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NATIONWIDE(R)
FIDELITY
ADVISOR
VARIABLE
ACCOUNT
Semi-Annual Report
FIDELITY
ADVISOR
ANNUITIES(SM)
June 30, 1996
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[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
[PICTURE]
PRESIDENT'S MESSAGE
We are pleased to present the 1996 semi-annual report of the Nationwide
Fidelity Advisor Variable Account.
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, President
-------------------------------
Joseph J. Gasper, President
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NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Fidelity Advisor Annuity Government Investment Fund (FAAGvInv)
1,475,315 shares (cost $16,239,452) ....................... $ 15,948,160
Fidelity Advisor Annuity Growth Opportunities Fund (FAAGroOpp)
20,813,880 shares (cost $263,616,138) ..................... 286,815,262
Fidelity Advisor Annuity High Yield Fund (FAAHiYld)
5,552,269 shares (cost $64,832,364) ....................... 67,404,542
Fidelity Advisor Annuity Income & Growth Fund (FAAIncGr)
6,837,151 shares (cost $74,945,110) ....................... 76,439,349
Fidelity Advisor Annuity Money Market Fund (FAAMyMkt)
35,496,876 shares (cost $35,496,876) ...................... 35,496,876
Fidelity Advisor Annuity Overseas Fund (FAAOSeas)
2,922,283 shares (cost $32,262,258) ....................... 34,249,153
------------
Total investments ....................................... 516,353,342
Accounts Receivable ............................................. 8,142
------------
Total assets ............................................ 516,361,484
============
CONTRACT OWNERS' EQUITY ............................................ $516,361,484
============
</TABLE>
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<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
--------- ----------
<S> <C> <C> <C>
Fidelity Advisor Annuity Classic contracts:
Fidelity Advisor Annuity
Government Investment Fund:
Tax qualified .......................... 68,719 $11.151622 $ 766,328
Non-tax qualified ...................... 28,973 11.151622 323,096
Fidelity Advisor Annuity
Growth Opportunities Fund:
Tax qualified .......................... 1,115,698 13.755379 15,346,849
Non-tax qualified ...................... 1,102,077 13.755379 15,159,487
Fidelity Advisor Annuity High Yield Fund:
Tax qualified .......................... 201,009 12.361568 2,484,786
Non-tax qualified ...................... 185,510 12.361568 2,293,194
Fidelity Advisor Annuity
Income &Growth Fund:
Tax qualified .......................... 344,433 11.232523 3,868,852
Non-tax qualified ...................... 312,920 11.232523 3,514,881
Fidelity Advisor Annuity Money Market Fund:
Tax qualified .......................... 111,493 10.587140 1,180,392
Non-tax qualified ...................... 76,389 10.587140 808,741
Fidelity Advisor Annuity Overseas Fund:
Tax qualified .......................... 135,262 11.568162 1,564,733
Non-tax qualified ...................... 131,167 11.568162 1,517,361
Fidelity Advisor Annuity Select contracts:
Fidelity Advisor Annuity
Government Investment Fund:
Tax qualified .......................... 505,833 11.134880 5,632,390
Non-tax qualified ...................... 828,611 11.134880 9,226,484
Fidelity Advisor Annuity
Growth Opportunities Fund:
Tax qualified .......................... 4,995,915 13.734726 68,617,524
Non-tax qualified ...................... 13,665,785 13.734726 187,695,813
Fidelity Advisor Annuity High Yield Fund:
Tax qualified .......................... 1,411,984 12.343025 17,428,154
Non-tax qualified ...................... 3,661,929 12.343025 45,199,281
Fidelity Advisor Annuity
Income &Growth Fund:
Tax qualified .......................... 1,846,946 11.215659 20,714,717
Non-tax qualified ...................... 4,310,198 11.215659 48,341,711
Fidelity Advisor Annuity Money Market Fund:
Tax qualified .......................... 1,333,231 10.571231 14,093,893
Non-tax qualified ...................... 1,836,620 10.571231 19,415,334
Fidelity Advisor Annuity Overseas Fund:
Tax qualified .......................... 752,230 11.550772 8,688,837
Non-tax qualified ...................... 1,946,073 11.550772 22,478,646
========= ========= ------------
$516,361,484
============
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends ........... $ 1,808,151 44,715
------------ ----------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares 18,541,494 2,063,487
Cost of mutual fund shares sold ............... (18,069,224) (2,023,544)
------------ ----------
Realized gain (loss) on investments ........... 472,270 39,943
Change in unrealized gain (loss) on investments 16,410,786 2,569,454
------------ ----------
Net gain (loss) on investments ............. 16,883,056 2,609,397
------------ ----------
Net investment activity ................. 18,691,207 2,654,112
------------ ----------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners .. 206,478,044 67,627,563
Redemptions ...................................... (6,527,860) (121,364)
Adjustments to maintain reserves ................. 33,118 19
------------ ----------
Net equity transactions ................. 199,983,302 67,506,218
------------ ----------
EXPENSES (NOTE 2):
Contract charges ................................. (2,878,547) (131,742)
Contingent deferred sales charges ................ (86,805) (531)
------------ ----------
Total expenses .......................... (2,965,352) (132,273)
------------ ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 215,709,157 70,028,057
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 300,652,327 --
------------ ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $516,361,484 70,028,057
============ ==========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide Fidelity Advisor Variable Account (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on July 22, 1994. The Account has been registered as a
unit investment trust under the Investment Company Act of 1940.
