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[LOGO]
NATIONWIDE(R)
VLI SEPARATE
ACCOUNT-3
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1996
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
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[LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
PRESIDENT'S MESSAGE
On behalf of Nationwide Life Insurance Company, we are pleased to bring you the
1996 annual report of the Nationwide VLI Separate Account-3.
The U.S. economy is enjoying the rewards of a stable political system and a
globally competitive business sector. These good times will last, although not
all years will show the stellar performance of the last two years. 1997 may be
the year in which normalcy will return.
The economic expansion has lasted six years already, and all resources are more
or less fully employed. The job market in particular is showing some strains,
and wages are rising a bit faster than before. Also, the competitive pressures
from abroad are increasing due to a sharp rise in the exchange value of our
currency. Business will be hard pressed under those conditions to continue
showing above-average profit increases. For the economy as a whole, inflation
has hit the low point in this business cycle and will slowly but surely be a
more important variable for monetary policy.
In the last few years, and especially in 1996, our economy expanded faster than
the natural rate of growth. This cannot continue without creating bottlenecks
that in turn induce price increases. Either the economy will slow under its own
weight or the Federal Reserve will have to step in. Some indicators point to a
softening of business activity. But whether this is enough will be a close
call.
Again, the long-term trend is very positive for the U.S., its business
activity, and its financial markets. However, 1997 might turn out to have some
more surprises than anticipated right now.
/s/ JOSEPH J. GASPER, President
Joseph J. Gasper, President
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NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
1,525 shares (cost $26,854) ............................................... 30,631
Dreyfus Stock Index Fund (DryStkIx)
9,742 shares (cost $171,041) .............................................. 197,563
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
11,386 shares (cost $218,226) ............................................. 239,440
Fidelity VIP - Growth Portfolio (FidVIPGr)
10,012 shares (cost $294,741) ............................................. 311,771
Fidelity VIP - High Income Portfolio (FidVIPHI)
3,028 shares (cost $35,628) ............................................... 37,911
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,059 shares (cost $18,065) ............................................... 19,951
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
6,055 shares (cost $91,797) ............................................... 102,510
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
7,084 shares (cost $102,557) .............................................. 117,319
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
276,603 shares (cost $3,273,884) .......................................... 4,503,103
Nationwide SAT - Government Bond Fund (NSATGvtBd)
134,748 shares (cost $1,465,741) .......................................... 1,487,613
Nationwide SAT - Money Market Fund (NSATMyMkt)
397,313 shares (cost $397,313) ............................................ 397,313
Nationwide SAT - Small Company Fund (NSATSmCo)
2,883 shares (cost $38,437) ............................................... 40,043
Nationwide SAT - Total Return Fund (NSATTotRe)
961,579 shares (cost $10,380,206) ......................................... 12,760,152
Neuberger & Berman - Balanced Portfolio (NBAMTBal)
792 shares (cost $11,091) ................................................. 11,129
Neuberger & Berman - Growth Portfolio (NBAMTGro)
2,352 shares (cost $60,933) ............................................... 60,637
Neuberger & Berman - Limited Maturity Bond Portfolio (NBAMTLMat)
75,687 shares (cost $1,158,239) ........................................... 1,204,929
Neuberger & Berman - Partners Portfolio (NBAMTPart)
