<PAGE> 1
[NATIONWIDE LOGO]
Nationwide(R)
VL SEPARATE ACCOUNT-A
(FORMERLY FINANCIAL HORIZONS VLSEPARATE ACCOUNT-1)
SEMI-ANNUAL REPORT
TO
CONTRACT OWNERS
JUNE 30, 1997
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
FHL-150-L (6/97)
<PAGE> 2
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We are pleased to present the 1997 semi-annual report of the Nationwide VL
Separate Account-A.
Our Enterprise Vision statement states: "We exist to serve our customers."
Everything we do is focused on you, our customer, and on your needs.
We recognize that your expectations have changed and your standards for value
and service are higher than ever before. You are being asked to take more
responsibility for your own financial future, as employers and government
programs provide fewer guarantees.
We know that you expect service and products customized to fit your needs -
including financial advice - and you expect to receive service at any time,
anywhere and any way you choose.
We are responding to your changing needs and expectations with innovative
product offerings, continuing investment in the training and professional
development of our people, and our investment in technology to enable us to
serve you faster, better and more cost effectively.
Equity investments produced solid gains for the first half of 1997 with the Dow
Jones Industrial Average breaking the 8,000 mark on July 16. The U.S. economy,
in its seventh year of expansion, is growing vigorously and corporate profits
are better than anticipated.
Interest rates and inflation are still at very low levels. However, the risk of
a temporary spike remains as the Federal Reserve might be forced to raise
interest rates in order to keep our economy on an inflation-free growth path.
Even such policy actions are not expected to end the prosperous times which we
now enjoy. In the long run, equity valuations will reflect these excellent
economic conditions.
Thank you for giving Nationwide Life and Annuity Insurance Company the
opportunity to meet your investment needs.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
3
<PAGE> 3
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
(formerly Financial Horizons VL Separate Account-1)
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
June 30, 1997
(UNAUDITED)
ASSETS:
Investments at market value:
<S> <C>
American Century VP - American Century VP Advantage (ACVPAdv)
65,595 shares (cost $340,412) ................................ $ 409,316
Fidelity VIP - Growth Portfolio (FidVIPGr)
1,182 shares (cost $29,220) .................................. 40,430
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
109 shares (cost $1,385) ..................................... 2,140
Nationwide SAT - Government Bond Fund (NSATGvtBd)
1,205 shares (cost $13,098) .................................. 13,251
Nationwide SAT - Money Market Fund (NSATMyMkt)
11,727 shares (cost $11,727) ................................. 11,727
Nationwide SAT - Total Return Fund (NSATTotRe)
850 shares (cost $9,175) ..................................... 13,353
Neuberger & Berman - Balanced Portfolio (NBAMTBal)
611 shares (cost $9,452) ..................................... 10,131
---------
Total investments ......................................... 500,348
Accounts receivable ................................................ 17
---------
Total assets .............................................. 500,365
=========
CONTRACT OWNERS' EQUITY ............................................... $ 500,365
=========
</TABLE>
4
<PAGE> 4
<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
------ ----------
<S> <C> <C> <C>
Multiple Payment Contracts and Flexible Premium Contracts:
American Century VP -
American Century VP Advantage .................................... 477 $ 15.099216 $ 7,202
American Century VP -
American Century VP Advantage
Initial Funding by Depositor (note 1a) ........................ 25,000 16.085686 402,142
Fidelity VIP - Growth Portfolio ................................... 1,782 22.684919 40,425
Nationwide SAT - Capital Appreciation Fund ........................ 96 22.151612 2,127
Nationwide SAT - Government Bond Fund ............................. 839 15.757158 13,220
Nationwide SAT - Money Market Fund ................................ 940 12.475345 11,727
Nationwide SAT - Total Return Fund ................................ 513 26.153320 13,417
Neuberger & Berman - Balanced Portfolio ........................... 578 17.483379 10,105
====== ========= =========
$ 500,365
=========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 5
<TABLE>
<CAPTION>
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, 1997, 1996 AND 1995
(UNAUDITED)
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends $ 7,211 6,966 5,862
Mortality and expense charges (note 3) (374) (350) (294)
------- ------- -------
Net investment activity 6,837 6,616 5,568
------- ------- -------
Proceeds from mutual fund shares sold 15,931 13,149 20,376
Cost of mutual funds sold (13,009) (11,754) (21,090)
------- ------- -------
Realized gain (loss) on investments 2,922 1,395 (714)
Change in unrealized gain (loss) on investments 2,368 (10,664) 35,694
------- ------- -------
Net gain (loss) on investments 5,290 (9,269) 34,980
------- ------- -------
Reinvested capital gains 22,573 20,663 74
------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations 34,700 18,010 40,622
------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners -
net of transfers between funds 8,400 13,570 24,391
Surrenders (22,690) (4,211) (164)
Policy loans (net of repayments) (note 4) 12,587 1,338 (10,000)
Deductions for surrender charges (note 2d) (2,718) (1,831) --
Redemptions to pay cost of insurance charges
and administration charges (notes 2b and 2c) (5,249) (6,067) (6,595)
------- ------- -------
Net increase (decrease) in equity transactions (9,670) 2,799 7,632
------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY 25,030 20,809 48,254
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 475,335 424,773 357,135
------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD $ 500,365 445,582 405,389
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
================================================================================
6
<PAGE> 6
NATIONWIDE VL SEPARATE ACCOUNT-A
(formerly Financial Horizons VL Separate Account-1)
NOTES TO FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
(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 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 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 American Century Variable Portfolios, Inc.
(American Century VP) (formerly TCI Portfolios, Inc.);
American Century VP - American Century VP Advantage (ACVPAdv)
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)
At June 30, 1997, 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.
7
<PAGE> 7
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at June 30, 1997. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company, which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Reclassifications
Certain 1996 and 1995 amounts have been reclassified to conform with
the current year presentation.
(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 $12.50 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 totaling less than $25,000 - $90/year
Purchase payments totaling $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.
8
<PAGE> 8
(d) Surrender Charges
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.
(3) ASSET 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.
================================================================================
9
<PAGE> 9
Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
