<PAGE> 1
[LOGO]
Nationwide(R)
VA Separate Account-A
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1997
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
FHL - 108 - T (12/97)
<PAGE> 2
[LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215 - 2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life and Annuity Insurance Company are pleased to
bring you the 1997 annual report of the Nationwide VA Separate
Account-A.
Equity markets ended a volatile season to record the third straight
year of gains topping the 20 percent mark. Additionally, returns on
fixed income investments were buoyed by declining inflation, steady
Federal Reserve policy and the positive outlook for lower budget
deficits.
The U.S. economy continues to be strong into 1998. However, there is
still much uncertainty about what effect the Southeast Asian crisis
will have on our economy during this year. The obvious result, we
believe, will be a slowing of economic growth due to reduced
exports, restrained pricing flexibility and lower corporate profits.
We expect the Federal Reserve will continue to stay on the sidelines
as the Southeast Asian economic turmoil plays out. At the same time,
low inflation and low interest rates should continue to provide a
healthy environment for financial assets.
We are committed to our customers as our most valuable asset. Our
commitment to you is to continue to add value to our products and
services to help you achieve your financial planning and retirement
goals. As always, we welcome and encourage your feedback.
/S/Joseph J. Gasper
Joseph J. Gasper, President
3
<PAGE> 3
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
2,029,128 shares (cost $11,327,976) ...................... $ 13,392,245
Federated IS - Federated American Leaders Fund II (FedAmLead)
1,377 shares (cost $22,709) .............................. 27,037
Federated IS - Federated High Income Bond Fund II (FedHiInc)
9,529 shares (cost $95,804) .............................. 104,341
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
6,583 shares (cost $134,346) ............................. 159,837
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,255,189 shares (cost $54,129,084) ...................... 83,667,515
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,286 shares (cost $25,818) .............................. 24,697
MFS(R) VIT - Emerging Growth Series (MFSEmGrSe)
5,816 shares (cost $76,520) .............................. 93,866
MFS(R) VIT - Total Return Series (MFSTotReSe)
1,490 shares (cost $21,759) .............................. 24,771
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
621,989 shares (cost $8,863,380) ......................... 13,192,393
Nationwide SAT - Government Bond Fund (NSATGvtBd)
2,838,560 shares (cost $31,779,790) ...................... 32,302,811
Nationwide SAT - Money Market Fund (NSATMyMkt)
3,477,508 shares (cost $3,477,508) ....................... 3,477,508
Nationwide SAT - Total Return Fund (NSATTotRe)
5,045,950 shares (cost $56,344,647) ...................... 82,652,666
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
1,550,836 shares (cost $23,722,418) ...................... 27,604,886
------------
Total investments ..................................... 256,724,573
Accounts receivable ............................................ 178,076
------------
Total assets .......................................... 256,902,649
ACCOUNTS PAYABLE .................................................. 102
------------
CONTRACT OWNERS' EQUITY ........................................... $256,902,547
============
</TABLE>
4
<PAGE> 4
<TABLE>
<CAPTION>
Annual
Contract owners' equity represented by: Units Unit Value Return
--------- ---------- ----------
<S> <C> <C> <C> <C>
Contracts in accumulation phase:
VA contracts:
American Century VP - American Century
VP Advantage:
Tax qualified ........................ 489,435 $ 15.665795 $ 7,667,388 11%
Non-tax qualified .................... 338,288 15.665795 5,299,550 11%
Initial Funding by Depositor (note 1a) 25,000 17.013707 425,343 13%
Fidelity VIP - Growth Portfolio:
Tax qualified ........................ 2,108,887 23.814680 50,222,469 22%
Non-tax qualified .................... 1,403,338 23.814680 33,420,045 22%
Nationwide SAT - Capital Appreciation Fund:
Tax qualified ........................... 304,490 23.867569 7,267,436 33%
Non-tax qualified ....................... 248,251 23.867569 5,925,148 33%
Nationwide SAT - Government Bond Fund:
Tax qualified ........................... 829,592 19.674364 16,321,695 8%
Non-tax qualified ....................... 811,841 19.674364 15,972,455 8%
Nationwide SAT - Money Market Fund:
Tax qualified ........................... 140,599 14.217123 1,998,913 4%
Non-tax qualified ....................... 116,206 14.217123 1,652,115 4%