3,311 shares (cost $47,877) ............................................... 54,571
Oppenheimer - Bond Fund (OppBdFd)
685 shares (cost $7,880) .................................................. 7,968
Oppenheimer - Global Securities Fund (OppGISec)
1,301 shares (cost $20,550) ............................................... 22,945
Oppenheimer - Multiple Strategies Fund (OppMult)
271 shares (cost $3,929) .................................................. 4,231
</TABLE>
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<TABLE>
<S> <C>
Strong Special Fund II, Inc. (StSpec2)
3,074 shares (cost $52,663) ............................................ 59,143
Strong VIF - Strong Discovery Fund II (StDisc2)
1,455 shares (cost $16,865) ............................................ 15,718
Strong VIF - Strong International Stock Fund II (StIntStk2)
1,173 shares (cost $13,237) ............................................ 13,173
TCI Portfolios - TCI Advantage (TCIAdv)
128,928 shares (cost $706,467) ......................................... 810,955
TCI Portfolios - TCI Balanced (TCIBal)
1,707 shares (cost $11,909) ............................................ 12,872
TCI Portfolios - TCI Growth (TCIGro)
5,249 shares (cost $59,640) ............................................ 53,745
TCI Portfolios - TCI International (TCIInt)
4,169 shares (cost $23,112) ............................................ 24,846
Van Eck - Gold and Natural Resources Fund (VEGoldNR)
1,161 shares (cost $19,649) ............................................ 19,415
Van Eck - Worldwide Bond Fund (VEWrldBd)
153 shares (cost $1,636) ............................................... 1,698
Van Kampen American Capital - Real Estate Securities Fund (VKACRESec)
311 shares (cost $3,856) ............................................... 4,595
Warburg Pincus - International Equity Portfolio (WPIntEq)
1,696 shares (cost $19,395) ............................................ 19,473
Warburg Pincus - Small Company Growth Portfolio (WPSmCoGr)
3,764 shares (cost $46,999) ............................................ 53,630
------------
Total investments ................................................... 22,700,993
Accounts receivable .......................................................... 1,688
------------
Total assets ........................................................ 22,702,681
============
Contract Owners' Equity ......................................................... $ 22,702,681
============
</TABLE>
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<TABLE>
<CAPTION>
Contract owners' equity represented by: UNITS UNIT VALUE
<S> <C> <C> <C>
The Dreyfus Socially Responsible Growth Fund, Inc. ...... 1,769 17.319589 $ 30,638
Dreyfus Stock Index Fund ................................ 11,799 16.744674 197,570
Fidelity VIP - Equity-Income Portfolio .................. 9,508 25.185570 239,464
Fidelity VIP - Growth Portfolio ......................... 12,891 24.186560 311,789
Fidelity VIP - High Income Portfolio .................... 1,607 23.588786 37,907
Fidelity VIP - Overseas Portfolio ....................... 1,301 15.324813 19,938
Fidelity VIP-II - Asset Manager Portfolio ............... 5,640 18.169993 102,479
Fidelity VIP-II - Contrafund Portfolio .................. 8,785 13.356323 117,335
Nationwide SAT - Capital Appreciation Fund .............. 244,631 18.410667 4,503,820
Nationwide SAT - Government Bond Fund ................... 96,709 15.383251 1,487,699
Nationwide SAT - Money Market Fund ...................... 32,529 12.214743 397,333
Nationwide SAT - Small Company Fund ..................... 2,876 13.915643 40,021
Nationwide SAT - Total Return Fund ...................... 580,335 21.988773 12,760,855
Neuberger & Berman - Balanced Portfolio ................. 80,273 15.011230 1,204,996
Neuberger & Berman - Growth Portfolio ................... 3,508 17.282005 60,625
Neuberger & Berman - Limited Maturity Bond Portfolio .... 819 13.551318 11,099
Neuberger & Berman - Partners Portfolio ................. 3,122 17.469360 54,539
Oppenheimer - Bond Fund ................................. 505 15.764821 7,961
Oppenheimer - Global Securities Fund .................... 1,704 13.457220 22,931
Oppenheimer - Multiple Strategies Fund .................. 229 18.446363 4,224
Strong Special Fund II, Inc. ............................ 2,742 21.575419 59,160
