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SUPPLEMENT DATED FEBRUARY 22, 2000 TO
PROSPECTUS DATED APRIL 30, 1999 FOR
MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANY
THROUGH ITS
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
THIS SUPPLEMENT PERTAINS TO CONTRACTS ISSUED IN THE STATE OF NEW YORK ONLY. FOR
CONTRACTS ISSUED IN THE STATE OF NEW YORK, THIS SUPPLEMENT UPDATES CERTAIN
INFORMATION CONTAINED IN YOUR PROSPECTUS. PLEASE READ IT AND KEEP IT WITH YOUR
PROSPECTUS FOR FUTURE REFERENCE.
If the Extra Value Option is elected at the time of application, Nationwide will
add to the Contract a credit of 3% of any purchase payment(s) made to the
Contract during the first twelve (12) months beginning from the Contract issue
date. For providing this credit, Nationwide will deduct a charge at an
annualized rate of 0.45% of the daily net assets of the variable account. This
charge will be assessed against fixed account allocations resulting in a
crediting rate of 0.45% less than the crediting rate which applies to the fixed
account if the Extra Value Option is not elected. Nationwide will discontinue
deducting this charge seven years from the date the contract is issued.
Applicants should be aware of the following prior to electing the Extra Value
Option:
1. Electing the Extra Credit Option will be beneficial for Contract owners
only if the investment performance of the underlying mutual funds is great
enough to compensate for the reduction in Contract value due to the 0.45%
charge (see "Extra Value Option");
2. Nationwide may make a profit from the charge assessed by the Extra Value
Option;
3. Because the 0.45% charge associated with the Extra Value Option will be
assessed against the entire variable account value for the first seven (7)
Contract years, Contract owners who anticipate making additional purchase
payments after the first Contract year should carefully examine the Extra
Value Option and consult their financial adviser regarding its
desirability;
4. Once the Extra Value Option is elected, it may not be revoked;
5. Nationwide may recapture all or part of the amount credited in the event of
early surrenders, including revocation of the Contract during the
contractual Free-look period.
THIS SUPPLEMENT DESCRIBES INFORMATION ABOUT THE EXTRA VALUE OPTION. PROSPECTIVE
CONTRACT OWNERS SHOULD READ ALL THE INFORMATION CONTAINED HEREIN SO THEY MAY
DETERMINE IF SUCH AN OPTION IS RIGHT FOR THEM.
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THE FOLLOWING INFORMATION PROVIDES MORE DETAILED INFORMATION ABOUT THE EXTRA
CREDIT OPTION. APPLICANTS CONSIDERING THE EXTRA VALUE OPTION SHOULD READ THE
INFORMATION PROVIDED CAREFULLY.
1. THE FIRST SENTENCE OF THE FIFTH PARAGRAPH ON PAGE 1 OF THE PROSPECTUS IS
AMENDED AS FOLLOWS:
The Statement of Additional Information (dated April 30, 1999, as amended
December 30, 1999) which contains additional information about the
contracts and the variable account, has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated herein by reference.
2. THE "ADDITIONAL CONTRACT OPTIONS" ON PAGES 7 AND 8 OF YOUR PROSPECTUS IS
AMENDED TO INCLUDE THE FOLLOWING:
EXTRA VALUE OPTION
Nationwide will credit 3% of the purchase payment(s) made to the contract
during the first 12 months the contract is in force for an additional
charge an annualized rate of 0.45% of the daily net assets of the variable
account. This charge will also be assessed against fixed account
allocations resulting in a crediting rate of 0.45% less than the crediting
rate which applies to the fixed account if the Extra Value Option is not
elected. Nationwide will discontinue deducting this charge seven years from
the date the contract is issued (see "Extra Value Option").
Extra Value Option................................................0.45%
Total Variable Account Charges (including Extra Value Option)..1.40%
The Total Variable Account Charges listed above include the Extra Value
Option, but do not include charges assessed for the election of additional
Contract options.
3. THE "EXAMPLE" ON PAGE 10 OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS: THE
CHART SHOWS THE AMOUNT OF EXPENSES (IN DOLLARS) THAT WOULD BE INCURRED
UNDER THIS CONTRACT ASSUMING A $1,000 INVESTMENT, 5% ANNUAL RETURN, AND NO
CHANGE IN UNDERLYING MUTUAL FUND EXPENSES. THESE DOLLAR FIGURES ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN
BELOW.
The chart reflects expenses of both the variable account and the underlying
mutual funds. The assumed variable account charge is 2.50%, which is the
maximum charge for the maximum number of rider options.
