NATIONWIDE VL SEPARATE ACCOUNT A, 497J, 1997-09-10

NATIONWIDE VL SEPARATE ACCOUNT A
497J, 1997-09-10

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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
P.O. Box 182150
Columbus, Ohio 43218-2150
(800) 547-7548, TDD (800) 238-3035

CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
ISSUED BY NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
THROUGH ITS NATIONWIDE VL SEPARATE ACCOUNT-A

The Life Insurance Policies offered by this prospectus are variable universal
life insurance policies (collectively referred to as the "Policies"). The
Policies are designed for use by corporations and employers, to provide life
insurance coverage and the flexibility to vary the amount and frequency of
premium payments. The Policies also may provide a Cash Surrender Value if the
Policy is terminated during the lifetime of the Insured. The death benefit and
Cash Value of the Policies may vary to reflect the experience of Nationwide VL
Separate Account-A (the "Variable Account") or the Fixed Account to which Cash
Values are allocated.

The Policies described in this prospectus meet the definition of "life
insurance" under Section 7702 of the Internal Revenue Code (the "Code").

The Policy Owner may allocate Net Premiums and Cash Value to one or more of the
Sub-Accounts of the Variable Account and the Fixed Account. The assets of each
Sub-Account will be used to purchase, at net asset value, shares of a
designated Underlying Mutual Fund in the following series:
<TABLE>
<CAPTION>

<S> <C>

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.: NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
-American Century VP Balanced -Growth Portfolio
-American Century VP Capital Appreciation -Limited Maturity Bond Portfolio
-American Century VP International -Partners Portfolio
-American Century VP Value OPPENHEIMER VARIABLE ACCOUNTS FUNDS:
DREYFUS: -Oppenheimer Bond Fund
-Dreyfus Socially Responsible Growth Fund -Oppenheimer Global Securities Fund
-Dreyfus Stock Index Fund -Oppenheimer Growth Fund
DREYFUS VARIABLE INVESTMENT FUND -Oppenheimer Multiple Strategies Fund
-Capital Appreciation Portfolio STRONG OPPORTUNITY FUND II, INC.:
-Growth & Income Portfolio** STRONG VARIABLE INSURANCE FUNDS, INC.:
FIDELITY VARIABLE INSURANCE PRODUCTS FUND: -Discovery Fund II, Inc.
-Equity-Income Portfolio -International Stock Fund II
-Growth Portfolio VAN ECK WORLDWIDE INSURANCE TRUST:
-High Income Portfolio** -Gold and Natural Resources Fund
-Overseas Portfolio -Worldwide Bond Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II: -Worldwide Emerging Markets Fund
-Asset Manager Portfolio VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT
-Contrafund Portfolio TRUST:
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III -Morgan Stanley Real Estate Securities Portfolio
-Growth Opportunities Portfolio WARBURG PINCUS TRUST:
MORGAN STANLEY UNIVERSAL FUNDS, INC. -International Equity Portfolio
-Emerging Markets Debt Portfolio -Post-Venture Capital Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST: -Small Company Growth Portfolio
-Capital Appreciation Fund
-Government Bond Fund
-Money Market Fund
-Small Company Fund
-Total Return Fund

</TABLE>

**The Growth & Income Portfolio and the High Income Portfolio may invest in
lower quality debt securities commonly referred to as junk bonds.

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY (THE "COMPANY") GUARANTEES THAT
THE DEATH BENEFIT FOR A POLICY WILL NEVER BE LESS THAN THE SPECIFIED AMOUNT
STATED ON THE POLICY DATA PAGES AS LONG AS THE POLICY IS IN FORCE. THERE IS NO
GUARANTEED CASH SURRENDER VALUE. IF THE CASH SURRENDER VALUE IS INSUFFICIENT TO
COVER THE CHARGES UNDER THE POLICY, THE POLICY WILL LAPSE WITHOUT VALUE. THIS
PROSPECTUS GENERALLY DESCRIBES ONLY THAT PORTION OF THE CASH VALUE ALLOCATED TO
THE VARIABLE ACCOUNT. FOR A BRIEF SUMMARY OF THE FIXED ACCOUNT OPTION, SEE "THE
FIXED ACCOUNT OPTION."

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INVESTMENTS IN THESE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, AND ARE NOT
GUARANTEED OR ENDORSED BY, THE ADVISER OF ANY OF THE UNDERLYING MUTUAL FUNDS
IDENTIFIED ABOVE, THE U.S. GOVERNMENT, OR ANY BANK OR BANK AFFILIATE.
INVESTMENTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. ANY
INVESTMENT IN THE CONTRACT INVOLVES CERTAIN INVESTMENT RISK WHICH MAY INCLUDE
THE POSSIBLE LOSS OF PRINCIPAL.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A PROSPECTUS
FOR THE UNDERLYING MUTUAL FUND OPTION(S) BEING CONSIDERED MUST ACCOMPANY THIS
PROSPECTUS AND SHOULD BE READ IN CONJUNCTION HEREWITH.

THE DATE OF THIS PROSPECTUS IS SEPTEMBER 5, 1997

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GLOSSARY OF TERMS

ATTAINED AGE-The Insured's age on the Policy Date, plus the number of full years
since the Policy Date.

ACCUMULATION UNIT-An accounting unit of measure used to calculate the Cash Value
of the Variable Account.

BENEFICIARY-The person to whom the Death Proceeds are paid.

CASH VALUE-The sum of the Policy values in the Variable Account, Fixed Account
and any associated value in the Policy Loan Account.

CASH SURRENDER VALUE-The Policy's Cash Value, less any Indebtedness under the
Policy

CODE-The Internal Revenue Code of 1986, as amended.

COMPANY- Nationwide Life and Annuity Insurance Company.

DEATH PROCEEDS-Amount of money payable to the Beneficiary if the Insured dies
while the Policy is in force prior to the Maturity Date.

FIXED ACCOUNT-An investment option which is funded by the General Account of the
Company.

GENERAL ACCOUNT-All assets of the Company other than those of the Variable
Account or in other separate accounts that have been or may be established by
the Company.

GUIDELINE LEVEL PREMIUM-The amount of level annual premium calculated in
accordance with the provisions of the Code. It represents the level annual
premiums required to mature the Policy under guaranteed mortality and current
expense charges, and an interest rate of 4%.

HOME OFFICE-The main office of the Company located in Columbus, Ohio.

INDEBTEDNESS-Amounts owed the Company as a result of Policy loans including both
principal and accrued interest.

INITIAL PREMIUM-The Initial Premium is the premium required for coverage to
become effective on the Policy Date. It is shown on the Policy Data Page.

INSURED-The person whose life is covered by the Policy, and who is named on the
Policy Data Page.

MATURITY DATE-The Policy Anniversary on or following the Insured's 100th
birthday.

MONTHLY ANNIVERSARY DAY-The same day as the Policy Date for each succeeding
month.

NET AMOUNT AT RISK-For any Policy month, the Net Amount at Risk is the death
benefit at the beginning of the Policy month minus the Cash Value calculated at
the beginning of the Policy month prior to deduction of the base Policy cost of
insurance charge.

NET ASSET VALUE-The worth of one share at the end of a market day or at the
close of the New York Stock Exchange. Net Asset Value is computed by adding the
value of all portfolio holdings plus other assets, deducting liabilities and
then dividing the result by the number of shares outstanding.

NET PREMIUMS-Net Premiums are equal to the actual premiums minus the percent of
premium charge. The percent of premium charges are shown on the Policy Data
Page.

POLICY ANNIVERSARY-The same day and month as the Policy Date for succeeding
years.

POLICY CHARGES-All deductions made from the value of the Variable Account, or
the Policy Cash Value.

POLICY DATE-The date the provisions of the Policy take effect, as shown on the
Policy Owner's Policy Data Page.

POLICY LOAN ACCOUNT-The Portion of the Cash Value which results from Policy
Indebtedness.

POLICY OWNER-The person designated in the Policy application as the Owner.

POLICY YEAR-Each year commencing with the Policy Date and each Policy
Anniversary thereafter.

SCHEDULED PREMIUM-The Scheduled Premium is shown on the Policy Data Page.

SPECIFIED AMOUNT-A dollar amount used to determine the death benefit under a
Policy. It is shown on the Policy Data Page.

SUB-ACCOUNT-A part of the Variable Account, the assets of which are invested
exclusively in a corresponding Underlying Mutual Fund.

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SURRENDER CHARGE - An amount deducted from the Cash Value if the Policy is
surrendered. This amount is zero.

TARGET PREMIUM - The level annual premium at which the sales load is reduced on
a current basis.

UNDERLYING MUTUAL FUNDS-The underlying mutual funds which correspond to the Sub-
Accounts of the Variable Account.

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

VALUATION PERIOD-A period commencing with the close of business on the New York
Stock Exchange and ending at the close of business for the next succeeding
Valuation Date.

VARIABLE ACCOUNT-A separate investment account of the Company, Nationwide VL
Separate Account-A.

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TABLE OF CONTENTS

GLOSSARY OF TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY OF THE POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Variable Life Insurance. . . . . . . . . . . . . . . . . . . . . . 8
The Variable Account and its Sub-Accounts. . . . . . . . . . . . . 8
The Fixed Account. . . . . . . . . . . . . . . . . . . . . . . . . 8
Deductions and Charges . . . . . . . . . . . . . . . . . . . . . . 8
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY. . . . . . . . . . . . . . . . 9
THE VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Investments of the Variable Account. . . . . . . . . . . . . . . .10
American Century Variable Portfolios, Inc., a member of American
Century-SM- Investments. . . . . . . . . . . . . . . . . . . . . .11
Dreyfus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Dreyfus Variable Investment Fund . . . . . . . . . . . . . . . . .12
Fidelity Variable Insurance Products Fund. . . . . . . . . . . . .12
Fidelity Variable Insurance Products Fund II . . . . . . . . . . .13
Fidelity Variable Insurance Products Fund III. . . . . . . . . . .13
Morgan Stanley Universal Funds, Inc. . . . . . . . . . . . . . . .14
Nationwide Separate Account Trust. . . . . . . . . . . . . . . . .14
Neuberger & Berman Advisers Management Trust . . . . . . . . . . .15
Oppenheimer Variable Account Funds . . . . . . . . . . . . . . . .15
Strong Opportunity Fund II, Inc. . . . . . . . . . . . . . . . . .16
Strong Variable Insurance Funds, Inc.. . . . . . . . . . . . . . .16
Van Eck Worldwide Insurance Trust. . . . . . . . . . . . . . . . .16
Van Kampen American Capital Life Investment Trust. . . . . . . . .17
Warburg Pincus Trust . . . . . . . . . . . . . . . . . . . . . . .17
Reinvestment . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Dollar Cost Averaging. . . . . . . . . . . . . . . . . . . . . . .19
Substitution of Securities . . . . . . . . . . . . . . . . . . . .19
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . .19
INFORMATION ABOUT THE POLICIES . . . . . . . . . . . . . . . . . . . . . . .20
Underwriting and Issuance. . . . . . . . . . . . . . . . . . . . .20
-Minimum Requirements for Issuance of a Policy . . . . . . . . . .20
-Premium Payments. . . . . . . . . . . . . . . . . . . . . . . . .20
Allocation of Net Premium and Cash Value . . . . . . . . . . . . .20
Short-Term Right to Cancel Policy. . . . . . . . . . . . . . . . .21
POLICY CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Deductions from Premiums . . . . . . . . . . . . . . . . . . . . .21
Deductions from Cash Value . . . . . . . . . . . . . . . . . . . .21
-Monthly Cost of Insurance . . . . . . . . . . . . . . . . . . . .21
-Monthly Administrative Charge . . . . . . . . . . . . . . . . . .22
Deductions from the Sub-Accounts . . . . . . . . . . . . . . . . .22
Reduction of Charges (Policy and Sub-Accounts) . . . . . . . . . .22
Expenses of the Underlying Mutual Funds . . . . . . . . . . . . . 22
HOW THE CASH VALUE VARIES. . . . . . . . . . . . . . . . . . . . . . . . . .25
How the Investment Experience is Determined. . . . . . . . . . . .25
Net Investment Factor. . . . . . . . . . . . . . . . . . . . . . .25
Valuation of Assets. . . . . . . . . . . . . . . . . . . . . . . .26
Determining the Cash Value . . . . . . . . . . . . . . . . . . . .26
Valuation Periods and Valuation Dates. . . . . . . . . . . . . . .26
SURRENDERING THE POLICY FOR CASH . . . . . . . . . . . . . . . . . . . . . .26
Right to Surrender . . . . . . . . . . . . . . . . . . . . . . . .26
Cash Surrender Value . . . . . . . . . . . . . . . . . . . . . . .26
Partial Surrenders . . . . . . . . . . . . . . . . . . . . . . . .26
-Preferred Partial Surrenders. . . . . . . . . . . . . . . . . . .27
-Reduction of the Specified Amount . . . . . . . . . . . . . . . .27
Maturity Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .27
Income Tax Withholding . . . . . . . . . . . . . . . . . . . . . .27
POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Taking a Policy Loan . . . . . . . . . . . . . . . . . . . . . . .27

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Effect on Investment Performance . . . . . . . . . . . . . . . . .27
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Effect on Death Benefit and Cash Value . . . . . . . . . . . . . .28
Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
HOW THE DEATH BENEFIT VARIES . . . . . . . . . . . . . . . . . . . . . . . .28
Calculation of the Death Benefit . . . . . . . . . . . . . . . . .28
Proceeds Payable on Death. . . . . . . . . . . . . . . . . . . . .30
RIGHT OF CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
CHANGES OF INVESTMENT POLICY . . . . . . . . . . . . . . . . . . . . . . . .30
GRACE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
THE FIXED ACCOUNT OPTION . . . . . . . . . . . . . . . . . . . . . . . . . .31
CHANGES IN EXISTING INSURANCE COVERAGE . . . . . . . . . . . . . . . . . . .31
Specified Amount Increases . . . . . . . . . . . . . . . . . . . .31
Specified Amount Decreases . . . . . . . . . . . . . . . . . . . .32
Changes in the Death Benefit Option. . . . . . . . . . . . . . . .32
OTHER POLICY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .32
Policy Owner . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . .33
Error in Age . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Suicide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Nonparticipating Policies. . . . . . . . . . . . . . . . . . . . .33
Riders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
LEGAL CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
DISTRIBUTION OF THE POLICIES . . . . . . . . . . . . . . . . . . . . . . . .34
CUSTODIAN OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Policy Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . .34
-Non-Resident Aliens . . . . . . . . . . . . . . . . . . . . . . .35
Taxation of the Company. . . . . . . . . . . . . . . . . . . . . .35
Tax Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
COMPANY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Directors of the Company . . . . . . . . . . . . . . . . . . . . .37
Executive Officers of the Company. . . . . . . . . . . . . . . . .38
OTHER CONTRACTS ISSUED BY THE COMPANY. . . . . . . . . . . . . . . . . . . .38
STATE REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
REPORTS TO POLICY OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . .39
ADVERTISING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
EXPERTS 39
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .39
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
APPENDIX 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
PERFORMANCE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

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THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.

THE PRIMARY PURPOSE OF THE POLICIES IS TO PROVIDE LIFE INSURANCE PROTECTION FOR
THE BENEFICIARY NAMED IN THE POLICY. NO CLAIM IS MADE THAT THE POLICIES ARE IN
ANY WAY SIMILAR OR COMPARABLE TO A SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.

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SUMMARY OF THE POLICIES

VARIABLE LIFE INSURANCE

The variable life insurance Policies offered by Nationwide Life and Annuity
Insurance Company (the "Company") provide for life insurance coverage on the
Insured. The Policies may provide for a Cash Surrender Value which is payable if
the Policy is terminated during the Insured's lifetime.

The death benefit and Cash Value of the Policies may increase or decrease to
reflect the investment performance of the Variable Account Sub-Accounts or the
Fixed Account to which Cash Values are allocated (see "How the Death Benefit
Varies"). There is no guaranteed Cash Surrender Value (see "How the Cash Value
Varies"). If the Cash Surrender Value is insufficient to pay the Policy Charges,
the Policy will lapse without value.

Under certain conditions, a Policy may become a modified endowment contract as a
result of a material change or a reduction in benefits as defined by the
Internal Revenue Code ("Code"). Excess premiums paid may also cause the Policy
to become a modified endowment contract. The Company will monitor premiums paid
and other policy transactions and will notify the Policy Owner when the Policy's
non-modified endowment contract status is in jeopardy (see "Tax Matters").

THE VARIABLE ACCOUNT AND ITS SUB-ACCOUNTS

The Company places the Policy's Net Premiums in the Variable Account or the
Fixed Account at the time the Policy is issued. The Policy Owner selects the
sub-accounts of the Variable Account or the Fixed Account into which the Cash
Value will be allocated. In such states which require a return of premiums to
those Policy Owners exercising their short term right to cancel (see "Short Term
Right to Cancel Policy"), Net Premiums will be allocated to the Nationwide
Separate Account Trust Money Market Fund sub-account (for any Net Premiums
allocated to a sub-account on the application) or the Fixed Account until the
expiration of the period in which the Policy Owner may exercise his or her
short-term right to cancel the Policy. Assets of each sub-account are invested
at net asset value in shares of a corresponding Underlying Mutual Fund (see
"Allocation of Net Premium and Cash Value"). For a description of the
Underlying Mutual Fund options and their investment objectives, see "Investments
of the Variable Account."

THE FIXED ACCOUNT

The Fixed Account is funded by the assets of the Company's General Account. Cash
Values allocated to the Fixed Account are credited with interest daily at a rate
declared by the Company. The interest rate declared is at the Company's sole
discretion, but may never be less than an effective annual rate of 3%.

DEDUCTIONS AND CHARGES

The Company deducts certain charges from the assets of the Variable Account and
the Cash Value of the Policy. These charges are made for administrative and
sales expenses, state premium taxes, providing life insurance protection and
assuming the mortality and expense risks. For a discussion of any charges
imposed by the Underlying Mutual Fund options, see the prospectuses of the
respective Underlying Mutual Funds.

The Company also deducts from premium payments a tax expense charge of 3.5%, on
both a current and guaranteed basis, of all premium payments. This charge
reimburses the Company for premium taxes imposed by various state and local
jurisdictions and for federal taxes imposed under Section 848 of the Code. The
3.5 tax expense rate consists of the following components: (1) a state premium
tax rate of 2.25%; and (2) a federal tax rate of 1.25%.

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The Company also deducts the following charges from the Policy's Cash Value on
the Policy Date and each subsequent Monthly Anniversary Day:

1. monthly cost of insurance; plus

2. monthly cost of any additional benefits provided by riders to the
Policy; plus

3. an administrative expense charge. This charge is currently $5.00 per
month. The charge may be increased at the sole discretion of the
Company but is guaranteed not to exceed $10.00 per month.

The Company also deducts on a daily basis from the assets of the Variable
Account a charge to provide for mortality and expense risks. This charge is
guaranteed not to exceed an annual effective rate of 0.75% of the daily net
assets of the Variable Account. On a current basis this annual effective rate
will be 0.60% in the first through fourth Policy Years, 0.40% in fifth through
twentieth Policy Years and 0.25% thereafter.

There are no Surrender Charges.

Underlying Mutual Fund shares are purchased at net asset value, which reflects
the deduction of investment management fees and certain other expenses. The
management fees are charged by each Underlying Mutual Fund's investment adviser
for managing the Underlying Mutual Fund and selecting its portfolio of
securities. Other Underlying Mutual Fund expenses can include such items as
interest expense on loans and contracts with transfer agents, custodians, and
other companies that provide services to the Underlying Mutual Fund (See
"Expenses of the Underlying Mutual Funds").

PREMIUMS

The minimum Initial Premium for which a Policy may be issued is equal to three
monthly deductions. A policy may be issued to an Insured up to age 80. For a
limited time, the Policy Owner has the right to cancel the Policy and receive a
full refund of premiums paid (see "Short-Term Right to Cancel Policy"). The
Initial Premium is due on the Policy Date. It will be credited on the Policy
Date. Any due and unpaid monthly deductions will be subtracted from the Cash
Value at this time. Insurance will not be effective until the Initial Premium
is paid. The Initial Premium is shown on the Policy data page. Premiums, other
than the Initial Premium may be made at any time while the Policy is in force.

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY

Nationwide Life and Annuity Insurance Company (the "Company"), is a stock life
insurance company organized under the laws of the State of Ohio in February,
1981. The Company is a member of Nationwide Insurance Enterprise which includes
Nationwide Life Insurance Company, Nationwide Indemnity Company, Nationwide
Mutual Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide
Property and Casualty Insurance Company, National Casualty Company, West Coast
Life Insurance Company, Scottsdale Indemnity Company and Nationwide General
Insurance Company and their affiliated companies. The Company's Home Office is
at One Nationwide Plaza, Columbus, Ohio 43216.

The Company offers a multiple line of products, including annuities. It is
admitted to do business in 46 states and the District of Columbia (for
additional information, see "The Company").

THE VARIABLE ACCOUNT

The Variable Account was established by the Company on August 8, 1984. The
Company has caused the Variable Account to be registered with the Securities and
Exchange Commission as a unit investment trust pursuant to the provisions of the
Investment Company Act of 1940. Such registration does not involve supervision
of the management of the Variable Account or the Company by the Securities and
Exchange Commission.

The Variable Account is a separate investment account of the Company and as
such, is not chargeable with the liabilities arising out of any other business
the Company may conduct. The Company does not guarantee the investment
performance of the Variable Account. The Death Benefit and Cash Value under the
Policy may vary with the investment performance of the investments of the
Variable Account (see "How the Death Benefit Varies" and "How Cash Value
Varies").

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Premium payments and Cash Value are allocated within the Variable Account among
one or more Sub-Accounts. The assets of each Sub-Account are used to purchase
shares of the Underlying Mutual Funds designated by the Policy Owner. Thus, the
investment performance of a Policy depends upon the investment performance of
the Underlying Mutual Fund options designated by the Policy Owner.

INVESTMENTS OF THE VARIABLE ACCOUNT

At the time of application, the Policy Owner elects to have the Net Premiums
allocated among one or more of the Variable Account Sub-Accounts and the Fixed
Account (see "Allocation of Net Premium and Cash Value"). In such states which
require a return of premiums to those Policy Owners exercising their short term
right to cancel (see "Short Term Right to Cancel Policy"), Net Premiums will be
allocated to the Nationwide Separate Account Trust Money Market Fund sub-account
(for any Net Premiums allocated to a sub-account on the application) or the
Fixed Account until the expiration of the period in which the Policy Owner may
exercise his or her short-term right to cancel the Policy. Any subsequent Net
Premiums received after this period will be allocated based on the Fund
allocation factors.

No less than 1% of Net Premiums may be allocated to any one Sub-Account or the
Fixed Account. The Policy Owner may change the allocation of Net Premiums or
may transfer Cash Value from one Sub-Account to another, subject to such terms
and conditions as may be imposed by each Underlying Mutual Fund option and as
set forth in this prospectus (see "Transfers", "Allocation of Cash Value" and
"Short-Term Right to Cancel Policy").

These Underlying Mutual Fund options are available only to serve as the
underlying investment for variable annuity and variable life contracts issued
through separate accounts of life insurance companies which may or may not be
affiliated, also known as "mixed and shared funding." There are certain risks
associated with mixed and shared funding, which is disclosed in the Underlying
Mutual Funds' prospectuses. A full description of the Underlying Mutual Funds,
their investment policies and restrictions, risks and charges are contained in
the prospectuses of the respective Underlying Mutual Funds.

Additional Premium payments, upon acceptance, will be allocated to the
Nationwide Separate Account Money Market Fund unless the Policy Owner specifies
otherwise (see "Premium Payments").

Each of the Underlying Mutual Fund options is a registered investment company
which receives investment advice from a registered investment adviser:

1. American Century Variable Portfolios, Inc., a member of the American
Century-SM- Investments;

2. Dreyfus Stock Index Fund, managed by Wells Fargo Nikko Investment
Advisors;

3. The Dreyfus Socially Responsible Growth Fund, Inc., managed by The
Dreyfus Corporation;

4. Dreyfus Variable Investment Fund, managed by The Dreyfus Corporation;

5. Fidelity Variable Insurance Products Fund, managed by Fidelity
Management & Research Company;

6. Fidelity Variable Insurance Products Fund II, managed by Fidelity
Management & Research Company;

7. Fidelity Variable Insurance Products Fund III, managed by Fidelity
Management & Research Company;

8. Morgan Stanley Universal Funds, Inc., managed by Morgan Stanley Asset
Management, Inc.;

9. Nationwide Separate Account Trust, managed by Nationwide Advisory
Services, Inc.;

10. Neuberger & Berman Advisers Management Trust, managed by Neuberger &
Berman Management Incorporated;

11. Oppenheimer Variable Accounts Funds, managed by Oppenheimer Management
Corporation;

12. Strong Opportunity Fund II, Inc., managed by Strong Capital
Management, Inc.;

13. Strong Variable Insurance Funds, Inc., managed by Strong Capital
Management

14. Van Eck Worldwide Insurance Trust, managed by Van Eck Associates
Corporation;

15. Van Kampen American Capital Life Investment Trust, managed by Van
Kampen American Capital Management, Inc.; and

16. Warburg Pincus Trust, managed by Warburg, Pincus Counsellors, Inc.

A summary of investment objectives is contained in the description of each
Underlying Mutual Fund below. More detailed information may be found in the
current prospectus for each Underlying Mutual Fund option. A

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<PAGE>

prospectus for the Underlying Mutual Fund option(s) being considered must
accompany this prospectus and should be read in conjunction herewith.

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

American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end management company, designed
only to provide investment vehicles for variable annuity and variable life
insurance products of insurance companies. A member of the American Century-SM-
Investments, 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 securities. There can be no assurance
that the Fund will achieve its investment objective.

- - 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.

- - AMERICAN CENTURY VP INTERNATIONAL

INVESTMENT OBJECTIVE: To seek capital growth. The Fund will seek to
achieve its investment objective by investing primarily in securities of
foreign companies that meet certain fundamental and technical standards of
selection and, in the opinion of the investment manager, have potential for
appreciation. Under normal conditions, the Fund will invest at least 65%
of its assets in common stocks or other equity securities of issuers from
at least three countries outside the United States. Securities of United
States issuers may be included in the portfolio from time to time.
Although the primary investment of the Fund will be common stocks (defined
to include depository receipts for common stocks), the Fund may also invest
in other types of securities consistent with the Fund's objective. When
the manager believes that the total return potential of other securities
equals or exceeds the potential return of common stocks, the Fund may
invest up to 35% of its assets in such other securities. There can be no
assurance that the Fund will achieve its objectives.

- - AMERICAN CENTURY VP VALUE

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

(Although the Statement of Additional Information concerning American
Century Variable Portfolios, Inc., refers to redemption's of securities in
kind under certain conditions, all surrendering or redeeming Contract
Owners will receive cash from the Company.)

DREYFUS

- - DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
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. Dreyfus
Corporation serves as the Fund's investment advisor. Tiffany Capitol
Advisors, Inc. serves as the Fund's sub-investment adviser and provides
day-to-day management of the Fund's portfolio.

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<PAGE>

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.

- - DREYFUS STOCK INDEX FUND

Dreyfus Stock Index Fund is an open-end, non-diversified, management
investment company. It was incorporated under Maryland law on January 24,
1989, and commenced operations on September 29, 1989. Wells Fargo Nikko
Investment Advisors serves as the Fund's index fund manager. As of May 1,
1994, Dreyfus Life Insurance Index Fund began doing business as Dreyfus
Stock Index Fund.

INVESTMENT OBJECTIVE: To provide investment results that correspond to the
price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Fund is neither sponsored by nor affiliated with Standard
& Poor's Corporation.

DREYFUS VARIABLE INVESTMENT FUND

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

- - CAPITAL APPRECIATION PORTFOLIO

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

- - GROWTH AND INCOME PORTFOLIO

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

FIDELITY VARIABLE INSURANCE PRODUCTS FUND

The Fund is an open-end, diversified, management investment company organized as
a Massachusetts business trust on November 13, 1981. The Fund's shares are
purchased by insurance companies to fund benefits under variable insurance and
annuity policies. Fidelity Management & Research Company ('FMR') is the Fund's
manager.

- - EQUITY-INCOME PORTFOLIO

INVESTMENT OBJECTIVE: To seek reasonable income by investing primarily in
income-producing equity securities. In choosing these securities FMR also
will consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's 500 Composite Stock Price Index.

