<PAGE> 1
N A T I O N W I D E(R)
F I D E L I T Y
A D V I S O R
V A R I A B L E
A C C O U N T
Semi-Annual Report
F I D E L I T Y
A D V I S O R
A N N U I T I E S(SM)
June 30, 1998
<PAGE> 2
[NATIONWIDE LIFE INSURANCE COMPANY LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to present the 1998
semi-annual report of the Nationwide Fidelity Advisor Variable Account.
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
Joseph J. Gasper, President
August 17, 1998
3
<PAGE> 3
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Fidelity VIP - Equity-Income Portfolio
2,593,762 shares (cost $59,622,218) ................................................... $ 65,284,999
Fidelity VIP - Equity-Income Portfolio: Service Class
370,687 shares (cost $9,302,562) ...................................................... 9,326,485
Fidelity VIP - Growth Portfolio
1,034,724 shares (cost $36,404,453) ................................................... 39,650,632
Fidelity VIP - Growth Portfolio: Service Class
197,422 shares (cost $7,238,439) ...................................................... 7,559,275
Fidelity VIP - High Income Portfolio
13,291,900 shares (cost $162,312,011) ................................................. 167,876,703
Fidelity VIP - High Income Portfolio: Service Class
914,768 shares (cost $11,558,180) ..................................................... 11,544,372
Fidelity VIP - Money Market Portfolio
46,423,332 shares (cost $46,423,332) .................................................. 46,423,332
Fidelity VIP - Overseas Portfolio
4,107,707 shares (cost $75,702,813) ................................................... 84,700,928
Fidelity VIP - Overseas Portfolio: Service Class
127,120 shares (cost $2,626,839) ...................................................... 2,619,939
Fidelity VIP-II - Asset Manager Portfolio
773,380 shares (cost $12,978,804) ..................................................... 13,340,810
Fidelity VIP-II - Asset Manager Portfolio: Service Class
56,372 shares (cost $959,848) ......................................................... 969,598
Fidelity VIP-II - Asset Manager: Growth Portfolio
725,050 shares (cost $10,932,074) ..................................................... 11,673,299
Fidelity VIP-II - Asset Manager: Growth Portfolio: Service Class
64,722 shares (cost $1,024,222) ....................................................... 1,038,146
Fidelity VIP-II - Contrafund Portfolio
3,230,818 shares (cost $59,809,175) ................................................... 70,916,461
Fidelity VIP-II - Contrafund Portfolio: Service Class
248,986 shares (cost $5,264,054) ...................................................... 5,465,251
Fidelity VIP-II - Index 500 Portfolio
404,910 shares (cost $44,818,514) ..................................................... 52,334,626
Fidelity VIP-II - Investment Grade Bond Portfolio
2,862,811 shares (cost $33,766,091) ................................................... 35,412,969
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Fidelity VIP-III - Balanced Portfolio
10,524,112 shares (cost $123,490,591) 161,650,365
Fidelity VIP-III - Balanced Portfolio: Service Class
206,438 shares (cost $3,107,994) 3,164,692
Fidelity VIP-III - Growth and Income Portfolio
3,060,249 shares (cost $37,134,655) 44,587,832
Fidelity VIP-III - Growth and Income Portfolio: Service Class
418,790 shares (cost $5,886,432) 6,089,213
Fidelity VIP-III - Growth Opportunities Portfolio
34,960,400 shares (cost $507,119,390) 714,590,576
Fidelity VIP-III - Growth Opportunities Portfolio: Service Class
979,140 shares (cost $19,680,730) 20,013,629
---------------
Total investments 1,576,234,132
Accounts receivable 30,135
---------------
Total assets 1,576,264,267
ACCOUNTS PAYABLE 28,725
---------------
CONTRACT OWNERS' EQUITY (NOTE 4) $ 1,576,235,542
===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 5
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
GOVERNMENT
TOTAL INVESTMENT FUND
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 27,142,531 12,323,493 - 287,288
Mortality, expense and administration
charges (note 2) ............................
Classic.................................... (735,176) (425,706) - (4,344)
Select..................................... (8,859,552) (5,131,636) - (52,349)
Select (Rider Option 1).................... (42,720) - - -
Select (Rider Option 2).................... (15,814) - - -
Generations................................ (51,521) - - -
Generations (Rider Option 1)............... (52,734) - - -
Generations (Rider Option 2)............... (11,049) - - -
------------- ------------- ------------- -------------
Net investment activity...................... 17,373,965 6,766,151 - 230,595
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold.......... 54,586,424 228,213,050 - 20,683,351
Cost of mutual fund shares sold................ (48,224,682) (228,529,593) - (21,543,654)
------------- ------------- ------------- -------------
Realized gain (loss) on investments.......... 6,361,742 (316,543) - (860,303)
Change in unrealized gain (loss) on investments 59,003,857 73,442,497 - 502,588
------------- ------------- ------------- -------------
Net gain (loss) on investments............... 65,365,599 73,125,954 - (357,715)
------------- ------------- ------------- -------------
Reinvested capital gains....................... 51,573,229 16,886,522 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 134,312,793 96,778,627 - (127,120)
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 243,508,683 225,800,134 - 703,478
Transfers between funds........................ - - - (20,346,585)
Redemptions.................................... (39,203,830) (18,800,819) - (279,350)
Annuity benefits............................... (35,063) - - -
Annual contract maintenance charge (note 2) ... (68,081) (49,658) - (386)
Contingent deferred sales charges (note 2) .... (785,077) (426,122) - (11,183)
Adjustments to maintain reserves............... (1,973) (2,437) - 13
------------- ------------- ------------- -------------
Net equity transactions.................... 203,414,659 206,521,098 - (19,934,013)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 337,727,452 303,299,725 - (20,061,133)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,238,508,090 674,396,891 - 20,061,133
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $1,576,235,542 977,696,616 - -
============= ============= ============= =============
<CAPTION>
HIGH YIELD FUND MONEY MARKET FUND
------------------------------ ------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... - 1,664,977 - 290,239
Mortality, expense and administration
charges (note 2) ............................
