<PAGE> 1
NACo [logo]
VARIABLE
ACCOUNT
[LOGO]
SEMI-ANNUAL REPORT
TO
PARTICIPANTS AND RETIRED PARTICIPANTS
JUNE 30, 1997
NATIONWIDE LIFE INSURANCE COMPANY
[NATIONWIDE LOGO]
HOME OFFICE: COLUMBUS, OHIO
APO-2278-L (6/97)
<PAGE> 2
[NATIONWIDE LIFE INSURANCE COMPANY LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO JOSEPH J. GASPER]
PRESIDENT'S MESSAGE
We are pleased to present the 1997 semi-annual report of the NACo Variable
Account.
Our Enterprise Vision statement states: "We exist to serve our customers."
Everything we do is focused on you, our customer, and on your needs.
We recognize that your expectations have changed and your standards for
value and service are higher than ever before. You are being asked to take
more responsibility for your own financial future, as employers and
government programs provide fewer guarantees.
We know that you expect service and products customized to fit your needs
- including financial advice - and you expect to receive service at any
time, anywhere and any way you choose.
We are responding to your changing needs and expectations with innovative
product offerings, continuing investment in the training and professional
development of our people, and our investment in technology to enable us
to serve you faster, better and more cost effectively.
Equity investments produced solid gains for the first half of 1997 with
the Dow Jones Industrial Average breaking the 8,000 mark on July 16. The
U.S. economy, in its seventh year of expansion, is growing vigorously and
corporate profits are better than anticipated.
Interest rates and inflation are still at very low levels. However, the
risk of a temporary spike remains as the Federal Reserve might be forced
to raise interest rates in order to keep our economy on an inflation-free
growth path.
Even such policy actions are not expected to end the prosperous times
which we now enjoy. In the long run, equity valuations will reflect these
excellent economic conditions.
Thank you for giving Nationwide Life Insurance Company the opportunity to
meet your investment needs.
/s/ Joseph J. Gasper
----------------------
Joseph J. Gasper, President
3
<PAGE> 3
CONTENTS
HOW TO READ THE SEMI-ANNUAL REPORT ................................. 5
Explanation on how to read and understand
the various financial reports
FUND PERFORMANCES .................................................. 6
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY ....... 8
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY ......................................... 10
NOTES TO FINANCIAL STATEMENTS ...................................... 18
4
<PAGE> 4
HOW TO READ THE SEMI-ANNUAL REPORT
This Semi-Annual Report is sent to all customers who own a Nationwide annuity
with all or some of the funds in the NACo Variable Account (the Account). The
Account is a separate account trust which offers investment options in
twenty-eight mutual funds from sixteen mutual fund houses.
The Semi-Annual Report has two major financial sections.
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
This statement, beginning on page 8, lists all the funds in the
Account, the number of shares owned, the amount paid for the shares (i.e.,
cost) and their market value on June 30, 1997. The funds are presented in
alphabetical order. The market value of the assets change as the underlying
mutual fund shares change in value. As contract owners make exchanges between
the funds, the number of shares in each fund increases and decreases. When
money is deposited (withdrawn) by contract owners, shares of the mutual funds
are bought (sold) by the Account. The total market value of the funds is equal
to the Total investments.
Accounts receivable, if applicable, is an asset of the Account for money market
fund shares or reinvested dividend shares added to the contract owners'
accounts, but not yet added to Total investments. Total investments plus
Accounts receivable equals Total assets.
Accounts payable, if applicable, is a liability of the Account for money market
fund shares deducted from the contract owners' accounts, but not yet deducted
from Total investments.
Total assets minus Accounts payable equals Contract owners' equity. For a
summary of Contract owners' equity by fund series turn to page 21.
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
These statements, found on page 10, show the activity in the Account for the
periods stated herein.
The Investment activity section shows the changes in unrealized gain (loss) of
the mutual funds in the Account, realized gain (loss) as shares of the funds are
bought (sold), mortality, expense and administration charges which are assessed
through the daily unit value calculations, and dividends and capital gains
earnings from the underlying mutual funds.
The Equity transactions section illustrates the receipt of purchase payments by
the Account as new contracts are sold, existing contract owners deposit
additional funds; and deductions from the Account when money is withdrawn,
contracts are canceled, annuity benefits are paid, and annual contract
maintenance charges and contingent deferred sales charges are assessed.
Net change in contract owners' equity equals Investment activity plus Equity
transactions.
The Contract owners' equity at the beginning of the period plus the Net change
in contract owners' equity equals the Contract owners' equity at the end of the
period. Contract owners' equity at the end of the calendar year will equal the
Contract owners' equity at the beginning of the next year.
As you review the following pages of the Semi-Annual Report, the Notes to
Financial Statements, beginning on page 18, will also help explain and clarify
the various statements and schedules.
5
<PAGE> 5
FUND PERFORMANCES
AVERAGE ANNUAL TOTAL RETURN: NON-STANDARDIZED++
PERCENT CHANGE IN NET ASSETS WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
<TABLE>
<CAPTION>
6 MONTHS YEAR 3 YEARS 5 YEARS 10 YEARS
1/1/97- 1996 7/1/94- 7/1/92- 7/1/87-
FUNDS+ 6/30/97 6/30/97 6/30/97 6/30/97
<S> <C> <C> <C> <C> <C>
AGGRESSIVE GROWTH FUNDS
American Century: Twentieth Century Growth Fund* 17.09% 13.92% 17.80% 11.75% 11.00%
American Century: Twentieth Century Ultra Fund . 15.86% 12.77% 23.82% 20.09% 17.23%
Mass. Investors Growth Stock Fund* ............. 25.66% 21.67% 27.73% 18.84% 12.96%
Putnam Voyager Fund ............................ 10.83% 11.73% 23.80% 18.73% 14.81%
GROWTH FUNDS
Dreyfus Third Century Fund ..................... 16.91% 23.15% 24.81% 15.72% 12.02%
Fidelity Contrafund ............................ 10.70% 20.78% 23.14% 18.95% 17.35%
Fidelity Magellan(R) Fund ..................... 15.36% 10.63% 21.61% 17.22% 14.16%
Fidelity OTC Portfolio ......................... 5.92% 22.56% 23.73% 16.69% 13.92%
MFS(R) Growth Opportunities Fund* .............. 14.80% 20.71% 24.65% 17.25% 10.70%
Nationwide(R) Growth Fund* ..................... 17.98% 15.59% 21.90% 15.50% 11.20%
Putnam Investors Fund .......................... 18.44% 20.25% 25.98% 19.62% 12.78%
Seligman Growth Fund, Inc. ..................... 12.12% 19.99% 21.54% 15.39% 11.02%
GROWTH AND INCOME FUNDS
Evergreen Income and Growth Fund* .............. 5.17% 11.82% 13.25% 10.03% 7.62%
Fidelity Equity-Income Fund .................... 16.83% 19.87% 22.68% 18.64% 12.54%
Fidelity Puritan(R) Fund ....................... 13.46% 14.06% 16.25% 15.14% 11.66%
Investment Company of America (R)** ............ 17.50% 18.22% 22.52% 16.04% 12.60%
Nationwide(R) Fund ............................. 22.83% 22.75% 26.63% 16.88% 12.88%
Neuberger & Berman Guardian Fund ............... 12.60% 16.76% 20.49% 17.38% 13.43%
INCOME FUNDS
Bond Fund of America(SM), Inc.** ............... 3.56% 5.69% 8.48% 7.52% 8.29%
Fidelity Capital & Income Fund* ................ 5.38% 10.34% 9.27% 10.72% 9.68%
MAS Funds - Fixed Income Portfolio ............. 3.32% 6.34% 8.91% 7.56% 8.60%
MFS(R) High Income Fund ........................ 5.34% 11.48% 11.03% 10.24% 8.39%
INDEX
SEI Index Funds S&P 500 Index Portfolio ........ 20.00% 21.46% 27.37% 18.38% 13.15%
INTERNATIONAL FUNDS
T. Rowe Price International Stock Fund (R) ..... 11.36% 14.89% 12.31% 12.52% 9.18%
Templeton Foreign Fund ......................... 10.67% 16.88% 12.60% 11.92% 11.03%
GOVERNMENT BOND FUND
Federated U.S. Government Securities Fund ...... 1.95% 2.59% 5.46% 4.57% 6.40%
MONEY MARKET FUND
Nationwide(R)Money Market Fund ................. 2.00% 3.98% 4.09% 3.16% 4.52%
U.S. TREASURY MONEY MARKET FUND
AIM STIT - Treasury Portfolio .................. 2.19% 4.40% 4.48% 3.61% 4.95%
S&P 500 *** .................................... 20.61% 22.96% 28.86% 19.78% 14.66%
<FN>
* These funds are not open to new participation.
** These funds are closed to entities adopting the NACo Public Employees Deferred Compensation Program on or after July
1, 1994.
*** The S & P 500 is a stock market index which assumes investment in the 500 largest available stocks. This unmanaged
index is normally used as a comparison or benchmark against equity mutual funds.
+ Funds are neither insured nor guaranteed by the U.S. Government. For the Money Market Fund, there can be no assurance
that this fund will be able to maintain a stable net asset value of $1 per share.
++ SEC and NASD regulations require that any reporting of product performance be accompanied by standardized data and
the disclosures are on the following page. Please review this information and a product prospectus before investing.