- - GROWTH PORTFOLIO

INVESTMENT OBJECTIVE: Seeks to achieve capital appreciation. This
Portfolio will invest in the securities of both well-known and established
companies, and smaller, less well-known companies which may have a narrow
product line or whose securities are thinly traded. These latter
securities will often involve greater

12
<PAGE>

risk than may be found in the ordinary investment security. FMR's analysis
and expertise plays an integral role in the selection of securities and,
therefore, the performance of the Portfolio. Many securities which FMR
believes would have the greatest potential may be regarded as speculative,
and investment in the Portfolio may involve greater risk than is inherent
in other mutual funds. It is also important to point out that the
Portfolio makes most sense for you if you can afford to ride out changes in
the stock market, because it invests primarily in common stocks. FMR also
can make temporary investments in securities such as investment-grade
bonds, high-quality preferred stocks and short-term notes, for defensive
purposes when it believes market conditions warrant.

- - HIGH INCOME PORTFOLIO

INVESTMENT OBJECTIVE: Seeks to obtain a high level of current income by
investing primarily in high-risk, high-yielding, lower-rated, fixed-income
securities, while also considering growth of capital. The portfolio's
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, zero coupon securities, and mortgage-
backed and asset-backed securities.

- up to 20% in common stocks and other equity securities when consistent
with the Portfolio's primary objective or acquired as part of a unit
combining fixed-income and equity securities.

Higher yields are usually available on securities that are lower-rated or that
are unrated. Lower-rated securities are usually defined as Ba or lower by
Moody's; BB or lower by Standard & Poor's and may be deemed to be of a
speculative nature. The Portfolio may also purchase lower-quality bonds such as
those rated Ca3 by Moody's or C- by Standard & Poor's which provide poor
protection for payment of principal and interest (commonly referred to as "junk
bonds"). For a further discussion of lower-rated securities, please see the
"Risks of Lower-Rated Debt Securities" section of the Portfolio's prospectus.

- - OVERSEAS PORTFOLIO

INVESTMENT OBJECTIVE: To seek long term growth of capital primarily
through investments in foreign securities. The Overseas Portfolio provides
a means for investors to diversify their own portfolios by participating in
companies and economies outside of the United States.

FIDELITY VARIABLE INSURANCE PRODUCTS FUND II

The Fund is an open-end, diversified, management investment company organized as
a Massachusetts business trust on March 21, 1988. The Fund's shares are
purchased by insurance companies to fund benefits under variable insurance and
annuity policies. FMR is the Fund's manager.

- - ASSET MANAGER PORTFOLIO

INVESTMENT OBJECTIVE: To seek to obtain high total return with reduced
risk over the long-term by allocating its assets among domestic and foreign
stocks, bonds and short-term fixed income instruments.

- - CONTRAFUND PORTFOLIO

INVESTMENT OBJECTIVE: To seek capital appreciation by investing primarily
in companies that the fund manager believes to be undervalued due to an
overly pessimistic appraisal by the public. This strategy can lead to
investments in domestic or foreign companies, small and large, many of
which may not be well known. The fund primarily invests in common stock
and securities convertible into common stock, but it has the flexibility to
invest in any type of security that may produce capital appreciation.

FIDELITY VARIABLE INSURANCE PRODUCTS FUND III

The Fidelity Variable Insurance Products Fund III is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
July 14, 1994. The Fund's name was changed from Fidelity Advisor Annuity Fund
to Variable Insurance Products Fund III on December 30, 1996. The Fund shares
are purchased by insurance companies to fund benefits under variable life
insurance and annuity contracts. Fidelity Management & Research Company ("FMR")
is the Fund's manager.

- - GROWTH OPPORTUNITIES PORTFOLIO

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

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<PAGE>

MORGAN STANLEY UNIVERSAL FUNDS, INC.

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

- - EMERGING MARKETS DEBT PORTFOLIO

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

NATIONWIDE SEPARATE ACCOUNT TRUST

Nationwide Separate Account Trust (the "Trust") is a diversified open-end
management investment company created under the laws of Massachusetts. The
Trust offers shares in the five separate Mutual Funds listed below, each with
its own investment objectives. Currently, shares of the Trust will be sold only
to life insurance company separate accounts to fund the benefits under variable
life insurance policies or variable annuity contracts issued by life insurance
companies. The assets of the Trust are managed by Nationwide Advisory Services,
Inc., One Nationwide Plaza, Columbus, Ohio 43216.

- - CAPITAL APPRECIATION FUND

INVESTMENT OBJECTIVE: The Fund is designed for investors who are
interested in long-term growth. The Fund seeks to meet its objective
primarily through a diversified portfolio of the common stock of companies
which the investment manager determines have a better-than-average
potential for sustained capital growth over the long term.

- - GOVERNMENT BOND FUND

INVESTMENT OBJECTIVE: To provide as high a level of income as is
consistent with capital preservation through investing primarily in bonds
and securities issued or backed by the U.S. Government, its agencies or
instrumentalities.

- - MONEY MARKET FUND

INVESTMENT OBJECTIVE: To seek as high a level of current income as is
considered consistent with the preservation of capital and liquidity by
investing primarily in money market instruments.

- - SMALL COMPANY FUND

INVESTMENT OBJECTIVE: The Fund seeks long-term growth of capital by
investing primarily in equity securities of domestic and foreign companies
with market capitalization's of less than $1 billion at the time of
purchase. Nationwide Advisory Services, Inc. ("NAS"), the Fund's adviser,
has contracted with a group of sub-advisers, each of which will manage a
portion of the Fund's portfolio. These sub-advisers are the Dreyfus
Corporation, Neuberger & Berman, L. P., Pictet International Management
Limited, Van Eck Associates Corporation, Strong Capital Management, Inc.
and Warburg Pincus Counsellors, Inc. The sub-advisers were chosen because
they utilize a number of different investment styles when investing in
small company stocks. By utilizing a number of investment styles, NAS
hopes to increase prospects for investment return and to reduce market risk
and volatility.

- - TOTAL RETURN FUND

INVESTMENT OBJECTIVE: To obtain a reasonable long-term total return (i.e.,
earnings growth plus potential dividend yield) on invested capital from a
flexible combination of current return and capital gains through
investments in common stocks, convertible issues, money market instruments
and bonds with a primary emphasis on common stocks.

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST

Neuberger & Berman Advisers Management Trust is an open-end diversified
management investment company established as a Massachusetts business trust on
December 14, 1983. Shares of the Trust are offered in connection with certain
variable annuity contracts and variable life insurance policies issued through

14
<PAGE>

life insurance company separate accounts and are also offered directly to
qualified pension and retirement plans outside of the separate account context.
The investment adviser is Neuberger & Berman Management Incorporated.

- - GROWTH PORTFOLIO

INVESTMENT OBJECTIVE: The Portfolio seeks capital growth through
investments in common stocks of companies that the investment adviser
believes will have above average earnings or otherwise provide investors
with above average potential for capital appreciation. To maximize this
potential, the investment adviser may also utilize, from time to time,
securities convertible into common stocks, warrants and options to purchase
such stocks.

- - LIMITED MATURITY BOND PORTFOLIO

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.
The Portfolio invests in securities which are at least investment grade and
does not invest in junk bonds.

- - PARTNERS PORTFOLIO

INVESTMENT OBJECTIVE: To seek capital growth. This Portfolio will seek to
achieve its objective by investing primarily in the common stock of
established companies. Its investment program seeks securities believed to
be undervalued based on fundamentals such as low price-to-earnings ratios,
consistent cash flows, and support from asset values. The objective of the
Partners Portfolio is not fundamental and can be changed by the Trustees of
the Trust without shareholder approval. Shareholders will, however,
receive at least 30 days prior notice thereof. There is no assurance the
investment objective will be met.

OPPENHEIMER VARIABLE ACCOUNT FUNDS

The Oppenheimer Variable Account Funds is an open-ended, diversified management
investment company organized as a Massachusetts business trust in 1984. Shares
of the Funds are sold only to provide benefits under variable life insurance
policies and variable annuity contracts. Oppenheimer Management Corporation is
the Funds' investment advisor.

- - OPPENHEIMER BOND FUND

INVESTMENT OBJECTIVE: Primarily to seek a high level of current income
from investment in high yield fixed-income securities rated "Baa" or better
by Moody's or "BBB" or better by Standard & Poor's. Secondarily, the Fund
seeks capital growth when consistent with its primary objective.

- - OPPENHEIMER GLOBAL SECURITIES FUND

INVESTMENT OBJECTIVE: To seek long-term capital appreciation by investing
a substantial portion of assets in securities of foreign issuers, "growth-
type" companies, cyclical industries and special situations which are
considered to have appreciation possibilities. Current income is not an
objective. These securities may be considered to be speculative.

- - OPPENHEIMER GROWTH FUND

INVESTMENT OBJECTIVE: The Fund seeks to achieve capital appreciation by
investing in securities of well-known established companies. In seeking
its objective of capital appreciation, the Fund will emphasize investments
in securities of well-known and established companies. Such securities
generally have a history of earnings and dividends and are issued by
seasoned companies (having an operating history of at least five years
including predecessors). Current income is a secondary consideration in
the selection of the Fund's portfolio securities.

- - OPPENHEIMER MULTIPLE STRATEGIES FUND

INVESTMENT OBJECTIVE: To seek a total investment return (which includes
current income and capital appreciation in the value of its shares) from
investments in common stocks and other equity securities, bonds and other
debt securities, and "money market" securities.

STRONG OPPORTUNITY FUND II, INC.

The Strong Opportunity Fund II, Inc. (fka "Strong Special Fund II, Inc.") is a
diversified, open-end management company commonly called a mutual fund. The
Fund was incorporated in Wisconsin and may only be purchased by the separate
accounts of insurance companies for the purpose of funding variable annuity

15
<PAGE>

contracts and variable life insurance policies. Strong Capital Management Inc.
(the "Advisor") is the investment advisor for the Fund.

INVESTMENT OBJECTIVE: To seek capital appreciation through investments in
a diversified portfolio of equity securities.

STRONG VARIABLE INSURANCE FUNDS, INC.

Strong Variable Insurance Funds, Inc. ("Corporation") is an open-end management
investment company, commonly referred to as a mutual fund. Incorporated in the
State of Wisconsin, the Corporation has been authorized to issue shares of
common stock and series and classes of series of common stock. The
International Stock Fund II and The Strong Discovery Fund II, Inc. ("Funds") are
offered by the Corporation to insurance company separate accounts for the
purpose of funding variable life insurance policies and variable annuity
contracts. Strong Capital Management, Inc. is the investment advisor to the
Funds.

- - DISCOVERY FUND II, INC.

INVESTMENT OBJECTIVE: To seek maximum capital appreciation through
investments in a diversified portfolio of securities. The Fund normally
emphasizes investment in equity securities and may invest up to 100% of its
total assets in equity securities including common stocks, preferred stocks
and securities convertible into common or preferred stocks. Although the
Fund normally emphasizes investment in equity securities, the Fund has the
flexibility to invest in any type of security that the Advisor believes has
the potential for capital appreciation including up to 100% of its total
assets in debt obligations, including intermediate to long-term corporate
or U.S. government debt securities.

- - INTERNATIONAL STOCK FUND II

INVESTMENT OBJECTIVE: To seek capital growth by investing primarily in the
equity securities of issuers located outside the United States.

VAN ECK WORLDWIDE INSURANCE TRUST

Van Eck Worldwide Insurance Trust is an open-end management investment company
organized as a "business trust" under the laws of the Commonwealth of
Massachusetts on January 7, 1987. Shares of the Trust are offered only to
separate accounts of various insurance companies to fund benefits of variable
insurance and annuity policies. The assets of the Trust are managed by Van Eck
Associates Corporation.

- - GOLD AND NATURAL RESOURCES FUND

INVESTMENT OBJECTIVE: To seek long-term capital appreciation by investing
in equity and debt securities of companies engaged in the exploration,
development, production and distribution of gold and other natural
resources, such as strategic and other metals, minerals, forest products,
oil, natural gas and coal. Current income is not an objective.

- - WORLDWIDE BOND FUND

INVESTMENT OBJECTIVE: To seek high total return through a flexible policy
of investing globally, primarily in debt securities. The Fund does not
invest in junk bonds.

- - WORLDWIDE EMERGING MARKETS FUND

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

VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST

The American Capital Life Investment Trust is an open-end diversified management
investment company organized as a Massachusetts business trust on June 3, 1985.
The Trust offers shares in separate funds which are sold only to insurance
companies to provide funding for variable life insurance policies and variable
annuity contracts. Van Kampen American Capital Asset Management, Inc. serves as
the Portfolio's investment adviser.

- - MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO

INVESTMENT OBJECTIVE: To seek long-term capital growth by investing in a
portfolio of securities of companies operating in the real estate industry
("Real Estate Securities"). Current income is a secondary consideration.
Real Estate Securities include equity securities, common stocks and
convertible securities, as well as non-convertible preferred stocks and
debt securities of real estate industry companies. A "real estate industry
company" is a company that derives at least 50% of its assets

16
<PAGE>

(marked to market), gross income or net profits from the ownership,
construction, management or sale of residential, commercial or industrial
real estate. Under normal market conditions, at least 65% of the
Portfolio's total assets will be invested in Real Estate Securities,
primarily equity securities of real estate investment trusts. The
Portfolio may invest up to 25% of its total assets in securities issued by
foreign issuers, some or all of which may also be Real Estate Securities.
There can be no assurance that the Portfolio will achieve its investment
objective.

WARBURG PINCUS TRUST

The Warburg Pincus Trust ("Trust") is an open-end management investment company
organized in March 1995 as a business trust under the laws of The Commonwealth
of Massachusetts. The Trust offers its shares to insurance companies for
allocation to separate accounts for the purpose of funding variable annuity and
variable life contracts. Trust portfolios are managed by Warburg, Pincus
Counsellors, Inc. ("Counsellors.")

- - INTERNATIONAL EQUITY PORTFOLIO

INVESTMENT OBJECTIVE: To seek long-term capital appreciation by investing
primarily in a broadly diversified portfolio of equity securities of
companies, wherever organized, that in the judgment of "Counsellors" have
their principal business activities and interests outside the United
States. The Portfolio will ordinarily invest substantially all of its
assets, but no less than 65% of its total assets, in common stocks,
warrants and securities convertible into or exchangeable for common stocks.
The Portfolio intends to invest principally in the securities of
financially strong companies with opportunities for growth within growing
international economies and markets through increased earning power and
improved utilization or recognition of assets.

- - POST-VENTURE CAPITAL PORTFOLIO

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

- - SMALL COMPANY GROWTH PORTFOLIO

INVESTMENT OBJECTIVE: To seek capital growth by investing in a portfolio
of equity securities of small-sized domestic companies. The Portfolio
ordinarily will invest at least 65% of its total assets in common stocks or
warrants of small-sized companies (i.e., companies having stock market
capitalization's of between $25 million and $1 billion at the time of
purchase) that represent attractive opportunities for capital growth. The
Portfolio intends to invest primarily in companies whose securities are
traded on domestic stock exchanges or in the over-the-counter market. The
Portfolio's investments will be made on the basis of their equity
characteristics and securities ratings generally will not be a factor in
the selection process.

REINVESTMENT

The Funds described above have as a policy the distribution of dividends in the
form of additional shares (or fractions thereof) of the Underlying Mutual Funds.
The distribution of additional shares will not affect the number of Accumulation
Units attributable to a particular Policy (see "Allocation of Net Premium and
Cash Value").

TRANSFERS

The Policy Owner may transfer amounts between the Fixed Account and the Sub-
Accounts, without penalty or adjustment, subject to the following requirements.
During any Policy Year, the Company reserves the right to restrict such
transfers between the Fixed Account and the Sub-Accounts to one transfer per
Policy Year.

Transfers made from the Fixed Account must be made within 45 days after the end
of an interest rate guarantee period (the period of time for which the current
interest crediting rate is guaranteed by the Company). The Company reserves the
right to restrict the amount transferred from the Fixed Account to 20% of that
portion of the Cash Value attributable to the Fixed Account as of the end of the
previous Policy Year.

Transfers made to the Fixed Account may not be made either: (a) prior to the
first Policy Anniversary; or (b) within 12 months subsequent to a prior
transfer. The Company reserves the right to restrict the amount transferred to
the Fixed Account to 20% of that portion of the Cash Value attributable to the
Sub-Accounts as of the close of business of the prior Valuation Period. The
Company further reserves the right to refuse a transfer

17
<PAGE>

to the Fixed Account, in the event the Cash Value attributable to the Fixed
Account should be greater than or equal to 30% of the Cash Value.

Transfers may be made either in writing or, in states allowing such transfers,
by telephone. In states allowing telephone transfers, and if the Owner so
elects, the Company will also permit the Policy Owner to utilize the Telephone
Exchange Privilege for exchanging amounts among Sub-Account options. The
Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include any or all
of the following, or such other procedures as the Company may, from time to
time, deem reasonable: requesting identifying information, such as name,
contract number, Social Security number, and/or personal identification number;
tape recording all telephone transactions; and providing written confirmation
thereof to both the Policy Owner and any agent of record at the last address of
record. Although failure to follow reasonable procedures may result in the
Company's liability for any losses due to unauthorized or fraudulent telephone
transfers, the Company will not be liable for following instructions
communicated by telephone which it reasonably believes to be genuine. Any losses
incurred pursuant to actions taken by the Company in reliance on telephone
instructions reasonably believed to be genuine shall be borne by the Contract
Owner.

Policy Owners who have entered into a Dollar Cost Averaging Agreement with the
Company (see "Dollar Cost Averaging" below) may transfer from the Fixed Account
to the Variable Account under the terms of that agreement.

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

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

DOLLAR COST AVERAGING

The Policy Owner may direct the Company to automatically transfer from the Money
Market Sub-Account, Fixed Account, or the Limited Maturity Bond Portfolio Sub-
Account to any other Sub-Account within the Variable Account on a monthly basis
or as frequently as otherwise authorized by the Company. This service is
intended to allow the Policy Owner to utilize dollar cost averaging, a long-term
investment program which provides for regular, level investments over time. The
Company makes no guarantees that dollar cost averaging, will result in a profit
or protect against loss in a declining market. To qualify for dollar cost
averaging, there must be a minimum total Cash Value, less Policy Indebtedness,
of $15,000. Transfers for purposes of dollar cost averaging can only be made
from the Money Market Sub-Account, Fixed Account, or the Limited Maturity Bond
Portfolio Sub-Account. The minimum monthly dollar cost averaging transfer is
$100. In addition, dollar cost averaging monthly transfers from the Fixed
Account must be equal to or less than 1/30th of the Fixed Account value when the
dollar cost averaging program is requested. Transfers out of the Fixed Account,
other than for dollar cost averaging, may be subject to certain additional
restrictions (see "Transfers" above). A written election of this service, on a
form provided by the Company, must be completed by the Policy Owner in order to
begin transfers. Once elected, transfers from the Money Market Sub-Account,
Fixed Account, or the Limited Maturity Bond Portfolio Sub-Account will be
processed monthly until either the value in the Money Market Sub-Account, Fixed
Account, or the Limited Maturity Bond Portfolio Sub-Account is completely
depleted or the Policy Owner instructs the Company in writing to cancel the
transfers.

18
<PAGE>

The Company reserves the right to discontinue offering dollar cost averaging
upon 30 days written notice to Policy Owners. However, any such discontinuation
would not affect dollar cost averaging programs already commenced. The Company
also reserves the right to assess a processing fee for this service.

SUBSTITUTION OF SECURITIES

If shares of the Underlying Mutual Fund options should no longer be available
for investment by the Variable Account or, if in the judgment of the Company's
management further investment in such Underlying Mutual Funds should become
inappropriate in view of the purposes of the Policy, the Company may substitute
shares of another Underlying Mutual Fund for shares already purchased or to be
purchased in the future by Net Premium payments under the Policy. No
substitution of securities in the Variable Account may take place without prior
approval of the Securities and Exchange Commission, and under such requirements
as it and any state insurance department may impose.

VOTING RIGHTS

Voting rights under the Policies apply only with respect to Cash Value allocated
to the Sub-Accounts of the Variable Account.

In accordance with its view of present applicable law, the Company will vote the
shares of the Underlying Mutual Funds held in the Variable Account at regular
and special meetings of the shareholders of the Underlying Mutual Funds in
accordance with instructions received from Policy Owners. However, if the
Investment Company Act of 1940 or any regulation thereunder should be amended or
if the present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote the shares of the Underlying Mutual
Funds in its own right, the Company may elect to do so.

The Policy Owner shall have the voting interest under a Policy. The number of
shares in each Sub-Account for which the Policy Owner may give voting
instructions is determined by dividing any portion of the Policy's Cash Value
derived from participation in that Underlying Mutual Fund by the net asset value
of one share of that Underlying Mutual Fund.

The number of shares which a person has a right to vote will be determined as of
a date chosen by the Company, but not more than 90 days prior to the meeting of
the Underlying Mutual Fund. Voting instructions will be solicited by written
communication prior to such meeting.

The Company will vote Underlying Mutual Fund shares in accordance with
instructions received from the Policy Owners. Underlying Mutual Fund shares held
by the Company or by the Variable Account as to which no timely instructions are
received will be voted by the Company in the same proportion as the voting
instructions which are received.

Each person having a voting interest in the Variable Account will receive
periodic reports relating to investments of the Variable Account, the Underlying
Mutual Funds' proxy material and a form with which to give such voting
instructions.

Notwithstanding contrary Policy Owner voting instructions, the Company may vote
Underlying Mutual Fund shares in any manner necessary to enable the Underlying
Mutual Fund to: (1) make or refrain from making any change in the investments or
investment policies for any of the Underlying Mutual Funds, if required by an
insurance regulatory authority; (2) refrain from making any change in the
investment policies or any investment adviser or principal underwriter of any
portfolio which may be initiated by Policy Owners or the Underlying Mutual
Fund's Board of Directors, provided the Company's disapproval of the change is
reasonable and, in the case of a change in the investment policies or investment
adviser, based on a good faith determination that such change would be contrary
to state law or otherwise inappropriate in light of the portfolio's objective
and purposes; or (3) enter into or refrain from entering into any advisory
agreement or underwriting contract, if required by any insurance regulatory
authority.

INFORMATION ABOUT THE POLICIES

UNDERWRITING AND ISSUANCE
- -Minimum Requirements for Issuance of a Policy

The Policies are designed to provide life insurance coverage and the flexibility
to vary the amount and frequency of premium payments. At issue, the Policy
Owner selects the initial Specified Amount and premium. The minimum Specified
Amount is $50,000 ($100,000 in Pennsylvania and New Jersey). Policies may be
issued to Insured's who are 80 or younger at the time of issue. Before issuing
any Policy, the Company requires satisfactory evidence of insurability which may
include a medical examination.

19
<PAGE>

- -Premium Payments

The Initial Premium for a Policy is payable in full at the Company's Home Office
or to an authorized agent. Upon payment of an initial premium, temporary
insurance may be provided, subject to a maximum amount. The effective date of
permanent insurance coverage is dependent upon completion of all underwriting
requirements, payment of Initial Premium, and delivery of the policy while the
Insured is still living.

Premiums, other than the Initial Premium, may be made at any time while the
Policy is in force. Each premium payment must be at least $50. The Company
reserves the right to require satisfactory evidence of insurability before
accepting any premium payment which results in an increase in the Net Amount at
Risk. The Company will refund any portion of any premium payment which is
determined to be in excess of the premium limit established by law to qualify
the Policy as a contract for life insurance. The Company may also require that
any existing Policy Indebtedness is repaid prior to accepting any additional
premium payments. Additional premium payments or other changes to the contract,
may jeopardize the Policy's non-modified endowment status. The Company will
monitor premiums paid and other policy transactions and will notify the Policy
Owner when non-modified endowment contract status is in jeopardy (see "Tax
Matters").

ALLOCATION OF NET PREMIUM AND CASH VALUE

The designation of investment allocations will be made by the prospective Policy
Owner at the time of application for a Policy. The Policy Owner may change the
way in which future Net Premiums are allocated by giving written notice to the
Company. All percentage allocations must be in whole numbers, and must be at
least 1%. The sum of allocations must equal 100%. At the time a Policy is
issued, its Cash Value will be determined as if the Policy had been issued and
the Initial Net Premium is invested on the date such premium was received in
good order by the Company.

In such states which require a return of premiums to those Policy Owners
exercising their short term right to cancel (see "Short Term Right to Cancel
Policy"), Net Premiums will be allocated to the Nationwide Separate Account
Trust Money Market Fund sub-account (for any Net Premiums allocated to a sub-
account on the application) or the Fixed Account until the expiration of the
period in which the Policy Owner may exercise his or her short-term right to
cancel the Policy. Net Premiums not designated for the Fixed Account will be
placed in the Nationwide Separate Account Trust Money Market Sub-Account. At
the expiration of the period in which the Policy Owner may exercise his or her
short term right to cancel the Policy, shares of the Underlying Mutual Funds
specified by the Policy Owner are purchased at net asset value for the
respective sub-account(s). The Policy Owner may change the allocation of Net
Premiums or may transfer Cash Value from one sub-account to another, subject to
such terms and conditions as may be imposed by each Underlying Mutual Fund and
as set forth in this prospectus.

SHORT-TERM RIGHT TO CANCEL POLICY

A Policy may be returned for cancellation and a full refund of premium within 10
days after the Policy is received, within 45 days after the application for
insurance is signed, or within 10 days after the Company mails or delivers a
Notice of Right of Withdrawal, whichever is latest. The Policy can be mailed or
delivered to the registered representative who sold it, or to the Company.
Immediately after such mailing or delivery, the Policy will be deemed void from
the beginning. The Company will refund the amount prescribed by the state in
which the Policy was issued in within seven days after it receives the Policy.
The amount of the refund will be either the Premiums paid or the Cash Surrender
Value. The scope of this right varies by state. The exact policy provision
approved or used in a particular state will be disclosed in any policy issued.

POLICY CHARGES

DEDUCTIONS FROM PREMIUMS

The Company deducts a sales load from each premium payment received which is
guaranteed never to exceed 5.5% of such premium payment during the first seven
Policy Years and 2% thereafter. On a current basis, the sales load is 5.5% of
the Target Premium plus 3% of premiums in excess of the Target Premium during
the first seven Policy Years, and 0% on all premiums thereafter. The Target
Premium is a premium level based upon a percentage of the Guideline Level
Premium. The Target Premium is the level annual premium amount at which the
sales load is reduced on a current basis.

The Company also deducts from premium payments a tax expense charge of 3.5%, on
both a current and guaranteed basis, of all premium payments. This charge
reimburses the Company for premium taxes imposed by various state and local
jurisdictions and for federal taxes imposed under Section 848 of the Code. The
3.5% tax expense rate consists of the following components: (1) a state premium
tax rate of 2.25%; and (2) a federal tax rate of 1.25%.

20
<PAGE>

The Company expects to pay an average state premium tax rate of approximately
2.25% of premiums for all states, although such tax rates range by state from 0%
to 4%. To reimburse the Company for the payment of state premium taxes
associated with the Policies, the Company deducts a charge for state premium
taxes equal to 2.25% of all premium payments received. This charge may be more
or less than the amount actually assessed by the state in which a particular
Policy Owner lives. The 1.25% federal tax component is designed to reimburse the
Company for expenses incurred from federal taxes imposed under Section 848 of
the Code (enacted by the Omnibus Budget Reconciliation Act of 1990). The Company
does not expect to make a profit from this charge.

DEDUCTIONS FROM CASH VALUE

The Company also deducts the following charges from the Policy's Cash Value on
the Policy Date and each subsequent Monthly Anniversary Day:

1. monthly cost of insurance charges; plus

2. monthly cost of any additional benefits provided by riders; plus

3. monthly administrative expense charge.

These deductions will be charged proportionately to the Cash Value in each
Variable Account Sub-Account and the Fixed Account.

- -Monthly Cost of Insurance

The monthly cost of insurance charge for each policy month is determined by
multiplying the monthly cost of insurance rate by the Net Amount at Risk. If
death benefit Option 1 is in effect and there have been increases in the
Specified Amount, then the Cash Value shall first be considered a part of the
initial Specified Amount. If the Cash Value exceeds the initial Specified
Amount, it shall then be considered a part of the additional increases in
Specified Amount resulting from the increases in the order of the increases.

Monthly cost of insurance rates will be unisex and will not exceed those
guaranteed in the Policy. Guaranteed cost of insurance rates are based on the
1980 Commissioners Standard Ordinary Male Mortality Table, Age Last Birthday,
aggregate as to tobacco status (1980 CSO). Guaranteed cost of insurance rates
for Policies issued on a substandard basis are based on appropriate percentage
multiples of the 1980 CSO.

