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NATIONWIDE(R)
VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
SEMI-ANNUAL REPORT
TO
CONTRACT OWNERS
JUNE 30, 1996
FHL-108-Q(6/96)
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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
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PRESIDENT'S MESSAGE
We are pleased to present the 1996 semi-annual report of the
Nationwide VA Separate Account-A.
Equity investments provided a respectable return for the first
half of 1996 with the major market indices holding comfortably
in double digits. Fixed-income investments, however, did not
perform as well with the average bond fund showing slightly
negative performance for the period. This was due to rising
interest rates and lingering inflation fears.
The U.S. economy showed signs of increasing strength during
the first half of the year. The question remains: will growth
fall back to the perceived inflation-free path by itself or
will the Federal Reserve have to step in and enforce
moderation? Recent economic statistics, such as the July
unemployment report, point in the direction of some
moderation. Also, fierce competition in all consumer-goods
markets make inflationary price increases very difficult. One
way or the other, we expect slower economic growth in the near
future.
Financial assets will remain the preferred individual
investment option because they will continue providing
security, liquidity, and income and growth.
We appreciate your confidence in the Nationwide Insurance
Enterprise and in our life and annuity products. You have our
assurance that your personal satisfaction with our products
and service is our highest priority.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
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NATIONWIDE VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments at market value:
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,260,949 shares (cost $51,390,404) ............... $ 67,964,120
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
455,077 shares (cost $5,269,518) .................. 6,707,840
Nationwide SAT - Government Bond Fund (NSATGvtBd)
3,368,923 shares (cost $37,789,258) ............... 36,485,435
Nationwide SAT - Money Market Fund (NSATMyMkt)
3,365,764 shares (cost $3,365,764) ................ 3,365,764
Nationwide SAT - Total Return Fund (NSATTotRe)
4,631,076 shares (cost $47,387,715) ............... 57,425,337
Neuberger & Berman - Balanced Portfolio (NBAMTBal)
1,658,001 shares (cost $25,057,721) ............... 25,450,311
TCI Portfolios - TCI Advantage (TCIAdv)
2,126,523 shares (cost $11,601,261) ............... 12,801,665
-----------
Total investments .............................. 210,200,472
Accounts receivable ..................................... 831
-----------
Total assets .................................... 210,201,303
===========
Contract Owners' Equity .................................... $210,201,303
</TABLE> ===========
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<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
----- ----------
Contracts in accumulation phase:
<S> <C> <C> <C>
Fidelity VIP - Growth Portfolio:
Tax qualified ........................... 2,184,104 $ 18.988223 $ 41,472,254
Non-tax qualified ....................... 1,393,856 18.988223 26,466,849
Nationwide SAT - Capital Appreciation Fund:
Tax qualified ........................... 246,208 15.819141 3,894,799
Non-tax qualified ....................... 177,830 15.819141 2,813,118
Nationwide SAT - Government Bond Fund:
Tax qualified ........................... 1,078,885 17.394695 18,766,876
Non-tax qualified ....................... 1,017,860 17.394695 17,705,364
Nationwide SAT - Money Market Fund:
Tax qualified ........................... 180,805 13.434256 2,428,981
Non-tax qualified ....................... 69,725 13.434256 936,703
Nationwide SAT - Total Return Fund:
Tax qualified ........................... 1,592,282 20.540706 32,706,596
Non-tax qualified ....................... 1,202,749 20.540706 24,705,314
Neuberger & Berman - Balanced Portfolio:
Tax qualified ........................... 1,019,161 14.570254 14,849,435
Non-tax qualified ....................... 727,586 14.570254 10,601,113
TCI Portfolios - TCI Advantage:
Tax qualified ........................... 558,939 13.450572 7,518,049
Non-tax qualified ....................... 366,207 13.450572 4,925,694
Initial Funding by Depositor (note 1a) .. 25,000 14.322518 358,063
========= ======
Reserves for annuity contracts in payout phase:
Tax qualified ........................... 38,663
Non-tax qualified ....................... 13,432
-----------
$210,201,303
===========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1996, 1995 and 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends ........... $ 10,718,939 2,931,031 4,547,558
------------ ------------ -----------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares 8,505,496 12,264,182 6,194,709
Cost of mutual fund shares sold ............... (7,610,478) (11,662,673) (6,062,396)
