<PAGE> 1
N A T I O N W I D E
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
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)
DECEMBER 31, 1998
<PAGE> 2
[LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO OF JOSEPH J. GASPER]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 1998 annual
report of the Nationwide Fidelity Advisor Variable Account.
Equity markets again defied the odds in 1998 to tally a fourth straight year of
double-digit gains, as measured by the major indices. This surprise came
following the breathtaking correction during the third quarter that gave us a
broad double-digit retreat. Fixed income investments also provided respectable
returns in 1998, supported by the continued low inflationary environment and
favorable Federal Reserve actions.
The performance of the American economy continues strong into 1999. However, we
believe the persisting slump in Asia and recent difficulties in Latin America
will inevitably take their toll and dampen growth in the United States. This
moderation, we think, will be healthy for our economy and get us back to a more
sustainable growth level. We look for interest rates to continue within the
range of the recent past, and we expect inflation to remain subdued. Moreover,
we remain optimistic about long-term prospects for U.S. business activity;
holders of financial assets should continue to profit from the anticipated
favorable investment climate.
We are pleased you have chosen our Company to provide the investment products
and services to help you meet your retirement savings and financial planning
goals.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
February 16, 1999
3
<PAGE> 3
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Fidelity VIP - Equity-Income Portfolio
2,639,029 shares (cost $61,222,852) .............................. $ 67,084,128
Fidelity VIP - Growth Portfolio
1,249,446 shares (cost $45,218,302) .............................. 56,062,644
Fidelity VIP - High Income Portfolio
13,392,771 shares (cost $162,461,867) ............................ 154,418,650
Fidelity VIP - Money Market Portfolio
63,267,165 shares (cost $63,267,165) ............................. 63,267,165
Fidelity VIP - Overseas Portfolio
3,962,390 shares (cost $73,445,477) .............................. 79,445,912
Fidelity VIP-II - Asset Manager Portfolio
835,419 shares (cost $14,190,713) ................................ 15,171,200
Fidelity VIP-II - Asset Manager: Growth Portfolio
776,512 shares (cost $11,838,166) ................................ 13,224,005
Fidelity VIP-II - Contrafund Portfolio
3,466,726 shares (cost $65,459,513) .............................. 84,726,778
Fidelity VIP-II - Index 500 Portfolio
532,116 shares (cost $61,572,677) ................................ 75,161,352
Fidelity VIP-II - Investment Grade Bond Portfolio
4,176,355 shares (cost $50,778,794) .............................. 54,125,559
Fidelity VIP-III - Balanced Portfolio
10,284,348 shares (cost $121,712,362) ............................ 165,680,849
Fidelity VIP-III - Growth and Income Portfolio
3,551,353 shares (cost $44,719,366) .............................. 57,354,358
Fidelity VIP-III - Growth Opportunities Portfolio
33,894,186 shares (cost $505,260,936) ............................ 775,498,973
Fidelity VIP - Equity-Income Portfolio: Service Class
758,036 shares (cost $18,560,760) ................................ 19,246,523
Fidelity VIP - Growth Portfolio: Service Class
431,282 shares (cost $16,465,473) ................................ 19,330,052
Fidelity VIP - High Income Portfolio: Service Class
1,706,976 shares (cost $20,744,141) .............................. 19,647,293
Fidelity VIP - Overseas Portfolio: Service Class
292,762 shares (cost $5,760,422) ................................. 5,864,016
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Fidelity VIP-II - Asset Manager Portfolio: Service Class
205,447 shares (cost $3,491,849) ................................. 3,718,593
Fidelity VIP-II - Asset Manager: Growth Portfolio: Service Class
147,309 shares (cost $2,294,845) ................................. 2,498,362
Fidelity VIP-II - Contrafund Portfolio: Service Class
607,247 shares (cost $12,899,743) ................................ 14,828,965
Fidelity VIP-III - Balanced Portfolio: Service Class
594,199 shares (cost $8,999,175) ................................. 9,548,778
Fidelity VIP-III - Growth and Income Portfolio: Service Class
1,139,649 shares (cost $16,301,118) .............................. 18,359,737
Fidelity VIP-III - Growth Opportunities Portfolio: Service Class
2,014,007 shares (cost $40,882,800) .............................. 46,040,194
--------------
Total investments ............................................. 1,820,304,086
Accounts receivable .................................................... 8,912
--------------
Total assets .................................................. 1,820,312,998
ACCOUNTS PAYABLE .......................................................... 271
--------------
CONTRACT OWNERS' EQUITY (NOTE 4) .......................................... $1,820,312,727
==============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 5
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL EQUITY-INCOME PORTFOLIO
------------------------------- --------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ 28,746,293 13,779,569 600,150 15,751
Mortality, expense and administration
charges (note 2)
Classic ....................................... (1,542,846) (1,083,010) (39,219) (10,689)
Select ........................................ (18,369,018) (12,435,476) (760,982) (231,323)
Select (Rider Option 1) ....................... (142,890) (1,046) (15,961) (126)
Select (Rider Option 2) ....................... (46,433) (282) (6,275) (35)
Generations ................................... (346,655) - - -
Generations (Rider Option 1) .................. (346,637) - - -
Generations (Rider Option 2) .................. (99,916) - - -
-------------- -------------- -------------- --------------
Net investment activity ......................... 7,851,898 259,755 (222,287) (226,422)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............. 221,265,915 287,881,219 3,724,216 22,507
Cost of mutual fund shares sold ................... (192,745,675) (283,840,344) (3,440,172) (21,016)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............. 28,520,240 4,040,875 284,044 1,491
Change in unrealized gain (loss) on investments ... 152,688,719 165,223,943 2,285,323 3,575,954
-------------- -------------- -------------- --------------
Net gain (loss) on investments .................. 181,208,959 169,264,818 2,569,367 3,577,445
-------------- -------------- -------------- --------------
Reinvested capital gains .......................... 51,573,229 17,399,176 2,135,830 79,191
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 240,634,086 186,923,749 4,482,910 3,430,214
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................. 439,055,602 429,777,841 24,438,255 28,876,880
Transfers between funds ........................... - - 3,516,796 7,018,612
Redemptions ....................................... (95,841,935) (51,393,337) (4,045,164) (494,788)
Annuity benefits .................................. (45,976) (2,059) (1,314) -
Annual contract maintenance charge (note 2) ....... (135,080) (99,391) (3,209) (203)
Contingent deferred sales charges (note 2) ........ (1,866,659) (1,101,526) (128,773) (7,134)
Adjustments to maintain reserves .................. 4,599 5,922 (823) 1,397
-------------- -------------- -------------- --------------
Net equity transactions ....................... 341,170,551 377,187,450 23,775,768 35,394,764
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............. 581,804,637 564,111,199 28,258,678 38,824,978
Contract owners' equity beginning of period ....... 1,238,508,090 674,396,891 38,824,978 -
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............. $1,820,312,727 1,238,508,090 67,083,656 38,824,978
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO HIGH INCOME PORTFOLIO
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ 133,285 4,508 10,862,359 105,786
Mortality, expense and administration
charges (note 2)
Classic ....................................... (29,588) (8,415) (126,145) (79,502)
