<PAGE> 1
[NATIONWIDE LOGO]
NATIONWIDE(R)
VA SEPARATE ACCOUNT-A
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1998
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO OF JOSEPH J. GASPER]
PRESIDENT'S MESSAGE
We at Nationwide Life and Annuity Insurance Company are pleased to bring you the
1998 annual report of the Nationwide VA Separate Account-A.
Equity markets again defied the odds in 1998 to tally a fourth straight year of
double-digit gains, as measured by the major indices. This surprise came
following the breathtaking correction during the third quarter that gave us a
broad double-digit retreat. Fixed income investments also provided respectable
returns in 1998, supported by the continued low inflationary environment and
favorable Federal Reserve actions.
The performance of the American economy continues strong into 1999. However, we
believe the persisting slump in Asia and recent difficulties in Latin America
will inevitably take their toll and dampen growth in the United States. This
moderation, we think, will be healthy for our economy and get us back to a more
sustainable growth level. We look for interest rates to continue within the
range of the recent past, and we expect inflation to remain subdued. Moreover,
we remain optimistic about long-term prospects for U.S. business activity;
holders of financial assets should continue to profit from the anticipated
favorable investment climate.
We are pleased you have chosen our Company to provide the investment products
and services to help you meet your retirement savings and financial planning
goals.
/s/ JOSEPH J. GASPER
---------------------------
Joseph J. Gasper, President
February 16, 1999
3
<PAGE> 3
================================================================================
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
1,951,829 shares (cost $11,170,293)....................................................... $ 13,545,696
Federated IS - Federated American Leaders Fund II (FedAmLead)
1,446 shares (cost $24,252)............................................................... 31,352
Federated IS - Federated High Income Bond Fund II (FedHiInc)
13,495 shares (cost $139,561)............................................................. 147,361
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
8,563 shares (cost $184,689).............................................................. 217,669
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,377,861 shares (cost $62,054,856)....................................................... 106,694,632
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,369 shares (cost $27,404)............................................................... 27,453
MFS(R) VIT - Emerging Growth Series (MFSEmGrSe)
7,653 shares (cost $112,689).............................................................. 164,318
MFS(R) VIT - Total Return Series (MFSTotReSe)
1,514 shares (cost $22,243)............................................................... 27,431
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
710,119 shares (cost $12,488,770)......................................................... 18,882,054
Nationwide SAT - Government Bond Fund (NSATGvtBd)
2,682,541 shares (cost $30,127,453)....................................................... 31,358,899
Nationwide SAT - Money Market Fund (NSATMyMkt)
4,724,961 shares (cost $4,724,961)........................................................ 4,724,961
Nationwide SAT - Total Return Fund (NSATTotRe)
4,784,022 shares (cost $57,449,682)....................................................... 88,026,006
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
1,710,702 shares (cost $26,303,122)....................................................... 27,952,864
-------------
Total investments.................................................................... 291,800,696
Accounts receivable............................................................................ 22,494
-------------
Total assets......................................................................... 291,823,190
Accounts payable.................................................................................... 82,678
-------------
Contract owners' equity............................................................................. $ 291,740,512
=============
</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 .............................. 422,481 $18.120337 $ 7,655,498 16%
Non-tax qualified .......................... 292,874 18.120337 5,306,976 16%
Initial Funding by Depositor (Note 1a) 25,000 19.938436 498,461 17%
Fidelity VIP - Growth Portfolio:
Tax qualified .............................. 1,927,875 32.787648 63,210,487 38%
Non-tax qualified .......................... 1,322,563 32.787648 43,363,730 38%
Nationwide SAT - Capital Appreciation Fund:
Tax qualified .............................. 341,118 30.616503 10,443,840 28%
Non-tax qualified .......................... 275,617 30.616503 8,438,429 28%
Nationwide SAT - Government Bond Fund:
Tax qualified .............................. 765,133 21.148524 16,181,434 7%
Non-tax qualified .......................... 717,431 21.148524 15,172,607 7%
Nationwide SAT - Money Market Fund:
Tax qualified .............................. 158,971 14.772116 2,348,338 4%
Non-tax qualified .......................... 155,307 14.772116 2,294,213 4%
Nationwide SAT - Total Return Fund:
Tax qualified .............................. 1,467,465 34.097665 50,037,130 17%
Non-tax qualified .......................... 1,111,401 34.097665 37,896,179 17%
