<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act File No. 33-82174
'40 Act File No. 811-8666
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 5 [x]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 6 [x]
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
(EXACT NAME OF REGISTRANT)
NATIONWIDE LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. MCCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in respect
of the Prospectus, the Statement of Additional Information and the Financial
Statements.
It is proposed that this filing will become effective (check appropriate
space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on January 20, 1997 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of securities by a prior
registration statement in accordance with Rule 24f-2 under the Investment
Company Act of 1940. Pursuant to Paragraph (a)(3) thereof, a non-refundable fee
in the amount of $500 has been paid to the Commission. Registrant filed its Rule
24f-2 Notice for the fiscal year ended December 31, 1995, on February 15, 1996.
================================================================================
1 of 99
<PAGE> 2
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
Caption in Prospectus and Statement of Additional Information and Other
Information
<TABLE>
<CAPTION>
N-4 ITEM PAGE
<S> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover page ................................................................... 7
Item 2. Definitions .................................................................. 8
Item 3. Synopsis or Highlights ....................................................... 14
Item 4. Condensed Financial Information .............................................. 15
Item 5. General Description of Registrant, Depositor, and Portfolio Companies ........ 16
Item 6. Deductions and Expenses ...................................................... 18
Item 7. General Description of Variable Annuity Contracts ............................ 19
Item 8. Annuity Period ............................................................... 23
Item 9. Death Benefit and Distributions .............................................. 25
Item 10. Purchases and Contract Value ................................................. 30
Item 11. Redemptions .................................................................. 31
Item 12. Taxes ........................................................................ 32
Item 13. Legal Proceedings ............................................................ 38
Item 14. Table of Contents of the Statement of Additional Information ................. 38
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page ................................................................... 41
Item 16. Table of Contents ............................................................ 41
Item 17. General Information and History .............................................. 41
Item 18. Services ..................................................................... 41
Item 19. Purchase of Securities Being Offered ......................................... 41
Item 20. Underwriters ................................................................. 42
Item 21. Calculation of Performance Information ....................................... 42
Item 22. Annuity Payments ............................................................. 44
Item 23. Financial Statements ......................................................... 45
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits ............................................ 82
Item 25. Directors and Officers of the Depositor ...................................... 84
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant 86
Item 27. Number of Contract Owners .................................................... 95
Item 28. Indemnification .............................................................. 95
Item 29. Principal Underwriter ........................................................ 96
Item 30. Location of Accounts and Records ............................................. 97
Item 31. Management Services .......................................................... 97
Item 32. Undertakings ................................................................. 97
</TABLE>
2 of 99
<PAGE> 3
SUPPLEMENT DATED JANUARY 20, 1997 TO
PROSPECTUS DATED MAY 1, 1996 FOR
INDIVIDUAL MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANY
THROUGH ITS
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
This Supplement updates certain information contained in your Prospectus. Please
read it and keep it with your Prospectus for future reference.
1. Effective December 30, 1996, the "Fidelity Advisor Annuity Fund (Trust)"
became the "Variable Insurance Products Fund III (VIP III)." Funds currently
offered under VIP III and this Prospectus include:
Growth Opportunities Portfolio (Formerly Fidelity Advisor Annuity Growth
Opportunities Fund)
Balanced Portfolio (Formerly Fidelity Advisor Annuity Income & Growth Fund)
Fidelity Advisor Annuity Government Investment Fund*
Fidelity Advisor Annuity High Yield Fund*
Fidelity Advisory Annuity Money Market Fund*
Fidelity Advisor Annuity Overseas Fund*
*An application has been filed with the Securities and Exchange Commission
("SEC") for an Order permitting the substitution of the indicated Fidelity
Advisor Annuity Funds with the following Fidelity Variable Insurance
Products Funds: Investment Grade Bond Portfolio (Variable Insurance
Products Fund II), High Income Portfolio, Money Market Portfolio and
Overseas Portfolio, respectively. Until the Order is granted by the SEC,
all the underlying Mutual Funds currently available in the Separate
Account, as well as the underlying Mutual Funds added pursuant to this
Supplement (see no. 2 below) will be available to all Contract Owners as
funding options. If the Order is granted, information will be sent to all
Contract Owners regarding the established "Exchange Date" on which all the
underlying Mutual Funds to be replaced will be eliminated in favor of the
substitution funds indicated.
2. Effective January 20, 1997, page 1 of the Prospectus is amended to include
the following additional underlying Mutual Fund options:
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio
Growth Portfolio
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager Portfolio
Asset Manager: Growth Portfolio
Contrafund Portfolio
Index 500 Portfolio
VARIABLE INSURANCE PRODUCTS FUND III
Growth & Income Portfolio
3 of 99
<PAGE> 4
3. The "Underlying Mutual Fund Annual Expenses" section located on page 6 of
the Prospectus is amended to include the following information:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MANAGEMENT OTHER EXPENSES TOTAL
FEES EXPENSES
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Variable Insurance Products Fund- 0.51% 0.10% 0.61%
Equity - Income Portfolio
- --------------------------------------------------------------------------------
Variable Insurance Products Fund- 0.61% 0.09% 0.70%
Growth Portfolio
- --------------------------------------------------------------------------------
Variable Insurance Products Fund II- 0.71% 0.10% 0.81%
Asset Manager Portfolio
- --------------------------------------------------------------------------------
Variable Insurance Products Fund II- 0.59% 0.41% 1.00%*
Asset Manager: Growth Portfolio
- --------------------------------------------------------------------------------
Variable Insurance Products Fund II- 0.61% 0.11% 0.72%
Contrafund Portfolio
- --------------------------------------------------------------------------------
Variable Insurance Products Fund II- 0.09% 0.19% 0.28%*
Index 500 Portfolio
- --------------------------------------------------------------------------------
Variable Insurance Products Fund III- 0.50% 0.20% 0.70%
Growth & Income Portfolio
- --------------------------------------------------------------------------------
Variable Insurance Products Fund III- 0.61% 0.24% 0.85%
Growth Opportunities Portfolio
- --------------------------------------------------------------------------------
</TABLE>
*The investment advisor has voluntarily agreed to reimburse a portion of
the management fees and/or operating expenses resulting in a reduction of
the total expenses. Absent any such partial reimbursement, "Management
Fees" and "Other Expenses" would have been 0.71% and 0.54% for the Fidelity
Variable Insurance Products Fund II - Asset Manager: Growth Portfolio and
0.28% and 0.19% for the Fidelity Variable Insurance Products Fund II -
Index 500 Portfolio.
4. The "Example" located on page 7 of the Prospectus is hereby amended to
include the following information:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
If you surrender If you do not If you annuitize
your Contract at surrender your your Contract at
the end of the Contract at the the end of the
applicable time end of the applicable time
period applicable time period
period
- -------------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Variable Insurance Products Fund- 84 110 139 241 21 65 112 241 * 65 112 241
Equity - Income Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund- 85 113 144 250 22 68 117 250 * 68 117 250
Growth Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II- 86 116 149 262 23 71 122 262 * 71 122 262
Asset Manager Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II- 88 122 159 282 25 77 132 282 * 77 132 282
Asset Manager: Growth Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II- 85 114 145 253 22 69 118 253 * 69 118 253
Contrafund Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II- 81 100 121 204 18 55 94 204 * 55 94 204
Index 500 Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund III- 85 113 144 250 22 68 117 250 * 68 117 250
Growth & Income Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. The section entitled "Underlying Mutual Fund Options" located on page 10 of
the Prospectus is amended to include the following information:
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 life insurance and annuity contracts. Fidelity
Management and Research Company ("FMR") is the Fund's manager.
4 of 99
<PAGE> 5
-EQUITY - INCOME PORTFOLIO
Investment Objective: To seek reasonable income by investing primarily in
income-producing equity securities. When choosing these securities, FMR
will also consider the potential for capital appreciation. The Portfolio's
goal is to achieve a yield that exceeds the composite yield on the
securities comprising the Standard & Poors Composite Stock Price Index.
-GROWTH PORTFOLIO
Investment Objective: To seek 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 narrow
product line or whose securities are thinly traded. These latter
securities will often involve greater risk than may be found in the
ordinary investment security. FMR's analysis and expertise plays an
integral role in the selection of securities and, therefore, the
performance of the Portfolio. Many securities which FMR believes would
have the greatest potential may be regarded as speculative, and investment
in the Portfolio may involve greater risk than is inherent in other mutual
funds. It is also important to point out that the Portfolio makes most
sense for you if you can afford to ride out changes in the stock market,
because it invests primarily in common stocks. FMR also can make temporary
investments in securities such as investment-grade bonds, high-quality
preferred stocks and short-term notes, for defensive purposes when it
believes market conditions warrant.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Fidelity Variable Insurance Products Fund II is an open-end,
diversified, management investment company organized as a Massachusetts
business trust on March 21, 1988. The Fund's shares are purchased by
insurance companies to fund benefits under variable life insurance and
annuity contracts. FMR is the Fund's manager.
-ASSET MANAGER PORTFOLIO
Investment Objective: To seek high total return with reduced risk over the
long term by allocating its assets among domestic and foreign stocks,
bonds and short-term fixed income instruments.
-ASSET MANAGER: GROWTH PORTFOLIO
Investment Objective: To seek maximum total return over the long-term by
allocating assets among domestic and foreign stocks, bonds, and short-term
fixed income instruments. The Portfolio's more aggressive approach focuses
primarily on stocks for high potential returns, however, because the
Portfolio can invest in bonds and short-term instruments, its return may
not be as high as a fund that invests only in stocks.
-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 Portfolio 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.
5 of 99
<PAGE> 6
-INDEX 500 PORTFOLIO
Investment Objective: To seek investment results that correspond to the
total return of common stocks that comprise the Standard & Poor's 500
Composite Stock Price Index (S&P 500). Normally, at least 80% of the
Portfolio's assets will be invested in equity securities of companies that
comprise the S&P 500. Although the Portfolio tries to allocate its assets
similarly to those of the S&P 500, the Portfolio's composition may not
always be identical to that of the S&P. FMR may choose, if extraordinary
circumstances warrant, to exclude a stock held in the S&P 500 and include
a similar stock in its place if doing so will help the Portfolio achieve
its objective.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
The Fund (originally organized as the Fidelity Advisor Annuity Fund)
is an open-end, diversified, management investment company organized as a
Massachusetts business trust on July 14, 1994. The Fund's name was changed
on December 30, 1996 from the Fidelity Advisor Annuity Fund to the
Fidelity Variable Insurance Products Fund III. The Fund's shares are
purchased by insurance companies to fund benefits under variable life
insurance and annuity contracts. FMR is the Fund's manager.
-GROWTH & INCOME PORTFOLIO
Investment Objective: To seek high total return through a combination of
current income and capital appreciation by investing mainly in equity
securities.
6. The "Underlying Mutual Fund Performance Summary" tables referenced on
pages 31 of the Prospectus are replaced with the following:
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO LIFE OF FUND DATE FUND
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 TO 12/31/95 EFFECTIVE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor Annuity N/A N/A 5.19% 1/3/95
Government Investment
Fund
- ------------------------------------------------------------------------------------
Growth Opportunities N/A N/A 21.14% 1/3/95
Portfolio (Formerly
Fidelity Advisor Annuity
Growth Opportunities
Fund)
- ------------------------------------------------------------------------------------
Fidelity Advisor Annuity N/A N/A 8.76% 1/3/95
High Yield Fund
- ------------------------------------------------------------------------------------
Balanced Portfolio N/A N/A 2.57% 1/3/95
(Formerly Fidelity
Advisor Annuity Income
& Growth Fund)
- ------------------------------------------------------------------------------------
Fidelity Advisory Annuity N/A N/A -6.11% 1/3/95
Money Market Fund
- ------------------------------------------------------------------------------------
Fidelity Advisor Annuity N/A N/A -1.23% 1/3/95
Overseas Fund
- ------------------------------------------------------------------------------------
</TABLE>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO LIFE OF FUND DATE FUND
SUB-ACCOUNT OPTIONS 12/31/95 12/31/95 TO 12/31/95 EFFECTIVE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor Annuity N/A N/A 14.89% 1/3/95
Government Investment
Fund
- ------------------------------------------------------------------------------------
Growth Opportunities N/A N/A 30.84% 1/3/95
Portfolio (Formerly
Fidelity Advisor Annuity
Growth Opportunities
Fund)
- ------------------------------------------------------------------------------------
Fidelity Advisor Annuity N/A N/A 18.46% 1/3/95
High Yield Fund
- ------------------------------------------------------------------------------------
Balanced Portfolio N/A N/A 12.27% 1/3/95
(Formerly Fidelity
Advisor Annuity Income
& Growth Fund)
- ------------------------------------------------------------------------------------
Fidelity Advisory Annuity N/A N/A 3.59% 1/3/95
Money Market Fund
- ------------------------------------------------------------------------------------
Fidelity Advisor Annuity N/A N/A 8.47% 1/3/95
Overseas Fund
- ------------------------------------------------------------------------------------
</TABLE>
6 of 99
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE
P.O. BOX 182610
COLUMBUS, OHIO 43218-2610, 1-800-573-5775
VOICE RESPONSE (AVAILABLE 24 HOURS) 1-800-573-2447
TDD 1-800-238-3035
INDIVIDUAL MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
OF NATIONWIDE LIFE INSURANCE COMPANY
The Individual Modified Single Premium Deferred Variable Annuity Contracts
described in this prospectus are modified single Purchase Payment contracts
(collectively referred to as the "Contracts"). Reference throughout the
prospectus to such Contracts shall also mean certificates issued under Group
Modified Single Premium Retirement Contracts. For such Group Contracts,
references to "Owner" shall mean the "Participant" unless the Plan otherwise
permits or requires the Owner to exercise contractual rights under the authority
of the Plan terms. The Contracts are sold either as Non-Qualified Contracts or
as Individual Retirement Annuities with contributions rolled-over from certain
tax-qualified plans such as Tax Sheltered Annuity plans, Qualified Plans or
IRAs. Annuity payments under the Contracts are deferred until a selected later
date.
Purchase Payments are allocated to the Nationwide Fidelity Advisor Variable
Account ("Variable Account"), a separate account of Nationwide Life Insurance
Company (the "Company"). The Variable Account is divided into Sub-Accounts, each
of which invests in shares of one of the Mutual Fund options described below:
FIDELITY ADVISOR ANNUITY FUND
<TABLE>
<S> <C>
Fidelity Advisor Annuity Fidelity Advisor Annuity
Government Investment Fund Growth Opportunities Fund
Fidelity Advisor Annuity Fidelity Advisor Annuity
High Yield Fund* Income & Growth Fund
Fidelity Advisor Annuity Fidelity Advisor Annuity
Money Market Fund Overseas Fund
</TABLE>
*The High Yield Fund may invest in lower quality debt securities commonly
referred to as junk bonds.
This prospectus provides you with the basic information you should know
about the Individual Modified Single Premium Deferred Variable Annuity Contracts
issued by the Nationwide Fidelity Advisor Variable Account before investing. You
should read it and keep it for future reference. A Statement of Additional
Information dated May 1, 1996, containing further information about the
Contracts and the Nationwide Fidelity Advisor Variable Account has been filed
with the Securities and Exchange Commission. You can obtain a copy without
charge from Nationwide Life Insurance Company by calling the number listed
above, or writing P.O. Box 182610, Columbus, Ohio 43218-2610.
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.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1996, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 32 OF THE PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
1
7 of 99
<PAGE> 8
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Contract Value prior to the Annuitization Date.
ANNUITANT- The person designated to receive annuity payments and upon whose
continuation of life any annuity payments involving life contingencies depends.
This person must be age 85 or younger at the time of Contract issuance unless
the Company has approved a request for an Annuitant of greater age. The
Annuitant may be changed prior to the Annuitization Date with the consent of the
Company.
ANNUITIZATION- The period during which annuity payments are actually received.
ANNUITIZATION DATE- The date on which annuity payments actually commence.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
commence. The Annuity Commencement Date is shown on the Data Page of the
Contract, and is subject to change by the Owner.
ANNUITY PAYMENT OPTION- The chosen form of annuity payments. Several options are
available under the Contract.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY- The Beneficiary is the person designated to receive certain
benefits under the Contract upon the death of the Designated Annuitant prior to
the Annuitization Date. The Beneficiary can be changed by the Contract Owner as
set forth in the Contract.
CODE- The Internal Revenue Code of 1986, as amended.
COMPANY- Nationwide Life Insurance Company.
CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Designated Annuitant.
CONTINGENT DESIGNATED ANNUITANT- The Contingent Designated Annuitant may be the
recipient of certain rights or benefits under this Contract when the Designated
Annuitant dies before the Annuitization Date. If a Contingent Designated
Annuitant is named on the application, all provisions of the Contract which are
based on the death of the Designated Annuitant will be based on the death of the
last survivor of the Designated Annuitant and the Contingent Designated
Annuitant. A Contingent Designated Annuitant may not be named for Contracts
issued as IRAs or Tax Sheltered Annuities.
CONTINGENT OWNER- A Contingent Owner succeeds to the rights of the Contract
Owner upon the Contract Owner's death before Annuitization. For Contracts issued
in the State of New York, references throughout this prospectus to "Contingent
Owner" shall mean "Owner's Beneficiary." A Contingent Owner may not be named for
Contracts issued as IRAs or Tax Sheltered Annuities.
CONTRACT- The Individual Modified Single Premium Deferred Variable Annuity
Contract described in this prospectus.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER (OWNER)- The Contract Owner is the person who possesses all
rights under the Contract, including the right to designate and change any
designations of the Owner, Contingent Owner, Designated Annuitant, Contingent
Designated Annuitant, Beneficiary, Contingent Beneficiary, Annuity Payment
Option, and the
Annuity Commencement Date.
CONTRACT VALUE- The sum of the value of all Variable Account Accumulation Units
attributable to the Contract plus any amount held under the Contract in the
Fixed Account.
CONTRACT YEAR- Each year the Contract remains in force commencing with the Date
of Issue.
DATE OF ISSUE- The date shown as the Date of Issue on the Data Page of the
Contract.
DEATH BENEFIT- The benefit payable upon the death of the Designated Annuitant
(or the Contingent Designated Annuitant, if applicable). This benefit does not
apply upon the death of the Contract Owner when the Owner
2
8 of 99
<PAGE> 9
and Designated Annuitant are not the same person. If the Annuitant dies after
the Annuitization Date, any benefit that may be payable shall be as specified in
the Annuity Payment Option elected.
DESIGNATED ANNUITANT- The person designated prior to the Annuitization Date to
receive annuity payments. No change of Designated Annuitant may be made without
the prior consent of the Company.
DISTRIBUTION- Any payment of part or all of the Contract Value.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- The Fixed Account is made up of all assets of the Company other
than those in the Variable Account or any other segregated asset account of the
Company.
FIXED ANNUITY- An annuity providing for payments which are guaranteed by the
Company as to dollar amount during Annuitization.
HOME OFFICE- The main office of the Company located in Columbus, Ohio.
INDIVIDUAL RETIREMENT ANNUITY (IRA)- An annuity which qualifies for favorable
tax treatment under Section 408 of the Code.
INTEREST RATE GUARANTEE PERIOD- An Interest Rate Guarantee Period is the
interval of time during which an interest rate credited to the Fixed Account is
guaranteed to remain the same. For new Purchase Payments allocated to the Fixed
Account or transfers from the Variable Account, this period begins upon the date
of deposit or transfer and ends at the end of the calendar quarter at least one
year (but not more than 15 months) from deposit or transfer. At the end of an
Interest Rate Guarantee Period, a new interest rate is declared with an Interest
Rate Guarantee Period starting at the end of the prior period and ending at the
end of the calendar quarter one year later.
JOINT OWNER- The Joint Owner, if any, possesses an undivided interest in the
entire Contract in conjunction with the Owner. IF A JOINT OWNER IS NAMED,
REFERENCES TO "CONTRACT OWNER" OR "OWNER" IN THIS PROSPECTUS WILL APPLY TO BOTH
THE OWNER AND JOINT OWNER. JOINT OWNERS MUST BE SPOUSES AT THE TIME JOINT
OWNERSHIP IS REQUESTED.
MUTUAL FUND (FUND)- A registered management investment company in which the
assets of the Sub-Accounts of the Variable Account will be invested.
NON-QUALIFIED CONTRACTS- A Contract which does not qualify for favorable tax
treatment under the provisions of Sections 401 or 403(a) (Qualified Plans), 408
(IRAs) or 403(b) (Tax-Sheltered Annuities) of the Code.
PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers between the Variable Account and Fixed
Account, or among the Sub-Accounts.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Code.
SUB-ACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Mutual Fund shares are allocated and for which Accumulation
Units and Annuity Units are separately maintained.
TAX SHELTERED ANNUITY- An annuity which qualifies for favorable tax treatment
under Section 403(b) of the Code.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date.
VARIABLE ACCOUNT- The Nationwide Fidelity Advisor Variable Account, a separate
investment account of the Company into which Variable Account Purchase Payments
are allocated. The Variable Account is divided into Sub-Accounts, each of which
invests in the shares of a separate underlying Mutual Fund.
VARIABLE ANNUITY- An annuity providing for payments which are not predetermined
or guaranteed as to dollar amount and which vary in amount with the investment
experience of the Variable Account.
3
9 of 99
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS........................................................ 2
SUMMARY OF CONTRACT EXPENSES..................................................... 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES........................................... 6
SYNOPSIS......................................................................... 8
CONDENSED FINANCIAL INFORMATION.................................................. 9
NATIONWIDE LIFE INSURANCE COMPANY............................................... 10
THE VARIABLE ACCOUNT............................................................ 10
Underlying Mutual Fund Options............................................ 10
Fidelity Advisor Annuity Fund............................................. 10
Voting Rights............................................................. 11
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS............... 12
Mortality Risk Charge..................................................... 12
Expense Risk Charge....................................................... 12
Contingent Deferred Sales Charge.......................................... 12
Administration Charge..................................................... 13
Premium Taxes............................................................. 13
Expenses of Variable Account.............................................. 13
Investments of the Variable Account....................................... 14
Right to Revoke........................................................... 14
Transfers................................................................. 14
Assignment................................................................ 15
Loan Privilege............................................................ 15
Ownership Provisions...................................................... 16
Contingent Owner and Beneficiary Provisions............................... 17
Substitution of Securities................................................ 17
Contract Owner Inquiries.................................................. 17
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT......................................... 17
Value of an Annuity Unit.................................................. 18
Assumed Investment Rate................................................... 18
Frequency and Amount of Annuity Payments.................................. 18
Annuity Commencement Date................................................. 18
Change in Annuity Commencement Date....................................... 18
Change in Form of Annuity................................................. 18
Annuity Payment Options................................................... 18
Death of Contract Owner................................................... 19
Death of Designated Annuitant Prior to the Annuitization Date............. 19
Death of Annuitant After the Annuitization Date........................... 20
Required Distribution for Tax Sheltered Annuities......................... 20
Required Distributions for Individual Retirement Annuities................ 21
Generation - Skipping Transfers........................................... 22
GENERAL INFORMATION............................................................. 22
Contract Owner Services................................................... 22
Statements and Reports.................................................... 23
Allocation of Purchase Payments and Contract Value........................ 24
Value of a Variable Account Accumulation Unit............................. 24
Net Investment Factor..................................................... 24
Valuation of Assets....................................................... 25
Determining the Contract Value............................................ 25
Surrender (Redemption).................................................... 25
Surrenders Under a Tax Sheltered Annuity Contract......................... 26
Taxes..................................................................... 26
Non-Qualified Contracts................................................... 27
Individual Retirement Annuities........................................... 28
Diversification........................................................... 29
Charge for Tax Provisions................................................. 29
</TABLE>
4
10 of 99
<PAGE> 11
<TABLE>
<S> <C>
Individual Retirement Annuities, Individual Retirement Accounts and
Tax Sheltered Annuities................................................ 29
Advertising............................................................... 29
LEGAL PROCEEDINGS............................................................... 32
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION........................ 32
APPENDIX........................................................................ 33
</TABLE>
5
11 of 99
<PAGE> 12
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Contingent Deferred Sales Charge(1).................. 7 %
--------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
RANGE OF CONTINGENT DEFERRED SALES CHARGE OVER TIME
Number of Completed Years from Contingent Deferred Sales Load
Date of Purchase Payment Percentage
<S> <C> <C>
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
- -------------------------------------------------------------------------
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES
<TABLE>
<S> <C>
Mortality and Expense Risk Charges........................... 1.25 %
--------
Administration Charge........................................ 0.15 %
--------
Total Separate Account Annual Expenses...................... 1.40 %
--------
</TABLE>
(1) Each Contract Year, the Contract Owner may withdraw without a Contingent
Deferred Sales Charge (CDSC) an amount equal to 10% of the total sum of all
Purchase Payments made to the Contract at the time of withdrawal. In
addition, any amount withdrawn in order for the Contract to meet minimum
Distribution requirements under the Code shall be free of CDSC. Withdrawals
may be restricted for Contracts issued pursuant to the terms of a Tax
Sheltered Annuity. This CDSC-free withdrawal privilege is non-cumulative,
that is, free amounts not taken during any given Contract Year cannot be
taken as free amounts in a subsequent Contract Year (see "Contingent
Deferred Sales Charge").
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(2)
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Management Other Total Mutual
Fees Expenses Fund Expenses
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity Advisor Annuity 0.00% 1.00% 1.00%
Government Investment Fund
- ----------------------------------------------------------------------------
Fidelity Advisor Annuity Growth 0.61% 0.28% 0.89%
Opportunities Fund
- ----------------------------------------------------------------------------
Fidelity Advisor Annuity High 0.43% 0.57% 1.00%
Yield Fund
- ----------------------------------------------------------------------------
Fidelity Advisor Annuity Income 0.51% 0.95% 1.46%
& Growth Fund
- ----------------------------------------------------------------------------
Fidelity Advisor Annuity Money 0.24% 0.55% 0.79%
Market Fund
- ----------------------------------------------------------------------------
Fidelity Advisor Annuity 0.00% 1.50% 1.50%
Overseas Fund
- ----------------------------------------------------------------------------
</TABLE>
(2) The Mutual Fund expenses shown above are assessed at the underlying Mutual
Fund level and are not direct charges against separate account assets or
reductions from Contract Values. These underlying Mutual Fund expenses are
taken into consideration in computing each underlying Mutual Fund's net
asset value, which is the share price used to calculate unit values of the
Variable Account. The amounts are based on historical expenses. The Growth
Opportunities Fund, the Income & Growth Fund, and the Money Market Fund are
adjusted to reflect current fees, and are calculated as a percentage of
each underlying Mutual Fund's average net assets. The investment adviser
has voluntarily agreed to reimburse the operating expenses of each fund
above an annual rate of 1.00%, 1.50%, 1.00%, 1.50%, 1.00% and 1.50% of the
average net assets of the Government Investment Fund, the Growth
Opportunities Fund, the High Yield Fund, the Income & Growth Fund, the
Money Market Fund and the Overseas Fund, respectively. If theses agreements
were not in effect, the management fees, other expenses, and total
underlying Mutual Fund expenses would be 0.45%, 1.44% and 1.89% for the
Government Investment Fund, 0.60%, 0.56% and 1.16% for the High Yield Fund;
and 0.76%, 2.14% and 2.90% for the Overseas Funds. The information relating
to the underlying Mutual Fund expense was provided by the underlying Mutual
Fund and was not independently verified by the Company.
6
12 of 99
<PAGE> 13
EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 investment and 5% annual return. These
dollar figures are illustrative only and should not be considered a
representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
If you surrender your Contract If you do not surrender your If you annuitize your Contract
at the end of the applicable Contract at the end of the at the end of the applicable
time period applicable time Period time period
- ------------------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Advisor 88 122 159 282 25 77 132 282 * 77 132 282
Annuity-Government
Investment Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor 87 119 154 271 24 74 127 271 * 74 127 271
Annuity-Growth
Opportunities Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor 88 122 159 282 25 77 132 282 * 77 132 282
Annuity-High
Yield Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor 93 137 183 329 30 92 156 329 * 92 156 329
Annuity-Income &
Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor 86 116 148 260 23 71 121 260 * 71 121 260
Annuity-Money
Market Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor 93 138 185 333 30 93 158 333 * 93 158 333
Annuity-Overseas
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The Contracts sold under this prospectus do not permit annuitizations during
the first two Contract Years.
The purpose of the Summary of Contract Expenses and Example is to assist
the Contract Owner in understanding the various costs and expenses that will be
borne directly or indirectly when investing in the Contract. The expenses of the
Variable Account as well as those of the Mutual Funds are reflected in the
Example. For more complete descriptions of the expenses of the Variable Account,
see "Variable Account Charges, Purchase Payments, and Other Deductions." For
more complete information regarding expenses paid out of the assets of the
underlying Mutual Funds, see the underlying Mutual Fund prospectuses. Deductions
for premium taxes may also apply but are not reflected in the Example shown
above (see "Premium Taxes").
7
13 of 99
<PAGE> 14
SYNOPSIS
There are three types of Contracts: (1) Non-Qualified Contracts, (2)
Individual Retirement Annuities purchased with contributions rolled over from
Qualified Plans, Tax Sheltered Annuities or IRAs, or (3) Tax Sheltered Annuities
with contributions rolled over or transferred from another Tax Sheltered Annuity
or Custodial Account.
The Company does not deduct a sales charge from Purchase Payments made for
these Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions, deduct from the Contract
Owner's Contract Value a Contingent Deferred Sales Charge not to exceed 7% of
the lesser of the total of all Purchase Payments made within 84 months prior to
the date of the request to surrender, or the amount surrendered. This charge,
when applicable, is imposed to permit the Company to recover sales expenses
which have been advanced by the Company (see "Contingent Deferred Sales
Charge").