Select ........................................ (484,627) (136,613) (2,077,769) (1,330,341)
Select (Rider Option 1) ....................... (14,910) (254) (13,240) (45)
Select (Rider Option 2) ....................... (4,473) (15) (5,806) (42)
Generations ................................... - - - -
Generations (Rider Option 1) .................. - - - -
Generations (Rider Option 2) .................. - - - -
--------------- -------------- -------------- --------------
Net investment activity ......................... (400,313) (140,789) 8,639,399 (1,304,144)
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............. 2,870,100 701,523 34,158,097 9,990,931
Cost of mutual fund shares sold ................... (2,481,565) (663,222) (34,536,377) (9,469,396)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............. 388,535 38,301 (378,280) 521,535
Change in unrealized gain (loss) on investments ... 9,302,636 1,541,707 (24,528,745) 16,484,146
--------------- -------------- -------------- --------------
Net gain (loss) on investments .................. 9,691,171 1,580,008 (24,907,025) 17,005,681
--------------- -------------- -------------- --------------
Reinvested capital gains .......................... 3,486,467 20,178 6,902,124 13,075
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 12,777,325 1,459,397 (9,365,502) 15,714,612
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................. 16,985,566 17,228,215 28,906,593 40,442,027
Transfers between funds ........................... 4,184,630 5,458,035 (3,894,607) 98,072,875
Redemptions ....................................... (1,597,186) (389,446) (10,314,646) (4,965,856)
Annuity benefits .................................. - - (1,828) (520)
Annual contract maintenance charge (note 2) ....... (2,420) (174) (9,856) (6,797)
Contingent deferred sales charges (note 2) ........ (33,687) (7,662) (221,320) (105,011)
Adjustments to maintain reserves .................. 433 387 (509) 1,793
--------------- -------------- -------------- --------------
Net equity transactions ....................... 19,537,336 22,289,355 14,463,827 133,438,511
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............. 32,314,661 23,748,752 5,098,325 149,153,123
Contract owners' equity beginning of period ....... 23,748,752 - 149,321,511 168,388
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............. $ 56,063,413 23,748,752 154,419,836 149,321,511
=============== ============== ============== ==============
</TABLE>
6
<PAGE> 6
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO OVERSEAS PORTFOLIO
-------------------------- -------------------------
1998 1997 1998 1997
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ 2,729,931 2,138,816 1,390,058 13,050
Mortality, expense and administration
charges (note 2)
Classic ....................................... (40,564) (20,370) (88,594) (60,043)
Select ........................................ (578,067) (540,448) (1,006,416) (670,326)
Select (Rider Option 1) ....................... (11,394) (21) (5,313) (105)
Select (Rider Option 2) ....................... (4,365) - (1,148) (28)
Generations ................................... (27,469) - - -
Generations (Rider Option 1) .................. (21,405) - - -
Generations (Rider Option 2) .................. (13,826) - - -
------------ ----------- ----------- -----------
Net investment activity ......................... 2,032,841 1,577,977 288,587 (717,452)
------------ ----------- ----------- -----------
Proceeds from mutual fund shares sold ............. 86,064,942 50,465,388 9,164,560 6,692,136
Cost of mutual fund shares sold ................... (86,064,942) (50,465,388) (8,380,638) (6,194,942)
------------ ----------- ----------- -----------
Realized gain (loss) on investments ............. - - 783,922 497,194
Change in unrealized gain (loss) on investments ... - - 2,431,247 3,564,616
------------ ----------- ----------- -----------
Net gain (loss) on investments .................. - - 3,215,169 4,061,810
------------ ----------- ----------- -----------
Reinvested capital gains .......................... - - 4,097,014 51,803
------------ ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 2,032,841 1,577,977 7,600,770 3,396,161
------------ ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ................................. 36,787,840 53,240,636 8,735,152 19,142,453
Transfers between funds ........................... (10,592,420) (8,324,168) (1,473,900) 48,946,911
Redemptions ....................................... (8,446,229) (4,162,215) (4,144,730) (2,818,245)
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... (2,787) (1,833) (7,644) (5,435)
Contingent deferred sales charges (note 2) ........ (175,051) (81,918) (92,445) (65,968)
Adjustments to maintain reserves .................. 184 (128) 542 3,181
------------ ----------- ----------- -----------
Net equity transactions ....................... 17,571,537 40,670,374 3,016,975 65,202,897
------------ ----------- ----------- -----------
Net change in contract owners' equity ............. 19,604,378 42,248,351 10,617,745 68,599,058
Contract owners' equity beginning of period ....... 43,662,462 1,414,111 68,829,824 230,766
------------ ----------- ----------- -----------
Contract owners' equity end of period ............. $ 63,266,840 43,662,462 79,447,569 68,829,824
============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ASSET MANAGER
ASSET MANAGER PORTFOLIO GROWTH PORTFOLIO
-------------------------- -------------------------
1998 1997 1998 1997
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ 350,865 5,034 182,827 -
Mortality, expense and administration
charges (note 2)
Classic ....................................... (7,562) (2,325) (8,047) (3,230)
Select ........................................ (168,847) (61,279) (141,334) (57,643)
Select (Rider Option 1) ....................... (3,292) (18) (2,786) (13)
Select (Rider Option 2) ....................... (1,328) - (409) (8)
Generations ................................... - - - -
Generations (Rider Option 1) .................. - - - -
Generations (Rider Option 2) .................. - - - -
------------ ----------- ----------- -----------
Net investment activity ......................... 169,836 (58,588) 30,251 (60,894)
------------ ----------- ----------- -----------
Proceeds from mutual fund shares sold ............. 2,121,060 167,650 905,852 608,370
Cost of mutual fund shares sold ................... (1,920,469) (169,948) (823,932) (526,461)
------------ ----------- ----------- -----------
Realized gain (loss) on investments ............. 200,591 (2,298) 81,920 81,909
Change in unrealized gain (loss) on investments ... 209,940 770,547 583,636 802,203
------------ ----------- ----------- -----------
Net gain (loss) on investments .................. 410,531 768,249 665,556 884,112
------------ ----------- ----------- -----------
Reinvested capital gains .......................... 1,052,595 12,628 854,987 620
------------ ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 1,632,962 722,289 1,550,794 823,838
------------ ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ................................. 4,059,284 6,537,589 3,545,378 5,851,889
Transfers between funds ........................... 109,848 2,915,117 202,313 1,816,591
Redemptions ....................................... (658,699) (124,289) (345,606) (210,136)
Annuity benefits .................................. (16,169) - - -
Annual contract maintenance charge (note 2) ....... (606) (65) (673) (56)
Contingent deferred sales charges (note 2) ........ (5,683) (642) (4,350) (5,660)
Adjustments to maintain reserves .................. (2,123) 169 66 (319)
------------ ----------- ----------- -----------
Net equity transactions ....................... 3,485,852 9,327,879 3,397,128 7,452,309
------------ ----------- ----------- -----------
Net change in contract owners' equity ............. 5,118,814 10,050,168 4,947,922 8,276,147
Contract owners' equity beginning of period ....... 10,050,168 - 8,276,147 -
------------ ----------- ----------- -----------
Contract owners' equity end of period ............. $ 15,168,982 10,050,168 13,224,069 8,276,147
============ =========== =========== ===========
</TABLE>