The rate class of an Insured may affect the cost of insurance rate. The Company
currently places Insured's into both standard rate classes and substandard
classes that involve a higher mortality risk. In an otherwise identical Policy,
an Insured in the standard rate class will have a lower cost of insurance than
an Insured in a rate class with higher mortality risks. The Company may also
issue certain Policies on a "Non Medical", guaranteed issue or simplified issue
basis to certain categories of individuals. Due to the underwriting criteria
established for Policies issued on a Non Medical basis, actual rates will be
higher than the current cost of insurance rates being charged under Policies
that are medically underwritten.

- -Monthly Administrative Charge

The Company deducts a monthly Administrative Expense Charge to reimburse it for
certain expenses related to maintenance of the Policies, accounting and record
keeping and periodic reporting to Policy Owners. This charge is designed only
to reimburse the Company for certain actual administrative expenses. The
Company does not expect to recover from this charge any amount in excess of
aggregate maintenance expenses. On a current basis this charge is $5.00 per
month in all Policy Years. On a guaranteed basis this charge is $10.00 per month
in all Policy Years.

DEDUCTIONS FROM THE SUB-ACCOUNTS

The Company assumes certain risks for guaranteeing the mortality and expense
charges. The mortality risks assumed under the Policies is that the Insured may
not live as long as expected. The expense risk assumed is that the actual
expenses incurred in issuing and administering the Policies may be greater than
expected. In addition, the Company assumes risks associated with the non-
recovery of policy issue, underwriting and other administrative expenses due to
Policies which lapse or are surrendered in the early Policy Years.

To compensate the Company for assuming these risks associated with the Policies,
the Company deducts on a daily basis from the assets of the Variable Account a
charge to provide for mortality and expense risks. This charge is guaranteed not
to exceed an annual effective rate of 0.75% of the daily net assets of the
Variable Account. On a current basis this rate will be 0.60% during the first
through fourth Policy Years, 0.40% during the fifth through twentieth Policy
Years, and 0.25% thereafter. To the extent that future levels of mortality and
expenses are less than or equal to those expected, the Company may realize a
profit from this charge.

21
<PAGE>
Unrecovered expenses are born by the Company's general assets which may include
profits, if any, from mortality and expense risk charges.

The Company does not currently assess any charge for income taxes incurred by
the Company as a result of the operations of the Sub-Accounts of the Variable
Account (see "Taxation of the Company"). The Company reserves the right to
assess a charge for such taxes against the Variable Account if the Company
determines that such taxes will be incurred.

REDUCTION OF CHARGES (POLICY AND SUB-ACCOUNTS)

The Policy is available for purchase by individuals, corporations and other
groups. For group or sponsored arrangements (including employees of the Company
and their family members) and for special exchange programs which the Company
may make available from time to time, the Company reserves the right to reduce
or eliminate the sales load, mortality and expense risk charges, monthly
administrative charge, monthly cost of insurance charges or other charges
normally assessed on certain multiple life cases where it is expected that the
size or nature of such cases will result in savings of sales, underwriting,
administrative or other costs.

Eligibility for and the amount of these reductions will be determined by a
number of factors, including the number of Insured's, the total premium expected
to be paid, total assets under management for the Policy Owner, the nature of
the relationship among individual Insured's, the purpose for which the Policies
are being purchased, the expected persistency of individual Policies, and any
other circumstances which, in the opinion of the Company is rationally related
to the expected reduction in expenses. The extent and nature of reductions may
change from time to time. Any variations in the charge structure will be
determined in a uniform manner reflecting differences in costs of services and
not unfairly discriminatory to Policy Owners.

EXPENSES OF THE UNDERLYING MUTUAL FUNDS

UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AFTER EXPENSE REIMBURSEMENT)

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

American Century Variable Portfolios, Inc.-American Century VP Balanced 1.00% 0.00% 1.00%
American Century Variable Portfolios, Inc.-American Century VP Capital Appreciation 1.00% 0.00% 1.00%
American Century Variable Portfolios, Inc.-American Century VP International 1.50% 0.00% 1.50%
American Century Variable Portfolios, Inc.-American Century VP Value 1.00% 0.00% 1.00%
Dreyfus Socially Responsible Growth Fund 0.72% 0.24% 0.96%
Dreyfus Stock Index Fund 0.25% 0.05% 0.30%
Dreyfus Variable Investment Fund - Capital Appreciation Portfolio 0.75% 0.08% 0.83%
Dreyfus Variable Investment Fund-Growth & Income Portfolio 0.75% 0.08% 0.83%
Fidelity VIP Fund-Equity-Income Portfolio 0.51% 0.07% 0.58%
Fidelity VIP Fund-Growth Portfolio 0.61% 0.08% 0.69%
Fidelity VIP Fund-High Income Portfolio 0.59% 0.12% 0.71%
Fidelity VIP Fund-Overseas Portfolio 0.76% 0.17% 0.93%
Fidelity VIP Fund II-Asset Manager Portfolio 0.64% 0.10% 0.74%
Fidelity VIP Fund II-Contrafund Portfolio 0.61% 0.13% 0.74%
Fidelity VIP Fund III-Growth Opportunities Portfolio 0.61% 0.16% 0.77%
Morgan Stanley Universal Funds, Inc.-Emerging Markets Debt Portfolio 0.80% 0.50% 1.30%
Neuberger & Berman Advisers Management
Trust-Growth Portfolio 0.83% 0.09% 0.92%
Neuberger & Berman Advisers Management
Trust-Limited Maturity Bond Portfolio 0.65% 0.13% 0.78%
Neuberger & Berman Advisers Management
Trust-Partners Portfolio 0.84% 0.11% 0.95%
NSAT-Capital Appreciation Fund 0.50% 0.02% 0.52%
NSAT-Government Bond Fund 0.50% 0.01% 0.51%
NSAT-Money Market Fund 0.50% 0.03% 0.53%
NSAT Small Company Fund 1.00% 0.10% 1.10%
NSAT-Total Return Fund 0.50% 0.02% 0.52%

22
<PAGE>

UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AFTER EXPENSE REIMBURSEMENT)

Oppenheimer Variable Account Fund-Oppenheimer Bond Fund 0.74% 0.04% 0.78%
Oppenheimer Variable Account Fund-Oppenheimer Global Securities Fund 0.73% 0.08% 0.81%
Oppenheimer Variable Account Fund-Oppenheimer Growth Fund 0.75% 0.04% 0.79%
Oppenheimer Variable Account Fund-Oppenheimer Multiple Strategies 0.73% 0.04% 0.77%
Strong Opportunity Fund II, Inc. 1.00% 0.17% 1.17%
Strong Variable Insurance Funds, Inc. - Discovery Fund II, Inc. 1.00% 0.22% 1.22%
Strong Variable Insurance Funds, Inc. - International Stock Fund II 1.00% 0.59% 1.59%
Van Eck Worldwide Insurance Trust-Gold and Natural Resources Fund 1.00% 0.08% 1.08%
Van Eck Worldwide Insurance Trust-Worldwide Bond Fund 1.00% 0.08% 1.08%
Van Eck Worldwide Insurance Trust-Worldwide Emerging Markets Fund 1.00% 0.00% 1.00%
Van Kampen American Capital Life Investment Trust -
Morgan Stanley Real Estate Securities Portfolio 0.83% 0.27% 1.10%
Warburg Pincus Trust-International Equity Portfolio 0.62% 0.78% 1.40%
Warburg Pincus Trust-Post-Venture Capital Portfolio 0.96% 0.40% 1.36%
Warburg Pincus Trust-Small Company Growth Portfolio 0.90% 0.26% 1.16%

</TABLE>

The Underlying Mutual Fund expenses shown above are assessed at the Underlying
Mutual Fund level and are not direct charges against the Variable Account or
reductions in Cash Value. 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. The
management fees and other expenses are more fully described in the prospectuses
for each individual Underlying Mutual Fund. None of the above Underlying Mutual
Funds are subject to 12b-1 fees. The following Underlying Mutual Funds are
subject to the following fee waiver or expense reimbursement arrangements:

FUND EXPENSES WITHOUT REIMBURSEMENT OR WAIVER
<S> <C>

American Century Variable Portfolios, Inc. - Absent a waiver of fees by the Portfolio's investment adviser and
American Century VP Value co-administrator, Management Fees for the Portfolio would equal 1.25%; Other
Expenses would equal .81%; Total Portfolio Operating Expenses would have been
2.06%.

Dreyfus Stock Index Fund In the event that aggregate expenses of the Fund exceed .40 of 1% of the value of
the Fund's average net assets for the fiscal year, the Fund may deduct from the
payment to be made to Dreyfus, or Dreyfus will bear, such excess expense. In
addition, the Fund may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the overall expense
ratio of the Fund.

Dreyfus Socially Responsible Growth Fund In the event that aggregate expenses of the Fund exceed .40 of 1% of the value of
the Fund's average net assets for the fiscal year, the Fund may deduct from the
payment to be made to Dreyfus, or Dreyfus will bear, such excess expense. In
addition, the Fund may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the overall expense
ratio of the Fund.

Fidelity VIP Fund - Equity-Income Portfolio The Adviser has voluntarily agreed subject to revision or termination to reimburse
a fund if, and to the extent that, its aggregate operating expenses, including
management fees, exceed a specified annual rate for the fund. The expense cap is:
1.50% imposed on October 9, 1986. Since the expense ratio is significantly below
the expense cap there is no reimbursement and none anticipated during the current
year. Since there is no reimbursement the discontinuance of the arrangement has
no effect on total fund operating expenses.

Fidelity VIP Fund - Growth Portfolio The Fund may, from time to time, agree to reimburse a fund for management fees and
other expenses above a specified limit. The Fund retains the ability to be repaid
if expenses fall below the specified limit prior to the end of the fiscal year.
Reimbursement arrangements, which may be terminated at any time, can decrease the
Fund's expense and boost its performance.

Fidelity VIP Fund - High-Income Portfolio The Fund may, from time to time, agree to reimburse a fund for management fees and
other expenses above a specified limit. The Fund retains the ability to be repaid
if expenses fall below the specified limit prior to the end of the fiscal year.
Reimbursement arrangements, which may be terminated at any time, can decrease the
Fund's expense and boost its performance.

Fidelity Variable Insurance Products Fund - The Adviser has voluntarily agreed subject to revision or termination to reimburse
Overseas Portfolio a fund if, and to the extent that, its aggregate operating expenses, including
management fees, exceed a specified annual rate for the fund. The expense cap is:
1.50% imposed on January 28, 1986. Since the expense ratio is significantly below
the expense cap there is no reimbursement and none anticipated during the current
year. Since there is no reimbursement the discontinuance of the arrangement has
no effect on total fund operating expenses.

23
<PAGE>

FUND EXPENSES WITHOUT REIMBURSEMENT OR WAIVER
<S> <C>

Fidelity VIP Fund II - Asset Manager Portfolio The Fund may, from time to time, agree to reimburse a fund for management fees and
other expenses above a specified limit. The Fund retains the ability to be repaid
if expenses fall below the specified limit prior to the end of the fiscal year.
Reimbursement arrangements, which may be terminated at any time, can decrease the
Fund's expense and boost its performance.

Fidelity VIP Fund II - Contrafund Portfolio The Fund may, from time to time, agree to reimburse a fund for management fees and
other expenses above a specified limit. The Fund retains the ability to be repaid
if expenses fall below the specified limit prior to the end of the fiscal year.
Reimbursement arrangements, which may be terminated at any time, can decrease the
Fund's expense and boost its performance.

Neuberger&Berman Advisers Management The Fund manager will limit expenses by reimbursing the Portfolio for its
Trust - Growth Portfolio operating expenses and its pro rata share of operating expenses, that exceed 1% of
the Fund's average daily net asset value.

Neuberger&Berman Advisers Management The Fund manager will limit expenses by reimbursing the Portfolio for its
Trust - Limited Maturity Bond Portfolio operating expenses and its pro rata share of operating expenses, that exceed 1% of
the Fund's average daily net asset value.

Neuberger&Berman Advisers Management The Fund manager will limit expenses by reimbursing the Portfolio for its
Trust - Partners Portfolio operating expenses and its pro rata share of operating expenses, that exceed 1% of
the Fund's average daily net asset value.

Oppenheimer Variable Account Funds - Total mutual fund expenses would have been 0.81% in the absence of a voluntary
Oppenheimer Growth Fund one-time fee reimbursement described in the Statement of Additional Information.

Van Kampen American Capital Life The Trust reimburses the Adviser for the cost of the Portfolio's accounting
Investment Trust - Morgan Stanley Real services. Further, the Adviser and the Subadviser may, from time to time, agree
Estate Securities Portfolio to waive their respective investment advisory fees or any portion thereof or elect
to reimburse the Portfolio for ordinary business expenses in excess of an agreed
upon amount.

Warburg Pincus Trust - International Equity The Management Fees, Other Expenses and Total Portfolio Operating Expenses are net
Portfolio of any fee waivers or expense reimbursements. Without such waivers or
reimbursements, Management Fees would have equaled 1.00%, Other Expenses would
have equaled 1.21% and total Portfolio Operating Expenses would have equaled
2.21%. The Fund's investment adviser had undertaken to reduce or otherwise limit
Total Portfolio Operating Expenses; there is no assurance that these undertakings
will continue.

Warburg Pincus Trust - Small Company The Management Fees, Other Expenses and Total Portfolio Operating Expenses are net
Growth Portfolio of any fee waivers or expense reimbursements. Without such waivers or
reimbursements, Management Fees would have equaled .90%, Other Expenses would have
equaled .60% and total Portfolio Operating Expenses would have equaled 1.50%. The
Fund's investment adviser had undertaken to reduce or otherwise limit Total
Portfolio Operating Expenses; there is no assurance that these undertakings will
continue.
</TABLE>

The information relating to the Underlying Mutual Fund expenses was provided by
the Underlying Mutual Fund and was not independently verified by the Company.

HOW THE CASH VALUE VARIES

On any date during the Policy Year, the Cash Value equals the Cash Value on the
preceding Valuation Date, plus any Net Premium applied since the previous
Valuation Date, minus any partial surrenders, plus or minus any investment
results, and less any Policy Charges.

There is no guaranteed Cash Value. The Cash Value will vary with the investment
experience of the Variable Account and/or the daily crediting of interest in the
Fixed Account and Policy Loan Account depending on the allocation of Cash Value
by the Policy Owner.

HOW THE INVESTMENT EXPERIENCE IS DETERMINED

The Cash Value in each Sub-Account is converted to Accumulation Units of that
Sub-Account. The conversion is accomplished by dividing the amount of Cash
Value allocated to a Sub-Account by the value of an Accumulation Unit for the
Sub-Account of the Valuation Period during which the allocation occurs.

The value of an Accumulation Unit for each Sub-Account was arbitrarily set
initially at $10 when the Underlying Mutual Fund shares in that Sub-Account were
available for purchase. The value for any subsequent Valuation Period is
determined by multiplying the Accumulation Unit value for each Sub-Account for
the immediately preceding Valuation Period by the Net Investment Factor for the
Sub-Account during the subsequent Valuation Period. The value of an
Accumulation Unit may increase or decrease from Valuation Period to Valuation
Period. The number of Accumulation Units will not change as a result of
investment experience.

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<PAGE>

NET INVESTMENT FACTOR
The Net Investment Factor for any Valuation Period is determined by dividing (a)
by (b) and subtracting (c) from the result where:

(a) is the net of:

(1) the net asset value per share of the Underlying Mutual Fund held in
the Sub-Account determined at the end of the current Valuation Period,
plus

(2) the per share amount of any dividend or capital gain distributions
made by the Underlying Mutual Fund held in the Sub-Account if the "ex-
dividend" date occurs during the current Valuation Period.

(b) is the net of:

(1) the net asset value per share of the Underlying Mutual Fund held in
the Sub-Account determined at the end of the immediately preceding
Valuation Period, plus or minus

(2) the per share charge or credit, if any, for any taxes reserved for in
the immediately preceding Valuation Period (see "Charge For Tax
Provisions").

(c) is a factor representing the daily Mortality and Expense Risk Charge
deducted from the Variable Account. Such factor is guaranteed not to
exceed an annual effective rate of 0.75% of the daily net assets of the
Variable Account. On a current basis this annual effective rate will be
0.60% during the first through fourth Policy Years, 0.40% during the fifth
through twentieth Policy Years, and 0.25% thereafter.

For Underlying Mutual Fund options that credit dividends on a daily basis and
pay such dividends once a month, the Net Investment Factor allows for the
monthly reinvestment of these daily dividends.

The Net Investment Factor may be greater or less than one; therefore, the value
of an Accumulation Unit may increase or decrease. It should be noted that
changes in the Net Investment Factor may not be directly proportional to changes
in the net asset value of Underlying Mutual Fund shares, because of the
deduction for Mortality and Expense Risk Charge, and any charge or credit for
tax reserves.

VALUATION OF ASSETS

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

DETERMINING THE CASH VALUE

The sum of the value of all Variable Account Accumulation Units attributable to
the Policy and amounts credited to the Fixed Account and the Policy Loan Account
is the Cash Value. The number of Accumulation Units credited per each Sub-
Account are determined by dividing the net amount allocated to the Sub-Account
by the Accumulation Unit Value for the Sub-Account for the Valuation Period
during which the premium is received by the Company. In the event part or all
of the Cash Value is surrendered or charges or deductions are made against the
Cash Value, an appropriate number of Accumulation Units from the Variable
Account and an appropriate amount from the Fixed Account will be deducted in the
same proportion that the Policy Owner's interest in the Variable Account and the
Fixed Account bears to the total Cash Value.

The Cash Value in the Fixed Account and the Policy Loan Account is credited with
interest daily at an effective annual rate which the Company periodically
declares. The annual effective rate will never be less than 3%. Upon request,
the Company will inform the Policy Owner of the then applicable rates for each
account.

VALUATION PERIODS AND VALUATION DATES

A Valuation Period is the period commencing at the close of business on the New
York Stock Exchange and ending at the close of business for the next succeeding
Valuation Date. A Valuation Date is each day that the New York Stock Exchange
and the Company's Home Office are open for business or any other day during
which there is sufficient degree of trading that the current net asset value of
the Accumulation Units might be materially affected.

SURRENDERING THE POLICY FOR CASH

RIGHT TO SURRENDER

The Policy Owner may surrender the Policy in full at any time while the Insured
is living and receive its Cash Surrender Value. The cancellation will be
effective as of the date the Company receives a proper written request for
cancellation and the Policy. Such written request must be signed. Where
permitted, the Company will require the signature to be guaranteed by a member
firm of the New York, American, Boston, Midwest, Philadelphia or Pacific Stock
Exchange, or by a Commercial Bank or a Savings and Loan, which is a member

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<PAGE>

of the Federal Deposit Insurance Corporation. In some cases, the Company may
require additional documentation of a customary nature.

CASH SURRENDER VALUE

The Cash Surrender Value increases or decreases daily to reflect the investment
experience of the Variable Account and the daily crediting of interest in the
Fixed Account and the Policy Loan Account. The Cash Surrender Value equals the
Policy's Cash Value, next computed after the date the Company receives a proper
written request for surrender and the Policy, minus any charges, Indebtedness or
other deductions due on that date.

PARTIAL SURRENDERS

After the Policy has been in force for one year, the Policy Owner may request a
partial surrender. Partial surrenders will be permitted only if they satisfy
the following requirements:

1. The minimum partial surrender is $500;

2. The partial surrender may not reduce the Specified Amount to less than
$50,000;

3. After the partial surrender, the Cash Surrender Value is greater than
$500 or an amount equal to three times the current monthly deduction,
if higher; and

4. After the partial surrender, the Policy continues to qualify as life
insurance.

When a partial surrender is made, the Cash Value will be reduced by the amount
of the partial surrender. Further, the Specified Amount will be reduced by the
amount necessary to prevent any increase to the Net Amount at Risk, unless the
Policy Owner elects that the partial surrender be treated as a preferred partial
surrender. (Any such reduction to the Specified Amount will be done in the
manner as set forth below).

- -Preferred Partial Surrenders

A partial surrender may be considered a preferred partial surrender if the
following conditions are met: (1) such surrender occurs before the 15th Policy
Anniversary; and (2) the surrender amount plus the amount of any previous
preferred policy surrenders in that same Policy Year does not exceed 10% of the
Cash Surrender Value as of the beginning of the Policy Year.

- -Reduction of the Specified Amount

When a partial surrender is made, in addition to the Cash Value being reduced by
the amount of the partial surrender, the Specified Amount also is reduced,
except for a preferred partial surrender. The reduction to the Specified Amount
will be made in the following order: (1) against the most recent increase in
the Specified Amount; (2) against the next most recent increases in the
Specified Amount in succession; and (3) against the Specified Amount under the
original application.

MATURITY PROCEEDS

The Maturity Date is the Policy Anniversary on or next following the Insured's
100th birthday. The maturity proceeds will be payable to the Policy Owner on
the Maturity Date provided the Policy is still in force. The Maturity Proceeds
will be equal to the amount of the Policy's Cash Value, less any Indebtedness.

INCOME TAX WITHHOLDING

Federal law requires the Company to withhold income tax from any portion of
surrender proceeds that is subject to tax, unless the Policy Owner advises the
Company, in writing, of his or her request not to withhold.

If the Policy Owner requests that the Company not withhold taxes, or if the
taxes withheld are insufficient, the Policy Owner may be liable for payment of
an estimated tax. The Policy Owner should consult his or her tax advisor.

In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following: (1) the value each year of the life
insurance protection provided, (2) an amount equal to any employer-paid
premiums; or (3) some or all of the amount by which the current value exceeds
the employer's interest in the Contract. Participants should consult with the
sponsor or the administrator of the Plan, and/or with their personal tax or
legal advisor, to determine the tax consequences, if any, of their employer-
sponsored life insurance arrangements.

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<PAGE>

POLICY LOANS

TAKING A POLICY LOAN

After the first Policy Year, the Policy Owner may take a Policy loan using the
Policy as security. Maximum Policy Indebtedness is limited to 90% of the Cash
Value in the Sub-Accounts of the Variable Account plus 100% of the Cash Value
in the Fixed Account plus 100% of the Cash Value in the Policy Loan Account.
The Company will not grant a loan for an amount less than $500 (unless otherwise
required by state law). Should the Death Proceeds become payable, the Policy be
surrendered, or the Policy mature while a loan is outstanding, the amount of
Policy Indebtedness will be deducted from the death benefit, Cash Surrender
Value or the maturity value, respectively.

Any request for a Policy loan must be in written form satisfactory to the
Company. The request must be signed. Where permitted, the Company will require
the signature to be guaranteed by a member firm of the New York, American,
Boston, Midwest, Philadelphia or Pacific Stock Exchange; or by a Commercial Bank
or a Savings and Loan which is a member of the Federal Deposit Insurance
Corporation. Certain policy loans may result in currently taxable income and
tax penalties (see "Tax Matters").

A Policy Owner considering the use of policy loans in connection with his or her
retirement income plan should consult his or her personal tax adviser regarding
potential tax consequences that may arise if necessary payments are not made to
keep the Policy from lapsing. The amount of such payments necessary to prevent
the Policy from lapsing would increase with age (see "Tax Matters").

EFFECT ON INVESTMENT PERFORMANCE

When a loan is made, an amount equal to the amount of the loan is transferred
from the Variable Account to the Policy Loan Account. If the assets relating to
a Policy are held in more than one Sub-Account, withdrawals from Sub-Accounts
will be made in proportion to the assets in each Variable Sub-Account at the
time of the loan. Policy loans will be transferred from the Fixed Account only
when insufficient amounts are available in the Variable Sub-Accounts. The
amount taken out of the Variable Account will not be affected by the Variable
Account's investment experience while the loan is outstanding.

INTEREST

On a current and guaranteed basis, any Cash Value allocated to the Policy Loan
Account will be credited with an annual effective rate of 3.0% in Policy Years 2
and thereafter. The loan interest rate is guaranteed to not exceed 3.75% per
year for all Policy loans. On a current basis, the loan interest rate is 3.6% in
Policy Years one through four, 3.4% in Policy Years five through twenty, and
3.25% thereafter. In the event that it is determined that such loans will be
treated, as a result of the differential between the interest crediting rate and
the loan interest rate, as taxable distributions under any applicable ruling,
regulation, or court decision, the Company retains the right to increase the net
cost (by decreasing the interest crediting rate) on all subsequent policy loans
to an amount that would result in the transaction being treated as a loan under
Federal tax law. If this amount is not prescribed by such ruling, regulation,
or court decision, the amount will be that which the Company considers to be
more likely to result in the transaction being treated as a loan under Federal
tax law.

Amounts transferred to the Policy Loan Account will earn interest daily from the
date of transfer. The earned interest is transferred from the Policy Loan
Account to a Variable Account or the Fixed Account on each Policy Anniversary,
at the time a new loan is requested, or at the time of loan repayment. It will
be allocated according to the Fund allocation factors in effect at the time of
the transfer.

Interest is charged daily and is payable at the end of each Policy Year or at
the time of loan repayment. Unpaid interest will be added to the existing
Policy Indebtedness as of the due date and will be charged interest at the same
rate as the rest of the Indebtedness.

Whenever the total Policy Indebtedness exceeds the Cash Value, the Company will
send a notice to the Policy Owner and the assignee, if any. The Policy will
terminate without value 61 days after the mailing of the notice unless a
sufficient repayment is made during that period. A repayment is sufficient if
it is large enough to reduce the total Policy Indebtedness to an amount equal to
the total Cash Value plus an amount sufficient to continue the Policy in force
for 3 months.

EFFECT ON DEATH BENEFIT AND CASH VALUE

A Policy loan, whether or not repaid, will have a permanent effect on the Death
Benefit and Cash Value because the investment results of the Variable Account or
the Fixed Account will apply only to the non-loaned portion of the Cash Value.
The longer the loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the Variable Account or the Fixed Account
while the loan is outstanding, the effect could be favorable or unfavorable.

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<PAGE>

REPAYMENT

All or part of the Indebtedness may be repaid at any time while the Policy is in
force during the Insured's lifetime. Any payment intended as a loan repayment,
rather than a premium payment, must be identified as such. Loan repayments will
be credited to the Variable Sub-Accounts and the Fixed Account in proportion to
the Policy Owner's Underlying Mutual Fund allocation factors in effect at the
time of the repayment. Each repayment may not be less than $50. The Company
reserves the right to require that any loan repayments resulting from Policy
loans transferred from the Fixed Account must be first allocated to the Fixed
Account.

HOW THE DEATH BENEFIT VARIES

CALCULATION OF THE DEATH BENEFIT

At issue, the Policy Owner selects the Specified Amount, death benefit option,
and definition of life insurance (Guideline Premium/Cash Value Corridor Test or
the Cash Value Accumulation Test) pursuant to Section 7702 of the Code.

While the Policy is in force, the death benefit will never be less than the
Specified Amount. The death benefit may vary with the Cash Value of the Policy,
which depends on investment performance.

The Policy Owner may choose one of three death benefit options.

Under Option 1, the death benefit will be the greater of the Specified Amount or
the applicable percentage of cash value. Under Option 1, the amount of the
death benefit will ordinarily not change for several years to reflect the
investment performance and may not change at all. If investment performance is
favorable the amount of death benefit may increase. To see how and when
investment performance will begin to affect death benefits, please see the
illustrations.

Under Option 2, the death benefit will be the greater of the Specified Amount
plus the Cash Value as of the date of death, or the applicable percentage of
cash value and will vary directly with the investment performance.

Under Option 3, the death benefit is the greater of: the applicable percentage
of the Cash Value (see Table below) as of the date of death; or the Specified
Amount plus the lesser of either: (i) the maximum increase amount shown on the
Policy, or (ii) the amount of all premium payments and interest accrued at the
Option 3 interest rate as shown in the Policy, accumulated up to the date of
death, less any partial surrenders and applicable interest accrued at the Option
3 interest rate as shown in the Policy. Once elected, Option 3 is irrevocable.

