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[LOGO]
Nationwide(R)
VA Separate Account-C
Semi-Annual Report
to
Contract Owners
June 30, 1998
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
FHL-474-G (6/98)
<PAGE> 2
[LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
PRESIDENT'S MESSAGE
We at Nationwide Life and Annuity Insurance Company are pleased to present the
1998 semi-annual report of the Nationwide VA Separate Account-C.
The bull market continued its run in the first half of 1998. Most of the gains
came in the first quarter with more modest returns or small losses for the
second half of the period. At this writing, a market correction that began in
the second quarter continues to provide a good deal of day-to-day volatility.
Much of the capriciousness of the market is due to uncertainty about the
economic outcome in Asia. However, we think the correction will be of limited
magnitude and duration and will provide a healthy respite before further market
advances.
We believe that existing economic and market fundamentals provide an ongoing
favorable environment for financial assets. Interest rates remain low; inflation
is nearly nonexistent; corporate earnings, albeit slowing, remain positive, and
U.S. economic growth appears to be on a modest but sustainable track.
Against this backdrop, we believe our variable insurance products continue to
provide the versatile investment vehicle you need to respond to changing market
conditions. We are committed to the continual evaluation of our products and
services to ensure that we remain responsive to your long-term financial
planning and retirement-savings needs.
/s/ Joseph J. Gasper, President
Joseph J. Gasper, President
August 17, 1998
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<PAGE> 3
NATIONWIDE VA SEPARATE ACCOUNT-C
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
June 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
4,471,489 shares (cost $94,468,360) .................................... $ 112,547,375
Fidelity VIP - Overseas Portfolio (FidVIPOv)
912,511 shares (cost $16,778,052) ...................................... 18,815,975
Nationwide SAT - Money Market Fund (NSATMyMkt)
8,992,117 shares (cost $8,992,117) ..................................... 8,992,117
Nationwide SAT - Total Return Fund (NSATTotRe)
3,844,370 shares (cost $56,318,170) .................................... 71,889,728
One Group - Asset Allocation Fund (OGAstAll)
5,095,279 shares (cost $66,888,982) .................................... 73,830,586
One Group - Equity Index Fund (OGEqIx)
365,078 shares (cost $3,638,806) ....................................... 3,676,334
One Group - Government Bond Fund (OGGvtBd)
2,838,297 shares (cost $29,290,116) .................................... 30,085,946
One Group - Growth Opportunities Fund (OGGrOpp)
4,355,734 shares (cost $59,760,589) .................................... 71,869,614
One Group - Large Company Growth Fund (OGLgCoGr)
7,377,708 shares (cost $112,682,043) ................................... 154,931,864
-------------
Total investments ................................................. 546,639,539
Accounts receivable .............................................................. -
-------------
Total assets ...................................................... 546,639,539
ACCOUNTS PAYABLE ...................................................................... 31,001
-------------
CONTRACT OWNERS' EQUITY ............................................................... $ 546,608,538
=============
</TABLE>
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<TABLE>
<CAPTION>
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN
----- ---------- ------
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Tax qualified .................................. 1,900,161 $ 21.159972 $ 40,207,354 10%
Non-tax qualified .............................. 3,418,725 21.159972 72,340,125 10%
Fidelity VIP - Overseas Portfolio:
Tax qualified .................................. 366,042 14.642593 5,359,804 15%
Non-tax qualified .............................. 918,981 14.642593 13,456,265 15%
Nationwide SAT - Money Market Fund:
Tax qualified .................................. 244,254 11.615424 2,837,114 2%
Non-tax qualified .............................. 527,096 11.615424 6,122,444 2%
Nationwide SAT - Total Return Fund:
Tax qualified .................................. 1,158,632 21.800224 25,258,437 14%
Non-tax qualified .............................. 2,139,038 21.800224 46,631,508 14%
One Group - Asset Allocation Fund:
Tax qualified .................................. 1,322,703 17.311541 22,898,027 10%
Non-tax qualified .............................. 2,839,558 17.311541 49,157,125 10%
Initial Funding by Depositor (note 1a) 97,500 18.211136 1,775,586 11%
One Group - Equity Index Fund:
Tax qualified .................................. 14,278 10.063323 143,684 1%(a)
Non-tax qualified .............................. 100,503 10.063323 1,011,394 1%(a)
Initial Funding by Depositor (note 1a) ......... 250,000 10.085015 2,521,254 1%(a)
One Group - Government Bond Fund:
Tax qualified .................................. 673,319 12.856302 8,656,392 3%
Non-tax qualified .............................. 1,140,862 12.856302 14,667,266 3%
Initial Funding by Depositor (note 1a) ......... 500,000 13.524621 6,762,311 4%
One Group - Growth Opportunities Fund:
Tax qualified .................................. 1,119,908 19.942906 22,334,220 15%
Non-tax qualified .............................. 2,481,236 19.942906 49,483,056 15%
Initial Funding by Depositor (note 1a) ......... 2,500 20.979544 52,449 16%
One Group - Large Company Growth Fund:
Tax qualified .................................. 2,149,887 22.323221 47,992,403 21%
Non-tax qualified .............................. 4,474,956 22.323221 99,895,432 21%
Initial Funding by Depositor (note 1a) ......... 300,000 23.482961 7,044,888 22%
========= =========== =============
$ 546,608,538
=============
</TABLE>
(a) This investment option was not being utilized for the entire period.