The Company will also assess an Administration Charge equal to an annual
rate of 0.15% of the daily net asset value of the Variable Account. This charge
is to reimburse the Company for administrative expenses related to the issue and
maintenance of the Contracts. The Company does not expect to recover from this
charge an amount in excess of accumulated administrative expenses (see
"Administration Charge").
The Company deducts a Mortality Risk Charge equal to an annual rate of
0.80% of the daily net asset value of the Variable Account for mortality risk
assumed by the Company (see "Mortality Risk Charge").
The Company deducts an Expense Risk Charge equal to an annual rate of 0.45%
of the daily net asset value of the Variable Account as compensation for the
Company's risk in undertaking not to increase administrative charges on the
Contracts regardless of the actual administrative costs (see "Expense Risk
Charge").
The initial Purchase Payment must be at least $15,000 and subsequent
Purchase Payments, if any, must be at least $1,000. Subsequent Purchase Payments
are not permitted for Contracts purchased in the states of New York, Oregon, and
Washington. The cumulative total of all Purchase Payments under Contracts issued
on the life of any one Designated Annuitant may not exceed $1,000,000 without
the prior consent of the Company (see "Allocation of Purchase Payments and
Contract Value").
If the Contract Value at the Annuitization Date is less than $5000, the
Contract Value may be distributed in one lump sum in lieu of annuity payments.
If any annuity payment would be less than $50, the Company shall have the right
to change the frequency of payments to such intervals as will result in payments
of at least $50. In no event, however, will annuity payments be made less
frequently than annually (see "Frequency and Amount of Annuity Payments").
Premium taxes payable to any governmental entity will be charged against
the Contracts. If any such premium taxes are payable by the Company at the time
Purchase Payments are made, an equal premium tax deduction may be made from the
Contract prior to the allocation of any Purchase Payment to any underlying
Mutual Fund option (see "Premium Taxes").
To be sure that the Contract Owner is satisfied with the Contract, the
Contract Owner has a ten day free look. Within ten days of the day the Contract
is received, it may be returned to the Home Office of the Company, at the
address shown on page 1 of this prospectus. When the Contract is received by the
Company, the Company will void the Contract and refund the Contract Value in
full unless otherwise required by state and/or federal law. All Individual
Retirement Annuity refunds will be return of Purchase Payments (see "Right to
Revoke").
8
14 of 99
<PAGE> 15
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values for an Accumulation Unit outstanding through the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF PERIOD YEAR
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Advisor 10.000000 11.493314 14.93% 237,795 1995
Annuity-
Government
Investment Fund-Q
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 11.493314 14.93% 443,946 1995
Annuity-
Government
Investment Fund-NQ
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 13.069019 30.69% 2,965,497 1995
Annuity-
Growth Opportunities
Fund-Q
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 13.069019 30.69% 8,130,130 1995
Annuity-
Growth Opportunities
Fund-NQ
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 11.846502 18.47% 798,794 1995
Annuity-
High Yield Fund-Q
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 11.846502 18.47% 2,248,404 1995
Annuity-
High Yield Fund-NQ
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 11.234358 12.34% 975,789 1995
Annuity-
Income & Growth
Fund-Q
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 11.234358 12.34% 2,441,208 1995
Annuity-
Income & Growth
Fund-NQ
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 10.375160 3.75% 798,314 1995
Annuity-
Money Market Fund-Q(*)
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 10.375160 3.75% 1,833,132 1995
Annuity-
Money Market Fund-NQ(*)
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 10.858102 8.58% 369,362 1995
Annuity-
Overseas Fund-Q
- --------------------------------------------------------------------------------
Fidelity Advisor 10.000000 10.858102 8.58% 1,018,290 1995
Annuity-
Overseas Fund-NQ
- --------------------------------------------------------------------------------
</TABLE>
* The 7-day yield on the Money Market Fund as of December 31, 1995 was 3.98%.
9
15 of 99
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws of
the State of Ohio in March, 1929. The Company is a member of the Nationwide
Insurance Enterprise, with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43216-6609. The Company offers a complete line of life insurance, including
annuities and accident and health insurance. It is admitted to do business in
the District of Columbia, Puerto Rico, and in all states.
THE VARIABLE ACCOUNT
The Variable Account was established by the Company on July 22, 1994,
pursuant to the provisions of Ohio law. 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 liabilities arising out of any other business
the Company may conduct. The Company does not guarantee the investment
performance of the Variable Account. Obligations under the Contracts, however,
are obligations of the Company. Income, gains and losses, whether or not
realized, from the assets of the Variable Account are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard to
other income, gains, or losses of the Company.
Purchase Payments are allocated within the Variable Account among one or
more Sub-Accounts made up of shares in the underlying Mutual Fund(s) designated
by the Contract Owner. A separate Sub-Account is established within the Variable
Account for each of the underlying Mutual Fund options that may be designated by
the Contract Owner.
UNDERLYING MUTUAL FUND OPTIONS
Contract Owners may choose from among a number of different Sub-Account
options. A summary of investment objectives is contained in the descriptions of
each underlying Mutual Fund below.
FIDELITY ADVISOR ANNUITY FUND
The Fund is an open-end, diversified, management investment company
organized as a Massachusetts business trust on July 15, 1994. 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.
FIDELITY ADVISOR ANNUITY GOVERNMENT INVESTMENT FUND
Investment Objective: Seeks a high level of current income by investing
primarily in obligations issued or guaranteed by the U.S. government or any
of its agencies or instrumentalities. Under normal circumstances, at least
65% of the Fund's total assets will be invested in government securities.
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
Investment Objective: Seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common stocks.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in securities of companies that FMR believes have long-term growth
potential. Growth can be considered either appreciation of the security
itself or growth of the company's earnings or gross sales. Accordingly,
these securities will pay little, if any, income, which will be entirely
incidental to the objective of capital growth.
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
Investment Objective: Seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed income and zero coupon
securities, such as bonds, debentures and notes, convertible securities and
preferred stocks. The Fund normally will invest at least 65% of its total
assets in high-yielding, income producing debt securities and preferred
stocks, including convertible and zero coupon securities. The fund may
invest all or a substantial portion of its assets in lower-quality debt
securities (commonly referred to as "junk bonds"). This is an aggressive
approach to income investing.
10
16 of 99
<PAGE> 17
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
Investment Objective: Seeks both income and growth of capital by investing
in a diversified portfolio of equity and fixed-income securities with
income, growth of income and capital appreciation potential. The Fund will
invest in equity securities, convertible securities, preferred and common
stocks paying any combination of dividends and capital gains and in
fixed-income securities. The Fund also may buy securities that are not
paying dividends but offer prospects for growth of capital or future
income. The proportion of the Fund's assets invested in each type of
security will vary from time to time in accordance with FMR's assessment of
economic conditions.
FIDELITY ADVISOR ANNUITY MONEY MARKET FUND
Investment Objective: Seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The fund
will invest only in high quality U.S. dollar-denominated money market
securities of domestic and foreign issuers.
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
Investment Objective: Seeks growth of capital primarily through investments
in foreign securities. The Fund defines foreign securities as securities of
issuers whose principal activities are outside the United States. Normally,
at least 65% of the Funds' total assets will be invested in securities of
issuers from at least three different countries outside of North America
(the United States, Canada, Mexico and Central America).
More detailed information may be found in the current prospectus for each
underlying Mutual Fund offered. Such a prospectus for the underlying Mutual Fund
being considered must accompany this prospectus and should be read in
conjunction herewith. A copy of each prospectus may be obtained without charge
from Nationwide Life Insurance Company by calling 1-800-573-5775, Voice Response
(available 24 hours) 1-800-573-2447, TDD 1-800-238-3035 or writing P.O. Box
182610, Columbus, Ohio 43218-2610.
The underlying Mutual Fund options may also be available to other separate
accounts of the Company. Although the Company does not anticipate any
disadvantages to this, there is a possibility that a material conflict may arise
between the interest of the Variable Account and one or more of the other
separate accounts participating in the underlying Mutual Fund options. A
conflict may occur due to a change in law affecting the operations of variable
life and variable annuity separate accounts, differences in the voting
instructions of the Contract Owners and those of other companies, or some other
reason. In the event of conflict, the Company will take any steps necessary to
protect the Contract Owners and variable annuity payees, including withdrawal of
the Variable Account from participation in the underlying Mutual Fund or Mutual
Funds which are involved in the conflict.
VOTING RIGHTS
Voting rights under the Contracts apply ONLY with respect to Purchase
Payments or accumulated amounts allocated to 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.
These shares will be voted in accordance with instructions received from
Contract Owners who have an interest in the Variable Account. 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, it may elect to do so.
The person having the voting interest under a Contract shall be the
Contract Owner. The number of underlying Mutual Fund shares attributable to each
Contract Owner is determined by dividing the Contract Owner's interest in each
respective Sub-Account of the Variable Account by the net asset value of the
underlying Mutual Fund corresponding to the Sub-Account.
The number of shares which a person has the right to vote will be
determined as of the date to be chosen by the Company not more than 90 days
prior to the meeting of the underlying Mutual Fund. Voting instructions will be
solicited by written communication at least 21 days prior to such meeting.
11
17 of 99
<PAGE> 18
Underlying Mutual Fund shares held in 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 with respect to all
Contracts participating in the Variable Account.
Each person having a voting interest will receive periodic reports relating
to the underlying Mutual Fund, proxy material and a form with which to give such
voting instructions.
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS
MORTALITY RISK CHARGE
The Company assumes a "mortality risk" by virtue of annuity rates
incorporated into the Contract which cannot be changed regardless of the death
rates of persons receiving annuity payments or of the general population.
For assuming this mortality risk, the Company deducts a Mortality Risk
Charge from the Variable Account. This amount is computed on a daily basis and
is equal to an annual rate of 0.80% of the daily net asset value of the Variable
Account. The Company expects to generate a profit through assessing this charge.
EXPENSE RISK CHARGE
The Company will not increase charges for administration of the Contracts
regardless of its actual expenses. For assuming this expense risk, the Company
deducts an Expense Risk Charge from the Variable Account. This amount is
computed on a daily basis and is equal to an annual rate of 0.45% of the daily
net asset value of the Variable Account. The Company expects to generate a
profit through assessing this charge.
CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for
these Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions, deduct a Contingent
Deferred Sales Charge not to exceed 7% of the lesser of the total of all
Purchase Payments made within 84 months prior to the date of the request to
surrender, or the amount surrendered. The Contingent Deferred Sales Charge, when
it is applicable, will be used to cover expenses relating to the sale of the
Contracts, including commissions paid to sales personnel, the costs of
preparation of sales literature and other promotional activity. The Company
attempts to recover its distribution costs relating to the sale of the Contracts
from the Contingent Deferred Sales Charge. Any shortfall will be made up from
the general account of the Company, which may indirectly include portions of the
Mortality and Expense Risk Charges, since the Company expects to generate a
profit from these charges. The maximum amount that may be paid to a selling
agent on the sale of these Contracts is 6.25% of Purchase Payments.
The Contingent Deferred Sales Charge is calculated by multiplying the
applicable Contingent Deferred Sales Charge percentages noted below by the
Purchase Payments that are surrendered. For purposes of calculating the
Contingent Deferred Sales Charge, surrenders are considered to come first from
the oldest Purchase Payment made to the Contract, then the next oldest Purchase
Payment and so forth, with any earnings attributable to such Purchase Payments
considered only after all Purchase Payments made to the Contract have been
considered. For tax purposes, a surrender is usually treated as a withdrawal of
earnings first. This charge will apply in the amounts set forth below to
Purchase Payments within the time periods set forth.
The Contingent Deferred Sales Charge applies to Purchase Payments as follows:
<TABLE>
<CAPTION>
CONTINGENT NUMBER OF
NUMBER OF COMPLETED DEFERRED COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
PURCHASE PAYMENT PERCENTAGE PURCHASE PAYMENT PERCENTAGE
---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
0 7% 4 3%
1 6% 5 2%
2 5% 6 1%
3 4% 7 0%
</TABLE>
12
18 of 99
<PAGE> 19
In any Contract Year, the Contract Owner may withdraw without a Contingent
Deferred Sales Charge (CDSC) an amount equal to 10% of the total sum of all
Purchase Payments made to the Contract at the time of withdrawal, less amounts
previously withdrawn in the same Contract Year under the same 10% free
withdrawal provision. In addition, any amount withdrawn in order to meet minimum
Distribution requirements under the Code shall be free of CDSC. This CDSC-free
withdrawal privilege is non-cumulative; free amounts not taken during any given
Contract Year cannot be taken as free amounts in a subsequent Contract Year. The
Contract Owner may be subject to a tax penalty if the Contract Owner takes
withdrawals prior to age 59-1/2 (see "Non-Qualified Contracts").
In addition, no Contingent Deferred Sales Charge will be deducted: (1) upon
the Annuitization of Contracts which have been in force for at least two years,
(2) upon payment of a death benefit pursuant to the death of the Designated
Annuitant, or (3) from any values which have been held under a Contract for at
least 84 months. No Contingent Deferred Sales Charge applies upon the transfer
of value among the Sub-Accounts or between the Fixed Account and the Variable
Account and vice-versa.
When a Contract is held by a Charitable Remainder Trust, the amount which
may be withdrawn from this Contract without application of a Contingent Deferred
Sales Charge, shall be the larger of (a) or (b), where (a) is:
The amount which would otherwise be available for withdrawal without
application of a Contingent Deferred Sales Charge;
and where (b) is:
The difference between the total Purchase Payments made to the Contract as
of the date of the withdrawal (reduced by previous withdrawals of such
Purchase Payments), and the Contract Value at the close of the day prior to
the date of the withdrawal.
When a Contract described in this prospectus is exchanged for another
Contract issued by the Company or any of its affiliated insurance companies, of
the type and class which the Company determined is eligible for such exchange,
the Company will waive the Contingent Deferred Sales Charge on the first
Contract. A Contingent Deferred Sales Charge may apply to the contract received
in the exchange.
ADMINISTRATION CHARGE
The Company assesses an Administration Charge equal on an annual basis to
0.15% of the daily net asset value of the Variable Account. The Administration
Charge is designed only to reimburse the Company for administrative expenses
related to the issuance and maintenance of the Contract. The Company will
monitor this charge to ensure that it does not exceed annual administration
expenses.
PREMIUM TAXES
The Company will charge against the Contract Value the amount of any
premium taxes levied by a state or any other governmental entity upon Purchase
Payments received by the Company. Premium taxes currently imposed by certain
jurisdictions range from 0% to 3.5%. This range is subject to change. The method
used to recoup premium tax expense will be determined by the Company at its sole
discretion and in compliance with applicable state law. The Company currently
deducts such charges from a Contract Owner's Contract Value either: (1) at the
time the Contract is surrendered, (2) at Annuitization, or (3) at such earlier
date as the Company may become subject to such taxes.
EXPENSES OF VARIABLE ACCOUNT
The Variable Account is responsible for the following types of expenses:
(1) administrative expenses relating to the issuance and maintenance of the
Contracts; (2) the mortality risk charges associated with guaranteeing the
annuity purchase rates at issue for the life of the Contracts; and (3) charges
associated with guaranteeing that the Mortality Risk, Expense Risk, Contract
Maintenance and Administration Charges described in this prospectus will not be
changed regardless of actual expenses. If these charges are insufficient to
cover these expenses, the loss will be borne by the Company.
For 1995, the Variable Account incurred total expenses equal to 0.90% of
its average net assets, relating to the administrative, sales, mortality and
expense risk charges described above for all Contracts outstanding during that
year. Deductions from and expenses paid out of the assets of the underlying
Mutual Funds are described in each underlying Mutual Fund's prospectus.
13
19 of 99
<PAGE> 20
INVESTMENTS OF THE VARIABLE ACCOUNT
At the time of purchase each Contract Owner elects to have Purchase
Payments attributable to his or her participation in the Variable Account
allocated among one or more of the Sub-Accounts which consist of shares in the
underlying Mutual Funds. Shares of the respective underlying Mutual Funds
specified by the Contract Owner are purchased at net asset value for the
respective Sub-Account(s) and converted into Accumulation Units. At the time of
purchase, the Contract Owner designates the underlying Mutual Funds to which he
or she desires to have Purchase Payments allocated. The Contract Owner may
change the election as to allocation of Purchase Payments or may elect to
exchange amounts among the Sub-Account options pursuant to such terms and
conditions applicable to such transactions as may be imposed by each of the
underlying Mutual Funds, in addition to those set forth in the Contracts.
RIGHT TO REVOKE
The Contract Owner may revoke the Contract at any time between the Date of
Issue and the date 10 days after receipt of the Contract and receive a refund of
the Contract Value unless otherwise required by state and/or federal law. All
Individual Retirement Annuity refunds will be a return of Purchase Payments. In
order to revoke the Contract, it must be mailed or delivered to the Home Office
of the Company at the mailing address shown on page 1 of this prospectus.
Mailing or delivery must occur on or before 10 days after receipt of the
Contract for revocation to be effective. In order to revoke the Contract, if it
has not been received, written notice must be mailed or delivered to the Home
Office of the Company at the mailing address shown on page 1 of this prospectus.
The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded to the Contract Owner will be paid by the Company.
TRANSFERS
The Company currently allows transfers up to 100% of the Variable Account
Contract Value from the Variable Account to the Fixed Account, without penalty
or adjustment. However, the Company reserves the right to restrict transfers
from the Variable Account to the Fixed Account to 10% of the Variable Account
Contract Value for any 12 month period. All amounts transferred to the Fixed
Account must remain on deposit in the Fixed Account until the expiration of the
Interest Rate Guarantee Period. Transfers from the Fixed Account may not be made
prior to the end of the then current Interest Rate Guarantee Period. The
Interest Rate Guarantee Period for any amount allocated to the Fixed Account
expires on the final day of a calendar quarter during which the one year
anniversary of the allocation of the Fixed Account occurs. Transfers must also
be made prior to the Annuitization Date. For all transfers involving the
Variable Account, the Contract Owner's value in each Sub-Account will be
determined as of the date the transfer request is received in the Home Office in
good order. The Company reserves the right to refuse transfers or Purchase
Payments into the Fixed Account if the Fixed Account is greater than or equal to
30% of the Contract Value.
The Contract Owner may at the maturity of an Interest Rate Guarantee
Period, transfer a portion of the value of the Fixed Account to the Variable
Account. The amount that may be transferred from the Fixed Account to the
Variable Account will be determined by the Company, at its sole discretion, but
will not be less than 10% of the total value of the portion of the Fixed Account
that is maturing. The amount that may be transferred from the Fixed Account will
be declared upon the expiration date of the then current Interest Rate Guarantee
Period. Transfers from the Fixed Account must be made within 45 days after the
expiration date of the Interest Rate Guarantee Period. Contract Owners who have
entered into a Dollar Cost Averaging agreement with the Company (see "Dollar
Cost Averaging") may transfer from the Fixed Account to the Variable Account
under the terms of that agreement.
Transfers may be made either in writing or, in states allowing such
transfers, by telephone. This telephone exchange privilege is made available to
Contract Owners automatically without the Owner's election. 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
Contract Owner and any agent of record, at the last address of record. 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
14
20 of 99
<PAGE> 21
on telephone instructions reasonably believed to be genuine shall be borne by
the Contract Owner. The Company may withdraw the telephone exchange privilege
upon 30 days' written notice to Contract Owners.
ASSIGNMENT
Where permitted, the Contract Owner may assign some or all of the rights
under the Contract at any time during the lifetime of the Designated Annuitant
prior to the Annuitization Date. Such assignment will take effect upon receipt
and recording by the Company at its Home Office of a written notice executed by
the Contract Owner. The Company assumes no responsibility for the validity or
tax consequences of any assignment. The Company shall not be liable as to any
payment or other settlement made by the Company before recording of the
assignment. Where necessary for the proper administration of the terms of the
Contract, an assignment will not be recorded until the Company has received
sufficient direction from the Contract Owner and assignee as to the proper
allocation of Contract rights under the assignment.
Any portion of Contract Value which is pledged or assigned shall be treated
as a Distribution and shall be included in gross income to the extent that the
cash value exceeds the investment in the Contract for the taxable year in which
assigned or pledged. In addition, any Contract Values assigned may, under
certain conditions, be subject to a tax penalty equal to 10% of the amount which
is included in gross income. All rights in this Contract are personal to the
Contract Owner and may not be assigned without written consent of the Company.
Assignment of the entire Contract Value may cause the portion of the Contract
Value which exceeds the total investment in the Contract and previously taxed
amounts to be included in gross income for federal income tax purposes each year
that the assignment is in effect. Individual Retirement Annuities and Tax
Sheltered Annuities are not eligible for assignment.
LOAN PRIVILEGE
Prior to the Annuitization Date, the Owner of a Tax Sheltered Annuity
Contract may receive a loan from the Contract Value subject to the terms of the
Contract, the Plan, and the Code, which may impose restrictions on loans.
Loans from Tax Sheltered Annuities are available beginning 30 days after
the Date of Issue. The Contract Owner may borrow a minimum of $1,000. In
non-ERISA plans, for Contract Values up to $20,000, the maximum loan balance
which may be outstanding at any time is 80% of the Contract Value, but not more
than $10,000. If the Contract Value is $20,000 or more, the maximum loan balance
which may be outstanding at any time is 50% of the Contract Value, but not more
than $50,000. For ERISA plans, the maximum loan balance which may be outstanding
at any time is 50% of the Contract Value, but not more than $50,000. The $50,000
limit will be reduced by the highest loan balances owed during the prior
one-year period. Additional loans are subject to the contract minimum amount.
The aggregate of all loans may not exceed the Contract Value limitations stated
above.
For salary reduction Tax Sheltered Annuities, loans may only be secured by
the Contract Value. For loans from Qualified Contracts and other Tax Sheltered
Annuities, the Company reserves the right to limit a loan to 50% of the Contract
Value subject to the acceptance by the Contract Owner of the Company's loan
agreement. Where permitted, the Company may require other named collateral where
the loan from a Contract exceeds 50% of the Contract Value.
All loans are made from a collateral fixed account. An amount equal to the
principal amount of the loan will be transferred to the collateral fixed
account. Unless instructed to the contrary by the Contract Owner, the Company
will first transfer to the collateral fixed account the Variable Account units
from the Contract Owner's investment options in proportion to the assets in each
option until the required balance is reached or all such variable units are
exhausted. The remaining required collateral will next be transferred from the
Fixed Account. No withdrawal charges are deducted at the time of the loan, or on
the transfer from the Variable Account to the collateral fixed account.
Until the loan has been repaid in full, that portion of the collateral
fixed account equal to the outstanding loan balance shall be credited with
interest at a rate 2.25% less than the loan interest rate fixed by the Company
for the term of the loan. However, the interest rate credited to the collateral
fixed account will never be less than 3.0%. Specific loan terms are disclosed at
the time of loan application or loan issuance.
Loans must be repaid in substantially level payments, not less frequently
than quarterly, within five years. Loans used to purchase the principal
residence of the Contract Owner must be repaid within 15 years. During
15
21 of 99
<PAGE> 22
the loan term, the outstanding balance of the loan will continue to earn
interest at an annual rate as specified in the loan agreement. Loan repayments
will consist of principal and interest in amounts set forth in the loan
agreement. Loan repayments will be allocated between the Fixed and Variable
Accounts in the same proportion as when the loan was made.
If the Contract is surrendered while the loan is outstanding, the surrender
value will be reduced by the amount of the loan outstanding plus accrued
interest. If the Contract Owner/Annuitant dies while the loan is outstanding,
the Death Benefit will be reduced by the amount of the loan outstanding plus
accrued interest. If annuity payments start while the loan is outstanding, the
Contract Value will be reduced by the amount of the outstanding loan plus
accrued interest. Until the loan is repaid, the Company reserves the right to
restrict any transfer of the Contract which would otherwise qualify as a
transfer as permitted in the Code.
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available under the terms of the loan agreement. If a loan
payment is not made when due, or by the end of the applicable grace period, then
that payment, which may be a single periodic payment or payment of the entire
loan, will be treated as a deemed Distribution, as permitted by law, may be
taxable to the borrower, and may be subject to the early withdrawal tax penalty.
Interest which subsequently accrues on defaulted amounts may also be treated as
additional deemed Distributions each year. Any defaulted amounts, plus accrued
interest, will be deducted from the Contract when the participant becomes
eligible for a Distribution of at least that amount, and this amount may again
be treated as a Distribution where required by law. Additional loans may not be
available while a previous loan remains in default.
Loans may also be subject to additional limitations or restrictions under
the terms of the employer's plan. Loans permitted under this Contract may still
be taxable in whole or part if the participant has additional loans from other
plans or contracts. The Company will calculate the maximum nontaxable loan based
on the information provided by the participant or the employer.
Loan repayments must be identified as such or else they will be treated as
Purchase Payments and will not be used to reduce the outstanding loan principal
or interest due. The Company reserves the right to modify the term or procedures
associated with the loan in the event of a change in the laws or regulations
relating to the treatment of loans. The Company also reserves the right to
assess a loan processing fee. Individual Retirement Annuities and Non-Qualified
Contracts are not eligible for loans.
OWNERSHIP PROVISIONS
Unless otherwise provided, the Contract Owner has all rights under the
Contract. IF THE PURCHASER NAMES SOMEONE OTHER THAN HIMSELF OR HERSELF AS OWNER,
THE PURCHASER WILL HAVE NO RIGHTS UNDER THE CONTRACT. If a Joint Owner is named,
the Joint Owner will possess an undivided interest in the Contract. Prior to the
Annuitization Date, a surviving Joint Owner shall retain sole rights in the
Contract upon the other Joint Owner's death if the deceased Joint Owner was not
also the Designated Annuitant. If the deceased Joint Owner was also the
Designated Annuitant, disposition of the Contract will be determined based on
the "Death of Designated Annuitant Prior to the Annuitization Date" provision.
Unless otherwise provided, when Joint Owners are named, the exercise of any
ownership right in the Contract (including the right to surrender or partially
surrender the Contract, to change the Contract Owner, the Contingent Owner, the
Designated Annuitant, the Contingent Designated Annuitant, the Beneficiary, the
Contingent Beneficiary, the Annuity Payment Option or the Annuity Commencement
Date) shall require a written indication of an intent to exercise that right,
signed by both Contract Owners. Joint Owners must be spouses at the time joint
ownership is requested.
If a Contract Owner dies prior to the Annuitization Date and the Contract
Owner and the Designated Annuitant are not the same person, Contract ownership
will be determined in accordance with the "Death of Contract Owner" provision.
If the Designated Annuitant (regardless of whether the Designated Annuitant is
also the Contract Owner) dies prior to the Annuitization Date, ownership will be
determined in accordance with the "Death of Designated Annuitant Prior to the
Annuitization Date" provision.
Prior to the Annuitization Date, the Contract Owner may name a new Contract
Owner. Such change may be subject to state and federal gift taxes, and may also
result in current federal income taxation (see "Taxes"). Any change of Contract
Owner will automatically revoke any prior Contract Owner designation. Any
request for change of Contract Owner must be (1) made by proper written
application, (2) received and recorded by the Company at its Home Office, and
(3) may include a signature guarantee as specified in the "Surrender" provision.
The change will become effective as of the date the written request is signed. A
new choice of
16
22 of 99
<PAGE> 23
Contract Owner will not apply to any payment made or action taken by the Company
prior to the time it was received and recorded.
The Contract Owner may request a change in the Designated Annuitant or
Contingent Designated Annuitant before the Annuitization Date. Such a request
must be made in writing on a form acceptable to the Company and must be signed
by the Contract Owner and the person to be named as Designated Annuitant or
Contingent Designated Annuitant. Any such change is subject to underwriting and
approval by the Company.
CONTINGENT OWNER AND BENEFICIARY PROVISIONS
The Contingent Owner is the person (or persons) who may receive certain
benefits under the Contract if the Contract Owner dies before the Annuitization
Date. If more than one Contingent Owner survives the Contract Owner, each will
share equally unless otherwise specified in the Contingent Owner designation. If
a Contingent Owner is not named or predeceases the Contract Owner, all rights
and interest of the Contingent Owner will vest in the Contract Owner's estate.
Subject to the terms of any existing assignment, the Contract Owner may change
the Contingent Owner from time to time prior to the Annuitization Date by
written notice to the Company. The change, upon receipt and recording by the
Company at its Home Office, will take effect as of the time the written notice
was signed, whether or not the Contract Owner is living at the time of
recording, but without further liability as to any payment or settlement made by
the Company before receipt of such change. Unless the Contingent Owner (or Joint
Owner) is also the named Beneficiary (or Contingent Beneficiary, if applicable),
the Contingent Owner (or Joint Owner) shall have no rights in the Contract if
the Contract Owner/Annuitant dies. If a Contract Owner/Annuitant dies,
disposition of the Contract shall be determined based on the "Death of
Designated Annuitant Prior to the Annuitization Date" provision.
The Beneficiary is the person or persons who may receive certain benefits
under the Contract in the event the Designated Annuitant dies prior to the
Annuitization Date. If more than one Beneficiary survives the Designated
Annuitant, each will share equally unless otherwise specified in the Beneficiary
designation. If no Beneficiary survives the Designated Annuitant, all rights and
interest of the Beneficiary shall vest in the Contingent Beneficiary, and if
more than one Contingent Beneficiary survives, each will share equally unless
otherwise specified in the Contingent Beneficiary designation. If a Contingent
Beneficiary is not named or predeceases the Designated Annuitant, all rights and
interest of the Contingent Beneficiary will vest with the Contract Owner or the
Contract Owner's estate. Subject to the terms of any existing assignment, the
Contract Owner may change the Beneficiary or Contingent Beneficiary from time to
time during the lifetime of the Designated Annuitant, by written notice to the
Company. The change, upon receipt by the Company at its Home Office, will take
effect as of the time the written notice was signed, whether or not the
Designated Annuitant is living at the time of recording, but without further
liability as to any payment or settlement made by the Company before receipt of
such change.