The "Applicable Percentage" for the Guideline Premium/Cash Value Corridor Test
is in the Tables below:

APPLICABLE PERCENTAGE OF CASH VALUE TABLE

Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value

0-40 250% 60 130% 80 105%
41 243% 61 128% 81 105%
42 236% 62 126% 82 105%
43 229% 63 124% 83 105%
44 222% 64 122% 84 105%

45 215% 65 120% 85 105%
46 209% 66 119% 86 105%
47 203% 67 118% 87 105%
48 197% 68 117% 88 105%
49 191% 69 116% 89 105%

50 185% 70 115% 90 105%
51 178% 71 113% 91 104%
52 171% 72 111% 92 103%
53 164% 73 109% 93 102%
54 157% 74 107% 94 101%

55 150% 75 105% 95 101%
56 146% 76 105% 96 101%
57 142% 77 105% 97 101%

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<PAGE>

Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value

58 138% 78 105% 98 101%
59 134% 79 105% 99 101%

The "Applicable Percentage" for the Cash Value Accumulation Test is the Table
below:

Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value

16 708.43% 44 292.29% 72 141.69%
17 687.69% 45 283.37% 73 139.10%
18 667.85% 46 274.79% 74 136.66%
19 648.73% 47 266.55% 75 134.38%
20 630.14% 48 258.61% 76 133.56%

21 611.94% 49 250.98% 77 132.83%
22 594.06% 50 243.65% 78 132.18%
23 576.45% 51 236.59% 79 131.58%
24 559.07% 52 229.82% 80 131.04%
25 541.95% 53 223.34% 81 130.55%

26 525.08% 54 217.13% 82 130.12%
27 508.52% 55 211.19% 83 127.37%
28 492.32% 56 205.51% 84 124.75%
29 476.49% 57 200.06% 85 122.26%
30 461.08% 58 194.84% 86 119.89%

31 446.10% 59 189.84% 87 117.63%
32 431.57% 60 185.03% 88 115.44%
33 417.50% 61 180.43% 89 113.31%
34 403.89% 62 176.02% 90 112.35%
35 390.73% 63 171.81% 91 111.38%

36 378.03% 64 167.80% 92 110.38%
37 365.79% 65 163.98% 93 109.32%
38 354.01% 66 160.34% 94 108.18%
39 342.67% 67 156.86% 95 106.94%
40 331.77% 68 153.54% 96 105.62%

41 321.30% 69 150.37% 97 104.27%
42 311.24% 70 147.33% 98 102.99%
43 301.57% 71 144.44% 99 101.98%

In the event the Policy Owner has a substandard rating, the above percentages
will differ.

PROCEEDS PAYABLE ON DEATH

The actual Death Proceeds payable on the Insured's death will be the death
benefit as described above, less any Policy Indebtedness and less any unpaid
Policy Charges. Under certain circumstances, the Death Proceeds may be adjusted
(see "Incontestability", "Error in Age", and "Suicide").

RIGHT OF CONVERSION

The Policy Owner may at any time, upon written request to the Company within 24
months of the Policy Date, make an irrevocable, one-time election to transfer
all Sub-Account Cash Values to the Fixed Account. The Right of Conversion
provision is subject to state availability.

CHANGES OF INVESTMENT POLICY

The Company may materially change the investment policy of the Variable Account.
The Company must inform the Policy Owners and obtain all necessary regulatory
approvals. Any change must be submitted to the various state insurance
departments which may disapprove it if deemed detrimental to the interests of
the

29
<PAGE>

Policy Owners or if it renders the Company's operations hazardous to the public.
If a Policy Owner objects, the Policy Owner may elect to transfer all Sub-
Account Cash Value to the Fixed Account. No transfer charges will be assessed.
The Policy Owner has the later of 60 days (6 months in Pennsylvania) from the
date of the investment policy change or 60 days (6 months in Pennsylvania) from
being informed of such change to make this conversion. The Company will not
require evidence of insurability for this conversion.

The new policy will not be affected by the investment experience of any separate
account. The new policy will be for an amount of insurance not exceeding the
death benefit of the Policy converted on the date of such conversion.

GRACE PERIOD

If the Cash Surrender Value on a Monthly Anniversary Day is not sufficient to
cover the current Policy Charges, a Grace Period of 61 days from the Monthly
Anniversary Day will be allowed for the payment of a premium equal to three
times the current monthly deduction. The Company will send a notice at the
start of the Grace Period to the Policy Owner's address as indicated on the
application or the last address specified. If the required premium is not paid
by the end of the Grace Period, the Policy will terminate without value. If the
Insured dies during the Grace Period, the Company will pay the Death Proceeds.

REINSTATEMENT

If the Grace Period ends and the Policy Owner has neither paid the required
premium nor surrendered the Policy for its Cash Surrender Value, the Policy
Owner may reinstate the Policy by:

1. submitting a written request at any time within 3 years after the end
of the Grace Period and prior to the Maturity Date;

2. providing evidence of insurability satisfactory to the Company;

3. paying sufficient premium to cover all policy charges that were due
and unpaid during the Grace Period;

4. paying sufficient premium to keep the Policy in force for 3 months
from the date of reinstatement; and

5. paying or reinstating any Indebtedness against the Policy which
existed at the end of the Grace Period.

The effective date of a reinstated Policy will be the Monthly Anniversary Day on
or next following the date the application for reinstatement is approved by the
Company. If the Policy is reinstated, the Cash Value on the date of
reinstatement, but prior to applying any premiums or loan repayments received,
will be set equal to the Cash Value at the end of the Grace Period.

Unless the Policy Owner has provided otherwise, all amounts will be allocated
based on the Underlying Mutual Fund allocation factors in effect at the start
of the Grace Period.

THE FIXED ACCOUNT OPTION

Under exemptive and exclusionary provisions, interests in the Company's General
Account have not been registered under the Securities Act of 1933 and the
General Account has not been registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the General Account nor
any interests therein is subject to the provisions of these Acts, and the
Company has been advised that the staff of the Securities and Exchange
Commission has not reviewed the disclosures in this prospectus relating to the
Fixed Account option. Disclosures regarding the General Account may, however,
be subject to certain generally applicable provisions of the federal securities
laws concerning the accuracy and completeness of statements made in
prospectuses.

As explained earlier, a Policy Owner may elect to allocate or transfer all or
part of the Cash Value to the Fixed Account and the amount allocated or
transferred becomes part of the Company's General Account. The Company's
General Account consists of all assets of the Company other than those in the
Variable Account and in other separate accounts that have been or may be
established by the Company. Subject to applicable law, the Company has sole
discretion over the investment of the assets of the General Account, and Policy
Owners do not share in the investment experience of those assets. The Company
guarantees that the part of the Cash Value invested under the Fixed Account
option will accrue interest daily at an effective annual rate that the Company
declares periodically. The Fixed Account crediting rate will not be less than
an effective

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<PAGE>

annual rate of 3%. Upon request the Company will inform a Policy Owner of the
then applicable rate. The Company is not obligated to credit interest at a
higher rate.

CHANGES IN EXISTING INSURANCE COVERAGE

The Policy Owner may request certain changes in the insurance coverage under the
Policy. Any request must be in writing and received at the Company's Home
Office. No change will take effect unless the Cash Surrender Value, after the
change, is sufficient to keep the Policy in force for at least 3 months.

SPECIFIED AMOUNT INCREASES

After the first Policy Year, the Policy Owner may request an increase to the
Specified Amount. Any increase will be subject to the following conditions:

1. the request must be applied for in writing;

2. satisfactory evidence of insurability must be provided;

3. the increase must be for a minimum of $10,000;

4. the Cash Surrender Value is sufficient to continue the Policy in force
for at least 3 months; and

5. age limits are the same as for a new issue.

Any approved increase will have an effective date of the Monthly Anniversary Day
on or next following the date the Company approves the supplemental application
unless a different date is requested by the Policy Owner. The Company reserves
the right to limit the number of Specified Amount increases to one each Policy
Year.

SPECIFIED AMOUNT DECREASES

After the first Policy Year, the Policy Owner may also request a decrease to the
Specified Amount. Any approved decrease will be effective on the Monthly
Anniversary Day on or next following the date the Company receives the request.
Any such decrease shall reduce insurance in the following order:

1. against insurance provided by the most recent increase;

2. against the next most recent increases successively; and

3. against insurance provided under the original application.

The Company reserves the right to limit the number of Specified Amount decreases
to one each Policy Year. The Company will refuse a request for a decrease which
would:

1. reduce the Specified Amount to less than $50,000 ($100,000 in New
Jersey and Pennsylvania); or

2. disqualify the Policy as a contract for life insurance.

CHANGES IN THE DEATH BENEFIT OPTION

After the first Policy Year, the Policy Owner may elect to change the death
benefit option under the Policy from either Option 1 to Option 2, or from Option
2 to Option 1. Initial elections to Option 3 are irrevocable. Accordingly,
such changes to or from Option 3 are not permitted. Only one change of death
benefit option is permitted per Policy Year. The effective date of such change
will be the Monthly Anniversary Day following the date such change is approved
by the Company.

In order for any such change in the death benefit option to become effective,
the Cash Surrender Value, after such change, must be sufficient to keep the
Policy in force for at least three months subsequent to said change.

The Company will adjust the Specified Amount such that the Net Amount at Risk
remains constant. Any such change which would result in the Specified Amount
being reduced to an amount in which the total premiums paid exceed the premium
limit required by applicable state law to qualify the Policy as a contract for
life insurance will not be permitted.

OTHER POLICY PROVISIONS

POLICY OWNER

While the Insured is living, all rights in this Policy are vested in the Policy
Owner named in the application or as subsequently changed, subject to
assignment, if any.

The Policy Owner may name a contingent Policy Owner or a new Policy Owner while
the Insured is living. Any change must be in a written form satisfactory to the
Company and recorded at the Company's Home Office. Once recorded, the change
will be effective when signed. The change will not affect any payment made or

31
<PAGE>

action taken by the Company before it was recorded. The Company may require
that the Policy be submitted for endorsement before making a change.

If the Policy Owner is other than the Insured and names no contingent Policy
Owner, and dies before the Insured, the Policy Owner's rights in this Policy
belong to the Policy Owner's estate.

BENEFICIARY

The Beneficiary(ies) shall be as named in the application or as subsequently
changed, subject to assignment, if any.

The Policy Owner may name a new Beneficiary while the Insured is living. Any
change must be in a written form satisfactory to the Company and recorded at the
Company's Home Office. Once recorded, the change will be effective when signed.
The change will not affect any payment made or action taken by the Company
before it was recorded.

If any Beneficiary predeceases the Insured, that Beneficiary's interest passes
to any surviving Beneficiary(ies), unless otherwise provided. Multiple
Beneficiaries will be paid in equal shares, unless otherwise provided. If no
named Beneficiary survives the Insured's, the Death Proceeds shall be paid to
the Policy Owner or the Policy Owner's estate.

ASSIGNMENT

While the Insured is living, the Policy Owner may assign his or her rights in
the Policy. The assignment must be in writing, signed by the Policy Owner and
recorded by the Company at its Home Office. Any assignment will not affect any
payments made or actions taken by the Company before it was recorded. The
Company is not responsible for any assignment not submitted for recording, nor
is the Company responsible for the sufficiency or validity of any assignment.
The assignment will be subject to any Indebtedness owed to the Company before it
was recorded.

INCONTESTABILITY

The Company will not contest payment of the Death Proceeds based on the initial
Specified Amount after the Policy has been in force during the Insured's
lifetime for 2 years from the Policy Date. For any increase in Specified Amount
requiring evidence of insurability, the Company will not contest payment of the
Death Proceeds based on such an increase after it has been in force during the
Insured's lifetime for 2 years from its effective date.

ERROR IN AGE

If the age of the Insured has been misstated, the affected benefits will be
adjusted. The amount of the death benefit will be (1) multiplied by (2) and
then the result added to (3), where:

1. is the amount of the death benefit at the time of the Insured's death
reduced by the amount of the Cash Value at the time of the Insured's
death;

2. is the ratio of the monthly cost of insurance applied in the policy
month of death and the monthly cost of insurance that should have been
applied at the true age in the policy month of death; and

3. is the Cash Value at the time of the Insured's death.

SUICIDE

If the Insured dies by suicide, while sane or insane, within two years from the
Policy Date, the Company will pay no more than the sum of the premiums paid,
less any Indebtedness. If the Insured dies by suicide, while sane or insane,
within two years from the date an application is accepted for an increase in the
Specified Amount, the Company will pay no more than the amount paid for such
additional benefit.

NONPARTICIPATING POLICIES

These are Nonparticipating Policies on which no dividends are payable. These
Policies do not share in the profits or surplus earnings of the Company.

RIDERS

A rider may be added as an addition to the Policy. Riders currently include:

1. Base Insured Term Rider;

2. Change of Insured Rider; and

3. Additional Protection Rider.

Rider availability varies by state.

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<PAGE>

LEGAL CONSIDERATIONS

On July 6, 1983, the U.S. Supreme Court held in ARIZONA GOVERNING COMMITTEE V.
NORRIS that certain annuity benefits provided by employers' retirement and
fringe benefit programs may not vary between men and women on the basis of sex.
This decision applies only to benefits derived from premiums made on or after
August 1, 1983. The Policies offered by this prospectus are based upon
actuarial tables which distinguish between men and women and thus the Policies
provide different benefits to men and women of the same age. Accordingly,
employers and employee organizations should consider, in consultation with legal
counsel, the impact of Norris on any employment related insurance or benefit
program before purchasing this Policy.

DISTRIBUTION OF THE POLICIES

The Policies will be sold by licensed insurance agents in those states where the
Policies may lawfully be sold. Such agents will be registered representatives
of broker dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. ("NASD"). The
Policies will be distributed by the General Distributor, Nationwide Advisory
Services, Inc. ("NAS"), One Nationwide Plaza, Columbus, Ohio 43216.

NAS is a corporation which was organized under the laws of the State of Ohio on
April 8, 1965. NAS is both a broker-dealer and registered investment adviser.
As such, it is the principal underwriter for several open-end investment
companies and for a number of separate accounts issued of the Company and
Nationwide Life Insurance Company (" NLIC") to fund the benefits of variable
insurance and annuity polices. NAS also currently acts as the investment
adviser and/or administrator for the mutual fund portfolios sold through NAS's
registered representatives and for some of the mutual fund portfolios which act
as underlying investment options for the variable insurance and annuity policies
issued by the Company or NLIC.

NAS acts as general distributor for the Nationwide Multi-Flex Variable Account,
Nationwide DC Variable Account, Nationwide Variable Account-II, Nationwide
Variable Account-5, Nationwide Variable Account-6, Nationwide Variable Account-
8, Nationwide Variable Account-9, Nationwide VA Separate Account-A, Nationwide
VA Separate Account-B, Nationwide VA Separate Account-C, Nationwide VL Separate
Account-A, Nationwide VL Separate Account-B, Nationwide VLI Separate Account-2,
Nationwide VLI Separate Account-3, Nationwide VLI Separate Account-4, NACo
Variable Account and the Nationwide Variable Account, all of which are separate
investment accounts of the Company or its affiliates. NAS is a wholly owned
subsidiary of the Company.

NAS also acts as principal underwriter for the Nationwide Investing Foundation,
Nationwide Separate Account Trust, Financial Horizons Investment Trust,
Nationwide Investing Foundation II, and Nationwide Asset Allocation Trust, which
are open-end management investment companies.

Gross first year commissions plus any expense allowance payments made by the
Company on the sale of these Policies distributed by the General Distributor
will not exceed 40% of the Target Premium plus 5% of any excess premium payments
in year one and 25% of the Target Premium plus 5% on the excess premium in
years two through four. Gross renewal commissions paid at the beginning of
Policy Year five and beyond by the Company will not exceed 2.5% of actual
premium payments plus an annual effective rate of 0.20%, paid quarterly, of the
Cash Value as of the end the prior quarter.

CUSTODIAN OF ASSETS

The Company serves as the Custodian of the assets of the Variable Account.

TAX MATTERS

POLICY PROCEEDS

Section 7702 of the Code provides that if certain tests are met, a Policy will
be treated as a life insurance policy for federal tax purposes. The Company
will monitor compliance with these tests. The Policy should thus receive the
same federal income tax treatment as fixed benefit life insurance. As a result,
the Death Proceeds payable under a Policy are excludable from gross income of
the beneficiary under Section 101 of the Code.

Section 7702A of the Code defines modified endowment contracts as those policies
issued or materially changed on or after June 21, 1988 on which the total
premiums paid during the first seven years exceed the amount that would have
been paid if the policy provided for paid up benefits after seven level annual
premiums (see "Information about the Policies"). The Code provides for
taxation of surrenders, partial surrenders, loans, collateral assignments and
other pre-death distributions from modified endowment contracts (other than
certain

33
<PAGE>

distributions to terminally ill or chronically ill individuals) are subject to
federal income taxes a manner similar to the way annuities are taxed. Modified
endowment contract distributions are defined by the Code as amounts not received
as an annuity and are taxable to the extent the cash value of the policy
exceeds, at the time of distribution, the premiums paid into the policy. A 10%
tax penalty generally applies to the taxable portion of such distributions
unless the Policy Owner is over age 59 1/2 or disabled or the distribution is
part of an annuity to the Policy Owner as defined in the Code. Under certain
circumstances, certain distributions made under a Policy on the life of a
"terminally ill individual" or a "chronically ill individual," as those terms
are defined in the Code, are excludable from gross income.

The Policies offered by this prospectus may or may not be issued as modified
endowment contracts. The Company will monitor premiums paid and will notify the
Policy Owner when the policy's non-modified endowment status is in jeopardy. If
a Policy is not a modified endowment contract, a cash distribution during the
first 15 years after a Policy is issued which causes a reduction in death
benefits may still become fully or partially taxable to the Owner pursuant to
Section 7702(f)(7) of the Code. The Policy Owner should carefully consider this
potential effect and seek further information before initiating any changes in
the terms of the policy. Under certain conditions, a Policy may become a
modified endowment as a result of a material change or a reduction in benefits
as defined by Section 7702A(c) of the Code.

In addition to meeting the tests required under Sections 7702, Section 817(h) of
the Code requires that the investments of separate accounts such as the Variable
Account be adequately diversified. Regulations under 817(h) provide that a
variable life policy that fails to satisfy the diversification standards will
not be treated as life insurance unless such failure was inadvertent, is
corrected, and the Policy Owner or the Company pays an amount to the Internal
Revenue Service. The amount will be based on the tax that would have been paid
by the Policy Owner if the income, for the period the policy was not
diversified, had been received by the Policy Owner. If the failure to diversify
is not corrected in this manner, the Policy Owner will be deemed the owner of
the underlying securities and taxed on the earnings of his or her account.

Representatives of the Internal Revenue Service have suggested, from time to
time, that the number of Underlying Mutual Funds available or the number of
transfer opportunities available under a variable product may be relevant in
determining whether the product qualifies for the desired tax treatment. No
formal guidance has been issued in this area. Should the Secretary of the
Treasury issue additional rules or regulations limiting the number of Underlying
Mutual Funds, transfers between Underlying Mutual Funds, exchanges of Underlying
Mutual Funds or changes in investment objectives of Underlying Mutual Funds such
that the Policy would no longer qualify as life insurance under Section 7702 of
the Code, the Company will take whatever steps are available to remain in
compliance.

The Company will monitor compliance with these regulations and, to the extent
necessary, will change the objectives or assets of the Sub-Account investments
to remain in compliance.

A total surrender or cancellation of the Policy by lapse or the maturity of the
Policy on its Maturity Date may have adverse tax consequences. If the amount
received by the Policy Owner plus total Policy Indebtedness exceeds the premiums
paid into the Policy, the excess generally will be treated as taxable income,
regardless of whether or not the Policy is a modified endowment contract.

- - Non-Resident Aliens

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

A payment may not be subject to withholding where the recipient sufficiently
establishes to the Company that such payment is effectively connected to the
recipient's conduct of a trade or business in the United States and that such
payment is includable in the recipient's gross income for United States federal
income tax purposes, Any such distributions may be subject to back-up
withholding at the statutory rate (currently 31%) if not taxpayer identification
number, or an incorrect taxpayer identification number, is provided.

34
<PAGE>

State and local estate, inheritance, income and other tax consequences of
ownership or receipt of Policy proceeds depend on the circumstances of each
Policy Owner or Beneficiary.

TAXATION OF THE COMPANY

The Company is taxed as a life insurance company under the Code. The Variable
Account will not be taxed separately from the Company as a "regulated investment
company" under Sub-chapter M of the Code. Investment income and realized
capital gains on the assets of the Variable Account are reinvested and taken
into account in determining the value of Accumulation Units. As a result, such
investment income and realized capital gains are automatically applied to
increase reserves under the Policies. Under Ohio law, in general, variable
account assets are immune from the claims of the general creditors of the
Company to the extent of the reserves and other policy liabilities.

The Company does not initially expect to incur any Federal income tax liability
that would be chargeable to the Variable Account. Based upon these
expectations, no charge is currently being made against the Variable Account for
federal income taxes. If, however, the Company determines that on a separate
Company basis such taxes may be incurred, it reserves the right to assess a
charge for such taxes against the Variable Account.

The Company may also incur state and local taxes (in addition to premium taxes)
in several states. At present, these taxes are not significant. If they
increase, however, charges for such taxes may be made.

TAX CHANGES

The foregoing discussion, which is based on the Company's understanding of
federal tax laws as they are currently interpreted by the Internal Revenue
Service, is general and is not intended as tax advice.

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

If the Policy Owner, Insured, or Beneficiary or other person receiving any
benefit or interest in or from the Policy is not both a resident and citizen of
the United States, there may be a tax imposed by a foreign country, in addition
to any tax imposed by the United States. The foreign law (including
regulations, rulings, and case law) may change and impose additional taxes on
the Policy, the Death Benefit, or other Distributions and/or ownership of the
Policy, or a treaty may be amended and all or part of the favorable treatment
may be eliminated.

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

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

THE COMPANY

The life insurance business, which includes product lines in health insurance
and annuities, is the only business in which the Company is engaged.

The Company markets its Policies through independent insurance brokers, general
agents, and registered representatives of registered NASD broker/dealer firms.

The Company serves as depositor for the Nationwide VL Separate Account-A,
Nationwide VL Separate Account-B, Nationwide VA Separate Account-C, Nationwide
VA Separate Account-B, and Nationwide VA Separate Account-A, each of which is a
registered investment company.

The Company, in common with other insurance companies, is subject to regulation
and supervision by the regulatory authorities of the states in which it is
licensed to do business. A license from the state insurance department is a
prerequisite to the transaction of insurance business in that state. In
general, all states have statutory administrative powers. Such regulation
relates, among other things, to licensing of insurers and their agents, the
approval of policy forms, the methods of computing reserves, the form and
content of statutory

35
<PAGE>

financial statements, the amount of policyholders' and stockholders' dividends,
and the type of distribution of investments permitted.

The Company operates in the highly competitive field of life insurance. There
are approximately 2,300 stock, mutual and other types of insurers in the life
insurance business in the United States, and a large number of them compete with
the registrant in the sale of insurance policies.

As is customary in insurance Company groups, employees are shared with the other
insurance companies in the group. In addition to its direct salaried employees,
the Company shares employees with Nationwide Mutual Insurance Company and
Nationwide Mutual Fire Insurance Company.

The Company does not presently own or lease any materially important physical
properties when its property holdings are viewed in relation to its total
assets. The Company shares Home Office, other facilities and equipment with
Nationwide Mutual Insurance Company.

COMPANY MANAGEMENT

Nationwide Life and Annuity Insurance Company, together with Nationwide Mutual
Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide
Indemnity Company, Nationwide Life Insurance Company, Nationwide Property and
Casualty Insurance Company, National Casualty Company, Scottsdale Indemnity
Company and Nationwide General Insurance Company and their affiliated companies
comprise the Nationwide Insurance Enterprise.

The companies comprising the Nationwide Insurance Enterprise have substantially
common boards of directors and officers. Nationwide Financial Services, Inc. is
the sole shareholder of Nationwide Life.

DIRECTORS OF THE COMPANY

Director
Name Since Principal Occupation

Lewis J. Alphin 1993 Farm Owner and Operator (1)

Keith W. Eckel 1996 Partner, Fred W. Eckel Sons; President,
Eckel Farms, Inc. (1)

Willard J. Engel 1994 General Manager Lyon County Co-Operative
Oil Company (1)

Fred C. Finney 1992 Owner and Operator, Moreland Fruit Farm;
Operator, Melrose Orchard (1)

Charles L. Fuellgraf, Jr. * + 1969 Chief Executive Officer, Fuellgraf
Electric Company. (1)

Joseph J. Gasper*+ 1996 President and Chief Operating Officer,
Nationwide Life and Annuity Insurance
Company and Nationwide Life and Annuity
Insurance Company. (2)

Henry S. Holloway *+ 1986 Farm Owner and Operator (1)

Dimon Richard McFerson *+ 1988 Chairman and Chief Executive Officer,
Nationwide Insurance Enterprise (2)

David O. Miller *+ 1985 President, Owen Potato Farm, Inc.;
Partner, M&M Enterprises (1)

C. Ray Noecker 1994 Owner and Operator, Noecker Farms (1)

James F. Patterson + 1989 Vice President, Pattersons, Inc. ;
President, Patterson Farms, Inc. (1)

Arden L. Shisler *+ 1984 President and Chief Executive Officer,
K&B Transport, Inc. (1)

Robert L. Stewart 1989 Owner and Operator, Sunnydale Farms and
Mining (1)

Nancy C. Thomas * 1986 Farm Owner and Operator. (1)

Harold W. Weihl 1990 Farm Owner and Operator, Weihl Farms (1)

*Member, Executive Committee +Member, Investment Committee

1) Principal occupation for last five years.

2) Prior to assuming this current position, Messrs. McFerson and Gasper held
other executive management positions with the companies.

36
<PAGE>

Each of the directors is a director of the other major insurance affiliates of
the Nationwide Insurance Enterprise, except Mr. Gasper who is a director only of
the Company and Nationwide Life Insurance Company. Messrs. McFerson and Gasper
are directors of Nationwide Advisory Services, Inc., a registered broker-dealer.

Messrs. Holloway, McFerson, Miller, Patterson, Shisler and Fuellgraf are
directors of Nationwide Financial Services, Inc. Messrs. Fuellgraf, McFerson,
Ms. Thomas and Mr. Weihl are trustees of Nationwide Investing Foundation, a
registered investment Company. Mr. McFerson is trustee of Nationwide Separate
Account Trust, Financial Horizons Investment Trust, Nationwide Investing
Foundation II and Nationwide Asset Allocation Trust, registered investment
companies. Mr. Engel is a director of Western Cooperative Transport.

EXECUTIVE OFFICERS OF THE COMPANY

NAME OFFICE HELD

Dimon Richard McFerson Chairman and Chief Executive Officer-Nationwide
Insurance Enterprise

Joseph J. Gasper President and Chief Operating Officer

Gordon E. McCutchan Executive Vice President, Law and Corporate
Services and Secretary

Robert A. Oakley Executive Vice President-Chief Financial Officer

Robert J. Woodward, Jr. Executive Vice President-Chief Investment Officer

James E. Brock Senior Vice President - Life Company Operations

W. Sidney Druen Senior Vice President and General Counsel and
Assistant Secretary

Harvey S. Galloway, Jr. Senior Vice President and Chief Actuary

Richard A. Karas Senior Vice President - Sales and Financial
Services

Mark R. Thresher Vice President - Controller

Duane M. Campbell Vice President - Treasurer

Mr. Gasper is also President and Chief Operating Officer of Nationwide Life
Insurance Company. Mr. Galloway is also an officer of Nationwide Mutual
Insurance Company and Nationwide Life Insurance Company. Each of the other
officers listed above is also an officer of each of the companies comprising the
Nationwide Insurance Enterprise. Each of the executive officers listed above
has been associated with the registrant in an executive capacity for more than
the past five years, except Mr. Thresher, who joined the Registrant in 1996.
From 1988-1996, Mr. Thresher served as a partner in the accounting firm KPMG
Peat Marwick LLP and lead partner for Nationwide Insurance Enterprise from 1993
to March, 1996.

OTHER CONTRACTS ISSUED BY THE COMPANY

The Company does presently and will, from time to time, offer variable contracts
and policies with benefits which vary in accordance with the investment
experience of a separate account of the Company.

STATE REGULATION

The Company is subject to the laws of Ohio governing insurance companies and to
regulation by the Ohio Insurance Department. An annual statement in a
prescribed form is filed with the Insurance Department each year covering the
operation of the Company for the preceding year and its financial condition as
of the end of such year. Regulation by the Insurance Department includes
periodic examination to determine the Company's contract liabilities and
reserves so that the Insurance Department may certify the items are correct.
The Company's books and accounts are subject to review by the Insurance
Department at all times and a full examination of its operations is conducted
periodically by the National Association of Insurance Commissioners. Such
regulation does not, however, involve any supervision of management or
investment practices or policies. In addition, the Company is subject to
regulation under the insurance laws of other jurisdictions in which it may
operate.