Nationwide SAT - Total Return Fund:
Tax qualified ........................... 1,599,168 29.258290 46,788,921 28%
Non-tax qualified ....................... 1,225,202 29.258290 35,847,315 28%
Neuberger & Berman AMT - Balanced Portfolio:
Tax qualified ........................... 881,853 17.698323 15,607,319 18%
Non-tax qualified ....................... 677,902 17.698323 11,997,729 18%
VA-II Eagle Choice contracts:
Federated IS - Federated American
Leaders Fund II:
Non-tax qualified ....................... 1,743 15.509873 27,034 30%
Federated IS - Federated High Income
Bond Fund II:
Non-tax qualified ....................... 8,255 12.638879 104,334 12%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ........................... 870 19.161385 16,670 26%
Non-tax qualified ....................... 7,470 19.161385 143,136 26%
Fidelity VIP - Overseas Portfolio:
Non-tax qualified ....................... 2,025 12.194007 24,693 10%
MFS(R) VIT - Emerging Growth Series:
Non-tax qualified ....................... 6,760 13.882402 93,845 20%
MFS(R) VIT - Total Return Series:
Non-tax qualified ....................... 1,840 13.455752 24,759 20%
============ ============
Reserves for annuity contracts in payout phase:
Tax qualified ........................... 45,493
Non-tax qualified ....................... 8,742
------------
$256,902,547
============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 5
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Total ACVPAdv
---------------------------------- ----------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 4,588,429 4,699,172 205,268 309,090
Mortality, expense and administration
charges (note 2) ............................ (3,155,507) (2,743,464) (169,983) (165,969)
------------- ------------- ------------- -------------
Net investment activity ..................... 1,432,922 1,955,708 35,285 143,121
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 30,083,967 21,740,726 1,849,764 1,445,773
Cost of mutual fund shares sold ............... (24,191,559) (19,156,737) (1,535,624) (1,241,093)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 5,892,408 2,583,989 314,140 204,680
Change in unrealized gain (loss) on investments 30,561,366 8,279,881 381,839 33,767
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 36,453,774 10,863,870 695,979 238,447
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 6,932,717 10,576,249 712,416 604,412
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 44,819,413 23,395,827 1,443,680 985,980
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 12,333,986 14,984,201 441,982 635,890
Transfers between funds ....................... -- -- (573,695) (483,280)
Redemptions ................................... (19,747,846) (14,810,150) (1,138,381) (731,839)
Annuity benefits .............................. (9,441) (8,432) -- --
Annual contract maintenance charge (note 2) ... (264,125) (267,941) (16,785) (18,387)
Contingent deferred sales charges (note 2) .... (306,609) (325,984) (18,458) (15,799)
Adjustments to maintain reserves .............. 5,099 6,740 197 260
------------- ------------- ------------- -------------
Net equity transactions ................... (7,988,936) (421,566) (1,305,140) (613,155)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 36,830,477 22,974,261 138,540 372,825
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 220,072,070 197,097,809 13,253,741 12,880,916
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD .......... $ 256,902,547 220,072,070 13,392,281 13,253,741
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FedAmLead FedHiInc
------------------------- ----------------------------------
1997 1996 1997 1996
------------- ---- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 39 -- 4,248 1,157
Mortality, expense and administration
charges (note 2) ............................ (218) -- (1,182) (198)
------------- ---- ------------- -------------
Net investment activity ..................... (179) -- 3,066 959
------------- ---- ------------- -------------
Proceeds from mutual fund shares sold ......... 187 -- 1,144 190
Cost of mutual fund shares sold ............... (156) -- (1,086) (188)
------------- ---- ------------- -------------
Realized gain (loss) on investments ......... 31 -- 58 2
Change in unrealized gain (loss) on investments 4,328 -- 7,211 1,326
------------- ---- ------------- -------------
Net gain (loss) on investments .............. 4,359 -- 7,269 1,328
------------- ---- ------------- -------------
Reinvested capital gains ...................... -- -- 215 --
------------- ---- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 4,180 -- 10,550 2,287
------------- ---- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 22,852 -- 39,000 52,500
