<PAGE> 1
NATIONWIDE(R)
VLI SEPARATE
ACCOUNT-3
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1998
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[GRAPHIC OF PRESIDENT]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to
bring you the 1998 annual report of the Nationwide VLI
Separate Account-3.
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.
[GRAPHIC OF JOSEPH J. GASPER SIGNATURE]
Joseph J. Gasper, President
February 16, 1999
3
<PAGE> 3
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
<S> <C> <C> <C>
138,182 shares (cost $781,557)........................................................................ $958,981
American Century VP - American Century VP Balanced (ACVPBal)
2,211 shares (cost $16,283) ........................................................................... 18,442
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
6,299 shares (cost $62,625) ........................................................................... 56,814
American Century VP - American Century VP Income & Growth (ACVPIncGr)
573 shares (cost $3,726) .............................................................................. 3,885
American Century VP - American Century VP International (ACVPInt)
4,532 shares (cost $28,348) ........................................................................... 34,533
American Century VP - American Century VP Value (ACVPValue)
983 shares (cost $7,028) .............................................................................. 6,618
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
2,251 shares (cost $52,029) ........................................................................... 69,972
Dreyfus Stock Index Fund (DryStkIx)
13,448 shares (cost $307,458) ......................................................................... 437,332
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
5,612 shares (cost $181,635) .......................................................................... 202,666
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
325 shares (cost $7,168) .............................................................................. 7,357
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
16,429 shares (cost $356,165) ......................................................................... 417,636
Fidelity VIP - Growth Portfolio (FidVIPGr)
13,963 shares (cost $441,216) ......................................................................... 626,500
Fidelity VIP - High Income Portfolio (FidVIPHI)
4,845 shares (cost $60,198) ........................................................................... 55,868
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,089 shares (cost $20,062) ........................................................................... 21,834
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
5,251 shares (cost $83,995) ........................................................................... 95,358
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
19,995 shares (cost $344,281) ......................................................................... 488,670
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
353 shares (cost $7,158) .............................................................................. 8,067
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
300,479 shares (cost $4,168,296) ...................................................................... 7,989,731
Nationwide SAT - Government Bond Fund (NSATGvtBd)
169,214 shares (cost $1,878,589) ...................................................................... 1,978,114
Nationwide SAT - Money Market Fund (NSATMyMkt)
325,406 shares (cost $325,406) ........................................................................ 325,406
Nationwide SAT - Small Company Fund (NSATSmCo)
2,645 shares (cost $39,219) ........................................................................... 42,339
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Nationwide SAT - Total Return Fund (NSATTotRe)
1,031,845 shares (cost $12,400,087 .............................. 18,985,946
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
88,386 shares (cost $1,367,924) ................................. 1,444,230
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
2,376 shares (cost $61,567) ..................................... 62,465
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
38 shares (cost $492) ........................................... 521
Neuberger & Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat)
814 shares (cost $11,211) ....................................... 11,245
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
6,820 shares (cost $128,895) .................................... 129,103
Oppenheimer VAF - Bond Fund (OppBdFd)
913 shares (cost $10,935) ....................................... 11,248
Oppenheimer VAF - Global Securities Fund (OppGISec)
3,121 shares (cost $59,501) ..................................... 68,884
Oppenheimer VAF - Growth Fund (OppGro)
261 shares (cost $9,014) ........................................ 9,560
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
524 shares (cost $8,113) ........................................ 8,934
Strong Opportunity Fund II, Inc. (StOpp2)
6,246 shares (cost $122,325) .................................... 135,673
Strong VIF - Strong Discovery Fund II (StDisc2)
1,486 shares (cost $17,921) ..................................... 18,906
Strong VIF - Strong International Stock Fund II (StIntStk2)
1,415 shares (cost $15,437) ..................................... 12,428
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
142 shares (cost $1,514) ........................................ 1,749
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
586 shares (cost $7,633) ........................................ 4,172
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
592 shares (cost $9,394) ........................................ 5,442
Van Kampen American Capital LIT -
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
1,516 shares (cost $23,736) ..................................... 20,865
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
2,419 shares (cost $28,079) ..................................... 26,585
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
83 shares (cost $882) ........................................... 978
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
2,459 shares (cost $35,128) ..................................... 39,369
Total assets ........................................... 34,844,426
ACCOUNTS PAYABLE ................................................... 4,591
CONTRACT OWNERS' EQUITY (NOTE 7) ................................... $34,839,835
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 5
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 199
<TABLE>
<CAPTION>
TOTAL ACVPADV
--------------------------------------------- ------------------------------
1998 1997 1996 1998 1997
------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 441,432 452,251 447,134 19,123 12,739
Mortality and expense charges
(note 3) (251,361) (208,160) (159,468) (3,703) (3,496
------------- -------------- -------------- -------------- -------------
Net investment activity 190,071 244,091 287,666 15,420 9,243
------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 2,923,380 2,224,444 1,904,080 78,478 106,359
Cost of mutual funds sold (2,044,536) (1,729,172) (1,696,815) (66,483) (94,785
------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 878,844 495,272 207,265 11,995 11,574
Change in unrealized gain (loss)
on investments 3,011,918 4,439,699 2,051,092 40,889 32,047
------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments 3,890,762 4,934,971 2,258,357 52,884 43,621
------------- -------------- -------------- -------------- -------------
Reinvested capital gains 1,454,945 845,589 830,186 71,955 44,789
------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 5,535,778 6,024,651 3,376,209 140,259 97,653
------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 4,210,270 4,453,849 4,940,306 68,519 62,979
Transfers between funds - - - (21,014) (35,911
Surrenders (1,087,106) (747,816) (641,251) (29,005) (40,827
Death benefits (note 4) (124,773) (28,333) (6,306) (10,265) -
Policy loans (net of repayments) (note 5)
Deductions for surrender charges (859,588) (891,821) (635,496) (18,396) (18,857
(note 2d)
Redemptions to pay cost of insurance (128,012) (166,341) (145,828) (3,416) (9,081