37
<PAGE>

REPORTS TO POLICY OWNERS

The Company will mail to the Policy Owner, at the address specified on the
application or any address provided subsequent to the application, an annual
statement showing the amount of the current death benefit, the Cash Value, and
Cash Surrender Value, premiums paid and monthly charges deducted since the last
report, the amounts invested in the Fixed Account and in the Variable Account
and in each Sub-Account of the Variable Account, and any Policy Indebtedness.

Policy Owners will also be sent annual and semi-annual reports containing
financial statements for the Variable Account as required by the 1940 Act.

In addition, Policy Owners will receive statements of significant transactions,
such as changes in Specified Amount, changes in death benefit option, changes in
future premium allocation, transfers among Sub-Accounts, premium payments,
loans, loan repayments, reinstatement and termination.

ADVERTISING

The Company is also ranked and rated by independent financial rating services,
including Moody's, Standard & Poor's and A.M. Best Company. The purpose of
these ratings is to reflect the financial strength or claims-paying ability of
the Company. The ratings are not intended to reflect the investment experience
or financial strength of the Variable Account. The Company may advertise these
ratings from time to time. In addition, the Company may include in certain
advertisements, endorsements in the form of a list of organizations, individuals
or other parties which recommend the Company or the Contracts. Furthermore, the
Company may occasionally include in advertisements comparisons of currently
taxable and tax deferred investment programs, based on selected tax brackets, or
discussions of alternative investment vehicles and general economic conditions.

LEGAL PROCEEDINGS

There are no material legal proceedings, other than ordinary routine litigation
incidental to the business to which the Company and the Variable Account are
parties or to which any of their property is the subject.

The General Distributor, Nationwide Advisory Services, Inc., is not engaged in
any material litigation of any nature.

EXPERTS

The financial statements and schedules have been included herein in reliance
upon the reports of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.

REGISTRATION STATEMENT

A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Policies offered hereby. This prospectus does not contain all the information
set forth in the Registration Statement and amendments thereto and exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Variable Account, the Company, and the Policies
offered hereby. Statements contained in this prospectus as to the content of
Policies and other legal instruments are summaries. For a complete statement of
the terms thereof, reference is made to such instruments as filed.

LEGAL OPINIONS

Legal matters in connection with the Policies described herein are being passed
upon by Druen, Dietrich, Reynolds & Koogler, One Nationwide Plaza, Columbus,
Ohio 43216. All the members of such firm are employed by the Nationwide Mutual
Insurance Company.

38
<PAGE>

APPENDIX 1

ILLUSTRATIONS OF CASH VALUES,
CASH SURRENDER VALUES,
AND DEATH BENEFITS

The illustrations in this prospectus have been prepared to help show how values
under the Policies change with investment performance. The illustrations
illustrate how Cash Values, Cash Surrender Values and death benefits under a
Policy would vary over time if the hypothetical gross investment rates of return
were a uniform annual effective rate of either 0%, 6% or 12%. If the
hypothetical gross investment rate of return averages 0%, 6% or 12% over a
period of years, but fluctuates above or below those averages for individual
years, the Cash Values, Cash Surrender Values and death benefits may be
different. For hypothetical returns of 0% and 6%, the illustrations also
illustrate when the Policies would go into default, at which time additional
premium payments would be required to continue the Policy in force. The
illustrations also assume there is no Policy Indebtedness, no additional premium
payments are made, no Cash Values are allocated to the Fixed Account, and there
are no changes in the Specified Amount or death benefit option.

The amounts shown for the Cash Value, Cash Surrender Value and death benefit as
of each Policy Anniversary reflect the fact that the net investment return on
the assets held in the Sub-Accounts is lower than the gross return. This is due
to the daily charges made against the assets of the Sub-Accounts for assuming
mortality and expense risks. The guaranteed mortality and expense risk charges
for Policy Years one through four are equivalent to an annual effective rate of
0.75% of the daily net asset value of the Variable Account. The current
mortality and expense risk charges for Policy Years one through four are
equivalent to an annual effective rate of 0.60% of the daily net asset value of
the Variable Account. The current mortality and expense risk charges for Policy
Years five through twenty are equivalent to an annual effective rate of 0.40% of
the daily net asset value of the Variable Account. The current mortality and
expense risk charges for Policy Years twenty-one and beyond are equivalent to an
annual effective rate of 0.25% of the daily net asset value of the Variable
Account. In addition, the net investment returns also reflect the deduction of
Underlying Mutual Fund investment advisory fees and other expenses which are
equivalent to an annual effective rate of 0.90% of the daily net asset value of
the Variable Account. This effective rate is based on the average of the fund
expenses for the preceding year for all mutual fund options available under the
policy as of April 30, 1997.

Considering current charges for mortality and expense risks and Underlying
Mutual Fund expenses, gross annual rates of return of 0%, 6% and 12% correspond
to net investment experience at constant annual rates of -1.50%, 4.50% and
10.50%, for Policy Years one through four, and rates of -1.30%, 4.70% and
10.70%, for Policy Years five through twenty, and rates of -1.15%, 4.85% and
10.85%, for Policy Years twenty-one and beyond. Considering guaranteed charges
for mortality and expense risks and Underlying Mutual Fund expenses, gross
annual rates of return of 0%, 6% and 12% correspond to net investment experience
at constant annual rates of -1.65%, 4.35% and 10.35%, for all Policy Years.

The illustrations also reflect the fact that the Company makes monthly charges
for providing insurance protection. Current values reflect current cost of
insurance charges and guaranteed values reflect the maximum cost of insurance
charges guaranteed in the Policy. The values shown are for Policies which are
issued as standard. Policies issued on a substandard basis would result in
lower Cash Values and Death benefits than those illustrated.

The illustrations also reflect the fact that the Company deducts a sales load
from each premium payment received guaranteed not to exceed 5.5% of each premium
payment for the first seven Policy Years and 2% thereafter. On a current basis,
the sales load is 5.5% of the Target Premium plus 3% of premiums in excess of
the Target Premium in the first seven Policy Years, and 0% on all premiums
thereafter. The Company also deducts a tax expense charge of 3.5%, both current
and guaranteed, from all premium payments. The illustrations also reflect the
fact that the Company deducts a charge for state premium taxes at a rate of
2.25% and for federal tax at a rate of 1.25% (imposed under Section 848 of the
Code) of all premium payments.

In addition, the illustrations reflect the fact that the Company deducts a
monthly administrative charge at the beginning of each Policy Month. This
monthly administrative expense charge is currently $5.00 per month and
guaranteed not to exceed $10.00. The illustrations also reflect the fact that
no charges for federal or state income taxes are currently made against the
Variable Account. If such a charge is made in the future, it will require a
higher gross investment return than illustrated in order to produce the net
after-tax returns shown in the illustrations.

Upon request, the Company will furnish a comparable illustration based on the
proposed Insured's age, smoking classification, rating classification and
premium payment requested.

39
<PAGE>

$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE/NONTOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 1
CURRENT VALUES

0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1 105,000 87,786 89,929 1,703,050 93,212 95,354 1,703,050 98,639 100,782 1,703,050
2 215,250 173,990 176,133 1,703,050 190,334 192,477 1,703,050 207,332 209,475 1,703,050
3 331,013 258,969 258,969 1,703,050 291,904 291,904 1,703,050 327,522 327,522 1,703,050
4 452,563 342,694 342,694 1,703,050 398,092 398,092 1,703,050 460,407 460,407 1,703,050
5 580,191 425,967 425,967 1,703,050 510,080 510,080 1,703,050 608,516 608,516 1,703,050
6 714,201 508,108 508,108 1,703,050 627,380 627,380 1,703,050 772,363 772,363 1,881,786
7 854,911 589,184 589,184 1,703,050 750,216 750,216 1,774,935 952,732 952,732 2,254,069
8 897,656 577,278 577,278 1,703,050 781,428 781,428 1,795,878 1,049,061 1,049,061 2,410,953
9 942,539 565,129 565,129 1,703,050 813,828 813,828 1,817,521 1,154,975 1,154,975 2,579,406
10 989,666 552,688 552,688 1,703,050 847,440 847,440 1,839,962 1,271,389 1,271,389 2,760,439
11 1,039,150 539,943 539,943 1,703,050 882,327 882,327 1,863,298 1,399,358 1,399,358 2,955,163
12 1,091,107 526,847 526,847 1,703,050 918,524 918,524 1,887,568 1,539,999 1,539,999 3,164,698
13 1,145,662 513,383 513,383 1,703,050 956,098 956,098 1,912,769 1,694,584 1,694,584 3,390,184
14 1,202,945 499,505 499,505 1,703,050 995,094 995,094 1,938,841 1,864,473 1,864,473 3,632,740
15 1,263,093 485,021 485,021 1,703,050 1,035,455 1,035,455 1,965,603 2,050,949 2,050,949 3,893,316
16 1,326,247 469,833 469,833 1,703,050 1,077,198 1,077,198 1,993,140 2,255,544 2,255,544 4,173,433
17 1,392,560 453,822 453,822 1,703,050 1,120,339 1,120,339 2,021,316 2,479,917 2,479,917 4,474,266
18 1,462,188 436,818 436,818 1,703,050 1,164,863 1,164,863 2,050,275 2,725,803 2,725,803 4,797,686
19 1,535,297 418,637 418,637 1,703,050 1,210,755 1,210,755 2,080,198 2,995,078 2,995,078 5,145,844
20 1,612,062 399,103 399,103 1,703,050 1,258,023 1,258,023 2,110,837 3,289,824 3,289,824 5,519,995
21 1,692,665 380,192 380,192 1,703,050 1,309,635 1,309,635 2,147,409 3,620,457 3,620,457 5,936,464
22 1,777,298 361,292 361,292 1,703,050 1,363,911 1,363,911 2,186,758 3,985,915 3,985,915 6,390,617
23 1,866,163 341,267 341,267 1,703,050 1,420,297 1,420,297 2,227,878 4,387,832 4,387,832 6,882,754
24 1,959,471 319,592 319,592 1,703,050 1,478,645 1,478,645 2,270,311 4,829,068 4,829,068 7,414,551
25 2,057,445 296,056 296,056 1,703,050 1,539,010 1,539,010 2,314,055 5,313,360 5,313,360 7,989,169
26 2,160,317 270,400 270,400 1,703,050 1,601,437 1,601,437 2,359,397 5,844,752 5,844,752 8,611,073
27 2,268,333 242,377 242,377 1,703,050 1,666,004 1,666,004 2,406,210 6,427,770 6,427,770 9,283,628
28 2,381,750 211,669 211,669 1,703,050 1,732,764 1,732,764 2,455,153 7,067,266 7,067,266 10,013,609
29 2,500,837 177,875 177,875 1,703,050 1,801,760 1,801,760 2,506,068 7,768,491 7,768,491 10,805,194
30 2,625,879 140,522 140,522 1,703,050 1,873,019 1,873,019 2,559,668 8,537,076 8,537,076 11,666,768

</TABLE>

(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$5.00 ADMINISTRATIVE EXPENSE CHARGE ALL THE TIME. CURRENT VALUES REFLECT A
PREMIUM CHARGE OF 9% OF TARGET PREMIUM AND 6.5% OF EXCESS-OF-TARGET PREMIUM
FOR THE FIRST 7 YEARS AND 3.5% OF ALL PREMIUM FROM EIGHTH YEAR AND ON.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.

THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE
OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE TRUST THAT
THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.

40
<PAGE>

$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 1
GUARANTEED VALUES

1 105,000 83,858 86,000 1,703,050 89,106 91,248 1,703,050 94,357 96,500 1,703,050
2 215,250 166,199 168,342 1,703,050 181,945 184,087 1,703,050 198,326 200,468 1,703,050
3 331,013 247,061 247,061 1,703,050 278,717 278,717 1,703,050 312,964 312,964 1,703,050
4 452,563 326,469 326,469 1,703,050 379,626 379,626 1,703,050 439,449 439,449 1,703,050
5 580,191 404,454 404,454 1,703,050 484,902 484,902 1,703,050 579,107 579,107 1,703,050
6 714,201 481,028 481,028 1,703,050 594,775 594,775 1,703,050 733,316 733,316 1,786,652
7 854,911 556,200 556,200 1,703,050 709,497 709,497 1,703,050 901,980 901,980 2,133,995
8 897,656 539,922 539,922 1,703,050 733,836 733,836 1,703,050 986,652 986,652 2,267,525
9 942,539 523,086 523,086 1,703,050 758,771 758,771 1,703,050 1,078,886 1,078,886 2,409,476
10 989,666 505,593 505,593 1,703,050 784,294 784,294 1,703,050 1,179,290 1,179,290 2,560,475
11 1,039,150 487,328 487,328 1,703,050 810,395 810,395 1,711,393 1,288,511 1,288,511 2,721,077
12 1,091,107 468,181 468,181 1,703,050 837,069 837,069 1,720,176 1,407,260 1,407,260 2,891,919
13 1,145,662 448,065 448,065 1,703,050 864,327 864,327 1,729,172 1,536,345 1,536,345 3,073,611
14 1,202,945 426,821 426,821 1,703,050 892,141 892,141 1,738,248 1,676,566 1,676,566 3,266,621
15 1,263,093 404,256 404,256 1,703,050 920,467 920,467 1,747,323 1,828,760 1,828,760 3,471,536
16 1,326,247 380,153 380,153 1,703,050 949,252 949,252 1,756,400 1,993,813 1,993,813 3,689,153
17 1,392,560 354,265 354,265 1,703,050 978,442 978,442 1,765,306 2,172,670 2,172,670 3,919,931
18 1,462,188 326,231 326,231 1,703,050 1,007,955 1,007,955 1,774,101 2,366,221 2,366,221 4,164,785
19 1,535,297 295,662 295,662 1,703,050 1,037,711 1,037,711 1,782,892 2,575,413 2,575,413 4,424,817
20 1,612,062 262,148 262,148 1,703,050 1,067,657 1,067,657 1,791,422 2,801,292 2,801,292 4,700,289
21 1,692,665 225,251 225,251 1,703,050 1,097,750 1,097,750 1,799,981 3,044,996 3,044,996 4,992,880
22 1,777,298 184,506 184,506 1,703,050 1,127,968 1,127,968 1,808,472 3,307,782 3,307,782 5,303,367
23 1,866,163 139,405 139,405 1,703,050 1,158,308 1,158,308 1,816,922 3,591,044 3,591,044 5,632,912
24 1,959,471 89,294 89,294 1,703,050 1,188,748 1,188,748 1,825,203 3,896,216 3,896,216 5,982,250
25 2,057,445 33,297 33,297 1,703,050 1,219,230 1,219,230 1,833,235 4,224,700 4,224,700 6,352,259
26 2,160,317 (*) (*) (*) 1,249,651 1,249,651 1,841,110 4,577,785 4,577,785 6,744,450
27 2,268,333 (*) (*) (*) 1,279,878 1,279,878 1,848,528 4,956,693 4,956,693 7,158,952
28 2,381,750 (*) (*) (*) 1,309,724 1,309,724 1,855,748 5,362,403 5,362,403 7,597,989
29 2,500,837 (*) (*) (*) 1,339,039 1,339,039 1,862,469 5,796,012 5,796,012 8,061,673
30 2,625,879 (*) (*) (*) 1,367,727 1,367,727 1,869,136 6,258,808 6,258,808 8,553,287

</TABLE>

(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND A
MONTHLY $10.00 ADMINISTRATIVE EXPENSE CHARGE ALL THE TIME. GUARANTEED
VALUES REFLECT A PREMIUM CHARGE OF 9% OF PREMIUM FOR THE FIRST 7 YEARS AND
5.5% OF PREMIUM FROM EIGHTH YEAR AND ON.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.

41
<PAGE>

$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE/NONTOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 2
CURRENT VALUES

1 105,000 87,587 89,730 1,790,637 93,000 95,143 1,796,050 98,415 100,558 1,801,465
2 215,250 173,348 175,491 1,876,398 189,626 191,769 1,892,676 206,555 208,698 1,909,605
3 331,013 257,648 257,648 1,960,698 290,389 290,389 1,993,439 325,795 325,795 2,028,845
4 452,563 340,430 340,430 2,043,480 395,392 395,392 2,098,442 457,208 457,208 2,160,258
5 580,191 422,441 422,441 2,125,491 505,707 505,707 2,208,757 603,133 603,133 2,306,183
6 714,201 502,957 502,957 2,206,007 620,742 620,742 2,323,792 764,156 764,156 2,467,206
7 854,911 582,021 582,021 2,285,071 740,741 740,741 2,443,791 941,909 941,909 2,644,959
8 897,656 568,009 568,009 2,271,059 768,746 768,746 2,471,796 1,035,437 1,035,437 2,738,487
9 942,539 553,650 553,650 2,256,700 797,516 797,516 2,500,566 1,138,373 1,138,373 2,841,423
10 989,666 538,882 538,882 2,241,932 827,019 827,019 2,530,069 1,251,650 1,251,650 2,954,700
11 1,039,150 523,701 523,701 2,226,751 857,281 857,281 2,560,331 1,376,362 1,376,362 3,079,412
12 1,091,107 508,057 508,057 2,211,107 888,277 888,277 2,591,327 1,513,665 1,513,665 3,216,715
13 1,145,662 491,938 491,938 2,194,988 920,027 920,027 2,623,077 1,664,887 1,664,887 3,367,937
14 1,202,945 475,298 475,298 2,178,348 952,509 952,509 2,655,559 1,831,439 1,831,439 3,568,376
15 1,263,093 457,889 457,889 2,160,939 985,495 985,495 2,688,545 2,014,515 2,014,515 3,824,154
16 1,326,247 439,600 439,600 2,142,650 1,018,886 1,018,886 2,721,936 2,215,474 2,215,474 4,099,292
17 1,392,560 420,303 420,303 2,123,353 1,052,554 1,052,554 2,755,604 2,435,861 2,435,861 4,394,780
18 1,462,188 399,807 399,807 2,102,857 1,086,303 1,086,303 2,789,353 2,677,377 2,677,377 4,712,452
19 1,535,297 377,915 377,915 2,080,965 1,119,918 1,119,918 2,822,968 2,941,868 2,941,868 5,054,423
20 1,612,062 354,459 354,459 2,057,509 1,153,198 1,153,198 2,856,248 3,231,375 3,231,375 5,421,925
21 1,692,665 331,815 331,815 2,034,865 1,189,821 1,189,821 2,892,871 3,556,134 3,556,134 5,830,993
22 1,777,298 309,431 309,431 2,012,481 1,228,216 1,228,216 2,931,266 3,915,097 3,915,097 6,277,075
23 1,866,163 285,878 285,878 1,988,928 1,266,997 1,266,997 2,970,047 4,309,873 4,309,873 6,760,466
24 1,959,471 260,563 260,563 1,963,613 1,305,557 1,305,557 3,008,607 4,743,268 4,743,268 7,282,813
25 2,057,445 233,317 233,317 1,936,367 1,343,688 1,343,688 3,046,738 5,218,954 5,218,954 7,847,220
26 2,160,317 203,933 203,933 1,906,983 1,381,135 1,381,135 3,084,185 5,740,903 5,740,903 8,458,073
27 2,268,333 172,244 172,244 1,875,294 1,417,665 1,417,665 3,120,715 6,313,561 6,313,561 9,118,676
28 2,381,750 138,026 138,026 1,841,076 1,452,977 1,452,977 3,156,027 6,941,693 6,941,693 9,835,685
29 2,500,837 101,002 101,002 1,804,052 1,486,695 1,486,695 3,189,745 7,630,457 7,630,457 10,613,203
30 2,625,879 60,857 60,857 1,763,907 1,518,384 1,518,384 3,221,434 8,385,385 8,385,385 11,459,468

</TABLE>

42
<PAGE>

$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 2
GUARANTEED VALUES

1 105,000 83,557 85,700 1,786,607 88,787 90,930 1,791,837 94,020 96,163 1,797,070
2 215,250 165,271 167,414 1,868,321 180,921 183,063 1,883,971 197,201 199,344 1,900,251
3 331,013 245,138 245,138 1,948,188 276,510 276,510 1,979,560 310,447 310,447 2,013,497
4 452,563 323,137 323,137 2,026,187 375,652 375,652 2,078,702 434,740 434,740 2,137,790
5 580,191 399,247 399,247 2,102,297 478,447 478,447 2,181,497 571,159 571,159 2,274,209
6 714,201 473,415 473,415 2,176,465 584,965 584,965 2,288,015 720,863 720,863 2,423,913
7 854,911 545,570 545,570 2,248,620 695,263 695,263 2,398,313 885,107 885,107 2,588,157
8 897,656 526,118 526,118 2,229,168 714,448 714,448 2,417,498 964,905 964,905 2,667,955
9 942,539 505,932 505,932 2,208,982 733,374 733,374 2,436,424 1,051,785 1,051,785 2,754,835
10 989,666 484,904 484,904 2,187,954 751,909 751,909 2,454,959 1,146,349 1,146,349 2,849,399
11 1,039,150 462,912 462,912 2,165,962 769,892 769,892 2,472,942 1,249,240 1,249,240 2,952,290
12 1,091,107 439,851 439,851 2,142,901 787,177 787,177 2,490,227 1,361,187 1,361,187 3,064,237
13 1,145,662 415,652 415,652 2,118,702 803,645 803,645 2,506,695 1,483,028 1,483,028 3,186,078
14 1,202,945 390,163 390,163 2,093,213 819,081 819,081 2,522,131 1,615,599 1,615,599 3,318,649
15 1,263,093 363,198 363,198 2,066,248 833,230 833,230 2,536,280 1,759,783 1,759,783 3,462,833
16 1,326,247 334,557 334,557 2,037,607 845,804 845,804 2,548,854 1,916,534 1,916,534 3,619,584
17 1,392,560 304,026 304,026 2,007,076 856,484 856,484 2,559,534 2,086,887 2,086,887 3,789,937
18 1,462,188 271,273 271,273 1,974,323 864,816 864,816 2,567,866 2,271,839 2,271,839 3,998,663
19 1,535,297 235,970 235,970 1,939,020 870,321 870,321 2,573,371 2,472,261 2,472,261 4,247,592
20 1,612,062 197,810 197,810 1,900,860 872,516 872,516 2,575,566 2,689,005 2,689,005 4,511,881
21 1,692,665 156,505 156,505 1,859,555 870,914 870,914 2,573,964 2,922,935 2,922,935 4,792,736
22 1,777,298 111,789 111,789 1,814,839 865,022 865,022 2,568,072 3,175,182 3,175,182 5,090,769
23 1,866,163 63,414 63,414 1,766,464 854,341 854,341 2,557,391 3,447,084 3,447,084 5,407,096
24 1,959,471 11,048 11,048 1,714,098 838,260 838,260 2,541,310 3,740,017 3,740,017 5,742,422
25 2,057,445 (*) (*) (*) 815,993 815,993 2,519,043 4,055,327 4,055,327 6,097,589
26 2,160,317 (*) (*) (*) 786,536 786,536 2,489,586 4,394,251 4,394,251 6,474,050
27 2,268,333 (*) (*) (*) 748,671 748,671 2,451,721 4,757,963 4,757,963 6,871,926
28 2,381,750 (*) (*) (*) 700,900 700,900 2,403,950 5,147,401 5,147,401 7,293,353
29 2,500,837 (*) (*) (*) 641,662 641,662 2,344,712 5,563,620 5,563,620 7,738,439
30 2,625,879 (*) (*) (*) 569,479 569,479 2,272,529 6,007,855 6,007,855 8,210,335

</TABLE>

43
<PAGE>

$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: GUARANTEED ISSUE/NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 1
CURRENT VALUES

1 40,816 31,065 31,374 1,703,050 33,063 33,372 1,703,050 35,063 35,372 1,703,050
2 83,672 60,300 60,609 1,703,050 66,205 66,514 1,703,050 72,355 72,663 1,703,050
3 128,671 87,990 87,990 1,703,050 99,708 99,708 1,703,050 112,409 112,409 1,703,050
4 175,921 114,855 114,855 1,703,050 134,318 134,318 1,703,050 156,280 156,280 1,703,050
5 225,532 141,515 141,515 1,703,050 170,769 170,769 1,703,050 205,142 205,142 1,703,050
6 277,625 167,891 167,891 1,703,050 209,040 209,040 1,703,050 259,399 259,399 1,703,050
7 332,321 193,822 193,822 1,703,050 249,065 249,065 1,703,050 319,495 319,495 1,703,050
8 389,753 220,728 220,728 1,703,050 292,471 292,471 1,703,050 387,752 387,752 1,703,050
9 450,056 246,871 246,871 1,703,050 337,607 337,607 1,703,050 463,166 463,166 1,703,050
10 513,375 272,461 272,461 1,703,050 384,776 384,776 1,703,050 546,767 546,767 1,703,050
11 579,859 297,401 297,401 1,703,050 434,002 434,002 1,703,050 639,430 639,430 1,703,050
12 649,668 321,318 321,318 1,703,050 485,066 485,066 1,703,050 741,944 741,944 1,703,050
13 722,967 344,184 344,184 1,703,050 538,075 538,075 1,703,050 855,521 855,521 1,703,050
14 799,931 365,931 365,931 1,703,050 593,117 593,117 1,703,050 981,530 981,530 1,703,050
15 880,743 386,483 386,483 1,703,050 650,293 650,293 1,703,050 1,121,547 1,121,547 1,703,050
16 965,596 405,708 405,708 1,703,050 709,684 709,684 1,703,050 1,277,385 1,277,385 1,703,050
17 1,054,691 423,596 423,596 1,703,050 771,496 771,496 1,703,050 1,450,526 1,450,526 1,856,673
18 1,148,242 439,981 439,981 1,703,050 835,849 835,849 1,703,050 1,641,423 1,641,423 2,068,193
19 1,246,469 454,691 454,691 1,703,050 902,907 902,907 1,703,050 1,851,857 1,851,857 2,296,303
20 1,349,608 467,579 467,579 1,703,050 972,901 972,901 1,703,050 2,083,849 2,083,849 2,542,296
21 1,417,089 443,589 443,589 1,703,050 1,008,939 1,008,939 1,703,050 2,302,456 2,302,456 2,762,947
22 1,487,943 419,516 419,516 1,703,050 1,047,290 1,047,290 1,703,050 2,544,383 2,544,383 3,027,816
23 1,562,341 395,360 395,360 1,703,050 1,088,104 1,088,104 1,703,050 2,812,159 2,812,159 3,318,348
24 1,640,458 371,121 371,121 1,703,050 1,131,538 1,131,538 1,703,050 3,108,589 3,108,589 3,637,049
25 1,722,480 346,116 346,116 1,703,050 1,177,473 1,177,473 1,703,050 3,436,508 3,436,508 3,986,349
26 1,808,604 318,911 318,911 1,703,050 1,225,583 1,225,583 1,703,050 3,798,740 3,798,740 4,368,551
27 1,899,035 289,234 289,234 1,703,050 1,276,107 1,276,107 1,703,050 4,199,685 4,199,685 4,745,645
28 1,993,986 256,754 256,754 1,703,050 1,329,318 1,329,318 1,703,050 4,643,768 4,643,768 5,154,582
29 2,093,686 221,055 221,055 1,703,050 1,385,539 1,385,539 1,703,050 5,135,998 5,135,998 5,598,238
30 2,198,370 181,622 181,622 1,703,050 1,445,151 1,445,151 1,703,050 5,682,084 5,682,084 6,079,830