Neuberger & Berman AMT - Balanced Portfolio:
Tax qualified .............................. 804,995 19.595500 15,774,280 11%
Non-tax qualified .......................... 618,690 19.595500 12,123,540 11%
VA-II Eagle Choice contracts:
Federated IS - Federated American Leaders Fund II:
Non-tax qualified .......................... 1,743 17.987623 31,352 16%
Federated IS- Federated High Income Bond Fund II:
Non-tax qualified .......................... 11,514 12.798283 147,359 1%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified .............................. 870 21.089978 18,348 10%
Non-tax qualified .......................... 9,450 21.089978 199,300 10%
Fidelity VIP - Overseas Portfolio:
Non-tax qualified .......................... 2,025 13.556393 27,452 11%
MFS(R) VIT - Emerging Growth Series:
Non-tax qualified .......................... 8,948 18.364204 164,323 32%
MFS(R) VIT - Total Return Series:
Non-tax qualified .......................... 1,840 14.903861 27,423 11%
========= =========
Reserves for annuity contracts in payout phase:
Tax qualified .............................. 287,218
Non-tax qualified .......................... 92,595
------------
$291,740,512
============
</TABLE>
* The annual return does not include contract charges satisfied by surrendering
units.
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, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL ACVPADV
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 4,323,281 4,588,429 292,829 205,268
Mortality, expense and administration
charges (note 2):
VA ...................................... (3,566,159) (3,151,072) (169,541) (169,983)
VA II Convertible ....................... (7,761) (4,435) -- --
------------- ------------- ------------- -------------
Net investment activity ..................... 749,361 1,432,922 123,288 35,285
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 47,150,221 30,083,967 2,219,938 1,849,764
Cost of mutual fund shares sold ............... (34,852,430) (24,191,559) (1,802,163) (1,535,624)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 12,297,791 5,892,408 417,775 314,140
Change in unrealized gain (loss) on investments 20,267,908 30,561,366 311,134 381,839
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 32,565,699 36,453,774 728,909 695,979
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 20,912,139 6,932,717 1,101,845 712,416
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 54,227,199 44,819,413 1,954,042 1,443,680
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 10,088,676 12,333,986 354,994 441,982
Transfers between funds ....................... -- -- (481,562) (573,695)
Redemptions ................................... (28,935,591) (19,747,846) (1,643,694) (1,138,381)
Annuity benefits .............................. (16,464) (9,441) (1,666) --
Annual contract maintenance charge (note 2) ... (257,516) (264,125) (15,108) (16,785)
Contingent deferred sales charges (note 2) .... (291,222) (306,609) (13,666) (18,458)
Adjustments to maintain reserves .............. 22,883 5,099 2,936 197
------------- ------------- ------------- -------------
Net equity transactions ................... (19,389,234) (7,988,936) (1,797,766) (1,305,140)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 34,837,965 36,830,477 156,276 138,540
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 256,902,547 220,072,070 13,392,281 13,253,741
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 291,740,512 256,902,547 13,548,557 13,392,281
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FEDAMLEAD FEDHIINC
------------------------------ -------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 134 39 2,448 4,248
Mortality, expense and administration
charges (note 2):
VA ...................................... -- -- -- --
VA II Convertible ....................... (412) (218) (1,945) (1,182)
------------- ------------- ------------- -------------
Net investment activity ..................... (278) (179) 503 3,066
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 418 187 1,948 1,144
Cost of mutual fund shares sold ............... (311) (156) (1,782) (1,086)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 107 31 166 58
Change in unrealized gain (loss) on investments 2,772 4,328 (737) 7,211
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 2,879 4,359 (571) 7,269
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 1,720 -- 664 215
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 4,321 4,180 596 10,550
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 22,852 42,431 39,000
Transfers between funds ....................... -- -- -- --
Redemptions ................................... -- -- -- --
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- -- --
Contingent deferred sales charges (note 2) .... -- -- -- --
Adjustments to maintain reserves .............. (3) 2 (2) --
------------- ------------- ------------- -------------
Net equity transactions ................... (3) 22,854 42,429 39,000
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 4,318 27,034 43,025 49,550
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 27,034 -- 104,334 54,784
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 31,352 27,034 147,359 104,334
============= ============= ============= =============
</TABLE>
6
<PAGE> 6
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<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):
VA ...................................... -- -- (1,214,243) (1,025,283)
VA II Convertible ....................... (2,798) (1,542) -- --
