------- -------------------- ----------------------- ----------------
Class A 4.422523 4.265493 877,250 1994
----------------------- -------------------- ----------------------- ----------------
3.739642 4.422523 1,068,154 1993
----------------------- -------------------- ----------------------- ----------------
3.225557 3.739642 1,036,507 1992
----------------------- -------------------- ----------------------- ----------------
2.186959 3.225557 1,186,991 1991
----------------------- -------------------- ----------------------- ----------------
2.651605 2.186959 2,159,639 1990
----------------------- -------------------- ----------------------- ----------------
2.731036 2.651605 2,739,257 1989
----------------------- -------------------- ----------------------- ----------------
2.453867 2.731036 2,747,679 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Nationwide(R) 2.001472 2.166981 51,355 1997
----------------------- -------------------- ----------------------- ----------------
Bond Fund - Class D 1.991196 2.001472 26,395 1996
----------------------- -------------------- ----------------------- ----------------
1.619166 1.991196 92,001 1995
----------------------- -------------------- ----------------------- ----------------
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
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
47
49 of 161
<PAGE> 50
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) 14.964379 20.697282 3,635,254 1997
----------------------- -------------------- ----------------------- ----------------
Fund - Class D 12.191058 14.964379 1,316,219 1996
----------------------- -------------------- ----------------------- ----------------
9.468045 12.191058 2,905,460 1995
----------------------- -------------------- ----------------------- ----------------
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
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Nationwide(R) 3.083008 3.854877 2,582,538 1997
----------------------- -------------------- ----------------------- ----------------
Growth Fund - Class D 2.667201 3.083008 1,156,065 1996
----------------------- -------------------- ----------------------- ----------------
2.092009 2.667201 3,668,270 1995
----------------------- -------------------- ----------------------- ----------------
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
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Nationwide(R) 2.884848 3.003821 18,830,414 1997
----------------------- -------------------- ----------------------- ----------------
Money Market 2.774433 2.884848 7,935,176 1996
----------------------- -------------------- ----------------------- ----------------
Fund*** 2.654661 2.774433 20,350,850 1995
----------------------- -------------------- ----------------------- ----------------
2.583387 2.654661 18,028,497 1994
----------------------- -------------------- ----------------------- ----------------
2.542721 2.583387 20,122,594 1993
----------------------- -------------------- ----------------------- ----------------
2.487178 2.542721 22,067,362 1992
----------------------- -------------------- ----------------------- ----------------
2.377082 2.487178 33,612,374 1991
----------------------- -------------------- ----------------------- ----------------
2.224557 2.377082 48,721,235 1990
----------------------- -------------------- ----------------------- ----------------
2.062504 2.224557 43,599,432 1989
----------------------- -------------------- ----------------------- ----------------
1.944054 2.062504 39,596,561 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Neuberger Berman 1.365700 1.595471 614,486 1997
----------------------- -------------------- ----------------------- ----------------
Guardian Fund, Inc. 1.169665 1.365700 0 1996
----------------------- -------------------- ----------------------- ----------------
1.000000 1.696655 0 1995
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Neuberger Berman 2.458922 3.146989 39,662 1997
----------------------- -------------------- ----------------------- ----------------
Manhattan Fund, Inc. 2.259932 2.458922 119,922 1996
----------------------- -------------------- ----------------------- ----------------
1.741549 2.259932 394,751 1995
----------------------- -------------------- ----------------------- ----------------
1.823796 1.741549 406,054 1994
----------------------- -------------------- ----------------------- ----------------
1.673695 1.823796 317,549 1993
----------------------- -------------------- ----------------------- ----------------
1.434738 1.673695 56,526 1992
----------------------- -------------------- ----------------------- ----------------
1.106565 1.434738 7,124 1991
----------------------- -------------------- ----------------------- ----------------
1.214940 1.106565 0 1990
----------------------- -------------------- ----------------------- ----------------
1.000000 1.214940 0 1989
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
48
50 of 161
<PAGE> 51
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 13.594501 18.110411 2,476,574 1997
----------------------- -------------------- ----------------------- ----------------
Investors 11.305164 13.594501 713,005 1996
----------------------- -------------------- ----------------------- ----------------
Fund - 8.297318 11.305164 3,422,356 1995
----------------------- -------------------- ----------------------- ----------------
Class A 8.652501 8.297318 3,674,131 1994
----------------------- -------------------- ----------------------- ----------------
7.410567 8.652501 4,311,483 1993
----------------------- -------------------- ----------------------- ----------------
6.934213 7.410567 4,294,647 1992
----------------------- -------------------- ----------------------- ----------------
5.445269 6.934213 4,745,398 1991
----------------------- -------------------- ----------------------- ----------------
5.654203 5.445269 6,112,297 1990
----------------------- -------------------- ----------------------- ----------------
4.262206 5.654203 5,893,052 1989
----------------------- -------------------- ----------------------- ----------------
4.003173 4.262206 9,986,301 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Putnam Voyager 3.074879 3.837109 35,911,119 1997
----------------------- -------------------- ----------------------- ----------------
Fund - Class A 2.752130 3.074879 18,151,250 1996
----------------------- -------------------- ----------------------- ----------------
1.982311 2.752130 21,036,155 1995
----------------------- -------------------- ----------------------- ----------------
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 2.962497 3.905079 3,892,401 1997
----------------------- -------------------- ----------------------- ----------------
Funds - S&P 500 2.439184 2.962497 524,069 1996
----------------------- -------------------- ----------------------- ----------------
Index Portfolio 1.792835 2.439184 1,072,618 1995
----------------------- -------------------- ----------------------- ----------------
1.792223 1.792835 722,997 1994
----------------------- -------------------- ----------------------- ----------------
1.647325 1.792223 509,498 1993
----------------------- -------------------- ----------------------- ----------------
1.548965 1.647325 257,368 1992
----------------------- -------------------- ----------------------- ----------------
1.203412 1.548965 121,485 1991
----------------------- -------------------- ----------------------- ----------------
1.254560 1.203412 509 1990
----------------------- -------------------- ----------------------- ----------------
1.000000 1.254560 0 1989
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Seligman 10.720312 12.541848 227,045 1997
----------------------- -------------------- ----------------------- ----------------
Growth 8.934609 10.720312 105,249 1996
----------------------- -------------------- ----------------------- ----------------
Fund, Inc. - 7.020585 8.934609 277,527 1995
----------------------- -------------------- ----------------------- ----------------
Class A 7.370495 7.020585 299,685 1994
----------------------- -------------------- ----------------------- ----------------
6.989639 7.370495 513,220 1993
----------------------- -------------------- ----------------------- ----------------
6.340967 6.989639 555,163 1992
----------------------- -------------------- ----------------------- ----------------
4.611005 6.340967 685,494 1991
----------------------- -------------------- ----------------------- ----------------
4.910683 4.611005 977,515 1990
----------------------- -------------------- ----------------------- ----------------
3.714452 4.910683 916,525 1989
----------------------- -------------------- ----------------------- ----------------
3.491789 3.714452 1,189,216 1988
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
49
51 of 161
<PAGE> 52
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>
T. Rowe Price 1.812062 1.843420 16,365,466 1997
----------------------- -------------------- ----------------------- ----------------
International 1.577274 1.812062 8,220,403 1996
----------------------- -------------------- ----------------------- ----------------
Stock Fund(R) 1.429428 1.577274 22,425,072 1995
----------------------- -------------------- ----------------------- ----------------
1.454045 1.429428 18,673,315 1994
----------------------- -------------------- ----------------------- ----------------
1.047655 1.454045 11,658,962 1993
----------------------- -------------------- ----------------------- ----------------
1.095728 1.047655 4,370,293 1992
----------------------- -------------------- ----------------------- ----------------
0.954695 1.095728 2,239,924 1991
----------------------- -------------------- ----------------------- ----------------
1.000000 0.954695 441,232 1990
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Templeton 1.774294 1.874393 43,044,777 1997
----------------------- -------------------- ----------------------- ----------------
Foreign 1.518092 1.774294 27,327,650 1996
----------------------- -------------------- ----------------------- ----------------
Fund - Class I 1.378759 1.518092 32,915,364 1995
----------------------- -------------------- ----------------------- ----------------
1.387073 1.378759 25,358,639 1994
----------------------- -------------------- ----------------------- ----------------
1.023491 1.387073 6,636,629 1993
----------------------- -------------------- ----------------------- ----------------
1.000000 1.023491 0 1992
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
*For Plans converted to a Variable Account Annual Expense Fee of 0.95% of
average net assets on June 30, 1996.
**The 7-day yield on the Dreyfus Cash Management - Class A as of December 31,
1997 was 3.83%.
***The 7-day yield on the Nationwide Money Market Fund as of December 31, 1997
was 4.23%.
****Unit information is not available for the year 1995.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until January 1998:
Janus Worldwide Fund; LifeDesigns Series - The Moderately Aggressive Portfolio;
LifeDesigns Series - The Moderate Portfolio; LifeDesigns Series - The Moderately
Conservative Portfolio; LifeDesigns Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until November
1998: American Century -Twentieth Century International Discovery Fund; Dreyfus
Capital Appreciation Fund, Inc.; Dreyfus Premier Midcap Stock Fund; Federated
Bond Fund; Fidelity Advisor Growth Opportunities Fund; Fidelity Advisor high
Yield Fund; INVESCO Dynamics Fund; INVESCO Total Return Fund; Morgan Stanley
Institutional Fund, Inc. - Equity Growth Portfolio - Class B; Nationwide S&P
500(R) Index Fund; Neuberger Berman Partners Trust; Oppenheimer Global Fund -
Class A; Prestige Balanced Fund - Class Y; Prestige International Fund - Class
Y; Prestige Large Cap Growth Fund - Class Y; Prestige Large Cap Value Fund -
Class Y; Prestige Small Cap Fund - Class Y.
50
52 of 161
<PAGE> 53
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER IIa*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.90%
<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>
American Century: 4.563176 5.846396 3,903,936 1997
-------------------- ---------------------- ---------------------- ------------
Twentieth Century 4.005400 4.563176 4,398,109 1996
-------------------- ---------------------- ---------------------- ------------
Growth Fund
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
American Century: 2.070035 2.526007 19,732,726 1997
-------------------- ---------------------- ---------------------- ------------
Twentieth Century Ultra 1.835553 2.070035 18,056,950 1996
-------------------- ---------------------- ---------------------- ------------
Fund
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
The Bond Fund 2.155938 2.333980 844,897 1997
-------------------- ---------------------- ---------------------- ------------
of America(R), Inc. 2.128763 2.155938 1,040,496 1996
-------------------- ---------------------- ---------------------- ------------
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Davis New York 1.686157 2.233818 199,664 1997
-------------------- ---------------------- ---------------------- ------------
Venture Fund 1.580715 1.686157 133,664 1996
-------------------- ---------------------- ---------------------- ------------
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Delaware Group 2.280397 2.936925 15,400 1997
-------------------- ---------------------- ---------------------- ------------
Decatur Fund, Inc. - Decatur 2.186556 2.280397 13,782 1996
-------------------- ---------------------- ---------------------- ------------
Income Fund
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Dreyfus 1.159453 1.212863 231,535 1997
-------------------- ---------------------- ---------------------- ------------
Cash Management Fund - 1.151569 1.159453 377,565 1996
-------------------- ---------------------- ---------------------- ------------
Class A
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Dreyfus S&P 500 Index Fund 1.000000 1.218064 3,436,138 1997
-------------------- ---------------------- ---------------------- ------------
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Dreyfus 2.756663 3.534332 1,286,026 1997
-------------------- ---------------------- ---------------------- ------------
Third Century Fund, Inc. 2.699982 2.756663 967,536 1996
-------------------- ---------------------- ---------------------- ------------
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Evergreen 1.947661 2.424026 388,299 1997
-------------------- ---------------------- ---------------------- ------------
Income and Growth 1.875063 1.947661 470,751 1996
-------------------- ---------------------- ---------------------- ------------
Fund (formerly
-------------------- ---------------------- ---------------------- ------------
Evergreen Total Return
-------------------- ---------------------- ---------------------- ------------
Fund)
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Federated U.S. Government 1.144477 1.215186 323,646 1997
-------------------- ---------------------- ---------------------- ------------
Securities Fund: 2-5 Years - 1.140767 1.144477 342,284 1996
-------------------- ---------------------- ---------------------- ------------
Institutional Shares
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Fidelity Asset 1.252806 1.518153 633,745 1997
-------------------- ---------------------- ---------------------- ------------
Manager(TM) 1.214007 1.252806 671,795 1996
-------------------- ---------------------- ---------------------- ------------
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Fidelity Capital 4.096833 4.656974 36,724 1997
-------------------- ---------------------- ---------------------- ------------
& Income Fund (formerly 4.015008 4.096833 77,649 1996
-------------------- ---------------------- ---------------------- ------------
Fidelity High Income Fund)
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Fidelity 2.059947 2.511017 15,968,503 1997
-------------------- ---------------------- ---------------------- ------------
Contrafund 1.953469 2.059947 13,231,488 1996
-------------------- ---------------------- ---------------------- ------------
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
Fidelity 5.360130 6.904928 7,169,293 1997
-------------------- ---------------------- ---------------------- ------------
Equity-Income Fund 5.110007 5.360130 6,443,316 1996
-------------------- ---------------------- ---------------------- ------------
- --------------------------------- -------------------- ---------------------- ---------------------- ------------
</TABLE>
51
53 of 161
<PAGE> 54
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 Magellan(R) 1.913267 2.400356 11,589,048 1997
----------------------- -------------------- ----------------------- -----------------
Fund 1.831563 1.913267 11,002,403 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
The Growth 2.692199 3.384653 650,012 1997
----------------------- -------------------- ----------------------- -----------------
Fund of America(R), Inc. 2.519027 2.692199 553,730 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
The Income 2.161106 2.616384 1,325,543 1997
----------------------- -------------------- ----------------------- -----------------
Fund of America(R), Inc. 2.072384 2.161106 1,137,681 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
INVESCO 1.678650 2.103587 1,917,268 1997
----------------------- -------------------- ----------------------- -----------------
Industrial Income Fund 1.613178 1.678650 1,639,958 1996
----------------------- -------------------- ----------------------- -----------------
(formerly Financial
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Industrial Income Fund)
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Janus Fund 1.603421 1.950041 5,595,764 1997
----------------------- -------------------- ----------------------- -----------------
1.550403 1.603421 4,109,624 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
MAS Funds Fixed 1.229861 1.335950 296,496 1997
----------------------- -------------------- ----------------------- -----------------
Income Portfolio 1.215745 1.229861 193,871 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
MFS(R) Growth 7.380837 9.017913 317,319 1997
----------------------- -------------------- ----------------------- -----------------
Opportunities Fund-Class A 7.065737 7.380837 361,634 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
MFS(R) High 5.518624 6.172004 25,730 1997
----------------------- -------------------- ----------------------- -----------------
Income Fund - Class A 5.541012 5.518624 41,389 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Massachusetts 10.881713 15.977352 19,733 1997
----------------------- -------------------- ----------------------- -----------------
Investors Growth 10.489691 10.881713 13,452 1996
----------------------- -------------------- ----------------------- -----------------
Stock Fund - Class A
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Nationwide(R) 14.965604 20.709316 509,179 1997
----------------------- -------------------- ----------------------- -----------------
Fund - Class D 14.282052 14.965604 336,341 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Nationwide(R) 3.083261 3.857119 357,289 1997
----------------------- -------------------- ----------------------- -----------------
Growth Fund - Class D 2.916856 3.083261 386,199 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Nationwide(R) 2.885091 3.005590 6,441,740 1997
----------------------- -------------------- ----------------------- -----------------
Money Market 2.867462 2.885091 6,749,071 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Putnam 13.595614 18.120944 133,581 1997
----------------------- -------------------- ----------------------- -----------------
Investors Fund - Class A 13.246208 13.595614 153,709 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Putnam Voyager 3.075131 3.839341 5,930,438 1997
----------------------- -------------------- ----------------------- -----------------
Fund - Class A 3.055821 3.075131 5,117,342 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
SEI Index Funds - S&P 2.962740 3.907349 52,580 1997
----------------------- -------------------- ----------------------- -----------------
500 Index Portfolio 2.823355 2.962740 71,085 1996
----------------------- -------------------- ----------------------- -----------------
--------------------------- ----------------------- -------------------- ----------------------- -----------------
</TABLE>
52
54 of 161
<PAGE> 55
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>
Seligman Growth Fund, Inc. 10.721190 12.549144 10,649 1997
----------------------- -------------------- ----------------------- ----------------
- Class A 10.356946 10.721190 17,582 1996
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
T. Rowe Price 1.812210 1.844492 1,859,130 1997
----------------------- -------------------- ----------------------- ----------------
International Stock Fund(R) 1.7255780 1.812210 1,718,457 1996
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Templeton 1.774439 1.875484 7,960,130 1997
----------------------- -------------------- ----------------------- ----------------
Foreign Fund - Class I 1.678650 1.774439 6,594,135 1996
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of 0.95%
of average net assets to a Variable Account Annual Expense Fee of 0.90% of
average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until January 1998:
Janus Worldwide Fund; LifeDesigns Series - The Moderately Aggressive Portfolio;
LifeDesigns Series - The Moderate Portfolio; LifeDesigns Series - The Moderately
Conservative Portfolio; LifeDesigns Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until November
1998: American Century -Twentieth Century International Discovery Fund; Dreyfus
Capital Appreciation Fund, Inc.; Dreyfus Premier Midcap Stock Fund; Federated
Bond Fund; Fidelity Advisor Growth Opportunities Fund; Fidelity Advisor high
Yield Fund; INVESCO Dynamics Fund; INVESCO Total Return Fund; Morgan Stanley
Institutional Fund, Inc. - Equity Growth Portfolio - Class B; Nationwide S&P
500(R) Index Fund; Neuberger Berman Partners Trust; Oppenheimer Global Fund -
Class A; Prestige Balanced Fund - Class Y; Prestige International Fund - Class
Y; Prestige Large Cap Growth Fund - Class Y; Prestige Large Cap Value Fund -
Class Y; Prestige Small Cap Fund - Class Y.
53
55 of 161
<PAGE> 56
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER IIb*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.90%
<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>
American Century: 4.764579 5.844955 337,408 1997
----------------------- -------------------- ----------------------- ----------------
Twentieth Century
----------------------- -------------------- ----------------------- ----------------
Growth Fund
--------------------------- ----------------------- -------------------- ----------------------- ----------------
American Century: 2.136815 2.525385 2,468,617 1997
----------------------- -------------------- ----------------------- ----------------
Twentieth Century Ultra
----------------------- -------------------- ----------------------- ----------------
Fund
--------------------------- ----------------------- -------------------- ----------------------- ----------------
The Bond Fund 2.179712 2.333393 110,244 1997
----------------------- -------------------- ----------------------- ----------------
of America(R), Inc.
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Delaware Group Decatur 2.413880 2.936202 262 1997
----------------------- -------------------- ----------------------- ----------------
Fund, Inc. - Decatur
Income
----------------------- -------------------- ----------------------- ----------------
Fund
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Dreyfus S&P 500 Index 1.000000 1.218064 287,240 1997
----------------------- -------------------- ----------------------- ----------------
Fund
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Dreyfus Third 2.906659 3.533462 196,674 1997
----------------------- -------------------- ----------------------- ----------------
Century Fund, Inc.
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Evergreen 1.944620 2.423429 62,878 1997
----------------------- -------------------- ----------------------- ----------------
Income and Growth
----------------------- -------------------- ----------------------- ----------------
Fund (formerly
----------------------- -------------------- ----------------------- ----------------
Evergreen Total Return
----------------------- -------------------- ----------------------- ----------------
Fund)
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Federated U.S. Government 1.152244 1.214882 76,514 1997
----------------------- -------------------- ----------------------- ----------------
Securities Fund: 2-5
Years -
----------------------- -------------------- ----------------------- ----------------
Institutional Shares
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Fidelity Asset 1.290308 1.517779 45,091 1997
----------------------- -------------------- ----------------------- ----------------
Manager(TM)
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Fidelity Capital 4.129100 4.655810 386 1997
----------------------- -------------------- ----------------------- ----------------
& Income Fund (formerly
----------------------- -------------------- ----------------------- ----------------
Fidelity High Income Fund)
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Fidelity 2.065778 2.510398 2,303,992 1997
----------------------- -------------------- ----------------------- ----------------
Contrafund
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Fidelity Equity - 5.625012 6.903229 617,355 1997
----------------------- -------------------- ----------------------- ----------------
Income Fund
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Fidelity Magellan(R) 1.980875 2.399765 1,313,023 1997
----------------------- -------------------- ----------------------- ----------------
Fund
--------------------------- ----------------------- -------------------- ----------------------- ----------------
The Growth Fund 2.787163 3.383820 50,498 1997
----------------------- -------------------- ----------------------- ----------------
of America(R), Inc.
--------------------------- ----------------------- -------------------- ----------------------- ----------------
The Income Fund 2.223220 2.615739 129,547 1997
----------------------- -------------------- ----------------------- ----------------
of America(R), Inc.
--------------------------- ----------------------- -------------------- ----------------------- ----------------
INVESCO Industrial Income 1.766394 2.103069 264,870 1997
----------------------- -------------------- ----------------------- ----------------
Fund (formerly Financial
----------------------- -------------------- ----------------------- ----------------
Industrial Income Fund)
--------------------------- ----------------------- -------------------- ----------------------- ----------------
Janus Fund 1.648584 1.949561 820,870 1997
----------------------- -------------------- ----------------------- ----------------
--------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
54
56 of 161
<PAGE> 57
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>
MAS Funds Fixed 1.244949 1.335621 10,073 1997
----------------------- -------------------- ----------------------- -----------------
Income Portfolio
--------------------------- ----------------------- -------------------- ----------------------- -----------------
MFS(R) Growth 7.657658 9.015691 28,071 1997
----------------------- -------------------- ----------------------- -----------------
Opportunities Fund-Class A
--------------------------- ----------------------- -------------------- ----------------------- -----------------
MFS(R) High Income Fund - 5.601820 6.170461 2,719 1997
----------------------- -------------------- ----------------------- -----------------
Class A
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Massachusetts 12.096499 15.973419 3,342 1997
----------------------- -------------------- ----------------------- -----------------
Investors Growth
----------------------- -------------------- ----------------------- -----------------
Stock Fund - Class A
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Nationwide(R) 16.371504 20.704221 74,871 1997
----------------------- -------------------- ----------------------- -----------------
Fund - Class D
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Nationwide(R) 3.186783 3.856169 26,821 1997
----------------------- -------------------- ----------------------- -----------------
Growth Fund - Class D
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Nationwide(R) 2.922724 3.004839 116,705 1997
----------------------- -------------------- ----------------------- -----------------
Money Market Fund
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Putnam 14.537628 18.116482 10,065 1997
----------------------- -------------------- ----------------------- -----------------
Investors Fund - Class A
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Putnam Voyager 3.040484 3.838394 682,444 1997
----------------------- -------------------- ----------------------- -----------------
Fund - Class A
--------------------------- ----------------------- -------------------- ----------------------- -----------------
T. Rowe Price 1.829926 1.844038 233,087 1997
----------------------- -------------------- ----------------------- -----------------
International Stock
----------------------- -------------------- ----------------------- -----------------
Fund(R)
--------------------------- ----------------------- -------------------- ----------------------- -----------------
Templeton 1.848961 1.875022 1,104,154 1997
----------------------- -------------------- ----------------------- -----------------
Foreign Fund - Class I
--------------------------- ----------------------- -------------------- ----------------------- -----------------
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of 0.95%
of average net assets to a Variable Account Annual Expense Fee of 0.90% of
average net assets on December 31, 1996.
** Unit information is not available for the year 1995.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until January 1998:
Janus Worldwide Fund; LifeDesigns Series - The Moderately Aggressive Portfolio;
LifeDesigns Series - The Moderate Portfolio; LifeDesigns Series - The Moderately
Conservative Portfolio; LifeDesigns Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until November
1998: American Century -Twentieth Century International Discovery Fund; Dreyfus
Capital Appreciation Fund, Inc.; Dreyfus Premier Midcap Stock Fund; Federated
Bond Fund; Fidelity Advisor Growth Opportunities Fund; Fidelity Advisor high
Yield Fund; INVESCO Dynamics Fund; INVESCO Total Return Fund; Morgan Stanley
Institutional Fund, Inc. - Equity Growth Portfolio - Class B; Nationwide S&P
500(R) Index Fund; Neuberger Berman Partners Trust; Oppenheimer Global Fund -
Class A; Prestige Balanced Fund - Class Y; Prestige International Fund - Class
Y; Prestige Large Cap Growth Fund - Class Y; Prestige Large Cap Value Fund -
Class Y; Prestige Small Cap Fund - Class Y.
55
57 of 161
<PAGE> 58
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER IIIa*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.80%
<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>
American Century: 4.563925 5.853199 1,540,193 1997
-------------------- ---------------------- --------------------- -------------
Twentieth Century 4.555198 4.563925 1,586,526 1996
-------------------- ---------------------- --------------------- -------------
Growth Fund
----------------------------- -------------------- ---------------------- --------------------- -------------
American Century: 2.070374 2.528946 11,990,091 1997
-------------------- ---------------------- --------------------- -------------
Twentieth Century Ultra 2.055822 2.070374 9,866,856 1996
-------------------- ---------------------- --------------------- -------------
Fund
----------------------------- -------------------- ---------------------- --------------------- -------------
The Bond Fund 2.156336 2.336766 379,522 1997
-------------------- ---------------------- --------------------- -------------
of America(R), Inc. 2.128822 2.156336 281,942 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Delaware Group 2.280770 2.940341 6,036 1997
-------------------- ---------------------- --------------------- -------------
Decatur Income Fund, 2.186573 2.280770 5,492 1996
-------------------- ---------------------- --------------------- -------------
Inc. - Decatur Income Fund
----------------------------- -------------------- ---------------------- --------------------- -------------
Dreyfus 2.757115 3.538445 912,241 1997
-------------------- ---------------------- --------------------- -------------
Third Century Fund, Inc. 2.700004 2.757115 603,861 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Dreyfus S&P 500 Index 1.000000 1.218878 2,297,690 1997
-------------------- ---------------------- --------------------- -------------
Fund
----------------------------- -------------------- ---------------------- --------------------- -------------
Evergreen 1.947980 2.426846 79,190 1997
-------------------- ---------------------- --------------------- -------------
Income and Growth 1.875078 1.947980 78,598 1996
-------------------- ---------------------- --------------------- -------------
Fund (formerly
-------------------- ---------------------- --------------------- -------------
Evergreen Total Return
-------------------- ---------------------- --------------------- -------------
Fund)
----------------------------- -------------------- ---------------------- --------------------- -------------
Federated U.S. Government 1.144669 1.216616 188,738 1997
-------------------- ---------------------- --------------------- -------------
Securities Fund: 2-5 Years - 1.140779 1.144669 104,682 1996
-------------------- ---------------------- --------------------- -------------
Institutional Shares
----------------------------- -------------------- ---------------------- --------------------- -------------
Fidelity Asset 1.253012 1.519919 299,273 1997
-------------------- ---------------------- --------------------- -------------
Manager(TM) 1.214017 1.253012 269,853 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Fidelity Capital 4.097522 4.662457 22,232 1997
-------------------- ---------------------- --------------------- -------------
& Income Fund (formerly 4.015052 4.097522 23,351 1996
-------------------- ---------------------- --------------------- -------------
Fidelity High Income Fund)
----------------------------- -------------------- ---------------------- --------------------- -------------
Fidelity 2.060284 2.513939 9,637,261 1997
-------------------- ---------------------- --------------------- -------------
Contrafund 1.953485 2.060284 7,230,068 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Fidelity 5.361008 6.912960 3,057,190 1997
-------------------- ---------------------- --------------------- -------------
Equity-Income Fund 5.110048 5.361008 2,555,440 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Fidelity Magellan(R) 1.913580 2.403149 6,180,393 1997
-------------------- ---------------------- --------------------- -------------
Fund 1.831578 1.913580 5,622,628 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
The Growth 2.692640 3.388591 496,036 1997
-------------------- ---------------------- --------------------- -------------
Fund of America(R), Inc. 2.519048 2.692640 441,833 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
The Income 2.161460 2.619427 490,571 1997
-------------------- ---------------------- --------------------- -------------
Fund of America(R), Inc. 2.072401 2.161460 367,278 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
</TABLE>
56
58 of 161
<PAGE> 59
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>
INVESCO Industrial Income 1.678925 2.106034 473,406 1997
-------------------- ---------------------- --------------------- -------------
Fund (formerly Financial 1.613191 1.678925 309,576 1996
-------------------- ---------------------- --------------------- -------------
Industrial Income Fund,
Inc.)
----------------------------- -------------------- ---------------------- --------------------- -------------
Janus Fund 1.603684 1.952310 2,423,723 1997
-------------------- ---------------------- --------------------- -------------
1.550416 1.603684 1,634,700 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
MAS Funds Fixed 1.230062 1.337506 248,580 1997
-------------------- ---------------------- --------------------- -------------
Income Portfolio 1.215755 1.230062 87,227 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
MFS(R) Growth 7.382046 9.028407 178,707 1997
-------------------- ---------------------- --------------------- -------------
Opportunities Fund - Class A 7.065795 7.382046 181,406 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
MFS(R) High Income Fund - 5.519552 6.179271 6,564 1997
-------------------- ---------------------- --------------------- -------------
Class A 5.410180 5.519552 6,455 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Massachusetts 10.883496 15.995935 12,152 1997
-------------------- ---------------------- --------------------- -------------
Investors Growth 10.489775 10.883496 11,971 1996
-------------------- ---------------------- --------------------- -------------
Stock Fund - Class A
----------------------------- -------------------- ---------------------- --------------------- -------------
Nationwide(R) 14.968055 20.733404 329,293 1997
-------------------- ---------------------- --------------------- -------------
Fund - Class D 14.282168 14.968055 195,684 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Nationwide(R) 3.083766 3.861607 93,047 1997
-------------------- ---------------------- --------------------- -------------
Growth Fund - Class D 2.916880 3.083766 96,156 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Nationwide(R) 2.885576 3.009129 909,979 1997
-------------------- ---------------------- --------------------- -------------
Money Market 2.867493 2.885576 901,408 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Putnam Investors Fund - 13.597842 18.142029 39,280 1997
-------------------- ---------------------- --------------------- -------------
Class A 13.246316 13.597842 38,905 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Putnam Voyager 3.075635 3.843809 3,166,939 1997
-------------------- ---------------------- --------------------- -------------
Fund - Class A 3.055846 3.075635 2,559,117 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
Seligman Growth Fund, Inc. - 10.722947 12.563748 2,475 1997
-------------------- ---------------------- --------------------- -------------
Class A 10.357031 10.722947 2,396 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
T. Rowe Price 1.812507 1.846640 1,036,525 1997
-------------------- ---------------------- --------------------- -------------
International Stock 1.725811 1.812507 931,357 1996
-------------------- ---------------------- --------------------- -------------
Fund(R)
----------------------------- -------------------- ---------------------- --------------------- -------------
Templeton 1.774730 1.877667 2,623,603 1997
-------------------- ---------------------- --------------------- -------------
Foreign Fund - Class I 1.678664 1.774730 2,061,896 1996
-------------------- ---------------------- --------------------- -------------
----------------------------- -------------------- ---------------------- --------------------- -------------
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of 0.95%
of average net assets to a Variable Account Annual Expense Fee of 0.80% of
average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
57
59 of 161
<PAGE> 60
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until January 1998:
Janus Worldwide Fund; LifeDesigns Series - The Moderately Aggressive Portfolio;
LifeDesigns Series - The Moderate Portfolio; LifeDesigns Series - The Moderately
Conservative Portfolio; LifeDesigns Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until November
1998: American Century -Twentieth Century International Discovery Fund; Dreyfus
Capital Appreciation Fund, Inc.; Dreyfus Premier Midcap Stock Fund; Federated
Bond Fund; Fidelity Advisor Growth Opportunities Fund; Fidelity Advisor high
Yield Fund; INVESCO Dynamics Fund; INVESCO Total Return Fund; Morgan Stanley
Institutional Fund, Inc. - Equity Growth Portfolio - Class B; Nationwide S&P
500(R) Index Fund; Neuberger Berman Partners Trust; Oppenheimer Global Fund -
Class A; Prestige Balanced Fund - Class Y; Prestige International Fund - Class
Y; Prestige Large Cap Growth Fund - Class Y; Prestige Large Cap Value Fund -
Class Y; Prestige Small Cap Fund - Class Y.
58
60 of 161
<PAGE> 61
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER IIIb*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.80%
<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>
American Century: 4.765845 5.850316 105,486 1997
---------------------- --------------------- --------------------- ------------
Twentieth Century
---------------------- --------------------- --------------------- ------------
Growth Fund
----------------------------- ---------------------- --------------------- --------------------- ------------
American Century: 2.137347 2.527701 322,005 1997
---------------------- --------------------- --------------------- ------------
Twentieth Century Ultra
---------------------- --------------------- --------------------- ------------
Fund
----------------------------- ---------------------- --------------------- --------------------- ------------
The Bond Fund 2.180297 2.335593 10,951 1997
---------------------- --------------------- --------------------- ------------
of America(R), Inc.
----------------------------- ---------------------- --------------------- --------------------- ------------
Dreyfus S&P 500 Index 1.000000 1.218878 36,388 1997
---------------------- --------------------- --------------------- ------------
Fund
----------------------------- ---------------------- --------------------- --------------------- ------------
Dreyfus 2.907383 3.536702 20,119 1997
---------------------- --------------------- --------------------- ------------
Third Century Fund, Inc.
----------------------------- ---------------------- --------------------- --------------------- ------------
Evergreen 1.945105 2.425651 9,663 1997
---------------------- --------------------- --------------------- ------------
Income and Growth
---------------------- --------------------- --------------------- ------------
Fund (formerly
---------------------- --------------------- --------------------- ------------
Evergreen Total Return
---------------------- --------------------- --------------------- ------------
Fund)
----------------------------- ---------------------- --------------------- --------------------- ------------
Federated U.S. Government 1.152535 1.216009 1,612 1997
---------------------- --------------------- --------------------- ------------
Securities Fund: 2-5 Years -
---------------------- --------------------- --------------------- ------------
Institutional Shares
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity Asset 1.290630 1.519171 62,190 1997
---------------------- --------------------- --------------------- ------------
Manager(TM)
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity Capital & Income 4.130144 4.660128 39,699 1997
---------------------- --------------------- --------------------- ------------
Fund (formerly Fidelity High
---------------------- --------------------- --------------------- ------------
Income Fund)
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity 2.066293 2.512701 186,236 1997
---------------------- --------------------- --------------------- ------------
Contrafund
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity 5.626412 6.909557 189,228 1997
---------------------- --------------------- --------------------- ------------
Equity-Income Fund
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity Magellan(R) 1.981369 2.401965 244,774 1997
---------------------- --------------------- --------------------- ------------
Fund
----------------------------- ---------------------- --------------------- --------------------- ------------
The Growth 2.787858 3.386923 6,443 1997
---------------------- --------------------- --------------------- ------------
Fund of America(R), Inc.
----------------------------- ---------------------- --------------------- --------------------- ------------
The Income 2.223774 2.618138 24,783 1997
---------------------- --------------------- --------------------- ------------
Fund of America(R), Inc.
