-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NKSuFgfL0klLdkXgIlb5V5pFP0gmsUhE/ChSQRMnlxGjWi/D8j6EQs9K38Yf77zx uPyLgrOGeHhvFrdXusYxnw== 0000950152-97-001457.txt : 19970303 0000950152-97-001457.hdr.sgml : 19970303 ACCESSION NUMBER: 0000950152-97-001457 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970228 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE LIFE & ANNUITY VA SEPARATE ACCOUNT C CENTRAL INDEX KEY: 0000909833 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 311000740 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-66496 FILM NUMBER: 97547960 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07908 FILM NUMBER: 97547961 BUSINESS ADDRESS: STREET 1: FINANCIAL HORIZONS LIFE INSURANCE CO STREET 2: P.O. BOX 182008 CITY: COLUMBUS STATE: OH ZIP: 43216-2008 BUSINESS PHONE: 614-249-71 MAIL ADDRESS: STREET 1: FINANCIAL HORIZONS LIFE INSURANCE CO STREET 2: P.O. BOX 182008 CITY: COLUMBUS STATE: OH ZIP: 43218-2008 FORMER COMPANY: FORMER CONFORMED NAME: FINANCIAL HORIZONS VA SEPARATE ACCOUNT 3 DATE OF NAME CHANGE: 19930728 485APOS 1 NATIONWIDE VA SEPARATE ACCT. C 1 As filed with the Securities and Exchange Commission. '33 Act File No. 33-66496 '40 Act File No. 811-7908 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POST-EFFECTIVE AMENDMENT NO. 4 [X] and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 6 [X] NATIONWIDE VA SEPARATE ACCOUNT-C (Exact Name of Registrant) NATIONWIDE LIFE AND ANNUITY 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, 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 [ ] on (date) pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a) of Rule 485 [x] on (May 1, 1997) 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. Registrant filed its 24f-2 Notice for the fiscal year ended December 31, 1996, on February 25, 1997. ================================================================================ 1 of 85 2 NATIONWIDE VA SEPARATE ACCOUNT-C REFERENCE TO ITEMS REQUIRED BY FORM N-4 Caption in Prospectus and Statement of Additional Information and Other Information
N-4 ITEM PAGE Part A INFORMATION REQUIRED IN A PROSPECTUS Item 1. Cover page......................................................................................... 3 Item 2. Definitions........................................................................................ 4 Item 3. Synopsis or Highlights............................................................................. 9 Item 4. Condensed Financial Information.................................................................... 10 Item 5. General Description of Registrant, Depositor, and Portfolio Companies.............................. 11 Item 6. Deductions and Expenses............................................................................ 13 Item 7. General Description of Variable Annuity Contracts.................................................. 15 Item 8. Annuity Period..................................................................................... 19 Item 9. Death Benefit and Distributions.................................................................... 21 Item 10. Purchases and Contract Value....................................................................... 25 Item 11. Redemptions........................................................................................ 26 Item 12. Taxes.............................................................................................. 27 Item 13. Legal Proceedings.................................................................................. 32 Item 14. Table of Contents of the Statement of Additional Information....................................... 32 Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION Item 15. Cover Page......................................................................................... 35 Item 16. Table of Contents.................................................................................. 35 Item 17. General Information and History.................................................................... 35 Item 18. Services........................................................................................... 35 Item 19. Purchase of Securities Being Offered............................................................... 35 Item 20. Underwriters....................................................................................... 36 Item 21. Calculation of Performance Information............................................................. 36 Item 22. Annuity Payments................................................................................... 38 Item 23. Financial Statements............................................................................... 39 Part C OTHER INFORMATION Item 24. Financial Statements and Exhibits.................................................................. 67 Item 25. Directors and Officers of the Depositor............................................................ 69 Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant..................... 71 Item 27. Number of Contract Owners.......................................................................... 80 Item 28. Indemnification.................................................................................... 80 Item 29. Principal Underwriter.............................................................................. 80 Item 30. Location of Accounts and Records................................................................... 82 Item 31. Management Services................................................................................ 82 Item 32. Undertakings....................................................................................... 82
2 of 85 3 NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY Home Office P.O. Box 182008 Columbus, Ohio 43218-2008, 1-800-860-3946, TDD 1-800-238-3035 INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED BY THE NATIONWIDE VA SEPARATE ACCOUNT-C OF NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY The Individual Deferred Variable Annuity Contracts described in this prospectus are flexible Purchase Payment Contracts (collectively referred to as the "Contracts"). The Contracts are sold to individuals for use in retirement plans which may qualify for special federal tax treatment under the Internal Revenue Code. Annuity payments under the Contracts are deferred until a selected later date. Purchase Payments are allocated to the Nationwide VA Separate Account-C ("Variable Account"), a separate account of Nationwide Life and Annuity Insurance Company (the "Company"). The Variable Account uses its assets to purchase shares at net asset value in one or more of the following series of the underlying Mutual Fund options: FIDELITY VARIABLE INSURANCE PRODUCTS FUND -Equity-Income Portfolio -Overseas Portfolio NATIONWIDE SEPARATE ACCOUNT TRUST -Money Market Fund -Total Return Fund THE ONE(R) GROUP INVESTMENT TRUST -Asset Allocation Fund -Government Bond Fund -Large Company Growth Fund -Growth Opportunities Fund This prospectus provides you with the basic information you should know about the Individual Deferred Variable Annuity Contracts issued by the Nationwide VA Separate Account-C before investing. You should read it and keep it for future reference. A Statement of Additional Information dated May 1, 1997, containing further information about the Contracts and the Nationwide VA Separate Account-C has been filed with the Securities and Exchange Commission. You can obtain a copy without charge from Nationwide Life and Annuity Insurance Company by calling the number listed above, or writing P. O. Box 182008, Columbus, Ohio 43218-2008. INVESTMENTS IN THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY BANC ONE CORPORATION OR ANY OF ITS AFFILIATES OR CORRESPONDENTS. INVESTMENTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. 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, 1997, IS INCORPORATED HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION APPEARS ON PAGE 30 OF THE PROSPECTUS. THE DATE OF THIS PROSPECTUS IS MAY 1, 1997. 1 3 of 85 4 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 actually receiving annuity payments and upon whose continuation of life any annuity payment involving life contingencies depends. The Annuitant is named on the Data Page of the Contract unless changed. No change of Annuitant may be made without the prior consent of the Company. This person must be age 85 or younger at the time of Contract issuance. 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 the 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 this Contract. The Annuity Payment Option is named in the application, unless changed. 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. 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 and Annuity 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. The Owner's right to name a Contingent Designated Annuitant may be restricted under the provisions of any retirement or deferred compensation plan for which this Contract is issued. A Contingent Designated Annuitant may not be named for Contracts issued as IRAs or Tax Sheltered Annuities. CONTRACT-The Individual Deferred Variable Annuity Contract described in this prospectus. CONTRACT ANNIVERSARY-An anniversary of the Date of Issue of the Contract. CONTRACT OWNER (OWNER)-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 Annuity Commencement Date. If a Joint Owner is named in the application, references to "Contract Owner" or "Owner" in this prospectus, unless otherwise indicated, will apply to both the Owner and Joint Owner. CONTRACT VALUE-The sum of the value of all 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 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 2 4 of 85 5 ERISA-The Employee Retirement Income Securities 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. 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 named, possesses an undivided interest in the entire Contract, along with the Owner. When a Joint Owner is named, the exercise of any ownership right under the Contract shall require written authorization, signed by both the Owner and Joint Owner, of an intent to exercise such right, unless the Owner and Joint Owner provide in the application that the exercise of any such ownership right may be made by either the Owner or Joint Owner independently of one another. Unless otherwise indicated, references to "Contract Owner" or "Owner" in this prospectus will apply to both the Owner and Joint Owner. MUTUAL FUND-A registered management investment company in which the assets of the Sub-Accounts of the Variable Account will be invested. NON-QUALIFIED CONTRACT-A Contract which does not qualify for favorable tax treatment under Sections 401, 408 or 403(b) of the Code. PLAN PARTICIPANT-The Plan Participant is the person for whom Purchase Payments are being made to a Qualified Plan or Tax Sheltered Annuity either through employer contributions or employee salary reduction contributions. 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 CONTRACT-A Contract which receives favorable tax treatment under the provisions of the Code, including those described in Section 401 and 403(a). 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 underlying Mutual Fund shares held by the Variable Account such that the current net asset value of the Variable Account 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 VA Separate Account-C, 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 shares of a separate underlying Mutual Fund. VARIABLE ANNUITY-An annuity providing for payments which vary in amount with the investment experience of the Variable Account. 3 5 of 85 6 TABLE OF CONTENTS GLOSSARY OF SPECIAL TERMS............................................................................................ 2 SUMMARY OF CONTRACT EXPENSES......................................................................................... 5 UNDERLYING MUTUAL FUND EXPENSES...................................................................................... 5 SYNOPSIS............................................................................................................. 7 NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY........................................................................ 9 THE VARIABLE ACCOUNT................................................................................................. 9 Underlying Mutual Fund Options.............................................................................. 9 Voting Rights............................................................................................... 10 VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS.................................................... 11 Mortality Risk Charge....................................................................................... 11 Expense Risk Charge......................................................................................... 11 Contingent Deferred Sales Charge............................................................................ 