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[NATIONWIDE(R)LOGO]
NATIONWIDE (R)
VA SEPARATE ACCOUNT-C
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-3)
SEMI-ANNUAL REPORT
TO
CONTRACT OWNERS
JUNE 30, 1997
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
FHL-474-E(6/97)
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[NATIONWIDE (R) LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[Joseph J. Gasper Photo]
PRESIDENT'S MESSAGE
We are pleased to present the 1997 semi-annual report of the Nationwide VA
Separate Account-C.
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
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<TABLE>
<CAPTION>
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NATIONWIDE VA SEPARATE ACCOUNT-C
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-3)
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1997
(UNAUDITED)
ASSETS:
Investments at market value:
<S> <C>
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
2,912,323 shares (cost $56,689,648) .................. $ 64,245,849
Fidelity VIP - Overseas Portfolio (FidVIPOv)
627,739 shares (cost $10,960,220) .................... 12,579,891
Nationwide SAT - Money Market Fund (NSATMyMkt)
9,081,785 shares (cost $9,081,785) ................... 9,081,785
Nationwide SAT - Total Return Fund (NSATTotRe)
2,397,821 shares (cost $30,935,968) .................. 37,669,764
One Group - Asset Allocation Fund (OGAstAll)
1,982,452 shares (cost $23,287,831) .................. 26,267,498
One Group - Government Bond Fund (OGGvtBd)
1,699,383 shares (cost $17,275,025) .................. 17,231,740
One Group - Growth Opportunities Fund (OGGrOpp)
2,446,590 shares (cost $29,983,054) .................. 34,374,601
One Group - Large Company Growth Fund (OGLgCoGr)
4,276,927 shares (cost $55,209,322) .................. 70,355,447
------------
Total investments ................................. 271,806,575
Accounts receivable ........................................ 1,283
------------
Total assets ...................................... 271,807,858
ACCOUNTS PAYABLE .............................................. 37,878
------------
CONTRACT OWNERS' EQUITY ....................................... $271,769,980
============
</TABLE>
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<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
--------- ----------
<S> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ........................ 1,389,967 $ 17.622693 $ 24,494,962
Non-tax qualified .................... 2,255,683 17.622693 39,751,209
Fidelity VIP - Overseas Portfolio:
Tax qualified ........................ 292,669 13.353749 3,908,228
Non-tax qualified .................... 649,384 13.353749 8,671,711
Nationwide SAT - Money Market Fund:
Tax qualified ........................ 255,802 11.171421 2,857,672
Non-tax qualified .................... 553,842 11.171421 6,187,202
Nationwide SAT - Total Return Fund:
Tax qualified ........................ 816,744 17.755595 14,501,776
Non-tax qualified .................... 1,304,841 17.755595 23,168,228
One Group - Asset Allocation Fund:
Tax qualified ........................ 678,059 14.471808 9,812,740
Non-tax qualified .................... 1,035,795 14.471808 14,989,826
Initial Funding by Depositor (note 1a) 97,500 15.026085 1,465,043
One Group - Government Bond Fund:
Tax qualified ........................ 399,499 11.773328 4,703,433
Non-tax qualified .................... 544,970 11.773328 6,416,111
Initial Funding by Depositor (note 1a) 500,000 12.224397 6,112,199
One Group - Growth Opportunities Fund:
Tax qualified ........................ 768,003 15.552959 11,944,719
Non-tax qualified .................... 1,439,570 15.552959 22,389,573
Initial Funding by Depositor (note 1a) 2,500 16.148868 40,372
One Group - Large Company Growth Fund:
Tax qualified ........................ 1,405,527 16.926329 23,790,412
Non-tax qualified .................... 2,439,526 16.926329 41,292,220
Initial Funding by Depositor (note 1a) 300,000 17.574480 5,272,344
============ =========== ============
$271,769,980
============
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VA SEPARATE ACCOUNT-C
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-3)
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FIDVIPEI
------------------------------ --------------------------
1997 1996 1997 1996
-------------- ------------ ----------- -----------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ............................. $ 2,295,560 909,980 715,785 19,753
Mortality, expense and administration
charges (note 2) ............................... (1,299,117) (490,054) (326,250) (117,594)
------------- ------------ ----------- -----------
Net investment activity ........................ 996,443 419,926 389,535 (97,841)
------------- ------------ ----------- -----------
Proceeds from mutual fund shares sold ............ 3,923,094 2,013,673 275,492 94,375
Cost of mutual fund shares sold .................. (3,712,737) (1,962,902) (217,385) (76,898)
------------- ------------ ----------- -----------
210,357 50,771 58,107 17,477
Change in unrealized gain (loss) on investments .. 26,351,454 2,652,795 3,579,447 236,558
------------- ------------ ----------- -----------
Net gain (loss) on investments ................. 26,561,811 2,703,566 3,637,554 254,035
------------- ------------ ----------- -----------
Reinvested capital gains ......................... 4,156,691 604,263 3,598,807 566,259
------------- ------------ ----------- -----------
Net increase (decrease) in contract owners' ..