NOTE: The above illustration represents past performance based on a $1,000 hypothetical Investment and reflects the
deduction of an actuarial risk fee which is equivalent to 0.95% on an annualized basis. The results shown represent past
performance and should not be considered a representation of performance or investor experience of the funds in the
future. Investment returns and principal are not guaranteed under these variable options. The unit values at the time of
redemption may be worth more or less than their original cost.
For complete information about the options available to you through your deferred compensation program, including charges
and expenses, consult your prospectus(es) which are available from your local deferred compensation representative. Please
read the prospectus(es) carefully before investing or sending money.
</TABLE>
Sources: National Financial Services
Computer Directions Advisors, Inc.
6
<PAGE> 6
AVERAGE ANNUAL TOTAL RETURN: STANDARDIZED
PERCENT CHANGE IN NET ASSETS WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
<TABLE>
<CAPTION>
6 MONTHS YEAR 3 YEARS 5 YEARS 10 YEARS
1/1/97- 1996 7/1/94- 7/1/92- 7/1/87-
FUNDS+ 6/30/97 6/30/97 6/30/97 6/30/97
<S> <C> <C> <C> <C> <C>
AGGRESSIVE GROWTH FUNDS
American Century: Twentieth Century Growth Fund* 13.09% 9.92% 16.84% 11.24% 10.84%
American Century: Twentieth Century Ultra Fund 11.86% 8.77% 22.94% 19.71% 17.13%
Mass. Investors Growth Stock Fund* 21.66% 17.67% 26.91% 18.43% 12.82%
Putnam Voyager Fund 6.83% 7.73% 22.92% 18.32% 14.70%
GROWTH FUNDS
Dreyfus Third Century Fund 12.91% 19.15% 23.94% 15.27% 11.88%
Fidelity Contrafund 6.70% 16.78% 22.25% 18.55% 17.25%
Fidelity Magellan(R) Fund 11.36% 6.63% 20.70% 16.80% 14.04%
Fidelity OTC Portfolio 1.92% 18.56% 22.85% 16.25% 13.79%
MFS(R) Growth Opportunities Fund* 10.80% 16.71% 23.79% 16.82% 10.54%
Nationwide(R) Growth Fund* 13.98% 11.59% 21.00% 15.04% 11.04%
Putnam Investors Fund 14.44% 16.25% 25.14% 19.23% 12.65%
Seligman Growth Fund, Inc. 8.12% 15.99% 20.63% 14.93% 10.86%
GROWTH AND INCOME FUNDS
Evergreen Income and Growth Fund* 1.17% 7.82% 12.20% 9.48% 7.41%
Fidelity Equity-Income Fund 12.83% 15.87% 21.79% 18.24% 12.40%
Fidelity Puritan(R)Fund 9.46% 10.06% 15.25% 14.68% 11.51%
Investment Company of America (R)** 13.50% 14.22% 21.63% 15.60% 12.46%
Nationwide(R) Fund 18.83% 18.75% 25.79% 16.44% 12.75%
Neuberger & Berman Fund Guardian Fund 8.60% 12.76% 19.56% 16.96% 13.30%
INCOME FUNDS
Bond Fund of America(SM), Inc.** -0.44% 1.69% 7.33% 6.91% 8.10%
Fidelity Capital & Income Fund* 1.38% 6.34% 8.14% 10.18% 9.50%
MAS Funds - Fixed Income Portfolio -0.68% 2.34% 7.77% 6.95% 8.41%
MFS(R) High Income Fund 1.34% 7.48% 9.94% 9.70% 8.20%
INDEX FUND
SEI Index Funds S&P 500 Index Portfolio 16.00% 17.46% 26.54% 17.96% 13.02%
INTERNATIONAL FUNDS
T. Rowe Price International Stock Fund (R) 7.36% 10.89% 11.24% 12.01% 9.00%
Templeton Foreign Fund 6.67% 12.88% 11.53% 11.40% 10.87%
GOVERNMENT BOND FUND
Federated U.S. Government Securities Fund -2.05% -1.41% 4.25% 3.89% 6.17%
MONEY MARKET FUND
Nationwide(R) Money Market Fund -2.00% -0.02% 2.84% 2.44% 4.25%
U.S. TREASURY MONEY MARKET FUND
AIM STIT - Treasury Portfolio -1.81% 0.40% 3.25% 2.91% 4.69%
<FN>
* These funds are not open to new participation.
** These funds are closed to entities adopting the NACo Public Employees Deferred Compensation Program on or after July
1, 1994.
+ Funds are neither insured nor guaranteed by the U.S. Government. For the Money Market Fund, there can be no assurance
that this fund will be able to maintain a stable net asset value of $1 per share.
NOTE: The above illustration represents past fund performance based on a $1,000 hypothetical Investment. The performance
figures reflect the deduction of a 0.95% annual asset fee and the maximum contingent deferred sales charge that would
apply only in the event that this Variable Annuity contract is terminated by your employer.
Investment principal and investment returns are not guaranteed under these variable options. Unit values at the time of
redemption may be worth more or less than their original cost. The results shown above should not be considered a
representation of performance or investor experience of the funds in the future.
For complete information about the options available to you through your deferred compensation program, including charges
and expenses, consult your prospectus(es) which are available from your local deferred compensation representative. Please
read the prospectus(es) carefully before investing or sending money.
</TABLE>
7
<PAGE> 7
NACo VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Century: Twentieth Century Growth Fund (ACTCGro)
4,009,886 shares (cost $82,072,610) ....................... $103,214,470
American Century: Twentieth Century Ultra Fund (ACTCUltra)
5,857,879 shares (cost $148,509,978) ...................... 191,552,641
The Bond Fund of America(SM), Inc. (BdFdAm)
1,031,436 shares (cost $13,936,548) ....................... 14,244,126
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
4,452,422 shares (cost $37,839,634) ....................... 46,127,091
Evergreen Income and Growth Fund - Class Y (EvIncGro)
186,171 shares (cost $3,688,419) .......................... 4,287,527
Federated U.S. Government Securities Fund: 2-5 Years -
Institutional shares (FedUSGvt)
347,877 shares (cost $3,654,874) .......................... 3,635,316
Fidelity Capital & Income Fund (FidCapInc)
301,370 shares (cost $2,461,407) .......................... 2,869,046
Fidelity Contrafund (FidContr)
6,037,029 shares (cost $223,738,176) ...................... 278,367,429
Fidelity Equity-Income Fund (FidEqInc)
6,608,854 shares (cost $219,025,257) ...................... 325,089,539
Fidelity Magellan(R) Fund (FidMgln)
1,229,623 shares (cost $94,765,144) ....................... 111,957,168
Fidelity OTC Portfolio (FidOTC)
783,802 shares (cost $25,358,118) ......................... 27,284,135
Fidelity Puritan(R) Fund (FidPurtn)
1,481,883 shares (cost $24,748,674) ....................... 28,629,972
The Investment Company of America(R) (InvCoAm)
2,262,158 shares (cost $47,593,414) ....................... 64,132,193
MAS Funds - Fixed Income Portfolio (MASFIP)
169,283 shares (cost $1,993,019) .......................... 2,031,398
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
1,108,729 shares (cost $12,629,445) ....................... 16,586,580
MFS(R) High Income Fund - Class A (MFSHiInc)
2,371,011 shares (cost $12,525,816) ....................... 12,827,170
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
912,394 shares (cost $9,974,162) .......................... 11,496,170
Nationwide(R) Fund (NWFund)
2,702,709 shares (cost $47,986,863) ....................... 66,919,070
</TABLE>
8
<PAGE> 8
<TABLE>
<S> <C>
Nationwide(R) Growth Fund (NWGroFd)
517,757 shares (cost $5,823,272) .............................................. 8,123,609
Nationwide(R) Money Market Fund (NWMyMkt)
51,828,736 shares (cost $51,828,736) .......................................... 51,828,736
Neuberger & Berman Guardian Fund (NBGuard)
1,200,775 shares (cost $30,070,310) ........................................... 34,726,415
Putnam Investors Fund - Class A (PutInvFd)
4,578,408 shares (cost $40,357,687) ........................................... 50,179,347
Putnam Voyager Fund - Class A (PutVoyFd)
9,511,547 shares (cost $136,633,418) .......................................... 170,732,263
SEI Index Funds - S&P 500 Index Portfolio (SEI500lx)
1,367,371 shares (cost $33,528,363) ........................................... 38,532,526
Seligman Growth Fund, Inc. - Class A (SelGroFd)
1,521,669 shares (cost $8,427,637) ............................................ 10,027,799
Short-Term Investments Trust - Treasury Portfolio - Institutional Class (AIMTreas)
4,198,508 shares (cost $4,198,508) ............................................ 4,198,508
T. Rowe Price International Funds, Inc. - International Stock Fund(R)(TRIntStk)
2,193,552 shares (cost $30,032,019) ........................................... 33,868,437
Templeton Foreign Fund - Class I (TemForFd)
4,276,163 shares (cost $42,456,779) ........................................... 49,261,395
--------------
Total investments .......................................................... 1,762,730,076
Accounts receivable ................................................................. 296,056
--------------
Total assets ............................................................... 1,763,026,132
ACCOUNTS PAYABLE ....................................................................... 24,899
--------------
CONTRACT OWNERS' EQUITY (NOTE 3) ....................................................... $1,763,001,233
==============
</TABLE>
9
<PAGE> 9
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Total ACTCGro
----------------------------------- ------------------------------
1997 1996 1997 1996
--------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 8,521,504 6,537,431 -- --
Mortality and expense charges ................. (3,928,317) (2,914,718) (331,683) (399,827)
Administration charge (note 2)
Tier I .................................. (1,547,806) (1,183,685) (121,056) (159,063)
Tier II ................................. (561,760) (392,419) (57,502) (59,403)
Tier III ................................ (299,893) (211,252) (24,570) (30,376)
Tier IV ................................. (188,537) (302,756) (16,560) (39,285)
Tier V .................................. (160,552) -- (12,885) --
--------------- -------------- ------------ ------------
Net investment activity ..................... 1,834,639 1,532,601 (564,256) (687,954)
Proceeds from mutual fund shares sold ......... 148,777,534 61,836,491 65,613,736 12,605,472
Cost of mutual fund shares sold ............... (143,091,400) (58,091,646) (68,069,453) (11,692,261)
--------------- -------------- ------------ ------------
Realized gain (loss) on investments ........... 5,686,134 3,744,845 (2,455,717) 913,211
Unrealized gain (loss) on investments ......... 194,485,796 50,200,225 19,758,622 9,682,574
--------------- -------------- ------------ ------------
Net gain (loss) on investments .............. 200,171,930 53,945,070 17,302,905 10,595,785
Reinvested capital gains ...................... 8,287,025 22,352,242 -- --
--------------- -------------- ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 210,293,594 77,829,913 16,738,649 9,907,831
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 206,770,431 154,494,603 (56,747,694) (6,060,304)
Redemptions ................................... (60,545,571) (34,247,716) (7,395,091) (5,026,368)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. (50,866) (83,128) 2,463 711
--------------- -------------- ------------ ------------