charges and administration
charges (notes 2b and 2c)
(2,017,340) (2,036,264) (2,089,346) (23,887) (10,757
Net equity transactions ------------- -------------- -------------- -------------- -------------
(6,549) 583,274 1,422,079 (37,464) (52,454
------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity
Contract owners' equity 5,529,229 6,607,925 4,798,288 102,795 45,199
beginning of period
29,310,606 22,702,681 17,904,393 856,191 810,992
Contract owners' equity ------------- -------------- -------------- -------------- -------------
end of period $ 34,839,835 29,310,606 22,702,681 958,986 856,191
============= ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
ACVPBAL
------------- -----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends 18,056 373 171 162
Mortality and expense charges
(note 3) (2,743) (147) (23) (219)
-------------- -------------- -------------- --------------
Net investment activity 15,313 226 148 (57)
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 100,725 5,521 560 231
Cost of mutual funds sold (91,177) (4,833) (500) (218)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments 9,548 688 60 13
Change in unrealized gain (loss)
on investments 5,853 (436) 1,633 891
-------------- -------------- -------------- --------------
Net gain (loss) on investments 15,401 252 1,693 904
-------------- -------------- -------------- --------------
Reinvested capital gains 34,817 2,314 746 207
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations 65,531 2,792 2,587 1,054
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 83,479 648 1,313 1,499
Transfers between funds (48,014) - 3,416 3,453
Surrenders (9,321) (3,950) (113) (23)
Death benefits (note 4) (407) - - -
Policy loans (net of repayments) (note 5)
Deductions for surrender charges (40,770) - - -
(note 2d)
Redemptions to pay cost of insurance (2,120) (465) (25) (5)
charges and administration
charges (notes 2b and 2c)
(6,503) (626) 3 -
Net equity transactions -------------- -------------- -------------- --------------
(23,656) (4,393) 4,594 4,924
-------------- -------------- -------------- --------------
Net change in contract
owners' equity
Contract owners' equity 41,875 (1,601) 7,181 5,978
beginning of period
769,117 20,052 12,871 6,893
Contract owners' equity -------------- -------------- -------------- --------------
end of period 810,992 18,451 20,052 12,871
============== ============== ============== ==============
</TABLE>
6
<PAGE> 6
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
ACVPCAPAP ACVPINCGR
---------------------------------------------- --------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ - - - 19 -
Mortality and expense charges
(note 3) ............................. (377) (264) (154) (12) -
-------------- -------------- -------------- -------------- -------------
Net investment activity .............. (377) (264) (154) 7 -
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold .......................... 19,751 16,373 17,129 216 -
Cost of mutual funds sold .............. (23,525) (19,447) (19,961) (222) -
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments ........................ (3,774) (3,074) (2,832) (6) -
Change in unrealized gain (loss)
on investments ....................... (284) 367 (5,469) 159 -
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments ....... (4,058) (2,707) (8,301) 153 -
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains ............... 3,128 1,358 5,393 - -
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations .................. (1,307) (1,613) (3,062) 160 -
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners ...................... 8,237 15,247 16,398 402 -
Transfers between funds ................ (10,313) 12,404 7,093 3,509 -
Surrenders ............................. (9,003) (1,216) (538) - -
Death benefits (note 4) ................ - - - - -
Policy loans (net of repayments) (note 5) 4,905 (6,640) (2,519) (4) -
Deductions for surrender charges
(note 2d) ............................ (1,060) (271) (122) - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) ............ (3,356) (2,969) (3,563) (189) -
-------------- -------------- -------------- -------------- -------------
Net equity transactions ............ (10,590) 16,555 16,749 3,718 -
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity ....................... (11,897) 14,942 13,687 3,878 -
Contract owners' equity
beginning of period .................. 68,695 53,753 40,066 - -
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period ........................ $ 56,798 68,695 53,753 3,878 -
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
ACVPINT
-------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... - 162 234 335
Mortality and expense charges
(note 3) ............................. - (193) (54) (48)
-------------- -------------- -------------- --------------
Net investment activity .............. - (31) 180 287
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold .......................... - 3,758 6,666 1,044
Cost of mutual funds sold .............. - (2,904) (5,748) (990)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments ........................ - 854 918 54
Change in unrealized gain (loss)
on investments ....................... - 1,807 2,645 1,724
-------------- -------------- -------------- --------------
Net gain (loss) on investments ....... - 2,661 3,563 1,778
-------------- -------------- -------------- --------------
Reinvested capital gains ............... - 1,666 451 112
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations .................. - 4,296 4,194 2,177
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ...................... - 2,509 4,901 4,482
Transfers between funds ................ - 3,810 (5,070) 18,762
Surrenders ............................. - (1,804) - (14)
Death benefits (note 4) ................ - - - -
Policy loans (net of repayments) (note 5)
Deductions for surrender charges ....... - 175 (2) -
(note 2d)............................. - (212) - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) ............ - (1,951) (1,124) (880)
------------- -------------- -------------- --------------
Net equity transactions ............ - 2,527 (1,295) 22,350
------------- -------------- -------------- --------------
Net change in contract
owners' equity ....................... - 6,823 2,899 24,527
Contract owners' equity
beginning of period .................. - 27,751 24,852 325
------------- -------------- -------------- --------------
Contract owners' equity
end of period ........................ - 34,574 27,751 24,852
============== ============== ============== ==============
</TABLE>
(Continued)
7
<PAGE> 7
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
ACVPVALUE DRYSRGRO
---------------------------------------------- --------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... - - - 109 161
Mortality and expense charges
(note 3) ............................. $ (32) - - (522) (88)
-------------- -------------- -------------- -------------- -------------
Net investment activity .............. (32) - - (413) 73
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold .......................... 30 - - 9,155 8,378
Cost of mutual funds sold .............. (31) - - (5,890) (5,531)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments ........................ (1) - - 3,265 2,847
Change in unrealized gain (loss)
on investments ....................... (410) - - 8,420 5,747
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments ....... (411) - - 11,685 8,594
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains ............... 5 - - 2,538 1,233
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations .................. (438) - - 13,810 9,900
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners ...................... 7,146 - - 2,861 4,271
Transfers between funds ................ - - - 17,202 7,312
Surrenders ............................. - - - (10,639) (819)
Death benefits (note 4)................. - - - - -
Policy loans (net of repayments) (note 5) - - - 6,949 (8,265)
Deductions for surrender charges
(note 2d) ............................ - - - (1,253) (182)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) ............ (165) - - (1,826) -
-------------- -------------- -------------- -------------- -------------
Net equity transactions 6,981 - - 13,294 2,317
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity ....................... 6,543 - - 27,104 12,217