------------ ------------ -----------
Realized gain (loss) on investments ........... 895,018 601,509 132,313
Change in unrealized gain (loss) on investments 477,262 22,044,921 (12,272,814)
------------ ------------ -----------
Net gain (loss) on investments ............. 1,372,280 22,646,430 (12,140,501)
------------ ------------ -----------
Net investment activity ................. 12,091,219 25,577,461 (7,592,943)
------------ ------------ -----------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners .. 8,623,893 6,015,986 36,791,497
Redemptions ...................................... (5,973,930) (10,234,774) (5,748,429)
Annuity Benefits ................................. (4,105) (1,256) --
Adjustments to maintain reserves ................. 3,302 (1,471) (1,249)
------------ ------------ -----------
Net equity transactions ................. 2,649,160 (4,221,515) 31,041,819
------------ ------------ -----------
EXPENSES (NOTE 2):
Contract charges ................................. (1,483,301) (1,259,403) (1,081,349)
Contingent deferred sales charges ................ (153,584) (266,642) (186,577)
------------ ------------ -----------
Total expenses .......................... (1,636,885) (1,526,045) (1,267,926)
------------ ------------ -----------
Net Change In Contract Owners' Equity ............... 13,103,494 19,829,901 22,180,950
Contract Owners' Equity Beginning Of Period ......... 197,097,809 161,910,153 133,992,921
------------ ------------ -----------
Contract Owners' Equity End Of Period ............... $ 210,201,303 181,740,054 156,173,871
============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996, 1995 and 1994
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide VA Separate Account-A (formerly Financial Horizons VA Separate
Account-1) (the Account) was established pursuant to a resolution of the Board
of Directors of Nationwide Life and Annuity Insurance Company (formerly
Financial Horizons Life Insurance Company) (the Company) on May 6, 1987. The
Account has been registered as a unit investment trust under the Investment
Company Act of 1940. On August 21, 1991, the Company transferred to the Account,
50,000 shares of the TCI Portfolios, Inc. - TCI Advantage fund for which the
Account was credited with 25,000 accumulation units. The value of the
accumulation units purchased by the Company on August 21, 1991 was $250,000.
The Company offers tax qualified and non-tax qualified Individual Deferred
Variable Annuity Contracts through the Account. The primary distribution for the
contracts is through banks and other financial institutions; however, other
distributors may be utilized.
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees are offered for purchase. See note
2 for a discussion of contract expenses.
With certain exceptions, contract owners in either the accumulation or the
payout phase may invest in any of the following funds:
Portfolio of the Fidelity Variable Insurance Products Fund (Fidelity
VIP);
Fidelity VIP - Growth Portfolio (FidVIPGr)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolio of the Neuberger &Berman Advisers Management Trust (Neuberger
& Berman);
Neuberger &Berman - Balanced Portfolio (NBAMTBal)
Portfolio of the TCI Portfolios, Inc. (TCI Portfolios);
TCI Portfolios - TCI Advantage (TCI Adv)
At June 30, 1996, contract owners have invested in all of the above funds.
The contract owners' equity is affected by the investment results of each fund,
equity transactions by contract owners and certain contract expenses (see note
2). The accompanying financial statements include only contract owners' purchase
payments pertaining to the variable portions of their contracts and exclude any
purchase payments for fixed dollar benefits, the latter being included in the
accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at June 30, 1996. 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.
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(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations
of the Company which is taxed as a life insurance company under the Internal
Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of such
contracts is surrendered, the Company will, with certain exceptions, deduct from
a contract owners' contract value a contingent deferred sales charge not to
exceed 7% of the lesser of purchase payments or the amount surrendered, such
charge declining 1% per year, to 0%, after the purchase payment has been held in
the contract for 84 months. No sales charges are deducted on redemptions used to
purchase units in the fixed investment options of the Company.
The following administrative charges are deducted by the Company: (a) an
annual contract maintenance charge of $30 which is satisfied by surrendering
units; and (b) a mortality risk charge, an expense risk charge and an
administration charge assessed through the daily unit value calculation equal to
an annual rate of 0.80%, 0.45% and 0.05%, respectively. No charges were deducted
from the initial funding, or from earnings thereon.