See accompanying notes to financial statements.
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NATIONWIDE VA SEPARATE ACCOUNT-C
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL FidVIPEI
--------------------------- ----------------------
1998 1997 1998 1997
------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 3,866,028 2,295,560 1,240,121 715,785
Mortality, expense and administration
charges (note 2) ................................ (2,864,730) (1,299,117) (653,269) (326,250)
------------ ----------- ----------- ----------
Net investment activity ......................... 1,001,298 996,443 586,852 389,535
------------ ----------- ----------- ----------
Proceeds from mutual fund shares sold ............. 7,706,235 3,923,094 338,374 275,492
Cost of mutual fund shares sold ................... (6,993,992) (3,712,737) (208,118) (217,385)
------------ ----------- ----------- ----------
Realized gain (loss) on investments ............. 712,243 210,357 130,256 58,107
Change in unrealized gain (loss) on investments ... 50,365,763 26,351,454 3,682,917 3,579,447
------------ ----------- ----------- ----------
Net gain (loss) on investments .................. 51,078,006 26,561,811 3,813,173 3,637,554
------------ ----------- ----------- ----------
Reinvested capital gains .......................... 5,282,141 4,156,691 4,413,373 3,598,807
------------ ----------- ----------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 57,361,445 31,714,945 8,813,398 7,625,896
------------ ----------- ----------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 124,201,523 75,556,088 19,123,204 16,769,365
Transfers between funds ........................... - - 477,763 1,002,643
Redemptions ....................................... (11,451,269) (3,438,869) (2,376,434) (678,966)
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... (22) (64) 2 (10)
Contingent deferred sales charges (note 2) ........ (362,018) (138,317) (68,152) (33,598)
Adjustments to maintain reserves .................. (3,591) 1,455 (7,672) 450
------------ ----------- ----------- ----------
Net equity transactions ....................... 112,384,623 71,980,293 17,148,711 17,059,884
------------ ----------- ----------- ----------
Net change in contract owners' equity ............. 169,746,068 103,695,238 25,962,109 24,685,780
Contract owners' equity beginning of period ....... 376,862,470 168,074,742 86,585,366 39,560,391
------------ ----------- ----------- ----------
Contract owners' equity end of period ............. $546,608,538 271,769,980 112,547,475 64,246,171
============ =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FidVIPOv NSATMyMkt
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. 294,761 140,536 241,897 175,938
Mortality, expense and administration
charges (note 2) ................................ (111,680) (62,700) (60,633) (45,601)
---------- ---------- --------- ---------
Net investment activity ......................... 183,081 77,836 181,264 130,337
---------- ---------- --------- ---------
Proceeds from mutual fund shares sold ............. 667,495 128,851 4,480,433 2,580,714
Cost of mutual fund shares sold ................... (544,614) (113,033) (4,480,433) (2,580,714)
---------- ---------- --------- ---------
Realized gain (loss) on investments ............. 122,881 15,818 - -
Change in unrealized gain (loss) on investments ... 1,091,836 903,840 - -
---------- ---------- --------- ---------
Net gain (loss) on investments .................. 1,214,717 919,658 - -
---------- ---------- --------- ---------
Reinvested capital gains .......................... 868,768 557,884 - -
---------- ---------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 2,266,566 1,555,378 181,264 130,337
---------- ---------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 2,251,581 3,122,993 4,155,820 7,120,744
Transfers between funds ........................... (335,442) 378,946 (4,065,271) (3,028,046)
Redemptions ....................................... (438,719) (139,766) (107,990) (366,855)
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... (7) - - -
Contingent deferred sales charges (note 2) ........ (20,584) (5,219) (4,062) (3,105)
Adjustments to maintain reserves .................. 73 113 (52) 940
---------- ---------- --------- ---------
Net equity transactions ....................... 1,456,902 3,357,067 (21,555) 3,723,678
---------- ---------- --------- ---------
Net change in contract owners' equity ............. 3,723,468 4,912,445 159,709 3,854,015