Contract owners' equity
beginning of period .................. - - - 42,855 30,638
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period ........................ $ 6,543 - - 69,959 42,855
============== ============== ============== ============== ============
</TABLE>
<TABLE>
<CAPTION>
DRYSTKLX
--------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... 69 5,032 4,753 3,193
Mortality and expense charges
(note 3) ............................. (834) (2,715) (1,726) (1,138)
-------------- -------------- -------------- --------------
Net investment activity .............. (765) 2,317 3,027 2,055
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold .......................... 3,627 71,990 57,672 15,530
Cost of mutual funds sold .............. (3,224) (40,908) (35,667) (12,325)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments ........................ 403 31,082 22,005 3,205
Change in unrealized gain (loss)
on investments ....................... 3,163 58,442 44,911 20,580
-------------- -------------- -------------- --------------
Net gain (loss) on investments ....... 3,566 89,524 66,916 23,785
-------------- -------------- -------------- --------------
Reinvested capital gains ............... 1,239 909 10,149 3,230
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations .................. 4,040 92,750 80,092 29,070
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ...................... 3,722 44,706 34,802 16,813
Transfers between funds ................ 3,011 55,914 61,294 54,396
Surrenders ............................. (59) (1,238) (432) -
Death benefits (note 4)................. - - - -
Policy loans (net of repayments) (note 5) (121) (70,038) (41,395) (5,987)
Deductions for surrender charges
(note 2d)............................. (13) (146) (96) -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) ............ (277) (15,056) (1,428) (396)
-------------- -------------- -------------- --------------
Net equity transactions 6,263 14,142 52,745 64,826
-------------- -------------- -------------- --------------
Net change in contract
owners' equity ....................... 10,303 106,892 132,837 93,896
Contract owners' equity
beginning of period .................. 20,335 330,407 197,570 103,674
-------------- -------------- -------------- --------------
Contract owners' equity
end of period ........................ 30,638 437,299 330,407 197,570
============== ============== ============== ==============
</TABLE>
(Continued)
8
<PAGE> 8
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
DryCapAp DryGrInc
---------------------------------------------- ---------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 1,104 80 - 55 17
Mortality and expense charges
(note 3) (508) (3) - (35) -
-------------- -------------- -------------- -------------- -------------
Net investment activity 596 77 - 20 17
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 11,604 339 - 580 2,217
Cost of mutual funds sold (10,443) (343) - (597) (2,101)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 1,161 (4) - (17) 116
Change in unrealized gain (loss)
on investments 21,032 (2) - 236 (48)
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments 22,193 (6) - 219 68
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 3 7 - 67 66
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 22,792 78 - 306 151
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 1,324 - - 6,636 143
Transfers between funds 168,936 10,711 - - 1,402
Surrenders - - - (491) -
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) - - - 522 (855)
Deductions for surrender charges
(note 2d) - - - (58) -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (839) (358) - (399) -
-------------- -------------- -------------- -------------- -------------
Net equity transactions 169,421 10,353 - 6,210 690
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity 192,213 10,431 - 6,516 841
Contract owners' equity
beginning of period 10,431 - - 841 -
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 202,644 10,431 - 7,357 841
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
FidVIPEI
--------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends - 6,967 6,340 121
Mortality and expense charges
(note 3) - (3,240) (2,750) (540)
-------------- -------------- -------------- --------------
Net investment activity - 3,727 3,590 (419)
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold - 178,067 38,671 15,900
Cost of mutual funds sold - (146,020) (30,850) (14,221)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments - 32,047 7,821 1,679
Change in unrealized gain (loss)
on investments - (19,152) 59,409 17,568
-------------- -------------- -------------- --------------
Net gain (loss) on investments - 12,895 67,230 19,247
-------------- -------------- -------------- --------------
Reinvested capital gains - 24,794 31,876 3,459
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations - 41,416 102,696 22,287
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners - 35,661 47,085 36,603
Transfers between funds - (133,030) 129,355 125,859
Surrenders - (836) (837) (66)
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) - (2,005) (1,733) (7,971)
Deductions for surrender charges
(note 2d) - (98) (186) (15)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) - (20,482) (18,859) (11,500)
-------------- -------------- -------------- --------------
Net equity transactions - (120,790) 154,825 142,910
-------------- -------------- -------------- --------------
Net change in contract
owners' equity - (79,374) 257,521 165,197
Contract owners' equity
beginning of period - 496,985 239,464 74,267
-------------- -------------- -------------- --------------
Contract owners' equity
end of period - 417,611 496,985 239,464
============== ============== ============== ==============
</TABLE>
(Continued)
9
<PAGE> 9
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
FIDVIPGR FIDVIPHI
---------------------------------------------- ---------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 2,130 2,197 421 4,477 2,716
Mortality and expense charges
(note 3) (3,719) (2,912) (1,363) (355) (139)
-------------- -------------- -------------- -------------- -------------
Net investment activity (1,589) (715) (942) 4,122 2,577
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 29,372 48,582 27,126 11,788 4,631
Cost of mutual funds sold (23,004) (42,413) (27,861) (10,748) (4,489)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 6,368 6,169 (735) 1,040 142
Change in unrealized gain (loss)
on investments 107,317 60,938 21,417 (10,637) 4,024
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments 113,685 67,107 20,682 (9,597) 4,166
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 55,712 9,833 10,639 2,845 336
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 167,808 76,225 30,379 (2,630) 7,079
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 60,527 63,266 61,227 11,217 8,521
Transfers between funds 17,221 (3,635) 96,027 (6,831) 11,758
Surrenders (10,674) (2,747) (96) (397) 333
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) (194) (18,648) (10,864) (540) (3,725)
Deductions for surrender charges
(note 2d) (1,257) (611) (22) (47) 74
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (23,389) (9,218) (8,404) (3,438) (3,408)
-------------- -------------- -------------- -------------- -------------
Net equity transactions 42,234 28,407 137,868 (36) 13,553
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity 210,042 104,632 168,247 (2,666) 20,632
Contract owners' equity
beginning of period 416,421 311,789 143,542 58,539 37,907
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 626,463 416,421 311,789 55,873 58,539
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
FIDVIPOV
-------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends 1,018 335 360 104
Mortality and expense charges
(note 3) (121) (153) (61) (136)
-------------- -------------- -------------- --------------
Net investment activity 897 182 299 (32)
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 9,726 1,816 8,615 1,493
Cost of mutual funds sold (9,709) (1,637) (7,746) (1,422)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments 17 179 869 71
Change in unrealized gain (loss)
on investments 1,860 503 (618) 1,622
-------------- -------------- -------------- --------------
Net gain (loss) on investments 1,877 682 251 1,693