For those contracts that do not elect the maximum number of rider options,
the expenses are reduced. Deductions for premium taxes are not reflected
but may apply.
<TABLE>
<CAPTION>
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The summary of contract If you surrender your contract If you do not surrender your If you annuitize your contract
expenses and example are to at the end of the applicable contract at the end of the at the end of the applicable
help contract owners time period applicable time period time period
understand the expenses
associated with the contract.
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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>
VIP Equity-Income Portfolio: 96 156 208 359 33 102 172 359 * 102 172 359
Service Class
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VIP Growth Portfolio: Service 97 158 212 367 34 104 176 367 * 104 176 367
Class
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VIP High Income Portfolio: 98 160 216 373 35 106 180 373 * 106 180 373
Service Class
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</TABLE>
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<TABLE>
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VIP Money Market Portfolio 92 144 189 323 29 90 153 323 * 90 153 323
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VIP Overseas Portfolio: 99 165 223 387 36 111 187 387 * 111 187 383
Service Class
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VIP II Asset Manager 97 159 213 369 34 105 177 369 * 105 177 369
Portfolio: Service Class
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VIP II Asset Manager: Growth 98 162 219 379 35 108 183 379 * 108 183 379
Portfolio: Service Class
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VIP II Contrafund Portfolio: 97 158 212 367 34 104 176 367 * 104 176 367
Service Class
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VIP II Investment Grade Bond 95 152 203 349 32 98 167 349 * 98 167 349
Portfolio
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VIP II Index 500 Portfolio 92 143 188 321 29 89 152 321 * 89 152 321
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VIP III Balanced Portfolio: 96 156 209 361 33 102 173 361 * 102 173 361
Service Class
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VIP III Growth & Income 97 156 210 362 34 102 174 362 * 102 174 362
Portfolio: Service Class
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VIP III Growth Opportunities 98 159 214 370 35 105 178 370 * 105 178 370
Portfolio: Service Class
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VIP III Mid Cap Portfolio: 101 169 230 399 38 115 194 399 * 115 194 399
Service Class
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</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
4. THE "MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS" PROVISION ON PAGE 11
OF YOUR PROSPECTUS IS AMENDED TO INCLUDE THE FOLLOWING:
If the contract owner elects the Extra Value Option, amounts credited to
the contract may not be used to meet the minimum initial and subsequent
purchase payment requirements.
5. THE "CHARGES AND EXPENSES" PROVISION ON PAGES 11 AND 12 OF YOUR PROSPECTUS
IS AMENDED TO INCLUDE THE FOLLOWING:
An Extra Value Option is available under the contract. The Extra Value
Option is only available at the time of application. If the contract owner
elects the Extra Value Option on the application, Nationwide will apply a
credit of 3% of the purchase payment(s) made during the first 12 months the
contract is in force. In exchange, Nationwide will deduct an additional
charge at an annualized rate of 0.45% of the daily net assets of the
variable account. Allocations to the fixed account will also be assessed,
resulting in a crediting rate of 0.45% less than the crediting rate which
applies to the fixed account if the Extra Value Option is not elected
Nationwide will discontinue deducting this charge seven years from the date
the contract was issued. Once the Extra Value Option is elected, it may not
be revoked (see "Extra Value Option"). THE EXTRA VALUE OPTION IS NOT
AVAILABLE IF THE 5 YEAR CDSC OPTION IS ELECTED.
6. THE "OPTIONAL CONTRACT BENEFITS, CHARGES AND DEDUCTIONS" PROVISION ON PAGES
17 THROUGH 19 OF YOUR PROSPECTUS IS AMENDED TO INCLUDE THE FOLLOWING:
EXTRA VALUE OPTION
For an additional charge at an annualized rate of 0.45% of the daily net
assets of the variable account, the contract owner can purchase an Extra
Value Option at the time of application. Nationwide may reduce this charge.
In exchange, Nationwide will apply a credit of 3% of the purchase
payment(s) made during the first 12 months the contract is in force. This
credit is funded from Nationwide's general account. The
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amount credited will be allocated among the sub-accounts, the fixed
account, and/or the Guaranteed Term Options in the same proportion that the
purchase payment is allocated to the contract.
The option of electing the Extra Value Option allows prospective Contract
owners to choose between two different variable account charge structures
for the first seven years of the Contract. If the credit is elected and no
additional Contract options are elected, the total variable account charges
under the Contract will be an annualized rate of 1.40% of the daily net
assets of the variable account for the first seven years of the Contract.
If the Extra Value Option is not elected, total variable account charges
will be an annualized rate of 0.95% (assuming no other Contract options are
elected) of the daily net assets of the variable account for the first
seven years of the Contract and thereafter.
