As filed with the Securities and Exchange Commission on April 28, 2005.
'33 Act File No. 333-104106
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 5
NATIONWIDE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
OHIO 63
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
31-4156830
(I.R.S. Employer Identification Number)
ONE NATIONWIDE PLAZA, COLUMBUS,
OHIO 43215 (Address, including zip code, and
telephone number, including area code,
of registrant's principal executive offices)
PATRICIA R. HATLER, ESQ.
SECRETARY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
TELEPHONE: (614) 249-7111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: April 28,
2005.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [X]
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
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GUARANTEED TERM OPTIONS
(In a limited number of states, Guaranteed Term Options are referred to as
Target Term Options)
NATIONWIDE LIFE INSURANCE COMPANY
One Nationwide Plaza
Columbus, Ohio 43215
Telephone: 1-800-848-6331
The date of this Prospectus is April 28, 2005.
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Certain state insurance laws applicable to these investment options may
preclude, or be interpreted to preclude, Nationwide from providing a contractual
guarantee in conjunction with the Specified Interest Rate. In such jurisdictions
the investment options are referred to as "Target Term Options" as opposed to
"Guaranteed Term Options." DESPITE THIS DISTINCTION IN TERMINOLOGY, NATIONWIDE
WILL ADMINISTER ALL OBLIGATIONS DESCRIBED IN THIS PROSPECTUS, REGARDLESS OF THE
JURISDICTION, IN PRECISELY THE SAME MANNER. Thus, there will be no difference
between the calculation, crediting, and administration of Specified Interests
Rates in "Guaranteed Term Options" issued in states permitting a contractual
guarantee, and the calculation, crediting, and administration of Specified
Interest Rates in "Target Term Options" issued in states not permitting a
contractual guarantee.
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THIS PROSPECTUS MUST BE READ ALONG WITH THE APPROPRIATE VARIABLE CONTRACT
PROSPECTUS AND THE PROSPECTUSES DESCRIBING THE UNDERLYING MUTUAL FUND INVESTMENT
OPTIONS. ALL OF THESE PROSPECTUSES SHOULD BE READ CAREFULLY AND MAINTAINED FOR
FUTURE REFERENCE.
This Prospectus describes investment options referred to as Guaranteed Term
Options (GTOs), offered by Nationwide Life Insurance Company (Nationwide), and
is accompanied by a copy of Nationwide's latest annual report on Form 10-K. The
GTOs are available under certain variable annuity contracts or variable life
insurance policies (collectively, "variable contracts") issued by Nationwide.
Generally, the variable contracts offered by Nationwide provide an array of
underlying mutual fund investment options to which the contract owner allocates
his or her purchase payments. The GTOs are separate, guaranteed interest
investment options available under variable contracts.
GTOs will produce a guaranteed annual effective yield at the Specified
Interest Rate so long as amounts invested are not withdrawn prior to the end of
the guaranteed term. In the event of a withdraw from the GTO for any reason
prior to the expiration of the guaranteed term, the amount withdrawn may be
subject to a market value adjustment. Please refer to the variable contract
prospectus for specific information regarding variable contract transactions
that may be subject to a market value adjustment.
Variable contract prospectuses contain important disclosure about the
variable contract that should be reviewed carefully before investing.
Additionally, variable contract prospectuses in which the GTOs are offered
contain information specific to the GTO, including variable contract charges and
deductions that apply to the GTO, what GTO terms are available and information
about transactions that may incur a market value adjustment. The prospectus for
the variable contract must be read along with this prospectus.
The minimum amount that may be allocated to a GTO is $1,000 per allocation.
Nationwide established the Nationwide Multiple Maturity Separate Account,
pursuant to Ohio law, to aid in reserving and accounting for GTO obligations.
However, all of the general assets of Nationwide are available for the purpose
of meeting the guarantees of the GTOs. Amounts allocated to the GTOs are
generally invested in fixed income investments purchased by Nationwide. Variable
contract owners allocating amounts to a GTO have no claim against any assets of
Nationwide, including assets held in the Nationwide Multiple Maturity Separate
Account.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The GTOs described in this Prospectus may not be available in all state
jurisdictions and, accordingly, representations made in this Prospectus do not
constitute an offering in such jurisdictions.
TABLE OF CONTENTS
GLOSSARY.......................................................................1
INFORMATION ABOUT THE GTOS.....................................................2
GENERAL....................................................................2
THE SPECIFIED INTEREST RATE................................................3
THE INVESTMENT PERIOD......................................................3
GUARANTEED TERMS...........................................................4
GTOS AT MATURITY...........................................................4
WITHDRAWALS PRIOR TO THE MATURITY DATE.....................................4
The Market Value Adjustment............................................5
MVA Interest Rates.....................................................5
The Market Value Adjustment Formula....................................5
VARIABLE CONTRACT CHARGES..................................................6
GTOS AT ANNUITIZATION......................................................6
NATIONWIDE LIFE INSURANCE COMPANY..............................................7
INVESTMENTS....................................................................7
CONTRACTS AND THE DISTRIBUTION (MARKETING) OF THE GTOS.........................7
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..............................7
LEGAL OPINION..................................................................7
EXPERTS........................................................................7
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION...........................8
APPENDIX.....................................................................A-1
REPORTS OF NATIONWIDE LIFE INSURANCE COMPANY....................................
