<PAGE> 1
[NATIONWIDE LOGO]
NATIONWIDE(R)
VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
SEMI-ANNUAL REPORT
TO
CONTRACT OWNERS
JUNE 30, 1997
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
FHL-108-S (6/97)
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We are pleased to present the 1997 semi-annual report of the Nationwide VA
Separate Account-A.
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 and Annuity Insurance Company the
opportunity to meet your investment needs.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
3
<PAGE> 3
NATIONWIDE VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
2,156,440 shares (cost $11,963,830) ................................... $ 13,456,185
Federated - Federated American Leaders Fund II (FedAmLead)
775 shares (cost $11,825) ............................................. 13,560
Federated - Federated High Income Bond Fund II (FedHiInc)
8,355 shares (cost $83,497) ........................................... 86,472
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
5,022 shares (cost $97,581) ........................................... 110,795
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,307,163 shares (cost $54,506,984) ................................... 78,904,975
Fidelity VIP - Overseas Portfolio (FidVIPOv)
228 shares (cost $3,973) .............................................. 4,560
MFS(R) - Emerging Growth Series (MFSEmGrSe)
5,857 shares (cost $77,089) ........................................... 85,928
MFS(R) - Total Return Series (MFSTotReSe)
861 shares (cost $11,911) ............................................. 13,142
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
580,186 shares (cost $7,587,908) ...................................... 11,348,445
Nationwide SAT - Government Bond Fund (NSATGvtBd)
2,981,832 shares (cost $33,401,934) ................................... 32,800,154
Nationwide SAT - Money Market Fund (NSATMyMkt)
3,417,719 shares (cost $3,417,719) .................................... 3,417,719
Nationwide SAT - Total Return Fund (NSATTotRe)
4,886,630 shares (cost $52,388,600) ................................... 76,768,964
Neuberger & Berman - Balanced Portfolio (NBAMTBal)
1,601,712 shares (cost $24,331,809) ................................... 26,556,392
-------------
Total investments .................................................. 243,567,291
Accounts receivable ......................................................... 2,062
-------------
Total assets ....................................................... 243,569,353
ACCOUNTS PAYABLE ............................................................... 33,814
-------------
CONTRACT OWNERS' EQUITY ........................................................ $ 243,535,539
=============
</TABLE>
4
<PAGE> 4
<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
-------- ----------
Contracts in accumulation phase:
VA contracts:
<S> <C> <C> <C>
American Century VP - American Century VP Advantage:
Tax qualified ........................................... 523,736 $ 14.909261 $ 7,808,517
Non-tax qualified ....................................... 351,832 14.909261 5,245,555
Initial Funding by Depositor ............................ 25,000 16.085686 402,142
Fidelity VIP - Growth Portfolio:
Tax qualified ........................................... 2,153,933 22.098307 47,598,273
Non-tax qualified ....................................... 1,415,542 22.098307 31,281,082
Nationwide SAT - Capital Appreciation Fund:
Tax qualified ........................................... 295,430 21.578999 6,375,084
Non-tax qualified ....................................... 230,476 21.578999 4,973,441
Nationwide SAT - Government Bond Fund:
Tax qualified ........................................... 898,898 18.571295 16,693,700
Non-tax qualified ....................................... 866,726 18.571295 16,096,224
Nationwide SAT - Money Market Fund:
Tax qualified ........................................... 157,945 13.941642 2,202,013
Non-tax qualified ....................................... 84,772 13.941642 1,181,861
Nationwide SAT - Total Return Fund:
Tax qualified ........................................... 1,610,294 27.172202 43,755,234
Non-tax qualified ....................................... 1,214,371 27.172202 32,997,134
Neuberger & Berman - Balanced Portfolio:
Tax qualified ........................................... 922,801 16.594338 15,313,272
Non-tax qualified ....................................... 677,533 16.594338 11,243,212
VA-II Eagle Choice contracts:
Federated - Federated American Leaders Fund II:
Non-tax qualified ....................................... 975 13.925427 13,577
Federated - Federated High Income Bond Fund II:
Non-tax qualified ....................................... 7,343 11.860737 87,093
Fidelity VIP - Equity-Income Portfolio:
Non-tax qualified ....................................... 6,318 17.533422 110,776
Fidelity VIP - Overseas Portfolio:
Non-tax qualified ....................................... 354 12.818285 4,538
MFS(R)- Emerging Growth Series:
Non-tax qualified ....................................... 6,760 12.707936 85,906
MFS(R)- Total Return Series:
Non-tax qualified ....................................... 1,055 12.443378 13,128
======== =========
Reserves for annuity contracts in payout phase:
Tax qualified ........................................... 43,530
Non-tax qualified ....................................... 10,247