Classic.................................... - (20,343) - (6,227)
Select..................................... - (245,157) - (75,036)
Select (Rider Option 1).................... - - - -
Select (Rider Option 2).................... - - - -
Generations................................ - - - -
Generations (Rider Option 1)............... - - - -
Generations (Rider Option 2)............... - - - -
------------- -------------- -------------- -------------
Net investment activity...................... - 1,399,477 - 208,976
------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.......... - 97,566,593 - 34,287,294
Cost of mutual fund shares sold................ - (98,450,573) - (34,287,294)
------------- -------------- -------------- -------------
Realized gain (loss) on investments.......... - (883,980) - -
Change in unrealized gain (loss) on investments - (2,411,864) - -
------------- -------------- -------------- -------------
Net gain (loss) on investments............... - (3,295,844) - -
------------- -------------- -------------- -------------
Reinvested capital gains....................... - 3,446,055 - -
------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... - 1,549,688 - 208,976
------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. - 5,965,897 - 5,893,572
Transfers between funds........................ - (97,185,572) - (35,384,848)
Redemptions.................................... - (1,335,478) - (643,822)
Annuity benefits............................... - - - -
Annual contract maintenance charge (note 2) ... - (1,254) - (196)
Contingent deferred sales charges (note 2) .... - (37,325) - (8,540)
Adjustments to maintain reserves............... - 352 - 2,487
------------- -------------- -------------- -------------
Net equity transactions.................... - (92,593,380) - (30,141,347)
------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ - (91,043,692) - (29,932,371)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... - 91,043,692 - 29,932,371
------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ - - - -
============= ============== ============== =============
</TABLE>
6
<PAGE> 6
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
OVERSEAS FUND EQUITY-INCOME PORTFOLIO
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... $ - 53,871 600,150 15,751
Mortality, expense and administration
charges (note 2)
Classic................................... - (9,830) (17,096) (3,307)
Select.................................... - (118,462) (353,031) (39,863)
Select (Rider Option 1)................... - - (5,323) -
Select (Rider Option 2)................... - - (2,210) -
Generations............................... - - - -
Generations (Rider Option 1).............. - - - -
Generations (Rider Option 2).............. - - - -
------------- ------------- ------------- -------------
Net investment activity..................... - (74,421) 222,490 (27,419)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold......... - 48,228,759 333,174 -
Cost of mutual fund shares sold............... - (48,637,341) (299,502) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments......... - (408,582) 33,672 -
Change in unrealized gain (loss) on investments - (2,797,481) 2,086,827 1,198,695
------------- ------------- ------------- -------------
Net gain (loss) on investments.............. - (3,206,063) 2,120,499 1,198,695
------------- ------------- ------------- -------------
Reinvested capital gains...................... - 4,309,141 2,135,830 79,191
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........ - 1,028,657 4,478,819 1,250,467
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................. - 2,025,270 18,105,212 11,803,112
Transfers between funds....................... - (47,818,175) 4,939,442 3,586,576
Redemptions................................... - (425,271) (1,043,835) (109,239)
Annuity benefits.............................. - - - -
Annual contract maintenance charge (note 2) .. - (821) (1,550) (64)
Contingent deferred sales charges (note 2) ... - (9,277) (17,709) (431)
Adjustments to maintain reserves.............. - 1,590 (376) 89
------------- ------------- ------------- -------------
Net equity transactions................... - (46,226,684) 21,981,184 15,280,043
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY........... - (45,198,027) 26,460,003 16,530,510
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... - 45,198,027 38,824,978 -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD........... $ - - 65,284,981 16,530,510
============= ============= ============= =============
<CAPTION>
EQUITY-INCOME PORTFOLIO:
SERVICE CLASS GROWTH PORTFOLIO
------------------------------ ------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... - - 133,285 4,508
Mortality, expense and administration
charges (note 2)
Classic................................... - - (11,972) (1,829)
Select.................................... - - (201,484) (22,044)
Select (Rider Option 1)................... - - (5,150) -
Select (Rider Option 2)................... - - (1,022) -
Generations............................... (5,799) - - -
Generations (Rider Option 1).............. (7,126) - - -
Generations (Rider Option 2).............. (1,358) - - -
------------- -------------- -------------- -------------
Net investment activity..................... (14,283) - (86,343) (19,365)
------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold......... 161,897 - 1,150,043 269,280
Cost of mutual fund shares sold............... (150,947) - (1,027,248) (286,713)
------------- -------------- -------------- -------------
Realized gain (loss) on investments......... 10,950 - 122,795 (17,433)
Change in unrealized gain (loss) on investments 23,923 - 1,704,472 630,550
------------- -------------- -------------- -------------
Net gain (loss) on investments.............. 34,873 - 1,827,267 613,117
------------- -------------- -------------- -------------
Reinvested capital gains...................... - - 3,486,467 20,178
------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........ 20,590 - 5,227,391 613,930
------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................. 9,163,312 - 10,397,763 6,510,393
Transfers between funds....................... 190,851 - 778,925 1,813,136
Redemptions................................... (48,254) - (489,838) (40,922)
Annuity benefits.............................. - - - -
Annual contract maintenance charge (note 2) .. - - (974) (28)
Contingent deferred sales charges (note 2) ... - - (11,053) (104)
Adjustments to maintain reserves.............. (37) - (210) 25
------------- -------------- -------------- -------------
Net equity transactions................... 9,305,872 - 10,674,613 8,282,500
------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY........... 9,326,462 - 15,902,004 8,896,430
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... - - 23,748,752 -
------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD........... 9,326,462 - 39,650,756 8,896,430
============= ============== ============== =============
</TABLE>
7
<PAGE> 7
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
GROWTH PORTFOLIO:
SERVICE CLASS HIGH INCOME PORTFOLIO
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................... $ - - 10,862,359 105,786
Mortality, expense and administration
charges (note 2)
Classic..................................... - - (62,570) (34,112)
Select...................................... - - (1,065,152) (411,210)
Select (Rider Option 1)..................... - - (3,947) -
Select (Rider Option 2)..................... - - (2,512) -
Generations................................. (4,323) - - -
Generations (Rider Option 1)................ (4,190) - - -
Generations (Rider Option 2)................ (1,585) - - -
------------- ------------- ------------- -------------
Net investment activity....................... (10,098) - 9,728,178 (339,536)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold........... 38,023 - 7,770,613 3,689,991
Cost of mutual fund shares sold................. (35,629) - (7,238,196) (3,876,133)
------------- ------------- ------------- -------------
Realized gain (loss) on investments........... 2,394 - 532,417 (186,142)
Change in unrealized gain (loss) on investments 320,836 - (10,920,836) 5,577,302
------------- ------------- ------------- -------------
Net gain (loss) on investments................ 323,230 - (10,388,419) 5,391,160
------------- ------------- ------------- -------------
Reinvested capital gains........................ - - 6,902,124 13,075