11 Elimination of Contingent Deferred Sales Charge............................................................. 12 Contract Maintenance Charge and Administration Charge....................................................... 13 Premium Taxes............................................................................................... 13 Expenses of the Variable Account............................................................................ 13 Investments of the Variable Account......................................................................... 13 Right to Revoke............................................................................................. 14 Transfers................................................................................................... 14 Assignment.................................................................................................. 15 Loan Privilege.............................................................................................. 15 Beneficiary Provisions...................................................................................... 16 Ownership Provisions........................................................................................ 16 Substitution of Securities.................................................................................. 17 Contract Owner Inquiries.................................................................................... 17 ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT.............................................................................. 17 Value of an Annuity Unit.................................................................................... 17 Assumed Investment Rate..................................................................................... 18 Frequency and Amount of Annuity Payments.................................................................... 18 Annuity Commencement Date................................................................................... 18 Change in Annuity Commencement Date......................................................................... 18 Annuity Payment Options..................................................................................... 18 Death of Contract Owner..................................................................................... 19 Death of Designated Annuitant Prior to the Annuitization Date............................................... 19 Death Benefit After the Annuitization Date.................................................................. 20 Required Distributions for Qualified Plans or Tax Sheltered Annuities....................................... 20 Required Distributions for Individual Retirement Annuities.................................................. 21 Generation-Skipping Transfers............................................................................... 21 GENERAL INFORMATION.................................................................................................. 21 Contract Owner Services..................................................................................... 21 Statements and Reports...................................................................................... 22 Allocation of Purchase Payments and Contract Value.......................................................... 23 Value of a Variable Account Accumulation Unit............................................................... 23 Net Investment Factor....................................................................................... 23 Valuation of Assets......................................................................................... 24 Determining the Contract Value.............................................................................. 24 Surrender (Redemption)...................................................................................... 24 Surrenders Under A Qualified Plan or Tax Sheltered Annuity Contract......................................... 25 Taxes....................................................................................................... 25 Non-Qualified Contracts..................................................................................... 26 Diversification............................................................................................. 27 Charge for Tax Provisions................................................................................... 27 Qualified Plans, Individual Retirement Annuities, Individual Retirement Accounts, and Tax Sheltered Annuities............................................................................... 27 Advertising................................................................................................. 28 LEGAL PROCEEDINGS.................................................................................................... 30 TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION............................................................. 30 APPENDIX............................................................................................................. 31
4 6 of 85 7 SUMMARY OF CONTRACT EXPENSES CONTRACT OWNER TRANSACTION EXPENSES Maximum Deferred Sales Charge(1)...................... 7% - - ------------------------------------------------------------------------------- RANGE OF CONTINGENT DEFERRED SALES CHARGE OVER TIME
Number of Completed Years from Contingent Deferred Sales Load Date of Purchase Payment Percentage 0 7% 1 6% 2 5% 3 4% 4 3% 5 2% 6 1% 7 0%
- ------------------------------------------------------------------------------- MAXIMUM CONTRACT MAINTENANCE CHARGE.............................................................. $0 ---- VARIABLE ACCOUNT ANNUAL EXPENSES Mortality and Expense Risk Charges........................................................ 1.25% ---- Administration Charge..................................................................... 0.05% ---- Total Variable Account Annual Expenses................................................ 1.30% ----
UNDERLYING MUTUAL FUND EXPENSES(2) - -------------------------------------------------------------------------------
Management Other Expenses Total Portfolio Fees Company Expenses - ------------------------------------------------------------------------------------------------------------ Fidelity VIP Fund-Equity Income Portfolio 0.51% 0.10% 0.61% - ------------------------------------------------------------------------------------------------------------ Fidelity VIP Fund-Overseas Portfolio 0.76% 0.15% 0.91% - ------------------------------------------------------------------------------------------------------------ NSAT-Money Market Fund 0.50% 0.02% 0.52% - ------------------------------------------------------------------------------------------------------------ NSAT-Total Return Fund 0.50% 0.01% 0.51% - ------------------------------------------------------------------------------------------------------------ The One(R)Group Investment Trust-Asset 0.70% 0.30% 1.00% Allocation Fund - ------------------------------------------------------------------------------------------------------------ The One(R)Group Investment Trust-Government 0.45% 0.30% 0.75% Bond Fund - ------------------------------------------------------------------------------------------------------------ The One(R)Group Investment Trust-Large 0.65% 0.25% 0.90% Company Growth Fund - ------------------------------------------------------------------------------------------------------------ The One(R)Group Investment Trust-Growth 0.65% 0.25% 0.90% Opportunities Fund - ------------------------------------------------------------------------------------------------------------
(1) Starting with the second year after a Purchase Payment has been made, 10% of that Purchase Payment may be withdrawn without imposition of a Contingent Deferred Sales Charge. In addition, any amount withdrawn from an Individual Retirement Annuity Contract, in order for the Contract to meet minimum Distribution requirements, shall be free of a Contingent Deferred Sales Charge. The free withdrawal privilege is non-cumulative and must be used in the year available. The Contingent Deferred Sales Charge is imposed only against Purchase Payments (see "Contingent Deferred Sales Charge"). (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 the Variable Account's unit value. The management fees and other expenses, are more fully described in the prospectuses for each underlying Mutual Fund. The information relating to the underlying Mutual Fund expenses was provided by the underlying Mutual Fund and was not independently verified by the Company. 5 7 of 85 8 EXAMPLE The following chart depicts the dollar amount of expenses that would be incurred under this Contract assuming a $1000 initial Purchase Payment and 5% annual return. 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. - --------------------------------------------------------------------------------
If you surrender your If you do not surrender your If you annuitize your Contract at the end of the Contract at the end of the Contract at the end of the applicable time period applicable time period applicable 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. - ------------------------------------------------------------------------------------------------------------ Fidelity VIP 90 107 133 230 20 62 106 230 * 62 106 230 Fund-Equity -- --- --- --- -- -- --- --- - -- --- --- Income Portfolio - ------------------------------------------------------------------------------------------------------------ Fidelity VIP 93 116 149 262 23 71 122 262 * 71 122 262 Fund -Overseas -- --- --- --- -- -- --- --- - -- --- --- Portfolio - ------------------------------------------------------------------------------------------------------------ NSAT-Money 89 104 129 220 19 59 102 220 * 59 102 220 Market Fund -- --- --- --- -- -- --- --- - -- --- --- - ------------------------------------------------------------------------------------------------------------ NSAT-Total 89 104 128 219 19 59 101 219 * 59 101 219 Return Fund -- --- --- --- -- -- --- --- - -- --- --- - ------------------------------------------------------------------------------------------------------------ The One(R)Group 94 119 154 272 24 74 127 272 * 74 127 272 Investment -- --- --- --- -- -- --- --- - -- --- --- Trust-Asset Allocation Fund - ------------------------------------------------------------------------------------------------------------ The One(R)Group 92 111 141 245 22 66 114 245 * 66 114 245 Investment -- --- --- --- -- -- --- --- - -- --- --- Trust-Government Bond Fund - ------------------------------------------------------------------------------------------------------------ The One(R)Group 93 116 149 261 23 71 122 261 * 71 122 261 Investment -- --- --- --- -- -- --- --- - -- --- --- Trust-Large Company Growth Fund - ------------------------------------------------------------------------------------------------------------ The One(R)Group 93 116 149 261 23 71 122 261 * 71 122 261 Investment -- --- --- --- -- -- --- --- - -- --- --- Trust-Growth Opportunities Fund - ------------------------------------------------------------------------------------------------------------
*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. The expenses of the Nationwide VA Separate Account-C as well as those of the underlying Mutual Fund options are reflected in the table. 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 a particular underlying Mutual Fund option, 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"). 6 8 of 85 9 SYNOPSIS 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 assess an Administration Charge equal to an annual rate of 0.05% of the daily net asset value of the Variable Account. This charge is used to reimburse the Company for administrative expenses related to the issuance and maintenance of the Contracts. The Company does not expect to recover from the 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 first year Purchase Payment must be at least $5,000 for Non-Qualified Contracts and at least $2,000 for Individual Retirement Annuities. However, if periodic Purchase Payments are expected by the Company, this initial first year minimum may be satisfied by Purchase Payments made on an annualized basis. 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. No minimum first year Purchase Payments apply to Qualified Contracts (see "Allocation of Purchase Payments and Contract Value"). If the Contract Value at the Annuitization Date is less than $500, the Contract Value may be distributed in one lump sum in lieu of annuity payments. If any annuity payment would be less than $20, the Company shall have the right to change the frequency of payments to such intervals as will result in payments of at least $20. 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 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 a return of Purchase Payments (see "Right to Revoke"). 7 9 of 85 10 CONDENSED FINANCIAL INFORMATION Accumulation Unit Values for an Accumulation Unit outstanding throughout the period.