Net equity transactions ................... 146,173,994 120,163,759 (64,140,322) (11,085,961)
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 356,467,588 197,993,672 (47,401,673) (1,178,130)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,406,533,645 984,592,120 150,619,441 149,653,676
--------------- -------------- ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 1,763,001,233 1,182,585,792 103,217,768 148,475,546
=============== ============== ============ ============
<CAPTION>
ACTCUltra BdFdAm
------------------------------ ----------------------------
1997 1996 1997 1996
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- 492,847 470,999
Mortality and expense charges ................. (423,190) (301,788) (34,958) (34,974)
Administration charge (note 2)
Tier I .................................. (164,385) (120,414) (14,226) (15,704)
Tier II ................................. (61,261) (40,288) (5,205) (4,149)
Tier III ................................ (28,761) (20,511) (2,812) (2,454)
Tier IV ................................. (19,733) (33,380) (1,703) (3,299)
Tier V .................................. (20,009) -- (1,110) --
------------ ------------ ----------- -----------
Net investment activity ..................... (717,339) (516,381) 432,833 410,419
Proceeds from mutual fund shares sold ......... 8,885,205 4,993,840 1,931,351 2,100,353
Cost of mutual fund shares sold ............... (6,607,023) (3,803,139) (1,851,996) (2,284,135)
------------ ------------ ----------- -----------
Realized gain (loss) on investments ........... 2,278,182 1,190,701 79,355 (183,782)
Unrealized gain (loss) on investments ......... 24,092,305 8,285,363 (20,974) (219,281)
------------ ------------ ----------- -----------
Net gain (loss) on investments .............. 26,370,487 9,476,064 58,381 (403,063)
Reinvested capital gains ...................... -- -- -- --
------------ ------------ ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 25,653,148 8,959,683 491,214 7,356
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 23,934,245 24,230,834 298,748 48,205
Redemptions ................................... (7,685,227) (4,882,590) (513,512) (488,547)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. (15,444) 9,681 (129) 515
------------ ------------ ----------- -----------
Net equity transactions ................... 16,233,574 19,357,925 (214,893) (439,827)
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 41,886,722 28,317,608 276,321 (432,471)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 149,650,009 100,332,907 13,981,906 13,418,681
------------ ------------ ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 191,536,731 128,650,515 14,258,227 12,986,210
============ ============ =========== ===========
</TABLE>
10
<PAGE> 10
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Dry3dCen EvincGro
----------------------------- --------------------------
1997 1996 1997 1996
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- 103,071 116,234
Mortality and expense charges ................. (94,641) (60,861) (10,775) (12,083)
Administration charge (note 2)
Tier I .................................. (37,799) (25,605) (4,050) (4,727)
Tier II ................................. (14,044) (7,754) (1,234) (1,064)
Tier III ................................ (5,231) (3,700) (722) (1,028)
Tier IV ................................. (4,878) (6,620) (646) (1,514)
Tier V .................................. (4,252) -- (574) --
------------ ----------- ---------- ----------
Net investment activity ..................... (160,845) (104,540) 85,070 95,818
Proceeds from mutual fund shares sold ......... 820,855 1,068,478 613,927 495,496
Cost of mutual fund shares sold ............... (701,417) (1,021,567) (581,697) (498,199)
------------ ----------- ---------- ----------
Realized gain (loss) on investments ........... 119,438 46,911 32,230 (2,703)
Unrealized gain (loss) on investments ......... 6,258,403 2,226,556 285,350 130,501
------------ ----------- ---------- ----------
Net gain (loss) on investments .............. 6,377,841 2,273,467 317,580 127,798
Reinvested capital gains ...................... -- -- -- --
------------ ----------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 6,216,996 2,168,927 402,650 223,616
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 10,820,817 1,532,282 (349,417) (266,730)
Redemptions ................................... (1,185,411) (614,569) (185,881) (156,342)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. (747) (36) (216) 499
------------ ----------- ---------- ----------
Net equity transactions ................... 9,634,659 917,677 (535,514) (422,573)
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 15,851,655 3,086,604 (132,864) (198,957)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 30,274,825 21,046,139 4,420,173 4,590,867
------------ ----------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 46,126,480 24,132,743 4,287,309 4,391,910
============ =========== ========== ==========
<CAPTION>
FedUSGvt FidCapInc
-------------------------- --------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 100,041 79,244 115,828 168,208
Mortality and expense charges ................. (9,051) (8,019) (7,307) (8,148)
Administration charge (note 2)
Tier I .................................. (3,290) (3,064) (2,381) (2,784)
Tier II ................................. (1,246) (813) (633) (714)
Tier III ................................ (382) (359) (1,029) (1,331)
Tier IV ................................. (632) (1,200) (570) (777)
Tier V .................................. (485) -- (220) --
---------- ---------- ---------- ----------
Net investment activity ..................... 84,955 65,789 103,688 154,454
Proceeds from mutual fund shares sold ......... 736,119 613,664 271,022 275,873
Cost of mutual fund shares sold ............... (731,544) (609,528) (201,584) (206,834)
---------- ---------- ---------- ----------
Realized gain (loss) on investments ........... 4,575 4,136 69,438 69,039
Unrealized gain (loss) on investments ......... (18,074) (93,553) (22,397) (100,960)
---------- ---------- ---------- ----------
Net gain (loss) on investments .............. (13,499) (89,417) 47,041 (31,921)
Reinvested capital gains ...................... -- -- -- --
---------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 71,456 (23,628) 150,729 122,533
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 260,915 384,418 (160,412) (136,545)
Redemptions ................................... (180,959) (144,920) (98,195) (109,162)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. 38 (24) (23) (54)
---------- ---------- ---------- ----------
Net equity transactions ................... 79,994 239,474 (258,630) (245,761)
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 151,450 215,846 (107,901) (123,228)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 3,483,920 2,802,949 2,976,924 3,039,732
---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 3,635,370 3,018,795 2,869,023 2,916,504
========== ========== ========== ==========
</TABLE>
11
<PAGE> 11
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FidContr FidEqinc
------------------------------- ------------------------------
1997 1996 1997 1996
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- 3,276,338 2,582,493
Mortality and expense charges ................. (592,163) (359,009) (713,633) (544,146)
Administration charge (note 2)
Tier I .................................. (237,949) (148,038) (263,404) (206,965)
Tier II ................................. (86,925) (51,240) (95,338) (66,338)
Tier III ................................ (43,247) (24,637) (67,270) (49,087)
Tier IV ................................. (30,663) (35,765) (31,963) (59,778)
Tier V .................................. (21,115) -- (32,930) --
------------- ------------ ------------ ------------
Net investment activity ..................... (1,012,062) (618,689) 2,071,800 1,656,179
Proceeds from mutual fund shares sold ......... 532,205 383,413 2,570,367 844,012
Cost of mutual fund shares sold ............... (411,280) (329,814) (1,390,698) (516,769)
------------- ------------ ------------ ------------
Realized gain (loss) on investments ........... 120,925 53,599 1,179,669 327,243
Unrealized gain (loss) on investments ......... 23,370,642 5,084,232 39,211,076 11,525,883
------------- ------------ ------------ ------------
Net gain (loss) on investments .............. 23,491,567 5,137,831 40,390,745 11,853,126
Reinvested capital gains ...................... 3,576,229 6,242,812 2,983,969 2,613,023
------------- ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 26,055,734 10,761,954 45,446,514 16,122,328
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 57,607,805 33,599,824 35,349,056 20,590,474
Redemptions ................................... (7,425,375) (3,221,013) (8,608,887) (4,824,630)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. (17,713) (73,920) (3,095) (390)
------------- ------------ ------------ ------------
Net equity transactions ................... 50,164,717 30,304,891 26,737,074 15,765,454
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 76,220,451 41,066,845 72,183,588 31,887,782
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 202,139,639 113,777,993 252,903,435 183,719,472
------------- ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 278,360,090 154,844,838 325,087,023 215,607,254
============= ============ ============ ============
<CAPTION>
FidMgin FidOTC
----------------------------- ---------------------------
1997 1996 1997 1996
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 887,068 525,152 -- --
Mortality and expense charges ................. (254,515) (238,887) (51,137) (18,203)
Administration charge (note 2)
Tier I .................................. (110,567) (101,597) (20,099) (6,924)
Tier II ................................. (36,983) (34,129) (6,451) (2,193)
Tier III ................................ (19,013) (15,868) (3,504) (1,166)
Tier IV ................................. (11,625) (22,757) (2,286) (2,329)
Tier V .................................. (7,405) -- (2,756) --
------------ ----------- ----------- ----------
Net investment activity ..................... 446,960 111,914 (86,233) (30,815)
Proceeds from mutual fund shares sold ......... 4,087,385 2,667,817 1,567,135 2,677,355
Cost of mutual fund shares sold ............... (3,578,760) (2,521,535) (1,410,503) (2,571,613)
------------ ----------- ----------- ----------
Realized gain (loss) on investments ........... 508,625 146,282 156,632 105,742
Unrealized gain (loss) on investments ......... 12,080,439 (11,669,605) 1,856,000 476,569