equity resulting from operations ........... 31,714,945 3,727,755 7,625,896 722,453
------------- ------------ ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds......... 75,556,088 51,543,144 17,772,008 13,306,614
Redemptions ...................................... (3,438,869) (1,574,421) (678,966) (370,400)
Annuity benefits ................................. -- -- -- --
Annual contract maintenance charge (note 2) ...... (64) (11,889) (10) (2,649)
Contingent deferred sales charges (note 2) ....... (138,317) (81,499) (33,598) (21,050)
Adjustments to maintain reserves ................. 1,455 4,865 450 1,165
------------- ------------ ----------- -----------
Net equity transactions ...................... 71,980,293 49,880,200 17,059,884 12,913,680
------------- ------------ ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 103,695,238 53,607,955 24,685,780 13,636,133
168,074,742 59,987,926 39,560,391 11,484,492
------------- ------------ ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. $ 271,769,980 113,595,881 64,246,171 25,120,625
============= ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FIDVIPOV NSATMYMKT
----------------------------- --------------------------
1997 1996 1997 1996
------------- ------------ ----------- -----------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ............................. 140,536 34,549 175,938 86,417
Mortality, expense and administration
charges (note 2) ............................... (62,700) (25,223) (45,601) (22,722)
------------- ------------ ----------- -----------
Net investment activity ........................ 77,836 9,326 130,337 63,695
------------- ------------ ----------- -----------
Proceeds from mutual fund shares sold ............ 128,851 20,885 2,580,714 1,589,477
Cost of mutual fund shares sold .................. (113,033) (19,835) (2,580,714) (1,589,477)
------------- ------------ ----------- ----------
Realized gain (loss) on investments ............ 15,818 1,050 -- --
Change in unrealized gain (loss) on investments .. 903,840 201,642 -- --
------------- ------------ ----------- -----------
Net gain (loss) on investments ................. 919,658 202,692 -- --
------------- ------------ ----------- -----------
Reinvested capital gains ......................... 557,884 38,004 -- --
------------- ------------ ----------- -----------
Net increase (decrease) in contract owners' ..
equity resulting from operations ........... 1,555,378 250,022 130,337 63,695
------------- ------------ ----------- -----------
EQUITY TRANSACTIONS: ...............................
Purchase payments received from contract
owners - net of transfers between funds......... 3,501,939 2,165,770 4,092,698 2,183,239
Redemptions ...................................... (139,766) (93,526) (366,855) (57,028)
Annuity benefits ................................. -- -- -- --
Annual contract maintenance charge (note 2) ...... -- (964) -- (135)
Contingent deferred sales charges (note 2) ....... (5,219) (4,288) (3,105) (2,140)
Adjustments to maintain reserves ................. 113 59 940 277
------------- ------------ ----------- -----------
Net equity transactions ...................... 3,357,067 2,067,051 3,723,678 2,124,213
------------- ------------ ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY 4,912,445 2,317,073 3,854,015 2,187,908
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 7,667,494 2,773,998 5,190,860 2,331,307
------------- ------------ ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. 12,579,939 5,091,071 9,044,875 4,519,215
============= ============ =========== ===========
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</TABLE>
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NATIONWIDE VA SEPARATE ACCOUNT-C
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-3)
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NSATTOTRE OGASTALL
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ............................. $ 267,693 109,231 327,524 114,182
Mortality, expense and administration
charges (note 2) ............................... (182,510) (60,534) (118,154) (39,058)
-------------- -------------- -------------- --------------
Net investment activity ........................ 85,183 48,697 209,370 75,124
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 306,667 53,251 147,681 78,312
Cost of mutual fund shares sold .................. (226,951) (45,848) (121,964) (69,283)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 79,716 7,403 25,717 9,029
Change in unrealized gain (loss) on investments .. 4,998,921 571,143 2,157,996 177,343
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 5,078,637 578,546 2,183,713 186,372
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... - - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners' ..
equity resulting from operations ........... 5,163,820 627,243 2,393,083 261,496
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds......... 11,498,341 6,100,086 9,873,015 4,612,211
Redemptions ...................................... (447,425) (212,376) (288,849) (161,320)
Annuity benefits ................................. - - - -
Annual contract maintenance charge (note 2) ...... - (1,250) - (860)
Contingent deferred sales charges (note 2) ....... (20,066) (11,265) (9,013) (5,750)
Adjustments to maintain reserves ................. 238 838 94 130
-------------- -------------- -------------- --------------
Net equity transactions ...................... 11,031,088 5,876,033 9,575,247 4,444,411
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY 16,194,908 6,503,276 11,968,330 4,705,907
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 21,475,096 6,290,564 14,299,279 5,003,974
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. $ 37,670,004 12,793,840 26,267,609 9,709,881
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
OGGVTBD OGGROPP
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ............................. 482,056 332,830 - 50,281
Mortality, expense and administration
charges (note 2) ............................... (62,632) (34,264) (177,893) (67,423)
------------- -------------- -------------- --------------
Net investment activity ........................ 419,424 298,566 (177,893) (17,142)
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 342,283 108,790 141,406 16,584
Cost of mutual fund shares sold .................. (342,437) (106,656) (110,253) (13,563)
------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ (154) 2,134 31,153 3,021
Change in unrealized gain (loss) on investments .. (9,125) (521,503) 4,353,453 646,703
------------- -------------- -------------- --------------
Net gain (loss) on investments ................. (9,279) (519,369) 4,384,606 649,724
------------- -------------- -------------- --------------
Reinvested capital gains ......................... - - - -
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners' ..