(Continued)
7
<PAGE> 7
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
CONTRAFUND PORTFOLIO INDEX 500 PORTFOLIO
---------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ 374,985 24,653 369,216 9,636
Mortality, expense and administration
charges (note 2)
Classic ....................................... (59,657) (23,334) (37,450) (10,070)
Select ........................................ (858,526) (345,666) (575,683) (180,444)
Select (Rider Option 1) ....................... (11,902) (95) (9,839) (24)
Select (Rider Option 2) ....................... (2,345) (30) (2,256) (9)
Generations ................................... - - (20,294) -
Generations (Rider Option 1) .................. - - (23,497) -
Generations (Rider Option 2) .................. - - (4,757) -
------------- ------------ ------------ ------------
Net investment activity ......................... (557,445) (344,472) (304,560) (180,911)
------------- ------------ ------------ ------------
Proceeds from mutual fund shares sold ............. 4,899,088 565,018 2,653,129 965,594
Cost of mutual fund shares sold ................... (4,114,192) (487,291) (2,072,374) (889,248)
------------- ------------ ------------ ------------
Realized gain (loss) on investments ............. 784,896 77,727 580,755 76,346
Change in unrealized gain (loss) on investments ... 14,022,891 5,244,373 10,718,449 2,870,226
------------- ------------ ------------ ------------
Net gain (loss) on investments .................. 14,807,787 5,322,100 11,299,204 2,946,572
------------- ------------ ------------ ------------
Reinvested capital gains .......................... 2,758,815 65,154 855,170 19,553
------------- ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 17,009,157 5,042,782 11,849,814 2,785,214
------------- ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ................................. 17,410,532 36,229,846 29,555,745 20,344,888
Transfers between funds ........................... 1,764,382 11,100,887 7,332,209 6,144,151
Redemptions ....................................... (2,918,682) (814,886) (2,251,651) (540,303)
Annuity benefits .................................. (1,385) - - -
Annual contract maintenance charge (note 2) ....... (6,037) (692) (3,966) (330)
Contingent deferred sales charges (note 2) ........ (55,124) (18,768) (35,351) (17,514)
Adjustments to maintain reserves .................. 441 (15,272) 87 (1,008)
------------- ------------ ------------ ------------
Net equity transactions ....................... 16,194,127 46,481,115 34,597,073 25,929,884
------------- ------------ ------------ ------------
Net change in contract owners' equity ............. 33,203,284 51,523,897 46,446,887 28,715,098
Contract owners' equity beginning of period ....... 51,523,897 - 28,715,098 -
------------- ------------ ------------ ------------
Contract owners' equity end of period ............. $ 84,727,181 51,523,897 75,161,985 28,715,098
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT GRADE
BOND PORTFOLIO BALANCED PORTFOLIO
---------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ 1,397,192 21,628 3,537,100 2,651,503
Mortality, expense and administration
charges (note 2)
Classic ....................................... (31,786) (18,691) (190,140) (153,146)
Select ........................................ (457,474) (261,060) (1,978,328) (1,593,030)
Select (Rider Option 1) ....................... (1,121) - (6,802) (28)
Select (Rider Option 2) ....................... (945) (40) (1,037) (9)
Generations ................................... (13,470) - - -
Generations (Rider Option 1) .................. (22,154) - - -
Generations (Rider Option 2) .................. (6,446) - - -
------------- ------------ ------------ ------------
Net investment activity ......................... 863,796 (258,163) 1,360,793 905,290
------------- ------------ ------------ ------------
Proceeds from mutual fund shares sold ............. 5,690,626 2,093,567 8,612,916 4,520,541
Cost of mutual fund shares sold ................... (5,213,813) (2,017,251) (6,109,489) (3,490,030)
------------- ------------ ------------ ------------
Realized gain (loss) on investments ............. 476,813 76,316 2,503,427 1,030,511
Change in unrealized gain (loss) on investments ... 1,274,245 2,072,932 13,665,547 20,657,622
------------- ------------ ------------ ------------
Net gain (loss) on investments .................. 1,751,058 2,149,248 16,168,974 21,688,133
------------- ------------ ------------ ------------
Reinvested capital gains .......................... 165,769 - 5,403,903 -
------------- ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 2,780,623 1,891,085 22,933,670 22,593,423
------------- ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ................................. 17,009,962 6,750,960 12,361,983 23,981,267
Transfers between funds ........................... 8,470,608 21,294,182 (1,896,771) (1,028,043)
Redemptions ....................................... (2,606,263) (1,465,723) (9,908,416) (6,165,682)
Annuity benefits .................................. (15,041) - (1,259) (296)
Annual contract maintenance charge (note 2) ....... (2,087) (1,273) (15,153) (13,901)
Contingent deferred sales charges (note 2) ........ (50,558) (29,247) (187,285) (126,607)
Adjustments to maintain reserves .................. (1,468) 222 1,390 1,693
------------- ------------ ------------ ------------
Net equity transactions ....................... 22,805,153 26,549,121 354,489 16,648,431
------------- ------------ ------------ ------------
Net change in contract owners' equity ............. 25,585,776 28,440,206 23,288,159 39,241,854
Contract owners' equity beginning of period ....... 28,538,182 97,976 142,394,052 103,152,198
------------- ------------ ------------ ------------
Contract owners' equity end of period ............. $ 54,123,958 28,538,182 165,682,211 142,394,052
============= ============ ============ ============
</TABLE>
8
<PAGE> 8
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
GROWTH AND INCOME GROWTH OPPORTUNITIES
PORTFOLIO PORTFOLIO
--------------------------- ---------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - 157,740 6,818,325 6,335,089
Mortality, expense and administration
charges (note 2)
Classic ....................................... (25,704) (6,903) (858,390) (650,933)
Select ........................................ (543,629) (159,344) (8,737,336) (6,371,570)
Select (Rider Option 1) ....................... (11,701) (13) (34,629) (304)
Select (Rider Option 2) ....................... (705) (32) (15,341) (34)
Generations ................................... - - - -
Generations (Rider Option 1) .................. - - - -
Generations (Rider Option 2) .................. - - - -
------------ ------------ ------------ ------------
Net investment activity ......................... (581,739) (8,552) (2,827,371) (687,752)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ............. 1,675,936 45,518 53,776,742 10,276,479
Cost of mutual fund shares sold ................... (1,294,541) (40,650) (31,095,663) (6,486,639)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ............. 381,395 4,868 22,681,079 3,789,840
Change in unrealized gain (loss) on investments ... 10,320,823 2,314,169 99,720,539 110,032,205
------------ ------------ ------------ ------------
Net gain (loss) on investments .................. 10,702,218 2,319,037 122,401,618 113,822,045
------------ ------------ ------------ ------------
Reinvested capital gains .......................... 158,758 512,654 23,701,797 8,869,124
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 10,279,237 2,823,139 143,276,044 122,003,417
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ................................. 15,826,845 18,613,704 77,524,904 137,949,525
Transfers between funds ........................... 7,690,493 5,163,722 (19,480,824) 2,156,049
Redemptions ....................................... (2,487,061) (510,742) (43,447,338) (26,047,105)
Annuity benefits .................................. - - (8,980) (1,243)
Annual contract maintenance charge (note 2) ....... (2,083) (188) (78,559) (65,787)
Contingent deferred sales charges (note 2) ........ (28,510) (14,424) (833,269) (554,646)
Adjustments to maintain reserves .................. 570 235 5,680 9,130