</TABLE>

44
<PAGE>

$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 1
GUARANTEED VALUES

1 40,816 28,953 29,262 1,703,050 30,875 31,184 1,703,050 32,800 33,109 1,703,050
2 83,672 57,073 57,382 1,703,050 62,724 63,033 1,703,050 68,613 68,921 1,703,050
3 128,671 84,353 84,353 1,703,050 95,578 95,578 1,703,050 107,746 107,746 1,703,050
4 175,921 110,772 110,772 1,703,050 129,455 129,455 1,703,050 150,531 150,531 1,703,050
5 225,532 136,312 136,312 1,703,050 164,381 164,381 1,703,050 197,344 197,344 1,703,050
6 277,625 160,923 160,923 1,703,050 200,353 200,353 1,703,050 248,576 248,576 1,703,050
7 332,321 184,546 184,546 1,703,050 237,363 237,363 1,703,050 304,661 304,661 1,703,050
8 389,753 208,457 208,457 1,703,050 276,821 276,821 1,703,050 367,594 367,594 1,703,050
9 450,056 231,213 231,213 1,703,050 317,349 317,349 1,703,050 436,577 436,577 1,703,050
10 513,375 252,752 252,752 1,703,050 358,956 358,956 1,703,050 512,278 512,278 1,703,050
11 579,859 273,002 273,002 1,703,050 401,647 401,647 1,703,050 595,456 595,456 1,703,050
12 649,668 291,904 291,904 1,703,050 445,454 445,454 1,703,050 687,005 687,005 1,703,050
13 722,967 309,430 309,430 1,703,050 490,449 490,449 1,703,050 787,984 787,984 1,703,050
14 799,931 325,482 325,482 1,703,050 536,655 536,655 1,703,050 899,565 899,565 1,703,050
15 880,743 339,936 339,936 1,703,050 584,092 584,092 1,703,050 1,023,110 1,023,110 1,703,050
16 965,596 352,654 352,654 1,703,050 632,791 632,791 1,703,050 1,160,217 1,160,217 1,703,050
17 1,054,691 363,484 363,484 1,703,050 682,799 682,799 1,703,050 1,312,778 1,312,778 1,703,050
18 1,148,242 372,177 372,177 1,703,050 734,119 734,119 1,703,050 1,481,780 1,481,780 1,867,043
19 1,246,469 378,481 378,481 1,703,050 786,796 786,796 1,703,050 1,667,181 1,667,181 2,067,304
20 1,349,608 382,144 382,144 1,703,050 840,927 840,927 1,703,050 1,870,592 1,870,592 2,282,123
21 1,417,089 345,962 345,962 1,703,050 857,475 857,475 1,703,050 2,053,501 2,053,501 2,464,201
22 1,487,943 306,230 306,230 1,703,050 873,030 873,030 1,703,050 2,253,775 2,253,775 2,681,993
23 1,562,341 262,469 262,469 1,703,050 887,447 887,447 1,703,050 2,473,052 2,473,052 2,918,201
24 1,640,458 214,065 214,065 1,703,050 900,528 900,528 1,703,050 2,713,114 2,713,114 3,174,343
25 1,722,480 160,197 160,197 1,703,050 911,986 911,986 1,703,050 2,975,894 2,975,894 3,452,036
26 1,808,604 99,762 99,762 1,703,050 921,424 921,424 1,703,050 3,263,480 3,263,480 3,753,002
27 1,899,035 31,330 31,330 1,703,050 928,322 928,322 1,703,050 3,579,619 3,579,619 4,044,969
28 1,993,986 (*) (*) (*) 931,993 931,993 1,703,050 3,927,578 3,927,578 4,359,611
29 2,093,686 (*) (*) (*) 931,653 931,653 1,703,050 4,311,237 4,311,237 4,699,248
30 2,198,370 (*) (*) (*) 926,448 926,448 1,703,050 4,735,269 4,735,269 5,066,738

</TABLE>

45
<PAGE>

$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: GUARANTEED ISSUE/NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 2
CURRENT VALUES

1 40,816 30,986 31,295 1,734,036 32,978 33,287 1,736,028 34,973 35,282 1,738,023
2 83,672 60,014 60,323 1,763,064 65,889 66,198 1,768,939 72,008 72,317 1,775,058
3 128,671 87,338 87,338 1,790,388 98,961 98,961 1,802,011 111,557 111,557 1,814,607
4 175,921 113,695 113,695 1,816,745 132,934 132,934 1,835,984 154,641 154,641 1,857,691
5 225,532 139,716 139,716 1,842,766 168,533 168,533 1,871,583 202,386 202,386 1,905,436
6 277,625 165,335 165,335 1,868,385 205,733 205,733 1,908,783 255,154 255,154 1,958,204
7 332,321 190,373 190,373 1,893,423 244,418 244,418 1,947,468 313,281 313,281 2,016,331
8 389,753 216,165 216,165 1,919,215 286,080 286,080 1,989,130 378,860 378,860 2,081,910
9 450,056 240,978 240,978 1,944,028 329,026 329,026 2,032,076 450,742 450,742 2,153,792
10 513,375 265,043 265,043 1,968,093 373,543 373,543 2,076,593 529,834 529,834 2,232,884
11 579,859 288,231 288,231 1,991,281 419,562 419,562 2,122,612 616,757 616,757 2,319,807
12 649,668 310,068 310,068 2,013,118 466,650 466,650 2,169,700 711,828 711,828 2,414,878
13 722,967 330,488 330,488 2,033,538 514,774 514,774 2,217,824 815,829 815,829 2,518,879
14 799,931 349,381 349,381 2,052,431 563,846 563,846 2,266,896 929,572 929,572 2,632,622
15 880,743 366,614 366,614 2,069,664 613,756 613,756 2,316,806 1,053,936 1,053,936 2,756,986
16 965,596 381,985 381,985 2,085,035 664,310 664,310 2,367,360 1,189,813 1,189,813 2,892,863
17 1,054,691 395,450 395,450 2,098,500 715,471 715,471 2,418,521 1,338,361 1,338,361 3,041,411
18 1,148,242 406,756 406,756 2,109,806 766,977 766,977 2,470,027 1,500,632 1,500,632 3,203,682
19 1,246,469 415,641 415,641 2,118,691 818,548 818,548 2,521,598 1,677,783 1,677,783 3,380,833
20 1,349,608 421,878 421,878 2,124,928 869,918 869,918 2,572,968 1,871,123 1,871,123 3,574,173
21 1,417,089 391,612 391,612 2,094,662 885,762 885,762 2,588,812 2,046,617 2,046,617 3,749,667
22 1,487,943 361,693 361,693 2,064,743 902,373 902,373 2,605,423 2,241,108 2,241,108 3,944,158
23 1,562,341 332,117 332,117 2,035,167 919,787 919,787 2,622,837 2,456,653 2,456,653 4,159,703
24 1,640,458 302,881 302,881 2,005,931 938,044 938,044 2,641,094 2,695,531 2,695,531 4,398,581
25 1,722,480 273,121 273,121 1,976,171 956,298 956,298 2,659,348 2,959,354 2,959,354 4,662,404
26 1,808,604 241,108 241,108 1,944,158 972,756 972,756 2,675,806 3,248,976 3,248,976 4,952,026
27 1,899,035 206,654 206,654 1,909,704 987,111 987,111 2,690,161 3,566,960 3,566,960 5,270,010
28 1,993,986 169,532 169,532 1,872,582 998,999 998,999 2,702,049 3,916,109 3,916,109 5,619,159
29 2,093,686 129,462 129,462 1,832,512 1,007,977 1,007,977 2,711,027 4,299,461 4,299,461 6,002,511
30 2,198,370 86,095 86,095 1,789,145 1,013,512 1,013,512 2,716,562 4,720,314 4,720,314 6,423,364

</TABLE>

46
<PAGE>

$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 2
GUARANTEED VALUES

1 40,816 28,842 29,151 1,731,892 30,757 31,066 1,733,807 32,676 32,984 1,735,726
2 83,672 56,738 57,047 1,759,788 62,354 62,663 1,765,404 68,206 68,514 1,771,256
3 128,671 83,669 83,669 1,786,719 94,791 94,791 1,797,841 106,847 106,847 1,809,897
4 175,921 109,598 109,598 1,812,648 128,052 128,052 1,831,102 148,865 148,865 1,851,915
5 225,532 134,493 134,493 1,837,543 162,121 162,121 1,865,171 194,554 194,554 1,897,604
6 277,625 158,285 158,285 1,861,335 196,943 196,943 1,899,993 244,199 244,199 1,947,249
7 332,321 180,889 180,889 1,883,939 232,447 232,447 1,935,497 298,099 298,099 2,001,149
8 389,753 203,545 203,545 1,906,595 269,957 269,957 1,973,007 358,065 358,065 2,061,115
9 450,056 224,777 224,777 1,927,827 308,002 308,002 2,011,052 423,074 423,074 2,126,124
10 513,375 244,489 244,489 1,947,539 346,480 346,480 2,049,530 493,519 493,519 2,196,569
11 579,859 262,569 262,569 1,965,619 385,268 385,268 2,088,318 569,812 569,812 2,272,862
12 649,668 278,923 278,923 1,981,973 424,257 424,257 2,127,307 652,426 652,426 2,355,476
13 722,967 293,494 293,494 1,996,544 463,366 463,366 2,166,416 741,920 741,920 2,444,970
14 799,931 306,138 306,138 2,009,188 502,423 502,423 2,205,473 838,817 838,817 2,541,867
15 880,743 316,682 316,682 2,019,732 541,212 541,212 2,244,262 943,661 943,661 2,646,711
16 965,596 324,936 324,936 2,027,986 579,491 579,491 2,282,541 1,057,028 1,057,028 2,760,078
17 1,054,691 330,695 330,695 2,033,745 616,987 616,987 2,320,037 1,179,537 1,179,537 2,882,587
18 1,148,242 333,637 333,637 2,036,687 653,292 653,292 2,356,342 1,311,742 1,311,742 3,014,792
19 1,246,469 333,444 333,444 2,036,494 687,980 687,980 2,391,030 1,454,253 1,454,253 3,157,303
20 1,349,608 329,819 329,819 2,032,869 720,618 720,618 2,423,668 1,607,756 1,607,756 3,310,806
21 1,417,089 286,351 286,351 1,989,401 712,454 712,454 2,415,504 1,732,516 1,732,516 3,435,566
22 1,487,943 239,507 239,507 1,942,557 699,715 699,715 2,402,765 1,865,750 1,865,750 3,568,800
23 1,562,341 189,039 189,039 1,892,089 681,893 681,893 2,384,943 2,008,006 2,008,006 3,711,056
24 1,640,458 134,614 134,614 1,837,664 658,361 658,361 2,361,411 2,159,793 2,159,793 3,862,843
25 1,722,480 75,763 75,763 1,778,813 628,322 628,322 2,331,372 2,321,523 2,321,523 4,024,573
26 1,808,604 11,844 11,844 1,714,894 590,757 590,757 2,293,807 2,493,459 2,493,459 4,196,509
27 1,899,035 (*) (*) (*) 544,434 544,434 2,247,484 2,675,713 2,675,713 4,378,763
28 1,993,986 (*) (*) (*) 487,839 487,839 2,190,889 2,868,176 2,868,176 4,571,226
29 2,093,686 (*) (*) (*) 419,396 419,396 2,122,446 3,070,731 3,070,731 4,773,781
30 2,198,370 (*) (*) (*) 337,611 337,611 2,040,661 3,283,401 3,283,401 4,986,451
</TABLE>

47
<PAGE>

PERFORMANCE TABLES

The following performance tables display historical investment results of the
Underlying Mutual Fund sub-accounts of the Variable Account. This information
may be useful in helping potential investors in deciding which Underlying Mutual
Fund sub-accounts to choose and in assessing the competence of the Underlying
Mutual Funds' investment advisers. The performance figures shown should be
considered in light of the investment objectives and policies, characteristics
and quality of the underlying portfolios of the Underlying Mutual Funds, and the
market conditions during the periods of time quoted. The performance figures
should not be considered as estimates or predictions of future performance.
Investment return and the principal value of the Underlying Mutual Fund sub-
accounts are not guaranteed and will fluctuate so that a Policy Owner's units,
when redeemed, may be worth more or less than their original cost.

48
<PAGE>

FUND PERFORMANCE TABLE*

Annual Percentage Change
--------------------------------------------------------
Fund Unit
UNDERLYING MUTUAL FUND Inception Values 1994 1995 1996
Date 12/31/96
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

American Century VP Balanced 05/01/91 9.34 -0.14 20.23 11.37
- ----------------------------------------------------------------------------------------------------------------
American Century VP Capital 11/20/87 9.13 -1.91 30.14 -5.04
Appreciation
- ----------------------------------------------------------------------------------------------------------------
American Century VP International 05/01/94 9.29 N/A 11.38 13.56
- ----------------------------------------------------------------------------------------------------------------
American Century VP Value 05/01/96 9.23 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund 05/02/94 9.34 N/A 60.73 18.74
Growth & Income Fund
- ----------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth 10/06/93 8.87 0.74 33.58 20.33
Fund
- ----------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 09/29/89 8.91 0.13 35.78 20.53
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Asset Manager 09/06/89 9.24 -6.79 16.09 13.75
Portfolio
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund Portfolio 01/03/95 9.21 N/A N/A 20.41
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Equity-Income 10/09/86 9.10 6.28 34.10 13.43
Portfolio
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Growth Portfolio 10/09/86 8.93 -0.76 34.38 13.85
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - High Income Portfolio 09/19/85 9.46 -2.28 19.72 13.18
- ----------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Overseas Portfolio 01/28/87 9.34 0.97 8.86 12.37
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 04/15/92 8.89 -1.64 28.41 25.21
- ----------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 11/08/82 9.78 -3.95 17.87 2.71
- ----------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 11/10/81 9.93 3.11 4.86 4.33
- ----------------------------------------------------------------------------------------------------------------
NSAT Small Company Fund 10/23/95 9.13 N/A N/A 21.92
- ----------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 11/08/82 9.03 0.32 28.15 20.94
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 09/10/84 9.16 -5.70 30.77 8.32
Management Trust - Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 09/10/84 9.86 -0.90 10.11 3.52
Management Trust - Bond Portfolio
- ----------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 03/22/94 8.95 N/A 35.48 28.62
Management Trust - Partners Portfolio
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - 04/30/85 9.80 -2.67 16.13 2.39
Bond Fund
- ----------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - 11/12/90 9.37 -6.43 1.48 16.93
Global Securities
- ----------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - 02/09/87 9.35 -2.68 20.47 13.40
Multiple Strategies
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - 05/08/92 8.93 -6.10 34.27 0.05
Discovery Fund II, Inc.
- ----------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - 10/20/95 9.62 N/A N/A 9.56
International Stock Fund II
- ----------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. 05/08/92 9.00 2.83 24.90 17.27
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - 12/27/95 9.60 -5.50 10.17 17.19
Worldwide Emerging Markets Fund
- ----------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - 09/01/89 9.92 -2.06 16.44 1.76
Worldwide Bond Fund
- ----------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - 09/01/87 9.47 N/A N/A 25.78
Worldwide Hard Assets Fund
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life 07/03/95 10.01 N/A N/A 39.50
Investment Trust - Morgan Stanley Real
Estate Securities Portfolio

- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - International 06/30/95 9.18 N/A N/A 9.16
Equity Portfolio
- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Post Venture 11/18/96 9.03 N/A N/A N/A
Capital Portfolio
- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Small Company 06/30/95 8.91 N/A N/A 13.06
Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------

Cumulative Non-Anualized
Percentage Change
---------------------------------------------------------------------
1 mo 1 Yr 2 Yrs 3 Yrs. 5 yrs. Inception
UNDERLYING MUTUAL FUND to to to to to to
12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

American Century VP Balanced -4.06 5.97 25.28 29.91 38.27 61.40
- -----------------------------------------------------------------------------------------------------------------------------
American Century VP Capital -8.56 -18.88 -0.30 5.83 16.42 102.86
Appreciation
- -----------------------------------------------------------------------------------------------------------------------------
American Century VP International 0.65 16.71 36.03 N/A N/A 25.64
- -----------------------------------------------------------------------------------------------------------------------------
American Century VP Value -2.56 N/A N/A N/A N/A 22.39
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund -4.52 6.35 60.91 N/A N/A 83.32
Growth & Income Fund
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth -5.58 13.36 50.90 61.20 N/A 72.69
Fund
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund -4.21 17.40 53.14 74.92 99.23 143.80
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Asset Manager -3.87 10.43 29.04 29.23 59.40 112.35
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund Portfolio -2.65 13.39 48.78 N/A N/A 61.74
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Equity-Income -3.78 9.96 41.06 67.78 115.53 239.69
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Growth Portfolio -5.67 5.39 40.96 52.93 87.27 271.11
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - High Income Portfolio -3.17 8.15 26.97 31.61 70.18 226.30
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Overseas Portfolio 0.84 11.86 27.51 24.97 58.68 103.40
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund -3.30 18.18 55.48 67.77 N/A 84.43
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund -1.06 4.45 14.84 18.92 37.29 225.37
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 0.36 4.31 9.23 13.40 18.39 173.57
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Small Company Fund -4.00 7.17 N/A N/A N/A 31.90
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund -3.38 16.80 46.85 62.48 85.64 592.87
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers -4.53 5.15 31.80 43.12 60.63 314.17
Management Trust - Growth Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers -0.36 4.56 11.18 15.00 26.47 144.84
Management Trust - Bond Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers -3.54 19.47 59.67 80.15 N/A 70.39
Management Trust - Partners Portfolio
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - -0.93 3.28 13.24 17.46 37.54 167.10
Bond Fund
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - -1.31 18.35 28.72 21.09 76.76 86.84
Global Securities
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - -2.53 9.72 28.35 36.28 63.69 170.01
Multiple Strategies
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - -6.96 -7.13 15.58 19.98 N/A 48.73
Discovery Fund II, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - -2.78 5.25 N/A N/A N/A 15.03
International Stock Fund II
- -----------------------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. -3.25 8.66 36.69 49.28 N/A 111.15
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - -3.70 -2.16 22.46 17.30 91.34 62.25
Worldwide Emerging Markets Fund
- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - -1.20 1.62 3.85 17.03 19.03 47.88
Worldwide Bond Fund
- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - -3.83 31.50 N/A N/A N/A 35.45
Worldwide Hard Assets Fund
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life -1.34 36.58 N/A N/A N/A 49.69
Investment Trust - Morgan Stanley Real
Estate Securities Portfolio
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - International -0.66 4.60 N/A N/A N/A 18.00
Equity Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Post Venture -6.47 N/A N/A N/A N/A -11.08
Capital Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Small Company -8.05 -5.97 N/A N/A N/A 22.79
Growth Portfolio
- -----------------------------------------------------------------------------------------------------------------------------

Average Annualized
Percentage Change
--------------------------------
3 Yrs. 5 yrs. Inception
UNDERLYING MUTUAL FUND to to to
12/31/96 12/31/96 12/31/96
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>

American Century VP Balanced 9.11 6.70 8.43
- ----------------------------------------------------------------------------------------
American Century VP Capital 1.91 3.09 7.85
Appreciation
- ----------------------------------------------------------------------------------------
American Century VP International N/A N/A 8.15
- ----------------------------------------------------------------------------------------
American Century VP Value N/A N/A 24.74
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund N/A N/A 23.14
Growth & Income Fund
- ----------------------------------------------------------------------------------------
Dreyfus Socially Responsible Growth 17.25 N/A 16.98
Fund
- ----------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 20.49 14.78 12.61
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Fidelity VIP Fund II - Asset Manager 8.92 9.77 10.46
Portfolio
- ----------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund Portfolio N/A N/A 23.92
- ----------------------------------------------------------------------------------------
Fidelity VIP Fund - Equity-Income 18.83 16.60 12.38
Portfolio
- ----------------------------------------------------------------------------------------
Fidelity VIP Fund - Growth Portfolio 15.21 13.37 13.33
- ----------------------------------------------------------------------------------------
Fidelity VIP Fund - High Income Portfolio 9.59 11.22 10.80
- ----------------------------------------------------------------------------------------
Fidelity VIP Fund - Overseas Portfolio 7.71 9.67 7.23
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 18.82 N/A 13.14
- ----------------------------------------------------------------------------------------
NSAT Government Bond Fund 5.95 6.54 8.54
- ----------------------------------------------------------------------------------------
NSAT Money Market Fund 4.28 3.43 6.76
- ----------------------------------------------------------------------------------------
NSAT Small Company Fund N/A N/A 21.23
- ----------------------------------------------------------------------------------------
NSAT Total Return Fund 17.56 13.17 14.39
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Neuberger & Berman Advisers 12.69 9.94 11.98
Management Trust - Growth Portfolio
- ----------------------------------------------------------------------------------------
Neuberger & Berman Advisers 4.77 4.81 7.39
Management Trust - Bond Portfolio
- ----------------------------------------------------------------------------------------
Neuberger & Berman Advisers 21.68 N/A 19.27
Management Trust - Partners Portfolio
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - 5.51 6.58 8.59
Bond Fund
- ----------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - 6.59 12.07 10.29
Global Securities
- ----------------------------------------------------------------------------------------
Oppenheimer Variable Account Fund - 10.87 10.36 10.29
Multiple Strategies
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - 6.26 N/A 8.45
Discovery Fund II, Inc.
- ----------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - N/A N/A 10.16
International Stock Fund II
- ----------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. 14.29 N/A 16.50
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - 5.46 13.86 6.59
Worldwide Emerging Markets Fund

- ----------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - 5.38 3.55 5.30
Worldwide Bond Fund
- ----------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - N/A N/A 27.21
Worldwide Hard Assets Fund
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Van Kampen American Capital Life N/A N/A 26.06
Investment Trust - Morgan Stanley Real
Estate Securities Portfolio
- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
Warburg Pincus Trust - International N/A N/A 9.97
Equity Portfolio
- ----------------------------------------------------------------------------------------
Warburg Pincus Trust - Post Venture N/A N/A -20.93
Capital Portfolio
- ----------------------------------------------------------------------------------------
Warburg Pincus Trust - Small Company N/A N/A 12.51
Growth Portfolio
- ----------------------------------------------------------------------------------------

</TABLE>

(See accompanying Notes to Fund Performance Table)

*TOTAL RETURN SHOWS THE PERCENT CHANGE IN UNIT VALUES, WITH DIVIDENDS AND
CAPITAL GAINS REINVESTED, AFTER THE DEDUCTION OF A GUARANTEED MORTALITY AND
EXPENSE RISK CHARGE AT THE RATE OF 0.75% PER ANNUM OF DAILY NET ASSET VALUE OF
THE VARIABLE ACCOUNT AND THE DEDUCTION OF APPLICABLE INVESTMENT ADVISORY FEES
AND OTHER EXPENSES OF THE UNDERLYING MUTUAL FUNDS.
THE TOTAL RETURN FIGURES DO NOT TAKE INTO ACCOUNT THE SEVERAL OTHER POLICY
CHARGES WHICH ARE DESCRIBED IN THE "POLICY CHARGES" SECTION. THESE OTHER
CHARGES INCLUDE DEDUCTIONS FROM PREMIUMS, COST OF INSURANCE CHARGES, AND A
MONTHLY ADMINISTRATIVE CHARGE.

49
<PAGE>

NOTES TO FUND PERFORMANCE TABLE

The preceding table displays three types of total return: (1) Annual Percentage
Change; (2) Cumulative Non-Annualized Percentage Change; and (3) Average
Annualized Percentage Change. Total return shows the percent change in unit
values, with dividends and capital gains reinvested, after the deduction of
guaranteed mortality and expense risk charge at the rate of 0.75% per annum of
daily net asset value of the Variable Account and the deduction of applicable
investment advisory fees and other expenses of the Underlying Mutual Funds. The
total return figures shown in the Annual Percentage Change and Average
Annualized Percentage Change columns represent annualized figures, i.e., that is
the rate of growth that would have produced the corresponding cumulative return
had performance been constant over the entire period quoted. The Annual
Percentage Change reflects the rate of return on an annual percentage basis
during the 1994, 1995 and 1996 calendar years. The Average Annualized
Percentage Change reflects the annual percentage rate of return over 3 and 5
year periods, or from Underlying Mutual Fund inception. The Cumulative Non-
Annualized Percentage Change total return figures are not annual return figures
but instead represent the total percentage change in unit value over the stated
periods without annualization. THE TOTAL RETURN FIGURES DO NOT TAKE INTO
ACCOUNT THE SEVERAL OTHER POLICY CHARGES WHICH ARE DESCRIBED IN THE "POLICY
CHARGES" SECTION. THESE OTHER CHARGES INCLUDE DEDUCTIONS FROM PREMIUMS, COST OF
INSURANCE CHARGES, SURRENDER CHARGES AND A MONTHLY ADMINISTRATIVE CHARGE.

The Underlying Mutual Fund Inception Date is the date the Underlying Mutual Fund
first became effective, which is not necessarily the same date the Underlying
Mutual Fund was first made available through the Variable Account. For those
Underlying Mutual Funds which have not been offered as Sub-Accounts through the
Variable Account for one of the quoted periods, the total return figures will
show the investment performance such Underlying Mutual Funds would have achieved
(reduced by the guaranteed mortality and expense risk charge and Underlying
Mutual Fund investment advisory fees and expenses) had they been offered as sub-
accounts through the Variable Account for the period quoted. Certain Underlying
Mutual Funds are not as old as some of the periods quoted, therefore, total
return figures may not be available for all of the periods shown.

THE PRECEDING FUND PERFORMANCE TABLE DISPLAYS HISTORICAL INVESTMENT RESULTS OF
THE UNDERLYING MUTUAL FUNDS. THIS INFORMATION MAY BE USEFUL IN HELPING
POTENTIAL INVESTORS IN DECIDING WHICH UNDERLYING MUTUAL FUNDS TO CHOOSE AND IN
ASSESSING THE COMPETENCE OF THE UNDERLYING MUTUAL FUNDS' INVESTMENT ADVISERS.
THE PERFORMANCE FIGURES SHOWN SHOULD BE CONSIDERED IN LIGHT OF THE INVESTMENT
OBJECTIVES AND POLICIES, CHARACTERISTICS AND QUALITY OF THE UNDERLYING
PORTFOLIOS OF THE UNDERLYING MUTUAL FUNDS, AND THE MARKET CONDITIONS DURING THE
PERIODS OF TIME QUOTED. THE PERFORMANCE FIGURES SHOULD NOT BE CONSIDERED AS
ESTIMATES OR PREDICTIONS OF FUTURE PERFORMANCE. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF THE UNDERLYING MUTUAL FUNDS ARE NOT GUARANTEED AND WILL
FLUCTUATE SO THAT A POLICY OWNER'S UNITS, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.