------------ ----------- ----------- ----------
Net gain (loss) on investments .............. 12,589,064 (11,523,323) 2,012,632 582,311
Reinvested capital gains ...................... 1,726,827 13,496,407 -- --
------------ ----------- ----------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 14,762,851 2,084,998 1,926,399 551,496
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 5,252,830 10,486,626 12,106,280 4,078,111
Redemptions ................................... (4,080,718) (3,045,130) (871,308) (373,167)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. 452 1,111 (1,388) 2,982
------------ ----------- ----------- ----------
Net equity transactions ................... 1,172,564 7,442,607 11,233,584 3,707,926
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 15,935,415 9,527,605 13,159,983 4,259,422
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 96,022,426 82,952,870 14,122,665 4,952,117
------------ ----------- ----------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 111,957,841 92,480,475 27,282,648 9,211,539
============ =========== =========== ==========
</TABLE>
12
<PAGE> 12
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FidPurtn InvCoAm
----------------------------- ----------------------------
1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 446,477 271,253 513,868 384,457
Mortality and expense charges ................. (62,424) (42,786) (137,856) (94,238)
Administration charge (note 2)
Tier I .................................. (26,473) (18,571) (59,716) (44,582)
Tier II ................................. (9,533) (6,519) (24,852) (14,648)
Tier III ................................ (4,249) (2,305) (9,323) (5,010)
Tier IV ................................. (3,080) (4,064) (5,268) (7,217)
Tier V .................................. (1,894) -- (3,520) --
------------ ----------- ----------- -----------
Net investment activity ..................... 338,824 197,008 273,333 218,762
Proceeds from mutual fund shares sold ......... 814,338 324,252 447,709 266,291
Cost of mutual fund shares sold ............... (684,522) (285,857) (312,271) (209,220)
------------ ----------- ----------- -----------
Realized gain (loss) on investments ........... 129,816 38,395 135,438 57,071
Unrealized gain (loss) on investments ......... 2,752,077 541,147 8,662,376 2,206,848
------------ ----------- ----------- -----------
Net gain (loss) on investments .............. 2,881,893 579,542 8,797,814 2,263,919
Reinvested capital gains ...................... -- -- -- --
------------ ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 3,220,717 776,550 9,071,147 2,482,681
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 4,546,283 4,718,306 9,116,425 5,675,975
Redemptions ................................... (726,234) (318,097) (1,771,273) (808,850)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. 90 (1,630) 1,016 206
------------ ----------- ----------- -----------
Net equity transactions ................... 3,820,139 4,398,579 7,346,168 4,867,331
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 7,040,856 5,175,129 16,417,315 7,350,012
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 21,589,381 13,138,596 47,716,024 31,745,657
------------ ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 28,630,237 18,313,725 64,133,339 39,095,669
============ =========== =========== ===========
<CAPTION>
MASFip MFSGrOpp
-------------------------- ----------------------------
1997 1996 1997 1996
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 28,745 15,657 -- --
Mortality and expense charges ................. (4,490) (2,231) (39,467) (37,876)
Administration charge (note 2)
Tier I .................................. (2,070) (888) (15,316) (15,836)
Tier II ................................. (531) (331) (5,520) (4,505)
Tier III ................................ (197) (135) (3,570) (3,661)
Tier IV ................................. (225) (242) (1,999) (3,419)
Tier V .................................. (191) -- (1,381) --
---------- ---------- ----------- -----------
Net investment activity ..................... 21,041 11,830 (67,253) (65,297)
Proceeds from mutual fund shares sold ......... 720,110 263,026 1,092,617 687,068
Cost of mutual fund shares sold ............... (718,408) (264,293) (840,448) (596,731)
---------- ---------- ----------- -----------
Realized gain (loss) on investments ........... 1,702 (1,267) 252,169 90,337
Unrealized gain (loss) on investments ......... 38,374 (4,013) 2,007,758 1,617,482
---------- ---------- ----------- -----------
Net gain (loss) on investments .............. 40,076 (5,280) 2,259,927 1,707,819
Reinvested capital gains ...................... -- -- -- --
---------- ---------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 61,117 6,550 2,192,674 1,642,522
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 506,339 588,317 (476,894) (109,740)
Redemptions ................................... (95,593) (17,850) (454,230) (455,157)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. 1,846 35 (13,391) (19,461)
---------- ---------- ----------- -----------
Net equity transactions ................... 412,592 570,502 (944,515) (584,358)
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 473,709 577,052 1,248,159 1,058,164
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,559,535 533,887 15,338,362 13,510,856
---------- ---------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 2,033,244 1,110,939 16,586,521 14,569,020
========== ========== =========== ===========
</TABLE>
13
<PAGE> 13
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
MFSHiinc MFSGrStk
---------------------------- ---------------------------
1997 1996 1997 1996
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... $ 530,400 422,030 -- --
Mortality and expense charges ................ (30,533) (26,308) (29,157) (22,828)
Administration charge (note 2)
Tier I ................................. (11,807) (10,827) (11,082) (9,068)
Tier II ................................ (3,895) (2,435) (3,796) (2,721)
Tier III ............................... (2,381) (1,939) (2,578) (1,724)
Tier IV ................................ (1,318) (3,201) (1,449) (2,591)
Tier V ................................. (1,585) -- (1,253) --
------------ ---------- ----------- ----------
Net investment activity .................... 478,881 377,320 (49,315) (38,932)
Proceeds from mutual fund shares sold ........ 3,835,668 2,432,993 3,942,610 850,601
Cost of mutual fund shares sold .............. (3,591,928) (2,516,717) (4,232,530) (830,961)
------------ ---------- ----------- ----------
Realized gain (loss) on investments .......... 243,740 (83,724) (289,920) 19,640
Unrealized gain (loss) on investments ........ (72,879) 42,423 2,790,280 1,046,377
------------ ---------- ----------- ----------
Net gain (loss) on investments ............. 170,861 (41,301) 2,500,360 1,066,017
Reinvested capital gains ..................... -- -- -- --
------------ ---------- ----------- ----------
Net increase (decrease) in contract owners
equity resulting from operations ....... 649,742 336,019 2,451,045 1,027,085
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds .... 1,605,127 249,442 (1,620,023) 556,525
Redemptions .................................. (476,935) (327,745) (565,608) (234,518)
Annual contract maintenance charge (note 2) .. -- -- -- --
Adjustments to maintain reserves ............. (1,282) (310) 1,095 (358)
------------ ---------- ----------- ----------
Net equity transactions .................. 1,126,910 (78,613) (2,184,536) 321,649
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 1,776,652 257,406 266,509 1,348,734
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 11,049,325 9,397,723 11,230,813 7,842,975
------------ ---------- ----------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD .......... $ 12,825,977 9,655,129 11,497,322 9,191,709
============ ========== =========== ==========
<CAPTION>
NWFund NWGroFd
---------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... 391,657 320,547 36,526 38,398
Mortality and expense charges ................ (134,628) (96,054) (18,751) (17,691)
Administration charge (note 2)
Tier I ................................. (54,194) (38,934) (7,463) (7,285)
Tier II ................................ (19,167) (14,768) (3,142) (3,048)
Tier III ............................... (10,580) (5,878) (1,226) (678)
Tier IV ................................ (6,584) (9,815) (885) (1,863)
Tier V ................................. (4,908) -- (682) --
----------- ----------- ---------- ----------
Net investment activity .................... 161,596 155,098 4,377 7,833
Proceeds from mutual fund shares sold ........ 463,376 1,465,637 458,787 290,151
Cost of mutual fund shares sold .............. (317,660) (1,195,215) (331,745) (223,377)
----------- ----------- ---------- ----------
Realized gain (loss) on investments .......... 145,716 270,422 127,042 66,774
Unrealized gain (loss) on investments ........ 11,208,743 2,813,056 1,123,363 367,326
----------- ----------- ---------- ----------
Net gain (loss) on investments ............. 11,354,459 3,083,478 1,250,405 434,100
Reinvested capital gains ..................... -- -- -- --
----------- ----------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ....... 11,516,055 3,238,576 1,254,782 441,933
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds .... 12,861,126 2,394,563 (163,482) 35,255
Redemptions .................................. (1,915,548) (1,386,387) (163,907) (124,853)
Annual contract maintenance charge (note 2) .. -- -- -- --
Adjustments to maintain reserves ............. (297) 106 (18) 44
----------- ----------- ---------- ----------
Net equity transactions .................. 10,945,281 1,008,282 (327,407) (89,554)
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 22,461,336 4,246,858 927,375 352,379
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 44,457,575 33,594,484 7,196,235 6,426,311
----------- ----------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD .......... 66,918,911 37,841,342 8,123,610 6,778,690
=========== =========== ========== ==========
</TABLE>
14
<PAGE> 14
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NWMyMkt NBGuard
----------------------------- ----------------------------
1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 1,285,365 1,029,181 74,402 63,007
Mortality and expense charges ................. (132,444) (116,798) (71,430) (36,936)
Administration charge (note 2)
Tier I .................................. (45,551) (37,864) (26,911) (14,001)
Tier II ................................. (13,422) (12,222) (10,120) (5,289)
Tier III ................................ (9,728) (7,888) (4,969) (2,606)
