<PAGE> 1
[LOGO]
Nationwide(R)
VA Separate Account-A
SEMI-ANNUAL REPORT
TO
CONTRACT OWNERS
JUNE 30, 1998
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
<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 present the
1998 semi-annual report of the Nationwide VA Separate Account-A.
The bull market continued its run in the first half of 1998. Most of the gains
came in the first quarter with more modest returns or small losses for the
second half of the period. At this writing, a market correction that began in
the second quarter continues to provide a good deal of day-to-day volatility.
Much of the capriciousness of the market is due to uncertainty about the
economic outcome in Asia. However, we think the correction will be of limited
magnitude and duration and will provide a healthy respite before further market
advances.
We believe that existing economic and market fundamentals provide an ongoing
favorable environment for financial assets. Interest rates remain low; inflation
is nearly nonexistent; corporate earnings, albeit slowing, remain positive, and
U.S. economic growth appears to be on a modest but sustainable track.
Against this backdrop, we believe our variable insurance products continue to
provide the versatile investment vehicle you need to respond to changing market
conditions. We are committed to the continual evaluation of our products and
services to ensure that we remain responsive to your long-term financial
planning and retirement-savings needs.
/s/ JOSEPH J. GASPER
---------------------------
Joseph J. Gasper, President
August 17, 1998
2
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NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1998
(UNAUDITED)
ASSETS:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
2,120,609 shares (cost $12,038,036)........................ $ 13,868,784
Federated IS - Federated American Leaders Fund II (FedAmLead)
1,456 shares (cost $24,409) ............................... 30,862
Federated IS - Federated High Income Bond Fund II (FedHiInc)
13,590 shares (cost $140,521) ............................. 150,309
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
8,624 shares (cost $185,885) .............................. 217,064
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,515,763 shares (cost $64,488,723) ....................... 96,404,049
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,379 shares (cost $27,574) ............................... 28,434
MFS(R)VIT - Emerging Growth Series (MFSEmGrSe)
7,708 shares (cost $113,434) .............................. 149,919
MFS(R)VIT - Total Return Series (MFSTotReSe)
1,525 shares (cost $22,392) ............................... 26,727
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
707,428 shares (cost $11,175,309) ......................... 17,820,114
Nationwide SAT - Government Bond Fund (NSATGvtBd)
2,792,592 shares (cost $31,270,938) ....................... 32,114,803
Nationwide SAT - Money Market Fund (NSATMyMkt)
3,697,708 shares (cost $3,697,708) ........................ 3,697,708
Nationwide SAT - Total Return Fund (NSATTotRe)
4,928,966 shares (cost $56,418,037) ....................... 92,171,660
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
1,822,030 shares (cost $27,932,131) ....................... 29,352,911
------------
Total investments ...................................... 286,033,344
Accounts receivable ............................................... --
------------
Total assets ........................................... 286,033,344
ACCOUNTS PAYABLE .................................................. 25,441
------------
CONTRACT OWNERS' EQUITY ........................................... $286,007,903
============
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<TABLE>
<CAPTION>
PERIOD
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 ................................ 452,138 $17.188858 $ 7,771,736 10%
Non-tax qualified............................. 327,385 17,188858 5,627,374 10%
Initial Funding by Depositor (note 1a)........ 25,000 18.789246 469,731 10%
Fidelity VIP - Growth Portfolio:
Tax qualified ................................ 2,052,823 28.186380 57,861,649 18%
Non-tax qualified ............................ 1,366,349 28.186380 38,512,432 18%
Nationwide SAT - Capital Appreciation Fund:
Tax qualified ................................ 343,614 28.283511 9,718,610 19%
Non-tax qualified ............................ 286,443 28.283511 8,101,614 19%
Nationwide SAT - Government Bond Fund:
Tax qualified ................................ 794,154 20.328057 16,143,608 3%
Non-tax qualified ............................ 785,336 20.328057 15,964,355 3%
Nationwide SAT - Money Market Fund:
Tax qualified ................................ 110,173 14.495745 1,597,040 2%
Non-tax qualified ............................ 143,045 14.495745 2,073,544 2%
Nationwide SAT - Total Return Fund:
Tax qualified ................................ 1,561,860 33.361895 52,106,609 14%
Non-tax qualified ............................ 1,200,355 33.361895 40,046,117 14%
Neuberger & Berman AMT - Balanced Portfolio:
Tax qualified ................................ 845,536 19.447454 16,443,522 10%
Non-tax qualified ............................ 663,812 19.447454 12,909,453 10%
VA-II Eagle Choice contracts:
Federated IS - Federated American
Leaders Fund II:
Non-tax qualified ............................ 1,743 17.706395 30,862 14%
Federated IS - Federated High Income
Bond Fund II:
Non-tax qualified ............................ 11,514 13.054810 150,313 3%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ................................ 870 21.031467 18,297 10%