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AVAILABLE INFORMATION
Nationwide Life Insurance Company files reports with the Securities and Exchange
Commission on Forms 10-Q, 10-K and 8-K.
The public may read and copy these reports at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers, like Nationwide Life
Insurance Company, that file electronically with the SEC (http://www.sec.gov).
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GLOSSARY
MVA INTEREST RATE- The rate of interest used in the Market Value formula.
Depending on the variable contracts under which the GTO is offered, the interest
rate will be the Constant Maturity Treasury (CMT) rates, or interest rate swaps,
for maturity durations of 1, 3, 5, 7 and 10 years, as declared regularly by the
Federal Reserve Board.
GUARANTEED TERM OPTION (GTO)- An investment option offered under variable
contracts that provides a Specified Interest Rate over Guaranteed Terms, so long
as certain conditions are met. In some jurisdictions the GTO is referred to as a
Target Term Option (TTO).
GUARANTEED TERM- The period corresponding to a 1, 3, 5, 7 or 10 year GTO.
Amounts allocated to a GTO will be credited with a Specified Interest Rate over
the corresponding Guaranteed Term, so long as such amounts are not withdrawn
from the GTO prior to the Maturity Date. Because every Guaranteed Term will end
on the final day of a calendar quarter, the Guaranteed Term may last for up to 3
months beyond the 1, 3, 5, 7 or 10 year anniversary of the allocation to the
GTO.
MARKET VALUE ADJUSTMENT- The upward or downward adjustment in value of amounts
allocated to a GTO that are withdrawn from the GTO for any reason prior to the
Maturity Date.
MATURITY DATE- The date on which a GTO matures. The date will be the last day of
the calendar quarter during or within 30 days after the first, third, fifth,
seventh or tenth anniversary on which amounts are allocated to a 1, 3, 5, 7 or
10 year GTO, respectively.
MATURITY PERIOD- The period during which the value of amounts allocated under a
GTO may be withdrawn without any Market Value Adjustment. The Maturity Period
will begin on the day following the Maturity Date and will end on the thirtieth
day after the Maturity Date.
SPECIFIED INTEREST RATE- The interest rate guaranteed to be credited to amounts
allocated to a GTO so long as the allocations are not withdrawn prior to the
Maturity Date. The Specified Interest Rate will not be less than the minimum
required by applicable state law.
SPECIFIED VALUE- The amount of a GTO allocation, plus interest accrued at the
Specified Interest Rate, minus any other amounts withdrawn. The Specified Value
is subject to a Market Value Adjustment at all times other than during the
Maturity Period.
1
INFORMATION ABOUT THE GTOS
GENERAL
GTOs are guaranteed interest rate investment options available under
certain variable contracts issued by Nationwide. There are five different
Guaranteed Terms: 1 year; 3 years; 5 years; 7 years; and 10 years. Not all
Guaranteed Terms may be available in all states.
A GTO may be purchased using purchase payments made to the variable
contracts, or by using funds transferred from other investment options available
in the variable contracts. The minimum allocation to a GTO is $1,000 per
allocation. Not all of the variable contracts issued by Nationwide offer GTOs.
If GTOs are available under a variable annuity contract or variable life
insurance policy, the prospectus for the variable contract and this prospectus
must be read together.
The guarantees associated with the GTOs are the exclusive obligation of
Nationwide. The Nationwide Multiple Maturity Separate Account, authorized and
created in accordance with Ohio law, was established for the sole purpose of
reserving and accounting for assets associated with the GTOs. Its assets are
owned by Nationwide. Contract owners with GTOs have no claim against, and
maintain no interest in, the assets. Also, contract owners do not participate in
the investment experience.
Amounts allocated to a GTO will be credited interest at the Specified Interest
Rate for the duration of the Guaranteed Term at a rate no less than the minimum
required by applicable state law. Specified Interest Rates are declared
periodically at Nationwide's sole discretion and available for new allocations
typically for one month. They may be available for longer or shorter periods
depending on interest rate fluctuations in financial markets. During this time,
any transfer allocation or new purchase payment allocation to a GTO will earn
the Specified Interest Rate effective for that Investment Period for the
duration of the Guaranteed Term. Guaranteed Terms may extend up to 3 months
beyond the 1-, 3-, 5-, 7- or 10-year term since GTO terms will always end on the
final day of a calendar quarter, see "The Specified Interest Rate" and
"Guaranteed Terms".
The Specified Interest Rate will be credited daily to amounts allocated to
a GTO to provide an annual effective yield. The Specified Interest Rate will
continue to be credited as long as allocations remain in the GTO until the
Maturity Date. Any withdrawal prior to the Maturity Date will be subject to a
Market Value Adjustment.
Nationwide applies the Market Value Adjustment by using the Market Value
Adjustment factor, which is derived from the Market Value Adjustment formula.
The Market Value Adjustment factor is multiplied by the part of the Specified
Value being withdrawn, resulting in either an increase or decrease in the amount
of the withdrawal. The Market Value Adjustment formula reflects the relationship
between three components:
(1) the MVA Interest Rate for the period coinciding with the Guaranteed
Term of the GTO at investment;
(2) the MVA Interest Rate for the number of years remaining in a
Guaranteed Term when the withdrawal from the GTO occurs; and
(3) the number of days remaining in the Guaranteed Term of the GTO.