Tier IV ................................. (7,237) (18,521) (3,272) (4,170)
Tier V .................................. (9,225) -- (3,725) --
------------ ----------- ----------- -----------
Net investment activity ..................... 1,067,758 835,888 (46,025) 5
Proceeds from mutual fund shares sold ......... 27,822,416 18,028,552 1,088,005 379,398
Cost of mutual fund shares sold ............... (27,822,416) (18,028,552) (856,213) (316,186)
------------ ----------- ----------- -----------
Realized gain (loss) on investments ........... -- -- 231,792 63,212
Unrealized gain (loss) on investments ......... -- -- 3,215,283 412,640
------------ ----------- ----------- -----------
Net gain (loss) on investments .............. -- -- 3,447,075 475,852
Reinvested capital gains ...................... -- -- -- --
------------ ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,067,758 835,888 3,401,050 475,857
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 3,974,271 321,487 10,526,570 6,205,069
Redemptions ................................... (3,746,518) (3,523,754) (1,111,061) (366,760)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. 257 (2,408) (3,228) (278)
------------ ----------- ----------- -----------
Net equity transactions ................... 228,010 (3,204,675) 9,412,281 5,838,031
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 1,295,768 (2,368,787) 12,813,331 6,313,888
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 50,815,017 42,887,884 21,909,962 9,931,773
------------ ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 52,110,785 40,519,097 34,723,293 16,245,661
============ =========== =========== ===========
<CAPTION>
PutinvFd PutVoyFd
---------------------------- ------------------------------
1997 1996 1997 1996
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- -- --
Mortality and expense charges ................. (105,733) (73,856) (373,376) (241,523)
Administration charge (note 2)
Tier I .................................. (50,794) (37,133) (157,449) (106,159)
Tier II ................................. (10,729) (8,255) (52,799) (32,133)
Tier III ................................ (8,627) (4,376) (25,838) (16,978)
Tier IV ................................. (3,997) (5,995) (17,450) (22,042)
Tier V .................................. (3,454) -- (13,723) --
----------- ----------- ------------ ------------
Net investment activity ..................... (183,334) (129,615) (640,635) (418,835)
Proceeds from mutual fund shares sold ......... 1,164,187 654,524 2,056,638 375,701
Cost of mutual fund shares sold ............... (1,028,827) (646,943) (1,218,328) (203,252)
----------- ----------- ------------ ------------
Realized gain (loss) on investments ........... 135,360 7,581 838,310 172,449
Unrealized gain (loss) on investments ......... 7,460,464 2,765,618 16,339,677 9,609,437
----------- ----------- ------------ ------------
Net gain (loss) on investments .............. 7,595,824 2,773,199 17,177,987 9,781,886
Reinvested capital gains ...................... -- -- -- --
----------- ----------- ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 7,412,490 2,643,584 16,537,352 9,363,051
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds ..... 8,512,659 2,883,915 22,596,211 26,439,235
Redemptions ................................... (1,548,901) (816,552) (5,546,604) (2,087,968)
Annual contract maintenance charge (note 2) ... -- -- -- --
Adjustments to maintain reserves .............. 386 749 4,484 3,379
----------- ----------- ------------ ------------
Net equity transactions ................... 6,964,144 2,068,112 17,054,091 24,354,646
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 14,376,634 4,711,696 33,591,443 33,717,697
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 35,803,162 25,556,691 137,145,381 74,868,678
----------- ----------- ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 50,179,796 30,268,387 170,736,824 108,586,375
=========== =========== ============ ============
</TABLE>
15
<PAGE> 15
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
SEI500ix SelGroFd
-------------------------- ---------------------------
1997 1996 1997 1996
------------ -------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... $ 148,745 -- -- --
Mortality and expense charges ................ (58,724) (317) (23,196) (16,304)
Administration charge (note 2)
Tier I ................................. (22,520) (170) (9,202) (6,816)
Tier II ................................ (7,679) (33) (2,574) (1,532)
Tier III ............................... (4,794) (8) (1,672) (1,281)
Tier IV ................................ (3,443) (29) (1,295) (1,872)
Tier V ................................. (2,252) -- (1,119) --
------------ -------- ----------- ----------
Net investment activity .................... 49,333 (557) (39,058) (27,805)
Proceeds from mutual fund shares sold ........ 256,727 16,228 750,304 296,818
Cost of mutual fund shares sold .............. (201,940) (16,264) (701,943) (319,740)
------------ -------- ----------- ----------
Realized gain (loss) on investments .......... 54,787 (36) 48,361 (22,922)
Unrealized gain (loss) on investments ........ 4,538,562 7,391 1,043,205 699,702
------------ -------- ----------- ----------
Net gain (loss) on investments ............. 4,593,349 7,355 1,091,566 676,780
Reinvested capital gains ..................... -- -- -- --
------------ -------- ----------- ----------
Net increase (decrease) in contract owners
equity resulting from operations ....... 4,642,682 6,798 1,052,508 648,975
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds .... 24,716,948 870,470 929,648 708,225
Redemptions .................................. (1,409,295) (5,173) (387,786) (111,772)
Annual contract maintenance charge (note 2) .. -- -- -- --
Adjustments to maintain reserves ............. (2,562) (616) (407) 448
------------ -------- ----------- ----------
Net equity transactions .................. 23,305,091 864,681 541,455 596,901
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 27,947,773 871,479 1,593,963 1,245,876
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 10,582,236 -- 8,433,505 5,510,652
------------ -------- ----------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD .......... $ 38,530,009 871,479 10,027,468 6,756,528
============ ======== =========== ==========
<CAPTION>
AIMTreas TRintStk
-------------------------- ----------------------------
1997 1996 1 997 1996
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... 90,126 50,571 -- --
Mortality and expense charges ................ (8,847) (5,146) (72,592) (40,607)
Administration charge (note 2)
Tier I ................................. (2,900) (2,152) (24,520) (14,746)
Tier II ................................ (772) (306) (10,010) (5,959)
Tier III ............................... (539) (722) (5,512) (2,443)
Tier IV ................................ (1,016) (468) (4,667) (5,081)
Tier V ................................. (367) -- (3,595) --
---------- ---------- ----------- -----------
Net investment activity .................... 75,685 41,777 (120,896) (68,836)
Proceeds from mutual fund shares sold ........ 6,179,448 1,705,995 7,588,473 2,833,710
Cost of mutual fund shares sold .............. (6,179,448) (1,705,995) (6,430,207) (2,375,419)
---------- ---------- ----------- -----------
Realized gain (loss) on investments .......... -- -- 1,158,266 458,291
Unrealized gain (loss) on investments ........ -- -- 2,391,991 891,824
---------- ---------- ----------- -----------
Net gain (loss) on investments ............. -- -- 3,550,257 1,350,115
Reinvested capital gains ..................... -- -- -- --
---------- ---------- ----------- -----------
Net increase (decrease) in contract owners '
equity resulting from operations ....... 75,685 41,777 3,429,361 1,281,279
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds .... 1,805,822 346,584 6,077,634 7,174,324
Redemptions .................................. (369,513) (86,735) (1,065,254) (338,384)
Annual contract maintenance charge (note 2) .. -- -- -- --
Adjustments to maintain reserves ............. 2,955 (71) (5,667) (1,687)
---------- ---------- ----------- -----------
Net equity transactions .................. 1,439,264 259,778 5,006,713 6,834,253
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 1,514,949 301,555 8,436,074 8,115,532
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 2,686,515 1,707,117 25,426,682 10,681,789
---------- ---------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD .......... 4,201,464 2,008,672 33,862,756 18,797,321
========== ========== =========== ===========
</TABLE>
16
<PAGE> 16
NACo VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TemForFd
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - -
Mortality and expense charges.......... (101,616) (57,274)
Administration charge (note 2)
Tier I .......................... (40,632) (23,768)
Tier II ......................... (16,397) (9,630)
Tier III ........................ (7,569) (3,103)
Tier IV ......................... (4,093) (5,462)
Tier V .......................... (3,937) -
------------ ------------
Net investment activity.............. (174,244) (99,237)
Proceeds from mutual fund shares sold.. 2,466,814 2,239,773
Cost of mutual fund shares sold........ (2,086,611) (2,301,530)
------------ ------------
Realized gain (loss) on investments.... 380,203 (61,757)
Unrealized gain (loss) on investments.. 4,135,130 1,854,688
------------ ------------
Net gain (loss) on investments....... 4,515,333 1,792,931
Reinvested capital gains............... - -
------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 4,341,089 1,693,694
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 12,882,594 6,949,456
Redemptions............................ (960,747) (350,723)
Annual contract maintenance charge (note 2) - -
Adjustments to maintain reserves....... (341) (2,351)
------------ ------------
Net equity transactions............ 11,921,506 6,596,382
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 16,262,595 8,290,076
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 32,998,572 16,969,644
------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 49,261,167 25,259,720
============ ============
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 17
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
NACo Variable Account (NACoVA) was established pursuant to a resolution
of the Board of Directors of Nationwide Life Insurance Company (the
Company) on September 7, 1988, and has been registered as a unit
investment trust under the Investment Company Act of 1940. The NACoVA
was introduced for exclusive use by Member Counties for deferred
compensation Plans adopted under the National Association of Counties
(NACo) Program.