----------------------------- ---------------------- --------------------- --------------------- ------------
INVESCO Industrial Income 1.766834 2.104998 5,633 1997
---------------------- --------------------- --------------------- ------------
Fund (formerly Financial
---------------------- --------------------- --------------------- ------------
Industrial Income Fund)
----------------------------- ---------------------- --------------------- --------------------- ------------
Janus Fund 1.648995 1.951349 174,631 1997
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
MAS Funds Fixed 1.245259 1.336847 3,162 1997
---------------------- --------------------- --------------------- ------------
Income Portfolio
----------------------------- ---------------------- --------------------- --------------------- ------------
</TABLE>
59
61 of 161
<PAGE> 62
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>
MFS(R) Growth 7.659566 9.023960 36,452 1997
---------------------- --------------------- --------------------- ------------
Opportunities Fund-Class A
----------------------------- ---------------------- --------------------- --------------------- ------------
MFS(R) High Income Fund - 5.603237 6.176184 16,908 1997
---------------------- --------------------- --------------------- ------------
Class A
----------------------------- ---------------------- --------------------- --------------------- ------------
Massachusetts 12.099510 15.988060 150 1997
---------------------- --------------------- --------------------- ------------
Investors Growth
---------------------- --------------------- --------------------- ------------
Stock Fund - Class A
----------------------------- ---------------------- --------------------- --------------------- ------------
Nationwide(R) 16.375580 20.723203 16,906 1997
---------------------- --------------------- --------------------- ------------
Fund - Class D
----------------------------- ---------------------- --------------------- --------------------- ------------
Nationwide(R) 3.187577 3.859705 22,824 1997
---------------------- --------------------- --------------------- ------------
Growth Fund - Class D
----------------------------- ---------------------- --------------------- --------------------- ------------
Nationwide(R) 2.923463 3.007626 68,201 1997
---------------------- --------------------- --------------------- ------------
Money Market
----------------------------- ---------------------- --------------------- --------------------- ------------
Putnam Investors Fund - 14.541250 18.133095 9,478 1997
---------------------- --------------------- --------------------- ------------
Class A
----------------------------- ---------------------- --------------------- --------------------- ------------
Putnam Voyager 3.041242 3.841914 95,529 1997
---------------------- --------------------- --------------------- ------------
Fund - Class A
----------------------------- ---------------------- --------------------- --------------------- ------------
Seligman Growth Fund, Inc. - 10.981630 12.557561 6,424 1997
---------------------- --------------------- --------------------- ------------
Class A
----------------------------- ---------------------- --------------------- --------------------- ------------
T. Rowe Price 1.830382 1.845731 15,280 1997
---------------------- --------------------- --------------------- ------------
International Stock
---------------------- --------------------- --------------------- ------------
Fund(R)
----------------------------- ---------------------- --------------------- --------------------- ------------
Templeton Foreign Fund - 1.849421 1.876743 147,481 1997
---------------------- --------------------- --------------------- ------------
Class I
----------------------------- ---------------------- --------------------- --------------------- ------------
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of 0.95%
of average net assets to a Variable Account Annual Expense Fee of 0.80% of
average net assets on December 31, 1996.
** Unit information is not available for the year 1995.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until January 1998:
Janus Worldwide Fund; LifeDesign Series - The Moderately Aggressive Portfolio;
LifeDesign Series - The Moderate Portfolio; LifeDesign Series - The Moderately
Conservative Portfolio; LifeDesign Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until November
1998: American Century -Twentieth Century International Discovery Fund; Dreyfus
Capital Appreciation Fund, Inc.; Dreyfus Premier Midcap Stock Fund; Federated
Bond Fund; Fidelity Advisor Growth Opportunities Fund; Fidelity Advisor high
Yield Fund; INVESCO Dynamics Fund; INVESCO Total Return Fund; Morgan Stanley
Institutional Fund, Inc. - Equity Growth Portfolio - Class B; Nationwide S&P
500(R) Index Fund; Neuberger Berman Partners Trust; Oppenheimer Global Fund -
Class A; Prestige Balanced Fund - Class Y; Prestige International Fund - Class
Y; Prestige Large Cap Growth Fund - Class Y; Prestige Large Cap Value Fund -
Class Y; Prestige Small Cap Fund - Class Y.
60
62 of 161
<PAGE> 63
CONDENSED FINANCIAL INFORMATION
TIER IV*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.70%
<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>
American Century: 4.564673 5.860011 758,360 1997
---------------------- --------------------- --------------------- --------------
Twentieth Century 4.555235 4.564673 735,112 1996
---------------------- --------------------- --------------------- --------------
Growth Fund
----------------------------- ---------------------- --------------------- --------------------- --------------
American Century: 1.573105 2.064969 1,088,027 1997
---------------------- --------------------- --------------------- --------------
Twentieth Century 1.528629 1.573105 949,150 1996
---------------------- --------------------- --------------------- --------------
Select Fund
----------------------------- ---------------------- --------------------- --------------------- --------------
American Century: 2.070713 2.531889 4,964,637 1997
---------------------- --------------------- --------------------- --------------
Twentieth Centuy Ultra 2.055839 2.070713 3,956,021 1996
---------------------- --------------------- --------------------- --------------
Fund
----------------------------- ---------------------- --------------------- --------------------- --------------
The Bond Fund 2.156734 2.339554 55,496 1997
---------------------- --------------------- --------------------- --------------
of America(R), Inc. 2.128881 2.156734 46,844 1996
---------------------- --------------------- --------------------- --------------
----------------------------- ---------------------- --------------------- --------------------- --------------
Dreyfus S&P 500 Index 1.000000 1.219691 1,092,654 1997
---------------------- --------------------- --------------------- --------------
Fund
----------------------------- ---------------------- --------------------- --------------------- --------------
Dreyfus 2.757567 3.542562 428,452 1997
---------------------- --------------------- --------------------- --------------
Third Century Fund, Inc. 2.700026 2.757567 244,163 1996
---------------------- --------------------- --------------------- --------------
----------------------------- ---------------------- --------------------- --------------------- --------------
Evergreen 1.948299 2.429669 21,853 1997
---------------------- --------------------- --------------------- --------------
Income and Growth 1.875094 1.948299 27,416 1996
---------------------- --------------------- --------------------- --------------
Fund (formerly
---------------------- --------------------- --------------------- --------------
Evergreen Total Return
---------------------- --------------------- --------------------- --------------
Fund)
----------------------------- ---------------------- --------------------- --------------------- --------------
Federated U.S. Government 1.144861 1.218047 114,003 1997
---------------------- --------------------- --------------------- --------------
Securities Fund: 2-5 Years - 1.140792 1.144861 104,637 1996
---------------------- --------------------- --------------------- --------------
Institutional Shares
----------------------------- ---------------------- --------------------- --------------------- --------------
Fidelity Asset 1.253217 1.521688 538,872 1997
---------------------- --------------------- --------------------- --------------
Manager(TM) 1.214027 1.253217 456,745 1996
---------------------- --------------------- --------------------- --------------
----------------------------- ---------------------- --------------------- --------------------- --------------
Fidelity Capital 4.098210 4.667941 22,307 1997
---------------------- --------------------- --------------------- --------------
& Income Fund (formerly 4.015097 4.098210 22,770 1996
---------------------- --------------------- --------------------- --------------
Fidelity High Income Fund)
----------------------------- ---------------------- --------------------- --------------------- --------------
Fidelity 2.060621 2.516865 4,750,222 1997
---------------------- --------------------- --------------------- --------------
Contrafund 1.953501 2.060621 3,683,606 1996
---------------------- --------------------- --------------------- --------------
----------------------------- ---------------------- --------------------- --------------------- --------------
Fidelity 5.361886 6.921001 2,389,431 1997
---------------------- --------------------- --------------------- --------------
Equity-Income Fund 5.110090 5.361886 1,989,159 1996
---------------------- --------------------- --------------------- --------------
----------------------------- ---------------------- --------------------- --------------------- --------------
Fidelity Magellan(R) 1.913894 2.405944 3,706,622 1997
---------------------- --------------------- --------------------- --------------
Fund 1.831593 1.913894 3,295,811 1996
---------------------- --------------------- --------------------- --------------
----------------------------- ---------------------- --------------------- --------------------- --------------
The Growth 2.693081 3.392534 170,540 1997
---------------------- --------------------- --------------------- --------------
Fund of America(R), Inc. 2.519069 2.693081 158,421 1996
---------------------- --------------------- --------------------- --------------
----------------------------- ---------------------- --------------------- --------------------- --------------
</TABLE>
61
63 of 161
<PAGE> 64
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 Income 2.161814 2.622475 294,406 1997
---------------------- --------------------- --------------------- -----------
Fund of America(R), Inc. 2.072418 2.161814 246,997 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
INVESCO Industrial Income 1.679200 2.108484 473,795 1997
---------------------- --------------------- --------------------- -----------
Fund (formerly Financial 1.613204 1.679200 346,238 1996
---------------------- --------------------- --------------------- -----------
Industrial Income Fund)
----------------------------- ---------------------- --------------------- --------------------- -----------
Janus Fund 1.603947 1.954582 2,404,760 1997
---------------------- --------------------- --------------------- -----------
1.550428 1.603947 1,696,374 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
MAS Funds Fixed 1.230264 1.339063 91,023 1997
---------------------- --------------------- --------------------- -----------
Income Portfolio 1.215765 1.230264 27,573 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
MFS(R) Growth 7.383255 9.038914 5,735 1997
---------------------- --------------------- --------------------- -----------
Opportunities Fund - Class A 7.065853 7.383255 7,294 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
MFS(R) High Income Fund - 5.520479 6.186539 105 1997
---------------------- --------------------- --------------------- -----------
Class A 5.410240 5.520479 130 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
Massachusetts 10.885279 16.014540 285 1997
---------------------- --------------------- --------------------- -----------
Investors Growth 10.489862 10.885279 280 1996
---------------------- --------------------- --------------------- -----------
Stock Fund - Class A
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
Nationwide(R) 14.970505 20.757521 142,531 1997
---------------------- --------------------- --------------------- -----------
Fund - Class D 14.282285 14.970505 54,398 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
Nationwide(R) 3.084270 3.866100 339,294 1997
---------------------- --------------------- --------------------- -----------
Growth Fund - Class D 2.916904 3.084270 286,704 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
Nationwide(R) 2.886060 3.012668 985,611 1997
---------------------- --------------------- --------------------- -----------
Money Market 2.867525 2.886060 1,141,686 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
Putnam Investors Fund - 13.600069 18.163138 4,776 1997
---------------------- --------------------- --------------------- -----------
Class A 13.246425 13.600069 4,735 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
Putnam Voyager 3.076140 3.848283 2,223,516 1997
---------------------- --------------------- --------------------- -----------
Fund - Class A 3.055871 3.076140 1,979,411 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
Seligman Growth Fund, Inc. - 10.724703 12.578369 684 1997
---------------------- --------------------- --------------------- -----------
Class A 10.357115 10.724703 684 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
T. Rowe Price 1.812803 1.848790 783,958 1997
---------------------- --------------------- --------------------- -----------
International Stock 1.725825 1.812803 881,585 1996
---------------------- --------------------- --------------------- -----------
Fund(R)
----------------------------- ---------------------- --------------------- --------------------- -----------
Templeton 1.775020 1.879853 1,763,615 1997
---------------------- --------------------- --------------------- -----------
Foreign Fund - Class I 1.678677 1.775020 1,461,504 1996
---------------------- --------------------- --------------------- -----------
----------------------------- ---------------------- --------------------- --------------------- -----------
</TABLE>
62
64 of 161
<PAGE> 65
* For Plans that converted from a Variable Account Annual Expense Fee of 0.95%
of average net assets to a Variable Account Annual Expense Fee of 0.70% of
average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until January 1998:
Janus Worldwide Fund; LifeDesigns Series - The Moderately Aggressive Portfolio;
LifeDesigns Series - The Moderate Portfolio; LifeDesigns Series - The Moderately
Conservative Portfolio; LifeDesigns Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until November
1998: American Century -Twentieth Century International Discovery Fund; Dreyfus
Capital Appreciation Fund, Inc.; Dreyfus Premier Midcap Stock Fund; Federated
Bond Fund; Fidelity Advisor Growth Opportunities Fund; Fidelity Advisor high
Yield Fund; INVESCO Dynamics Fund; INVESCO Total Return Fund; Morgan Stanley
Institutional Fund, Inc. - Equity Growth Portfolio - Class B; Nationwide S&P
500(R) Index Fund; Neuberger Berman Partners Trust; Oppenheimer Global Fund -
Class A; Prestige Balanced Fund - Class Y; Prestige International Fund - Class
Y; Prestige Large Cap Growth Fund - Class Y; Prestige Large Cap Value Fund -
Class Y; Prestige Small Cap Fund - Class Y.
63
65 of 161
<PAGE> 66
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER V*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.65%
<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 Equity Funds, Inc. - 2.057438 2.318983 2,389,104 1997
---------------------- --------------------- --------------------- ------------
AIM Constellation Fund 1.897355 2.057438 1,258,757 1996
---------------------- --------------------- --------------------- ------------
- Institutional Class
----------------------------- ---------------------- --------------------- --------------------- ------------
American Century: 4.567407 5.866443 6,244,941 1997
---------------------- --------------------- --------------------- ------------
Twentieth Century 4.139808 4.567401 6,000,935 1996
---------------------- --------------------- --------------------- ------------
Growth Fund
----------------------------- ---------------------- --------------------- --------------------- ------------
American Century: 2.071951 2.534668 19,414,868 1997
---------------------- --------------------- --------------------- ------------
Twentieth Centuy Ultra 1.858002 2.071951 16,258,739 1996
---------------------- --------------------- --------------------- ------------
Fund
----------------------------- ---------------------- --------------------- --------------------- ------------
The Bond Fund 2.158056 2.342166 736,645 1997
---------------------- --------------------- --------------------- ------------
of America(R), Inc. 2.057925 2.158056 471,875 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Dreyfus 2.759214 3.546449 2,302,999 1997
---------------------- --------------------- --------------------- ------------
Third Century Fund, Inc. 2.421004 2.759214 1,592,562 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Evergreen 1.949465 2.432337 433,149 1997
---------------------- --------------------- --------------------- ------------
Income and Growth 1.797507 1.949465 494,994 1996
---------------------- --------------------- --------------------- ------------
Fund (formerly
---------------------- --------------------- --------------------- ------------
Evergreen Total Return
---------------------- --------------------- --------------------- ------------
Fund)
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity Capital & Income 4.100654 4.673077 70,677 1997
---------------------- --------------------- --------------------- ------------
Fund (formerly Fidelity High 3.891882 4.100654 84,610 1996
---------------------- --------------------- --------------------- ------------
Income Fund)
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity 2.061853 2.519627 3,990,922 1997
---------------------- --------------------- --------------------- ------------
Contrafund 1.834521 2.061853 1,600,079 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity 5.365090 6.928596 7,574,670 1997
---------------------- --------------------- --------------------- ------------
Equity-Income Fund 4.792632 5.365090 6,613,425 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity Growth & 2.003791 2.591531 3,435,213 1997
---------------------- --------------------- --------------------- ------------
Income Portfolio 1.788691 2.003791 1,071,573 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Fidelity Magellan(R) 1.915038 2.408585 16,840,881 1997
---------------------- --------------------- --------------------- ------------
Fund 1.732300 1.915038 15,847,180 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
MFS(R)Growth 7.387670 9.048839 1,999,203 1997
---------------------- --------------------- --------------------- ------------
Opportunities Fund - Class A 6.482021 7.387670 2,053,995 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
MFS(R)High Income Fund - 5.523771 6.193345 500,487 1997
---------------------- --------------------- --------------------- ------------
Class A 5.237254 5.523771 466,255 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Massachusetts 10.891785 16.032114 271,730 1997
---------------------- --------------------- --------------------- ------------
Investors Growth 9.620839 10.891785 270,135 1996
---------------------- --------------------- --------------------- ------------
Stock Fund - Class A
----------------------------- ---------------------- --------------------- --------------------- ------------
</TABLE>
64
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<PAGE> 67
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)Bond Fund - 2.003508 2.175755 51,355 1997
---------------------- --------------------- --------------------- ------------
Class D 1.902228 2.003508 53,369 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Nationwide(R) 14.979448 20.780295 721,864 1997
---------------------- --------------------- --------------------- ------------
Fund - Class D 13.293866 14.979448 408,411 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Nationwide(R) 3.086114 3.870345 658,443 1997
---------------------- --------------------- --------------------- ------------
Growth Fund - Class D 2.801588 3.086114 517,548 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Nationwide(R) 2.887782 3.015983 3,131,282 1997
---------------------- --------------------- --------------------- ------------
Money Market 2.848502 2.887782 3,694,679 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Neuberger Berman 1.367075 1.601873 614,486 1997
---------------------- --------------------- --------------------- ------------
Guardian Fund, Inc. 1.203016 1.367075 109,076 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Putnam 13.608194 18.183069 1,771,233 1997
---------------------- --------------------- --------------------- ------------
Investors Fund - Class A 12.172007 13.608194 1,571,300 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Putnam Voyager 3.077980 3.852510 1,528,999 1997
---------------------- --------------------- --------------------- ------------
Fund - Class A 2.937103 3.077980 990,216 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
SEI Index Funds - 2.965481 3.920739 3,689,771 1997
---------------------- --------------------- --------------------- ------------
S&P 500 Index 2.610748 2.965481 724,558 1996
---------------------- --------------------- --------------------- ------------
Portfolio
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
Seligman 10.731114 12.592179 113,689 1997
---------------------- --------------------- --------------------- ------------
Growth Fund, Inc. - Class A 9.693645 10.731114 121,166 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
T. Rowe Price 1.813888 1.850821 4,875,751 1997
---------------------- --------------------- --------------------- ------------
International Stock 1.686337 1.813888 5,512,814 1996
---------------------- --------------------- --------------------- ------------
Fund(R)
----------------------------- ---------------------- --------------------- --------------------- ------------
Templeton 1.776082 1.881918 1,092,861 1997
---------------------- --------------------- --------------------- ------------
Foreign Fund - Class I 1.628310 1.776082 168,098 1996
---------------------- --------------------- --------------------- ------------
----------------------------- ---------------------- --------------------- --------------------- ------------
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of 0.95%
of average net assets to a Variable Account Annual Expense Fee of 0.65% of
average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until January 1998:
Janus Worldwide Fund; LifeDesigns Series - The Moderately Aggressive Portfolio;
LifeDesigns Series - The Moderate Portfolio; LifeDesigns Series - The Moderately
Conservative Portfolio; LifeDesigns Series - The Conservative Portfolio;
Nationwide Separate Account Trust - Nationwide Small Company Fund; Warburg
Pincus Emerging Growth Fund.
Accumulation unit value information is not available for the following
underlying mutual funds because they were not made available until November
1998: American Century -Twentieth Century
65
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<PAGE> 68
International Discovery Fund; Dreyfus Capital Appreciation Fund, Inc.; Dreyfus
Premier Midcap Stock Fund; Federated Bond Fund; Fidelity Advisor Growth
Opportunities Fund; Fidelity Advisor high Yield Fund; INVESCO Dynamics Fund;
INVESCO Total Return Fund; Morgan Stanley Institutional Fund, Inc. - Equity
Growth Portfolio - Class B; Nationwide S&P 500(R) Index Fund; Neuberger Berman
Partners Trust; Oppenheimer Global Fund - Class A; Prestige Balanced Fund -
Class Y; Prestige International Fund - Class Y; Prestige Large Cap Growth Fund -
Class Y; Prestige Large Cap Value Fund - Class Y; Prestige Small Cap Fund -
Class Y.
66
68 of 161
<PAGE> 69
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
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 May 1, 1999. 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
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History....................................................................................... 1
Services.............................................................................................................. 1
Purchase of Securities Being Offered.................................................................................. 2
Underwriters.......................................................................................................... 2
Calculation of Performance............................................................................................ 2
Annuity Payments...................................................................................................... 8
Financial Statements.................................................................................................. 9
</TABLE>
GENERAL INFORMATION AND HISTORY
The Nationwide DC Variable Account ("variable account") is a separate investment
account of Nationwide Life Insurance Company ("Nationwide"). Nationwide is a
member of the Nationwide Insurance Enterprise and all of it's common stock is
owned by Nationwide Financial Services, Inc. ("NFS"), a holding company. NFS has
two classes of common stock outstanding with different voting rights enabling
Nationwide Corporation (the holder of all of the outstanding Class B Common
Stock) to control NFS. Nationwide Corporation is a holding company as well. All
of its common stock is held by Nationwide Mutual Insurance Company (95.2%) and
Nationwide Mutual Fire Insurance Company (4.8%), the ultimate controlling
persons of Nationwide Insurance Enterprise. The Nationwide Insurance Enterprise
is one of America's largest insurance and financial services family of
companies, with combined assets of over $83.2 billion as of December 31, 1997.
SERVICES
Nationwide, which has responsibility for administration of the contracts and the
variable account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each contract owner
and the number and type of contract issued to each contract 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
Nationwide. The assets of each sub-account will be kept physically segregated
and held separate and apart from assets of other sub-accounts and from assets of
any other firm, person, or corporation. Nationwide will maintain a record of all
purchases and redemption of shares of the underlying mutual fund held in each
sub-account.
Nationwide, or affiliates of Nationwide, may have entered into agreements with
either the investment adviser or distributor of the underlying mutual funds. The
agreements relate to administrative services furnished by Nationwide or an
affiliate of Nationwide and provide for an annual fee based on the average
aggregate net assets of the variable account (and other separate accounts of
Nationwide or life insurance company subsidiaries of Nationwide) 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.
1
69 of 161
<PAGE> 70
The audited financial statements 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. Agents are 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 Nationwide's Group Fixed
Fund Retirement contract, the contract owner, or the participant if the plan so
provides, may exchange accumulation units between any sub-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 effective when received in
good order at Nationwide's home office.
UNDERWRITERS
The contracts, which are offered continuously, are distributed by Nationwide
Investment Services Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio
43215. NISC is a wholly owned subsidiary of Nationwide. During the fiscal years
ended December 31, 1997, 1996, and 1995, no underwriting commissions were paid
by Nationwide to NISC.
CALCULATION OF PERFORMANCE
Any current yield quotations of the Nationwide Money Market Fund, the Dreyfus
Cash Management Fund - Class A, and the Nationwide Separate Account Trust- Money
Market Fund subject to Rule 482 of the Securities Act of 1933, will consist of a
seven calendar day historical yield, carried at least to the nearest hundredth
of a percent. The yield will 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 units at the beginning of the base
period, subtracting a hypothetical charge reflecting deductions from contract
owner accounts, and dividing the net change in account value by the value of the
account at the beginning of the period to obtain a base period return, and
multiplying the base period return by (365/7) or (366/7) in a leap year. At
December 31, 1997, the Nationwide Money Market Fund, the Dreyfus Cash Management
Fund - Class A, and NSAT-Money Market Fund seven-day current yield was 4.23%,
3.83%, and 4.40%, respectively. The Nationwide Money Market Fund, the Dreyfus
Cash Management Fund - Class A, and NSAT Money Market Fund seven-day 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 at December 31, 1997 were 4.32%, 3.90% and 4.50%, respectively.
The Nationwide Money Market Fund, the Dreyfus Cash Management Fund, Nationwide
Separate Account Trust- Money Market 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' portfolios, 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 given occasion
will remain in effect for any period of time and there is no guarantee that the
net asset values will remain constant. It should be noted that a contract
owner's investment in the Nationwide Money Market Fund Sub-Account, the Dreyfus
Cash Management Fund - Class A Sub-Account, Nationwide Separate Account Trust
Money Market 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.
2
70 of 161
<PAGE> 71
Nationwide may, from time to time, advertise several types of historical
performance of the sub-accounts. Nationwide may advertise for the sub-account's
standardized "average annual total return," calculated in a manner prescribed by
the SEC, and nonstandardized "total return." "Average annual total return"
illustrates the percentage rate of return of a hypothetical initial investment
of $1,000 for the most recent one, five and ten year periods, or for a period
covering the time the underlying mutual fund option has been available in the
variable account if the underlying mutual fund option has not been available for
the prescribed periods. THIS CALCULATION REFLECTS THE DEDUCTION OF ALL
APPLICABLE CHARGES MADE TO THE CONTRACTS EXCEPT FOR PREMIUM TAXES, WHICH MAY BE
IMPOSED BY CERTAIN STATES.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," illustrates the percentage rate of return of a
hypothetical initial investment of $10,000 for the most recent one, five and ten
year periods, or for a period covering the time the underlying mutual fund
option has been in existence. For those underlying mutual fund options which
have not been held as sub-accounts for one of prescribed periods, the
nonstandardized total return illustrations will show the investment performance
such underlying mutual fund options would have achieved (reduced by the same
charges except the Participant Account Maintenance Charge and CDSC) had such
underlying mutual fund options been available in the variable account for the
periods quoted. THE CDSC IS NOT REFLECTED BECAUSE THE CONTRACTS ARE DESIGNED FOR
LONG TERM INVESTMENT. THE CDSC, IF REFLECTED, WOULD DECREASE THE LEVEL OF
PERFORMANCE SHOWN. AN INITIAL INVESTMENT OF $10,000 IS ASSUMED BECAUSE THAT
AMOUNT MORE CLOSELY APPROXIMATES THE SIZE OF A TYPICAL CONTRACT THAN DOES THE
$1,000 ASSUMPTION USED IN CALCULATING THE STANDARDIZED AVERAGE ANNUAL TOTAL
RETURN QUOTATIONS.
The standardized average annual return and nonstandardized total return
quotations reflected below are calculated as described in this section using
Underlying Mutual Fund performance for the period ended December 31, 1997.
However, the Company generally provides performance quotations on a more
frequent basis, the results of which could reflect better or worse results than
shown below. The quotations and other comparative material advertised by the
Company are based upon historical earnings and are not intended to represent or
guarantee future results. A Contract Owner's Contract Value at redemption may be
more or less than the original cost.
ANNUITY PAYMENTS
See "retirement income payments" located in the prospectus.
3
71 of 161
<PAGE> 72
<PAGE> 1
Independent Auditors' Report
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide DC Variable Account:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide DC Variable Account as of December 31,
1997, and the related statements of operations and changes in contract owners'
equity for each of the years in the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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. Our procedures included
confirmation of securities owned as of December 31, 1997, by correspondence with
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 referred to above present fairly,
in all material respects, the financial position of Nationwide DC Variable
Account as of December 31, 1997, and the results of its operations and its
changes in contract owners' equity for each of the years in the two year period
then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1998
<PAGE> 2
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets:
Investments at market value:
AIM Equity Funds, Inc. - AIM Constellation Fund - Institutional Class (AIMCon)
353,123 shares (cost $9,814,177) ............................................ $ 9,590,833
American Century: Twentieth Century Growth Fund (ACTCGro)
5,820,537 shares (cost $124,391,823) ........................................ 139,751,098
American Century: Twentieth Century Select Fund (ACTCSel)
53,889 shares (cost $2,029,743) ............................................. 2,295,131
American Century: Twentieth Century Ultra Fund (ACTCUltra)
12,261,059 shares (cost $324,921,418) ....................................... 334,726,919
The Bond Fund of America(SM), Inc. (BdFdAm)
891,354 shares (cost $12,244,809) ........................................... 12,478,950
Davis New York Venture Fund, Inc. - Class A (DNYVenFd)
19,577 shares (cost $453,076) ............................................... 437,146
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund Institutional Class (DeDecInc)
14,039 shares (cost $255,992) ................................................ 282,599
Dreyfus Cash Management - Class A (DryCsMgt)
280,979 shares (cost $280,979) .............................................. 280,979
Dreyfus S&P 500 Index Fund (Dry500Ix)
1,018,745 shares (cost $28,751,343) ......................................... 29,237,968
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
3,439,808 shares (cost $31,837,262) ......................................... 36,152,385
Evergreen Income and Growth Fund - Class Y (EvIncGro)
193,507 shares (cost $3,789,466) ............................................ 4,630,612
The Institutional Shares of Federated GNMA Trust (FedGNMA)
84,604 shares (cost $945,490) ............................................... 958,562
Federated U.S. Government Securities Fund: 2-5 Years -
Institutional Shares (FedUSGvt)
237,513 shares (cost $2,498,293) ............................................. 2,524,767
Fidelity Asset Manager(TM) (FidAsMgr)
361,947 shares (cost $6,132,945) ............................................ 6,641,734
Fidelity Capital & Income Fund (FidCapInc)
137,300 shares (cost $1,223,378) ............................................ 1,374,369
Fidelity Contrafund (FidContr)
5,374,235 shares (cost $216,052,916) ........................................ 250,600,591
Fidelity Equity-Income Fund (FidEqInc)
5,615,995 shares (cost $209,919,501) ........................................ 294,334,304
Fidelity Growth & Income Portfolio (FidGrInc)
233,635 shares (cost $8,374,913) ............................................ 8,901,489
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Fidelity Magellan(R) Fund (FidMgln)
2,403,663 shares (cost $189,857,516) ........................................ 228,996,978
The Growth Fund of America(R), Inc. (GroFdAm)
723,811 shares (cost $12,215,214) ........................................... 13,593,179
The Income Fund of America(R), Inc. (IncFdAm)
1,032,931 shares (cost $16,631,222) ......................................... 18,355,189
INVESCO Industrial Income Fund, Inc. (InvIndInc)
1,534,974 shares (cost $20,422,144) ......................................... 22,886,469
Janus Fund (JanFund)
2,639,870 shares (cost $65,892,003) ......................................... 65,732,768
Janus Twenty Fund (Jan20Fd)
531 shares (cost $18,331) ................................................... 16,459
MAS Funds - Fixed Income Portfolio (MASFIP)
223,094 shares (cost $2,666,574) ............................................ 2,659,279
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
1,999,018 shares (cost $23,875,723) ......................................... 27,826,327
MFS(R) High Income Fund - Class A (MFSHiInc)
709,914 shares (cost $3,798,950) ............................................ 3,925,825
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
580,079 shares (cost $6,431,749) ............................................ 7,204,580
Nationwide(R) Bond Fund (NWBdFd)
11,726 shares (cost $107,869) ............................................... 111,750
Nationwide(R) Fund (NWFund)
2,844,581 shares (cost $58,840,651) ......................................... 75,352,944
Nationwide(R) Growth Fund (NWGroFd)
681,066 shares (cost $8,684,403) ............................................ 9,970,810
Nationwide(R) Money Market Fund (NWMyMkt)
45,685,723 shares (cost $45,685,723) ........................................ 45,685,723
Neuberger & Berman Guardian Fund (NBGuard)
37,973 shares (cost $1,101,956) ............................................. 983,491
Neuberger & Berman Manhattan Fund (NBManhFd)
11,339 shares (cost $134,200) ............................................... 124,843
Neuberger & Berman Partners Fund (NBPartFd)
76,015 shares (cost $2,209,884) ............................................. 1,999,193
Putnam Investors Fund - Class A (PutInvFd)
4,002,278 shares (cost $35,706,575) ......................................... 44,985,604
Putnam Voyager Fund - Class A (PutVoyFd)
7,238,618 shares (cost $117,476,335) ........................................ 137,895,671
SEI Index Funds - S&P 500 Index Portfolio (SEI500Ix)
497,766 shares (cost $14,146,931) ........................................... 15,256,513
Seligman Growth Fund, Inc. - Class A (SelGroFd)
469,336 shares (cost $2,521,649) ............................................ 2,853,565
T. Rowe Price International Funds, Inc. - International Stock Fund(R) (TRIntStk)
2,251,952 shares (cost $31,779,749) ......................................... 30,221,189
</TABLE>
(Continued)
<PAGE> 4
<TABLE>
<S> <C>
Templeton Foreign Fund - Class I (TemForFd)
8,112,299 shares (cost $81,035,996) ......................................... 80,717,371
American Century VP - American Century VP Balanced (ACVPBal)
830 shares (cost $6,031) .................................................... 6,842
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
8,162 shares (cost $83,823) ................................................. 79,009
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
357 shares (cost $8,306) .................................................... 8,913
Dreyfus Stock Index Fund (DryStkIx)
1,782 shares (cost $34,903) ................................................. 45,889
Fidelity VIP Fund II - Asset Manager Portfolio (FidVIPAM)
2,097 shares (cost $32,469) ................................................. 37,762
Fidelity VIP Fund - Equity-Income Portfolio (FidVIPEI)
6,960 shares (cost $137,259) ................................................ 168,985
Fidelity VIP Fund - Growth Portfolio (FidVIPGr)
3,591 shares (cost $105,209) ................................................ 133,242
Fidelity VIP Fund - High Income Portfolio (FidVIPHI)
3,346 shares (cost $40,631) ................................................. 45,435
Fidelity VIP - Overseas Portfolio (FidVIPOv)
8,313 shares (cost $145,630) ................................................ 159,604
Nationwide SAT - Government Bond Fund (NSATGvtBd)
1,299 shares (cost $14,382) ................................................. 14,783
Nationwide SAT - Money Market Fund (NSATMyMkt)
8,360 shares (cost $8,360) .................................................. 8,360
Nationwide SAT - Total Return Fund (NSATTotRe)
7,892 shares (cost $110,139) ................................................ 129,267
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
925 shares (cost $24,005) ................................................... 28,236
Neuberger & Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat)
598 shares (cost $8,207) .................................................... 8,440
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
1,429 shares (cost $21,046) ................................................. 29,435
--------------
Total investments ........................................................ 1,973,460,358
Accounts receivable ............................................................... 10,966,077