Transfers between funds ....................... -- -- -- --
Redemptions ................................... -- -- -- --
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- -- --
Contingent deferred sales charges (note 2) .... -- -- -- --
Adjustments to maintain reserves .............. 2 -- -- (3)
------------- ---- ------------- -------------
Net equity transactions ................... 22,854 -- 39,000 52,497
------------- ---- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 27,034 -- 49,550 54,784
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... -- -- 54,784 --
------------- ---- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 27,034 -- 104,334 54,784
============= ==== ============= =============
</TABLE>
6
<PAGE> 6
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
FidVIPEI FidVIPGr
------------------------------ ------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 959 -- 475,032 163,383
Mortality, expense and administration
charges (note 2) ............................ (1,542) (203) (1,025,283) (873,633)
----------- ----------- ----------- -----------
Net investment activity ..................... (583) (203) (550,251) (710,250)
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 11,629 188 5,907,035 3,611,143
Cost of mutual fund shares sold ............... (11,126) (179) (3,439,457) (2,402,868)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... 503 9 2,467,578 1,208,275
Change in unrealized gain (loss) on investments 21,674 3,817 11,226,583 3,455,531
----------- ----------- ----------- -----------
Net gain (loss) on investments .............. 22,177 3,826 13,694,161 4,663,806
----------- ----------- ----------- -----------
Reinvested capital gains ...................... 4,824 -- 2,126,335 4,125,406
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 26,418 3,623 15,270,245 8,078,962
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 77,284 52,500 3,552,724 5,398,757
Transfers between funds ....................... -- -- (227,550) 1,346,708
Redemptions ................................... -- -- (5,192,521) (4,125,711)
Annuity benefits .............................. -- -- (3,902) (3,187)
Annual contract maintenance charge (note 2) ... -- -- (92,656) (91,813)
Contingent deferred sales charges (note 2) .... -- -- (94,463) (94,484)
Adjustments to maintain reserves .............. (23) 4 2,905 3,285
----------- ----------- ----------- -----------
Net equity transactions ................... 77,261 52,504 (2,055,463) 2,433,555
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 103,679 56,127 13,214,782 10,512,517
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 56,127 -- 70,455,464 59,942,947
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD .......... $ 159,806 56,127 83,670,246 70,455,464
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FidVIPOv MFSEmGrSe
----------------------- -----------------------------------
1997 1996 1997 1996
----------- ---- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- -- --
Mortality, expense and administration
charges (note 2) ............................ (176) -- (1,108) (182)
----------- ---- ----------- -----------
Net investment activity ..................... (176) -- (1,108) (182)
----------- ---- ----------- -----------
Proceeds from mutual fund shares sold ......... 153 -- 1,058 487
Cost of mutual fund shares sold ............... (136) -- (955) (485)
----------- ---- ----------- -----------
Realized gain (loss) on investments ......... 17 -- 103 2
Change in unrealized gain (loss) on investments (1,122) -- 19,110 (1,764)
----------- ---- ----------- -----------
Net gain (loss) on investments .............. (1,105) -- 19,213 (1,762)
----------- ---- ----------- -----------
Reinvested capital gains ...................... -- -- -- 436
----------- ---- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (1,281) -- 18,105 (1,508)
----------- ---- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 25,973 -- 24,000 53,250
Transfers between funds ....................... -- -- -- --
Redemptions ................................... -- -- -- --
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- -- --
Contingent deferred sales charges (note 2) .... -- -- -- --
Adjustments to maintain reserves .............. 1 -- (2) --
----------- ---- ----------- -----------
Net equity transactions ................... 25,974 -- 23,998 53,250
----------- ---- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 24,693 -- 42,103 51,742
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... -- -- 51,742 --
----------- ---- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 24,693 -- 93,845 51,742
=========== ==== =========== ===========
</TABLE>
(Continued)
7
<PAGE> 7
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