SUBSTITUTION OF SECURITIES
If the shares of the underlying Mutual Funds described in this prospectus
should no longer be available for investment by the Variable Account or if, in
the judgment of the Company's management, further investment in such underlying
Mutual Fund shares should become inappropriate, the Company may eliminate
Sub-Accounts, combine two or more Sub-Accounts or substitute one or more
underlying Mutual Funds for other underlying Mutual Fund shares already
purchased or to be purchased in the future by Purchase Payments under the
Contract. 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 may impose.
CONTRACT OWNER INQUIRIES
Contract Owner inquiries may be directed to Nationwide Life Insurance
Company by writing P.O. Box 182610, Columbus, Ohio 43218-2610, or calling
1-800-573-5775, Voice Response (available 24 hours) 1-800-573-2447, TDD
1-800-238-3035.
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT
At the Annuitization Date the Variable Account Contract Value is applied to
the Annuity Payment Option elected and the amount of the first such payment made
shall be determined in accordance with the Annuity Table in the Contract.
Subsequent Variable Annuity payments vary in amount in accordance with the
investment performance of the Variable Account. The dollar amount of the first
annuity payment determined as above is divided by the
17
23 of 99
<PAGE> 24
value of an Annuity Unit as of the Annuitization Date to establish the number of
Annuity Units representing each monthly annuity payment. This number of Annuity
Units remains fixed during the annuity payment period. The dollar amount of the
second and subsequent payments is not predetermined and may change from month to
month. The dollar amount of each subsequent payment is determined by multiplying
the fixed number of Annuity Units by the Annuity Unit Value for the Valuation
Period in which the payment is due. The Company guarantees that the dollar
amount of each payment after the first will not be affected by variations in
mortality experience from mortality assumptions used to determine the first
payment.
VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit was arbitrarily set initially at $10 when the
first underlying Mutual Fund shares were purchased. The value of an Annuity Unit
for a Sub-Account for any subsequent Valuation Period is determined by
multiplying the Annuity Unit Value for the immediately preceding Valuation
Period by the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated, and multiplying the result by an
interest factor to neutralize the assumed investment rate of 3.5% per annum (see
"Net Investment Factor").
ASSUMED INVESTMENT RATE
A 3.5% Assumed Investment Rate is built into the Annuity Tables contained
in the Contracts. A higher assumption would mean a higher initial payment but
more slowly rising or more rapidly falling subsequent payments. A lower
assumption would have the opposite effect. If the actual investment rate is at
the annual rate of 3.5%, the annuity payments will be level.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments. However, if the net
amount available to apply under any Annuity Payment Option is less than $5,000,
the Company shall have the right to pay such amount in one lump sum in lieu of
the payments otherwise provided for. In addition, if the payments provided for
would be or become less than $50, the Company shall have the right to change the
frequency of payments to such intervals as will result in payments of at least
$50. In no event will the Company make payments under an annuity option less
frequently than annually.
ANNUITY COMMENCEMENT DATE
The Contract Owner selects an Annuity Commencement Date at the time of
application. Such date may be the first day of a calendar month or any other
agreed upon date and must be at least 2 years after the Date of Issue. In the
event the Contract is issued subject to the terms of a Tax Sheltered Annuity
Plan, Annuitization may occur during the first two years subject to approval by
the Company.
CHANGE IN ANNUITY COMMENCEMENT DATE
The Contract Owner may, upon prior written notice to the Company, change
the Annuity Commencement Date. The date to which such a change may be made shall
be the first day of a calendar month.
If the Contract Owner requests in writing (see "Ownership Provisions"), and
the Company approves the request, the Annuity Commencement Date may be deferred.
The amount of the Death Benefit will be limited to the Contract Value if the
Annuity Commencement Date is postponed beyond the first day of the calendar
month after the Annuitant's 86th birthday.
CHANGE IN FORM OF ANNUITY
The Contract Owner may, upon prior written notice to the Company, at any
time prior to the Annuitization Date, elect one of the Annuity Payment Options.
ANNUITY PAYMENT OPTIONS
Any of the following Annuity Payment Options may be elected:
Option 1-Life Annuity-An annuity payable monthly during the lifetime of the
Annuitant, ceasing with the last payment due prior to the death of the
Annuitant. IT WOULD BE POSSIBLE UNDER THIS OPTION FOR THE ANNUITANT TO
RECEIVE ONLY ONE ANNUITY PAYMENT IF HE OR SHE DIED BEFORE THE SECOND ANNUITY
PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD ANNUITY
PAYMENT DATE, AND SO ON.
18
24 of 99
<PAGE> 25
Option 2-Joint and Last Survivor Annuity-An annuity payable monthly during
the joint lifetimes of the Annuitant and designated second person and
continuing thereafter during the lifetime of the survivor. AS IS THE CASE
UNDER OPTION 1 ABOVE, THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER
THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVING ANNUITANT
REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
Option 3-Life Annuity With 120 or 240 Monthly Payments Guaranteed-An annuity
payable monthly during the lifetime of the Annuitant with the guarantee that
if at the death of the Annuitant payments have been made for fewer than 120
or 240 months, as selected, payments will be made as follows:
(1)If the Annuitant is the payee, any guaranteed annuity payments will be
continued during the remainder of the selected period to such recipient as
chosen by the Annuitant at the time the Annuity Payment Option was
selected. In the alternative, the recipient may, at any time, elect to
have the present value of the guaranteed number of annuity payments
remaining paid in a lump sum as specified in section (2) below.
(2)If someone other than the Annuitant is the payee, the present value,
computed as of the date on which notice of death is received by the
Company at its Home Office, of the guaranteed number of annuity payments
remaining after receipt of such notice and to which the deceased would
have been entitled had he or she not died, computed at the Assumed
Investment Rate effective in determining the Annuity Tables, shall be paid
in a lump sum.
Some of the stated Annuity Options may not be available in all states. The
Contract Owner may request an alternative non-guaranteed option by giving notice
in writing prior to Annuitization. If such a request is approved by the Company,
it will be permitted under the Contract.
If the Owner fails to elect an Annuity Payment Option, the Contract Value
will continue to accumulate. Individual Retirement Annuities and Tax Sheltered
Annuities are subject to the minimum Distribution requirements set forth in the
Code.
DEATH OF CONTRACT OWNER
If the Contract Owner and the Designated Annuitant are not the same person
and the Contract Owner dies prior to the Annuitization Date, then the Joint
Owner, if any, becomes the new Contract Owner. If no Joint Owner is named (or if
the Joint Owner predeceases the Contract Owner), then the Contingent Owner
becomes the new Contract Owner. If no Contingent Owner is named (or if the
Contingent Owner predeceases the Contract Owner), then the Contract Owner's
estate becomes the Contract Owner. Unless the new Contract Owner is the prior
Contract Owner's spouse, the entire interest in the Contract, less applicable
deductions (which may include a Contingent Deferred Sales Charge), must be
distributed within five years of the prior Contract Owner's death. The new
Contract Owner may elect to receive Distribution in the form of a life annuity
or an annuity for a period not exceeding his or her life expectancy. Such
annuity must begin within one year following the date of the prior Contract
Owner's death. If the new Contract Owner is the spouse of the prior Contract
Owner, then the Contract may be continued without any required Distribution.
If the Designated Annuitant (regardless of whether the Designated Annuitant
is also the Contract Owner) dies prior to the Annuitization Date, a Death
Benefit will be payable in accordance with the "Death of Designated Annuitant
Prior to the Annuitization Date" provision below, provided however, that all
Distributions made as a result of the death of the Contract Owner shall be made
within the time limits set forth in this provision. If a Contract
Owner/Annuitant dies prior to the Annuitization Date, and the Beneficiary is the
Contract Owner/Annuitant's spouse, such spouse may elect to continue the
Contract as the Contract Owner and Annuitant.
Individual Retirement Annuities or Tax Sheltered Annuities will be subject
to specific rules set forth in the Plan, Contract, or Code concerning
Distributions upon the death of the Contract Owner.
DEATH OF DESIGNATED ANNUITANT PRIOR TO THE ANNUITIZATION DATE
If the Designated Annuitant dies prior to the Annuitization Date, a Death
Benefit is payable unless the Contract Owner has also named a Contingent
Designated Annuitant, in which case the Death Benefit is payable upon the death
of the last survivor of the Designated Annuitant and Contingent Designated
Annuitant. The Death Benefit is payable to the Beneficiary. If no Beneficiary is
named (or if the Beneficiary predeceases the Designated Annuitant), then the
Death Benefit is payable to the Contingent
19
25 of 99
<PAGE> 26
Beneficiary. If no Contingent Beneficiary is named (or if the Contingent
Beneficiary predeceases the Designated Annuitant), then the Death Benefit will
be paid to Contract Owner or the Contract Owner's estate.
The value of the Death Benefit will be determined as of the Valuation Date
coincident with or next following the date the Company receives in writing (1)
due proof of the Designated Annuitant's death; (2) an election for either a
single sum payment or an Annuity Payment Option; and (3) any form required by
state insurance laws. If a single sum payment is requested, payment will be made
in accordance with any applicable laws and regulations governing the payment of
Death Benefits. If an Annuity Payment Option is requested, election must be made
by the Beneficiary during the 90-day period commencing with the date written
notice is received by the Company. If no election has been made by the end of
such 90-day period commencing with the date written notice is received by the
Company, the Death Benefit will be paid in a single sum payment. If the
Designated Annuitant dies prior to his or her 86th birthday, the value of the
Death Benefit will be the greater of (1) the sum of all Purchase Payments, made
to the Contract less any amounts surrendered, (2) the Contract Value, or (3) the
Contract Value as of the most recent five-year Contract Anniversary, less any
amounts surrendered since the most recent five-year Contract Anniversary. If the
Designated Annuitant dies on or after his or her 86th birthday, then the Death
Benefit will be equal to the Contract Value.
If the Contract Owner is not a natural person, the death of the Designated
Annuitant (or a change of the Designated Annuitant) will be treated like a death
of the Contract Owner and will result in a Distribution of either:
(a) the Death Benefit described above (if there is no Contingent
Designated Annuitant and the Designated Annuitant has died), or in all
other cases
(b) a Distribution to the Contract Owner if the Designated Annuitant has
been changed,
provided that any such Distribution must be made within the time period
specified in the "Death of Contract Owner" provision.
DEATH OF ANNUITANT AFTER THE ANNUITIZATION DATE
If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be as specified in the Annuity Payment Option selected.
REQUIRED DISTRIBUTION FOR TAX SHELTERED ANNUITIES
The entire interest of an Annuitant under a Tax Sheltered Annuity Contract
will be distributed in a manner consistent with the Minimum Distribution and
Incidental Benefit (MDIB) provisions of Section 401(a)(9) of the Code and
regulations thereunder, as applicable, and will be paid, notwithstanding
anything else contained herein, to the Contract Owner/Annuitant under the
Annuity Payments Option selected, over a period not exceeding:
(a) the life of the Contract Owner/Annuitant or the lives of the Contract
Owner/Annuitant and the Contract Owner/Annuitant's designated
Beneficiary; or
(b) a period not extending beyond the life expectancy of the Contract
Owner/Annuitant or the life expectancy of the Contract Owner/Annuitant
and the Contract Owner/Annuitant's designated Beneficiary.
If the Contract Owner/Annuitant's entire interest is to be distributed in
equal or substantially equal payments over a period described in A or B, such
payments will commence not later than the first day of April following the
calendar year in which the Contract Owner/Annuitant attains age 70-1/2 (the
required beginning date). In the case of a governmental plan (as defined in Code
Section 414(d)), or church plan (as defined in Code Section 401(a)(9)(C)), the
Required Beginning Date will be the later of the dates determined under the
preceding sentence or April 1 of the calendar year following the calendar year
in which the Annuitant retires.
If the Contract Owner dies prior to the commencement of his or her
Distribution, the interest in the Tax Sheltered Annuity must be distributed by
December 31 of the calendar year in which the fifth anniversary of his or her
death occurs unless:
(a) In the case of a Tax Sheltered Annuity, the Contract Owner names his or her
surviving spouse as the Beneficiary and such spouse elects to:
20
26 of 99
<PAGE> 27
(i) treat the annuity as a Tax Sheltered Annuity established for his or
her benefit; or
(ii) receive Distribution of the account in nearly equal payments over his
or her life (or a period not exceeding his or her life expectancy) and
commencing not later than December 31 of the year in which the
Contract Owner would have attained age 70-1/2; or
(b) In the case of a Tax Sheltered Annuity, the Contract Owner names a
Beneficiary other than his or her surviving spouse and such Beneficiary
elects to receive a Distribution of the account in nearly equal payments
over his or her life (or a period not exceeding his or her life expectancy)
commencing not later than December 31 of the year following the year in
which the Contract Owner dies.
If the Contract Owner/Annuitant dies after Distribution has commenced,
Distribution must continue at least as rapidly as under the schedule being used
prior to his or her death.
Payments commencing on the Required Beginning Date will not be less than
the lesser of the quotient obtained by dividing the entire interest of the
Contract Owner/Annuitant by the life expectancy of the Contract Owner/Annuitant,
or the joint and last survivor expectancy of the Contract Owner/Annuitant and
the Contract Owner/Annuitant's designated Beneficiary (whichever is applicable
under the applicable Minimum Distribution or MDIB provisions). Life expectancy
and joint and last survivor expectancy are computed by the use of return
multiples contained in Section 1.72-9 of the Treasury Regulations.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES
Distribution from an Individual Retirement Annuity must begin not later
than April 1 of the calendar year following the calendar year in which the
Contract Owner attains age 70-1/2. Distribution may be accepted in a lump sum or
in nearly equal payments over: (a) the Contract Owner's life or the lives of the
Contract Owner and the Contract Owner's spouse or designated Beneficiary, or (b)
a period not extending beyond the Contract Owner and the Contract Owner's spouse
or designated Beneficiary.
If the Contract Owner dies prior to the commencement of the Distribution,
the interest in the Individual Retirement Annuity must be distributed by
December 31 of the calendar year in which the fifth anniversary of the Contract
Owner's death occurs unless:
(a) The Contract Owner has named his or her surviving spouse as the designated
Beneficiary and such spouse elects to:
(i) treat the annuity as an Individual Retirement Annuity established for
his or her benefit; or
(ii) receive Distribution of the account in nearly equal payments over his
or her life (or a period not exceeding his or her life expectancy) and
commencing not later than December 31 of the year in which the
Contract Owner would have attained age 70-1/2; or
(b) The Contract Owner has named a Beneficiary other than his or her surviving
spouse and such Beneficiary elects to receive a Distribution of the account
in nearly equal payments over his or her life (or a period not exceeding
his or her life expectancy) commencing not later than December 31 of the
year following the year in which the Contract Owner dies.
If the Contract Owner dies after Distribution has commenced, the
Distribution must continue at least as rapidly as under the schedule being used
prior to the Contract Owner's death, except to the extent that a surviving
spouse Beneficiary may elect to treat the Contract as his or her own, in the
same manner as is described in section (a)(i) of this provision.
If the amounts distributed to the Contract Owner are less than those
mentioned above, penalty tax of 50% is levied on the amount that should have
been distributed for that year.
A pro-rata portion of all Distributions will be included in the gross
income of the person receiving the Distribution and taxed at ordinary income tax
rates. The portion of the Distribution which is taxable is based on the ratio
between the amount by which non-deductible Purchase Payments exceed prior
non-taxable Distributions and total account balances at the time of the
Distribution. The Contract Owner must annually report the amount of
non-deductible Purchase Payments, the amount of any Distribution, the amount by
which non-deductible Purchase Payments, the amount of any Distribution, the
amount by which
21
27 of 99
<PAGE> 28
non-deductible Purchase Payments for all years exceed non-taxable
Distributions for all years, and the total balance of all Individual Retirement
Annuities.
Individual Retirement Annuity Distributions will not receive the benefit of
the tax treatment of a lump sum Distribution from a Qualified Plan. If the
Contract Owner dies prior to the time Distribution of the Contract Owner's
interest in the annuity is completed, the balance will also be included in the
Contract Owner's gross estate.
GENERATION-SKIPPING TRANSFERS
The Company may determine whether the Death Benefit or any other payment
constitutes a direct skip as defined in Section 2612 of the Code, and the amount
of the tax on the generation-skipping transfer resulting from such direct skip.
If applicable, the payment will be reduced by any tax the Company is required to
pay by Section 2603 of the Code.
A direct skip may occur when property is transferred to or a Death Benefit
is paid to an individual two or more generations younger than the Contract
Owner.
GENERAL INFORMATION
CONTRACT OWNER SERVICES
ASSET REBALANCING - The Contract Owner may direct the automatic
reallocation of contract values to the underlying Mutual Fund options on a
predetermined percentage basis every three months. If the last day of the three
month period falls on a Saturday, Sunday, recognized holiday or any other day
when the New York Stock Exchange is closed, the Asset Rebalancing exchange will
occur on the last business day before that day. Asset Rebalancing will not
affect future allocations of Purchase Payments. An Asset Rebalancing request
must be in writing on a form provided by the Company. The Contract Owner may
want to contact a financial adviser in order to discuss the use of Asset
Rebalancing in his or her Contract.
Contracts issued to a Tax Sheltered Annuity Plan as defined by the Code may
have superseding plan restrictions with regard to frequency of underlying Mutual
Fund exchanges and underlying Mutual Fund options.
The Company reserves the right to discontinue offering Asset Rebalancing
upon 30 days' written notice; such discontinuation will not affect Asset
Rebalancing programs which have already commenced. The Company also reserves the
right to assess a processing fee for this service.
DOLLAR COST AVERAGING- The Contract Owner may direct the Company to
automatically transfer a specified amount from the Money Market Fund
Sub-Account, the Limited Maturity Bond Portfolio Sub-Account or the Fixed
Account to any other Sub-Account within the Variable Account on a monthly basis.
This service is intended to allow the Contract 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.
Transfers for purposes of Dollar Cost Averaging can only be made from the Money
Market Fund Sub-Account, the Limited Maturity Bond Portfolio Sub-Account or the
Fixed 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"). A written election of this service, on a form provided by the
Company, must be completed by the Contract Owner in order to begin transfers.
Once elected, transfers from the Money Market Fund Sub-Account, the Limited
Maturity Bond Portfolio Sub-Account or the Fixed Account will be processed
monthly until either the value in the Money Market Fund Sub-Account, the Limited
Maturity Bond Portfolio Sub-Account or the Fixed Account is completely depleted
or the Contract Owner instructs the Company in writing to cancel the monthly
transfers.
The Company reserves the right to discontinue offering Dollar Cost
Averaging upon 30 days' written notice; such discontinuation will not affect
Dollar Cost Averaging programs already commenced. The Company also reserves the
right to assess a processing fee for this service.
22
28 of 99
<PAGE> 29
SYSTEMATIC WITHDRAWALS- The Contract Owner may elect in writing on a form
provided by the Company to take Systematic Withdrawals of a specified dollar
amount (of at least $100) on a monthly, quarterly, semi-annual or annual basis.
The Company will process the withdrawals as directed by surrendering on a
pro-rata basis Accumulation Units from all of the Sub-Accounts in which the
Contract Owner has an interest, and the Fixed Account. A Contingent Deferred
Sales Charge may apply to Systematic Withdrawals in accordance with the
considerations set forth in the "Contingent Deferred Sales Charge" section. Each
Systematic Withdrawal is subject to federal income taxes on the taxable portion.
In addition, a 10% federal penalty tax may be assessed on Systematic Withdrawals
if the Contract Owner is under age 59-1/2. If directed by the Contract Owner,
the Company will withhold federal income taxes from each Systematic Withdrawal.
A Systematic Withdrawal program will terminate automatically at the end of each
Contract Year and may be reinstated only pursuant to a new request. The Contract
Owner may discontinue Systematic Withdrawals at any time by notifying the
Company in writing.
If the Contract Owner withdraws amounts pursuant to a Systematic Withdrawal
program, then the Contract Owner may withdraw each Contract Year without a CDSC
an amount up to the greater of (i) 10% of the total sum of all Purchase Payments
made to the Contract at the time of withdrawal, (in addition, any amount
withdrawn from any Individual Retirement Annuity Contract, in order to meet
minimum Distribution requirements shall be free of CDSC); or (ii) the specified
percentage of the Contract Value based on the Contract Owner's age, as shown in
the following table:
<TABLE>
<CAPTION>
Contract Owner's Percentage of
Age Contract Value
------------------- ------------------
<S> <C>
Under 59-1/2 5%
59-1/2 to 70-1/2 7%
70-1/2 to 75 9%
75 and Over 13%
</TABLE>
If the total amounts withdrawn in any Contract Year exceed the CDSC-free
amount as calculated under the Systematic Withdrawal method described above,
then such total withdrawn amounts will be eligible only for the 10% of Purchase
Payment CDSC-free withdrawal privilege described in the "Contingent Deferred
Sales Charge" section, and the total amount of CDSC charged during the Contract
Year will be determined in accordance with that provision.
The Contract Value and the Contract Owner's age for purposes of applying
the CDSC-free withdrawal percentage described in this provision are determined
as of the date the request for a Systematic Withdrawal program is received and
recorded by the Company at its Home Office. (In the case of Joint Owners, the
older Owner's age will be used.) The Contract Owner may elect to take such
CDSC-free amounts only once each Contract Year. Furthermore, this CDSC-free
withdrawal privilege for Systematic Withdrawals is non-cumulative; free amounts
not taken during any given Contract Year cannot be taken as free amounts in a
subsequent Contract Year.
Systematic Withdrawals are not available prior to the expiration of the ten
day free look provision of the Contract. The Company also reserves the right to
assess a processing fee for this service.
STATEMENTS AND REPORTS
The Company will mail to Contract Owners, at their last known address of
record, any statements and reports required by applicable law or regulation.
Contract Owners should therefore give the Company prompt notice of any address
change. The Company will send a confirmation statement to Contract Owners each
time a transaction is made affecting the Owners' Variable Account Contract
Value, such as making additional Purchase Payments, transfers, exchanges or
withdrawals. Quarterly statements are also mailed detailing the Contract
activity during the calendar quarter. Instead of receiving an immediate
confirmation of transactions made pursuant to some types of periodic payment
plan (such as a dollar cost averaging program) or salary reduction arrangement,
the Contract Owner may receive confirmation of such transactions in their
quarterly statements. The Contract Owner should review the information in these
statements carefully. All errors or corrections must be reported to the Company
immediately to assure proper crediting to the Owner's Contract. The Company will
assume all transactions are accurately reported on quarterly statements or
confirmation statements unless the Contract Owner notifies the Company otherwise
within 30 days after receipt of the
23
29 of 99
<PAGE> 30
statement. The Company will also send to Contract Owners each year an annual
report and a semi-annual report containing financial statements for the Variable
Account, as of December 31 and June 30, respectively.
ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments are allocated to one or more Sub-Accounts within the
Variable Account in accordance with the designation of the underlying Mutual
Funds by the Contract Owner, and converted into Accumulation Units.
The initial Purchase Payment must be at least $15,000. Subsequent Purchase
Payments, if any, must be at least $1,000. Subsequent Purchase Payments are not
permitted in the states of New York, Oregon, and Washington. The cumulative
total of all Purchase Payments under Contracts issued on the life of any one
Designated Annuitant may not exceed $1,000,000 without prior consent of the
Company.
The initial Purchase Payment allocated to designated Sub-Accounts of the
Variable Account will be priced no later than 2 business days after receipt of
an order to purchase, if the application and all information necessary for
processing the purchase order are complete. The Company may, however, retain the
Purchase Payment for up to 5 business days while attempting to complete an
incomplete application. If the application cannot be made complete within 5
days, the prospective purchaser will be informed of the reasons for the delay
and the Purchase Payment will be returned immediately unless the prospective
purchaser specifically consents to the Company retaining the Purchase Payment
until the application is made complete. Thereafter, subsequent Purchase Payments
will be priced on the basis of the Accumulation Unit Value next completed for
the appropriate Sub-Account after the additional Purchase Payment is received.
Purchase Payments will not be priced on the following nationally recognized
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
VALUE OF A VARIABLE ACCOUNT ACCUMULATION UNIT
The value of a Variable Account 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.
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 Risk Charge, Expense Risk
Charge and Administration Charge deducted from the Variable Account. Such
factor is equal to an annual rate of 1.40% of the daily net asset value of
the Variable Account.
24
30 of 90
<PAGE> 31
For underlying Mutual Funds that credit dividends on a daily basis and pay
such dividends once a month (the Nationwide Separate Account Trust - Money
Market Fund), 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 Risk Charge, Expense Risk Charge and Administration
Charge.
VALUATION OF ASSETS
Underlying Mutual Fund shares in the Variable Account will be valued at their
net asset value.
DETERMINING THE CONTRACT VALUE
The sum of the value of all Variable Account Accumulation Units
attributable to the Contract and amounts credited to the Fixed Account is the
Contract 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 Purchase Payment is received by the Company. If part or all of the
Contract Value is surrendered or charges or deductions are made against the
Contract 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 Contract Owner's interest in the Variable Account and
the Fixed Account bears to the total Contract Value.
SURRENDER (REDEMPTION)
While the Contract is in force and prior to the earlier of the
Annuitization Date or the death of the Designated Annuitant, the Company will,
upon proper written application by the Contract Owner deemed by the Company to
be in good order, allow the Contract Owner to surrender a portion or all of the
Contract Value. "Proper written application" means that the Contract Owner must
request the surrender in writing and include the Contract. The Company may
require that the signature(s) be guaranteed by a member firm of a major stock
exchange or other depository institution qualified to give such a guaranty.
The Company will, upon receipt of any such written request, surrender a
number of Accumulation Units from the Variable Account and an amount from the
Fixed Account necessary to equal the gross dollar amount requested, less any
applicable Contingent Deferred Sales Charge (see "Contingent Deferred Sales
Charge"). In the event of a partial surrender, the Company will, unless
instructed to the contrary, surrender Accumulation Units from all Sub-Accounts
in which the Contract Owner has an interest, and the Fixed Account. The number
of Accumulation Units surrendered from each Sub-Account and the amount
surrendered from the Fixed Account will be in the same proportion that the
Contract Owner's interest in the Sub-Accounts and Fixed Account bears to the
total Contract Value.
The Company will pay any funds applied for from the Variable Account within
7 days of receipt of such application in the Company's Home Office. However, the
Company reserves the right to suspend or postpone the date of any payment of any
benefit or values for any Valuation Period (1) when the New York Stock Exchange
("Exchange") is closed, (2) when trading on the Exchange is restricted, (3) when
an emergency exists as a result of which disposal of securities held in the
Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets, or (4)
during any other period when the Securities and Exchange Commission, by order,
so permits for the protection of security holders, provided that applicable
rules and regulations of the Securities and Exchange Commission shall govern as
to whether the conditions prescribed in (2) and (3) exist. The Contract Value on
surrender may be more or less than the total of Purchase Payments made by a
Contract Owner, depending on the market value of the underlying Mutual Fund
shares.
25
31 of 99
<PAGE> 32
SURRENDERS UNDER A TAX SHELTERED ANNUITY CONTRACT
Except as provided below, the Owner may surrender part or all of the
Contract Value at any time this Contract is in force prior to the earlier of the
Annuitization Date or the death of the Designated Annuitant:
A. The surrender of Contract Value attributable to contributions made pursuant
to a salary reduction agreement (within the meaning of Code Section
402(g)(3)(A) or (C)), or transfers from a Custodial Account described in
Section 403(b)(7) of the Code, may be executed only -
1. when the Contract Owner attains age 59-1/2, separates from service,
dies, or becomes disabled (within the meaning of Code Section 72(m)(7));
or
2. in the case of hardship (as defined for purposes of Code Section
401(k)), provided that any surrender of Contract Value in the case of
hardship may not include any income attributable to salary reduction
contributions.
B. The surrender limitations described in A. above for Tax Sheltered Annuities
apply to:
1. salary reduction contributions to Tax Sheltered Annuities made for plan
years beginning after December 31, 1988;
2. earnings credited to such contracts after the last plan year beginning
before January 1, 1989, on amounts attributable to salary reduction
contributions; and
3. all amounts transferred from 403(b)(7) Custodial Accounts (except that
earnings, and employer contributions as of December 31, 1988 in such
Custodial Accounts may be withdrawn in the case of hardship).
C. Any Distribution other than the above, including exercise of a contractual
ten-day free look provision (when available) may result in the immediate
application of taxes and penalties and/or retroactive disqualification of a
Qualified Contract or Tax Sheltered Annuity.
A premature Distribution may not be eligible for rollover treatment. To
assist in preventing disqualification in the event of a ten-day free look, the
Company will agree to transfer the proceeds to another contract which meets the
requirements of Section 403(b) of the Code, upon proper direction by the
Contract Owner. The foregoing is the Company's understanding of the withdrawal
restrictions which are currently applicable under Section 403(b)(11) and Revenue
Ruling 90-24. Such restrictions are subject to legislative change and/or
reinterpretation from time to time. Distributions pursuant to Qualified Domestic
Relations Orders will not be considered to be a violation of the restrictions
stated in this provision.
The Contract surrender provisions may also be modified pursuant to the plan
terms and Code tax provisions when the Contract is issued to fund a Qualified
Plan.
INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF A
PERSONAL TAX ADVISER.
TAXES
The Company does not make any guarantee regarding the tax status for any
Contract or any transaction involving the Contracts.
Section 72 of the Code governs taxation of annuities in general. That
section sets forth different rules for: (1) Qualified Contracts; (2) Individual
Retirement Annuities and Individual Retirement Accounts; (3) Tax Sheltered
Annuities; or (4) Non-Qualified Contracts. Each type of annuity is discussed
below.
Distributions to participants from Qualified Contracts or Tax Sheltered
Annuities are generally taxed when received. A portion of each Distribution is
excludable from income based on the ratio between the after tax investment of
the Owner/Annuitant in the Contract and the value of the Contract at the time of
the withdrawal or Annuitization.
26
32 of 99
<PAGE> 33
Distributions from Individual Retirement Annuities and Contracts owned by
Individual Retirement Accounts are also generally taxed when received. The
portion of each such payment which is excludable is based on the ratio between
the amount by which nondeductible Purchase Payments to all such Contracts
exceeds prior non-taxable Distributions from such Contracts, and the total
account balances in such Contracts at the time of the Distribution. The Owner of
such Individual Retirement Annuities or the Annuitant under Contracts held by
Individual Retirement Accounts must annually report to the Internal Revenue
Service the amount of nondeductible Purchase Payments, the amount of any
Distribution, the amount by which nondeductible Purchase Payments for all years
exceed non-taxable Distributions for all years, and the total balance in all
Individual Retirement Annuities and Accounts. Owners should consult a financial
consultant, legal counsel or tax advisor to discuss in detail the taxation and
the use of the Contracts.
NON-QUALIFIED CONTRACTS
The rules applicable to Non-Qualified Contracts provide that a portion of
each annuity payment received is excludable from taxable income based on the
ratio between the Contract Owner's investment in the Contract and the expected
return on the Contract. The maximum amount excludable from income is the
investment in the Contract. If the Annuitant dies prior to excluding from income
the entire investment in the Contract, the Annuitant's final tax return may
reflect a deduction for the balance of the investment in the Contract.
Distributions made from the Contract prior to the Annuitization Date are
taxable to the Contract Owner to the extent that the cash value of the Contract
exceeds the Contract Owner's investment at the time of the Distribution.
Distributions, for this purpose, include partial surrenders, dividends, loans,
or any portion of the Contract which is assigned or pledged; or for Contracts
issued after April 22, 1987, any portion of the Contract transferred by gift.
For these purposes, a transfer by gift may occur upon Annuitization if the
Contract Owner and the Annuitant are not the same individual. In determining the
taxable amount of a Distribution, all annuity contracts issued after October 21,
1988, by the same company to the same contract owner during any 12 month period,
will be treated as one annuity contract. Additional limitations on the use of
multiple contracts may be imposed by Treasury Regulations. Distributions prior
to the Annuitization Date with respect to that portion of the Contract invested
prior to August 14, 1982, are treated first as a recovery of the investment in
the Contract as of that date. A Distribution in excess of the amount of the
investment in the Contract as of August 14, 1982, will be treated as taxable
income.
The Tax Reform Act of 1986 has changed the tax treatment of certain
Non-Qualified Contracts held by entities other than individuals. Such entities
are taxed currently on the earnings on the Contract which are attributable to
contributions made to the Contract after February 28, 1986. There are exceptions
for immediate annuities and certain Contracts owned for the benefit of an
individual. An immediate annuity, for purposes of this discussion, is a single
premium Contract on which payments begin within one year of purchase. If this
Contract is issued as the result of an exchange described in Section 1035 of the
Code, it will generally be considered to have been purchased on the purchase
date of the contract given up in the exchange.
Code Section 72 also provides for a penalty, equal to 10% of any
Distribution which is includable in gross income, if such Distribution is made
prior to attaining age 59-1/2 or disability of the Contract Owner. The penalty
does not apply if the Distribution is one of a series of substantially equal
periodic payments made over the life or life expectancy (or joint lives or life
expectancies) of the Annuitant (and the Annuitant's Beneficiary), or for the
purchase of an immediate annuity, or is allocable to an investment in the
Contract before August 14, 1982. A Contract Owner wishing to begin taking
Distributions to which the 10% tax penalty does not apply should forward a
written request to the Company. Upon receipt of a written request from the
Contract Owner, the Company will inform the Contract Owner of the procedures
pursuant to Company policy and subject to limitations of the Contract including
but not limited to first year withdrawals. If the Annuitant or Contract Owner
selects an annuity for life or life expectancy, or begins a pre-defined series
of withdrawals based on life expectancy, and changes the method of payment
before the expiration of 5 years and the attainment of age 59-1/2, the early
withdrawal penalty will apply. The penalty will be equal to that which would
have been imposed had no exception applied from the outset, and the Annuitant or
Contract Owner will also pay interest on the amount of the penalty from the date
it would have originally applied until it is actually paid.
In order to qualify as an annuity Contract under Section 72 of the Code,
the Contract must provide for Distribution to be made upon the death of the
Contract Owner. In such case, the Contingent Owner or other
27
33 of 99
<PAGE> 34
named recipient must receive the Distribution within 5 years of the Owner's
death. However, the recipient may elect for payments to be made over their life
or life expectancy if such payments begin within one year from the death of the
Contract Owner. If the Contingent Owner or other named recipient is the
surviving spouse, such spouse may be treated as the Contract Owner and the
Contract may be continued throughout the life of the surviving spouse. In the
event the Contract Owner dies on or after the Annuitization Date and before the
entire interest has been distributed, the remaining portion must be distributed
at least as rapidly as under the method of Distribution being used as of the
date of the Contract Owner's death (see "Required Distribution For Tax Sheltered
Annuities"). If the Contract Owner is not an individual, the death of the
Annuitant (or a change in the Annuitant) will result in a Distribution pursuant
to these rules, regardless of whether a Contingent Annuitant has been named.
The Company is required to withhold tax from certain Distributions to the
extent that such Distribution would constitute income to the Contract Owner. The
Contract Owner is entitled to elect not to have federal income tax withheld from
any such Distribution, but may be subject to penalties in the event insufficient
federal income tax is withheld during a calendar year.
Generally, the taxable portion of any Distribution from a Contract to a
nonresident alien of the United States is subject to tax withholding at a rate
equal to thirty percent (30%) of such amount or, if applicable, a lower treaty
rate. A payment may not be subject to withholding where the recipient
sufficiently establishes that such payment is effectively connected to the
recipient's conduct of a trade or business in the United States and such payment
is includable in the recipient's gross income.
The Company may be required to determine whether the Death Benefit or any
other payment constitutes a direct skip as defined in Section 2612 of the Code,
and the amount of the tax on the generation-skipping transfer resulting from
such direct skip. If applicable, such payment will be reduced by any tax the
Company is required to pay by Section 2603 of the Code. A direct skip may occur
when property is transferred to or a Death Benefit is paid to an individual two
or more generations younger than the Contract Owner.
INDIVIDUAL RETIREMENT ANNUITIES
The Contract may be purchased as an Individual Retirement Annuity under
Section 408(b) of the Code. Because the Contract's initial and subsequent
Purchase Payments are greater than the maximum contribution permitted an
Individual Retirement Annuity, or an Individual Retirement Annuity Contract may
be purchased only in connection with a "rollover" (including a direct
trustee-to-trustee transfer, where permitted). Specifically, an Individual
Retirement Annuity Contract may be purchased only in connection with a rollover
of amounts from a Qualified Plan, Tax-Sheltered Annuity or Individual Retirement
Annuity. The Contract Owner should seek competent advice as to the tax
consequences associated with the use of a Contract as an Individual Retirement
Annuity.
Recent changes to the Code permit the rollover of most Distributions from
Qualified Plans to other Qualified Plans or Individual Retirement Accounts. Most
Distributions from Tax-Sheltered Annuities may be rolled into another
Tax-Sheltered Annuity or Individual Retirement Account. Distributions which may
not be rolled over are those which are:
1. one of a series of substantially equal annual (or more frequent) payments
made: (a) over the life (or life expectancy) of the employee, (b) the joint
lives (or joint life expectancies) of the employee and the employee's
designated beneficiary, or (c) for a specified period of ten years or more,
or
2. a required minimum Distribution.
Any Distribution eligible for rollover will be subject to federal tax
withholding at a rate of twenty percent (20%) unless the Distribution is
transferred directly to an appropriate plan as described above.
Individual Retirement Accounts and Individual Retirement Annuities may not
provide life insurance benefits. If the Death Benefit exceeds the greater of the
cash value of the Contract or the sum of all Purchase Payments (less any
surrenders), it is possible the Internal Revenue Service could determine that
the Individual Retirement Account or Individual Retirement Annuity did not
qualify for the desired tax treatment.
28
34 of 99
<PAGE> 35
DIVERSIFICATION
The Internal Revenue Service has promulgated regulations under Section
817(h) of the Code relating to diversification standards for the investments
underlying a variable annuity contract. The regulations provide that a variable
annuity contract which does not satisfy the diversification standards will not
be treated as an annuity contract, unless the failure to satisfy the regulations
was inadvertent, the failure is corrected, and the 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 Owner if the income, for the period the contract was
not diversified, had been received by the Owner. If the failure to diversify is
not corrected in this manner, the Owner of an annuity Contract will be deemed
the owner of the underlying securities and will be taxed on the earnings of his
or her account. The Company believes, under its interpretation of the Code and
regulations thereunder, that the investments underlying this Contract meet these
diversification standards.
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 Contract would no longer qualify as an annuity under Section 72 of the
Code, the Company will take whatever steps are available to remain in
compliance.
CHARGE FOR TAX PROVISIONS
The Company is no longer required to maintain a capital gain reserve
liability on Non-Qualified Contracts since capital gains attributable to assets
held in the Company's Variable Account for such Contracts are not taxable to the
Company. However, the Company reserves the right to implement and adjust the tax
charge in the future, if the tax laws change.
INDIVIDUAL RETIREMENT ANNUITIES, INDIVIDUAL RETIREMENT ACCOUNTS AND TAX
SHELTERED ANNUITIES
The Contracts may be used with Individual Retirement Annuities, Individual
Retirement Accounts, Tax Sheltered Annuities and other plans receiving favorable
tax treatment. For information regarding eligibility, limitations on permissible
amounts of Purchase Payments, and tax consequences on Distribution from such
plans, the purchasers of such Contracts should seek competent advice. The terms
of such plans may limit the rights available under the Contracts.
The Code permits the rollover of most Distributions from Qualified Plans to
other Qualified Plans, Individual Retirement Accounts, or Individual Retirement
Annuities. Most Distributions from Tax Sheltered Annuities may be rolled into
another Tax Sheltered Annuity, an Individual Retirement Account, or an
Individual Retirement Annuity. Distributions which may not be rolled over are
those which
are:
1. one of a series of substantially equal annual (or more frequent) payments
made: (a) over the life (or life expectancy) of the employee, (b) the joint
lives (or joint life expectancies) of the employee and the employee's
designated beneficiary, or (c) for a specified period of ten years or more,
or
2. a required minimum Distribution.
Any Distribution eligible for rollover will be subject to federal tax
withholding at a 20 percent rate unless the Distribution is transferred directly
to an appropriate plan as described above. Owners should consult a financial
consultant to discuss in detail a particular tax situation and the use of the
Contracts.
ADVERTISING
A "yield" and "effective yield" may be advertised for the Nationwide
Fidelity Advisor Annuity Money Market Fund Sub-Account. "Yield" is a measure of
the net dividend and interest income earned over a specific seven-day period
(which period will be stated in the advertisement) expressed as a percentage of
the offering price of the Sub-Account's units. Yield is an annualized figure,
which means that it is assumed that the Sub-Account generates the same level of
net income over a 52-week period. The "effective yield" is calculated
29
35 of 99
<PAGE> 36
similarly but includes the effect of assumed compounding, calculated under rules
prescribed by the Securities and Exchange Commission. The effective yield will
be slightly higher than yield due to this compounding effect.
The Company may also from time to time advertise the performance of the
Sub-Account of the Variable Account relative to the performance of other
variable annuity Sub-Accounts or underlying mutual funds with similar or
different objectives, or the investment industry as a whole. Other investments
to which the Sub-Accounts may be compared include, but are not limited to:
precious metals; real estate; stocks and bonds; closed-end funds; CDs; bank
money market deposit accounts and passbook savings; and the Consumer Price
Index.
The Sub-Accounts of the Variable Account may also be compared to certain
market indexes, which may include, but are not limited to: S&P 500;
Shearson/Lehman Intermediate Government/Corporate Bond Index; Shearson/Lehman
Long-Term Government/Corporate Bond Index; Donoghue Money Fund Average; U.S.
Treasury Note Index; Bank Rate Monitor National Index of 2 Year CD Rates; and
Dow Jones Industrial Average.
Normally these rankings and ratings are published by independent tracking
services and publications of general interest including, but not limited to:
Lipper Analytical Services, Inc., CDA/ Wiesenberger, Morningstar, Donoghue's;
magazines such as Money, Forbes, Kiplinger's Personal Finance Magazine,
Financial World, Consumer Reports, Business Week, Time, Newsweek, National
Underwriter, U.S. News and World Report; rating services such as LIMRA, Value,
Best's Agent Guide, Western Annuity Guide, Comparative Annuity Reports; and
other publications such as the Wall Street Journal, Barron's, Investor's Daily,
and Standard & Poor's Outlook. In addition, Variable Annuity Research & Data
Service (The VARDS Report) is an independent rating service that ranks over 500
variable annuity funds based upon total return performance. These rating
services and publications rank the performance of the underlying Mutual Funds
against all underlying mutual funds over specified periods and against funds in
specified categories. The rankings may or may not include the effects of sales
or other charges.
The Company is also ranked and rated by independent financial rating
services, among which are Moody's, Standard & Poor's and A.M. Best Company. The
purpose of these ratings is to reflect the financial strength or claims-paying
ability of the Company. The ratings are not intended to reflect the investment
experience or financial strength of the Variable Account. The Company may
advertise these ratings from time to time. In addition, the Company may include
in certain advertisements, endorsements in the form of a list of organizations,
individuals or other parties which recommend the Company or the 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.
The Company may from time to time advertise several types of historical
performance for the Sub-Accounts of the Variable Account. The Company may
advertise for the Sub-Accounts standardized "average annual total return",
calculated in a manner prescribed by the Securities and Exchange Commission, and
nonstandardized "total return." "Average annual total return" will show the
percentage rate of return of a hypothetical initial investment of $1,000 for at
least the most recent one, five and ten year period, or for a period covering
the time the underlying Mutual Fund option held in the Sub-Account has been in
existence, if the underlying Mutual Fund option has not been in existence for
one of the prescribed periods. This calculation reflects the deduction of all
applicable charges made to the Contracts except for premium taxes, which may be
imposed by certain states.
Nonstandardized "total return" will be calculated in a similar manner and
for the same time periods as the average annual total return except total return
will assume an initial investment of $10,000 and will not reflect the deduction
of any applicable Contingent Deferred Sales Charge, which, if reflected, would
decrease the level of performance shown. The Contingent Deferred Sales Charge is
not reflected because the Contracts are designed for long term investment. An
assumed initial investment of $10,000 will be used because that figure more
closely approximates the size of a typical Contract than does the $1,000 figure
used in calculating the standardized average annual total return quotations. The
amount of the hypothetical initial investment assumed affects performance
because the Contract Maintenance Charge is a fixed per Contract charge.
30
36 of 99
<PAGE> 37
For those underlying Mutual Fund options which have not been held as
Sub-Accounts within the Variable Account for one of the quoted periods, the
standardized average annual total return and nonstandardized total return
quotations will show the investment performance such underlying Mutual Fund
options would have achieved (reduced by the applicable charges) had they been
held as Sub-Accounts within the Variable Account for the period quoted.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE COMPANY
IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE FUTURE
RESULTS. A CONTRACT OWNER'S CONTRACT VALUE AT REDEMPTION MAY BE MORE OR LESS
THAN ORIGINAL COST.
Standardized average annual total return and non-standardized total returns
are calculated as described above, for each of the Sub-Accounts available within
the Variable Account for which there is significant investment history. These
figures are based upon historical earnings and are not necessarily
representative of future results.
UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO LIFE OF FUND DATE FUND
SUB-ACCOUNT OPTIONS 12-31-95 12/31/95 TO 12/31/95 EFFECTIVE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor 8.08% N/A 8.08% 12/01/94
Annuity Government
Investment Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor
Annuity 24.00% N/A 24.00% 12/01/94
Growth Opportunities
Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor 11.65% N/A 11.65% 12/01/94
Annuity
High Yield Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor 5.46% N/A 5.46% 12/01/94
Annuity
Income & Growth Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor -3.21% N/A -3.21% 12/01/94
Annuity
Money Market Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor 1.66% N/A 1.66% 12/01/94
Annuity
Overseas Fund
- ---------------------------------------------------------------------------------
</TABLE>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO LIFE OF FUND DATE FUND
SUB-ACCOUNT OPTIONS 12-31-95 12/31/95 TO 12/31/95 EFFECTIVE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor 15.08% N/A 15.08% 12/01/94
Annuity Government
Investment Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor
Annuity 31.00% N/A 31.00% 12/01/94
Growth Opportunities
Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor 18.65% N/A 18.65% 12/01/94
Annuity
High Yield Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor 12.46% N/A 12.46% 12/01/94
Annuity
Income & Growth Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor 3.79% N/A 3.79% 12/01/94
Annuity
Money Market Fund
- ---------------------------------------------------------------------------------
Fidelity Advisor 8.66% N/A 8.66% 12/01/94
Annuity
Overseas Fund
- ---------------------------------------------------------------------------------
</TABLE>
31
37 of 99
<PAGE> 38
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, Fidelity Investments Institutional Services
Company, Inc., is not engaged in any litigation of any material nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History............................................ 1
Services................................................................... 1
Purchase of Securities Being Offered....................................... 1
Underwriters............................................................... 2
Calculations of Performance................................................ 2
Underlying Mutual Fund Performance Summary................................. 3
Annuity Payments........................................................... 4
Financial Statements....................................................... 5
32
38 of 99
<PAGE> 39
APPENDIX
Purchase Payments under the Fixed Account portion of the Contract and
transfers to the Fixed Account portion become part of the general account of the
Company, which support insurance and annuity obligations. Because of exemptive
and exclusionary provisions, interests in the general account have not been
registered under the Securities Act of 1933 ("1933 Act"), nor is the general
account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the general account nor any interest
therein are generally subject to the provisions of the 1933 or 1940 Acts, and we
have been advised that the staff of the Securities and Exchange Commission has
not reviewed the disclosures in this prospectus which related to the guaranteed
interest portion. Disclosures regarding the Fixed Account portion of the
Contract and the general account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
FIXED ACCOUNT ALLOCATIONS
THE FIXED ACCOUNT
The Fixed Account is made up of all the general assets of the Company,
other than those in the Variable Account and any other segregated asset account.
Fixed Account Purchase Payments will be allocated to the Fixed Account by
election of the Contract Owner at the time of purchase.
The Company will invest the assets of the Fixed Account in those assets
chosen by the Company and allowed by applicable law. Investment income from such
Fixed Account assets will be allocated by the Company between itself and the
Contracts participating in the Fixed Account.
The level of annuity payments made to Annuitants under the Contracts will
not be affected by the mortality experience (death rate) of persons receiving
such payments or of the general population. The Company assumes this "mortality
risk" by virtue of annuity rates incorporated in the Contract which cannot be
changed. In addition, the Company guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The amount of such investment income allocated to
the Contracts will vary from year to year in the sole discretion of the Company
at such rate or rates as the Company prospectively declares from time to time.
Any such rate or rates so determined will remain effective for a period of not
less than twelve months, and remain at such rate unless changed. However, the
Company guarantees that it will credit interest at not less than 3.0% per year
(or as otherwise required under state law, or at such minimum rate as stated in
the contract when sold). ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED
ACCOUNT IN EXCESS OF 3.0% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF
THE COMPANY. THE CONTRACT OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED
ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3.0% FOR ANY GIVEN
YEAR. New Purchase Payments deposited to the Contract which are allocated to the
Fixed Account may receive a different rate of interest than money transferred
from the Variable Sub-Accounts to the Fixed Account and amounts maturing in the
Fixed Account at the expiration of an Interest Rate Guarantee Period.
The Company guarantees that, at any time, the Fixed Account Contract Value
will not be less than the amount of the Purchase Payments allocated to the Fixed
Account, plus interest credited as described above, less the sum of all
administrative charges, any applicable premium taxes, and less any amounts
surrendered. If the Contract Owner effects a surrender, the amount available
from the Fixed Account will be reduced by any applicable Contingent Deferred
Sales Charge (see "Contingent Deferred Sales Charge").
TRANSFERS
Contract Owners may at the maturity of an Interest Rate Guarantee Period,
transfer a portion of the value of the Fixed Account to the Variable Account.
The maximum percentage that may be transferred will be determined by the Company
at its sole discretion, but will not be less than 10% of the total value of the
portion of the Fixed Account that is maturing and will be declared upon the
expiration date of the then current Interest Rate Guarantee Period. The Interest
Rate Guarantee Period expires on the final day of a calendar quarter.
33
39 of 99
<PAGE> 40
Transfers must be made within 45 days after the expiration date of the guarantee
period. Owners who have entered into a Dollar Cost Averaging Agreement with the
Company (see "Dollar Cost Averaging") may transfer from the Fixed Account to the
Variable Account under the terms of that agreement.
ANNUITY PAYMENT PERIOD-FIXED ACCOUNT
FIRST AND SUBSEQUENT PAYMENTS
A Fixed Annuity is an annuity with payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. The first Fixed
Annuity payment will be determined by applying the Fixed Account Contract Value
to the applicable Annuity Table in accordance with the Annuity Payment Option
elected. This will be done at the Annuitization Date on an age last birthday
basis. Fixed Annuity payments after the first will not be less than the first
Fixed Annuity payment.
The Company does not credit discretionary interest to Fixed Annuity
payments during the annuity payment period for annuity options based on life
contingencies. The Annuitant must rely on the Annuity Tables applicable to the
Contracts to determine the amount of such Fixed Annuity payments.
34
40 of 99
<PAGE> 41
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
INDIVIDUAL MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED BY
THE NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
OF NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the prospectus
and should be read in conjunction with the prospectus dated May 1, 1996. The
prospectus may be obtained from Nationwide Life Insurance Company by writing
P.O. Box 182610, Columbus, Ohio 43218-2610, or calling 1-800-573-5775, Voice
Response (available 24 hours) 1-800-573-2447, TDD 1-800-238-3035.
TABLE OF CONTENTS
PAGE
General Information and History......................................... 1
Services................................................................ 1
Purchase of Securities Being Offered.................................... 1
Underwriters............................................................ 2
Calculations of Performance............................................. 2
Underlying Mutual Fund Performance Summary.............................. 3
Annuity Payments........................................................ 4
Financial Statements.................................................... 5
GENERAL INFORMATION AND HISTORY
The Nationwide Fidelity Advisor Variable Account is a separate investment
account of Nationwide Life Insurance Company ("Company"). The Company is a
member of the Nationwide Insurance Enterprise and all of the Company's common
stock is owned by Nationwide Corporation. Nationwide Corporation is a holding
company. All of its common stock is held by Nationwide Mutual Insurance Company
(95.3%) and Nationwide Mutual Fire Insurance Company (4.7%).
SERVICES
The Company, which has responsibility for administration of the Contracts
and the Variable Account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each Contract Owner
and the number and type of Contract issued to each such Contract Owner and
records with respect to the Contract Value of each Contract.
The Custodian of the assets of the Variable Account is the Company. The
Company will maintain a record of all purchases and redemptions of shares of the
underlying Mutual Funds. The Company has entered into an agreement with the
adviser of the underlying Mutual Funds. The agreement relates to administrative
services furnished by the Company and provides for an annual fee based on the
average aggregate net assets of the Variable Account (and other separate
accounts of the Company or life insurance company subsidiaries of the Company)
invested in particular underlying Mutual Funds. These fees in no way affect the
net asset value of the underlying Mutual Funds or fees paid by the Contract
Owner.
The financial statements and schedules have been included herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and upon the authority
of said firm as experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states where
the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934.
The Contract Owner may transfer up to 100% of the Contract Value from the
Variable Account to the Fixed Account. However, the Company, at its sole
discretion, reserves the right to limit such transfers to 25% of the Contract
Value for any 12 month period. Contract Owners may at the maturity of an
Interest Rate Guarantee Period transfer a portion of the Contract Value of the
Fixed Account to the Variable Account. Such portion will be determined by the
Company at its sole discretion (but will not be less than 10% of the total value
of the portion of the Fixed Account that is maturing), and will be declared upon
the expiration date of the then current Interest Rate Guarantee Period. The
Interest Rate Guarantee Period expires on the final day of a calendar quarter.
Transfers under this provision must be made within 45 days after the termination
date of the
1
41 of 99
<PAGE> 42
guarantee period. Owners who have entered into a Dollar Cost Averaging agreement
with the Company may transfer from the Fixed Account under the terms of that
agreement.
Transfers from the Fixed and Variable Accounts may not be made prior to the
first Contract Anniversary. Transfers from the Fixed Account may not be made
within 12 months of any prior Transfer. Transfers must also be made prior to the
Annuitization Date.
UNDERWRITERS
The Contracts, which are offered continuously, are distributed by Fidelity
Investments Institutional Services Company, Inc. ("Fidelity"), 82 Devonshire
Street, Boston, Massachusetts 02109. The Company has paid no underwriting
commission to Fidelity.
CALCULATIONS OF PERFORMANCE
Any current yield quotations of the Fidelity Advisor Annuity Money Market
Fund Sub-Account, subject to Rule 482 of the Securities Act of 1933, shall
consist of a seven calendar day historical yield, carried at least to the
nearest hundredth of a percent. The yield shall be calculated by determining the
net change, exclusive of capital changes, in the value of hypothetical
pre-existing account having a balance of one accumulation unit at the beginning
of the base period, subtracting a hypothetical charge reflecting deductions from
Contract Owner accounts, and dividing the net change in account value by the
value of the account at the beginning of the period to obtain a base period
return, and multiplying the base period return by (365/7) or (366/7) in a leap
year. As of December 31, 1995, the Fidelity Advisor Annuity Money Market Fund
Sub-Account's seven day current unit value yield was 3.98%. The Fidelity Advisor
Annuity Money Market Fund Sub-Account's effective yield shall be computed
similarly but includes the effect of assumed compounding on an annualized basis
of the current unit value yield quotations of the Fund, and for the period
ending December 31, 1995, the effective yield was 4.06%.
The Fidelity Advisor Annuity Money Market Fund Sub-Account's yield and
effective yield will fluctuate daily. Actual yields will depend on factors such
as the type of instruments in the Fund's portfolio, portfolio quality and
average maturity, changes in interest rates, and the Fund's expenses. Although
the Sub-Account determines its yield on the basis of a seven calendar day
period, it may use a different time period on occasion. The yield quotes may
reflect the expense limitation described in the Fund's Statement of Additional
Information. There is no assurance that the yields quoted on any given occasion
will remain in effect for any period of time and there is no guarantee that the
net asset values will remain constant. It should be noted that a Contract
Owner's investment in the Fidelity Advisor Annuity Money Market Fund Sub-Account
is not guaranteed or insured. Yield of other money market funds may not be
comparable if a different base period or another method of calculation is used.
Income generated within a bond Sub-Account may be reflected in "30 Day
Yield" quotations. Such quotations are computed by dividing the net investment
income per Accumulation Unit during the 30 day period by the maximum unit value
per Accumulation Unit on the last day of the period. The formula for arriving at
bond fund yield quotations is as follows: 2[((a-b)/cd+1)(6)-1] where: a = net
investment income earned by the applicable portfolio; b = expenses for the
period, including contract level fees and charges; c = the average daily number
of Accumulation Units outstanding during the period; and d = the maximum
offering price per Accumulation Unit on the last day of the period.
All performance advertising shall also include quotations of standardized
average annual total return, calculated in accordance with a standard method
prescribed by rules of the Securities and Exchange Commission, to facilitate
comparison with standardized Average annual total return advertised for a
specific period is found by first taking a hypothetical $1,000 investment in
each of the Sub-Accounts' units on the first day of the period at the offering
price, which is the Accumulation Unit Value per unit ("initial investment") and
computing the ending redeemable value ("redeemable value") of that investment at
the end of the period. The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. Standardized average annual total return reflects the deduction of a
1.40% Mortality, Expense Risk and Administration Charge. The redeemable value
also reflects the effect of any applicable Contingent Deferred Sales Charge that
may be imposed at the end of the period (see "Contingent Deferred Sales Charge"
located in the prospectus.) No deduction is made for premium taxes which may be
assessed by certain states. Nonstandardized total return may also be advertised,
and is calculated in a manner similar to standardized average annual total
return except the nonstandardized total return is based on a hypothetical
initial investment of $25,000 and does not reflect the deduction of any
2
42 of 99
<PAGE> 43
applicable Contingent Deferred Sales Charge. Reflecting the Contingent Deferred
Sales Charge would decrease the level of the performance advertised. The
Contingent Deferred Sales Charge is not reflected because the Contract is
designed for long term investment. An assumed initial investment of $25,000 will
be used because that figure more closely approximates the size of a typical
Contract than does the $1,000 figure used in calculating the standardized
average annual total return quotations.