-------------- -------------- -------------- --------------
Reinvested capital gains 199 987 1,428 114
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations 2,973 1,851 1,978 1,775
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 10,642 3,023 3,857 2,792
Transfers between funds 13,888 2,264 (5,213) 8,008
Surrenders (588) - (81) (34)
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) 108 (1,604) (2,330) (566)
Deductions for surrender charges
(note 2d) (134) - (18) (8)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (2,307) (1,083) (748) (816)
-------------- -------------- -------------- --------------
Net equity transactions 21,609 2,600 (4,533) 9,376
-------------- -------------- -------------- --------------
Net change in contract
owners' equity 24,582 4,451 (2,555) 11,151
Contract owners' equity
beginning of period 13,325 17,383 19,938 8,787
-------------- -------------- -------------- --------------
Contract owners' equity
end of period 37,907 21,834 17,383 19,938
============== ============== ============== ==============
</TABLE>
(Continued)
10
<PAGE> 10
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
FIDVIPAM FIDVIPCON
---------------------------------------------- ---------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 4,043 3,614 2,404 2,496 2,011
Mortality and expense charges
(note 3) (823) (414) (644) (2,561) (1,607)
-------------- -------------- -------------- -------------- -------------
Net investment activity 3,220 3,200 1,760 (65) 404
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 52,116 42,295 8,996 48,520 7,477
Cost of mutual funds sold (46,800) (36,365) (8,025) (31,647) (5,308)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 5,316 5,930 971 16,873 2,169
Change in unrealized gain (loss)
on investments (5,723) 6,372 7,164 77,750 51,877
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments (407) 12,302 8,135 94,623 54,046
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 12,128 9,065 1,983 18,366 5,315
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 14,941 24,567 11,878 112,924 59,765
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 9,641 8,749 12,328 21,970 18,570
Transfers between funds 1,888 20,102 24,141 22,252 164,277
Surrenders - - - (3,320) 360
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) (48,271) (31,692) (7,839) (9,514) (5,718)
Deductions for surrender charges
(note 2d) - - - (391) 80
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (3,950) (3,114) (2,598) (7,785) (2,157)
-------------- -------------- -------------- -------------- -------------
Net equity transactions (40,692) (5,955) 26,032 23,212 175,412
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity (25,751) 18,612 37,910 136,136 235,177
Contract owners' equity
beginning of period 121,091 102,479 64,569 352,512 117,335
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 95,340 121,091 102,479 488,648 352,512
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
FIDVIPGROP
--------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends - 9 - -
Mortality and expense charges
(note 3) (394) (32) - -
-------------- -------------- -------------- --------------
Net investment activity (394) (23) - -
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 7,841 918 - -
Cost of mutual funds sold (7,270) (910) - -
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments 571 8 - -
Change in unrealized gain (loss)
on investments 14,624 909 - -
-------------- -------------- -------------- --------------
Net gain (loss) on investments 15,195 917 - -
-------------- -------------- -------------- --------------
Reinvested capital gains 536 33 - -
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations 15,337 927 - -
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 21,257 3,849 - -
Transfers between funds 52,630 4,426 - -
Surrenders (469) - - -
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) (5,191) (832) - -
Deductions for surrender charges
(note 2d) (107) - - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (2,039) (296) - -
-------------- -------------- -------------- --------------
Net equity transactions 66,081 7,147 - -
-------------- -------------- -------------- --------------
Net change in contract
owners' equity 81,418 8,074 - -
Contract owners' equity
beginning of period 35,917 - - -
-------------- -------------- -------------- --------------
Contract owners' equity
end of period 117,335 8,074 - -
============== ============== ============== ==============
</TABLE>
(Continued)
11
<PAGE> 11
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
NSATCAPAP NSATGVTBD
---------------------------------------------- ---------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 56,511 57,171 56,557 99,695 93,642
Mortality and expense charges
(note 3) (54,976) (44,903) (30,916) (15,337) (12,402)
-------------- -------------- -------------- -------------- -------------
Net investment activity 1,535 12,268 25,641 84,358 81,240
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 466,891 227,802 251,374 208,750 196,884
Cost of mutual funds sold (201,555) (125,614) (178,975) (194,080) (200,136)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 265,336 102,188 72,399 14,670 (3,252)
Change in unrealized gain (loss)
on investments 1,310,092 1,282,125 651,041 29,475 48,181
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments 1,575,428 1,384,313 723,440 44,145 44,929
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 221,169 131,565 129,452 9,470 -
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 1,798,132 1,528,146 878,533 137,973 126,169
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 706,503 576,936 689,709 575,305 668,858
Transfers between funds 82,239 35,346 (72,830) (30,016) (92,915)
Surrenders (232,748) (128,728) (83,559) (61,261) (50,560)
Death benefits (note 4) (52,012) (324) (1,427) - (360)
Policy loans (net of repayments)
(note 5) (192,222) (158,076) (152,508) (17,667) (41,260)
Deductions for surrender charges
(note 2d) (27,407) (28,634) (19,002) (7,214) (11,246)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (304,373) (117,273) (125,274) (255,843) (449,664)
-------------- -------------- -------------- -------------- -------------
Net equity transactions (20,020) 179,247 235,109 203,304 22,853
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity 1,778,112 1,707,393 1,113,642 341,277 149,022
Contract owners' equity
beginning of period 6,211,213 4,503,820 3,390,178 1,636,721 1,487,699
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 7,989,325 6,211,213 4,503,820 1,977,998 1,636,721
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NSATMYMKT
-------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends 94,842 17,712 18,569 19,727
Mortality and expense charges
(note 3) (11,622) (2,877) (2,145) (2,828)
-------------- -------------- -------------- --------------
Net investment activity 83,220 14,835 16,424 16,899
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 404,881 213,696 143,558 113,843
Cost of mutual funds sold (419,505) (213,696) (143,558) (113,843)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments (14,624) - - -
Change in unrealized gain (loss)
on investments (29,088) - - -
-------------- -------------- -------------- --------------
Net gain (loss) on investments (43,712) - - -
-------------- -------------- -------------- --------------
Reinvested capital gains - - - -
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations 39,508 14,835 16,424 16,899
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 715,338 17,951 134,226 191,272
Transfers between funds (217,365) 7,464 (45,033) 10,558
Surrenders (92,984) (21,098) (4,916) (17,532)
Death benefits (note 4) (62) 1 - 1
Policy loans (net of repayments)
(note 5) (55,560) 4,580 (5,585) (4,237)
Deductions for surrender charges
(note 2d) (21,146) (2,484) (1,093) (3,991)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (466,215) (48,312) (139,235) (203,728)
-------------- -------------- -------------- --------------
Net equity transactions (137,994) (41,898) (61,636) (27,657)
-------------- -------------- -------------- --------------
Net change in contract
owners' equity (98,486) (27,063) (45,212) (10,758)
Contract owners' equity
beginning of period 1,586,185 352,121 397,333 408,091
-------------- -------------- -------------- --------------
Contract owners' equity
end of period 1,487,699 325,058 352,121 397,333
============== ============== ============== ==============