MFSTotReSe NSATCapAp
--------------------------- ------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- 118,424 99,606
Mortality, expense and administration
charges (note 2) ............................ (209) -- (145,398) (88,741)
----------- ----------- ----------- -----------
Net investment activity ..................... (209) -- (26,974) 10,865
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 186 -- 1,086,868 652,065
Cost of mutual fund shares sold ............... (163) -- (569,027) (466,547)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... 23 -- 517,841 185,518
Change in unrealized gain (loss) on investments 3,013 -- 2,288,294 1,060,119
----------- ----------- ----------- -----------
Net gain (loss) on investments .............. 3,036 -- 2,806,135 1,245,637
----------- ----------- ----------- -----------
Reinvested capital gains ...................... -- -- 278,879 242,780
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,827 -- 3,058,040 1,499,282
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 21,939 -- 1,215,488 1,085,270
Transfers between funds ....................... -- -- 1,306,249 1,038,034
Redemptions ................................... -- -- (811,974) (592,203)
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- (10,550) (7,882)
Contingent deferred sales charges (note 2) .... -- -- (14,584) (14,984)
Adjustments to maintain reserves .............. (7) -- 248 489
----------- ----------- ----------- -----------
Net equity transactions ................... 21,932 -- 1,684,877 1,508,724
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 24,759 -- 4,742,917 3,008,006
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... -- -- 8,449,667 5,441,661
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 24,759 -- 13,192,584 8,449,667
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NSATGvtBd NSATMyMkt
------------------------------ ------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 2,003,916 2,244,378 188,948 185,600
Mortality, expense and administration
charges (note 2) ............................ (430,628) (481,292) (48,170) (48,987)
----------- ----------- ----------- -----------
Net investment activity ..................... 1,573,288 1,763,086 140,778 136,613
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 6,063,749 6,656,174 6,132,122 3,648,435
Cost of mutual fund shares sold ............... (6,121,368) (6,801,289) (6,132,122) (3,648,435)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... (57,619) (145,115) -- --
Change in unrealized gain (loss) on investments 1,069,495 (958,810) -- --
----------- ----------- ----------- -----------
Net gain (loss) on investments .............. 1,011,876 (1,103,925) -- --
----------- ----------- ----------- -----------
Reinvested capital gains ...................... -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,585,164 659,161 140,778 136,613
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 960,685 1,333,048 521,896 386,140
Transfers between funds ....................... (2,417,365) (3,144,832) 649,313 (186,583)
Redemptions ................................... (3,397,263) (3,186,377) (1,416,420) (693,997)
Annuity benefits .............................. (4,041) (3,949) -- --
Annual contract maintenance charge (note 2) ... (35,429) (44,262) (4,045) (4,784)
Contingent deferred sales charges (note 2) .... (46,119) (65,660) (15,466) (16,702)
Adjustments to maintain reserves .............. 38 586 (242) 20
----------- ----------- ----------- -----------
Net equity transactions ................... (4,939,494) (5,111,446) (264,964) (515,906)
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... (2,354,330) (4,452,285) (124,186) (379,293)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 34,657,222 39,109,507 3,775,214 4,154,507
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 32,302,892 34,657,222 3,651,028 3,775,214
=========== =========== =========== ===========
</TABLE>
8
<PAGE> 8
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
NSATTotRe NBAMTBal
-------------------------------- --------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 1,133,579 1,125,003 458,016 570,955
Mortality, expense and administration
charges (note 2) ............................ (984,801) (755,095) (346,809) (329,164)
------------ ------------ ------------ ------------
Net investment activity ..................... 148,778 369,908 111,207 241,791
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 5,765,462 3,182,148 3,264,610 2,544,123
Cost of mutual fund shares sold ............... (3,486,615) (2,216,863) (2,893,724) (2,378,790)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 2,278,847 965,285 370,886 165,333
Change in unrealized gain (loss) on investments 12,881,367 6,965,148 2,659,574 (2,279,253)