--------------
Total assets ............................................................. 1,984,426,435
Accounts payable ..................................................................... 10,325,466
--------------
Contract owners' equity (note 4) ..................................................... $1,974,100,969
==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
TOTAL AIMCon
---------------------------------- ----------------------------------
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ 20,895,878 19,852,186 -- --
Mortality and expense charges (note 2) ............. (8,777,426) (7,324,869) (83,193) (53,871)
Administration charge (note 2)
Tier I ......................................... (4,398,894) (3,675,030) (55,661) (44,853)
Tier II ........................................ (1,173,353) (1,000,535) -- --
Tier III ....................................... (388,328) (279,498) -- --
Tier IV ........................................ (149,483) (128,485) -- --
Tier V ......................................... (420,645) (361,137) (6,404) (1,210)
--------------- --------------- --------------- ---------------
Net investment activity .......................... 5,587,749 7,082,632 (145,258) (99,934)
Proceeds from mutual fund shares sold .............. 357,793,032 426,930,903 18,815,677 1,188,174
Cost of mutual fund shares sold .................... (303,606,933) (365,983,789) (15,735,318) (823,994)
--------------- --------------- --------------- ---------------
Realized gain (loss) on investments .............. 54,186,099 60,947,114 3,080,359 364,180
Change in unrealized gain (loss) on investments .... 102,369,350 33,461,531 (1,523,649) 713,388
--------------- --------------- --------------- ---------------
Net gain (loss) on investments ................... 156,555,449 94,408,645 1,556,710 1,077,568
--------------- --------------- --------------- ---------------
Reinvested capital gains ........................... 184,171,649 91,935,777 657,567 508,345
--------------- --------------- --------------- ---------------
Net increase (decrease) in contract owners'
equity resulting from operations ............. 346,314,847 193,427,054 2,069,019 1,485,979
--------------- --------------- --------------- ---------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................. 453,926,543 391,105,511 7,859,657 6,347,755
Transfers between funds ............................ -- -- (1,122,286) 3,672,192
Redemptions ........................................ (251,618,723) (384,960,385) (14,772,202) (1,656,333)
Annual contract maintenance charge (note 2) ........ (2,992) (109,548) -- --
Contingent deferred sales charges (note 2) ......... (14,054) (4,539) (695) (313)
Adjustments to maintain reserves ................... (293,934) (130,864) (797) (415)
--------------- --------------- --------------- ---------------
Net equity transactions ........................ 201,996,840 5,900,175 (8,036,323) 8,362,886
Net change in contract owners' equity .............. 548,311,687 199,327,229 (5,967,304) 9,848,865
Contract owners' equity beginning of period ........ 1,425,789,282 1,226,462,053 15,557,461 5,708,596
--------------- --------------- --------------- ---------------
Contract owners' equity end of period .............. $ 1,974,100,969 1,425,789,282 9,590,157 15,557,461
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
AIMWein ACTCGro
---------------------------------- ----------------------------------
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... -- 14,997 -- 964,074
Mortality and expense charges (note 2) ............. (9,318) (9,300) (642,882) (736,946)
Administration charge (note 2)
Tier I ......................................... (8,386) (8,370) (271,869) (308,479)
Tier II ........................................ -- -- (93,304) (126,718)
Tier III ....................................... -- -- (26,285) (23,471)
Tier IV ........................................ -- -- (7,827) (9,068)
Tier V ......................................... -- -- (48,240) (52,202)
--------------- --------------- --------------- ---------------
Net investment activity .......................... (17,704) (2,673) (1,090,407) (292,810)
Proceeds from mutual fund shares sold .............. 2,988,919 362,431 16,716,393 58,779,225
Cost of mutual fund shares sold .................... (2,485,069) (306,808) (16,558,938) (63,406,533)
--------------- --------------- --------------- ---------------
Realized gain (loss) on investments .............. 503,850 55,623 157,455 (4,627,308)
Change in unrealized gain (loss) on investments .... (68,071) 26,347 10,717,229 21,683,917
--------------- --------------- --------------- ---------------
Net gain (loss) on investments ................... 435,779 81,970 10,874,684 17,056,609
--------------- --------------- --------------- ---------------
Reinvested capital gains ........................... 57 223,451 20,522,141 1,295,969
--------------- --------------- --------------- ---------------
Net increase (decrease) in contract owners'
equity resulting from operations ............. 418,132 302,748 30,306,418 18,059,768
--------------- --------------- --------------- ---------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................. 430,962 537,314 14,467,218 17,388,418
Transfers between funds ............................ (191,388) (70,108) (6,426,109) (21,672,216)
Redemptions ........................................ (2,774,113) (177,736) (12,448,292) (49,435,421)
Annual contract maintenance charge (note 2) ........ -- -- (4) (25,093)
Contingent deferred sales charges (note 2) ......... -- -- (700) (325)
Adjustments to maintain reserves ................... (440) 80 3,742 (3,642)
--------------- --------------- --------------- ---------------
Net equity transactions ........................ (2,534,979) 289,550 (4,404,145) (53,748,279)
Net change in contract owners' equity .............. (2,116,847) 592,298 25,902,273 (35,688,511)
Contract owners' equity beginning of period ........ 2,116,847 1,524,549 113,853,751 149,542,262
--------------- --------------- --------------- ---------------
Contract owners' equity end of period .............. -- 2,116,847 139,756,024 113,853,751
=============== =============== =============== ===============
</TABLE>
(Continued)
<PAGE> 6
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ACTCSel ACTCUltra
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 8,911 11,951 127,927 --
Mortality and expense charges (note 2) ........... (9,710) (9,312) (1,509,815) (1,223,060)
Administration charge (note 2)
Tier I ....................................... (226) (231) (776,590) (620,290)
Tier II ...................................... -- -- (199,798) (159,009)
Tier III ..................................... -- -- (80,544) (62,126)
Tier IV ...................................... (3,783) (3,622) (21,246) (19,777)
Tier V ....................................... -- -- (62,951) (54,629)
------------ ------------ ------------ ------------
Net investment activity ........................ (4,808) (1,214) (2,523,017) (2,138,891)
Proceeds from mutual fund shares sold ............ 105,754 573,132 42,925,473 45,912,843
Cost of mutual fund shares sold .................. (82,007) (503,535) (28,943,858) (33,382,579)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............ 23,747 69,597 13,981,615 12,530,264
Change in unrealized gain (loss) on investments .. 123,754 41,842 (23,440,931) 2,813,597
------------ ------------ ------------ ------------
Net gain (loss) on investments ................. 147,501 111,439 (9,459,316) 15,343,861
------------ ------------ ------------ ------------
Reinvested capital gains ......................... 357,648 136,147 68,012,104 14,628,040
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 500,341 246,372 56,029,771 27,833,010
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 237,869 144,642 76,463,255 77,539,281
Transfers between funds .......................... 72,140 (297,684) (3,905,194) (4,202,211)
Redemptions ...................................... (73,384) (204,280) (39,257,098) (48,772,720)
Annual contract maintenance charge (note 2) ...... -- -- (24) (36)
Contingent deferred sales charges (note 2) ....... -- -- (1,699) (1,200)
Adjustments to maintain reserves ................. (255) (1,008) (69,090) 16,497
------------ ------------ ------------ ------------
Net equity transactions ...................... 236,370 (358,330) 33,230,150 24,579,611
Net change in contract owners' equity ............ 736,711 (111,958) 89,259,921 52,412,621
Contract owners' equity beginning of period ...... 1,558,172 1,670,130 245,403,535 192,990,914
------------ ------------ ------------ ------------
Contract owners' equity end of period ............ $ 2,294,883 1,558,172 334,663,456 245,403,535
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
BdFdAm DNYVenFd
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. 831,172 1,046,187 2,454 21,123
Mortality and expense charges (note 2) ........... (59,085) (73,390) (20,053) (17,262)
Administration charge (note 2)
Tier I ....................................... (33,669) (41,477) (16,533) (5,711)
Tier II ...................................... (8,744) (13,677) (1,346) (8,733)
Tier III ..................................... (2,293) (2,065) -- --
Tier IV ...................................... (201) (214) -- --
Tier V ....................................... (1,926) (1,870) -- --
------------ ------------ ------------ ------------
Net investment activity ........................ 725,254 913,494 (35,478) (10,583)
Proceeds from mutual fund shares sold ............ 5,280,682 8,814,167 8,604,728 3,456,609
Cost of mutual fund shares sold .................. (5,010,122) (8,967,702) (7,453,575) (2,805,367)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............ 270,560 (153,535) 1,151,153 651,242
Change in unrealized gain (loss) on investments .. (62,236) (20,855) (200,770) 14,694
------------ ------------ ------------ ------------
Net gain (loss) on investments ................. 208,324 (174,390) 950,383 665,936
------------ ------------ ------------ ------------
Reinvested capital gains ......................... -- -- 10,430 82,146
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 933,578 739,104 925,335 737,499
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 2,017,698 3,181,588 4,085,503 1,804,566
Transfers between funds .......................... (215,164) (1,049,358) 2,267,457 784,377
Redemptions ...................................... (1,811,719) (6,476,871) (9,056,278) (3,494,975)
Annual contract maintenance charge (note 2) ...... (8) (2,955) -- --
Contingent deferred sales charges (note 2) ....... -- -- -- --
Adjustments to maintain reserves ................. (783) (1,103) 8,950 165
------------ ------------ ------------ ------------
Net equity transactions ...................... (9,976) (4,348,699) (2,694,368) (905,867)
Net change in contract owners' equity ............ 923,602 (3,609,595) (1,769,033) (168,368)
Contract owners' equity beginning of period ...... 11,554,576 15,164,171 2,215,046 2,383,414
------------ ------------ ------------ ------------
Contract owners' equity end of period ............ 12,478,178 11,554,576 446,013 2,215,046
============ ============ ============ ============
</TABLE>
<PAGE> 7
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
DeDecInc DryCsMgt
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 7,552 7,849 54,849 136,743
Mortality and expense charges (note 2) ........... (1,261) (1,071) (5,071) (13,528)
Administration charge (note 2)
Tier I ....................................... (889) (785) (3,079) (2,135)
Tier II ...................................... (157) (111) (1,320) (8,925)
Tier III ..................................... (46) (37) -- --
Tier IV ...................................... -- -- -- --
Tier V ....................................... -- -- -- --
----------- ----------- ----------- -----------
Net investment activity ........................ 5,199 5,845 45,379 112,155
Proceeds from mutual fund shares sold ............ 32,460 37,688 6,117,696 6,819,165
Cost of mutual fund shares sold .................. (26,970) (35,438) (6,117,696) (6,819,165)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ............ 5,490 2,250 -- --
Change in unrealized gain (loss) on investments .. 14,342 821 -- --
----------- ----------- ----------- -----------
Net gain (loss) on investments ................. 19,832 3,071 -- --
----------- ----------- ----------- -----------
Reinvested capital gains ......................... 37,091 28,159 -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 62,122 37,075 45,379 112,155
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 30,795 32,196 662,604 534,980
Transfers between funds .......................... (2,219) (18,353) (165,420) 345,922
Redemptions ...................................... (31,221) (19,904) (1,416,011) (2,682,910)
Annual contract maintenance charge (note 2) ...... -- (4) -- --
Contingent deferred sales charges (note 2) ....... -- -- -- --
Adjustments to maintain reserves ................. -- (135) (171) (243)
----------- ----------- ----------- -----------
Net equity transactions ...................... (2,645) (6,200) (918,998) (1,802,251)
Net change in contract owners' equity .............. 59,477 30,875 (873,619) (1,690,096)
Contract owners' equity beginning of period ........ 223,128 192,253 1,154,439 2,844,535
----------- ----------- ----------- -----------
Contract owners' equity end of period .............. $ 282,605 223,128 280,820 1,154,439
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Dry500Ix Dry3dCen
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. 284,069 -- 62,610 42,627
Mortality and expense charges (note 2) ........... (35,171) -- (145,644) (95,294)
Administration charge (note 2)
Tier I ....................................... (14,618) -- (65,097) (45,192)
Tier II ...................................... (9,421) -- (16,969) (12,596)
Tier III ..................................... (3,048) -- (7,994) (3,757)
Tier IV ...................................... (830) -- (2,467) (940)
Tier V ....................................... -- -- (9,783) (6,217)
----------- ----------- ----------- -----------
Net investment activity ........................ 220,981 -- (185,344) (121,369)
Proceeds from mutual fund shares sold ............ 2,486,482 -- 3,259,863 6,090,694
Cost of mutual fund shares sold .................. (2,245,649) -- (2,727,200) (5,350,324)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ............ 240,833 -- 532,663 740,370
Change in unrealized gain (loss) on investments .. 486,625 -- 3,474,496 41,428
----------- ----------- ----------- -----------
Net gain (loss) on investments ................. 727,458 -- 4,007,159 781,798
----------- ----------- ----------- -----------
Reinvested capital gains ......................... 433,206 -- 2,817,470 2,973,237
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 1,381,645 -- 6,639,285 3,633,666
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 8,226,484 -- 9,162,128 4,244,258
Transfers between funds .......................... 10,392,894 -- 2,904,857 2,628,824
Redemptions ...................................... (763,066) -- (2,496,781) (5,116,680)
Annual contract maintenance charge (note 2) ...... -- -- -- --
Contingent deferred sales charges (note 2) ....... -- -- -- --
Adjustments to maintain reserves ................. (170,387) -- (3,144) 265
----------- ----------- ----------- -----------
Net equity transactions ...................... 17,685,925 -- 9,567,060 1,756,667
Net change in contract owners' equity .............. 19,067,570 -- 16,206,345 5,390,333
Contract owners' equity beginning of period ........ -- -- 19,942,835 14,552,502
----------- ----------- ----------- -----------
Contract owners' equity end of period .............. 19,067,570 -- 36,149,180 19,942,835
=========== =========== =========== ===========
</TABLE>
(Continued)
<PAGE> 8
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
EvIncGro FedGNMA
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. $ 204,120 267,495 49,431 44,688
Mortality and expense charges (note 2) ............... (21,764) (28,011) (3,754) (3,329)
Administration charge (note 2)
Tier I ........................................... (9,480) (10,537) (3,378) (2,996)
Tier II .......................................... (4,090) (6,618) -- --
Tier III ......................................... (587) (499) -- --
Tier IV .......................................... (102) (224) -- --
Tier V ........................................... (1,465) (1,992) -- --
---------- ---------- ---------- ----------
Net investment activity ............................ 166,632 219,614 42,299 38,363
Proceeds from mutual fund shares sold ................ 847,065 2,360,157 440,928 203,672
Cost of mutual fund shares sold ...................... (754,439) (2,355,105) (428,095) (209,513)
---------- ---------- ---------- ----------
Realized gain (loss) on investments ................ 92,626 5,052 12,833 (5,841)
Change in unrealized gain (loss) on investments ...... 409,277 329,828 493 (5,208)
---------- ---------- ---------- ----------
Net gain (loss) on investments ..................... 501,903 334,880 13,326 (11,049)
---------- ---------- ---------- ----------
Reinvested capital gains ............................. 285,501 -- -- --
---------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 954,036 554,494 55,625 27,314
---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 314,114 537,355 97,632 152,176
Transfers between funds .............................. (630,620) (879,504) 396,046 (7,769)
Redemptions .......................................... (327,850) (1,565,234) (299,846) (94,659)
Annual contract maintenance charge (note 2) .......... -- -- -- --
Contingent deferred sales charges (note 2) ........... -- -- (165) (11)
Adjustments to maintain reserves ..................... 44 120 (5) (70)
---------- ---------- ---------- ----------
Net equity transactions .......................... (644,312) (1,907,263) 193,662 49,667
Net change in contract owners' equity .................. 309,724 (1,352,769) 249,287 76,981
Contract owners' equity beginning of period ............ 4,320,926 5,673,695 709,278 632,297
---------- ---------- ---------- ----------
Contract owners' equity end of period .................. $4,630,650 4,320,926 958,565 709,278
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FedUSGvt FidAsMgr
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. 122,936 109,980 200,644 228,299
Mortality and expense charges (note 2) ............... (11,028) (11,497) (29,750) (34,006)
Administration charge (note 2)
Tier I ........................................... (6,630) (4,151) (17,550) (14,080)
Tier II .......................................... (1,877) (1,950) (3,833) (10,889)
Tier III ......................................... (400) (395) (1,227) (919)
Tier IV .......................................... (259) (317) (1,365) (1,288)
Tier V ........................................... -- (899) -- --
---------- ---------- ---------- ----------
Net investment activity ............................ 102,742 90,771 146,919 167,117
Proceeds from mutual fund shares sold ................ 1,662,873 1,653,358 1,776,704 4,210,588
Cost of mutual fund shares sold ...................... (1,668,080) (1,626,128) (1,379,459) (3,630,222)
---------- ---------- ---------- ----------
Realized gain (loss) on investments ................ (5,207) 27,230 397,245 580,366
Change in unrealized gain (loss) on investments ...... 33,840 (66,217) 219,715 (264,491)
---------- ---------- ---------- ----------
Net gain (loss) on investments ..................... 28,633 (38,987) 616,960 315,875
---------- ---------- ---------- ----------
Reinvested capital gains ............................. -- -- 370,511 221,907
---------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 131,375 51,784 1,134,390 704,899
---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 665,677 966,775 1,689,785 2,180,472
Transfers between funds .............................. 36,017 (704,468) (77,999) (890,070)
Redemptions .......................................... (329,946) (386,399) (1,129,423) (3,521,012)
Annual contract maintenance charge (note 2) .......... -- -- -- --
Contingent deferred sales charges (note 2) ........... -- -- (42) --
Adjustments to maintain reserves ..................... (158) (286) 2,277 (410)
---------- ---------- ---------- ----------
Net equity transactions .......................... 371,590 (124,378) 484,598 (2,231,020)
Net change in contract owners' equity .................. 502,965 (72,594) 1,618,988 (1,526,121)
Contract owners' equity beginning of period ............ 2,021,665 2,094,259 5,023,827 6,549,948
---------- ---------- ---------- ----------
Contract owners' equity end of period .................. 2,524,630 2,021,665 6,642,815 5,023,827
========== ========== ========== ==========
</TABLE>
<PAGE> 9
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FidCapInc FidContr
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 94,905 117,308 1,712,764 1,545,421
Mortality and expense charges (note 2) ............ (6,810) (7,639) (1,095,804) (734,971)
Administration charge (note 2)
Tier I ........................................ (2,241) (2,409) (644,732) (432,587)
Tier II ....................................... (657) (1,277) (155,250) (119,426)
Tier III ...................................... (831) (316) (60,205) (37,618)
Tier IV ....................................... (170) (207) (19,745) (14,872)
Tier V ........................................ (506) (697) (10,700) (1,548)
------------ ------------ ------------ ------------
Net investment activity ......................... 83,690 104,763 (273,672) 204,399
Proceeds from mutual fund shares sold ............. 181,090 500,552 24,431,745 26,450,915
Cost of mutual fund shares sold ................... (133,415) (364,126) (15,172,449) (20,427,691)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. 47,675 136,426 9,259,296 6,023,224
Change in unrealized gain (loss) on investments ... 43,602 (106,075) 11,711,270 9,814,737
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. 91,277 30,351 20,970,566 15,837,961
------------ ------------ ------------ ------------
Reinvested capital gains .......................... -- -- 21,858,485 11,581,370
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 174,967 135,114 42,555,379 27,623,730
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. -- (23) 71,455,791 55,820,118
Transfers between funds ........................... (47,356) (62,523) 2,764,788 13,444,223
Redemptions ....................................... (120,296) (425,397) (35,148,446) (34,561,066)
Annual contract maintenance charge (note 2) ....... -- -- (12) --
Contingent deferred sales charges (note 2) ........ -- -- -- (16)
Adjustments to maintain reserves .................. (69) (257) (25,659) (77,234)
------------ ------------ ------------ ------------
Net equity transactions ....................... (167,721) (488,200) 39,046,462 34,626,025
Net change in contract owners' equity ............. 7,246 (353,086) 81,601,841 62,249,755
Contract owners' equity beginning of period ....... 1,367,071 1,720,157 168,983,800 106,734,045
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. $ 1,374,317 1,367,071 250,585,641 168,983,800
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FidEqInc FidGrInc
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. 4,846,247 4,458,988 171,835 120,582
Mortality and expense charges (note 2) ............ (1,228,965) (951,325) (72,380) (34,818)
Administration charge (note 2)
Tier I ........................................ (555,462) (427,937) (39,476) (31,336)
Tier II ....................................... (182,609) (124,216) -- --
Tier III ...................................... (56,191) (40,047) -- --
Tier IV ....................................... (27,411) (23,180) -- --
Tier V ........................................ (66,404) (58,763) (8,555) --
------------ ------------ ------------ ------------
Net investment activity ......................... 2,729,205 2,833,520 51,424 54,428
Proceeds from mutual fund shares sold ............. 7,591,614 32,470,928 15,556,109 3,117,754
Cost of mutual fund shares sold ................... (4,094,211) (18,103,159) (12,289,818) (2,524,726)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. 3,497,403 14,367,769 3,266,291 593,028
Change in unrealized gain (loss) on investments ... 43,670,084 6,810,967 (795,078) 345,172
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. 47,167,487 21,178,736 2,471,213 938,200
------------ ------------ ------------ ------------
Reinvested capital gains .......................... 10,700,332 8,080,048 617,392 306,623
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 60,597,024 32,092,304 3,140,029 1,299,251
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 49,555,826 37,796,687 8,903,236 4,132,838
Transfers between funds ........................... 7,627,274 6,082,051 1,906,025 1,663,942
Redemptions ....................................... (16,944,810) (41,406,202) (15,606,356) (3,534,384)
Annual contract maintenance charge (note 2) ....... -- (17,665) -- --
Contingent deferred sales charges (note 2) ........ (2,187) (190) -- --
Adjustments to maintain reserves .................. (2,091) (6,538) 973 2
------------ ------------ ------------ ------------
Net equity transactions ....................... 40,234,012 2,448,143 (4,796,122) 2,262,398
Net change in contract owners' equity ............. 100,831,036 34,540,447 (1,656,093) 3,561,649
Contract owners' equity beginning of period ....... 193,502,053 158,961,606 10,558,554 6,996,905
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. 294,333,089 193,502,053 8,902,461 10,558,554
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 10
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FidMgIn FidOTC
------------------------------- ------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 2,776,362 2,347,353 -- --
Mortality and expense charges (note 2) ............ (1,029,833) (928,190) -- --
Administration charge (note 2)
Tier I ........................................ (554,264) (489,031) -- --
Tier II ....................................... (107,173) (84,316) -- --
Tier III ...................................... (39,771) (34,922) -- --
Tier IV ....................................... (15,441) (14,932) -- --
Tier V ........................................ (52,539) (55,169) -- --
------------- ------------- ------------- -------------
Net investment activity ......................... 977,341 740,793 -- --
Proceeds from mutual fund shares sold ............. 17,843,381 25,879,725 -- 78,420
Cost of mutual fund shares sold ................... (14,477,806) (22,802,539) -- (80,480)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ............. 3,365,575 3,077,186 -- (2,060)
Change in unrealized gain (loss) on investments ... 29,086,622 (11,383,877) -- 2,064
------------- ------------- ------------- -------------
Net gain (loss) on investments .................. 32,452,197 (8,306,691) -- 4
------------- ------------- ------------- -------------
Reinvested capital gains .......................... 11,739,123 25,354,072 -- --
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 45,168,661 17,788,174 -- 4
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 41,946,309 53,096,333 -- --
Transfers between funds ........................... (12,805,250) (32,238,041) -- --
Redemptions ....................................... (22,357,376) (20,782,223) -- (78,420)
Annual contract maintenance charge (note 2) ....... -- -- -- --
Contingent deferred sales charges (note 2) ........ (1,445) (808) -- --
Adjustments to maintain reserves .................. (7,838) (4,540) -- (4)
------------- ------------- ------------- -------------
Net equity transactions ....................... 6,774,400 70,721 -- (78,424)
Net change in contract owners' equity ............. 51,943,061 17,858,895 -- (78,420)
Contract owners' equity beginning of period ....... 177,046,208 159,187,313 -- 78,420
------------- ------------- ------------- -------------
Contract owners' equity end of period ............. $ 228,989,269 177,046,208 -- --
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
GroFdAm IncFdAm
------------------------------- -------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. 83,852 85,990 802,807 1,014,512
Mortality and expense charges (note 2) ............ (57,706) (76,212) (86,189) (93,298)
Administration charge (note 2)
Tier I ........................................ (34,281) (54,923) (55,580) (67,682)
Tier II ....................................... (7,916) (5,621) (12,467) (8,905)
Tier III ...................................... (4,327) (3,446) (3,364) (2,368)
Tier IV ....................................... (1,003) (967) (1,297) (1,207)
Tier V ........................................ -- -- -- --
------------- ------------- ------------- -------------
Net investment activity ......................... (21,381) (55,179) 643,910 841,052
Proceeds from mutual fund shares sold ............. 1,428,368 11,929,973 3,825,869 7,389,650
Cost of mutual fund shares sold ................... (1,129,814) (9,375,437) (2,940,941) (6,503,900)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ............. 298,554 2,554,536 884,928 885,750
Change in unrealized gain (loss) on investments ... 937,071 (1,344,244) 357,933 (190,102)
------------- ------------- ------------- -------------
Net gain (loss) on investments .................. 1,235,625 1,210,292 1,242,861 695,648
------------- ------------- ------------- -------------
Reinvested capital gains .......................... 1,328,724 672,289 1,368,961 952,784
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 2,542,968 1,827,402 3,255,732 2,489,484
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 2,447,734 3,842,164 3,463,650 4,244,393
Transfers between funds ........................... (330,586) (522,247) (263,093) (1,138,464)
Redemptions ....................................... (846,573) (11,256,013) (3,321,842) (6,743,100)
Annual contract maintenance charge (note 2) ....... -- (6,535) -- --
Contingent deferred sales charges (note 2) ........ -- -- -- --
Adjustments to maintain reserves .................. (854) (708) 170 (872)
------------- ------------- ------------- -------------
Net equity transactions ....................... 1,269,721 (7,943,339) (121,115) (3,638,043)
Net change in contract owners' equity ............. 3,812,689 (6,115,937) 3,134,617 (1,148,559)
Contract owners' equity beginning of period ....... 9,779,679 15,895,616 15,220,788 16,369,347
------------- ------------- ------------- -------------
Contract owners' equity end of period ............. 13,592,368 9,779,679 18,355,405 15,220,788
============= ============= ============= =============
</TABLE>
<PAGE> 11
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
InvIndInc JanFund
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 503,142 519,784 504,628 310,689
Mortality and expense charges (note 2) ............ (102,486) (87,753) (263,647) (147,723)
Administration charge (note 2)
Tier I ........................................ (68,066) (58,875) (155,821) (90,100)
Tier II ....................................... (15,321) (13,634) (40,695) (19,019)
Tier III ...................................... (2,187) (1,437) (12,305) (7,216)
Tier IV ....................................... (1,625) (1,159) (7,654) (4,725)
Tier V ........................................ -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ......................... 313,457 356,926 24,506 41,906
Proceeds from mutual fund shares sold ............. 2,918,824 6,354,821 1,817,544 5,274,235
Cost of mutual fund shares sold ................... (2,133,346) (5,655,544) (1,287,899) (4,248,259)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. 785,478 699,277 529,645 1,025,976
Change in unrealized gain (loss) on investments ... 1,085,683 234,134 (1,083,219) (822,680)
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. 1,871,161 933,411 (553,574) 203,296
------------ ------------ ------------ ------------
Reinvested capital gains .......................... 2,264,235 1,190,695 10,329,860 4,343,103
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 4,448,853 2,481,032 9,800,792 4,588,305
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 5,518,647 5,610,132 22,193,127 13,945,193
Transfers between funds ........................... (42,962) (563,565) 385,853 6,909,943
Redemptions ....................................... (3,356,403) (6,639,034) (3,993,919) (6,395,457)
Annual contract maintenance charge (note 2) ....... -- (2,841) -- --
Contingent deferred sales charges (note 2) ........ -- -- -- --
Adjustments to maintain reserves .................. (284) (1,143) (6,804) (1,049)
------------ ------------ ------------ ------------
Net equity transactions ....................... 2,118,998 (1,596,451) 18,578,257 14,458,630
Net change in contract owners' equity ............. 6,567,851 884,581 28,379,049 19,046,935
Contract owners' equity beginning of period ....... 16,322,252 15,437,671 37,346,871 18,299,936
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. $ 22,890,103 16,322,252 65,725,920 37,346,871
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Jan20Fd MASFIP
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. 45 1,383 131,839 57,963
Mortality and expense charges (note 2) ............ (643) (664) (9,679) (4,231)
Administration charge (note 2)
Tier I ........................................ (578) (598) (5,793) (2,507)
Tier II ....................................... -- -- (1,213) (652)
Tier III ...................................... -- -- (733) (262)
Tier IV ....................................... -- -- (202) (77)
Tier V ........................................ -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ......................... (1,176) 121 114,219 50,234
Proceeds from mutual fund shares sold ............. 571,046 178,295 1,183,622 558,613
Cost of mutual fund shares sold ................... (609,105) (153,190) (1,164,040) (557,602)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. (38,059) 25,105 19,582 1,011
Change in unrealized gain (loss) on investments ... 33,644 (36,405) (6,279) (3,811)
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. (4,415) (11,300) 13,303 (2,800)
------------ ------------ ------------ ------------
Reinvested capital gains .......................... 2,061 40,485 34,732 12,299
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ (3,530) 29,306 162,254 59,733
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 215,002 264,436 892,120 819,228
Transfers between funds ........................... 124,576 60,880 562,385 112,068
Redemptions ....................................... (569,390) (146,847) (220,277) (151,855)
Annual contract maintenance charge (note 2) ....... -- -- -- --
Contingent deferred sales charges (note 2) ........ -- -- -- --
Adjustments to maintain reserves .................. 4 -- (131) (209)
------------ ------------ ------------ ------------
Net equity transactions ....................... (229,808) 178,469 1,234,097 779,232
Net change in contract owners' equity ............. (233,338) 207,775 1,396,351 838,965
Contract owners' equity beginning of period ....... 249,793 42,018 1,262,922 423,957
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. 16,455 249,793 2,659,273 1,262,922
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 12
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
MFSGrOpp MFSHiInc
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ -- -- 312,636 337,552
Mortality and expense charges (note 2) ............ (134,126) (140,948) (18,058) (23,190)
Administration charge (note 2)
Tier I ........................................ (22,570) (27,772) (2,559) (4,661)
Tier II ....................................... (11,636) (10,430) (655) (908)
Tier III ...................................... (5,520) (4,357) (418) (119)
Tier IV ....................................... (108) (145) (1) (2)
Tier V ........................................ (25,510) (26,829) (4,109) (5,002)
------------ ------------ ------------ ------------
Net investment activity ......................... (199,470) (210,481) 286,836 303,670
Proceeds from mutual fund shares sold ............. 4,369,685 3,751,453 2,220,329 1,645,150
Cost of mutual fund shares sold ................... (3,326,454) (3,254,502) (2,126,593) (1,605,880)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. 1,043,231 496,951 93,736 39,270
Change in unrealized gain (loss) on investments ... 846,207 1,417,206 19,624 79,309
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. 1,889,438 1,914,157 113,360 118,579
------------ ------------ ------------ ------------
Reinvested capital gains .......................... 3,444,649 2,751,576 -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 5,134,617 4,455,252 400,196 422,249
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 1,426,143 1,180,246 610,811 352,677
Transfers between funds ........................... (942,811) (773,129) (123,874) (369,285)
Redemptions ....................................... (3,228,399) (2,771,393) (708,681) (651,164)
Annual contract maintenance charge (note 2) ....... -- (27) -- --
Contingent deferred sales charges (note 2) ........ -- -- -- --
Adjustments to maintain reserves .................. (21,750) (18,619) (2,782) (353)
------------ ------------ ------------ ------------
Net equity transactions ....................... (2,766,817) (2,382,922) (224,526) (668,125)
Net change in contract owners' equity ............. 2,367,800 2,072,330 175,670 (245,876)
Contract owners' equity beginning of period ....... 25,459,101 23,386,771 3,747,401 3,993,277
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. $ 27,826,901 25,459,101 3,923,071 3,747,401
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
MFSGrStk NWBdFd
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. 3,241 -- 8,172 11,782
Mortality and expense charges (note 2) ............ (30,470) (30,903) (641) (1,101)
Administration charge (note 2)
Tier I ........................................ (8,816) (7,969) (76) (213)
Tier II ....................................... (1,116) (2,829) -- --
Tier III ...................................... (501) (410) -- --
Tier IV ....................................... (8) (7) -- --
Tier V ........................................ (5,527) (5,343) (167) (259)
------------ ------------ ------------ ------------
Net investment activity ......................... (43,197) (47,461) 7,288 10,209
Proceeds from mutual fund shares sold ............. 806,782 1,529,884 78,071 136,724
Cost of mutual fund shares sold ................... (796,449) (1,482,189) (82,229) (134,113)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. 10,333 47,695 (4,158) 2,611
Change in unrealized gain (loss) on investments ... 1,199,210 (205,079) 6,157 (10,029)
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. 1,209,543 (157,384) 1,999 (7,418)
------------ ------------ ------------ ------------
Reinvested capital gains .......................... 1,104,545 1,217,085 -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 2,270,891 1,012,240 9,287 2,791
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 560,733 492,179 22,759 62,411
Transfers between funds ........................... 54,405 (274,332) (33,788) (43,758)
Redemptions ....................................... (695,501) (1,144,387) (46,264) (44,847)
Annual contract maintenance charge (note 2) ....... (486) (519) -- --
Contingent deferred sales charges (note 2) ........ (456) (128) -- --
Adjustments to maintain reserves .................. 451 (830) (12) (35)
------------ ------------ ------------ ------------
Net equity transactions ....................... (80,854) (928,017) (57,305) (26,229)
Net change in contract owners' equity ............. 2,190,037 84,223 (48,018) (23,438)
Contract owners' equity beginning of period ....... 5,014,974 4,930,751 159,754 183,192
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. 7,205,011 5,014,974 111,736 159,754
============ ============ ============ ============
</TABLE>
<PAGE> 13
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
NWMyMkt NBGuard
<TABLE>
<CAPTION>
NWFund NWGroFd
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 690,370 609,726 68,821 98,234
Mortality and expense charges (note 2) ............ (266,484) (191,658) (44,059) (50,111)
Administration charge (note 2)
Tier I ........................................ (123,555) (96,358) (17,354) (20,206)
Tier II ....................................... (35,569) (27,976) (5,594) (9,047)
Tier III ...................................... (14,919) (7,436) (1,245) (972)
Tier IV ....................................... (3,750) (1,643) (2,168) (2,176)
Tier V ........................................ (15,150) (9,936) (3,087) (2,787)
------------ ------------ ------------ ------------
Net investment activity ......................... 230,943 274,719 (4,686) 12,935
Proceeds from mutual fund shares sold ............. 3,524,263 14,865,042 888,498 4,378,762
Cost of mutual fund shares sold ................... (2,432,914) (11,883,176) (640,663) (3,358,066)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. 1,091,349 2,981,866 247,835 1,020,696
Change in unrealized gain (loss) on investments ... 11,194,545 1,906,009 428,346 (277,957)
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. 12,285,894 4,887,875 676,181 742,739
------------ ------------ ------------ ------------
Reinvested capital gains .......................... 3,686,826 2,216,305 1,209,332 534,447
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 16,203,663 7,378,899 1,880,827 1,290,121
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 15,483,476 5,277,378 1,294,729 1,185,223
Transfers between funds ........................... 13,256,766 (2,809,029) (227,077) (1,384,376)