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 THE PERIOD YEAR - ----------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance 10.132457 13.510928 33.34% 324,280 1995 Products Fund - Equity Income ---------------------------------------------------------------------------------- Portfolio - Q 10.000000 10.132457 1.32% 48,709 1994 - ----------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance 10.132457 13.510928 33.34% 525,735 1995 Products Fund - Equity Income ---------------------------------------------------------------------------------- Portfolio - NQ 10.000000 10.132457 1.32% 79,134 1994 - ----------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance 9.542958 10.330773 8.26% 87,650 1995 Products Fund ---------------------------------------------------------------------------------- Overseas Portfolio - Q 10.000000 9.542958 -4.57% 37,588 1994 - ----------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance 9.542958 10.330773 8.26% 180,868 1995 Products Fund ---------------------------------------------------------------------------------- Overseas Portfolio - NQ 10.000000 9.542958 -4.57% 66,350 1994 - ----------------------------------------------------------------------------------------------------------------------- Nationwide Separate Account 10.135415 10.569801 4.29% 99,809 1995 Trust - Money Market Fund - Q* ---------------------------------------------------------------------------------- 10.000000 10.135415 1.35% 16,557 1994 - ----------------------------------------------------------------------------------------------------------------------- Nationwide Separate Account 10.135415 10.569801 4.29% 120,754 1995 Trust - Money Market Fund - NQ* ---------------------------------------------------------------------------------- 10.000000 10.135415 1.35% 31,027 1994 - ----------------------------------------------------------------------------------------------------------------------- Nationwide Separate Account 9.767528 12.445719 27.42% 188,348 1995 Trust - Total Return Fund - Q ---------------------------------------------------------------------------------- 10.000000 9.767528 -2.32% 35,204 1994 - ----------------------------------------------------------------------------------------------------------------------- Nationwide Separate Account 9.767528 12.445719 27.42% 317,092 1995 Trust - Total Return Fund - NQ ---------------------------------------------------------------------------------- 10.000000 9.767528 -2.32% 53,945 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.819156 11.697239 19.13% 149,620 1995 Asset Allocation Fund - Q ---------------------------------------------------------------------------------- 10.000000 9.819156 -1.81% 33,312 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust 9.819156 11.697239 19.13% 178,905 1995 Asset Allocation Fund - NQ ---------------------------------------------------------------------------------- 10.000000 9.819156 -1.81% 38,193 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.867500 11.909104 20.69% 97,500 1995 Asset Allocation Fund - Initial ---------------------------------------------------------------------------------- Funding by Depositor 10.000000 9.867500 -1.32% 97,500 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.861504 11.358330 15.18% 139,391 1995 Government Bond Fund - Q ---------------------------------------------------------------------------------- 10.000000 9.861504 -1.38% 13,330 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.861504 11.358330 15.18% 152,273 1995 Government Bond Fund - NQ ---------------------------------------------------------------------------------- 10.000000 9.861504 -1.38% 11,348 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.910061 11.564087 16.69% 500,000 1995 Government Bond Fund - Initial ---------------------------------------------------------------------------------- Funding by Depositor 10.000000 9.910061 -0.90% 500,000 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 10.003154 12.255940 22.52% 388,897 1995 Large Company Growth Fund - Q --------------------------------------------------------------------------------- 10.000000 10.003154 0.03% 43,062 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 10.003154 12.255940 22.52% 632,427 1995 Large Company Growth Fund - NQ ---------------------------------------------------------------------------------- 10.000000 10.003154 0.03% 76,916 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 10.052392 12.477892 24.13% 300,000 1995 Large Company Growth Fund - ---------------------------------------------------------------------------------- Initial Funding by Depositor 10.000000 10.052392 0.52% 300,000 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.652463 11.819338 22.45% 182,690 1995 Growth Opportunities Fund - Q ---------------------------------------------------------------------------------- 10.000000 9.652463 -3.48% 37,250 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.652463 11.819338 22.45% 385,700 1995 Growth Opportunities Fund - NQ ---------------------------------------------------------------------------------- 10.000000 9.652463 -3.48% 57,644 1994 - ----------------------------------------------------------------------------------------------------------------------- The One(R) Group Investment Trust - 9.700000 12.033480 24.06% 2,500 1995 Growth Opportunities Fund - ---------------------------------------------------------------------------------- Initial Funding by Depositor 10.000000 9.700000 -3.00% 2,500 1994 - -----------------------------------------------------------------------------------------------------------------------
*The 7-day yield on the Money Market Fund as of December 30, 1996 was %. 8 10 of 85 11 NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY Nationwide Life and Annuity Insurance Company, formerly Financial Horizons Life Insurance Company, is a stock life insurance company organized under the laws of the State of Ohio and was established in February, 1981. The Company is a member of the "Nationwide Insurance Enterprise," with its Home Office at One Nationwide Plaza, Columbus, Ohio 43216. The Company offers certain life insurance products and annuities. THE VARIABLE ACCOUNT The Nationwide VA Separate Account-C, formerly Financial Horizons VA Separate Account-3 (the "Variable Account") was established by the Company on July 24, 1991, 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 option(s) as designated by the Contract Owner. There are two Sub-Accounts within the Variable Account for each of the underlying Mutual Fund options which may be designated by the Contract Owner. One such Sub-Account contains the underlying Mutual Fund shares attributable to Accumulation Units for Qualified Contracts and one such Sub-Account contains the underlying Mutual Fund shares attributable to Accumulation Units for Non-Qualified Contracts. UNDERLYING MUTUAL FUND OPTIONS A summary of investment objectives is contained in the descriptions of each underlying Mutual Fund option below. More detailed information may be found in the current prospectus for each underlying Mutual Fund offered. Such a prospectus for the underlying Mutual Fund option(s) 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 and Annuity Insurance Company by calling 1-(800) 860-3946, TDD 1-(800) 238-3035, or writing P.O. Box 182008, Columbus, Ohio 43218-2008. Contract Owners may choose from among the following underlying Mutual Fund options under the Contracts. There can be no assurance that any of the underlying Mutual Fund options will achieve its objective. FIDELITY VARIABLE INSURANCE PRODUCTS FUND The Fidelity Variable Insurance Products Fund is an open-end, diversified management investment company organized as a Massachusetts business trust on November 13, 1981. The Fund's shares are purchased by insurance companies to fund benefits under variable insurance and annuity policies. Fidelity Management & Research Company ("FMR") is the Fund's manager. -EQUITY-INCOME PORTFOLIO Investment Objective: To seek reasonable income by investing primarily in income-producing equity securities. In choosing these securities FMR also will consider the potential for capital appreciation. The Portfolio's goal is to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor's 500 Composite Stock Price Index. -OVERSEAS PORTFOLIO Investment Objective: To seek long term growth of capital primarily through investments in foreign securities. The Overseas Portfolio provides a means for investors to diversify their own portfolios by participating in companies and economies outside of the United States. 9 11 of 85 12 NATIONWIDE SEPARATE ACCOUNT TRUST Nationwide Separate Account Trust is a diversified, open-end management investment company created under the laws of Massachusetts. The Nationwide Separate Account Trust offers shares under this Contract in the two underlying Mutual Funds listed below, each with its own investment objectives. Currently, shares of the Nationwide Separate Account Trust will be sold only to life insurance company separate accounts to fund the benefits under variable insurance or annuity policies issued by life insurance companies. The assets of the Nationwide Separate Account Trust are managed by Nationwide Advisory Services, Inc. of One Nationwide Plaza, Columbus, Ohio 43216, a wholly-owned subsidiary of Nationwide Life Insurance Company. -MONEY MARKET FUND Investment Objective: To seek as high a level of current income as is considered consistent with the preservation of capital and liquidity by investing primarily in money market instruments. -TOTAL RETURN FUND Investment Objective: To obtain a reasonable long-term total return (i.e., earnings growth plus potential dividend yield) on invested capital from a flexible combination of current return and capital gains through investments in common stocks, convertible issues, money market instruments and bonds with a primary emphasis on common stocks. THE ONE(R) GROUP INVESTMENT TRUST The One(R)Group Investment Trust is a diversified, open-end management investment company organized under the laws of Massachusetts by a Declaration of Trust, dated June 7, 1993. The One(R) Group Investment Trust offers shares in the four separate mutual funds (the "Funds") shown below, each with its own investment objective. The shares of the Funds are sold only to Nationwide Life and Annuity Insurance Company to fund the benefits of The One(R) Investors Annuity and certain other separate accounts funding variable annuity contracts and variable life policies issued by other life insurance companies and qualified pension and retirement plans. The assets of The One(R) Group Investment Trust are managed by Banc One Investment Advisers Corporation. -GOVERNMENT BOND FUND Investment Objective: To seek a high level of current income with liquidity and safety of principal. -ASSET ALLOCATION FUND Investment Objective: To seek total return while preserving capital. -GROWTH OPPORTUNITIES FUND Investment Objective: To seek growth of capital and, secondarily, current income, by investing primarily in equity securities. Issuers will include medium sized companies with a history of above-average growth or companies that are expected to enter periods of above-average growth, and smaller companies which are positioned in emerging growth industries. -LARGE COMPANY GROWTH FUND Investment Objective: To seek long-term capital appreciation and growth of income by investing primarily in equity securities. The weighted average capitalization of the companies in which the Fund invests will always be in excess of the market median capitalization of the S & P 500 Index. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY UNDERLYING MUTUAL FUND WILL BE MET. 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 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 shares of the underlying Mutual Funds in its own right, it may elect to do so. 10 12 of 85 13 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 values 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 and voting instructions will be solicited by written communication at least 21 days prior to such meeting. 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 Funds, proxy materials 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 (see "Elimination of Contingent Deferred Sales Charge" section), 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 6.2% of Purchase Payments. If part or all of the Contract Value is surrendered, a Contingent Deferred Sales Charge will be deducted by the Company. For purposes of the Contingent Deferred Sales Charge, surrenders under a Contract come first from the Purchase Payments which have been on deposit under the Contract for the longest time period. For tax purposes, a surrender is usually treated as a withdrawal of earnings first. This charge will apply to Purchase Payments withdrawn within the time periods as set forth below. The Contingent Deferred Sales Charge applies to the withdrawal of Purchase Payments as follows: 11 13 of 85 14
NUMBER OF COMPLETED CONTINGENT DEFERRED YEARS FROM DATE OF SALES CHARGE PURCHASE PAYMENT PERCENTAGE 0 7% 1 6% 2 5% 3 4% 4 3% 5 2% 6 1% 7 0%