-------------
$ 243,535,539
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
5
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<TABLE>
<CAPTION>
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
TOTAL ACVPADV
----------------------------- ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 2,923,248 2,814,055 205,268 209,447
Mortality, expense and administration
charges (note 2)..................... (1,479,318) (1,329,623) (83,280) (81,359)
-------------- -------------- -------------- --------------
Net investment activity.............. 1,443,930 1,484,432 121,988 128,088
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 14,003,335 8,505,496 838,290 784,724
Cost of mutual fund shares sold........ (11,802,944) (7,610,478) (714,980) (678,369)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 2,200,391 895,018 123,310 106,355
Change in unrealized gain (loss) on 19,541,185 477,262 (190,075) (448,260)
investments ........................ -------------- -------------- -------------- --------------
Net gain (loss) on investments....... 21,741,576 1,372,280 (66,765) (341,905)
-------------- -------------- -------------- --------------
Reinvested capital gains............... 4,019,365 7,904,884 712,416 604,412
Net increase (decrease) in contract -------------- -------------- -------------- --------------
owners' equity resulting from
operations....................... 27,204,871 10,761,596 767,639 390,595
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract 6,515,888 8,623,893 36,276 (179,918)
owners - net of transfers between funds (9,922,750) (5,973,930) (579,504) (270,794)
Redemptions............................ (4,491) (4,105) - -
Annuity benefits....................... (154,616) (153,678) (11,099) (11,831)
Annual contract maintenance charge (note 2) (176,829) (153,584) (10,860) (7,273)
Contingent deferred sales charges (note 2) 1,396 3,302 21 112
Adjustments to maintain reserves....... -------------- -------------- -------------- --------------
(3,741,402) 2,341,898 (565,166) (469,704)
Net equity transactions............ -------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 23,463,469 13,103,494 202,473 (79,109)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 220,072,070 197,097,809 13,253,741 12,880,916
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 243,535,539 210,201,303 13,456,214 12,801,807
============== ============== ============== ==============
<CAPTION>
FEDAMLEAD FEDHIINC
------------------------------ -----------------------------
1997 1996 1997 1996
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 39 - 2,904 -
Mortality, expense and administration
charges (note 2)..................... (44) - (468) -
------------- -------------- -------------- --------------
Net investment activity.............. (5) - 2,436 -
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 30 - 452 -
Cost of mutual fund shares sold........ (27) - (440) -
------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 3 - 12 -
Change in unrealized gain (loss) on
investments ........................ 1,736 - 1,650 -
------------- -------------- -------------- --------------
Net gain (loss) on investments....... 1,739 - 1,662 -
------------- -------------- -------------- --------------
Reinvested capital gains............... - - 215 -
Net increase (decrease) in contract ------------- -------------- -------------- --------------
owners' equity resulting from
operations....................... 1,734 - 4,313 -
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 11,852 - 28,000 -
Redemptions............................ - - - -
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (9) - (4) -
------------- -------------- -------------- --------------
Net equity transactions............ 11,843 - 27,996 -
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 13,577 - 32,309 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 54,784 -
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 13,577 - 87,093 -
============= ============== ============== ==============
</TABLE>
6
<PAGE> 6
<TABLE>
<CAPTION>
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
FIDVIPEI FIDVIPGR
------------------------------- ------------------------------
1997 1996 1997 1996
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 959 - 475,032 163,382
Mortality, expense and administration
charges (note 2)..................... (561) - (475,917) (417,806)
-------------- -------------- -------------- --------------
Net investment activity.............. 398 - (885) (254,424)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 10,677 - 2,603,803 1,441,557
Cost of mutual fund shares sold........ (10,331) - (1,640,617) (987,078)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 346 - 963,186 454,479
Change in unrealized gain (loss) on
investments.......................... 9,397 - 6,086,143 1,717,398
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 9,743 - 7,049,329 2,171,877
-------------- -------------- -------------- --------------
Reinvested capital gains............... 4,824 - 2,126,335 4,125,405
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 14,965 - 9,174,779 6,042,858
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 39,685 - 2,097,790 3,873,322
Redemptions............................ - - (2,708,278) (1,794,234)
Annuity benefits....................... - - (1,811) (1,451)
Annual contract maintenance charge (note 2) - - (54,028) (52,758)