Redemptions ....................................... (4,206,078) (10,666,892) (510,560) (3,340,229)
Annual contract maintenance charge (note 2) ....... (1,088) (3,430) -- (951)
Contingent deferred sales charges (note 2) ........ (897) (1,525) -- --
Adjustments to maintain reserves .................. 433 (4,940) 95 (883)
------------ ------------ ------------ ------------
Net equity transactions ....................... 24,532,612 (8,208,438) 557,187 (3,541,216)
Net change in contract owners' equity ............. 40,736,275 (829,539) 2,438,014 (2,251,095)
Contract owners' equity beginning of period ....... 34,591,092 35,420,631 7,532,918 9,784,013
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. $ 75,327,367 34,591,092 9,970,932 7,532,918
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NWMyMkt NBGuard
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. 2,956,768 2,752,685 4,553 818
Mortality and expense charges (note 2) ............ (298,652) (305,814) (3,053) (199)
Administration charge (note 2)
Tier I ........................................ (99,691) (113,053) -- --
Tier II ....................................... (78,281) (71,393) -- --
Tier III ...................................... (9,259) (7,717) -- --
Tier IV ....................................... (6,949) (7,408) -- --
Tier V ........................................ (17,169) (17,873) (916) (60)
------------ ------------ ------------ ------------
Net investment activity ......................... 2,446,767 2,229,427 584 559
Proceeds from mutual fund shares sold ............. 90,261,974 49,156,048 453,514 48,535
Cost of mutual fund shares sold ................... (90,261,974) (49,156,048) (414,080) (46,031)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. -- -- 39,434 2,504
Change in unrealized gain (loss) on investments ... -- -- (121,548) 3,082
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. -- -- (82,114) 5,586
------------ ------------ ------------ ------------
Reinvested capital gains .......................... -- -- 128,744 6,718
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 2,446,767 2,229,427 47,214 12,863
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 9,680,836 9,722,355 620,995 51,062
Transfers between funds ........................... (8,123,293) 10,132,289 226,325 90,814
Redemptions ....................................... (6,330,019) (19,598,410) (60,295) (5,488)
Annual contract maintenance charge (note 2) ....... (15) (7,285) -- --
Contingent deferred sales charges (note 2) ........ (2,230) -- -- --
Adjustments to maintain reserves .................. 25,609 (11,502) 838 1
------------ ------------ ------------ ------------
Net equity transactions ....................... (4,749,112) 237,447 787,863 136,389
Net change in contract owners' equity ............. (2,302,345) 2,466,874 835,077 149,252
Contract owners' equity beginning of period ....... 58,928,944 56,462,070 149,252 --
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. 56,626,599 58,928,944 984,329 149,252
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 14
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
NBManhFd NBPartFd
------------------------ ----------------------------
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. $ -- -- 11,614 --
Mortality and expense charges (note 2) ............... (810) (1,891) (4,937) --
Administration charge (note 2)
Tier I ........................................... (729) (1,702) (4,443) --
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
-------- -------- ---------- ----------
Net investment activity ............................ (1,539) (3,593) 2,234 --
Proceeds from mutual fund shares sold ................ 223,724 683,440 359,092 --
Cost of mutual fund shares sold ...................... (233,494) (603,228) (298,999) --
-------- -------- ---------- ----------
Realized gain (loss) on investments ................ (9,770) 80,212 60,093 --
Change in unrealized gain (loss) on investments ...... 14,259 (84,746) (210,691) --
-------- -------- ---------- ----------
Net gain (loss) on investments ..................... 4,489 (4,534) (150,598) --
-------- -------- ---------- ----------
Reinvested capital gains ............................. 31,773 36,716 356,973 --
-------- -------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 34,723 28,589 208,609 --
-------- -------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 19,016 54,284 350,067 --
Transfers between funds .............................. (53,207) (158,418) 1,620,917 --
Redemptions .......................................... (170,571) (521,670) (180,319) --
Annual contract maintenance charge (note 2) .......... -- -- -- --
Contingent deferred sales charges (note 2) ........... -- -- (81) --
Adjustments to maintain reserves ..................... (24) (16) (49) --
-------- -------- ---------- ----------
Net equity transactions .......................... (204,786) (625,820) 1,790,535 --
Net change in contract owners' equity ................ (170,063) (597,231) 1,999,144 --
Contract owners' equity beginning of period .......... 294,879 892,110 -- --
-------- -------- ---------- ----------
Contract owners' equity end of period ................ 124,816 294,879 1,999,144 --
======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
PutInvFd PutVoyFd
------------------------------ -------------------------------
1997 1996 1997 1996
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. 151,621 177,791 -- --
Mortality and expense charges (note 2) ............... (195,092) (215,499) (555,728) (405,453)
Administration charge (note 2)
Tier I ........................................... (40,182) (66,267) (309,069) (249,379)
Tier II .......................................... (9,409) (14,602) (83,941) (47,574)
Tier III ......................................... (2,362) (1,673) (30,283) (20,916)
Tier IV .......................................... (153) (181) (14,092) (11,410)
Tier V ........................................... (40,310) (36,112) (6,508) (1,654)
----------- ----------- ------------ -----------
Net investment activity ............................ (135,887) (156,543) (999,621) (736,386)
Proceeds from mutual fund shares sold ................ 4,687,426 16,120,252 3,521,888 29,750,407
Cost of mutual fund shares sold ...................... (3,887,599) (13,829,607) (2,454,300) (19,681,984)
----------- ----------- ------------ -----------
Realized gain (loss) on investments ................ 799,827 2,290,645 1,067,588 10,068,423
Change in unrealized gain (loss) on investments ...... 6,208,349 929,669 16,465,312 (7,567,617)
----------- ----------- ------------ -----------
Net gain (loss) on investments ..................... 7,008,176 3,220,314 17,532,900 2,500,806
----------- ----------- ------------ -----------
Reinvested capital gains ............................. 3,906,053 3,852,133 8,147,769 6,131,999
----------- ----------- ------------ -----------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 10,778,342 6,915,904 24,681,048 7,896,419
----------- ----------- ------------ -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 4,228,718 3,828,208 40,104,364 35,639,746
Transfers between funds .............................. 483,737 588,152 (7,100,256) 20,472,847
Redemptions .......................................... (4,259,983) (16,253,501) (8,346,447) (33,323,584)
Annual contract maintenance charge (note 2) .......... (897) (8,554) -- (20,997)
Contingent deferred sales charges (note 2) ........... (3,177) (13) -- --
Adjustments to maintain reserves ..................... (1,786) (1,802) (16,760) (1,550)
----------- ----------- ------------ -----------
Net equity transactions .......................... 446,612 (11,847,510) 24,640,901 22,766,462
Net change in contract owners' equity ................ 11,224,954 (4,931,606) 49,321,949 30,662,881
Contract owners' equity beginning of period .......... 33,758,690 38,690,296 88,557,114 57,894,233
----------- ----------- ------------ -----------
Contract owners' equity end of period ................ 44,983,644 33,758,690 137,879,063 88,557,114
=========== =========== ============ ===========
</TABLE>
<PAGE> 15
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
SEI500Ix SelGroFd
----------------------------- ----------------------------
1997 1996 1997 1996
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. $ 150,459 79,126 -- --
Mortality and expense charges (note 2) ............... (54,468) (20,251) (13,883) (14,589)
Administration charge (note 2)
Tier I ........................................... (10,682) (4,799) (5,127) (5,044)
Tier II .......................................... (712) (9,796) (533) (721)
Tier III ......................................... -- -- (319) (80)
Tier IV .......................................... -- -- (16) (17)
Tier V ........................................... (12,513) (802) (2,084) (2,372)
----------- ---------- ---------- ----------
Net investment activity ............................ 72,084 43,478 (21,962) (22,823)
Proceeds from mutual fund shares sold ................ 8,384,055 4,023,809 421,999 595,006
Cost of mutual fund shares sold ...................... (6,905,964) (3,238,353) (373,415) (641,612)
----------- ---------- ---------- ----------
Realized gain (loss) on investments ................ 1,478,091 785,456 48,584 (46,606)
Change in unrealized gain (loss) on investments ...... 859,863 (107,235) 75,942 315,182
----------- ---------- ---------- ----------
Net gain (loss) on investments ..................... 2,337,954 678,221 124,526 268,576
----------- ---------- ---------- ----------
Reinvested capital gains ............................. 101,303 51,614 331,508 207,272
----------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 2,511,341 773,313 434,072 453,025
----------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 9,263,710 2,458,442 172,142 245,420
Transfers between funds .............................. 5,120,331 1,885,669 (199,396) (168,392)
Redemptions .......................................... (5,549,796) (3,820,927) (202,858) (358,902)
Annual contract maintenance charge (note 2) .......... -- -- (395) (417)
Contingent deferred sales charges (note 2) ........... -- -- (79) --
Adjustments to maintain reserves ..................... 626 (988) (18) (253)
----------- ---------- ---------- ----------
Net equity transactions .......................... 8,834,871 522,196 (230,604) (282,544)
Net change in contract owners' equity ................ 11,346,212 1,295,509 203,468 170,481
Contract owners' equity beginning of period .......... 3,911,822 2,616,313 2,650,076 2,479,595
----------- ---------- ---------- ----------
Contract owners' equity end of period ................ $15,258,034 3,911,822 2,853,544 2,650,076
=========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
StComStk TRIntStk
---------------------------- ------------------------------
1997 1996 1997 1996
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. 700 15,873 429,540 421,885
Mortality and expense charges (note 2) ............... (27,052) (15,027) (170,837) (207,424)
Administration charge (note 2)
Tier I ........................................... (24,346) (13,525) (72,216) (82,097)
Tier II .......................................... -- -- (16,170) (37,048)
Tier III ......................................... -- -- (5,875) (3,990)
Tier IV .......................................... -- -- (3,180) (2,932)
Tier V ........................................... -- -- (15,793) (16,774)
---------- ---------- ----------- -----------
Net investment activity ............................ (50,698) (12,679) 145,469 71,620
Proceeds from mutual fund shares sold ................ 9,411,196 314,741 21,375,609 28,109,045
Cost of mutual fund shares sold ...................... (8,332,762) (259,999) (18,182,586) (25,136,622)
---------- ---------- ----------- -----------
Realized gain (loss) on investments ................ 1,078,434 54,742 3,193,023 2,972,423
Change in unrealized gain (loss) on investments ...... (44,067) (56,531) (3,881,061) 1,623,911
---------- ---------- ----------- -----------
Net gain (loss) on investments ..................... 1,034,367 (1,789) (688,038) 4,596,334
---------- ---------- ----------- -----------
Reinvested capital gains ............................. 121,492 558,161 1,181,235 468,761
---------- ---------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 1,105,161 543,693 638,666 5,136,715
---------- ---------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 3,697,972 1,777,857 10,867,253 13,680,176
Transfers between funds .............................. 658,529 374,549 (6,714,250) 2,973,100
Redemptions .......................................... (9,645,678) (292,697) (5,866,407) (25,855,536)
Annual contract maintenance charge (note 2) .......... -- -- -- (12,178)
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... 93 (63) (6,971) 3,183
---------- ---------- ----------- -----------
Net equity transactions .......................... (5,289,084) 1,859,646 (1,720,375) (9,211,255)
Net change in contract owners' equity ................ (4,183,923) 2,403,339 (1,081,709) (4,074,540)
Contract owners' equity beginning of period .......... 4,183,923 1,780,584 31,295,943 35,370,483
---------- ---------- ----------- -----------
Contract owners' equity end of period ................ -- 4,183,923 30,214,234 31,295,943
========== ========== =========== ===========
</TABLE>
(Continued)
<PAGE> 16
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
TemForFd TemGISmCo
------------------------------ --------------------------
1997 1996 1997 1996
----------- ----------- ---------- --------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. $ 2,501,840 1,851,490 9,088 13,353
Mortality and expense charges (note 2) ............... (409,635) (317,757) (4,075) (3,928)
Administration charge (note 2)
Tier I ........................................... (250,509) (208,994) (3,668) (3,535)
Tier II .......................................... (65,577) (41,919) -- --
Tier III ......................................... (15,289) (10,927) -- --
Tier IV .......................................... (6,430) (5,788) -- --
Tier V ........................................... (2,329) (138) -- --
----------- ----------- ---------- --------
Net investment activity ............................ 1,752,071 1,265,967 1,345 5,890
Proceeds from mutual fund shares sold ................ 15,858,573 10,763,918 1,438,698 314,361
Cost of mutual fund shares sold ...................... (14,325,078) (10,261,033) (1,386,525) (310,261)
----------- ----------- ---------- --------
Realized gain (loss) on investments ................ 1,533,495 502,885 52,173 4,100
Change in unrealized gain (loss) on investments ...... (5,986,071) 6,814,567 (7,129) 52,775
----------- ----------- ---------- --------
Net gain (loss) on investments ..................... (4,452,576) 7,317,452 45,044 56,875
----------- ----------- ---------- --------
Reinvested capital gains ............................. 6,603,142 1,162,755 38,267 84,857
----------- ----------- ---------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 3,902,637 9,746,174 84,656 147,622
----------- ----------- ---------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 22,039,949 19,435,223 232,849 250,169
Transfers between funds .............................. (1,002,242) (2,100,929) (115,482) 176,387
Redemptions .......................................... (10,962,908) (10,304,746) (1,147,196) (193,568)
Annual contract maintenance charge (note 2) .......... -- -- -- --
Contingent deferred sales charges (note 2) ........... (201) (10) -- --
Adjustments to maintain reserves ..................... 1,523 (4,024) (193) (5,443)
----------- ----------- ---------- --------
Net equity transactions .......................... 10,076,121 7,025,514 (1,030,022) 227,545
Net change in contract owners' equity ................ 13,978,758 16,771,688 (945,366) 375,167
Contract owners' equity beginning of period .......... 66,740,239 49,968,551 945,366 570,199
----------- ----------- ---------- --------
Contract owners' equity end of period ................ $80,718,997 66,740,239 -- 945,366
=========== =========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
ACVPBal ACVPCapAp
-------------------- ----------------------
1997 1996 1997 1996
------ ------ ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. 51 51 -- --
Mortality and expense charges (note 2) ............... (27) (14) (383) (512)
Administration charge (note 2)
Tier I ........................................... (25) (13) (345) (461)
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
------ ------ ------- -------
Net investment activity ............................ (1) 24 (728) (973)
Proceeds from mutual fund shares sold ................ -- -- 47,270 34,506
Cost of mutual fund shares sold ...................... -- -- (47,990) (26,357)
------ ------ ------- -------
Realized gain (loss) on investments ................ -- -- (720) 8,149
Change in unrealized gain (loss) on investments ...... 529 234 (3,222) (22,116)
------ ------ ------- -------
Net gain (loss) on investments ..................... 529 234 (3,942) (13,967)
------ ------ ------- -------
Reinvested capital gains ............................. 203 64 1,834 11,221
------ ------ ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 731 322 (2,836) (3,719)
------ ------ ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 2,004 2,004 32,191 34,289
Transfers between funds .............................. -- -- (33,826) --
Redemptions .......................................... -- -- (1,115) (33,937)
Annual contract maintenance charge (note 2) .......... -- -- (12) (21)
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... -- (1) (439) (6)
------ ------ ------- -------
Net equity transactions .......................... 2,004 2,003 (3,201) 325
Net change in contract owners' equity ................ 2,735 2,325 (6,037) (3,394)
Contract owners' equity beginning of period .......... 4,106 1,781 84,604 87,998
------ ------ ------- -------
Contract owners' equity end of period ................ 6,841 4,106 78,567 84,604
====== ====== ======= =======
</TABLE>
<PAGE> 17
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
DrySRGro DryStkIx
----------------------- ----------------------
1997 1996 1997 1996
------ --------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. $ 32 -- 593 317
Mortality and expense charges (note 2) ............... (21) -- (186) (68)
Administration charge (note 2)
Tier I ........................................... (19) -- (167) (62)
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
------ --------- ------- -------
Net investment activity ............................ (8) -- 240 187
Proceeds from mutual fund shares sold ................ -- -- 21 --
Cost of mutual fund shares sold ...................... -- -- (10) --
------ --------- ------- -------
Realized gain (loss) on investments ................ -- -- 11 --
Change in unrealized gain (loss) on investments ...... 607 -- 8,203 2,006
------ --------- ------- -------
Net gain (loss) on investments ..................... 607 -- 8,214 2,006
------ --------- ------- -------
Reinvested capital gains ............................. 251 -- 1,314 382
------ --------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 850 -- 9,768 2,575
------ --------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 5,227 -- 8,847 15,048
Transfers between funds .............................. 2,835 -- 16 2,746
Redemptions .......................................... -- -- -- --
Annual contract maintenance charge (note 2) .......... -- -- -- --
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... 1 -- (3) (2)
------ --------- ------- -------
Net equity transactions .......................... 8,063 -- 8,860 17,792
Net change in contract owners' equity ................ 8,913 -- 18,628 20,367
Contract owners' equity beginning of period .......... -- -- 27,259 6,892
------ --------- ------- -------
Contract owners' equity end of period ................ $8,913 -- 45,887 27,259
====== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FidVIPAM FidVIPEI
---------------------- -----------------------
1997 1996 1997 1996
------- ------- -------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. 832 443 1,638 81
Mortality and expense charges (note 2) ............... (152) (84) (656) (328)
Administration charge (note 2)
Tier I ........................................... (137) (76) (591) (296)
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
------- ------- -------- -------
Net investment activity ............................ 543 283 391 (543)
Proceeds from mutual fund shares sold ................ -- -- 881 9,407
Cost of mutual fund shares sold ...................... -- -- (609) (7,567)
------- ------- -------- -------
Realized gain (loss) on investments ................ -- -- 272 1,840
Change in unrealized gain (loss) on investments ...... 2,692 1,605 21,307 4,892
------- ------- -------- -------
Net gain (loss) on investments ..................... 2,692 1,605 21,579 6,732
------- ------- -------- -------
Reinvested capital gains ............................. 2,086 365 8,234 2,320
------- ------- -------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 5,321 2,253 30,204 8,509
------- ------- -------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 9,177 9,305 46,876 43,516
Transfers between funds .............................. 95 -- 67 (1,480)
Redemptions .......................................... -- -- (143) (7,854)
Annual contract maintenance charge (note 2) .......... -- -- -- --
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... -- -- (21) 8
------- ------- -------- -------
Net equity transactions .......................... 9,272 9,305 46,779 34,190
Net change in contract owners' equity ................ 14,593 11,558 76,983 42,699
Contract owners' equity beginning of period .......... 23,167 11,609 91,971 49,272
------- ------- -------- -------
Contract owners' equity end of period ................ 37,760 23,167 168,954 91,971
======= ======= ======== =======
</TABLE>
(Continued)
<PAGE> 18
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FidVIPGr FidVIPHI
------------------------ ----------------------
1997 1996 1997 1996
--------- ------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. $ 565 117 1,817 1,014
Mortality and expense charges (note 2) ............... (540) (297) (173) (75)
Administration charge (note 2)
Tier I ........................................... (486) (267) (156) (67)
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
--------- ------- ------- -------
Net investment activity ............................ (461) (447) 1,488 872
Proceeds from mutual fund shares sold ................ 2,530 779 20 5,916
Cost of mutual fund shares sold ...................... (1,696) (541) (17) (5,666)
--------- ------- ------- -------
Realized gain (loss) on investments ................ 834 238 3 250
Change in unrealized gain (loss) on investments ...... 17,902 4,310 3,589 488
--------- ------- ------- -------
Net gain (loss) on investments ..................... 18,736 4,548 3,592 738
--------- ------- ------- -------
Reinvested capital gains ............................. 2,531 2,957 225 198
--------- ------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 20,806 7,058 5,305 1,808
--------- ------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 33,185 34,041 16,116 16,228
Transfers between funds .............................. (1,451) -- -- --
Redemptions .......................................... (284) (485) -- (6,450)
Annual contract maintenance charge (note 2) .......... -- -- -- --
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... 3 1 (2) (2)
--------- ------- ------- -------
Net equity transactions .......................... 31,453 33,557 16,114 9,776
Net change in contract owners' equity ................ 52,259 40,615 21,419 11,584
Contract owners' equity beginning of period .......... 80,978 40,363 24,013 12,429
--------- ------- ------- -------
Contract owners' equity end of period ................ $ 133,237 80,978 45,432 24,013
========= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FidVIPOv NSATGvtBd
------------------------ ----------------------
1997 1996 1997 1996
-------- -------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. 1,845 741 825 681
Mortality and expense charges (note 2) ............... (679) (391) (67) (52)
Administration charge (note 2)
Tier I ........................................... (611) (352) (60) (47)
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
-------- -------- ------- -------
Net investment activity ............................ 555 (2) 698 582
Proceeds from mutual fund shares sold ................ 1,605 7,065 2,513 --
Cost of mutual fund shares sold ...................... (1,311) (6,626) (2,354) --
-------- -------- ------- -------
Realized gain (loss) on investments ................ 294 439 159 --
Change in unrealized gain (loss) on investments ...... 2,792 7,875 270 (246)
-------- -------- ------- -------
Net gain (loss) on investments ..................... 3,086 8,314 429 (246)
-------- -------- ------- -------
Reinvested capital gains ............................. 7,326 815 -- --
-------- -------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 10,967 9,127 1,127 336
-------- -------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 37,048 41,252 3,575 3,305
Transfers between funds .............................. 9,863 (5,162) -- --
Redemptions .......................................... (581) (296) (2,506) --
Annual contract maintenance charge (note 2) .......... -- -- (32) (17)
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... 2 (8) (1) (1)
-------- -------- ------- -------
Net equity transactions .......................... 46,332 35,786 1,036 3,287
Net change in contract owners' equity ................ 57,299 44,913 2,163 3,623
Contract owners' equity beginning of period .......... 102,297 57,384 12,618 8,995
-------- -------- ------- -------
Contract owners' equity end of period ................ 159,596 102,297 14,781 12,618
======== ======== ======= =======
</TABLE>
<PAGE> 19
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
NSATMyMkt NSATTotRe
----------------------- -----------------------
1997 1996 1997 1996
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................................. $ 1,378 1,371 1,290 733
Mortality and expense charges (note 2) ............... (135) (138) (444) (179)
Administration charge (note 2)
Tier I ........................................... (121) (124) (399) (161)
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
-------- ------- -------- -------
Net investment activity ............................ 1,122 1,109 447 393
Proceeds from mutual fund shares sold ................ 37,780 2,529 374 3,134
Cost of mutual fund shares sold ...................... (37,780) (2,529) (234) (2,334)
-------- ------- -------- -------
Realized gain (loss) on investments ................ -- -- 140 800
Change in unrealized gain (loss) on investments ...... -- -- 13,515 3,998
-------- ------- -------- -------
Net gain (loss) on investments ..................... -- -- 13,655 4,798
-------- ------- -------- -------
Reinvested capital gains ............................. -- -- 4,114 1,755
-------- ------- -------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 1,122 1,109 18,216 6,946
-------- ------- -------- -------
Equity transactions:
Purchase payments received from
contract owners .................................... 8,580 15,079 27,743 18,485
Transfers between funds .............................. (15,000) 2,672 36,972 1,224
Redemptions .......................................... (22,757) -- (149) (3,122)
Annual contract maintenance charge (note 2) .......... (5) -- (4) (4)
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... (7) 4 11 (1)
-------- ------- -------- -------
Net equity transactions .......................... (29,189) 17,755 64,573 16,582
Net change in contract owners' equity ................ (28,067) 18,864 82,789 23,528
Contract owners' equity beginning of period .......... 36,420 17,556 46,482 22,954
-------- ------- -------- -------
Contract owners' equity end of period ................ $ 8,353 36,420 129,271 46,482
======== ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
NBAMTGro NBAMTLMat
---------------------- ---------------------
1997 1996 1997 1996
------- ------- ------ ------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................................. -- 16 441 294
Mortality and expense charges (note 2) ............... (114) (209) (44) (23)
Administration charge (note 2)
Tier I ........................................... (103) (188) (40) (21)
Tier II .......................................... -- -- -- --
Tier III ......................................... -- -- -- --
Tier IV .......................................... -- -- -- --
Tier V ........................................... -- -- -- --
------- ------- ------ ------
Net investment activity ............................ (217) (381) 357 250
Proceeds from mutual fund shares sold ................ 289 34,734 3,118 --
Cost of mutual fund shares sold ...................... (224) (30,072) (3,150) --
------- ------- ------ ------
Realized gain (loss) on investments ................ 65 4,662 (32) --
Change in unrealized gain (loss) on investments ...... 3,892 (5,353) 176 (67)
------- ------- ------ ------
Net gain (loss) on investments ..................... 3,957 (691) 144 (67)
------- ------- ------ ------
Reinvested capital gains ............................. 1,560 3,808 -- --
------- ------- ------ ------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 5,300 2,736 501 183
------- ------- ------ ------
Equity transactions:
Purchase payments received from
contract owners .................................... 6,212 8,488 4,298 3,443
Transfers between funds .............................. -- -- (3,114) --
Redemptions .......................................... (143) (34,697) -- --
Annual contract maintenance charge (note 2) .......... (10) (19) -- --
Contingent deferred sales charges (note 2) ........... -- -- -- --
Adjustments to maintain reserves ..................... 1 -- -- --
------- ------- ------ ------
Net equity transactions .......................... 6,060 (26,228) 1,184 3,443
Net change in contract owners' equity ................ 11,360 (23,492) 1,685 3,626
Contract owners' equity beginning of period .......... 16,877 40,369 6,755 3,129
------- ------- ------ ------
Contract owners' equity end of period ................ 28,237 16,877 8,440 6,755
======= ======= ====== ======
</TABLE>
(Continued)
<PAGE> 20
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
NBAMTPart
-----------------------
1997 1996
-------- -------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................. $ 47 26
Mortality and expense charges (note 2) ............... (104) (55)
Administration charge (note 2)
Tier I ........................................... (93) (49)
Tier II .......................................... -- --
Tier III ......................................... -- --
Tier IV .......................................... -- --
Tier V ........................................... -- --
-------- -------
Net investment activity ............................ (150) (78)
Proceeds from mutual fund shares sold ................ 346 472
Cost of mutual fund shares sold ...................... (161) (327)
-------- -------
Realized gain (loss) on investments ................ 185 145
Change in unrealized gain (loss) on investments ...... 4,404 2,418
-------- -------
Net gain (loss) on investments ..................... 4,589 2,563
-------- -------
Reinvested capital gains ............................. 729 324
-------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............... 5,168 2,809
-------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................... 6,119 4,697
Transfers between funds .............................. 3,543 --
Redemptions .......................................... (167) (471)
Annual contract maintenance charge (note 2) .......... -- --
Contingent deferred sales charges (note 2) ........... -- --
Adjustments to maintain reserves ..................... (2) (2)
-------- -------
Net equity transactions .......................... 9,493 4,224
Net change in contract owners' equity ................ 14,661 7,033
Contract owners' equity beginning of period .......... 14,770 7,737
-------- -------
Contract owners' equity end of period ................ $ 29,431 14,770
======== =======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 21
NATIONWIDE DC VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide DC Variable Account (the Account) was established by
resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on July 10, 1974. The Account has been registered
as a unit investment trust under the Investment Company Act of 1940.
The Company offers group flexible fund retirement contracts through the
Account. The primary distribution for the contracts is through an
affiliated sales organization; however, other distributors may be
utilized.
(b) The Contracts
Participants in group flexible fund contracts may be invested in any of
the following funds:
AIM Equity Funds, Inc. - AIM Constellation Fund - Institutional
Class (AIMCon)
AIM Equity Funds, Inc. - AIM Weingarten Fund - Institutional Class
(AIMWein)
American Century: Twentieth Century Growth Fund (ACTCGro)
American Century: Twentieth Century Select Fund (ACTCSel)
American Century: Twentieth Century Ultra Fund (ACTCUltra)
The Bond Fund of America(SM), Inc. (BdFdAm)
(only available for certain contracts issued beginning January
1, 1994)
Davis New York Venture Fund, Inc. - Class A (DNYVenFd)
Delaware Group Decatur Fund, Inc. - Decatur Income Fund
Institutional Class (DeDecInc)
(not available for contracts issued on or after August 1,
1993)
Dreyfus Cash Management - Class A (DryCsMgt)
Dreyfus S&P 500 Index Fund (Dry500Ix)
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
Evergreen Income and Growth Fund - Class Y (EvIncGro)
(formerly The Evergreen Total Return Fund - Class Y)
The Institutional Shares of Federated GNMA Trust (FedGNMA)
Federated U.S. Government Securities Fund: 2-5 Years -
Institutional Shares (FedUSGvt)
Fidelity Asset Manager(TM) (FidAsMgr)
Fidelity Capital & Income Fund (FidCapInc)
(not available for contracts issued on or after January 1, 1987)
Fidelity Contrafund (FidContr)
Fidelity Equity-Income Fund (FidEqInc)
Fidelity Growth & Income Portfolio (FidGrInc)
Fidelity Magellan(R) Fund (FidMgln)
<PAGE> 22
Fidelity OTC Portfolio (FidOTC)
Fidelity Puritan(R) Fund (FidPurtn)
The Growth Fund of America(R), Inc. (GroFdAm)
(only available for certain contracts issued beginning January
1, 1994)
The Income Fund of America(R), Inc. (IncFdAm)
(only available for certain contracts issued beginning January
1, 1994)
INVESCO Industrial Income Fund, Inc. (InvIndInc)
Janus Fund (JanFund)
Janus Twenty Fund (Jan20Fd)
MAS Funds - Fixed Income Portfolio (MASFIP)
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
MFS(R) High Income Fund - Class A (MFSHiInc)
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
Nationwide(R) Bond Fund (NWBdFd) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) Fund (NWFund) (managed for a fee by an affiliated
investment advisor)
Nationwide(R) Growth Fund (NWGroFd) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) Money Market Fund (NWMyMkt) (managed for a fee by an
affiliated investment advisor)
Neuberger & Berman Guardian Fund (NBGuard)
Neuberger & Berman Manhattan Fund (NBManhFd)
Neuberger & Berman Partners Fund (NBPartFd)
Putnam Investors Fund - Class A (PutInvFd)
Putnam Voyager Fund - Class A (PutVoyFd)
SEI Index Funds - S&P 500 Index Portfolio (SEI500Ix)
Seligman Growth Fund, Inc. - Class A (SelGroFd)
Strong Common Stock Fund, Inc. (StComStk)
T. Rowe Price International Funds, Inc. - International Stock
Fund(R) (TRIntStk)
Templeton Foreign Fund - Class I (TemForFd)
Templeton Global Smaller Companies Fund, Inc. - Class I
(TemGlSmCo)
The following funds are available for investment only by Plans
established under Internal Revenue Code (IRC) Section 403(b).
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP) (formerly TCI Portfolios, Inc.);
American Century VP - American Century VP Balanced (ACVPBal)
(formerly TCI Portfolios - TCI Balanced)
American Century VP - American Century VP Capital
Appreciation (ACVPCapAp) (formerly TCI Portfolios -
TCI Growth)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
<PAGE> 23
Portfolios of the Fidelity Variable Insurance Products Fund I & II
(Fidelity VIP);
Fidelity VIP - Asset Manager Portfolio (FidVIPAM)
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Fidelity VIP - Growth Portfolio (FidVIPGr)
Fidelity VIP - High Income Portfolio (FidVIPHI)
Fidelity VIP - Overseas Portfolio (FidVIPOv)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger & Berman AMT);
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
Neuberger & Berman AMT - Limited Maturity Bond Portfolio
(NBAMTLMat)
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
All of the above funds were being utilized as of December 31, 1997,
except AIM Equity Funds, Inc. - AIM Weingarten Fund - Institutional
Class (AIMWein), Fidelity OTC Portfolio (FidOTC), Fidelity Puritan(R)
Fund (FidPurtn), Nationwide SAT - Capital Appreciation Fund
(NSATCapAp), Strong Common Stock Fund, Inc. (StComStk) and Templeton
Global Smaller Companies Fund, Inc. - Class I (TemGlSmCo)
The contract owners' equity is affected by the investment results of
each fund, equity transactions by contract owners and certain expenses
(see note 2). The accompanying financial statements include only
contract owners' purchase payments pertaining to the variable portions
of their contracts and exclude any purchase payments for fixed dollar
benefits, the latter being included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1997. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company, which is taxed as a life insurance company
under the IRC. The assets in this account are held pursuant to
contracts with entities which are exempt from Federal income tax.
Because of this exemption, no taxes need be provided for investment
income or realized and unrealized capital gains. Annuity payouts and
withdrawal payments are taxable as wages when received by the
participants.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Reclassifications
Certain 1996 amounts have been reclassified to conform with the current
year presentation.
<PAGE> 24
(2) EXPENSES
Net purchase payments received for contracts issued before July 1, 1980,
represent contributions by the contract owners less a sales charge by the
Company of not more than 5%, to cover sales expenses. The Company does not
deduct a sales charge from purchase payments for contracts issued after
July 1, 1980. However, if any part of the contract value representing
participant accounts that have been established under the contracts and
held in the Account for less than sixteen (16) years is surrendered, the
Company will, with certain exceptions, assess a contingent deferred sales
charge. This charge will be equal to not more than 5% of the lesser of all
purchase payments received on behalf of the surrendering participant or
contract owner prior to the date of the request for surrender, or the
amount surrendered. Sales charges or contingent deferred sales charges of
less than 5% reflect actual variations in expense (usually reduced agents'
commissions). No sales charges are deducted on redemptions used to purchase
units in the fixed investment options of the Company. Sales charges may be
reduced or eliminated upon negotiated conversion of the contracts to other
investment programs offered by the Company or its affiliates.
The following contract charges are deducted by the Company on contracts
issued before July 1, 1980: (a) an annual contract maintenance charge of $8
assessed by surrendering units; (b) a charge for mortality and expense risk
assessed through the daily unit value calculation equal to an annual rate
of 0.95%; and (c) a charge on complete redemption, equal to the lesser of
$8 or 2% of the value of the account, except when such redemption occurs
within 31 days of the anniversary date of the contract.
For contracts issued beginning July 1, 1980 through April 30, 1991,
contract charges include: (a) an annual contract maintenance charge of $12
or $15, based upon administrative services provided, assessed by
surrendering units; and (b) a charge for mortality and expense risk
assessed through the daily unit value calculation equal to an annual rate
of 0.95%.
For contracts issued on or after May 1, 1991, contract charges include a
mortality risk charge, an expense risk charge and an administration charge
assessed through the daily unit value calculation equal to an annual rate
of 0.35%, 0.15% and 0.45% respectively. Beginning November 1, 1996, the
administration charge was based upon the aggregate balance of assets held
under the contract by each contract owner as follows:
<TABLE>
<CAPTION>
Expense Administration
Tier Assets (Millions) Charge
<S> <C> <C>
I Up to $10 .45%
II Over $10 to $25 .40%
III Over $25 to $50 .30%
IV Over $50 to $150 .20%
V Over $150 .15%
</TABLE>
The administration charge implemented on November 1, 1996 was based on the
June 30, 1996 asset balance. Thereafter, the administrative charge will be
determined using the December 31 asset balance and is effective at the next
expense tier on the following May 1.
Contract owners may negotiate an exchange privilege with the Company. The
exchange privilege provides for transfers of units among the various
investment options for each participant's account. The number of transfers
allowed, and any administrative charges associated therewith, are subject
to negotiation between the contract owner and the Company.