------------ ------------ ------------ ------------
Net investment activity ..................... (563) (583) (788,005) (550,251)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 2,806 11,629 10,807,056 5,907,035
Cost of mutual fund shares sold ............... (2,271) (11,126) (6,175,412) (3,439,457)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 535 503 4,631,644 2,467,578
Change in unrealized gain (loss) on investments 7,490 21,674 15,101,345 11,226,583
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 8,025 22,177 19,732,989 13,694,161
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 7,955 4,824 11,149,500 2,126,335
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 15,417 26,418 30,094,484 15,270,245
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 42,431 77,284 2,737,406 3,552,724
Transfers between funds ....................... -- -- (1,599,924) (227,550)
Redemptions ................................... -- -- (8,019,362) (5,192,521)
Annuity benefits .............................. -- -- (6,308) (3,902)
Annual contract maintenance charge (note 2) ... -- -- (92,392) (92,656)
Contingent deferred sales charges (note 2) .... -- -- (89,886) (94,463)
Adjustments to maintain reserves .............. (6) (23) 11,502 2,905
------------ ------------ ------------ ------------
Net equity transactions ................... 42,425 77,261 (7,058,964) (2,055,463)
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 57,842 103,679 23,035,520 13,214,782
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 159,806 56,127 83,670,246 70,455,464
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 217,648 159,806 106,705,766 83,670,246
============ ============ ============ ============
</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):
VA ...................................... -- -- -- --
VA II Convertible ....................... (376) (176) (1,863) (1,108)
------------ ------------ ------------ ------------
Net investment activity ..................... 112 (176) (1,863) (1,108)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 383 153 1,882 1,058
Cost of mutual fund shares sold ............... (342) (136) (1,411) (955)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 41 17 471 103
Change in unrealized gain (loss) on investments 1,171 (1,122) 34,283 19,110
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 1,212 (1,105) 34,754 19,213
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 1,439 -- 1,215 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,763 (1,281) 34,106 18,105
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 25,973 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) 1 3 (2)
------------ ------------ ------------ ------------
Net equity transactions ................... (4) 25,974 36,372 23,998
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 2,759 24,693 70,478 42,103
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 24,693 -- 93,845 51,742
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 27,452 24,693 164,323 93,845
============ ============ ============ ============
</TABLE>
(Continued)
================================================================================
7
<PAGE> 7
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
MFSTOTRESE NSATCAPAP
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 360 -- 132,292 118,424
Mortality, expense and administration
charges (note 2):
VA ...................................... -- -- (214,106) (145,398)
VA II Convertible ....................... (367) (209) -- --
----------- ----------- ----------- -----------
Net investment activity ..................... (7) (209) (81,814) (26,974)
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 374 186 2,729,182 1,086,868
Cost of mutual fund shares sold ............... (299) (163) (1,227,260) (569,027)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... 75 23 1,501,922 517,841
Change in unrealized gain (loss) on investments 2,175 3,013 2,064,271 2,288,294
----------- ----------- ----------- -----------
Net gain (loss) on investments .............. 2,250 3,036 3,566,193 2,806,135
----------- ----------- ----------- -----------
Reinvested capital gains ...................... 423 -- 523,967 278,879
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,666 2,827 4,008,346 3,058,040
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. -- 21,939 1,199,816 1,215,488
Transfers between funds ....................... -- -- 2,037,217 1,306,249
Redemptions ................................... -- -- (1,527,306) (811,974)
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... -- -- (13,152) (10,550)
Contingent deferred sales charges (note 2) .... -- -- (15,416) (14,584)
Adjustments to maintain reserves .............. (2) (7) 180 248
----------- ----------- ----------- -----------
Net equity transactions ................... (2) 21,932 1,681,339 1,684,877
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 2,664 24,759 5,689,685 4,742,917
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 24,759 -- 13,192,584 8,449,667
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 27,423 24,759 18,882,269 13,192,584
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NSATGVTBD NSATMYMKT
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 1,706,933 2,003,916 221,645 188,948
Mortality, expense and administration
charges (note 2):
VA ...................................... (422,247) (430,628) (56,566) (48,170)
VA II Convertible ....................... -- -- -- --
----------- ----------- ----------- -----------