The Company offers group flexible fund retirement contracts through the
NACoVA. The primary distribution for the contracts is through an
affiliated sales organization.
(b) The Contracts
The Group Flexible Retirement Contracts (the Contract) are offered for
purchase in connection with deferred compensation Plans adopted by
Member Counties under the NACo Program. Participants in the contracts
may invest in any of the following fund sub-accounts:
American Century: Twentieth Century Growth Fund (ACTCGro)
(formerly Twentieth Century Investors, Inc. - Growth Investors)
American Century: Twentieth Century Ultra Fund (ACTCUltra)
(formerly Twentieth Century Investors, Inc. - Ultra Investors)
The Bond Fund of America(SM), Inc. (BdFdAm) (only available for
certain contracts issued beginning January 1, 1994)
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
Evergreen Income and Growth Fund - Class Y (EvIncGro)
(formerly The Evergreen Total Return Fund - Class Y)
(not available for contracts issued on or after October 1, 1993)
Federated U.S. Government Securities Fund: 2-5 Years -
Institutional Shares (FedUSGvt)
Fidelity Capital & Income Fund (FidCapInc)
(not available for contracts issued on or after January 1, 1987)
Fidelity Contrafund (FidContr)
Fidelity Equity-Income Fund (FidEqInc)
Fidelity Magellan(R) Fund (FidMgln)
Fidelity OTC Portfolio (FidOTC)
Fidelity Puritan(R) Fund (FidPurtn)
The Investment Company of America(R) (InvCoAm)
(only available for certain contracts issued beginning July 1,
1994)
MAS Funds - Fixed Income Portfolio (MASFIP)
18
<PAGE> 18
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
(not available for contracts issued on or after October 1, 1993)
MFS(R) High Income Fund - Class A (MFSHiInc)
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
Nationwide(R) Fund (NWFund) (managed for a fee by an affiliated
investment advisor)
Nationwide(R) Growth Fund (NWGroFd) (managed for a fee by an
affiliated investment advisor)
(not available for contracts issued on or after October 1, 1993)
Nationwide(R) Money Market Fund (NWMyMkt) (managed for a fee by an
affiliated investment advisor)
Neuberger & Berman Guardian Fund (NBGuard)
Putnam Investors Fund - Class A (PutInvFd)
Putnam Voyager Fund - Class A (PutVoyFd)
SEI Index Funds - S&P 500 Index Portfolio (SEI500Ix)
Seligman Growth Fund, Inc. - Class A (SelGroFd)
Short-Term Investments Trust - Treasury Portfolio - Institutional
Class (AIMTreas)
T. Rowe Price International Funds, Inc. - International Stock
Fund(R) (TRIntStk)
Templeton Foreign Fund - Class I (TemForFd)
All of the above funds were being utilized as of June 30, 1997.
The contract owners' equity is affected by the investment results of
each fund, equity transactions by contract owners and certain expenses
(see note 2). The accompanying financial statements include only
contract owners' purchase payments pertaining to the variable portions
of their contracts and exclude any purchase payments for fixed dollar
benefits, the latter being included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at June 30, 1997. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the NACoVA form a part of, and are taxed with, operations
of the Company, which is taxed as a life insurance company under the
Internal Revenue Code. The assets in this account are held pursuant to
contracts with entities which are exempt from federal income tax.
Because of this exemption, no taxes need be provided for investment
income or realized and unrealized capital gains. Annuity payouts and
withdrawal payments are taxable as wages when received by the
participants.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Reclassifications
Certain 1996 amounts have been reclassified to conform with the current
year presentation.
19
<PAGE> 19
(2) EXPENSES
No deduction for a sales charge is made from the purchase payments for
these contracts. However, if an owner terminates the contract and directs
the Company to withdraw all or part of the contract value held in the
Account for less than sixteen (16) years, the Company will, with certain
exceptions, assess a contingent deferred sales charge by deducting an
amount from each participant's account. This charge will be equal to not
more than 4% in the first year, declining to 1% in the fifteenth year, of
the lesser of all purchase payments made on behalf of a participant prior
to the date of withdrawal, or the amount withdrawn. No sales charges are
deducted on redemptions used to purchase units in the fixed investment
options of the Company. Sales charges may be reduced or eliminated upon
negotiated conversion of the contracts to other investment programs offered
by the Company or its affiliates.
The following charges are deducted by the Company: a mortality risk charge,
an expense risk charge and an administration charge which are assessed
through the daily unit value calculation. The morality risk charge and the
expense risk charge are equal to an annual rate of 0.10% and 0.40%
respectively; and the administration charge prior to May 1, 1996 was 0.45%.
Beginning May 1, 1996, the administration charge is based upon the
aggregate balance of assets held under the Contract by each Member County,
as follows:
Expense Administration
Tier Assets (Millions) Charge
I Up to $10 .45%
II Over $10 to $25 .40%
III Over $25 to $50 .30%
IV Over $50 to $150 .20%
V Over $150 .15%
The administration charge is determined using the December 31 asset balance
and is effective at the next expense tier on the following May 1.
Contract owners may negotiate an exchange privilege with the Company. The
exchange privilege provides for transfers of units among the various
investment options for each participant's account. The number of transfers
allowed, and any administrative charges associated therewith, are subject
to negotiation between the contract owner and the Company.
20
<PAGE> 20
(3) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at June 30, 1997.
<TABLE>
<CAPTION>
TIER I (DECEMBER 31, 1995, SEE NOTE 2) UNITS UNIT VALUE
-------------------------------------- --------- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 7,796,355 $ 5.342551 $ 41,652,424
American Century: Twentieth Century Ultra Fund 50,831,311 1.650897 83,917,259
The Bond Fund of America(SM), Inc. 2,911,519 2.232512 6,500,001
The Dreyfus Third Century Fund, Inc. 6,463,696 3.222516 20,829,364
Evergreen Income and Growth Fund - Class Y 845,980 2.144336 1,814,065
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 1,210,756 1.250714 1,514,309
Fidelity Capital & Income Fund 245,243 4.317074 1,058,732
Fidelity Contrafund 72,679,652 1.758952 127,840,019
Fidelity Equity-Income Fund 21,606,647 6.261622 135,292,656
Fidelity Magellan(R) Fund 32,926,152 1.660474 54,673,019
Fidelity OTC Portfolio 6,723,900 1.780206 11,969,927
Fidelity Puritan(R) Fund 9,253,357 1.494647 13,830,502
The Investment Company of America(R) 14,937,794 2.080978 31,085,221
MAS Funds - Fixed Income Portfolio 899,697 1.271592 1,144,048
MFS(R) Growth Opportunities Fund - Class A 851,871 8.472605 7,217,566
MFS(R) High Income Fund - Class A 951,189 5.812741 5,529,015
Massachusetts Investors Growth Stock Fund - Class A 356,212 13.672832 4,870,427
Nationwide(R) Fund 1,658,868 18.380924 30,491,527
Nationwide(R) Growth Fund 995,484 3.637361 3,620,935
Nationwide(R) Money Market Fund 6,920,929 2.942520 20,364,972
Neuberger & Berman Guardian Fund 9,056,558 1.644389 14,892,504
Putnam Investors Fund - Class A 1,684,407 16.101629 27,121,697
Putnam Voyager Fund - Class A 24,056,392 3.407862 81,980,864
SEI Index Funds - S&P 500 Index Portfolio 12,332,643 1.367218 16,861,411
Seligman Growth Fund, Inc. - Class A. 376,768 12.019665 4,528,625
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 1,181,427 1.194507 1,411,223
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) 9,982,453 1.312425 13,101,221
Templeton Foreign Fund - Class I 16,610,997 1.345339 22,347,422
========== ======== ----------
Sub-Total Tier I (December 31, 1995) $ 787,460,955
==============
</TABLE>
21
<PAGE> 21
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER II (DECEMBER 31, 1995, SEE NOTE 2) UNITS UNIT VALUE