(3) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
<PAGE> 25
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL
TIER I (JUNE 30, 1996, SEE NOTE 2) UNITS UNIT VALUE RETURN
---------------------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM Constellation
Fund - Institutional Class ............ 1,753,409 $ 2.309709 $ 4,049,865 12%
American Century: Twentieth Century
Growth Fund ........................... 10,995,755 5.842997 64,248,163 28%
American Century: Twentieth Century
Select Fund ........................... 23,381 2.058976 48,141 31%
American Century: Twentieth Century
Ultra Fund ............................ 73,545,284 2.524538 185,667,864 22%
The Bond Fund of America(SM), Inc. ....... 3,207,320 2.332586 7,481,350 8%
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund Institutional Class 74,563 2.935219 218,859 29%
Dreyfus S&P 500 Index Fund ............... 8,503,701 1.217658 10,354,600 22%(a)
The Dreyfus Third Century Fund, Inc. ..... 5,074,527 3.532278 17,924,640 28%
Evergreen Income and Growth Fund -
Class Y ............................... 914,194 2.422617 2,214,742 24%
The Institutional Shares of Federated
GNMA Trust ............................ 688,011 1.393241 958,565 8%
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares ...... 1,373,391 1.214470 1,667,942 6%
Fidelity Asset Manager(TM) ............... 2,796,412 1.517270 4,242,912 21%
Fidelity Capital & Income Fund ........... 102,795 4.654233 478,432 14%
Fidelity Contrafund ...................... 62,958,434 2.509557 157,997,779 22%
Fidelity Equity-Income Fund .............. 21,606,856 6.900916 149,107,098 29%
Fidelity Magellan(R) Fund ................ 55,482,152 2.398961 133,099,519 25%
The Growth Fund of America(R), Inc. ...... 2,642,923 3.382686 8,940,179 26%
The Income Fund of America(R), Inc. ...... 4,752,235 2.614863 12,426,443 21%
INVESCO Industrial Income Fund, Inc ...... 7,749,404 2.102364 16,292,068 25%
Janus Fund ............................... 22,289,770 1.948907 43,440,689 22%
Janus Twenty Fund ........................ 7,662 2.147649 16,455 28%
MAS Funds - Fixed Income Portfolio ....... 1,341,493 1.335173 1,791,125 9%
MFS(R) Growth Opportunities Fund -
Class A ............................... 513,453 9.012670 4,627,582 22%
MFS(R) High Income Fund - Class A ........ 81,409 6.168371 502,161 12%
Massachusetts Investors Growth Stock
Fund - Class A ........................ 142,697 15.968069 2,278,596 47%
Nationwide(R) Fund ....................... 1,840,610 20.697282 38,095,624 38%
Nationwide(R) Growth Fund ................ 1,084,820 3.854877 4,181,848 25%
Nationwide(R) Money Market Fund .......... 7,176,896 3.003821 21,558,111 4%
Neuberger & Berman Manhattan Fund ........ 39,662 3.146989 124,816 28%
Neuberger & Berman Partners Fund ......... 1,370,455 1.458745 1,999,144 28%
Putnam Investors Fund - Class A .......... 508,161 18.110411 9,203,005 33%
Putnam Voyager Fund - Class A ............ 22,283,254 3.837109 85,503,274 25%
</TABLE>
(Continued)
<PAGE> 26
<TABLE>
<S> <C> <C> <C> <C>
SEI Index Funds - S&P 500 Index Portfolio 150,050 3.905079 585,957 32%
Seligman Growth Fund, Inc - Class A. ..... 93,124 12.541848 1,167,947 17%
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) ........... 7,561,237 1.843420 13,938,536 2%
Templeton Foreign Fund - Class I ......... 28,352,933 1.874393 53,144,539 6%
American Century VP - American Century
VP Balanced ........................... 4,531 1.509759 6,841 15%
American Century VP - American Century
VP Capital Appreciation ............... 50,033 1.570313 78,567 (4)%
The Dreyfus Socially Responsible
Growth Fund, Inc. ..................... 4,478 1.990292 8,913 27%
Dreyfus Stock Index Fund ................. 21,714 2.113257 45,887 32%
Fidelity VIP - Asset Manager Portfolio ... 25,131 1.502515 37,760 20%
Fidelity VIP - Equity-Income Portfolio ... 90,224 1.872610 168,954 27%
Fidelity VIP - Growth Portfolio .......... 70,171 1.898743 133,237 22%
Fidelity VIP - High Income Portfolio ..... 29,112 1.560592 45,432 17%
Fidelity VIP - Overseas Portfolio ........ 125,065 1.276107 159,596 11%
Nationwide SAT - Government Bond Fund .... 8,433 1.752816 14,781 9%
Nationwide SAT - Money Market Fund ....... 6,361 1.313205 8,353 4%
Nationwide SAT - Total Return Fund ....... 42,827 3.018448 129,271 28%
Neuberger & Berman AMT -
Growth Portfolio ...................... 12,306 2.294545 28,237 28%
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio ....... 7,063 1.194950 8,440 6%
Neuberger & Berman AMT -
Partners Portfolio .................... 13,504 2.179432 29,431 30%
========== ========= --------------
Sub-Total Tier I (June 30, 1996) ....... $1,060,482,270
==============
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
ANNUAL
TIER II (JUNE 30, 1996, SEE NOTE 2) UNITS UNIT VALUE RETURN
----------------------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
American Century: Twentieth Century
Growth Fund ........................... 3,903,936 $ 5.846396 $ 22,823,956 28%
American Century: Twentieth Century
Ultra Fund ............................ 19,732,726 2.526007 49,845,004 22%
The Bond Fund of America(SM), Inc. ....... 844,897 2.333980 1,971,973 8%
Davis New York Venture Fund, Inc. -
Class A ............................... 199,664 2.233818 446,013 32%
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund Institutional Class 15,400 2.936925 45,229 29%
Dreyfus Cash Management - Class A ........ 231,535 1.212863 280,820 5%
Dreyfus S&P 500 Index Fund ............... 3,436,138 1.218064 4,185,436 22%(a)
The Dreyfus Third Century Fund, Inc. ..... 1,286,026 3.534332 4,545,243 28%
Evergreen Income and Growth Fund -
Class Y ............................... 388,299 2.424026 941,247 24%
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares ...... 323,646 1.215186 393,290 6%
Fidelity Asset Manager(TM) ............... 633,745 1.518153 962,122 21%
Fidelity Capital & Income Fund ........... 36,724 4.656974 171,023 14%
Fidelity Contrafund ...................... 15,968,503 2.511017 40,097,182 22%
Fidelity Equity-Income Fund .............. 7,169,293 6.904928 49,503,452 29%
Fidelity Magellan(R) Fund ................ 11,589,048 2.400356 27,817,841 25%
The Growth Fund of America(R), Inc. ...... 650,012 3.384653 2,200,065 26%
The Income Fund of America(R), Inc. ...... 1,325,543 2.616384 3,468,129 21%
INVESCO Industrial Income Fund, Inc ...... 1,917,268 2.103587 4,033,140 25%
Janus Fund ............................... 5,595,764 1.950041 10,911,969 22%
MAS Funds - Fixed Income Portfolio ....... 296,496 1.335950 396,104 9%
MFS(R) Growth Opportunities Fund -
Class A ............................... 317,319 9.017913 2,861,555 22%
MFS(R) High Income Fund - Class A ........ 25,730 6.172004 158,806 12%
Massachusetts Investors Growth Stock
Fund - Class A ........................ 19,733 15.977352 315,281 47%
Nationwide(R) Fund ....................... 509,179 20.709316 10,544,749 38%
Nationwide(R) Growth Fund ................ 357,289 3.857119 1,378,106 25%
Nationwide(R) Money Market Fund .......... 6,441,740 3.005590 19,361,229 4%
Putnam Investors Fund - Class A .......... 133,581 18.120944 2,420,614 33%
Putnam Voyager Fund - Class A ............ 5,930,438 3.839341 22,768,974 25%
SEI Index Funds - S&P 500 Index Portfolio 52,580 3.907349 205,448 32%
Seligman Growth Fund, Inc - Class A. ..... 10,649 12.549144 133,636 17%
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) ........... 1,859,628 1.844492 3,430,069 2%
Templeton Foreign Fund - Class I ......... 7,960,130 1.875484 14,929,096 6%
========== ========= ------------
Sub-Total Tier II (June 30, 1996) ...... $303,546,801
============
</TABLE>
(Continued)
<PAGE> 28
<TABLE>
<CAPTION>
ANNUAL
TIER II (DECEMBER 31, 1996, SEE NOTE 2) UNITS UNIT VALUE RETURN
--------------------------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
American Century: Twentieth Century
Growth Fund ........................... 337,408 $ 5.844955 $1,972,135 28%
American Century: Twentieth Century
Ultra Fund ............................ 2,468,617 2.525385 6,234,208 22%
The Bond Fund of America(SM), Inc. ....... 110,244 2.333393 257,243 8%
Delaware Group Decatur Fund, Inc.-
Decatur Income Fund Institutional Class 262 2.936202 769 29%
Dreyfus S&P 500 Index Fund ............... 287,240 1.218064 349,877 22%(a)
The Dreyfus Third Century Fund, Inc. ..... 196,674 3.533462 694,940 28%
Evergreen Income and Growth Fund -
Class Y ............................... 62,878 2.423429 152,380 24%
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares ...... 76,514 1.214882 92,955 6%
Fidelity Asset Manager(TM) ............... 45,091 1.517779 68,438 21%
Fidelity Capital & Income Fund ........... 386 4.655810 1,797 14%
Fidelity Contrafund ...................... 2,303,992 2.510398 5,783,937 22%
Fidelity Equity-Income Fund .............. 617,355 6.903229 4,261,743 29%
Fidelity Magellan(R) Fund ................ 1,313,023 2.399765 3,150,947 25%
The Growth Fund of America(R), Inc. ...... 50,498 3.383820 170,876 26%
The Income Fund of America(R), Inc. ...... 129,547 2.615739 338,861 21%
INVESCO Industrial Income Fund, Inc ...... 264,870 2.103069 557,040 25%
Janus Fund ............................... 820,870 1.949561 1,600,336 22%
MAS Funds - Fixed Income Portfolio ....... 10,073 1.335621 13,454 9%
MFS(R) Growth Opportunities Fund -
Class A ............................... 28,071 9.015691 253,079 22%
MFS(R) High Income Fund - Class A ........ 2,719 6.170461 16,777 12%
Massachusetts Investors Growth Stock
Fund - Class A ........................ 3,342 15.973419 53,383 47%
Nationwide(R) Fund ....................... 74,871 20.704221 1,550,146 38%
Nationwide(R) Growth Fund ................ 26,821 3.856169 103,426 25%
Nationwide(R) Money Market Fund .......... 116,705 3.004839 350,680 4%
Putnam Investors Fund - Class A .......... 10,065 18.116482 182,342 33%
Putnam Voyager Fund - Class A ............ 682,444 3.838394 2,619,489 25%
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) ........... 233,087 1.844038 429,821 2%
Templeton Foreign Fund - Class I ......... 1,104,154 1.875022 2,070,313 6%
========== ========== -----------
Sub-Total Tier II (December 31, 1996) .. $33,331,392
===========
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
ANNUAL
TIER III (JUNE 30, 1996, SEE NOTE 2) UNITS UNIT VALUE RETURN
------------------------------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
American Century: Twentieth Century
Growth Fund ........................... 1,540,193 $ 5.853199 $ 9,015,056 28%
American Century: Twentieth Century
Ultra Fund ............................ 11,990,091 2.528946 30,322,293 22%
The Bond Fund of America(SM), Inc. ......... 379,522 2.336766 886,854 8%
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund Institutional Class 6,036 2.940341 17,748 29%
Dreyfus S&P 500 Index Fund ............... 2,297,690 1.218878 2,800,604 22%(a)
The Dreyfus Third Century Fund, Inc. ..... 912,241 3.538445 3,227,915 28%
Evergreen Income and Growth Fund -
Class Y ............................... 79,190 2.426846 192,182 25%
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares ...... 188,738 1.216616 229,622 6%
Fidelity Asset Manager(TM) ................. 299,273 1.519919 454,871 21%
Fidelity Capital & Income Fund ........... 22,232 4.662457 103,656 14%
Fidelity Contrafund ...................... 9,637,261 2.513939 24,227,486 22%
Fidelity Equity-Income Fund .............. 3,057,190 6.912960 21,134,232 29%
Fidelity Magellan(R) Fund ................ 6,180,393 2.403149 14,852,405 26%
The Growth Fund of America(R), Inc. ...... 496,036 3.388591 1,680,863 26%
The Income Fund of America(R), Inc. ...... 490,571 2.619427 1,285,015 21%
INVESCO Industrial Income Fund, Inc ...... 473,406 2.106034 997,009 25%
Janus Fund ............................... 2,423,723 1.952310 4,731,859 22%
MAS Funds - Fixed Income Portfolio ....... 248,580 1.337506 332,477 9%
MFS(R) Growth Opportunities Fund -
Class A ............................... 178,707 9.028407 1,613,440 22%
MFS(R) High Income Fund - Class A ........ 6,564 6.179271 40,561 12%
Massachusetts Investors Growth Stock
Fund - Class A ........................ 12,152 15.995935 194,383 47%
Nationwide(R) Fund ....................... 329,293 20.733404 6,827,365 39%
Nationwide(R) Growth Fund ................ 93,047 3.861607 359,311 25%
Nationwide(R) Money Market Fund .......... 909,979 3.009129 2,738,244 4%
Putnam Investors Fund - Class A .......... 39,280 18.142029 712,619 33%
Putnam Voyager Fund - Class A ............ 3,166,939 3.843809 12,173,109 25%
Seligman Growth Fund, Inc - Class A ...... 2,475 12.563748 31,095 17%
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) ........... 1,036,525 1.846640 1,914,089 2%
Templeton Foreign Fund - Class I ......... 2,623,603 1.877667 4,926,253 6%
========== ========== ------------
Sub-Total Tier III (June 30, 1996) ..... $148,022,616
============
</TABLE>
(Continued)
<PAGE> 30
<TABLE>
<CAPTION>
ANNUAL
TIER III (DECEMBER 31, 1996, SEE NOTE 2) UNITS UNIT VALUE RETURN
---------------------------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
American Century: Twentieth Century
Growth Fund ........................... 105,486 $ 5.850316 $ 617,126 28%
American Century: Twentieth Century
Ultra Fund ............................ 322,005 2.527701 813,932 22%
The Bond Fund of America(SM), Inc. ......... 10,951 2.335593 25,577 8%
Dreyfus S&P 500 Index Fund ............... 36,388 1.218878 44,353 22%(a)
The Dreyfus Third Century Fund, Inc. ..... 20,119 3.536702 71,155 28%
Evergreen Income and Growth Fund -
Class Y ............................... 9,663 2.425651 23,439 25%
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares ...... 1,612 1.216009 1,960 6%
Fidelity Asset Manager(TM) ................. 62,190 1.519171 94,477 21%
Fidelity Capital & Income Fund ........... 39,699 4.660128 185,002 14%
Fidelity Contrafund ...................... 186,236 2.512701 467,955 22%
Fidelity Equity-Income Fund .............. 189,228 6.909557 1,307,482 29%
Fidelity Magellan(R) Fund ................ 244,774 2.401965 587,939 26%
The Growth Fund of America(R), Inc. ...... 6,443 3.386923 21,822 26%
The Income Fund of America(R), Inc. ...... 24,783 2.618138 64,885 21%
INVESCO Industrial Income Fund, Inc ...... 5,633 2.104998 11,857 25%
Janus Fund ............................... 174,631 1.951349 340,766 22%
MAS Funds - Fixed Income Portfolio ....... 3,162 1.336847 4,227 9%
MFS(R) Growth Opportunities Fund -
Class A ............................... 36,452 9.023960 328,941 22%
MFS(R) High Income Fund - Class A ........ 16,908 6.176184 104,427 12%
Massachusetts Investors Growth Stock
Fund - Class A ........................ 150 15.988060 2,398 47%
Nationwide(R) Fund ....................... 16,906 20.723203 350,346 38%
Nationwide(R) Growth Fund ................ 22,824 3.859705 88,094 25%
Nationwide(R) Money Market Fund .......... 68,201 3.007626 205,123 4%
Putnam Investors Fund - Class A .......... 9,478 18.133095 171,865 33%
Putnam Voyager Fund - Class A ............ 95,529 3.841914 367,014 25%
Seligman Growth Fund, Inc - Class A ...... 6,424 12.557561 80,670 17%
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) ........... 15,280 1.845731 28,203 2%
Templeton Foreign Fund - Class I ......... 147,481 1.876743 276,784 6%
======== ========= ----------
Sub-Total Tier III (December 31, 1996) . $6,687,819
==========
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
ANNUAL
TIER IV (JUNE 30, 1996, SEE NOTE 2) UNITS UNIT VALUE RETURN
----------------------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
American Century: Twentieth Century
Growth Fund ........................... 758,360 $ 5.860011 $ 4,443,998 28%
American Century: Twentieth Century
Select Fund ........................... 1,088,027 2.064969 2,246,742 31%
American Century: Twentieth Century
Ultra Fund ............................ 4,964,637 2.531889 12,569,910 22%
The Bond Fund of America(SM), Inc. ......... 55,496 2.339554 129,836 8%
Dreyfus S&P 500 Index Fund ............... 1,092,654 1.219691 1,332,700 22%(a)
The Dreyfus Third Century Fund, Inc. ..... 428,452 3.542562 1,517,818 28%
Evergreen Income and Growth Fund -
Class Y ............................... 21,853 2.429669 53,096 25%
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares ...... 114,003 1.218047 138,861 6%
Fidelity Asset Manager(TM) ................. 538,872 1.521688 819,995 21%
Fidelity Capital & Income Fund ........... 22,307 4.667941 104,128 14%
Fidelity Contrafund ...................... 4,750,222 2.516865 11,955,667 22%
Fidelity Equity-Income Fund .............. 2,389,431 6.921001 16,537,254 29%
Fidelity Magellan(R) Fund ................ 3,706,622 2.405944 8,917,925 26%
The Growth Fund of America(R), Inc. ...... 170,540 3.392534 578,563 26%
The Income Fund of America(R), Inc. ...... 294,406 2.622475 772,072 21%
INVESCO Industrial Income Fund, Inc ...... 473,795 2.108484 998,989 26%
Janus Fund ............................... 2,404,760 1.954582 4,700,301 22%
MAS Funds - Fixed Income Portfolio ....... 91,023 1.339063 121,886 9%
MFS(R) Growth Opportunities Fund -
Class A ............................... 5,735 9.038914 51,838 22%
MFS(R) High Income Fund - Class A ........ 105 6.186539 650 12%
Massachusetts Investors Growth Stock
Fund - Class A ........................ 285 16.014540 4,564 47%
Nationwide(R) Fund ....................... 142,531 20.757521 2,958,590 39%
Nationwide(R) Growth Fund ................ 339,294 3.866100 1,311,745 25%
Nationwide(R) Money Market Fund .......... 985,611 3.012668 2,969,319 4%
Putnam Investors Fund - Class A .......... 4,776 18.163138 86,747 34%
Putnam Voyager Fund - Class A ............ 2,223,516 3.848283 8,556,719 25%
Seligman Growth Fund, Inc - Class A ...... 684 12.578369 8,604 17%
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) ........... 783,958 1.848790 1,449,374 2%
Templeton Foreign Fund - Class I ......... 1,763,615 1.879853 3,315,337 6%
========== ========== -----------
Sub-Total Tier IV (June 30, 1996) ...... $88,653,228
===========
</TABLE>
(Continued)
<PAGE> 32
<TABLE>
<CAPTION>
ANNUAL
TIER V (JUNE 30, 1996, SEE NOTE 2) UNITS UNIT VALUE RETURN
---------------------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM Constellation
Fund - Institutional Class ............ 2,389,104 $ 2.318983 $ 5,540,292 13%
American Century: Twentieth Century
Growth Fund ........................... 6,244,941 5.866443 36,635,590 28%
American Century: Twentieth Century
Ultra Fund ............................ 19,414,868 2.534668 49,210,245 22%
The Bond Fund of America(SM), Inc. ......... 736,645 2.342166 1,725,345 9%
The Dreyfus Third Century Fund, Inc. ..... 2,302,999 3.546449 8,167,469 29%
Evergreen Income and Growth Fund -
Class Y ............................... 433,149 2.432337 1,053,564 25%
Fidelity Capital & Income Fund ........... 70,677 4.673077 330,279 14%
Fidelity Contrafund ...................... 3,990,922 2.519627 10,055,635 22%
Fidelity Equity-Income Fund .............. 7,574,670 6.928596 52,481,828 29%
Fidelity Growth & Income Portfolio ....... 3,435,213 2.591531 8,902,461 29%
Fidelity Magellan(R) Fund ................ 16,840,881 2.408585 40,562,693 26%
MFS(R) Growth Opportunities Fund -
Class A ............................... 1,999,203 9.048839 18,090,466 22%
MFS(R) High Income Fund - Class A ........ 500,487 6.193345 3,099,689 12%
Massachusetts Investors Growth Stock
Fund - Class A ........................ 271,730 16.032114 4,356,406 47%
Nationwide(R) Bond Fund .................. 51,355 2.175755 111,736 9%
Nationwide(R) Fund ....................... 721,864 20.780295 15,000,547 39%
Nationwide(R) Growth Fund ................ 658,443 3.870345 2,548,402 25%
Nationwide(R) Money Market Fund .......... 3,131,282 3.015983 9,443,893 4%
Neuberger & Berman Guardian Fund ......... 614,486 1.601873 984,329 17%
Putnam Investors Fund - Class A .......... 1,771,233 18.183069 32,206,452 34%
Putnam Voyager Fund - Class A ............ 1,528,999 3.852510 5,890,484 25%
SEI Index Funds - S&P 500 Index Portfolio 3,689,771 3.920739 14,466,629 32%
Seligman Growth Fund, Inc - Class A ...... 113,689 12.592179 1,431,592 17%
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) ........... 4,875,751 1.850821 9,024,142 2%
Templeton Foreign Fund - Class I ......... 1,092,861 1.881918 2,056,675 6%
========== ========== -----------
Sub-Total Tier V (June 30, 1996) ....... 333,376,843
==============
Total Contract Owners' Equity ........ $1,974,100,969
==============
</TABLE>
(a) This investment option was not being utilized for the entire period.
<PAGE> 73
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Nationwide Life
Insurance Company and subsidiaries (collectively the Company), a wholly owned
subsidiary of Nationwide Financial Services, Inc., as of December 31, 1997 and
1996, and the related consolidated statements of income, shareholder's equity
and cash flows for each of the years in the three-year period ended December 31,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements 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.
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, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
January 30, 1998
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions of dollars)
<TABLE>
<CAPTION>
December 31,
-----------------------------------
ASSETS 1997 1996
------
----------------- ---------------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $13,204.1 $12,304.6
Equity securities 80.4 59.1
Mortgage loans on real estate, net 5,181.6 5,272.1
Real estate, net 311.4 265.8
Policy loans 415.3 371.8
Other long-term investments 25.2 28.7
Short-term investments 358.4 4.8
---------- ---------
19,576.4 18,306.9
---------- ---------
Cash 175.6 43.8
Accrued investment income 210.5 210.2
Deferred policy acquisition costs 1,665.4 1,366.5
Investment in subsidiaries classified as discontinued operations - 485.7
Other assets 438.4 426.5
Assets held in Separate Accounts 37,724.4 26,926.7
---------- ---------
$59,790.7 $47,766.3
========== =========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Future policy benefits and claims $18,702.8 $17,600.6
Other liabilities 885.6 1,101.1
Liabilities related to Separate Accounts 37,724.4 26,926.7
---------- ---------
57,312.8 45,628.4
---------- ---------
Commitments and contingencies (notes 7 and 13)
Shareholder's equity:
Common stock, $1 par value. Authorized 5.0 million shares;
3.8 million shares issued and outstanding 3.8 3.8
Additional paid-in capital 914.7 527.9
Retained earnings 1,312.3 1,432.6
Unrealized gains on securities available-for-sale, net 247.1 173.6
---------- ---------
2,477.9 2,137.9
---------- ---------
$59,790.7 $47,766.3
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(in millions of dollars)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1997 1996 1995
------------- ------------- --------------
<S> <C> <C> <C>
Revenues:
Investment product and universal life insurance product policy charges $ 545.2 $ 400.9 $ 286.6
Traditional life insurance premiums 205.4 198.6 199.1
Net investment income 1,409.2 1,357.8 1,294.0
Realized gains (losses) on investments 11.1 (0.3) (1.7)
Other 46.5 35.9 20.7
---------- ---------- ----------
2,217.4 1,992.9 1,798.7
---------- ---------- ----------
Benefits and expenses:
Interest credited to policyholder account balances 1,016.6 982.3 950.3
Other benefits and claims 178.2 178.3 165.2
Policyholder dividends on participating policies 40.6 41.0 39.9
Amortization of deferred policy acquisition costs 167.2 133.4 82.7
Other operating expenses 384.9 342.4 273.0
---------- ---------- ----------
1,787.5 1,677.4 1,511.1
---------- ---------- ----------
Income from continuing operations before federal income tax expense 429.9 315.5 287.6
Federal income tax expense 150.2 110.9 99.8
---------- ---------- ----------
Income from continuing operations 279.7 204.6 187.8
Income from discontinued operations (less federal income tax expense
of $4.5 and $7.4 in 1996 and 1995, respectively) - 11.3 24.7
---------- ---------- ----------
Net income $ 279.7 $ 215.9 $ 212.5
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Shareholder's Equity
(in millions of dollars)
<TABLE>
<CAPTION>
Unrealized
gains
(losses)
Additional on securities Total
Common paid-in Retained available- shareholder's
stock capital earnings for-sale, net equity
----------- ------------- -------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
December 31, 1994 $3.8 $ 606.2 $1,378.2 $(119.7) $1,868.5
Capital contribution - 51.0 - (4.1) 46.9
Net income - - 212.5 - 212.5
Dividends to shareholder - - (7.5) - (7.5)
Unrealized gains on securities available-
for-sale, net - - - 508.1 508.1
-------- -------- -------- -------- ---------
December 31, 1995 3.8 657.2 1,583.2 384.3 2628.5
Net income - - 215.9 - 215.9
Dividends to shareholder - (129.3) (366.5) (39.8) (535.6)
Unrealized losses on securities available-
for-sale, net - - - (170.9) (170.9)
-------- -------- -------- -------- ---------
December 31, 1996 3.8 527.9 1,432.6 173.6 2,137.9
Capital contribution - 836.8 - - 836.8
Net income - - 279.7 - 279.7
Dividends to shareholder - (450.0) (400.0) - (850.0)
Unrealized gains on securities available-
for-sale, net - - - 73.5 73.5
-------- -------- -------- -------- ---------
December 31, 1997 $3.8 $ 914.7 $1,312.3 $ 247.1 $2,477.9
======== ======== ======== ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(in millions of dollars)
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------------
1997 1996 1995
------------------------------ ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 279.7 $ 215.9 $ 212.5
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest credited to policyholder account balances 1,016.6 982.3 950.3
Capitalization of deferred policy acquisition costs (487.9) (422.6) (321.3)
Amortization of deferred policy acquisition costs 167.2 133.4 82.7
Amortization and depreciation (2.0) 7.0 10.2
Realized (gains) losses on invested assets, net (11.1) (0.3) 3.3
(Increase) decrease in accrued investment income (0.3) 2.8 (16.9)
(Increase) decrease in other assets (12.7) (38.9) 39.9
(Decrease) increase in policy liabilities (23.1) (151.0) 123.9
Increase in other liabilities 230.6 191.4 27.0
Other, net (10.9) (61.7) 1.8
----------- --------- --------
Net cash provided by operating activities 1,146.1 858.3 1,113.4
----------- --------- --------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 993.4 1,162.8 634.6
Proceeds from sale of securities available-for-sale 574.5 299.6 107.3
Proceeds from maturity of fixed maturity securities held-to-maturity - - 564.4
Proceeds from repayments of mortgage loans on real estate 437.3 309.0 207.8
Proceeds from sale of real estate 34.8 18.5 48.3
Proceeds from repayments of policy loans and sale of other invested assets 22.7 22.8 53.6
Cost of securities available-for-sale acquired (2,828.1) (1,573.6) (1,942.4)
Cost of fixed maturity securities held-to-maturity acquired - - (593.6)
Cost of mortgage loans on real estate acquired (752.2) (972.8) (796.0)
Cost of real estate acquired (24.9) (7.9) (10.9)
Policy loans issued and other invested assets acquired (62.5) (57.7) (75.9)
Short-term investments, net (354.8) 28.0 77.8
----------- --------- --------
Net cash used in investing activities (1,959.8) (771.3) (1,725.0)
----------- --------- --------
Cash flows from financing activities:
Proceeds from capital contributions 836.8 - -
Cash dividends paid - (50.0) (7.5)
Increase in investment product and universal life insurance
product account balances 2,488.5 1,781.8 1,883.7
Decrease in investment product and universal life insurance
product account balances (2,379.8) (1,784.5) (1,258.7)
----------- --------- --------
Net cash provided by (used in) financing activities 945.5 (52.7) 617.5
----------- --------- --------
Net increase in cash 131.8 34.3 5.9
Cash, beginning of year 43.8 9.5 3.6
----------- --------- --------
Cash, end of year $ 175.6 $ 43.8 $ 9.5
=========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1997, 1996 and 1995
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Prior to January 27, 1997, Nationwide Life Insurance Company (NLIC) was
wholly owned by Nationwide Corporation (Nationwide Corp.). On that
date, Nationwide Corp. contributed the outstanding shares of NLIC's
common stock to Nationwide Financial Services, Inc. (NFS), a holding
company formed by Nationwide Corp. in November 1996 for NLIC and the
other companies within the Nationwide Insurance Enterprise that offer
or distribute long-term savings and retirement products. On March 11
1997, NFS completed an initial public offering of its Class A common
stock.
During 1996 and 1997, Nationwide Corp. and NFS completed certain
transactions in anticipation of the initial public offering that
focused the business of NFS on long-term savings and retirement
products. On September 24, 1996, NLIC declared a dividend payable to
Nationwide Corp. on January 1, 1997 consisting of the outstanding
shares of common stock of certain subsidiaries that do not offer or
distribute long-term savings or retirement products. In addition,
during 1996, NLIC entered into two reinsurance agreements whereby all
of NLIC's accident and health and group life insurance business was
ceded to two affiliates effective January 1, 1996. These subsidiaries,
through December 31, 1996, and all accident and health and group life
insurance business have been accounted for as discontinued operations
for all periods presented. See notes 11 and 15. Additionally, NLIC paid
$900.0 million of dividends, $50.0 million to Nationwide Corp. on
December 31, 1996 and $850.0 million to NFS, which then made an
equivalent dividend to Nationwide Corp., on February 24, 1997.
NFS contributed $836.8 million to the capital of NLIC during March
1997.
Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity
Insurance Company (NLAIC), Nationwide Advisory Services, Inc.,
Nationwide Investment Services Corporation and NWE, Inc. NLIC and its
subsidiaries are collectively referred to as "the Company."
The Company is a leading provider of long-term savings and retirement
products. The Company is subject to regulation by the Insurance
Departments of states in which it is licensed, and undergoes periodic
examinations by those departments.
(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, which differ
from statutory accounting practices prescribed or permitted by
regulatory authorities. Annual Statements for NLIC and NLAIC, filed
with the Department of Insurance of the State of Ohio (the Department),
are prepared on the basis of accounting practices prescribed or
permitted by the Department. 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.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
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 consolidated financial statements include the accounts of NLIC
and its wholly owned subsidiaries. Subsidiaries that are
classified and reported as discontinued operations are not
consolidated but rather are reported as "Investment in
subsidiaries classified as discontinued operations" in the
accompanying consolidated balance sheets and "Income from
discontinued operations" in the accompanying consolidated
statements of income. 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, 1997 or 1996.
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 is 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. Impairment
losses are 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.
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.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(c) REVENUES AND BENEFITS
INVESTMENT PRODUCTS AND UNIVERSAL LIFE INSURANCE PRODUCTS:
Investment products consist primarily of individual and group
variable and fixed annuities. Universal life insurance products
include universal life insurance, variable universal life
insurance and other interest-sensitive life insurance policies.
Revenues for investment products and universal life insurance
products consist of net investment income, 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 interest credited to policy account balances and benefits
and claims incurred in the period in excess of related policy
account balances.
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of whole life insurance,
limited-payment life insurance, term life insurance 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.
(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 sales expenses have been deferred. For
investment products and universal life insurance 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). For traditional life 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.
(e) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. For all but $365.5 million of separate
account assets, 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.
(f) FUTURE POLICY BENEFITS
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges.
Future policy benefits for traditional life 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 4.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(g) PARTICIPATING BUSINESS
Participating business represents approximately 50% in 1997 (52%
in 1996 and 54% in 1995) of the Company's life insurance in force,
77% in 1997 (78% in 1996 and 79% in 1995) of the number of life
insurance policies in force, and 27% in 1997 (40% in 1996 and 47%
in 1995) of life insurance statutory premiums. The provision for
policyholder dividends is based on current dividend scales and is
included in "Future policy benefits and claims" in the
accompanying consolidated balance sheets.
(h) FEDERAL INCOME TAX
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Nationwide Corp. The members of the consolidated
tax return group have a tax sharing arrangement which provides, in
effect, for each member to bear essentially the same federal
income tax liability as if separate tax returns were filed.
The Company utilizes the asset and liability method of accounting
for income tax. Under this 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.
(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. All of the Company's accident
and health and group life insurance business is ceded to
affiliates and is accounted for as discontinued operations. See
notes 11 and 15.
(j) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 130 - REPORTING
COMPREHENSIVE INCOME was issued in June 1997 and is effective for
fiscal years beginning after December 15, 1997. The statement
establishes standards for reporting and display of comprehensive
income and its components in a full set of financial statements.
Comprehensive income includes all changes in equity during a
period except those resulting from investments by shareholders and
distributions to shareholders and includes net income.
Comprehensive income would be reported in addition to earnings
amounts currently presented. The Company will adopt the statement
and begin reporting comprehensive income in the first quarter of
1998.
(k) RECLASSIFICATION
Certain items in the 1996 and 1995 consolidated financial
statements have been reclassified to conform to the 1997
presentation.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(3) INVESTMENTS
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1997 and
1996 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
(in millions of dollars) cost gains losses fair value
-------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
December 31, 1997:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 305.1 $ 8.6 $ - $ 313.7
Obligations of states and political subdivisions 1.6 - - 1.6
Debt securities issued by foreign governments 93.3 2.7 (0.2) 95.8
Corporate securities 8,698.7 355.5 (11.5) 9,042.7
Mortgage-backed securities 3,634.2 118.6 (2.5) 3,750.3
------------ --------- --------- -----------
Total fixed maturity securities 12,732.9 485.4 (14.2) 13,204.1
Equity securities 67.8 12.9 (0.3) 80.4
------------ --------- --------- -----------
$ 12,800.7 $ 498.3 $ (14.5) $ 13,284.5
============ ========= ========= ===========
December 31, 1996:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 275.7 $ 4.8 $ (1.3) $ 279.2
Obligations of states and political subdivisions 6.2 0.5 - 6.7
Debt securities issued by foreign governments 100.7 2.1 (0.9) 101.9
Corporate securities 7,999.3 285.9 (33.7) 8,251.5
Mortgage-backed securities 3,589.0 91.4 (15.1) 3,665.3
------------ --------- --------- -----------
Total fixed maturity securities 11,970.9 384.7 (51.0) 12,304.6
Equity securities 43.9 15.6 (0.4) 59.1
------------ --------- --------- -----------
$ 12,014.8 $ 400.3 $ (51.4) $ 12,363.7
============ ========= ========= ===========
</TABLE>
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1997, 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
(in millions of dollars) cost fair value
-------------- ----------
<S> <C> <C>
Fixed maturity securities available for sale:
Due in one year or less $ 419.2 $ 422.1
Due after one year through five years 4,573.5 4,708.4
Due after five years through ten years 2,772.6 2,879.7
Due after ten years 1,333.4 1,443.6
----------- -----------
9,098.7 9,453.8
Mortgage-backed securities 3,634.2 3,750.3
----------- -----------
$ 12,732.9 $ 13,204.1
=========== ===========
</TABLE>
<PAGE> 11
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The components of unrealized gains on securities available-for-sale,
net, were as follows as of December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996
----------- ----------
<S> <C> <C>
Gross unrealized gains $ 483.8 $349.0
Adjustment to deferred policy acquisition costs (103.7) (81.9)
Deferred federal income tax (133.0) (93.5)
-------- -------
$ 247.1 $173.6
======== =======
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturity securities
held-to-maturity follows for the years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
----------- ------------- -----------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $137.5 $(289.2) $876.3
Equity securities (2.7) 8.9 -
Fixed maturity securities held-to-maturity - - 75.6
------- ------- -------
$134.8 $(280.3) $ 951.9
======= ======= =======
</TABLE>
Proceeds from the sale of securities available-for-sale during 1997,
1996 and 1995 were $574.5 million, $299.6 million and $107.3 million,
respectively. During 1997, gross gains of $9.9 million ($6.6 million
and $4.8 million in 1996 and 1995, respectively) and gross losses of
$18.0 million ($6.9 million and $2.1 million in 1996 and 1995,
respectively) were realized on those sales. In addition, gross gains of
$15.1 million and gross losses of $0.7 million were realized in 1997
when the Company paid a dividend to NFS, which then made an equivalent
dividend to Nationwide Corp., consisting of securities having an
aggregate fair value of $850.0 million.
During 1995, the Company transferred fixed maturity securities
classified as held-to-maturity with amortized cost of $25.4 million 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 $3.5
million.
As permitted by the Financial Accounting Standards Board'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 nearly 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 $3.32 billion,
resulting in a gross unrealized gain of $155.9 million.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1997 was $19.9 million ($51.8 million as
of December 31, 1996), which includes $3.9 million ($41.7 million as of
December 31, 1996) of impaired mortgage loans on real estate for which
the related valuation allowance was $0.1 million ($8.5 million as of
December 31, 1996) and $16.0 million ($10.1 million as of December 31,
1996) of impaired mortgage loans on real estate for which there was no
valuation allowance. During 1997, the average recorded investment in
impaired mortgage loans on real estate was approximately $31.8 million
($39.7 million in 1996) and interest income recognized on those loans
was $1.0 million ($2.1 million in 1996), which is equal to interest
income recognized using a cash-basis method of income recognition.
<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996
------------- -------------
<S> <C> <C>
Allowance, beginning of year $51.0 $49.1
(Reductions) additions charged to operations (1.2) 4.5
Direct write-downs charged against the allowance (7.3) (2.6)
------ ------
Allowance, end of year $42.5 $51.0
====== ======
</TABLE>
Real estate is presented at cost less accumulated depreciation of $45.1
million as of December 31, 1997 ($30.3 million as of December 31, 1996)
and valuation allowances of $11.1 million as of December 31, 1997
($15.2 million as of December 31, 1996).
Investments that were non-income producing for the twelve month period
preceding December 31, 1997 amounted to $19.4 million ($26.8 million
for 1996) and consisted of $3.0 million ($0.2 million in 1996) in
securities available-for-sale, $16.4 million ($20.6 million in 1996) in
real estate and none ($5.9 million in 1996) in other long-term
investments.
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $ 911.6 $ 917.1 $ 685.8
Equity securities 0.8 1.3 1.3
Fixed maturity securities held-to-maturity - - 201.8
Mortgage loans on real estate 457.7 432.8 395.5
Real estate 42.9 44.3 38.3
Short-term investments 22.7 4.2 10.6
Other 21.0 4.0 7.2
-------- -------- --------
Total investment income 1,456.7 1,403.7 1,340.5
Less investment expenses 47.5 45.9 46.5
-------- -------- --------
Net investment income $1,409.2 $1,357.8 $1,294.0
======== ======== ========
</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>
(in millions of dollars) 1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $ 3.6 $(3.5) $ 4.2
Equity securities 2.7 3.2 3.4
Mortgage loans on real estate 1.6 (4.1) (7.1)
Real estate and other 3.2 4.1 (2.2)
------ ------ ------
$11.1 $(0.3) $(1.7)
====== ====== ======
</TABLE>
Fixed maturity securities with an amortized cost of $6.2 million as
of December 31, 1997 and 1996 were on deposit with various
regulatory agencies as required by law.
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(4) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for investment contracts
represents approximately 86% and 87% of the total liability for future
policy benefits as of December 31, 1997 and 1996, respectively. The
average interest rate credited on investment product policies was
approximately 6.1%, 6.3% and 6.6% for the years ended December 31,
1997, 1996 and 1995, respectively.
The liability for future policy benefits for traditional life insurance
policies has been established based upon the following assumptions:
INTEREST RATES: Interest rates vary by issue year and were 6.9%
and 6.6% in 1997 and 1996, respectively. Interest rates have
generally ranged from 6.0% to 10.5% for previous issue years.
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.
The Company has entered into a reinsurance contract to cede a portion
of its general account individual annuity business to The Franklin Life
Insurance Company (Franklin). Total recoveries due from Franklin were
$220.2 million and $240.5 million as of December 31, 1997 and 1996,
respectively. The contract is immaterial to the Company's results of
operations. The ceding of risk does not discharge the original insurer
from its primary obligation to the policyholder. Under the terms of the
contract, Franklin has established a trust as collateral for the
recoveries. The trust assets are invested in investment grade
securities, the market value of which must at all times be greater than
or equal to 102% of the reinsured reserves.
The Company has reinsurance agreements with certain affiliates as
described in note 11. All other reinsurance agreements are not material
to either premiums or reinsurance recoverables.
(5) FEDERAL INCOME TAX
The Company's current federal income tax liability was $60.1 million
and $30.2 million as of December 31, 1997 and 1996, respectively.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996
---------- ----------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $200.1 $183.0
Liabilities in Separate Accounts 242.0 188.4
Mortgage loans on real estate and real estate 19.0 23.4
Other assets and other liabilities 59.2 53.7
------- ------
Total gross deferred tax assets 520.3 448.5
Less valuation allowance (7.0) (7.0)
------- ------
Net deferred tax assets 513.3 441.5
------- ------
Deferred tax liabilities:
Deferred policy acquisition costs 480.5 399.3
Fixed maturity securities 193.3 133.2
Deferred tax on realized investment gains 40.1 37.6
Equity securities and other long-term investments 7.5 8.2
Other 22.2 25.4
------- ------
Total gross deferred tax liabilities 743.6 603.7
------- ------
Net deferred tax liability $230.3 $162.2
======= ======
</TABLE>
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. Nearly all future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. There
has been no change in the valuation allowance for the years ended
December 31, 1997, 1996 and 1995.