Generally, the Market Value Adjustment formula approximates the
relationship between prevailing interest rates at the time of the GTO
allocation, prevailing interest rates at the time of the withdrawal and the
amount of time remaining in a Guaranteed Term (see "The Market Value
Adjustment").
Contract owners having GTOs with Maturity Dates coinciding with the end of
the calendar quarter will be notified of the impending expiration of the
Guaranteed Term at least 15 days, and at most 30 days, prior to the end of each
calendar quarter. Contract owners will then have the option of directing the
withdrawal of any amount in the GTO during the Maturity Period, without any
Market Value Adjustment. However, any amount withdrawn from the GTO during this
period may be subject to a surrender charge assessed by the variable contract.
Please refer to the prospectus for the variable contract for more information
about surrender charges.
2
If no direction is received by the thirtieth day following the Maturity
Date, amounts in the GTO will be automatically transferred (with no Market Value
Adjustment) to the money market sub-account available in the variable contract.
For the period commencing with the first day after the Maturity Date and ending
on the thirtieth day following the Maturity Date, the GTO will be credited with
the same Specified Interest Rate in effect before the Maturity Date (see "GTOs
at Maturity").
The minimum amount of any allocation to a GTO is $1,000.
Under certain rare circumstances, when volatility in financial markets
compromises the ability of Nationwide to process allocations to or from the GTOs
in an orderly manner, Nationwide may temporarily suspend the right to make
additional allocations to the GTOs and/or to effect transfers or withdrawals
from the GTOs. Nationwide anticipates invoking this suspension only when these
transactions cannot be executed by Nationwide in a manner consistent with its
obligations to contract owners with existing or prospective interests in one or
more GTOs. Under no circumstances, however, will Nationwide limit a contract
owner's right to make at least one allocation to a GTO, and one withdrawal from
a GTO, in any calendar year. All contract owners will be promptly notified of
Nationwide's determination to invoke any suspension in the right to make
allocations to or to effect withdrawals from the GTOs.
In addition, the variable contracts that offer GTOs may impose certain
restrictions on the transferability of invested assets within the variable
contract. The variable product prospectus should be reviewed with regard to
specific transfer limitation provisions.
THE SPECIFIED INTEREST RATE
The Specified Interest Rate is the rate of interest guaranteed by
Nationwide to be credited to amounts allocated to the GTOs for the Guaranteed
Term. Different Specified Interest Rates may be established for the five
available GTO terms. Amounts withdrawn from a GTO prior to the maturity date
will be subject to a market value adjustment.
Generally, Nationwide will declare new Specified Interest Rates monthly;
however, depending on interest rate fluctuations, Nationwide may declare new
Specified Interest Rates more or less frequently.
Nationwide observes no specific method in establishing the Specified
Interest Rates. However, Nationwide will attempt to declare Specified Interest
Rates that are related to interest rates associated with fixed-income
investments available at the time and having durations and cash flow attributes
compatible with the Guaranteed Terms of the GTOs. In addition, the establishment
of Specified Interest Rates may be influenced by other factors, including
competitive considerations, administrative costs and general economic trends.
Nationwide has no way of precisely predicting what Specified Interest Rates may
be declared in the future, however, the Specified Interest Rate will not be less
than the minimum rate required by applicable state law.
THE INVESTMENT PERIOD
The Investment Period is the period of time during which a particular
Specified Interest Rate is in effect for new allocations to the available GTOs.
All allocations made to a GTO during an Investment Period are credited with the
Specified Interest Rate in effect at the time of allocation. An Investment
Period ends when a new Specified Interest Rate relative to the applicable GTO is
declared. Subsequent declarations of new Specified Interest Rates have no effect
on allocations made to GTOs during prior Investment Periods. Prior allocations
to the GTO will be credited with the Specified Interest Rate in effect when the
allocation was made.
Interest at the Specified Interest Rate is credited to allocations made to
GTOs on a daily basis, resulting in an annual effective yield guaranteed by
Nationwide, unless amounts are withdrawn from the GTO for any reason prior to
the Maturity Date. Interest at the Specified Interest Rate will be credited for
the entire Guaranteed Term. If amounts are withdrawn from the GTO for any reason
prior to the Maturity Date, a Market Value Adjustment will be applied to that
amount.
3
Information concerning the Specified Interest Rates in effect for the
various GTOs can be obtained by calling the following toll free phone number:
1-800-848-6331.
GUARANTEED TERMS
The Guaranteed Term is the period of time corresponding with the selected
GTO for which the Specified Interest Rate is guaranteed to be in effect. A
Guaranteed Term always expires on a Maturity Date which will be the last day of
a calendar quarter. Consequently, a Guaranteed Term may last up to 3 months
longer than the anniversary date of the allocation to the GTO.
For example, if an allocation is made to a 10 year GTO on August 1, 1999,
the Specified Interest Rate for that GTO will be credited until September 30,
2009; the Guaranteed Term will begin on August 1, 1999 and end on September 30,
2009.
Guaranteed Terms will be exactly 1, 3, 5, 7 or 10 years only when an
allocation to a GTO occurs on the last day of a calendar quarter.