</TABLE>
(Continued)
12
<PAGE> 12
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
NSATSMCO NSATTOTRE
---------------------------------------------- ---------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ - - 121 184,659 221,608
Mortality and expense charges
(note 3) (390) (209) (170) (141,818) (122,321)
-------------- -------------- -------------- -------------- -------------
Net investment activity (390) (209) (49) 42,841 99,287
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 28,399 9,361 10,050 1,085,788 1,020,699
Cost of mutual funds sold (26,375) (8,181) (9,040) (618,881) (706,961)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 2,024 1,180 1,010 466,907 313,738
Change in unrealized gain (loss)
on investments (4,434) 5,948 1,523 1,557,136 2,648,777
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments (2,410) 7,128 2,533 2,024,043 2,962,515
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains - 1,655 219 738,779 518,789
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations (2,800) 8,574 2,703 2,805,663 3,580,591
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 7,939 11,847 4,298 2,325,426 2,521,846
Transfers between funds (17,351) 2,997 32,760 (61,885) (308,827)
Surrenders (1,102) (27) - (585,152) (451,045)
Death benefits (note 4) - - - (62,497) (27,649)
Policy loans (net of repayments)
(note 5) (2,666) (2,640) (1,966) (458,542) (473,902)
Deductions for surrender charges
(note 2d) (130) (6) - (68,905) (100,329)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (2,320) - (207) (1,193,693) (1,217,219)
-------------- -------------- -------------- -------------- -------------
Net equity transactions (15,630) 12,171 34,885 (105,248) (57,125)
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity (18,430) 20,745 37,588 2,700,415 3,523,466
Contract owners' equity
beginning of period 60,766 40,021 2,433 16,284,321 12,760,855
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 42,336 60,766 40,021 18,984,736 16,284,321
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NBAMTBAL
--------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends 220,034 33,067 22,402 26,709
Mortality and expense charges
(note 3) (89,084) (11,829) (10,350) (9,145)
-------------- -------------- -------------- --------------
Net investment activity 130,950 21,238 12,052 17,564
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 607,687 210,279 155,218 219,724
Cost of mutual funds sold (492,296) (210,334) (142,708) (205,327)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments 115,391 (55) 12,510 14,397
Change in unrealized gain (loss)
on investments 1,431,671 (110,079) 139,695 (107,617)
-------------- -------------- -------------- --------------
Net gain (loss) on investments 1,547,062 (110,134) 152,205 (93,220)
-------------- -------------- -------------- --------------
Reinvested capital gains 481,673 232,254 57,499 148,526
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations 2,159,685 143,358 221,756 72,870
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 2,781,851 200,479 176,325 224,381
Transfers between funds (184,767) (92,088) (62,137) (57,437)
Surrenders (337,925) (78,898) (42,668) (96,680)
Death benefits (note 4) (3,966) - - (445)
Policy loans (net of repayments)
(note 5) (302,135) (35,809) (49,326) (12,532)
Deductions for surrender charges
(note 2d) (76,848) (9,291) (9,491) (21,986)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (1,194,716) (75,520) (49,735) (54,729)
-------------- -------------- -------------- --------------
Net equity transactions 681,494 (91,127) (37,032) (19,428)
-------------- -------------- -------------- --------------
Net change in contract
owners' equity 2,841,179 52,231 184,724 53,442
Contract owners' equity
beginning of period 9,919,676 1,389,720 1,204,996 1,151,554
-------------- -------------- -------------- --------------
Contract owners' equity
end of period 12,760,855 1,441,951 1,389,720 1,204,996
============== ============== ============== ==============
</TABLE>
(Continued)
13
<PAGE> 13
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
NBAMTGRO NBAMTGUARD
---------------------------------------------- --------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ - - 19 - -
Mortality and expense charges
(note 3) (359) (295) (8) (1) -
-------------- -------------- -------------- -------------- -------------
Net investment activity (359) (295) 11 (1) -
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 15,315 36,777 3,795 440 -
Cost of mutual funds sold (14,646) (33,554) (3,918) (435) -
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 669 3,223 (123) 5 -
Change in unrealized gain (loss)
on investments (6,710) 7,904 (9) 29 -
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments (6,041) 11,127 (132) 34 -
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 15,182 4,858 4,370 - -
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 8,782 15,690 4,249 33 -
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 10,274 11,927 13,986 56 -
Transfers between funds (5,544) (9,110) 10,801 432 -
Surrenders (9,851) (2,224) (63) - -
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) 6,335 (15,013) (2,120) - -
Deductions for surrender charges
(note 2d) (1,160) (495) (14) - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (4,235) (3,519) (3,008) (9) -
-------------- -------------- -------------- -------------- -------------
Net equity transactions (4,181) (18,434) 19,582 479 -
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity 4,601 (2,744) 23,831 512 -
Contract owners' equity
beginning of period 57,881 60,625 36,794 - -
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 62,482 57,881 60,625 512 -
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NBAMTLMAT
-------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends - 645 516 663
Mortality and expense charges
(note 3) - (106) (552) (197)
-------------- -------------- -------------- --------------
Net investment activity - 539 (36) 466
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold - 915 3,804 497
Cost of mutual funds sold - (957) (3,809) (508)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments - (42) (5) (11)
Change in unrealized gain (loss)
on investments - (148) 143 (203)
-------------- -------------- -------------- --------------
Net gain (loss) on investments - (190) 138 (214)
-------------- -------------- -------------- --------------
Reinvested capital gains - - - -
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations - 349 102 252
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners - 1,277 2,269 2,726
Transfers between funds - - (2,841) 734
Surrenders - - - -
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) - 3 (613) -
Deductions for surrender charges
(note 2d) - - - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) - (425) - -
-------------- -------------- -------------- --------------
Net equity transactions - 855 (1,185) 3,460
-------------- -------------- -------------- --------------
Net change in contract
owners' equity - 1,204 (1,083) 3,712
Contract owners' equity
beginning of period - 10,016 11,099 7,387
-------------- -------------- -------------- --------------
Contract owners' equity
end of period - 11,220 10,016 11,099
============== ============== ============== ==============
</TABLE>
(Continued)
14
<PAGE> 14
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
NBAMTPART OPPBDFD
---------------------------------------------- --------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Reinvested dividends
Mortality and expense charges $ 542 209 56 70 301
(note 3) (807) (364) (24) (102) (7)
Net investment activity -------------- -------------- -------------- -------------- -------------
(265) (155) 32 (32) 294
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 69,018 4,174 1,501 805 5,913
Cost of mutual funds sold (55,703) (2,766) (1,245) (774) (5,797)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 13,315 1,408 256 31 116
Change in unrealized gain (loss)
on investments (27,406) 20,920 5,709 242 (18)
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments (14,091) 22,328 5,965 273 98
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 17,062 3,214 700 63 17
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 2,706 25,387 6,697 304 409
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 19,544 13,757 3,023 13 762
Transfers between funds 3,492 40,368 27,787 7,798 (6,410)
Surrenders (11,127) (29) - - (75)