Net investment activity ..................... 1,284,686 1,573,288 165,079 140,778
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 7,141,556 6,063,749 8,576,339 6,132,122
Cost of mutual fund shares sold ............... (6,953,482) (6,121,368) (8,576,339) (6,132,122)
----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... 188,074 (57,619) -- --
Change in unrealized gain (loss) on investments 708,425 1,069,495 -- --
----------- ----------- ----------- -----------
Net gain (loss) on investments .............. 896,499 1,011,876 -- --
----------- ----------- ----------- -----------
Reinvested capital gains ...................... 151,117 -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,332,302 2,585,164 165,079 140,778
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 1,335,263 960,685 314,840 521,896
Transfers between funds ....................... 412,520 (2,417,365) 2,154,594 649,313
Redemptions ................................... (4,948,454) (3,397,263) (1,620,690) (1,416,420)
Annuity benefits .............................. (4,265) (4,041) -- --
Annual contract maintenance charge (note 2) ... (29,309) (35,429) (3,873) (4,045)
Contingent deferred sales charges (note 2) .... (42,231) (46,119) (18,281) (15,466)
Adjustments to maintain reserves .............. 296 38 (146) (242)
----------- ----------- ----------- -----------
Net equity transactions ................... (3,276,180) (4,939,494) 826,444 (264,964)
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... (943,878) (2,354,330) 991,523 (124,186)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 32,302,892 34,657,222 3,651,028 3,775,214
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 31,359,014 32,302,892 4,642,551 3,651,028
=========== =========== =========== ===========
</TABLE>
8
<PAGE> 8
NATIONWIDE VA SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NSATTOTRE NBAMTBAL
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 891,027 1,133,579 646,652 458,016
Mortality, expense and administration
charges (note 2):
VA ...................................... (1,131,746) (984,801) (357,710) (346,809)
VA II Convertible ....................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ..................... (240,719) 148,778 288,942 111,207
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 12,121,959 5,765,462 3,546,380 3,264,610
Cost of mutual fund shares sold ............... (6,698,872) (3,486,615) (3,412,486) (2,893,724)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 5,423,087 2,278,847 133,894 370,886
Change in unrealized gain (loss) on investments 4,268,306 12,881,367 (2,232,727) 2,659,574
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 9,691,393 15,160,214 (2,098,833) 3,030,460
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 3,430,335 2,634,473 4,541,959 1,175,575
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 12,881,009 17,943,465 2,732,068 4,317,242
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 3,144,831 4,254,140 880,295 1,176,023
Transfers between funds ....................... (1,943,493) 1,564,750 (579,352) (301,702)
Redemptions ................................... (8,549,939) (5,283,668) (2,626,146) (2,507,619)
Annuity benefits .............................. (3,182) (1,498) (1,043) --
Annual contract maintenance charge (note 2) ... (76,335) (74,653) (27,347) (30,007)
Contingent deferred sales charges (note 2) .... (80,993) (74,498) (30,749) (43,021)
Adjustments to maintain reserves .............. 5,185 1,705 2,944 277
------------ ------------ ------------ ------------
Net equity transactions ................... (7,503,926) 386,278 (2,381,398) (1,706,049)
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 5,377,083 18,329,743 350,670 2,611,193
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 82,653,997 64,324,254 27,605,048 24,993,855
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 88,031,080 82,653,997 27,955,718 27,605,048
============ ============ ============ ============
</TABLE>
================================================================================
See accompanying notes to financial statements.
9
<PAGE> 9
================================================================================
NATIONWIDE VA SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(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);
American Century VP - American Century VP Advantage
(ACVPAdv)
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 December 31, 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.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(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, 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 up to $30, dependent
upon contract type and issue date, 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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(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,
1998, 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, 1998, 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, 1998, 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 LLP
Columbus, Ohio
February 5, 1999
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<S> <C>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY ----------------
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220 | Bulk Rate |
| U.S. Postage |
| PAID |
|Columbus, Ohio|
|Permit No. 521|
----------------
Nationwide(R) is a registered federal service mark of Nationwide Mutual Insurance Company
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