GTOS AT MATURITY
Nationwide will send notice to contract owners of impending Maturity Dates
(always the last day of a calendar quarter) at least 15 days and at most 30 days
prior to the end of a Guaranteed Term. The notice will include the projected
value of the GTO on the Maturity Date, and will also specify options that
contract owners have with respect to the maturing GTO.
Once the GTO matures, contract owners may:
(1) surrender the GTO, in part or in whole, without a Market Value
Adjustment during the Maturity Period; however, any surrender charges
that may be applicable under the variable contract will be assessed;
(2) transfer (all or part) of the GTO, without a Market Value Adjustment,
to any other investment option under the variable contract, including
any of the underlying mutual fund sub-accounts, or another GTO of the
same or different duration during the Maturity Period. A confirmation
of any such transfer will be sent immediately after the transfer is
processed; or
(3) elect not to transfer or surrender all or a portion of the GTO, in
which case the GTO will be automatically transferred to the available
money market sub-account of the contract at the end of the Maturity
Period. A confirmation will be sent immediately after the automatic
transfer is executed.
If no direction is received by Nationwide prior to the Maturity Date, all
amounts in that GTO will be transferred to the available money market
sub-account of the contract.
The GTO will continue to be credited with the Specified Interest Rate in
effect before the Maturity Date during the Maturity Period, and prior to any of
the transactions set forth in (1), (2), or (3) above.
WITHDRAWALS PRIOR TO THE MATURITY DATE
Anytime value is removed from the GTO it will be referred to in this
prospectus as a withdrawal. However, under the variable contract, withdrawals of
value from the GTO may be considered a transfer among investment options of the
variable contract or a surrender. Depending upon the transaction and the terms
of the variable contract, additional conditions or charges may apply to
withdrawals from the GTO. Please refer to the variable contract prospectus for
information regarding transferring assets among investment options or taking
surrenders from the variable contract.
Withdrawals from the GTOs prior to the Maturity Date will be subject to a
Market Value Adjustment.
4
The Market Value Adjustment
The Market Value Adjustment is determined by multiplying a Market Value
Adjustment factor (arrived at by using the Market Value Adjustment formula) by
the Specified Value, or the portion of the Specified Value being withdrawn. The
Specified Value is the amount allocated to the GTO, plus interest accrued at the
Specified Interest Rate, minus prior withdrawals. The Market Value Adjustment
may either increase or decrease the amount of the withdrawal.
The Market Value Adjustment is intended to approximate, without
duplicating, Nationwide's experience when it liquidates assets in order to
satisfy contractual obligations. Such obligations arise when contract owners
make withdrawals, or when the operation of the variable contract requires a
distribution. Nationwide does not make the adjustment on distributions to pay
death benefits in certain jurisdictions. When liquidating assets, Nationwide may
realize either a gain or a loss.
MVA Interest Rates
The Market Value Adjustment formula used to determine the Market Value
Adjustment factor is based on either CMT rates, or interest rate swaps,
depending on the variable contracts under which the GTO is offered. CMT rates
and interest rate swaps are declared by the Federal Reserve Board on a regular
basis. Nationwide either uses CMT rates or interest rate swaps in its Market
Value Adjustment formula because they represent a readily available and
consistently reliable interest rate benchmark in financial markets, which can be
relied upon to reflect the relationship between Specified Interest Rates
declared by Nationwide and the prospective interest rate fluctuations.
CMT rates and interest rate swaps for 1, 3, 5, 7 and 10 years are
published by the Federal Reserve Board on a regular basis. To the extent that
the Market Value Adjustment formula shown below requires a rate associated with
a maturity not published (such as a 4, 6, 8 or 9 year maturity), Nationwide will
calculate such rates based on the relationship of the published rates. For
example, if the published 3 year rate is 6% and the published 5 year rate is
6.50%, the 4 year rate will be calculated as 6.25%.
The Market Value Adjustment Formula
The Market Value Adjustment formula is used when a withdrawal is made from
a GTO during the Guaranteed Term. The Market Value Adjustment is a calculation
expressing the relationship between three factors:
(1) the MVA Interest Rate for the period of time coinciding with the
Guaranteed Term of the GTO;
(2) the MVA Interest Rate for a period coinciding with the time remaining
in the Guaranteed Term of a GTO when a withdrawal giving rise to a
Market Value Adjustment occurs; and
(3) the number of days remaining in the Guaranteed Term of the GTO.
The formula for determining the Market Value Adjustment factor is:
- ----- -- --- --
t
1 + a
------------------
-- ---
1 + b + .0025
- ----- -- --- --
Where:
a= the MVA Interest Rate for a period equal to the Guaranteed Term at the
time of deposit in the GTO;
b= the MVA Interest Rate at the time of withdrawal for a period of time
equal to the time remaining in the Guaranteed Term. In determining the
number of years to maturity, any partial year will be counted as a
full year, unless it would cause the number of years to exceed the
Guaranteed Term; and
t= the number of days until the Maturity Date, divided by 365.25.
5
In certain jurisdictions the denominator is 1+b without the addition of
..0025.
In the case of "a" above, the MVA Interest Rate used will either be the CMT
rate or interest rate swap, depending on the variable contract. For variable
contracts using CMT rates, "a" will be the CMT rate declared on Fridays by the
Federal Reserve Board, and placed in effect by Nationwide for allocations made
to the GTO on the following Wednesday through Tuesday. For variable contracts
using interest rate swaps, "a" is the interest rate swap published by the
Federal Reserve Board two days before the date the allocation to the GTO was
made.