(3) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for contract owners' equity. This schedule is presented in the
following format:
o Beginning unit value - Jan. 1
o Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying
mutual funds.)
o Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
o Contract charges
(This amount reflects the decrease in the unit value due to the
mortality risk charge, expense risk charge and administration
charge discussed in note 2.)
o Ending unit value - June 30
o Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
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SCHEDULE I
NATIONWIDE VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
SCHEDULES OF CHANGES IN UNIT VALUE
SIX MONTH PERIODS ENDED JUNE 30, 1996, 1995 and 1994
(UNAUDITED)
<TABLE>
<CAPTION>
FIDVIPGR NSATCAPAP NSATGVTBD NSATMYMKT NSATTOTRE NBAMTBAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996
Beginning unit value - Jan. 1 $17.260484 14.442619 17.796519 13.190835 19.046261 14.230121
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.239829 .128194 .542083 .329738 .205850 2.180116
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .605890 1.348024 (.831245) .000000 1.417890 (1.745499)
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.117980) (.099696) (.112662) (.086317) (.129295) (.094484)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $18.988223 15.819141 17.394695 13.434256 20.540706 14.570254
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 10% 10% (2)% 2% 8% 2%
TCIADV TCIADV+
- -----------------------------------------------------------
1996
Beginning unit value - Jan. 1 13.047149 13.802855
- -----------------------------------------------------------
Reinvested capital gains
and dividends .835374 .886970
- -----------------------------------------------------------
Unrealized gain (loss) (.346544) (.367307)
- -----------------------------------------------------------
Contract charges (.085407) .000000
- -----------------------------------------------------------
Ending unit value - June 30 13.450572 14.322518
- -----------------------------------------------------------
Percentage increase (decrease)
in unit value* 3% 4%
FIDVIPGR NSATCAPAP NSATGVTBD NSATMYMKT NSATTOTRE NBAMTBAL
- -----------------------------------------------------------------------------------------------------------------------------------
1995
Beginning unit value - Jan. 1 $12.918431 11.311683 15.183984 12.648732 14.947703 11.649194
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .071384 .108494 .522803 .357525 .230860 .296423
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.986554 1.024511 1.275023 .000000 2.158505 1.551461
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.090387) (.077176) (.104399) (.083614) (.104755) (.081307)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $15.885982 12.367512 16.877411 12.922643 17.232313 13.415771
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 23% 9% 11% 2% 15% 15%
TCIADV TCIADV+
- -----------------------------------------------------------
1995
Beginning unit value - Jan. 1 11.322395 11.822996
- -----------------------------------------------------------
Reinvested capital gains
and dividends .176081 .184730
- -----------------------------------------------------------
Unrealized gain (loss) .930070 .975046
- -----------------------------------------------------------
Contract charges (.076287) .000000
- -----------------------------------------------------------
Ending unit value - June 30 12.352259 12.982772
- -----------------------------------------------------------
Percentage increase (decrease)
in unit value* 9% 10%
FIDVIPGR NSATCAPAP NSATGVTBD NSATMYMKT NSATTOTRE NBAMTBAL
- -----------------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $13.090637 11.564256 15.897022 12.335970 14.983077 12.212412
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .787428 .072046 .474287 .194882 .185116 .476225
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (2.044575) (.647961) (1.103301) .000000 (.219664) (1.321144)
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.083085) (.073837) (.100877) (.080492) (.097459) (.078037)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $11.750405 10.914504 15.167131 12.450360 14.851070 11.289456
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (10)% (6)% (5)% 1% (1)% (8)%
TCIADV TCIADV+
- -----------------------------------------------------------
1994
Beginning unit value - Jan. 1 $11.353606 11.701906
- -----------------------------------------------------------
Reinvested capital gains
and dividends .129165 .133775
- -----------------------------------------------------------
Unrealized gain (loss) (.305168) (.316874)
- -----------------------------------------------------------
Contract charges (.073932) .000000
- -----------------------------------------------------------
Ending unit value - June 30 $11.103671 11.518807
- -----------------------------------------------------------
Percentage increase (decrease)
in unit value* (2)% (2)%
<FN>
* An annualized rate of return cannot be determined as it is the change for a
six month period and contract charges do not include the annual contract
maintenance charge discussed in note 2.
+ For Depositor, see note 1a.
See note 3.
</TABLE>
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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220
Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