--------------------------------------- ----- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 3,083,137 $ 5.345664 $ 16,481,414
American Century: Twentieth Century Ultra Fund 15,679,946 1.651860 25,901,076
The Bond Fund of America(SM), Inc. 737,070 2.233841 1,646,497
The Dreyfus Third Century Fund, Inc. 1,978,649 3.224393 6,379,942
Evergreen Income and Growth Fund - Class Y 179,337 2.145585 384,783
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 320,605 1.251450 401,221
Fidelity Capital & Income Fund 51,423 4.319613 222,127
Fidelity Contrafund 20,891,123 1.759977 36,767,896
Fidelity Equity-Income Fund 6,131,750 6.265268 38,417,057
Fidelity Magellan(R) Fund 9,268,883 1.661441 15,399,702
Fidelity OTC Portfolio 1,931,574 1.781244 3,440,605
Fidelity Puritan(R) Fund 2,420,561 1.495517 3,619,990
The Investment Company of America(R) 5,050,921 2.082190 10,516,977
MAS Funds - Fixed Income Portfolio 167,594 1.272333 213,235
MFS(R) Growth Opportunities Fund - Class A 237,342 8.477543 2,012,077
MFS(R) High Income Fund - Class A 227,650 5.816160 1,324,049
Massachusetts Investors Growth Stock Fund - Class A 112,293 13.680799 1,536,258
Nationwide(R) Fund 504,517 18.391626 9,278,888
Nationwide(R) Growth Fund 365,078 3.639480 1,328,694
Nationwide(R) Money Market Fund 1,798,289 2.944251 5,294,614
Neuberger & Berman Guardian Fund 2,791,802 1.645348 4,593,486
Putnam Investors Fund - Class A 272,406 16.111009 4,388,736
Putnam Voyager Fund - Class A 6,555,611 3.409849 22,353,644
SEI Index Funds - S&P 500 Index Portfolio 3,583,783 1.368013 4,902,662
Seligman Growth Fund, Inc. - Class A. 82,743 12.026668 995,123
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 219,207 1.195210 261,998
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) 3,131,447 1.313190 4,112,185
Templeton Foreign Fund - Class I 5,490,611 1.346122 7,391,032
========= ======== ---------
Sub-Total Tier II (December 31, 1995) $ 229,565,968
=============
</TABLE>
22
<PAGE> 22
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER II (DECEMBER 31, 1996, SEE NOTE 2) UNITS UNIT VALUE
--------------------------------------- ----- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 1,143,946 $ 5.342996 $ 6,112,099
American Century: Twentieth Century Ultra Fund 5,781,351 1.651035 9,545,213
The Bond Fund of America(SM), Inc. 435,287 2.232716 971,872
The Dreyfus Third Century Fund, Inc. 747,129 3.222784 2,407,835
Evergreen Income and Growth Fund - Class Y 109,076 2.144515 233,915
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 122,938 1.250820 153,773
Fidelity Capital & Income Fund 22,572 4.317438 97,453
Fidelity Contrafund 7,958,871 1.759099 14,000,442
Fidelity Equity-Income Fund 2,582,067 6.262144 16,169,275
Fidelity Magellan(R) Fund 2,952,662 1.660613 4,903,229
Fidelity OTC Portfolio 600,574 1.780355 1,069,235
Fidelity Puritan(R) Fund 1,149,623 1.494772 1,718,424
The Investment Company of America(R) 1,868,658 2.081152 3,888,961
MAS Funds - Fixed Income Portfolio 25,890 1.271698 32,924
MFS(R) Growth Opportunities Fund - Class A 108,321 8.473311 917,838
MFS(R) High Income Fund - Class A 153,690 5.813231 893,435
Massachusetts Investors Growth Stock Fund - Class A 39,327 13.673971 537,756
Nationwide(R) Fund 146,679 18.382456 2,696,320
Nationwide(R) Growth Fund 104,965 3.637664 381,827
Nationwide(R) Money Market Fund 518,650 2.942768 1,526,267
Neuberger & Berman Guardian Fund 936,168 1.644527 1,539,554
Putnam Investors Fund - Class A 133,603 16.102971 2,151,405
Putnam Voyager Fund - Class A 2,326,713 3.408146 7,929,778
SEI Index Funds - S&P 500 Index Portfolio 880,551 1.367332 1,204,006
Seligman Growth Fund, Inc. - Class A. 39,967 12.020667 480,430
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 191,780 1.194608 229,102
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) 1,389,759 1.312535 1,824,107
Templeton Foreign Fund - Class I 1,792,914 1.345451 2,412,278
========= ======== ---------
Sub-Total Tier II (December 31, 1996) $ 86,028,753
============
</TABLE>
23
<PAGE> 23
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER III (DECEMBER 31, 1995, SEE NOTE 2) UNITS UNIT VALUE
---------------------------------------- ----- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 1,661,418 $ 5.351896 $ 8,891,736
American Century: Twentieth Century Ultra Fund 8,801,890 1.653785 14,556,434
The Bond Fund of America(SM), Inc. 624,068 2.236499 1,395,727
The Dreyfus Third Century Fund, Inc. 871,813 3.228151 2,814,344
Evergreen Income and Growth Fund - Class Y 184,872 2.148086 397,121
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 140,217 1.252922 175,681
Fidelity Capital & Income Fund 127,465 4.324693 551,247
Fidelity Contrafund 12,223,579 1.762029 21,538,301
Fidelity Equity-Income Fund 5,949,627 6.272568 37,319,440
Fidelity Magellan(R) Fund 5,544,159 1.663378 9,222,032
Fidelity OTC Portfolio 1,346,062 1.783321 2,400,461
Fidelity Puritan(R) Fund 1,274,683 1.497260 1,908,532
The Investment Company of America(R) 2,335,996 2.084617 4,869,657
MAS Funds - Fixed Income Portfolio 111,080 1.273816 141,495
MFS(R) Growth Opportunities Fund - Class A 231,366 8.487429 1,963,702
MFS(R) High Income Fund - Class A 230,423 5.823000 1,341,753
Massachusetts Investors Growth Stock Fund - Class A 86,345 13.696746 1,182,646
Nationwide(R) Fund 294,742 18.413050 5,427,099
Nationwide(R) Growth Fund 111,035 3.643721 404,581
Nationwide(R) Money Market Fund 1,214,459 2.947713 3,579,877
Neuberger & Berman Guardian Fund 1,624,589 1.647265 2,676,129
Putnam Investors Fund - Class A 231,550 16.129787 3,734,852
Putnam Voyager Fund - Class A 3,814,246 3.413826 13,021,172
SEI Index Funds - S&P 500 Index Portfolio 2,503,528 1.369603 3,428,839
Seligman Growth Fund, Inc. - Class A. 76,036 12.040687 915,526
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 403,865 1.196616 483,271
T. Rowe Price International Funds, Inc. -
International Stock Fund (R) 1,907,527 1.314721 2,507,866
Templeton Foreign Fund - Class I 2,499,425 1.347691 3,368,453
========= ======== ---------
Sub-Total Tier III (December 31, 1995) $ 150,217,974
=============
</TABLE>
24
<PAGE> 24
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER III (DECEMBER 31, 1996, SEE NOTE 2) UNITS UNIT VALUE
---------------------------------------- ----- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 714,374 $ 5.346555 $ 3,819,440
American Century: Twentieth Century Ultra Fund 4,155,836 1.652135 6,866,002
The Bond Fund of America(SM), Inc. 199,965 2.234248 446,771
The Dreyfus Third Century Fund, Inc. 371,572 3.224931 1,198,294
Evergreen Income and Growth Fund - Class Y 27,197 2.145943 58,363
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 63,410 1.251661 79,368
Fidelity Capital & Income Fund 23,338 4.320342 100,828
Fidelity Contrafund 6,438,032 1.760271 11,332,681
Fidelity Equity-Income Fund 2,047,412 6.266313 12,829,724
Fidelity Magellan(R) Fund 2,717,144 1.661718 4,515,127
Fidelity OTC Portfolio 488,881 1.781541 870,962
Fidelity Puritan(R) Fund 828,954 1.495767 1,239,922
The Investment Company of America(R) 1,096,585 2.082538 2,283,680
MAS Funds - Fixed Income Portfolio 6,219 1.272546 7,914
MFS(R) Growth Opportunities Fund - Class A 64,774 8.478956 549,216
MFS(R) High Income Fund - Class A 61,306 5.817140 356,626
Massachusetts Investors Growth Stock Fund - Class A 38,811 13.683078 531,054
Nationwide(R) Fund 162,572 18.394693 2,990,462
Nationwide(R) Growth Fund 125,589 3.640086 457,155
Nationwide(R) Money Market Fund 800,467 2.944747 2,357,173
Neuberger & Berman Guardian Fund 738,337 1.645622 1,215,024
Putnam Investors Fund - Class A 175,671 16.113697 2,830,709
Putnam Voyager Fund - Class A 1,852,631 3.410417 6,318,244
SEI Index Funds - S&P 500 Index Portfolio 1,492,028 1.368241 2,041,454
Seligman Growth Fund, Inc. - Class A. 22,233 12.028674 267,434
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 28,810 1.195412 34,440
T. Rowe Price International Funds, Inc. -
International Stock Fund (R) 1,294,407 1.313409 1,700,086
Templeton Foreign Fund - Class I 1,955,241 1.346347 2,632,433
========= ======== ---------
Sub-Total Tier III (December 31, 1996) $ 69,930,586
============
</TABLE>
25
<PAGE> 25
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER IV (DECEMBER 31, 1995, SEE NOTE 2) UNITS UNIT VALUE