equity resulting from operations ........... 410,145 (220,803) 4,206,713 632,582
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds......... 2,419,215 3,866,402 8,297,022 7,035,558
Redemptions ...................................... (239,970) (55,055) (441,670) (267,594)
Annuity benefits ................................. - - - -
Annual contract maintenance charge (note 2) ...... - (714) (10) (1,888)
Contingent deferred sales charges (note 2) ....... (7,173) (1,633) (23,291) (15,187)
Adjustments to maintain reserves ................. 1 103 107 738
------------- -------------- -------------- --------------
Net equity transactions ...................... 2,172,073 3,809,103 7,832,158 6,751,627
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY 2,582,218 3,588,300 12,038,871 7,384,209
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 14,649,524 9,094,860 22,335,793 6,748,078
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. 17,231,742 12,683,160 34,374,664 14,132,287
============= ============== ============== ==============
</TABLE>
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NATIONWIDE VA SEPARATE ACCOUNT-C
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-3)
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
OGLGCOGR
------------------------------
1997 1996
-------------- --------------
INVESTMENT ACTIVITY:
<S> <C> <C>
Reinvested dividends ............................. $ 186,028 162,737
Mortality, expense and administration
charges (note 2) ............................... (323,377) (123,236)
-------------- --------------
Net investment activity ........................ (137,349) 39,501
-------------- --------------
Proceeds from mutual fund shares sold ............ - 51,999
Cost of mutual fund shares sold .................. - (41,342)
-------------- --------------
Realized gain (loss) on investments ............ - 10,657
Change in unrealized gain (loss) on investments .. 10,366,922 1,340,909
-------------- --------------
Net gain (loss) on investments ................. 10,366,922 1,351,566
-------------- --------------
Reinvested capital gains ......................... - -
-------------- --------------
Net increase (decrease) in contract owners' ..
equity resulting from operations ........... 10,229,573 1,391,067
-------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners - net of transfers between funds......... 18,101,850 12,273,264
Redemptions ...................................... (835,368) (357,122)
Annuity benefits ................................. - -
Annual contract maintenance charge (note 2) ...... (44) (3,429)
Contingent deferred sales charges (note 2) ....... (36,852) (20,186)
Adjustments to maintain reserves ................. (488) 1,555
-------------- --------------
Net equity transactions ...................... 17,229,098 11,894,082
-------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY 27,458,671 13,285,149
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 42,896,305 16,260,653
-------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. $ 70,354,976 29,545,802
============== ==============
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VA SEPARATE ACCOUNT-C
(FORMERLY FINANCIAL HORIZONS VA SEPARATE ACCOUNT-3)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide VA Separate Account-C (formerly Financial Horizons
VA Separate Account-3) (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 July 24, 1991. The Account has been registered as a
unit investment trust under the Investment Company Act of 1940.
On August 17, 1994, the Company (Depositor) transferred to the Account
97,500 shares of the One Group-Asset Allocation Fund, 500,000 shares of
the One Group-Government Bond Fund, 2,500 shares of the One
Group-Growth Opportunities Fund and 300,000 shares of the One
Group-Large Company Growth Fund, for which the Account was credited
with 97,500 units of the One Group-Asset Allocation Fund, 500,000 units
of the One Group-Government Bond Fund, 2,500 units of the One
Group-Growth Opportunities Fund and 300,000 units of the One
Group-Large Company Growth Fund. These amounts represent the initial
funding of the Account. The value of the units purchased by the Company
on August 17, 1994 was $9,000,000.
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.
(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:
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Fidelity VIP - Overseas Portfolio (FidVIPOv)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Total Return Fund (NSATTotRe)
Funds of The One Group(R) Investment Trust (One Group);
One Group - Asset Allocation Fund (OGAstAll)
One Group - Government Bond Fund (OGGvtBd)
One Group - Growth Opportunities Fund (OGGrOpp)
One Group - Large Company Growth Fund (OGLgCoGr)
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 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.
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<PAGE> 9
(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 a specific identification basis. Investment
transactions are accounted 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 provisions of the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Reclassifications
Certain 1996 amounts have been reclassified to conform with the current
year presentation.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of
such contracts is surrendered, the Company will, with certain exceptions,
deduct from a contract owner's 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) an annual
contract maintenance charge of $30 which is satisfied by surrendering
units; and (b) 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. No charges
are deducted from the initial funding by the Depositor, or from earnings
thereon.
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10
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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