The standardized average annual total return and nonstandardized total
return quotations will be current to the last day of the calendar quarter
preceding the date on which an advertisement is submitted for publication. Both
the standardized average annual return and the nonstandardized total return will
be based on rolling calendar quarters and will cover periods of one, five, and
ten years, or a period covering the time the underlying Mutual Fund held in the
Sub-Account has been in existence, if the underlying Mutual Fund has not been in
existence for one of the prescribed periods. For those underlying Mutual Funds
which have not been held as Sub-Accounts within the Variable Account for one of
the quoted periods, the standardized average annual total return and
nonstandardized total return quotations will show the investment performance
such underlying Mutual Funds would have achieved (reduced by the applicable
charges) had they been held as Sub-Accounts within the Variable Account for the
period quoted.
Quotations of standardized average annual total return and non-standardized
total return are based upon historical earnings and will fluctuate. Any
quotation of performance, therefore, would not be considered a guarantee of
future performance. Factors affecting a Sub-Account's performance include
general market conditions, operating expenses and investment management. A
Contract Owner's account when redeemed may be more or less than original cost.
Standardized average annual return and non-standardized total returns are
calculated as described above, for each of the Sub-Accounts available within the
Variable Account for which there is significant investment history. These
figures are based upon historical earnings and are not necessarily
representative of future results.
UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO LIFE OF FUND DATE FUND
SUB-ACCOUNT OPTIONS 12-31-95 12/31/95 TO 12/31/95 EFFECTIVE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor 8.08% N/A 8.08% 12/01/94
Annuity Government
Investment Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 24.00% N/A 24.00% 12/01/94
Growth Opportunities Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 11.65% N/A 11.65% 12/01/94
High Yield Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 5.46% N/A 5.46% 12/01/94
Income & Growth Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity -3.21% N/A -3.21% 12/01/94
Money Market Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 1.66% N/A 1.66% 12/01/94
Overseas Fund
- -------------------------------------------------------------------------------------
</TABLE>
3
43 of 99
<PAGE> 44
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
1 YEAR TO 5 YEARS TO LIFE OF FUND DATE FUND
SUB-ACCOUNT OPTIONS 12-31-95 12/31/95 TO 12/31/95 EFFECTIVE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor 15.08% N/A 15.08% 12/01/94
Annuity Government
Investment Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 31.00% N/A 31.00% 12/01/94
Growth Opportunities Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 18.65% N/A 18.65% 12/01/94
High Yield Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 12.46% N/A 12.46% 12/01/94
Income & Growth Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 3.79% N/A 3.79% 12/01/94
Money Market Fund
- -------------------------------------------------------------------------------------
Fidelity Advisor Annuity 8.66% N/A 8.66% 12/01/94
Overseas Fund
- -------------------------------------------------------------------------------------
</TABLE>
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the prospectus.
4
44 of 99
<PAGE> 45
<PAGE> 1
================================================================================
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Contract Owners of
Nationwide Fidelity Advisor Variable Account
Nationwide Life Insurance Company:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Fidelity Advisor Variable Account as of
December 31, 1995, and the related statement of operations and changes in
contract owners' equity and schedule of changes in unit value for the year then
ended. These financial statements and schedule 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 schedule of changes in unit value
based on our audit.
We conducted our audit 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 schedule of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and the
transfer agents of the underlying mutual funds. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and schedule of changes in unit
value referred to above present fairly, in all material respects, the financial
position of Nationwide Fidelity Advisor Variable Account as of December 31,
1995, and the results of its operations and its changes in contract owners'
equity and the schedule of changes in unit value for the year then ended in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1996
================================================================================
<PAGE> 2
================================================================================
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Fidelity Advisor Annuity Government Investment Fund (FAAGvInv)
757,673 shares (cost $8,418,241) .......................... $ 8,395,016
Fidelity Advisor Annuity Growth Opportunities Fund (FAAGroOp)
12,568,860 shares (cost $153,577,483) ..................... 164,274,999
Fidelity Advisor Annuity High Yield Fund (FAAHiYld)
3,399,341 shares (cost $38,988,010) ....................... 39,364,365
Fidelity Advisor Annuity Income & Growth Fund (FAAIncGr)
3,863,222 shares (cost $42,013,333) ....................... 43,152,191
Fidelity Advisor Annuity Money Market Fund (FAAMyMkt)
28,974,511 shares (cost $28,974,511) ...................... 28,974,511
Fidelity Advisor Annuity Overseas Fund (FAAOSeas)
1,505,319 shares (cost $16,122,382) ....................... 16,483,238
------------
Total investments ..................................... 300,644,320
Accounts receivable ............................................ 8,007
------------
Total assets .......................................... 300,652,327
============
CONTRACT OWNERS' EQUITY ........................................ $300,652,327
============
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Contract owners' equity represented by: Units Unit Value
----- ----------
<S> <C> <C> <C>
Fidelity Advisor Annuity Classic contracts:
Fidelity Advisor Annuity
Government Investment Fund:
Tax qualified .......................... 27,705 $ 11.504795 $ 318,740
Non-tax qualified ...................... 20,929 11.504795 240,784
Fidelity Advisor Annuity
Growth Opportunities Fund:
Tax qualified .......................... 765,860 13.082083 10,019,044
Non-tax qualified ...................... 706,845 13.082083 9,247,005
Fidelity Advisor Annuity High Yield Fund:
Tax qualified .......................... 138,890 11.858324 1,647,003
Non-tax qualified ...................... 136,503 11.858324 1,618,697
Fidelity Advisor Annuity
Income & Growth Fund:
Tax qualified .......................... 208,830 11.245581 2,348,415
Non-tax qualified ...................... 214,834 11.245581 2,415,933
Fidelity Advisor Annuity Money Market Fund:
Tax qualified .......................... 68,159 10.385538 707,868
Non-tax qualified ...................... 93,702 10.385538 973,146
Fidelity Advisor Annuity Overseas Fund:
Tax qualified .......................... 73,727 10.868973 801,337
Non-tax qualified ...................... 56,545 10.868973 614,586
Fidelity Advisor Annuity Select contracts:
Fidelity Advisor Annuity
Government Investment Fund:
Tax qualified .......................... 237,795 11.493314 2,733,053
Non-tax qualified ...................... 443,946 11.493314 5,102,411
Fidelity Advisor Annuity
Growth Opportunities Fund:
Tax qualified .......................... 2,965,497 13.069019 38,756,137
Non-tax qualified ...................... 8,130,130 13.069019 106,252,823
Fidelity Advisor Annuity High Yield Fund:
Tax qualified .......................... 798,794 11.846502 9,462,915
Non-tax qualified ...................... 2,248,404 11.846502 26,635,722
Fidelity Advisor Annuity
Income & Growth Fund:
Tax qualified .......................... 975,789 11.234358 10,962,363
Non-tax qualified ...................... 2,441,208 11.234358 27,425,405
Fidelity Advisor Annuity Money Market Fund:
Tax qualified .......................... 798,314 10.375160 8,282,635
Non-tax qualified ...................... 1,833,132 10.375160 19,019,038
Fidelity Advisor Annuity Overseas Fund:
Tax qualified .......................... 369,362 10.858102 4,010,570
Non-tax qualified ...................... 1,018,290 10.858102 11,056,697
========= ================ ----------------
$ 300,652,327
================
</TABLE>
See accompanying notes to financial statements.
================================================================================
<PAGE> 4
================================================================================
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
----
<S> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends ................ $ 5,253,187
-------------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares ..... 10,325,387
Cost of mutual fund shares sold ..................... (10,182,494)
-------------
Realized gain (loss) on investments ................. 142,893
Change in unrealized gain (loss) on investments ..... 12,550,359
-------------
Net gain (loss) on investments .................... 12,693,252
-------------
Net investment activity ....................... 17,946,439
-------------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners ....... 286,274,311
Redemptions ........................................... (2,222,588)
Adjustments to maintain reserves ...................... 8,009
-------------
Net equity transactions ....................... 284,059,732
-------------
EXPENSES (NOTE 2):
Contract charges ...................................... (1,324,828)
Contingent deferred sales charges ..................... (29,016)
-------------
Total expenses ................................ (1,353,844)
-------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ................... 300,652,327
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ............. --
-------------
CONTRACT OWNERS' EQUITY END OF PERIOD ................... $ 300,652,327
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
<PAGE> 5
================================================================================
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide Fidelity Advisor Variable Account (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on July 22, 1994. The Account has been registered as a
unit investment trust under the Investment Company Act of 1940.
The Company offers tax qualified and non-tax qualified Individual Deferred
Variable Annuity Contracts, and Individual Modified Single Premium Deferred
Variable Annuity Contracts through the Account. The primary distribution for the
contracts is through Fidelity Investments(R).
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees, are offered for purchase. See note
2 for a discussion of contract expenses.
Contract owners in either the accumulation or the payout phase may invest in
any of the following:
Fidelity Advisor Annuity Government Investment Fund (FAAGvInv)
Fidelity Advisor Annuity Growth Opportunities Fund (FAAGroOp)
Fidelity Advisor Annuity High Yield Fund (FAAHiYld)
Fidelity Advisor Annuity Income & Growth Fund (FAAIncGr)
Fidelity Advisor Annuity Money Market Fund (FAAMyMkt)
Fidelity Advisor Annuity Overseas Fund (FAAOSeas)
At December 31, 1995, 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 contract expenses (see
note 2). The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their contracts and
exclude any purchase payments for fixed dollar benefits, the latter being
included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing net
asset value per share at December 31, 1995. The cost of investments sold is
determined on a specific identification basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations of
the Company which is taxed as a life insurance company under the 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.
<PAGE> 6
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of such
contracts is surrendered, the Company will, with certain exceptions, deduct from
a contract owner's contract value a contingent deferred sales charge, not to
exceed 7% of the lesser of purchase payments or the amount surrendered, such
charge declining 1% per year, to 0%, after the purchase payment has been held in
the contract for 84 months. No sales charges are deducted on redemptions used to
purchase units in the fixed investment options of the Company.
The following administrative charges are deducted by the Company: (a) for
the Fidelity Advisor Annuity Classic contracts an annual contract maintenance
charge of $30, with certain exceptions, which is satisfied by surrendering
units; and (b) for the Fidelity Advisor Annuity Classic contracts a mortality
risk charge, an expense risk charge and an administration charge assessed
through the daily unit value calculation equal to an annual rate of 0.80%, 0.45%
and 0.05%, respectively; for the Fidelity Advisor Annuity Select contracts a
mortality risk charge, an expense risk charge and an administration charge
assessed through the daily unit value calculations equal to an annual rate of
0.80%, 0.45% and 0.15%, respectively.
(3) 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 for each
series, as applicable, in the following format:
- Beginning unit value - Jan. 1
- 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.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
- Contract charges
(This amount reflects the decrease in the unit value due to the
mortality risk charge, expense risk charge and administration charge
discussed in note 2.)
- Ending unit value - Dec. 31
- Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
================================================================================
<PAGE> 7
SCHEDULE I
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
FIDELITY ADVISOR ANNUITY CLASSIC CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULE OF CHANGES IN UNIT VALUE
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
FAAGvInv FAAGroOp FAAHiYld FAAIncGr FAAMyMkt FAAOSeas
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $ 10.000000 10.000000 10.000000 10.000000 10.000000 10.000000
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .562856 .177745 .424612 .217242 .517389 .059248
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.081135 3.053458 1.576049 1.165103 .000000 .944343
- ----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.139196) (.149120) (.142337) (.136764) (.131851) (.134618)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $ 11.504795 13.082083 11.858324 11.245581 10.385538 10.868973
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 15% 31% 19% 12% 4% 9%
==================================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as contract charges do
not include the annual contract maintenance charge discussed in note 2.
================================================================================
<PAGE> 8
SCHEDULE I, CONTINUED
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
FIDELITY ADVISOR ANNUITY SELECT CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULE OF CHANGES IN UNIT VALUE
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
FAAGvInv FAAGroOp FAAHiYld FAAIncGr FAAMyMkt FAAOSeas
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $10.000000 10.000000 10.000000 10.000000 10.000000 10.000000
- -------------------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .562307 .177572 .424198 .217030 .517131 .059190
- -------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.080916 3.052053 1.575576 1.164620 .000000 .943888
- -------------------------------------------------------------------------------------------------------------------
Contract charges (.149909) (.160606) (.153272) (.147292) (.141971) (.144976)
- -------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $11.493314 13.069019 11.846502 11.234358 10.375160 10.858102
- -------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 15% 31% 18% 12% 4% 9%
===================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as contract charges do
not include the annual contract maintenance charge discussed in note 2.
See note 3.
================================================================================
<PAGE> 46
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Nationwide Life Insurance Company:
We have audited the consolidated financial statements of Nationwide Life
Insurance Company (a wholly owned subsidiary of Nationwide Corporation) and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the financial
statement schedules as listed in the accompanying index. These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Participating insurance and the related surplus are discussed in note 12. The
Company and its counsel are of the opinion that the ultimate ownership of the
participating surplus in excess of the contemplated equitable policyholder
dividends belongs to the shareholder. The accompanying consolidated financial
statements are presented on such basis.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
In 1994, the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
In 1993, the Company adopted the provisions of SFAS No. 109, Accounting for
Income Taxes and SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions.
KPMG Peat Marwick LLP
Columbus, Ohio
February 26, 1996
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Balance Sheets
December 31, 1995 and 1994
(000's omitted)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ----------------- ----------------
<S> <C> <C>
Investments (notes 5, 8 and 9):
Securities available-for-sale, at fair value:
Fixed maturities (cost $13,438,630 in 1995; $8,318,865 in 1994) $ 14,167,377 8,045,906
Equity securities (cost $27,362 in 1995; $18,372 in 1994) 33,718 24,713
Fixed maturities held-to-maturity, at amortized cost (fair value $3,602,310 in 1994) - 3,688,787
Mortgage loans on real estate 4,786,599 4,222,284
Real estate 239,089 252,681
Policy loans 370,908 340,491
Other long-term investments 67,280 63,914
Short-term investments (note 13) 45,732 131,643
----------- -----------
19,710,703 16,770,419
----------- -----------
Cash 10,485 7,436
Accrued investment income 239,881 220,540
Deferred policy acquisition costs 1,094,195 1,064,159
Deferred Federal income tax -- 36,515
Other assets 795,169 790,603
Assets held in Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
$40,614,111 31,112,133
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Future policy benefits and claims (notes 6 and 8) 18,200,128 16,321,461
Policyholders' dividend accumulations 353,554 338,058
Other policyholder funds 71,155 72,770
Accrued Federal income tax (note 7):
Current 34,064 13,126
Deferred 238,877 -
----------- -----------
272,941 13,126
----------- -----------
Other liabilities 284,143 235,778
Liabilities related to Separate Accounts (note 8) 18,763,678 12,222,461
----------- -----------
37,945,599 29,203,654
----------- -----------
Shareholder's equity (notes 3, 4, 5, 7, 12 and 13):
Capital shares, $1 par value. Authorized 5,000 shares, issued and
outstanding 3,815 shares 3,815 3,815
Additional paid-in capital 673,782 622,753
Retained earnings 1,606,607 1,401,579
Unrealized gains (losses) on securities available-for-sale, net 384,308 (119,668)
----------- -----------
2,668,512 1,908,479
----------- -----------
Commitments and contingencies (notes 9 and 15)
$40,614,111 31,112,133
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues (note 16):
Traditional life insurance premiums $ 274,957 209,538 215,715
Accident and health insurance premiums 509,658 324,524 312,655
Universal life and investment product policy charges 307,676 239,021 188,057
Net investment income (note 5) 1,482,980 1,289,501 1,204,426
Realized gains (losses) on investments (notes 5 and 13) 836 (16,384) 113,673
---------- ---------- ----------
2,576,107 2,046,200 2,034,526
---------- ---------- ----------
Benefits and expenses:
Benefits and claims 1,656,287 1,279,763 1,236,906
Provision for policyholders' dividends on participating policies (note 12) 48,074 46,061 53,189
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Other operating costs and expenses 458,970 352,402 329,396
---------- ---------- ----------
2,256,375 1,772,970 1,721,625
---------- ---------- ----------
Income before Federal income tax expense and cumulative effect of
changes in accounting principles 319,732 273,230 312,901
---------- ---------- ----------
Federal income tax expense (note 7):
Current 103,464 79,847 75,124
Deferred 3,790 9,657 31,634
---------- ---------- ----------
107,254 89,504 106,758
---------- ---------- ----------
Income before cumulative effect of changes in accounting principles 212,478 183,726 206,143
Cumulative effect of changes in accounting principles, net (note 3) -- -- 5,365
---------- ---------- ----------
Net income $ 212,478 183,726 211,508
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Unrealized
gains (losses)
Additional on securities Total
Capital paid-in Retained available-for- shareholder's
shares capital earnings sale, net equity
----------- ----------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
1993:
Balance, beginning of year $ 3,815 311,753 1,024,150 90,524 1,430,242
Capital contributions -- 111,000 -- -- 111,000
Dividends paid to shareholder -- -- (17,805) -- (17,805)
Net income -- -- 211,508 -- 211,508
Unrealized losses on equity securities, net -- -- -- (83,777) (83,777)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 422,753 1,217,853 6,747 1,651,168
========== ========== ========= ========== ==========
1994:
Balance, beginning of year 3,815 422,753 1,217,853 6,747 1,651,168
Capital contribution -- 200,000 -- -- 200,000
Net income -- -- 183,726 -- 183,726
Adjustment for change in accounting for
certain investments in debt and equity
securities, net (note 3) -- -- -- 216,915 216,915
Unrealized losses on securities available-
for-sale, net -- -- -- (343,330) (343,330)
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 622,753 1,401,579 (119,668) 1,908,479
========== ========== ========== ========== ==========
1995:
Balance, beginning of year 3,815 622,753 1,401,579 (119,668) 1,908,479
Capital contribution (note 13) -- 51,029 -- (4,111) 46,918
Dividends paid to shareholder -- -- (7,450) -- (7,450)
Net income -- -- 212,478 -- 212,478
Unrealized gains on securities available-
for-sale, net -- -- -- 508,087 508,087
---------- ---------- ---------- ---------- ----------
Balance, end of year $ 3,815 673,782 1,606,607 384,308 2,668,512
========== ========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
1995 1994 1993
-------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 212,478 183,726 211,508
Adjustments to reconcile net income to net cash provided by operating
activities:
Capitalization of deferred policy acquisition costs (349,456) (264,434) (191,994)
Amortization of deferred policy acquisition costs 93,044 94,744 102,134
Amortization and depreciation 10,319 6,207 11,156
Realized losses (gains) on invested assets, net 717 15,949 (113,648)
Deferred Federal income tax expense (benefit) 4,023 (2,166) (6,006)
Increase in accrued investment income (19,341) (29,654) (4,218)
Increase in other assets (3,227) (112,566) (549,277)
Increase in policy liabilities 198,200 1,038,641 509,370
Increase in policyholders' dividend accumulations 15,496 15,372 17,316
Increase in accrued Federal income tax payable 20,938 832 16,838
Increase in other liabilities 48,365 17,826 26,958
Other, net (20,556) (19,303) (11,745)
----------- ----------- ------------
Net cash provided by operating activities 211,000 945,174 18,392
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 706,442 579,067 --
Proceeds from sale of securities available-for-sale 131,420 247,876 247,502
Proceeds from maturity of fixed maturities held-to-maturity 633,173 516,003 1,192,093
Proceeds from sale of fixed maturities -- -- 33,959
Proceeds from repayments of mortgage loans on real estate 215,134 220,744 146,047
Proceeds from sale of real estate 48,477 46,713 23,587
Proceeds from repayments of policy loans and sale of other invested assets 79,620 134,998 59,643
Cost of securities available-for-sale acquired (2,232,047) (2,569,672) (12,550)
Cost of fixed maturities held-to-maturity acquired (669,449) (675,835) (2,016,831)
Cost of mortgage loans on real estate acquired (821,078) (627,025) (475,336)
Cost of real estate acquired (10,970) (15,962) (8,827)
Policy loans issued and other invested assets acquired (92,904) (118,012) (76,491)
----------- ----------- ------------
Net cash used in investing activities (2,012,182) (2,261,105) (887,204)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from capital contributions 46,918 200,000 111,000
Dividends paid to shareholder (7,450) -- (17,805)
Increase in universal life and investment product account balances 3,202,135 3,640,958 2,249,740
Decrease in universal life and investment product account balances (1,523,283) (2,449,580) (1,458,504)
----------- ----------- -----------
Net cash provided by financing activities 1,718,320 1,391,378 884,431
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (82,862) 75,447 15,619
Cash and cash equivalents, beginning of year 139,079 63,632 48,013
----------- ----------- -----------
Cash and cash equivalents, end of year $ 56,217 139,079 63,632
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(000's omitted)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Nationwide Life Insurance Company (NLIC) is a wholly owned subsidiary of
Nationwide Corporation (Corp.). Wholly-owned subsidiaries of NLIC include
Nationwide Life and Annuity Insurance Company (NLAIC) (formerly known as
Financial Horizons Life Insurance Company), West Coast Life Insurance
Company (WCLIC), Employers Life Insurance Company of Wausau and
subsidiaries (ELICW), National Casualty Company (NCC) and Nationwide
Financial Services, Inc. (NFS). NLIC and its subsidiaries are
collectively referred to as "the Company."
NLIC, NLAIC, WCLIC and ELICW are life and accident and health insurers
and NCC is a property and casualty insurer. The Company is licensed in
all 50 states, the District of Columbia, the Virgin Islands and Puerto
Rico. The Company offers a full range of life insurance, health insurance
and annuity products through exclusive agents, brokers and other
distribution channels and is subject to competition from other insurers
throughout the United States. The Company is subject to regulation by the
Insurance Departments of states in which it is licensed, and undergoes
periodic examinations by those departments.
The following is a description of the most significant risks facing
life and health insurers and how the Company mitigates those risks:
LEGAL/REGULATORY RISK is the risk that changes in the legal or
regulatory environment in which an insurer operates will create
additional expenses not anticipated by the insurer in pricing its
products. That is, regulatory initiatives designed to reduce insurer
profits, new legal theories or insurance company insolvencies through
guaranty fund assessments may create costs for the insurer beyond
those currently recorded in the consolidated financial statements. The
Company mitigates this risk by offering a wide range of products and
by operating throughout the United States, thus reducing its exposure
to any single product or jurisdiction, and also by employing
underwriting practices which identify and minimize the adverse impact
of this risk.
CREDIT RISK is the risk that issuers of securities owned by the
Company or mortgagors on mortgage loans on real estate owned by the
Company will default or that other parties, including reinsurers,
which owe the Company money, will not pay. The Company minimizes this
risk by adhering to a conservative investment strategy, by maintaining
sound reinsurance and credit and collection policies and by
providing for any amounts deemed uncollectible.
INTEREST RATE RISK is the risk that interest rates will change and
cause a decrease in the value of an insurer's investments. This change
in rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent
that liabilities come due more quickly than assets mature, an insurer
would have to borrow funds or sell assets prior to maturity and
potentially recognize a gain or loss.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which
differ from statutory accounting practices prescribed or permitted by
regulatory authorities. See note 4.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities as of the
date of the consolidated financial statements and the reported amounts of
revenues and expenses for the reporting period. Actual results could differ
significantly from those estimates.
The most significant estimates include those used in determining deferred
policy acquisition costs, valuation allowances for mortgage loans on real
estate and real estate investments and the liability for future policy benefits
and claims. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
(a) CONSOLIDATION POLICY
The December 31, 1995 consolidated financial statements include the
accounts of NLIC and its wholly owned subsidiaries NLAIC, WCLIC, ELICW, NCC
and NFS. The December 31, 1994 and 1993 consolidated financial statements
include the accounts of NLIC, NLAIC, WCLIC, NCC and NFS. The December 31,
1994 consolidated balance sheet also includes the accounts of ELICW, which
was acquired by NLIC effective December 31, 1994. See Note 13. All
significant intercompany balances and transactions have been eliminated.
(b) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities and
equity securities as either held-to-maturity, available-for-sale or
trading. Fixed maturity securities are classified as held-to-maturity when
the Company has the positive intent and ability to hold the securities to
maturity and are stated at amortized cost. Fixed maturity securities not
classified as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the unrealized gains
and losses, net of adjustments to deferred policy acquisition costs and
deferred Federal income tax, reported as a separate component of
shareholder's equity. The adjustment to deferred policy acquisition costs
represents the change in amortization of deferred policy acquisition costs
that would have been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed maturity
securities classified as held-to-maturity or trading as of
December 31, 1995.
Mortgage loans on real estate are carried at the unpaid principal balance
less valuation allowances. The Company provides valuation allowances for
impairments of mortgage loans on real estate based on a review by portfolio
managers. The measurement of impaired loans is based on the present value
of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the fair value of the collateral, if
the loan is collateral dependent. Loans in foreclosure and loans considered
to be impaired are placed on non-accrual status. Interest received on
non-accrual status mortgage loans on real estate are included in interest
income in the period received.
Real estate is carried at cost less accumulated depreciation and valuation
allowances. Other long-term investments are carried on the equity basis,
adjusted for valuation allowances.
Realized gains and losses on the sale of investments are determined on the
basis of specific security identification. Estimates for valuation
allowances and other than temporary declines are included in realized gains
and losses on investments.
In March, 1995, the Financial Accounting Standards Board (FASB) issued
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121 - ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
(SFAS 121). SFAS 121 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
The statement is effective for fiscal years beginning after December 15,
1995 and earlier application is permitted. Previously issued consolidated
financial statements shall not be restated. The Company will adopt SFAS 121
in 1996 and the impact on the consolidated financial statements is not
expected to be material.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(c) REVENUES AND BENEFITS
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums and
benefits and consist primarily of whole life, limited-payment life, term
life and certain annuities with life contingencies. Premiums for
traditional life insurance products are recognized as revenue when due.
Benefits and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This association
is accomplished by the provision for future policy benefits and the
deferral and amortization of policy acquisition costs.
UNIVERSAL LIFE AND INVESTMENT PRODUCTS: Universal life products include
universal life, variable universal life and other interest-sensitive life
insurance policies. Investment products consist primarily of individual and
group deferred annuities, annuities without life contingencies and
guaranteed investment contracts. Revenues for universal life and investment
products consist of asset fees, cost of insurance, policy administration
and surrender charges that have been earned and assessed against policy
account balances during the period. Policy benefits and claims that are
charged to expense include benefits and claims incurred in the period in
excess of related policy account balances and interest credited to policy
account balances.
ACCIDENT AND HEALTH INSURANCE: Accident and health insurance premiums
are recognized as revenue over the terms of the policies. Policy claims are
charged to expense in the period that the claims are incurred.
(d) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, certain
expenses of the policy issue and underwriting department and certain
variable agency expenses have been deferred. For traditional life and
individual health insurance products, these deferred policy acquisition
costs are predominantly being amortized with interest over the premium
paying period of the related policies in proportion to the ratio of actual
annual premium revenue to the anticipated total premium revenue. Such
anticipated premium revenue was estimated using the same assumptions as
were used for computing liabilities for future policy benefits. For
universal life and investment products, deferred policy acquisition costs
are being amortized with interest over the lives of the policies in
relation to the present value of estimated future gross profits from
projected interest margins, asset fees, cost of insurance, policy
administration and surrender charges. For years in which gross profits are
negative, deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs are
adjusted to reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale as described in note 2(b).
(e) SEPARATE ACCOUNTS
Separate Account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific investment
objectives. The investment income and gains or losses of these accounts
accrue directly to the contractholders. The activity of the Separate
Accounts is not reflected in the consolidated statements of income and cash
flows except for the fees the Company receives for administrative services
and risks assumed.
(f) FUTURE POLICY BENEFITS
Future policy benefits for traditional life and individual health
insurance policies have been calculated using a net level premium method
based on estimates of mortality, morbidity, investment yields and
withdrawals which were used or which were being experienced at the time the
policies were issued, rather than the assumptions prescribed by state
regulatory authorities. See note 6.
Future policy benefits for annuity policies in the accumulation phase,
universal life and variable universal life policies have been calculated
based on participants' contributions plus interest credited less applicable
contract charges.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Future policy benefits and claims for collectively renewable long-term
disability policies (primarily discounted at 5.2%) and group long-term
disability policies (primarily discounted at 5.5%) are the present value of
amounts not yet due on reported claims and an estimate of amounts to be
paid on incurred but unreported claims. The impact of reserve discounting
is not material. Future policy benefits and claims on other
group health insurance policies are not discounted.
(g) PARTICIPATING BUSINESS
Participating business represents approximately 45% (45% in 1994 and
48% in 1993) of the Company's ordinary life insurance in force, 72% (72% in
1994 and 1993) of the number of policies in force, and 39% (41% in 1994 and
45% in 1993) of life insurance premiums. The provision for policyholder
dividends is based on current dividend scales. Future dividends are
provided for ratably in future policy benefits based on dividend scales in
effect at the time the policies were issued. Dividend scales are approved
by the Board of Directors.
Income attributable to participating policies in excess of policyholder
dividends is accounted for as belonging to the shareholder. See note 12.
(h) FEDERAL INCOME TAX
NLIC, NLAIC, WCLIC and NCC file a consolidated Federal income tax
return with Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Corp. Through 1994, ELICW filed a consolidated Federal
income tax return with Employers Insurance of Wausau A Mutual Company.
Beginning in 1995, ELICW files a separate Federal income tax return.
In 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 109 - ACCOUNTING FOR INCOME TAXES, which required a change
from the deferred method of accounting for income tax of APB Opinion 11 to
the asset and liability method of accounting for income tax. Under the
asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under this method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to
reduce the deferred tax assets to the amounts expected to be realized.
The Company has reported the cumulative effect of the change in method
of accounting for income tax in the 1993 consolidated statement of income.