50
<PAGE>

CASH VALUE PERFORMANCE TABLE*
HYPOTHETICAL ANNUAL PREMIUM: $10,000
$440,003 SPECIFIED AMOUNT
MALE AGE 45 / NON-TOBACCO PREFERRED

1 Year to 2 Years to
12/31/96 12/31/96
--------------------------------------------------------------------
FUND CASH CASH
UNDERLYING MUTUAL FUND INCEPTION ACCUM SURR. ACCUM SURR.
DATE VALUE VALUE VALUE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

American Century VP Balanced 05/01/91 $8,688 $8,766 $18,912 $18,990
- -----------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation 11/20/87 $6,597 $6,676 $14,782 $14,860
- -----------------------------------------------------------------------------------------------------------------------------
American Century VP International 05/01/94 $9,575 $9,654 $20,655 $20,734
- -----------------------------------------------------------------------------------------------------------------------------
American Century VP Value 05/01/94 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund 05/02/94 $8,720 $8,799 $22,040 $22,119
Growth & Income Fund
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible 10/06/93 $9,320 $9,398 $21,732 $21,810
Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund 09/29/89 $9,652 $9,731 $22,216 $22,295
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Asset Manager 09/06/89 $9,057 $9,135 $19,556 $19,634
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund 01/03/95 $9,320 $9,399 $21,577 $21,655
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Equity-Income 10/09/86 $9,003 $9,081 $20,556 $20,634
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Growth Portfolio 10/09/86 $8,644 $8,722 $20,281 $20,360
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - High Income 09/19/85 $8,870 $8,949 $19,215 $19,293
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Overseas 01/28/87 $9,160 $9,239 $19,517 $19,596
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 04/15/92 $9,710 $9,789 $22,435 $22,513
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 11/08/82 $8,534 $8,612 $17,861 $17,940
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 11/10/81 $8,518 $8,597 $17,328 $17,406
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Small Company Fund 10/23/95 $8,818 $8,897 N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 11/08/82 $9,591 $9,670 $21,601 $21,680
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 09/10/84 $8,567 $8,645 $19,363 $19,442
Management Trust - Growth
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 09/10/84 $8,539 $8,617 $17,528 $17,607
Management Trust - Bond Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers 03/22/94 $9,832 $9,910 $22,945 $23,023
Management Trust - Partners
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account 04/30/85 $8,434 $8,513 $17,622 $17,701
Fund - Bond Fund
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account 11/12/90 $9,727 $9,805 $20,163 $20,241
Fund - Global Securities
- -----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account 02/09/87 $9,001 $9,079 $19,457 $19,535
Fund - Multiple Strategies
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, 05/08/92 $7,572 $7,650 $17,068 $17,146
Inc. -Discovery Fund II, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, 10/20/95 $8,606 $8,685 N/A N/A
Inc. -International Stock Fund II
- -----------------------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. 05/08/92 $8,904 $8,982 $20,082 $20,161
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust 12/27/95 $7,963 $8,042 $17,917 $17,995
- - Worldwide Emerging Markets
Fund
- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust 09/01/89 $8,300 $8,378 $16,680 $16,758
- - Worldwide Bond Fund
- -----------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust 09/01/89 $10,901 $10,980 N/A N/A
- - Worldwide Hard Assets Fund
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life 07/03/95 $11,304 $11,383 N/A N/A
Investment Trust - Morgan Stanley
Real Estate Securities Portfolio
- -----------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - International 06/30/95 $8,542 $8,621 N/A N/A
Equity Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Post Venture 11/18/96 N/A N/A N/A N/A
Capital Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Small 06/30/95 $7,716 $7,794 N/A N/A
Company Growth Portfolio
- -----------------------------------------------------------------------------------------------------------------------------

3 Years to 5 Years to
12/31/96 12/31/96
-----------------------------------------------------
CASH CASH
UNDERLYING MUTUAL FUND ACCUM SURR. ACCUM SURR.
VALUE VALUE VALUE VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

American Century VP Balanced $29,352 $29,352 $51,350 $51,350
- --------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation $23,294 $23,294 $41,455 $41,455
- --------------------------------------------------------------------------------------------------------------
American Century VP International N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
American Century VP Value N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund N/A N/A N/A N/A
Growth & Income Fund
- --------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible $34,729 $34,729 N/A N/A
Growth Fund
- --------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund $36,387 $36,387 $66,495 $66,495
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Asset Manager $29,933 $29,933 $54,041 $54,041
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund N/A N/A N/A N/A
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Equity-Income $34,211 $34,211 $65,947 $65,947
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Growth Portfolio $32,608 $32,608 $61,277 $61,277
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - High Income $29,779 $29,779 $55,350 $55,350
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Overseas $29,551 $29,551 $54,822 $54,822
Portfolio
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund $35,980 $35,980 N/A N/A
- --------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund $27,405 $27,405 $48,085 $48,085
- --------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund $26,443 $26,443 $45,087 $45,087
- --------------------------------------------------------------------------------------------------------------
NSAT Small Company Fund N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund $34,747 $34,747 $63,332 $63,332
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers $30,874 $30,874 $55,390 $55,390
Management Trust - Growth
Portfolio
- --------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers $26,763 $26,763 $46,226 $46,226
Management Trust - Bond Portfolio
- --------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers $37,515 $37,515 N/A N/A
Management Trust - Partners
Portfolio
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account $27,058 $27,058 $47,957 $47,957
Fund - Bond Fund
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account $29,879 $29,879 $58,365 $58,365
Fund - Global Securities
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account $30,426 $30,426 $55,334 $55,334
Fund - Multiple Strategies
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, $26,709 $26,709 N/A N/A
Inc. -Discovery Fund II, Inc.
- --------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, N/A N/A N/A N/A
Inc. -International Stock Fund II
- --------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. $32,167 $32,167 N/A N/A
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust $27,271 $27,271 $56,180 $56,180
- - Worldwide Emerging Markets
Fund
- --------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust $26,094 $26,094 $45,104 $45,104
- - Worldwide Bond Fund
- --------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust N/A N/A N/A N/A
- - Worldwide Hard Assets Fund
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life N/A N/A N/A N/A
Investment Trust - Morgan Stanley
Real Estate Securities Portfolio
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - International N/A N/A N/A N/A
Equity Portfolio
- --------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Post Venture N/A N/A N/A N/A
Capital Portfolio
- --------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Small N/A N/A N/A N/A
Company Growth Portfolio
- --------------------------------------------------------------------------------------------------------------

10 Years to Inception to
12/31/96 12/31/96
-----------------------------------------------------
CASH CASH
UNDERLYING MUTUAL FUND ACCUM SURR. ACCUM SURR.
VALUE VALUE VALUE VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

American Century VP Balanced N/A N/A $64,786 $64,786
- --------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation N/A N/A $109,150 $109,150
- --------------------------------------------------------------------------------------------------------------
American Century VP International N/A N/A $29,975 $29,975
- --------------------------------------------------------------------------------------------------------------
American Century VP Value N/A N/A $10,154 $10,232
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund N/A N/A $36,007 $36,007
Growth & Income Fund
- --------------------------------------------------------------------------------------------------------------
Dreyfus Socially Responsible N/A N/A $46,155 $46,155
Growth Fund
- --------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund N/A N/A $121,745 $121,745
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Asset Manager N/A N/A $100,142 $100,142
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund II - Contrafund N/A N/A $31,766 $31,766
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Equity-Income $177,675 $177,675 $198,138 $198,138
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Growth Portfolio $176,533 $176,533 $197,812 $197,812
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - High Income $154,341 $154,341 $197,897 $197,897
Portfolio
- --------------------------------------------------------------------------------------------------------------
Fidelity VIP Fund - Overseas $129,016 $129,016 $142,367 $142,367
Portfolio
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund N/A N/A $64,792 $64,792
- --------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund $122,366 $122,366 $229,133 $229,133
- --------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund $102,541 $102,541 $200,419 $200,419
- --------------------------------------------------------------------------------------------------------------
NSAT Small Company Fund N/A N/A $19,330 $19,408
- --------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund $167,295 $167,295 $377,534 $377,534
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers $143,638 $143,638 $222,627 $222,627
Management Trust - Growth
Portfolio
- --------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers $109,757 $109,757 $159,240 $159,240
Management Trust - Bond Portfolio
- --------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers N/A N/A $46,163 $46,163
Management Trust - Partners
Portfolio
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account $122,649 $122,649 $162,816 $162,816
Fund - Bond Fund
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account N/A N/A $85,001 $85,001
Fund - Global Securities
- --------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account $142,510 $142,510 $155,789 $155,789
Fund - Multiple Strategies
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, N/A N/A $48,990 $48,990
Inc. -Discovery Fund II, Inc.
- --------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, N/A N/A $18,360 $18,439
Inc. -International Stock Fund II
- --------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. N/A N/A $62,320 $62,320
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust N/A N/A $92,088 $92,088
- - Worldwide Emerging Markets
Fund
- --------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust N/A N/A $77,279 $77,279
- - Worldwide Bond Fund
- --------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust N/A N/A $20,846 $20,925
- - Worldwide Hard Assets Fund
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life N/A N/A $23,184 $23,263
Investment Trust - Morgan Stanley
Real Estate Securities Portfolio
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - International N/A N/A $18,067 $18,145
Equity Portfolio
- --------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Post Venture N/A N/A $7,688 $7,766
Capital Portfolio
- --------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Small N/A N/A $17,403 $17,481
Company Growth Portfolio
- --------------------------------------------------------------------------------------------------------------

</TABLE>

(See Accompanying Notes to Cash Value Performance Table)

*THE CASH SURRENDER VALUE FIGURES REFLECT THE DEDUCTION OF ALL APPLICABLE POLICY
CHARGES, INCLUDING A DEDUCTION FROM EACH PREMIUM PAYMENT, A 0.75% ASSET CHARGE,
APPLICABLE COST OF INSURANCE CHARGES, AND A MONTHLY ADMINISTRATIVE CHARGE (AND
THE DEDUCTION OF APPLICABLE INVESTMENT ADVISORY FEES AND OTHER EXPENSES OF THE
UNDERLYING MUTUAL FUNDS).

51
<PAGE>

NOTES TO CASH VALUE PERFORMANCE TABLE

The preceding Cash Value performance table shows the effect of the performance
quoted on accumulated values and cash surrender values, based on a hypothetical
annual premium of $10,000 for a 45 year-old male, non-tobacco preferred, with a
level death benefit and an initial specified amount of $440,003 (based on a
Guideline Level Premium of $10,000 issued on a preferred basis). The cash
surrender value figures reflect the deduction of all applicable Policy Charges,
including a deduction from each premium payment, a 0.75% asset charge,
applicable cost of insurance charges, and a monthly administrative charge (and
the deduction of applicable investment advisory fees and other expenses of the
Underlying Mutual Funds). See the "Policy Charges" section for more information
about these charges. The cost of insurance charges may be higher or lower for
purchasers who do not meet the profile of the hypothetical purchaser.
Illustrations reflecting a potential purchaser's specific characteristics are
available from the Company upon request.

The Underlying Mutual Fund Inception Date is the date the Underlying Mutual Fund
first became effective, which is not necessarily the same date the Underlying
Mutual Fund was first made available through the Variable Account. For those
Underlying Mutual Funds which have not been offered as sub-accounts through the
Variable Account for one of the quoted periods, the cash values will show the
investment performance such Underlying Mutual Funds would have achieved (reduced
by any applicable Variable Account and Policy Charges, and Underlying Mutual
Fund investment advisory fees and expenses) had they been offered as sub-
accounts through the Variable Account for the period quoted. Certain Underlying
Mutual Funds are not as old as some of the periods quoted, therefore, the cash
values may not be available for all of the periods shown.

THE PRECEDING CASH-VALUE PERFORMANCE TABLE DISPLAYS HISTORICAL INVESTMENT
RESULTS OF THE UNDERLYING MUTUAL FUNDS OF THE VARIABLE ACCOUNT. THIS
INFORMATION MAY BE USEFUL IN HELPING POTENTIAL INVESTORS IN DECIDING WHICH
UNDERLYING MUTUAL FUNDS TO CHOOSE AND IN ASSESSING THE COMPETENCE OF THE
UNDERLYING MUTUAL FUNDS' INVESTMENT ADVISERS. THE PERFORMANCE FIGURES SHOWN
SHOULD BE CONSIDERED IN LIGHT OF THE INVESTMENT OBJECTIVES AND POLICIES,
CHARACTERISTICS AND QUALITY OF THE UNDERLYING PORTFOLIOS OF THE UNDERLYING
MUTUAL FUNDS, AND THE MARKET CONDITIONS DURING THE PERIODS OF TIME QUOTED. THE
PERFORMANCE FIGURES SHOULD NOT BE CONSIDERED AS ESTIMATES OR PREDICTIONS OF
FUTURE PERFORMANCE. INVESTMENT RETURN AND THE PRINCIPAL VALUE OF THE UNDERLYING
MUTUAL FUNDS ARE NOT GUARANTEED AND WILL FLUCTUATE SO THAT A POLICY OWNER'S
UNITS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.

<PAGE>

Independent Auditors' Report

The Board of Directors of Nationwide Life and Annuity Insurance Company
(formerly Financial Horizons Life Insurance Company) and
Contract Owners of Nationwide VL Separate Account-A
(formerly Financial Horizons VL Separate Account-1):

We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VL Separate Account-A (formerly Financial
Horizons VL Separate Account-1) as of December 31, 1996, and the related
statements of operations and changes in contract owners' equity and schedules
of changes in unit value for each of the years in the three year period then
ended. These financial statements and schedules of changes in unit value are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedules of changes in
unit value based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedules of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, 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 and schedules of changes in unit
value referred to above present fairly, in all material respects, the financial
position of Nationwide VL Separate Account-A (formerly Financial Horizons VL
Separate Account-1) as of December 31, 1996, and the results of its operations
and its changes in contract owners' equity and the schedules of changes in unit
value for each of the years in the three year period then ended in conformity
with generally accepted accounting principles.

KPMG Peat Marwick LLP

Columbus, Ohio
February 7, 1997

<PAGE>

NATIONWIDE VL SEPARATE ACCOUNT-A
(Formerly Financial Horizons VL Separate Account-1)
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY

December 31, 1996

<TABLE>
<S> <C>
ASSETS:

Investments at market value:

Fidelity VIP - Growth Portfolio (FidVIPGr)
1,295 shares (cost $30,834) ............................. $ 40,328

Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
96 shares (cost $1,141) ................................. 1,561

Nationwide SAT - Government Bond Fund (NSATGvtBd)
1,578 shares (cost $16,876) ............................. 17,425

Nationwide SAT - Money Market Fund (NSATMyMkt)
10,224 shares (cost $10,224) ............................ 10,224

Nationwide SAT - Total Return Fund (NSATTotRe)
863 shares (cost $9,232) ................................ 11,458

Neuberger & Berman - Balanced Portfolio (NBAMTBal)
724 shares (cost $11,022) ............................... 11,523

TCI Portfolios - TCI Advantage (TCIAdv)
60,866 shares (cost $312,528) ........................... 382,850
--------
Total assets 475,369
Accounts Payable 34
--------
Contract Owners' Equity $475,335
========

Contract owners' equity represented by: UNITS UNIT VALUE
----- ----------
Multiple Payment Contracts and Flexible Premium Contracts:

Fidelity VIP - Growth Portfolio ....................... 2,016 $20.008196 $ 40,337

Nationwide SAT - Capital Appreciation Fund ............ 83 18.410667 1,528

Nationwide SAT - Government Bond Fund ................. 1,132 15.383251 17,414

Nationwide SAT - Money Market Fund .................... 835 12.214743 10,199

Nationwide SAT - Total Return Fund .................... 523 21.988773 11,500

Neuberger & Berman - Balanced Portfolio ............... 729 15.775523 11,500

TCI Portfolios - TCI Advantage ........................ 413 14.210999 5,869

TCI Portfolios - TCI Advantage Initial Funding by
Depositor (note 1a) .................................. 25,000 15.079515 376,988
====== ========= ========
$475,335
========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

NATIONWIDE VL SEPARATE ACCOUNT-A
(Formerly Financial Horizons VL Separate Account-1)
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY

Years Ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment Activity:
Reinvested capital gains and
dividends............................ $ 31,785 $ 13,451 $ 12,249
Mortality and expense charges
(note 3)............................. (722) (621) (1,049)
-------- ------ --------
Net investment activity............ 31,063 12,830 11,200
-------- ------ --------

Proceeds from mutual fund shares
sold................................. 16,003 36,212 134,821
Cost of mutual fund shares sold....... (14,209) (35,326) (138,965)
-------- ------ --------
Realized gain (loss) on
investments....................... 1,794 886 (4,144)
Change in unrealized gain (loss)
on investments....................... 8,266 53,488 (7,482)
-------- ------- --------
Net gain (loss) on investments..... 10,060 54,374 (11,626)
-------- ------- --------
Net increase (decrease) in
contract owners' equity
resulting from operations... 41,123 67,204 (426)
-------- ------- --------

Equity Transactions:
Purchase payments received from
contract owners..................... 24,097 36,589 --
Surrenders (note 2d).................. (6,042) (164) (9,107)
Policy loans (net of repayments)
(note 4)............................ 3,498 (23,321) --
Deductions for surrender charges
(note 2d)........................... -- -- --
Redemptions to pay cost of insurance
charges and administrative charges
(notes 2b and 2c)................... (12,114) (12,670) (20,999)
-------- ------ --------
Net equity transactions......... 9,439 434 (30,106)
-------- ------ --------

Net change in contract owners' equity 50,562 67,638 (30,532)
Contract owners' equity beginning
of period............................. 424,773 357,135 387,667
-------- ------ --------
Contract owners' equity end of
period................................ $ 475,335 $424,773 $357,135
========= ======= =======
</TABLE>

See accompanying notes to financial statements.

<PAGE>

NATIONWIDE VL SEPARATE ACCOUNT-A
(Formerly Financial Horizons VL Separate Account-1)
NOTES TO FINANCIAL STATEMENTS

December 31, 1996, 1995 and 1994

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Organization and Nature of Operations

Nationwide VL Separate Account-A (formerly Financial Horizons VL
Separate Account-1) (the Account) was established pursuant to a
resolution of the Board of Directors of Nationwide Life and Annuity
Insurance Company (formerly Financial Horizons Life Insurance Company)
(the Company) on August 8, 1984. The Account has been registered as a
unit investment trust under the Investment Company Act of 1940. On
August 21, 1991, the Company (Depositor) transferred to the Account,
50,000 shares of the TCI Portfolios, Inc. - TCI Advantage fund for
which the Account was credited with 25,000 accumulation units. The
value of the accumulation units purchased by the Company on August 21,
1991 was $250,000.

The Company offers Modified Single Premium, Multiple Payment and
Flexible Premium Variable Life Insurance Policies through the Account.
The primary distribution for the contracts is through banks and other
financial institutions; however, other distributors may be utilized.

(b) The Contracts

Only contracts with a front-end sales charge, a contingent deferred
sales charge and certain other fees, have been purchased.
Additionally, contracts without a front-end sales charge, but with a
contingent deferred sales charge and certain other fees, have been
purchased. See note 2 for a discussion of policy charges and note 3
for asset charges.

Contract owners may invest in the following:

Portfolio of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Growth Portfolio (FidVIPGr)

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)

Portfolio of the Neuberger &Berman Advisers Management Trust
(Neuberger & Berman);
Neuberger & Berman - Balanced Portfolio (NBAMTBal)

Portfolio of the TCI Portfolios, Inc. (TCIPortfolios); TCI
Portfolios - TCI Advantage (TCIAdv)

At December 31, 1996, contract owners have invested in all of the
above funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners and
certain policy charges (see notes 2 and 3). 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 investment options, the latter being
included in the accounts of the Company.

The market value of the underlying mutual funds is based on the
closing net asset value per share at December 31, 1996. 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.

<PAGE>

(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 Internal Revenue Code.

The Company does not provide for income taxes within the Account.
Taxes are the responsibility of the contract owner upon termination or
withdrawal.

(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 1995 and 1994 amounts have been reclassified to conform with
the current year presentation.

(2) POLICY CHARGES

(a) Deductions from Premiums

On multiple payment contracts and flexible premium contracts, the
Company deducts a charge for state premium taxes equal to 2.5% of all
premiums received to cover the payment of these premium taxes. The
Company also deducts a sales load from each premium payment received
not to exceed 3.5% of each premium payment. The Company may at its
sole discretion reduce this sales loading.

(b) Cost of Insurance

A cost of insurance charge is assessed monthly against each contract
by liquidating units. The amount of the charge is based upon age, sex,
rate class and net amount at risk (death benefit less total contract
value).

For multiple payment contracts, the Company currently deducts a
monthly administrative charge of $5 (may deduct up to $7.50, maximum)
to recover policy maintenance, accounting, record keeping and other
administrative expenses.

For flexible premium contracts, the Company currently deducts a
monthly administrative charge of $25 during the first policy year and
$5 per month thereafter (may deduct up to $7.50, maximum) to recover
policy maintenance, accounting, record keeping and other
administrative expenses. Additionally, the Company deducts an increase
charge of $2.04 per year per $1,000 applied to any increase in the
specified amount during the first 12 months after the increase becomes
effective.

For single premium contracts, the Company deducts an annual
administrative charge which is determined as follows:
Purchase payments totaling less than $25,000 - $90/year

Purchase payments totaling $25,000 or more - $50/year

The above charges are assessed against each contract by liquidating
units.

No charges were deducted from the initial funding, or from the earnings
thereon.

(d) Surrender Charges

Policy surrenders result in a redemption of the contract value from
the Account and payment of the surrender proceeds to the contract
owner or designee. The surrender proceeds consist of the contract
value, less any outstanding policy loans, and less a surrender charge,
if applicable. The charge is determined according to contract type.

For multiple payment contracts and flexible premium contracts, the
amount charged is determined based upon a specified percentage of the
initial surrender charge, which varies by issue age, sex and rate
class. The charge is 100% of the initial surrender charge in the first
year, declining to 0% after the ninth year.

For single premium contracts, the charge is determined based upon a
specified percentage of the original purchase payment. The charge is
8.5% in the first year, and declines to 0% after the ninth year.

<PAGE>

(3) ASSET CHARGES

For multiple payment contracts and flexible premium contracts, the Company
deducts charges from the contract to cover mortality and expense risk
charges related to operations, and to recover policy maintenance charges.
The charge is equal to an annual rate of .80%, with certain exceptions.

For single premium contracts, the Company deducts a charge from the
contract to cover mortality and expense risk charges related to
operations, and to recover policy maintenance and premium tax charges. The
charge is equal to an annual rate of 1.30% during the first ten policy
years, and 1.00% thereafter.

The above charges are assessed through the daily unit value calculation.
No charges are deducted from the initial funding, or from earnings
thereon.

(4) POLICY LOANS (NET OF REPAYMENTS)

Contract provisions allow contract owners to borrow up to 90% of a
policy's cash surrender value. On each policy anniversary following the
initial loan, 6% interest is due and payable to the Company.

At the time the loan is granted, the amount of the loan is transferred
from the Account to the Company's general account as collateral for the
outstanding loan. Collateral amounts in the general account are credited
with the stated rate of interest in effect at the time the loan is made,
subject to a guaranteed minimum rate. Loan repayments result in a transfer
of collateral, including interest, back to the Account.

(5) SCHEDULE I

Schedule I presents the components of the change in the unit values, which
are the basis for contract owners' equity. This schedule is presented in
the following format:

o Beginning unit value - Jan. 1

o Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying
mutual funds.)

o Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)

o Asset charges
(This amount reflects the decrease in the unit value due to the
charges discussed in note 3.)

o Ending unit value - Dec. 31

o Percentage increase (decrease) in unit value.

<PAGE>

SCHEDULE I

NATIONWIDE VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VL SEPARATE ACCOUNT-1)
MULTIPLE PAYMENT CONTRACTS AND FLEXIBLE PREMIUM CONTRACTS
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>

<C> <C> <C> <C> <C> <C> <C> <C>
FIDVIPGR NSATCAPAP NSATGVTBD NSATMYMKT NSATTOTRE NBAMTBAL TCIADV TCIADV+
-------- --------- --------- --------- --------- -------- ------ -------
1996
Beginning unit value -
Jan. 1 $17.583952 14.713230 14.984933 11.714295 18.192762 14.878481 13.112917 13.802855
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.263661 .766553 .930103 .596995 1.217547 2.281380 .945920 .998314
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.312893 3.061949 (.412550) .000000 2.737018 (1.262381) .260998 .278346
- -----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.152310) (.131065) (.119235) (.096547) (.158554) (.121957) (.108836) .000000
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $20.008196 18.410667 15.383251 12.214743 21.988773 15.775523 14.210999 15.079515
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 14% 25% 3% 4% 21% 6% 8% 9%
===================================================================================================================================

1995
Beginning unit value -
Jan. 1 $13.094007 11.465403 12.720514 11.176411 14.205723 12.118394 11.321934 11.822996
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Reinvested capital gains
and dividends .072389 .653781 .903001 .629782 1.413734 .308616 .411556 .431938
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Unrealized gain (loss) 4.544905 2.696528 1.472503 .000000 2.703396 2.562255 1.477165 1.547921
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Asset charges (.127349) (.102482) (.111085) (.091898) (.130091) (.110784) (.097738) .000000
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Ending unit value -
Dec. 31 $17.583952 14.713230 14.984933 11.714295 18.192762 14.878481 13.112917 13.802855
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Percentage increase (decrease)
in unit value* 34% 28% 18% 5% 28% 23% 16% 17%
===================================================================================================================================

1994
Beginning unit value -
Jan. 1 $13.201441 11.662121 13.250482 10.845265 14.167308 12.640011 11.295721 11.701906
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Reinvested capital gains
and dividends .794469 .184927 .833925 .419275 .717782 .493181 .297670 .309969
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Unrealized gain (loss) (.799798) (.289863) (1.261429) .000000 (.565055) (.916591) (.181209) (.188879)
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Asset charges (.102105) (.091782) (.102464) (.088129) (.114312) (.098207) (.090248) .000000
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Ending unit value -
Dec. 31 $13.094007 11.465403 12.720514 11.176411 14.205723 12.118394 11.321934 11.822996
- - ----------------------------------------------------------------------------------------------------------------------------------
- -
Percentage increase (decrease)
in unit value* (1)% (2)% (4)% 3% 0% (4)% 0% 1%
===================================================================================================================================
</TABLE>

*An annualized rate of return cannot be determined as asset charges do not
include the policy charges discussed in note 2.

+For Depositor, see note 1a.

See note 5.
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Nationwide Life and Annuity Insurance Company:

We have audited the accompanying balance sheets of Nationwide Life and Annuity
Insurance Company, a wholly owned subsidiary of Nationwide Life Insurance
Company, as of December 31, 1996 and 1995, and the related statements of income,
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1996. 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. 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 Life and Annuity
Insurance Company as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

In 1994, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities.

KPMG Peat Marwick LLP

Columbus, Ohio
January 31, 1997

<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Balance Sheets

December 31, 1996 and 1995
($000's omitted)

<TABLE>
<CAPTION>
Assets 1996 1995
------ ---------- -------
<S> <C> <C>
Investments (notes 4, 7 and 8):
Securities available-for-sale, at fair value:
Fixed maturity securities (cost $640,303 in 1996; $539,214 in 1995) $ 648,076 555,751
Equity securities (cost $10,854 in 1996; $10,256 in 1995) 12,254 11,407
Mortgage loans on real estate, net 150,997 104,736
Real estate, net 1,090 1,117
Policy loans 126 94
Short-term investments (note 12) 492 4,844
---------- -------
813,035 677,949
---------- -------
Cash 4,296 --
Accrued investment income 9,189 8,464
Deferred policy acquisition costs 16,168 23,405
Deferred federal income tax (note 6) 4,735 --
Other assets 32,747 208
Assets held in Separate Accounts (note 7) 486,251 257,556
---------- -------
$1,366,421 967,582
========== =======
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims (notes 5 and 7) $ 80,720 621,280
Funds withheld under coinsurance agreement with affiliate (note 12) 679,571 --
Accrued federal income tax (note 6):
Current 7,914 708
Deferred -- 2,830
---------- -------
7,914 3,538
---------- -------
Other liabilities 27,928 5,031
Liabilities related to Separate Accounts (note 7) 486,251 257,556
---------- -------
1,282,384 887,405
---------- -------
Commitments (notes 7 and 8)

Shareholder's equity (notes 3, 4 and 11):
Capital shares, $40 par value. Authorized, issued and outstanding 66,000 shares 2,640 2,640
Additional paid-in capital 52,960 52,960
Retained earnings 25,209 20,123
Unrealized gains on securities available-for-sale, net 3,228 4,454
---------- -------
84,037 80,177
---------- -------
$1,366,421 967,582
========== =======
</TABLE>

See accompanying notes to financial statements.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Statements of Income

Years ended December 31, 1996, 1995 and 1994
($000's omitted)

<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Revenues (note 13):
Investment product and universal life insurance product policy charges $ 6,656 4,322 3,601
Traditional life insurance premiums 246 674 311
Net investment income (note 4) 51,045 49,108 45,030
Realized losses on investments (note 4) (3) (702) (625)
-------- ------- -------
57,944 53,402 48,317
-------- ------- -------
Benefits and expenses:
Benefits and claims 35,524 34,180 29,870
Amortization of deferred policy acquisition costs 7,380 5,508 6,940
Other operating expenses (note 12) 7,247 6,567 6,320
-------- ------- -------
50,151 46,255 43,130
-------- ------- -------
Income before federal income tax expense 7,793 7,147 5,187
-------- ------- -------
Federal income tax expense (benefit) (note 6):
Current 9,612 2,012 2,103
Deferred (6,905) 361 (244)
-------- ------- -------
2,707 2,373 1,859
-------- ------- -------
Net income $ 5,086 4,774 3,328
======== ======= =======
</TABLE>

See accompanying notes to financial statements.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Statements of Shareholder's Equity

Years ended December 31, 1996, 1995 and 1994
($000's omitted)

<TABLE>
<CAPTION>
Unrealized
gains (losses)
Additional on securities Total
Capital paid-in Retained available-for- shareholder's
shares capital earnings sale, net equity
------- ---------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C>
1994:
Balance, beginning of year $2,640 43,960 12,021 38 58,659
Capital contribution -- 9,000 -- -- 9,000
Net income -- -- 3,328 -- 3,328
Adjustment for change in accounting for
certain investments in debt and equity
securities, net (note 3) -- -- -- 4,698 4,698
Unrealized losses on securities available-
for-sale, net -- -- -- (8,439) (8,439)
------ ------ ------ ------ -------
Balance, end of year $2,640 52,960 15,349 (3,703) 67,246
====== ====== ====== ====== =======
1995:
Balance, beginning of year 2,640 52,960 15,349 (3,703) 67,246
Net income -- -- 4,774 -- 4,774
Unrealized gains on securities available-
for-sale, net -- -- -- 8,157 8,157
------ ------ ------ ------ -------
Balance, end of year $2,640 52,960 20,123 4,454 80,177
====== ====== ====== ====== =======
1996:
Balance, beginning of year 2,640 52,960 20,123 4,454 80,177
Net income -- -- 5,086 -- 5,086
Unrealized losses on securities available-
for-sale, net -- -- -- (1,226) (1,226)
------ ------ ------ ------ -------
Balance, end of year $2,640 52,960 25,209 3,228 84,037
====== ====== ====== ====== =======
</TABLE>

See accompanying notes to financial statements.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Statements of Cash Flows

Years ended December 31, 1996, 1995 and 1994
($000's omitted)

<TABLE>
<CAPTION>
1996 1995 1994
--------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 5,086 4,774 3,328
Adjustments to reconcile net income to net cash provided by
operating activities:
Capitalization of deferred policy acquisition costs (19,987) (6,754) (7,283)
Amortization of deferred policy acquisition costs 7,380 5,508 6,940
Commission and expense allowances under coinsurance
agreement with affiliate (note 12) 26,473 -- --
Amortization and depreciation 1,721 878 473
Realized losses on invested assets, net 3 702 625
Deferred federal income tax (benefit) expense (6,905) 361 (244)
Increase in accrued investment income (725) (423) (750)
(Increase) decrease in other assets (32,539) 62 (126)
(Decrease) increase in policy liabilities and funds withheld
on coinsurance agreement with affiliate (7,101) 627 926
Increase (decrease) in accrued federal income tax payable 7,206 698 (254)
Increase (decrease) in other liabilities 22,897 368 (505)
--------- ------- -------
Net cash provided by operating activities 3,509 6,801 3,130
--------- ------- -------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 73,966 41,729 24,850
Proceeds from sale of securities available-for-sale 2,480 3,070 13,170
Proceeds from maturity of fixed maturity securities held-to-maturity -- 11,251 8,483
Proceeds from repayments of mortgage loans on real estate 10,975 8,673 5,733
Proceeds from sale of real estate -- 655 --
Proceeds from repayments of policy loans 23 50 2
Cost of securities available-for-sale acquired (179,671) (79,140) (94,130)
Cost of fixed maturity securities held-to maturity acquired -- (8,000) (15,544)
Cost of mortgage loans on real estate acquired (57,395) (18,000) (11,000)
Cost of real estate acquired -- (10) (52)
Policy loans issued (55) (66) (80)
Short-term investments, net 4,352 (4,479) 1,407
--------- ------- -------
Net cash used in investing activities (145,325) (44,267) (67,161)
--------- ------- -------
Cash flows from financing activities:
Proceeds from capital contribution -- -- 9,000
Increase in investment product and universal life insurance
product account balances 235,286 79,523 95,254
Decrease in investment product and universal life insurance
product account balances (89,174) (42,057) (40,223)
--------- ------- -------
Net cash provided by financing activities 146,112 37,466 64,031
--------- ------- -------
Net increase in cash 4,296 -- --

Cash, beginning of year -- -- --
--------- ------- -------
Cash, end of year $ 4,296 -- --
========= ======= =======
</TABLE>

See accompanying notes to financial statements.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements

December 31, 1996, 1995 and 1994
($000's omitted)

(1) Organization and Description of Business

Nationwide Life and Annuity Insurance Company (the Company) is a wholly
owned subsidiary of Nationwide Life Insurance Company (NLIC).