------------ ------------ ------------ ------------
Net equity transactions ....................... 21,000,254 23,252,307 13,681,614 113,445,923
------------ ------------ ------------ ------------
Net change in contract owners' equity ............. 31,279,491 26,075,446 156,957,658 235,449,340
Contract owners' equity beginning of period ....... 26,075,446 - 618,547,573 383,098,233
------------ ------------ ------------ ------------
Contract owners' equity end of period ............. $ 57,354,937 26,075,446 775,505,231 618,547,573
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
EQUITY-INCOME PORTFOLIO: GROWTH PORTFOLIO:
SERVICE CLASS SERVICE CLASS
------------------------------ ----------------------------
1998 1997 1998 1997
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - - - -
Mortality, expense and administration
charges (note 2)
Classic ....................................... - - - -
Select ........................................ - - - -
Select (Rider Option 1) ....................... - - - -
Select (Rider Option 2) ....................... - - - -
Generations ................................... (35,645) - (33,383) -
Generations (Rider Option 1) .................. (39,080) - (27,492) -
Generations (Rider Option 2) .................. (10,048) - (9,526) -
------------- -------------- ------------ -------------
Net investment activity ......................... (84,773) - (70,401) -
------------- -------------- ------------ -------------
Proceeds from mutual fund shares sold ............. 655,853 - 390,810 -
Cost of mutual fund shares sold ................... (673,141) - (352,615) -
------------- -------------- ------------ -------------
Realized gain (loss) on investments ............. (17,288) - 38,195 -
Change in unrealized gain (loss) on investments ... 685,763 - 2,864,579 -
------------- -------------- ------------ -------------
Net gain (loss) on investments .................. 668,475 - 2,902,774 -
------------- -------------- ------------ -------------
Reinvested capital gains .......................... - - - -
------------- -------------- ------------ -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 583,702 - 2,832,373 -
------------- -------------- ------------ -------------
Equity transactions:
Purchase payments received from
contract owners ................................. 18,948,835 - 15,833,951 -
Transfers between funds ........................... 91,604 - 979,486 -
Redemptions ....................................... (375,768) - (312,595) -
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... - - - -
Contingent deferred sales charges (note 2) ........ (1,837) - (3,166) -
Adjustments to maintain reserves .................. (21) - 117 -
------------- -------------- ------------ -------------
Net equity transactions ....................... 18,662,813 - 16,497,793 -
------------- -------------- ------------ -------------
Net change in contract owners' equity ............. 19,246,515 - 19,330,166 -
Contract owners' equity beginning of period ....... - - - -
------------- -------------- ------------ -------------
Contract owners' equity end of period ............. $ 19,246,515 - 19,330,166 -
============= ============== ============ =============
</TABLE>
(Continued)
9
<PAGE> 9
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
HIGH INCOME PORTFOLIO: OVERSEAS PORTFOLIO
SERVICE CLASS SERVICE CLASS
------------------------------ -----------------------------
1998 1997 1998 1997
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - - - -
Mortality, expense and administration
charges (note 2)
Classic ....................................... - - - -
Select ........................................ - - - -
Select (Rider Option 1) ....................... - - - -
Select (Rider Option 2) ....................... - - - -
Generations ................................... (49,642) - (11,313) -
Generations (Rider Option 1) .................. (37,699) - (10,118) -
Generations (Rider Option 2) .................. (11,178) - (3,117) -
-------------- ------------- ------------- -------------
Net investment activity ......................... (98,519) - (24,548) -
-------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ............. 1,922,952 - 282,331 -
Cost of mutual fund shares sold ................... (2,195,994) - (301,072) -
-------------- ------------- ------------- -------------
Realized gain (loss) on investments ............. (273,042) - (18,741) -
Change in unrealized gain (loss) on investments ... (1,096,849) - 103,595 -
-------------- ------------- ------------- -------------
Net gain (loss) on investments .................. (1,369,891) - 84,854 -
-------------- ------------- ------------- -------------
Reinvested capital gains .......................... - - - -
-------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ (1,468,410) - 60,306 -
-------------- ------------- ------------- -------------
Equity transactions:
Purchase payments received from
contract owners ................................. 22,844,703 - 5,217,109 -
Transfers between funds ........................... (1,225,535) - 653,623 -
Redemptions ....................................... (500,261) - (66,607) -
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... - - - -
Contingent deferred sales charges (note 2) ........ (3,207) - (416) -
Adjustments to maintain reserves .................. (68) - (10) -
-------------- ------------- ------------- -------------
Net equity transactions ....................... 21,115,632 - 5,803,699 -
-------------- ------------- ------------- -------------
Net change in contract owners' equity ............. 19,647,222 - 5,864,005 -
Contract owners' equity beginning of period ....... - - - -
-------------- ------------- ------------- -------------
Contract owners' equity end of period ............. $ 19,647,222 - 5,864,005 -
============== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
ASSET MANAGER:
ASSET MANAGER PORTFOLIO: GROWTH PORTFOLIO:
SERVICE CLASS SERVICE CLASS
------------------------------- ------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - - - -
Mortality, expense and administration
charges (note 2)
Classic ....................................... - - - -
Select ........................................ - - - -
Select (Rider Option 1) ....................... - - - -
Select (Rider Option 2) ....................... - - - -
Generations ................................... (6,565) - (3,692) -
Generations (Rider Option 1) .................. (4,118) - (4,062) -
Generations (Rider Option 2) .................. (998) - (1,888) -
-------------- -------------- -------------- -------------
Net investment activity ......................... (11,681) - (9,642) -
-------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold ............. 71,477 - 219,864 -
Cost of mutual fund shares sold ................... (73,296) - (231,538) -
-------------- -------------- -------------- -------------
Realized gain (loss) on investments ............. (1,819) - (11,674) -
Change in unrealized gain (loss) on investments ... 226,745 - 203,517 -
-------------- -------------- -------------- -------------
Net gain (loss) on investments .................. 224,926 - 191,843 -
-------------- -------------- -------------- -------------
Reinvested capital gains .......................... - - - -
-------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 213,245 - 182,201 -
-------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners ................................. 3,392,283 - 2,398,093 -
Transfers between funds ........................... 135,795 - (35,776) -
Redemptions ....................................... (22,375) - (46,097) -
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... - - - -
Contingent deferred sales charges (note 2) ........ (354) - (60) -
Adjustments to maintain reserves .................. (5) - (14) -
-------------- -------------- -------------- -------------
Net equity transactions ....................... 3,505,344 - 2,316,146 -
-------------- -------------- -------------- -------------
Net change in contract owners' equity ............. 3,718,589 - 2,498,347 -
Contract owners' equity beginning of period ....... - - - -
-------------- -------------- -------------- -------------