Starting with the second year after a Purchase Payment has been made under the Contract, 10% of that Purchase Payment may be withdrawn each year without imposition of the Contingent Deferred Sales Charge. In addition, any amount withdrawn from an Individual Retirement Annuity Contract, in order for the Contract to meet minimum Distribution requirements, shall be free of a Contingent Deferred Sales Charge. This free withdrawal privilege is non-cumulative and must be used in the year available. No sales charges are deducted on redemption proceeds used to purchase units in the Fixed Account option of this annuity. 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") to determine when the penalty will apply. ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE For 403(b) Tax Sheltered Annuity Contracts, Section 401 Contracts, and SEP-IRA Contracts the Company will waive the Contingent Deferred Sales Charge when: A. the Plan Participant experiences a case of hardship (as provided in Code Section 403(b) and as defined for purposes of Code Section 401(k)); B. the Plan Participant becomes disabled (within the meaning of Code Section 72(m)(7)); C. the Plan Participant attains age 59-1/2 and has participated in the Contract for at least 5 years, as determined from the Contract Anniversary date; D. the Plan Participant has participated in the Contract for at least 15 years as determined from the Contract Anniversary date; E. the Plan Participant dies; or F. the Contract is annuitized after 2 years from the inception of the Contract. For Non-Qualified Contracts and Individual Retirement Annuities, the Company will waive the Contingent Deferred Sales Charge when: 1. the Designated Annuitant dies; or 2. the Contract Owner annuitizes after 2 years in the Contract. The Company may waive or reduce the Contingent Deferred Sales Charge when sales are to employees of Banc One Corporation, or the employees of its affiliates, subsidiaries, or holding companies. 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 determines is eligible for such exchange, the Company will waive the Contingent Deferred Sales Charge on the first Contract. In no event will elimination of Contingent Deferred Sales Charges be permitted where such elimination will be unfairly discriminatory to any person, or where prohibited by state law. 12 14 of 85 15 ADMINISTRATION CHARGE The Company assesses an Administration Charge equal on an annual basis to 0.05% of the daily net asset value of the Variable Account. The deduction of the Administration Charge is made from each Sub-Account in the same proportion that the Contract Value in each Sub-Account bears to the total Contract Value in the Variable Account. This charge is designed only to reimburse the Company for administrative expenses related to the issuance and maintenance of the Contracts. 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%. The 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 THE 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) mortality risk expense associated with guaranteeing the annuity purchase rates at issue for the life of the Contracts; and (3) expense risk charge associated with guaranteeing that the Mortality Risk, Expense Risk, Contract Maintenance and Administration Charges described in this prospectus will not change 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 0.83% 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 of the underlying Mutual Funds' prospectuses. 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. Such election is subject to any minimum Purchase Payment limitations which may be imposed by the underlying Mutual Funds designated. The election as to allocation of Purchase Payments or as to transfers of the Contract Value from one Sub-Account to another may be changed by the Contract Owner 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 application 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 Contract Owner may request a transfer of up to 100% of the Contract Value from the Variable Account to the Fixed Account without penalty or adjustment. All amounts transferred to the Fixed Account 13 15 of 85 16 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 to the Fixed Account occurs. Transfers must 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 restrict transfers from the Variable Account to the Fixed Account to 25% of the Contract Value for any 12 month period. 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 maximum percentage 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. The specific percentage will be declared upon the expiration date of the guaranteed period. Transfers from the Fixed Account must be made within 45 days after the expiration date of the 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 Contract Owner's election. The Company will employ procedures reasonably designed 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. Although failure to follow reasonable procedures may result in the Company's liability for any losses due to unauthorized or fraudulent telephone transfers, the Company will not be liable for following instructions communicated by telephone which it reasonably believes to be genuine. Any losses incurred pursuant to actions taken by the Company in reliance on telephone instructions reasonably believed to be genuine shall be borne by the Contract Owner. The Company may withdraw the telephone exchange privilege upon 30 days' written notice to Contract Owners. 14 16 of 85 17 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. Such assignment will take effect upon receipt and recording by the Company at its Home Office of a written notice thereof executed by the Contract Owner. The Company assumes no responsibility for the validity or sufficiency of any assignment. The Company shall not be liable as to any payment or other settlement made by the Company before receipt 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. If this Contract is a Non-Qualified Contract, 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 would, under certain conditions, be subject to a tax penalty equal to 10% of the amount which is included in gross income. Assignments 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 Annuity Contracts, Qualified Contracts and Tax Sheltered Annuity Contracts are not eligible for assignment. LOAN PRIVILEGE Prior to the Annuitization Date, the Owner of a Qualified Contract or 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 impose restrictions on loans. Loans from Qualified Contracts or 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 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 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 Variable Accounts in the same proportion as when the loan was made. 15 17 of 85 18 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/Designated Annuitant dies while the loan is outstanding, the Death Benefit will be reduced by the amount of the loan outstanding plus accrued interest. If a Contract Owner who is not the Designated Annuitant dies prior to the Annuitization Date and while the loan is outstanding, the Distribution will be reduced by the amount of the outstanding loan plus any 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, the entire loan will be treated as a deemed Distribution, 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, SEP-IRA accounts and Non Qualified Contracts are not eligible for loans. BENEFICIARY PROVISIONS The Beneficiary will be the designated person (or persons) who survive the Designated Annuitant, and if more than one survive, they will share equally unless otherwise specified in the Beneficiary designation. Unless otherwise provided in the Contract or in an effective change of Beneficiary designation, all rights and interests of any Beneficiary predeceasing the Designated Annuitant shall vest in the Contingent Beneficiary if designated. If a Contingent Beneficiary is not designated or predeceases the Beneficiary, all rights and interest of the Beneficiary will vest in the Contract Owner or the Contract Owner's estate. Subject to the terms of any existing assignment, the Contract Owner may change the Beneficiary from time to time during the lifetime of the Designated Annuitant, by written notice to the Company. The change will, upon receipt by the Company at its Home Office, 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. 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 named, the Joint Owner possesses an undivided interest in the entire Contract. When a Joint Owner is named, the exercise of any ownership right in the Contract shall require a written indication, signed by both the Owner and Joint Owner, of an intent to exercise such right, unless the Owner and Joint Owner provide in the application that the exercise of any such ownership right may be made by either the Owner or Joint Owner independently of one another. In this latter situation, the Company will not be liable for any loss, liability, cost, or expense for acting in accordance with the instructions of either the Owner or Joint Owner. The Annuitant may become the Contract Owner on and after the Annuitization Date, subject to the terms elected at Annuitization. If the Contract Owner or Joint Owner dies before the Annuitization Date, a Distribution will be paid in accordance with the "Death of Contract Owner" provision. If the Annuitant does not survive the Contract Owner or if the Owner and the Annuitant are the same person, contract ownership will be determined in accordance with the "Death Of Designated Annuitant Prior To The Annuitization Date" provision. 16 18 of 85 19 Prior to the Annuitization Date, the Contract Owner may name a new Owner at any time which will automatically revoke any prior choice. Such change may be subject to state and federal gift taxes. Any request for change must be made in writing and received by the Company at its Home Office. A request for change of Owner must be a "proper written application" and may include a signature guarantee as specified in the "Surrender" section. The change will become effective as of the date the written request is signed. A new choice of Owner will not apply to any payment made or action taken by the Company prior to the time it was received. A change in the Designated Annuitant must comply with the following conditions: (1) request for such change must be made by the Contract Owner; (2) request must be made in writing on a form acceptable to the Company; (3) request must be signed by the Contract Owner; and (4) such change is subject to underwriting by the Company. A change of the Designated Annuitant shall be treated as the death of the Owner for purposes of the "Death of Contract Owner" provisions, if the Owner is not an individual. 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 in view of the purposes of the Contract, the Company may eliminate Sub-Accounts, combine two or more Sub-Accounts or substitute shares of one or more underlying Mutual Funds for other underlying Mutual Fund shares already purchased or to be purchased in the future with 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 and Annuity Insurance Company by writing P.O. Box 182008, Columbus, Ohio 43218-2008, or calling 1-800-860-3946, 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 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 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 built into the Annuity Tables contained in the Contracts (see "Net Investment Factor"). 17 19 of 85 20 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 $500, 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 $20, the Company shall have the right to change the frequency of payments to such intervals as will result in payments of at least $20. 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 must be the first day of a calendar month and must be at least 2 years after the Date of Issue. 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 Annuitization Date is postponed beyond the first day of the calendar month after the Annuitant's 75th birthday. ANNUITY PAYMENT OPTIONS The Contract Owner may, upon prior written notice to the Company, at any time prior to the Annuitization Date, elect one of the following Annuity Payment Options. 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 THE ANNUITANT DIED BEFORE THE SECOND ANNUITY PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD ANNUITY PAYMENT DATE, AND SO ON. 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) Any guaranteed annuity payments will be continued during the remainder of the selected period to the Beneficiary or the Beneficiary 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 (2) below. (2) The present value, computed as of the date in 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 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. 18 20 of 85 21 If the Owner of a Non-Qualified Contract fails to elect an Annuity Payment Option, the Contract Value will continue to accumulate. Qualified Plan Contracts, Individual Retirement Annuities or Tax Sheltered Annuities are subject to the minimum Distribution requirements set forth in the Code. DEATH OF CONTRACT OWNER Upon the death of the Owner or Joint Owner, if any, the following rules will apply in those situations in which the Contract was not issued in connection with a Qualified Plan, Tax Sheltered Annuity or Individual Retirement Annuity. 