Under these circumstances, the decision to elect or decline the Extra Value
Option will depend primarily on whether the prospective Contract owner
believes it is more advantageous to have: (a) a 1.40% variable account
charge for the first seven years of the Contract, plus the Extra Value
Option credit, or (b) a 0.95% variable account charge for the first seven
years of the Contract, without the Extra Value Option credit.
The following table demonstrates hypothetical rates of return for Contracts
with the Extra Value Option and no other optional benefits (total variable
account asset charges of 1.40%) and Contracts with no additional Contract
options whatsoever (total variable account asset charges of 0.95%). The
figures are based upon:
(a) a $100,000 initial purchase payment with no additional purchase payments;
(b) the deduction of variable account charges of an annualized rate of
0.95% (base Contract) and 1.40% (Contract with only the Extra Value
Option) of the daily net asset value; and
(c) an assumed annual rate of return before charges of 7.75% for all years
for a period of 10 years.
7.75% RATE OF RETURN
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Contract Year Base Contract Contract With Extra Value Option
(0.95% total asset charges) (1.40% total asset charges)
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1 $106,800 $109,541
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2 $114,062 $116,496
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3 $121,819 $123,894
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4 $130,102 $131,761
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5 $138,949 $140,128
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6 $148,398 $149,026
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7 $158,489 $158,489
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8 $169,266 $169,266
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9 $180,776 $180,776
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10 $193,069 $193,069
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Generally, the higher the rate of return, the more advantageous the Extra Value
Option becomes and vice versa.
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Amounts credited to the Contract in connection with the Extra Value Option may
be recaptured if:
(a) the Contract owner elects to surrender the Contract pursuant to the
contractual free-look provisions; or
(b) withdrawals that are subject to a CDSC are taken before the end of the
seventh Contract year.
If the Contract is surrendered pursuant to the contractual free-look, Nationwide
may recapture the full credited amount if the Contract value, at the time of the
request to surrender, is equal to or greater than the purchase payments made to
the Contract. In such a situation, the Contract owner is entitled to keep any
earnings. If, however, the Contract value is less than the purchase payments
made to the Contract, Nationwide will bear the loss.
After the free look period and before the seventh contract anniversary, amounts
credited under the Extra Value Option may be re-captured whenever withdrawals
are made that are subject to a CDSC in accordance with the following:
(Extra Value Amount)
Contract Years Percentage of First Year Purchase Payments
- -------------- ------------------------------------------
1 and 2 3%
3,4 and 5 2%
6 and 7 1%
After year 7 0%
The percentage of the amount credited to be recaptured will be determined
by the percentage of total purchase payments reflected in the amount
surrendered that is subject to CDSC. The amount recaptured will be taken
from the sub-accounts and the fixed account in the same proportion as
allocated by the contract owner at the time of the withdrawal.
NO AMOUNT CREDITED WILL BE SUBJECT TO RECAPTURE IF THE WITHDRAWAL IS NOT
SUBJECT TO A CDSC OR IF A DISTRIBUTION IS TAKEN AS A RESULT OF DEATH,
ANNUITIZATION, OR TO MEET MINIMUM DISTRIBUTION REQUIREMENTS UNDER THE
INTERNAL REVENUE CODE. IN ADDITION, NO RECAPTURE WILL TAKE PLACE AFTER THE
SEVENTH CONTRACT YEAR.
After the end of the first seven Contract years, the 0.45% charge for the
Extra Value Option will no longer be assessed and the amount credited will
be fully vested. Nationwide intends to administer the removal of the 0.45%
rider option charge by decreasing the number of units and increasing the
unit value of the sub-accounts in which the Contract owner was invested at
the end of the seventh contract year. The elimination of the 0.45% charge
and the adjustment in the number of units and unit values will not affect
Contract owners' Contract values.
7. THE "MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS" PROVISION ON PAGE 20
OF YOUR PROSPECTUS IS AMENDED TO INCLUDE THE FOLLOWING:
If the contract owner elects the Extra Value Option, amounts credited to
the contract may not be used to meet the minimum initial and subsequent
purchase payment requirements.
8. THE "RIGHT TO REVOKE" PROVISION ON PAGE 24 OF YOUR PROSPECTUS IS AMENDED TO
INCLUDE THE FOLLOWING:
Contract owners, who have elected the Extra Value Option and subsequently
terminate the contract under the free look provision, will forfeit any
amounts credited to the contract. For those jurisdictions that allow a
return of Contract value, the Contract owner will retain any earnings
attributable to the amount credited; all losses attributable to the amount
credited will be incurred by Nationwide.
