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[NATIONWIDE LOGO]
NATIONWIDE(R)
VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VLSEPARATE ACCOUNT-1)
SEMI-ANNUAL REPORT
TO
CONTRACT OWNERS
JUNE 30, 1996
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
FHL-150-J (6/96)
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
[PHOTO]
PRESIDENT'S MESSAGE
We are pleased to present the 1996 semi-annual report of the Nationwide VL
Separate Account-A.
Equity investments provided a respectable return for the first half of 1996 with
the major market indices holding comfortably in double digits. Fixed-income
investments, however, did not perform as well with the average bond fund showing
slightly negative performance for the period. This was due to rising interest
rates and lingering inflation fears.
The U.S. economy showed signs of increasing strength during the first half of
the year. The question remains: will growth fall back to the perceived
inflation-free path by itself or will the Federal Reserve have to step in and
enforce moderation? Recent economic statistics, such as the July unemployment
report, point in the direction of some moderation. Also, fierce competition in
all consumer-goods markets make inflationary price increases very difficult. One
way or the other, we expect slower economic growth in the near future.
Financial assets will remain the preferred individual investment option because
they will continue providing security, liquidity, and income and growth.
We appreciate your confidence in the Nationwide Insurance Enterprise and in our
life and annuity products. You have our assurance that your personal
satisfaction with our products and service is our highest priority.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
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NATIONWIDE VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VL SEPARATE ACCOUNT-1)
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
Fidelity VIP - Growth Portfolio (FidVIPGr)
1,238 shares (cost $28,845) ............................. $ 37,200
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
95 shares (cost $1,108) ................................. 1,394
Nationwide SAT - Government Bond Fund (NSATGvtBd)
1,414 shares (cost $15,044) ............................. 15,314
Nationwide SAT - Money Market Fund (NSATMyMkt)
7,817 shares (cost $7,817) .............................. 7,817
Nationwide SAT - Total Return Fund (NSATTotRe)
828 shares (cost $8,654) ................................ 10,273
Neuberger & Berman - Balanced Portfolio (NBAMTBal)
707 shares (cost $10,742) ............................... 10,848
TCI Portfolios - TCI Advantage (TCIAdv)
60,254 shares (cost $308,783) ........................... 362,728
-------
Total investments ..................................... 445,574
Accounts receivable ........................................... 8
-------
Total assets .......................................... 445,582
=======
Contract owners' equity .......................................... $445,582
=======
</TABLE>
<TABLE>
<CAPTION>
Contract owners' equity represented by: Units Unit Value
--------- --------------
<S> <C> <C> <C>
Multiple Payment Contracts and Flexible Premium
Contracts:
Fidelity VIP - Growth Portfolio 1,920 $19.393000 $ 37,235
Nationwide SAT - Capital Appreciation Fund 85 16.156308 1,373
Nationwide SAT - Government Bond Fund 1,042 14.683688 15,300
Nationwide SAT - Money Market Fund 653 11.960484 7,810
Nationwide SAT - Total Return Fund 522 19.669875 10,268
Neuberger & Berman - Balanced Portfolio 710 15.272684 10,844
TCI Portfolios - TCI Advantage 346 13.552588 4,689
TCI Portfolios - TCI Advantage
Initial Funding by Depositor (note 1a) 25,000 14.322518 358,063
====== ========= -------
$ 445,582
=======
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VL SEPARATE ACCOUNT-1)
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1996, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends ........... $ 27,629 5,936 6,573
-------- -------- --------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares 13,149 20,376 60,271
Cost of mutual fund shares sold ............... (11,754) (21,090) (61,400)
-------- -------- --------
Realized gain (loss) on investments ........... 1,395 (714) (1,129)
Change in unrealized gain (loss) on investments (10,664) 35,694 (15,488)
-------- -------- --------
Net gain (loss) on investments ............. (9,269) 34,980 (16,617)
-------- -------- --------
Net investment activity ................. 18,360 40,916 (10,044)
-------- -------- --------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners .. 13,570 24,391 25,512
Surrenders (note 2d) ............................. (4,211) (164) --
Policy loans (net of repayments) ................. 1,338 (10,000) --
-------- -------- --------
Net equity transactions ................. 10,697 14,227 25,512
-------- -------- --------
EXPENSES:
Deductions for surrender charges (note 2d) ....... (1,831) -- --
Redemptions to pay cost of insurance charges and
administrative charges (notes 2b and 2c) ...... (6,067) (6,595) (10,199)
Deductions for asset charges (note 3) ............ (350) (294) (534)
-------- -------- --------
Total expenses .......................... (8,248) (6,889) (10,733)
-------- -------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 20,809 48,254 4,735
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 424,773 357,135 387,667
-------- -------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $ 445,582 405,389 392,402
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VL SEPARATE ACCOUNT-1)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996, 1995 AND 1994
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide VL Separate Account-A (formerly Financial Horizons VL Separate
Account-1) (the Account) was established pursuant to a resolution of the Board
of Directors of Nationwide Life and Annuity Insurance Company (formerly
Financial Horizons Life Insurance Company) (the Company) on August 8, 1984. The
Account has been registered as a unit investment trust under the Investment
Company Act of 1940. On August 21, 1991, the Company (Depositor) transferred to
the Account, 50,000 shares of the TCI Portfolios, Inc. - TCI Advantage fund for
which the Account was credited with 25,000 accumulation units. The value of the
accumulation units purchased by the Company on August 21, 1991 was $250,000.