1. In the event the death occurs before the Annuitization Date, the entire interest of the Contract, less any applicable deductions (which may include a Contingent Deferred Sales Charge), must be distributed within five years after the Owner's death. In the alternative, the party entitled to receive the Distribution may elect to receive the Distribution in the form of a life annuity or an annuity for a period certain not exceeding his or her life expectancy. Such an annuity must begin within one year from the date of the Owner's death. If the deceased Owner and the Designated Annuitant are not the same person, the Distribution described above will be paid to the Joint Owner, if any. If no Joint Owner is named, the Designated Annuitant will receive the Distribution. If the deceased Owner and the Designated Annuitant are the same person or if the Designated Annuitant predeceases the Owner, the Distribution will be made in accordance with the Distribution requirements set forth in the "Death Of Designated Annuitant Prior To The Annuitization Date" section provided, however, all Distributions made as a result of the death of an Owner shall be made within the time limits set forth above. If the Contract Owner and the Designated Annuitant are not the same, no Death Benefit is payable upon the death of the Contract Owner. If the person entitled to receive the Distribution is the Owner's spouse, the Contract may be continued by such spouse without compliance with the Distribution rules set forth herein. 2. In the event the Contract Owner/Annuitant dies on or after the Annuitization Date, Distribution, if any, must be made to the Beneficiary at least as rapidly as under the method of Distribution in effect as of the date of the Contract Owner/Annuitant's death. 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 pursuant Section (1) of this provision, regardless of whether a Contingent Designated Annuitant has also been named. The Distribution will take the form of either: (a) the Death Benefit described below (if the Designated Annuitant has died and there is no Contingent Designated Annuitant), or, in all other cases, (b) the benefit described in Section (1) of this provision, except that in the event of a change of Designated Annuitant, the benefit will be paid to the Contract Owner if the Designated Annuitant is living, or as a Death Benefit to the Beneficiary upon the death of the Designated Annuitant (and the Contingent Designated Annuitant, if any) prior to the expiration of the period described in Section (1) of this provision. Contracts issued in connection with Individual Retirement Annuities will be subject to specific rules, set forth in the Code, concerning Distributions upon the death of the Owner/Designated Annuitant. DEATH OF DESIGNATED ANNUITANT PRIOR TO THE ANNUITIZATION DATE If the Designated Annuitant dies prior to the Annuitization Date, a Death Benefit will be paid to the Beneficiary upon receipt of due proof of death of the Designated Annuitant. The value of the Death Benefit will be determined as of the Valuation Date coincident with or next following the date the Company receives both (1) due proof of death and (2) an election for a single sum payment or an Annuity Payment Option. If a single sum settlement 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 desired, election may 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, the Death Benefit will be paid 19 21 of 85 22 to the Beneficiary in a single sum. If the Designated Annuitant dies prior to the first day of the calendar month after his or her 75th birthday, the dollar 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 after the first day of the calendar month after his or her 75th birthday, then the Death Benefit will be equal to the Contract Value. DEATH BENEFIT AFTER THE ANNUITIZATION DATE If the Annuitant dies after the Annuitization Date, the Death Benefit shall be as specified in the Annuity Payment Option elected. REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS OR TAX SHELTERED ANNUITIES The entire interest of an Annuitant under a Qualified Contract or 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 Owner/Annuitant under the Annuity Payments Option selected, over a period not exceeding: A. the life of the Owner/Annuitant or the lives of the Owner/Annuitant and the Owner/Annuitant's designated Beneficiary; or B. a period not extending beyond the life expectancy of the Owner/Annuitant or the life expectancy of the Owner/Annuitant and the Owner/Annuitant's designated Beneficiary provided that, for Tax Sheltered Annuity Contracts, no Distributions will be required from this Contract if Distributions otherwise required from this Contract are being withdrawn from another Tax Sheltered Annuity Contract of the Annuitant. If the 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 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 Owner dies prior to the commencement of his or her Distribution, the interest in the Qualified Contract or Tax Sheltered Annuity must be distributed by December 31 of the calendar year during which the fifth anniversary of his or her death occurs unless: (a) In the case of a Tax Sheltered Annuity, the Owner names his or her surviving spouse as the Beneficiary and such spouse elects to: (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 Owner would have attained age 70-1/2; or (b) In the case of a Tax Sheltered Annuity or a Qualified Contract, the 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 Owner dies. If the 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, except that a surviving spouse may treat a Tax Sheltered Annuity as his or her own to the extent permitted by law. 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 Owner/Annuitant by the life expectancy of the Owner/Annuitant, or the joint and last survivor expectancy of the Owner/Annuitant and the 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. 20 22 of 85 23 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 Owner attains age 70-1/2, provided that, for Individual Retirement Annuity Contracts, no Distributions will be required from this Contract if Distributions otherwise required from this Contract are being withdrawn from another Individual Retirement Annuity Contract of the Annuitant. Distribution may be accepted in a lump sum or in nearly equal payments over: (a) the Owner's life or the lives of the Owner and his or her spouse or designated Beneficiary, or (b) a period not extending beyond the life expectancy of the Owner or the joint life expectancy of the Owner and the Owner's designated Beneficiary. If the Owner dies prior to the commencement of his or her Distribution, the interest in the IRA must be distributed by December 31 of the calendar year in which the fifth anniversary of his or her death occurs unless: (a) The Owner names his or her surviving spouse as the 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 Owner would have attained age 70-1/2; or (b) The 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 Owner dies. If the Owner dies after Distribution has commenced, Distribution must continue at least as rapidly as under the schedule being used prior to his or her death, except that a surviving spouse may treat the Individual Retirement Annuity as his or her own in the same manner as is described in Section (a)(i) of this provision. If the amounts distributed do not satisfy the Distribution rules mentioned above, a 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 Owner of an Individual Retirement Annuity must annually report the amount of non-deductible Purchase Payments, the amount of any Distribution, the amount by which non-deductible Purchase Payments for all years exceed non-taxable Distributions for all years, and the total balance of all Individual Retirement Accounts and 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 Owner dies prior to the time Distribution of his or her interest in the annuity is completed, the balance will also be included in his or her 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. Contracts issued to a Qualified Plan or a Tax Sheltered Annuity 21 23 of 85 24 Plan as defined by the Code may have superseding plan restrictions with regard to the frequency of fund exchanges and underlying Mutual Fund options. The Contract Owner may want to contact a financial adviser in order to discuss a the use of Asset Rebalancing in his or her Contract. 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 funds from the Money Market 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. To qualify for Dollar Cost Averaging, there must be a minimum total Contract Value of $15,000. Transfers for purposes of Dollar Cost Averaging can only be made from the Money Market 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 Sub-Account or the Fixed Account will be processed monthly until either the value in the Money Market 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. SYSTEMATIC WITHDRAWALS-A Contract Owner may elect in writing on a form provided by the Company to take Systematic Withdrawals by surrendering 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 Sub-Accounts in which the Contract Owner has an interest. Each Systematic Withdrawal is subject to federal income taxes on the taxable portion. For tax purposes, withdrawals are deemed to be taken first from earnings, then from Purchase Payment only after all earnings have been withdrawn. In addition, a 10% federal penalty tax may be assessed on Systematic Withdrawals if the Contract Owner is under age 59-1/2. 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. The Contract Owner may discontinue Systematic Withdrawals at any time by notifying the Company in writing. The Company reserves the right to discontinue offering Systematic Withdrawals upon 30 days' written notice; such discontinuation will not affect Systematic Withdrawal programs already commenced. 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 plans (such as a dollar cost averaging program or salary reduction arrangement), Contract Owners may receive confirmation of such transactions in their quarterly statements. Contract Owners 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 statement. The Company will also send to Contract Owners each year a semi-annual report and an annual report containing financial statements for the Variable Account, as of June 30 and December 31, respectively. 22 24 of 85 25 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 first year Purchase Payment must be at least $5,000 for Non-Qualified Contracts and $2,000 for Individual Retirement Annuities. However, if periodic payments are expected by the Company, this initial first year minimum may be satisfied by Purchase Payments made on an annualized basis. Purchase Payments, if any, after the first Contract Year must be at least $10 each. The Contract Owner may increase or decrease Purchase Payments or change the frequency of payment. The Contract Owner is not obligated to continue Purchase Payments in the amount or at the frequency elected. There are no penalties for failure to continue Purchase Payments. 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 PURCHASER IS CAUTIONED THAT INVESTMENT RETURN ON SMALL INITIAL AND SUBSEQUENT PURCHASE PAYMENTS MAY BE LESS THAN CHARGES ASSESSED BY THE COMPANY. The initial Purchase Payment allocated to designated Sub-Accounts of the Variable Account will be priced not 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 upon receipt by the Company. 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, Purchase Payments will be priced on the basis of the Accumulation Unit Value next computed 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 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 Mortality Risk Charge, Expense Risk Charge and Administration Charge deducted from the Variable Account. Such factor is equal to an annual rate of 1.30% of the daily net asset value of the Variable Account. 23 25 of 85 26 For underlying Mutual Funds that credit dividends on a daily basis and pay such dividends once a month, the Net Investment Factor allows for the monthly reinvestment of these daily dividends. The Net Investment Factor may be greater or less than one; therefore, the value of an Accumulation Unit may increase or decrease. It should be noted that changes in the Net Investment Factor may not be directly proportional to changes in the net asset value of underlying Mutual Fund shares, because of the deduction for Mortality Risk Charge, Expense Risk Charge and Administration Charge, and any charge or credit for tax reserves (see "Charge For Tax Provisions"). 