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations.......... 313,132 - 6,241,883 5,064,699
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................... 7,243,338 - 20,751,192 18,109,886
Transfers between funds......................... 42,959 - (3,712,181) 97,513,580
Redemptions..................................... (40,157) - (4,614,343) (1,522,391)
Annuity benefits................................ - - (958) -
Annual contract maintenance charge (note 2) .... - - (4,813) (2,586)
Contingent deferred sales charges (note 2) ..... - - (104,602) (27,220)
Adjustments to maintain reserves................ (5) - 300 1,552
------------- ------------- ------------- -------------
Net equity transactions..................... 7,246,135 - 12,314,595 114,072,821
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............. 7,559,267 - 18,556,478 119,137,520
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...... - - 149,321,511 168,388
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............. $ 7,559,267 - 167,877,989 119,305,908
============= ============= ============= =============
<CAPTION>
HIGH INCOME PORTFOLIO:
SERVICE CLASS MONEY MARKET PORTFOLIO
------------------------------ ------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................... - - 1,126,169 840,480
Mortality, expense and administration
charges (note 2)
Classic..................................... - - (19,935) (17,017)
Select...................................... - - (258,610) (205,136)
Select (Rider Option 1)..................... - - (2,069) -
Select (Rider Option 2)..................... - - (463) -
Generations................................. (9,713) - (3,194) -
Generations (Rider Option 1)................ (6,128) - (3,777) -
Generations (Rider Option 2)................ (1,033) (1,556) -
------------- -------------- -------------- -------------
Net investment activity....................... (16,874) - 836,565 618,327
------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold........... 60 - 25,474,812 14,263,286
Cost of mutual fund shares sold................. (60) - (25,474,812) (14,263,286)
------------- -------------- -------------- -------------
Realized gain (loss) on investments........... - - - -
Change in unrealized gain (loss) on investments (13,808) - - -
------------- -------------- -------------- -------------
Net gain (loss) on investments................ (13,808) - - -
------------- -------------- -------------- -------------
Reinvested capital gains........................ - - - -
------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations.......... (30,682) - 836,565 618,327
------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................... 11,674,698 - 16,097,369 36,206,100
Transfers between funds......................... (55,505) - (12,127,200) 15,121,146
Redemptions..................................... (44,140) - (1,991,455) (981,068)
Annuity benefits................................ - - - -
Annual contract maintenance charge (note 2) .... - - (1,191) (719)
Contingent deferred sales charges (note 2) ..... - - (53,261) (17,381)
Adjustments to maintain reserves................ (10) - (74) (117)
------------- -------------- -------------- -------------
Net equity transactions..................... 11,575,043 - 1,924,188 50,327,961
------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............. 11,544,361 - 2,760,753 50,946,288
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...... - - 43,662,462 1,414,111
------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............. 11,544,361 - 46,423,215 52,360,399
============= ============== ============== =============
</TABLE>
8
<PAGE> 8
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
OVERSEAS PORTFOLIO:
OVERSEAS PORTFOLIO SERVICE CLASS
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 1,390,058 13,050 - -
Mortality, expense and administration
charges (note 2)
Classic...................................... (44,790) (18,058) - -
Select....................................... (510,009) (217,688) - -
Select (Rider Option 1)...................... (1,956) - - -
Select (Rider Option 2)...................... (591) - - -
Generations.................................. - - (1,550) -
Generations (Rider Option 1)................. - - (1,898) -
Generations (Rider Option 2)................. - - (102) -
------------- ------------- ------------- -------------
Net investment activity........................ 832,712 (222,696) (3,550) -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............ 3,318,668 947,517 28,433 -
Cost of mutual fund shares sold.................. (2,907,177) (958,768) (27,147) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments............ 411,491 (11,251) 1,286 -
Change in unrealized gain (loss) on investments . 5,428,926 7,260,020 (6,899) -
------------- ------------- ------------- -------------
Net gain (loss) on investments................. 5,840,417 7,248,769 (5,613) -
------------- ------------- ------------- -------------
Reinvested capital gains......................... 4,097,014 51,803 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 10,770,143 7,077,876 (9,163) -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 5,819,193 8,539,222 2,521,329 -
Transfers between funds.......................... 1,077,668 51,779,620 110,474 -
Redemptions...................................... (1,751,406) (816,584) (2,701) -
Annuity benefits................................. - - - -
Annual contract maintenance charge (note 2) ..... (4,088) (2,560) - -
Contingent deferred sales charges (note 2) ...... (39,760) (20,396) - -
Adjustments to maintain reserves................. 977 3,216 (7) -
------------- ------------- ------------- -------------
Net equity transactions...................... 5,102,584 59,482,518 2,629,095 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 15,872,727 66,560,394 2,619,932 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 68,829,824 230,766 - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. $ 84,702,551 66,791,160 2,619,932 -
============= ============= ============= =============
<CAPTION>
ASSET MANAGER PORTFOLIO:
ASSET MANAGER PORTFOLIO SERVICE CLASS
------------------------------ ------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ 350,865 5,034 - -
Mortality, expense and administration
charges (note 2)
Classic...................................... (3,187) (894) - -
Select....................................... (79,752) (10,778) - -
Select (Rider Option 1)...................... (1,101) - - -
Select (Rider Option 2)...................... (527) - - -
Generations.................................. - - (813) -
Generations (Rider Option 1)................. - - (166) -
Generations (Rider Option 2)................. - - (44) -
------------- -------------- -------------- -------------
Net investment activity........................ 266,298 (6,638) (1,023) -
------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold............ 714,871 53,664 11,945 -
Cost of mutual fund shares sold.................. (651,635) (59,003) (11,571) -
------------- -------------- -------------- -------------
Realized gain (loss) on investments............ 63,236 (5,339) 374 -
Change in unrealized gain (loss) on investments . (408,541) 240,699 9,750 -
------------- -------------- -------------- -------------
Net gain (loss) on investments................. (345,305) 235,360 10,124 -
------------- -------------- -------------- -------------
Reinvested capital gains......................... 1,052,595 12,628 - -
------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 973,588 241,350 9,101 -
------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 2,469,613 2,463,622 917,149 -
Transfers between funds.......................... 320,287 1,719,185 43,347 -
Redemptions...................................... (452,451) (16,387) - -
Annuity benefits................................. (16,169) - - -
Annual contract maintenance charge (note 2) ..... (185) (3) - -
Contingent deferred sales charges (note 2) ...... (4,130) (8) - -
Adjustments to maintain reserves................. (2,044) 48 (1) -
------------- -------------- -------------- -------------
Net equity transactions...................... 2,314,921 4,166,457 960,495 -
------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 3,288,509 4,407,807 969,596 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 10,050,168 - - -
------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. 13,338,677 4,407,807 969,596 -
============= ============== ============== =============
</TABLE>
9
<PAGE> 9