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9. THE "SURRENDER (REDEMPTION)" PROVISION ON PAGES 24 AND 25 OF YOUR
PROSPECTUS IS AMENDED TO INCLUDE THE FOLLOWING:
During the first seven Contract years only, if an amount withdrawn is
subject to a CDSC, then a portion of the amount credited may be recaptured.
No recapture will take place after the seventh Contract year. The amount
credited will not, however, be subject to recapture if a free withdrawal
(not subject to the CDSC) is being made (see "Extra Value Option").
10. THE "PARTIAL SURRENDERS (PARTIAL REDEMPTIONS)" PROVISION ON PAGE 24 OF YOUR
PROSPECTUS IS AMENDED TO INCLUDE THE FOLLOWING:
The CDSC deducted is a percentage of the amount requested by the contract
owner. Amounts deducted for CDSC are not subject to subsequent CDSC.
11. THE THIRD PARAGRAPH OF THE "HISTORICAL PERFORMANCE OF THE SUB-ACCOUNTS"
PROVISION LOCATED IN THE SECTION ENTITLED "ADVERTISING AND THE SUB-ACCOUNT
PERFORMANCE SUMMARY" IS AMENDED AS FOLLOWS:
Non-standardized average annual total return is calculated similarly to
standardized average annual total return except non-standardized average
annual total return assumes an initial investment of $25,000, with contract
variable account charges of 1.40%. (A CDSC is reflected.) An assumed
initial investment of $25,000 is used because that amount more accurately
reflects the average contract size.
ACCORDINGLY, THE "TOTAL SUB-ACCOUNT PERFORMANCE SUMMARY NON-STANDARDIZED
AVERAGE ANNUAL RETURN" IS AMENDED AS FOLLOWS:
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
PLEASE NOTE: THE PERFORMANCE NUMBERS BELOW REFLECT THE DEDUCTION OF THE AMOUNT
ASSESSED FOR THE BASE CONTRACT WITH ONLY THE EXTRA VALUE OPTION FOR TOTAL
VARIABLE ACCOUNT EXPENSES EQUAL TO AN ANNUALIZED RATE OF 1.40% OF THE DAILY NET
ASSETS OF THE VARIABLE ACCOUNT. FOR CONTRACT OWNERS WHICH HAVE CHOSEN RIDER
OPTIONS HAVING TOTAL VARIABLE ACCOUNT EXPENSES MORE THAN 1.40%, THE FUND
PERFORMANCE AS SHOWN BELOW WOULD BE REDUCED IN ACCORDANCE TO THE COSTS OF THE
RIDER OPTIONS SELECTED. FOR CONTRACT OWNERS WHO HAVE CHOSEN RIDER OPTIONS HAVING
TOTAL VARIABLE ACCOUNT EXPENSES OF LESS THAN 1.40%, THE FUND PERFORMANCE AS
SHOWN BELOW WOULD BE INCREASED ACCORDINGLY.
<TABLE>
<CAPTION>
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10 Years
to 12/31/98
1 Year 5 Years or Life of Date Fund
Sub-Account Option to 12/31/98 to 12/31/98 Fund Effective
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VIP Equity-Income Portfolio: Service Class 3.69% 16.81% 14.01% 10/09/86
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VIP Growth Portfolio: Service Class 31.17% 19.77% 17.73% 10/09/86
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VIP High Income Portfolio: Service Class -11.67% 6.83% 9.51% 09/19/85
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VIP Money Market Portfolio -2.31% 3.35% 4.19% 04/01/82
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VIP Overseas Portfolio: Service Class 4.77% 7.75% 8.54% 01/28/87
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VIP II Asset Manager Portfolio: Service Class 6.78% 9.81% 3.01% 09/06/89
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VIP II Asset Manager: Growth Portfolio: Service Class 9.16% N/A 7.48% 01/03/95
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VIP II Contrafund Portfolio: Service Class 21.85% N/A 9.91% 01/03/95
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VIP II Investment Grade Bond Portfolio 1.03% 4.77% 6.85% 12/05/88
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VIP II Index 500 Portfolio 20.26% 21.77% 7.30% 08/27/92
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VIP III Balanced Portfolio: Service Class 9.42% N/A 13.43% 01/03/95
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VIP III Growth & Income Portfolio: Service Class 21.19% N/A 22.98% 12/31/96
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VIP III Growth Opportunities Portfolio: Service Class 16.49% N/A 23.93% 01/03/95
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</TABLE>
The Fidelity VIP III Mid Cap Portfolio: Service Class was added to the variable
account on January 11, 1999. Therefore, no year-end sub-account performance is
available.
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