The Company offers Modified Single Premium, Multiple Payment and Flexible
Premium Variable Life Insurance Policies 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 with a front-end sales charge, a contingent deferred sales
charge and certain other fees, have been purchased. Additionally, contracts
without a front-end sales charge, but with a contingent deferred sales charge
and certain other fees, have been purchased. See note 2 for a discussion of
policy charges and note 3 for asset charges.
Contract owners may invest in the following:
Portfolio of the Fidelity Variable Insurance Products Fund (Fidelity
VIP);
Fidelity VIP - Growth Portfolio (FidVIPGr)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolio of the Neuberger & Berman Advisers Management Trust
(Neuberger & Berman);
Neuberger & Berman - Balanced Portfolio (NBAMTBal)
Portfolio of the TCI Portfolios, Inc. (TCIPortfolios);
TCI Portfolios - TCI Advantage (TCIAdv)
At June 30, 1996, contract owners have invested in all of the above funds.
The contract owners' equity is affected by the investment results of each fund,
equity transactions by contract owners and certain policy charges (see notes 2
and 3). 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 investment options, the latter
being included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at June 30, 1996. The cost of investments sold is
determined on the specific identification basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date.
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(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations
of the Company, which is taxed as a life insurance company under the Internal
Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) POLICY CHARGES
(a) Deductions from Premiums
On multiple payment contracts and flexible premium contracts, the Company
deducts a charge for state premium taxes equal to 2.5% of all premiums received
to cover the payment of these premium taxes. The Company also deducts a sales
load from each premium payment received not to exceed 3.5% of each premium
payment. The Company may at its sole discretion reduce this sales loading.
(b) Cost of Insurance
A cost of insurance charge is assessed monthly against each contract by
liquidating units. The amount of the charge is based upon age, sex, rate class
and net amount at risk (death benefit less total contract value).
(c) Administrative Charges
For multiple payment contracts, the Company currently deducts a monthly
administrative charge of $5 (may deduct up to $7.50, maximum) to recover policy
maintenance, accounting, record keeping and other administrative expenses.
For flexible premium contracts, the Company currently deducts a monthly
administrative charge of $25 during the first policy year and $5 per month
thereafter (may deduct up to $7.50, maximum) to recover policy maintenance,
accounting, record keeping and other administrative expenses. Additionally, the
Company deducts an increase charge of $2.04 per year per $1,000 applied to any
increase in the specified amount during the first 12 months after the increase
becomes effective.
For single premium contracts, the Company deducts an annual administrative
charge which is determined as follows:
Purchase payments totalling less than $25,000 - $90/year
Purchase payments totalling $25,000 or more - $50/year
The above charges are assessed against each contract by liquidating
units.
No charges were deducted from the initial funding, or from the
earnings thereon.
(d) Surrenders
Policy surrenders result in a redemption of the contract value from the
Account and payment of the surrender proceeds to the contract owner or designee.
The surrender proceeds consist of the contract value, less any outstanding
policy loans, and less a surrender charge, if applicable. The charge is
determined according to contract type.
For multiple payment contracts and flexible premium contracts, the amount
charged is determined based upon a specified percentage of the initial surrender
charge, which varies by issue age, sex and rate class. The charge is 100% of the
initial surrender charge in the first year, declining to 0% after the ninth
year.
For single premium contracts, the charge is determined based upon a
specified percentage of the original purchase payment. The charge is 8.5% in the
first year, and declines to 0% after the ninth year.
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(3) ASSET CHARGES CHARGES
For multiple payment contracts and flexible premium contracts, the Company
deducts charges from the contract to cover mortality and expense risk charges
related to operations, and to recover policy maintenance charges. The charge is
equal to an annual rate of .80%, with certain exceptions.
For single premium contracts, the Company deducts a charge from the
contract to cover mortality and expense risk charges related to operations, and
to recover policy maintenance and premium tax charges. The charge is equal to an
annual rate of 1.30% during the first ten policy years, and 1.00% thereafter.
The above charges are assessed through the daily unit value calculation.
No charges are deducted from the initial funding, or from earnings thereon.