In the case of "b" above, the MVA Interest Rate used will either be the CMT
rate or interest rate swap, depending on the variable contract. For variable
contracts using CMT rates, "b" will be the CMT rate declared on Fridays by the
Federal Reserve Board, and placed in effect by Nationwide for withdrawals giving
rise to a Market Value Adjustment on the following Wednesday through Tuesday.
For variable contracts using interest rate swaps, "b" is the interest rate swap
published by the Federal Reserve Board two days before the date of withdrawal
giving rise to a Market Value Adjustment.
The Market Value Adjustment factor will be equal to 1 during the Investment
Period.
The Market Value Adjustment formula shown above also accounts for some of
the administrative and processing expenses incurred when fixed-interest
investments are liquidated. This is represented by the addition of .0025 in the
Market Value Adjustment formula.
The result of the Market Value Adjustment formula shown above is the Market
Value Adjustment factor. The Market Value Adjustment factor is multiplied by the
Specified Value, or that portion of the Specified Value being distributed from a
GTO, in order to effect a Market Value Adjustment. The Market Value Adjustment
factor will either be greater than, less than, or equal to 1 and will be
multiplied by the Specified Value (or a portion of the Specified Value) being
withdrawn from the GTO for any reason. If the Market Value Adjustment factor is
greater than 1, a gain will be realized by the contract owner; if the Market
Value Adjustment factor is less than 1, a loss will be realized. If the Market
Value Adjustment factor is exactly 1, no gain or loss will be realized.
If the Federal Reserve Board halts publication of CMT rates or interest
rate swaps, or if, for any other reason, they are not available, Nationwide will
use appropriate rates based on U.S. Treasury Bond yields.
Examples of how to calculate Market Value Adjustments based on CMT rates
are provided in the Appendix.
VARIABLE CONTRACT CHARGES
The variable contracts under which GTOs are made available have various
fees and charges, some of which may be assessed against allocations made to
GTOs. Contract charges assessed against allocations made to the GTOs will reduce
the credited guaranteed interest rate by the amount of the applicable charge.
The variable contract prospectus fully describes these fees and charges and any
impact such charges may have on the credited guaranteed interest rate of the
GTOs.
The variable contracts that offer the GTOs may also have surrender charges.
If a variable contract owner takes a withdrawal from the GTO (prior to the
Maturity Date) that is also considered a surrender from the variable contract,
the amount will be subject to a Market Value Adjustment in addition to any
surrender charge assessed pursuant to the terms of the variable contract. Please
refer to the variable contract prospectus for more information about variable
contract transactions that may incur surrender charges and/or a Market Value
Adjustment.
GTOS AT ANNUITIZATION
GTOs are not available as investment options for variable annuity contracts
that are annuitized. If a variable annuity contract is annuitized prior to the
Maturity Date of the GTO, a Market Value Adjustment will apply to amounts
transferred from the GTO to other investment options under the variable annuity
contract (unless such an adjustment is not permitted in your jurisdiction).
6
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in
March, 1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in all states, the District of Columbia and Puerto
Rico.
INVESTMENTS
Nationwide intends to invest amounts allocated to GTOs in high quality,
fixed interest investments (investment grade bonds, mortgages, and
collateralized mortgage obligations) in the same manner as Nationwide invests
its general account assets. Nationwide takes into account the various maturity
durations of the GTOs (1, 3, 5, 7 and 10 years) and anticipated cash-flow
requirements when making investments. Nationwide is not obligated to invest GTO
allocations in accordance with any particular investment objective, but will
generally adhere to Nationwide's overall investment philosophy. The Specified
Interest Rates declared by Nationwide for the various GTOs will not necessarily
correspond to the performance of the non-unitized separate account.
CONTRACTS AND THE DISTRIBUTION (MARKETING) OF THE GTOS
The GTOs are available only as investment options under certain variable
contracts issued by Nationwide. The appropriate variable contract prospectus
and, if applicable, the Statement of Additional Information should be consulted
for information regarding the distribution of the variable contracts.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The latest Annual Report on Form 10-K for Nationwide has been filed with
the Commission. The report is incorporated herein by reference, and a copy must
accompany this Prospectus. The report contains additional information about
Nationwide, including consolidated financial statements. The consolidated
financial statements of the Annual Report are audited. Nationwide filed this
report, via EDGAR, File No. 002-64559 on March 1, 2005.
If requested, Nationwide will furnish, without charge, a copy of any and
all of the documents incorporated by reference, other than exhibits to those
documents (unless such exhibits are specifically incorporated by reference in
those documents).
LEGAL OPINION
Legal matters in connection with federal laws and regulations affecting the
issue and sale of the GTOs described in this Prospectus and the organization of
Nationwide, its authority to issue GTOs under Ohio law, and the validity of the
endorsement to the variable annuity contracts under Ohio law have been passed on
by Nationwide's Office of General Counsel.
EXPERTS
The consolidated financial statements and schedules of Nationwide Life
Insurance Company and subsidiaries for each of the years in the three-year
period ended December 31, 2004, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority of such firm as
experts in accounting and auditing. The report of KPMG LLP covering the December
31, 2004 consolidated financial statements and schedules contains an explanatory
paragraph that states that Nationwide Life Insurance Company and subsidiaries
adopted the American Institute of Certified Public Accountants' Statement of
Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate Accounts in 2004.