Contract owners' equity end of period ............. $ 3,718,589 - 2,498,347 -
============== ============== ============== =============
</TABLE>
10
<PAGE> 10
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
CONTRAFUND PORTFOLIO: BALANCED PORTFOLIO:
SERVICE CLASS SERVICE CLASS
------------------------------ -----------------------------
1998 1997 1998 1997
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - - - -
Mortality, expense and administration
charges (note 2)
Classic ....................................... - - - -
Select ........................................ - - - -
Select (Rider Option 1) ....................... - - - -
Select (Rider Option 2) ....................... - - - -
Generations ................................... (23,438) - (15,680) -
Generations (Rider Option 1) .................. (24,226) - (11,424) -
Generations (Rider Option 2) .................. (6,160) - (5,294) -
-------------- ------------- ------------- -------------
Net investment activity ......................... (53,824) - (32,398) -
-------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ............. 194,844 - 235,493 -
Cost of mutual fund shares sold ................... (190,062) - (233,390) -
-------------- ------------- ------------- -------------
Realized gain (loss) on investments ............. 4,782 - 2,103 -
Change in unrealized gain (loss) on investments ... 1,929,222 - 549,603 -
-------------- ------------- ------------- -------------
Net gain (loss) on investments .................. 1,934,004 - 551,706 -
-------------- ------------- ------------- -------------
Reinvested capital gains .......................... - - - -
-------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 1,880,180 - 519,308 -
-------------- ------------- ------------- -------------
Equity transactions:
Purchase payments received from
contract owners ................................. 11,884,096 - 8,771,958 -
Transfers between funds ........................... 1,287,064 - 389,137 -
Redemptions ....................................... (222,049) - (130,919) -
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... - - - -
Contingent deferred sales charges (note 2) ........ (326) - (636) -
Adjustments to maintain reserves .................. 84 - (59) -
-------------- ------------- ------------- -------------
Net equity transactions ....................... 12,948,869 - 9,029,481 -
-------------- ------------- ------------- -------------
Net change in contract owners' equity ............. 14,829,049 - 9,548,789 -
Contract owners' equity beginning of period ....... - - - -
-------------- ------------- ------------- -------------
Contract owners' equity end of period ............. $ 14,829,049 - 9,548,789 -
============== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO: GROWTH OPPORTUNITIES
SERVICE CLASS PORTFOLIO: SERVICE CLASS
------------------------------- ------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - - - -
Mortality, expense and administration
charges (note 2)
Classic ....................................... - - - -
Select ........................................ - - - -
Select (Rider Option 1) ....................... - - - -
Select (Rider Option 2) ....................... - - - -
Generations ................................... (24,821) - (81,243) -
Generations (Rider Option 1) .................. (31,994) - (89,368) -
Generations (Rider Option 2) .................. (7,363) - (19,315) -
-------------- -------------- -------------- -------------
Net investment activity ......................... (64,178) - (189,926) -
-------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold ............. 801,099 - 173,928 -
Cost of mutual fund shares sold ................... (781,432) - (164,968) -
-------------- -------------- -------------- -------------
Realized gain (loss) on investments ............. 19,667 - 8,960 -
Change in unrealized gain (loss) on investments ... 2,058,619 - 5,157,394 -
-------------- -------------- -------------- -------------
Net gain (loss) on investments .................. 2,078,286 - 5,166,354 -
-------------- -------------- -------------- -------------
Reinvested capital gains .......................... - - - -
-------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 2,014,108 - 4,976,428 -
-------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners ................................. 15,905,391 - 40,711,144 -
Transfers between funds ........................... 692,100 - 1,099,745 -
Redemptions ....................................... (251,704) - (741,889) -
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... - - - -
Contingent deferred sales charges (note 2) ........ (160) - (5,091) -
Adjustments to maintain reserves .................. 48 - 57 -
-------------- -------------- -------------- -------------
Net equity transactions ....................... 16,345,675 - 41,063,966 -
-------------- -------------- -------------- -------------
Net change in contract owners' equity ............. 18,359,783 - 46,040,394 -
Contract owners' equity beginning of period ....... - - - -
-------------- -------------- -------------- -------------
Contract owners' equity end of period ............. $ 18,359,783 - 46,040,394 -
============== ============== ============== =============
</TABLE>
(Continued)
11
<PAGE> 11
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
GOVERNMENT
INVESTMENT FUND HIGH YIELD FUND
------------------------------ -----------------------------
1998 1997 1998 1997
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - 287,288 - 1,664,977
Mortality, expense and administration
charges (note 2)
Classic ....................................... - (3,971) - (16,813)
Select ........................................ - (52,722) - (248,687)
Select (Rider Option 1) ....................... - - - -
Select (Rider Option 2) ....................... - - - -
Generations ................................... - - - -
Generations (Rider Option 1) .................. - - - -
Generations (Rider Option 2) .................. - - - -
-------------- ------------- ------------- -------------
Net investment activity ......................... - 230,595 - 1,399,477
-------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ............. - 20,683,351 - 97,566,593
Cost of mutual fund shares sold ................... - (21,543,654) - (98,450,573)
-------------- ------------- ------------- -------------
Realized gain (loss) on investments ............. - (860,303) - (883,980)
Change in unrealized gain (loss) on investments ... - 502,588 - (2,411,864)
-------------- ------------- ------------- -------------
Net gain (loss) on investments .................. - (357,715) - (3,295,844)
-------------- ------------- ------------- -------------
Reinvested capital gains .......................... - - - 3,446,055
-------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ - (127,120) - 1,549,688
-------------- ------------- ------------- -------------
Equity transactions:
Purchase payments received from
contract owners ................................. - 703,479 - 5,965,726
Transfers between funds ........................... - (20,346,585) - (97,185,398)
Redemptions ....................................... - (279,350) - (1,335,478)
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... - (386) - (1,254)
Contingent deferred sales charges (note 2) ........ - (11,183) - (37,325)
Adjustments to maintain reserves .................. - 13 - 352
-------------- ------------- ------------- -------------
Net equity transactions ....................... - (19,934,012) - (92,593,377)
-------------- ------------- ------------- -------------
Net change in contract owners' equity ............. - (20,061,132) - (91,043,689)
Contract owners' equity beginning of period ....... - 20,061,132 - 91,043,689
-------------- ------------- ------------- -------------
Contract owners' equity end of period ............. $ - - - -
============== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET FUND OVERSEAS FUND
------------------------------- ------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .............................. $ - 290,239 - 53,871
Mortality, expense and administration
charges (note 2)
Classic ....................................... - (3,845) - (10,730)
Select ........................................ - (77,418) - (117,562)