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) (12,996) 1,787 (728) (277) 1,767
Deductions for surrender charges
(note 2d) (1,310) (6) - - (17)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (5,165) (1,852) (289) (680) (313)
-------------- -------------- -------------- -------------- -------------
Net equity transactions (7,562) 54,025 29,793 6,854 (4,286)
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity (4,856) 79,412 36,490 7,158 (3,877)
Contract owners' equity
beginning of period 133,951 54,539 18,049 4,084 7,961
-------------- -------------- -------------- -------------- -------------
Contract owners' equity $ 129,095 133,951 54,539 11,242 4,084
end of period ============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
OPPGLSEC
-------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Reinvested dividends
Mortality and expense charges 383 1,229 476 -
(note 3) (291) (386) (139) (93)
Net investment activity -------------- -------------- -------------- --------------
92 843 337 (93)
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 13,884 10,115 1,007 529
Cost of mutual funds sold (14,003) (7,187) (783) (486)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments (119) 2,928 224 43
Change in unrealized gain (loss)
on investments (46) (402) 7,389 2,513
-------------- -------------- -------------- --------------
Net gain (loss) on investments (165) 2,526 7,613 2,556
-------------- -------------- -------------- --------------
Reinvested capital gains 5 4,626 - -
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations (68) 7,995 7,950 2,463
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 1,438 9,045 11,574 2,683
Transfers between funds 3,239 2,264 15,543 11,587
Surrenders (30) (3,712) (39) (42)
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) (3,581) (727) (172) -
Deductions for surrender charges
(note 2d) (7) (437) (9) (9)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (339) (2,073) (1,248) (157)
-------------- -------------- -------------- --------------
Net equity transactions 720 4,360 25,649 14,062
-------------- -------------- -------------- --------------
Net change in contract
owners' equity 652 12,355 33,599 16,525
Contract owners' equity
beginning of period 7,309 56,530 22,931 6,406
-------------- -------------- -------------- --------------
Contract owners' equity 7,961 68,885 56,530 22,931
end of period ============== ============== ============== ==============
</TABLE>
(Continued)
15
<PAGE> 15
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
OPPGRO OPPMULT
---------------------------------------------- ---------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 23 - - 74 226
Mortality and expense charges
(note 3) (36) - - (47) (5)
-------------- -------------- -------------- -------------- -------------
Net investment activity (13) - - 27 221
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 1,325 - - - 32
Cost of mutual funds sold (1,165) - - - (30)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 160 - - - 2
Change in unrealized gain (loss)
on investments 546 - - 36 484
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments 706 - - 36 486
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 280 - - 431 159
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 973 - - 494 866
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 4,311 75 - 1,130 670
Transfers between funds 4,149 427 - - 1,962
Surrenders - - - - -
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) - - - - -
Deductions for surrender charges
(note 2d) - - - - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (369) - - (404) -
-------------- -------------- -------------- -------------- -------------
Net equity transactions 8,091 502 - 726 2,632
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity 9,064 502 - 1,220 3,498
Contract owners' equity
beginning of period 502 - - 7,722 4,224
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 9,566 502 - 8,942 7,722
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
STOPP2
--------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends 163 314 342 354
Mortality and expense charges
(note 3) (7) (870) (480) (339)
-------------- -------------- -------------- --------------
Net investment activity 156 (556) (138) 15
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 38 18,389 6,165 9,897
Cost of mutual funds sold (35) (13,936) (4,969) (8,977)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments 3 4,453 1,196 920
Change in unrealized gain (loss)
on investments 271 (4,471) 11,339 5,190
-------------- -------------- -------------- --------------
Net gain (loss) on investments 274 (18) 12,535 6,110
-------------- -------------- -------------- --------------
Reinvested capital gains 52 16,130 7,197 1,657
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations 482 15,556 19,594 7,782
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 413 14,991 20,886 13,726
Transfers between funds 1,268 7,055 20,468 4,803
Surrenders - (5,800) (1,798) (693)
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) - (4,632) (2,348) (565)
Deductions for surrender charges
(note 2d) - (683) (400) (158)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) - (5,924) (475) (546)
-------------- -------------- -------------- --------------
Net equity transactions 1,681 5,007 36,333 16,567
-------------- -------------- -------------- --------------
Net change in contract
owners' equity 2,163 20,563 55,927 24,349
Contract owners' equity
beginning of period 2,061 115,087 59,160 34,811
-------------- -------------- -------------- --------------
Contract owners' equity
end of period 4,224 135,650 115,087 59,160
============== ============== ============== ==============
</TABLE>
(Continued)
16
<PAGE> 16
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
STDISC2 STINTSTK2
---------------------------------------------- --------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ - - 975 149 238
Mortality and expense charges
(note 3) (190) (67) (238) (1,320) (24)
-------------- -------------- -------------- -------------- -------------
Net investment activity (190) (67) 737 (1,171) 214
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 20,350 5,639 3,891 1,066 2,020
Cost of mutual funds sold (19,537) (6,370) (4,377) (1,378) (2,347)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments 813 (731) (486) (312) (327)
Change in unrealized gain (loss)
on investments (1,342) 3,473 (1,385) (546) (2,400)
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments (529) 2,742 (1,871) (858) (2,727)
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 367 - 1,184 - 356
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations (352) 2,675 50 (2,029) (2,157)
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 6,563 4,874 5,381 3,584 2,885
Transfers between funds (16,445) 9,677 3,290 - (1,813)
Surrenders (1,636) (98) - (344) -
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) (245) (290) (2,611) - -
Deductions for surrender charges
(note 2d) (193) (22) - (40) -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (918) (438) - (601) (341)
-------------- -------------- -------------- -------------- -------------
Net equity transactions (12,874) 13,703 6,060 2,599 731
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity (13,226) 16,378 6,110 570 (1,426)
Contract owners' equity
beginning of period 32,100 15,722 9,612 11,856 13,282
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 18,874 32,100 15,722 12,426 11,856
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
VEWRLDBD
--------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends 36 15 55 19
Mortality and expense charges
(note 3) (5,464) (31) (1) (94)
-------------- -------------- -------------- --------------
Net investment activity (5,428) (16) 54 (75)
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 380 129 197 138
Cost of mutual funds sold (376) (128) (205) (141)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments 4 1 (8) (3)
Change in unrealized gain (loss)
on investments (63) 184 (12) 60
-------------- -------------- -------------- --------------
Net gain (loss) on investments (59) 185 (20) 57
-------------- -------------- -------------- --------------
Reinvested capital gains - - - -
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations (5,487) 169 34 (18)
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 6,572 204 170 143
Transfers between funds 12,252 - - 1,056
Surrenders - - - -