Strong VIF - Strong Discovery Fund II ................... 952 16.514861 15,722
Strong VIF - Strong International Stock Fund II ......... 1,185 11.208230 13,282
TCI Portfolios - TCI Advantage .......................... 30,540 14.210999 434,004
TCI Portfolios - TCI Advantage (Depositor) (note 1a) .... 25,000 15.079515 376,988
TCI Portfolios - TCI Balanced ........................... 879 14.642920 12,871
TCI Portfolios - TCI Growth ............................. 3,507 15.327392 53,753
TCI Portfolios - TCI International ...................... 2,090 11.890858 24,852
Van Eck - Gold and Natural Resources Fund ............... 1,062 18.284590 19,418
Van Eck - Worldwide Bond Fund ........................... 126 13.479157 1,698
Van Kampen American Capital -
Real Estate Securities Fund .......................... 306 15.045195 4,604
Warburg Pincus - International Equity Portfolio ......... 1,670 11.660648 19,473
Warburg Pincus - Small Company Growth Portfolio ......... 3,809 14.080553 53,633
======= ========== -----------
$22,702,681
===========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends ................... $ 1,277,321 1,084,513 494,868
Mortality and expense charges (note 3) ................... (159,468) (119,641) (80,632)
------------ ---------- ----------
Net investment activity ............................... 1,117,853 964,872 414,236
------------ ---------- ----------
Proceeds from mutual fund shares sold .................... 1,904,080 2,252,228 4,179,645
Cost of mutual fund shares sold .......................... (1,696,815) (2,113,393) (4,147,943)
------------ ---------- ----------
Realized gain (loss) on investments ................... 207,265 138,835 31,702
Change in unrealized gain (loss) on investments .......... 2,051,091 2,274,433 (556,146)
------------ ---------- ----------
Net gain (loss) on investments ........................ 2,258,356 2,413,268 (524,444)
------------ ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ................ 3,376,209 3,378,140 (110,208)
------------ ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners .......... 4,940,306 4,661,075 8,317,542
Surrenders (note 2d) ..................................... (641,251) (427,125) (172,813)
Death benefits (note 4) .................................. (6,306) (11,836) (17,276)
Policy loans (net of repayments) (note 5) ................ (635,496) (212,115) (85,214)
Deductions for surrender charges (note 2d) ............... (145,828) (71,008) (59,849)
Redemptions to pay cost of insurance charges
and administrative charges (notes 2b and 2c) .......... (2,089,346) (2,073,851) (2,524,466)
------------ ---------- ----------
Net equity transactions ............................ 1,422,079 1,865,140 5,457,924
------------ ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ....................... 4,798,288 5,243,280 5,347,716
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................. 17,904,393 12,661,113 7,313,397
------------ ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ....................... $ 22,702,681 17,904,393 12,661,113
============ ========== ==========
</TABLE>
See accompanying notes to financial statements.
7
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NATIONWIDE VLI SEPARATE ACCOUNT-3
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide VLISeparate Account-3 (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
Insurance Company (the Company) on August 8, 1984. The Account has
been registered as a unit investment trust under the Investment
Company Act of 1940. On August 21, 1991, the Company (Depositor)
transferred to the Account 50,000 shares of TCI Portfolios, Inc. - TCI
Advantage, for which it was credited with 25,000 accumulation units.
The value of the accumulation units purchased by the Company on August
21, 1991 was $250,000. The Company offers Modified Single Premium and
Flexible Premium Variable Life Insurance Policies through the Account.
The primary distribution for the contracts is through Company Agents;
however, other distributors may be utilized.
(b) The Contracts
Only contracts with a front-end sales load, a surrender charge and
certain other fees have been purchased. See note 2 for a discussion of
policy charges and note 3 for asset charges.