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 15,160,214 7,930,433 3,030,460 (2,113,920)
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 2,634,473 2,428,148 1,175,575 3,175,067
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 17,943,465 10,728,489 4,317,242 1,302,938
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 4,254,140 4,607,271 1,176,023 1,379,575
Transfers between funds ....................... 1,564,750 1,963,546 (301,702) (533,593)
Redemptions ................................... (5,283,668) (3,838,961) (2,507,619) (1,641,062)
Annuity benefits .............................. (1,498) (1,296) -- --
Annual contract maintenance charge (note 2) ... (74,653) (69,013) (30,007) (31,800)
Contingent deferred sales charges (note 2) .... (74,498) (78,628) (43,021) (39,727)
Adjustments to maintain reserves .............. 1,705 1,723 277 376
------------ ------------ ------------ ------------
Net equity transactions ................... 386,278 2,584,642 (1,706,049) (866,231)
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 18,329,743 13,313,131 2,611,193 436,707
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 64,324,254 51,011,123 24,993,855 24,557,148
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD .......... $ 82,653,997 64,324,254 27,605,048 24,993,855
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 9
NATIONWIDE VA SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide VA Separate Account-A (the Account) was established pursuant
to a resolution of the Board of Directors of Nationwide Life and
Annuity 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 American Century VP - American Century VP
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 IS) (available
for VA-II Eagle Choice contracts);
Federated IS - Federated American Leaders Fund II (FedAmLead)
Federated IS - 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) VIT)
(available for VA-II Eagle Choice contracts);
MFS(R) VIT - Emerging Growth Series (MFSEmGrSe)
MFS(R) VIT - 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 AMT) (available for VA contracts);
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
10
<PAGE> 10
At December 31, 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 December 31, 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
period 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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<PAGE> 11
The following table provides mortality, expense and administration charges by
contract type for the period ended December 31, 1997:
<TABLE>
<CAPTION>
TOTAL ACVPAdv FedAmLead FedHilnc FidVIPEI
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
VA.............................. $ 3,151,072 169,983 - - -
VA II Convertible............... 4,435 - 218 1,182 1,542
------------ ------------ ------------ ------------ ------------
Total....................... $ 3,155,507 169,983 218 1,182 1,542
============ ============ ============ ============ ============
FidVIPGr FidVIPOv MFSEmGrSe MFSTotReSe NSATCapAp
------------ ------------ ------------ ------------ ------------
VA.............................. $ 1,025,283 - - - 145,398
VA II Convertible............... - 176 1,108 209 -
------------ ------------ ------------ ------------ ------------
Total....................... $ 1,025,283 176 1,108 209 145,398
============ ============ ============ ============ ============
NSATGvtBd NSATMyMkt NSATTotRe NBAMTBal
------------ ------------ ------------ ------------
VA.............................. $ 430,628 48,170 984,801 346,809
VA II Convertible............... - - - -
------------ ------------ ------------ ------------
Total....................... $ 430,628 48,170 984,801 346,809
============ ============ ============ ============
</TABLE>
(3) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
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Independent Auditors' Report
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide VA Separate Account-A:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VA Separate Account-A as of December 31,
1997, and the related statements of operations and changes in contract owners'
equity for each of the years in the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of securities owned as of December 31, 1997, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide VA Separate
Account-A as of December 31, 1997, and the results of its operations and its
changes in contract owners' equity for each of the years in the two year period
then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1998
13
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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA - 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