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSET MANAGER: ASSET MANAGER:
GROWTH PORTFOLIO GROWTH PORTFOLIO: SERVICE CLASS
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 182,827 - - -
Mortality, expense and administration
charges (note 2)
Classic.................................... (3,842) (1,063) - -
Select..................................... (64,931) (12,808) - -
Select (Rider Option 1).................... (746) - - -
Select (Rider Option 2).................... (171) - - -
Generations................................ - - (599) -
Generations (Rider Option 1)............... - - (462) -
Generations (Rider Option 2)............... - - (179) -
------------- ------------- ------------- -------------
Net investment activity...................... 113,137 (13,871) (1,240) -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold.......... 340,778 45,288 2,727 -
Cost of mutual fund shares sold................ (297,241) (45,581) (2,635) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments.......... 43,537 (293) 92 -
Change in unrealized gain (loss) on investments (60,978) 322,792 13,924 -
------------- ------------- ------------- -------------
Net gain (loss) on investments............... (17,441) 322,499 14,016 -
------------- ------------- ------------- -------------
Reinvested capital gains....................... 854,987 620 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 950,683 309,248 12,776 -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 2,367,985 3,106,668 1,023,564 -
Transfers between funds........................ 223,528 1,289,821 6,151 -
Redemptions.................................... (142,386) (40,623) (4,345) -
Annuity benefits............................... - - - -
Annual contract maintenance charge (note 2) ... (359) (17) - -
Contingent deferred sales charges (note 2) .... (2,302) (1,500) - -
Adjustments to maintain reserves............... 23 13 (2) -
------------- ------------- ------------- -------------
Net equity transactions.................... 2,446,489 4,354,362 1,025,368 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 3,397,172 4,663,610 1,038,144 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 8,276,147 - - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 11,673,319 4,663,610 1,038,144 -
============= ============= ============= =============
<CAPTION>
CONTRAFUND PORTFOLIO:
CONTRAFUND PORTFOLIO SERVICE CLASS
------------------------------ ------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 374,985 24,653 - -
Mortality, expense and administration
charges (note 2)
Classic.................................... (25,977) (6,036) - -
Select..................................... (396,784) (72,761) - -
Select (Rider Option 1).................... (3,179) - - -
Select (Rider Option 2).................... (1,005) - - -
Generations................................ - - (3,428) -
Generations (Rider Option 1)............... - - (3,308) -
Generations (Rider Option 2)............... - - (510) -
------------- -------------- -------------- -------------
Net investment activity...................... (51,960) (54,144) (7,246) -
------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.......... 2,279,235 13,865 34,897 -
Cost of mutual fund shares sold................ (1,914,686) (13,937) (33,349) -
------------- -------------- -------------- -------------
Realized gain (loss) on investments.......... 364,549 (72) 1,548 -
Change in unrealized gain (loss) on investments 5,862,913 1,843,950 201,197 -
------------- -------------- -------------- -------------
Net gain (loss) on investments............... 6,227,462 1,843,878 202,745 -
------------- -------------- -------------- -------------
Reinvested capital gains....................... 2,758,815 65,154 - -
------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 8,934,317 1,854,888 195,499 -
------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 10,445,026 18,697,330 4,993,204 -
Transfers between funds........................ 1,430,985 6,215,896 282,781 -
Redemptions.................................... (1,383,363) (201,459) (6,235) -
Annuity benefits............................... - - - -
Annual contract maintenance charge (note 2) ... (3,377) (186) - -
Contingent deferred sales charges (note 2) .... (31,053) (3,922) - -
Adjustments to maintain reserves............... 175 (15,176) (4) -
------------- -------------- -------------- -------------
Net equity transactions.................... 10,458,393 24,692,483 5,269,746 -
------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 19,392,710 26,547,371 5,465,245 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 51,523,897 - - -
------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ 70,916,607 26,547,371 5,465,245 -
============= ============== ============== =============
</TABLE>
10
<PAGE> 10
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT GRADE
INDEX 500 PORTFOLIO BOND PORTFOLIO
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................ $ 369,216 9,636 1,397,192 21,628
Mortality, expense and administration
charges (note 2)
Classic.................................. (15,285) (2,793) (14,084) (7,175)
Select................................... (245,011) (33,665) (201,444) (86,499)
Select (Rider Option 1).................. (2,861) - (425) -
Select (Rider Option 2).................. (734) - (387) -
Generations.............................. (2,847) - (1,533) -
Generations (Rider Option 1)............. (2,726) - (1,319) -
Generations (Rider Option 2)............. (511) - (353) -
------------- ------------- ------------- -------------
Net investment activity.................... 99,241 (26,822) 1,177,647 (72,046)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold........ 342,168 316,941 1,258,033 362,597
Cost of mutual fund shares sold.............. (271,859) (335,624) (1,184,187) (383,824)
------------- ------------- ------------- -------------
Realized gain (loss) on investments........ 70,309 (18,683) 73,846 (21,227)
Change in unrealized gain (loss) on investments 4,645,885 1,079,475 (425,642) 628,526
------------- ------------- ------------- -------------
Net gain (loss) on investments............. 4,716,194 1,060,792 (351,796) 607,299
------------- ------------- ------------- -------------
Reinvested capital gains..................... 855,170 19,553 165,769 -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations....... 5,670,605 1,053,523 991,620 535,253
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................ 14,562,979 9,386,079 5,853,296 3,523,276
Transfers between funds...................... 4,250,431 3,572,108 1,105,720 20,822,077
Redemptions.................................. (847,328) (164,419) (1,044,664) (639,358)
Annuity benefits............................. - - (15,041) -
Annual contract maintenance charge (note 2) . (1,892) (60) (1,152) (546)
Contingent deferred sales charges (note 2) .. (14,721) (8,011) (15,120) (10,143)
Adjustments to maintain reserves............. (409) (941) (1,423) 154
------------- ------------- ------------- -------------
Net equity transactions.................. 17,949,060 12,784,756 5,881,616 23,695,460
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.......... 23,619,665 13,838,279 6,873,236 24,230,713
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 28,715,098 - 28,538,182 97,975
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.......... $ 52,334,763 13,838,279 35,411,418 24,328,688
============= ============= ============= =============
<CAPTION>
BALANCED PORTFOLIO:
BALANCED PORTFOLIO SERVICE CLASS
------------------------------ ------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................ 3,537,100 2,651,503 - -
Mortality, expense and administration
charges (note 2)
Classic.................................. (92,772) (60,225) - -
Select................................... (974,798) (726,004) - -
Select (Rider Option 1).................. (1,805) - - -
Select (Rider Option 2).................. (350) - - -
Generations.............................. - - (1,977) -
Generations (Rider Option 1)............. - - (988) -
Generations (Rider Option 2)............. - - (493) -
------------- -------------- -------------- -------------
Net investment activity.................... 2,467,375 1,865,274 (3,458) -
------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold........ 2,395,048 2,206,323 29,320 -
Cost of mutual fund shares sold.............. (1,674,185) (1,800,991) (28,081) -
------------- -------------- -------------- -------------
Realized gain (loss) on investments........ 720,863 405,332 1,239 -