7
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of Nationwide pursuant to the foregoing provisions, or otherwise,
Nationwide has been advised 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, Nationwide 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.
8
APPENDIX
Example A
Assume that a variable annuity contract owner made a $10,000 allocation on the
last day of a calendar quarter into a 5-year Guaranteed Term Option. The
Specified Interest Rate at the time is 8.5% and the 5-year Constant Maturity
Treasury Rate in effect is 8%. The variable annuity contract owner decides to
surrender the GTO 985 days from maturity. The Specified Value of the GTO is
$12,067.96. At this time, the 3-year Constant Maturity Treasury Rate is 7%.
(985/365.25 is 2.69, which rounds up to 3, so the 3-year CMT Rate is Used.)
d
---------------
---------------
1 + a 365.25
-------------------------
MVA FACTOR = 1 + b + 0.0025
985
--------------
--------------
1 + 0.08 365.25
------------------------
MVA FACTOR = 1 + 0.07 + 0.0025
MVA FACTOR = 1.01897
SURRENDER VALUE = SPECIFIED VALUE .........X MVA FACTOR
SURRENDER VALUE = $12,067.96 .........X 1.01897
*SURRENDER VALUE = $12,296.89
*Assumes no variable annuity contract contingent deferred sales charges are
applicable. In jurisdictions where the .0025 is not permitted in the
denominator, the Surrender Value is $12,374.52.
Specified Value (for purposes of the Example) = the amount of the GTO allocation
($10,000), plus interest accrued at the Specified Interest Rate (8.5%).
a= The Constant Maturity Treasury Rate declared by the Federal Reserve Board
on Friday, and placed in effect by Nationwide for allocations made to the
GTO on the following Wednesday through Tuesday.
b= The Constant Maturity Treasury Rate declared by the Federal Reserve Board
on Friday, and placed in effect by Nationwide for withdrawals, transfers or
other distributions giving rise to a Market Value Adjustment on the
following Wednesday through Tuesday.
d= The number of days remaining in the Guaranteed Term.
Example B
Assume that a variable annuity contract owner made a $10,000 allocation on the
last day of a calendar quarter into a 5-year Guaranteed Term Option. The
Specified Interest Rate at the time is 8.5% and the 5-year Constant Maturity
Treasury Rate in effect is 8%. The variable annuity contract owner decides to
surrender his money 985 days from maturity. The Specified Value of the GTO is
$12,067.96. At this time, the 3-year Constant Maturity Treasury Rate is 9%.
(985/365.25 is, 2.69 which rounds up to 3, so the 3-year CMT Rate is used.)
d
----------------
----------------
1 + a 365.25
------------------------
MVA FACTOR = 1 + B + 0.0025
985
---------------
---------------
1 + 0.08 365.25
------------------------
MVA FACTOR = 1 + 0.09 + 0.0025
MVA FACTOR = 0.96944
SURRENDER VALUE = SPECIFIED VALUE .........X MVA FACTOR
SURRENDER VALUE = $12,067.96 .........X 0.96944
*SURRENDER VALUE = $11,699.17
*Assumes no variable annuity contract contingent deferred sales charges are
applicable. In jurisdictions where the .0025 is not permitted in the
denominator, the Surrender Value is $11,771.69.
Specified Value (for purposes of the Example) = the amount of the GTO allocation
($10,000), plus interest accrued at the Specified Interest Rate (8.5%).
a= The Constant Maturity Treasury Rate declared by the Federal Reserve Board
on Friday, and placed in effect by Nationwide for allocations made to the
GTO on the following Wednesday through Tuesday.
b= The Constant Maturity Treasury Rate declared by the Federal Reserve Board
on Friday, and placed in effect by Nationwide for withdrawals, transfers or
other distributions giving rise to a Market Value Adjustment on the
following Wednesday through Tuesday.
d= The number of days remaining in the Guaranteed Term.
Example C
Assume that a variable annuity contract owner made a $10,000 allocation on the
last day of a calendar quarter into a 5-year Guaranteed Term Option. The
Specified Interest Rate at the time is 8.5% and the 5-year interest rate swap in
effect is 8%. The variable annuity contract owner decides to surrender the GTO
985 days from maturity. The Specified Value of the GTO is $12,067.96. At this
time, the 3-year interest rate swap is 7%. (985/365.25 is 2.69, which rounds up
to 3, so the 3-year interest rate swap is used.)
d
--------------
1 + a 365.25
------------------------
MVA FACTOR = 1 + B + 0.0025
985
--------------
1 + 0.08 365.25
------------------------
MVA FACTOR = 1 + 0.07 + 0.0025
MVA FACTOR = 1.01897
SURRENDER VALUE = SPECIFIED VALUE .........X MVA FACTOR
SURRENDER VALUE = $12,067.96 .........X 1.01897
*SURRENDER VALUE = $ 12,296.89
*Assumes no variable annuity contract contingent deferred sales charges are
applicable. In jurisdictions where the .0025 is not permitted in the
denominator, the Surrender Value is $12,374.52.