Contract owners may invest in the following funds:
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
Portfolio of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Growth and Income Portfolio (DryGroInc)
Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity
VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Fidelity VIP - Growth Portfolio (FidVIPGr)
Fidelity VIP - High Income Portfolio (FidVIPHI)
Fidelity VIP - Overseas Portfolio (FidVIPOv)
Portfolios of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Small Company Fund (NSATSmCo)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger & Berman);
Neuberger & Berman - Balanced Portfolio (NBAMTBal)
Neuberger & Berman - Growth Portfolio (NBAMTGro)
Neuberger & Berman - Limited Maturity Bond Portfolio (NBAMTLMat)
Neuberger & Berman - Partners Portfolio (NBAMTPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer);
Oppenheimer - Bond Fund (OppBdFd)
Oppenheimer - Global Securities Fund (OppGlSec)
Oppenheimer - Multiple Strategies Fund (OppMult)
Strong Special Fund II, Inc. (StSpec2)
Funds of the Strong Variable Insurance Funds, Inc. (Strong VIF);
Strong VIF - Strong Discovery Fund II (StDisc2)
Strong VIF - Strong International Stock Fund II (StIntStk2)
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Portfolios of the TCI Portfolios, Inc. (TCI Portfolios);
TCI Portfolios - TCI Advantage (TCIAdv)
TCI Portfolios - TCI Balanced (TCIBal)
TCI Portfolios - TCI Growth (TCIGro)
TCI Portfolios - TCI International (TCIInt)
TCI Portfolios - TCI Value (TCIValue)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck) (formerly Van
Eck Investment Trust);
Van Eck - Gold and Natural Resources Fund (VEGoldNR)
Van Eck - Worldwide Bond Fund (VEWrldBd) (formerly Van Eck - Global
Bond Fund (VEGlobBd))
Van Eck - Worldwide Emerging Markets Fund (VEWrldEMkt)
Fund of the Van Kampen American Capital Life Investment Trust (Van
Kampen American Capital);
Van Kampen American Capital - Real Estate Securities Fund
(VKACRESec)
Portfolios of the Warburg Pincus Trust (Warburg Pincus);
Warburg Pincus - International Equity Portfolio (WPIntEq)
Warburg Pincus - Post Venture Capital Portfolio (WPPVenCap)
Warburg Pincus - Small Company Growth Portfolio (WPSmCoGr)
At December 31, 1996, contract owners have invested in all of the
above funds except for Dreyfus VIF - Growth and Income Portfolio, TCI
Portfolios - TCI Value, Van Eck - Worldwide Emerging Markets Fund, and
Warburg Pincus Post Venture Capital Portfolio. The contract owners'
equity is affected by the investment results of each fund, equity
transactions by contract owners and certain policy charges (see notes
2 and 3). 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 December 31, 1996. The cost of
investments sold is determined on the 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 provisions of the Internal Revenue Code. The Company does
not provide for income taxes within the Account.
Taxes are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities,
if any, at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(f) Reclassifications
Certain 1995 and 1994 amounts have been reclassified to conform with
the current year presentation.
(2) POLICY CHARGES
(a) Deductions from Premium
On flexible premium life insurance contracts, the Company deducts a
charge for state premium taxes equal to 2.5% of all premiums received
to cover the payment of these premium taxes. Additionally, the Company
deducts a front-end sales load of up to 3.5% from each premium payment
received. The Company may at its sole discretion reduce this sales
loading.
(b) Cost of Insurance
A cost of insurance charge is assessed monthly against each contract.
The amount of the charge is based upon age, sex, rate class and net
amount at risk (death benefit less total contract value).
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(c) Administrative Charges
For flexible premium contracts, the Company currently deducts a
monthly administrative charge of $25 during the first policy year and
$5 per month thereafter (may deduct up to $7.50, maximum) to recover
policy maintenance, accounting, record keeping and other
administrative expenses. Additionally, the Company deducts an increase
charge of $2.04 per year per $1,000 applied to any increase in the
specified amount during the first 12 months after the increase becomes
effective.
The above charges are assessed against each contract by liquidating
units.
(d) Surrender Charges
Policy surrenders result in a redemption of the contract value from
the Separate Account and payment of the surrender proceeds to the
contract owner or designee. The surrender proceeds consist of the
contract value, less any outstanding policy loans, and less a
surrender charge, if applicable. The amount of the charge is based
upon a specified percentage of the initial surrender charge which
varies by issue age, sex and rate class. For flexible premium
contracts, the charge is 100% of the initial surrender charge in the
first year, declining to 30% of the initial surrender charge in the
ninth year.
No surrender charge is assessed on any contract surrendered after the
ninth year.
The Company may waive the surrender charge for certain contracts in
which the sales expenses normally associated with the distribution of a
contract are not incurred. No charges were deducted from the initial
funding, or from earnings thereon.