Non-tax qualified ............................ 9,450 21.031467 198,747 10%
Fidelity VIP - Overseas Portfolio:
Non-tax qualified ............................ 2,025 14.041221 28,433 15%
MFS(R)VIT - Emerging Growth Series:
Non-tax qualified ............................ 8,948 16.754957 149,923 21%
MFS(R)VIT - Total Return Series:
Non-tax qualified ............................ 1,840 14.521373 26,719 8%
======== =========
Reserves for annuity contracts in payout phase:
Tax qualified ................................ 50,326
Non-tax qualified ............................ 6,889
------------
$286,007,903
============
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL ACVPADV
---------------------------- -------------------------
1998 1997 1998 1997
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 2,928,751 2,923,248 292,829 205,268
Mortality, expense and administration
charges (note 2) ............................ (1,769,707) (1,479,318) (84,764) (83,280)
------------ ----------- ---------- ----------
Net investment activity ..................... 1,159,044 1,443,930 208,065 121,988
------------ ----------- ---------- ----------
Proceeds from mutual fund shares sold ........... 18,001,906 14,003,335 968,980 838,290
Cost of mutual fund shares sold ................. (13,450,703) (11,802,944) (785,956) (714,980)
------------ ----------- ---------- ----------
Realized gain (loss) on investments ........... 4,551,203 2,200,391 183,024 123,310
Change in unrealized gain (loss) on investments.. 11,795,435 19,541,185 (233,519) (190,075)
------------ ----------- ---------- ----------
Net gain (loss) on investments ................ 16,346,638 21,741,576 (50,495) (66,765)
------------ ----------- ---------- ----------
Reinvested capital gains ........................ 16,806,720 4,019,365 1,101,845 712,416
------------ ----------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 34,312,402 27,204,871 1,259,415 767,639
------------ ----------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 6,428,181 6,515,888 158,043 210,616
Transfers between funds ....................... -- -- (203,875) (174,340)
Redemptions ................................... (11,336,813) (9,922,750) (719,149) (579,504)
Annuity benefits .............................. (5,234) (4,491) -- --
Annual contract maintenance charge (note 2) ... (149,969) (154,616) (9,653) (11,099)
Contingent deferred sales charges (note 2) .... (145,162) (176,829) (8,255) (10,860)
Adjustments to maintain reserves .............. 1,951 1,396 34 21
------------ ----------- ---------- ----------
Net equity transactions ..................... (5,207,046) (3,741,402) (782,855) (565,166)
------------ ----------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 29,105,356 23,463,469 476,560 202,473
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 256,902,547 220,072,070 13,392,281 13,253,741
------------ ----------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $286,007,903 243,535,539 13,868,841 13,456,214
============ =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FEDAMLEAD FEDHILNC
----------------- ------------------
1998 1997 1998 1997
------ ------ ------- ------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 134 39 2,448 2,904
Mortality, expense and administration
charges (note 2) ............................ (205) (44) (909) (468)
------ ------ ------- ------
Net investment activity ..................... (71) (5) 1,539 2,436
------ ------ ------- ------
Proceeds from mutual fund shares sold ........... 211 30 912 452
Cost of mutual fund shares sold ................. (155) (27) (821) (440)
------ ------ ------- ------
Realized gain (loss) on investments ........... 56 3 91 12
Change in unrealized gain (loss) on investments.. 2,125 1,736 1,250 1,650
------ ------ ------- ------
Net gain (loss) on investments ................ 2,181 1,739 1,341 1,662
------ ------ ------- ------
Reinvested capital gains ........................ 1,720 -- 664 215
------ ------ ------- ------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 3,830 1,734 3,544 4,313
------ ------ ------- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 11,852 42,431 28,000
Transfers between funds ....................... -- -- -- --
Redemptions ................................... -- -- -- --
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- -- --
Contingent deferred sales charges (note 2) .... -- -- -- --
Adjustments to maintain reserves .............. (2) (9) 4 (4)
------ ------ ------- ------
Net equity transactions ..................... (2) 11,843 42,435 27,996
------ ------ ------- ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 3,828 13,577 45,979 32,309
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 27,034 -- 104,334 54,784
------ ------ ------- ------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 30,862 13,577 150,313 87,093
====== ====== ======= ======
</TABLE>
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NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
FIDVIPEI FIDVIPGR
-------------------- -------------------------
1998 1997 1998 1997
-------- ------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 2,235 959 426,238 475,032
Mortality, expense and administration
charges (note 2) ............................ (1,351) (561) (586,553) (475,917)
-------- ------- ---------- ----------
Net investment activity ..................... 884 398 (160,315) (885)
-------- ------- ---------- ----------
Proceeds from mutual fund shares sold ......... 1,359 10,677 4,249,921 2,603,803