Federal income tax expense attributable to income from continuing
operations for the years ended December 31 was as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Currently payable $121.7 $116.5 $88.7
Deferred tax expense (benefit) 28.5 (5.6) 11.1
------ ------ ------
$150.2 $110.9 $99.8
====== ====== ======
</TABLE>
Total federal income tax expense for the years ended December 31, 1997,
1996 and 1995 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------------------- ---------------------- ----------------------
(in millions of dollars) Amount % Amount % Amount %
---------------------- ------------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $150.5 35.0 $110.4 35.0 $100.6 35.0
Tax exempt interest and dividends
received deduction - 0.0 (0.2) (0.1) - 0.0
Other, net (0.3) (0.1) 0.7 0.3 (0.8) (0.3)
------ ---- ------ ---- ------ ----
Total (effective rate of each year) $150.2 34.9 $110.9 35.2 $ 99.8 34.7
====== ==== ====== ==== ====== ====
</TABLE>
Total federal income tax paid was $91.8 million, $115.8 million and
$51.8 million during the years ended December 31, 1997, 1996 and 1995,
respectively.
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(6) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures summarize the carrying amount and estimated
fair value of the Company's financial instruments. Certain assets and
liabilities are specifically excluded from the disclosure requirements
of financial instruments. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The fair value of a financial instrument is defined 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 to be based on estimates using
present value or other valuation techniques. Many of the Company's
assets and liabilities subject to the disclosure requirements are not
actively traded, requiring fair values to be estimated by management
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.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from the disclosure requirements, estimated fair value of policy
reserves on life insurance contracts is 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:
FIXED MATURITY AND EQUITY SECURITIES: The 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.
MORTGAGE LOANS ON REAL ESTATE, NET: 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 mortgage loans in default is the estimated fair
value of the underlying collateral.
POLICY LOANS, SHORT-TERM INVESTMENTS AND CASH: The carrying amount
reported in the consolidated balance sheets for these instruments
approximates their fair value.
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, which includes certain surrender
charges.
INVESTMENT CONTRACTS: The 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.
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
POLICY RESERVES ON LIFE INSURANCE CONTRACTS: Included are
disclosures for individual life insurance, universal life
insurance 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.
COMMITMENTS TO EXTEND CREDIT: Commitments to extend credit have
nominal fair value because of the short-term nature of such
commitments. See note 13.
Carrying amount and estimated fair value of financial instruments
subject to disclosure requirements and policy reserves on life
insurance contracts were as follows as of December 31:
<TABLE>
<CAPTION>
1997 1996
------------------------------ -------------------------------
Carrying Estimated Carrying Estimated
(in millions of dollars) amount fair value amount fair value
------------------------------ --------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $13,204.1 $13,204.1 $12,304.6 $12,304.6
Equity securities 80.4 80.4 59.1 59.1
Mortgage loans on real estate, net 5,181.6 5,509.7 5,272.1 5,397.9
Policy loans 415.3 415.3 371.8 371.8
Short-term investments 358.4 358.4 4.8 4.8
Cash 175.6 175.6 43.8 43.8
Assets held in Separate Accounts 37,724.4 37,724.4 26,926.7 26,926.7
Liabilities:
Investment contracts 14,708.2 14,322.1 13,914.4 13,484.5
Policy reserves on life insurance contracts 3,345.4 3,182.4 3,392.8 3,197.5
Liabilities related to Separate Accounts 37,724.4 36,747.0 26,926.7 26,164.2
</TABLE>
(7) RISK DISCLOSURES
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK: The risk that changes in the legal or regulatory
environment in which an insurer operates will result in increased
competition, reduce demand for a company's products, or create
additional expenses not anticipated by the insurer in pricing its
products. 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: 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
reinsurance and credit and collection policies and by providing for any
amounts deemed uncollectible.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
INTEREST RATE RISK: 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.
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 75% 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 $341.4 million
extending into 1998 were outstanding as of December 31, 1997. The
Company also had $63.9 million of commitments to purchase fixed
maturity securities outstanding as of December 31, 1997.
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% (21% in 1996) in any geographic area and no more than 2% (2%
in 1996) with any one borrower as of December 31, 1997. As of December
31, 1997, 46% (44% in 1996) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed retail
properties.
The Company had a significant reinsurance recoverable balance from one
reinsurer as of December 31, 1997 and 1996. See note 4.
(8) 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 year of service. 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> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
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 (the 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, 1997, 1996 and 1995 were $7.5 million, $7.4
million and $10.5 million, respectively.
The Company had no net accrued pension expense as of December 31, 1997
($1.1 million as of December 31, 1996).
The net periodic pension cost for the Retirement Plan as a whole for
the years ended December 31, 1997 and 1996 and for the Nationwide
Insurance Companies and Affiliates Retirement Plan as a whole for the
year ended December 31, 1995 follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 77.3 $ 75.5 $ 64.5
Interest cost on projected benefit obligation 118.6 105.5 95.3
Actual return on plan assets (328.0) (210.6) (249.3)
Net amortization and deferral 196.4 101.8 143.4
-------- -------- --------
$ 64.3 $ 72.2 $ 53.9
======== ======== ========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Weighted average discount rate 6.50% 6.00% 7.50%
Rate of increase in future compensation levels 4.75% 4.25% 6.25%
Expected long-term rate of return on plan assets 7.25% 6.75% 8.75%
</TABLE>
Information regarding the funded status of the Retirement Plan as a
whole as of December 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996
----------- -----------
<S> <C> <C>
Accumulated benefit obligation:
Vested $1,547.5 $1,338.6
Nonvested 13.5 11.1
-------- ---------
$1,561.0 $1,349.7
======== =========
Net accrued pension expense:
Projected benefit obligation for services rendered to date $2,033.8 $1,847.8
Plan assets at fair value 2,212.9 1,947.9
--------- ---------
Plan assets in excess of projected benefit obligation 179.1 100.1
Unrecognized prior service cost 34.7 37.9
Unrecognized net gains (330.7) (202.0)
Unrecognized net asset at transition 33.3 37.2
--------- ---------
$ (83.6) $ (26.8)
========= =========
</TABLE>
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Weighted average discount rate 6.00% 6.50%
Rate of increase in future compensation levels 4.25% 4.75%
</TABLE>
Assets of the Retirement Plan are invested in group annuity contracts
of NLIC and Employers Life Insurance Company of Wausau (ELICW).
(9) 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.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation (APBO), however, 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,
1997 and 1996 was $36.5 million and $34.9 million, respectively, and
the net periodic postretirement benefit cost (NPPBC) for 1997, 1996 and
1995 was $3.0 million, $3.3 million and $3.1 million, respectively.
Information regarding the funded status of the plan as a whole as of
December 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996
----------- -----------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 93.3 $ 93.0
Fully eligible, active plan participants 31.6 23.7
Other active plan participants 113.0 84.0
-------- --------
Accumulated postretirement benefit obligation 237.9 200.7
Plan assets at fair value 69.2 63.0
-------- --------
Plan assets less than accumulated postretirement benefit obligation (168.7) (137.7)
Unrecognized transition obligation of affiliates 1.5 1.7
Unrecognized net losses (gains) 1.6 (23.2)
-------- --------
$(165.6) $(159.2)
======== ========
</TABLE>
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1997, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
----------- ------------ ------------
<S> <C> <C> <C>
Service cost (benefits attributed to employee
service during the year) $ 7.0 $ 6.5 $ 6.2
Interest cost on accumulated postretirement
benefit obligation 14.0 13.7 14.2
Actual return on plan assets (3.6) (4.3) (2.7)
Amortization of unrecognized transition
obligation of affiliates 0.2 0.2 3.0
Net amortization and deferral (0.5) 1.8 (1.6)
------- ------ ------
$17.1 $17.9 $19.1
======= ====== ======
</TABLE>
Actuarial assumptions used for the measurement of the APBO and the
NPPBC for 1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
APBO:
Discount rate 6.70% 7.25% 6.75%
Assumed health care cost trend rate:
Initial rate 12.13% 11.00% 11.00%
Ultimate rate 6.12% 6.00% 6.00%
Uniform declining period 12 Years 12 Years 12 Years
NPPBC:
Discount rate 7.25% 6.65% 8.00%
Long term rate of return on plan
assets, net of tax 5.89% 4.80% 8.00%
Assumed health care cost trend rate:
Initial rate 11.00% 11.00% 10.00%
Ultimate rate 6.00% 6.00% 6.00%
Uniform declining period 12 Years 12 Years 12 Years
</TABLE>
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,
1997 by $0.4 million and have no impact on the NPPBC for the year ended
December 31, 1997.
(10) SHAREHOLDER'S EQUITY, REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS
AND DIVIDEND RESTRICTIONS
Ohio, NLIC's and NLAIC'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 NLAIC each exceed
the minimum risk-based capital requirements.
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The statutory capital and surplus of NLIC as of December 31, 1997, 1996
and 1995 was $1.13 billion, $1.00 billion and $1.36 billion,
respectively. The statutory net income of NLIC for the years ended
December 31, 1997, 1996 and 1995 was $111.7 million, $73.2 million and
$86.5 million, respectively.
As a result of the $850.0 million dividend paid on February 24, 1997,
any dividend paid by NLIC during the twelve-month period immediately
following the $850.0 million dividend would be an extraordinary
dividend under Ohio insurance laws. Accordingly, no such dividend could
be paid without prior regulatory approval. The Company has no reason to
believe that any reasonably foreseeable dividend to be paid by NLIC
would not receive the required approval.
In addition, the payment of dividends by NLIC may also be subject to
restrictions set forth in the insurance laws of New York that limit the
amount of statutory profits on NLIC's participating policies (measured
before dividends to policyholders) that can inure to the benefit of the
Company and its shareholder.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and shareholder dividends
in the future.
(11) TRANSACTIONS WITH AFFILIATES
As part of the restructuring described in note 1, NLIC paid a dividend
valued at $485.7 million to Nationwide Corp. on January 1, 1997
consisting of the outstanding shares of common stock of ELICW, National
Casualty Company (NCC) and West Coast Life Insurance Company (WCLIC).
Also, on February 24, 1997, NLIC paid a dividend to NFS, and NFS paid
an equivalent dividend to Nationwide Corp., consisting of securities
having an aggregate fair value of $850.0 million. The Company
recognized a gain of $14.4 million on the transfer of securities.
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1997, 1996 and 1995, the
Company made lease payments to NMIC and its subsidiaries of $8.4
million, $9.1 million and $9.0 million, respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by this agreement are subject to
allocation among NMIC, the Company and other affiliates. Amounts
allocated to the Company were $85.8 million, $101.6 million and $107.1
million in 1997, 1996 and 1995, respectively. The allocations are based
on techniques and procedures in accordance with insurance regulatory
guidelines. Measures used to allocate expenses among companies include
individual employee estimates of time spent, special cost studies,
salary expense, commissions expense and other methods agreed to by the
participating companies that are within industry guidelines and
practices. The Company believes these allocation methods are
reasonable. In addition, the Company does not believe that expenses
recognized under the inter-company agreements are materially different
than expenses that would have been recognized had the Company operated
on a stand alone basis. Amounts payable to NMIC from the Company under
the cost sharing agreement were $20.5 million and $15.1 million as of
December 31, 1997 and 1996, respectively.
The Company also 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 1997 and
1996 were not material. The Company believes that the terms of the
repurchase agreements are materially consistent with what the Company
could have obtained with unaffiliated parties.
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Intercompany reinsurance agreements exist between NLIC and,
respectively, NMIC and ELICW whereby all of NLIC's accident and health
and group life insurance business is ceded on a modified coinsurance
basis. NLIC entered into the reinsurance agreements during 1996 because
the accident and health and group life insurance business was unrelated
to the Company's long-term savings and retirement products.
Accordingly, the accident and health and group life insurance business
has been accounted for as discontinued operations for all periods
presented. Under modified coinsurance agreements, invested assets are
retained by the ceding company and investment earnings are paid to the
reinsurer. Under the terms of the Company's agreements, the investment
risk associated with changes in interest rates is borne by ELICW or
NMIC, as the case may be. Risk of asset default is retained by the
Company, although a fee is paid by ELICW or NMIC, as the case may be,
to the Company for the Company's retention of such risk. The agreements
will remain in force until all policy obligations are settled. However,
with respect to the agreement between NLIC and NMIC, either party may
terminate the contract on January 1 of any year with prior notice. The
ceding of risk does not discharge the original insurer from its primary
obligation to the policyholder. The Company believes that the terms of
the modified coinsurance agreements are consistent in all material
respects with what the Company could have obtained with unaffiliated
parties. Amounts ceded to NMIC and ELICW for the years ended December
31, 1997 and 1996 were:
<TABLE>
<CAPTION>
1997 1996
---------------------------- ----------------------------
(in millions of dollars) NMIC ELICW NMIC ELICW
-------------- ------------- ----------------------------
<S> <C> <C> <C> <C>
Premiums $ 91.4 $199.8 $ 97.3 $224.2
Net investment income and other revenue $ 10.7 $ 13.4 $ 10.9 $ 14.8
Benefits, claims and other expenses $100.7 $225.9 $100.5 $246.6
</TABLE>
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as a common agent in handling the purchase and sale of
short-term securities for the respective accounts of the participants.
Amounts on deposit with NCMC were $211.0 million and $4.8 million as of
December 31, 1997 and 1996, respectively, and are included in
short-term investments on the accompanying consolidated balance sheets.
On March 1, 1995, Nationwide Corp. contributed all of the outstanding
shares of common stock of Farmland Life Insurance Company (Farmland) to
NLIC. Farmland merged into WCLIC effective June 30, 1995. The
contribution resulted in a direct increase to consolidated
shareholder's equity of $46.9 million. As discussed in note 15, WCLIC
is accounted for as discontinued operations.
Certain annuity products are sold through three affiliated companies,
which are also subsidiaries of NFS. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1997 were $66.1
million, $76.9 million and $57.3 million, respectively.
(12) BANK LINES OF CREDIT
In August 1996, NLIC, along with NMIC, entered into a $600.0 million
revolving credit facility which provides for a $600.0 million loan over
a five year term on a fully revolving basis with a group of national
financial institutions. The credit facility provides for several and
not joint liability with respect to any amount drawn by either NLIC or
NMIC. NLIC and NMIC pay facility and usage fees to the financial
institutions to maintain the revolving credit facility. All previously
existing line of credit agreements were canceled. In September 1997,
the credit agreement was amended to include NFS as a party to and
borrower under the agreement.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(13) 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.
(14) SEGMENT INFORMATION
The Company has three product segments: Variable Annuities, Fixed
Annuities and Life Insurance. The Variable Annuities segment consists
of annuity contracts that provide the customer with the opportunity to
invest in mutual funds managed by the Company and independent
investment managers, with the investment returns accumulating on a
tax-deferred basis. The Fixed Annuities segment consists of annuity
contracts that generate a return for the customer at a specified
interest rate, fixed for a prescribed period, with returns accumulating
on a tax-deferred basis. The Fixed Annuities segment also includes the
fixed option under the Company's variable annuity contracts. The Life
Insurance segment consists of insurance products that provide a death
benefit and may also allow the customer to build cash value on a
tax-deferred basis. In addition, the Company reports corporate expenses
and investments, and the related investment income supporting capital
not specifically allocated to its product segments in a Corporate and
Other segment. In addition, all realized gains and losses and
investment management fees and other revenue earned from mutual funds,
other than the portion allocated to the variable annuities and life
insurance segments, are reported in the Corporate and Other segment.
The following table summarizes revenues and income from continuing
operations before federal income tax expense for the years ended
December 31, 1997, 1996 and 1995 and assets as of December 31, 1997,
1996 and 1995, by segment.
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Revenues:
Variable Annuities $ 404.0 $ 284.6 $ 189.1
Fixed Annuities 1,141.4 1,092.6 1,052.0
Life Insurance 473.1 435.6 409.1
Corporate and Other 198.9 180.1 148.5
----------- ---------- ----------
$ 2,217.4 $ 1,992.9 $ 1,798.7
=========== ========== ==========
Income from continuing operations before federal income tax
expense:
Variable Annuities $ 150.9 $ 90.3 $ 50.8
Fixed Annuities 169.5 135.4 137.0
Life Insurance 70.9 67.2 67.6
Corporate and Other 38.6 22.6 32.2
----------- ---------- ----------
$ 429.9 $ 315.5 $ 287.6
=========== ========== ==========
Assets:
Variable Annuities $ 35,278.7 $ 25,069.7 $ 17,333.0
Fixed Annuities 14,436.3 13,994.7 13,250.4
Life Insurance 3,901.4 3,353.3 3,027.4
Corporate and Other 6,174.3 5,348.6 4,896.8
----------- ---------- ----------
$ 59,790.7 $ 47,766.3 $ 38,507.6
=========== ========== ==========
</TABLE>
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(15) DISCONTINUED OPERATIONS
As discussed in note 1, NFS is a holding company for NLIC and certain
other companies within the Nationwide Insurance Enterprise that offer
or distribute long-term savings and retirement products. Prior to the
contribution by Nationwide Corp. of the outstanding common stock of
NLIC to NFS, NLIC effected certain transactions with respect to certain
subsidiaries and lines of business that were unrelated to long-term
savings and retirement products.
On September 24, 1996, NLIC's Board of Directors declared a dividend
payable to Nationwide Corp. on January 1, 1997 consisting of the
outstanding shares of common stock of three subsidiaries: ELICW, NCC
and WCLIC. ELICW writes group accident and health and group life
insurance business and maintains it offices in Wausau, Wisconsin. NCC
is a property and casualty company with offices in Scottsdale, Arizona
that serves as a fronting company for a property and casualty
subsidiary of NMIC. WCLIC writes high dollar term life insurance
policies and is located in San Francisco, California. ELICW, NCC and
WCLIC have been accounted for as discontinued operations in the
accompanying consolidated financial statements through December 31,
1996. The Company did not recognize any gain or loss on the disposal of
these subsidiaries.
Also, during 1996, NLIC entered into two reinsurance agreements whereby
all of NLIC's accident and health and group life insurance business was
ceded to ELICW and NMIC, effective January 1, 1996. See note 11 for a
complete discussion of the reinsurance agreements. The Company has
discontinued its accident and health and group life insurance business
and in connection therewith has entered into reinsurance agreements to
cede all existing and any future writings to other affiliated
companies. NLIC's accident and health and group life insurance business
is accounted for as discontinued operations for all periods presented.
The Company did not recognize any gain or loss on the disposal of the
accident and health and group life insurance business. The assets,
liabilities, results of operations and activities of discontinued
operations are distinguished physically, operationally and for
financial reporting purposes from the remaining assets, liabilities,
results of operations and activities of the Company.
A summary of the results of operations of discontinued operations for
the years ended December 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
-------------- ------------- ------------
<S> <C> <C> <C>
Revenues $ - $ 668.9 $ 776.9
Net income $ - $ 11.3 $ 24.7
</TABLE>
A summary of the assets and liabilities of discontinued operations as
of December 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1997 1996 1995
-------------- ------------- -------------
<S> <C> <C> <C>
Assets, consisting primarily of investments $247.3 $3,288.5 $3,206.7
Liabilities, consisting primarily of policy benefits and claims $247.3 $2,802.8 $2,700.0
</TABLE>
<PAGE> 74
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
Item 24. FINANCIAL STATEMENTS AND EXHIBITS Page
<S> <C>
(a) Financial Statements:
(1) Financial statements included in Prospectus. (Part A):
Condensed Financial Information. 44
(2) Financial statements included in Part B:
Those financial statements 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. 72
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1997 73
Statements of Operations and Changes in
Contract Owners' Equity for the years ended
December 31, 1997 and 1996. 76
Notes to Financial Statements. 92
Nationwide Life Insurance Company:
Independent Auditors' Report. 104
Consolidated Balance Sheets as of December
31, 1997 and 1996. 105
Consolidated Statements of Income for the
years ended December 31, 1997, 1996 and
1995. 106
Consolidated Statements of Shareholder's 107
Equity for the years ended December 31, 1997, 1996 and
1995.
Consolidated Statements of Cash Flows for 108
the years ended December 31, 1997, 1996
and 1995.
Notes to Consolidated Financial Statements. 109
</TABLE>
128 of 161
<PAGE> 75
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of
Directors authorizing the establishment of
the Registrant - Filed previously with Registration
Statement (File No. 2-51911) and is hereby
incorporated by reference.
(2) Not Applicable
(3) Underwriting or Distribution of contracts between
the Registrant and Principal Underwriter - Attached
hereto.
(4) The form of the variable annuity contract - Filed
previously with Registration Statement (File No.
2-51911) and is hereby incorporated by reference.
(5) Variable Annuity Application - Attached hereto.
(6) Articles of Incorporation of Depositor - Filed
previously with Registration Statement (File No.
2-51911) and is hereby incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with
Registration Statement (File No. 2-51911) and is
hereby incorporated by reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
129 of 161
<PAGE> 76
<TABLE>
<CAPTION>
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olive, NC 28365
A. I. Bell Director
4121 North River Road West
Zanesville, OH 43701
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
300 East Marshall 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
Dimon R. McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Chairman of the Board and Director
115 Sprague Drive
Hebron, OH 43025
Yvonne L. Montgomery Director
2859 Paces Ferry Road
Atlanta, GA 30339
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
</TABLE>
130 of 161
<PAGE> 77
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
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
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, OH 43215
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
Robert J. Woodward Jr. Executive Vice President
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Susan A. Wolken Senior Vice President - Life
One Nationwide Plaza Company Operations
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Individual Annuity Operations
Columbus, OH 43215
Matthew S. Easley Vice President -
One Nationwide Plaza Life Marketing and Administrative Services
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Retail Operations
Columbus, OH 43215
Joseph P. Rath
One Nationwide Plaza Vice President - Office of
Columbus, OH 43215 Product and Market Compliance
</TABLE>
131 of 161
<PAGE> 78
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
132 of 161
<PAGE> 79
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <S> <C>
Affiliate Agency, Inc. Delaware Life Insurance Agency
Affiliate Agency of Ohio, Inc. Ohio 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 Inactive
Colonial County Mutual Insurance Texas Insurance Company
Company
Colonial Insurance Company of Wisconsin Insurance Company
Wisconsin
Columbus Insurance Brokerage and Germany Insurance Broker
Service GMBH
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Agency Insurance California Insurance Broker
Services of California
Companies Agency of Alabama, Inc. Alabama Insurance Broker
Companies Agency of Georgia, Inc. Georgia Insurance Broker
Companies Agency of Idaho, Inc. Idaho Insurance Broker
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 Local Recording Agent (P&C)
Companies Annuity Agency of Texas, Texas Group and Variable Contract Agent
Inc.
Cooperative Service Company Nebraska Insurance Agency
Countrywide Services Corporation Delaware Products Liability, Investigative and Claims
Management Services
</TABLE>
133 of 161
<PAGE> 80
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Employers Insurance of WAUSAU a Wisconsin Mutual Insurance Company
Mutual Company
** Employers Life Insurance Company Wisconsin Life Insurance Company
of Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Mutual Insurance Company
Financial Horizons Distributors Alabama Life Insurance Agency
Agency of Alabama, Inc.
Financial Horizons Distributors Ohio Life Insurance Agency
Agency of Ohio, Inc.
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.
Gates McDonald Health Plus, Inc. Ohio Managed Care Organization
Greater La Crosse Health Plans, Wisconsin Commercial Health and Medicare Supplement
Inc. Insurance
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency
Irvin L. Schwartz and Associates, Ohio Insurance Agency
Inc.
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
</TABLE>
134 of 161
<PAGE> 81
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <S> <C>
** MRM Investments, Inc. Ohio Owns and Operates a Recreational Ski Facility
** National Casualty Company Wisconsin Insurance Company
National Casualty Company of Great Britain Insurance Company
America, Ltd.
** National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
** Nationwide Advisory Services, Inc. Ohio Registered Broker-Dealer, Investment Manager
and Administrator
Nationwide Agency, Inc. Ohio Insurance Agency
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Asset Allocation Trust Massachusetts Investment Company
Nationwide Cash Management Company Ohio Investment Securities Agent
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/Dispatch LLC Ohio Engaged in related Arena development Activity
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
Nationwide Financial Services Delaware Statutory Business Trust
Capital Trust
Nationwide Financial Services, Inc. Delaware 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
</TABLE>
135 of 161
<PAGE> 82
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <S> <C>
Nationwide General Insurance Ohio Insurance Company
Company
Nationwide Global Holdings, Inc. Ohio Holding Company for Enterprise International
Operations
Nationwide Health Plans, Inc. Ohio Health Maintenance Organization
* Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
Nationwide Insurance Enterprise Ohio Performs shares services functions for the
Services, Ltd. Enterprise
Nationwide Insurance Golf Ohio Membership Non-Profit Corporation
Charities, Inc.
Nationwide Mutual Funds Ohio Investment Company
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 Management Systems, Ohio Offers Preferred Provider Organization and
Inc. Other Related Products and Services
Nationwide Mutual Fire Insurance Ohio Mutual Insurance Company
Company
Nationwide Mutual Insurance Company Ohio Mutual Insurance Company
Nationwide Properties, Ltd. Ohio Develops, owns and operates real estate and
real estate investments
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
Nationwide Realty Investors, Ltd. Ohio Develops, owns and operates real estate and
real estate investments
* Nationwide Separate Account Trust Massachusetts Investment Company
Nationwide Trust Company, FSB United States Federal Savings Bank
NEA Valuebuilder Investor Delaware Life Insurance Agency
Services, Inc.
NEA Valuebuilder Investor Services Alabama Life Insurance Agency
of Alabama, Inc.
</TABLE>
136 of 161
<PAGE> 83
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <S> <C>
NEA Valuebuilder Investor Services Arizona Life Insurance Agency
of Arizona, 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, Inc.
NEA Valuebuilder Services Massachusetts Life Insurance Agency
Insurance 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
Physicians Plus Insurance Wisconsin Health Maintenance Organization
Corporation
Prevea Health Insurance Plan, Inc. Wisconsin Health Maintenance Organization
Public Employees Benefit Services Delaware Markets and Administers Deferred Compensation
Corporation Plans for Public Employees
</TABLE>
137 of 161
<PAGE> 84
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <S> <C>
Public Employees Benefit Services Alabama Markets and Administers Deferred Compensation
Corporation of Alabama Plans for Public Employees
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
Scottsdale Surplus Lines Insurance Arizona Excess and Surplus Lines Insurance Company
Company
SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura Insurance Group
Group
TIG Countrywide Insurance Group California Independent Agency Personal Lines Underwriter
Wausau (Bermuda) Ltd. Bermuda Rent-a-captive Reinsurer
Wausau Business Insurance Company Wisconsin Insurance Company
Wausau General Insurance Company Illinois Insurance Company
Wausau Insurance Company (U.K.) United Kingdom Insurance and Reinsurance Company
Limited
Wausau International Underwriters California Special Risks, Excess and Surplus Lines
Insurance Underwriting Manager
** Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company
Company
Wausau Service Corporation Wisconsin Holding Company
Wausau Underwriters Insurance Wisconsin Insurance Company
Company
</TABLE>
138 of 161
<PAGE> 85
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF 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 Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide DCVA II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Separate Account No. 1 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
Sepearate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Ohio Nationwide Life Separate Issuer of Annuity Contracts
Variable Account Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-9 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance
Account-A Separate Account Policies
</TABLE>
139 of 161
<PAGE> 86
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
(SEE ATTACHED
STATE CHART) UNLESS
OF OTHERWISE
COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance
Account-B Separate Account Policies
Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance
Account-C Separate Account Policies
Nationwide VL Separate Account-D Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
Nationwide VLI Separate Account-4 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-5 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
</TABLE>
140 of 161
<PAGE> 87
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
- ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- ------------------------
------------------------------------------
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| (EMPLOYERS) |
| |========================================
| Contribution Note Cost |
| ----------------- ---- |
| Casualty $400,000,000 |
------------------------------------------
|
-----------------------------------------------------------------------
| | |
- --------------------------- --------------------------- ---------------------------- ---------------------------
| KEY HEALTH PLAN, INC. | | WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | |
| | | (U.K.) LIMITED | | CORPORATION (WSC) | | NATIONWIDE LLOYDS |
|Common Stock: 1,000 | |Common Stock: 8,506,800 | |Common Stock: 1,000 Shares| | |
|------------ Shares | |------------ Shares | |------------ | | |
| | | | | |=========| |
| Cost | | Cost | | Cost | || | A TEXAS LLOYDS |
| ---- | | ---- | | ---- | || | |
|Employers- | |Employers- | |Employers- | || | |
| 80% $1,828,478 | |100% $18,683,300| |100% $176,763,000| || | |
- --------------------------- --------------------------- ---------------------------- || ---------------------------
| ||
--------------------------------------------------------------------- ||
| | | ||
- --------------------------- | --------------------------- | ---------------------------- | || ---------------------------
| WAUSAU BUSINESS | | | COMPANIES AGENCY | | | COUNTRYWIDE SERVICES | | || | |
| INSURANCE COMPANY | | | OF KENTUCKY, INC. | | | CORPORATION | | || | |
|Common Stock: 10,900,000 | | |Common Stock: 1,000 | | |Common Stock: 100 Shares | | || | COMPANIES |
|------------ Shares | | |------------ Shares | | |------------ | | || | AGENCY OF |
| |---|---| | |---| | | ||==| TEXAS, INC. |
| Cost | | | Cost | | | Cost | | || | |
| ---- | | | ---- | | | ---- | | || | |
|WSC-100% $33,800,000| | |WSC-100% $1,000 | | |WSC-100% $145,852 | | || | |
- --------------------------- | --------------------------- | ---------------------------- | || ---------------------------
| | | ||
- --------------------------- | --------------------------- | ---------------------------- | || ---------------------------
| WAUSAU UNDERWRITERS | | | COMPANIES AGENCY | | | WAUSAU GENERAL | | || | |
| INSURANCE COMPANY | | | OF MASSACHUSETTS, INC. | | | INSURANCE COMPANY | | || | |
|Common Stock: 8,750 | | |Common Stock: 1,000 | | |Common Stock: 200,000 | | || | COMPANIES ANNUITY |
|------------ Shares | | |------------ Shares | | |------------ Shares | | || | AGENCY OF |
| |---|---| | |---| | | ====| TEXAS, INC. |
| Cost | | | Cost | | | Cost | | | |
| ---- | | | ---- | | | ---- | | | |
|WSC-100% $69,560,006| | |WSC-100% $1,000 | | |WSC-100% $39,000,000 | | | |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| | |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| GREATER LA CROSSE | | | COMPANIES AGENCY | | | WAUSAU INTERNATIONAL | | | AMERICAN MARINE |
| HEALTH PLANS, INC. | | | OF NEW YORK, INC. | | | UNDERWRITERS | | | UNDERWRITERS, INC. |
|Common Stock: 3,000 | | |Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 20 |
|------------ Shares | | |------------ Shares | | |------------ Shares | | |------------ Shares |
| |---|---| | |---| | |------| |
| Cost | | | Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- | | | ---- |
|WSC-33.3% $1,461,761 | | |WSC-100% $1,000 | | |WSC-100% $10,000 | | |WSC-100% $248,222 |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| | |
- --------------------------- | --------------------------- | ---------------------------- | ---------------------------
| COMPANIES AGENCY | | | COMPANIES AGENCY | | | COMPANIES AGENCY | | | COMPANIES |
| OF ALABAMA, INC. | | | OF PENNSYLVANIA, INC. | | | INSURANCE SERVICES | | | AGENCY, INC. |
| | | | | | | OF CALIFORNIA | | | |
|Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 100 |
|------------ Shares | | |------------ Shares | |---|------------ Shares | |------|------------ Shares |
| |---|---| | | | | | |
| Cost | | | Cost | | | Cost | | Cost |
| ---- | | | ---- | | | ---- | | ---- |
|WSC-100% $100 | | |WSC-100% $100 | | |WSC-100% $1,000 | |WSC-100% $10,000 |
- --------------------------- | --------------------------- | ---------------------------- ---------------------------
| | |
- --------------------------- | --------------------------- | ---------------------------- ---------------------------
| COMPANIES AGENCY | | | COMPANIES AGENCY | | | PHYSICIANS PLUS | | PENSION ASSOCIATES |
| OF IDAHO, INC. | | | OF PHOENIX, INC. | | | INSURANCE | | OF WAUSAU, INC. |
| | | | | | | CORPORATION | |Common Stock: 1,000 |
|Common Stock: 1,000 | | |Common Stock: 1,000 | | |Common Stock: 7,150 | |------------ Shares |
|------------ Shares | | |------------ Shares | | |------------ Shares | | |
| |-------| | |---|Preferred Stock: 11,540 | | |
| | | | | | |--------------- Shares | |Companies Cost |
| | | | | | | | |Agency, Inc. ---- |
| Cost | | | Cost | | | Cost | |(Wisconsin)-100% $10,000 |
| ---- | | | ---- | | | ---- | | |
|WSC-100% $1,000 | | |WSC-100% $1,000 | | |WSC-33-1/3% $6,215,459| | |
- --------------------------- | --------------------------- | ---------------------------- ---------------------------
| |
| --------------------------- | ----------------------------
| | WAUSAU | | | PREVEA HEALTH |
| | (BERMUDA) LTD. | | | INSURANCE PLAN, INC. |
| | Common Stock: 120,000 | | |Common Stock: 3,000 Shares|
| | ------------- Shares | | |------------ |
----| | ----| |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| WSC-100% $5,000,000| |WSC-33-1/3% $500,000 |
--------------------------- ----------------------------
</TABLE>
<PAGE> 88
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE(R) (middle)
<S> <C> <C>
-----------------------------------------------------------------------------
| |
| |
| NATIONWIDE MUTUAL |
=======| INSURANCE COMPANY |================================================
| (CASUALTY) |
| |
| |
-----------------------------------------------------------------------------
| || |
| || -------------------------------------------------------------
| || ---------------------------------------------------------------------------------------
| || | |
- -------------------------------- || | -------------------------------- --------------------------------
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|Common Stock: 10,330 Shares | || | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|------------ | || | | | | |
| Cost | || | |Common Stock: 20,000 | |Common Stock: 10,000 |
| ---- | || | |------------ Shares | |------------ Shares |
|Casualty-18.6% $88,320 | || | | Cost | | Cost |
|Fire-18.6% $88,463 | || | | ---- | | ---- |
|Preferred Stock: 1,466 Shares | || |----|Casualty-100% $5,944,422 | ---------|Casualty-100% $87,943,140 |
|--------------- | || | | | | | |
| Cost | || | | | | | |
| ---- | || | | | | | |
|Casualty-6.8% $100,000 | || | | | | | |
|Fire-6.8% $100,000 | || | | | | | |
- -------------------------------- || | -------------------------------- | --------------------------------
|| | |
- -------------------------------- || | -------------------------------- | --------------------------------
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY | | | NECKURA |
| INSURANCE COMPANY | || | | AND CASUALTY | | | INSURANCE COMPANY |
|Guaranty Fund | || | | INSURANCE COMPANY | | | |
|------------ |========= |----|Common Stock: 60,000 | |--------|Common Stock: 6,000 |
|Certificate |-------- | |------------ Shares | | |------------ Shares |
|----------- Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | |Neckura- ---- |
|Casualty $500,000 | | | |Casualty-100% $6,000,000 | | |100% DM 6,000,000 |
- -------------------------------- | | -------------------------------- | --------------------------------
| | | |
- -------------------------------- | | -------------------------------- | --------------------------------
| F & B, INC. | | | | COLONIAL INSURANCE | | | NECKURA LIFE |
| | | | | COMPANY OF WINCONSIN | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | | (COLONIAL) | | | |
|------------ | ------| |----|Common Stock: 1,750 | |--------|Common Stock: 4,000 |
| Cost | | | |------------ Shares | | |------------ Shares |
| ---- | | | | Cost | | | Cost |
|Farmland | | | | ---- | | | ---- |
|Mutual-100% $10 | | | |Casualty-100% $41,750,000 | | |Neckura-100% DM 15,825,681 |
- -------------------------------- | | -------------------------------- | --------------------------------
| | |
- -------------------------------- | | -------------------------------- | --------------------------------
| COOPERATIVE SERVICE | | | | SCOTTSDALE | | | NECKURA GENERAL |
| COMPANY | | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
|Common Stock: 600 Shares | | | | (SIC) | | | |
|------------ | | | |Common Stock: 30,136 | | |Common Stock: 1,500 |
| Cost |-------- |----|------------ Shares | ---- |--------|------------ Shares |
| ---- | | | Cost | | | | Cost |
|Farmland $3,506,173 | | | ---- | | | | ---- |
|Mutual-100% | | |Casualty-100% $150,000,000 | | | |Neckura-100% DM 1,656,925 |
| | | | | | | | |
| | | | | | | | |
- -------------------------------- | -------------------------------- | | --------------------------------
| | |