See note 3.
(i) REINSURANCE CEDED
Reinsurance premiums ceded and reinsurance recoveries on benefits and
claims incurred are deducted from the respective income and expense
accounts. Assets and liabilities related to reinsurance ceded are reported
on a gross basis.
(j) CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company
considers all short-term investments with original maturities of three
months or less to be cash equivalents.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(k) RECLASSIFICATION
Certain items in the 1994 and 1993 consolidated financial
statements have been reclassified to conform to the 1995
presentation.
(3) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, the Company changed its method of
accounting for certain investments in debt and equity securities in
connection with the issuance of STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 115 - ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. As of January 1, 1994, the Company classified fixed
maturity securities with amortized cost and fair value of $6,593,844
and $7,024,736, respectively, as available-for-sale and recorded the
securities at fair value. Previously, these securities were recorded
at amortized cost. The effect as of January 1, 1994 has been recorded
as a direct credit to shareholder's equity as follows:
<TABLE>
<CAPTION>
<S> <C>
Excess of fair value over amortized cost of fixed maturity
securities available-for-sale $ 430,892
Adjustment to deferred policy acquisition costs (97,177)
Deferred Federal income tax (116,800)
---------
$ 216,915
=========
During 1993, the Company adopted accounting principles in connection
with the issuance of two accounting standards by the FASB. The effect
as of January 1, 1993, the date of adoption, has been recognized in
the 1993 consolidated statement of income as the cumulative effect of
changes in accounting principles, as follows:
Asset/liability method of recognizing income tax (note 2(h)) $ 26,344
Accrual method of recognizing postretirement benefits other
than pensions (net of tax benefit of $11,296) (note 11) (20,979)
--------
$ 5,365
========
</TABLE>
(4) BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance
with GAAP. Annual Statements for NLIC and NLAIC, WCLIC, ELICW and NCC,
filed with the Department of Insurance of the State of Ohio (the
Department), California Department of Insurance, Wisconsin Insurance
Department and Michigan Bureau of Insurance, respectively, are prepared
on the basis of accounting practices prescribed or permitted by such
regulatory authorities. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
The statutory capital shares and surplus of NLIC as reported to
regulatory authorities as of December 31, 1995, 1994 and 1993 was
$1,363,031, $1,262,861 and $992,631, respectively. The statutory net
income of NLIC as reported to regulatory authorities for the years
ended December 31, 1995, 1994 and 1993 was $86,529, $76,532 and
$185,943, respectively.
<PAGE> 11
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(5) INVESTMENTS
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturities $ 772,589 674,346 --
Equity securities 1,436 550 7,230
Fixed maturities held-to-maturity 232,692 193,009 800,255
Mortgage loans on real estate 410,965 376,783 364,810
Real estate 39,222 40,280 39,684
Short-term investments 12,249 6,990 5,080
Other 61,701 42,831 33,832
---------- ---------- ----------
Total investment income 1,530,854 1,334,789 1,250,891
Less investment expenses 47,874 45,288 46,465
---------- ---------- ----------
Net investment income $1,482,980 1,289,501 1,204,426
========== ========== ==========
</TABLE>
An analysis of realized gains (losses) on investments, net of
valuation allowances, by investment type follows for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- --------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 6,792 (7,120) --
Equity securities 3,435 1,427 129,728
Fixed maturities -- -- 20,225
Mortgage loans on real estate (7,312) (20,462) (28,241)
Real estate and other (2,079) 9,771 (8,039)
-------- -------- --------
$ 836 (16,384) 113,673
======== ======== ========
</TABLE>
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1995 1994
--------------- -------------
<S> <C> <C>
Gross unrealized gains (losses) $ 735,103 (266,618)
Adjustment to deferred policy acquisition costs (143,851) 82,525
Deferred Federal income tax (206,944) 64,425
--------- ---------
$ 384,308 (119,668)
========= =========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturities held-to-maturity
follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturities $ 1,001,706 (703,851) --
Equity securities 15 (1,990) (128,837)
Fixed maturities held-to-maturity 86,477 (421,427) 223,392
----------- ----------- -----------
$ 1,088,198 (1,127,268) 94,555
=========== =========== ===========
</TABLE>
<PAGE> 12
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of securities available-for-sale
were as follows as of December 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
-------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 438,109 36,714 (53) 474,770
Obligations of states and political subdivisions 9,742 1,252 (1) 10,993
Debt securities issued by foreign governments 162,442 9,641 (66) 172,017
Corporate securities 8,902,494 524,796 (30,561) 9,396,729
Mortgage-backed securities 3,925,843 196,645 (9,620) 4,112,868
--------- ----------- ----------- -----------
Total fixed maturities 13,438,630 769,048 (40,301) 14,167,377
Equity securities 27,362 6,441 (85) 33,718
---------- ----------- ----------- -----------
$13,465,992 775,489 (40,386) 14,201,095
=========== =========== ============ ===========
</TABLE>
The amortized cost and estimated fair value of securities available-for-sale
and fixed maturities held-to-maturity were as follows as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
Fixed maturities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 393,156 1,794 (18,941) 376,009
Obligations of states and political subdivisions 2,202 55 (21) 2,236
Debt securities issued by foreign governments 177,910 872 (9,205) 169,577
Corporate securities 4,201,738 50,405 (128,698) 4,123,445
Mortgage-backed securities 3,543,859 18,125 (187,345) 3,374,639
---------- ---------- ---------- ---------
Total fixed maturities 8,318,865 71,251 (344,210) 8,045,906
Equity securities 18,372 6,637 (296) 24,713
---------- ---------- ---------- ---------
$8,337,237 77,888 (344,506) 8,070,619
========== ========= ========== =========
FIXED MATURITY SECURITIES HELD-TO-MATURITY
Obligations of states and political subdivisions $ 11,613 92 (255) 11,450
Debt securities issued by foreign governments 16,131 111 (39) 16,203
Corporate securities 3,661,043 34,180 (120,566) 3,574,657
---------- ---------- ---------- ---------
$3,688,787 34,383 (120,860) 3,602,310
========== ========== ========== =========
</TABLE>
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity securities
available-for-sale as of December 31, 1995, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
----------- ------------
<S> <C> <C>
FIXED MATURITY SECURITIES AVAILABLE-FOR-SALE
- --------------------------------------------
Due in one year or less $ 641,490 647,639
Due after one year through five years 5,365,703 5,623,126
Due after five years through ten years 2,477,457 2,609,262
Due after ten years 1,028,137 1,174,482
----------- -----------
9,512,787 10,054,509
Mortgage-backed securities 3,925,843 4,112,868
----------- -----------
$13,438,630 14,167,377
=========== ===========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1995 and 1994
were $131,420 and $247,876, respectively, while proceeds from sales of
investments in fixed maturity securities during 1993 were $33,959. Gross gains
of $7,197 ($3,406 in 1994 and $2,413 in 1993) and gross losses of $2,309
($21,866 in 1994 and $39 in 1993) were realized on those sales.
During 1995, the Company transferred fixed maturity securities classified as
held-to-maturity with amortized cost of $27,929 to available-for-sale
securities due to evidence of a significant deterioration in the issuer's
creditworthiness. The transfer of those fixed maturity securities resulted in
a gross unrealized loss of $4,285.
As permitted by the FASB's Special Report, A GUIDE TO IMPLEMENTATION OF
STATEMENT 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, issued in November, 1995, the Company transferred all of its fixed
maturity securities previously classified as held-to-maturity to
available-for-sale. As of December 14, 1995, the date of transfer, the fixed
maturity securities had amortized cost of $3,705,644, resulting in a gross
unrealized gain of $171,531.
Investments that were non-income producing for the twelve month period
preceding December 31, 1995 amounted to $28,958 ($11,513 for 1994) and
consisted of $8,228 (none in 1994) in fixed maturity securities, $14,740
($11,111 in 1994) in real estate and $5,990 ($402 in 1994) in other long-term
investments.
Real estate is presented at cost less accumulated depreciation of $30,931 in
1995 ($29,275 in 1994) and valuation allowances of $26,250 in 1995 ($27,330 in
1994).
Other long-term investments are presented net of valuation allowances of $457
as of December 31, 1995. There were no such valuation allowances as of December
31, 1994.
As of December 31, 1995, the recorded investment of mortgage loans on real
estate considered to be impaired (under STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN as amended
by STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 118, ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN - INCOME RECOGNITION AND DISCLOSURE) was $44,995,
which includes $23,975 of impaired mortgage loans on real estate for which the
related valuation allowance was $5,276 and $21,020 of impaired mortgage loans
on real estate for which there was no valuation allowance. During 1995, the
average recorded investment in impaired mortgage loans on real estate was
approximately $22,621 and interest income recognized on those loans was $416,
which is equal to interest income recognized using a cash-basis method of
income recognition.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the year ended December 31, 1995:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Allowance, beginning year $ 47,892
Additions charged to operations 7,653
Direct write-downs charged against the allowance (4,850)
--------
Allowance, end of year $ 50,695
========
</TABLE>
Foresclosures of mortgage loans on real estate were $37,187 in 1994 and
mortgage loans on real estate in process of foreclosure or in-substance
foreclosed as of December 31, 1994 totaled $19,878, which approximated fair
value.
Fixed maturity securities with an amortized cost of $13,982 and $11,137 as
of December 31, 1995 and 1994, respectively, were on deposit with various
regulatory agencies as required by law.
(6) FUTURE POLICY BENEFITS AND CLAIMS
The liability for future policy benefits for investment contracts represents
approximately 82% and 81% of the total liability for future policy benefits
as of December 31, 1995 and 1994, respectively. The average interest rate
credited on investment product policies was approximately 6.5%, 6.5% and
7.0% for the years ended December 31, 1995, 1994 and 1993, respectively.
The liability for future policy benefits for traditional life insurance and
individual health insurance policies has been established based upon the
following assumptions:
INTEREST RATES: Interest rates vary as follows:
<TABLE>
<CAPTION>
Health
Year of issue Life Insurance insurance
-------------- ------------------------------------------------------------ ---------------
<S> <C> <C>
1995 7.6%, not graded - permanent contracts with loan provisions 4.5%
7.7%, not graded - all other contracts
1984-1994 6.0% to 10.5%, not graded 5.0% to 6.0%
1966-1983 6.0% to 8.1%, graded over 20 years to 4.0% to 6.6% 3.5% to 6.0%
1965 and prior generally lower than post 1965 issues 3.5% to 4.0%
</TABLE>
WITHDRAWALS: Rates, which vary by issue age, type of coverage and
policy duration, are based on Company experience.
MORTALITY: Mortality and morbidity rates are based on published tables,
modified for the Company's actual experience.
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Activity in the liability for unpaid claims and claim adjustment expenses is
summarized for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 637,998 592,180 760,209
Less reinsurance recoverables 438,761 430,720 547,683
--------- --------- ---------
Net balance, beginning of year 199,237 161,460 212,526
--------- --------- ---------
Incurred related to:
Current year 425,907 273,299 309,721
Prior years (17,203) (26,156) (26,248)
--------- --------- ---------
Total incurred 408,704 247,143 283,473
--------- --------- ---------
Paid related to:
Current year 290,605 175,700 208,978
Prior years 111,353 73,889 125,561
--------- --------- ---------
Total paid 401,958 249,589 334,539
--------- --------- ---------
Unpaid claims of acquired companies 2,542 40,223 --
--------- --------- ---------
Net balance, end of year 208,525 199,237 161,460
Plus reinsurance recoverables 491,321 438,761 430,720
--------- --------- ---------
Balance, end of year $ 699,846 637,998 592,180
========= ========= =========
</TABLE>
Reinsurance recoverables include amounts from affiliates, as discussed in
note 13, of $477,912, $430,936, $430,278 and $534,983 as of December 31,
1995, 1994, 1993 and 1992, respectively.
The provision for claims and claim adjustment expenses for prior years
decreased in each of the three years ended December 31, 1995 due to
lower-than-anticipated costs to settle accident and health insurance claims.
(7) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 179,916 124,044
Fixed maturity securities available-for-sale -- 95,536
Liabilities in Separate Accounts 129,120 94,783
Mortgage loans on real estate and real estate 26,062 25,632
Other policyholder funds 7,752 7,137
Other assets and other liabilities 47,215 57,528
--------- ---------
Total gross deferred tax assets 390,065 404,660
--------- ---------
Deferred tax liabilities:
Deferred policy acquisition costs 312,616 317,224
Fixed maturity securities available-for-sale 266,184 --
Equity securities available-for-sale and other
long-term investments 3,431 3,620
Other 46,711 47,301
--------- ---------
Total gross deferred tax liabilities 628,942 368,145
--------- ---------
$(238,877) 36,515
========= =========
</TABLE>
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company has determined that valuation allowances are not necessary as
of December 31, 1995, 1994 and 1993 based on its analysis of future
deductible amounts. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion
of the total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery of
Federal income tax paid within the statutory carryback period. In
addition, for future deductible amounts for securities available-for-sale,
affiliates of the Company which are included in the same consolidated
Federal income tax return hold investments that could be sold for capital
gains that could offset capital losses realized by the Company should
securities available-for-sale be sold at a loss.
<TABLE>
Total Federal income tax expense for the years ended December 31, 1995,
1994 and 1993 differs from the amount computed by applying the U.S.
Federal income tax rate to income before tax as follows:
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
--------------- ----- -------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 111,906 35.0 $ 95,631 35.0 $ 109,515 35.0
Tax exempt interest and dividends
received deduction (137) (0.1) (194) (0.1) (2,322) (0.7)
Current year increase in U.S. Federal
income tax rate -- -- -- -- 1,704 0.5
Other, net (4,515) (1.4) (5,933) (2.1) (2,139) (0.7)
--------- ---- --------- ---- --------- ----
Total (effective rate of each year) $ 107,254 33.5 $ 89,504 32.8 $ 106,758 34.1
========= ==== ========= ==== ========= ====
</TABLE>
Total Federal income tax paid was $75,309, $87,576 and $58,286 during the
years ended December 31, 1995, 1994 and 1993, respectively.
Prior to 1984, the Life Insurance Company Income Tax Act of 1959 as
amended by the Deficit Reduction Act of 1984 (DRA), permitted the deferral
from taxation of a portion of statutory income under certain
circumstances. In these situations, the deferred income was accumulated in
the Policyholders' Surplus Account (PSA). Management considers the
likelihood of distributions from the PSA to be remote; therefore, no
Federal income tax has been provided for such distributions in the
consolidated financial statements. The DRA eliminated any additional
deferrals to the PSA. Any distributions from the PSA, however, will
continue to be taxable at the then current tax rate. The balance of the
PSA was approximately $35,344 as of December 31, 1995.
(8) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107 - DISCLOSURES ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (SFAS 107) requires disclosure of fair
value information about existing on and off-balance sheet financial
instruments. SFAS 107 defines the fair value of a financial instrument as
the amount at which the financial instrument could be exchanged in a
current transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using present
value or other valuation techniques.
These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Although
fair value estimates are calculated using assumptions that management
believes are appropriate, changes in assumptions could cause these
estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets
and,in many cases, could not be realized in the immediate settlement of
the instruments. SFAS 107 excludes certain assets and liabilities from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from SFAS 107 disclosures, estimated fair value of policy reserves on
life insurance contracts are provided to make the fair value disclosures
more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying
amount reported in the consolidated balance sheets for these
instruments approximates their fair value.
FIXED MATURITY AND EQUITY SECURITIES: Fair value for fixed
maturity securities is based on quoted market prices, where available.
For fixed maturity securities not actively traded, fair value is
estimated using values obtained from independent pricing services or,
in the case of private placements, is estimated by discounting
expected future cash flows using a current market rate applicable to
the yield, credit quality and maturity of the investments. The fair
value for equity securities is based on quoted market prices.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of
assets held in Separate Accounts is based on quoted market prices. The
fair value of liabilities related to Separate Accounts is the
amount payable on demand.
MORTGAGE LOANS ON REAL ESTATE: The fair value for mortgage
loans on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations. Fair
value for mortgages in default is the estimated fair value of the
underlying collateral.
INVESTMENT CONTRACTS: Fair value for the Company's liabilities under
investment type contracts is disclosed using two methods. For
investment contracts without defined maturities, fair value is the
amount payable on demand. For investment contracts with known or
determined maturities, fair value is estimated using discounted cash
flow analysis. Interest rates used are similar to currently offered
contracts with maturities consistent with those remaining for the
contracts being valued.
POLICY RESERVES ON LIFE INSURANCE CONTRACTS: Included are disclosures
for individual life, universal life and supplementary contracts with
life contingencies for which the estimated fair value is the amount
payable on demand. Also included are disclosures for the Company's
limited payment policies, which the Company has used discounted cash
flow analyses similar to those used for investment contracts with
known maturities to estimate fair value.
POLICYHOLDERS' DIVIDEND ACCUMULATIONS AND OTHER POLICYHOLDER FUNDS:
The carrying amount reported in the consolidated balance sheets for
these instruments approximates their fair value.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Carrying amount and estimated fair value of financial instruments
subject to SFAS 107 and policy reserves on life insurance contracts were
as follow as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------------------------- -------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
- ------
Investments:
Securities available-for-sale:
Fixed maturities $14,167,377 14,167,377 8,045,906 8,045,906
Equity securities 33,718 33,718 24,713 24,713
Fixed maturities held-to-maturity -- -- 3,688,787 3,602,310
Mortgage loans on real estate 4,786,599 5,169,805 4,222,284 4,173,284
Policy loans 370,908 370,908 340,491 340,491
Short-term investments 45,732 45,732 131,643 131,643
Cash 10,485 10,485 7,436 7,436
Assets held in Separate Accounts 18,763,678 18,763,678 12,222,461 12,222,461
LIABILITIES
- -----------
Investment contracts 13,561,943 13,221,724 12,189,894 11,657,556
Policy reserves on life insurance contacts 3,695,814 3,659,074 3,170,085 2,934,384
Policyholders' dividend accumulations 353,554 353,554 338,058 338,058
Other policyholder funds 71,155 71,155 72,770 72,770
Liabilities related to Separate Accounts 18,763,678 18,224,933 12,222,461 11,807,331
</TABLE>
(9) ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURES
--------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a party to
financial instruments with off-balance-sheet risk in the normal course of
business through management of its investment portfolio. These financial
instruments include commitments to extend credit in the form of loans. These
instruments involve, to varying degrees, elements of credit risk in excess
of amounts recognized on the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are agreements
to lend to a borrower, and are subject to conditions established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a deposit. Commitments
extended by the Company are based on management's case-by-case credit
evaluation of the borrower and the borrower's loan collateral. The
underlying mortgage property represents the collateral if the commitment is
funded. The Company's policy for new mortgage loans on real estate is to
lend no more than 80% of collateral value. Should the commitment be funded,
the Company's exposure to credit loss in the event of nonperformance by the
borrower is represented by the contractual amounts of these commitments less
the net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments. Commitments on
mortgage loans on real estate of $361,974 extending into 1996 were
outstanding as of December 31, 1995.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the United
States. The Company has a diversified portfolio with no more than 20% (22%
in 1994) in any geographic area and no more than 2% (2% in 1994) with any
one borrower.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The summary below depicts loans by remaining principal balance as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995:
East North Central $ 140,732 110,361 534,814 184,201 970,108
East South Central 23,978 15,653 183,790 84,588 308,009
Mountain -- 18,940 144,156 48,727 211,823
Middle Atlantic 124,079 72,201 183,562 18,383 398,225
New England 9,594 39,526 153,644 1 202,765
Pacific 190,628 239,687 395,914 107,650 933,879
South Atlantic 101,904 74,731 458,355 279,692 914,682
West North Central 134,866 14,205 81,521 37,586 268,178
West South Central 69,143 99,618 194,717 272,323 635,801
--------- --------- --------- --------- ---------
$ 794,924 684,922 2,330,473 1,033,151 4,843,470
========= ========= ========= =========
Less valuation allowances and unamortized discount 56,871
---------
Total mortgage loans on real estate, net $4,786,599
=========
</TABLE>
<TABLE>
<CAPTION>
Apartment
Office Warehouse Retail & other Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1994:
East North Central $ 109,233 103,499 540,686 191,489 944,907
East South Central 24,298 10,803 127,845 76,897 239,843
Mountain 3,150 13,770 140,358 39,682 196,960
Middle Atlantic 61,299 53,285 140,847 30,111 285,542
New England 10,536 43,282 139,131 4 192,953
Pacific 195,393 210,930 397,911 68,768 873,002
South Atlantic 87,150 81,576 424,150 210,354 803,230
West North Central 127,760 11,766 80,854 4,738 225,118
West South Central 51,013 84,796 184,923 194,788 515,520
--------- --------- --------- --------- ---------
$ 669,832 613,707 2,176,705 816,831 4,277,075
========= ========= ========= =========
Less valuation allowances and unamortized discount 54,791
---------
Total mortgage loans on real estate, net $4,222,284
=========
</TABLE>
(10) PENSION PLAN
------------
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least one
thousand hours of service within a twelve-month period and who have met
certain age requirements. Benefits are based upon the highest average
annual salary of a specified number of consecutive years of the last ten
years of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company.
Effective January 1, 1995, the plan was amended to provide enhanced
benefits for participants who met certain eligibility requirements and
elected early retirement no later than March 15, 1995. The entire cost of
the enhanced benefit was borne by NMIC and certain of its property and
casualty insurance company affiliates.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Effective December 31, 1995, the Nationwide Insurance Companies and
Affiliates Retirement Plan was merged with the Farmland Mutual Insurance
Company Employees' Retirement Plan and the Wausau Insurance Companies
Pension Plan to form the Nationwide Insurance Enterprise Retirement
Plan. Immediately prior to the merger, the plans were amended to provide
consistent benefits for service after January 1, 1996. These amendments had
no significant impact on the accumulated benefit obligation or projected
benefit obligation as of December 31, 1995.
Pension costs charged to operations by the Company during the years ended
December 31, 1995, 1994 and 1993 were $14,105, $10,451 and $6,702,
respectively.
The Company's net accrued pension expense as of December 31, 1995 and
1994 was $1,376 and $1,836, respectively.
The net periodic pension cost for the Nationwide Insurance Companies and
Affiliates Retirement Plan as a whole for the years ended December 31,
1995, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 64,524 64,740 47,694
Interest cost on projected benefit obligation 95,283 73,951 70,543
Actual return on plan assets (249,294) (21,495) (105,002)
Net amortization and deferral 143,353 (62,150) 20,832
--------- --------- ---------
$ 53,866 55,046 34,067
========= ========= =========
</TABLE>
Basis for measurements, net periodic pension cost:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate 7.50% 5.75% 6.75%
Rate of increase in future compensation levels 6.25% 4.50% 4.75%
Expected long-term rate of return on plan assets 8.75% 7.00% 7.50%
</TABLE>
Information regarding the funded status of the Nationwide Insurance
Enterprise Retirement Plan as a whole as of December 31, 1995
(post-merger) and the Nationwide Insurance Companies and Affiliates
Retirement Plan as of December 31, 1995 (pre-merger) and 1994 follows:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Accumulated benefit obligation:
Vested $ 1,236,730 1,002,079 914,850
Nonvested 26,503 8,998 7,570
----------- ----------- -----------
$ 1,263,233 1,011,077 922,420
=========== =========== ===========
Net accrued pension expense:
Projected benefit obligation for services rendered
to date $ 1,780,616 1,447,522 1,305,547
Plan assets at fair value 1,738,004 1,508,781 1,241,771
----------- ----------- -----------
Plan assets (less than) in excess of projected
benefit obligation (42,612) 61,259 (63,776)
Unrecognized prior service cost 42,845 42,850 46,201
Unrecognized net (gains) losses (63,130) (86,195) 39,408
Unrecognized net obligation (asset) at transition 41,305 (19,841) (21,994)
----------- ----------- -----------
$ (21,592) (1,927) (161)
=========== =========== ===========
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of plan:
<TABLE>
<CAPTION>
Post-merger Pre-merger
1995 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Weighed average discount rate 6.00% 6.00% 7.50%
Rate of increase in future compensation levels 4.25% 4.25% 6.25%
</TABLE>
Assets of the Nationwide Insurance Enterprise Retirement Plan are invested
in group annuity contracts of NLIC and ELICW. Prior to the merger, the
assets of the Nationwide Insurance Companies and Affiliates Retirement
Plan were invested in a group annuity contract of NLIC.
(11) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
-------------------------------------------
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years of
service with the Company after reaching age 40. Postretirement health
care benefit contributions are adjusted annually and contain cost-sharing
features such as deductibles and coinsurance. In addition, there are caps
on the Company's portion of the per-participant cost of the postretirement
health care benefits. These caps can increase annually, but not more than
three percent. The Company's policy is to fund the cost of health care
benefits in amounts determined at the discretion of management. Plan
assets are invested primarily in group annuity contracts of NLIC.
Effective January 1, 1993, the Company adopted the provisions of STATEMENT
OF FINANCIAL ACCOUNTING STANDARDS NO. 106 - EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (SFAS 106), which requires the
accrual method of accounting for postretirement life and health care
insurance benefits based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of
employees who are expected to qualify for such benefits.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation as of January 1, 1993. Accordingly, a
noncash charge of $32,275 ($20,979 net of related income tax benefit) was
recorded in the 1993 consolidated statement of income as a cumulative
effect of a change in accounting principle. See note 3. The adoption of
SFAS 106, including the cumulative effect of the change in accounting
principle, increased the expense for postretirement benefits by $35,277
to $36,544 in 1993. Certain affiliated companies elected to amortize their
initial transition obligation over periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of
December 31, 1995 and 1994 was $51,490 and $36,001, respectively, and the
net periodic postretirement benefit cost (NPPBC) for 1995 and 1994 was
$8,269 and $4,627, respectively.
The amount of NPPBC for the plan as a whole for the years ended
December 31, 1995, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits attributed to employee service during the year $ 6,235 8,586 7,090
Interest cost on accumulated postretirement benefit obligation 14,151 14,011 13,928
Actual return on plan assets (2,657) (1,622) --
Amortization of unrecognized transition obligation of affiliates 2,966 568 568
Net amortization and deferral (1,619) 1,622 --
-------- -------- --------
$ 19,076 23,165 21,586
======== ======== ========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the plan as a whole as of
December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accrued postretirement benefit expense:
Retirees $ 88,680 76,677
Fully eligible, active plan participants 28,793 22,013
Other active plan participants 90,375 59,089
--------- ---------
Accumulated postretirement benefit obligation (APBO) 207,848 157,779
Plan assets at fair value 54,325 49,012
--------- ---------
Plan assets less than accumulated postretirement benefit obligation (153,523) (108,767)
Unrecognized transition obligation of affiliates 1,827 6,577
Unrecognized net gains (1,038) (41,497)
--------- ---------
$(152,734) (143,687)
========= =========
</TABLE>
Actuarial assumptions used for the measurement of the APBO as of
December 31, 1995 and 1994 and the NPPBC for 1995, 1994 and 1993 were
as follows:
<TABLE>
<CAPTION>
1995 1995 1994 1994 1993
APBO NPPBC APBO NPPBC NPPBC
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Discount rate 6.75% 8% 8% 7% 8%
Assumed health care cost trend rate:
Initial rate 11% 10% 11% 12% 14%
Ultimate rate 6% 6% 6% 6% 6%
Uniform declining period 12 Years 12 Years 12 Years 12 Years 12 Years
</TABLE>
The health care cost trend rate assumption has an effect on the amounts
reported. For the plan as a whole, a one percentage point increase in
the assumed health care cost trend rate would increase the APBO as of
December 31, 1995 by $641 and the NPPBC for the year ended December 31,
1995 by $107.
(12) REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS AND DIVIDEND
RESTRICTIONS
-------------------------------------------------------------
Each insurance company's state of domicile imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and each of its
insurance subsidiaries exceed the minimum risk-based capital
requirements.
In accordance with the requirements of the New York statutes, the
Company has agreed with the Superintendent of Insurance of that state
that so long as participating policies and contracts are held by
residents of New York, no profits on participating policies and
contracts in excess of the larger of (a) ten percent of such profits or
(b) fifty cents per year per thousand dollars of participating life
insurance in force, exclusive of group term, as of the year-end shall
inure to the benefit of the shareholder. Such New York statutes
further provide that so long as such agreement is in effect, such
excess of profits shall be exhibited as "participating policyholders'
surplus" in annual statements filed with the Superintendent and shall
be used only for the payment or apportionment of dividends to
participating policyholders at least to the extent required by statute
or for the purpose of making up any loss on participating policies.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
In the opinion of counsel for the Company, the ultimate ownership of the
entire surplus, however classified, of the Company resides with the
shareholder, subject to the usual requirements under state laws and
regulations that certain deposits, reserves and minimum surplus be
maintained for the protection of the policyholders until all policy
contracts are discharged.
Based on the opinion of counsel with respect to the ownership of its
surplus, the Company is of the opinion that the earnings attributable to
participating policies in excess of the amounts paid as dividends to
policyholders belong to the shareholder rather than the policyholders,
and such earnings are so treated by the Company.
The amount of shareholder's equity other than capital shares was
$2,664,697, $1,904,664 and $1,647,353 as of December 31, 1995, 1994 and
1993, respectively. The amount thereof not presently available for
dividends to the shareholder due to the New York restrictions was
$1,503,241, $929,934 and $954,037 as of December 31, 1995, 1994 and 1993,
respectively.
Ohio law limits the payment of dividends to shareholders. The maximum
dividend that may be paid by the Company without prior approval of the
Director of the Department is limited to the greater of statutory gain
from operations of the preceding calendar year or 10% of statutory
shareholder's surplus as of the prior December 31. Therefore, $2,468,687
of shareholder's equity, as presented in the accompanying consolidated
financial statements, is so restricted as to dividend payments in 1996.