The Company sells primarily fixed and variable rate annuities through
banks and other financial institutions. In addition, the Company sells
universal life and other interest-sensitive life insurance products and is
subject to competition from other financial services providers throughout
the United States. The Company is subject to regulation by the Insurance
Departments of states in which it is licensed, and undergoes periodic
examinations by those departments.

The following is a description of the most significant risks facing life
insurers and how the Company mitigates those risks:

Legal/Regulatory Risk is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives, new legal theories or
insurance company insolvencies through guaranty fund assessments may
create costs for the insurer beyond those currently recorded in the
financial statements. The Company mitigates this risk by operating
throughout the United States, thus reducing its exposure to any single
jurisdiction, and also by employing underwriting practices which
identify and minimize the adverse impact of this risk.

Credit Risk is the risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default. The Company minimizes this risk by adhering to a
conservative investment strategy, by maintaining credit and collection
policies and by providing for any amounts deemed uncollectible.

Interest Rate Risk is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This change
in rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.

(2) Summary of Significant Accounting Policies

The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP) which differ from
statutory accounting practices prescribed or permitted by regulatory
authorities. An Annual Statement, filed with the Department of Insurance
of the State of Ohio (the Department), is 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.

In preparing the 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 financial statements and the reported amounts of revenues
and expenses for the reporting period. Actual results could differ
significantly from those estimates.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

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) 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, 1996 or 1995.

Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based on a
review by portfolio managers. The measurement of impaired loans is
based on the present value of expected future cash flows discounted at
the loan's effective interest rate or, as a practical expedient, at the
fair value of the collateral, if the loan is collateral dependent.
Loans in foreclosure and loans considered to be impaired are placed on
non-accrual status. Interest received on non-accrual status mortgage
loans on real estate are included in interest income in the period
received.

Real estate is carried at cost less accumulated depreciation and
valuation allowances. Other long-term investments are carried on the
equity basis, adjusted for valuation allowances. 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.

(b) Revenues and Benefits

Investment Products and Universal Life Insurance Products: Investment
products consist primarily of individual variable and fixed annuities
and annuities without life contingencies. 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 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.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For 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(a).

(d) Separate Accounts

Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the statements of income and cash flows
except for the fees the Company receives.

(e) 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.

(f) Federal Income Tax

The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC). The members of the
consolidated tax return group have a tax sharing agreement 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.

(g) 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.

(h) Statements of Cash Flows

The Company routinely invests its available cash balances in highly
liquid, short-term investments with affiliated companies. See note 12.
As such, the Company had no cash balance as of December 31, 1995 and
1994.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

(i) Reclassification

Certain items in the 1995 and 1994 financial statements have been
reclassified to conform to the 1996 presentation.

(3) Change in Accounting Principle

Effective January 1, 1994, the Company changed its method of accounting
for certain investments in debt and equity securities in connection with
the issuance of Statement of Financial Accounting Standards (SFAS) No. 115
Accounting for Certain Investments in Debt and Equity Securities. As of
January 1, 1994, the Company classified fixed maturity securities with
amortized cost and fair value of $380,974 and $399,556, respectively, as
available-for-sale and recorded the securities at fair value. Previously,
these securities were recorded at amortized cost. The effect as of January
1, 1994, has been recorded as a direct credit to shareholder's equity as
follows:

<TABLE>
<S> <C>
Excess of fair value over amortized cost of fixed maturity
securities available-for-sale $ 18,582
Adjustment to deferred policy acquisition costs (11,355)
Deferred federal income tax (2,529)
--------
$ 4,698
========
</TABLE>

(4) Investments

The amortized cost and estimated fair value of securities
available-for-sale were as follows as of December 31, 1996 and 1995:

<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
1996: cost gains losses fair value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 3,695 7 (78) 3,624
Obligations of states and political subdivisions 269 -- (2) 267
Debt securities issued by foreign governments 6,129 133 (8) 6,254
Corporate securities 393,371 5,916 (1,824) 397,463
Mortgage-backed securities 236,839 4,621 (992) 240,468
-------- ------- -------- -------
Total fixed maturity securities 640,303 10,677 (2,904) 648,076
Equity securities 10,854 1,540 (140) 12,254
-------- ------- -------- -------
$651,157 12,217 (3,044) 660,330
======== ======= ======== =======
1995:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 3,492 18 -- 3,510
Obligations of states and political subdivisions 271 -- (1) 270
Debt securities issued by foreign governments 6,177 301 -- 6,478
Corporate securities 332,425 10,116 (925) 341,616
Mortgage-backed securities 196,849 7,649 (621) 203,877
-------- ------- -------- -------
Total fixed maturity securities 539,214 18,084 (1,547) 555,751
Equity securities 10,256 1,151 -- 11,407
-------- ------- -------- -------
$549,470 19,235 (1,547) 567,158
======== ======= ======== =======
</TABLE>
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

The amortized cost and estimated fair value of fixed maturity securities
available-for-sale as of December 31, 1996, by contractual maturity, are
shown below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.

<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
--------- ----------
<S> <C> <C>
Fixed maturity securities available-for-sale:
Due in one year or less $ 43,219 43,441
Due after one year through five years 198,045 200,453
Due after five years through ten years 121,820 122,595
Due after ten years 40,380 41,119
-------- -------
403,464 407,608
Mortgage-backed securities 236,839 240,468
-------- -------
$640,303 648,076
======== =======
</TABLE>

The components of unrealized gains on securities available-for-sale, net,
were as follows as of December 31:

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Gross unrealized gains $ 9,173 17,688
Adjustment to deferred policy acquisition
costs (4,207) (10,836)
Deferred federal income tax (1,738) (2,398)
------- -------
$ 3,228 4,454
======= =======
</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>
1996 1995 1994
-------- ------ -------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $ (8,764) 30,647 (32,692)
Equity securities 249 1,283 (190)
Fixed maturity securities
held-to-maturity -- 3,941 (8,407)
-------- ------ -------
$ (8,515) 35,871 (41,289)
======== ====== =======
</TABLE>

Proceeds from the sale of securities available-for-sale during 1996, 1995
and 1994 were $2,480, $3,070 and $13,170, respectively. During 1996, gross
gains of $181 ($64 and $373 in 1995 and 1994, respectively) and no gross
losses ($6 and $73 in 1995 and 1994, respectively) were realized on those
sales.

During 1995, the Company transferred fixed maturity securities classified
as held-to-maturity with amortized cost of $2,000 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 $600.

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 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 $77,405, resulting in a gross unrealized gain of $1,709.

The Company has no investments which were non-income producing for the
twelve month period preceding December 31, 1996 ($996 of fixed maturity
securities in 1995).
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

Real estate is presented at cost less accumulated depreciation of $108 as
of December 31, 1996 ($81 as of December 31, 1995) and valuation
allowances of $229 as of December 31, 1996 ($229 as of December 31, 1995).

The recorded investment of mortgage loans on real estate considered to be
impaired (under SFAS No. 114 - Accounting by Creditors for Impairment of a
Loan as amended by SFAS No. 118 - Accounting by Creditors for Impairment
of a Loan Income Recognition and Disclosure) as of December 31, 1996 was
$955 ($966 as of December 31, 1995), which includes $955 (none as of
December 31, 1995) of impaired mortgage loans on real estate for which the
related valuation allowance was $184 (none as of December 31, 1995) and
none ($966 as of December 31, 1995) of impaired mortgage loans on real
estate for which there was no valuation allowance. During 1996, the
average recorded investment in impaired mortgage loans on real estate was
approximately $964 ($242 in 1995) and interest income recognized on those
loans was $16 (none in 1995), which is equal to interest income recognized
using a cash-basis method of income recognition.

Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the year ended December 31, 1996:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Allowance, beginning of year $750 860
Additional charged to operations 184 --
Reduction of the allowance credited
to operations -- (110)
---- ----
Allowance, end of year $934 750
==== ====
</TABLE>

An analysis of investment income by investment type follows for the years
ended December 31:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $40,552 35,093 36,720
Equity securities 598 713 16
Fixed maturity securities
held-to-maturity -- 4,530 540
Mortgage loans on real estate 9,991 9,106 8,437
Real estate 214 273 175
Short-term investments 507 348 207
Other 57 41 19
------- ------ ------
Total investment income 51,919 50,104 46,114
Less: investment expenses 874 996 1,084
------- ------ ------
Net investment income $51,045 49,108 45,030
======= ====== ======
</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>
1996 1995 1994
----- ---- ----
<S> <C> <C> <C>
Fixed maturity securities available-for-sale $ 181 (822) 260
Mortgage loans on real estate (184) 110 (832)
Real estate and other -- 10 (53)
----- ---- ----
$ (3) (702) (625)
===== ==== ====
</TABLE>

Fixed maturity securities with an amortized cost of $3,403 and $2,806 as
of December 31, 1996 and 1995, respectively, were on deposit with various
regulatory agencies as required by law.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

(5) Future Policy Benefits

The liability for future policy benefits for investment contracts has been
established based on policy terms, interest rates and various contract
provisions. The average interest rate credited on investment product
policies was approximately 5.6%, 5.6% and 5.3% for the years ended
December 31, 1996, 1995 and 1994, respectively.

(6) Federal Income Tax

The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1996 and 1995 are as follows:

<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Deferred tax assets:
Liabilities in Separate Accounts $ 5,311 3,445
Future policy benefits 1,070 5,249
Mortgage loans on real estate and real estate 407 338
Other assets and other liabilities 3,836 708
-------- -------
Total gross deferred tax assets 10,624 9,740
-------- -------
Deferred tax liabilities:
Fixed maturity securities 3,268 6,308
Deferred policy acquisition costs 2,131 6,262
Equity securities 490 --
-------- -------
Total gross deferred tax liabilities 5,889 12,570
-------- -------
$ 4,735 (2,830)
======== =======
</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. All future
deductible amounts can be offset by future taxable amounts or recovery of
federal income tax paid within the statutory carryback period. The Company
has determined that valuation allowances are not necessary as of December
31, 1996, 1995 and 1994 based on its analysis of future deductible
amounts.

Total federal income tax expense for the years ended December 31, 1996,
1995 and 1994 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:

<TABLE>
<CAPTION>
1996 1995 1994
---------------- ---------------- ----------------
Amount % Amount % Amount %
------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 2,728 35.0 $ 2,501 35.0 $ 1,815 35.0
Tax exempt interest and dividends
received deduction (175) (2.3) (150) (2.1) (50) (1.0)
Other, net 154 2.0 22 0.3 94 1.8
------- ---- ------- ---- ------- ----
Total (effective rate of each year) $ 2,707 34.7 $ 2,373 33.2 $ 1,859 35.8
======= ==== ======= ==== ======= ====
</TABLE>

Total federal income tax paid was $2,335, $1,314 and $2,357 during the
years ended December 31, 1996, 1995 and 1994, respectively.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

(7) Disclosures about Fair Value of Financial Instruments

SFAS No. 107 - Disclosures about Fair Value of Financial Instruments (SFAS
107) requires disclosure of fair value information about existing on and
off-balance sheet financial instruments. SFAS 107 defines the fair value
of a financial instrument as the amount at which the financial instrument
could be exchanged in a current transaction between willing parties. In
cases where quoted market prices are not available, fair value is based on
estimates using present value or other valuation techniques.

These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Although
fair value estimates are calculated using assumptions that management
believes are appropriate, changes in assumptions could cause these
estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets
and, in many cases, could not be realized in the immediate settlement of
the instruments. SFAS 107 excludes certain assets and liabilities from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.

Although insurance contracts, other than policies such as annuities that
are classified as investment contracts, are specifically exempted from
SFAS 107 disclosures, estimated fair value of policy reserves on life
insurance contracts 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:

Cash, short-term investments and policy loans: The carrying amount
reported in the balance sheets for these instruments approximates their
fair value.

Fixed maturity and equity securities: Fair value for fixed maturity
securities is based on quoted market prices, where available. For fixed
maturity securities not actively traded, fair value is estimated using
values obtained from independent pricing services or, in the case of
private placements, is estimated by discounting expected future cash
flows using a current market rate applicable to the yield, credit
quality and maturity of the investments. The fair value for equity
securities is based on quoted market prices.

Separate Account assets and liabilities: The fair value of assets held
in Separate Accounts is based on quoted market prices. The fair value
of liabilities related to Separate Accounts is the amount payable on
demand, which includes certain surrender charges.

Mortgage loans on real estate: The fair value for mortgage loans on
real estate is estimated using discounted cash flow analyses, using
interest rates currently being offered for similar loans to borrowers
with similar credit ratings. Loans with similar characteristics are
aggregated for purposes of the calculations. Fair value for mortgages
in default is the estimated fair value of the underlying collateral.

Investment contracts: Fair value for the Company's liabilities under
investment type contracts is disclosed using two methods. For
investment contracts without defined maturities, fair value is the
amount payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted cash
flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the
contracts being valued.

Policy reserves on life insurance contracts: 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.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

Commitments to extend credit: Commitments to extend credit have nominal
value because of the short-term nature of such commitments. See note 8.

Carrying amount and estimated fair value of financial instruments subject
to SFAS 107 and policy reserves on life insurance contracts were as
follows as of December 31, 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
----------------------- -----------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets
Investments:
Securities available-for-sale:
Fixed maturity securities $648,076 648,076 555,751 555,751
Equity securities 12,254 12,254 11,407 11,407
Mortgage loans on real estate, net 150,997 152,496 104,736 111,501
Policy loans 126 126 94 94
Short-term investments 492 492 4,844 4,844
Cash 4,296 4,296 -- --
Assets held in Separate Accounts 486,251 486,251 257,556 257,556

Liabilities
Investment contracts 75,417 72,262 616,984 601,582
Policy reserves on life insurance contracts 5,303 5,390 4,296 4,520
Liabilities related to Separate Accounts 486,251 471,125 257,556 246,996
</TABLE>

(8) Additional Financial Instruments Disclosures

Financial Instruments with Off-Balance-Sheet Risk: The Company is a party
to financial instruments with off-balance-sheet risk in the normal course
of business through management of its investment portfolio. These
financial instruments include commitments to extend credit in the form of
loans. These instruments involve, to varying degrees, elements of credit
risk in excess of amounts recognized on the 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 $19,500
extending into 1997 were outstanding as of December 31, 1996.

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
31% (28% in 1995) in any geographic area and no more than 5% (15% in 1995)
with any one borrower.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

The summary below depicts loans by remaining principal balance as of
December 31, 1996 and 1995:

<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
-------- --------- ------ --------- --------
<S> <C> <C> <C> <C> <C>
1996:
East North Central $ 1,968 2,324 8,203 7,867 20,362
East South Central -- -- 1,828 11,591 13,419
Mountain -- 1,394 -- 1,986 3,380
Middle Atlantic 2,817 -- 883 1,990 5,690
New England 1,993 868 1,944 -- 4,805
Pacific 3,883 15,779 10,093 9,273 39,028
South Atlantic 9,926 -- 16,209 20,520 46,655
West North Central 2,000 -- -- -- 2,000
West South Central 3,824 -- 1,995 10,847 16,666
-------- ------ ------ ------- --------
$ 26,411 20,365 41,155 64,074 152,005
======== ====== ====== =======
Less valuation allowances and unamortized discount 1,008
--------
Total mortgage loans on real estate, net $150,997
========
1995:
East North Central $ 1,854 878 8,263 3,940 14,935
East South Central -- -- 1,877 11,753 13,630
Mountain -- -- -- 1,964 1,964
Middle Atlantic 882 1,820 901 -- 3,603
New England -- 895 1,963 -- 2,858
Pacific 1,923 8,600 8,211 8,838 27,572
South Atlantic 3,953 -- 9,928 15,797 29,678
West North Central -- 1,500 -- -- 1,500
West South Central 3,881 969 -- 4,932 9,782
-------- ------ ------ ------- --------
$ 12,493 14,662 31,143 47,224 105,522
======== ====== ====== =======
Less valuation allowances and unamortized discount 786
--------
Total mortgage loans on real estate, net $104,736
========
</TABLE>

(9) Pension Plan

The Company is a participant, together with other affiliated companies, in
a pension plan covering all employees who have completed at least one
thousand hours of service within a twelve-month period and who have met
certain age requirements. Benefits are based upon the highest average
annual salary of a specified number of consecutive years of the last ten
years of service. The Company funds 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.

Effective December 31, 1995, the Nationwide Insurance Companies and
Affiliates Retirement Plan was merged with the Farmland Mutual Insurance
Company Employees' Retirement Plan and the Wausau Insurance Companies
Pension Plan to form the Nationwide Insurance Enterprise Retirement Plan.
Immediately prior to the merger, the plans were amended to provide
consistent benefits for service after January 1, 1996. These amendments
had no significant impact on the accumulated benefit obligation or
projected benefit obligation as of December 31, 1995.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

Pension costs charged to operations by the Company during the years ended
December 31, 1996, 1995 and 1994 were $189, $214 and $265, respectively.

The net periodic pension cost for the Nationwide Insurance Enterprise
Retirement Plan as a whole for the year ended December 31, 1996 and for
the Nationwide Insurance Companies and Affiliates Retirement Plan as a
whole for the years ended December 31, 1995 and 1994 follows:

<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- -------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 75,466 64,524 64,740
Interest cost on projected benefit obligation 105,511 95,283 73,951
Actual return on plan assets (210,583) (249,294) (21,495)
Net amortization and deferral 101,795 143,353 (62,150)
--------- -------- -------
$ 72,189 53,866 55,046
========= ======== =======
</TABLE>

Basis for measurements, net periodic pension cost:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Weighted average discount rate 6.00% 7.50% 5.75%
Rate of increase in future compensation levels 4.25% 6.25% 4.50%
Expected long-term rate of return on plan assets 6.75% 8.75% 7.00%
</TABLE>

Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1996 and 1995
follows:

<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Accumulated benefit obligation:
Vested $ 1,338,554 1,236,730
Nonvested 11,149 26,503
----------- ----------
$ 1,349,703 1,263,233
=========== ==========
Net accrued pension expense:
Projected benefit obligation for services rendered to date $ 1,847,828 1,780,616
Plan assets at fair value 1,947,933 1,738,004
----------- ----------
Plan assets in excess of (less than) projected benefit
obligation 100,105 (42,612)
Unrecognized prior service cost 37,870 42,845
Unrecognized net gains (201,952) (63,130)
Unrecognized net asset at transition 37,158 41,305
----------- ----------
$ (26,819) (21,592)
=========== ==========
</TABLE>

Basis for measurements, funded status of plan:

<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Weighted average discount rate 6.50% 6.00%
Rate of increase in future compensation levels 4.75% 4.25%
</TABLE>

Assets of the Nationwide Insurance Enterprise Retirement Plan are invested
in group annuity contracts of NLIC and Employers Life Insurance Company of
Wausau, a wholly owned subsidiary of NLIC.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

(10) 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, 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,
1996 and 1995 was $840 and $808, respectively, and the net periodic
postretirement benefit cost (NPPBC) for 1996, 1995 and 1994 was $78, $66
and $119, respectively.

The amount of NPPBC for the plan as a whole for the years ended December
31, 1996, 1995 and 1994 was as follows:

<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $ 6,541 6,235 8,586
Interest cost on accumulated postretirement benefit obligation 13,679 14,151 14,011
Actual return on plan assets (4,348) (2,657) (1,622)
Amortization of unrecognized transition obligation of affiliates 173 2,966 568
Net amortization and deferral 1,830 (1,619) 1,622
-------- ------- -------
$ 17,875 19,076 23,165
======== ======= =======
</TABLE>

Information regarding the funded status of the plan as a whole as of
December 31, 1996 and 1995 follows:

<TABLE>
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 92,954 88,680
Fully eligible, active plan participants 23,749 28,793
Other active plan participants 83,986 90,375
--------- --------
Accumulated postretirement benefit obligation (APBO) 200,689 207,848
Plan assets at fair value 63,044 54,325
--------- --------
Plan assets less than accumulated postretirement benefit obligation (137,645) (153,523)
Unrecognized transition obligation of affiliates 1,654 1,827
Unrecognized net gains (23,225) (1,038)
--------- --------
$(159,216) (152,734)
========= ========
</TABLE>
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

Actuarial assumptions used for the measurement of the APBO as of December
31, 1996 and 1995 and the NPPBC for 1996, 1995 and 1994 were as follows:

<TABLE>
<CAPTION>
1996 1996 1995 1995 1994
APBO NPPBC APBO NPPBC NPPBC
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Discount rate 7.25% 6.65% 6.75% 8.00% 7.00%
Long-term rate of return on plan
assets, net of tax -- 4.80% -- 8.00% N/A
Assumed health care cost trend rate:
Initial rate 11.00% 11.00% 11.00% 10.00% 12.00%
Ultimate rate 6.00% 6.00% 6.00% 6.00% 6.00%
Uniform declining period 12 Years 12 Years 12 Years 12 Years 12 Years
</TABLE>

The health care cost trend rate assumption has an effect on the amounts
reported. For the plan as a whole, a one percentage point increase in the
assumed health care cost trend rate would increase the APBO as of December
31, 1996 by $701 and the NPPBC for the year ended December 31, 1996 by
$83.

(11) Regulatory Risk-Based Capital and Dividend Restriction

Ohio, the Company's state of domicile, imposes minimum risk-based capital
requirements that were developed by the NAIC. The formulas for determining
the amount of risk-based capital specify various weighting factors that
are applied to financial balances or various levels of activity based on
the perceived degree of risk. Regulatory compliance is determined by a
ratio of the company's regulatory total adjusted capital, as defined by
the NAIC, to its authorized control level risk-based capital, as defined
by the NAIC. Companies below specific trigger points or ratios are
classified within certain levels, each of which requires specified
corrective action. The Company exceeds the minimum risk-based capital
requirements.

The statutory capital shares and surplus of the Company as reported to
regulatory authorities as of December 31, 1996, 1995 and 1994 was $71,390,
$54,978 and $48,947, respectively. The statutory net income of the Company
as reported to regulatory authorities for the years ended December 31,
1996, 1995 and 1994 was $670, $8,023 and $6,173, respectively.

The Company is limited in the amount of shareholder dividends it may pay
without prior approval by the Department. As of December 31, 1996, the
maximum amount available for dividend payment from the Company to its
shareholder without prior approval of the Department is $7,139.

The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and stockholder dividends in
the future.

(12) Transactions With Affiliates

The Company leases office space from NMIC and certain of its subsidiaries.
For the years ended December 31, 1996, 1995 and 1994, the Company made
lease payments to NMIC and its subsidiaries of $410, $287 and $341,
respectively.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

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 $2,682, $2,596 and $2,503 in 1996, 1995 and 1994,
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 $2,275 and $1,186 as of December 31, 1996 and
1995, respectively.

Effective December 31, 1996, the Company entered into an intercompany
reinsurance agreement with NLIC whereby certain inforce and subsequently
issued fixed individual deferred annuity contracts are ceded on a 100%
coinsurance with funds withheld basis. Under 100% coinsurance with funds
withheld agreements, invested assets are retained by the ceding company
and liabilities for future policy benefits are transferred to the assuming
company. In addition, net investment earnings on the invested assets
retained by the ceding company are to be paid to the assuming company.
Under terms of the Company's agreement, the investment risk associated
with changes in interest rates is borne by NLIC. Risk of asset default is
retained by the Company, although a fee is paid by NLIC to the Company for
the Company's retention of such risk. The agreement will remain inforce
until all contract obligations are settled. The ceding of risk does not
discharge the original insurer from its primary obligation to the
contractholder. The Company believes that the terms of the 100%
coinsurance with funds withheld agreement are consistent in all material
respects with what the Company could have obtained with unaffiliated
parties.

The Company has recorded a liability equal to the amount due to NLIC as of
December 31, 1996 for $679,571, which represents the future policy
benefits of the fixed individual deferred annuity contracts ceded. In
consideration for the initial inforce business reinsured, NLIC agreed to
pay the Company $26,473 in commission and expense allowances which were
applied to the Company's deferred policy acquisition costs as of December
31, 1996. No significant gain or loss was recognized as a result of the
agreement.

The Company and various affiliates entered into agreements with Nationwide
Cash Management Company (NCMC) and California Cash Management Company
(CCMC), both affiliates, under which NCMC and CCMC act as common agents in
handling the purchase and sale of short-term securities for the respective
accounts of the participants. Amounts on deposit with NCMC and CCMC were
$492 and $4,844 as of December 31, 1996 and 1995, respectively, and are
included in short-term investments on the accompanying balance sheets.

Certain annuity products are sold through an affiliated company, which is
a subsidiary of Nationwide Corporation. Total commissions paid to the
affiliate for the three years ended December 31, 1996 were $14,644, $5,949
and $6,633, respectively.

(13) Segment Information

The Company has three primary 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 an affiliated 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 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
are reported in the Corporate and Other segment.
<PAGE>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)

Notes to Financial Statements, Continued

During 1996, the Company changed its reporting segments to better reflect
the way the businesses are managed. Prior periods have been restated to
reflect these changes.

The following table summarizes the revenues and income (loss) before
federal income tax expense for the years ended December 31, 1996, 1995 and
1994 and assets as of December 31, 1996, 1995 and 1994, by business
segment.

<TABLE>
<CAPTION>
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Revenues:
Variable Annuities $ 4,591 2,927 2,435
Fixed Annuities 51,643 50,056 44,812
Life Insurance 165 185 179
Corporate and Other 1,545 234 891
----------- -------- --------
$ 57,944 53,402 48,317
=========== ======== ========
Income (loss) before federal income tax expense:
Variable Annuities 1,094 1,196 658
Fixed Annuities 5,156 5,633 5,093
Life Insurance (1) (381) (990)
Corporate and Other 1,544 699 426
----------- -------- --------
$ 7,793 7,147 5,187
=========== ======== ========
Assets:
Variable Annuities 503,111 267,097 185,332
Fixed Annuities 787,682 643,313 606,696
Life Insurance 2,597 2,665 2,677
Corporate and Other 73,031 54,507 38,335
----------- -------- --------
$ 1,366,421 967,582 833,040
=========== ======== ========
</TABLE>