Select (Rider Option 1) ....................... - - - -
Select (Rider Option 2) ....................... - - - -
Generations ................................... - - - -
Generations (Rider Option 1) .................. - - - -
Generations (Rider Option 2) .................. - - - -
-------------- -------------- -------------- -------------
Net investment activity ......................... - 208,976 - (74,421)
-------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold ............. - 34,287,294 - 48,228,759
Cost of mutual fund shares sold ................... - (34,287,294) - (48,637,341)
-------------- -------------- -------------- -------------
Realized gain (loss) on investments ............. - - - (408,582)
Change in unrealized gain (loss) on investments ... - - - (2,797,481)
-------------- -------------- -------------- -------------
Net gain (loss) on investments .................. - - - (3,206,063)
-------------- -------------- -------------- -------------
Reinvested capital gains .......................... - - - 4,309,141
-------------- -------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ............ - 208,976 - 1,028,657
-------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners ................................. - 5,893,573 - 2,025,184
Transfers between funds ........................... - (35,384,849) - (47,818,089)
Redemptions ....................................... - (643,822) - (425,271)
Annuity benefits .................................. - - - -
Annual contract maintenance charge (note 2) ....... - (196) - (821)
Contingent deferred sales charges (note 2) ........ - (8,540) - (9,277)
Adjustments to maintain reserves .................. - 2,487 - 1,590
-------------- -------------- -------------- -------------
Net equity transactions ....................... - (30,141,347) - (46,226,684)
-------------- -------------- -------------- -------------
Net change in contract owners' equity ............. - (29,932,371) - (45,198,027)
Contract owners' equity beginning of period ....... - 29,932,371 - 45,198,027
-------------- -------------- -------------- -------------
Contract owners' equity end of period ............. $ - - - -
============== ============== ============== =============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 12
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(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 available in the Fidelity Advisor Classic and Select
Products:
<TABLE>
<S> <C>
Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio
Fidelity VIP - Growth Portfolio Fidelity VIP - High Income Portfolio
Fidelity VIP - Money Market Portfolio (also available in the Fidelity Advisor Generations product)
Fidelity VIP - Overseas Portfolio
Portfolios of the Fidelity Variable Insurance Products Fund II(Fidelity VIP-II);
Fidelity VIP-II - Asset Manager Portfolio
Fidelity VIP-II - Asset Manager: Growth Portfolio
Fidelity VIP-II - Contrafund Portfolio
Fidelity VIP-II - Index 500 Portfolio (also available in the Fidelity Advisor Generations product)
Fidelity VIP-II - Investment Grade Bond Portfolio (also available in the Fidelity Generations product)
Portfolios of the Fidelity Variable Insurance Products Fund III(Fidelity VIP-III);
Fidelity VIP-III - Balanced Portfolio
Fidelity VIP-III - Growth and Income Portfolio
Fidelity VIP-III - Growth Opportunities Portfolio
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
Funds available in the Fidelity Advisor Generations product:
Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio: Service Class
Fidelity VIP - Growth Portfolio: Service Class
Fidelity VIP - High Income Portfolio: Service Class
Fidelity VIP - Overseas Portfolio: Service Class
</TABLE>
13
<PAGE> 13
<TABLE>
<S> <C>
Portfolios of the Fidelity Variable Insurance Products Fund II (Fidelity VIP-II);
Fidelity VIP-II - Asset Manager Portfolio: Service Class
Fidelity VIP-II - Asset Manager: Growth Portfolio: Service Class
Fidelity VIP-II - Contrafund Portfolio: Service Class
Portfolios of the Fidelity Variable Insurance Products Fund III (Fidelity VIP-III);
Fidelity VIP-III - Balanced Portfolio: Service Class
Fidelity VIP-III - Growth and Income Portfolio: Service Class
Fidelity VIP-III - Growth Opportunities Portfolio: Service Class
</TABLE>
At December 31, 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.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(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 December 31, 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.
14
<PAGE> 14
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.
15
<PAGE> 15
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1998,
for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN(b)
----- ---------- ---------
<S> <C> <C> <C> <C>
FIDELITY ADVISOR ANNUITY CLASSIC CONTRACTS:
Fidelity VIP - Equity-Income Portfolio:
Tax qualified .............................. 153,274 $ 13.504485 $ 2,069,886 10%
Non-tax qualified .......................... 134,102 13.504485 1,810,978 10%
Fidelity VIP - Growth Portfolio:
Tax qualified .............................. 117,115 16.000493 1,873,898 38%
Non-tax qualified .......................... 93,958 16.000493 1,503,374 38%
Fidelity VIP - High Income Portfolio:
Tax qualified .............................. 475,850 11.211755 5,335,114 (6)%
Non-tax qualified .......................... 353,048 11.211755 3,958,288 (6)%
Fidelity VIP - Money Market Portfolio:
Tax qualified .............................. 175,478 10.907151 1,913,965 4%
Non-tax qualified .......................... 118,306 10.907151 1,290,381 4%
Fidelity VIP - Overseas Portfolio:
Tax qualified .............................. 303,117 12.890557 3,907,347 11%
Non-tax qualified .......................... 237,415 12.890557 3,060,412 11%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified .............................. 26,091 13.242881 345,520 14%
Non-tax qualified .......................... 28,317 13.242881 374,999 14%
Fidelity VIP-II - Asset Manager:
Growth Portfolio:
Tax qualified .............................. 30,141 13.869175 418,031 16%
Non-tax qualified .......................... 19,928 13.869175 276,385 16%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified .............................. 251,534 15.066384 3,789,708 28%
Non-tax qualified .......................... 155,593 15.066384 2,344,224 28%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .............................. 167,612 15.840285 2,655,022 27%
Non-tax qualified .......................... 101,830 15.840285 1,613,016 27%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .............................. 159,327 11.634559 1,853,699 7%
Non-tax qualified .......................... 93,625 11.634559 1,089,286 7%
Fidelity VIP-III - Balanced Portfolio:
Tax qualified .............................. 533,457 17.091747 9,117,712 16%
Non-tax qualified .......................... 384,433 17.091747 6,570,632 16%
Fidelity VIP-III- Growth and
Income Portfolio:
Tax qualified .............................. 108,608 15.812524 1,717,367 28%
Non-tax qualified .......................... 74,546 15.812524 1,178,760 28%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified .............................. 1,579,126 24.090333 38,041,671 23%
Non-tax qualified .......................... 1,568,582 24.090333 37,787,663 23%
</TABLE>
16
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C>
FIDELITY ADVISOR ANNUITY SELECT CONTRACTS:
Fidelity VIP - Equity-Income Portfolio:
Tax qualified .............................. 1,732,312 13.477888 23,347,907 10%
Non-tax qualified .......................... 2,789,952 13.477888 37,602,661 10%
Fidelity VIP - Growth Portfolio:
Tax qualified .............................. 1,138,568 15.969000 18,181,792 38%
Non-tax qualified .......................... 2,009,283 15.969000 32,086,240 38%
Fidelity VIP - High Income Portfolio:
Tax qualified .............................. 4,158,432 11.187199 46,521,206 (6)%
Non-tax qualified .......................... 8,642,408 11.187199 96,684,338 (6)%
Fidelity VIP - Money Market Portfolio:
Tax qualified .............................. 1,305,540 10.883253 14,208,522 4%
Non-tax qualified .......................... 2,759,939 10.883253 30,037,114 4%
Fidelity VIP - Overseas Portfolio:
Tax qualified .............................. 1,730,887 12.862332 22,263,243 11%