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 Accumulation Units attributable to the Contract plus any amount held under the Contract in the Fixed Account is the Contract Value. The number of Accumulation Units credited per each Sub-Account is 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 will be deducted in the same proportion that the Contract Owner's interest in the Variable 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 surrender must be requested in writing by the Contract Owner, and the Company may require that the signature(s) be guaranteed by a member firm of the New York, American, Boston, Midwest, Philadelphia, or Pacific Stock Exchange, by a commercial bank or a savings and loan which is a member of the Federal Deposit Insurance Corporation or other eligible guarantor institution as defined by the federal securities laws and regulations. In some cases (for example, requests by a corporation, partnership, agent, fiduciary, or surviving Joint Owner), the Company will require additional documentation of a customary nature. 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 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. Certain redemption restrictions also apply to Contracts issued under the Texas Optional Retirement Program or the Louisiana Optional Retirement Plan. With respect to Contracts issued under the Texas Optional Retirement Program, the Texas Attorney General has ruled that withdrawal benefits are available only in the event of a participant's death, retirement, termination of employment due to total disability, or other termination of employment in a Texas public institution of higher education. Retirement benefits made pursuant to the Louisiana Optional Retirement Plan are to be paid in the form of lifetime income and, except for 24 26 of 85 27 Death Benefits, lump sum cash payments are not permitted. A participant under the Louisiana Optional Retirement Plan may take a Distribution from the Contract only in the event of retirement or termination of employment. A participant under either the Texas Optional Retirement Program or the Louisiana Optional Retirement Plan will not, therefore, be entitled to receive the right of withdrawal in order to receive the cash values credited to such participant under the Contract unless one of the foregoing conditions has been satisfied. The value of such Contracts may, however, be transferred to other contracts or other carriers during the participation in these retirement programs, subject to any applicable Contingent Deferred Sales Charge. The Company issues this Contract to participants in the Texas Optional Retirement Program in reliance upon, and in compliance with, Rule 6c-7 of the Investment Company Act of 1940 and to participants in the Louisiana Optional Retirement Plan in reliance upon, and in compliance with, an exemptive order the Company obtained from the Securities and Exchange Commission on August 22, 1990. SURRENDERS UNDER A QUALIFIED PLAN OR 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 also 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 of a Tax Sheltered Annuity 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 401(k)(2)(B), 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 in 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 of 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. 25 27 of 85 28 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. 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 exceed 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 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. 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, 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 policyholder 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 which may be issued to prevent the avoidance of the purpose of these rules). 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 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 the Qualified Contracts, Individual Retirement Annuities and Tax Sheltered Annuities; 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. 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 the attainment of age 59-1/2, the death 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 is made from 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 selects an annuity for life or 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 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 or Joint Owner. In such case the Designated Annuitant, Beneficiary or other 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 his or her life or life expectancy if such 26 28 of 85 29 payments begin within one year from the death of the Contract Owner. If the Contract Owner's Beneficiary 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. If the Contract Owner is not an individual, the death of the Designated Annuitant (or a change of the Designated Annuitant) will result in a Distribution pursuant to these rules, regardless of whether a Contingent Designated Annuitant was 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 paid, through withholding or estimated payments, 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. Payment of a benefit or transfer of any property to an individual two or more generations younger than the Contract Owner may constitute a generation-skipping transfer, subject to taxation under Section 2601 et seq. of the Code (see "Generation-Skipping Transfers"). 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 a 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. QUALIFIED PLANS, INDIVIDUAL RETIREMENT ANNUITIES, INDIVIDUAL RETIREMENT ACCOUNTS AND TAX SHELTERED ANNUITIES The Contracts may be used with Qualified Plans, 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: 27 29 of 85 30 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 in this provision. The Contract is available for Qualified Plans electing to comply with section 404(c) of ERISA. It is the responsibility of the plan and its fiduciaries to determine and satisfy section 404(c) requirements. Individual Retirement Accounts and Individual Retirement Annuities may not provide life insurance benefits. If the Death Benefit exceeds the greater of the cash value, the Contract Value, or the sum of all Purchase Payments, less amounts surrendered, it is possible that the Internal Revenue Service could determine that the Individual Retirement Account or Individual Retirement Annuity did not qualify for the desired tax treatment. ADVERTISING 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 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. 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 will average annual total return except total return will assume an initial investment of $10,000. 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. 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. A "yield" and "effective yield" may also be advertised for the Money Market 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 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-Accounts 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 indices, 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 2-1/2 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 28 30 of 85 31 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 Fund options against all underlying mutual funds over specified periods and against underlying mutual funds in specified categories. The rankings may or may not include the effects of sales or other charges. The Company is also ranked and rated by independent financial rating services, among which are Moody's, Standard & Poor's and A.M. Best Company. The purpose of these ratings is to reflect the financial strength or claims-paying ability of the Company. The ratings are not intended to reflect the investment experience or financial strength of the Variable Account. The Company may advertise these ratings from time to time. In addition, the Company may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend the Company or the contract. Furthermore, the Company may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions. ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE COMPANY IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE FUTURE RESULTS. A CONTRACT OWNER'S CONTRACT VALUE AT REDEMPTION MAY BE MORE OR LESS THAN ORIGINAL COST. UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY STANDARDIZED AVERAGE ANNUAL TOTAL RETURN - -------------------------------------------------------------------------------
SUB-ACCOUNT OPTIONS 1 Year To 5 Years To Life of Fund Date Fund 12/31/95 12/31/95 To 12/31/95 Effective - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Equity Income 24.94% 17.36% 9.02% 10-09-86 Portfolio - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Overseas Portfolio -0.14% 3.52% 3.04% 1-28-87 - ---------------------------------------------------------------------------------------------------- NSAT-Money Market Fund -4.11% -0.42% 1.81%* 11-10-81 - ---------------------------------------------------------------------------------------------------- NSAT-Total Return Fund 19.02% 12.73% 8.79%* 11-08-82 - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 10.73% N/A 3.51% 08-01-94 Trust-Asset Allocation Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 6.78% N/A 1.22% 08-01-94 Trust-Government Bond Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 14.12% N/A 7.30% 08-01-94 Trust-Large Company Growth Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 13.64% N/A 4.02% 08-01-94 Trust-Growth Opportunities Fund - ----------------------------------------------------------------------------------------------------
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN - -------------------------------------------------------------------------------
SUB-ACCOUNT OPTIONS 1 Year To 5 Years To Life of Fund Date Fund 12/31/95 12/31/95 To 12/31/95 Effective - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Equity Income 33.04% 19.54% 11.61% 10-09-86 Portfolio - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Overseas Portfolio 7.06% 6.46% 5.66% 1-28-87 - ---------------------------------------------------------------------------------------------------- NSAT-Money Market Fund 3.99% 2.66% 4.26%* 11-10-81 - ---------------------------------------------------------------------------------------------------- NSAT-Total Return Fund 27.12% 15.01% 10.79%* 11-08-82 - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 18.83% N/A 11.27% 08-01-94 Trust-Asset Allocation Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 14.88% N/A 8.98% 08-01-94 Trust-Government Bond Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 22.22% N/A 15.01% 08-01-94 Trust-Large Company Growth Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 21.74% N/A 11.82% 08-01-94 Trust-Growth Opportunities Fund - ----------------------------------------------------------------------------------------------------
*Represents 10 years to 12/31/95. 29 31 of 85 32 LEGAL PROCEEDINGS There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company and the Variable Account are parties or to which any of their property is the subject. The General Distributor, Nationwide Advisory Services, Inc., is not engaged in any 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 History.................................. 3 Annuity Payments............................................................ 4 Financial Statements........................................................ 5
30 32 of 85 33 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 relate to the Fixed Account. 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 Nationwide VA Separate Account-C 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 in this provision, 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. Transfers under this provision 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. 31 33 of 85 34 Any group annuity Contract offered in conjunction with the prospectus, the assets of which are invested in the general account of the Company, may be subject to restrictions or surrender of a plan's or a participant's interest in the Annuity Contract, and may require that such a surrender be completed over a period of 5 years. 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 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. ASSUMED INTEREST RATE AND ANNUITY TABLES The Annuity Tables contained in the Contracts are based on the 1971 Individual Annuity Mortality Table (set back one year) and an assumed interest rate of 3.5%. 32 34 of 85 35 STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1997 INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED BY THE NATIONWIDE VA SEPARATE ACCOUNT-C OF NATIONWIDE LIFE AND ANNUITY 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, 1997. The prospectus may be obtained from Nationwide Life and Annuity Insurance Company by writing P. O. Box 182008, Columbus, Ohio 43218-2008, or calling 1-800-860-3946, 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 History................................... 3 Annuity Payments............................................................. 4 Financial Statements......................................................... 5