(3) ASSET CHARGES
The Company deducts a charge equal to an annual rate of .80%, with certain
exceptions, to cover mortality and expense risk charges related to
operations. On each policy anniversary beginning with the 10th, this
charge is reduced to 0.50% on an annual basis provided that the cash
surrender value of the contract is $25,000 or more on such anniversary.
This charge is assessed through the unit value calculation.
(4) DEATH BENEFITS
Death benefits result in a redemption of the contract value from the
Separate Account and payment of the death benefit proceeds, less any
outstanding policy loans and policy charges, to the legal beneficiary. The
excess of the death benefit proceeds over the contract value on the date
of death is paid by the Company's general account.
(5) POLICY LOANS (NET OF REPAYMENTS)
Contract provisions allow contract owners to borrow 90% of a policy's cash
surrender value. The contract is charged 6% on the outstanding loan and is
due and payable in advance on the policy anniversary.
At the time the loan is granted, the amount of the loan plus interest, if
any, is transferred from the Account to the Company's general account as
collateral for the outstanding loan. Collateral amounts in the general
account are credited with the stated rate of interest in effect at the time
the loan is made, subject to a guaranteed minimum rate. Interest credited
is paid by the Company's general account to the Account. Loan repayments
result in a transfer of collateral back to the Account.
(6) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for contract owners' equity. This schedule is presented in
the following format:
o Beginning unit value - Jan. 1
o Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying
mutual funds.)
o Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
o Asset charges
(This amount reflects the decrease in the unit value due to the
charge discussed in note 3.)
o Ending unit value - Dec. 31
o Percentage increase (decrease) in unit value.
10
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<TABLE>
<CAPTION>
SCHEDULE I
NATIONWIDE VLI SEPARATE ACCOUNT-3
SCHEDULES OF CHANGES IN UNIT VALUE
Years Ended December 31, 1996, 1995 and 1994
DRYSRGRO DRYSTKIX FIDVIPEI FIDVIPGR FIDVIPHI FIDVIPOV FIDVIPAM FIDVIPCON
--------- -------- -------- -------- -------- -------- -------- ---------
1996***
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning unit value - Jan. 1 $14.401809 13.775382 22.215745 21.256059 20.852993 13.645033 15.982529 11.099135
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .747630 .596225 1.025291 1.527554 1.902180 .335875 1.051899 .104631
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.296912 2.494042 2.132663 1.587071 1.012148 1.459385 1.270941 2.248711
- ----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.126762) (.120975) (.188129) (.184124) (.178535) (.115480) (.135376) (.096154)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $17.319589 16.744674 25.185570 24.186560 23.588786 15.324813 18.169993 13.356323
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value*(a) 20% 22% 13% 14% 13% 12% 14% 20%
==================================================================================================================================
1995
Beginning unit value - Jan. 1 $13.083801 12.456650 19.991986 21.077777 19.897254 13.633767 15.029765 10.655665
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .396430 .239425 .229029 .000000 .000000 .000000 .000000 .143118
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .967071 1.122261 2.063681 .249916 1.022818 .055055 1.003384 .336322
- ----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.045493) (.042954) (.068951) (.071634) (.067079) (.043789) (.050620) (.035970)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $14.401809 13.775382 22.215745 21.256059 20.852993 13.645033 15.982529 11.099135
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value*(a) 10%(b) 11%(b) 11%(b) 1%(b) 5%(b) 0%(b) 6%(b) 4%(b)
==================================================================================================================================
1994
Beginning unit value - Jan. 1 ** ** ** ** ** ** ** **
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss)
- ----------------------------------------------------------------------------------------------------------------------------------
Asset charges
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value*(a)
==================================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a)Asset charges do not include the policy charges discussed in note 2; and
(b)This investment option was not utilized for the entire year indicated.