Contract owners' equity beginning of period ....... 15,092,594 7,667,494 8,799,843 5,190,860
---------- ---------- --------- ---------
Contract owners' equity end of period ............. 18,816,062 12,579,939 8,959,552 9,044,875
========== ========== ========= =========
</TABLE>
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NATIONWIDE VA SEPARATE ACCOUNT-C
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
NSATTotRe OGAstAll
----------------------- ------------------------
1998 1997 1998 1997
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 354,537 267,693 752,290 327,524
Mortality, expense and administration
charges (note 2) ............................... (406,032) (182,510) (346,107) (118,154)
----------- ---------- ---------- ----------
Net investment activity ........................ (51,495) 85,183 406,183 209,370
----------- ---------- ---------- ----------
Proceeds from mutual fund shares sold ............ 324,558 306,667 140,532 147,681
Cost of mutual fund shares sold .................. (204,058) (226,951) (106,420) (121,964)
----------- ---------- ---------- ----------
Realized gain (loss) on investments ............ 120,500 79,716 34,112 25,717
Change in unrealized gain (loss) on investments .. 7,703,592 4,998,921 4,765,518 2,157,996
----------- ---------- ---------- ----------
Net gain (loss) on investments ................. 7,824,092 5,078,637 4,799,630 2,183,713
----------- ---------- ---------- ----------
Reinvested capital gains ......................... - - - -
----------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 7,772,597 5,163,820 5,205,813 2,393,083
----------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 12,502,105 11,173,294 28,099,898 9,675,225
Transfers between funds .......................... 630,403 325,047 1,100,551 197,790
Redemptions ...................................... (1,470,832) (447,425) (1,359,619) (288,849)
Annuity benefits ................................. - - - -
Annual contract maintenance charge (note 2) ...... (6) - 2 -
Contingent deferred sales charges (note 2) ....... (47,528) (20,066) (31,017) (9,013)
Adjustments to maintain reserves ................. (418) 238 (1,378) 94
----------- ---------- ---------- ----------
Net equity transactions 11,613,724 11,031,088 27,808,437 9,575,247
----------- ---------- ---------- ----------
Net change in contract owners' equity ............ 19,386,321 16,194,908 33,014,250 11,968,330
Contract owners' equity beginning of period ...... 52,503,643 21,475,096 40,816,490 14,299,279
----------- ---------- ---------- ----------
Contract owners' equity end of period ............ $71,889,964 37,670,004 73,830,740 26,267,609
=========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
OGEqIx OGGvtBd
------------------ ----------------------
1998 1997 1998 1997
-------- ------ ---------- --------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. 4,925 - 707,614 482,056
Mortality, expense and administration
charges (note 2) ............................... (614) - (120,937) (62,632)
--------- -- ---------- ----------
Net investment activity ........................ 4,311 - 586,677 419,424
--------- -- ---------- ----------
Proceeds from mutual fund shares sold ............ 12 - 970,177 342,283
Cost of mutual fund shares sold .................. (12) - (955,681) (342,437)
--------- -- ---------- ----------
Realized gain (loss) on investments ............ - - 14,496 (154)
Change in unrealized gain (loss) on investments .. 37,529 - 243,966 (9,125)
--------- -- ---------- ----------
Net gain (loss) on investments ................. 37,529 - 258,462 (9,279)
--------- -- ---------- ----------
Reinvested capital gains ......................... - - - -
--------- -- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 41,840 - 845,139 410,145
--------- -- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 3,560,308 - 7,509,330 2,509,534
Transfers between funds .......................... 75,298 - 252,915 (90,319)
Redemptions ...................................... (1,111) - (901,551) (239,970)
Annuity benefits ................................. - - - -
Annual contract maintenance charge (note 2) ...... - - - -
Contingent deferred sales charges (note 2) ....... - - (14,741) (7,173)
Adjustments to maintain reserves ................. 1 - 8,918 1
--------- -- ---------- ----------
Net equity transactions 3,634,496 - 6,854,871 2,172,073
--------- -- ---------- ----------
Net change in contract owners' equity ............ 3,676,336 - 7,700,010 2,582,218
Contract owners' equity beginning of period ...... - - 22,385,957 14,649,524