Each of NLIC's insurance company subsidiaries are limited in their
payment of dividends by the state insurance department of their
respective state of domicile. As of December 31, 1995, the maximum amount
of shareholder's equity available for dividend payment to NLIC in 1996 by
its insurance company subsidiaries without prior approval are:
<TABLE>
<S> <C>
Nationwide Life and Annuity Insurance Company $10,143
West Coast Life Insurance Company 13,153
Employers Life Insurance Company of Wausau 10,132
National Casualty Company --
-------
$33,428
=======
</TABLE>
(13) TRANSACTIONS WITH AFFILIATES
----------------------------
On March 1, 1995, Corp. contributed all of the outstanding shares of
Farmland Life Insurance Company (Farmland) to NLIC, which then merged
Farmland into WCLIC effective June 30, 1995. The contribution resulted in
a direct increase to consolidated shareholder's equity of $46,918. The
contribution of Farmland has been accounted for in a manner similar to a
pooling of interests and accordingly, Farmland's results are included in
the consolidated statements of income beginning January 1, 1995. However,
prior period consolidated financial statements have not been restated due
to the impact of Farmland being immaterial.
Effective December 31, 1994, NLIC purchased all of the outstanding shares
of ELICW from Wausau Service Corporation (WSC) for $155,000. NLIC
transferred fixed maturity securities and cash with a fair value of
$155,000 to WSC on December 28, 1994, which resulted in a realized loss
of $19,239 on the disposition of the securities. The purchase price
approximated both the historical cost basis and fair value of net assets
of ELICW. ELICW has and will continue to share home office, other
facilities, equipment and common management and administrative services
with WSC.
Certain annuity products are sold through three affiliated companies
which are also subsidiaries of Corp. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1995 were
$57,969, $50,470 and $44,577, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
The Company shares home office, other facilities, equipment and common
management and administrative services with affiliates.
The Company participates in intercompany repurchase agreements with
affiliates whereby the seller will transfer securities to the buyer at a
stated value. Upon demand or a stated period, the securities will be
repurchased by the seller at the original sales price plus a price
differential. Transactions under the agreements during 1995 and
1994 were not material.
During 1993, the Company sold equity securities with a market value
$194,515 to NMIC, resulting in a realized gain of $122,823. With the
proceeds, the Company purchased securities with a market value of
$194,139 and cash of $376 from NMIC.
Intercompany reinsurance contracts exist between NLIC and NMIC, NLIC and
WCLIC, NLIC and NCC, WCLIC and NMIC and WCLIC and ELICW as of December
31, 1995. These contracts are immaterial to the consolidated financial
statements.
NCC participates in several 100% quota share reinsurance agreements with
NMIC and Nationwide Mutual Fire Insurance Company, the minority
shareholder of Corp. As a result of these agreements, the following
assets and (liabilities) are included in the consolidated financial
statements as of December 31, 1995 and 1994 for reinsurance ceded:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Reinsurance recoverable $ 590,379 541,289
Unearned premium reserves (112,467) (110,353)
Liability for unpaid claims and claim adjustment expense (477,912) (430,936)
</TABLE>
The ceding of reinsurance does not discharge the original insurer from
primary liability to its policyholder. The insurer which assumes the
coverage assumes the related liability and it is the practice of insurers
to treat insured risks, to the extent of reinsurance ceded, as though
they were risks for which the original insurer is not liable. Management
believes the financial strength of NMIC reduces to an acceptable level
any risk to NCC under these intercompany reinsurance agreements.
ELICW assumes certain accident and health insurance business from
Employers Insurance of Wausau A Mutual Company, an affiliate. During
1995, total premiums assumed by ELICW under the reinsurance
agreement were $150,622.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC) and California Cash Management
Company (CCMC), both affiliates, under which NCMC and CCMC act as common
agents in handling the purchase and sale of short-term securities for the
respective accounts of the participants. Amounts on deposit with NCMC and
CCMC were $21,644 and $92,531 as of December 31, 1995 and 1994,
respectively, and are included in short-term investments on the
accompanying consolidated balance sheets.
(14) BANK LINES OF CREDIT
--------------------
As of December 31, 1995 and 1994, NLIC had $120,000 of confirmed but
unused bank lines of credit which support a $100,000 commercial paper
borrowing authorization.
(15) CONTINGENCIES
-------------
The Company is a defendant in various lawsuits. In the opinion of
management, the effects, if any, of such lawsuits are not expected to be
material to the Company's financial position or results of operations.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Corporation)
Notes to Consolidated Financial Statements, Continued
(16) SEGMENT INFORMATION
-------------------
The Company operates in the long-term savings, life insurance and
accident and health insurance lines of business in the life insurance and
property and casualty insurance industries. Long-term savings operations
include both qualified and non-qualified annuity contracts issued to both
individuals and groups. Life insurance operations include whole life,
universal life, variable universal life and endowment and term life
insurance issued to individuals and groups. Accident and health insurance
operations also provide coverage to individuals and groups. Corporate
primarily includes investments, and the related investment income, which
are not specifically allocated to one of the three operating segments. In
addition, realized gains and losses on all general account investments
are reported as a component of the corporate segment.
During 1995, the Company changed its reporting segments to better reflect
the way the businesses are managed. Prior periods have been restated to
reflect these changes.
The following table summarizes the revenues and income (loss) before
Federal income tax expense and cumulative effect of changes in accounting
principles for the years ended December 31, 1995, 1994 and 1993 and
assets as of December 31, 1995, 1994 and 1993, by business segment.
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Long-term savings $ 1,406,241 1,125,013 1,048,045
Life insurance 502,885 452,795 432,343
Accident and health insurance 532,383 345,545 339,764
Corporate 134,598 122,847 214,374
------------ ------------ ------------
$ 2,576,107 2,046,200 2,034,526
============ ============ ============
Income (loss) before Federal income tax expense and
cumulative effect of changes in accounting principles:
Long-term savings 129,475 95,530 47,966
Life insurance 63,169 46,119 36,383
Accident and health insurance (12,521) 13,221 15,041
Corporate 139,609 118,360 213,511
------------ ------------ ------------
$ 319,732 273,230 312,901
============ ============ ============
Assets:
Long-term savings 34,634,892 25,815,273 20,695,598
Life insurance 3,675,581 3,231,651 2,897,574
Accident and health insurance 307,643 291,296 297,200
Corporate 1,995,995 1,773,913 1,515,989
------------ ------------ ------------
$ 40,614,111 31,112,133 25,406,361
============ ============ ============
</TABLE>
<PAGE> 26
Schedule I
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Summary of Investments - Other Than Investments in Related Parties
December 31, 1995
(000's omitted)
<TABLE>
<CAPTION>
----------------- --------------- ------------------
Column B Column C Column D
----------------- --------------- ---------------
Amount at which
shown in the
consolidated
Cost Market value balance sheet
----------------- ---------------- -------------------
<S> <C> <C> <C>
Fixed maturities available-for-sale:
Bonds and notes:
U.S. Government and government agencies and authorities $ 3,913,961 4,116,744 4,116,744
States, municipalities and political subdivisions 9,742 10,993 10,993
Foreign governments 162,442 172,016 172,016
Public utilities 2,053,701 2,146,000 2,146,000
All other corporate 7,298,784 7,721,624 7,721,624
----------------- ---------------- -------------------
Total fixed maturities available-for-sale 13,438,630 14,167,377 14,167,377
----------------- ---------------- -------------------
Equity securities available-for-sale:
Common stocks:
Industrial, miscellaneous and all other 26,037 32,474 32,474
Non-redeemable preferred stock 1,325 1,244 1,244
----------------- ---------------- -------------------
Total equity securities available-for-sale 27,362 33,718 33,718
----------------- ---------------- -------------------
Mortgage loans on real estate 4,838,432 4,786,599*
Real estate:
Investment properties 213,340 171,739*
Acquired in satisfaction of debt 82,930 67,350*
Policy loans 370,908 370,908
Other long-term investments 73,190 67,280#
Short-term investments 45,732 45,732
----------------- -------------------
Total investments $19,090,524 19,710,703
================= ===================
</TABLE>
* Difference from Column B is primarily due to accumulated depreciation
and valuation allowances due to impairments on real estate and
valuation allowances due to impairments on mortgage loans on real
estate. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations and note 5 to the consolidated
financial statements.
# Difference from Column B is primarily due to operating losses of
investments in limited partnerships.
See accompanying independent auditors' report.
<PAGE> 27
Schedule III
------------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Supplementary Insurance Information
December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Column A Column B Column C Column D Column E Column F
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Deferred Future policy Other policy
policy benefits, losses, claims and
Segment acquisition claims and Unearned premiums benefits payable Premium
costs loss expenses (1) (2) revenue
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
1995: Long-term savings $ 668,784 14,847,449 455 -
Life insurance 416,209 2,494,344 408,990 274,957
Accident and health
insurance 9,202 858,335 15,264 509,658
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,094,195 18,200,128 424,709 784,615
============== ===================== ================== ===============
1994: Long-term savings 663,696 13,300,015 240 -
Life insurance 387,486 2,245,375 397,174 209,538
Accident and health
insurance 12,977 776,071 13,414 324,524
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $1,064,159 16,321,461 410,828 534,062
============== ===================== ================== ===============
1993: Long-term savings 506,243 11,308,024 1,262 -
Life insurance 291,683 2,047,844 378,788 215,715
Accident and health
insurance 14,018 736,387 14,595 312,655
Corporate - - - -
-------------- --------------------- ------------------ ---------------
Total $ 811,944 14,092,255 394,645 528,370
============== ===================== ================== ===============
- ----------------------------------- -------------- -------------------- ------------------ ----------------- --------------
Column A Column G Column H Column I Column J Column K
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
Net Amortization Other
investment Benefits, claims, of deferred operating
Segment income losses and policy expenses Premiums
(3) settlement expenses acquisition costs (3) written
- ----------------------------------- -------------- -------------------- ------------------- ------------------ ---------------
1995: Long-term savings $1,124,207 1,009,632 51,998 210,525
Life insurance 202,285 267,123 34,124 94,461
Accident and health
insurance 22,725 379,532 6,922 153,984 473,513
Corporate 133,763 - - -
-------------- -------------------- ------------------- ------------------
Total $1,482,980 1,656,287 93,044 458,970
============== ==================== =================== ==================
1994: Long-term savings 945,318 807,756 56,236 171,038
Life insurance 183,933 237,125 33,394 90,535
Accident and health
insurance 21,020 234,882 5,114 90,829 315,688
Corporate 139,230 - - -
-------------- -------------------- ------------------- ------------------
Total $1,289,501 1,279,763 94,744 352,402
============== ==================== =================== ==================
1993: Long-term savings 897,639 800,385 43,291 157,046
Life insurance 178,978 227,786 35,220 89,496
Accident and health
insurance 27,108 208,735 23,623 82,854 263,117
Corporate 100,701 - - -
-------------- -------------------- ------------------- ------------------
Total $1,204,426 1,236,906 102,134 329,396
============== ==================== =================== ==================
<FN>
(1) Unearned premiums are included in Column C amounts. (3) Allocations of net investment income and certain general
(2) Column E agrees to the sum of the consolidated balance expenses are based on a number of assumptions and
sheet captions, "Policyholders' dividend estimates, and reported operating results would
accumulations" and "Other policyholder funds". change by segment if different methods were applied.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 28
Schedule IV
-----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Reinsurance
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
Percentage
Ceded to Assumed from of amount
Gross amount other companies other companies Net amount assumed to net
------------------- ------------------ ----------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
1995:
Life insurance in force $51,613,116 6,865,011 742,451 45,490,556 1.6%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 281,687 12,817 6,087 274,957 2.2%
Accident and health
insurance 427,943 73,131 154,846 509,658 30.4%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 709,630 85,948 160,933 784,615 20.5%
=================== ================== ================= ================== ===============
1994:
Life insurance in force $46,262,595 5,289,259 819,799 41,793,135 2.0%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 209,918 7,551 7,171 209,538 3.4%
Accident and health
insurance 389,573 69,095 4,046 324,524 1.2%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 599,491 76,646 11,217 534,062 2.1%
=================== ================== ================= ================== ===============
1993:
Life insurance in force $39,417,116 4,352,071 180,739 35,245,784 0.5%
=================== ================== ================= ================== ===============
Premiums:
Life insurance 218,764 6,161 3,112 215,715 1.4%
Accident and health
insurance 398,289 88,506 2,872 312,655 0.9%
------------------- ------------------ ----------------- ------------------ ---------------
Total $ 617,053 94,667 5,984 528,370 1.1%
=================== ================== ================= ================== ===============
</TABLE>
See accompanying independent auditors' report.
<PAGE> 29
Schedule V
----------
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1995, 1994 and 1993
(000's omitted)
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Column A Column B Column C Column D Column E
- ------------------------------------------------- ---------------- ----------------------------- ------------- -------------
Balance at Charged to Balance at
beginning of costs and Charged to Deductions end of
Description period expenses other accounts (1) period
- ------------------------------------------------- ---------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1995:
Valuation allowances - fixed maturity securities $ - 10,153 - 10,153 -
Valuation allowances - mortgage loans on real
estate 47,892 7,653 - 4,850 50,695
Valuation allowances - real estate 27,330 (1,080) - - 26,250
Valuation allowances - other long-term
investments - 457 - - 457
1994:
Valuation allowances - fixed maturity securities 6,680 (6,680) - - -
Valuation allowances - mortgage loans on real
estate 42,350 21,672 - 16,130 47,892
Valuation allowances - real estate 31,357 (4,027) - - 27,330
1993:
Valuation allowances - fixed maturity securities 5,746 934 - - 6,680
Valuation allowances - mortgage loans on real
estate 31,872 28,241 - 17,763 42,350
Valuation allowances - real estate 35,471 (4,114) - - 31,357
Valuation allowances - other long-term
investments 700 (700) - - -
<FN>
(1) Amounts represent direct write-downs charged against the valuation
allowance.
</TABLE>
See accompanying independent auditors' report.
<PAGE> 47
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1)Financial statements and schedule included PAGE
in Prospectus
(Part A):
Condensed Financial Information 15
(2)Financial statement included in Part B
as required by Item 23. 45
Nationwide Fidelity Advisor Variable Account:
Independent Auditors' Report. 45
Statement of Assets, Liabilities and
Contract Owners' Equity as of December 31, 1995. 46
Statement of Operations and Changes in
Contract Owners' Equity for the year
ended December 31, 1995. 48
Notes to Financial Statements. 49
Schedules of Changes in Unit Value. 51
Nationwide Life Insurance Company:
Independent Auditors' Report. 53
Consolidated Balance Sheets as of December 54
31, 1995 and 1994.
Consolidated Statements of Income for the 55
years ended December 31, 1995, 1994 and
1993.
Consolidated Statements of Shareholder's 56
Equity for the years ended December 31,
1995, 1994 and 1993.
Consolidated Statements of Cash Flows for 57
the years ended December 31, 1995, 1994
and 1993.
Notes to Consolidated Financial Statements. 58
Schedule I - Summary of Investments - Other Than
Investments in Related Parties. 78
Schedule III - Supplementary Insurance Information. 79
Schedule IV - Reinsurance. 80
Schedule V - Valuation and Qualifying Accounts. 81
82 of 99
<PAGE> 48
Item 24. (b) Exhibits
(1) Resolution of Depositor's Board of Directors
authorizing the establishment of the Registrant. -
Filed previously with the Registration Statement
(File No. 33-82174) on November 8, 1994, and hereby
incorporated by reference.
(2) Not Applicable
(3) Form of the Underwriting or Distribution contracts
between the Registrant and the Principal Underwriter.
- Filed previously with the Registration Statement
(File No. 33-82174) on November 8, 1994, and hereby
incorporated by reference.
(4) The form of the variable annuity contract. - Filed
previously with the Registration Statement (File No.
33-82174) on November 8, 1994, and hereby
incorporated by reference.
(5) The variable annuity application. - Filed previously
with the Registration Statement (File No. 33-82174)
on November 8, 1994, and hereby incorporated by
reference.
(6) Articles of Incorporation of the Depositor. - Filed
previously with the Registration Statement (File No.
33-82174) on November 8, 1994, and hereby
incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with the
Registration Statement (File No. 33-82174) on
November 8, 1994, and hereby incorporated by
reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Computation of Performance Quotations - Filed
previously with the Registration Statement (File No.
33-82174) on November 8, 1994, and hereby
incorporated by reference.
83 of 99
<PAGE> 49
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olives, NC 28365
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
84 of 99
<PAGE> 50
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President,
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
James E. Brock Senior Vice President -
One Nationwide Plaza Life Company Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President-Chief Actuary-
One Nationwide Plaza Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
85 of 99
<PAGE> 51
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Matthew S. Easley Vice President -
One Nationwide Plaza Annuity and Pension Actuarial
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President -
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
****other subsidiaries
86 of 99
<PAGE> 52
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C>
Affiliate Agency of Ohio Life Insurance Agency
Ohio, Inc.
Affiliate Agency, Inc. Delaware Life Insurance Agency
Allnations, Inc. Ohio Promotes cooperative insurance
corporations worldwide
American Marine Florida Underwriting Manager
Underwriters, Inc.
Auto Direkt Insurance Germany Insurance Company
Company
The Beak and Wire Ohio Radio Tower Joint Venture
Corporation
California Cash California Investment Securities Agent
Management Company
Colonial County Mutual Texas Insurance Company
insurance Company
Colonial Insurance California Insurance Company
Company of California
Columbus Insurance Germany Insurance Broker
Brokerage and Service
GMBH
Companies Agency California Insurance Broker
Insurance Services of
California
Companies Agency of Alabama Insurance Broker
Alabama, Inc.
Companies Agency of Idaho Insurance Broker
Idaho, Inc.
Companies Agency of Illinois Acts as Collection Agent for
Illinois, Inc. Policies placed through Brokers
Companies Agency of Kentucky Insurance Broker
Kentucky, Inc.
Companies Agency of Massachusetts Insurance Broker
Massachusetts, Inc.
Companies Agency of New New York Insurance Broker
York, Inc.
Companies Agency of Pennsylvania Insurance Broker
Pennsylvania, Inc.
Companies Agency of Arizona Insurance Broker
Phoenix, Inc.
Companies Agency of Texas Insurance Broker
Texas, Inc.
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Annuity Agency Texas Insurance Broker
of Texas, Inc.
Countrywide Services Delaware Products Liability,
Corporation Investigative and Claims
Management Services
Employers Insurance of Wisconsin Insurance Company
Wausau A Mutual Company
</TABLE>
87 of 99
<PAGE> 53
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C>
** Employers Life Insurance Wisconsin Life Insurance Company
Company of Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Iowa Insurance Company
Insurance Company
Financial Horizons Alabama Life Insurance Agency
Distributors Agency of
Alabama, Inc.
Financial Horizons Ohio Insurance Agency
Distributors Agency of
Ohio
Financial Horizons Oklahoma Life Insurance Agency
Distributors Agency of
Oklahoma, Inc.
Financial Horizons Texas Life Insurance Agency
Distributors Agency of
Texas, Inc.
* Financial Horizons Massachusetts Investment Company
Investment Trust
Financial Horizons Oklahoma Broker Dealer
Securities Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Nevada Self-Insurance Administration
Company of Nevada Claims Examinations and Data
Processing Services
Gates, McDonald & New York Workers Compensation Claims
Company of New York, Inc. Administration
Greater La Crosse Health Wisconsin Writes Commercial Health and
Plans, Inc. Medicare Supplement Insurance
InHealth Agency, Inc. Ohio Insurance Agency
InHealth Management Ohio Develops and operates Managed
Systems, Inc. Care Delivery System
Insurance Ohio Insurance Broker and Insurance
Intermediaries, Inc. Agency
Key Health Plan, Inc. California Pre-paid health plans
Landmark Financial New York Life Insurance Agency
Services of New York,
Inc.
Leben Direkt Insurance Germany Life Insurance Company
Company
Lone Star General Texas Insurance Agency
Agency, Inc.
** MRM Investments, Inc. Ohio Owns and operates a
Recreational Ski Facility
** National Casualty Company Michigan Insurance Company
National Casualty Great Britain Insurance Company
Company of America, Ltd.
** National Premium and Delaware Insurance Administrative
Benefit Administration Services
Company
Nationwide Agribusiness Iowa Insurance Company
Insurance Company
Nationwide Cash Ohio Investment Securities Agent
Management Company
</TABLE>
88 of 99
<PAGE> 54
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Nationwide Ohio Radio Broadcasting Business
Communications, Inc.
Nationwide Community Ohio Redevelopment of blighted areas
Urban Redevelopment within the City of Columbus,
Corporation Ohio
Nationwide Corporation Ohio Organized for the purpose of
acquiring, holding,
encumbering,
transferring, or
otherwise disposing
of shares, bonds,
and other evidences
of indebtedness,
securities, and
contracts of other
persons,
associations,
corporations,
domestic or foreign
and to form or
acquire the control
of other
corporations
Nationwide Development Ohio Owns, leases and manages
Company commercial real estate
Nationwide Financial Delaware Insurance Agency
Institution Distributors
Agency, Inc.
** Nationwide Advisory Ohio Registered Broker-Dealer,
Services, Inc. Investment Manager and
Administrator
Nationwide General Ohio Insurance Company
Insurance Company
Nationwide HMO, Inc. Ohio Health Maintenance Organization
* Nationwide Indemnity Ohio Reinsurance Company
Company
Nationwide Insurance Ohio Membership Non-Profit
Enterprise Foundation Corporation
Nationwide Insurance Ohio Membership Non-Profit
Golf Charities, Inc. Corporation
Nationwide Investing Michigan Investment Company
Foundation
* Nationwide Investing Massachusetts Investment Company
Foundation II
Nationwide Investment Oklahoma Registered Broker-Dealer in
Services Corporation Deferred Compensation Market
Nationwide Investors Ohio Stock Transfer Agent
Services, Inc.
** Nationwide Life and Ohio Life Insurance Company
Annuity Insurance Company
** Nationwide Life Ohio Life Insurance Company
Insurance Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Mutual Fire Ohio Insurance Company
Insurance Company
Nationwide Mutual Ohio Insurance Company
Insurance Company
Nationwide Property and Ohio Insurance Company
Casualty Insurance
Company
** Nationwide Property Ohio Owns, leases, manages and deals
Management, Inc. in Real Property
</TABLE>
89 of 99
<PAGE> 55
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
* Nationwide Separate Massachusetts Investment Company
Account Trust
NEA Valuebuilder Alabama Life Insurance Agency
Investor Services of
Alabama, Inc.
NEA Valuebuilder Arizona Life Insurance Agency
Investor Services of
Arizona, Inc.
NEA Valuebuilder Massachusetts Life Insurance Agency
Investor Services of
Massachusetts, Inc.
NEA Valuebuilder Montana Life Insurance Agency
Investor Services of
Montana, Inc.
NEA Valuebuilder Nevada Life Insurance Agency
Investor Services of
Nevada, Inc.
NEA Valuebuilder Ohio Life Insurance Agency
Investor Services of
Ohio, Inc.
NEA Valuebuilder Oklahoma Life Insurance Agency
Investor Services of
Oklahoma, Inc.
NEA Valuebuilder Texas Life Insurance Agency
Investor Services of
Texas, Inc.
NEA Valuebuilder Wyoming Life Insurance Agency
Investor Services of
Wyoming
NEA Valuebuilder Delaware Life Insurance Agency
Investor Services, Inc.
NEA Valuebuilder Massachusetts Life Insurance Agency
Services Insurance
Agency, Inc.