(4) POLICY LOANS (NET OF REPAYMENTS)
Contract provisions allow contract owners to borrow up to 90% of a
policy's cash surrender value. On each policy anniversary following the initial
loan, 6% interest is due and payable to the Company.
At the time the loan is granted, the amount of the loan is transferred
from the Account to the Company's general account as collateral for the
outstanding loan. Collateral amounts in the general account are credited with
the stated rate of interest in effect at the time the loan is made, subject to a
guaranteed minimum rate. Loan repayments result in a transfer of collateral,
including interest, back to the Account.
(5) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for contract owners' equity. This schedule is presented in the
following format:
- Beginning unit value - Jan. 1
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying
mutual funds.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
- Asset charges
(This amount reflects the decrease in the unit value due to the
charges discussed in note 3.)
- Ending unit value - June 30
- Percentage increase (decrease) in unit value.
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SCHEDULE I
NATIONWIDE VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VL SEPARATE ACCOUNT-1)
MULTIPLE PAYMENT CONTRACTS AND FLEXIBLE PREMIUM CONTRACTS
SCHEDULES OF CHANGES IN UNIT VALUE
SIX MONTH PERIODS ENDED JUNE 30, 1996, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
FidVIPGr NSATCapAp NSATGvtBd NSATMyMkt NSATTotRe NBAmtBal TCIAdv
<S> <C> <C> <C> <C> <C> <C> <C>
1996
Beginning unit value - Jan. 1 $17.583952 14.713230 14.984933 11.714295 18.192762 14.878481 13.112917
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.263661 .130848 .457308 .293298 .196992 2.281380 .840768
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .618963 1.374408 (.700476) .000000 1.355728 (1.826701) (.348553)
- -----------------------------------------------------------------------------------------------------------------------------------
Asset charges .073576 (.062178) (.058077) (.047109) (.075607) (.060476) (.052544)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $19.393000 16.156308 14.683688 11.960484 19.669875 15.272684 13.552588
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 10% 10% (2)% 2% 8% 3% 3%
===================================================================================================================================
1995
Beginning unit value - Jan. 1 $13.094077 11.465403 12.720514 11.176411 14.205723 12.118394 11.321934
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .072389 .110173 .438811 .316243 .219815 .308616 .176395
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.032414 1.039681 1.069274 .000000 2.053852 1.616284 .931473
- -----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.056089) (.047881) (.053537) (.045408) (.060943) (.051779) (.046699)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $16.142721 12.567376 14.175062 11.447246 16.418447 13.991515 12.383103
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 23% 10% 11% 2% 16% 15% 9%
===================================================================================================================================
1994
Beginning unit value - Jan. 1 $13.201441 11.662121 13.250482 10.845265 14.167308 12.640011 11.295721
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .794469 .072792 .396083 .171513 .175370 .493181 .128749
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (2.064813) (.654655) (.921057) .000000 (.208324) (1.369475) (.304481)
- -----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.051289) (.045583) (.051463) (.043483) (.056410) (.049443) (.045033)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $11.879808 11.034675 12.674045 10.973295 14.077944 11.714274 11.074956
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (10)% (5)% (4)% 1% (1)% (7)% (2)%
===================================================================================================================================
<CAPTION>
TCIAdv+
<S> <C>
1996
Beginning unit value - Jan. 1 13.802855
- -------------------------------------------------
Reinvested capital gains
and dividends .886970
- -------------------------------------------------
Unrealized gain (loss) (.367307)
- -------------------------------------------------
Asset charges .000000
- -------------------------------------------------
Ending unit value - June 30 14.322518
- -------------------------------------------------
Percentage increase (decrease)
in unit value* 4%
================================================
1995
Beginning unit value - Jan. 1 11.822996
- -------------------------------------------------
Reinvested capital gains
and dividends .184730
- -------------------------------------------------
Unrealized gain (loss) .975046
- -------------------------------------------------
Asset charges .000000
- -------------------------------------------------
Ending unit value - June 30 12.982772
- -------------------------------------------------
Percentage increase (decrease)
in unit value* 10%
================================================
1994
Beginning unit value - Jan. 1 11.701906
- -------------------------------------------------
Reinvested capital gains
and dividends .133775
- -------------------------------------------------
Unrealized gain (loss) (.316874)
- -------------------------------------------------
Asset charges .000000
- -------------------------------------------------
Ending unit value - June 30 11.518807
- -------------------------------------------------
Percentage increase (decrease)
in unit value* (2)%
================================================
<FN>
* This is not an annualized rate of return as it is the change for a six
month period and asset charges do not include the policy charges discussed
in note 2.
+ For Depositor, see note 1a.
</TABLE>
See note 5.
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Bulk Rate
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PAID
Columbus, Ohio
Permit No. 521
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220
NATIONWIDE(R) IS A REGISTERED FEDERAL SERVICE MARK OF NATIONWIDE MUTUAL
INSURANCE COMPANY