Contingent deferred sales charges (note 2) - - (58,874) (48,750)
Adjustments to maintain reserves....... (1) - 840 1,890
-------------- -------------- -------------- --------------
Net equity transactions............ 39,684 - (724,361) 1,978,019
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 54,649 - 8,450,418 8,020,877
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 56,127 - 70,455,464 59,942,947
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 110,776 - 78,905,882 67,963,824
============== ============== ============== ==============
<CAPTION>
FIDVIPOV MFSEMGRSE
----------------------------- ------------------------------
1997 1996 1997 1996
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - - - -
Mortality, expense and administration
charges (note 2)..................... (14) - (442) -
------------- -------------- -------------- --------------
Net investment activity.............. (14) - (442) -
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. - - 386 -
Cost of mutual fund shares sold........ - - (386) -
------------- -------------- -------------- --------------
Realized gain (loss) on investments.. - - - -
Change in unrealized gain (loss) on
investments.......................... 587 - 10,603 -
------------- -------------- -------------- --------------
Net gain (loss) on investments....... 587 - 10,603 -
------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations. 573 - 10,161 -
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 3,973 - 24,000 -
Redemptions............................ - - - -
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (8) - 3 -
------------- -------------- -------------- --------------
Net equity transactions............ 3,965 - 24,003 -
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 4,538 - 34,164 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 51,742 -
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 4,538 - 85,906 -
============= ============== ============== ==============
</TABLE>
7
<PAGE> 7
<TABLE>
<CAPTION>
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
MFSTotReSe NSATCapAp
---------------------------- ------------------------------
1997 1996 1997 1996
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 55,443 51,919
Mortality, expense and administration
charges (note 2)..................... (43) - (63,604) (39,370)
-------------- -------------- -------------- --------------
Net investment activity.............. (43) - (8,161) 12,549
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 30 - 294,485 212,678
Cost of mutual fund shares sold........ (28) - (171,704) (162,088)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 2 - 122,781 50,590
Change in unrealized gain (loss) on
investments .......................... 1,231 - 1,719,818 457,722
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 1,233 - 1,842,599 508,312
-------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 1,190 - 1,834,438 520,861
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 11,939 - 1,321,167 888,500
Redemptions............................ - - (245,988) (135,757)
Annuity benefits....................... - - - -
Annual contract maintenance charge (note 2) - - (5,609) (4,077)
Contingent deferred sales charges (note 2) - - (5,251) (3,630)
Adjustments to maintain reserves....... (1) - 101 359
-------------- -------------- -------------- --------------
Net equity transactions............ 11,938 - 1,064,420 745,395
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 13,128 - 2,898,858 1,266,256
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 8,449,667 5,441,661
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 13,128 - 11,348,525 6,707,917
============== ============== ============== ==============
<CAPTION>
NSATGvtBd NSATMyMkt
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 1,028,900 1,156,397 88,286 95,093
Mortality, expense and administration
charges (note 2)..................... (216,096) (245,254) (22,796) (24,984)
------------- -------------- -------------- --------------
Net investment activity.............. 812,804 911,143 65,490 70,109
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 3,005,536 2,635,873 2,870,281 1,786,829
Cost of mutual fund shares sold........ (3,057,762) (2,728,588) (2,870,281) (1,786,829)
------------- -------------- -------------- --------------
Realized gain (loss) on investments.. (52,226) (92,715) - -
Change in unrealized gain (loss) on
investments ......................... (55,306) (1,716,158) - -
------------- -------------- -------------- --------------
Net gain (loss) on investments....... (107,532) (1,808,873) - -
------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
------------- -------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from 705,272 (897,730) 65,490 70,109
operations....................... ------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds (1,096,498) (348,147) 531,677 (367,213)
Redemptions............................ (1,421,486) (1,325,112) (976,752) (475,518)
Annuity benefits....................... (1,989) (1,976) - -
Annual contract maintenance charge (note 2) (19,640) (23,363) (2,320) (2,624)
Contingent deferred sales charges (note 2) (22,695) (27,709) (9,312) (13,484)
Adjustments to maintain reserves....... (15) 202 (123) (93)
------------- -------------- -------------- --------------
Net equity transactions............ (2,562,323) (1,726,105) (456,830) (858,932)