Non-tax qualified .......................... 3,855,007 12.862332 49,584,380 11%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified .............................. 351,207 13.216823 4,641,841 13%
Non-tax qualified .......................... 698,387 13.216823 9,230,457 13%
Fidelity VIP-II - Asset Manager:
Growth Portfolio:
Tax qualified .............................. 299,850 13.841884 4,150,489 16%
Non-tax qualified .......................... 576,240 13.841884 7,976,247 16%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified .............................. 1,788,055 15.036722 26,886,486 28%
Non-tax qualified .......................... 3,318,944 15.036722 49,906,038 28%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .............................. 1,111,939 15.809112 17,578,768 27%
Non-tax qualified .......................... 2,367,722 15.809112 37,431,582 27%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .............................. 1,286,880 11.609070 14,939,480 7%
Non-tax qualified .......................... 2,102,024 11.609070 24,402,544 7%
Fidelity VIP-III - Balanced Portfolio:
Tax qualified .............................. 2,652,827 17.022798 45,158,538 16%
Non-tax qualified .......................... 6,102,782 17.022798 103,886,425 16%
Fidelity VIP-III- Growth and
Income Portfolio:
Tax qualified .............................. 968,478 15.781386 15,283,925 28%
Non-tax qualified .......................... 2,375,755 15.781386 37,492,707 28%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified .............................. 8,627,546 23.993138 207,001,902 23%
Non-tax qualified .......................... 20,287,152 23.993138 486,752,438 23%
</TABLE>
(Continued)
17
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C>
FIDELITY ADVISOR ANNUITY SELECT (RIDER OPTION 1):
Fidelity VIP - Equity-Income Portfolio:
Tax qualified .............................. 41,419 11.368793 470,884 10%
Non-tax qualified .......................... 101,795 11.368793 1,157,286 10%
Fidelity VIP - Growth Portfolio:
Tax qualified .............................. 38,516 13.781993 530,827 37%
Non-tax qualified .......................... 94,771 13.781993 1,306,133 37%
Fidelity VIP - High Income Portfolio:
Tax qualified .............................. 55,178 9.547168 526,794 (6)%
Non-tax qualified .......................... 99,132 9.547168 946,430 (6)%
Fidelity VIP - Money Market Portfolio:
Tax qualified .............................. 37,306 10.462911 390,329 4%
Non-tax qualified .......................... 111,460 10.462911 1,166,196 4%
Fidelity VIP - Overseas Portfolio:
Tax qualified .............................. 20,502 10.994287 225,405 11%
Non-tax qualified .......................... 27,574 10.994287 303,156 11%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified .............................. 4,399 11.575607 50,921 13%
Non-tax qualified .......................... 28,093 11.575607 325,194 13%
Fidelity VIP-II - Asset Manager
Growth Portfolio:
Tax qualified .............................. 9,734 11.864403 115,488 16%
Non-tax qualified .......................... 17,710 11.864403 210,119 16%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified .............................. 35,003 12.747959 446,217 28%
Non-tax qualified .......................... 83,877 12.747959 1,069,261 28%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .............................. 23,101 13.065126 301,817 26%
Non-tax qualified .......................... 68,636 13.065126 896,738 26%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .............................. 4,667 10.883913 50,795 7%
Non-tax qualified .......................... 6,209 10.883913 67,578 7%
Fidelity VIP-III - Balanced Portfolio:
Tax qualified .............................. 23,691 11.909803 282,155 16%
Non-tax qualified .......................... 46,788 11.909803 557,236 16%
Fidelity VIP-III- Growth and
Income Portfolio:
Tax qualified .............................. 36,694 13.287693 487,579 28%
Non-tax qualified .......................... 80,881 13.287693 1,074,722 28%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified .............................. 114,036 12.762442 1,455,378 23%
Non-tax qualified .......................... 227,642 12.762442 2,905,268 23%
</TABLE>
18
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C>
FIDELITY ADVISOR ANNUITY SELECT (RIDER OPTION 2):
Fidelity VIP - Equity-Income Portfolio:
Tax qualified .............................. 24,656 11.362118 280,144 10%
Non-tax qualified .......................... 29,725 11.362118 337,739 10%
Fidelity VIP - Growth Portfolio:
Tax qualified .............................. 30,523 13.773906 420,421 37%
Non-tax qualified .......................... 11,669 13.773906 160,728 37%
Fidelity VIP - High Income Portfolio:
Tax qualified .............................. 11,405 9.541553 108,821 (6)%
Non-tax qualified .......................... 34,631 9.541553 330,434 (6)%
Fidelity VIP - Money Market Portfolio:
Tax qualified .............................. 61,727 10.456715 645,462 4%
Non-tax qualified .......................... 10,039 10.456715 104,975 4%
Fidelity VIP - Overseas Portfolio:
Tax qualified .............................. 1,537 10.987826 16,888 11%
Non-tax qualified .......................... 7,894 10.987826 86,738 11%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified .............................. 1,346 11.568800 15,572 13%
Non-tax qualified .......................... 9,296 11.568800 107,544 13%
Fidelity VIP-II - Asset Manager
Growth Portfolio:
Non-tax qualified .......................... 6,520 11.857417 77,310 16%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified .............................. 2,116 12.740463 26,959 28%
Non-tax qualified .......................... 19,726 12.740463 251,318 28%
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .............................. 2,611 13.057468 34,093 26%
Non-tax qualified .......................... 24,391 13.057468 318,485 26%
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .............................. 2,596 10.877515 28,238 7%
Non-tax qualified .......................... 4,254 10.877515 46,273 7%
Fidelity VIP-III - Balanced Portfolio:
Tax qualified .............................. 1,398 11.902806 16,640 16%
Non-tax qualified .......................... 7,406 11.902806 88,152 16%
Fidelity VIP-III- Growth and
Income Portfolio:
Tax qualified .............................. 1,884 13.279886 25,019 28%
Non-tax qualified .......................... 7,143 13.279886 94,858 28%
Fidelity VIP-III - Growth Opportunities
Portfolio:
Tax qualified .............................. 60,778 12.754941 775,220 23%
Non-tax qualified .......................... 57,554 12.754941 734,098 23%
</TABLE>
(Continued)
19
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C>
FIDELITY ADVISOR GENERATIONS ANNUITY CONTRACTS:
Fidelity VIP - Money Market Portfolio:
Tax qualified .............................. 239,010 10.407380 2,487,468 4%(a)
Non-tax qualified .......................... 390,433 10.407380 4,063,385 4%(a)
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .............................. 196,106 12.204206 2,393,318 22%(a)
Non-tax qualified .......................... 338,172 12.204206 4,127,121 22%(a)
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .............................. 147,838 10.690813 1,580,508 7%(a)
Non-tax qualified .......................... 250,598 10.690813 2,679,096 7%(a)
Fidelity VIP - Equity-Income Portfolio:
Service Class:
Tax qualified .............................. 343,285 10.758604 3,693,267 8%(a)
Non-tax qualified .......................... 492,319 10.758604 5,296,665 8%(a)
Fidelity VIP - Growth Portfolio:
Service Class:
Tax qualified .............................. 272,183 13.265992 3,610,778 33%(a)
Non-tax qualified .......................... 464,386 13.265992 6,160,541 33%(a)
Fidelity VIP - High Income Portfolio:
Service Class:
Tax qualified .............................. 484,504 9.218542 4,466,420 (8)%(a)
Non-tax qualified .......................... 601,794 9.218542 5,547,663 (8)%(a)
Fidelity VIP - Overseas Portfolio:
Service Class:
Tax qualified .............................. 134,873 10.586638 1,427,852 6%(a)
Non-tax qualified .......................... 129,179 10.586638 1,367,571 6%(a)