Neckura General Germany Insurance Company
Insurance Company
Neckura Holding Company Germany Administrative Service for
Neckura Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Germany Life Insurance Company
Company
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Massachusetts Markets and Administers
Insurance Agency, Inc. Deferred Compensation Plans for
Public Employees
PEBSCO of Texas, Inc. Texas Markets and Administers
Deferred Compensation Plans for
Public Employees
Pension Associates of Wisconsin Pension plan administration,
Wausau, Inc. record keeping and consulting
and compensation consulting
Public Employees Benefit Delaware Marketing and Administration of
Services corporation Deferred Employee Compensation
Plans for Public Employees
Public Employees Benefit Alabama Markets and Administers
Services Corporation of Deferred Compensation Plans for
Alabama Public Employees
</TABLE>
90 of 99
<PAGE> 56
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE
OF ATTACHED
COMPANY ORGANIZATION CHART) PRINCIPAL BUSINESS
UNLESS
OTHERWISE
INDICATED
<S> <C> <C> <C>
Public Employees Benefit Arkansas Markets and Administers
Services Corporation of Deferred Compensation Plans for
Arkansas Public Employees
Public Employees Benefit Montana Markets and Administers
Services Corporation of Deferred Compensation Plans for
Montana Public Employees
Public Employees Benefit New Mexico Markets and Administers
Services Corporation of Deferred Compensation Plans for
New Mexico Public Employees
Scottsdale Indemnity Ohio Insurance Company
Company
Scottsdale Insurance Ohio Insurance Company
Company
SVM Sales GmbH, Neckura Germany Sales support for Neckura
Insurance Group Insurance Group
Wausau Business Illinois Insurance Company
Insurance Company
Wausau General Insurance Illinois Insurance Company
Company
Wausau Insurance Company United Insurance and Reinsurance
(U.K.) Limited Kingdom Company
Wausau International California Special Risks, Excess and
Underwriters Surplus Lines Insurance
Underwriting Manager
** Wausau Preferred Health Wisconsin Insurance and Reinsurance
Insurance Company Company
Wausau Service Wisconsin Holding Company
Corporation
Wausau Underwriters Wisconsin Insurance Company
Insurance Company
** West Coast Life California Life Insurance Company
Insurance Company
</TABLE>
91 of 99
<PAGE> 57
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
(SEE ATTACHED CHART)
STATE UNLESS OTHERWISE
OF INDICATED
COMPANY ORGANIZATION PRINCIPAL BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* NACo Variable Account Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* Nationwide DC Variable Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* Nationwide DCVA-II Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* Separate Account No. 1 Ohio Nationwide Life Issuer of Annuity
Separate Account Contracts
* Nationwide Multi-Flex Ohio Nationwide Life Issuer of Annuity
Variable Account Separate Account Contracts
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity
Account-A Annuity Separate Contracts
Account
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity
Account-B Annuity Separate Contracts
Account
Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity
Account-C Annuity Separate Contracts
Account
* Nationwide VA Separate Ohio Nationwide Life and Issuer of Annuity
Account-Q Annuity Separate Contracts
Account
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-II Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-3 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-4 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-5 Separate Account Contracts
* Nationwide Fidelity Ohio Nationwide Life Issuer of Annuity
Advisor Variable Account Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-6 Separate Account Contracts
* Nationwide Variable Ohio Nationwide Life Issuer of Annuity
Account-8 Separate Account Contracts
* Nationwide VL Separate Ohio Nationwide Life and Issuer of Life
Account-A Annuity Separate Insurance Contracts
Account
* Nationwide VL Separate Ohio Nationwide Life and Issuer of Life
Account - B Annuity Separate Insurance Contracts
Account
* Nationwide VLI Separate Ohio Nationwide Life Issuer of Life
Account Separate Account Insurance Contracts
* Nationwide VLI Separate Ohio Nationwide Life Issuer of Life
Account-2 Separate Account Insurance Contracts
* Nationwide VLI Separate Ohio Nationwide Life Issuer of Life
Account-3 Separate Account Insurance Contracts
</TABLE>
92 of 99
<PAGE> 58
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side}
______________________
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|______________________|
<S> <C> <C>
________________________________________________________________________________________________
| EMPLOYERS INSURANCE OF WAUSAU |
| A MUTUAL COMPANY |
| (EMPLOYERS) |_________________________________
| Contribution Note Cost |_________________________________
| ----------------- ---- |
| Casualty $400,000,000 |
|________________________________________________________________________________________________|
| |
_____________|_________________ _____________|__________________ _____________________ __________________
| WAUSAU INSURANCE CO. | | WAUSAU SERVICE | | | | |
| (U.K.) LIMITED | | CORPORATION (WSC) | | | | |
| | | | | NATIONWIDE LLOYDS | | COMPANIES |
| Common Stock: 8,506,800 | | Common Stock: 1,000 | | | | |
| ------------- Shares | | ------------- Shares |_____| |_____| AGENCY OF |
| | | |_____| |_____| |
| Cost | | Cost | | | | TEXAS, INC. |
| ---- | | ---- | | A TEXAS LLOYDS | | |
| Employers-- | | Employers-- | | | | |
| 100% $15,683,300 | | 100% $106,763,000 | | | | |
|_______________________________| |________________________________| |_____________________| |__________________|
|
| ______________________________
| | WAUSAU BUSINESS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 10,900,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ----- |
| | WSC-100% $21,800,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU UNDERWRITERS |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 8,750 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $44,560,006 |
| |______________________________|
|
| ______________________________
| | GREATER LA CROSSE |
| | HEALTH PLANS, INC. |
| | |
| | Common Stock: 3,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-33.3% $861,761 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ALABAMA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF KENTUCKY, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PENNSYLVANIA, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $100 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF MASSACHUSETTS, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF NEW YORK, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF PHOENIX, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF IDAHO, INC. |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
|
| ______________________________
| | COUNTRYWIDE SERVICES |
| | CORPORATION |
| | |
| | Common Stock: 100 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $145,852 |
| |______________________________|
|
|
| ______________________________
| | WAUSAU GENERAL |
| | INSURANCE COMPANY |
| | |
| | Common Stock: 200,000 |
|____| ------------ Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $31,000,000 |
| |______________________________|
|
| ______________________________
| | WAUSAU INTERNATIONAL |
| | UNDERWRITERS |
| | |
| | Common Stock: 1,000 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $10,000 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | INSURANCE SERVICES |
| | OF CALIFORNIA |
| | |
|____| Common Stock: 1,000 |
| | ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $1,000 |
| |______________________________|
|
| ______________________________
| | AMERICAN MARINE |
| | UNDERWRITERS, INC. |
| | |
| | Common Stock: 20 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $248,222 |
| |______________________________|
|
| ______________________________
| | COMPANIES AGENCY |
| | OF ILLINOIS, INC. |
| | |
| | Common Stock: 250 |
|____| ------------- Shares |
| | |
| | Cost |
| | ---- |
| | WSC-100% $2,500 |
| |______________________________|
|
| ______________________________ _____________________________
| | COMPANIES AGENCY, INC. | | PENSION ASSOCIATES |
| | | | OF WAUSAU, INC. |
| | | | |
| | Common Stock: 100 | | Common Stock: 1,000 |
|____| ------------- Shares |____| ------------- Shares |
| | | |
| Cost | | Companies Cost |
| ---- | | Agency, Inc. ---- |
| WSC-100% $10,000 | | (Wisconsin) -- $10,000 |
|______________________________| | 100% |
|_____________________________|
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C> <C>
_________________________________
| |
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
|_________________________________|
_________________________________________ ___________________________
| | | |
___| NATIONWIDE MUTUAL |_____________________________________________| NATIONWIDE MUTUAL |
___| INSURANCE COMPANY |_____________________________________________| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
|_________________________________________| |___________________________|
| || |________________________________________________________________ |
| || | | |
______________|_______________ || | _____________________________ _____________|_______|______________
| | || | | | | |
| ALLNATIONS, INC. | || | | NATIONWIDE GENERAL | | NATIONWIDE |
| | || | | INSURANCE COMPANY | | CORPORATION |
| Common Stock: 2,936 | || | | | | |
| ------------- Shares | || | | Common Stock: 20,000 Shares | | Common Stock: Control |
| Cost | || |___| ------------- | | ------------- ------- |
| ---- | || | | | | $13,642,432 100% |
| Casualty-26% $88,320 | || | | Cost | | |
| Fire-26% $88,463 | || | | ---- | | Shares Cost |
| Preferred Stock: 1,466 Shares| || | | Casualty-100% $5,944,422 | | ----- ---- |
| ---------------- | || | |_____________________________| | Casualty 12,992,922 $751,352,485 |
| Cost | || | | Fire 649,510 24,007,936 |
| ---- | || | | |
| Casualty-6.8% $100,000 | || | | (See Page 2) |
| Fire-6.8% $100,000 | || | |____________________________________|
|______________________________| || |
|| |
_________________________ || | _____________________________
| | || | | |
| FARMLAND MUTUAL | || | | NATIONWIDE PROPERTY |
| INSURANCE COMPANY | || | | AND CASUALTY |
| | || | | INSURANCE COMPANY |
| Guaranty Fund |______|| | | |
| ------------- |_______| | | Common Stock: 60,000 Shares |
| Certificate | | | ------------- |
| ----------- | | | Cost |
| | | | ---- |
| Cost | | | Casualty-100% $6,000,000 |
| ---- | | |_____________________________|
| Casualty $500,000 | |
|_________________________| | _____________________________
| | | |
| | | COLONIAL INSURANCE |
_______________|___________ | | COMPANY OF CALIFORNIA |
| F & B, INC. | | | (COLONIAL) |
| | | | |
| Common Stock: 1 Share | |___| Common Stock: 1,750 Shares |
| ------------- | | | ------------- |
| | | | Cost |
| Cost | | | ---- |
| ---- | | | Casualty-100% $11,750,000 |
| Farmland Mutual- $10 | | |_____________________________|
| 100% | |
|___________________________| | _____________________________ __________________________
____________________________ | | | | |
| | | | SCOTTSDALE | | NATIONAL PREMIUM & |
| NATIONWIDE AGRIBUSINESS | | | INSURANCE COMPANY | | BENEFIT ADMINISTRATION |
| INSURANCE COMPANY | | | | | COMPANY |
| | | | Common Stock: 30,136 Shares | | |
| Common Stock: 1,000,000 |___|___| ------------- |______| Common Stock: 10,000 |
| ------------- Shares | | | | | ------------ Shares |
| | | | Cost | | |
| | | | ---- | | Cost |
| | | | Casualty-100% $150,000,000 | | ---- |
| Casualty-99.9% $26,714,335 | | |_____________________________| | Scottsdale-100% $10,000 |
| | | |__________________________|
| Other Capital: | |
| -------------- | |
| Casualty-Ptd. $ 713,567 | |
|____________________________| |
|
|
|
|
| _____________________________ ______________________________
| | NECKURA HOLDING | | NECKURA |
| | COMPANY (NECKURA) | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 10,000 Shares | | Common Stock: 6,000 Shares |
|___| ------------- |_____________________| ------------- |
| | | | | |
| | Cost | | | Cost |
| | --- | | | ---- |
| | Casualty-100% $87,943,140 | | | Neckura-100% DM 6,000,000 |
| |_____________________________| | |______________________________|
| |
| | _____________________________
| | | NECKURA LIFE |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 4,000 Shares |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 15,825,681 |
| | |_____________________________|
| |
| | _____________________________
| | | NECKURA GENERAL |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| |_____| ------------ |
| | | |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,656,925 |
| | |_____________________________|
| |
| | _____________________________
| | | COLUMBUS INSURANCE |
| | | BROKERAGE AND SERVICE |
| | | GmbH |
| | | |
| | | Common Stock: 1 Share |
| |_____| ------------- |
| | | |
| | | Cost |
| | | ----- |
| | | Neckura-100% DM 51,639 |
| | |_____________________________|
| |
| | _____________________________
| | | AUTO DIREKT |
| | | INSURANCE COMPANY |
| | | |
| | | Common Stock: 1,500 Shares |
| | | ------------- |
| |_____| |
| | | Cost |
| | | ---- |
| | | Neckura-100% DM 1,643,149 |
| | |_____________________________|
| |
| _____________________________ | ____________________________
| | NATIONWIDE | | | SVM SALES |
| | DEVELOPMENT COMPANY | | | GmbH |
| | | | | |
| | Common Stock: 99,000 Shares | | | Common Stock: 50 Shares |
| | ------------- | |_____| ------------- |
| | | | |
|___| Cost | | Cost |
| | --- | | ---- |
| | Casualty-100% $15,100,000 | | Neckura-100% DM 50,000 |
| | Other Capital: | |____________________________|
| | -------------- |
| | Casualty-Ptd. $ 2,796,100 |
| |_____________________________|
|
|
| _____________________________
| | SCOTTSDALE |
| | INDEMNITY COMPANY |
| | |
|___| Common Stock: 50,000 Shares |
| | ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $8,800,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE |
| | INDEMNITY COMPANY |
| | |
| | Common Stock: 28,000 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $294,529,000 |
| |_____________________________|
|
| _____________________________ __________________________
| | LONE STAR | | COLONIAL COUNTY MUTUAL |
| | GENERAL AGENCY, INC. | | INSURANCE COMPANY |
| | | | |
| | Common Stock: 1,000 Shares |______| Surplus Debentures: |
|___| ------------- |______| ------------------- |
| | | | |
| | Cost | | Cost |
| | ---- | | ---- |
| | Casualty-100% $5,000,000 | | Colonial $500,000 |
| |_____________________________| | Lone Star 150,000 |
| |__________________________|
|
| _____________________________
| | NATIONWIDE |
| | COMMUNITY URBAN |
| | REDEVELOPMENT |
| | CORPORATION |
| | |
| | Common Stock: 10 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,000 |
| |_____________________________|
|
| _____________________________
| | INSURANCE |
| | INTERMEDIARIES, INC. |
| | |
| | Common Stock: 1,615 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $1,615,000 |
| |_____________________________|
|
| _____________________________
| | NATIONWIDE CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 100 Shares |
| | ------------- |
|___| |
| | Cost |
| | ---- |
| | Casualty-90% $9,000 |
| | NW Fin Serv- 1,000 |
| | 10% |
| |_____________________________|
|
|
| _____________________________
| | CALIFORNIA CASH |
| | MANAGEMENT COMPANY |
| | |
| | Common Stock: 90 Shares |
|___| ------------- |
| | |
| | Cost |
| | ---- |
| | Casualty-100% $9,000 |
| |_____________________________|
|
|
| _____________________________ __________________________
| | NATIONWIDE | | THE BEAK AND |
| | COMMUNICATIONS, INC. | | WIRE CORPORATION |
| | | | |
| | Common Stock: 14,750 Shares | | Common Stock: 750 Shares |
|___| ------------- |_____| ------------- |
| | | |
| Cost | | Cost |
| ---- | | ---- |
| Casualty-100% $11,510,000 | | NW Comm- $531,000 |
| | | 100% |
| Other Capital: | |__________________________|
| -------------- |
| Casualty-Ptd. 1,000,000 |
|_____________________________|
<FN>
Subsidiary Companies - Solid Line
Contractual Association - Double Line
December 31, 1995
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (left side)
<S> <C> <C>
_______________________________________
| |
| EMPLOYERS INSURANCE |___________________________________________
| OF WAUSAU |___________________________________________
| A MUTUAL COMPANY |
|_______________________________________|
__________________________
|
____________|_________________
| NATIONWIDE LIFE INSURANCE |
| COMPANY (NW LIFE) |
|Common Stock: 3,814,779 Shares|
| ------------- |
| |
| NW Corp.- Cost |
| 100% ---- |
| $950,226,915 |
|______________________________|
_________________________________________________________________________________|
____________|_____________ ___________|_______________ | ______________________________
| NATIONWIDE | | NATIONAL CASUALTY | | | NATIONWIDE LIFE AND |
| FINANCIAL SERVICES, INC. | | COMPANY (NC) | | | ANNUITY INSURANCE COMPANY |
| (NW FIN. SERV.) | | Common Stock: 100 Shares | | | |
______|Common Stock: 7,676 Shares| | ------------- | | | Common Stock: 66,000 Shares |
| ____|------------- | | | |_______| ------------- |
| | | Cost | | Cost | | | NW Life- Cost |
| | | ---- | | ---- | | | 100% ---- |
| | | NW Life-100% $5,996,261 | | NW Life-100% $66,132,811 | | | $58,070,003 |
| | |__________________________| |___________________________| | |______________________________|
| | __________________________ ___________|_______________ | ________________________________
| | | NATIONWIDE | | | | | WEST COAST LIFE |
| | | INVESTOR SERVICES, INC. | | | | | INSURANCE COMPANY |
| | | Common Stock: 5 Shares | | NCC OF AMERICA, INC. | | | Common Stock: 1,000,000 Shares|
| |___| ------------- | | (INACTIVE) | |_______| ------------- |
| | | NW Fin. Serv.-100% | | | | | |
| | | Cost | | NC-100% | | | Cost |
| | | ---- | | | | | ---- |
| | | $5,000 | | | | | NW Life-100% $133,809,265 |
| | |__________________________| |___________________________| | |________________________________|
| | __________________________ ______________________________ | ____________________________
| | | NATIONWIDE | | EMPLOYERS LIFE INSURANCE CO. | | | NATIONWIDE PROPERTY |
| | | INVESTING | | OF WAUSAU (ELIOW) | | | MANAGEMENT, INC. |
| | | FOUNDATION | | | | | Common Stock: 59 Shares |
| |___| | ______| Common Stock: 250,000 Shares |____|_______| ------------ |
| ___| | | | ------------- Cost | | | Cost |
| | | | | | ---- | | | ---- |
| | | | | | NW Life-100% $155,000,000 | | | NW Life-100% $1,907,896 |
| | | COMMON LAW TRUST | | |______________________________| | |__________________________ |
| | |__________________________| | | |
| | | _____________________________ | __________|_______________
| | __________________________ | | WAUSAU PREFERRED | | | MRM INVESTMENTS, INC. |
| | | NATIONWIDE | | | HEALTH INSURANCE CO. | | | |
| | | INVESTING | | | | | | Common Stock: 1 Share |
| |___| FOUNDATION II | |______| Common Stock: 200 Shares | | | ------------ |
| ___| | | | ------------- | | | |
| | | | | | Cost | | | Cost |
| | | | | | ---- | | | Nat. Prop. ---- |
| | | COMMON LAW TRUST | | | ELIOW -- 100% $57,413,193 | | | Mgmt.-100% $550,000 |
| | |__________________________| | |_____________________________| | |___________________________|
| | | |
| | | _____________________________ | ___________________________
| | __________________________ | | KEY HEALTH PLAN, INC. | | | NWE, INC. |
| | | NATIONWIDE | | | | | | |
| | | SEPARATE ACCOUNT | |______| Common Stock: 1,000 Shares | |______| Common Stock: 100 Shares |
| | | TRUST | | ------------- | | ------------ |
| |___| | | Cost | | Cost |
| ___| | | ---- | | ---- |
| | | COMMON LAW TRUST | | ELIOW-80% $2,700,000 | | NW Life-100% $35,971,375 |
| | | | |_____________________________| |___________________________|
| | |__________________________|
| |
| | __________________________
| | | FINANCIAL HORIZONS |
| | | INVESTMENT TRUST |
| |___| |
|_____| |
| COMMON LAW TRUST |
|__________________________|
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (middle)
<S> <C> <C> <C>
_______________________________________
| |
________________________________| NATIONWIDE MUTUAL |___________________________________________________________
________________________________| INSURANCE COMPANY |___________________________________________________________
| (CASUALTY) |
|_______________________________________|
| _______________________________________________________________
__________________|______________|___
| NATIONWIDE CORPORATION (NW Corp) |
| Common Stock: Control: |
| ------------- ------- |
| 13,642,432 100% |
| |
| Shares Cost |
| ------ ---- |
| Casualty 12,992,922 $751,352,485 |
| Fire 649,510 24,007,936 |
|_____________________________________|
|
____________________________________________________|______________________________________________________________________________
| | |
___________|_________________ _____________|_____________ ____________|______________
| PUBLIC EMPLOYEES BENEFIT | | GATES, McDONALD | | NATIONWIDE FINANCIAL |
|SERVICES CORPORATION (PEBSCO) | | & COMPANY (GATES) | | INSTITUTION DISTRIBUTORS |
______| Common Stock: 236,494 Shares | | Common Stock: 254 Shares | | AGENCY, INC. (NFIDAI)|
| ____| ------------- | | ------------- |___ _____| Common Stock: 1,000 Shares|
| | | Cost | | | | | ___| ------------- |
| | | NW Corp.- ---- | | Cost | | | | | Cost |
| | | 100% $ 7,830,936 | | ---- | | | | | NW Corp. ---- |
| | |______________________________| | NW Corp.- $25,683,532 | | | | | 100% $19,501,000 |
| | | 100% | | | | |___________________________|
| | |___________________________| | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | | ___________________________
| | | PEBSCO SECURITIES | | OF NEW YORK, INC. | | | | | FINANCIAL HORIZONS |
| | | CORP. | | Common Stock: 3 Shares | | | | | DISTRIBUTORS AGY. |
| |____| Common Stock: 5,000 Shares | | ------------- |___| | | | OF ALABAMA, INC. |
| | | ------------- | | | | | |___|Common Stock: 10,000 Shares|
| | | Cost | | Cost | | | | |----------- |
| | | ---- | | ---- | | | | | Cost |
| | | PEBSCO-100% $25,000 | | Gates-100% $106,947 | | | | | ---- |
| | |____________________________| | | | | | | NFIDAI-100% $100 |
| | |___________________________| | | | |___________________________|
| | | | |
| | | | |
| | ___________________________ | | |
| | ____________________________ | GATES, McDONALD & COMPANY| | | |
| | | PEBSCO OF | | OF NEVADA | | | | ___________________________
| | | ALABAMA | | | | | | | LANDMARK FINANCIAL |
| | |Common Stock: 100,000 Shares| | Common Stock: 40 Shares |___| | | | SERVICES OF |
| |____|------------- | | | | | | NEW YORK, INC. |
| | | Cost | | Gates-100% Cost | | |___|Common Stock: 10,000 Shares|
| | | ---- | | ---- | | | |------------- |
| | | PEBSCO-100% $1,000 | | $93,750 | | | | Cost |
| | |____________________________| |___________________________| | | | ---- |
| | | | | NFIDAI-100% $10,100 |
| | | | |___________________________|
| | | |
| | | |
| | ____________________________ | |
| | | PEBSCO OF | | |
| | | ARKANSAS | | | ___________________________
| | | Common Stock: 50,000 Shares| | | | FINANCIAL HORIZONS |
| |____| ------------- | | | | SECURITIES CORP. |
| | | Cost | ________________________________|_|___|Common Stock: 10,000 Shares|
| | | ---- | | AFFILIATE AGENCY, INC. | | | |------------- |
| | | PEBSCO-100% $500 | | | | | | Cost |
| | |____________________________| | Common Stock: 100 Shares | | | | ---- |
| | | | | | | NFIDAI-100% $153,000 |
| | | NFIDAI-100% Cost | | | |___________________________|
| | | ---- | | |
| | ___________________________ | $100 | | |
| | | PEBSCO OF MASSACHUSETTS | |___________________________| | |
| | | INSURANCE AGENCY, INC. | | | ___________________________
| |____| Common Stock: 1,000 Shares| | | | |
| | | ------------- | | | | FINANCIAL HORIZONS |
| | | Cost | | |___| DISTRIBUTORS |
| | | ---- | | ___| AGENCY OF OHIO, |
| | | PEBSCO-100% $1,000 | | | | INC. |
| | |___________________________| | | |___________________________|
| | | |
| | | |
| | | |
| | ___________________________ | | ___________________________
| | | PEBSCO OF | | | | |
| | | MONTANA | | |___| FINANCIAL HORIZONS |
| |____| Common Stock: 500 Shares | | ___| DISTRIBUTORS AGENCY |
| | | ------------- | | | | OF OKLAHOMA, INC. |
| | | Cost | | | |___________________________|
| | | ---- | | |
| | | PEBSCO-100% $500 | | |
| | |___________________________| | |
| | | |
| | ___________________________ | |
| | | PEBSCO OF | | | ___________________________
| | | NEW MEXICO | | | | |
| | | | | |___| FINANCIAL HORIZONS |
| |____|Common Stock: 1,000 Shares | | ___| DISTRIBUTORS AGENCY |
| | |------------- | | | | OF TEXAS, INC. |
| | | Cost | | | |___________________________|
| | | ----- | | |
| | | PEBSCO-100% $1,000 | | |
| | |___________________________| | | ___________________________
| | | | | |
| | ___________________________ | |___| AFFILIATE |
| |____| | |_____| AGENCY OF |
|______| PEBSCO OF | | OHIO, INC. |
| TEXAS, INC. | | |
|___________________________| |___________________________|
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE (right side)
<S> <C> <C>
_______________________________________
| |
______________________| NATIONWIDE MUTUAL |
______________________| FIRE INSURANCE COMPANY |
| (FIRE) |
|_______________________________________|
________________________________________|
____________________________________________________________________
| | |
_____________|_____________ | ____________|______________
| NEA VALUEBUILDER | | | NATIONWIDE HMO, INC. |
| INVESTOR SERVICES, INC. | | | (NW HMO) |
| (NEA) | | | Common Stock: 100 Shares |
_______| Common Stock: 500 Shares | |_____| ------------ |
| _____| ------------- | | | Cost |
| | | Cost | | | ---- |
| | | NW Corp.- ---- | | | NW Corp.- |
| | | 100% $5,000 | | | 100% $14,603,732 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH MANAGEMENT |
| | | INVESTOR SERVICES | | | SYSTEMS, INC. |
| |_____| OF ALABAMA, INC. | | | Common Stock: 100 Shares |
| | | Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | | |
| | | Cost | | | Cost |
| | | ---- | | | NW HMO ---- |
| | | NEA-100% $5,000 | | | INC.-100% $25,149 |
| | |___________________________| | |___________________________|
| | |
| | ___________________________ | ___________________________
| | | NEA VALUEBUILDER | | | INHEALTH |
| | | INVESTOR SERVICES | | | AGENCY, INC. |
| | | OF MONTANA, INC. | | | Common Stock: 100 Shares |
| |_____| Common Stock: 500 Shares | |_____| ------------- |
| | | ------------- | | Cost |
| | | Cost | | NW HMO ---- |
| | | ----- | | INC.-99% $116,077 |
| | | NEA-100% $500 | |___________________________|
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF NEVADA, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF OHIO, INC. |
| | | Common Stock: 100 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-91% $5,000 |
| | |___________________________|
| |
| | ___________________________
| | | NEA VALUEBUILDER |
| | | INVESTOR SERVICES |
| |_____| OF WYOMING, INC. |
| | | Common Stock: 500 Shares |
| | | ------------- Cost |
| | | ---- |
| | | NEA-100% $500 |
| | |___________________________|
| |
| | ___________________________
| | | |
| | | NEA VALUEBUILDER |
| |_____| INVESTOR SERVICES |
| | | OF TEXAS, INC. |
| | | |
| | |___________________________|
| |
| | ___________________________
| | | |
| |_____| NEA VALUEBUILDER |
|_______| INVESTOR SERVICES |
| OF OKLAHOMA, INC. |
| |
|___________________________|
</TABLE>
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
December 31, 1995
Page 2
<PAGE> 63
Item 27. NUMBER OF CONTRACT OWNERS
The number of Contract Owners for Qualified and Non-Qualified Contracts
as of February 22, 1996, was 2,128 and 5,010, respectively.
Item 28. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State of
Ohio, for indemnification by the Company of any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative by reason of the fact that such person
is or was a director, officer or employee of the Company, against
expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, to the extent and
under the circumstances permitted by the General Corporation Law of the
State of Ohio.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Act") may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
95 of 99
<PAGE> 64
Item 29. PRINCIPAL UNDERWRITER
(a) The Principal Underwriter is Fidelity Investments Institutional
Services Company, Inc. which does not act as principal
underwriter, depositor, sponsor, or investment adviser to any
other investment company.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER
---------------- --------------------------------------
<S> <C>
William F. Devin Director
Edward C. Johnson 3d Director
Richard G. Malconian President
Paul J. Hondros President
Charles Delle Donne Senior Vice President and Regional Manager
Gary Horby Senior Vice President and Regional Manager
David Liebrock Senior Vice President and Regional Manager
Nishan Vartabedian Senior Vice President and Regional Manager
James M. McKinney Senior Vice President
Lorrayne Chu Senior Vice President
Thomas T. Bieniek Senior Vice President
Marie Harrigan Senior Vice President
Brian A. Clancey Senior Vice President
William Adair Senior Vice President, Broker/Dealer
Gregory Brakovich Senior Vice President, Broker/Dealer
Virginia M. Meany Senior Vice President, Client Services
Robert MacDonald Senior Vice President, Insurance Market
Reed Tupper Senior Vice President, Insurance Market
Arthur S. Loring Senior Vice President, Clerk and General Counsel
Suan Pfau Vice President, Finance
Joseph Collins Vice President, Human Resources
Robert Sauvageau Vice President, Systems
Michael P. Castellano Financial Operations Officer
Lois Towers Compliance Officer
Steven Jonas Treasurer
John D. Crumrine Assistant Treasurer
David C. Weinstein Assistant Clerk
</TABLE>
(c) Not applicable
The address for each person named in Item 29 is 82 Devonshire Street,
Boston, Massachusetts 02109.
96 of 99
<PAGE> 65
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Robert O. Cline
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than 16
months old for so long as payments under the variable annuity
contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included
in the prospectus that the applicant can remove to send for a
Statement of Additional Information; and
(c) deliver any Statement of Additional Information and any financial
statements required to be made available under this form promptly
upon written or oral request.
The Registrant hereby represents that the fees and charges deducted
under the Contract in the aggregate are reasonable in relation to the
services rendered, the expenses expected to be incurred, and risks
assumed by the Company.
The Registrant hereby represents that any contract offered by the
prospectus and which is issued pursuant to Section 403(b) of the Code
is issued by the Registrant in reliance upon, and in compliance with,
the Securities and Exchange Commission's industry-wide no-action letter
to the American Council of Life Insurance (publicly available November
28, 1988) which permits withdrawal restrictions to the extent necessary
to comply with IRC Section 403(b)(11).
97 of 99
<PAGE> 66
Offered by
Nationwide Life Insurance Company
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide Fidelity Advisor Variable Account
Individual Deferred Variable Annuity Contract
PROSPECTUS
May 1, 1996
98 of 99
<PAGE> 67
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT, certifies
that it meets the requirements of Securities Act Rule 485(b) for effectiveness
of this Post-Effective Amendment and has caused this Post-Effective Amendment to
be signed on its behalf in the City of Columbus, and State of Ohio, on this 17th
day of January, 1997.
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
--------------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
--------------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
--------------------------------------------
Joseph P. Rath
Vice President and
Associate General Counsel
As required by the Securities Act of 1933, this Post-Effective Amendment has
been signed by the following persons in the capacities indicated on the 17th day
of January, 1997.
SIGNATURE TITLE
LEWIS J. ALPHIN Director
- -----------------------------
Lewis J. Alphin
KEITH W. ECKEL Director
- -----------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- -----------------------------
Willard J. Engel
FRED C. FINNEY Director
- -----------------------------
Fred C. Finney
CHARLES L. FUELLGRAF, JR. Director
- -----------------------------
Charles L. Fuellgraf, Jr.
JOSEPH J. GASPER President/Chief Operating Officer and Director
- -----------------------------
Joseph J. Gasper
HENRY S. HOLLOWAY Chairman of the Board and Director
- -----------------------------
Henry S. Holloway
D. RICHARD MCFERSON Chairman and Chief Executive Officer - Nationwide
- ----------------------------- Insurance Enterprise and Director
D. Richard McFerson
DAVID O. MILLER Director
- -----------------------------
David O. Miller
C. RAY NOECKER Director
- -----------------------------
C. Ray Noecker
ROBERT A. OAKLEY Executive Vice President-Chief Financial Officer
- -----------------------------
Robert A. Oakley
JAMES F. PATTERSON Director By/s/JOSEPH P. RATH
- ----------------------------- -------------------------
James F. Patterson Joseph P. Rath
ARDEN L. SHISLER Director Attorney-in-Fact
- -----------------------------
Arden L. Shisler
ROBERT L. STEWART Director
- -----------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- -----------------------------
Nancy C. Thomas
HAROLD W. WEIHL Director
- -----------------------------
Harold W. Weihl
99 of 99
<PAGE> 68
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, which has filed or will file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1993, as amended,
various Registration Statements and amendments thereto for the registration
under said Act of Individual Deferred Variable Annuity Contracts in connection
with the MFS Variable Account, Nationwide Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-3, Nationwide Variable Account-4,
Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide
Fidelity Advisor Variable Account, Nationwide Multi-Flex Variable Account and
Nationwide Variable Account-8; and the registration of fixed interest rate
options subject to a market value adjustment offered under some or all of the
aforementioned individual Variable Annuity Contracts in connection with the
Nationwide Multiple Maturity Separate Account, and the registration of Group
Flexible fund Retirement Contracts in connection with the Nationwide DC
Variable Account, Nationwide DCVA III, and the NACo Variable Account; and the
registration of Group Common Stock Variable Annuity Contracts in connection
with Separate Account No. 1; and the registration of variable life insurance
policies in connection with the Nationwide VLI Separate Account, Nationwide
VLI Separate Account-2, Nationwide VLI Separate Account-3 of Nationwide Life
Insurance Company, hereby constitutes and appoints D. Richard McFerson, Joseph
J. Gasper, Gordon E. McCutchan, W. Sidney Druen, and Joseph P. Rath, and each
of them with power to act without the others, his/her attorney, with full power
of substitution and resubstitution, for and in his/her name, place and stead,
in any and all capacities, to approve, and sign such Registration Statements
and any and all amendments thereto, with power to affix the corporate seal of
said corporation thereto and to attest said seal and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys, and
each of them, full power and authority to do and perform all and every act and
thing requisite to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming that which said attorneys, or any of
them, may lawfully do or cause to be done by virtue hereof. This instrument
may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this 4th day of April, 1996.
/s/ Lewis J. Alphin /s/ David O. Miller
- ------------------------------------- -------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
/s/ Keith W. Eckel /s/ C. Ray Noecker
- ------------------------------------- -------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
/s/ Willard P. Engel /s/ Robert A. Oakley
- ------------------------------------- -------------------------------------
Willard P. Engel, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
/s/ Fred C. Finney
- ------------------------------------- /s/ James F. Patterson
Fred C. Finney, Director -------------------------------------
James F. Patterson, Director
/s/ Charles L. Fuellgraf
- ------------------------------------- /s/ Arden L. Shisler
Charles L. Fuellgraf, Director -------------------------------------
Arden L. Shisler, Director
/s/ Joseph J. Gasper
- ------------------------------------- /s/ Robert L. Stewart
Joseph J. Gasper, President and Chief -------------------------------------
Operating Officer and Director Robert L. Stewart, Director
/s/ Henry S. Holloway /s/ Nancy C. Thomas
- ------------------------------------- -------------------------------------
Henry S. Holloway, Chairman of the Nancy C. Thomas, Director
Board, Director
/s/ Harold W. Weihl
/s/ D. Richard McFerson -------------------------------------
- ------------------------------------- Harold W. Weihl, Director
D. Richard McFerson, Chairman and
Chief Executive Officer-Nationwide
Insurance Enterprise and Director