GENERAL INFORMATION AND HISTORY The Nationwide VA Separate Account-C (formerly Financial Horizons VA Separate Account-3) is a separate investment account of Nationwide Life and Annuity Insurance Company ("Company") (formerly Financial Horizons Life Insurance Company). The Company is a member of the Nationwide Insurance Enterprise and all of the Company's common stock is owned by Nationwide Life Insurance Company. The common stock of Nationwide Life Insurance Company is owned by Nationwide Financial Services, Inc., an insurance company holding company. Nationwide Financial Services, Inc. is owned by Nationwide Corporation, 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, or affiliates of the Company may have entered into agreements with either the investment adviser or distributor for several of the underlying Mutual Funds. The agreements relate to administrative services furnished by the Company or an affiliate of the Company and provide for an annual fee based on the average aggregate net assets of the Variable Account (and other separate accounts of the Company or life insurance company subsidiaries of the Company) invested in particular underlying Mutual Funds. These fees in no way affect the net asset value of the underlying Mutual Funds or fees paid by the Contract Owner. The financial statements and schedules have been included herein in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and upon the authority of said firm as experts in accounting and auditing. PURCHASE OF SECURITIES BEING OFFERED The Contracts will be sold by licensed insurance agents in the states where the Contracts may be lawfully sold. Such agents will be registered representatives of broker-dealers registered under the 1 35 of 85 36 Securities Exchange Act of 1934 who are members of the National Association of Securities Dealers, Inc. ("NASD"). The Contract Owner may transfer up to 100% of the Contract Value from the Variable Account to the Fixed Account, without penalty or adjustment. 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 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 Nationwide Advisory Services, Inc. ("NAS"), One Nationwide Plaza, Columbus, Ohio 43216, an affiliate of the Company. No underwriting commissions were paid by the Company to NAS. CALCULATIONS OF PERFORMANCE All performance advertising shall include quotations of standardized average annual total return, calculated in accordance with standard method prescribed by rules of the Securities and Exchange Commission, to facilitate comparison with standardized total return advertised by other variable annuity separate accounts. 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. Average annual total return reflects the deduction of a maximum $30 Contract Maintenance Charge and a 1.30% Mortality, Expense Risk and Administration Charge. The redeemable value also reflects the effect of any 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 $10,000 and does not reflect the deduction of any 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 $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 used affects performance because the Contract Maintenance Charge is a fixed per Contract charge. 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 the rolling calendar quarters and will cover at least 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 Fund options which have not been held as Sub-Accounts within the Variable Account 2 36 of 85 37 for one of the quoted periods, the 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 average annual total return and total return are based upon historical earnings and will fluctuate. Any quotation of performance, therefore, should not be considered a guarantee of future performance. Factors affecting a Sub-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. Any current yield quotations of the Nationwide Separate Account Trust 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. The Nationwide Separate Account Trust Money Market Fund Sub-Account's effective yield is computed similarly but includes the effect of assumed compounding on an annualized basis of the current yield quotations of the Fund. The Nationwide Separate Account Trust 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 underlying Mutual Fund's portfolio, portfolio quality and average maturity, changes in interest rates, and the underlying Mutual 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 "Investment Manager and Other Services" in the underlying Mutual 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 Nationwide Separate Account Trust Money Market Fund Sub-Account is not guaranteed or insured. Yield of other money market funds may not be comparable if a different base or another method of calculation is used. UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY STANDARDIZED AVERAGE ANNUAL TOTAL RETURN - -------------------------------------------------------------------------------
SUB-ACCOUNT OPTIONS 1 Year To 5 Years To Life of Fund Date Fund 12/31/95 12/31/95 To 12/31/95 Effective - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Equity Income 24.94% 17.36% 9.02% 10-09-86 Portfolio - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Overseas Portfolio -0.14% 3.52% 3.04% 1-28-87 - ---------------------------------------------------------------------------------------------------- NSAT-Money Market Fund -4.11% -0.42% 1.81%* 11-10-81 - ---------------------------------------------------------------------------------------------------- NSAT-Total Return Fund 19.02% 12.73% 8.79%* 11-08-82 - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 10.73% N/A 3.51% 08-01-94 Trust-Asset Allocation Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 6.78% N/A 1.22% 08-01-94 Trust-Government Bond Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 14.12% N/A 7.30% 08-01-94 Trust-Large Company Growth Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 13.64% N/A 4.02% 08-01-94 Trust-Growth Opportunities Fund - ----------------------------------------------------------------------------------------------------
3 37 of 85 38 NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN - --------------------------------------------------------------------------------
SUB-ACCOUNT OPTIONS 1 Year To 5 Years To Life of Fund Date Fund 12/31/95 12/31/95 To 12/31/95 Effective - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Equity Income 33.04% 19.54% 11.61% 10-09-86 Portfolio - ---------------------------------------------------------------------------------------------------- Fidelity VIP Fund-Overseas Portfolio 7.06% 6.46% 5.66% 1-28-87 - ---------------------------------------------------------------------------------------------------- NSAT-Money Market Fund 3.99% 2.66% 4.26%* 11-10-81 - ---------------------------------------------------------------------------------------------------- NSAT-Total Return Fund 27.12% 15.01% 10.79%* 11-08-82 - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 18.83% N/A 11.27% 08-01-94 Trust-Asset Allocation Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 14.88% N/A 8.98% 08-01-94 Trust-Government Bond Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 22.22% N/A 15.01% 08-01-94 Trust-Large Company Growth Fund - ---------------------------------------------------------------------------------------------------- The One(R) Group Investment 21.74% N/A 11.82% 08-01-94 Trust-Growth Opportunities Fund - ----------------------------------------------------------------------------------------------------
*Represents 10 years to 12/31/95. ANNUITY PAYMENTS See "Frequency and Amount of Annuity Payments" located in the prospectus. 4 38 of 85 39 NATIONWIDE INSURANCE ENTERPRISE "SEPARATE ACCOUNT FINANCIALS"* *To be added by Post-Effective Amendment to the Registration Statement to be filed prior to May 1, 1997. 40 NATIONWIDE INSURANCE ENTERPRISE "LIFE COMPANY FINANCIALS"* *To be added by Post-Effective Amendment to the Registration Statement to be filed prior to May 1, 1997. 41 PART C. OTHER INFORMATION Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: PAGE (1) Financial statements and schedule included 10 in Prospectus (Part A): Condensed Financial Information (2) Financial statements and schedule included 39 in Part B: Those financial statements and schedule required by Item 23 to be included in Part B have been incorporated therein by reference to the Statement of Additional Information (Part A). Nationwide VA Separate Account-C: Independent Auditors' Report. 39 Statement of Assets, Liabilities and Contract 40 Owners' Equity as of December 31, 1995. Statements of Operations and Changes in 42 Contract Owners' Equity for the year ended December 31, 1995 and for the period August 17, 1994 (commencement of operations) through December 31, 1994. Notes to Financial Statements. 43 Schedules of Changes in Unit Value. 45 Nationwide Life and Annuity Insurance Company: Independent Auditors' Report. 47 Balance Sheets as of December 31, 48 1995 and 1994. Statements of Income for the years ended 49 December 31, 1995, 1994 and 1993. Statements of Shareholder's Equity for the 50 years ended December 31, 1995, 1994 and 1993. Statements of Cash Flows for the years ended 51 December 31, 1995, 1994 and 1993. Notes to Financial Statements. 52
67 of 85 42 Item 24. (b) Exhibits - All applicable Exhibits, as listed below, were included as Exhibits to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4 of the Nationwide VA Separate Account-C (SEC File No. 33-66496), and are incorporated herein by this reference (1) Resolution of the Depositor's Board of Directors authorizing the establishment of the Registrant (2) Not Applicable (3) Underwriting or Distribution of contracts between the Registrant and Principal Underwriter (4) The Form of the Variable Annuity Contract (5) Variable Annuity Application (6) Articles of Incorporation of Depositor (7) Not Applicable (8) Not Applicable (9) Opinion of Counsel (10) Not Applicable (11) Not Applicable (12) Not Applicable (13) Performance Advertising Calculation Schedule 68 of 85 43 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
69 of 85 44
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
70 of 85 45
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 71 of 85 46
NO. VOTING SECURITIES STATE (SEE ATTACHED OF ORGANIZATION CHART) UNLESS COMPANY OTHERWISE PRINCIPAL BUSINESS INDICATED Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency Affiliate Agency, Inc. Delaware Life Insurance Agency Allnations, Inc. Ohio Promotes cooperative insurance corporations worldwide American Marine Underwriters, Inc. Florida Underwriting Manager Auto Direkt Insurance Company Germany Insurance Company The Beak and Wire Corporation Ohio Radio Tower Joint Venture California Cash Management Company California Investment Securities Agent Colonial County Mutual insurance Texas Insurance Company Company Colonial Insurance Company of California Insurance Company California Columbus Insurance Brokerage and Germany Insurance Broker Service GMBH Companies Agency Insurance Services California Insurance Broker of California Companies Agency of Alabama, Inc. Alabama Insurance Broker Companies Agency of Idaho, Inc. Idaho Insurance Broker Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for Policies placed through Brokers Companies Agency of Kentucky, Inc. Kentucky Insurance Broker Companies Agency of Massachusetts, Massachusetts Insurance Broker Inc. Companies Agency of New York, Inc. New York Insurance Broker Companies Agency of Pennsylvania, Inc. Pennsylvania Insurance Broker Companies Agency of Phoenix, Inc. Arizona Insurance Broker Companies Agency of Texas, Inc. Texas Insurance Broker Companies Agency, Inc. Wisconsin Insurance Broker Companies Annuity Agency of Texas, Texas Insurance Broker Inc. Countrywide Services Corporation Delaware Products Liability, Investigative and Claims Management Services
72 of 85 47
NO. VOTING SECURITIES STATE (SEE ATTACHED OF ORGANIZATION CHART) UNLESS COMPANY OTHERWISE PRINCIPAL BUSINESS INDICATED Employers Insurance of Wausau A Wisconsin Insurance Company Mutual Company ** Employers Life Insurance Company of Wisconsin Life Insurance Company Wausau F & B, Inc. Iowa Insurance Agency Farmland Mutual Insurance Company Iowa Insurance Company Financial Horizons Distributors Alabama Life Insurance Agency Agency of Alabama, Inc. Financial Horizons Distributors Ohio Insurance Agency Agency of Ohio Financial Horizons Distributors Oklahoma Life Insurance Agency Agency of Oklahoma, Inc. Financial Horizons Distributors Texas Life Insurance Agency Agency of Texas, Inc. * Financial Horizons Investment Trust Massachusetts Investment Company Financial Horizons Securities Oklahoma Broker Dealer Corporation Gates, McDonald & Company Ohio Cost Control Business Gates, McDonald & Company of Nevada Nevada Self-Insurance Administration Claims Examinations and Data Processing Services Gates, McDonald & Company of New New York Workers Compensation Claims Administration York, Inc. Greater La Crosse Health Plans, Inc. Wisconsin Writes Commercial Health and Medicare Supplement Insurance InHealth Agency, Inc. Ohio Insurance Agency InHealth Management Systems, Inc. Ohio Develops and operates Managed Care Delivery System Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency Key Health Plan, Inc. California Pre-paid health plans Landmark Financial Services of New New York Life Insurance Agency York, Inc. Leben Direkt Insurance Company Germany Life Insurance Company Lone Star General Agency, Inc. Texas Insurance Agency ** MRM Investments, Inc. Ohio Owns and operates a Recreational Ski Facility ** National Casualty Company Michigan Insurance Company National Casualty Company of America, Great Britain Insurance Company Ltd.