**This investment option was not utilized or was not available.
***No other investment options were being utilized.
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<TABLE>
<CAPTION>
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-3
SCHEDULES OF CHANGES IN UNIT VALUE
Years Ended December 31, 1996, 1995 and 1994
NSATCAPAP NSATGVTBD NSATMYMKT NSATSMCO NSATTOTRE NBAMTBAL NBAMTGRO NBAMTLMAT NBAMTPART
---------- ---------- --------- --------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996***
Beginning unit
value - Jan. 1 $14.713230 14.984933 11.714295 11.420759 18.192762 14.157643 15.962482 13.096811 13.591346
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .766553 .930103 .596995 .133983 1.217547 2.170851 1.448641 1.102543 .554011
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) 3.061949 (.412550) .000000 2.463983 2.737018 (1.201214) .003774 (.542247) 3.446498
- -----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.131065) (.119235) (.096547) (.103082) (.158554) (.116050) (.132892) (.105789) (.122495)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit
value - Dec. 31 $18.410667 15.383251 12.214743 13.915643 21.988773 15.011230 17.282005 13.551318 17.469360
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage
increase (decrease)
in unit value*(a) 25% 3% 4% 22% 21% 6% 8% 3% 29%
===================================================================================================================================
1995
Beginning unit
value - Jan. 1 $11.465403 12.720514 11.176411 10.000000 14.205723 11.531273 15.674452 12.612894 12.574475
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .653781 .903001 .629782 .017475 1.413734 .293664 .000000 .000000 .000000
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) 2.696528 1.472503 .000000 1.418968 2.703396 2.438125 .341270 .526078 1.059943
- -----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.102482) (.111085) (.091898) (.015684) (.130091) (.105419) (.053240) (.042161) (.043072)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit
value - Dec. 31 $14.713230 14.984933 11.714295 11.420759 18.192762 14.157643 15.962482 13.096811 13.591346
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a) 28% 18% 5% 14%(b) 28% 23% 2%(b) 4%(b) 8%(b)
===================================================================================================================================
1994
Beginning unit
value - Jan. 1 $11.662121 13.250482 10.845265 ** 14.167308 12.027618 ** ** **
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .184927 .833925 .419275 .717782 .469287
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) (.289863) (1.261429) .000000 (.565055) (.872191)
- -----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.091782) (.102464) (.088129) (.114312) (.093441)
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit
value - Dec. 31 $11.465403 12.720514 11.176411 14.205723 11.531273
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a) (2)% (4)% 3% 0% (4)%
===================================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a)Asset charges do not include the policy charges discussed in note 2; and
(b)This investment option was not utilized for the entire year indicated.
**This investment option was not utilized or was not available.
***No other investment options were being utilized.
12
<PAGE> 12
<TABLE>
<CAPTION>
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-3
SCHEDULES OF CHANGES IN UNIT VALUE
Years Ended December 31, 1996, 1995 and 1994
OPPBDFD OPPGISEC OPPMULT STSPEC2 STDISC2 STINTSTK2 TCIADV TCIADV+
--------- --------- -------- -------- -------- -------- -------- --------
1996***
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning unit value -
Jan. 1 $15.164813 11.542134 16.100377 18.408627 16.514850 10.236021 13.112917 13.802855
- --------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .975830 .000000 1.226905 .866384 3.367146 .051144 .945920 .998314
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.253799) 2.014545 1.256649 2.458870 (3.238459) 1.009533 .260998 .278346
- --------------------------------------------------------------------------------------------------------------------------------
Asset charges (.122023) (.099459) (.137568) (.158462) (.128676) (.088468) (.108836) .000000
- --------------------------------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $15.764821 13.457220 18.446363 21.575419 16.514861 11.208230 14.210999 15.079515
- --------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a) 4% 17% 15% 17% 0% 9% 8% 9%
================================================================================================================================
1995
Beginning unit value -
Jan. 1 $14.319149 11.943012 15.453572 17.177125 15.320395 ** 11.321934 11.822996
- --------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .451093 .000000 .337996 .082118 .211565 .411556 .431938
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .442834 (.362402) .360634 1.207608 1.035469 1.477165 1.547921
- --------------------------------------------------------------------------------------------------------------------------------
Asset charges (.048263) (.038476) (.051825) (.058224) (.052579) (.097738) .000000
- --------------------------------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $15.164813 11.542134 16.100377 18.408627 16.514850 13.112917 13.802855
- --------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a) 6%(b) (3)%(b) 4%(b) 7%(b) 8%(b) 16% 17%
================================================================================================================================
1994
Beginning unit value -
Jan. 1 ** ** ** ** ** ** $11.295721 11.701906
- --------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .297670 .309969
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.181209) (.188879)
- --------------------------------------------------------------------------------------------------------------------------------
Asset charges (.090248) .000000
- --------------------------------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $11.321934 11.822996
- --------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a) 0% 1%
================================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a) Asset charges do not include the policy charges discussed in note 2;
and
(b) This investment option was not utilized for the entire year
indicated.