Cost of mutual fund shares sold ............... (1,075) (10,331) (2,472,621) (1,640,617)
-------- ------- ---------- ----------
Realized gain (loss) on investments ........... 284 346 1,777,300 963,186
Change in unrealized gain (loss) on investments 5,689 9,397 2,376,895 6,086,143
-------- ------- ---------- ----------
Net gain (loss) on investments ................ 5,973 9,743 4,154,195 7,049,329
-------- ------- ---------- ----------
Reinvested capital gains ...................... 7,955 4,824 11,149,500 2,126,335
-------- ------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 14,812 14,965 15,143,380 9,174,779
-------- ------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 42,431 39,685 1,800,857 2,037,834
Transfers between funds ....................... -- -- (921,896) 59,956
Redemptions ................................... -- -- (3,191,767) (2,708,278)
Annuity benefits .............................. -- -- (2,255) (1,811)
Annual contract maintenance charge (note 2) ... -- -- (53,487) (54,028)
Contingent deferred sales charges (note 2) .... -- -- (41,284) (58,874)
Adjustments to maintain reserves .............. (5) (1) 1,410 840
-------- ------- ---------- ----------
Net equity transactions ..................... 42,426 39,684 (2,408,422) (724,361)
-------- ------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 57,238 54,649 12,734,958 8,450,418
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 159,806 56,127 83,670,246 70,455,464
-------- ------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $217,044 110,776 96,405,204 78,905,882
======== ======= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FIDVIPOV MFSEMGRSE
---------------- ------------------
1998 1997 1998 1997
------ ----- ------- ------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 488 -- -- --
Mortality, expense and administration
charges (note 2) ............................ (191) (14) (872) (442)
------ ----- ------- ------
Net investment activity ..................... 297 (14) (872) (442)
------ ----- ------- ------
Proceeds from mutual fund shares sold ......... 198 -- 890 386
Cost of mutual fund shares sold ............... (171) -- (666) (386)
------ ----- ------- ------
Realized gain (loss) on investments ........... 27 -- 224 --
Change in unrealized gain (loss) on investments 1,981 587 19,139 10,603
------ ----- ------- ------
Net gain (loss) on investments ................ 2,008 587 19,363 10,603
------ ----- ------- ------
Reinvested capital gains ...................... 1,439 -- 1,215 --
------ ----- ------- ------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 3,744 573 19,706 10,161
------ ----- ------- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 3,973 36,369 24,000
Transfers between funds ....................... -- -- -- --
Redemptions ................................... -- -- -- --
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- -- --
Contingent deferred sales charges (note 2) .... -- -- -- --
Adjustments to maintain reserves .............. (4) (8) 3 3
------ ----- ------- ------
Net equity transactions ..................... (4) 3,965 36,372 24,003
------ ----- ------- ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 3,740 4,538 56,078 34,164
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 24,693 -- 93,845 51,742
------ ----- ------- ------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 28,433 4,538 149,923 85,906
====== ===== ======= ======
</TABLE>
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NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MFSTOTRESE NSATCAPAP
----------------- ------------------------
1998 1997 1998 1997
------- ------ ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 360 -- 72,116 55,443
Mortality, expense and administration
charges (note 2) ............................ (181) (43) (101,768) (63,604)
------- ------ ---------- ----------
Net investment activity ..................... 179 (43) (29,652) (8,161)
------- ------ ---------- ----------
Proceeds from mutual fund shares sold ......... 188 30 534,054 294,485
Cost of mutual fund shares sold ............... (150) (28) (239,801) (171,704
------- ------ ---------- ----------
Realized gain (loss) on investments ........... 38 2 294,253 122,781
Change in unrealized gain (loss) on investments 1,322 1,231 2,315,792 1,719,818
------- ------ ---------- ----------
Net gain (loss) on investments ................ 1,360 1,233 2,610,045 1,842,599
------- ------ ---------- ----------
Reinvested capital gains ...................... 423 -- -- --
------- ------ ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations .......... 1,962 1,190 2,580,393 1,834,438
------- ------ ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 11,939 828,344 533,975
Transfers between funds ....................... -- -- 1,866,644 787,192
Redemptions ................................... -- -- (634,992) (245,988)
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- (7,102) (5,609)
Contingent deferred sales charges (note 2) .... -- -- (5,722) (5,251)
Adjustments to maintain reserves .............. (2) (1) 75 101
------- ------ ---------- ----------
Net equity transactions ..................... (2) 11,938 2,047,247 1,064,420
------- ------ ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 1,960 13,128 4,627,640 2,898,858
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 24,759 -- 13,192,584 8,449,667
------- ------ ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $26,719 13,128 17,820,224 11,348,525
======= ====== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
NSATGVTBD NSATMYMKT