Change in unrealized gain (loss) on investments 7,856,834 12,049,276 56,698 -
------------- -------------- -------------- -------------
Net gain (loss) on investments............. 8,577,697 12,454,608 57,937 -
------------- -------------- -------------- -------------
Reinvested capital gains..................... 5,403,903 - - -
------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations....... 16,448,975 14,319,882 54,479 -
------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................ 7,303,539 13,260,830 3,063,263 -
Transfers between funds...................... 6,442 (1,740,686) 80,857 -
Redemptions.................................. (4,411,425) (2,425,691) (33,837) -
Annuity benefits............................. (628) - - -
Annual contract maintenance charge (note 2) . (7,327) (6,742) - -
Contingent deferred sales charges (note 2) .. (83,293) (47,890) - -
Adjustments to maintain reserves............. 607 819 (75) -
------------- -------------- -------------- -------------
Net equity transactions.................. 2,807,915 9,040,640 3,110,208 -
------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.......... 19,256,890 23,360,522 3,164,687 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 142,394,052 103,152,198 - -
------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.......... 161,650,942 126,512,720 3,164,687 -
============= ============== ============== =============
</TABLE>
11
<PAGE> 11
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
GROWTH AND INCOME GROWTH AND INCOME PORTFOLIO:
PORTFOLIO SERVICE CLASS
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... $ - - - -
Mortality, expense and administration
charges (note 2)
Classic................................... (10,153) (2,202) - -
Select.................................... (227,766) (26,544) - -
Select (Rider Option 1)................... (2,969) - - -
Select (Rider Option 2)................... (313) - - -
Generations............................... - - (3,020) -
Generations (Rider Option 1).............. - - (3,888) -
Generations (Rider Option 2).............. - - (853) -
------------- ------------- ------------- -------------
Net investment activity..................... (241,201) (28,746) (7,761) -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold......... 28,097 29,617 254,098 -
Cost of mutual fund shares sold............... (20,886) (26,876) (245,882) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments......... 7,211 2,741 8,216 -
Change in unrealized gain (loss) on investments 5,139,007 966,625 202,781 -
............................................... ------------- ------------- ------------- -------------
Net gain (loss) on investments.............. 5,146,218 969,366 210,997 -
------------- ------------- ------------- -------------
Reinvested capital gains...................... 158,758 - - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........ 5,063,775 940,620 203,236 -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................. 9,453,853 8,266,788 5,736,928 -
Transfers between funds....................... 4,996,317 2,403,190 154,084 -
Redemptions................................... (991,144) (75,728) (5,037) -
Annuity benefits.............................. - - - -
Annual contract maintenance charge (note 2) .. (782) (25) - -
Contingent deferred sales charges (note 2) ... (9,625) (2,274) - -
Adjustments to maintain reserves.............. 157 80 (4) -
------------- ------------- ------------- -------------
Net equity transactions................... 13,448,776 10,592,031 5,885,971 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY........... 18,512,551 11,532,651 6,089,207 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 26,075,446 - - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD........... $ 44,587,997 11,532,651 6,089,207 -
============= ============= ============= =============
<CAPTION>
GROWTH OPPORTUNITIES GROWTH OPPORTUNITIES
PORTFOLIO PORTFOLIO: SERVICE CLASS
------------------------------ ------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... 6,818,325 6,335,089 - -
Mortality, expense and administration
charges (note 2)
Classic................................... (413,513) (230,251) - -
Select.................................... (4,280,780) (2,775,632) - -
Select (Rider Option 1)................... (11,189) - - -
Select (Rider Option 2)................... (5,529) - - -
Generations............................... - - (12,725) -
Generations (Rider Option 1).............. - - (16,758) -
Generations (Rider Option 2).............. - - (2,472) -
------------- -------------- -------------- -------------
Net investment activity..................... 2,107,314 3,329,206 (31,955) -
------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold......... 8,539,046 5,248,684 80,438 -
Cost of mutual fund shares sold............... (4,651,902) (3,559,995) (75,865) -
------------- -------------- -------------- -------------
Realized gain (loss) on investments......... 3,887,144 1,688,689 4,573 -
Change in unrealized gain (loss) on investments 36,953,688 46,351,344 332,900 -
............................................... ------------- -------------- -------------- -------------
Net gain (loss) on investments.............. 40,840,832 48,040,033 337,473 -
------------- -------------- -------------- -------------
Reinvested capital gains...................... 23,701,797 8,869,124 - -
------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........ 66,649,943 60,238,363 305,518 -
------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................. 53,810,557 71,338,611 19,734,321 -
Transfers between funds....................... (4,213,525) (3,360,469) 67,162 -
Redemptions................................... (19,762,259) (9,083,029) (93,227) -
Annuity benefits.............................. (2,267) - - -
Annual contract maintenance charge (note 2) .. (40,391) (33,465) - -
Contingent deferred sales charges (note 2) ... (398,448) (220,517) - -
Adjustments to maintain reserves.............. 654 3,359 (185) -
------------- -------------- -------------- -------------
Net equity transactions................... 29,394,321 58,644,490 19,708,071 -
------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY........... 96,044,264 118,882,853 20,013,589 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .... 618,547,573 383,098,230 - -
------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD........... 714,591,837 501,981,083 20,013,589 -
============= ============== ============== =============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 12
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(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.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in any of the following:
Funds of Fidelity Advisor Annuity Fund (effective January 20,
1997, the following funds are no longer available);
Fidelity Advisor Annuity Government Investment Fund
Fidelity Advisor Annuity High Yield Fund
Fidelity Advisor Annuity Money Market Fund
Fidelity Advisor Annuity Overseas Fund
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio*
Fidelity VIP - Equity-Income Portfolio: Service Class+
Fidelity VIP - Growth Portfolio*
Fidelity VIP - Growth Portfolio: Service Class+
Fidelity VIP - High Income Portfolio*
Fidelity VIP - High Income Portfolio: Service Class+
Fidelity VIP - Money Market Portfolio
Fidelity VIP - Overseas Portfolio*
Fidelity VIP - Overseas Portfolio: Service Class+
Portfolios of the Fidelity Variable Insurance Products Fund
II(Fidelity VIP-II);
Fidelity VIP-II - Asset Manager Portfolio*
Fidelity VIP-II - Asset Manager Portfolio: Service Class+
Fidelity VIP-II - Asset Manager: Growth Portfolio*
Fidelity VIP-II - Asset Manager: Growth Portfolio: Service
Class+
Fidelity VIP-II - Contrafund Portfolio*
Fidelity VIP-II - Contrafund Portfolio: Service Class+
Fidelity VIP-II - Index 500 Portfolio
Fidelity VIP-II - Investment Grade Bond Portfolio
Portfolios of the Fidelity Variable Insurance Products Fund
III(Fidelity VIP-III);
Fidelity VIP-III - Balanced Portfolio*
(formerly Fidelity Advisor Annuity Income & Growth Fund)
Fidelity VIP-III - Balanced Portfolio: Service Class+
Fidelity VIP-III - Growth and Income Portfolio*
Fidelity VIP-III - Growth and Income Portfolio: Service Class+
13
<PAGE> 13
Fidelity VIP-III - Growth Opportunities Portfolio*
(formerly Fidelity Advisor Annuity Growth Opportunities Fund)
Fidelity VIP-III - Growth Opportunities Portfolio: Service
Class+
At June 30, 1998, except as noted, 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, 1998. 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.