The Company offers tax qualified and non-tax qualified Individual Deferred
Variable Annuity Contracts, and Individual Modified Single Premium Deferred
Variable Annuity Contracts through the Account. The primary distribution for the
contracts is through Fidelity Investments(R).
(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.
Contract owners in either the accumulation or the payout phase may
invest in any of the following:
Funds of Fidelity Advisor Annuity Fund;
Fidelity Advisor Annuity Government Investment Fund (FAAGvInv)
Fidelity Advisor Annuity Growth Opportunities Fund (FAAGrOpp)
Fidelity Advisor Annuity High Yield Fund (FAAHiYld)
Fidelity Advisor Annuity Income & Growth Fund (FAAIncGr)
Fidelity Advisor Annuity Money Market Fund (FAAMyMkt)
Fidelity Advisor Annuity Overseas Fund (FAAOSeas)
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 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.
(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 a 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.
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(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 administrative charges are deducted by the Company: (a) for
the Fidelity Advisor Annuity Classic contracts an annual contract maintenance
charge of $30, with certain exceptions, which is satisfied by surrendering
units; and (b) for the Fidelity Advisor Annuity Classic 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 Fidelity Advisor Annuity Select contracts a
mortality risk charge, an expense risk charge and an administration charge
assessed through the daily unit value calculations equal to an annual rate of
0.80%, 0.45% and 0.15%, respectively.
(3) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for determining contract owners' equity. This schedule is
presented for each series, as applicable, in the following format:
o Beginning unit value - Jan. 1
o Reinvested dividends and capital gains
(This amount reflects the increase in the unit value due to
dividend and capital gain distributions from the underlying
mutual funds.)
o Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
o Contract charges
(This amount reflects the decrease in the unit value due to the
mortality risk charge, expense risk charge and administration
charge discussed in note 2.)
o Ending unit value - June 30
o Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
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<TABLE>
SCHEDULE I
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
FIDELITY ADVISOR ANNUITY CLASSIC CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
FAAGVINV FAAGROPP FAAHIYLD FAAINCGR FAAMYMKT FAAOSEAS
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1996
Beginning unit value - Jan. 1 $11.504795 13.082083 11.858324 11.245581 10.385538 10.868973
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .000000 .049986 .010228 .050277 .269590 .009914
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.280504) .709521 .572010 .008853 .000000 .762062
- ----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.072669) (.086211) (.078994) (.072188) (.067988) (.072787)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $11.151622 13.755379) 12.361568 11.232523 10.587140 11.568162
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (3)% 5% 4% 0% 2% 6%
==================================================================================================================================
1995
Beginning unit value - Jan. 1 $10.000000 10.000000 10.000000 10.000000 10.000000 10.000000
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .000000 .000000 .000000 .000000 .258217 .000000
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.006297 1.792938 1.116277 .746883 .000000 .607134
- ----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.066283) (.067879) (.066951) (.065229) (.064597) (.064602)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $10.940014 11.725059) 11.049326 10.681654 10.193620 10.542532
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 9% 17% 10% 7% 2% 5%
==================================================================================================================================
<FN>
* This is not an annualized rate of return as it is the change for a six month
period and contract charges do not include the annual contract maintenance
charge discussed in note 2.
</TABLE>
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<TABLE>
SCHEDULE I, CONTINUED
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
FIDELITY ADVISOR ANNUITY SELECT CONTRACTS
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
FAAGVINV FAAGROPP FAAHIYLD FAAINCGR FAAMYMKT FAAOSEAS
---------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996
Beginning unit value - Jan. 1 $11.493314 13.069019 11.846502 11.234358 10.375160 10.858102
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .000000 .049931 .010217 .050222 .269234 .009903
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.280234) .708544 .571313 .008767 .000000 .761091
- ----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.078200) (.092768) (.085007) (.077688) (.073163) (.078324)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $11.134880 13.734726 12.343025 11.215659 10.571231 11.550772
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (3)% 5% 4% 0% 2% 6%
==================================================================================================================================
1995
Beginning unit value - Jan. 1 $10.000000 10.000000 10.000000 10.000000 10.000000 10.000000
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .000000 .000000 .000000 .000000 .258148 .000000
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.005993 1.792354 1.115978 .746605 .000000 .606869
- ----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.071373) (.073085) (.072093) (.070225) (.069566) (.069551)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $10.934620 11.719269 11.043885 10.676380 10.188582 10.537318
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 9% 17% 10% 7% 2% 5%
==================================================================================================================================
<FN>
* This is not an annualized rate of return as it is the change for a six month
period and contract charges do not include the annual contract maintenance
charge discussed in note 2.
</TABLE>
See note 3.
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[NATIONWIDE LOGO]
Nationwide Life Insurance Company. Home Office: Columbus, Ohio
Before investing, understand that variable annuities are not insured by the
FDIC or any other government agency, are not bank deposits, and are not the
obligation of, or guaranteed by, the financial institution where they are
offered. Variable annuities involve investment risk, including the
possible loss of principal.
Nationwide(R) is a registered
federal service mark of Nationwide Mutual Insurance Company.
APO-2929-B (6/96)