------------------------ ----------------------
1998 1997 1998 1997
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 906,817 1,028,900 97,654 88,286
Mortality, expense and administration
charges (note 2) ............................ (208,329) (216,096) (24,427) (22,796)
---------- ---------- --------- ---------
Net investment activity ..................... 698,488 812,804 73,227 65,490
---------- ---------- --------- ---------
Proceeds from mutual fund shares sold ......... 2,814,657 3,005,536 3,302,676 2,870,281
---------- ---------- --------- ---------
Cost of mutual fund shares sold ............... (2,778,037) (3,057,762) (3,302,676) (2,870,281)
---------- ---------- --------- ---------
Realized gain (loss) on investments ........... 36,620 (52,226) -- --
Change in unrealized gain (loss) on investments 320,845 (55,306) -- --
---------- ---------- --------- ---------
Net gain (loss) on investments ................ 357,465 (107,532) -- --
---------- ---------- --------- ---------
Reinvested capital gains ...................... -- -- -- --
---------- ---------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations .......... 1,055,953 705,272 73,227 65,490
---------- ---------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 953,007 455,913 171,230 233,014
Transfers between funds ....................... (298,312) (1,552,411) 159,419 298,663
Redemptions ................................... (1,857,894) (1,421,486) (376,663) (976,752)
Annuity benefits .............................. (2,101) (1,989) -- --
Annual contract maintenance charge (note 2) ... (15,367) (19,640) (1,809) (2,320)
Contingent deferred sales charges (note 2) .... (23,555) (22,695) (5,677) (9,312)
Adjustments to maintain reserves .............. 229 (15) (171) (123)
---------- ---------- --------- ---------
Net equity transactions ..................... (1,243,993) (2,562,323) (53,671) (456,830)
---------- ---------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... (188,040) (1,857,051) 19,556 (391,340)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 32,302,892 34,657,222 3,651,028 3,775,214
---------- ---------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 32,114,852 32,800,171 3,670,584 3,383,874
========== ========== ========= =========
</TABLE>
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NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
NSATTOTRE NBAMTBAL
-------------------------- -------------------------
1998 1997 1998 1997
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 480,780 608,401 646,652 458,016
Mortality, expense and administration
charges (note 2) .............................. (575,782) (450,288) (184,375) (165,765)
----------- ---------- ---------- ----------
Net investment activity ....................... (95,002) 158,113 462,277 292,251
----------- ---------- ---------- ----------
Proceeds from mutual fund shares sold ........... 4,556,151 2,748,037 1,571,709 1,631,328
Cost of mutual fund shares sold ................. (2,441,074) (1,807,628) (1,427,500) (1,528,760)
----------- ---------- ---------- ----------
Realized gain (loss) on investments ........... 2,115,077 940,409 144,209 102,568
Change in unrealized gain (loss) on investments.. 9,445,604 10,953,712 (2,461,688) 1,001,689
----------- ---------- ---------- ----------
Net gain (loss) on investments ................ 11,560,681 11,894,121 (2,317,479) 1,104,257
----------- ---------- ---------- ----------
Reinvested capital gains ........................ -- -- 4,541,959 1,175,575
----------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 11,465,679 12,052,234 2,686,757 2,572,083
----------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................... 1,860,828 2,408,245 534,641 516,842
Transfers between funds ......................... (304,782) 956,672 (297,198) (375,732)
Redemptions ..................................... (3,413,760) (2,882,335) (1,142,588) (1,108,407)
Annuity benefits ................................ (878) (691) -- --
Annual contract maintenance charge (note 2) ..... (45,663) (43,516) (16,888) (18,404)
Contingent deferred sales charges (note 2) ...... (43,784) (45,964) (16,885) (23,873)
Adjustments to maintain reserves ................ 292 472 88 120
----------- ---------- ---------- ----------
Net equity transactions ....................... (1,947,747) 392,883 (938,830) (1,009,454)
----------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 9,517,932 12,445,117 1,747,927 1,562,629
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 82,653,997 64,324,254 27,605,048 24,993,855
----------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $92,171,929 76,769,371 29,352,975 26,556,484
=========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE> 9
- --------------------------------------------------------------------------------
NATIONWIDE VA SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(UNAUDITED)
(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)
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At June 30, 1998, 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, 1998. 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.
(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.
(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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NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY --------------
HOME OFFICE: ONE NATIONWIDE PLAZA * COLUMBUS, OHIO 43215-2220 Bulk Rate
U.S. Postage
P A I D
Columbus, Ohio
Permit No. 521
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Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