(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) 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 calculation
equal to an annual rate of 0.80%, 0.45% and 0.15%, respectively; for the
Fidelity Advisor Generations Annuity contracts a mortality risk charge and
an expense risk charge assessed through the daily unit value calculation
equal to an annual rate of .80% and .15%, respectively. For Fidelity
Advisor Annuity Select and Fidelity Advisor Generations Annuity contracts,
optional long term care facility with a one-year stepped up death benefit
rider is offered at an additional annual rate of 0.05% (Rider Option 1).
Optional long care facility with a 5% enhanced death benefit rider is
offered at an additional annual rate of 0.10% (Rider Option 2).
(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.
* This fund is only available for the Fidelity Advisor Annuity Classic or Select
contracts.
+ This fund is only available for the Fidelity Advisor Generations
Annuity contracts.
14
<PAGE> 14
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at June 30, 1998, for
each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN
-------- ---------- --------
<S> <C> <C> <C> <C>
FIDELITY ADVISOR ANNUITY CLASSIC CONTRACTS:
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ......................... 128,093 $13.460145 $ 1,724,150 10%
Non-tax qualified ..................... 108,092 13.460145 1,454,934 10%
Fidelity VIP - Growth Portfolio:
Tax qualified ......................... 91,593 13.755061 1,259,867 18%
Non-tax qualified ..................... 74,655 13.755061 1,026,884 18%
Fidelity VIP - High Income Portfolio:
Tax qualified ......................... 515,371 12.362722 6,371,388 4%
Non-tax qualified ..................... 384,111 12.362722 4,748,658 4%
Fidelity VIP - Money Market Portfolio:
Tax qualified ......................... 151,802 10.692446 1,623,135 2%
Non-tax qualified ..................... 47,806 10.692446 511,163 2%
Fidelity VIP - Overseas Portfolio:
Tax qualified ......................... 302,767 13.344747 4,040,349 15%
Non-tax qualified ..................... 244,829 13.344747 3,267,181 15%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified ......................... 22,151 12.662471 280,486 9%
Non-tax qualified ..................... 28,141 12.662471 356,335 9%
Fidelity VIP-II - Asset Manager:
Growth Portfolio:
Tax qualified ......................... 37,323 13.198490 492,607 10%
Non-tax qualified ..................... 19,360 13.198490 255,523 10%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified ......................... 216,293 13.620824 2,946,089 16%
Non-tax qualified ..................... 149,033 13.620824 2,029,952 16%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified ......................... 121,103 14.590374 1,766,938 17%
Non-tax qualified ..................... 86,812 14.590374 1,266,620 17%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified ......................... 126,965 11.178360 1,419,260 3%
Non-tax qualified ..................... 81,573 11.178360 911,852 3%
Fidelity VIP-III - Balanced Portfolio:
Tax qualified ......................... 529,963 16.403827 8,693,421 11%
Non-tax qualified ..................... 396,004 16.403827 6,495,981 11%
Fidelity VIP-III- Growth and
Income Portfolio:
Tax qualified ......................... 82,608 14.359845 1,186,238 16%
Non-tax qualified ..................... 58,051 14.359845 833,603 16%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified ......................... 1,575,116 21.663515 34,122,549 11%
Non-tax qualified ..................... 1,560,271 21.663515 33,800,954 11%
</TABLE>
(Continued)
15
<PAGE> 15
<TABLE>
<CAPTION>
FIDELITY ADVISOR ANNUITY SELECT CONTRACTS:
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ......................... 1,691,612 13.440500 22,736,111 10%
Non-tax qualified ..................... 2,803,517 13.440500 37,680,670 10%
Fidelity VIP - Growth Portfolio:
Tax qualified ......................... 980,245 13.734990 13,463,655 18%
Non-tax qualified ..................... 1,645,192 13.734990 22,596,696 18%
Fidelity VIP - High Income Portfolio:
Tax qualified ......................... 4,065,954 12.341957 50,181,829 4%
Non-tax qualified ..................... 8,506,225 12.341957 104,983,463 4%
Fidelity VIP - Money Market Portfolio:
Tax qualified ......................... 1,197,179 10.674471 12,779,253 2%
Non-tax qualified ..................... 2,295,991 10.674471 24,508,489 2%
Fidelity VIP - Overseas Portfolio:
Tax qualified ......................... 1,778,603 13.322329 23,695,134 15%
Non-tax qualified ..................... 3,994,316 13.322329 53,213,592 15%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified ......................... 305,713 12.644003 3,865,436 9%
Non-tax qualified ..................... 664,962 12.644003 8,407,782 9%
Fidelity VIP-II - Asset Manager:
Growth Portfolio:
Tax qualified ......................... 282,184 13.179249 3,718,973 10%
Non-tax qualified ..................... 528,466 13.179249 6,964,785 10%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified ......................... 1,699,661 13.600953 23,117,009 16%
Non-tax qualified ..................... 3,068,676 13.600953 41,736,918 16%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified ......................... 959,479 14.569100 13,978,745 17%
Non-tax qualified ..................... 2,025,229 14.569100 29,505,764 17%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified ......................... 1,012,935 11.159577 11,303,926 3%
Non-tax qualified ..................... 1,715,093 11.159577 19,139,712 3%
Fidelity VIP-III - Balanced Portfolio:
Tax qualified ......................... 2,700,717 16.345991 44,145,896 11%
Non-tax qualified ..................... 6,223,231 16.345991 101,724,878 11%
Fidelity VIP-III- Growth and
Income Portfolio:
Tax qualified ......................... 883,549 14.338891 12,669,113 16%
Non-tax qualified ..................... 2,022,258 14.338891 28,996,937 16%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified ......................... 8,876,350 21.587137 191,614,984 11%
Non-tax qualified ..................... 20,908,185 21.587137 451,347,854 11%
</TABLE>
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<TABLE>
<CAPTION>
FIDELITY ADVISOR ANNUITY SELECT (RIDER OPTION 1):
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ............................. 29,954 11.340149 339,683 10%
Non-tax qualified ......................... 78,732 11.340149 892,833 10%
Fidelity VIP - Growth Portfolio:
Tax qualified ............................. 24,021 11.856959 284,816 18%
Non-tax qualified ......................... 67,264 11.856959 797,546 18%
Fidelity VIP - High Income Portfolio:
Tax qualified ............................. 36,527 10.535331 384,824 4%
Non-tax qualified ......................... 64,720 10.535331 681,847 4%
Fidelity VIP - Money Market Portfolio:
Tax qualified ............................. 38,999 10.264819 400,318 2%
Non-tax qualified ......................... 23,360 10.264819 239,786 2%
Fidelity VIP - Overseas Portfolio:
Tax qualified ............................. 11,213 11.390392 127,720 15%
Non-tax qualified ......................... 25,371 11.390392 288,986 15%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified ............................. 2,418 11.076752 26,784 8%
Non-tax qualified ......................... 21,007 11.076752 232,689 8%
Fidelity VIP-II - Asset Manager
Growth Portfolio:
Tax qualified ............................. 5,400 11.299318 61,016 10%
Non-tax qualified ......................... 13,612 11.299318 153,806 10%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified ............................. 14,058 11.533666 162,140 16%
Non-tax qualified ......................... 66,057 11.533666 761,879 16%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified ............................. 12,462 12.043425 150,085 17%
Non-tax qualified ......................... 51,272 12.043425 617,490 17%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified ............................. 4,501 10.465169 47,104 3%
Non-tax qualified ......................... 3,114 10.465169 32,589 3%
Fidelity VIP-III - Balanced Portfolio:
Tax qualified ............................. 6,181 11.439210 70,706 11%
Non-tax qualified ......................... 37,778 11.439210 432,150 11%
Fidelity VIP-III- Growth and
Income Portfolio:
Tax qualified ............................. 18,809 12.076210 227,141 16%
Non-tax qualified ......................... 53,806 12.076210 649,773 16%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified ............................. 53,165 11.485563 610,630 11%
Non-tax qualified ......................... 161,327 11.485563 1,852,931 11%
</TABLE>
(Continued)
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<TABLE>
<CAPTION>
FIDELITY ADVISOR ANNUITY SELECT (RIDER OPTION 2):
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ............................. 16,541 11.336392 187,515 10%
Non-tax qualified ......................... 23,734 11.336392 269,058 10%
Fidelity VIP - Growth Portfolio:
Tax qualified ............................. 7,901 11.853026 93,651 18%
Non-tax qualified ......................... 10,769 11.853026 127,645 18%
Fidelity VIP - High Income Portfolio:
Tax qualified ............................. 8,954 10.531831 94,302 4%
Non-tax qualified ......................... 40,016 10.531831 421,442 4%
Fidelity VIP - Money Market Portfolio:
Tax qualified ............................. 6,414 10.261364 65,816 2%
Non-tax qualified ......................... 8,695 10.261364 89,223 2%
Fidelity VIP - Overseas Portfolio:
Tax qualified ............................. 400 11.386618 4,555 15%
Non-tax qualified ......................... 5,711 11.386618 65,029 15%
Fidelity VIP-II - Asset Manager Portfolio:
Non-tax qualified ......................... 8,629 11.073070 95,550 8%
Fidelity VIP-II - Asset Manager
Growth Portfolio:
Non-tax qualified ......................... 2,355 11.295551 26,601 10%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified ............................. 2,039 11.529833 23,509 16%
Non-tax qualified ......................... 12,067 11.529833 139,130 16%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified ............................. 3,060 12.039434 36,841 17%
Non-tax qualified ......................... 11,133 12.039434 134,035 17%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified ............................. 2,553 10.461693 26,709 3%
Non-tax qualified ......................... 2,227 10.461693 23,298 3%
Fidelity VIP-III - Balanced Portfolio:
Non-tax qualified ......................... 7,235 11.435411 82,735 11%
Fidelity VIP-III- Growth and
Income Portfolio:
Non-tax qualified ......................... 2,085 12.072205 25,171 16%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified ............................. 54,097 11.481747 621,128 10%
Non-tax qualified ......................... 51,582 11.481747 592,251 10%
</TABLE>
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<TABLE>
<CAPTION>
FIDELITY ADVISOR GENERATIONS ANNUITY CONTRACTS:
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Service Class:
Tax qualified ........................... 201,309 10.712556 2,156,534 7%(a)
Non-tax qualified ....................... 184,464 10.712556 1,976,081 7%(a)
Fidelity VIP - Growth Portfolio:
Service Class:
Tax qualified ........................... 122,734 11.387787 1,397,669 14%(a)
Non-tax qualified ....................... 195,952 11.387787 2,231,460 14%(a)
Fidelity VIP - High Income Portfolio:
Service Class:
Tax qualified ........................... 287,397 10.156340 2,918,902 2%(a)
Non-tax qualified ....................... 340,782 10.156340 3,461,098 2%(a)
Fidelity VIP - Money Market Portfolio:
Tax qualified ........................... 138,724 10.184323 1,412,810 2%(a)
Non-tax qualified ....................... 111,617 10.184323 1,136,744 2%(a)
Fidelity VIP - Overseas Portfolio:
Service Class:
Tax qualified ........................... 67,458 10.945732 738,377 9%(a)
Non-tax qualified ....................... 57,834 10.945732 633,035 9%(a)
Fidelity VIP-II - Asset Manager Portfolio:
Service Class:
Tax qualified ........................... 33,273 10.597832 352,622 6%(a)
Non-tax qualified ....................... 30,634 10.597832 324,654 6%(a)
Fidelity VIP-II - Asset Manager:
Growth Portfolio: Service Class:
Tax qualified ........................... 20,398 10.718288 218,632 7%(a)
Non-tax qualified ....................... 19,399 10.718288 207,924 7%(a)
Fidelity VIP-II - Contrafund Portfolio:
Service Class:
Tax qualified ........................... 99,542 11.325336 1,127,347 13%(a)
Non-tax qualified ....................... 126,765 11.325336 1,435,656 13%(a)
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified ........................... 94,781 11.221191 1,063,556 12%(a)
Non-tax qualified ....................... 97,780 11.221191 1,097,208 12%(a)
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified ........................... 68,766 10.253311 705,079 3%(a)
Non-tax qualified ....................... 57,938 10.253311 594,056 3%(a)
Fidelity VIP-III - Balanced Portfolio:
Service Class:
Tax qualified ........................... 90,059 10.870876 979,020 9%(a)
Non-tax qualified ....................... 57,883 10.870876 629,239 9%(a)
Fidelity VIP-III- Growth and
Income Portfolio: Service Class:
Tax qualified ........................... 76,670 11.238560 861,660 12%(a)