--------- -- ---------- ----------
Contract owners' equity end of period ............ 3,676,336 - 30,085,967 17,231,742
========= == ========== ==========
</TABLE>
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NATIONWIDE VA SEPARATE ACCOUNT-C
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
OGGrOpp OGLgCoGr
---------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ - - 269,883 186,028
Mortality, expense and administration
charges (note 2) .............................. (398,665) (177,893) (766,793) (323,377)
----------- ---------- ----------- ----------
Net investment activity ....................... (398,665) (177,893) (496,910) (137,349)
----------- ---------- ----------- ----------
Proceeds from mutual fund shares sold ........... 280,786 141,406 503,868 -
Cost of mutual fund shares sold ................. (199,314) (110,253) (295,342) -
----------- ---------- ----------- ----------
Realized gain (loss) on investments ........... 81,472 31,153 208,526 -
Change in unrealized gain (loss) on investments.. 8,592,216 4,353,453 24,248,189 10,366,922
----------- ---------- ----------- ----------
Net gain (loss) on investments ................ 8,673,688 4,384,606 24,456,715 10,366,922
----------- ---------- ----------- ----------
Reinvested capital gains ........................ - - - -
----------- ---------- ----------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations .......... 8,275,023 4,206,713 23,959,805 10,229,573
----------- ---------- ----------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................... 13,621,373 7,884,380 33,377,904 17,300,553
Transfers between funds ......................... 515,269 412,642 1,348,514 801,297
Redemptions ..................................... (1,307,304) (441,670) (3,487,709) (835,368)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (7) (10) (6) (44)
Contingent deferred sales charges (note 2) ...... (53,205) (23,291) (122,729) (36,852)
Adjustments to maintain reserves ................ 113 107 (3,176) (488)
----------- ---------- ----------- ----------
Net equity transactions ..................... 12,776,239 7,832,158 31,112,798 17,229,098
----------- ---------- ----------- ----------
Net change in contract owners' equity ........... 21,051,262 12,038,871 55,072,603 27,458,671
Contract owners' equity beginning of period ..... 50,818,466 22,335,793 99,860,111 42,896,305
----------- ---------- ----------- ----------
Contract owners' equity end of period ........... $71,869,728 34,374,664 154,932,714 70,354,976
=========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
8
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NATIONWIDE VA SEPARATE ACCOUNT-C
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 and 1997
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide VA Separate Account-C (the Account) was established
pursuant to a resolution of the Board of Directors of
Nationwide Life and Annuity 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.
On May 1, 1998, the Company (Depositor) transferred to the
Account, 250,000 shares of the One Group-Equity Index Fund,
for which the Account was credited with 250,000 units of the
foregoing One Group Fund. The value of the units purchased by
the Company on May 1, 1998 was $2,500,000.
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 - Equity Index Fund (OGEqIx)
One Group - Government Bond Fund (OGGvtBd)
One Group - Growth Opportunities Fund (OGGrOpp)
One Group - Large Company Growth Fund (OGLgCoGr)
At June 30, 1998, 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, 1998. 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.
(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 Company deducts 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. Prior to 1997, the Company deducted an annual contract
maintenance charge of $30. This charge is no longer assessed. No
charges are deducted from the initial funding by the Depositor, or from
earnings thereon.
(3) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things,
shareholder communications, preparation, postage, fund transfer agency
and various other record keeping and customer service functions. These
fees are paid to an affiliate of the Company.
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[THIS PAGE LEFT BLANK INTENTIONALLY]
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<TABLE>
<S> <C>
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY Bulk Rate
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220 U.S. Postage
P A I D
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
</TABLE>