**This Investment option was not utilized or was not available.
***No other investment options were being utilized.
+For Depositor, see note 1a.
13
<PAGE> 13
<TABLE>
<CAPTION>
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-3
SCHEDULES OF CHANGES IN UNIT VALUE
Years Ended December 31, 1996, 1995 and 1994
TCIBAL TCIGRO TCIINT VEGOLDNR VEWRLDBD VKACRESEC WPINTEQ WPSMCOGR
------ ------ ------ --------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996***
Beginning unit value -
Jan. 1 $13.155049 16.149061 10.477472 15.612002 13.253457 10.792212 10.687672 12.461074
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .622373 1.812196 .249286 .331277 .361660 .289441 .227366 .000000
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .976138 (2.505020) 1.252389 2.482492 (.030793) 4.059026 .836487 1.727810
- ----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.110640) (.128845) (.088289) (.141181) (.105167) (.095484) (.090877) (.108331)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $14.642920 15.327392 11.890858 18.284590 13.479157 15.045195 11.660648 14.080553
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a) 11% (5)% 13% 17% 2% 39% 9% 13%
==================================================================================================================================
1995
Beginning unit value -
Jan. 1 $12.526705 15.745499 10.216142 15.406908 13.012850 10.203521 10.236484 10.233506
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .187655 .000000 .000000 .075481 .245483 .092168 .077521 .000000
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .482910 .457100 .294719 .180118 .038021 .530496 .408042 2.264927
- ----------------------------------------------------------------------------------------------------------------------------------
Asset charges (.042221) (.053538) (.033389) (.050505) (.042897) (.033973) (.034375) (.037359)
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31 $13.155049 16.149061 10.477472 15.612002 13.253457 10.792212 10.687672 12.461074
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a) 5%(b) 3%(b) 3%(b) 1%(b) 2%(b) 6%(b) 4%(b) 22%(b)
==================================================================================================================================
1994
Beginning unit value -
Jan. 1 ** ** ** ** ** ** ** **
- ----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss)
- ----------------------------------------------------------------------------------------------------------------------------------
Asset charges
- ----------------------------------------------------------------------------------------------------------------------------------
Ending unit value -
Dec. 31
- ----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease)
in unit value*(a)
==================================================================================================================================
</TABLE>
*An annualized rate of return cannot be determined as:
(a) Asset charges do not include the policy charges discussed in note 2; and
(b) This investment option was not utilized for the entire year
indicated.
**This investment option was not utilized or was not available.
***No other investment options were being utilized.
See note 6.
14
<PAGE> 14
Independent Auditors' Report
----------------------------
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide VLI Separate Account-3:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VLI Separate Account-3 as of December 31,
1996, and the related statements of operations and changes in contract owners'
equity and schedules of changes in unit value for each of the years in the
three year period then ended. These financial statements and schedules of
changes in unit value are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules of changes in unit value 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 and schedules of
changes in unit value 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, 1996, 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 and schedules of changes in unit
value referred to above present fairly, in all material respects, the financial
position of Nationwide VLI Separate Account-3 as of December 31, 1996, and the
results of its operations and its changes in contract owners' equity and the
schedules of changes in unit value for each of the years in the three year
period then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 7, 1997
15
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220
Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