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) - - - -
Deductions for surrender charges
(note 2d) - - - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (55) (199) (300) -
-------------- -------------- -------------- --------------
Net equity transactions 18,769 5 (130) 1,199
-------------- -------------- -------------- --------------
Net change in contract
owners' equity 13,282 174 (96) 1,181
Contract owners' equity
beginning of period - 1,602 1,698 517
-------------- -------------- -------------- --------------
Contract owners' equity
end of period 13,282 1,776 1,602 1,698
============== ============== ============== ==============
</TABLE>
(Continued)
17
<PAGE> 17
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
VEWRLDEMKT VEWRLDHAS
---------------------------------------------- --------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 48 1 - 51 360
Mortality and expense charges
(note 3) (23) (1) - (140) (33)
-------------- -------------- -------------- -------------- -------------
Net investment activity 25 - - (89) 327
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 2,898 1,348 - 8,612 17,573
Cost of mutual funds sold (4,179) (1,356) - (9,488) (18,952)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments (1,281) (8) - (876) (1,379)
Change in unrealized gain (loss)
on investments (1,171) (2,290) - (3,152) (566)
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments (2,452) (2,298) - (4,028) (1,945)
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains 43 - - 1,261 487
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations (2,384) (2,298) - (2,856) (1,131)
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 218 35 - 1,314 151
Transfers between funds (1) 11,824 - (6,736) 12,753
Surrenders (248) - - (232) (12,552)
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) 537 (793) - (1,534) 796
Deductions for surrender charges
(note 2d) (29) - - (27) (2,792)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (2,697) - - (579) (521)
-------------- -------------- -------------- -------------- -------------
Net equity transactions (2,220) 11,066 - (7,794) (2,165)
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity (4,604) 8,768 - (10,650) (3,296)
Contract owners' equity
beginning of period 8,768 - - 16,122 19,418
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 4,164 8,768 - 5,472 16,122
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
VKMSRESEC
--------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends 291 38 550 41
Mortality and expense charges
(note 3) (448) (166) (43) (77)
-------------- -------------- -------------- --------------
Net investment activity (157) (128) 507 (36)
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold 19,584 11,641 9,603 -
Cost of mutual funds sold (18,863) (12,855) (7,795) -
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments 721 (1,214) 1,808 -
Change in unrealized gain (loss)
on investments (256) (3,184) (426) 732
-------------- -------------- -------------- --------------
Net gain (loss) on investments 465 (4,398) 1,382 732
-------------- -------------- -------------- --------------
Reinvested capital gains 285 378 1,812 19
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations 593 (4,148) 3,701 715
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners 1,377 3,108 4,935 738
Transfers between funds 22,438 8,994 9,274 2,741
Surrenders (80) (2,261) (27) -
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) (10,452) (4,523) (1,533) -
Deductions for surrender charges
(note 2d) (18) (266) (6) -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (529) (1,008) 11 -
-------------- -------------- -------------- --------------
Net equity transactions 12,736 4,044 12,654 3,479
-------------- -------------- -------------- --------------
Net change in contract
owners' equity 13,329 (104) 16,355 4,194
Contract owners' equity
beginning of period 6,089 20,959 4,604 410
-------------- -------------- -------------- --------------
Contract owners' equity
end of period 19,418 20,855 20,959 4,604
============== ============== ============== ==============
</TABLE>
(Continued)
18
<PAGE> 18
NATIONWIDE VLI SEPARATE ACCOUNT-3
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
WPINTEQ WPPVENCAP
---------------------------------------------- --------------------------------
1998 1997 1996 1998 1997
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends $ 156 192 261 - -
Mortality and expense charges
(note 3) (169) (70) (39) (5) -
-------------- -------------- -------------- -------------- -------------
Net investment activity (13) 122 222 (5) -
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund
shares sold 5,243 7,011 7,425 - -
Cost of mutual funds sold (5,782) (6,378) (7,302) - -
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on
investments (539) 633 123 - -
Change in unrealized gain (loss)
on investments 1,522 (3,096) 23 96 -
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments 983 (2,463) 146 96 -
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains - 1,329 116 - -
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity resulting
from operations 970 (1,012) 484 91 -
-------------- -------------- -------------- -------------- -------------
Equity transactions:
Purchase payments received from
contract owners 7,022 6,856 3,666 908 -
Transfers between funds (4,285) 3,823 14,184 - -
Surrenders - (1,349) - - -
Death benefits (note 4) - - - - -
Policy loans (net of repayments)
(note 5) (94) (3,408) (1,405) - -
Deductions for surrender charges
(note 2d) - (300) - - -
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) (1,109) - - (21) -
-------------- -------------- -------------- -------------- -------------
Net equity transactions 1,534 5,622 16,445 887 -
-------------- -------------- -------------- -------------- -------------
Net change in contract
owners' equity 2,504 4,610 16,929 978 -
Contract owners' equity
beginning of period 24,083 19,473 2,544 - -
-------------- -------------- -------------- -------------- -------------
Contract owners' equity
end of period $ 26,587 24,083 19,473 978 -
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
WPSMCOGR
-------------- ----------------------------------------------
1996 1998 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends - - - -
Mortality and expense charges
(note 3) - (249) (212) (50)
-------------- -------------- -------------- --------------
Net investment activity - (249) (212) (50)
-------------- -------------- -------------- --------------
Proceeds from mutual fund
shares sold - 19,636 20,824 25,594
Cost of mutual funds sold - (14,863) (15,610) (21,195)
-------------- -------------- -------------- --------------
Realized gain (loss) on
investments - 4,773 5,214 4,399
Change in unrealized gain (loss)
on investments - (5,217) 2,827 29
-------------- -------------- -------------- --------------
Net gain (loss) on investments - (444) 8,041 4,428
-------------- -------------- -------------- --------------
Reinvested capital gains - - - -
-------------- -------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations - (693) 7,829 4,378
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners - 4,229 8,281 6,343
Transfers between funds - (15,770) (7,578) 13,647
Surrenders - (279) (5,302) (455)
Death benefits (note 4) - - - -
Policy loans (net of repayments)
(note 5) - (262) (1,352) (3,376)
Deductions for surrender charges
(note 2d) - (33) (1,179) (103)
Redemptions to pay cost of insurance
charges and administration
charges (notes 2b and 2c) - (2,146) (5) (271)
-------------- -------------- -------------- --------------
Net equity transactions - (14,261) (7,135) 15,785
-------------- -------------- -------------- --------------
Net change in contract
owners' equity - (14,954) 694 20,163
Contract owners' equity
beginning of period - 54,327 53,633 33,470
-------------- -------------- -------------- --------------
Contract owners' equity
end of period - 39,373 54,327 53,633
============== ============== ============== ==============
</TABLE>
(Continued)
19
<PAGE> 19
NATIONWIDE VLI SEPARATE ACCOUNT-3
NOTES TO FINANCIAL STATEMENTS
DECEMBER, 1998, 1997 AND 1996
(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 American Century VP - American Century VP
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 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 offered for purchase. See note 2 for a
discussion of policy charges and note 3 for asset charges.