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (1,857,051) (2,623,835) (391,340) (788,823)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 34,657,222 39,109,507 3,775,214 4,154,507
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 32,800,171 36,485,672 3,383,874 3,365,684
============= ============== ============== ==============
</TABLE>
8
<PAGE> 8
<TABLE>
<CAPTION>
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
NSATTotRe NBAMTBal
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 608,401 566,862 458,016 570,955
Mortality, expense and administration
charges (note 2)..................... (450,288) (355,934) (165,765) (164,916)
-------------- -------------- -------------- --------------
Net investment activity.............. 158,113 210,928 292,251 406,039
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 2,748,037 881,230 1,631,328 762,605
Cost of mutual fund shares sold........ (1,807,628) (612,995) (1,528,760) (654,531)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 940,409 268,235 102,568 108,074
Change in unrealized gain (loss) on
investments........................... 10,953,712 3,576,118 1,001,689 (3,109,558)
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 11,894,121 3,844,353 1,104,257 (3,001,484)
-------------- -------------- -------------- --------------
Reinvested capital gains............... - - 1,175,575 3,175,067
-------------- -------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 12,052,234 4,055,281 2,572,083 579,622
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds 3,364,917 3,817,212 141,110 940,137
Redemptions............................ (2,882,335) (1,379,796) (1,108,407) (592,719)
Annuity benefits....................... (691) (678) - -
Annual contract maintenance charge (note 2) (43,516) (39,828) (18,404) (19,197)
Contingent deferred sales charges (note 2) (45,964) (38,095) (23,873) (14,643)
Adjustments to maintain reserves....... 472 632 120 200
-------------- -------------- -------------- --------------
Net equity transactions............ 392,883 2,359,447 (1,009,454) 313,778
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 12,445,117 6,414,728 1,562,629 893,400
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 64,324,254 51,011,123 24,993,855 24,557,148
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 76,769,371 57,425,851 26,556,484 25,450,548
============== ============== ============== ==============
See accompanying notes to financial statements.
==============================================================================================================
</TABLE>
9
<PAGE> 9
NATIONWIDE VA SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-1)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(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 American Century Variable Portfolios, Inc.
(American Century VP)(formerly TCI Portfolios, Inc.) (available
for VA contracts);
American Century VP - American Century VP Advantage (ACVPAdv)
(formerly TCI Portfolios - TCI Advantage)
Funds of the Federated Insurance Series (Federated) (available for
VA-II Eagle Choice contracts);
Federated - Federated American Leaders Fund II (FedAmLead)
Federated - Federated High Income Bond Fund II (FedHiInc)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI) (available for
VA-II Eagle Choice contracts)
Fidelity VIP - Growth Portfolio (FidVIPGr) (available for VA
contracts)
Fidelity VIP - Overseas Portfolio (FidVIPOv) (available for
VA-II Eagle Choice contracts)
Funds of the MFS(R) Variable Insurance Trust (MFS(R)) (available
for VA-II Eagle Choice contracts);
MFS(R) - Emerging Growth Series (MFSEmGrSe)
MFS(R) - Total Return Series (MFSTotReSe)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
(available for VA contracts)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
(available for all contracts)
Nationwide SAT - Money Market Fund (NSATMyMkt)
(available for all contracts)
Nationwide SAT - Small Company Fund (NSATSmCo)
(available for VA-II Eagle Choice contracts)
Nationwide SAT - Total Return Fund (NSATTotRe)
(available for VA contracts)
Portfolio of the Neuberger &Berman Advisers Management Trust
(Neuberger &Berman)(available for VA contracts);
Neuberger &Berman - Balanced Portfolio (NBAMTBal)
10
<PAGE> 10
At June 30, 1997, contract owners have invested in all of the above
funds except the Nationwide SAT - Small Company Fund. 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, 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 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.
(f) Reclassifications
Certain 1996 amounts have been reclassified to conform with the current
year presentation.
(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 contract charges are deducted by the Company: (a) for the VA
contracts an annual contract maintenance charge of $30 which is satisfied
by surrendering units; for the VA II Convertible contracts a one-time
contract maintenance charge of up to $50, dependent upon the initial
purchase payment and contract type; and (b) for the VA contracts 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; for the VA II Convertible
contracts 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 0.15%, respectively. No charges
were deducted from the initial funding, or from earnings thereon.
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Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