- -------------------------------- | -------------------------------- | | --------------------------------
| NATIONWIDE AGRIBUSINESS | | | SCOTTSDALE | | | | COLUMBUS INSURANCE |
| INSURANCE COMPANY | | | SURPLUS LINES | | | | BROKERAGE AND SERVICE |
|Common Stock: 1,000,000 | | | INSURANCE COMPANY | | | | GmbH |
|------------ Shares |------------ | | Common Stock: 100,000 | | | |Common Stock: 1 Share |
| | | | ------------ Shares | ---| |--------|------------ |
| Cost | | | | | | | Cost |
|Casualty-99.9% ---- | | | Cost | | | | ---- |
|Other Capital: $26,714,335 | | | ---- | | | |Neckura-100% DM 51,639 |
|------------- | | | SIC-100% $6,000,000 | | | | |
|Casualty-Ptd. $ 713,576 | | | | | | | |
- -------------------------------- | -------------------------------- | | --------------------------------
| | |
- -------------------------------- | -------------------------------- | | --------------------------------
| NATIONAL CASUALTY | | | NATIONAL PREMIUM & | | | | LEBEN DIREKT |
| COMPANY | | | BENEFIT ADMINISTRATION | | | | INSURANCE COMPANY |
| (NC) | | | COMPANY | | | | |
|Common Stock: 100 Shares | | |Common Stock: 10,000 | | | |Common Stock: 4,000 Shares |
|------------ |------------- |------------ Shares |----- ---------|------------ |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|Casualty-100% $67,442,439 | |Scottsdale-100% $10,000 | | |Neckura-100% DM 4,000,000 |
| | | | | | |
| | | | | | |
- -------------------------------- -------------------------------- | --------------------------------
| |
- -------------------------------- -------------------------------- | --------------------------------
| NCC OF AMERICA, LTD. | | SVM SALES | | | AUTO DIREKT |
| (INACTIVE) | | GmbH | | | INSURANCE COMPANY |
| | | | | | |
| | |Common Stock: 50 Shares | | |Common Stock: 1,500 Shares |
| | |------------ |----------------- |------------ |
| | | Cost | | Cost |
|NC-100% | | ---- | | ---- |
| | |Neckura-100% DM 50,000 | |Neckura-100% DM 1,643,149 |
| | | | | |
| | | | | |
- -------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION|
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
-----------------------------------------------------------------------------
| |
| |
| NATIONWIDE MUTUAL |
=======| FIRE INSURANCE COMPANY |
| (FIRE) |
| |
| |
-----------------------------------------------------------------------------
|
- --------------- --------------------------------------------------
| |
- ----------------------------------------------------------------------------------------------------------------- |
| | | |
| -------------------------------- | -------------------------------- ----------------------------------
| | SCOTTSDALE | | | NATIONWIDE | | NATIONWIDE |
| | INDEMNITY COMPANY | | | COMMUNITY URBAN | | CORPORATION |
| | | | | REDEVELOPMENT | | |
| | | | | CORPORATION | |Common Stock: Control: |
| |Common Stock: 50,000 | | |Common Stock: 10 Shares | |------------ ------- |
|-----|------------ Shares | |----|------------ | |$13,642,432 100% |
| | Cost | | | Cost | | Shares Cost |
| | ---- | | | ---- | | ------ ---- |
| |Casualty-100% $8,800,000 | | |Casualty-100% $1,000 | |Casualty 12,992,922 $751,352,485|
| | | | | | |Fire 649,510 24,007,936|
| | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- ----------------------------------
| |
| -------------------------------- | --------------------------------
| | NATIONWIDE | | | INSURANCE |
| | INDEMNITY COMPANY | | | INTERMEDIARIES, INC. |
| | | | | |
|-----|Common Stock: 28,000 | |----|Common Stock: 1,615 |
| |------------ Shares | | |------------ Shares |
| | Cost | | | Cost |
| | ---- | | | ---- |
| |Casualty-100% $294,529,000 | | |Casualty-100% $1,615,000 |
| -------------------------------- | --------------------------------
| |
| -------------------------------- | --------------------------------
| | LONE STAR | | | NATIONWIDE CASH |
| | GENERAL AGENCY, INC. | | | MANAGEMENT COMPANY |
| | | | |Common Stock: 100 Shares |
------|Common Stock: 1,000 | |----|------------ |
| |------------ Shares | | | Cost |
| | Cost | | | ---- |
| | ---- | | |Casualty-90% $9,000 |
| |Casualty-100% $5,000,000 | | |NW Adv. Serv. 1,000 |
| -------------------------------- | --------------------------------
| || |
| -------------------------------- | --------------------------------
| | COLONIAL COUNTY MUTUAL | | | CALIFORNIA CASH |
| | INSURANCE COMPANY | | | MANAGEMENT |
| | | | | (Inactive) |
| |Surplus Debentures | | | |
| |------------------ | |----| |
| | Cost | | | |
| | ---- | | | |
| |Colonial $500,000 | | |Casualty-100% |
| |Lone Star 150,000 | | | |
| -------------------------------- | --------------------------------
| |
| -------------------------------- | --------------------------------
| | TIG COUNTRYWIDE | | | THE BEAK AND |
| | INSURANCE COMPANY | | | WIRE CORPORATION |
| |Common Stock 12,500 | | | |
-----|------------ Shares | | |Common Stock: 750 Shares |
| | | -----|------------ |
| | Cost | | | Cost |
| | ---- | | | ---- |
| |Casualty-100% $215,273,000 | | |Casualty-100% $1,419,000 |
| | | | | |
| -------------------------------- | | |
| | --------------------------------
| |
| -------------------------------- | --------------------------------
| | NATIONWIDE INSURANCE | | | NATIONWIDE/DISPATCH LLC |
| | ENTERPRISE SERVICES, LTD. | | | |
| | | | | |
| |Single Member Limited | | | |
- - - |Liability Company | - - -| |
| | | |
| | | |
|Casualty-100% | |Casualty-90% |
| | | |
-------------------------------- | |
--------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Lines
Limited Liability Company -- Dotted Line
December 31, 1997
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
(Left Side)
------------------------------------------------
| EMPLOYERS INSURANCE |
| OF WAUSAU |==========================================
| A MUTUAL COMPANY |
------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
| | |
--------------------------- --------------------------- ---------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | INSTITUTION DISTRIBUTORS |
| | | CAPITAL TRUST | | AGENCY, INC. (NFIDAI) |
| Common Stock: 3,814,779 | | Preferred Stock: | | Common Stock: 1,000 |
| ------------ Shares | | --------------- | | ------------ Shares |
| | | | | |
| NFS--100% | | NFS--100% | | NFS--100% |
--------------------------- --------------------------- ---------------------------
| ||
--------------------------- | --------------------------- --------------------------- || --------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | FINANCIAL HORIZONS | || | |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES, INC. | | DISTRIBUTORS AGENCY | || | |
| | | | (NW ADV. SERV.) | | OF ALABAMA, INC. | || | |
| Common Stock: 66,000 | | | Common Stock: 7,676 | | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--|--| ------------ Shares |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OHIO, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $58,070,003 | | | NW Life -100% $5,996,261 | || | NFIDAI -100% $100 | || | |
--------------------------- | --------------------------- || --------------------------- || --------------------------
| || ||
--------------------------- | --------------------------- || --------------------------- || --------------------------
| NWE, INC. | | | NATIONWIDE | || | LANDMARK FINANCIAL | || | |
| | | | INVESTORS SERVICES, INC. | || | SERVICES OF | || | |
| | | | | || | NEW YORK, INC. | || | |
| Common Stock: 100 | | | Common Stock: 5 Shares | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | ------------ |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OKLAHOMA, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $35,971,375 | | | NW Adv. Serv. -100% $5,000| || | NFIDAI -100% $10,100 | || | |
--------------------------- | --------------------------- || --------------------------- || --------------------------
| || ||
--------------------------- | --------------------------- || --------------------------- || --------------------------
| NATIONWIDE INVESTMENT | | | FINANCIAL HORIZONS | || | FINANCIAL HORIZONS | || | |
| SERVICES CORPORATION | | | INVESTMENT TRUST | || | SECURITIES CORP. | || | |
| | | | | || | | || | |
| Common Stock: 5,000 | | | | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF TEXAS, INC. |
| Cost | | | | || | Cost | || | |
| ---- | | | | || | ---- | || | |
| NW Life -100% $529,728 | | | COMMON LAW TRUST | || | NFIDAI -100% $153,000 | || | |
--------------------------- | --------------------------- || --------------------------- || --------------------------
| || ||
--------------------------- | --------------------------- || --------------------------- || --------------------------
| NATIONWIDE REALTY | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | || | |
| PROPERTIES, LTD. | | | INVESTING | || | | || | |
| | | | FOUNDATION | || | | || | |
| Units: | | | | || | Common Stock: 100 | || | AFFILIATE |
| ------ - -| | |==|| | ------------ Shares |--||==| AGENCY OF |
| | | | | || | | | OHIO, INC. |
| | | | | || | Cost | | |
| NW Life -90% | | | | || | ---- | | |
| NW Mutual-10% | | | COMMON LAW TRUST | || | NFIDAI -100% $100 | | |
--------------------------- | --------------------------- || --------------------------- --------------------------
| ||
--------------------------- | --------------------------- ||
| NATIONWIDE | | | NATIONWIDE | ||
| PROPERTIES, LTD. | | | INVESTING | ||
| | | | FOUNDATION II | ||
| Units: - -| | | ||
| ------ | | |==||
| | | | ||
| | | | ||
| NW Life -97.6% | | | ||
| NW Mutual -2.4% | | COMMON LAW TRUST | ||
--------------------------- --------------------------- ||
||
--------------------------- ||
| NATIONWIDE | ||
| SEPARATE ACCOUNT | ||
| TRUST | ||
| | ||
| |__||
| |
| |
| |
| COMMON LAW TRUST |
---------------------------
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
(Center)
NATIONWIDE INSURANCE ENTERPRISE (R)
<S> <C> <C> <C> <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 |
---------------------------------------
|-----------------------------------------------------------------
--------------------------- |
| NATIONWIDE FINANCIAL | |
| SERVICES, INC. (NFS) | |
| | |
| Common Stock: Control | |
| ------------ ------- | |
| | |
| | |
| Class A Public--100% | |
| Class B NW Corp--100% | |
--------------------------- |
| |
---------------------------------------------------------------------- |
| | | |
--------------------------- --------------------------- --------------------------- | -------------------------
| IRVIN L. SCHWARTZ | | PUBLIC EMPLOYEES BENEFIT | | NEA VALUEBUILDER | | | NATIONWIDE GLOBAL |
| & ASSOCIATES | | SERVICES CORPORATION | | INVESTOR SERVICES, INC. | | | HOLDINGS, INC. |
| | | (PEBSCO) | | (NEA) | | | |
| Common Stock: Control | | Common Stock: 236,494 |==|| | Common Stock: 500 |= || | | Common Stock: 1 Share |
| ------------ ------- | | ------------ Shares | || | ------------ Shares | || |--| ------------ |
| | | | || | | || | | |
| | | | || | | || | | Cost |
| Class A Other -100% | | | || | | || | | ---- |
| Class B NFS -100% | | NFS -100% | || | NFS -100% | || | | NW Corp-100% $7,000,00 |
- ---------------------------- ---------------------------- || ---------------------------- || | --------------------------
--------------------------- || --------------------------- || |
| PEBSCO OF | || | NEA VALUEBUILDER | || | --------------------------
| ALABAMA | || | INVESTOR SERVICES | || | | MRM INVESTMENT, INC. |
| | || | OF ALABAMA, INC. | || | | |
| Common Stock: 100,000 | || | Common Stock: 500 | || | | |
| ------------ Shares |--|| | ------------ Shares |--|| __ | Common Stock: 1 Share |
| | || | | || | ----------- |
| Cost | || | Cost | || | |
| ---- | || | ---- | || | Cost |
| PEBSCO -100% $1,000 | || | NEA -100% $5,000 | || | ---- |
--------------------------- || --------------------------- || | NW Corp.-100% $7,000,000|
|| || --------------------------
--------------------------- || --------------------------- ||
| PEBSCO OF | || | NEA VALUEBUILDER | ||
| ARKANSAS | || | INVESTOR SERVICES | ||
| | || | OF ARIZONA, INC. | ||
| Common Stock: 50,000 | || | Common Stock: 100 | ||
| ------------ Shares |--|| | ------------ Shares |--||
| | || | | ||
| Cost | || | Cost | ||
| ---- | || | ---- | ||
| PEBSCO -100% $500 | || | NEA -100% $1,000 | ||
--------------------------- || --------------------------- ||
|| ||
--------------------------- || --------------------------- ||
| PEBSCO OF MASSACHUSETTS | || | NEA VALUEBUILDER | ||
| INSURANCE AGENCY, INC. | || | INVESTOR SERVICES | ||
| | || | OF MONTANA, INC. | ||
| Common Stock: 1,000 | || | Common Stock: 500 | ||
| ------------ Shares |--|| | ------------ Shares |--||
| | || | | ||
| Cost | || | Cost | ||
| ---- | || | ---- | ||
| PEBSCO -100% $1,000 | || | NEA -100% $500 | ||
--------------------------- || --------------------------- ||
|| ||
--------------------------- || --------------------------- || -------------------------
| PEBSCO OF | || | NEA VALUEBUILDER | || | NEA VALUEBUILDER |
| MONTANA | || | INVESTOR SERVICES | || | INVESTOR SERVICES |
| | || | OF NEVADA, INC. | || | OF OHIO, INC. |
| Common Stock: 500 | || | Common Stock: 500 | || | |
| ------------ Shares |--|| | ------------ Shares |--||====| |
| | || | | || | |
| Cost | || | Cost | || | |
| ---- | || | ---- | || | |
| PEBSCO -100% $500 | || | NEA -100% $500 | || | |
--------------------------- || --------------------------- || --------------------------
|| ||
--------------------------- || --------------------------- || -------------------------
| PEBSCO OF | || | NEA VALUEBUILDER | || | NEA VALUEBUILDER |
| NEW MEXICO | || | INVESTOR SERVICES | || | INVESTOR SERVICES |
| | || | OF WYOMING, INC. | || | OF OKLAHOMA, INC. |
| Common Stock: 1,000 | || | Common Stock: 500 | || | |
| ------------ Shares |--|| | ------------ Shares |--||====| |
| | || | | || | |
| Cost | || | Cost | || | |
| ---- | || | ---- | || | |
| PEBSCO -100% $1,000 | || | NEA -100% $500 | || | |
--------------------------- || --------------------------- || --------------------------
|| ||
--------------------------- || --------------------------- || --------------------------
| | || | NEA VALUEBUILDER | || | NEA VALUEBUILDER |
| | || | SERVICES INSURANCE | || | INVESTOR SERVICES |
| PEBSCO OF | || | AGENCY, INC. | || | OF TEXAS, INC. |
| TEXAS, INC. | || | Common Stock: 100 | || | |
| |==|| | ------------ Shares |--||=== | |
| | | | | |
| | | Cost | | |
| | | ---- | | |
| | | NEA -100% $1,000 | | |
--------------------------- --------------------------- --------------------------
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------
| NATIONWIDE MUTUAL |
========================================| FIRE INSURANCE COMPANY |
| (FIRE) |
------------------------------------------------
|
- -----------------------------------------------------------------|
- ----------------------------------------------------------------------------------------------
| | |
--------------------------- ------------------------------ ------------------------------
| GATES, MCDONALD | | EMPLOYERS LIFE INSURANCE | | NATIONWIDE |
| & COMPANY (GATES) | | OF WAUSAU (ELIOW) | | HEALTH PLANS, INC. (NHP) |
| | | | | |
| Common Stock: 254 | | Common Stock: 250,000 | | Common Stock: 100 |
|-- | ------------ Shares | |--| ------------ Shares | |--| ------------ Shares |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| | NW CORP. -100% $25,683,532 | | | NW CORP. -100% $126,509,480 | | | NW CORP. -100% $14,603,732 |
| ----------------------------- | ------------------------------ | ------------------------------
| | |
| --------------------------- | ------------------------------ | ------------------------------
| | GATES, MCDONALD & COMPANY | | | WAUSAU PREFERRED | | | NATIONWIDE MANAGEMENT |
| | OF NEW YORK, INC. | | | HEALTH INSURANCE CO. | | | SYSTEMS, INC. |
| | | | | | | | |
| | Common Stock: 3 | | | Common Stock: 200 | | | Common Stock: 100 |
|-- | ------------ Shares | |--| ------------ Shares | |--| ------------ Shares |
| | | | | | | |
| | Cost | | Cost | | | NHP Cost |
| | ---- | | ---- | | | ---- |
| | GATES -100% $106,947 | | ELIOW -100% $57,413,193 | | | Inc. -100% $25,149 |
| ----------------------------- ------------------------------ | ------------------------------
| |
| ----------------------------- | ------------------------------
| | GATES, MCDONALD & COMPANY | | | NATIONWIDE |
| | OF NEVADA | | | AGENCY, INC. |
| | | | | |
| | Common Stock: 40 | | | Common Stock: 100 |
|-- | ------------ Shares | |--| ------------ Shares |
| | | | |
| | Cost | | Cost |
| | ---- | | NHP ---- |
| | Gates -100% $93,750 | | Inc. -99% $116,077 |
| ----------------------------- ------------------------------
|
| -----------------------------
| | GATESMCDONALD |
| | HEALTH PLUS, INC. |
| | |
| | Common Stock: 200 |
|-- | ------------ Shares |
| |
| Cost |
| ---- |
| Gates -100% $2,000,000 |
-----------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1997
Page 2
</TABLE>
<PAGE> 93
ITEM 27. NUMBER OF CONTRACT OWNERS
The number of Contract Owners of Contracts as of December 31, 1998 was
3,857.
ITEM 28. INDEMNIFICATION
Provision is made in Nationwide's Amended and Restated Code of
Regulations and expressly authorized by the General Corporation Law of
the State of Ohio, for indemnification by the Nationwide 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
Nationwide, 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 Nationwide pursuant to the foregoing provisions, Nationwide
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 Investment Services Corporation ("NISC") serves as
principal underwriter and general distributor for the
Nationwide DC Variable Account and the NACo Variable Account.
143 of 161
<PAGE> 94
(b) NATIONWIDE INVESTMENT SERVICES CORPORATION
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
- ------------------------------------------------------ -----------------------------------------------------
NAME AND BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER
- ------------------------------------------------------ -----------------------------------------------------
<S> <C>
Joseph J. Gasper Chairman of the Board
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Richard A. Karas Director and Vice Chairman
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Dimon R. McFerson Director, Chairman and Chief Executive Officer -
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Timothy E. Murphy President
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Robert A. Oakley Executive Vice President -
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President -
One Nationwide Plaza Chief Investment Officer
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Joseph P. Rath Director and Vice President - Compliance
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Barbara J. Shane Vice President - Compliance Officer
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Mark R. Thresher Vice President and Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Gary E. Berndt Assistant Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Terry C. Smetzer Assistant Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Phillip C. Gath Director
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
Susan A. Wolken Director
One Nationwide Plaza
Columbus, Ohio 43215
- ------------------------------------------------------ -----------------------------------------------------
</TABLE>
144 of 161
<PAGE> 95
<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
Investment
Services
Corporation
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
John Davis
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 Internal
Revenue 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
Internal Revenue Code Section 403(b)(11).
The Depositor hereby represents:
(a) 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
Nationwide.
145 of 161
<PAGE> 96
Offered by
Nationwide Life Insurance Company
NATIONWIDE LIFE INSURANCE COMPANY
Group Flexible Fund Retirement Contracts
PROSPECTUS
May 1, 1999
146 of 161
<PAGE> 97
NATIONWIDE LIFE INSURANCE COMPANY
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED THROUGH THE NATIONWIDE DC VARIABLE ACCOUNT
(Supplement Dated May 1, 1999 to Prospectus Dated May 1, 1999)
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 INTERNAL REVENUE 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>
<CAPTION>
PARTICIPANT TRANSACTION EXPENSES
<S> <C>
Maximum Contingent Deferred Sales Charge......................................................... 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 Fees Other Total Underlying
Expenses Mutual Fund Expenses
- -------------------------------------------------------------- ---------------- -------------- ------------------------
<S> <C> <C> <C>
American Century Variable Portfolios, Inc. - American 1.00% 0.00% 1.00%
Century VP Balanced
- -------------------------------------------------------------- ---------------- -------------- ------------------------
American Century Variable Portfolios, Inc. - American 1.00% 0.00% 1.00%
Century VP Capital Appreciation
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Dreyfus Socially Responsible Growth Fund, Inc. 0.75% 0.01% 0.76%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Dreyfus Stock Index Fund 0.25% 0.03% 0.28%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Fidelity VIP Equity Income Portfolio(4) 0.50% 0.07% 0.57%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Fidelity VIP Growth Portfolio(4) 0.60% 0.07% 0.67%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Fidelity VIP High Income Portfolio(3) 0.59% 0.12% 0.71%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Fidelity VIP Overseas Portfolio(4) 0.75% 0.15% 0.90%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Fidelity VIP II Asset Manager Portfolio(4) 0.55% 0.09% 0.64%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Neuberger Berman AMT Growth Portfolio 0.83% 0.07% 0.90%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Neuberger Berman AMT Limited Maturity Bond Portfolio 0.65% 0.12% 0.77%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
Neuberger Berman AMT Partners Portfolio 0.80% 0.06% 0.86%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
NSAT Capital Appreciation Fund 0.60% 0.09% 0.69%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
NSAT Government Bond Fund 0.50% 0.08% 0.58%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
NSAT Money Market Fund 0.40% 0.08% 0.48%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
NSAT Total Return Fund 0.60% 0.07% 0.67%
- -------------------------------------------------------------- ---------------- -------------- ------------------------
</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. None of the above underlying mutual fund
options are subject to 12b-1 fees.
3 The Fidelity VIP High Income Portfolio may invest in lower quality debt
securities commonly referred to as junk bonds.
4 The investment advisers for the indicated underlying mutual funds have
voluntarily agreed to reimburse a portion of the management fees and/or other
expenses resulting in a reduction of total expenses. Absent any partial
reimbursement, "Management Fees" and "Other Expenses" would have been 0.50%
and 0.08% for Fidelity VIP Equity Income Portfolio, 0.60% and 0.09% for
Fidelity VIP Growth Portfolio, 0.75% and 0.17% for Fidelity VIP Overseas
Portfolio, 0.55% and 0.10% for Fidelity VIP II Asset Manager Portfolio.
147 of 161
<PAGE> 98
EXAMPLE
The following chart shows the amount of expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual return, and
no change in expenses. These dollar figures are illustrative only and should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your Contract If you do not surrender your If you annuitize your contract
at the end of the applicable Contract at the end of the at the end of the applicable
time period applicable time period time period
- --------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century Variable 71 114 159 285 21 64 109 235 21 64 109 235
Portfolios, Inc. - American
Century VP Balanced
- --------------------------------------------------------------------------------------------------------------------------
American Century Variable 71 114 159 285 21 64 109 235 21 64 109 235
Portfolios, Inc. - American
Century VP Capital
Appreciation
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Socially responsible 68 106 146 259 18 56 96 209 18 56 96 209
Growth Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Dreyfux Stock Index Fund 63 91 120 204 13 41 70 154 13 41 70 154
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income 66 100 136 238 16 50 86 188 16 50 86 188
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 67 103 141 249 17 53 91 199 17 53 91 199
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income 68 104 144 253 18 54 94 203 18 54 91 203
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas 70 110 154 274 20 64 104 224 20 60 104 224
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset 67 102 140 245 17 52 90 195 17 52 90 195
Manager Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth 70 110 154 274 20 60 104 224 20 60 104 224
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Limited 68 106 147 260 18 56 97 210 18 56 97 210
Maturity Bond Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT 69 109 152 270 19 59 102 220 19 59 102 220
Partners Portfolio
- --------------------------------------------------------------------------------------------------------------------------
NSAT - Capital Appreciation 67 104 142 251 17 54 92 201 17 54 92 201
Fund
- --------------------------------------------------------------------------------------------------------------------------
NSAT Government Bond 66 100 137 239 16 50 87 189 16 50 87 189
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
NSAT- Money Market Fund 65 97 131 227 15 47 81 177 15 47 81 177
- --------------------------------------------------------------------------------------------------------------------------
NSAT - Total Return Fund 67 103 141 249 17 53 91 199 17 53 91 199
- --------------------------------------------------------------------------------------------------------------------------
</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).
148 of 161
<PAGE> 99
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>
American Century 1.316124 1.509759 4,531 1997
----------------------- ---------------------- ------------------------- ---------------------
Variable Portfolios, 1.184177 1.316124 3,120 1996
----------------------- ---------------------- ------------------------- ---------------------
Inc. - American 0.986992 1.184177 1,504 1995
----------------------- ---------------------- ------------------------- ---------------------
Century VP 1.000000 0.986992 0 1994
----------------------- ---------------------- ------------------------- ---------------------
Balanced
========================= ======================= ====================== ========================= =====================
American Century 1.638699 1.570313 50,033 1997
----------------------- ---------------------- ------------------------- ---------------------
Variable Portfolios 1.729155 1.638699 51,629 1996
----------------------- ---------------------- ------------------------- ---------------------
Inc. - American 1.331537 1.729155 50,891 1995
----------------------- ---------------------- ------------------------- ---------------------
Century VP 1.360119 1.331537 38,898 1994
----------------------- ---------------------- ------------------------- ---------------------
Capital 1.244720 1.360119 33,128 1993
----------------------- ---------------------- ------------------------- ---------------------
Appreciation 1.273681 1.244720 21,051 1992
----------------------- ---------------------- ------------------------- ---------------------
0.906306 1.273681 10,348 1991
----------------------- ---------------------- ------------------------- ---------------------
1.000000 0.906306 4,711 1990
----------------------- ---------------------- ------------------------- ---------------------
========================= ======================= ====================== ========================= =====================
Dreyfus Stock 1.604580 2.113257 21,714 1997
----------------------- ---------------------- ------------------------- ---------------------
Index Fund 1.322035 1.604580 16,988 1996
----------------------- ---------------------- ------------------------- ---------------------
0.975745 1.322035 5,213 1995
----------------------- ---------------------- ------------------------- ---------------------
1.000000 0.975745 782 1994
----------------------- ---------------------- ------------------------- ---------------------
========================= ======================= ====================== ========================= =====================
Dreyfus Socially 1.564429 1.990292 4,478 1997
----------------------- ---------------------- ------------------------- ---------------------
Responsible 1.302837 1.564429 0 1996
----------------------- ---------------------- ------------------------- ---------------------
Growth Fund 0.977428 1.302837 0 1995
----------------------- ---------------------- ------------------------- ---------------------
1.000000 0.977428 0 1994
----------------------- ---------------------- ------------------------- ---------------------
========================= ======================= ====================== ========================= =====================
Fidelity VIP 1.552351 1.898743 70,171 1997
----------------------- ---------------------- ------------------------- ---------------------
Growth Portfolio 1.366323 1.552351 52,165 1996
----------------------- ---------------------- ------------------------- ---------------------
1.018963 1.366323 29,541 1995
----------------------- ---------------------- ------------------------- ---------------------
1.000000 1.018963 7,026 1994
----------------------- ---------------------- ------------------------- ---------------------
========================= ======================= ====================== ========================= =====================
Fidelity VIP 1.475687 1.872610 90,224 1997
----------------------- ---------------------- ------------------------- ---------------------
Equity Income 1.303642 1.475687 62,324 1996
----------------------- ---------------------- ------------------------- ---------------------
Portfolio 0.974175 1.303642 37,796 1995
----------------------- ---------------------- ------------------------- ---------------------
1.000000 0.974175 5,699 1994
----------------------- ---------------------- ------------------------- ---------------------
========================= ======================= ====================== ========================= =====================
Fidelity VIP 1.338939 1.560592 29,112 1997
----------------------- ---------------------- ------------------------- ---------------------
High Income 1.185437 1.338939 17,934 1996
----------------------- ---------------------- ------------------------- ---------------------
Portfolio 0.992271 1.185437 10,485 1995
----------------------- ---------------------- ------------------------- ---------------------
1.000000 0.992271 1,484 1994
----------------------- ---------------------- ------------------------- ---------------------
========================= ======================= ====================== ========================= =====================
</TABLE>
149 of 161
<PAGE> 100
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUEAT UNIT VALUE ACCUM. UNITS
BEGINNING AT END OUTSTANDING AT THE END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
======================== ====================== ======================= ======================== ======================
<S> <C> <C> <C> <C>
Fidelity VIP 1.154842 1.276107 125,065 1997
---------------------- ----------------------- ------------------------ ----------------------
Overseas Portfolio 1.029809 1.154842 88,581 1996
---------------------- ----------------------- ------------------------ ----------------------
0.947883 1.029809 55,723 1995
---------------------- ----------------------- ------------------------ ----------------------
1.000000 0.947883 10,984 1994
---------------------- ----------------------- ------------------------ ----------------------
======================== ====================== ======================= ======================== ======================
Fidelity VIP II 1.257222 1.502515 25,131 1997
---------------------- ----------------------- ------------------------ ----------------------
Asset Manager 1.107535 1.257222 18,427 1996
---------------------- ----------------------- ------------------------ ----------------------
Portfolio 0.955979 1.107535 10,482 1995
---------------------- ----------------------- ------------------------ ----------------------
1.000000 0.955979 2,037 1994
---------------------- ----------------------- ------------------------ ----------------------
======================== ====================== ======================= ======================== ======================
Neuberger 1.795607 2.294545 12,306 1997
---------------------- ----------------------- ------------------------ ----------------------
Berman AMT 1.661013 1.795607 9,399 1996
---------------------- ----------------------- ------------------------ ----------------------
Growth Portfolio 1.272940 1.661013 24,304 1995
---------------------- ----------------------- ------------------------ ----------------------
1.352530 1.272940 17,238 1994
---------------------- ----------------------- ------------------------ ----------------------
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
---------------------- ----------------------- ------------------------ ----------------------
======================== ====================== ======================= ======================== ======================
Neuberger 1.130160 1.194950 7,063 1997
---------------------- ----------------------- ------------------------ ----------------------
Berman AMT 1.093904 1.130160 5,977 1996
---------------------- ----------------------- ------------------------ ----------------------
Limited Maturity 0.995462 1.093904 2,860 1995
---------------------- ----------------------- ------------------------ ----------------------
Bond Portfolio 1.000000 0.995462 597 1994
---------------------- ----------------------- ------------------------ ----------------------
======================== ====================== ======================= ======================== ======================
Neuberger 1.676351 2.179432 13,504 1997
---------------------- ----------------------- ------------------------ ----------------------
Berman AMT 1.306186 1.676351 8,811 1996
---------------------- ----------------------- ------------------------ ----------------------
Partners Portfolio 0.966223 1.306186 5,923 1995
---------------------- ----------------------- ------------------------ ----------------------
1.000000 0.966223 3,237 1994
---------------------- ----------------------- ------------------------ ----------------------
======================== ====================== ======================= ======================== ======================
NSAT Government 1.613565 1.752816 8,433 1997
---------------------- ----------------------- ------------------------ ----------------------
Bond Fund 1.574158 1.613565 7,820 1996
---------------------- ----------------------- ------------------------ ----------------------
1.338281 1.574158 5,714 1995
---------------------- ----------------------- ------------------------ ----------------------
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 1.509879 2.011485 0 1997
---------------------- ----------------------- ------------------------ ----------------------
Appreciation Fund 1.208468 1.509879 0 1996
---------------------- ----------------------- ------------------------ ----------------------
1.000000 1.208468 0 1995
---------------------- ----------------------- ------------------------ ----------------------
======================== ====================== ======================= ======================== ======================
</TABLE>
150 of 161
<PAGE> 101
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUM. UNITS
AT BEGINNING AT END OUTSTANDING AT THE END
FUND OF PERIOD OF PERIOD OF THE PERIOD YEAR
======================== ====================== ======================= ======================== ======================
<S> <C> <C> <C> <C>
NSAT Money 1.259556 1.313205 6,361 1997
---------------------- ----------------------- ------------------------ ----------------------
Market Fund 1.209790 1.259556 28,915 1996
---------------------- ----------------------- ------------------------ ----------------------
1.155984 1.209790 14,512 1995
---------------------- ----------------------- ------------------------ ----------------------
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 2.354356 3.018448 42,827 1997
---------------------- ----------------------- ------------------------ ----------------------
Return Fund 1.950853 2.354356 19,743 1996
---------------------- ----------------------- ------------------------ ----------------------
(formerly 1.525590 1.950853 11,766 1995
---------------------- ----------------------- ------------------------ ----------------------
"Common 1.523742 1.525590 3,996 1994
---------------------- ----------------------- ------------------------ ----------------------
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
---------------------- ----------------------- ------------------------ ----------------------
======================== ====================== ======================= ======================== ======================
</TABLE>
151 of 161
<PAGE> 102
3. The section titled "Advertising and Sub-Account Performance Summary" is
amended to add the following information:
STANDARDIZED AVERAGE TOTAL ANNUAL RETURN
The following funds are in conjunction with Contracts issued pursuant to Section
403(b) of the Code ("Tax-Sheltered Annuity Contracts"):
<TABLE>
<CAPTION>
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
10 YEARS
OR DATE FUND
AVAILABLE IN
VARIABLE
YEAR ENDED 3 YEARS 5 YEARS ACCOUNT TO
SERIES OPTIONS 12/31/97 TO 12/31/97 TO 12/31/97 12/31/97
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - American 8.21% 12.62% 8.14% 9.54%
Century VP Balanced
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
American Century Variable Portfolios, Inc. - American -10.39% 2.80% 2.54% 6.30%
Century VP Capital Appreciation
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Dreyfus Socially Responsible Growth Fund, Inc. 20.72% 24.49% NA 19.42%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Dreyfus Stock Index Fund 25.20% 27.18% 16.76% 14.53%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity Overseas Portfolio 4.00% 7.61% 11.24% 7.19%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity VIP Equity Income Portfolio 20.40% 22.02% 17.31% 14.53%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity VIP Growth Portfolio 15.81% 20.72% 15.12% 15.05%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity VIP High Income Portfolio 10.05% 13.72% 10.96% 10.43%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity VIP II Asset Manager Portfolio 13.01% 13.66% 9.91% 11.53%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Neuberger Berman AMT Growth Portfolio 21.29% 19.29% 10.36% 12.72%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Neuberger Berman AMT Limited Maturity Bond -0.77% 3.33% 2.31% 4.54%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Neuberger Berman AMT Partners Portfolio 23.51% 28.99% NA 25.29%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Capital Appreciation Fund 26.72% 26.36% 15.93% 16.60%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Government Bond Fund 2.13% 6.61% 4.15% 6.86%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Money Market Fund -2.24% 1.29% 1.14% 2.97%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Total Return Fund 21.71% 23.23% 14.98% 13.38%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
</TABLE>
NON-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"):
(The total return figures shown below do not reflect the deduction of the
Participant Account Maintenance Charge or any applicable Contingent Deferred
Sales Charge)
<TABLE>
<CAPTION>
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
YEAR ENDED 3 YEARS 5 YEARS 10 YEARS
SERIES OPTIONS 12/31/97 TO 12/31/97 TO 12/31/97 TO 12/31/97 OR
LIFE OF FUND
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - American 14.71% 15.22% 10.21% 9.98%
Century VP Balanced
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
American Century Variable Portfolios, Inc. - American -4.17% 5.65% 4.75% 7.66%
Century VP Capital Appreciation
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Dreyfus Socially Responsible Growth Fund, Inc. 27.22% 26.75% NA 20.09%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Dreyfus Stock Index Fund 31.70% 29.38% 18.57% 14.75%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity Overseas Portfolio 10.50% 10.42% 13.02% 8.58%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity VIP Equity Income Portfolio 26.90% 24.34% 19.01% 15.65%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
</TABLE>
152 of 161
<PAGE> 103
<TABLE>
<CAPTION>
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
10 YEARS
TO 12/31/97
YEAR ENDED 3 YEARS 5 YEARS OR LIFE OF
SERIES OPTIONS 12/31/97 TO 12/31/97 TO 12/31/97 FUND
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C>
Fidelity VIP Growth Portfolio 22.31% 23.06% 16.89% 16.09%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity VIP High Income Portfolio 16.55% 16.29% 12.86% 11.74%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Fidelity VIP II Asset Manager Portfolio 19.51% 16.27% 11.88% 11.80%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Neuberger Berman AMT Growth Portfolio 27.79% 21.70% 12.40% 13.80%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Neuberger Berman AMT Limited Maturity Bond 5.73% 6.28% 4.63% 6.05%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
Neuberger Berman AMT Partners Portfolio 30.01% 31.15% NA 26.06%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Capital Appreciation Fund 33.22% 28.62% 17.79% 17.04%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Government Bond Fund 8.63% 9.41% 6.37% 8.22%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Money Market Fund 4.26% 4.34% 3.53% 4.61%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
NSAT Total Return Fund 28.21% 25.54% 16.83% 14.54%
- -------------------------------------------------------- ----------------- ------------------ -------------- ---------------
</TABLE>
4. The section entitled "PARTICIPANT ACCOUNT MAINTENANCE CHARGE" in the
prospectus is amended by adding the following paragraph:
For Tax-Sheltered Annuity Contracts, Nationwide will make a maximum charge
of $15 per participant per year to reimburse Nationwide 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 Nationwide offset such administrative expenses,
and such charges will not exceed Nationwide's actual administration
expenses under the contracts.