Specified Value (for purposes of the Example) = the amount of the GTO allocation
($10,000), plus interest accrued at the Specified Interest Rate (8.5%).
a= The interest rate swap published by the Federal Reserve Board two days
before the date the allocation to the GTO was made. If no interest rate
swap is available for this date, then the most recent available rate prior
to that date will be used.
b= The interest rate swap published by the Federal Reserve Board two days
before the date of withdrawal, transfer or other distribution giving rise
to a Market Value Adjustment. If no interest rate swap is available for
this date, then the most recent available rate prior to that date will be
used.
d= The number of days remaining in the Guaranteed Term.
Example D
Assume that a variable annuity contract owner made a $10,000 allocation on the
last day of a calendar quarter into a 5-year Guaranteed Term Option. The
Specified Interest Rate at the time is 8.5% and the 5-year interest rate swap in
effect is 8%. The variable annuity contract owner decides to surrender the GTO
985 days from maturity. The Specified Value of the GTO is $12,067.96. At this
time, the 3-year interest rate swap is 9%. (985/365.25 is 2.69, which rounds up
to 3, so the 3-year interest rate swap is used.)
d
---------------
1 + a 365.25
----------------------------
MVA FACTOR = 1 + B + 0.0025
985
---------------
1 + 0.08 365.25
----------------------------
MVA FACTOR = 1 + 0.09 + 0.0025
MVA FACTOR = 0.96944
SURRENDER VALUE = SPECIFIED VALUE X........ MVA FACTOR
SURRENDER VALUE = $12,067.96 .........X 0.96944
*SURRENDER VALUE = $11,699.17
*Assumes no variable annuity contract contingent deferred sales charges are
applicable. In jurisdictions where the .0025 is not permitted in the
denominator, the Surrender Value is $11,771.69.
Specified Value (for purposes of the Example) = the amount of the GTO allocation
($10,000), plus interest accrued at the Specified Interest Rate (8.5%).
a= The interest rate swap published by the Federal Reserve Board two days
before the date the allocation to the GTO was made. If no interest rate
swap is available for this date, then the most recent available rate prior
to that date will be used.
b= The interest rate swap published by the Federal Reserve Board two days
before the date of the withdrawal, transfer or other distribution giving
rise to a Market Value Adjustment. If no interest rate swap is available
for this date, then the most recent available rate prior to that date will
be used.
d= The number of days remaining in the Guaranteed Term.
The table set forth below illustrates the impact of a Market Value Adjustment
applied upon a full surrender of a 10-year GTO allocation, at various stages of
the corresponding Guaranteed Term. These figures assume a $10,000 allocation to
the 10-year GTO on the last day of a calendar quarter. These figures assume a
Specified Interest Rate of 8.5% on the date the allocation to the GTO was made.
These figures are based on a 10-year CMT Rate of 8% in effect on the date the
allocation to the GTO was made (a in the Market Value Adjustment Formula) and
varying current yield CMT Rates shown in the first column (b in the Market Value
Adjustment Formula).
- --------------------------------------------------------------------------------------------------
TIME REMAINING TO THE
END OF THE GUARANTEED SPECIFIED VALUE MARKET VALUE MARKET
CURRENT YIELD TERM ADJUSTMENT VALUE
- --------------------------------------------------------------------------------------------------
12.00% 9 Years $10,850 -29.35% $7,665
- --------------------------------------------------------------------------------------------------
7 Years $12,776 -23.68% $9,751
- --------------------------------------------------------------------------------------------------
5 Years $15,040 -17.56% $12,399
- --------------------------------------------------------------------------------------------------
2 Years $19,215 -7.43% $17,786
- --------------------------------------------------------------------------------------------------
180 Days $21,733 -1.88% $21,323
- --------------------------------------------------------------------------------------------------
10.00% 9 Years $10,850 -16.94% $9,012
- --------------------------------------------------------------------------------------------------
7 Years $12,776 -13.44% $11,059
- --------------------------------------------------------------------------------------------------
5 Years $15,040 -9.80% $13,566
- --------------------------------------------------------------------------------------------------
2 Years $19,215 -4.04% $18,438
- --------------------------------------------------------------------------------------------------
180 Days $21,733 -1.01% $21,513
- --------------------------------------------------------------------------------------------------
9.00% 9 Years $10,850 -9.84% $9,782
- --------------------------------------------------------------------------------------------------
7 Years $12,776 -7.74% $11,787
- --------------------------------------------------------------------------------------------------
5 Years $15,040 -5.59% $14,199
- --------------------------------------------------------------------------------------------------
2 Years $19,215 -2.28% $18,777
- --------------------------------------------------------------------------------------------------
180 Days $21,733 -0.57% $21,610
- --------------------------------------------------------------------------------------------------
8.00% 9 Years $10,850 -2.06% $10,627
- --------------------------------------------------------------------------------------------------
7 Years $12,776 -1.61% $12,571
- --------------------------------------------------------------------------------------------------
5 Years $15,040 -1.15% $14,867
- --------------------------------------------------------------------------------------------------
2 Years $19,215 -0.46% $19,126
- --------------------------------------------------------------------------------------------------
180 Days $21,733 -0.11% $21,708
- --------------------------------------------------------------------------------------------------
7.00% 9 Years $10,850 6.47% $11,552
- --------------------------------------------------------------------------------------------------
7 Years $12,776 5.00% $13,414
- --------------------------------------------------------------------------------------------------
5 Years $15,040 3.55% $15,573
- --------------------------------------------------------------------------------------------------
2 Years $19,215 1.40% $19,484
- --------------------------------------------------------------------------------------------------