73 of 85 48
NO. VOTING SECURITIES STATE (SEE ATTACHED OF ORGANIZATION CHART) UNLESS COMPANY OTHERWISE PRINCIPAL BUSINESS INDICATED ** National Premium and Benefit Delaware Insurance Administrative Services Administration Company Nationwide Agribusiness Insurance Iowa Insurance Company Company Nationwide Asset Allocation Trust Massachusetts Investment Company --------------------------------- ------------- ------------------ Nationwide Cash Management Company Ohio Investment Securities Agent Nationwide Communications, Inc. Ohio Radio Broadcasting Business Nationwide Community Urban Ohio Redevelopment of blighted areas within the Redevelopment Corporation City of Columbus, Ohio Nationwide Corporation Ohio Organized for the purpose of acquiring, holding, encumbering, transferring, or otherwise disposing of shares, bonds, and other evidences of indebtedness, securities, and contracts of other persons, associations, corporations, domestic or foreign and to form or acquire the control of other corporations Nationwide Development Company Ohio Owns, leases and manages commercial real estate Nationwide Financial Institution Delaware Insurance Agency Distributors Agency, Inc. ** Nationwide Advisory Services, Inc. Ohio Registered Broker-Dealer, Investment Manager and Administrator Nationwide General Insurance Company Ohio Insurance Company Nationwide HMO, Inc. Ohio Health Maintenance Organization * Nationwide Indemnity Company Ohio Reinsurance Company Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation Foundation Nationwide Insurance Golf Charities, Ohio Membership Non-Profit Corporation Inc. Nationwide Investing Foundation Michigan Investment Company * Nationwide Investing Massachusetts Investment Company Foundation II Nationwide Investment Services Oklahoma Registered Broker-Dealer in Deferred Corporation Compensation Market Nationwide Investors Services, Inc. Ohio Stock Transfer Agent ** Nationwide Life and Annuity Insurance Ohio Life Insurance Company Company ** Nationwide Life Insurance Company Ohio Life Insurance Company Nationwide Lloyds Texas Texas Lloyds Company
74 of 85 49
NO. VOTING SECURITIES STATE (SEE ATTACHED OF ORGANIZATION CHART) UNLESS COMPANY OTHERWISE PRINCIPAL BUSINESS INDICATED Nationwide Mutual Fire Insurance Ohio Insurance Company Company Nationwide Mutual Insurance Company Ohio Insurance Company Nationwide Property and Casualty Ohio Insurance Company Insurance Company ** Nationwide Property Management, Inc. Ohio Owns, leases, manages and deals in Real Property * Nationwide Separate Account Trust Massachusetts Investment Company NEA Valuebuilder Investor Services of Alabama Life Insurance Agency Alabama, Inc. NEA Valuebuilder Investor Services of Arizona Life Insurance Agency Arizona, Inc. NEA Valuebuilder Investor Services of Massachusetts Life Insurance Agency Massachusetts, Inc. NEA Valuebuilder Investor Services of Montana Life Insurance Agency Montana, Inc. NEA Valuebuilder Investor Services of Nevada Life Insurance Agency Nevada, Inc. NEA Valuebuilder Investor Services of Ohio Life Insurance Agency Ohio, Inc. NEA Valuebuilder Investor Services of Oklahoma Life Insurance Agency Oklahoma, Inc. NEA Valuebuilder Investor Services of Texas Life Insurance Agency Texas, Inc. NEA Valuebuilder Investor Services of Wyoming Life Insurance Agency Wyoming NEA Valuebuilder Investor Services, Delaware Life Insurance Agency Inc. NEA Valuebuilder Services Insurance Massachusetts Life Insurance Agency Agency, Inc. Neckura General Insurance Company Germany Insurance Company Neckura Holding Company Germany Administrative Service for Neckura Insurance Group Neckura Insurance Company Germany Insurance Company Neckura Life Insurance Company Germany Life Insurance Company NWE, Inc. Ohio Special Investments PEBSCO of Massachusetts Insurance Massachusetts Markets and Administers Deferred Compensation Agency, Inc. Plans for Public Employees
75 of 85 50
NO. VOTING SECURITIES STATE (SEE ATTACHED OF ORGANIZATION CHART) UNLESS COMPANY OTHERWISE PRINCIPAL BUSINESS INDICATED PEBSCO of Texas, Inc. Texas Markets and Administers Deferred Compensation Plans for Public Employees Pension Associates of Wausau, Inc. Wisconsin Pension plan administration, record keeping and consulting and compensation consulting Public Employees Benefit Services Delaware Marketing and Administration of Deferred corporation Employee Compensation Plans for Public Employees Public Employees Benefit Services Alabama Markets and Administers Deferred Compensation Corporation of Alabama Plans for Public Employees Public Employees Benefit Services Arkansas Markets and Administers Deferred Compensation Corporation of Arkansas Plans for Public Employees Public Employees Benefit Services Montana Markets and Administers Deferred Compensation Corporation of Montana Plans for Public Employees Public Employees Benefit Services New Mexico Markets and Administers Deferred Compensation Corporation of New Mexico Plans for Public Employees Scottsdale Indemnity Company Ohio Insurance Company Scottsdale Insurance Company Ohio Insurance Company SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura Insurance Group Group Wausau Business Insurance Company Illinois Insurance Company Wausau General Insurance Company Illinois Insurance Company Wausau Insurance Company (U.K.) United Kingdom Insurance and Reinsurance Company Limited Wausau International Underwriters California Special Risks, Excess and Surplus Lines Insurance Underwriting Manager ** Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company Company Wausau Service Corporation Wisconsin Holding Company Wausau Underwriters Insurance Company Wisconsin Insurance Company ** West Coast Life Insurance Company California Life Insurance Company
76 of 85 51
NO. VOTING SECURITIES (SEE ATTACHED CHART) STATE UNLESS OTHERWISE COMPANY OF ORGANIZATION INDICATED PRINCIPAL BUSINESS * MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide DC Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide DC Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts Account II Account * Nationwide Life Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts Separate Account * Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts Separate Account Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts Separate Account * Nationwide VA Separate Account-Q Ohio Nationwide Life and Annuity Issuer of Annuity Contracts Separate Account * Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts Account Account * Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts Account * Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance Account-A Separate Account Contracts * Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance Account-B Separate Account Contracts * Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance Account Contracts
77 of 85 52 * Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance Account Contracts * Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance Account Contracts
78 of 85 53 Nationwide Insurance Enterprise Organizational Chart* *To be added by Post-Effective Amendment to the Registration Statement to be filed prior to May 1, 1997. 54 Item 27. NUMBER OF CONTRACT OWNERS The number of Contract Owners of Qualified and Non-Qualified Contracts as of January 31, 1997 was 1,984 and 2,823, 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. Item 29. PRINCIPAL UNDERWRITER (a) Nationwide Advisory Services, Inc. ("NAS") acts as general distributor for the Nationwide Multi-Flex Variable Account, Nationwide DC Variable Account, Nationwide DC Variable Account II, Nationwide Variable Account-II, Nationwide Variable Account-5, Nationwide Variable Account-6, Nationwide Variable Account-8, Nationwide VA Separate Account-A, Nationwide VA Separate Account-B, Nationwide VA Separate Account-C, Nationwide VL Separate Account-A, Nationwide VL Separate Account-B, Nationwide VLI Separate Account-2, Nationwide VLI Separate Account-3, NACo Variable Account and the Nationwide Variable Account, all of which are separate investment accounts of the Company or its affiliates. NAS also acts as principal underwriter for the Nationwide Investing Foundation, Nationwide Separate Account Trust, Financial Horizons Investment Trust, and Nationwide Investing Foundation II, which are open-end management investment companies. (b) NATIONWIDE ADVISORY SERVICES, INC. DIRECTORS AND OFFICERS
POSITIONS AND OFFICES NAME AND BUSINESS ADDRESS WITH UNDERWRITER Joseph J. Gasper President and Director One Nationwide Plaza Columbus, Ohio 43215 D. Richard McFerson Chairman of the Board of Directors and One Nationwide Plaza Chairman and Columbus, OH 43215 Chief Executive Officer--Nationwide Insurance Enterprise and Director Gordon E. McCutchan One Nationwide Plaza Executive Vice President-Law and Columbus, OH 43215 Corporate Services and Director
81 of 85 55 (b) NATIONWIDE ADVISORY SERVICES, INC. DIRECTORS AND OFFICERS Robert A. Oakley Executive Vice President - Chief Financial One Nationwide Plaza Officer and Director Columbus, Ohio 43215 Robert J. Woodward Executive Vice President - Chief Investment One Nationwide Plaza Officer and Director Columbus, Ohio 43215 W. Sidney Druen Senior Vice President and One Nationwide Plaza General Counsel and Columbus, OH 43215 Assistant Secretary James F. Laird, Jr. Vice President and General One Nationwide Plaza Manager Columbus, OH 43215 Peter J. Neckermann Vice President One Nationwide Plaza Columbus, OH 43215 Harry S. Schermer Vice President - Investments One Nationwide Plaza Columbus, OH 43215 Rae I. Mercer Secretary One Nationwide Plaza Columbus, OH 43215 William G. Goslee Treasurer One Nationwide Plaza Columbus, Ohio 43215
(c) NAME OF NET UNDERWRITING COMPENSATION ON PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION Nationwide Advisory N/A N/A N/A N/A Services, Inc.
82 of 85 56 Item 30. LOCATION OF ACCOUNTS AND RECORDS Robert O. Cline Nationwide Life and Annuity 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 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). 83 of 85 57 Offered by Nationwide Life and Annuity Insurance Company NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY Nationwide VA Separate Account-C Individual Deferred Variable Annuity Contracts PROSPECTUS May 1, 1997 84 of 85 58 SIGNATURES As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, NATIONWIDE VA SEPARATE ACCOUNT-C has caused this Post-Effective Amendment to be signed on its behalf in the City of Columbus, and State of Ohio, on this 28th day of February, 1997. NATIONWIDE VA SEPARATE ACCOUNT-C ---------------------------------------------- (Registrant) NATIONWIDE LIFE AND ANNUITY 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 28th day of February, 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 Chairman and Chief Executive Officer--Nationwide D. RICHARD MCFERSON 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 - ------------------------------------------ Arden L. Shisler ROBERT L. STEWART Director - ------------------------------------------ Robert L. Stewart Director NANCY C. THOMAS - ------------------------------------------ Nancy C. Thomas HAROLD W. WEIHL Director - ------------------------------------------ Harold W. Weihl
85 of 85 59 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as directors and/or officers of NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY, an Ohio corporation, which has filed or will file with the Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended, various Registration Statements and amendments thereto for the registration under said Act of Individual Deferred Variable Annuity Contracts in connection with the Nationwide VA Separate Account-A, the Nationwide VA Separate Account-B, the Nationwide VA Separate Account-C and the Nationwide VA Separate Account-Q 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-A; and the registration of variable life insurance policies in connection with the Nationwide VL Separate Account-A of Nationwide Life and Annuity 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 J. ENGEL /s/ ROBERT A. OAKLEY - ------------------------------------------------------ ------------------------------------------------------ Willard J. 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, JR. - ------------------------------------------------------ /s/ ARDEN L. SHISLER Charles L. Fuellgraf, Jr., 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 Board, Director Nancy C. Thomas, Director /s/ D. RICHARD MCFERSON /s/ HAROLD W. WEIHL - ------------------------------------------------------ ------------------------------------------------------ D. Richard McFerson, Chairman and Harold W. Weihl, Director Chief Executive Officer-Nationwide Insurance Enterprise and Director
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