Fidelity VIP-II - Asset Manager Portfolio:
Service Class:
Tax qualified .............................. 71,666 11.098876 795,412 11%(a)
Non-tax qualified .......................... 84,366 11.098876 936,368 11%(a)
Fidelity VIP-II - Asset Manager:
Growth Portfolio: Service Class:
Tax qualified .............................. 29,182 11.278688 329,135 13%(a)
Non-tax qualified .......................... 57,110 11.278688 644,126 13%(a)
Fidelity VIP-II - Contrafund Portfolio:
Service Class:
Tax qualified .............................. 208,682 12.539357 2,616,738 25%(a)
Non-tax qualified .......................... 350,091 12.539357 4,389,916 25%(a)
Fidelity VIP-III - Balanced Portfolio:
Service Class:
Tax qualified .............................. 174,467 11.340963 1,978,624 13%(a)
Non-tax qualified .......................... 247,421 11.340963 2,805,992 13%(a)
Fidelity VIP-III- Growth and
Income Portfolio: Service Class:
Tax qualified .............................. 228,032 12.392371 2,825,857 24%(a)
Non-tax qualified .......................... 394,454 12.392371 4,888,220 24%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio: Service Class:
Tax qualified .............................. 673,404 11.936099 8,037,817 19%(a)
Non-tax qualified .......................... 1,073,225 11.936099 12,810,120 19%(a)
</TABLE>
20
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C>
FIDELITY ADVISOR GENERATIONS ANNUITY
(RIDER OPTION 1):
Fidelity VIP - Money Market Portfolio:
Tax qualified .............................. 252,165 10.402557 2,623,161 4%(a)
Non-tax qualified .......................... 180,132 10.402557 1,873,833 4%(a)
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .............................. 193,851 12.198716 2,364,733 22%(a)
Non-tax qualified .......................... 329,494 12.198716 4,019,404 22%(a)
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .............................. 118,873 10.686005 1,270,277 7%(a)
Non-tax qualified .......................... 401,936 10.686005 4,295,090 7%(a)
Fidelity VIP - Equity-Income Portfolio:
Service Class:
Tax qualified .............................. 312,594 10.753771 3,361,564 8%(a)
Non-tax qualified .......................... 456,864 10.753771 4,913,011 8%(a)
Fidelity VIP - Growth Portfolio:
Service Class:
Tax qualified .............................. 259,268 13.260038 3,437,904 33%(a)
Non-tax qualified .......................... 297,743 13.260038 3,948,083 33%(a)
Fidelity VIP - High Income Portfolio:
Service Class:
Tax qualified .............................. 316,524 9.214386 2,916,574 (8)%(a)
Non-tax qualified .......................... 458,599 9.214386 4,225,708 (8)%(a)
Fidelity VIP - Overseas Portfolio:
Service Class:
Tax qualified .............................. 82,289 10.581883 870,773 6%(a)
Non-tax qualified .......................... 122,011 10.581883 1,291,106 6%(a)
Fidelity VIP-II - Asset Manager Portfolio:
Service Class:
Tax qualified .............................. 61,666 11.093882 684,115 11%(a)
Non-tax qualified .......................... 91,981 11.093882 1,020,426 11%(a)
Fidelity VIP-II - Asset Manager:
Growth Portfolio: Service Class:
Tax qualified .............................. 54,864 11.273630 618,516 13%(a)
Non-tax qualified .......................... 47,213 11.273630 532,262 13%(a)
Fidelity VIP-II - Contrafund Portfolio:
Service Class:
Tax qualified .............................. 227,291 12.533725 2,848,803 25%(a)
Non-tax qualified .......................... 262,976 12.533725 3,296,069 25%(a)
Fidelity VIP-III - Balanced Portfolio:
Service Class:
Tax qualified .............................. 128,615 11.335864 1,457,962 13%(a)
Non-tax qualified .......................... 192,273 11.335864 2,179,581 13%(a)
Fidelity VIP-III- Growth and
Income Portfolio: Service Class:
Tax qualified .............................. 353,600 12.386801 4,379,973 24%(a)
Non-tax qualified .......................... 351,258 12.386801 4,350,963 24%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio: Service Class:
Tax qualified .............................. 831,168 11.930730 9,916,441 19%(a)
Non-tax qualified .......................... 896,484 11.930730 10,695,709 19%(a)
</TABLE>
(Continued)
21
<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C>
FIDELITY ADVISOR GENERATIONS ANNUITY
(RIDER OPTION 2):
Fidelity VIP - Money Market Portfolio:
Tax qualified .............................. 133,561 10.397737 1,388,732 4%(a)
Non-tax qualified .......................... 103,226 10.397737 1,073,317 4%(a)
Fidelity VIP-II - Index 500 Portfolio:
Tax qualified .............................. 45,723 12.193234 557,511 22%(a)
Non-tax qualified .......................... 71,382 12.193234 870,377 22%(a)
Fidelity VIP-II - Investment Grade
Bond Portfolio:
Tax qualified .............................. 38,420 10.681197 410,372 7%(a)
Non-tax qualified .......................... 125,354 10.681197 1,338,931 7%(a)
Fidelity VIP - Equity-Income Portfolio:
Service Class:
Tax qualified .............................. 76,194 10.748944 819,005 7%(a)
Non-tax qualified .......................... 108,197 10.748944 1,163,003 7%(a)
Fidelity VIP - Growth Portfolio:
Service Class:
Tax qualified .............................. 46,684 13.254076 618,753 33%(a)
Non-tax qualified .......................... 117,255 13.254076 1,554,107 33%(a)
Fidelity VIP - High Income Portfolio:
Service Class:
Tax qualified .............................. 72,605 9.210254 668,710 (8)%(a)
Non-tax qualified .......................... 197,839 9.210254 1,822,147 (8)%(a)
Fidelity VIP - Overseas Portfolio:
Service Class:
Tax qualified .............................. 16,755 10.577127 177,220 6%(a)
Non-tax qualified .......................... 68,968 10.577127 729,483 6%(a)
Fidelity VIP-II - Asset Manager Portfolio:
Service Class:
Tax qualified .............................. 8,319 11.088896 92,249 11%(a)
Non-tax qualified .......................... 17,136 11.088896 190,019 11%(a)
Fidelity VIP-II - Asset Manager:
Growth Portfolio: Service Class:
Tax qualified .............................. 24,911 11.268555 280,711 13%(a)
Non-tax qualified .......................... 8,306 11.268555 93,597 13%(a)
Fidelity VIP-II - Contrafund Portfolio:
Service Class:
Tax qualified .............................. 52,457 12.528086 657,186 25%(a)
Non-tax qualified .......................... 81,444 12.528086 1,020,337 25%(a)
Fidelity VIP-III - Balanced Portfolio:
Service Class:
Tax qualified .............................. 44,418 11.330772 503,290 13%(a)
Non-tax qualified .......................... 55,013 11.330772 623,340 13%(a)
Fidelity VIP-III- Growth and
Income Portfolio: Service Class:
Tax qualified .............................. 48,820 12.381235 604,452 24%(a)
Non-tax qualified .......................... 105,831 12.381235 1,310,318 24%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio: Service Class:
Tax qualified .............................. 123,265 11.925368 1,469,980 19%(a)
Non-tax qualified .......................... 260,816 11.925368 3,110,327 19%(a)
========= ===========
Reserves for annuity contracts in payout phase:
Tax qualified .............................. 42,282
Non-tax qualified .......................... 184,309
---------------
$ 1,820,312,727
===============
</TABLE>
(a) This investment option was not being utilized for the entire period.
Accordingly, the annual return was computed for such period as the
investment option was utilized.
(b) The annual return does not include contract charges satisfied by
surrendering units.
22
<PAGE> 22
Independent Auditors' Report
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Fidelity Advisor Variable Account:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Fidelity Advisor Variable Account as of
December 31, 1998, and the related statements of operations and changes in
contract owners' equity for each of the years in the two year period then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide Fidelity Advisor
Variable Account as of December 31, 1998, and the results of its operations and
its changes in contract owners' equity for each of the years in the two year
period then ended in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
23
<PAGE> 23
[NATIONWIDE 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 = G (12/98)