Contract owners may invest in the following funds:
Portfolios of the American Century Variable Portfolios, Inc. (American
Century VP)
(formerly TCI Portfolios, Inc.);
American Century VP - American Century VP Advantage (ACVPAdv)
(formerly TCI Portfolios - TCI Advantage)
American Century VP - American Century VP Balanced (ACVPBal)
(formerly TCI Portfolios - TCI Balanced)
American Century VP - American Century VP Capital Appreciation
(ACVPCapAp) (formerly TCI Portfolios - TCI Growth)
American Century VP - American Century VP Income & Growth (ACVPIncGr)
American Century VP - American Century VP International (ACVPInt)
(formerly TCI Portfolios - TCI International) American Century VP
- American Century VP Value (ACVPValue)
(formerly TCI Portfolios - TCI Value)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
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)
Portfolio of the Fidelity Variable Insurance Products Fund III (Fidelity
VIP-III);
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
20
<PAGE> 20
Portfolio of the Morgan Stanley Universal Funds, Inc. (Morgan Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
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 Cap Value Fund (NSATSmCapV)
Nationwide SAT - Small Company Fund (NSATSmCo) Nationwide SAT -
Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust (Neuberger &
Berman AMT);
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal) Neuberger &
Berman AMT - Growth Portfolio (NBAMTGro) Neuberger & Berman AMT -
Guardian Portfolio (NBAMTGuard) Neuberger & Berman AMT - Limited
Maturity Bond Portfolio (NBAMTLMat) Neuberger & Berman AMT -
Partners Portfolio (NBAMTPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer VAF);
Oppenheimer VAF - Bond Fund (OppBdFd) Oppenheimer VAF - Global
Securities Fund (OppGlSec) Oppenheimer VAF - Growth Fund (OppGro)
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
Strong Opportunity Fund II, Inc. (StOpp2) (formerly Strong Special Fund II,
Inc.)
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)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT); Van Eck
WIT - Worldwide Bond Fund (VEWrldBd) Van Eck WIT - Worldwide
Emerging Markets Fund (VEWrldEMkt) Van Eck WIT - Worldwide Hard
Assets Fund (VEWrldHAs)
(formerly Van Eck WIT - Gold and Natural Resources Fund)
Portfolio of the Van Kampen American Capital Life Investment Trust (Van Kampen
American Capital LIT);
Van Kampen American Capital LIT - Morgan Stanley Real Estate Securities
Portfolio (VKMSRESec)
(formerly Van Kampen American Capital LIT - Real Estate Securities Fund)
Portfolios of the Warburg Pincus Trust;
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
At December 31, 1998, contract owners have invested in all of the above
funds except for Morgan Stanley Universal Funds - Emerging Markets Debt
Portfolio and Nationwide SAT - Small Cap Value Fund. 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.
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.
21
<PAGE> 21
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 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 1997 and 1996 amounts have been reclassified to conform with
the current period 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).
(c) Administrative Charges
For flexible premium contracts, the Company currently deducts a monthly
administrative charge of $12.50 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
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.
22
<PAGE> 22
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
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 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 including interest back to the Account.
(6) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
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(7) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1998.
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN TO
----- ---------- ---------
<S> <C> <C> <C> <C>
American Century VP -
American Century VP Advantage 24,904 $ 18.492009 $ 460,525 16%
American Century VP -
American Century VP Advantage
Initial Funding by Depositor (note 1a) 25,000 19.938436 498,461 17%
American Century VP -
American Century VP Balanced 955 19.320541 18,451 15%
American Century VP -
American Century VP Capital Appreciation 3,978 14.277913 56,798 (3)%
American Century VP -
American Century VP Income Growth 357 10.862660 3,878 9%(a)
American Century VP -
American Century VP International 2,097 16.487231 34,574 18%
American Century VP -
American Century VP Value 496 13.192098 6,543 4%
The Dreyfus Socially Responsible
Growth Fund, Inc. 2,470 28.323603 69,959 28%
Dreyfus Stock Index Fund 15,567 28.091438 437,299 27%
Dreyfus VIF - Capital Appreciation Portfolio 15,355 13.197284 202,644 29%
Dreyfus VIF - Growth and Income Portfolio 576 12.772496 7,357 11%
Fidelity VIP - Equity-Income Portfolio 11,782 35.444796 417,611 11%
Fidelity VIP - Growth Portfolio 15,280 40.998916 626,463 38%
Fidelity VIP - High Income Portfolio 2,138 26.133234 55,873 (5)%
Fidelity VIP - Overseas Portfolio 1,151 18.969496 21,834 12%
Fidelity VIP-II - Asset Manager Portfolio 3,841 24.821550 95,340 14%
Fidelity VIP-II - Contrafund Portfolio 23,039 21.209617 488,648 29%
Fidelity VIP-III - Growth Opportunities Portfolio 596 13.546531 8,074 24%
Nationwide SAT - Capital Appreciation Fund 252,268 31.669989 7,989,325 29%
Nationwide SAT - Government Bond Fund 109,393 18.081576 1,977,998 8%
Nationwide SAT - Money Market Fund 24,405 13.319323 325,058 4%
Nationwide SAT - Small Company Fund 2,608 16.233001 42,336 0%
Nationwide SAT - Total Return Fund 574,062 33.070880 18,984,736 17%
</TABLE>
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<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C>
Neuberger & Berman AMT -
Balanced Portfolio 72,841 19.795868 1,441,951 11%
Neuberger & Berman AMT -
Growth Portfolio 2,465 25.347646 62,482 15%
Neuberger & Berman AMT -
Guardian Portfolio 55 9.314041 512 (7)%(a)
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio 755 14.860392 11,220 4%
Neuberger & Berman AMT -
Partners Portfolio 5,490 23.514569 129,095 3%
Oppenheimer VAF - Bond Fund 621 18.103341 11,242 6%
Oppenheimer VAF - Global Securities Fund 3,715 18.542353 68,885 13%
Oppenheimer VAF - Growth Fund 744 12.857977 9,566 23%
Oppenheimer VAF - Multiple Strategies Fund 394 22.696024 8,942 6%
Strong Opportunity Fund II, Inc. 4,485 30.245312 135,650 13%
Strong VIF - Strong Discovery Fund II 972 19.418031 18,874 6%
Strong VIF - Strong International Stock Fund II 1,368 9.083353 12,426 (6)%
Van Eck WIT - Worldwide Bond Fund 116 15.314274 1,776 12%
Van Eck WIT -
Worldwide Emerging Markets Fund 721 5.775322 4,164 (35)%
Van Eck WIT - Worldwide Hard Assets Fund 448 12.213207 5,472 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio 1,312 15.895654 20,855 (12)%
Warburg Pincus Trust -
International Equity Portfolio 2,250 11.816371 26,587 5%
Warburg Pincus Trust -
Post Venture Capital Portfolio 81 12.075838 978 6%
Warburg Pincus Trust -
Small Company Growth Portfolio 2,529 15.568525 39,373 (4)%
====== ========= ------------
$ 34,839,835
============
</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.
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<PAGE> 25
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,
1998, and the related statements of operations and changes in contract owners'
equity for each of the years in the three 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 VLI Separate
Account-3 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 three year
period then ended in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
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<TABLE>
<S> <C>
NATIONWIDE LIFE INSURANCE COMPANY Bulk Rate
HOME OFFICE: ONE NATIONWIDE PLAZA -- COLUMBUS, OHIO 43215-2220 U.S. Postage
28 PAID
Columbus, Ohio
Permit No. 521
</TABLE>
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