--------------------------------------- --------- ---------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 1,642,583 $ 5.358136 $ 8,801,183
American Century: Twentieth Century Ultra Fund 9,029,714 1.655714 14,950,624
The Bond Fund of America(SM), Inc. 669,966 2.239157 1,500,159
The Dreyfus Third Century Fund, Inc. 1,287,672 3.231914 4,161,645
Evergreen Income and Growth Fund - Class Y 221,358 2.150589 476,050
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 448,948 1.254393 563,157
Fidelity Capital & Income Fund 77,306 4.329774 334,718
Fidelity Contrafund 15,260,969 1.764082 26,921,601
Fidelity Equity-Income Fund 4,634,296 6.279877 29,102,809
Fidelity Magellan(R) Fund 6,185,804 1.665316 10,301,318
Fidelity OTC Portfolio 1,135,855 1.785400 2,027,956
Fidelity Puritan(R) Fund 1,948,566 1.499005 2,920,910
The Investment Company of America(R) 2,689,271 2.087045 5,612,630
MAS Funds - Fixed Income Portfolio 174,580 1.275301 222,642
MFS(R) Growth Opportunities Fund - Class A 161,432 8.497326 1,371,740
MFS(R) High Income Fund - Class A 185,405 5.829840 1,080,881
Massachusetts Investors Growth Stock Fund - Class A 65,903 13.712711 903,709
Nationwide(R) Fund 372,261 18.434499 6,862,445
Nationwide(R) Growth Fund 244,505 3.647967 891,946
Nationwide(R) Money Market Fund 2,069,488 2.951176 6,107,423
Neuberger & Berman Guardian Fund 1,772,312 1.649185 2,922,870
Putnam Investors Fund - Class A 242,699 16.148586 3,919,246
Putnam Voyager Fund - Class A 3,960,894 3.417808 13,537,575
SEI Index Funds - S&P 500 Index Portfolio 3,116,152 1.371194 4,272,849
Seligman Growth Fund, Inc. - Class A. 86,318 12.054722 1,040,539
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 891,537 1.198021 1,068,080
T. Rowe Price International Funds, Inc. -
International Stock Fund (R) 3,102,578 1.316253 4,083,778
Templeton Foreign Fund - Class I 2,818,070 1.349261 3,802,312
========= ======== ---------
Sub-Total Tier IV (December 31, 1995) $ 159,762,795
=============
</TABLE>
26
<PAGE> 26
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER IV (DECEMBER 31, 1996, SEE NOTE 2) UNITS UNIT VALUE
--------------------------------------- --------- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 829,130 $ 5.352788 $ 4,438,157
American Century: Twentieth Century Ultra Fund 3,978,227 1.654061 6,580,230
The Bond Fund of America(SM), Inc. 114,425 2.236906 255,958
The Dreyfus Third Century Fund, Inc. 509,877 3.228689 1,646,234
Evergreen Income and Growth Fund - Class Y 82,079 2.148444 176,342
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 41,337 1.253133 51,801
Fidelity Capital & Income Fund 51,706 4.325421 223,650
Fidelity Contrafund 4,673,310 1.762322 8,235,877
Fidelity Equity-Income Fund 1,181,735 6.273614 7,413,749
Fidelity Magellan(R) Fund 1,437,104 1.663655 2,390,845
Fidelity OTC Portfolio 614,934 1.783618 1,096,807
Fidelity Puritan(R) Fund 338,365 1.497510 506,705
The Investment Company of America(R) 293,909 2.084964 612,790
MAS Funds - Fixed Income Portfolio 32,017 1.274029 40,791
MFS(R) Growth Opportunities Fund - Class A 84,740 8.488844 719,345
MFS(R) High Income Fund - Class A 46,446 5.823980 270,501
Massachusetts Investors Growth Stock Fund - Class A 20,864 13.699027 285,816
Nationwide(R) Fund 65,299 18.416120 1,202,554
Nationwide(R) Growth Fund 19,454 3.644328 70,897
Nationwide(R) Money Market Fund 323,829 2.948209 954,716
Neuberger & Berman Guardian Fund 569,283 1.647540 937,917
Putnam Investors Fund - Class A 50,552 16.132477 815,529
Putnam Voyager Fund - Class A 1,652,019 3.414395 5,640,645
SEI Index Funds - S&P 500 Index Portfolio 850,173 1.369831 1,164,593
Seligman Growth Fund, Inc. - Class A. 24,787 12.042695 298,502
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 102,273 1.196817 122,402
T. Rowe Price International Funds, Inc. -
International Stock Fund (R) 824,780 1.314940 1,084,536
Templeton Foreign Fund - Class I 834,029 1.347916 1,124,201
======= ======== ---------
Sub-Total Tier IV (December 31, 1996) $ 48,362,090
============
</TABLE>
27
<PAGE> 27
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER IV (DECEMBER 31, 1996, SEE NOTE 2)* UNITS UNIT VALUE
---------------------------------------- --------- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 2,020 $ 5.344777 $ 10,796
American Century: Twentieth Century Ultra Fund 34,497 1.651585 56,975
The Bond Fund of America(SM), Inc. 104 2.233530 232
The Dreyfus Third Century Fund, Inc. 2,714 3.223859 8,750
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 29,424 1.251241 36,817
Fidelity Contrafund 49,300 1.759686 86,753
Fidelity Equity-Income Fund 4,909 6.264233 30,751
Fidelity Magellan(R) Fund 28,056 1.661166 46,606
Fidelity OTC Portfolio 3,856 1.780948 6,867
Fidelity Puritan(R) Fund 14,934 1.495271 22,330
The Investment Company of America(R) 3,001 2.081846 6,248
MAS Funds - Fixed Income Portfolio 438 1.272123 557
MFS(R) Growth Opportunities Fund - Class A 486 8.476135 4,119
MFS(R) High Income Fund - Class A 101 5.815190 587
Massachusetts Investors Growth Stock Fund - Class A 295 13.678527 4,035
Nationwide(R) Fund 512 18.388587 9,415
Nationwide(R) Growth Fund 175 3.638875 637
Nationwide(R) Money Market Fund 3,673 2.943760 10,812
Neuberger & Berman Guardian Fund 16,809 1.645075 27,652
Putnam Investors Fund - Class A 410 16.108344 6,604
Putnam Voyager Fund - Class A 16,420 3.409282 55,980
SEI Index Funds - S&P 500 Index Portfolio 9,031 1.367788 12,352
Seligman Growth Fund, Inc. - Class A. 352 12.024677 4,233
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 12,441 1.195011 14,867
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) 8,905 1.312973 11,692
Templeton Foreign Fund - Class I 6,284 1.345900 8,458
===== ======== -----
Sub-Total Tier IV (December 31, 1996) $ 485,125
=========
<FN>
*Tier includes certain Departments of a Member County that was previously converted to Tier IV using the Asset Balance as
of December 31, 1995.
</TABLE>
28
<PAGE> 28
Contract owners' equity - continued
<TABLE>
<CAPTION>
TIER V (DECEMBER 31, 1996, SEE NOTE 2) UNITS UNIT VALUE
-------------------------------------- --------- ----------
<S> <C> <C> <C>
American Century: Twentieth Century Growth Fund 2,427,978 $ 5.358582 $ 13,010,519
American Century: Twentieth Century Ultra Fund 17,612,032 1.655852 29,162,918
The Bond Fund of America(SM), Inc. 688,147 2.239361 1,541,010
The Dreyfus Third Century Fund, Inc. 2,066,737 3.232183 6,680,072
Evergreen Income and Growth Fund - Class Y 347,164 2.150769 746,670
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 525,503 1.254499 659,243
Fidelity Capital & Income Fund 64,725 4.330138 280,268
Fidelity Contrafund 17,932,197 1.764230 31,636,520
Fidelity Equity-Income Fund 7,724,279 6.280400 48,511,562
Fidelity Magellan(R) Fund 6,308,164 1.665455 10,505,963
Fidelity OTC Portfolio 2,464,132 1.785549 4,399,828
Fidelity Puritan(R) Fund 1,909,722 1.499130 2,862,922
The Investment Company of America(R) 2,518,745 2.087220 5,257,175
MAS Funds - Fixed Income Portfolio 180,051 1.275408 229,638
MFS(R) Growth Opportunities Fund - Class A 215,452 8.498034 1,830,918
MFS(R) High Income Fund - Class A 348,030 5.830331 2,029,130
Massachusetts Investors Growth Stock Fund - Class A 119,997 13.713853 1,645,621
Nationwide(R) Fund 431,774 18.436035 7,960,201
Nationwide(R) Growth Fund 265,040 3.648271 966,938
Nationwide(R) Money Market Fund 4,037,011 2.951424 11,914,931
Neuberger & Berman Guardian Fund 3,588,234 1.649323 5,918,157
Putnam Investors Fund - Class A 322,665 16.149933 5,211,018
Putnam Voyager Fund - Class A 5,821,646 3.418092 19,898,922
SEI Index Funds - S&P 500 Index Portfolio 3,384,972 1.371309 4,641,843
Seligman Growth Fund, Inc. - Class A. 124,178 12.055727 1,497,056
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class 480,820 1.198122 576,081
T. Rowe Price International Funds, Inc. -
International Stock Fund (R) 4,130,536 1.316363 5,437,285
Templeton Foreign Fund - Class I 4,575,883 1.349374 6,174,578
========= ======== ---------
Sub-Total Tier V (December 31, 1996) 231,186,987
===========
Total Contract Owners' Equity 1,763,001,233
==============
</TABLE>
See accompanying notes to financial statements.
29
<PAGE> 29
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