180 Days $21,733 0.34% $21,808
- --------------------------------------------------------------------------------------------------
6.00% 9 Years $10,850 15.84% $12,569
- --------------------------------------------------------------------------------------------------
7 Years $12,776 12.11% $14,324
- --------------------------------------------------------------------------------------------------
5 Years $15,040 8.51% $16,321
- --------------------------------------------------------------------------------------------------
2 Years $19,215 3.32% $19,853
- --------------------------------------------------------------------------------------------------
180 Days $21,733 0.81% $21,909
- --------------------------------------------------------------------------------------------------
4.00% 9 Years $10,850 37.45% $14,914
- --------------------------------------------------------------------------------------------------
7 Years $12,776 28.07% $16,362
- --------------------------------------------------------------------------------------------------
5 Years $15,040 19.33% $17,948
- --------------------------------------------------------------------------------------------------
2 Years $19,215 7.32% $20,623
- --------------------------------------------------------------------------------------------------
180 Days $21,733 1.76% $22,115
- --------------------------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN A PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not Applicable
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Ohio's General Corporation Law expressly authorizes and
Nationwide's Amended and Restated Code of Regulations provides for
indemnification by Nationwide of any person who, because such
person is or was a director, officer or employee of Nationwide was
or is a party; or is threatened to be made a party to:
o any threatened, pending or completed civil action, suit or
proceeding;
o any threatened, pending or completed criminal action, suit
or proceeding;
o any threatened, pending or completed administrative action
or proceeding;
o any threatened, pending or completed investigative action or
proceeding; ,
The indemnification will be for actual and reasonable expenses,
including attorney's fees, judgments, fines and amounts paid in
settlement by such person in connection with such action, suit or
proceeding, to the extent and under the circumstances permitted by
the Ohio's General Corporation Law.
Nationwide has been informed that in the opinion of the Securities
and Exchange Commission the indemnification of directors, officers
or persons controlling Nationwide for liabilities arising under
the Securities Act of 1933 ("Act") is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities is
asserted by a director, officer or controlling person in
connection with the securities being registered, the registrant
will submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act. Nationwide and the directors, officers
and/or controlling persons will be governed by the final
adjudication of such issue. Nationwide will not be required to
seek the court's determination if, in the opinion of Nationwide's
counsel, the matter has been settled by controlling precedent.
However, 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 permitted.
Item 16. EXHIBITS AND FINANCIAL SCHEDULES
(a) Exhibits Description
1 Not Applicable.
2 None.
4 Annuity Endorsement to Contracts (previously filed as
Exhibit 4 to Form S-1, Commission File Number
33-58997, filed on May 2, 1995 and incorporated
herein by reference).
5 Opinion Regarding Legality (including Consent).
(Attached hereto).
8 None.
10 None.
11 None.
12 None.
13 None.
15 None.
16 None.
23(i) Consent of Independent Registered Public Accounting
Firm. (Attached hereto).
23(ii) Consent of Counsel (see Exhibit 5).
24 Power of Attorney. (Attached hereto).
25 None.
26 None.
Item 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining of any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering;
(4) That, for the purposes of determining any liability
under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 15(d)
of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration
statement shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof; and
(5) To deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to securities
holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim
financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically
incorporated by reference in the prospectus to
provide such interim financial information.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Columbus,
State of Ohio, on the 18th of April, 2005.
NATIONWIDE LIFE INSURANCE COMPANY
- ---------------------------------------------------------------
(Registrant)
By: /s/ PAIGE L. RYAN
- ---------------------------------------------------------------
Paige L. Ryan, Esq.
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed by the following persons in the
capacities and on the dates indicated.
W. G. JURGENSEN
- -------------------------------------------------------------------------
W. G. Jurgensen, Director and Chief Executive Officer
ARDEN L. SHISLER
- -------------------------------------------------------------------------
Arden L. Shisler, Chairman of the Board and President
JOSEPH A. ALUTTO
- -------------------------------------------------------------------------
Joseph A. Alutto, Director
JAMES G. BROCKSMITH, JR.
- -------------------------------------------------------------------------
James G. Brocksmith, Jr., Director
KEITH W. ECKEL
- -------------------------------------------------------------------------
Keith W. Eckel, Director
LYDIA M. MARSHALL
- -------------------------------------------------------------------------
Lydia M. Marshall, Director
DONALD L. MCWHORTER
- -------------------------------------------------------------------------
Donald L. McWhorter, Director
MARTHA JAMES MILLER DE LOMBERA
- -------------------------------------------------------------------------
Martha James Miller de Lombera, Director
DAVID O. MILLER
- -------------------------------------------------------------------------
David O. Miller, Director
JAMES F. PATTERSON
- -------------------------------------------------------------------------
James F. Patterson, Director
GERALD D. PROTHRO
- -------------------------------------------------------------------------
Gerald D. Prothro, Director
ALEX SHUMATE
- -------------------------------------------------------------------------
Alex Shumate, Director
By /s/ PAIGE L. RYAN
------------------------------------------------------
Paige L. Ryan
Attorney-in-Fact