5. The section entitled "SYNOPSIS 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 Nationwide. The Certificate describes the rights and
benefits to which the participant is entitled under the contract. The term
contract owner, as used throughout the contract, refers to the purchaser and the
holder of the contract. However, the contract owner's rights are limited by the
plan, if any, the Internal Revenue 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 Nationwide. 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. Nationwide will accept direction only from the participant
except as otherwise specifically provided in the plan, if any. Nationwide shall
be entitled to rely on any action taken or omitted by the participant, pursuant
to the terms of the contract.
6. The section entitled "CONTRACT SUSPENSION AND TERMINATION" in the
prospectus is amended by deleting the last sentence of that section.
7. The section entitled "APPLICATION OF PURCHASE PAYMENTS" in the prospectus
is amended by adding the following paragraph at the end:
153 of 161
<PAGE> 104
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 Internal Revenue Code Section 403(b),
or the elective deferral limits set forth in Internal Revenue Code Section
402(g), except for amounts eligible for rollover, transfer or exchange treatment
under the Internal Revenue Code. In no event may the purchase payments exceed
the limits described in Internal Revenue Code Section 415. The amount of the
purchase payments and earnings thereon in excess of the limits set forth in
Internal Revenue 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. Nationwide may change the required minimum annual
purchase payment to any amount which does not violate the applicable provisions
of the Internal Revenue Code.
8. The section entitled "REDEMPTION OF PARTICIPANT ACCOUNTS" 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
Internal Revenue Code prohibits redemptions of purchase payments made
pursuant to a salary reduction agreement (within the meaning of
402(g)(3)(C) of the Internal Revenue Code) before the person reaches age 59
1/2, separates from service, dies, becomes disabled (within the meaning of
Internal Revenue 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 Internal Revenue 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 Internal
Revenue 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 403(b)(11). Nationwide 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).
9. The section entitled "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
Internal Revenue 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).
154 of 161
<PAGE> 105
In the case of a governmental plan or church plan (as defined in Internal
Revenue 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 Internal Revenue Code Section 401(a)(9) and applicable
regulations.
10. The section entitled " PARTICIPANT DEATH 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.
11. References throughout the Prospectus to the "GROUP FIXED FUND RETIREMENT
CONTRACT" are hereby changed to "GROUP FIXED TAX DEFERRED ANNUITY
CONTRACT."
12. "Appendix A: Objectives for 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 contracts and variable life insurance
policies 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.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN
CENTURY(SM) FAMILY OF INVESTMENTS
American Century Variable Products, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end management investment
company, designed only to provide investment vehicles for variable annuity
and variable life insurance products of insurance companies. American
Century Variable Portfolios, Inc. is managed by American Century Investment
Management, Inc.
-AMERICAN CENTURY VP BALANCED
Investment Objective: Capital growth and current income. The Fund will
seek to achieve its objective by maintaining approximately 60% of the
assets of the Fund in common stocks (including securities convertible
into common stocks and other equity equivalents) that are considered by
management to have better-than-average prospects for appreciation and
approximately 40% in fixed income senior securities. There can be no
assurance that the Fund will achieve its investment objective.
155 of 161
<PAGE> 106
-AMERICAN CENTURY VP CAPITAL APPRECIATION
Investment Objective: Capital growth. The Fund will seek to achieve its
objective by investing in common stocks (including securities
convertible into common stocks and other equity equivalents) that meet
certain fundamental and technical standards of selection and have, in
the opinion of the Fund's investment manager, better than average
potential for appreciation. The Fund tries to stay fully invested in
such securities, regardless of the movement of stock prices generally.
The Fund may invest in cash and cash equivalents temporarily or when it
is unable to find common stocks meeting its criteria of selection. It
may purchase securities only of companies that have a record of at
least three years continuous operation. There can be no assurance that
the Fund will achieve its investment objective
DREYFUS STOCK INDEX FUND, INC.
The Dreyfus Stock Index Fund, Inc. is an open-end, non-diversified,
management investment company. It was incorporated under Maryland law on
January 24, 1989, and commenced operations on September 29, 1989. The
Dreyfus Corporation ("Dreyfus") serves as the Fund's manager, while Mellon
Equity Associates, an affiliate of Dreyfus, serves as the Fund's index
manager.
Investment Objective: To provide investment results that correspond to
the price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Fund is neither sponsored by nor affiliated with
Standard & Poor's Corporation.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end,
diversified, management investment company. It was incorporated under
Maryland law on July 20, 1992, and commenced operations on October 7, 1993.
The Dreyfus Corporation serves as the Fund's investment adviser and
provides day-to-day management of the Fund's portfolio.
Investment Objective: The Fund's primary goal is to provide capital
growth through equity investment in companies that, in the opinion of
the Fund's management, not only meet traditional investment standards
but which also show evidence that they conduct their business in a
manner that contributes to the enhancement of the quality of life in
America. Current income is secondary to the primary goal.
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND ("VIP")
The Fund is an open-end, diversified, management investment company
organized as a Massachusetts business trust on November 13, 1981. The
Fund's shares are purchased by insurance companies to fund benefits under
variable insurance and annuity policies. Fidelity Management & Research
Company ("FMR") is the Fund's manager.
-VIP EQUITY-INCOME PORTFOLIO
Investment Objective: To seek reasonable income by investing primarily
in income-producing equity securities. In choosing these securities FMR
also will consider the potential for capital appreciation. The
Portfolio's goal is to achieve a yield which exceeds the composite
yield on the securities comprising the Standard & Poor's 500 Composite
Stock Price Index.
-VIP GROWTH PORTFOLIO
Investment Objective: Seeks to achieve capital appreciation. This
Portfolio will invest in the securities of both well-known and
established companies, and smaller, less well-known companies which may
have a narrow product line or whose securities are thinly traded. These
latter securities will often involve greater risk than may be found in
ordinary investment security. FMR's analysis and expertise plays an
integral role in the selection of securities and, therefore, the
performance of the portfolio. Many securities which FMR believes would
have the greatest potential may be regarded as speculative, and
investment in the Portfolio may involve greater risk than is inherent
in other underlying mutual funds. It is also important to point out
that the Portfolio makes most sense for you if you can afford to ride
out changes in the stock market, because it invests primarily in common
stocks. FMR also can make temporary investments in
156 of 161
<PAGE> 107
securities such as investment-grade bonds, high quality preferred
stocks and short-term notes, for defensive purposes when it believes
market conditions warrant.
-VIP HIGH INCOME PORTFOLIO
Investment Objective: Seeks to obtain a high level of current income by
investing primarily in high-risk, lower-rated, high-yielding, fixed
income securities, while also considering growth capital. The Portfolio
manager will seek high current income normally by investing the
Portfolio's assets as follows:
* at least 65% in income-producing debt securities and preferred
stocks, including convertible securities
* up to 20% in common stocks and other equity securities when
consistent with the Portfolio's primary objective or acquired as
part of a unit combining fixed-income and equity securities
Higher yields are usually available on securities that are lower-rated
or that are unrated. Lower-rated securities are usually defined as Ba
or lower by Moody's; BB or lower by Standard & Poor's and may be deemed
to be of a speculative nature. The Portfolio may also purchase
lower-quality bonds such as those rated Ca3 by Moody's or C- by
Standard & Poor's which provide poor protection for payment of
principal and interest (commonly referred to as "junk bonds"). For a
further discussion of lower-rated securities, please see the "Risks of
Lower-Rated Debt Securities" section of the Portfolio's prospectus.
-VIP OVERSEAS PORTFOLIO
Investment Objective: To seek long term growth of capital primarily
through investments in foreign securities. The Overseas Portfolio
provides a means for investors to diversify their own portfolios by
participating in companies and economics outside of the United States.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II ("VIP II")
The Variable Insurance Products Fund II is an open-end, diversified, management
investment company organized as a Massachusetts business trust on March 21,
1988. The Fund's shares are purchased by insurance companies to fund benefits
under variable insurance and annuity policies. Fidelity Management & Research
Company ("FMR") is the Fund's manager.
-VIP II ASSET MANAGER PORTFOLIO
Investment Objective: To seek high total return with reduced risk over
the long-term by allocating its assets among domestic and foreign
stocks, bonds and short-term fixed income instruments.
NATIONWIDE SEPARATE ACCOUNT TRUST (NSAT)
Nationwide Separate Account Trust (NSAT) is a diversified and open-end
management investment company created under the laws of Massachusetts. The NSAT
offers shares in the four separate mutual funds listed below, each with its own
investment objectives. Currently, shares of the NSAT will be sold only to life
insurance company separate accounts to fund the benefits under variable life
insurance policies or variable annuity contracts issued by life insurance
companies. The assets of the NSAT are managed by Nationwide Advisory Services,
Inc., One Nationwide Plaza, Columbus, Ohio 43215, a wholly-owned subsidiary of
Nationwide Life Insurance Company.
- -CAPITAL APPRECIATION FUND
Investment Objective: The Fund is designed for investors who are
interested in long-term growth. The Fund seeks to meet its objective
primarily through a diversified portfolio of the common stock of
companies which the investment manager determines have a
better-than-average potential for sustained capital growth over the
long term.
157 of 161
<PAGE> 108
-GOVERNMENT BOND FUND
Investment Objective: To provide as high a level of income as is
consistent with the preservation of capital. It seeks to achieve its
objective by investing in a diversified portfolio of securities issued
or backed by the U.S. Government, its agencies or instrumentalities.
-MONEY MARKET FUND
Investment Objective: To seek as high a level of income as is
considered consistent with the preservation of capital and liquidity by
investing primarily in money market instruments.
-TOTAL RETURN FUND
Investment Objective: To obtain a reasonable long-term total return
(i.e., earnings growth plus potential dividend yield) on invested
capital from a flexible combination of current return and capital gains
through investments in common stocks, convertible issues, money market
instruments and bonds with a primary emphasis on common stocks.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Neuberger Berman Advisers Management Trust is an open-end diversified management
investment company established as a Massachusetts business trust on December 14,
1983. Shares of the Trust are offered in connection with a certain variable
annuity contracts and variable life insurance policies issued through life
insurance company separate accounts and are also offered directly to qualified
pension and retirement plans outside of the separate account context. The
investment adviser is Neuberger Berman Management Incorporated.
-AMT GROWTH PORTFOLIO
Investment Objective: The Portfolio seeks capital growth through
investments in common stocks of companies that the investment adviser
believes will have above average earnings or otherwise provide
investors with above average potential for capital appreciation. To
maximize this potential, the investment adviser may utilize, from time
to time, securities convertible into common stocks, warrants and
options to purchase such stocks.
-AMT LIMITED MATURITY BOND PORTFOLIO
Investment Objective: To provide the high level of current income,
consistent with low risk to principal and liquidity. As a secondary
objective, it also seeks to enhance its total return through capital
appreciation when market factors, such as falling interest rates and
rising bond prices, indicate that capital appreciation may be available
without significant risk to principal. It seeks to achieve its
objectives through investments in a diversified portfolio of limited
maturity debt securities.
-AMT PARTNERS PORTFOLIO
Investment Objective: To seek capital growth. This Portfolio will seek
to achieve its objective by investing primarily in the common stock of
established companies. Its investment program seeks securities believed
to be undervalued based on fundamentals such as low price-to-earnings
ratios, consistent cash flows, and support from asset values. The
objective of the Partners Portfolio is not fundamental and can be
changed by the Trustees of the Trust without shareholder approval.
Shareholders will, however, receive at least 30 days prior notice
thereof. There is no assurance the investment objective will be met.
13. The section entitled "FEDERAL TAX CONSIDERATIONS" in the prospectus is
amended by adding the following paragraphs at the end:
Recent changes to the Internal Revenue 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
158 of 161
<PAGE> 109
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.
159 of 161
<PAGE> 110
INDEPENDENT AUDITORS' CONSENT AND REPORT ON FINANCIAL STATEMENT SCHEDULES
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide DC Variable Account:
The audits referred to in our report on Nationwide Life Insurance Company (the
Company) dated January 30, 1998, included the related financial statement
schedules as of December 31, 1997, and for each of the years in the three-year
period ended December 31, 1997, included in the registration statement. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG Peat Marwick LLP
Columbus, Ohio
April 30, 1998
160 of 161
<PAGE> 111
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE DC VARIABLE ACCOUNT, and the Depositor,
Nationwide Life Insurance Company have caused this Post-Effective Amendment to
be signed on their behalf in the City of Columbus, and State of Ohio, on this
25th day of February, 1999.
NATIONWIDE DC VARIABLE ACCOUNT
---------------------------------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
---------------------------------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
---------------------------------------------------------------
Joseph P. Rath
Vice President- Office Of Product and Market Compliance
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 25th day
of February, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
LEWIS J. ALPHIN Director
- ---------------------------------------
Lewis J. Alphin
A. I. BELL Director
- ---------------------------------------
A. I. Bell
KEITH W. ECKEL Director
- ---------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- ---------------------------------------
Willard J. Engel
FRED C. FINNEY Director
- ---------------------------------------
Fred C. Finney
CHARLES L. FUELLGRAF, JR. Director
- ---------------------------------------
Charles L. Fuellgraf, Jr.
JOSEPH J. GASPER President and Chief Operating
- --------------------------------------- Officer and Director
Joseph J. Gasper
DIMON R. MCFERSON Chairman and Chief Executive
- --------------------------------------- Officer Nationwide Insurance
Dimon R. McFerson Enterprise and Director
DAVID O. MILLER Chairman of the Board and
- --------------------------------------- Director
David O. Miller
YVONNE L. MONTGOMERY Director
- ---------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President - Chief
- --------------------------------------- Financial Officer
Robert A. Oakley
JAMES F. PATTERSON Director
- ---------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ JOSEPH P. RATH
- --------------------------------------- -------------------------------------
Arden L. Shisler Joseph P. Rath
Attorney-in-Fact
ROBERT L. STEWART Director
- ---------------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- ---------------------------------------
Nancy C. Thomas
HAROLD W. WEIHL Director
- ---------------------------------------
Harold W. Weihl
</TABLE>
161 of 161
<PAGE> 1
NATIONWIDE LIFE INSURANCE COMPANY
NATIONWIDE DC VARIABLE ACCOUNT
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
EXHIBITS TO FORM N-4
SEC FILE NO. 251911
<PAGE> 2
EXHIBIT NO. 3
UNDERWRITING OR DISTRIBUTION OF CONTRACTS BETWEEN
THE REGISTRANT AND PRINCIPAL UNDERWRITER
<PAGE> 3
MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this 16th day of November, 1998, between Nationwide
Life Insurance Company ("Nationwide"), and Nationwide Investment Services
Corporation ("NISC").
Nationwide proposes to develop, issue and administer, and NISC proposes to
provide the exclusive national distribution services for certain annuity
products (the "Products"). The Products to be sold hereunder are the Group
Flexible Fund Retirement Contracts (The "Products") and such other products as
may hereafter be agreed upon by the parties.
The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
--------------------------
1. Appointment of Product Administration
-------------------------------------
Nationwide is hereby appointed Product Administrator for the
Products.
2. Duties of Nationwide
--------------------
Nationwide will perform in a proper and timely manner, those
functions enumerated in the column marked "Nationwide" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
3. Duties of NISC
--------------
NISC will perform in a proper and timely manner, those
functions enumerated in the column marked "NISC" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
-----------------------------------------------
1. Distribution of Products
------------------------
The Products will be distributed through registered
representatives of NASD broker-dealer firms, appointed by
Nationwide, who shall be duly qualified and licensed as agents
(the "Agents"), in accordance with applicable state insurance
authority.
2. NISC shall be the exclusive National Distributor of the
Products.
<PAGE> 4
3. Appointment and Termination of Agents
-------------------------------------
Appointment and termination of Agents shall be processed and
executed by Nationwide. NISC reserves the right to require
Nationwide to consult with it regarding licensing decisions.
4. Advertising
-----------
NISC shall not print, publish or distribute any advertisement,
circular or document relating to the Products or relating to
Nationwide unless such advertisement, circular or document has
been approved in writing by Nationwide. Such approval shall
not be unreasonably withheld, and shall be given promptly,
normally within three (3) business days. Neither Nationwide
nor any of its affiliates shall print, publish or distribute
any advertisement, circular or document relating to the
Products or relating to NISC unless such advertisement,
circular or document has been approved in writing by NISC.
Such approval shall not be unreasonably withheld, and shall be
given promptly, normally within three (3) business days.
However, nothing herein shall prohibit any person from
advertising the Products on a generic basis.
5. Marketing Conduct
-----------------
The parties will jointly develop standards, practices and
procedures respecting the marketing of the Products. Such
standards, practices and procedures are intended to help
Nationwide meet its obligations as an issuer under the
securities laws, to assure compliance with state insurance
laws, and to help NISC meet its obligations under the
securities laws as National Distributor. These standards,
practices and procedures are subject to continuing review and
neither Nationwide nor NISC will object unreasonably to
changes to such standards, practices and procedures
recommended by the other to comply with the intent of this
provision.
6. Sales Material and Other Documents
----------------------------------
a. Sales Material
--------------
1) Nationwide shall develop and prepare all
promotional material to be used in the
distribution of the Products, in
consultation with NISC.
2) Nationwide is responsible for the printing
and the expense of providing such
promotional material.
3) Nationwide is responsible for approval of
such promotional material by state insurance
regulators, where required.
4) NISC and Nationwide agree to abide by the
Advertising and Sales Promotion Material
Guidelines, attached hereto as EXHIBIT B,
and incorporated herein by reference.
<PAGE> 5
b. Prospectuses
------------
1) Nationwide is responsible for the
preparation and regulatory clearance of any
required registration statements and
prospectuses for the Products.
2) Nationwide is responsible for the printing
of Product prospectuses in such quantities
as the parties agree are necessary to assure
sufficient supplies.
3) Nationwide is responsible for supplying
Agents with sufficient quantities of Product
prospectuses.
c. Contracts, Applications and Related Forms
-----------------------------------------
1) Nationwide, in consultation with NISC, is
responsible for the design and printing of
adequate supplies of Product applications,
contracts, related forms, and such service
forms as the parties agree are necessary.
2) Nationwide is responsible for supplying
adequate quantities of all such forms to the
Agents.
7. Appointment of Agents
---------------------
a. NISC will assist Nationwide in facilitating the
appointment of Agents by Nationwide.
b. Nationwide will forward all appointment forms and
applications to the appropriate states and maintain
all contacts with the states.
c. Nationwide will maintain appointment files on Agents,
and NISC will have access to such files as needed.
8. Licensing and Appointment Guide
-------------------------------
Nationwide shall provide to NISC a Licensing and Appointment
Guide (as well periodic updates thereto), setting forth the
requirements for licensing and appointment, in such quantities
as NISC may reasonably require.
<PAGE> 6
9. Other
-----
a. Product Training
----------------
Nationwide is responsible for any Product training
for the Agents.
b. Field Sales Material
--------------------
1) Nationwide, in consultation with NISC, is
responsible for the development, printing
and distribution of non-public field sales
material to be used by Agents.
2) NISC shall have the right to review all
field sales materials and to require any
modification mandated by regulatory
requirements.
c. Production Reports
------------------
Nationwide will deliver to NISC the items listed in
Production Reports to be Provided, attached hereto as
EXHIBIT C, and incorporated herein by reference.
d. Customer Service
----------------
Each party will notify the other of all material
pertinent inquiries and complaints it receives, from
whatever source and to whomever directed, and will
consult with the other in responding to such
inquiries and complaints.
C. GENERAL PROVISIONS
------------------
1. Waiver
------
The forbearance or neglect of either party to insist upon
strict compliance by the other with any of the provisions of
this Agreement, whether continuing or not, or to declare a
forfeiture of termination against the other, shall not be
construed as a waiver of any rights or privileges of the
forbearing party in the event of a further default or failure
of performance.
2. Limitations
-----------
Neither party shall have authority on behalf of the other to:
make, alter or discharge any contractual terms of the
Products; waive any forfeiture; extend the time of making any
contributions to the products; guarantee dividends; alter the
forms which either may prescribe; nor substitute other forms
in place of those prescribed by the other.
<PAGE> 7
3. Binding Effect
--------------
This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors
and assigns, provided that neither party shall assign or
sub-contract this Agreement or any rights or obligations
hereunder without prior written consent of the other.
4. Indemnification
---------------
Each party ("Indemnifying Party") hereby agrees to release,
indemnify and hold harmless the other party, its officers,
directors, employers, agents, servants, predecessors or
successors from any claims or liability arising out of the
acts or omissions of the Indemnifying Party not authorized by
this Agreement, including the violation of any federal or
state law or regulation.
5. Notices
-------
All notices, requests, demands and other communication under
this Agreement shall be in writing and shall be deemed to have
been given on the date of service if served personally on the
party to whom notice is to be given, or on the date of mailing
if sent postage prepaid by First Class Mail, Registered or
Certified mail, by overnight mail, properly addressed as
follows:
TO NATIONWIDE:
Nationwide Life Insurance Company
Duane C. Meek, Vice President-Sales
Two Nationwide Plaza
Columbus, Ohio 43215
TO NISC:
Nationwide Investment Services Corporation.
Joseph P. Rath, Vice President-Compliance
One Nationwide Plaza
Columbus, Ohio 43215
<PAGE> 8
6. Governing Law
-------------
This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio.
7. Arbitration
-----------
The parties agree that misunderstandings or disputes arising
from this Agreement shall be decided by arbitration, conducted
upon request of either party before three arbitrators (unless
the parties agree on a single arbitrator) designated by the
American Arbitration Association, and in accordance with the
rules of such Association. The expenses of the arbitration
proceedings conducted hereunder shall be borne equally by both
parties.
8. Confidentiality
---------------
Any information, documents and materials, whether printed or
oral, furnished by either party or its agents or employees to
the other shall be held in confidence. No such information
shall be given to any third party, other than to such
sub-contractors of NISC as may be permitted herein, or under
requirements of a lawful authority, without the express
written consent of the other party.
D. TERM OF AGREEMENT
-----------------
This Agreement, including the Exhibits attached hereto, shall remain in
full force and effect until terminated, and may be amended only by
mutual agreement of the parties in writing. Any decision by either
party to cease issuance or distribution of any specific Product shall
not effect a termination of the Agreement unless such termination is
mutually agreed upon, or unless notice is given pursuant to Section
E.2. hereof.
E. TERMINATION
-----------
1. Either party may terminate this Agreement for cause at any
time, upon written notice to the other, if the other knowingly
and willfully: (a) fails to comply with the laws or
regulations of any state or governmental agency or body having
jurisdiction over the sale of insurance or securities; (b)
misappropriates any money or property belonging to the other;
(c) subjects the other to any actual or potential liability
due to misfeasance, malfeasance, or nonfeasance; (d) commits
any fraud upon the other; (e) has an assignment for the
benefit of creditors; (f) incurs bankruptcy; or (g) commits a
material breach of this Agreement.
2. Either party may terminate this Agreement, without regard to
cause, upon six months prior written notice to the other.
3. In the event of termination of this Agreement, the following
conditions shall apply:
<PAGE> 9
a) The parties irrevocably acknowledge the continuing
right to use any Product trademark that might then be
associated with any Products, but only with respect
to all business in force at the time of termination.
b) In the event this Agreement is terminated the parties
will use their best efforts to preserve in force the
business issued pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
NATIONWIDE LIFE INSURANCE COMPANY
By:
---------------------------------
Duane C. Meek
Title: Vice President - Sales
------------------------------
NATIONWIDE INVESTMENT SERVICES
CORPORATION
By:
---------------------------------
Joseph P. Rath
Title: Vice President - Compliance
------------------------------
<PAGE> 10
<TABLE>
EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
<CAPTION>
A. PRODUCT UNDERWRITING/ISSUE
--------------------------
NATIONWIDE NISC
<S> <C>
- - Establishes underwriting criteria for - Consults with regard to new business
application processing and rejections. procedures and processing.
- - Reviews the completed application.
Applies underwriting/issue criteria to
application.
- - Notifies Agent and/or customer of any
error or missing data necessary to
underwrite application and establish
records for owner of Product ("Contract
Owner").
- - Prepares policy data page for approved
business and mails with policy to
Contract Owner.
- - Establishes and maintains all records
required for each Contract Owner, as
applicable.
- - Prepares and mails confirmation and other
statements to Contract Owners and Agents,
as required.
- - Prints, provides all forms ancillary to
issue of contract/policy forms for
Products.
- - Maintains supply of approved specimen
policy forms and all ancillary forms,
distributes same to Agents.
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
B. BILLING AND COLLECTION
----------------------
NATIONWIDE
<S> <C>
- - Receives premium/purchase payments and
reconciles amount received with
remittance media.
- - Updates Contract Owner records to reflect
receipt of premium/purchase payment and
performs accounting/ investment
allocation of each payment received.
- - Deposits all cash received under the
Products in accordance with the terms of
the Products.
C. BANKING
-------
NATIONWIDE
- - Balances, edits, endorses and prepares
daily deposit.
- - Places deposits in depository account.
- - Prepares daily cash journal summary
reports and maintains same for review by
NISC.
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
D. PRICING/VALUATION/ACCOUNTING/TRADING
------------------------------------
NATIONWIDE NISC
<S> <C>
- - Maintains and makes available, as - Cooperates in annual audit of
reasonably requested, records used in separate account financials
determining "Net Amount Available for conducted for purposes of financial
Investment." statement certification and
publication.
- - Collects information needed in determining
Variable Account unit values from the - Will clear and settle Mutual Fund
Funds including daily net asset value, trades on behalf of the separate
capital gains or dividend distributions, and accounts using the National
the number of Fund Shares acquired or sold Securities Clearing Corporation -
during the immediately preceding valuation FUND/Serv System.
period.
- - Performs daily unit valuation
calculation.
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
E. CONTRACT OWNER SERVICE/RECORD MAINTENANCE
-----------------------------------------
NATIONWIDE NISC
<S> <C>
- - Receives and processes all Contract - Accommodates customer service function
Owner service requests, including but by providing any supporting information
not limited to informational requests, or documentation which may be in the
beneficiary changes, and transfers of control of NISC.
Contract Value among eligible
investment options.
- - Maintains daily records of all changes
made to Contract Owner accounts.
- - Researches and responds to all Contract
Owner/Agent inquiries.
- - Keeps all required Contract Owner
records.
- - Maintains adequate number of toll free
lines to service Contract Owner/Agent
inquiries.
F. DISBURSEMENTS (SURRENDERS, DEATH CLAIMS, LOANS)
-----------------------------------------------
NATIONWIDE NISC
- - Receives and processes surrenders, loans,
and death claims in accordance with
established guidelines.
- - Prepares checks for surrenders, loans,
and death claims, and forwards to
Contract Owner or Beneficiary. Prepares
and mails confirmation statement of
disbursement to Contract Owner/
Beneficiary with copy to Agent.
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
G. COMMISSIONS
-----------
NATIONWIDE NISC
<S> <C>
- - Ascertains, on receipt of applications,
whether writing Agent is appropriately
licensed.
- - Pays commissions and other fees in
accordance with agreements relating to
same.
H. PROXY PROCESSING
----------------
NATIONWIDE NISC
- - Receives record date information from
Funds Receives proxy solicitation
materials from Funds.
- - Prepares Voting Instruction cards and
mails solicitation, if necessary.
- - Tabulates and votes all Fund Shares in
accordance with SEC requirements.
I. PERIODIC REPORTS TO CONTRACT OWNERS
-----------------------------------
NATIONWIDE NISC
- - Prepares and mails quarterly and annual
Statements of Account to Contract Owners.
- - Prepares and mails all semi-annual and
annual reports of Variable Account(s) to
Contract Owners.
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
J. REGULATORY/STATEMENT REPORTS
----------------------------
NATIONWIDE NISC
<S> <C>
- - Prepares and files Separate Account
Annual Statements.
- - Prepares and mails the appropriate,
required IRS reports at the Contract
Owner level. Files same with required
regulatory agencies.
- - Prepares and files form N-SAR for the
Separate Account.
K. PREMIUM TAXES
-------------
NATIONWIDE NISC
- - Collects, pays and accounts for premium
taxes as appropriate.
- - Prepares and maintains all premium tax
records by state.
- - Maintains liabilities in General Account
ledger for accrual of premium tax
collected.
- - Integrates all company premium taxes due
and performs related accounting.
L. FINANCIAL AND MANAGEMENT REPORTS
--------------------------------
NATIONWIDE NISC
- - Provides periodic reports in accordance - Provides periodic reports in accordance
with the Schedule of Reports to be with the Schedule of Reports to be
prepared jointly by Nationwide and prepared jointly by Nationwide and NISC.
NISC. (See EXHIBIT C) (See EXHIBIT C)
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
M. AGENT LICENSE RECORDKEEPING
---------------------------
NATIONWIDE NISC
<S> <C>
- - Receives, establishes, processes, and
maintains Agent appointment records.
</TABLE>
<PAGE> 17
EXHIBIT B
ADVERTISING AND SALES PROMOTION MATERIAL GUIDELINES
FOR APPROVAL BY THE OFFICE OF SALES-FINANCIAL SERVICES
In order to assure compliance with state and federal regulatory requirements and
to maintain control over the distribution of promotional materials dealing with
the Products, Nationwide and NISC require that ALL variable contract promotional
materials be REVIEWED and APPROVED by both Nationwide and NISC PRIOR to their
use. These guidelines are intended to provide appropriate regulatory and
distribution controls.
1. Sufficient lead time must be allowed in the submission of all
promotional material. The Office of Sales-Financial Services ("OS-FS")
and NISC shall approve in writing all promotional material. Such
approval shall not be unreasonably withheld, and shall be given
promptly, normally within three (3) days.
2. All promotional material will be submitted in "draft" form to permit
any changes or corrections to be made prior to the printing.
3. Nationwide and NISC will provide each other with details as to each and
every use of all promotional material submitted. Approval for one use
will not constitute approval for any other use. Different standards of
review may apply when the same advertising material is intended for
different uses. The following information will be provided for each
item of promotional material:
a. In what jurisdiction(s) the material will be used.
b. Whether distribution will be to broker/dealer, entity,
participant, etc.
c. How the material will be used (e.g., brochure, mailing, 482
ads, etc.).
d. The projected date of initial use and, if a special promotion,
the projected date of last use.
4. Each party will advise the other of the date it discontinues the use of
any material.
5. Any changes to previously approved promotional material must be
resubmitted, following these procedures. When approved material is to
be put to a different use, request for approval of the material for the
new use must be submitted.
6. OS-FS and NISC will assign a form number to each item of advertising
and sales promotional material. This number will appear on each piece
of advertising and sales promotional material. It will be used to aid
in necessary filings, and to maintain appropriate controls.
7. OS-FS and NISC will provide WRITTEN APPROVAL for all material to be
used.
8. Nationwide and NISC will provide each other with a minimum of 50 copies
of all material in final print form to effect necessary state filings.
9. NISC will coordinate SEC/NASD filings of sales and promotional
material.
10. All telephone communication and written correspondence regarding
promotional materials should be directed to Marketing Director, Office
of Sales-Financial Services, Nationwide Life Insurance Company, One
Nationwide Plaza, Columbus, Ohio 43216 (phone (614)249- 6258)
<PAGE> 18
EXHIBIT C
PRODUCTION REPORTS TO BE PROVIDED
Nationwide agrees to provide the following reports to NISC:
1. Daily Receipt Report: Indicates which Agents are generating
sales
2. Daily Approval Report: Indicates which applications have been
approved
3. Daily Activity Summary: Indicates top firms' sales and
liquidation by month, year-to-date as
well as total assets by firm.
4. Dealer Activity Indicates top firms' sales and
Summary by Territory liquidation by month, year-to-date
5. Summary of Sales by Indicates sales by territory/dealer/
Territory and Dealer: branch, including non-commissionable
amounts and actual commission payments,
as well as chargebacks (Internal use
only)
6. Commission Report: Indicates commission paid and
chargebacks, matched to Commission
checks.
In addition, Nationwide will provide reports detailing current appointments and
other information, as reasonably requested by NISC.
<PAGE> 1
EXHIBIT NO. 5
THE VARIABLE ANNUITY APPLICATION FORM
<PAGE> 2
MASTER ANNUITY APPLICATION
FOR GROUP FLEXIBLE FUND RETIREMENT CONTRACT TO
NATIONWIDE LIFE INSURANCE COMPANY
COLUMBUS, OHIO 43215-2220
Application is hereby made for a Group Flexible Fund Retirement Contract by:
, For The Exclusive Benefit Of Its Plan Participants And Their Beneficiaries
- --------------------------------------------------------------------------------
(Entity Name)
CONTRACT PROVISIONS
1. 5% Alternate Assumed Investment Rate: [_] Yes [_] No
2. Fund(s) Offered within the Separate Account:
<TABLE>
<S> <C> <C>
Aggressive Portfolio Janus Worldwide Fund Amer Century Income & Growth
Conservative Portfolio MAS Funds Fixed Income Portfolio Amer Century: 20th Century Intl.
Moderate Portfolio MASS. Investors Growth Stock Discovery - Investor
Moderately Aggressive Portfolio Fund - A Dreyfus Appreciation
Moderately Conservative Portfolio MFS Growth Opportunities - A Dreyfus Third Century
AIM Consellation MFS High Income Fund - A Dreyfus Premier Mid-Cap Stock - A
Amer Century: 20th Century Growth Nationwide Bond Fund Federated Bond - F
Amer Century: 20th Century Select Nationwide Growth Fund - D Fidelity Advisor Growth Op - A.
Amer Century: 20th Century Ultra Neuberger & Berman Guardian Fund Fidelity Advisor High Yield - T
Davis New York Venture Neuberger & Berman Manhattan Fund INVESCO Dynamics
Dreyfus Cash Management Putnam Investors Fund - A INVESCO Total Return Fund
Dreyfus S & P 500 Index Fund Putnam Voyager - A Morgan Stanley Inst. Equity Growth - B
Evergreen Income & Growth Fund SEI Index Fund - S&P 500 Index Fund Nationwide Fund - D
Federated US Gov. Securities Fund Seligman Growth Fund - A Nationwide Money Market Fund
Inst. Shares: 2-5 years T. Rowe Price International Stock Nationwide S&P 500 Index - Y
Fidelity Asset Manager Fund Neuberger-Berman Partners Trust
Fidelity Equity Income Prestige Balanced Fund - Y NSAT Small Company
Fidelity Growth & Income Portfolio Prestige International Fund - Y Oppenheimer Global - A
INVESCO Industrial Income Fund Prestige Large Cap Growth - Y Templeton Foreign Fund - I
Janus Fund Prestige Large Cap Value - Y Warburg Pincus Emerging Growth
Prestige Small Cap Fund - Y
</TABLE>
3. It is understood that ownership and control of the contract applied for
under this Master Application will be vested in,__________________________,
For The Exclusive Benefit Of Its Plan Participants And Their Beneficiaries.
The entity hereby certifies that before the application was signed a
representative from the entity received a current prospectus of the Group
Flexible Fund Retirement Contract that described all sales charges and
other information relative to the contract(s) being applied for. Please
send the entity a copy of the Statement of Additional Information to the
DCVA Prospectus.
THE ENTITY UNDERSTANDS THAT RETIREMENT INCOME PAYMENTS (AND TERMINATION VALUES,
IF ANY) PROVIDED BY THE CONTRACT(S) ARE VARIABLE WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
The Flexible Fund Retirement Contract applied for shall become effective upon
its Contract Date if the purchase payment and the application are each
acceptable to Nationwide Life. In the event the purchase payment or the
application is not acceptable, Nationwide Life's liability shall be limited to a
return of the sum of money paid.
Signed at: this day of , 19 .
----------------------- -- ------------------ --
(Entity Name)
- ---------------------------------------------- ----------------------------
(Entity Official Signature) (Date)
- ----------------------------------------------
(Title)
- ---------------------------------------------- ----------------------------
(Authorized Representative Signature) (Date)