Non-tax qualified ....................... 139,320 11.238560 1,565,756 12%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio: Service Class:
Tax qualified ........................... 351,061 10.723933 3,764,755 7%(a)
Non-tax qualified ....................... 495,996 10.723933 5,319,028 7%(a)
</TABLE>
(Continued)
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<TABLE>
<CAPTION>
FIDELITY ADVISOR GENERATIONS ANNUITY (RIDER OPTION 1):
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Service Class:
Tax qualified .................................. 134,782 10.710468 1,443,578 7%(a)
Non-tax qualified .............................. 246,431 10.710468 2,639,391 7%(a)
Fidelity VIP - Growth Portfolio:
Service Class:
Tax qualified .................................. 130,691 11.385567 1,487,991 14%(a)
Non-tax qualified .............................. 118,563 11.385567 1,349,907 14%(a)
Fidelity VIP - High Income Portfolio:
Service Class:
Tax qualified .................................. 163,361 10.154357 1,658,826 2%(a)
Non-tax qualified .............................. 254,811 10.154357 2,587,442 2%(a)
Fidelity VIP - Money Market Portfolio:
Tax qualified .................................. 106,775 10.182196 1,087,204 2%(a)
Non-tax qualified .............................. 126,388 10.182196 1,286,907 2%(a)
Fidelity VIP - Overseas Portfolio:
Service Class:
Tax qualified .................................. 36,903 10.943599 403,852 9%(a)
Non-tax qualified .............................. 67,339 10.943599 736,931 9%(a)
Fidelity VIP-II - Asset Manager Portfolio:
Service Class:
Tax qualified .................................. 10,105 10.595763 107,070 6%(a)
Non-tax qualified .............................. 10,618 10.595763 112,506 6%(a)
Fidelity VIP-II - Asset Manager:
Growth Portfolio: Service Class:
Tax qualified .................................. 23,721 10.716196 254,199 7%(a)
Non-tax qualified .............................. 13,834 10.716196 148,248 7%(a)
Fidelity VIP-II - Contrafund Portfolio:
Service Class:
Tax qualified .................................. 109,018 11.323125 1,234,424 13%(a)
Non-tax qualified .............................. 97,393 11.323125 1,102,793 13%(a)
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .................................. 62,838 11.218998 704,979 12%(a)
Non-tax qualified .............................. 143,856 11.218998 1,613,920 12%(a)
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .................................. 37,911 10.251312 388,637 3%(a)
Non-tax qualified .............................. 40,364 10.251312 413,784 3%(a)
Fidelity VIP-III - Balanced Portfolio:
Service Class:
Tax qualified .................................. 38,328 10.868761 416,578 9%(a)
Non-tax qualified .............................. 62,337 10.868761 677,526 9%(a)
Fidelity VIP-III- Growth and
Income Portfolio: Service Class:
Tax qualified .................................. 136,018 11.236366 1,528,348 12%(a)
Non-tax qualified .............................. 138,160 11.236366 1,552,416 12%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio: Service Class:
Tax qualified .................................. 464,477 10.721840 4,980,048 7%(a)
Non-tax qualified .............................. 395,390 10.721840 4,239,308 7%(a)
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
FIDELITY ADVISOR GENERATIONS ANNUITY (RIDER OPTION 2):
Fidelity VIP - Equity-Income Portfolio:
Service Class:
Tax qualified .................................. 43,075 10.708377 461,263 7%(a)
Non-tax qualified .............................. 60,665 10.708377 649,624 7%(a)
Fidelity VIP - Growth Portfolio:
Service Class:
Tax qualified .................................. 13,756 11.383343 156,589 14%(a)
Non-tax qualified .............................. 82,195 11.383343 935,654 14%(a)
Fidelity VIP - High Income Portfolio:
Service Class:
Tax qualified .................................. 28,186 10.152377 286,155 2%(a)
Non-tax qualified .............................. 62,245 10.152377 631,935 2%(a)
Fidelity VIP - Money Market Portfolio:
Tax qualified .................................. 99,452 10.180069 1,012,428 2%(a)
Non-tax qualified .............................. 26,516 10.180069 269,935 2%(a)
Fidelity VIP - Overseas Portfolio:
Service Class:
Tax qualified .................................. 3,217 10.941470 35,199 9%(a)
Non-tax qualified .............................. 6,631 10.941470 72,553 9%(a)
Fidelity VIP-II - Asset Manager Portfolio:
Service Class:
Tax qualified .................................. 904 10.593701 9,577 6%(a)
Non-tax qualified .............................. 5,962 10.593701 63,160 6%(a)
Fidelity VIP-II - Asset Manager:
Growth Portfolio: Service Class:
Tax qualified .................................. 18,814 10.714104 201,575 7%(a)
Non-tax qualified .............................. 706 10.714104 7,564 7%(a)
Fidelity VIP-II - Contrafund Portfolio:
Service Class:
Tax qualified .................................. 24,865 11.320916 281,495 13%(a)
Non-tax qualified .............................. 25,045 11.320916 283,532 13%(a)
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .................................. 10,355 11.216809 116,150 12%(a)
Non-tax qualified .............................. 25,179 11.216809 282,428 12%(a)
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .................................. 6,655 10.249310 68,209 2%(a)
Non-tax qualified .............................. 26,167 10.249310 268,194 2%(a)
Fidelity VIP-III - Balanced Portfolio:
Service Class:
Tax qualified .................................. 28,863 10.866638 313,644 9%(a)
Non-tax qualified .............................. 13,682 10.866638 148,677 9%(a)
Fidelity VIP-III- Growth and
Income Portfolio: Service Class:
Tax qualified .................................. 13,103 11.234174 147,201 12%(a)
Non-tax qualified .............................. 38,618 11.234174 433,841 12%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio: Service Class:
Tax qualified .................................. 42,880 10.719748 459,663 7%(a)
Non-tax qualified .............................. 116,682 10.719748 1,250,802 7%(a)
======== ==============
Reserves for annuity contracts in payout phase:
Tax qualified .................................. 43,962
Non-tax qualified .............................. 142,631
--------------
$1,576,235,542
==============
</TABLE>
(a) This investment option was not being utilized for the entire period.
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23
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[NATIONWIDE LIFE INSURANCE COMPANY LOGO]
[FIDELITY INVESTMENTS 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-F (6/98)
24
